Eli Lilly & Company v. Natural Answers Inc ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-1375
ELI LILLY & COMPANY, an Indiana corporation,
Plaintiff-Appellee,
v.
NATURAL ANSWERS, INCORPORATED, a Florida
corporation, and BRIAN A. FEINSTEIN,
Defendants-Appellants.
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. IP 99-1600-C H/G--David F. Hamilton, Judge.
Argued September 11, 2000--Decided November 21, 2000
Before BAUER, EVANS, and WILLIAMS, Circuit Judges.
EVANS, Circuit Judge. When Internet start-up
Natural Answers, Inc. began marketing a line of
herbal products called Herbscriptions, we assume
it hoped to avoid getting embroiled in a nasty
court fight, especially one with a global
pharmaceutical giant like the Eli Lilly company.
But no such luck, for here it is (along with its
founder Brian Feinstein), asking us to reverse a
district court order, granted on Lilly’s motion
for a preliminary injunction, which stopped
Natural Answers from marketing its herbal "mood
elevator" HERBROZAC. Although Natural Answers
does its best to paint this case as David versus
Goliath, and hopes for a result similar to that
achieved by David, it doesn’t have much of a
slingshot to carry into the battle.
The basis of Lilly’s claim is that the name
HERBROZAC comes unfairly close to Lilly’s
protected mark for PROZAC, a prescription drug
used to treat clinical depression. PROZAC has
received considerable media attention since its
rollout in 1988, appearing twice (March 26, 1990,
and February 7, 1994) on the cover of Newsweek.
In 1999 Fortune magazine named it one of the top
six "health and grooming" products of the 20th
Century./1 PROZAC has been prescribed over 240
million times for 17 million Americans,
generating sales of more than $12 billion.
Natural Answers develops, markets, and sells a
line of herbal dietary supplements that it calls
Herbscriptions. Herbscriptions are positioned as
"drug alternatives" and include supplements
called HerbenolPM, HERBALIUM, HERBASPIRIN, and
HERBADRYL. Natural Answers’ Feinstein testified
that each name was chosen to call to mind the
function of a famous drug from which its name is
derived./2 Although Natural Answers is careful
to characterize its products as alternatives to
drugs, as opposed to substitutes for drugs,
Feinstein testified that he hopes to persuade
consumers not to have "a default reaction to
immediately go to their physician and have a
prescription for something they may not need."
Natural Answers markets its Herbscriptions line
exclusively through its Internet Web site but
plans to expand its channels of distribution to
include retail outlets like health food and
convenience stores. Natural Answers’ Web site
contains a column labeled "Think Herbs - not
drugs!", under which it reads "Don’t get your
prescriptions filled with drugs . . . Get your
Herbscriptions filled with Nature!" The Web site
also features a table labeled "Herbs v. Drugs"
which contrasts Natural Answers’ products with a
generic "Drug Alternative." In addition, until
December 1999, Natural Answers’ Web site
contained a source code which included the term
"Prozac" as a metatag,/3 and described HERBROZAC
as "a powerful, and effective all-natural and
herbal formula alternative to the prescription
drug Prozac." Internet search engines read source
codes, which are not immediately visible to an
Internet user, in response to search queries.
Natural Answers’ use of "Prozac" as a metatag was
an attempt to guide Internet users searching for
information on PROZAC to Natural Answers’ Web
site. This effort apparently was unsuccessful,
however, because searchers entering the keyword
"Prozac" were swamped with Web sites containing
a greater number of references to PROZAC.
Natural Answers removed the term "Prozac" from
its source codes in response to this lawsuit.
HERBROZAC is positioned as a "mood elevator."
In order to maintain its status as a "food," and
thus remain beyond the scope of the Food and Drug
Administration’s drug approval process,
HERBROZAC’s label warns that "[t]his product is
not intended to diagnose, treat or cure any
disease." No prescription is necessary to
purchase HERBROZAC. The tablets themselves are
larger than average, dark brown with black specs,
and have a distinctly herbal odor. In contrast,
PROZAC is available only with a doctor’s
prescription, which can be filled only by a
licensed pharmacist. PROZAC tablets are green
and off-white, and smaller than average.
Before Natural Answers could get HERBROZAC off
the ground, Lilly sued to enjoin use of that
name, claiming infringement under the Lanham
Trademark Act, 15 U.S.C. sec. 1125(a), dilution
under the Federal Trademark Dilution Act, 15
U.S.C. sec.1125(c), and violation of Indiana’s
unfair competition law. Addressing the federal
claims only, the district court held that Lilly
would likely succeed in proving at trial that the
HERBROZAC name is likely to confuse consumers
under the Lanham Act. In addition, after holding
that Lilly was not required to demonstrate actual
dilution in order to obtain relief under the
Trademark Dilution Act, the court found that use
of the HERBROZAC name created a likelihood of
dilution of the PROZAC mark. Accordingly, the
district court enjoined Natural Answers from
further use of the HERBROZAC name and ordered
that the references to PROZAC be removed from
the source files of Natural Answers’ Web site. At
that time, Natural Answers had sold less than
$2,000 worth of the supplement. This appeal
followed.
