for the Fourth Circuit for the Fourth Circuit for the Fourth Circuit Microstrategy… v. Motorola, Incorporated

Filed: April 3, 2001
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 01-1289
(CA-01-249-A)
MicroStrategy, Inc.,
Plaintiff - Appellant,
versus
Motorola, Inc.,
Defendant - Appellee.
O R D E R
The court amends its opinion filed March 28, 2001, as follows:
On page 7, first full paragraph, line 1 -- the name
“Microsoft” is corrected to read “MicroStrategy.”
For the Court - By Direction
/s/ Patricia S. Connor
Clerk

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PUBLISHED PUBLISHED PUBLISHED PUBLISHED
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT FOR THE FOURTH CIRCUIT FOR THE FOURTH CIRCUIT FOR THE FOURTH CIRCUIT
MICROSTRATEGY INCORPORATED,
Plaintiff-Appellant,
v. No. 01-1289
MOTOROLA, INCORPORATED,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Gerald Bruce Lee, District Judge.
(CA-01-249-A)
Argued: March 15, 2001
Decided: March 28, 2001
Before NIEMEYER, MOTZ, and GREGORY, Circuit Judges.
_________________________________________________________________
Affirmed by published opinion. Judge Motz wrote the majority opin-
ion, in which Judge Gregory joined. Judge Niemeyer wrote a dissent-
ing opinion.
_________________________________________________________________
COUNSEL COUNSEL COUNSEL COUNSEL
ARGUED: ARGUED: ARGUED: ARGUED: Carter G. Phillips, SIDLEY & AUSTIN, Washington,
D.C., for Appellant. Edward W. Warren, KIRKLAND & ELLIS,
Washington, D.C., for Appellee. ON BRIEF: ON BRIEF: ON BRIEF: ON BRIEF: Daniel Meron, Amanda
L. Tyler, Benjamin Gruenstein, SIDLEY & AUSTIN, Washington,
D.C.; Jonathan Klein, MICROSTRATEGY, INCORPORATED,
Vienna, Virginia, for Appellant. C. Torrence Armstrong, MCGUIRE

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WOODS, L.L.P., McLean, Virginia; Brian D. Sieve, KIRKLAND &
ELLIS, Chicago, Illinois; Jerome Gilson, BRINKS, HOFER, GIL-
SON & LIONE, Chicago, Illinois, for Appellee.
_________________________________________________________________
OPINION OPINION OPINION OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
In this interlocutory appeal, we agreed to review on an expedited
basis the denial of a preliminary injunction to MicroStrategy, Incorpo-
rated, which seeks to enjoin Motorola, Incorporated, from use of a
purported MicroStrategy trademark. For the reasons that follow, we
affirm.
I.
Motorola, a global communications and electronics company, pro-
duces electronic hardware. In June 2000, Motorola held a business
summit of its marketing officers to determine how to market more
effectively its services and products on a worldwide basis. The com-
pany decided to develop a new brand, which would cut across its vari-
ous business interests, to establish a more cohesive corporate identity.
In early July, Motorola contacted three advertising agencies, inviting
each to compete in creating this new brand. The company met with
all three agencies during the week of August 7, 2000. One agency,
Ogilvey & Mather, suggested the use of "Intelligence Everywhere" as
a trademark and global brand for Motorola products. Ogilvey &
Mather also represented that its attorneys had conducted a trademark
search for "Intelligence Everywhere," which revealed no conflicting
use of the phrase as a trademark.
Motorola selected Ogilvey & Mather as its agency and began its
normal procedures for clearing "Intelligence Everywhere" as a trade-
mark. In-house trademark counsel for Motorola performed and com-
missioned various trademark searches for "Intelligence Everywhere"
and turned up no conflicting trademark uses of the phrase. On Octo-
ber 5, 2000, in-house counsel informed Motorola management that no
conflicting marks had been found and that the phrase was available
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for use as a mark in the United States and throughout the world. How-
ever, in-house counsel also informed Motorola management that a
Canadian company, Cel Corporation, had registered the domain name
"intelligenceeverywhere.com" and further investigation revealed that
Cel might be using the name as a trademark on some products. A
month later, Motorola obtained Cel's rights to "Intelligence Every-
where."
