On June 13, 2016, the Second Circuit Court of Appeals in Guthrie Healthcare System v. ContextMedia, Inc. – a trademark infringement case involving visually-similar entity logos – affirmed the Southern District Court of New York as to the district court’s finding of a likelihood of trademark confusion, and vacated, reversed, and remanded the district court’s decision as to the geographic scope of the trademark injunction on the basis that the injunction was too narrowly construed and as such, failed to protect the plaintiff from the harms caused by potential confusion.
Although the Second Circuit in Guthrie Healthcare System v. ContextMedia, Inc. does not establish any groundbreaking new legal precedent, it does explore the limits of “likelihood of confusion” in the geographic and digital context, specifically with regard to overlapping scope between plaintiff and defendant.
The plaintiff, Guthrie Healthcare System (Guthrie), is a non-profit healthcare entity that primarily operates in the Twin Tiers region of New York – straddling the border of New York and Pennsylvania. Guthrie is a reasonably-sized healthcare system by most standards, with 32 medical facilities including hospitals and clinics, in addition to other specialized care facilities. Despite this New York and Twin Tiers region focus, Guthrie recruits personnel, conducts research, and obtains funding from all over the country. Importantly, Guthrie does not endorse or advertise any third-party products or services for a variety of funding, clinical, and perception-based reasons.
The defendant, ContextMedia, Inc. (CM), is a digital health and wellness business with national reach (serving physicians in all 50 states). Any confusion between the logos of Guthrie and CM – thus establishing the perception that Guthrie is somehow associated with a third-party product or service – is likely to negatively affect Guthrie as a healthcare entity, as they have avoided endorsing or advertising third-party products and services for very specific and strategically-sound reasons.
History of Use
In September 2001, Guthrie developed and launched their infringed-upon logo in cooperation with Monigle Associates, a graphic design firm. Though other trademarked logos in existence at the time made use of stylized human figures and shields, there existed no other logo in which a stylized human figure was placed on top of a four-sectioned shield. Though Guthrie used their logo for years, it was not until 2006 that they applied to federally register the mark with the USPTO, and it was not until January 22, 2008 that the mark was finally registered (No. 3,374,204). On February 13, 2013, registration of the mark was recognized as incontestable by the USPTO.
Defendant CM, by contrast, began developing their infringing logo in late 2007 in cooperation with Anthony Bonilla, a freelance graphic designer. It was not until March 2008 that CM began to use the logo – two months after Guthrie’s mark had been federally registered with the USPTO.
Similarity of the Marks
Both Guthrie and CM feature their logos at-issue (an abstract human figure on a colorful background) prominently in their promotional activity. Guthrie uses the logo to promote its healthcare services, while ContextMedia positions its logo in and around its media products, and uses the logo to promote its products online.
The Second Circuit court was quick to affirm the decision of the district court in finding that CM had infringed upon Guthrie’s mark and created a high likelihood of confusion. The court wrote that CM’s logo was “jaw-droppingly similar” to that of Guthrie, which had been designed and registered with the USPTO years before.
Injunction Too Narrow
Pursuant to their finding that defendant CM infringed upon Guthrie’s mark, the district court narrowly enjoined CM from using the logo in the Twin Tiers region. The injunction did not prevent CM from continuing to use the infringing logo outside of the Twin Tiers region, nor did it prevent CM from using the logo in promotional content online.
The Second Circuit, in their opinion, determined that the injunction was overly narrow, because: 1) Guthrie has healthcare facilities outside of the Twin Tiers region that are not covered by the injunction; 2) CM can still use the infringing logo in online promotional content accessible to persons within the Twin Tiers region; 3) Guthrie also promotes its brand over the internet; 4) Guthrie has core activities it conducts nationally (such as recruitment, research, and fundraising) that would be negatively affected by the confusion created by the infringing logo; and 5) Guthrie would be prevented from expanding to other non-injunction regions without risking logo confusion.
The Second Circuit affirmed the injunction in part, only so far as it prevents CM from using Guthrie’s logo, modified the injunction to include additional counties where Guthrie owned and operated healthcare facilities, and vacated the injunction with respect to it allowing CM to continue to use their infringing logo outside of the Twin Tiers region. The proceedings were subsequently remanded to the district court to determine whether an injunction could be precisely designed enough to protect Guthrie’s mark from confusion while allowing CM to continue to use the logo.
Trademark injunctions must take into account both online promotion and future expansion plans. A narrowly-tailored geographically limited injunction can be particularly damaging to growing businesses if the business is forced to accept trademark confusion in the event of future expansion. The geographic scope of a trademark injunction should, therefore, carefully take into consideration the total services, activities, and growth plans of the successful plaintiff’s business endeavors.