11-502-cv
Tecnimed SRL v. Kidz-Med, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of
New York, on the 10th day of February, two thousand twelve.
PRESENT: BARRINGTON D. PARKER,
REENA RAGGI,
RAYMOND J. LOHIER, JR.,
Circuit Judges.
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TECNIMED SRL,
Plaintiff-Counter-
Defendant-Appellee,
v. No. 11-502-cv
KIDZ-MED, INC., AMERICAN SCIENTIFIC
RESOURCES, INC.,
Defendants-Counter-
Claimants-Appellants.
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FOR APPELLANTS: Richard C. Yeskoo, Thomas T. Tamlyn, Yeskoo Hogan &
Tamlyn, LLP, New York, New York.
FOR APPELLEE: Jennifer B. Furey, Matthew P. Horvitz, Cooley Manion Jones
LLP, Boston, Massachusetts; Anthony L. Miele, Miele Law
Group PC, Boston, Massachusetts.
Appeal from an order of the United States District Court for the Southern District of
New York (Paul G. Gardephe, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the order entered on January 18, 2011, is AFFIRMED.
Defendants Kidz-Med, Inc. and American Scientific Resources, Inc. (collectively,
“Kidz-Med”) appeal from an order granting a preliminary injunction barring Kidz-Med’s
continued use of the trade dress for its non-contact thermometer, and requiring a recall of its
thermometers featuring that trade dress and use of a new trade dress design. Kidz-Med
maintains that the district court erred in determining that plaintiff Tecnimed SRL established
the likelihood of success on the merits and irreparable harm required for a preliminary
injunction, see Salinger v. Colting, 607 F.3d 68, 77–78 (2d Cir. 2010), or the propriety of a
product recall as a remedy. We review the grant of a preliminary injunction for abuse of
discretion, and we will reverse only if the injunction is based on an error of law or a clearly
erroneous assessment of the evidence, or if it cannot be located within the range of
permissible outcomes. See Oneida Nation of N.Y. v. Cuomo, 645 F.3d 154, 164 (2d Cir.
2011). We assume the parties’ familiarity with the facts and the record of prior proceedings,
which we reference only as necessary to explain our decision to affirm.
1. Likelihood of Success on the Merits
a. Trade Ownership
Kidz-Med submits that the district court erred in finding that Tecnimed, the
manufacturer of the Thermofocus non-contact thermometer, established a likelihood of
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success in demonstrating ownership of the challenged trade dress, which was created for use
with the Thermofocus. Kidz-Med, which distributed the Thermofocus in the United States,
claims that the evidence shows that it invented and first affixed the trade dress to the
Thermofocus, making it the trade dress’s owner. See 15 U.S.C. § 1125(a); Sengoku Works
Ltd. v. RMC Int’l, Ltd., 96 F.3d 1217, 1220 (9th Cir. 1996) (identifying various factors used
to determine trademark’s ownership between manufacturer and distributor, including “which
party invented and first affixed the mark onto the product”); see also ITC Ltd. v. Punchgini,
Inc., 482 F.3d 135, 147 (2d Cir. 2007) (“[S]o long as a person is the first to use a particular
mark to identify his goods or services in a given market, and so long as that owner continues
to make use of the mark, he is entitled to prevent others from using the mark to describe their
own goods in that market.” (internal quotation marks omitted)). We need not decide which
legal standard applies to trade dress ownership disputes between a manufacturer and a
distributor because the parties agree that, here, the Sengoku factors apply, see Tecnimed SRL
v. Kidz-Med, Inc., 763 F. Supp. 2d 395, 403 (S.D.N.Y. 2011), and we identify no clear error
in the district court’s findings with respect to those factors and the ultimate issue of
ownership.