On October 19, 2000, Motorola filed an intent-to-use application
with the United States Patent and Trademark Office for the registra-
tion of the trademark "Intelligence Everywhere," indicating its intent
to use this mark on a vast array of its products and services. On
December 10, 2000, Motorola registered the domain name "intelli-
genceeverywhere.com" with Network Solutions, Inc. in Herndon, Vir-
ginia.
On January 8, 2001, MicroStrategy,1111 a producer of communication
software, notified Motorola that MicroStategy had been using "Intelli-
gence Everywhere" as a trademark since "at least as early as 1998."
A. 461. MicroStrategy further stated that the mark had obtained com-
mon law protection, and that Motorola's intended use of the mark
would constitute unlawful infringement. Motorola responded by
expressing its belief that its use of the mark would not violate state
or federal law and its intent to continue using the mark. MicroStrategy
then submitted its own application to the United States Patent and
Trademark Office seeking to register the trademark,"Intelligence
Everywhere."
On February 13, 2001, MicroStategy filed this action in the United
States District Court for the Eastern District of Virginia, raising
claims of trademark infringement, trademark dilution, and cyber-
squatting. MicroStrategy moved the court for a preliminary injunction
to prevent Motorola's intended use of the mark. Such an injunction
would have prevented Motorola from launching its planned global
advertising campaign around the "Intelligence Everywhere" mark,
otherwise scheduled to begin the week of March 19, 2001. On Febru-
ary 23, 2001, the district court heard oral argument and denied the
_________________________________________________________________
1111 Although not as large as Motorola, MicroStrategy employs 2,000 peo-
ple and has approximately $225 million in annual sales.
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motion for a preliminary injunction, explaining its rationale from the
bench; the court issued a written opinion five days later, on February
28, 2001.
After noting an interlocutory appeal on its trademark infringement
claim, MicroStrategy then moved this court for expedited consider-
ation of that appeal.2222 We granted the request and, after receiving
briefs from the parties, heard oral argument on the matter on March
15, 2001. Immediately following argument, we issued a written order,
which affirmed the district court's judgment denying the injunction.
We explain here our reasons for that order.
II.
We review the grant or denial of a preliminary injunction for abuse
of discretion, recognizing that "preliminary injunctions are extraordi-
nary remedies involving the exercise of very far-reaching power to be
granted only sparingly and in limited circumstances." Direx Israel,
Ltd. v. Breakthrough Med. Corp., 952 F.2d 802, 816 (4th Cir. 1992)
(internal quotation marks omitted).
As the district court noted, in order to obtain a preliminary injunc-
tion a plaintiff must satisfy the familiar four-factor test established in
Blackwelder Furniture Co. v. Selig Mfg. Co., 550 F.2d 189 (4th Cir.
1977). A court must consider (1) the likelihood of irreparable harm
to the plaintiff if the preliminary injunction is denied; (2) the likeli-
hood of harm to the defendant if the request is granted; (3) the likeli-
hood that the plaintiff will succeed on the merits; and (4) the public
interest. Id. at 195-97; Direx, 952 F.2d at 812.
"[T]he first step . . . is for the court to balance the `likelihood' of
irreparable harm to the plaintiff against the `likelihood' of harm to the
defendant; and if a decided imbalance of hardship should appear in
plaintiff's favor, then . . . [i]t will ordinarily be enough that the plain-
tiff has raised questions going to the merits so serious, substantial,
difficult, and doubtful, as to make them fair ground for litigation."
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2222 MicroStrategy does not appeal the denial of a preliminary injunction
with respect to its trademark dilution and cybersquatting claims. Brief of
Appellant at 20 n.7.
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Blackwelder, 550 F.2d at 195 (emphasis added). But "if `the plight of
the defendant [is] not substantially different from that of the plain-
tiffs,' that is, if there is no imbalance of hardship in favor of the plain-
tiff, then `the probability of success begins to assume real
significance,' and interim relief is more likely to require a clear show-
ing of a likelihood of success." Direx, 952 F.2d at 808 (quoting Black-
welder, 550 F.2d at 195 n.3).