The standard for deciding a motion for a
preliminary injunction is well-established and
need not be restated at length. Suffice it to say
that the moving party is required to demonstrate
a likelihood of success on the merits, that it
has no adequate remedy at law, and that it will
suffer irreparable harm if preliminary relief is
denied. Abbott Lab. v. Mead Johnson & Co., 971
F.2d 6, 11 (7th Cir. 1992). If the moving party
can pass this threshold, the court will then
consider any irreparable harm a preliminary
injunction would cause to the nonmoving party, as
well as the consequences to nonparties of
granting or denying the requested relief. Id. at
11-12. Then, sitting as would a court of equity,
the court weighs all of these factors on a
sliding scale; the more likely that the plaintiff
will succeed on the merits, the less the balance
of harms need favor him. Diginet, Inc. v. Western
Union ATS, Inc., 958 F.2d 1388, 1393 (7th Cir.
1992).
The district court (Judge David F. Hamilton
presiding) painstakingly followed the prescribed
formula, although it devoted the bulk of its
analysis to Lilly’s likelihood of success on the
merits. Because the other factors are easily
resolved, we’ll follow the district court’s lead.
We review the district court’s decision to grant
a preliminary injunction under the abuse of
discretion standard. Abbott Lab., 971 F.2d at 12.
In analyzing the relevant factors, a district
court abuses its discretion only when it makes a
clear error of fact or an error of law. Id. at
13.
We turn first to the Lanham Act, enacted in
1946. In the Act, Congress explicitly stated it
intended to protect registered marks from
interference by state legislation, prevent unfair
competition, and protect against fraud "by the
use of reproductions, copies, counterfeits, or
colorable imitations of registered marks . . . ."
15 U.S.C. sec. 1127. Against this background
suggesting a broad legislative purpose, courts
have come to a consensus that a Lanham Act
plaintiff need only establish that its mark is
protectable and that the junior mark is likely to
cause confusion among consumers. Munters Corp. v.
Matsui Am., Inc., 909 F.2d 250, 252 (7th Cir.
1990); International Kennel Club of Chicago, Inc.
v. Mighty Star, Inc., 846 F.2d 1079, 1084 (7th
Cir. 1988). Because Lilly registered the PROZAC
mark in 1985 and has used it continuously for
more than 5 years, it is incontestable. See 15
U.S.C. sec. 1065. As a result, Natural Answers
cannot--and does not--argue that the PROZAC mark
is outside the protection of the Lanham Act. See
Park ’N Fly, Inc. v. Dollar Park and Fly, Inc.,
469 U.S. 189, 205 (1985).
Natural Answers does contend, however, that
consumers are unlikely to be confused by the
HERBROZAC name. In assessing the likelihood of
consumer confusion, we generally consider seven
factors: (1) the similarity between the marks in
appearance and suggestion, (2) the similarity of
the products, (3) the area and manner of
concurrent use of the products, (4) the degree of
care likely to be exercised by consumers, (5) the
strength of the complainant’s mark, (6) any
evidence of actual confusion, and (7) the
defendant’s intent (or lack thereof) to palm off
its product as that of another. Smith Fiberglass
Prods., Inc. v. Ameron, Inc., 7 F.3d 1327, 1329
(7th Cir. 1993). As the district court
recognized, these factors are not a mechanical
checklist, and "[t]he proper weight given to each
. . . will vary from case to case." Dorr-Oliver,
Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 381 (7th
Cir. 1996). At the same time, although no one
factor is decisive, the similarity of the marks,
the intent of the defendant, and evidence of
actual confusion are the most important
considerations. G. Heileman Brewing Co., Inc. v.
Anheuser-Busch, Inc., 873 F.2d 985, 999 (7th Cir.
1989).
After an exhaustive analysis of each of the
relevant factors, Judge Hamilton concluded that
use of the HERBROZAC name was likely to confuse
consumers. Specifically, he found that the
similarity between the two marks and products,
the strength of the PROZAC mark, consumers’
degree of care in choosing between PROZAC and
HERBROZAC, alleged evidence of actual confusion,
and Natural Answers’ intent to palm off all
created a likelihood of confusion. The conclusion
regarding likelihood of confusion is a finding of
fact which will not be reversed unless it is
clearly erroneous. Smith Fiberglass Prods., 7
F.3d at 1329; AHP Subsidiary Holding Co. v.
Stuart Hale Co., 1 F.3d 611, 616 (7th Cir. 1993).
We’ll now take a closer look at each of the
factors bearing on the likelihood of confusion.
