IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 23, 2008
No. 07-50406 Charles R. Fulbruge III
Clerk
PAULSSON GEOPHYSICAL SERVICES INC
Plaintiff-Appellee
v.
AXEL M SIGMAR; RESERVOIR SYSTEMS INC; SIGMA RESEARCH INC
Defendants-Appellants
Appeal from the United States District Court
for the Western District of Texas
Before GARWOOD, CLEMENT and ELROD, Circuit Judges.
PER CURIAM:
The Appellants appeal the district court’s grant of the Appellee’s motion
for a preliminary injunction. We affirm.
I. FACTS AND PROCEEDINGS
Plaintiff-Appellee Paulsson Geophysical Services, Inc. (“Paulsson”) is a
California corporation that provides seismic imaging services to the oil and gas
exploration and production industry. It markets a three-dimensional vertical
seismic profile service called “MASSIVE 3D VSP” and holds trademarks
registered in the United States for both “P/GSI” and “MASSIVE 3D VSP”.
Defendant-Appellant Axel M. Sigmar is a resident of Texas who is the registered
agent for Defendants-Appellants Reservoir Systems, Inc. (“RSI”) and Sigma
No. 07-50406
Research, Inc. (“SRI”), both Texas corporations. Sigmar is also the president of
the board of administration for Reservoir Systems Internacional (“RSM”), a
Mexican corporation.1
In 2000, Paulsson and the Appellants began discussing the possibility of
a cooperative business venture. Paulsson knew that Sigmar was in contact with
Petroleos Mexicanos (“Pemex”) regarding a contract to provide seismic data
acquisition services. In order to facilitate discussions between the parties,
Paulsson entered into mutual nondisclosure agreements with Sigmar and SRI
in March 2000 and March 2004. In March 2005, Paulsson provided RSI with a
letter of authority, allowing it to promote Paulsson’s MASSIVE 3D VSP services
in Mexico. In May 2005, RSI granted all rights under the letter of authority to
RSM, but the grant also indicated that it gave RSM the right to “use” Paulsson’s
technology, not just promote it. The assignment to the Mexican corporation was
made in Texas and filed in the Texas Secretary of State’s records and certified
with an apostille.2 Although Sigmar and Paulsson later negotiated to amend the
letter of authority to permit RSI to promote Paulsson’s technology through RSM,
the amendment was not finalized. Both before and after issuing the letter of
authority, Paulsson specified to the Appellants that the letter did not grant RSI
a license to use Paulsson’s technology or to commit Paulsson to perform services.
On July 24, 2006, RSM and Pemex entered into a contract in which Pemex
would receive seismic profiles using Paulsson’s MASSIVE 3D VSP technology.
Paulsson later became concerned that the Appellants had obtained the
contract with Pemex by offering Paulsson’s services even though they had no
authority to do so. Paulsson also became concerned about the use of its
trademarks because it believed that the Appellants planned to perform the
1
Defendants-Appellants will be collectively referred to as “Appellants.”
2
“[A] standard certification provided under the Hague Convention for authenticating
documents used in foreign countries.” BLACK’S LAW DICTIONARY 105 (8th ed. 2004).
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No. 07-50406
contract with Pemex by using a different system while still purporting to provide
Paulsson’s technology.
Paulsson filed suit on December 4, 2006, moving for a temporary
restraining order and preliminary injunction to prevent Sigmar, RSI, SRI, and
RSM from using Paulsson’s trademarks or other proprietary information.
Sigmar, RSI, and SRI denied that the court had subject matter jurisdiction over
the action in their answer, but they did not move to dismiss the action on that
basis. The district court issued a temporary restraining order and granted the
motion for a preliminary injunction. On February 23, 2007, the case was
reassigned from Judge Yeakel to Judge Sparks. On May 25, 2007, the district
court granted RSM’s motion to dismiss for lack of personal and subject matter
jurisdiction.