In this case, the grant of an injunction would cause at least as much
harm to the defendant, Motorola, as its denial would to the plaintiff,
MicroStrategy. Indeed, to some extent, the parties' arguments on
irreparable harm present two sides of the same coin. Each maintains
that it has superior rights to the use of "Intelligence Everywhere" as
a trademark and that the grant, or denial, of injunctive relief will
cause irreparable harm to its use of the mark. Thus, we can only con-
clude that a "decided imbalance of hardship" does not weigh in
MicroStrategy's favor. Blackwelder, 550 F.2d at 195. In fact, it well
may be that Motorola has demonstrated that it will suffer more from
a grant of an injunction than MicroStrategy will from its denial.3333 At
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3333 Although MicroStrategy makes only the general argument noted in
text with respect to irreparable harm, Motorola has offered evidence
detailing the particulars of the harm it would suffer if a preliminary
injunction was granted. For example, Motorola has submitted affidavits
explaining that it has previewed the "Intelligence Everywhere" mark to
its "key customers," and has told those customers that the mark would
be the basis of a "joint co-marketing and advertising campaign with
Motorola," to be launched the week of March 19, 2001 to coincide with
three international technology trade shows. A. 266. An injunction would
assertedly cause Motorola incalculable harm to its "reputation and good
will within the industry" and "negatively impact key business ventures."
Id. Motorola has submitted evidence as to print and television advertise-
ments, new packaging, and website redesign -- all featuring the "Intelli-
gence Everywhere" mark -- that it has developed for the same mid-
March campaign to accompany the three trade shows. A. 264-65. The
company has also outlined its financial investment in developing the "In-
telligence Everywhere" mark, which as of February 20, 2001 totaled
more than $24 million. A. 263-64. Undoubtedly, Motorola incurred some
of these expenses after it received notification of MicroStragegy's claim
in January 2001, but not even MicroStrategy contends that Motorola had
not spent substantial sums on its global campaign prior to any notice
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the very least, "there is no imbalance of hardship"; accordingly, we
turn to the question of likelihood of success on the merits. Direx, 952
F.2d at 808.
When, as here, the balance of hardship "does not tilt decidedly in
plaintiff's favor" then a plaintiff must demonstrate a "strong showing
of likelihood of success" or a "substantial likelihood of success" by
"clear and convincing evidence" in order to obtain relief. Id. at 818
(internal quotation marks and citations omitted). In trademark cases,
a plaintiff's burden may be even greater. As we noted in Direx, the
foremost trademark authority has stated that "when the hardship bal-
ance does not tip `decidedly' or `significantly' in favor of the plain-
tiff," then the plaintiff must prove the "`probability (not mere
possibility)'" of success on the merits; in other words, the plaintiff
must have "a very clear and strong case." Direx, 952 F.2d at 813
(quoting 2 J. Thomas McCarthy on Trademarks and Unfair Competi-
tion § 30.16 (2d ed. 1980)). "`[T]o doubt is to deny'"; thus, "if there
is doubt as to the probability of plaintiff's ultimate success on the
merits, the preliminary injunction must be denied." Id.
With this standard in mind, we turn to the question of whether
MicroStrategy has demonstrated substantial likelihood of success on
_________________________________________________________________
from MicroStrategy. Moreover, the record clearly demonstrates that,
after conducting an extensive trademark search and carefully evaluating
MicroStrategy's claims, Motorola believed that MicroStrategy had no
valid claim to the "Intelligence Everywhere" mark. It seems entirely rea-
sonable for Motorola, considering its significant sunk costs, to continue
preparations for its campaign in face of what it viewed as a meritless
claim. The dissent's contrary contention, that Motorola acted in bad
faith, assumes that MicroStragegy's claim to the mark was not only
valid, but clearly valid; to adopt this view is to have already adjudicated
MicroStrategy's ownership of the mark in its favor. Not only is this an
inappropriate starting place, but, as we explain above, an insupportable
conclusion. Of course, we make no "contention that `bad faith' infringe-
ment can only be proved" when a mark is "clearly valid," post at n.3;
rather, we merely suggest that the dissent's contention -- that Motorola
has acted in bad faith and the balance of harm weighs in MicroStrategy's
favor -- is based on the insupportable view, given the record at this pre-
liminary stage, that MicroStrategy has proved its asserted mark clearly
valid.
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the merits in its trademark infringement claim. For a plaintiff to pre-
vail on a claim of trademark infringement, the plaintiff must first and
most fundamentally prove that it has a valid and protectable mark. See
Petro Stopping Ctrs. v. James River Petroleum, 130 F.3d 88, 91 (4th
Cir. 1997).