The similarity between the names PROZAC and
HERBROZAC is obvious: HERBROZAC contains five of
the six letters in PROZAC, and the "B" in
HERBROZAC sounds similar to the "P" in PROZAC.
Natural Answers argues that the two marks are
dissimilar because HERBROZAC may be pronounced
with an emphasis on the first syllable
(HERBrozac), thus rendering the "B" and "P"
sounds less similar than when the second syllable
of HERBROZAC is emphasized (herBROzac). Even
under Natural Answers’ preferred pronunciation
(which seems contrary to the natural
pronunciation of a combination of the root words
"herb" and "Prozac"), however, the two words are
strikingly similar.
Natural Answers next argues that the HERBROZAC
name merely "calls to mind" PROZAC, while at the
same time distinguishing itself. The mere fact
that one mark brings another mark to mind is not
sufficient to establish a likelihood of confusion
as to the source of the product. Application of
Ferrero, 479 F.2d 1395, 1397 (C.C.P.A. 1973). In
addition, Natural Answers asserts that its
adaptation of the PROZAC name is a parody and
implies that, as such, it is entitled to some
heightened form of protection from trademark
liability. In any case, the HERB prefix,
according to Natural Answers, so significantly
distinguishes HERBROZAC from PROZAC that
consumer confusion is unlikely.
As the district court found, however, "HERBROZAC
does much more than merely ’call to mind’ the
PROZAC mark." Unlike the mark at issue in
Ferrero, PROZAC is a fanciful word that has no
meaning independent of Lilly’s mark. Such marks
are entitled to the highest protection. See
Seven-Up Co. v. Tropicana Prods., Inc., 356 F.2d
567, 568 (C.C.P.A. 1966) ("with coined words
which are meaningless so far as the English
language is concerned, slight variations in
spelling or arrangement of letters are often
insufficient to direct the buyer’s attention to
the distinction between marks"). In addition, the
district court received evidence that other
pharmaceutical companies have expanded their
product lines to include dietary supplements
based on "St. John’s Wort" (the principal herbal
component of HERBROZAC), increasing the
likelihood that consumers would mistakenly
believe that HERBROZAC is affiliated with or
sponsored by Lilly. Moreover, HERBROZAC is not a
parody of PROZAC. A parody is a humorous or
satirical imitation of a work of art that
"creates a new art work that makes ridiculous the
style and expression of the original." Rogers v.
Koons, 960 F.2d 301, 309-10 (2d Cir. 1992).
Natural Answers does not even attempt to point
out any humor or satire in its imitation of the
PROZAC mark. More important, we previously
cautioned that even if a junior mark meets the
definition of a parody, it still runs afoul of
the trademark laws if it is likely to confuse
consumers. See Nike, Inc. v. "Just Did It"
Enterprises, 6 F.3d 1225, 1228 (7th Cir. 1993)
("the parody has to be a takeoff, not a ripoff").
Given the strong similarity in the marks and the
potential overlap in Lilly’s and Natural Answers’
product lines, the mere addition of the HERB
prefix does not go far enough to distinguish
Natural Answers’ product from PROZAC.
Accordingly, the strong similarity of the marks
weighs heavily in favor of a finding of
likelihood of confusion.
Another factor is whether HERBROZAC and PROZAC
are similar products. On a purely technical level
they are different: HERBROZAC is a food and
PROZAC is a drug. See 21 U.S.C. sec. 321(f)-
(g)(1) (distinguishing between dietary
supplements and drugs for purposes of Federal
Food, Drug and Cosmetic Act); Dietary Supplement
Health and Education Act of 1994, S. Rep. No.
103-410, pt. VIII, sec. 2(2)(A)-(B) (clarifying
that dietary supplements are not drugs and should
not be regulated as drugs). This is a critical
distinction, moreover, because HERBROZAC is not
subject to the rigorous testing and approval
process applied to drugs.
The fact that HERBROZAC and PROZAC are not the
same product does not end our inquiry, however,
because we are concerned only with whether they
are similar. Although its legal papers take a
contrary position, Natural Answers would
certainly have consumers believe that HERBROZAC
and PROZAC are similar products. Indeed, Natural
Answers describes HERBROZAC as a "mood elevator,"
the mirror image of anti-depressant, and markets
it as an alternative to PROZAC. Natural Answers’
dual-track conception of HERBROZAC--as a PROZAC
alternative for marketing purposes, but a
dissimilar product for legal purposes--is
disingenuous. Moreover, contrary to Natural
Answers’ suggestion, our inquiry in comparing the
two products is not whether they are
interchangeable, but whether "the parties’
products are the kind the public might very well
attribute to a single source (the plaintiff)."
International Kennel Club, 846 F.2d at 1089(affirming preliminary injunction in favor of dog
show sponsor against manufacturer of toy dogs);
see also Forum Corp. of N. Am. v. Forum, Ltd.,
903 F.2d 434, 442 (7th Cir. 1990) (quoting
International Kennel Club). Because dietary
supplements and drugs serve somewhat similar
functions, and because dietary supplements are an
area of natural expansion for pharmaceutical
companies, HERBROZAC’s similarity to PROZAC is
indicative of a likelihood of confusion.
