WORLDCARE Trademark Injunction Part I

 Worldcare Limited Corporation v. World Insurance Company, Case No. 8:11CV99 (D. Neb. May 9, 2011).

Written by Jay Lewis

On May 9, 2011, WorldCare Limited Corporation (“WorldCare”) was granted a preliminary injunction against World Insurance Corporation (“Defendant”) preventing further use of the “WORLDCARE” mark or name.

WorldCare is a provider of second-opinion telemedicine services.  The service allows individuals and insureds to request second opinions through WorldCare’s consortium of specialized physicians at highly regarded hospitals and universities.  WorldCare sells its services through insurance policies as an additional benefit.  WorldCare registered its trademark, “WORLDCARE,” in June of 1996.

Defendant provides health insurance products and services including basic medical, major medical, comprehensive major medical, short-term medical, and dental insurance.  Defendant began using WORLDCARE in February 2003 as a brand name on its insurance products.  Defendant applied for a registration of the WORLDCARE mark on March 28, 2005, but the application was rejected.  Defendant continued to use the mark creating customer confusion in violation of the Lanham Act, 15 U.S.C. §§ 1114(a), 1125(a). WorldCare filed for a preliminary injunction against Defendant on September 21, 2010.

Defendant argued that WorldCare failed to renew its ownership in the WORLDCARE mark under 15 U.S.C. § 1059(a). The Court stated: “Nevertheless, ownership of registration is not determinative of ownership of trademark rights, and ‘the absence of federal registration does not unleash the mark to public use.’" quoting, Gilbert/Robinson, Inc. v. Carrie Beverage-Missouri, Inc., 989 F.2d 985, 992 (8th Cir. 1993).

The Court cited Dataphase Sys., Inc. v. C.L. Systems Inc., 640 F.2d 109 (8th Cir. 1981) for the four factors of a preliminary injunction: “(1) The threat of irreparable harm to the movant; (2) the state of balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest.” Dataphase at 114.

Balance of Harms

The Court first reviewed the ‘balance of harms’ between the parties and found in favor of WorldCare.  Defendant’s executive testified that the company had already started to phase out the use of the WORLDCARE mark from its products.  The executive explained, however, the phase-out was only temporary.  Defendant was not willing to consent to a complete termination of the mark’s use.  The executive believed the company was not legally obligated to terminate the use and it could be harmed by a negative public perception if did so voluntarily.  The Court found that due to Defendant’s own actions in phasing out the use of the mark, the burden of an injunction had been significantly minimized.  An injunction reinforcing the phase-out would not cause significant additional harm.

Part II of this post will examine the Probability of Success on the Merits.

The Hangover II Injunction Denied

By Jay Lewis

S. Victor Whitmill v. Warner Bros. Entertainment, Inc., 4:11-cv-752 (E.D. Mo. 2011)

Plaintiff S. Victor Whitmill (“Whitmill”) is the tattoo artist who inked Mike Tyson’s face.  Whitmill sought a preliminary injunction against Warner Brothers Entertainment (“Defendant”) to enjoin the release of “The Hangover II.”  Actor Ed Helms sports an identical tattoo in the film which Whitmill believes infringes on his copyright. Missouri Eastern District Court Judge Catherine D. Perry orally denied Whitmill’s preliminary injunction at the hearing and issued a short one page order.

To obtain a preliminary injunction, the movant must show likelihood of success on the merits, irreparable harm, the balance of equities weighs in favor of the movant, and an injunction is in the public interest.  Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008). 

To be successful on the merits, Whitmill needed to demonstrate he had a valid copyright and the Defendant copied the protected work. See Plaintiff’s Memorandum in Support of his Motion for Preliminary Injunction, p 5, citing, Rottlund Co. v Pinnacle Corp., 452 F. 3d 726 (8th Cir. 2006).  Based on the facts set forth in the Plaintiff’s Memorandum, Whitmill demonstrated both a copyright and an unauthorized copy.  Plaintiff’s Memo, p 5-7. However, according to the Memorandum in Opposition to Plaintiff’s Motion for Preliminary Injunction, seen here, “[t]here are no reported cases addressing the copyrightability of tattoos.” (Memo in Opposition, p. 12).  Regardless, the Judge found a copyright, stating:

Of course tattoos can be copyrighted. I don’t think there is any reasonable dispute about that. They are not copyrighting Mr. Tyson’s face, or restricting Mr. Tyson’s use of his own face, as the defendant argues, or saying that someone who has a tattoo can’t remove the tattoo or change it, but the tattoo itself and the design itself can be copyrighted, and I think it’s entirely consistent with the copyright law.

NY Times, quoting Judge Perry.

