CHARLENE EDWARDS HONEYWELL, District Judge.
This cause comes before the Court on Plaintiff TracFone Wireless, Inc.'s ("TracFone") Motion for Preliminary Injunction, filed on July 10, 2013 ("Motion for Preliminary Injunction") (Doc. 9). As explained herein, after being served with the Motion for Preliminary Injunction, several Defendants stipulated to entry of a
TracFone is the largest provider of prepaid wireless telephone service in the United States. Doc. 9-1, Declaration of Kevin Wehling ("Wehling Dec."), ¶ 22. TracFone markets and sells its telecommunications products and services under the TracFone, TelCel, Telcel America, NET10, SafeLink Wireless, Straight Talk, and spiracle logo brands, all of which are registered trademarks owned by, or licensed to, TracFone (the "TracFone Trademarks"). Id. at ¶¶ 22, 27-29; see Doc. 1-1. TracFone's service enables its customers to prepay for their wireless service by purchasing TracFone prepaid airtime and specially-manufactured wireless phones. Wehling Dec., ¶ 22. Customers load airtime minutes into their TracFone prepaid phones using codes and proprietary online tools generated from PIN numbers associated with TracFone prepaid airtime or through a TracFone customer service representative. Id. Only TracFone and its authorized, affiliated sales agents are permitted to sell TracFone cellular phones, prepaid airtime cards, and TracFone prepaid airtime minutes, and to use TracFone's marks. Id. at ¶ 33.
Recently, TracFone became aware that Defendants Lopez and RMI — who are not authorized retailers or distributors of TracFone products or services — have engaged in a collaborative effort in which they have represented themselves as TracFone employees and have been advertising, and purporting to sell, certain premium brands of cellular phones (such as an Apple iPhone or Samsung Galaxy) with unlimited minutes to Mexico under one of the TracFone brand names, such as TelCel or TelCel America. Id. at ¶¶ 5, 10, 34. Once customers purchase what they believe to be a premium TracFone cellular phone and Defendants receive payment, Defendants then deliver substantially less expensive TracFone phones to these customers. Id. at ¶¶ 4, 10.
TracFone has received calls and complaints from angry and confused customers who have been duped by the phone switch scheme. Id. at ¶¶ 5, 15. These customers are upset that they have received less expensive phones than what they thought they were purchasing, and believe that TracFone is responsible for tricking them. Id. Several of the defrauded customers have identified the seller of these phones as Defendant The Real Imagination, LLC ("TRI"), which has a location of 47 Sawfish Court, Kissimmee, Florida, and whose members include Defendant Rolando R. Quisca Astocahuana ("Quisca"), Defendant Carolina Davila Santillana ("Santillana"), and Defendant Alicia D. Washington ("Washington"). Id. at ¶¶ 5-6. Other defrauded customers have identified Defendant Ricardo Valenzuela ("Valenzuela") or RMI, which is operated by Lopez, as sellers of the phones. Id. at ¶¶ 5, 7. As part of its investigation into the bait-and-switch scheme, TracFone hired a private investigator who discovered: multiple receipts for TracFone phones and products along with delivery packages and labels related to the 47 Sawfish Court address, TRI, or
On July 8, 2013, TracFone filed a Complaint in this Court asserting the following claims against all Defendants: (1) Count One — trademark infringement in violation of 15 U.S.C. § 1114; (2) Count Two — unfair competition and false advertising in violation of 15 U.S.C. § 1125; (3) Count Three — contributory trademark infringement; (4) Count Four — unfair competition and deceptive trade practices in violation of Fla. Stat. § 501.204; (5) Count Five — civil conspiracy in violation of Florida common law. Doc. 1. Subsequently, TracFone filed its Motion for Preliminary Injunction, seeking a court order prohibiting Defendants from selling, advertising, and distributing TracFone products and services, using the TracFone Trademarks, or participating in the bait-and-switch scheme. See Doc. 9. Thereafter, Defendants Washington, TRI, Quisca, and Santillana stipulated to entry of a preliminary injunction against them.