Sigmar, RSI, and SRI appeal the district court’s grant of Paulsson’s motion
for a preliminary injunction. They also assert that the district court lacked
subject matter jurisdiction.
II. STANDARDS OF REVIEW
This Court reviews questions of subject matter jurisdiction de novo.
Lundeen v. Mineta, 291 F.3d 300, 303 (5th Cir. 2002). “[T]he issue of subject
matter jurisdiction may be raised for the first time on appeal.” Veldhoen v. U.S.
Coast Guard, 35 F.3d 222, 225 (5th Cir. 1994).
With regard to a preliminary injunction,
[a] district court’s grant of a preliminary injunction is
reviewed for abuse of discretion. Each of the four elements required
to support a preliminary injunction . . . presents a mixed question
of fact and law. Findings of fact are reviewed only for clear error;
legal conclusions are subject to de novo review. Although the
ultimate decision whether to grant or deny a preliminary injunction
is reviewed only for abuse of discretion, a decision grounded in
erroneous legal principles is reviewed de novo.
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No. 07-50406
Women’s Med. Ctr. of Nw. Houston v. Bell, 248 F.3d 411, 418–19 (5th Cir. 2001)
(footnotes omitted). In reviewing a trademark claim, a “finding of a likelihood
of confusion is . . . a finding of fact reviewed for clear error.” Westchester Media
v. PRL USA Holdings, Inc., 214 F.3d 658, 665 (5th Cir. 2000).
III. DISCUSSION
A. Subject Matter Jurisdiction
“[T]he legislation of Congress will not extend beyond the boundaries of the
United States unless a contrary legislative intent appears.” Steele v. Bulova
Watch Co., 344 U.S. 280, 285 (1952). In Bulova, the Supreme Court addressed
the issue of whether a district court had “jurisdiction to award relief to an
American corporation against acts of trade-mark infringement . . . consummated
in a foreign country by a citizen and resident of the United States.” Id. at 281.
The Court noted “the broad jurisdictional grant in the Lanham Act.” Id. at 286.
The Act applies to trademark infringement in “commerce” and defines that term
as “‘all commerce which may lawfully be regulated by Congress.” Id. at 284
(quoting 15 U.S.C. § 1127).
Regarding the jurisdictional question before it, the Court concluded that
“[w]here . . . there can be no interference with the sovereignty of another nation,
the District Court in exercising its equity powers may command persons
properly before it to cease or perform acts outside its territorial jurisdiction.”
Bulova, 344 U.S. at 289. However, the Court relied in part on the fact that the
infringing party’s activities “were not confined within the territorial limits of a
foreign nation.” Id. at 286. The defendant had brought some of the materials
used in its infringing activities from the United States to Mexico, and some of
the watches he assembled were later found in Texas. Id. at 284–85.
Relying on Bulova, this Court affirmed a district court’s assertion of
jurisdiction to enjoin trademark infringement in Saudi Arabia after analyzing
the following:
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[C]ertain factors are relevant in determining whether the contacts
and interests of the United States are sufficient to support the
exercise of extraterritorial jurisdiction. These include the
citizenship of the defendant, the effect on United States commerce,
and the existence of a conflict with foreign law. The absence of any
one of these is not dispositive. Nor should a court limit its inquiry
exclusively to these considerations. Rather, these factors will
necessarily be the primary elements in any balancing analysis.
Am. Rice, Inc. v. Ark. Rice Growers Coop. Ass’n, 701 F.2d 408, 414 (5th Cir. 1983)
(internal citation and footnotes omitted).3 Still, this Court noted that “some
effect” on United States commerce, as opposed to a substantial effect, may be
sufficient for that factor. Id. at 414 n.8. It determined that the infringing party’s
sales in Saudia Arabia had “more than an insignificant effect on United States
commerce.” Id. at 414. However, like the Bulova Court, this Court also
emphasized the importance of the fact that the infringing party was a United
States corporation. Id. at 416. It noted, “[n]o principle of international law bars
the United States from governing the conduct of its own citizens upon the high
seas or even in foreign countries when the rights of other nations are not
infringed.” Id. (internal quotations omitted).
