United States District Court, D. Minnesota
Robert Clary Esq., Owens, Clary & Aiken, LLP, Dallas, TX, on behalf of Plaintiff.
MEMORANDUM OPINION AND ORDER
ANN D. MONTGOMERY, District Judge.
In September 2014, Merchant Advisory Group ("Plaintiff") sued Merchants Advisory Group, LLC ("Defendant" or "MA LLC") on five counts: (1) infringement of federally registered trademarks; (2) false association; (3) common law trademark infringement; (4) common law unfair competition; and (5) deceptive trade practices. Compl. [Docket No. 1] ¶¶ 27-66. No answer has been filed and no appearance has been made on behalf of Defendant. On October 7, 2014, the Clerk of Court entered Default against Defendant. Clerk's Default Entry [Docket No. 11]. On November 12, 2014, Plaintiff moved for final default judgment and permanent injunctive relief enjoining Defendant from using Plaintiff's registered trademarks. Pl.'s Appl. Final Default [Docket No. 12]. For the reasons discussed below, Plaintiff's motion for final default judgment and injunctive relief is GRANTED.
Plaintiff provides electronic payment services for business merchants. Pl.'s Appl. Final Default at 2. Plaintiff has two registered trademarks (or "marks"), both first used in commerce in 2007. The marks are: (1) "MERCHANT ADVISORY GROUP" (U.S. Registration No. 4, 484, 659) and (2) "MAG MERCHANT ADVISORY GROUP" (U.S. Registration No. 4, 484, 660). Compl. at pp. 27-28. Plaintiff alleges that Defendant began infringing on the marks in 2013 by using "MERCHANTS ADVISORY GROUP" and "MAG" to describe its payment processing services for merchants. Pl.'s Appl. for Final Default at 5 (emphasis added). Plaintiff sent several letters to Defendant requesting that it immediately cease using Plaintiff's protected marks. Defendant never responded and continues to use Plaintiff's marks. Id.
After default is entered, factual allegations in a complaint are taken as true. Brown v. Kenron Aluminum & Glass Corp., 477 F.2d 526, 531 (8th Cir. 1973) ("If the court determines that the defendant is in default, his liability to the plaintiff is deemed established.... The allegations of the complaint except to the amount of damages are taken as true.") (citing 3 Barron & Holtzoff, Federal Practice & Procedure § 1216, pp. 85-86 (1958). However, where injunctive relief rather than monetary damages is sought, it "remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law." Murray v. Lene, 595 F.3d 868, 871 (8th Cir. 2010) (citing 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 2688 at 63 (3d ed. 1998)).
To prove trademark infringement, a plaintiff must show that (1) it owns valid, protectable marks, and (2) a likelihood of confusion exists between the plaintiff's marks and the defendant's marks. 3M Co. v. Mohan, Case No. 09-1413, 2010 Lexis 124672, *43 (D. Minn. 2010); See also 15 U.S. Code § 1114. Under the Lanham Act, registration of a trademark is prima facie evidence of registration validity, the registrant's ownership of the mark, and of the registrant's exclusive right to use the mark in commerce in connection with the goods or services specified in the certificate of registration. See 15 U.S.C. § 1057(b); General Mills Inc. v. Kellogg Co., 824 F.2d 622, 626 (8th Cir. 1987). In this case, Plaintiff has produced certified copies of the registrations showing that it is the owner of federally registered mark numbers 4, 484, 659 and 4, 484, 660. Compl. at 32-33. Thus, the only question that remains is whether confusion is likely based on Defendant's use of Plaintiff's marks.
Courts consider six factors when analyzing the likelihood of confusion: (1) the strength of the trademark; (2) the similarity between the parties' marks; (3) the competitive proximity of the parties' products; (4) the alleged infringer's intent to confuse the public; (5) evidence of any actual confusion; and (6) the degree of care reasonably expected of the plaintiff's potential customers. Mohan, 2010 Lexis 124672 at *43. Here, all six factors weigh in favor of Plaintiff.
The strength of a mark is determined by the inherent conceptual distinctiveness and its commercial strength in the marketplace. Mars Musical Adventures, Inc. v. Mars, Inc., 159 F.Supp.2d 1146, 1150 (D. Minn. 2001). There are four categories of conceptual distinctiveness: (1) generic, (2) descriptive, (3) suggestive, or (4) arbitrary. Id . Generic marks are afforded no protection because they are used by the general public to identify a category of goods. Id . On the other end of the spectrum, arbitrary and fanciful marks enjoy the highest level of protection. Id . A descriptive mark receives protection only if it has become distinctive by acquiring a secondary meaning because, standing on its own, the mark immediately conveys the meaning of a product. Duluth News-Tribune v. Mesabi Publ. Co., 84 F.3d 1093, 1096 (8th Cir. 1992). See also 20th Century Wear, Inc. v. Sanmark-Stardust., 747 F.2d 81, 87-88 (2d Cir. 1984) (finding "Cozy Warm ENERGY-SAVERS" to be descriptive). Suggestive marks benefit from some protection because they are highly distinct and require imagination to reach a conclusion regarding the nature of the product. Mars, Inc., 159 F.Supp.2d 1146, 1150. Plaintiff's marks qualify, at a minimum, as suggestive because the mark does not immediately convey the nature or function of Plaintiff's products and services.
The second factor, similarity of marks, is determined by whether "the total effect conveyed by the two marks is confusingly similar." Luigino's, Inc. v. Stouffer Corp., 170 F.3d 827, 830 (8th Cir. 1999). Defendant MA, LLC maintains a website where it identifies itself as "Merchants Advisory Group" and refers to itself as "MAG". Plaintiff asserts that Defendant targets the same credit card processing industry that Plaintiff MAG operates through representations such as "[w]ith many years in the bankcard industry we have put together an impressive portfolio of top-tier banks and processing companies." Horwedel Decl. [Docket No. 12-1] ¶¶ 8-9. Defendant's website also uses "MAG" to promote its expertise in credit card technologies, one of the primary services provided by Plaintiff for merchants in the payment services industry. Id . Defendants use of "Merchants Advisory Group" only differs from Plaintiff's protected mark by one "s" and it's use of "MAG" is identical to Plaintiff's protected mark. For these reasons, the parties' marks are similar and prone to confusion.
The third factor, the competitive proximity of the parties' products, also favors Plaintiff. Products are in competitive proximity when their sales, outlets, trade channels and customers either overlap or are similar. J & B Wholesale Distrib. Inc. v. Redus Beverages, LLC, 621 F.Supp.2d 678, 685-86 (D. Minn. 2007). Here, Defendant's description of its services mirrors the services provided by Plaintiff. As stated on Defendant's website:
We welcome the opportunity to work with you, the merchant, in order to find the best solution for your business. With many years in the bankcard industry we have put together an impressive portfolio of top-tier banks and processing companies. Once we learn more about what you do and what your processing needs are, we tell you which business service would best suit your needs. Specifically, we focus on different industries and have spent countless hours to learn how each one really works, and what makes each one unique and prosper. This has allowed us to fully understand your ...