RICARDO S. MARTINEZ, CHIEF UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
This matter is before the Court on Plaintiffs Second Amended Motion and Memorandum for Entry of Preliminary Injunction (Dkt. # 81) and Defendant Amazon.com, Inc.s Unopposed Motion to File Documents Under Seal (Dkt. # 82). Plaintiffs Motion for Preliminary Injunction maintains that Defendant is impermissibly using Plaintiffs trademark in various contexts to further Defendants own business interests. Plaintiff argues that Defendants actions are harming its own business and seeks a preliminary injunction to prevent Defendants numerous uses of its trademark. Defendant maintains that its use is in accordance with trademark law and that no preliminary injunction is warranted. Dkt. # 84. Having reviewed the record and for the reasons below, the Court denies Plaintiffs Motion and grants, in part, Defendants motion to seal.
II. BACKGROUND
Plaintiff, The Comphy Company, markets itself as a luxury company, historically supplying its linens to luxury spas. Dkt. # 34 at ¶ 2. Plaintiffs business has grown from a single employee to a successful industry leader in spa linens. Id. at ¶¶ 3-11. Over time, Plaintiff expanded into bedding and began selling to luxury hotels and spas and allowing those customers to sell bedding directly to the public. Id. at ¶¶ 14-15. To further capitalize on its new product and reputation, Plaintiff began marketing its bedding to high-end bed and breakfasts. Id. at ¶ 15. Around this same time, Plaintiff began shipping directly to the public so that the hotels, spas, and bed and breakfasts selling its products did not have to carry inventory. Id. at ¶ 17. Ultimately, Plaintiff decided to start retailing its products online through its own website. Id. at ¶ 18.
Plaintiff does not market directly to customers and instead relies upon word of mouth and first-hand exposure at hotels, spas, and bed and breakfasts utilizing its products. Id. at ¶¶ 19-34. Defendant has solicited Plaintiff several times to sell its products on Defendants platforms. Id. at ¶ 25. To maintain the luxury branding of its products, Plaintiff has actively decided not to sell or market its products on Defendants platforms. Id. at ¶¶ 25-26.
In furtherance of its own business, Defendant purchases keyword advertising from various search engines so that members of the public searching for certain terms are offered to search on Defendants website. Defendant has purchased keyword advertising utilizing keywords including COMPHY from several search engines. Dkt. # 1-12 (Google search for comphy sheets displaying Defendants ad for Comfy Sheets Queen); Dkt. # 1-13 (Bing search results for comphy sheets displaying Defendants ad for Shop Comfy Sheets); Dkt. # 97-2 (Yahoo! search results for comphy displaying Defendants ad for Comphy Co. Sheets); Dkt. # 104-3 (Bing search for comphy co sheets displaying Defendants ad for Comphy Company Sheets at Amazon). Some ads appear to take consumers to searches for related products on Defendants website and some appear to take consumers to specific products.
Within Defendants website, individuals may also make searches. If comph is entered, Defendants search bar provides possible searches including for comphy sheets, comphy company sheets, and comphysheets along with seven other unrelated possible searches. Dkt. # 1-7. Because Plaintiffs products are not available through Defendant, a search for comphy sheets provides products similar to Plaintiffs products, including bedding offered for sale by Comfy. Dkt. # 1-8. On one product advertised in response to a search for comphy sheets, Defendant includes a prominent tag providing: Amazons Choice for comphy sheets. Dkt. # 1-11.
Plaintiff believes that Defendants actions are causing it to fall short of its yearly growth target and that Defendants actions are harming its brand. Id. at ¶¶ 29-30, 32. Plaintiff projected a significant increase in its online sales in 2018 but has not met that growth rate through May 31, 2018. Id. at ¶ 29. Plaintiff maintains that, if not granted the requested relief, it will suffer irreparable harm from Defendants continued actions. Plaintiff requests that the Court enter a preliminary injunction prohibiting Defendant from:
1. Promoting, supporting or allowing third parties unauthorized use of the COMPHY trademark (or highly similar marks such as COMFY) to promote bedding, sheets, pillows and related products not made by or under the authority of The Comphy Co. (the Infringing Products);
2. Distributing, offering for sale, and selling merchandise under the COMPHY COMPANY, COMPHY SHEETS or COMFY SHEETS storefront in connection with the Infringing Products;
3. Using the prepopulated search term Comphy Company Sheets, the search term Comphy (either alone or with other words), the search term Comfy applied to the Infringing Products (either alone or with other words), the search term Comfy Company Sheets and the corresponding display of infringing and unlabeled third-party sheets in connection with such searches. Any search including Comphy or Comfy Sheets/Bedding/Pillows should only display products with clear and unambiguous labelling to show that the products are not genuine Comphy brand products;
4. Automatically suggesting searches for Comphy, Comphy Sheets, Comphy Company and Comfy Sheets when users begin to type a first few letters of those marks;
5. Using Comphy on product search result pages in phrases like Amazons Choice for Comphy Sheets; and
6. Using COMPHY or COMFY SHEETS as keywords with Google AdWords and other online advertising networks.
Dkt. # 81 at 22-23.
