A claim of trademark infringement, whether brought under 15 U.S.C.S. § 1114(1) (for infringement of a registered mark) or 15 U.S.C.S. § 1125(a) (for infringement of rights in a mark acquired by use), is analyzed under the familiar two-prong test described in Gruner. The test looks first to whether the plaintiff's mark is entitled to protection, and second to whether defendant's use of the mark is likely to cause consumers confusion as to the origin or sponsorship of the defendant's goods.
This suit, brought under § 32 of the Lanham Act, 15 U.S.C. § 1114 (1), alleged that Nawab et al. (Nawab) infringed VEL's rights in the registered mark VIRGIN by operating retail stores selling wireless telephones and related accessories and services under the trade name VIRGIN WIRELESS. The United States District Court for the Eastern District of New York denied VEL's motion for a preliminary injunction, based upon its finding that VEL's registration did not cover the retail sale of wireless telephones and related products, and that VEL failed to show a likelihood of consumer confusion. Plaintiff Virgin Enterprises Limited (VEL) appealed from the denial of its motion for a preliminary injunction.
Is VEL entitled to a preliminary injunction?
The court held that of the six Polaroid factors that pertain directly to the likelihood of consumer confusion, all but one favor VEL, and that one - sophistication of consumers - is neutral. The VEL is strongly favored by the strength of its mark, both inherent and acquired; the similarity of the marks; the proximity of the products and services; the likelihood that VEL would bridge the gap; and the existence of actual confusion. None of the factors favors the Nawab. The remaining factors were found to be neutral. Although the court did not suggest that likelihood of confusion may be properly determined simply by the number of factors in one party's favor, the overall assessment in this case admits only of a finding in plaintiff's favor that defendants' sale of telephones and telephone-related services under the VIRGIN mark was likely to cause substantial consumer confusion. One issue remains. Nawab argued that VEL should be barred by laches from seeking injunctive relief. They contend that because of VEL's delay after learning of the Nawab’s applications to register the VIRGIN marks, they expended considerable sums and developed goodwill in their use of the VIRGIN marks before VEL brought suit. Because the district court ruled in the Nawab’s favor it made no express finding on the issue of laches. But the district court explicitly found that VEL first learned of Nawab’s use of the name VIRGIN in commerce only two days before VEL instituted this suit. Given that finding, VEL could not be chargeable with laches.
The court concluded that, as a matter of law, VEL demonstrated irreparable harm and likelihood of success on the merits and was entitled to a preliminary injunction.