The district court did not address the issue of subject matter jurisdiction
over Sigmar, RSI, and SRI in detail. In its opinion dismissing the suit against
RSM for lack of personal and subject matter jurisdiction, it noted that it had
jurisdiction over Lanham Act claims against United States citizens. The
Appellants do not dispute that they are citizens of the United States. Nor do
they assert that the trademarks at issue are protected by Mexican law. Their
argument rests solely on their contention that Paulsson failed to show any effect
on United States commerce.
3
This Court recently reaffirmed these factors in a case with similar facts to American
Rice. See Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 327–28 (5th Cir. 2008).
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No. 07-50406
The language of Bulova and American Rice suggests that a district court
may have jurisdiction over Lanham Act claims against United States citizens
properly before it where there is no interference with a foreign nation’s
sovereignty, regardless of the effect on United States commerce. However, the
facts of those cases involved the movement of goods that had some effect on
United States commerce. Here, there is no need to decide what is the smallest
“effect” on United States commerce that is necessary to sustain a court’s
jurisdiction over United States citizens committing trademark infringement in
a foreign country, because the Appellants’ activities in this case rose to the level
of the infringing parties in Bulova and American Rice.
The three U.S. Appellants and the U.S. Appellee were all engaged in
commercial activity in the United States. The two trademarks at issue were
registered in the United States. RSI received a letter of authority from Paulsson
while conducting commercial activity in the United States. It then executed,
within the United States, an assignment of those rights to a Mexican
corporation, RSM. In that assignment, Sigmar acknowledged on RSI’s behalf
that, although RSM would be the prime contractor with Pemex, RSI would be
acting as a subcontractor using Paulsson’s and SRI’s proprietary technologies.
RSI even availed itself of the facilities of the State of Texas to record the
assignment and obtain an apostille—which is defined above—so that the
document could be used in Mexico. The assignment clearly was transported or
transmitted across the border to Mexico where RSM conducted negotiations with
Pemex.
On June 30, 2005, RSI entered into a services agreement with RSM to
provide oil exploration activities under RSM’s contract with Pemex.4 The
agreement claimed that RSI would use SRI’s technology. Sigmar signed the
4
The record only shows one contract between RSM and Pemex, although it was not
signed until July 24, 2006.
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No. 07-50406
services agreement on behalf of both RSI and RSM. On the same day, in
furtherance of RSM’s contract with Pemex, RSI and RSM entered into an
agreement to sublicense RSM to use the “Base Technology, Seismic Technology,
and Equipment” that RSI was licensed by SRI to use. Sigmar signed the
sublicense agreement on behalf of both RSI and RSM. Based upon RSM’s
response to interrogatories, the services agreement and the sublicensing
agreement were the only contracts between RSI and RSM.
Although the above agreements did not mention Paulsson’s technology or
trademarks, the record indicates that its technology and marks were central to
RSI’s and RSM’s future work with Pemex. RSM’s “business information”
document dated July 11, 2005, expressed that it would provide services to Pemex
utilizing “Massive 3D VSP®” equipment and that RSI had an exclusive
agreement to provide the “Massive 3D VSP® in Mexico.” The document also
explained that “[i]n order to provide services to Pemex, RSI ha[d] entered into
a variety of arrangements with specialized service providers, including [Paulsson
and SRI].” Sigmar testified that the purpose of the business information
document was to obtain financing for RSM.
He pursued such financing from a corporation in New York. In an
agreement dated July 16, 2005, that corporation agreed to obtain $30,000,000
in financing for “RSI/RSM.” The funding would be guaranteed by a lien on
assets and “an assignment of all rights related to the use of patents related to
seismic imaging technology held by RSI and granted to RSM in Mexico.” Sigmar
signed the agreement on behalf of both RSM and RSI. The financing from that
agreement, however, was never obtained.