III. DISCUSSION
1. Legal Standard
Preliminary injunctive relief is an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief. Winter v. Natural Res. Def. Council, Inc. , 555 U.S. 7, 22, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008) (citing Mazurek v. Armstrong , 520 U.S. 968, 972, 117 S.Ct. 1865, 138 L.Ed.2d 162 (1997) (per curiam) ). To obtain a preliminary injunction, the moving party must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest. Id. [A]n injunction cannot issue merely because it is possible that there will be an irreparable injury to the plaintiff; it must be likely that there will be. Am. Trucking Associations, Inc. v. City of Los Angeles , 559 F.3d 1046, 1052 (9th Cir. 2009) (citing Winter , 555 U.S. at 21, 129 S.Ct. 365 ).
2. Likelihood of Success on the Merits
Plaintiff alleges that it is likely to succeed on the merits of its trademark infringement, false designation of origin, and contributory trademark infringement claims. But the Court cannot conclude that Plaintiff is likely to succeed on the merits of its claims on the record before the Court. The Courts task is made more difficult because Plaintiff challenges Defendants use of COMPHY in several distinct contexts but does not address those situations separately. Rather, Plaintiff focuses on the sum of Defendants uses which strengthens certain of Plaintiffs claims and dilutes others. On this record, the Court cannot conclude that Plaintiff is likely to succeed on its various claims.
A. Trademark Infringement Claims
Trademark law is concerned with the protection of symbols, elements or devices used to identify a product in the marketplace and to prevent confusion as to its source. RDF Media Ltd. v. Fox Broad. Co. , 372 F.Supp.2d 556, 563 (C.D. Cal. 2005) (quoting EMI Catalogue Partnership v. Hill, Holliday, Connors, Cosmopulos, Inc. , 228 F.3d 56, 63 (2d Cir. 2000) ). To prove its trademark infringement claims, Plaintiff must establish that its mark is a valid and protectable trademark and that Defendant is using a confusingly similar mark. Herb Reed Enterprises, LLC v. Fla. Entmt Mgmt., Inc. , 736 F.3d 1239, 1247 (9th Cir. 2013) (quoting Grocery Outlet, Inc. v. Albertsons, Inc., 497 F.3d 949, 951 (9th Cir. 2007) (per curiam) ). At bottom, the inquiry is whether Defendants use of Plaintiffs trademark creates a likelihood that the consuming public will be confused as to who makes what product. Jada Toys, Inc. v. Mattel, Inc. , 518 F.3d 628, 632 (9th Cir. 2008) (quoting Brother Records, Inc. v. Jardine , 318 F.3d 900, 908 (9th Cir. 2003) ).
i. Not Clear Plaintiff Has a Valid Protectable Trademark in COMPHY
A trademark includes any word, name, symbol, or device, or any combination thereof-[ ] used by a person ... to identify and distinguish his or her goods ... from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown. 15 U.S.C. § 1127. Since 2013, Plaintiff has held a registered trademark for a stylized THE COMPHY CO. and design, as shown in Figure 1. Dkt. # 1-5 (providing a copy of U.S. Trademark Registration No. 3,479,190). During the pendency of this Motion, Plaintiffs registration was amended to include a stylized C above the word COMPHY, as shown in Figure 2. Dkt. # 103-1 at 2 (copy of updated U.S. Trademark Registration No. 3,479,190).
However, registration provides only a presumption of validity and shifts the burden to the defendant to prove otherwise. OTR Wheel Engg, Inc. v. W. Worldwide Servs., Inc. , 897 F.3d 1008, 1022 (9th Cir. 2018). Defendant challenges the validity of Plaintiffs trademark by (1) questioning whether the registered mark has application in this case because the case deals with products outside of those specified in the registration, and (2) questioning whether the stylized nature of the registered mark provides the same protection to bare uses of COMPHY.
a. Registered Trademark Does Not Expand Beyond Specified Goods
Plaintiffs registered mark is for: Linens and bedding for health spas , namely, towels, pads in the nature of bed pads, mattress pads and table pads, sheets, duvets, comforters, pillow cases, pillow shams, and table skirts. Dkt. # 103-1 at 2 (emphasis added). Defendant points out that Plaintiff seeks to protect the use of COMPHY in relation to consumer bedding-a good outside the scope of Plaintiffs registration. Dkt. # 84 at 9-10 (advancing argument and citing Plaintiffs testimony that spa bedding and consumer bedding are distinct). The Court agrees.