A district court may issue a preliminary injunction where the moving party demonstrates: (1) a substantial likelihood of success on the merits; (2) that irreparable injury will be suffered unless the injunction issues; (3) the threatened injury to the movant outweighs whatever damage the proposed injunction may cause the opposing party; and (4) if issued, the injunction would not be adverse to the public interest. Four Seasons Hotels and Resorts, B.V. v. Consorcio Barr, S.A., 320 F.3d 1205, 1210 (11th Cir.2003). "[A] preliminary injunction is an extraordinary and drastic remedy not to be granted unless the movant clearly establishe[s] the burden of persuasion as to each of the four prerequisites." Id. (internal citations and quotations omitted).
TracFone asserts that it has a substantial likelihood of success on the merits with respect to its claims under three separate subsections of the Lanham Act, 15 U.S.C. § 1051 et seq. Doc. 9, pp. 6-12. The Court addresses each claim below.
Section 32(1) of the Lanham Act protects trademark owners against the use in commerce of "any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale,
The only remaining issue on TracFone's trademark infringement claim is whether Defendants' use of the TracFone Trademarks is likely to cause confusion. In assessing whether a likelihood of consumer confusion exists, courts consider the following seven factors: (1) type of mark; (2) similarity of mark; (3) similarity of the products the marks represent; (4) similarity of the parties' retail outlets (trade channels) and customers; (5) similarity of advertising media; (6) defendant's intent; and (7) actual confusion. Frehling Enter., Inc. v. Int'l Select Group, Inc., 192 F.3d 1330, 1335 (11th Cir.1999). The type of mark and actual confusion are the most important factors. Id. The Court considers each factor below.
There are four categories of marks, listed in order from weak to strong: (1) generic; (2) descriptive; (3) suggestive; and (4) arbitrary. Id. The stronger the mark, the greater the scope of protection accorded to it; the weaker the mark, the less trademark protection it receives. Id. The categories are based on the relationship between the name and the service or good it describes:
Id. at 1335-36 (internal citations and quotations omitted). The Eleventh Circuit has also held that the degree to which third parties make use of the mark is
TracFone argues that its trademarks are arbitrary as applied to prepaid phone services and, therefore, entitled to substantial protection. Doc. 9, p. 8. While the Court need not decide conclusively which category the TracFone Trademarks (i.e., TracFone, TelCel, Telcel America, NET10, SafeLink Wireless, Straight Talk, and the spiracle logo) fall within for purposes of this Order, they appear to be, at a minimum, suggestive marks because they require some imagination (if very little) by the consumer to be understood as pertaining to cellular phone service. See Frehling, 192 F.3d at 1335. TracFone has also introduced evidence, in the form of Wehling's sworn declarations, that only TracFone and its affiliates are permitted to use the TracFone Trademarks, thereby resulting in a stronger mark. See Wehling Dec., ¶ 33; Frehling, 192 F.3d at 1336. Finally, TracFone has introduced evidence that the TracFone and spiracle logo trademarks, in particular, have been deemed incontestable, resulting in further enhancement of the strength of those marks.
In assessing the similarity of the marks, the Court "compares the marks and considers the overall impressions that the marks create, including the sound, appearance, and manner in which they are used." Frehling, 192 F.3d at 1337. Here, TracFone avers that Defendants have been replicating TracFone's marks. Wehling Dec., ¶¶ 11, 15, 35. Accordingly, there is a substantial likelihood of consumer confusion. See Int'l Cosmetics Exch., Inc. v. Gapardis Health & Beauty, Inc., 303 F.3d 1242, 1248-49 (11th Cir.2002) (finding that the defendants' concurrent use of a mark posed a substantial likelihood of confusion among consumers). As such, the second factor weighs heavily in favor of TracFone.