The district court held that MicroStrategy had failed to show a likeli-
hood of success on this critical, initial burden. The court reasoned that
although the record demonstrated that MicroStrategy had registered
approximately 50 marks, it failed to register "Intelligence Every-
where" as a mark and, therefore, did not qualify for protection under
15 U.S.C. § 1114(1) (1994 & Supp. V 1999). With respect to Micro-
Strategy's claim under the common law of Virginia, the court con-
cluded that "a careful review" of the record did "not reveal" that
MicroStrategy used the term "Intelligence Everywhere" to "identif[y]
MicroStrategy as a source of goods or services." A. 51.
Of course, as MicroStrategy points out, a mark need not be regis-
tered to garner federal trademark protection. Rather, "it is common
ground that § 43(a) [of the Lanham Act, 15 U.S.C. § 1125 (1994 &
Supp. V 1999)] protects qualifying unregistered trademarks." Two
Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992). But
§ 43(a) of the Lanham Act, like Virginia common law,4444 does require
that in order to obtain trademark protection "a designation must be
proven to perform the job of identification: to identify one source and
distinguish it from other sources." 1 J. Thomas McCarthy, McCarthy
on Trademarks and Unfair Competition § 3:3 (4th ed. 2000). "Not
every single word [or] phrase . . . that appears on a label or in an
advertisement qualifies as a protectable mark." See id. If a purported
mark fails to identify its source, it is not protectable -- under state or
federal law. Id.; see also 15 U.S.C. § 1127 (1994) ("`trademark'
includes any word, name, symbol, or device, or any combination
thereof . . . used by a person . . . to identify and distinguish his or her
goods"). As the Sixth Circuit recently put it,"a plaintiff must show
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4444 Section 43(a) of the Lanham Act "tracks classic principles of state law
of unfair competition." 4 J. Thomas McCarthy, McCarthy on Trademarks
and Unfair Competition § 27:18 (4th ed. 2000); see also Lone Star Steak-
house & Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 929 n.10
(4th Cir. 1995).
7

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that it has actually used the designation at issue as a trademark"; thus
the designation or phrase must be used to "perform[ ] the trademark
function of identifying the source of the merchandise to the custom-
ers." Rock & Roll Hall of Fame v. Gentile Prods., 134 F.3d 749, 753
(6th Cir. 1998).
After careful examination of the 252 pages of MicroStrategy docu-
ments that the company has submitted in support of its motion for
preliminary injunction, we agree with the district court: Micro-
Strategy has failed to demonstrate that it has likely used "Intelligence
Everywhere" to identify MicroStrategy as the source of its goods or
services.
MicroStrategy has offered 24 documents (not including duplicates
of press releases), dating from March 1999 through early 2001, in
which it has used the term "Intelligence Everywhere." These include
two annual reports, several press releases, brochures, sales presenta-
tions, a product manual, a business card, and newspaper articles.
Although most of these documents contain several pages of densely
printed material and some are quite lengthy, see A. 374 (39 pages),
A. 159 (64 pages), A. 413 (30 pages), A. 131 (28 pages), A. 352 (22
pages), and A. 115 (16 pages), typically each refers only once to "In-
telligence Everywhere," and that reference follows no particular
design or sequence, i.e., sometimes its on the cover, sometimes not,
most often "Intelligence Everywhere" appears in the midst of text.
Use of a trademark to identify goods and services and distinguish
them from those of others "does not contemplate that the public will
be required or expected to browse through a group of words, or scan
an entire page in order to decide that a particular word, separated
from its context, may or may not be intended, or may or may not
serve to identify the product." In re Morganroth, 208 U.S.P.Q. 284,
288 (T.T.A.B. 1980); Ex parte Nat'l Geog. Soc., 83 U.S.P.Q. 260
(Comm'n Pat. 1949). Yet that is precisely the sort of examination one
is forced to employ even to find the term "Intelligence Everywhere"
in many of MicroStrategy's materials.
Moreover, MicroStrategy has not used any "constant pattern" or
design to highlight "Intelligence Everywhere." Cf. Textron Inc. v.