On approximately May 8, 2006, RSI entered into a loan agreement and
subsequently received $5,000,000 from a Delaware corporation with its principal
place of business in Texas. Based upon e-mails from the Delaware corporation
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No. 07-50406
to RSM officials, it is clear that the financing was for RSI and RSM in Mexico.
RSI was subsequently sued in Harris County, Texas for failing to repay the loan.
On July 24, 2006, RSM entered into a contract with Pemex titled “Work
to obtain and process data from massive 3D seismic vertical profiles in the
marine or inland areas, using MASSIVE 3D VSP technology, for the assets of
[Pemex].” The total amount of the contract was $29,401,098.16.
RSI subsequently chartered a vessel on October 13, 2006 from a different
Delaware corporation with its principal place of business in Texas. The vessel
was to be delivered in Texas City, Texas for operations in “Mexico (Gulf of
Mexico)” and the first thirty days of the charter were to cost $1,590,000. In the
agreement, various obligations of the vessel’s owner were extended to RSM and
Pemex, which were included as RSI’s customers. The vessel owner subsequently
filed suit against RSI for failing to pay for extensions of the charter.
During 2006, RSM transferred $7,120,086.56 to RSI.
These significant contracts and financial transactions were clearly related
to RSI’s support of RSM’s contract to use MASSIVE 3D VSP technology. Based
upon our review of the record, we disagree with the Appellants’ confident
assertion in their brief that “there is no evidence showing any effect on United
States commerce.” These activities not only had some effect; they had a
substantial effect on United States commerce. Although not necessarily
violations of the Lanham Act, these activities were all “essential steps in the
course of business consummated abroad,” the misuse of Paulsson’s trademarks.
Bulova, 344 U.S. at 287. Therefore, we hold that the district court had subject
matter jurisdiction over the Lanham Act claims against the Appellants.
B. Preliminary Injunction
A court should issue a preliminary injunction if the movant shows
(1) a substantial likelihood of success on the merits, (2) a substantial
threat of irreparable injury if the injunction is not issued, (3) that
the threatened injury if the injunction is denied outweighs any
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No. 07-50406
harm that will result if the injunction is granted, and (4) that the
grant of an injunction will not disserve the public interest.
Speaks v. Kruse, 445 F.3d 396, 399–400 (5th Cir. 2006) (internal quotations
omitted). The Lanham Act makes liable, “[a]ny person who . . . uses in
commerce any word, term, name, symbol, or device, . . . which . . . is likely to
cause confusion, or to cause mistake . . . as to the origin, sponsorship, or
approval of his or her goods, services, or commercial activities by another
person.” 15 U.S.C. § 1125(a)(1)(A).
To succeed in a trademark infringement claim, a party must first show
that it has a protectable right in the mark and, second, show that there is a
likelihood of confusion between the marks. See Security Ctr., Ltd. v. First Nat’l
Security Ctrs., 75 F.2d 1295, 1298 (5th Cir. 1985). To obtain an injunction for
trademark infringement, a party
[f]irst . . . must prove that the name he seeks to protect is eligible for
protection. He must then prove he is the senior user. . . . [H]e must
then show a likelihood of confusion between his mark and that of
the defendant. Finally, . . . he must show that the likelihood of
confusion will actually cause him irreparable injury for which there
is no adequate legal remedy.
Union Nat’l Bank of Tex., Laredo, Tex. v. Union Nat’l Bank of Tex., Austin, Tex.,
909 F.2d 839, 844 (5th Cir. 1990).
With regard to the preliminary injunction element of establishing a
substantial likelihood of success on the merits, the Appellants do not dispute the
marks’ eligibility for protection or that Paulsson is the senior user. They only
argue that the district court erred in finding that there was a likelihood of
confusion. They also claim that the court did not make a finding regarding the
irreparable injury element, and, if it did, it was in error.