The third factor requires a determination "as to whether the products are the kind that the public attributes to a single source, not whether or not the purchasing public can readily distinguish between the products of the respective parties." Frehling, 192 F.3d at 1338. Here, TracFone has proffered evidence that Defendants are offering products and services which they purport to be TracFone products and services. Wehling Dec., ¶¶ 4-5, 10-11, 19. Therefore, a consumer would reasonably conclude that a single source — TracFone — is marketing those products and services. As such, there is a high degree of similarity between the products and services, and
The fourth factor takes into consideration "where, how, and to whom the parties' products are sold. Direct competition between the parties is not required for this factor to weigh in favor of a likelihood of confusion, though evidence that the products are sold in the same stores is certainly strong. The parties' outlets and customer bases need not be identical, but some degree of overlap should be present." Frehling, 192 F.3d at 1339 (internal citations and quotations omitted). Here, TracFone argues that Defendants' infringing products and services are sold through the same trade channels and to the same customers as TracFone's products and services, see Doc. 9, p. 9, but aside from generalized allegations, see Wehling Dec., ¶ 19, it offers minimal evidence on this point. As such, this factor does not weigh in favor of TracFone.
By contrast, TracFone has offered some evidence that Defendants' method of advertising is similar to TracFone's. Wehling avers that Defendants, like TracFone, advertise their products and services on the Internet. See Wehling Dec., ¶¶ 9, 31. Since there appears to be some overlap in the parties' methods of advertising, the Court finds that this factor weighs slightly in favor of TracFone. See Frehling, 192 F.3d at 1339-40.
Turning to the fifth factor, the Court must consider whether Defendants adopted TracFone's marks with the intention of deriving a benefit from TracFone's business reputation. See id. at 1340. "[T]his fact alone may be enough to justify the inference that there is confusing similarity." Id. Indeed, "a likelihood of confusion can be found as a matter of law if the defendant intended to derive benefit from the plaintiffs trademark." Babbit Elec., Inc. v. Dynascan Corp., 38 F.3d 1161, 1179 (11th Cir.1994). Here, TracFone has presented substantial evidence, in the form of a well-supported external investigation, that Defendants engaged in a comprehensive bait-and-switch scheme in which they posed as representatives of TracFone in purporting to sell TracFone products. Talatham Dec., ¶¶ 4-12; Wehling Dec., ¶¶ 4-11. This is clear evidence that Defendants used TracFone's marks with the intent of deriving a benefit from TracFone's business reputation. As such, the sixth factor weighs heavily in favor of TracFone.
Evidence of actual confusion is the "best evidence of a likelihood of confusion." Frehling, 192 F.3d at 1340. Here, TracFone has pointed to clear evidence of actual confusion by consumers, as TracFone has received complaints from customers who have been defrauded into purchasing products and services which they believed to be TracFone products and services. Wehling Dec., ¶¶ 5, 13, 15. Therefore, the seventh factor weighs heavily in favor of TracFone.
Evaluating the overall balance of the factors, five of the factors — including the two most important factors — weigh heavily in favor of TracFone, one factor weighs slightly in favor of TracFone, and one factor does not weigh in favor of TracFone. Thus, the Court concludes that TracFone has demonstrated that Defendants' use of the TracFone Trademarks is likely to cause consumer confusion. As a result, the Court finds that TracFone has a substantial likelihood of success on the merits
"Section 43(a) of the Lanham Act creates a federal cause of action for unfair competition in interstate commerce, and forbids unfair trade practices involving infringement of trademarks, even in the absence of federal trademark registration."
Section 43(a)(1)(B) of the Lanham Act provides for a civil action against:
15 U.S.C. § 1125(a)(1)(B). To establish a likelihood of success on the merits of a false advertising claim under Section 43(a), the movant must establish: (1) the advertisements of the opposing party were false or misleading; (2) the advertisements deceived, or had the capacity to deceive, consumers; (3) the deception had a material effect on purchasing decisions; (4) the misrepresented product or service affects interstate commerce; and (5) the movant has been — or is likely to be — injured as a result of the false advertising. Johnson & Johnson Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242, 1247 (11th Cir. 2002). If an advertisement is literally false, the movant need not present evidence of consumer deception. Id.
