United States District Court, District of Vermont
ORDER ON MOTION FOR PRELIMINARY INJUNCTION (DOC. 5)
J. Garvan Murtha, United States District Judge
The parties to this action are manufacturers of cookie cutters. Plaintiff Ann Clark, Ltd. ("Ann Clark") claims Defendant R&M International Corp. ("R&M") has failed to designate the geographic origin of its cookie cutters in violation of the Lanham Act, 15 U.S.C. § 1125(a), the Vermont Consumer Protection Act, 9 V.S.A. § 2451 et seq., and Vermont common law of unfair competition. (Doc. 1 ¶ 1.) Pending is Ann Clark's motion for a preliminary injunction requiring R&M mark the foreign country of origin on its products, among other things. (Doc. 5.)
Ann Clark and R&M are competitors in the market for selling cookie cutters in the United States. (Doc. 1 ¶ 7.) Ann Clark, a Vermont corporation, manufactures cookie cutters in the United States. (Id. ¶¶ 4, 9.) R&M, a Pennsylvania corporation, manufactures cookie cutters in China. (Id. ¶¶ 5, 12.) R&M admits failing to mark certain of its cookie cutters "Made in China" (Id. ¶ 14 Doc. 11 ¶ 14), but asserts it has taken corrective action to ensure no unlabeled cookie cutter products exist in the marketplace. (Doc. 11 ¶ 14.)
Ann Clark alleges R&M's failure to mark some of its cookie cutters as "Made in China" affects prospective buyers' purchasing decisions (Doc. 1 ¶ 17) and has caused it to incur higher costs due to consumer confusion (Id. ¶ 18). R&M responds it is unaware of any instances of consumer confusion and asserts "American consumers often assume or otherwise expect inexpensive bakeware accessories, like the cookie cutter products offered for sale by R&M, are in fact produced overseas in countries like the People's Republic of China, and not the United States." (Doc. 21 at 6.)
Ann Clark asks the Court to enjoin R&M (1) from failing to mark the country of origin on its products; (2) from misrepresenting the country of origin of its products; (3) from engaging in any other unfair competition with Ann Clark; (4) from destroying any documents pertaining to the failure to mark the country of origin on its products; (5) to recall all improperly marked products from distributors and retailers; and (6) to file a report within 30 days describing its compliance with the injunction. (Doc. 5 at 1-2.)
A court may enter a preliminary injunction when the moving party can establish "(1) irreparable harm and (2) either (a) a likelihood of success on the merits, or (b) sufficiently serious questions going to the merits of its claims to make them fair ground for litigation, plus a balance of the hardships tipping decidedly in favor of the moving party." Oneida Nation of New York v. Cuomo, 645 F.3d 154, 164 (2d Cir. 2011). A preliminary injunction is an "extraordinary remedy and should not be routinely granted." Patton v. Dole, 806 F.2d 24, 28 (2d Cir. 1986).
A. Likelihood of Success on the Merits
The Lanham Act, 14 U.S.C. § 1125(a), provides a cause of action for false designation of origin. See Res. Developers, Inc. v. Statue of Liberty-Ellis Island Found., Inc., 926 F.2d 134, 139 (2d Cir. 1991). To state a claim for injunctive relief under the Lanham Act, a plaintiff must "demonstrate a likelihood of deception or confusion on the part of the buying public caused by the false description or representation." PPX Enters, v. Audiofidelity Enters., Inc., 818 F.2d 266, 271 (2d Cir. 1987). "Whether likelihood of confusion exists is a matter of mixed fact and law reviewed de novo." Merriam-Webster, Inc. v. Random House, Inc., 35 F.3d 65, 70 (2d Cir. 1994).
Ann Clark argues there is a likelihood of confusion as a matter of law, relying on Alto Products Corp. v. Ratek Industries Ltd., No. 95 Civ. 3314, 1996 WL 497027 (S.D.N.Y. Sept. 3, 1996) ("Alto II"). In Alto II the court found "a consumer encountering goods with no marking as to country of origin will assume that they are American-made, thus creating a likelihood of confusion with goods which are, in fact, American-made." Id at *5. That court held "failure to designate country of origin in violation of the Tariff Act violates § 43(a) of the Lanham Act as a matter of law." See id.
R&M argues the more recent decision in Milso Industries Corp. v. Nazzaro, No. 08 Civ. 1026, 2012 WL 3778978 (D. Conn. Aug. 30, 2012), should control. Milso rejected Alto II's perse rule, finding illogical a passive failure to label could result in liability because the Lanham Act imposes no affirmative duty of disclosure. See id. at *19. The Milso opinion also criticizes Alto's per se rule as "inappropriately restricting] the ability of the finder of fact to evaluate the particular circumstances of each case." Id at *20. R&M also contends the assumptions underlying Alto are outdated, observing that at present countless products are manufactured abroad and imported into the United States such that consumers assume unlabeled products are manufactured in China. (Doc. 21 at 13.)
The Court finds the reasoning in Milso persuasive and declines to find R&M's failure to label its cookie cutters amounted to a per se violation of the Lanham Act. As the Milso court observed, a per se rule unnecessarily restricts courts from considering the specific facts of the case. See 2012 WL 3778978, at *20; see also Mugworld, Inc. v. G.G. Marck & Assocs., Inc., 563 F.Supp.2d 659, 669 (E.D. Tex. 2007) ("At most, evidence of improper designation of origin is evidence in support of a Lanham Act 'false designation of origin' claim."). Other courts have also criticized Alto II as misreading the Lanham Act. See York Grp., Inc. v. Horizon Casket Grp., Inc., 459 F.Supp.2d 567, 578 (S.D. Tex. 2006) (declining to adopt Alto II's per se rule); but see Baden Sports, Inc. v. Molten, No. C06-0210P, ...