(1) Likelihood of Success
In determining whether a likelihood of confusion exists, this
court considers the following nonexhaustive list of factors: (1) the
type of trademark allegedly infringed, (2) the similarity between the
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two marks, (3) the similarity of the products or services, (4) the
identity of the retail outlets and purchasers, (5) the identity of the
advertising media used, (6) the defendant’s intent, and (7) any
evidence of actual confusion. No one factor is dispositive, and a
finding of a likelihood of confusion does not even require a positive
finding on a majority of these “digits of confusion.”
Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 194 (5th Cir. 1998) (citation
omitted). This Court has also added “[a]n eighth factor, the degree of care
employed by consumers.” Rolex Watch USA, Inc. v. Meece, 158 F.3d 816, 830 (5th
Cir. 1998).
The Appellants claim that the district court failed to consider the “digits
of confusion” in making its decision to grant the preliminary injunction. They
also claim the district court erred in granting the injunction because of the lack
of confusion over the use of the marks and the unlikelihood of potential
confusion.
a. “Digits of Confusion” Analysis
To justify their claim that the district court erred by failing to consider the
digits of confusion, the Appellants rely in part on the admonition that “the
district court must apply the ‘digits of confusion’ test” in Sunbeam Products, Inc.
v. West Bend Co., 123 F.3d 246, 257 (5th Cir. 1997), abrogated on other grounds
by TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23 (2001). The
district court found that it “need not engage in an analysis of each of the ‘digits
of confusion’ listed above where, as here, Defendants RSI and RSM employed
[Paulsson’s] exact marks in its dealings with Pemex.” The district court relied
on Microsoft Corp. v. Software Wholesale Club, Inc., 129 F. Supp. 2d 995, 1007
n.11 (S.D. Tex. 2000), in which the court found that where a counterfeit mark
was used, confusion was clear. We disagree with the Appellants’ assertion that
the district court did not conduct a digits of confusion analysis. It clearly did.
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The Appellants further argue that the district court erred by not analyzing
each of the digits. They rely on language from Rolex Watch in which this Court
reversed a district court’s partial denial of an injunction because it “fail[ed] to
consider and weigh all of the digits of confusion.” 158 F.3d at 831. The
Appellants’ reliance on Rolex Watch is misplaced, however, because it is
distinguishable. The marks at issue in that case were similar, not the exact
marks as the district court found here. Id. at 830. Thus, the marks in Rolex
Watch required greater analysis. Also, this Court noted a variety of problems
with the district court’s analysis in Rolex Watch. It determined that the district
court should have considered factors identified by Rolex’s expert in determining
whether there was a likelihood of confusion. Id. at 831. The same design had
been found to be likely to cause confusion in a different case. Id. at 830. As a
result, this Court’s holding in Rolex Watch that “[t]he district court erred by
failing to consider and weigh all of the digits of confusion,” is inapplicable to the
facts of this case where the Appellants used the exact same mark.
Also, the Appellants’ argument that we should adopt such a reading of
Rolex Watch conflicts with this Court’s description of the digits of confusion.
“The digits are a flexible and nonexhaustive list. They do not apply
mechanically to every case and can serve only as guides, not as an exact
calculus.” Scott Fetzer Co. v. House of Vacuums Inc., 381 F.3d 477, 485 (5th Cir.
2004). Because the Appellants used Paulsson’s exact marks, we hold that the
district court did not err as a matter of law in its digits of confusion analysis.
b. Likelihood of Confusion
To determine if there was a likelihood of confusion, the district court
correctly used the standard “more than a mere possibility of confusion,” relying
on Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526, 543 (5th Cir. 1998),
abrogated on other grounds by TrafFix Devices, Inc., 532 U.S. at 32–33. It found
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No. 07-50406
that there was a likelihood of confusion because Pemex had recently required the
use of MASSIVE 3D VSP technology in the performance of services, despite a
document showing that it had accepted different technology for one oil well. The
court also found that Sigmar’s refusal to assure that the use of Paulsson’s marks
would not occur again indicated a continued likelihood of confusion. It
determined that the small community of potential customers may be confused
about who was providing services to Pemex.