It is unlikely that HERBROZAC and PROZAC would
ever be used concurrently. As Lilly points out,
there is some degree of danger that consumers
suffering from self-diagnosed depression will
view HERBROZAC as a PROZAC substitute and never
seek medical advice. However, a consumer must
have a prescription from a doctor in order to
obtain PROZAC, and we have no doubt that doctors
would experience little difficulty in
distinguishing between the two products. Thus,
any consumer with access to PROZAC would
necessarily have the advice of a doctor, who
presumably would explain the merits and demerits
of each product. Accordingly, it is unlikely that
HERBROZAC and PROZAC would be used concurrently.
This factor, therefore, weighs in favor of
Natural Answers.
Although we will indulge in the assumption that
doctors exercise great care in selecting
medications for their patients, the record
contains scant evidence of the degree of care
likely to be exercised by ordinary consumers.
Natural Answers suggests that the legislative
history of the Dietary Supplement Health and
Education Act--which found that consumers
generally believe that dietary supplements should
not be regulated as drugs--is indicative of a
high standard of care among consumers. See
Dietary Supplement Health and Education Act of
1994, S. Rep. No. 103-410, pt. VIII, sec.
2(9)(B). In addition, Natural Answers asserts
that its Web site, the only medium through which
HERBROZAC is advertised, makes clear that the
product is not associated with Lilly.
We are not at all sure that Natural Answers’
customers exercise greater than average care.
Natural Answers would have us consider only the
care exercised by doctors, but the first-line
consumers of HERBROZAC are ordinary consumers,
who may or may not seek medical advice before
buying HERBROZAC. Indeed, Natural Answers’
strategy is to divert consumers away from doctors
by "hav[ing] them go natural first and not go
with drugs," so we must look at the degree of
care exercised by all consumers. See Forum Corp.
of N. Am., 903 F.2d at 442 ("the court properly
should . . . consider[ ] the group of potential
purchasers of both products"). Unfortunately for
Natural Answers, there is just no evidence that
consumers as a whole are extraordinarily careful
when it comes to dietary supplements. The
legislative history cited by Natural Answers
demonstrates that consumers are not generally
confused between dietary supplements and drugs,
and maybe even that they are unlikely to think
that HERBROZAC is actually PROZAC, but it
certainly does not address the potential for
confusion concerning Lilly’s sponsorship of, or
affiliation with, HERBROZAC. This is the question
we must answer, see Pebble Beach Co. v. Tour 18
I Ltd., 155 F.3d 526, 543 (5th Cir. 1998), and
neither the cited legislative history nor the
fact that Natural Answers’ Web site does not
visibly mention PROZAC or Lilly helps our
analysis. We will therefore discount the degree
of consumer care factor.
"The term ’strength’ as applied to trademarks
refers to the distinctiveness of the mark, or
more precisely, its tendency to identify the
goods sold under the mark as emanating from a
particular . . . source." Sands, Taylor & Wood
Co. v. Quaker Oats Co., 978 F.2d 947, 959 (7th
Cir. 1992) (quoting McGregor-Doniger, Inc. v.
Drizzle, Inc., 599 F.2d 1126, 1131 (2d Cir.
1979), superseded by rule on other grounds, as
stated in Bristol-Myers Squibb Co. v. McNeil-
P.P.C., Inc., 973 F.2d 1033, 1044 (2d Cir.
1992)). Natural Answers concedes, as it must,
that PROZAC is a strong mark. This factor weighs
in favor of a finding of likelihood of confusion.
The record contains no evidence of actual
consumer confusion, but Lilly cannot be expected
to tender such evidence at this stage. When Lilly
filed this lawsuit, Natural Answers had sold less
than $2,000 worth of HERBROZAC, so it is not
surprising that Lilly cannot identify consumers
who were actually confused about the origin or
sponsorship of HERBROZAC. Even a statistically
reliable consumer survey would likely require a
greater sampling than the total number of
HERBROZAC customers.
Despite these limitations, Judge Hamilton found
a risk of "initial interest confusion." Such
confusion, which is actionable under the Lanham
Act, occurs when a consumer is lured to a product
by its similarity to a known mark, even though
the consumer realizes the true identity and
origin of the product before consummating a
purchase. Dorr-Oliver, 94 F.3d at 382. The
district court relied upon the phonetic
similarity of HERBROZAC to PROZAC, as well as
Natural Answers’ use of the "Prozac" metatag on
its Web site, to find a risk of initial interest
confusion.
