Defendants are correct. In the absence of significant injury to
the consuming public, a party entering into a settlement
agreement with respect to a trademark will be held to its
contract. Here, Times Mirror has not demonstrated that any public
confusion that may result from the parties' shared use of the
Field & Stream mark rises to the level of injury to the public.
Moreover, the public interest in enforcing contracts outweighs
any harm the public might experience due to possible confusion
between the parties' products, particularly when, as here, Times
Mirror repeatedly entered into agreements with FSLC with full
knowledge of the potential for public confusion between its
products and those of FSLC, and FSLC relied on the contractual
promises made by Times Mirror. Finally, the judicial policy of
encouraging out-of-court settlement of trademark disputes is best
served by holding the parties to their contractual undertakings.
For all of these reasons, as discussed more thoroughly below,
defendants' motion is granted, and plaintiff's trademark
infringement, false designation of origin, and unfair competition
claims, brought under the Lanham Act and New York common law, are
1. Legal Standards
One of the primary purposes of the Lanham Act is to protect the
public from confusion as to the source of goods. See, e.g.,
Sterling Drug, Inc. v. Bayer AG, 14 F.3d 733, 740 (2d Cir.
1994). The ultimate inquiry in the typical trademark
infringement, unfair competition, and false designation of origin
suits brought under the Lanham Act "is whether there exists a
`likelihood that an appreciable number of ordinarily prudent
purchasers [will] be misled, or indeed simply confused, as to the
source of the goods in question.'" Thompson Medical Co. v.
Pfizer, 753 F.2d 208, 213 (2d Cir. 1985) (quoting Mushroom
Makers, Inc. v. R.G. Barry Corp., 580 F.2d 44, 47 (2d Cir.
1978)); see also Nabisco, Inc. v. Warner-Lambert Co., No.
99-7191, ___ F.3d ___, ___, 2000 WL 790926, at *2 (2d Cir. June
5, 2000) ("To prevail on its trademark infringement and unfair
competition claims, Nabisco must prove that ICE BREAKERS is a
protectable trademark and that Warner-Lambert's use of DENTYNE
ICE is likely to confuse consumers as to the source or
sponsorship of Nabisco's ICE BREAKERS product."); Federal
Express Corp. v. Federal Espresso, Inc., 201 F.3d 168, 174 (2d
Cir. 2000) (in false designation of origin case, "[t]he hallmark
of infringement . . . is likelihood of confusion"). The standard
for unfair competition claims brought under New York common law
is virtually identical. See Girl Scouts v. Bantam Doubleday Dell
Publ'g Group, Inc., 808 F. Supp. 1112, 1131 (S.D.N.Y. 1992),
aff'd, 996 F.2d 1477 (2d Cir. 1993).
When the parties involved in a trademark dispute have entered
into an agreement governing their rights to use the mark,
however, the party seeking rescission of the contract must show
more than mere likelihood of confusion. "[A] party entering into
[an agreement] with respect to a trademark will be held to his
contract unless enforcement of the contract would result in
injury to the public through confusion." VISA Int'l Serv.
Ass'n v. Bankcard Holders of America, 784 F.2d 1472, 1473 (9th
Cir. 1986) (emphasis added); accord Proriver, Inc. v. Red River
Grill, LLC, 83 F. Supp.2d 42, 45 (D.D.C. 1999); Kegan v. Apple
Computer, Inc., No. 95 C 1339, 1996 WL 667808, at *3 (N.D.Ill.
Nov.15, 1996); see also Peyrat v. L.N. Renault & Sons, Inc.,
247 F. Supp. 1009, 1014 (S.D.N.Y. 1965) (an agreement between
parties to a trademark controversy "is valid and enforceable so
long as no injury is caused to the public"). If the party seeking
rescission of a trademark agreement demonstrates that enforcement
of the contract will create confusion that will cause harm to the
public, "the court must then weigh this confusion and resulting
harm against contract law's policy of holding parties to the
terms of their agreements, in order to determine whether
enforcement of the contract ultimately violates public policy."
Proriver, 83 F. Supp.2d at 45-46; see also VISA Int'l, 784
F.2d at 1474-75; Beer Nuts, Inc. v. King Nut Co., 477 F.2d 326,
328 (6th Cir.), cert. denied, 414 U.S. 858, 94 S.Ct. 66, 38
L.Ed.2d 108 (1973); T & T Mfg. Co. v. A.T. Cross Co.,
449 F. Supp. 813, 827 (D.R.I.) ("T & T I"), aff'd 587 F.2d 533
(1st Cir. 1978) ("T & T II"), cert. denied, 441 U.S. 908, 99
S.Ct. 2000, 60 L.Ed.2d 377 (1979).
The question of whether enforcement of the trademark agreement
will cause confusion is a separate inquiry from the question of
whether it will cause injury. In other words, a finding of public
confusion does not necessarily result in a finding of public
injury. As the First Circuit explained:
We cannot agree with [the party seeking rescission]
that merely because the district court made a finding
of likelihood of public confusion that [i]pso facto
the Settlement Agreement should now not be enforced
according to its terms. Rather, . . . the [d]egree
or [e]xtent of public confusion must be examined in
order to ascertain whether there is any significant
harm to the public by decreeing enforcement of the
Settlement Agreement. Additionally, there are other
considerations, most notably the policy, vital to the
law of contracts, of holding people to the terms of
agreements knowingly and willfully entered into.
T & T II, 587 F.2d at 538 (emphasis added); accord VISA
Int'l, 784 F.2d at 1474 n. 2; Proriver, 83 F. Supp.2d at 46 n.
5. But see Peyrat, 247 F. Supp. at 1014 (stating that
"[c]onfusion as to the source of origin of a consumer product
would be the type of public injury which must be prevented").