Cardinal Eng'g Corp., 164 U.S.P.Q. 397, 399 (T.T.A.B. 1969) (mark
found because, "since its inception," it had been used by the company
8

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in a "constant pattern"; it was "always set off" in some manner). A
trademark need not be "particularly large in size or . . . appear in any
particular position on the goods, but it must be used in such a manner
that its nature and function are readily apparent and recognizable
without extended analysis or research and certainly without legal
opinion." In re Morganroth, 208 U.S.P.Q. at 288; See also Ex parte
Nat'l Geog. Soc., 83 U.S.P.Q. at 260-61. Unlike certain Micro-
Strategy trademarks, e.g., "Intelligent E-Business," MicroStrategy has
not consistently placed "Intelligence Everywhere" on a particular part
of the page, or in a particular type, or labeled it with "TM,"5555 or consis-
tently used a distinctive font, color, typeset or any other method that
makes "its nature and function readily apparent and recognizable
without extended analysis." Id. "[A] designation is not likely to be
perceived as a mark of origin unless it is repetitively used, as opposed
to only an occasional or isolated use." 1 McCarthy § 3.3.
On its business card and elsewhere, MicroStrategy characterizes
"Intelligence Everywhere" as the company "mission," see A. 224, A.
453, A. 109, A. 162, A. 116, A. 314, A. 450, A. 320, A. 354, A. 386,
"vision," see A. 327; A. 344, A. 348, A. 443, A. 453, "effort," see A.
324, A. 447, "motto" A. 315, or "dream," A. 313. Although in the
proper context, a mission statement, like a slogan, can serve as a
trademark, a company mission statement or slogan is certainly not by
definition a trademark. Rather, mission statements, like "[s]logans
_________________________________________________________________
5555 Only infrequently has MicroStrategy designated "Intelligence Every-
where" with a TM (just five times in pre-2001 documents, see A. 109,
A. 116, A. 324 (duplicated at A. 447), A. 327 (duplicated at A. 443 with
TM and at A. 348 and A. 344 without TM); A. 354), while it has consis-
tently designated other phrases with the "TM." Moreover, although on
eight documents presented to us MicroStrategy has included lists of its
trademarks, the company omits "Intelligence Everywhere" from its lists
of trademarks about as often as it includes the phrase. Compare A. 130,
A. 158, A. 325 (duplicated at A. 447) (all listing"Intelligence Every-
where") with A. 99, A. 102, A. 221, A. 454 (all omitting "Intelligence
Everywhere") and A. 329, 346, 350, 445 (duplications of same press
release listing phrase on A. 329 but omitting phrase on A. 346 and A.
350 and omitting entire list on A. 445). Notably, although the company
lists 18 trademarks in its handsomely printed 64-page 1999 annual
report, it does not include "Intelligence Everywhere" among them. See
A. 221.
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often appear in such a context that they do not identify and distinguish
the source of goods or services. In such cases, they are neither protec-
table nor registrable as trademarks." See 1 McCarthy § 7:20 (empha-
sis added). So it is here. MicroStrategy has not demonstrated that it
has used the mission statement to identify and distinguish the source
of its products or services. If anything, the phrase has been used to
advertise MicroStrategy's goods, without identifying the source of
those goods. Unless used in a context whereby they take on a dual
function, advertisements are not trademarks.
Moreover, the record does not bear out MicroStrategy's claim that
the company "for years has used the mark consistently in widely dis-
tributed sales brochures [and] product manuals sold with the software,
and advertising for its Broadcaster software"; the mark "is commonly
placed right next to the name, Broadcaster." Brief of Appellant at 32.
The two items that MicroStrategy provides to support this proposition
are a Broadcaster product brochure, copyrighted in 2000, and a
Broadcaster administrator guide, which indicates it was published in
September 1999. Nothing in the record indicates precisely how
"widely" these items have been distributed. What is clear is that not
even in these two documents did MicroStrategy use "Intelligence
Everywhere" "consistently" as a trademark"right next to the name,
Broadcaster." For example, in the text-filled three-page Broadcaster
product brochure, the phrase "MicroStrategy Broadcaster" appears 19
times, A. 97-99; "Intelligence Everywhere" does not "commonly
appear right next to" it, rather "Intelligence Everywhere" appears just
once. See A. 98. "Microstrategy Broadcaster" appears twice on the
cover of the brochure; "Intelligence Everywhere" is nowhere on the
cover. A. 97. "Broadcaster," in large letters, heads the top of the sec-
ond page of the brochure, in much smaller letters "MicroStrategy
Broadcaster" is repeated underneath, and next to that, also in the same
much smaller print, is "Intelligence Everywhere." A. 99. While
"MicroStrategy Broadcaster" is repeated several more times on the
page, "Intelligence Everywhere" is not. Moreover, on the last page of
the brochure, when MicroStrategy lists its trademarks, including
"MicroStrategy Broadcaster" and fourteen other marks, it does not list
"Intelligence Everywhere." A. 99.6666
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6666 Examination of the excerpt of the administrator guide presented to us
reveals a similar story. The excerpt is eight pages; it mentions "Micro-
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What appears to have eluded MicroStrategy is that "[e]ven though
a word, name, symbol, device, or a combination of words [a slogan]
may be used in the sale or advertising of services or on or in connec-
tion with goods" it is not protectable as a trademark "unless it is used
as a mark." In re Morganroth, 208 U.S.P.Q. at 287; see also In re
Int'l Paper Co., 142 U.S.P.Q. 503, 505 (T.T.A.B. 1964) (noting that
the "question here is not whether a slogan can perform the function
of a trademark" but whether it does perform this function, i.e., "iden-
tify and distinguish" the owner's goods from those of others). "Intelli-
gence Everywhere" could function as a trademark, but MicroStrategy
has not clearly demonstrated that it has, in fact, used the phrase as a
mark.
