Id. at 5-6. Warner-Lambert does not dispute, however, that the product is sold to consumers in its original packaging (individual bags). Warner-Lambert affixes the freshness date to the shipping containers that it sells to wholesalers and retailers. Pl. Reply Mem. at 3. On October 25, 1995, Warner-Lambert sued Defendants under the Lanham Act, New York state trademark laws, and New York common law. On October 26, this Court granted a temporary restraining order that enjoined Defendants from continuing to sell HALLS brand products in cartons not bearing Warner-Lambert freshness dates.
Plaintiffs now seek a preliminary injunction enjoining Defendants from the following: selling HALLS past Warner-Lambert's freshness date; selling HALLS that have been repackaged or relabeled in a manner that omits the freshness date and lot code; selling HALLS that have been repackaged in a way that combines products from different manufacturing lots into a single container; disposing of any HALLS (including the packaging and marks thereon) that have been relabeled, repackaged or will shortly be past their freshness date; disposing of any sales, marketing or promotional materials that were distributed (or prepared for distribution) to customers and relate to HALLS products; and disposing of documents that relate to purchases or sales of HALLS products.
In order to obtain a preliminary injunction in this Circuit, the applicant must demonstrate irreparable harm, and either (1) a likelihood of success on the merits of its case, or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of the hardships tipping decidedly in its favor. Polymer Technology Corp. v. Mimran, 37 F.3d 74 (2d Cir. 1994) (citing Coca-Cola Co. v. Tropicana Prods., Inc., 690 F.2d 312, 314-15 (2d Cir. 1982)). Irreparable injury means "injury for which a monetary award cannot be adequate compensation." Loveridge v. Pendleton Woolen Mills, Inc., 788 F.2d 914, 917 (2d Cir. 1986) (quoting Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979) (per curiam)). Consequently, "where money damages are adequate compensation a preliminary injunction should not issue." JSG Trading Corp. v. Tray-Wrap, Inc., 917 F.2d 75, 79 (2d Cir. 1990). A preliminary injunction is an extraordinary remedy, and one that should not be granted as a routine matter. Thus a party seeking such relief must show a likelihood of irreparable injury, not a possibility of irreparable injury. "Likelihood sets, of course, a higher standard than possibility." Id. at 79-80.
However, if a plaintiff can show that its claim of trademark infringement is likely to succeed, then irreparable harm is presumed. "In the preliminary injunction context, a showing of likelihood of confusion as to source or sponsorship establishes the requisite likelihood of success on the merits as well as risk of irreparable harm." Standard & Poor's Corp. v. Commodity Exchange, Inc., 683 F.2d 704, 708 (2d Cir. 1982), cited in Home Box Office, Inc. v. Showtime/The Movie Channel Inc., 832 F.2d 1311, 1314 (2d Cir. 1987). Therefore, the issue here is whether Warner-Lambert has demonstrated a likelihood of success on the merits.
III. Discussion of the Merits
A. Prevailing on a Trademark Infringement Claim Regarding Quality Control Procedures