But we are concerned here with evidence of
actual confusion, not a mere risk of confusion,
and we find no such evidence in the record. The
similarity of the two marks is a separate
consideration in our analysis, and although it
does create a risk of confusion, it does not
constitute evidence of actual confusion. The same
can be said of Natural Answers’ use of the
"Prozac" metatag: it is evidence of Natural
Answers’ intent, see infra, and it creates a risk
of confusion, but it is not evidence of actual
confusion. Such evidence would most likely take
the form of a consumer survey, which would not be
limited to a sampling of HERBROZAC customers
because "initial interest confusion" is complete
prior to any actual purchase. Lilly failed to
take such a survey, or to provide other evidence
of actual confusion. So we must disagree with the
district court that evidence of actual confusion
indicates a likelihood of confusion. We have
previously made clear, however, that evidence of
actual confusion is not essential to a finding of
a likelihood of confusion. E.g., Computer Care v.
Service Sys. Enter., Inc., 982 F.2d 1063, 1070
(7th Cir. 1992).
The final factor for consideration is Natural
Answers’ intent. Natural Answers urges us to drop
this factor from our analysis, asserting that its
intent (or lack thereof) to confuse consumers is
not probative of whether consumers are likely to
actually become confused. We disagree. The fact
that one actively pursues an objective greatly
increases the chances that the objective will be
achieved, and we have no doubt that this general
principle applies here. For this reason, a
defendant’s intent is an "important factor,"
Computer Care, 982 F.2d at 1070; Processed
Plastic Co. v. Warner Communications, Inc., 675
F.2d 852, 857 (7th Cir. 1982), and can even be
weighed more heavily than other factors. See
Schwinn Bicycle Co. v. Ross Bicycles, Inc., 870
F.2d 1176, 1184-85 (7th Cir. 1989).
Two facts point to the conclusion that Natural
Answers intended to confuse consumers. First, Mr.
Feinstein admitted that the name HERBROZAC was
coined to remind consumers of PROZAC, in
accordance with Natural Answers’ pattern of
adapting famous marks for use in its
Herbscriptions line. Although Natural Answers now
claims that the intent of the name is only to
describe the general function of the product and
to distinguish it from PROZAC, we have a
difficult time believing this innocent
explanation. The HERBROZAC name does nothing--
other than through its reference to the PROZAC
mark-- to describe the function of "mood
elevation." If, at the conclusion of this case,
Natural Answers is searching for a new name for
its product that truly describes its function, it
might come up with something like "Natural
Answers’ Herbal Mood Elevator," a name that would
describe the product’s function but not infringe
upon Lilly’s mark.
The second fact probative of Natural Answers’
wrongful intent is its references to PROZAC in
the source codes of its Web site. The clear
intent of this effort, whether or not it was
successful, was to divert Internet users
searching for information on PROZAC to Natural
Answers’ Web site. As the Ninth Circuit explained
in Brookfield Communications, Inc. v. West Coast
Entertainment Corp., 174 F.3d 1036, 1064 (9th
Cir. 1999), "[u]sing another’s trademark in one’s
metatags is much like posting a sign with
another’s trademark in front of one’s store." As
such, it is significant evidence of intent to
confuse and mislead. See id. at 1062; New York
State Soc. of Certified Public Accountants v.
Eric Louis Assoc., Inc., 79 F. Supp.2d 331, 341
(S.D.N.Y. 1999) (defendant’s bad faith in using
plaintiff’s trademark in metatag probative of
likelihood of confusion). Because Natural
Answers’ wrongful intent is so obvious, we weigh
it heavily.
Having considered each of the relevant factors
in our likelihood of confusion analysis, we
cannot say that the district court erred in
finding such a likelihood. Although the district
court improperly weighed the evidence of actual
confusion, we believe the other factors--
especially the similarity of the marks, the
strength of the PROZAC mark, and Natural
Answers’ intent to confuse--strongly support the
district court’s ultimate conclusion.
Accordingly, we affirm the district court’s
preliminary injunction under the Lanham Act.
Lilly also brought a claim under the Trademark
Dilution Act of 1995, which opens an alternative
avenue of relief for the owners of famous marks.
The Act provides:
The owner of a famous mark shall be entitled,
subject to the principles of equity and upon such
terms as the court deems reasonable, to an
injunction against another person’s commercial
use in commerce of a mark or trade name, if such
use begins after the mark has become famous and
causes dilution of the distinctive quality of the
mark, and to obtain such other relief as is
provided in this subsection.
15 U.S.C. sec. 1125(c)(1). Courts recognize two
principal forms of dilution: tarnishing and
blurring. Dilution by tarnishing occurs when a
junior mark’s similarity to a famous mark causes
consumers mistakenly to associate the famous mark
with the defendant’s inferior or offensive
product. Panavision Int’l, L.P. v. Toeppen, 141
F.3d 1316, 1326 n.7 (9th Cir. 1998). Dilution by
blurring, the injury at issue here, occurs when
consumers "’see the plaintiff’s mark used on a
plethora of different goods and services,’ . . .
