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Guthrie Healthcare System v. Contextmedia, Inc.

United States Court of Appeals, Second Circuit

June 13, 2016

GUTHRIE HEALTHCARE SYSTEM, Plaintiff-Appellant-Cross-Appellee,
v.
CONTEXTMEDIA, INC., an Illinois Corporation, RISHI SHAH, an Individual, Defendants-Appellees-Cross-Appellants, DOES I through X, Defendants.

          Argued: December 11, 2015

         Plaintiff, a provider of healthcare services in New York and Pennsylvania, and Defendant, a provider of digital health-related content nationwide, both appeal from the judgment of the United States District Court for the Southern District of New York (Forrest, J.), which granted limited permanent injunctive relief on Plaintiff's claim of trademark infringement. The complaint alleged that Defendant's trademarks were confusingly similar to Plaintiff's trademark. The injunction, following a bench trial, prohibited Defendant from using its marks within Plaintiff's geographic service area, but placed no restriction on Defendant's use of its marks on the Internet or outside Plaintiff's service area. The Court of Appeals concludes that Defendant's trademarks are infringing, but that the current limitations placed on Defendant by the district court in the injunction were based on an incorrect standard and fail to give Plaintiff and the public adequate protection from likely confusion. The finding of liability and the grant of injunctive relief are AFFIRMED. The scope of the injunction is expanded, and the case is REMANDED for further proceedings.

          ELLIOTT J. STEIN, Stevens & Lee, Lawrenceville, NJ, (Bradley L. Mitchell, Neil C. Schur, on the brief), for Plaintiff-Appellant-Cross-Appellee.

          EAMON P. JOYCE, Sidley Austin LLP, New York, NY, (Joshua J. Fougere, on the brief), for Defendants-Appellees-Cross-Appellants.

          Before: JACOBS, LEVAL, CALABRESI, Circuit Judges

          LEVAL, CIRCUIT JUDGE.

         Plaintiff and Defendant[1] each appeal from the judgment of the United States District Court for the Southern District of New York (Forrest, J.), which, following a bench trial, imposed on Defendant a limited injunction. Defendant contests the finding of liability, and Plaintiff contests the limited scope of the injunction. The complaint alleged trademark infringement in violation of the Lanham Act, 15 U.S.C. § 1114, unfair competition, and a number of related claims, on the basis that Defendant's trademark logo was confusingly similar to Plaintiff's trademark. The court ruled in Plaintiff's favor, finding that a likelihood of confusion resulted from Defendant's use of trademarks similar to Plaintiff's. The court accordingly granted permanent injunctive relief, prohibiting Defendant from using its marks within Plaintiff's geographic service area ("Guthrie Service Area") (covering the "Twin Tiers" region of Northern Pennsylvania and Southern New York), but held that Defendant may continue to use its marks everywhere outside the Guthrie Service Area, as well as without restriction in Internet transmissions, on Defendant's websites and on social media.

         We agree with the district court's liability determination that there is a likelihood of confusion between Plaintiff's and Defendant's trademarks. We conclude, however, that, in restricting the scope of the injunction, the court misapplied the law, and failed to adequately protect the interests of Plaintiff and the public from likely confusion. We therefore affirm the judgment in part, vacate in part, expand the scope of the injunction, and remand for further consideration of the scope of the injunction.

         BACKGROUND

         I. Plaintiff

         Plaintiff Guthrie Healthcare System is a Pennsylvania non-profit corporation composed of Guthrie Healthcare, the Guthrie Clinic, and the Guthrie Foundation. Operating primarily in the Twin Tiers region of New York and Pennsylvania, Plaintiff has 32 medical facilities, including three hospitals and 29 clinics, as well as a number of specialized healthcare facilities such as a cardiology center and a cancer center. Plaintiff also operates home healthcare services, hospice services, and a durable medical equipment company. It has a multi-disciplinary medical group practice that includes more than 280 physicians and 130 mid-level providers (physician assistants and nurse practitioners) who practice in New York and Pennsylvania. It also operates a pharmacy, and several medical supply stores, which sell directly to the public.

         Plaintiff recruits doctors and residents nationwide. It provides educational programs for its physicians, nurses, and medical technicians. Additionally, it operates the Guthrie School of Nursing, which recruits students nationwide. The Guthrie Foundation conducts medical research and fundraising beyond the Guthrie Service Area, and disseminates medical information over the Internet, as well as in symposia and seminars. It requires that such information meet evidence-based medicine guidelines.

         Plaintiff refuses to endorse third-party products or services or to host advertisements, in order to accommodate research funders' sensitivities, preserve its eligibility for clinical trials, and avoid the fact or appearance of conflict of interest, bias, or partiality.

