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Eleventh Circuit: Trademark licensee liable for infringement when deviating from license

January 17, 2008
Post by Blog Staff

In a decision Tuesday, the Eleventh Circuit affirmed a district court's finding of trademark infringement against a trademark licensee. The alleged infringer was actually licensed to use the mark owner's trademark, but did not use the mark as described in the license, instead using an abbreviated form. As a result, the court affirmed the jury's finding of infringement and the associated damages award, reviewing its seven-factor likelihood-of-confusion test and emphasizing the factors of actual confusion and type of mark. However, the court vacated the district court's injunction against further infringement. Because the infringer was actually licensed to use the mark as a whole, an injunction that prevented further use of the truncated mark "or any other similar marks" (language often used in trademark injunctions) was inappropriately broad, as it would prevent the infringer from using the licensed mark.More detail of Aronowitz v. Heath-Chem Corp. after the jump.In 2002, Jack Aronowitz and Heath-Chem Corporation entered into an agreement whereby Aronowitz would become a director and consultant at Health Chem's research facility in order to develop a new medical diagnostic patch. When disputes arose, a second agreement was formed in 2003, whereby Aronowitz would create a separate business entity in Florida to develop the patch and Health Chem would retain an option to purchase the rights to the patch. This agreement also granted Aronowitz a limited license to use the trademark "Health-Chem Diagnostics" while developing the patch. When the 2003 agreement fell apart, Aronowitz brought suit against Health-Chem claiming breach of contract. Among other things, Health-Chem responded with a claim of trademark infringement. Health-Chem alleged that Aronowitz had only been given a license to use the name "Health-Chem Diagnostics," but instead had often used the more general name "Health Chem" on his documents and website. After the jury found Aronowitz liable for trademark infringement (and addressed other contract issues between the parties), Aronowitz moved for judgment as a matter of law, arguing that he had not used the mark without permission and that there was no likelihood of confusion. The district court denied the motion, finding that the mark "Health-Chem" was not equivalent to "Health-Chem Diagnostics" and that there was sufficient evidence of customer confusion. Both sides appealed.

With regard to the trademark claim under de novo review, the Eleventh Circuit stated that trademark infringement could be shown when (1) an infringer uses the mark in commerce without consent and (2) the use is likely to cause confusion. On appeal, Aronowitz argued that the second element, likelihood of confusion, did not exist. In order to evaluate the likelihood of confusion element, the Eleventh Circuit applies a seven-factor test, noting that the first and last factors were the most important. The factors are:

  1. type of mark
  2. similarity of the marks
  3. similarity of the products the marks represent
  4. similarity of the parties' retail outlets and customers
  5. similarity of advertising media
  6. defendant's intent
  7. evidence of actual confusion

As for the type of mark at issue, the court noted that the parties agreed that the "Health-Chem" mark was suggestive, the second strongest type of mark. Further, because a mark's strength is enhanced when there is little to no third-party use and there was no positive testimony of third-party use of the mark, it merited further protection. When analyzing the actual confusion factor, the court noted that Health-Chem customers had been confused about whether Health-Chem had a facility in Florida (where Aronowitz's entity existed), and major customers had been confused about discrepancies between the products Health-Chem claimed to produce and those displayed on Aronowitz's website. The court went on to note that, although there was no apparent intent to infringe, none of the other factors weighed favorably for or against infringement. Therefore, "because the two most important factors in determining the likelihood of confusion – type of mark and actual confusion – weighed in favor of finding such confusion," the Eleventh Circuit upheld the district court's judgment as a matter of law.The court, however, vacated the district court's injunction against further infringement. The injunction prevented further use of the "Health-Chem" mark, but also included language common to many trademark injunctions, namely that Aronowitz also could not use "any other marks similar to [Health-Chem's] trademark." Here, however, the mark Aronowitz is enjoined from using makes up part of a mark that Aronowitz has a license to use. As a result, this additional "boilerplate" language was inappropriate, and the Eleventh Circuit vacated the injunction as overly broad for this reason.

To read the full decision in Aronowitz. v. Heath-Chem Corp., click here.


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