’raising the possibility that the mark will lose
its ability to serve as a unique identifier of
the plaintiff’s product.’" Hormel Foods Corp. v.
Jim Henson Prod., Inc., 73 F.3d 497, 506 (2d Cir.
1996) (quoting 3 McCarthy on Trademarks and
Unfair Competition sec. 24.13[1][a][i] (3d ed.
1995) (hereinafter "McCarthy"); Deere & Co. v.
MTD Prods., Inc., 41 F.3d 39, 43 (2d Cir.
1994))./4 The Trademark Dilution Act seeks to
prevent both of these forms of dilution by
"protect[ing] the trademark owner from the
erosion of the distinctiveness and prestige of a
trademark caused by . . . a proliferation of
borrowings, that while not degrading the original
seller’s mark, are so numerous as to deprive the
mark of its distinctiveness and hence impact."
Illinois High School Ass’n v. GTE Vantage Inc.,
99 F.3d 244, 247 (7th Cir. 1996). The strongest
protection is reserved for fanciful marks that
are purely the product of imagination and have no
logical association with the product. Nabisco,
Inc. v. PF Brands, Inc., 191 F.3d 208, 216 (2d
Cir. 1999).
There are four elements to Lilly’s Trademark
Dilution Act claim: (1) the PROZAC mark is
famous, (2) Natural Answers adopted its HERBROZAC
name after the PROZAC mark became famous, (3)
use of the HERBROZAC name "causes dilution" of
the PROZAC mark, and (4) Natural Answers’ use of
the HERBROZAC name is commercial and in commerce.
See 15 U.S.C. sec. 1125(c)(1); Syndicate Sales,
Inc. v. Hampshire Paper Corp., 192 F.3d 633, 639
(7th Cir. 1999). The likelihood of confusion, and
whether HERBROZAC competes with PROZAC, are
irrelevant. See 15 U.S.C. sec. 1127. Natural
Answers concedes all but the third element/5--
that HERBROZAC "causes dilution" of PROZAC--so
we will focus our attention solely on that issue.
As a threshold issue, the parties dispute
whether the "causes dilution" element can be
satisfied by evidence of a mere likelihood of
dilution, or whether proof of actual dilution is
required. The legislative history of the Act does
not specifically address this question, and the
circuit courts to have considered it are divided.
Compare Westchester Media v. PRL USA Holdings,
Inc., 214 F.3d 658, 671 (requiring proof of
actual harm) and Ringling Bros.-Barnum & Bailey
Combined Shows, Inc. v. Utah Div. of Travel Dev.,
170 F.3d 449, 461 (4th Cir.) (same), cert.
denied, 120 S. Ct. 286 (1999) with Nabisco, 191
F.3d at 224-25 (likelihood of dilution
sufficient). See also Times Mirror Magazines,
Inc. v. Las Vegas Sports News, L.L.C., 212 F.3d
157, 179 n.11 (3d Cir. 2000) (dissenting judge
agreeing with majority’s implicit holding "that
the District Court did not err in finding that
irreparable injury may be shown even in the
absence of actual economic harm"). With guidance
from these courts, we’ll take our own stab at
deciding what "causes dilution" means, reviewing
the district court’s statutory interpretation of
that phrase de novo. Komorowski v. Townline Mini-
Mart and Restaurant, 162 F.3d 962, 965 (7th Cir.
1998).
In Ringling Brothers, the Fourth Circuit set
out a cogent argument for a restrictive reading
of the Trademark Dilution Act that requires the
plaintiff to submit proof of actual economic
harm. The court observed that state antidilution
statutes--upon which the Trademark Dilution Act
is based--typically prohibit the use of a mark
that creates a "likelihood of . . . dilution of
the distinctive quality of a [senior] mark." 170
F.3d at 456 (quoting Model State Trademark Act
sec. 12 (1964), reprinted in 3 McCarthy sec. 22:8
(4th ed. 1998)); see also, e.g., N.Y. Gen. Bus.
Law sec. 360-1 ("Likelihood of . . . dilution of
the distinctive quality of a mark . . . shall be
ground for injunctive relief . . . ."); Cal. Bus.
& Prof. Code sec. 14330 (same); Fla. Stat. ch.
495.151 (injunction available if "there exists a
likelihood . . . of dilution of the distinctive
quality of the [senior] mark . . . ."). The
federal Act, on the other hand, does not
incorporate the word "likelihood," which implies
an application to future acts that cause
dilution, but instead employs the present tense
"causes dilution." In addition, whereas state
antidilution statutes generally provide only
injunctive relief, indicating that their purpose
is to prevent future harm, the federal statute
permits injured plaintiffs to obtain damages in
limited circumstances. Ringling Brothers, 170
F.3d at 461. And the conduct proscribed by the
federal statute is "another person’s . . . use,"
not merely threatened use, of a protected mark.