For these reasons, MicroStrategy has at this juncture utterly failed
to provide a basis for a court to find the probability of its trademark
usage, let alone trademark infringement by Motorola. Rather, Micro-
Strategy has presented a record of limited, sporadic, and inconsistent
use of the phrase "Intelligence Everywhere." Obviously, this does not
constitute "a clear and strong case" of likelihood of success on the
merits. Of course, MicroStrategy may yet prevail on its infringement
claim at trial. But the company has not demonstrated that this is
likely, let alone that the district court abused its discretion in refusing
to grant the requested preliminary injunction.7777 The judgment of the
district court is therefore
_________________________________________________________________
Strategy Broadcaster" six times, A. 100-107. Again "Intelligence Every-
where" appears but once. A. 100. That single appearance is on the cover,
to be sure, but it is in the smallest print on the cover, more than halfway
down the page, not near, let alone "right next to the name Broadcaster,"
as MicroStrategy claims. Furthermore, again in the administrator guide,
MicroStrategy lists its trademarks including "MicroStrategy Broadcaster"
and fourteen others, but omits any mention of "Intelligence Everywhere."
A. 102.
7777 Given our resolution of this appeal, we need not, and do not, reach the
district court's holding on the likelihood of confusion between Micro-
Strategy's and Motorola's use of the phrase "Intelligence Everywhere."
We do note some skepticism, however, as to the district court's conclu-
sions that "Intelligence Everywhere" is a descriptive mark, that the
"MicroStrategy and Motorola marks are not similar," and that Micro-
Strategy and Motorola "offer different goods and services which serve
different unrelated purposes."
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AFFIRMED.
NIEMEYER, Circuit Judge, dissenting:
To deny MicroStrategy a preliminary injunction at this stage of the
proceedings, when no trial has yet been held, ensures that any rights
MicroStrategy may have in the mark "Intelligence Everywhere" will
be seriously undermined, if not permanently destroyed, by Motorola's
planned advertising campaign promoting its identical mark in a con-
tiguous, complementary product market. Because the outcome on the
nature and scope of MicroStrategy's alleged senior mark is not a fore-
gone conclusion at this time, likelihood of success on the merits is not
a determinative factor on the appropriateness of entering a prelimi-
nary injunction. But, because the balance of hardships so clearly
favors MicroStrategy, the principles of equity suggest that we enter
a preliminary injunction to prohibit Motorola's use of its junior mark
"Intelligence Everywhere" until a trial can be held to determine
whether MicroStrategy has a valid, senior interest in the mark.
The majority, in weighing the first two Blackwelder1111 factors -- the
relative likelihood of irreparable harms to the parties -- gives too
much weight to Motorola's professed hardships in reaching the con-
clusion that the balance does "not tilt decidedly in plaintiff's favor."
Supra, at 6. The majority relies specifically on Motorola's allegations
regarding the potential harm it will suffer from an injunction, namely
that (1) its reputation and good will in the industry will be harmed
because it has previewed the mark to various customers; (2) it will
lose its financial investment in print and television advertisements
featuring the "Intelligence Everywhere" mark; and (3) its financial
investment in developing the mark, which to date exceeds $24 mil-
lion, will be lost or, at least, adversely impacted. See id. at 5-6 n.3.
But even if these harms are relevant, the evidence shows that their
primary cause is Motorola's decision to continue its own marketing
strategy, even after being put on notice of MicroStrategy's claim in
January 2001.