The record shows that Tecnimed and Kidz-Med worked together to create the trade
dress for Thermofocus thermometers sold in the United States. Although Kidz-Med
undoubtedly devised the final package design, that design was based on key elements first
conceived by Tecnimed, including “the purple and blue color scheme; the phrase ‘5 in 1’; the
photograph of the mother holding a sleeping baby; and the five small illustrations depicting
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a child, bottle, formula, nursery, and bathwater.” Id. at 404. Moreover, the record shows that
the trade dress Kidz-Med developed was approved by Tecnimed before it was used for the
Thermofocus. These facts permitted the district court to find that Tecnimed invented the
trade dress at issue.
While the district court did not identify which party first affixed the trade dress, that
omission does not render clearly erroneous the finding that Tecnimed demonstrated a
likelihood of success on the merits on the question of who owned the trade dress. Although
the record is clear that Kidz-Med, not Tecnimed, affixed the trade dress to the Thermofocus
thermometers sold in the United States, Kidz-Med did so pursuant to its distribution
agreement with Tecnimed, which obligated Kidz-Med to “make use of Tecnimed’s
trademarks, trade names or any other symbols, for the only purpose of identifying and
advertising the Products, within the scope of his activity as distributor of Tecnimed and in
Tecnimed’s sole interest.” Bellifemine Decl., Ex A ¶ 8.1. In short, because Kidz-Med
affixed the trade dress at the instruction, and for the benefit, of Tecnimed, the district court
did not clearly err in according this action little weight in determining ownership. Further,
record evidence showed that Tecnimed had used its earlier iteration of the Thermofocus trade
dress, on which Kidz-Med’s design was based, in the United States. Finally, Kidz-Med does
not dispute the remaining factors on which the district court relied in concluding that
Tecnimed likely owned the trade dress, including that Tecnimed manufactured the
Thermofocus, and that Kidz-Med’s name on the packaging did not outweigh the presence of
Tecnimed’s “Thermofocus” mark. See Tecnimed SRL v. Kidz-Med, Inc., 763 F. Supp. 2d
at 404.
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b. Bad Faith
Kidz-Med challenges the district court’s finding that it acted in bad faith in adopting
the disputed trade dress for its non-contact thermometer, which informed the court’s further
determinations that use of the trade dress would cause consumer confusion and that a recall
was necessary. See Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 588 F.3d 97, 115 (2d
Cir. 2009) (identifying “evidence that the imitative mark was adopted in bad faith” as one
factor to consider in determining likelihood of consumer confusion); Perfect Fit Indus., Inc.
v. Acme Quilting Co., 646 F.2d 800, 807 (2d Cir. 1981) (considering defendant’s intentional,
bad faith acts in reviewing district court’s recall). We are not persuaded that this finding was
clearly erroneous.
The district court identified the following facts as supporting a bad faith finding:
(1) Kidz-Med acted intentionally in employing a trade dress for its non-contact thermometers
that looked similar to, and was designed to create confusion with, the Thermofocus
packaging; (2) Kidz-Med issued misleading promotional materials that included testimonials
from Thermofocus users; (3) Kidz-Med’s website conflated the Thermofocus and Kidz-Med
thermometers; (4) Kidz-Med tried to pass off its thermometer as the Thermofocus; and
(5) Kidz-Med continued to use this trade dress despite receiving a cease-and-desist letter, the
complaint in this lawsuit, and a warning from the district court at the preliminary injunction
hearing that the trade dress probably infringed Tecnimed’s mark. See Tecnimed SRL v.
Kidz-Med, Inc., 763 F. Supp. 2d at 408–09, 414. Kidz-Med insists that its refusal to stop
using its trade dress during this litigation is not indicative of bad faith, but demonstrates a
good faith belief in the strength of its defense.