         Plaintiff derives a substantial portion of its patient-care revenue from referrals from physicians and medical professionals. Around 20% of the approximately $300 million annually paid to Plaintiff for specialized medical care comes from referrals by other doctors and medical professionals who are not affiliated with Plaintiff. Plaintiff focuses considerable marketing efforts on these referring doctors and medical professionals, inviting them to classes, seminars, and symposia, and assuring them that Guthrie will not seek to provide medical services to the referred patients beyond those for which they were referred.

         II. Defendant CMI

         Defendant ContextMedia ("CMI"), founded in 2006, has offices in Chicago and New York City, and employs 42 people. Rishi Shah is CMI's president and one of its directors. Defendant serves approximately 2, 600 physician practices, and operates in all 50 states.

         Defendant's business is to deliver health-related content to physician practices. Defendant installs digital screens in waiting areas, examination rooms, and infusion rooms in physician practices which play short videos and clips about health and wellness to patients at those facilities. In the vast majority of instances, Defendant's revenue comes from advertising displayed with its content; a small number of physicians who subscribe to its service pay a fee in order to avoid advertisements. The advertisers whose ads appear together with Defendant's content, its "sponsors, " are mostly large pharmaceutical companies; their ads are displayed in between the segments of educational health-related programming.

         The material Defendant displays on its screens is primarily educational digital content related to health and wellness, such as short segments on nutrition and exercise tips. Much of this material is created by organizations such as the American Heart Association, the American Dietetic Association, the Academy of Nutrition and Dietetics, the Juvenile Diabetes Research Foundation, Health Day TV, and D Life, among others, from which Defendant obtains licenses to broadcast their materials.

         Medical offices that wish to display CMI's programming in their practices enroll as Defendant's "members." Defendant then installs flat panel display units, media players, and necessary hardware in their waiting rooms. Defendant recruits new members by placing cold calls to physician practices.

         Defendant has two websites: www.contextmediahealth.com, which serves primarily members, and www.contextmediainc.com, which is directed primarily to potential sponsors, prospective employees, and media.

         The CMI screen is divided into three sections. A sidebar on the left side of the screen displays CMI's marks. There is also a main content window, and a news ticker at the bottom of the screen. The main content window also occasionally displays the CMI marks.

         III. The Trademarks

         a. Plaintiff's Trademark

         Plaintiff launched the Guthrie Trademark and a new brand identity in September 2001. The mark was developed by Monigle Associates, a consulting firm that works in corporate branding and identity. Soon after, every aspect of Plaintiffs business bore the Guthrie Trademark. Plaintiff appHed to register the Guthrie Trademark with the United States Patent and Trademark Office ("PTO") in 2006, and the mark became a Registered Trademark on January 22, 2008. Plaintiffs mark is pictured below:

         (Image Omitted.)

         The Guthrie Trademark has two elements-a logo on the left and the Guthrie name, which appears in bold, capital letters to the right of the logo. This litigation concerns primarily the logo. The Guthrie logo consists of a shield containing a stylized human figure composed of crescent moon segments, topped by a detached oval head. The upper part of the body-outstretched arms and torso-is represented by a single crescent moon shape with its two points curving upward, each representing an arm, terminating at points at the outer edges of the background shield. The portion of the body below that crescent is represented by two partial vertical crescents, joined at the top where they meet the upper body crescent and combine to represent the lower part of the torso, and separated at the bottom, so that each represents a leg. The points of the crescents curve toward the viewer's left, and each lower tip ends at the border of the background shield. The center point between the tips of the figure's legs is substantially to the right of the vertical center line of the background shield, while the head is to the left of the vertical centerline of the shield, so that the figure tilts toward the viewer's left. The points of the crescent moons (depicting the arms and the legs of the figure) divide the shield into four segments. The human figure is white. The segments of the shield outside the outline of the human figure are colored - two segments are dark blue, one is yellow, and one is orange. There is a small, rectangular cutaway at the top right corner of the shield. The word "Guthrie" is always presented in large, bold, capital letters to the right of the logo.

         The Guthrie Trademark is prominently featured on both the primary Guthrie website (www.guthrie.org) and the website focused on personnel recruitment and business development (www.ichoseguthrie.org). The Trademark appears on Guthrie facilities, personnel badges, business cards, stationery, brochures, reports, publications, billboards, buses, and in print and television advertisements.

         Beginning in 2001, Plaintiff ran television advertising that prominently displayed the Guthrie Trademark in New York and Pennsylvania. Plaintiff has also partnered with television stations to produce health-related features that have been broadcast to wide audiences, also featuring the Guthrie Trademark. From July 1, 2008 to June 30, 2013, Plaintiff spent $7.25 million promoting the Guthrie Mark and brand.