Because TracFone has not provided the Court with any copies of Defendants' advertisements, the Court cannot at this point determine whether the advertisements were literally false. Nevertheless, there is enough evidence for the Court to conclude that TracFone is likely
As to the second requirement for issuance of a preliminary injunction, "[t]he law is well settled that the existence of a likelihood of confusion constitutes irreparable injury, as a matter of law, sufficient to satisfy the requirements" for issuing the injunction. BellSouth Adver. & Publ'g Corp. v. Real Color Pages, Inc., 792 F.Supp. 775, 784 (M.D.Fla.1991); see E. Remy Martin & Co., S.A. v. Shaw-Ross Int'l Imports, Inc., 756 F.2d 1525, 1530 (11th Cir.1985). Because the Court has found that TracFone is likely to prevail on the merits of its Lanham Act claims by establishing a substantial likelihood of confusion, the Court necessarily finds that TracFone has established that the threatened injury is of an irreparable nature. See E. Remy Martin, 756 F.2d at 1533-34; BellSouth, 792 F.Supp. at 784; Sundor Brands, Inc. v. Borden, Inc., 653 F.Supp. 86, 93 (M.D.Fla.1986).
Turning to the third prong, the Court finds that Defendants have no legitimate interest in the continued use of the TracFone Trademarks. See Laboratorios Roldan, C. por A. v. Tex Int'l, Inc., 902 F.Supp. 1555, 1571 (S.D.Fla.1995). Indeed, issuance of a preliminary injunction will merely enjoin Defendants from conducting a business which is already prohibited by federal law. See MediaOne of Del., Inc. v. E & A Beepers & Cellulars, 43 F.Supp.2d 1348, 1354 (S.D.Fla.1998). TracFone, on the other hand, continues to suffer harm in the form of lost goodwill, diminished reputation, and increased costs due to customer complaints. See supra, Part III.A.3. Accordingly, the threatened injury to TracFone clearly outweighs any damage an injunction may cause Defendants.
"In a trademark infringement or unfair competition case, a third party, the consuming public, is present and its interests are paramount. When a trademark is said to have been infringed, what is actually infringed is the right of the public to be free of confusion and the synonymous right of the trademark owner to control his
In sum, TracFone has met each of the requirements necessary for issuance of a preliminary injunction, and, therefore, the Court will issue the injunction.
Having determined that TracFone is entitled to a preliminary injunction in its favor, the Court must now decide whether to require TracFone to post a bond. Federal Rule of Civil Procedure 65(c) provides that a court may issue a preliminary injunction "only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained." While a bond is therefore normally required, "it is well-established that the amount of security required by [Rule 65(c)] is a matter within the discretion of the trial court, and the court may elect to require no security at all." BellSouth Telecomms., Inc. v. MCImetro Access Transmission Servs., LLC, 425 F.3d 964, 971 (11th Cir.2005) (internal quotations and punctuation omitted). Because the Court has determined that TracFone has a high probability of succeeding on the merits of its Lanham Act claims, and because Defendants have no legitimate interest in the continued use of the TracFone Trademarks, the Court will not require TracFone to post a bond. See Harris v. Hous. Auth. of City of Daytona Beach, No. 6:01-cv-254, 2001 WL 36404273, at *5 (M.D.Fla. Apr. 25, 2001) (not requiring a bond where the preliminary injunction would result in minimal potential harm to the defendant); Univ. Books & Videos, Inc. v. Metro. Dade County, 33 F.Supp.2d 1364, 1374 (S.D.Fla.1999) (not requiring a bond where the movant had a high probability of succeeding on the merits of its claim).
Accordingly, it is hereby