_________________________________________________________________
1111 Blackwelder Furniture Co. v. Seiling Mfg. Co., 550 F.2d 189 (4th Cir.
1977).
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For example, Motorola's Director of Corporate Identity, James
Winski, admits that the printing of its annual report -- a potential loss
in excess of one million dollars -- was not scheduled to commence
until late February 2001, well over a month after Motorola was first
put on notice that MicroStrategy claimed the "Intelligence Every-
where" slogan as its mark.2222 Likewise, Motorola Vice President Sandra
West admits in her affidavit that television commercials featuring the
"Intelligence Everywhere" mark were scheduled to be shot at the end
of February, and thus could have been canceled or postponed. More-
over, although West asserts that Motorola's goodwill and reputation
in the industry will be undermined because it has already made pre-
sentations to key customers in which it previewed the trademark and
announced a March roll-out date, West does not indicate whether
these presentations occurred before or after Motorola was given
notice that the planned advertising blitz well might infringe a Micro-
Strategy trademark. Indeed, it is telling that Motorola's "evidence
detailing the particulars" of its potential injuries asserts specific dates
for several outlays prior to January, e.g., to Ogilvey & Mather in Sep-
tember 2000 and to the Cel Corporation in November 2000, but then
steers carefully away from asserting the dates on which it spent the
bulk of the $24 million.
Of course, even without the January notice, these expenditures are
irrelevant to MicroStrategy's right to enjoin Motorola's use of the
mark. And the majority's error in relying on these expenditures is
made all the more glaring by the fact that Motorola's decision to
spend money on the planned advertising campaign after it was on
notice weighs in favor of MicroStrategy because it demonstrates
Motorola's bad faith.3333 Thus, these expenditures should have been
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2222 Indeed, the record contains no evidence regarding when Motorola
began the design of its annual report to include the "Intelligence Every-
where" mark. It may be that even that decision was made subsequent to
its being put on notice of MicroStrategy's claim to the mark.
3333 That the district judge and two members of this court have been
impressed by the amount spent on a trademark by a potential infringer,
a theoretically irrelevant factor, would seem to indicate that companies
wishing to escape infringement liability will best be served by heeding
the advice of Martin Luther, that if you sin, "sin boldly" (pecca fortiter).
Letter from Luther to Melanchthon (1521), in Epistolae (1556).
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taken to tip the balance in favor of MicroStrategy rather than against
it.
But weighing most heavily in favor of MicroStrategy is the cer-
tainty that Motorola's widespread use of the identical mark in a com-
plementary product market will effectively and permanently destroy
MicroStrategy's mark if an injunction is not entered. Motorola's
resources far exceed those of MicroStrategy's, and Motorola's pro-
posed use of the mark will be nearly universal. Thus, considering only
the relative harms, I believe that the harm from delay of Motorola's
introduction of "Intelligence Everywhere"-- a delay that does not
necessarily entail the loss of development expenses-- is outweighed
by the irreparable injury that will occur to MicroStrategy's mark,
even if it is able to prevail on the merits.
Even on the merits, MicroStrategy's chances of prevailing at trial
are quite good and certainly are nowhere as bleak as the majority sug-
gests. Any doubt about MicroStrategy's eventual success, as the
majority observes, would come from questions about how consis-
tently MicroStrategy has been in using the "Intelligence Everywhere"
slogan as a trademark. Yet, even as to this, the closest question on the
merits, there is a good deal of evidence in the record in Micro-
Strategy's favor.
_________________________________________________________________
The majority's suggestion, albeit ambiguous, that "bad faith" infringe-
ment can only be proved in a case where a claim to a mark is "not only
valid, but clearly valid," supra, at 5-6 n.3, is simply an inaccurate state-
ment of what is required to recover profits, actual damages, and attorney
fees under 15 U.S.C. § 1117(a). See Int'l Star Class Yacht Racing Ass'n
v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749, 754 (2d Cir. 1996) (dis-
cussing the relevance of continued infringement to an assessment of "bad
faith" after the infringer was put on notice of the claimed trademark by
its being sued for infringement); cf. Nalpac, Ltd. v. Corning Glass
Works, 784 F.2d 752, 755-56 (6th Cir. 1986) (affirming finding of good
faith based in part on the infringer's cessation of infringing activities
after acquiring knowledge of another's claim to the trademark, but before
a final adjudication). However risky, a party can decide to "bet[ ] on the
fact that [the claimant] w[ill] not prevail in its suit," but, if it loses that
bet, the infringer "should not escape the consequences of its conduct."
