The opinion of the court was delivered by: Hon. Glenn T. Suddaby, United States District Judge
Currently before the Court in this false-advertising action are a motion for a temporary restraining order and preliminary injunction filed by Pacheco Ross Architects, P.C., and Dennis A. Ross, Architect ("Plaintiffs"), and a cross-motion for a temporary restraining order and preliminary injunction filed by Mitchell Associates Architects and Robert A. Mitchell ("Defendants"). (Dkt. Nos. 18, 27.) For the reasons stated below, both motions are granted in part, and denied in part, and the parties are directed to commence the process to arbitrate this matter within thirty (30) days of the date of this Decision and Order.
On September 26, 2008, Plaintiffs in this action filed a motion for a temporary restraining order and preliminary injunction. (Dkt. No. 18.) On October 3, 2008, Defendants filed a cross-motion for a temporary restraining order and preliminary injunction. (Dkt. No. 27.) On November 3, 2008, the parties appeared before the Court for oral argument on the pending cross-motions and, after a conference with the undersigned, agreed on terms of advertising for an upcoming trade show and moved to stay the Court's decision on the pending cross-motions, so that the parties could arbitrate their dispute. See Text Order for 11/03/2008. The Court granted that motion to stay. Id.
On November 5, 2008, Defendants filed a motion to disqualify Plaintiffs' counsel due to an asserted conflict of interest. (Dkt. No. 38.) On November 17, 2008, Plaintiffs filed a motion to lift the stay. (Dkt. No. 40.) On November 20, 2008, the Court denied Plaintiffs' motion to lift the stay for three reasons: (1) the urgency of a preliminary injunction had diminished because the next trade show appeared to be months away; (2) the parties had not even yet begun arbitration, which they agreed during oral argument has the potential to resolve the bulk of the dispute in question; and (3) it appeared appropriate for the Decision on pending cross-motions for injunctive relief to be rendered only after a decision on the motion to disqualify Plaintiffs' counsel was rendered. See Text Order for 11/20/2008. On May 29, 2008, Magistrate Judge Randolph F. Treece denied Defendants' motion to disqualify Plaintiffs' counsel. (Dkt. No. 50.)
On June 3, 2009, Plaintiffs renewed their motion to lift the stay due to the issuance of Magistrate Judge Treece's decision and the fact that two trade shows were imminent. (Dkt. No. 51.) That same day, Defendants joined in the request. (Dkt. No. 52.) On June 4, 2009, the Court granted the request to lift the stay and afforded Defendants an opportunity to respond to Plaintiffs' submission of June 3, 2009. See Text Order for 06/04/2009. On June 6, 2009, Defendants filed that response. (Dkt. Nos. 54-55.)
Generally, Plaintiffs' motion for a preliminary injunction, and Defendants' cross-motion, have placed in issue the parties' claims regarding sixteen (16) architectural designs, which the Court will describe later. Each motion requests that the Court issue an Order prohibiting the opposing parties from making certain advertising claims, and/or requiring certain attributions, when making any written or graphic representations about any of the sixteen (16) architectural designs in one or more of the following three forums or mediums: (1) at industry trade shows, including a trade show scheduled for June 11-13, 2009, in Verona, New York, and a trade show scheduled for June 26-29, 2009, in Springfield, Massachusetts; (2) in general marketing or public relations materials, and (3) on the internet.
II. ANALYSIS OF CROSS-MOTIONS FOR INJUNCTIVE RELIEF
Pursuant to the well-known legal standard governing motions for preliminary injunctions, a party seeking such relief must establish two things. First, the party must establish a likelihood of irreparable harm if the requested relief is denied. Second, the party must establish either (a) a likelihood of success on the merits of its case, or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation, and a balance of hardships tipping decidedly in its favor.
A. First Requirement--Likelihood of Irreparable Harm
Based on the affidavit testimony of Robert Mitchell and Dennis Ross, and exhibits thereto, the Court finds as follows: (1) this is a specialized industry, having to do with the design of fire houses; (2) two very useful ways for a company to attract new clients in this industry is to (a) advertise the fact that the company has received an architectural award, and (b) advertise the fact that the company has performed previous architectural work; (3) both of these types of advertisements are made, for the most part, at trade shows, which are attended by fire chiefs, commissioners and other fire personnel; (4) a large percentage of both sides' new projects come from these trade shows; (5) only a handful of such trade shows occur each year in the United States, approximately eight such shows occurring in 2009; (6) at the trade shows, customers are likely to be confused, or misled, if two different architectural firms claim to have received the same architectural award, or to have performed the same architectural work; (7) once a customer has hired an architectural firm for a project in this industry, the competing firms have effectively lost that customer for that project; (8) while it is difficult to specify the monetary loss resulting from the loss of any particular project, generally, the cost of each project is in the range of hundreds of thousands, if not millions, of dollars; and (9) because the potential loss of customers is of a continuing nature, the movant would have to pursue damages each time it was injured, if equitable relief were not granted.