At oral argument, the Appellants pointed to documents which they
claimed showed that Pemex understood that it not receiving MASSIVE 3D VSP
technology because it accepted Sigmar’s proposal to use digital sensors as
opposed to Paulsson’s analog sensors. We agree that Pemex understood that it
was receiving services using different sensors. However, despite that
understanding, Pemex continued to use the term “Massive 3D VSP” to describe
the services it would receive in an October 14, 2006 document. We also agree
with the district court that this confusion was aggravated by the fact that the
object of the RSM contract with Pemex continued to be “[w]ork to obtain and
process data from massive 3D seismic vertical profiles in the marine or inland
areas, using MASSIVE 3D VSP technology, for the assets of [Pemex].” Despite
the use of different sensors, not only was there a likelihood that Pemex was
confused as to whether the technology used in combination with new sensors
was MASSIVE 3D VSP technology, but the record shows that Pemex was
actually confused. Pemex continued to label those services under the rubric of
Paulsson’s MASSIVE 3D VSP trademark.
Sigmar testified in the district court about the October 14, 2006 document
which indicated Pemex’s confusion. He explained Pemex’s use of the MASSIVE
3D VSP technology mark in the letter, stating that Pemex was simply using the
term “Massive” to describe “just a lot of shots to a large array.” His testimony
is contradicted by the document itself, particularly since the word “Massive”
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(“Masivo” in the Spanish original) was capitalized, indicating it referred
specifically to the trademark. Sigmar’s explanation is, at best, strained, and
suggests that the district court had a substantial basis to reject his testimony in
general, as well as his specific testimony that he had confirmed to Pemex that
he and his corporations were no longer using MASSIVE 3D VSP technology.
Considering Pemex’s confusion and Sigmar’s testimony, we hold that the
district court did not clearly err in finding a likelihood of confusion.
(2) Irreparable Injury
Federal courts have long recognized that, when the
threatened harm is more than de minimis, it is not so much the
magnitude but the irreparability that counts for purposes of a
preliminary injunction. . . . [A]n injury is irreparable only if it
cannot be undone through monetary remedies. . . . The absence of
an available remedy by which the movant can later recover
monetary damages . . . may . . . be sufficient to show irreparable
injury.
Enter. Int’l, Inc. v. Corporacion Estatal Petrolera Ecuatoriana, 762 F.2d 464,
472–73 (5th Cir. 1985) (internal quotations and footnotes omitted).
At least one district court in the Fifth Circuit has held that in a trademark
case, “[w]hen a likelihood of confusion exists, the plaintiff’s lack of control over
the quality of the defendant’s goods or services constitutes an immediate and
irreparable injury, regardless of the actual quality of those goods or services.”
Quantum Fitness Corp. v. Quantum Lifestyle Ctrs., L.L.C., 83 F. Supp. 2d 810,
831 (S.D. Tex. 1999). This Court has avoided “expressly adopting this
presumption of irreparable injury.” S. Monorail Co. v. Robbins & Myers, Inc.,
666 F.2d 185, 188 (5th Cir. Unit B 1982).
Many other circuits, however, have addressed this issue and held that a
court may presume irreparable injury upon finding a likelihood of confusion in
a trademark case. See Brennan’s, Inc. v. Brennan’s Rest., L.L.C., 360 F.3d 125,
129 (2d Cir. 2004); Ty, Inc. v. Jones Group, Inc., 237 F.3d 891, 902 (7th Cir.