Id. Finally, Ringling Brothers found that the
Act’s definition of dilution, "the lessening of
the capacity of a famous mark to identify and
distinguish goods or services," "makes plain what
the state statutes may not: that the end harm at
which [the Act] is aimed is a mark’s selling
power, not its ’distinctiveness’ as such." Id. at
458. Accordingly, the Fourth Circuit held that
the use of a name that erodes the distinctiveness
of a senior mark but does not affect its holder’s
bottom line is not actionable under the Act. Id.
at 461. The Fifth Circuit essentially adopted
these conclusions in Westchester Media, 214 F.3d
at 670-71.
The Second Circuit rejected Ringling Brothers in
Nabisco, observing that the Fourth Circuit’s
reading of the statute would subject senior mark
holders to uncompensable injury. After all, the
primary remedy of the Act is an injunction
against future use of an offending mark; damages
are permitted only when the defendant acts
wilfully. 15 U.S.C. sec. 1125(c)(2). Thus, if the
"causes dilution" element requires proof of
actual economic harm, senior mark holders will be
restrained from bringing suit prior to suffering
an injury for which the Act will not compensate
them in many circumstances. Nabisco, 191 F.3d at
224. By the time plaintiffs were permitted to
file suit, moreover, junior mark holders might
have the defense that the senior mark had lost
its distinctiveness due to the numerous other
marks that have copied it. Senior mark holders
would also be open to the argument that they had
failed actively to protect their marks. Finally,
if adjudication of a Trademark Dilution Act claim
were not possible prior to economic injury,
upstart companies would be unable to seek a
declaratory judgment that their mark is
sufficiently different from a senior mark prior
to expending the funds necessary to launch their
product. Id. Congress could not have intended
these unjust and inefficient results.
In addition, the Fourth Circuit’s interpretation
of the Act holds plaintiffs to an impossible
level of proof. In the case of an immensely
successful product such as PROZAC, it is
possible that the distinctiveness of its mark
could be diluted even as its sales are
increasing, albeit not increasing as much as they
would in the absence of the offending mark. See
Times Mirror Magazines, 212 F.3d at 179 n.11
(Barry, J., dissenting on other grounds; citing
S. Rep. No. 100-515, at 108 (noting that
distinctive quality of a mark "could be
materially reduced during a period of rising
sales")). Even if diminished revenue could be
shown, moreover, it would be immensely difficult
to prove that the loss occurred as a result of
the dilution of the senior mark. Nabisco, 191
F.3d at 224. Customer surveys, the only other
sufficient means of proof suggested in Ringling
Brothers,/6 are expensive, time consuming, and
subject to manipulation. Nabisco, 191 F.3d at
224. In addition, we doubt that dilution of the
distinctiveness of a mark is something that can
be measured on an empirical basis by even the
most carefully constructed survey. It is hard to
believe that Congress would create a right of
action but at the same time render proof of the
plaintiff’s case all but impossible. We therefore
side with the Second Circuit and hold that proof
of a mere "likelihood of dilution" is sufficient
to satisfy the "causes dilution" element of
Lilly’s case.
How then, should we decide whether Lilly has
demonstrated a likelihood of dilution? The Second
Circuit adopted a number of factors from the much
criticized concurrence in Mead Data Central, Inc.
v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d
1026, 1035 (2d Cir. 1989), added several new
factors, and strongly urged courts to think for
themselves about what considerations they believe
are relevant to dilution. Nabisco, 191 F.3d at
227-28. We’ll accept the Second Circuit’s
invitation and discard a number of the Mead Data
factors that we consider irrelevant.
In suggesting a test for dilution under New
York’s antidilution statute, the concurring judge
in Mead Data identified the following pertinent
considerations: (1) similarity of the marks, (2)
similarity of the products covered by the marks,
(3) sophistication of consumers, (4) predatory
intent, (5) renown of the senior mark, and (6)
renown of the junior mark. Mead Data, 875 F.2d at
1035. As a number of courts and commentators have
observed, however, several of these factors are
more suited to an inquiry into the likelihood of
confusion. E.g., 4 McCarthy sec. 24:94.2 (4th ed.
2000). For example, the second factor, the
similarity of the products in question, is
completely irrelevant because the Trademark
Dilution Act explicitly states that dilution can
occur "regardless of the presence or absence of
. . . competition between the owner of the famous
mark and other parties . . . ." 15 U.S.C. sec.
1127. Indeed, the primary application of the Act
is to cases involving widely different goods
(i.e., Kodak pianos and Kodak film). I.P. Lund
Trading ApS v. Kohler Co., 163 F.3d 27, 49 (1st
Cir. 1998). Similarly, the sophistication of
consumers, intent of the junior mark holder, and
renown of the junior mark are all probative of
the likelihood of confusion but not particularly
relevant to the "capacity of [the senior] mark to
identify and distinguish" itself./7 Id. at 49-
50. Accordingly, we will consider, as the
district court did, only two of the six factors--
the similarity between the HERBROZAC and PROZAC
marks, and the renown of the PROZAC mark.