Int'l Star Class Yacht Racing Ass'n, 80 F.3d at 754.
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First, while MicroStrategy has not consistently used the mark in all
of its corporate documents, the record certainly does reflect that
MicroStrategy has used the mark consistently as a trademark with
respect to its "Broadcaster" software.4444 On the cover of the software
user's manual, which is distributed with the software, the mark is set
out in prominent, highlighted text. See generally In re Post Props.,
Inc., 227 U.S.P.Q. 334, 334-35 (T.T.A.B. 1985) (listing distinctive or
different print style and prominent position on a label or advertising
copy as a common indicator that a word, phrase, or picture is being
used as a trademark). Moreover, every MicroStrategy business card
features the mark, set off with quotation marks, in initial capital let-
ters, with the TM signal next to it. Either of these consistent uses
alone could be enough to establish the adoption of "Intelligence
Everywhere" as a mark, and together, they provide MicroStrategy
with considerable evidence to present at trial on the first element of
its infringement claim.
If it is able to establish this element, MicroStrategy is almost cer-
tain to prevail on the other elements of its infringement claim. Despite
the district court's contrary conclusion, it cannot seriously be con-
tended that MicroStrategy's use of "Intelligence Everywhere" is
descriptive rather than suggestive. The phrase does not impart infor-
mation about MicroStrategy or its products directly-- the hallmark
of a descriptive mark -- but instead "requires some operation of the
imagination to connect" the meaning of the phrase to MicroStrategy
and its products, the very definition of a suggestive mark. Pizzeria
Uno Corp. v. Temple, 747 F.2d 1522, 1527 (4th Cir. 1984) (quoting
Union Carbide Corp. v. Ever-Reddy, Inc., 531 F.2d 366, 379 (7th Cir.
1976) (internal quotation marks omitted)). A potential customer faced
solely with the slogan would be unable to describe precisely what
product or services were offered by MicroStrategy, unlike in the cases
of marks held to be descriptive, e.g., "After Tan post-tanning lotion,
5 Minute glue, King Size men's clothing, and the Yellow Pages tele-
phone directory." Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455,
464 (4th Cir. 1996) (citing 1 J. Thomas McCarthy, McCarthy on
Trademarks and Unfair Competition, § 11.08 (3d ed. 1995)).
_________________________________________________________________
4444 The majority irrelevantly cites to non-use in contexts other than
"Broadcaster," which says nothing about its adoption of the mark in con-
nection with this specific product.
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Further, MicroStrategy should have little difficulty in establishing
a "likelihood of confusion" under the Lanham Act in this case. See id.
at 463 (setting forth the factors considered in the "likelihood of confu-
sion" analysis). We need not discuss each of the factors at length here,
because it is simply a matter of common sense that MicroStrategy's
"Broadcaster" product -- which bears the "Intelligence Everywhere"
mark and is sold to customers who not only use Motorola products,
but may use them to run "Broadcaster" itself-- will become associ-
ated by its customers with Motorola after that company's expensive
media blitz. Where senior and junior users of identical marks operate
in contiguous product markets that involve complementary products,
confusion can almost be presumed. And in this case, the probability
of confusion is enhanced, not lessened, by Motorola's plan to link its
hallmark "M" with the "Intelligence Everywhere" slogan. As dis-
cussed above, "Broadcaster" customers are likely to be Motorola cus-
tomers -- the targets of the advertising blitz-- and thus are
inherently likely to begin associating the slogan with Motorola and
naturally to assume that MicroStrategy products bearing the slogan
are associated with Motorola -- a classic case of "reverse confusion."
See A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d
198, 228 (3d Cir. 2000) ("[R]everse confusion occurs when the junior
user saturates the market with a similar trademark and overwhelms
the senior user" (citations and internal quotation marks omitted)).
Because the district court applied the controlling legal standards
improperly and, in addition, considered irrelevant factors in determin-
ing the relative harms to the parties, I would reverse its ruling and
remand for entry of a preliminary injunction pending trial. I would
also direct the district court to conduct that trial expeditiously so as
to minimize any harm that might be caused by further delay. For these
reasons, I respectfully dissent.
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