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2001); GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1209 (9th Cir. 2000);
Circuit City Stores, Inc. v. CarMax, Inc., 165 F.3d 1047, 1056 (6th Cir. 1999);
McDonald’s Corp. v. Robertson, 147 F.3d 1301, 1310 (11th Cir. 1998); Pappan
Enters., Inc. v. Hardee’s Food Sys., Inc., 143 F.3d 800, 805 (3d Cir. 1998); Societe
Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633, 640 (1st Cir. 1992);
Black Hills Jewelry Mfg. Co. v. Gold Rush, Inc., 633 F.2d 746, 753 n.7 (8th Cir.
1980).
Since oral argument, the Eleventh Circuit has noted that “a recent U.S.
Supreme Court case calls into question whether courts may presume irreparable
harm merely because a plaintiff in an intellectual property case has
demonstrated a likelihood of success on the merits.” N. Am. Med. Corp. v. Axion
Worldwide, Inc., No. 07-11574, 2008 WL 918411, at *12 (11th Cir. Apr. 7, 2008)
(citing eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)). In eBay, the
Court reversed the Federal Circuit for applying a categorical rule to permanent
injunctions in a Patent Act case. 547 U.S. at 393–94. It concluded that “neither
court below correctly applied the traditional four-factor framework that governs
the award of injunctive relief.” Id. at 394.
In its findings, the district court properly cited the four requirements that
needed to be met before it could issue a preliminary injunction, including the
substantial threat of irreparable injury.5 After devoting the bulk of its analysis
to its finding of a likelihood of confusion, the court also found that the Appellants
would suffer little harm from an injunction. The court further found that
[t]here is a likelihood of harm to [Paulsson] in the case of
Defendants’ further use of the marks because of the possible injury
to the company’s goodwill should the Pemex Contract not be
performed to Pemex’s satisfaction, or should the seismic-profiling
5
The court expressly stated each of the four elements which issuance of a “preliminary
injunction” requires that “the movant demonstrate[],” including “(2) a substantial threat that
the movant will suffer irreparable injury if the injunctive relief is denied.”
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marketplace believe that [Paulsson] is sponsoring the services used
to perform the Pemex Contract in the event that inferior or
inappropriate technology and services are used instead.
The district court concluded that Paulsson had “met its burden, having
demonstrated that the elements supporting a preliminary injunction apply to
this case.”
Based upon our reading of the district court’s findings, we disagree with
the Appellants that the court failed to find a substantial threat of irreparable
injury. The district court cited all four factors and concluded that Paulsson had
demonstrated that they had all been met. Also, its finding of likelihood of harm
to Paulsson, although in the balance-of-harms analysis, was not necessarily
limited to that analysis alone. The irreparable injury element is inherently
related to the balance-of-harms analysis.
We have no need to decide whether a court may presume irreparable
injury upon finding a likelihood of confusion in a trademark case, a difficult
question considering the Supreme Court’s opinion in eBay. The facts of this case
support a finding of a substantial threat of irreparable injury. The value of the
Pemex contract was sizeable, over $29,000,000. Paulsson was clearly interested
in developing business in Mexico based upon its efforts to have RSI promote its
technology there. In addition to the threat to potential business in Mexico, we
agree with the district court that the “small community of companies that make
up [Paulsson’s] potential customers may” have been confused about who was
providing services in Mexico under Paulsson’s mark. There was a substantial
threat to Paulsson’s goodwill and the value of its MASSIVE 3D VSP mark in
Mexico and throughout its small pool of potential customers, because the
Appellants were continuing to use the mark while modifying the technology
associated with it. Paulsson had lost control of the quality of the technology that
was being associated with its mark. Such damage to Paulsson’s goodwill in
Mexico and worldwide could not be quantified. Thus, the damage to Paulsson
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could not be undone by monetary remedies. We hold that the district court did
not clearly err in finding a substantial threat of irreparable injury to Paulsson
if the injunction were not issued.
IV. CONCLUSION
The district court’s grant of Paulsson’s motion for a preliminary injunction
is AFFIRMED.
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