We already have addressed the similarity between
the two marks at issue and concluded that they
are highly similar. As for our second factor,
PROZAC has achieved substantial renown. As we
noted earlier, PROZAC has received an immense
amount of attention from the news media. In
addition to what we have already described,
PROZAC has been the subject of two national
bestsellers (Peter D. Kramer’s "Listening to
Prozac" (1993) and Elizabeth Wurtzel’s "Prozac
Nation: Young and Depressed in America" (1994))
and segments on 60 Minutes, Good Morning America,
and the Oprah Winfrey Show. According to a
Baltimore Sun columnist, PROZAC is "a designer
label, a buzzword, a brand name familiar to . .
. Americans who have taken it, but also [to]
those who wonder if they, too might find a cure
for whatever ails them in the little green-and-
off-white capsule." Given this evidence, we
cannot disagree with the district court’s
conclusion that PROZAC "has achieved
extraordinary fame in American culture." We
therefore affirm the district court’s holding
that Lilly has shown a likelihood of success in
proving a likelihood of dilution.
We also affirm the district court’s assessment
of the remaining preliminary injunction issues.
Irreparable harm is generally presumed in cases
of trademark infringement and dilution. See
Abbott Lab., 971 F.2d at 16 (recognizing the
"well-established presumption that injuries
arising from Lanham Act violations are
irreparable, even absent a showing of business
loss"); American Dairy Queen Corp. v. New Line
Prod., Inc., 35 F. Supp. 2d 727, 729 (D. Minn.
1998) (presuming irreparable harm by dilution).
The brief sales history of HERBROZAC minimizes
any potential harm to Natural Answers posed by
the district court’s injunction, especially given
the structure of the injunction, which permits
Natural Answers to continue to market its product
under an alternative name. Finally, the public
interest is served by the injunction because
enforcement of the trademark laws prevents
consumer confusion. Abbott Lab., 971 F.2d at 19;
International Kennel Club, 846 F.2d at 1092 n.8.
AFFIRMED.
/1 The other five were Gillette disposable safety
razors, Band-Aids, Penicillin, Tampons, and birth
control pills. Any ranking of this sort, of
course, is both subjective and suspect, for
Fortune went on to put Tupperware, the penny
loafer, and the skateboard on its list of 20th
Century bests in the Home, Clothing, and Travel
categories.
/2 Notably, the Herbscriptions line contains one
supplement, ZONK OUT, whose name is not derived
from any other product. ZONK OUT, as its name
suggests, is designed to promote deep sleep.
Feinstein testified that he chose the name ZONK
OUT because he "did not believe that there was a
sleeping preparation out there that was so widely
known with a suffix that would call to mind a
certain function so as to help the consumer know
that [it] . . . would help them sleep."
/3 The Ninth Circuit recently explained the function
of metatags in Brookfield Communications, Inc. v.
West Coast Entertainment Corp., 174 F.3d 1036,
1045 (9th Cir. 1999):
Metatags are HTML codes intended to describe the
contents of the web site. There are different
types of metatags, but those of principal concern
to us are the "description" and "keyword"
metatags. The description metatags are intended
to describe the web site; the keyword metatags,
at least in theory, contain keywords relating to
the contents of the web site. The more often a
term appears in the metatags and in the text of
the web page, the more likely it is that the web
page will be "hit" in a search for that keyword
and the higher on the list of "hits" the web page
will appear.
/4 The classic hypothetical examples of dilution by
blurring include DuPont shoes, Buick aspirin,
Schlitz varnish, and Kodak pianos. "No one would
confuse Kodak pianos with Kodak film, but the use
of the name on the piano could dilute its
effectiveness as a mark for the film." I.P. Lund
Trading ApS v. Kohler Co., 163 F.3d 27, 49 (1st
Cir. 1998).
/5 Natural Answers argued before the district court
that PROZAC is not a famous mark but concedes
the point on appeal. Even without a concession,
however, we agree with the district court’s
thorough observations concerning the
extraordinary fame PROZAC has achieved.
/6 Ringling Brothers states that "relevant
contextual factors," such as the extent of the
junior mark’s exposure, the similarity of the
marks, and the strength of the senior mark, are
also relevant. 170 F.3d at 465. The court then
suggests, however, that none of these factors
would alone be sufficient, but would only be
relevant "as indirect evidence that might
complement other proof." Id./7 The same can be said of several additional
factors considered in Nabisco: "actual confusion
and the likelihood of confusion, shared consumers
and geographic isolation, the adjectival quality
of the junior use, and the interrelated factors
of duration of the junior use, harm to the junior
user, and delay by the senior in bringing the
action." 191 F.3d at 228. Each of these factors
is either relevant only to likelihood of
confusion, or already is incorporated into our
injunction analysis.