As a result, the Court concludes that both sides have established a likelihood of irreparable harm if the requested relief is denied.
B. Second Requirement--Probability of Success on Merits
Section 43(a) of the Lanham Act gives rise to two causes of action: (1) a claim based on the false designation of a product's origin; and (2) a claim based on the false advertising regarding a product.
Taking the second cause of action first, to establish a false-advertising claim under the Lanham Act, the plaintiff must demonstrate that the statement in the challenged advertisement is false in a material way. Falsity may be established by proving that (1) the advertising is literally false as a factual matter, or (2) although the advertisement is literally true, it is likely to deceive or confuse consumers. With regard to the second manner of proving falsity, there are at least three evidentiary routes to prove a likelihood of consumer confusion: (1) survey evidence; (2) evidence of actual confusion; and/or (3) argument based on an inference arising from a judicial comparison of the claims and the context of their use in the marketplace.
Here, the parties have adduced no survey evidence of consumer confusion, or evidence of actual consumer confusion. Therefore, the likelihood of success of their claims depends on a judicial comparison of the advertising representations and the context of their use in the marketplace. Such a judicial comparison does not involve a subjective judgment as to whether the judge would personally be confused, but rather, whether the ordinary, prudent customer in the marketplace would likely be confused. Morever, during such a judicial comparison, a court may consider a number of factors, often called "Polaroid factors,"*fn1 which are well-known and need not be recited in their entirety here. What is important to note is that the list of Polaroid factors can be enlarged or diminished depending on the facts of the particular case. This is because a court's evaluation of the Polaroid factors is not a mechanical process. Rather, a court should focus on the ultimate question of whether consumers are likely to be confused.
Based on the affidavit testimony of Robert Mitchell and Dennis Ross, and exhibits thereto, the Court finds that--while a few of the Polaroid factors militate somewhat against the likelihood of confusion--when taken in their totality, the Polaroid factors weigh in favor of a finding of consumer confusion with regard to fourteen (14) of the sixteen (16) architectural designs addressed by the parties' motion papers.
Specifically, the Court finds that these fourteen (14) architectural designs are as follows:
(1) "Cayuga Heights Fire Station"; (2) "Armonk Fire Station"; (3) "Horsham Battalion # 1"; (4) "Herman Volunteer Fire Co."; (5) "City of Hudson Dept. of Fire"; (6) "Kingston Fire Department"; (7) "Poughkeepsie Public Safety Facility"; (8) "Pearl River Hook & Ladder Co"; (9) "Orangeburg Fire District"; (10) "Stillwater Fire District"; (11) "Horsham Battalion #2"; (12) "Guilderland Fire Station"; (13) "Verdoy Volunteer Fire Department"; and (14) "New City Fire Station."
With regard to the confusion likely to be caused among consumers, the Court finds that, here, that confusion regards who was primarily responsible for designing the architectural work in question, and/or for receiving the architectural award in question.
With regard to the modified Polaroid factors, the Court finds that the factors that weigh somewhat against a finding of consumer confusion are (1) the fact that there does not appear to be a significant difference between the quality of the movant's product and the opposing party's product, and (2) the fact that the consumers in the relevant market appear to be relatively sophisticated.
On the other hand, the Court finds that the modified Polaroid factors that weigh decidedly in favor of a finding of consumer confusion are as follows: (1) the strength of the moving party's claim to be responsible, or largely responsible, for the architectural design and/or award in question; (2) the close similarity between the opposing party's representations (that it was responsible for the design and/or award in question) and the moving party's representations (that it was responsible for the design and/or award in question); (3) the fact that the architectural services offered by the movant are the same as those offered by the opposing party, and the close proximity of the parties' advertisements for those services in trade shows and trade magazines; (4) the parties' demonstrated intent to continue to compete with each other for credit to the architectural design and/or award in question; (5) ...