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Warner Bros. v. Gay Toys, Inc - 658 F.2d 76 (2d Cir. 1981)

Rule:

In an action for a preliminary injunction there must be a showing of (A) irreparable harm and (B) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief. This standard applies where a preliminary injunction is sought as relief for alleged trademark infringement.

Facts:

Warner Bros. filed a motion for preliminary injunction against the toy corporation to enjoin it from using certain non-functional, distinctive symbols in the manufacture and sale of its toy car. The district court denied the motion.

Issue:

Did plaintiff Warner Brothers state sufficient grounds under the Lanham Act that would entitle it to an injunction against the toy company?

Answer:

Yes.

Conclusion:

The court held that protection afforded under the Lanham Act, encompassed specific ingredients of toy car produced by the toy company. There was sufficient likelihood of confusion as to source of sponsorship of the toy car. It deliberately utilized symbols derived from Warner Bros’ television series to capitalize on the demand produced by that series, and did so to divert business and increase its sales by misleading consumers as to the source and sponsorship of the toy car. The denial of Warner Bros’ injunction would have suffered substantial lost sales, and its licensees would have lost confidence in its licensing program.

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