The Defendant, in its Memorandum, offered several defenses to Whitmill’s copyright infringement claim. (Memo in Opposition, pp. 18-19).  The Defendant argued that displaying Tyson’s tattoo on a character in the film constituted Fair Use: 

[T]he fair use of a copyrighted work…for purposes such as criticism, comment…is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include — 

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

17 U.S.C. § 107.

Judge Perry rejected the Fair Use argument, stating, “This use of the tattoo did not comment on the artist’s work or have any critical bearing on the original composition. There was no change to this tattoo or any parody of the tattoo itself. Any other facial tattoo would have worked as well to serve the plot device.” NY Times.

The next factor, irreparable harm, is presumed if movant has established the likelihood of success on the merits in a copyright infringement case according to Plaintiff’s Memorandum which cites West Pub. Co. v. Mead Data Central, Inc., 799 F.2d 1219, 1229 (8th Cir. 1986); DF Inst. Inc. v. Marketshare EDS, 84 USPQ 2d 1206, 1212 (D. Minn. 2007).  (Plaintiff’s Memo, page 8).  Based upon the Judge’s statements that a copyright exists and the Defendant infringed upon it, supra, irreparable harm was presumed in this case.

Although Whitmill showed a likelihood of success on the merits and irreparable harm, the balance of harms and public interest tipped too sharply in favor of the Defendant. The Defendant and its partners had invested hundreds of millions of dollars into producing, marketing and distributing the film.  An injunction preventing the opening would have cost the Defendant millions in box office revenues over the Memorial Day weekend.  Additionally, the Defendant argued that a substantial likelihood existed that a delay in the release of the film would create a black market of pirated DVDs based upon the prints that already had been shipped to theaters around the country. (Memo in Opposition, pp. 36-40).

Judge Perry agreed with the Defendant:

The public interest does favor protecting the thousands of other business people in the country as well as Warner Brothers, and not causing those nonparties to lose money, and I think it would be significant, and I think it would be disruptive. I think that tilts the public interest in favor of Warner Brothers on this because all over the country people would be losing money if I were to enjoin this movie.

NY Times.

The Hangover II was released in theaters as scheduled.  It reportedly grossed $86 million over the weekend and $137 million since its release breaking previous box-office records for an R-rated comedy. LA Times.

Verizon Litigation

By Jay Lewis

 Part II

Verizon filed a motion for preliminary injunction based on Defendants’ deceptive acts, which induced customers to purchase non-compliant premium services.  Verizon also claimed that the customers, in turn, threatened to leave the Verizon network because of Defendants’ actions.  The Court granted Verizon’s motion for a preliminary injunction after conducting a hearing. 

The Court cited Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) for the general factors a plaintiff must show to obtain a preliminary injunction:

  1. A likelihood of success on the merits of the legal claim,
  2. Irreparable harm in the absence of preliminary relief,
  3. The balance of equities tips in the favor plaintiff’s favor, and
  4. The relief is in the public interest.

The Court further cited Alliance for Wild Rockies v. Cottrell, 622 F.3d 1045 (9th Cir. 2010) for the 9th Circuit sliding scale balancing test.  Under this 9th Circuit test, if the balance of hardships tips sharply in the plaintiff’s favor, likelihood of success on the merits becomes less of a factor to consider. Alliance, 1049-53.

Verizon based its request for preliminary injunction on three legal bases:

  1. Arizona Consumer Fraud Act (“ACFA”),
  2. Tortious Interference with Contract, and
  3. Unjust Enrichment.

ACFA, the Court decided, did not apply in this case.  AFCA protects the merchant-consumer relationship.  It provides a means for consumers to bring an action against merchants for deceptive or fraudulent practices.  Here, Verizon was not a purchaser of Defendants services but merely a conduit to the customers.  Therefore, Verizon would not likely succeed on the merits of its AFCA claim.

The Court held that Verizon would likely succeed on the merits of its claim for tortious interference with contractual relations.  The Court affirmatively stated that, under Arizona law, a civil defendant can be held liable for tortious interference with contractual relations if the interference made the plaintiff’s compliance with a contract more expensive. This is an extension of Arizona precedent where the facts of previous tortious interference cases indicate the contract ended in breach or termination.  In Verizon’s case, the Court applies Restatement (Second) of Torts §767 (1979) which punishes tortious actions that merely burden the plaintiff’s performance on an existing contract.  The fact that Verizon paid reimbursement fees to retain customers and monitoring fees to prevent continued deception met the criteria set forth in §767.

The Court found that Verizon’s theory for unjust enrichment would not likely succeed on the merits.  Specifically, Verizon did not suffer the required impoverishment.  In fact, Verizon gained an estimated $24 million from Defendants’ actions.

After determining that Verizon has a likelihood of success on the merits for tortious interference, the Court found the three other factors of a preliminary injunction had been met:

  • Verizon would suffer irreparable harm to its business reputation if Defendants were allowed to continue deceiving customers; damage to goodwill constituted irreparable harm.
  • The balance of harms tipped in Verizon’s favor as Verizon has an interest in protecting its customer relationships and Defendants have no legitimate interest in accessing the network through deceptive means. 
  • The public interest in this matter is to protect contractual relationships from exploitation through improper means.

 Part III shall discuss the Defendants' arguments.