Court: Court of Appeals for the Second Circuit; February 12, 2009; Federal Appellate Court
Fido’s Fences Inc. appeals a district court order from September 8, 2008, which granted Canine Fence Company a preliminary injunction. Fido’s, a licensed dealer of Invisible Fence brand systems from 1989 until 2008, is in dispute with Canine, the exclusive distributor of these systems in New York. Both parties agree that the dealership agreement was terminated by May 16, 2008, which required Fido’s to stop using Invisible Fence trademarks immediately upon termination. Canine sought an injunction specifically to prevent Fido’s from using telephone numbers linked to the Invisible Fence trademark. The district court's injunction mandated that a third-party voicemail service handle calls to Fido’s numbers, directing callers to options relevant to Fido’s and authorized Invisible Fence dealers.
The court reviews preliminary injunctions for abuse of discretion, requiring the plaintiff to show either a likelihood of irreparable injury or serious questions on the merits combined with a favorable balance of hardships. In trademark infringement cases involving former licensees, a finding of irreparable harm is typically automatic if unlawful use and consumer confusion are evident. The court found that Canine demonstrated a compelling need for injunctive relief due to the risk of consumer confusion after Fido’s license was revoked. The terms of the Agreement required Fido’s to cease all use of trademarks upon termination, and evidence of Fido’s continued use of these marks supported Canine’s likelihood of success on the merits. Thus, the court concluded that the district court did not abuse its discretion in issuing the injunction.
Irreparable harm was established in this case, drawing parallels to the consumer confusion rationale in prior cases. Canine provided sufficient evidence for the district court to conclude that Fido’s actions caused irreparable harm, despite Fido's not filing a counterclaim for trademark infringement. Until 2008, Fido’s exclusively sold Invisible Fence brand systems, which included trademarked components. Each installation was marked with a sign displaying Fido's contact information, leading customers to mistakenly believe they were still an authorized dealer after the termination of their agreement with Canine in May 2008. Testimony indicated that a customer unknowingly purchased an upgrade from Fido’s that was not an Invisible Fence product.
Fido's misleading communications exacerbated confusion, particularly a postcard sent to customers advising them to ignore Canine's communications and continue dealings with Fido’s, despite Fido’s lack of authorization to service the Invisible Fence brand products. The court found that consumers were likely to be confused due to Fido’s long-standing relationship with Canine, supporting the district court's conclusion that Canine suffered irreparable harm from Fido's unauthorized actions. Fido’s claim on appeal—that consumers could not associate Fido’s with Canine—was dismissed as meritless, as was Fido’s assertion regarding the limited injunction causing it irreparable harm. The court upheld the district court's decision not to require a bond, citing discretion under the Federal Rules of Civil Procedure due to a lack of evidence of potential harm. All of Fido’s other arguments were also found to lack merit, leading to the affirmation of the district court's order.