         Starting in 2010, Plaintiff began a new program called digital signage, designed to "push" health-related content out to video screens at Guthrie facilities. Only two such screens are now in place, but according to Joseph Scopelliti, the President and CEO of Guthrie, "many more" are planned. The project was included in the 2013 and 2014 Fiscal Year budgets. However, the two screens that are in place have been there since 2011 (or 2010), and no more have gone up. There has been no development or implementation of content for the screens.

         b. Defendant's Trademarks

         In late 2007, Defendant hired Anthony Bonilla, a graphic designer, to develop a logo. Defendant began using Bonilla's designs as its logos in March 2008.

         Defendant's eight marks at issue in this litigation contain the same graphic element, although the colors of the background elements differ. Defendant's Mark 1 is pictured below:

         (Image Omitted.)

         Like the Guthrie logo. Defendant's logo consists of a shield containing a stylized human figure composed of crescent moon segments, topped by a detached oval head. The upper part of the body-outstretched arms and torso-is represented by a single crescent moon shape with its two points curving upward, each representing an arm, terminating at points at the outer edges of the background shield. The portion of the body below that crescent is represented by two partial vertical crescents, joined at the top where they meet the upper body crescent and combine to represent the lower part of the torso, and separated at the bottom so that each represents a leg. Both of the points of these crescents curve toward the viewer's left, and each lower tip ends at the border of the background shield. The center point between the tips of the figure's legs is to the right of the vertical center line of the background shield, while the head is to the left of the vertical centerline of the shield, so that the figure tilts toward the viewer's left. The points of the crescent moons (depicting the arms and the legs of the figure) divide the shield into four segments.

         As with Plaintiff's logo, the human figure in Defendant's logo is always white, and the four background shield sections are colored. Defendant uses its logo with text in bold, usually capitalized letters, laid out to the right of the logo. It uses the logo in eight different marks, the differences lying primarily in the different text and in the varying colors of the background shield. Three of Defendant's marks have a color scheme similar to Guthrie's-"Mark 1" (the logo with the text "Diabetes Health Network"), "Mark 2, " (the logo with the text "ContextMedia"), and "Mark 8" (the logo with the text "ContextMedia Health")-all have a purple segment, two yellow/gold segments, and a dark blue segment. Other CMI marks at issue have background color schemes that differ from Guthrie's. Three of the CMI marks are in black and white. Defendant sometimes uses its name, "ContextMedia, " alongside the logo. In other marks, the text alongside the logo describes the health-related subject matter of the particular videos being shown. Occasionally Defendant's graphic appears on its own without accompanying text.

         The PTO originally refused to register three of Defendant's marks because of likelihood of confusion with Plaintiff's mark. Defendant responded to the PTO and made many of the same arguments it made in this case. The PTO ultimately approved the marks for registration, and registered Defendant's first seven marks between 2009 and 2013.

         On August 16, 2013, ten months after this litigation commenced, Defendant filed an Intent to Use Trademark Application to register another mark ("CMI Mark 8").

         Defendant has rebranded itself as ContextMedia Health, and intends to use Mark 8 as its primary mark going forward. The condition-specific marks continue to be used in some communications with sponsors.

         IV. Events Triggering this Suit

         Plaintiff had never heard of Defendant prior to December 2011, when Plaintiff received a holiday card from Defendant which displayed its Mark 1. Mary Ann Dougherty, Plaintiff's director of strategic planning and marketing, saw that the "[t]he graphic elements used in the [CMI] trademarks [were] very, very similar to that of the Guthrie trademark." On January 3, 2012, she contacted Defendant to advise it that it was "duplicating" Plaintiff's logo and requested an explanation. She followed up with a letter on February 1, 2012, "demanding" that Defendant cease all use of Plaintiff's image. She never received a reply from Defendant.

         V. Proceedings Below

         Plaintiff filed this action on October 26, 2012. The amended complaint asserts eight counts of trademark infringement under 15 U.S.C. § 1114; a claim of unfair competition under 15 U.S.C. § 1125(a); a claim of false designation of origin under 15 U.S.C. § 1125(a); common-law unfair competition; a claim of trademark dilution under 15 U.S.C. § 1125(c); and unjust enrichment.

         Defendants moved for summary judgment on all counts, and the district court granted it in part. The court found that there was no triable issue of material fact as to actual consumer confusion, bad faith, or willful deception for Marks 1-7; as a result, monetary relief was not available under the Lanham Act. The court also granted summary judgment to Defendants on the state-law unfair competition claim, which requires bad faith as an element. Plaintiff abandoned its claim for dilution prior to the grant of summary judgment. Before trial, the court granted Defendant's motion for reconsideration and dismissed Plaintiff's unjust ...


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