Tuesday, December 11, 2018

low volume of confused callers doesn't establish irreparable harm

TrueNorth Companies, L.C. v. Trunorth Warranty Plans, LLC, No. C17-31-LTS, --- F.Supp.3d ----, 2018 WL 6438370 (N.D. Iowa Dec. 7, 2018)

TrueNorth sued TN Warranty for trademark infringement and related claims based on the parties’ respective design logos:
plaintiff's logo
defendant's logo
TrueNorth provides financial and insurance services, including products and services to commercial transportation companies and drivers including “transportation risk management, transportation property insurance and transportation equipment insurance. TrueNorth originated in eastern Iowa and now has offices in Tennessee, Texas, Illinois, Michigan and Colorado.”  TN Warranty sells commercial truck warranties, specifically “extended warranty services for mechanical components for used commercial vehicles manufactured by others whose original manufacturer’s warranty has expired.” It markets through independent truck dealers or “authorized retailers,” and the end user is a truck owner or fleet owner who owns the truck(s) covered by the warranties. About 80 percent of its authorized retailers are used truck dealers who sell TN Warranty products at the point of sale at or near the same time they close a deal for the sale of a used truck, while about 15 percent of its warranties are sold by finance companies that provide the financing for the truck and approximately 5 percent of its warranties are sold by repair facilities. Sales to end consumers (individual truckers) are under 1 percent of sales.  TN Warranty argued that “in training new authorized retailers, it emphasizes that it is not selling insurance, but a limited warranty. It does not compete with providers of insurance products and does not market its warranty products through insurance brokers or agents.”  According to TN Warranty, neither it nor its retailers have encountered TrueNorth in the marketplace and was unaware of any other entities that market insurance to the end user in the same way that TN Warranty markets its products; its clients don’t offer insurance. Also, TN Warranty said, “most customers are interested in coverage, cost and convenience rather than the provider of the warranty.”

TrueNorth registered three marks in 2006, including the one shown above, a word mark for TRUENORTH, and the following logo:

TN Warranty started as CompassOne Warranty in 2015, with a mark derived from an earlier company with a mark called Vector Compass. 

In 2015, another entity sued alleging that “Compass” infringed its rights, so (apparently after a contempt order) the founder formed TN Warranty instead, using “TrüNorth” to pay homage to its CompassOne Warranty and Compass Group roots. “It chose to use a dieresis (ü) in its mark to give the brand an international feel, consistent with the company’s international aspirations.”  TN Warranty applied to register the mark; TrueNorth opposed and TN Warranty defaulted.  (Seems like a B&B v. Hargis issue here.)

In early 2016, TrueNorth sent a C&D; in mid-2016, it received an application for insurance from one of its clients in the trucking industry, and among the forms submitted with the application was a Component Breakdown Limited Warranty Agreement form for TRÜNORTH™.  TrueNorth ultimately sued at the end of March 2017. TN Warranty states that it then voluntarily redesigned its mark as follows:

TN Warranty also argued that a non-party, Premium 2000+, was run by an ex-business partner turned rival of TN Warranty’s founder, who’s filed various lawsuits against that founder.  Premium 2000+ allegedly offered to do business with TrueNorth, but cited TN Warranty’s name and mark as a “road block” to doing business, indicating TrueNorth’s lawsuit was premised more on Premium 2000+’s animosity towards the founder rather than on true confusion in the marketplace. TrueNorth disagreed, citing emails and phone calls from truck drivers and professionals within the trucking and insurance industries that allegedly demonstrated confusion.

Preliminary injunction: though the Eighth Circuit has not yet ruled on the Lanham Act consequences of eBay and Winter, those cases lead to the conclusion that a presumption of irreparable harm upon showing likely success on the merits (via confusion) is not warranted.

Harm to reputation can, however, be irreparable.  TrueNorth argued that TN Warranty has received negative consumer reports from the Better Business Bureau and Trucker’s Report (an online forum used by truck drivers). Some of TrueNorth’s trucking industry partners contacted TrueNorth on behalf of drivers with warranty claims in an attempt to resolve warranty issues. It explained its delay in seeking a preliminary injunction stems with an increase in calls about warranties that it received in 2018. TrueNorth argued that it started recording calls in January 2018 due to the “increasing number of calls and other instances of confusion among TrueNorth customers.” It recorded six calls in February 2018, four calls in March 2018, one call in April 2018, three calls in May 2018, no calls in June 2018, two calls in late July 2018 and six calls in August 2018. Its witness described the harm as follows: “Just verbal communications that have been relayed to me that they think that the presence of having su[ch] a similar logo is creating challenges and confusion that is disruptive to our working together to market to owner operators and truck lessees.” The witness further described the situation as creating challenges with how TrueNorth tries to market to leasing companies, but could not provide any specific examples and was not aware of any specific loss of business with the company under discussion.

The court found this evidence of irreparable harm insufficient. Under Eighth Circuit law, a party must show that “the harm is certain and great and of such imminence that there is a clear and present need for equitable relief.” Though TrueNorth showed some level of confusion through phone call recordings and email communications, that didn’t rise to the level of irreparable harm (such as loss of customers or decline in sales) based on this confusion. The time addressing confusion and explaining that TrueNorth provides insurance services and not warranty services “can be addressed through monetary means.”  As to call volume, TrueNorth didn’t provide context; apparently each of the 28 to 30 individuals who take calls in TrueNorth’s call center receive 25 to 30 calls per day (and up to 100 calls per day during peak season). “Six calls per month is hardly so disruptive that TrueNorth is suffering irreparable harm that cannot be addressed through monetary means.”

Nor did TrueNorth show that the alleged harm was more than a possibility. Though reputational damage can constitute a threat of irreparable harm and is difficult to measure, there was still no showing that it was likely. TrueNorth argued that its reputational damage came from (1) customers upset about their warranties and (2) industry partners who have commented on TN Warranty’s presence. But TrueNorth doesn’t sell truck warranties, and there was no record evidence that upset TN Warranty customers would tell fellow truck drivers to avoid business with “True North” or fail to go to TrueNorth for insurance based on a negative impression stemming from their warranty.  This was possible, but merely speculative. And the only industry partners at issue were Lone Mountain Leasing (which raised the alarm on the logo in the first place) and Premium 2000+ (“which competes with TN Warranty and has its own arguable agenda for pursuing business with TrueNorth”).  And the relevant witness couldn’t establish any specific harm as to those partners.  As to Premium 2000+, it sought out TrueNorth to do business, not the opposite, and its reason for not going forward was “questionable based on the record,” which included an email stating that they couldn’t do anything unless TrueNorth got rid of TN Warranty’s founder. “TrueNorth has demonstrated only that its affiliates have acknowledged the presence of another entity named “True North.”

TrueNorth had dealt with other True North entities, and had previously entered into coexistence agreements with one that provided financial consulting services to large banks and credit reporting agencies and another that provided advertising and public relations services. “TrueNorth’s willingness to co-exist with other entities using the same name, albeit in arguably different industries, tends to lessen the alleged harm.”

Finally, its delay in seeking relief weighed against finding irreparable harm. TrueNorth waited 17 months after filing its complaint to bring its motion for preliminary injunction, and even longer if you measure from the time TrueNorth learned of TN Warranty. “TrueNorth’s only explanation for the delay was that it was collecting sufficient evidence to support its motion. If the harm was truly as serious, imminent and irreparable as alleged, TrueNorth should not have needed 17 months to bring a properly supported motion.”

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