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Kidz-Med misunderstands the import of the district court’s finding. The district court
identified bad faith in the totality of the evidence referenced. It emphasized Kidz-Med’s
conduct during this litigation only in reasoning that a recall order was appropriate because
Kidz-Med had “deliberately sailed in harm’s way” by continuing to use the trade dress
despite warnings that it could lose. Id. at 415 (quoting Cherry River Music Co. v. Simitar
Entm’t, Inc., 38 F. Supp. 2d 310, 323 (S.D.N.Y. 1999)). This manifests no clear error in the
overall finding of bad faith. Indeed, Kidz-Med concedes that it intentionally used the
Thermofocus packaging as the basis for its non-contact thermometer’s packaging, and the
remaining findings as to deliberate confusion or deception are supported by the record.1
2. Irreparable Harm
Kidz-Med faults the district court’s finding that Tecnimed would suffer irreparable
harm if Kidz-Med’s infringing trade dress remained on the market. Kidz-Med maintains that
the district court clearly erred in finding that Tecnimed was still selling the Thermofocus in
the United States, and that those sales would be diminished by Kidz-Med’s marketing of its
competing thermometer.
At the preliminary injunction hearing, Tecnimed introduced evidence that
Thermofocus thermometers distributed by Kidz-Med in the purple/blue packaging were still
available for purchase in the United States from online distributors and brick-and-mortar
1
The Trademark Amendments Act of 1999 § 5, Pub. L. 106-43 (Aug. 5, 1999),
codified at 15 U.S.C. § 1125(a)(3), amended Section 43(a) of the Lanham Act to require that
the person asserting trade dress protection also prove that the alleged trade dress is not
“functional.” See Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 116 (2d Cir. 2001). The
issue was not raised in the district court and has not been raised to us on appeal. Therefore,
we consider it no further.
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retail shops. Although Kidz-Med put forward evidence indicating that those thermometers
were no longer being sold, the district court was entitled to resolve this factual dispute in
favor of Tecnimed. See Arch Ins. Co. v. Precision Stone, Inc., 584 F.3d 33, 39 (2d Cir.
2009) (holding that on clear error review, appellate court cannot “second-guess the trial
court’s choice between permissible competing inferences” (internal quotation marks and
ellipses omitted)). Nor did the district court clearly err in finding that consumers would think
Kidz-Med’s non-contact thermometer was associated with, or a successor to, the
Thermofocus, in light of Kidz-Med’s prior distribution of the Thermofocus, its affixation of
its mark to the Thermofocus packaging, and its use of a trade dress for its non-contact
thermometers that could confuse consumers.
We reject Kidz-Med’s argument that the district court erred in allocating the burden
of proving irreparable harm. Kidz-Med conflates the district court’s ruling on Tecnimed’s
preliminary injunction motion with the denial of Kidz-Med’s subsequent motion to stay the
proceedings. As the district court correctly held, it was Kidz-Med’s burden to demonstrate
its entitlement to a stay pending appeal. See In re World Trade Ctr. Disaster Site Litig., 503
F.3d 167, 170 (2d Cir. 2007).
3. Recall Order
Nor did the district court abuse its discretion in finding that a recall of Kidz-Med’s
non-contact thermometers would be more beneficial to Tecnimed than burdensome to Kidz-
Med. See Perfect Fit Indus., Inc. v. Acme Quilting Co., 646 F.2d at 807 (stating that district
court should consider relative benefit to trademark owner and burden to infringer when
determining whether product recall is appropriate remedy). Kidz-Med does not dispute the
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district court’s finding that a recall would require it to contact five retailers and would cost
$95,000 to complete. See Tecnimed SRL v. Kidz-Med, Inc., 763 F. Supp. 2d at 416. It
complains that the district court did not weigh these facts against Kidz-Med’s precarious
financial condition. In fact, the record shows that the district court specifically concluded
that Kidz-Med should bear the costs despite its imminent insolvency because it had assumed
the risk of a recall by intentionally keeping its non-contact thermometers on the market
during this litigation’s pendency. See id.; see also Perfect Fit Indus., Inc. v. Acme Quilting
Co., 646 F.2d at 807 (holding that defendant’s intentional acts to infringe plaintiff’s
trademark supported district court’s recall order).
4. Conclusion
We have considered Kidz-Med’s remaining arguments and find them to be without
merit. Accordingly, we AFFIRM the order of the district court.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
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