Defendant relies on Levi Strauss & Co. v. Blue Bell, Inc. where the Ninth Circuit held that the protection afforded by registration with regard to jackets and garments, particularly trousers did not extend to the holders own use of the mark with regard to shirts. 778 F.2d 1352, 1354 (9th Cir. 1985). Conversely, Plaintiff relies on Applied Info. Scis. Corp. v. eBAY, Inc. where the Ninth Circuit held that the protection afforded by registration extends to others using the registered mark with regard to goods or services outside of those listed in the registration. 511 F.3d 966, 971 (9th Cir. 2007). This case is more akin to Levi Strauss as Plaintiff seeks to expand its registration mark into consumer bedding. The Ninth Circuit, in Applied Infor Scis. Corp. , distinguished Levi Strauss on just this basis. Id. at 971 (Strauss was attempting to extend its own use of its registered mark to goods not specified in its federal registration.). Plaintiff does not allege that Defendants use of COMPHY in any way interferes with Plaintiffs use of its registered trademark in relation to the goods specified in the trademark registration.
b. Protection Does Not Extend to Component Parts of Registered Mark
Defendant also challenges whether Plaintiffs registered mark for a stylized C with Comphy provides a presumption of validity applying to bare uses of COMPHY. Dkt. # 84 at 10 (Any presumption that results from registration pertains to the whole mark ... rather than to any individual portion of the mark. ) (quoting Igloo Prods. Corp. v. Brantex, Inc. , 202 F.3d 814, 817 (5th Cir. 2000) ). Plaintiff does not address this challenge and the Court agrees with Defendant. Plaintiffs own testimony is that: From the beginning, all Comphy brand products have been marked with a tag that prominently included the word mark Comphy and associated logo. Dkt. # 34 at ¶ 14 (emphasis added); see also , Dkt. # 34-8 (representations of the tags used). Nowhere does Plaintiff allege that Defendant is making use of the registered mark itself or any use of the stylized C that distinguishes Plaintiffs registered mark. Determining the protection afforded the bare use of COMPHY therefore requires analysis apart from the fact Plaintiff holds a registered trademark.
c. Plaintiff Does Not Clearly Establish a Valid and Protectable Mark
The protection afforded a mark relies upon its distinctiveness. S. California Darts Assn v. Zaffina , 762 F.3d 921, 929 (9th Cir. 2014) (citing Zobmondo Entmt, LLC v. Falls Media, LLC, 602 F.3d 1108, 1113 (9th Cir. 2010) ). The purpose of a trademark is to help consumers identify the source, but a mark cannot serve a source-identifying function if the public has never seen the mark and thus is not meritorious of trademark protection until it is used in public in a manner that creates an association among consumers between the mark and the marks owner. Brookfield Commcns, Inc. v. W. Coast Entmt Corp. , 174 F.3d 1036, 1051 (9th Cir. 1999). A marks strength is determined by consideration of its conceptual and commercial strength. Network Automation, Inc. v. Advanced Systems Concepts, Inc. , 638 F.3d 1137, 1149 (9th Cir. 2011) (citing Brookfield Commcns, Inc. , 174 F.3d at 1058 ).
The conceptual strength addresses a marks distinctiveness on a sliding scale of: (1) generic, (2) descriptive, (3) suggestive, (4) arbitrary, and (5) fanciful. Two Pesos, Inc. v. Taco Cabana, Inc. , 505 U.S. 763, 768, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992). The last three categories are entitled to the strongest protection because they are inherently distinctive as their intrinsic nature serves to identify a particular source of a product. Id. Generic marks are never protected. Rudolph Intl, Inc. v. Realys, Inc. , 482 F.3d 1195, 1198 (9th Cir. 2007) (citing Filipino Yellow Pages, Inc. v. Asian Journal Publns, Inc. , 198 F.3d 1143, 1147 (9th Cir. 1999) ). Descriptive marks are not inherently distinctive, but commercial strength and secondary meaning can provide a descriptive mark stronger protection. Sand Hill Advisors, LLC v. Sand Hill Advisors, LLC , 680 F.Supp.2d 1107, 1112-13 (N.D. Cal. 2010) (citations omitted).
The crux of the issue then, is whether Plaintiffs use of COMPHY, COMPHY COMPANY, or COMPHY CO. is descriptive or suggestive. Determining whether a mark is descriptive or suggestive is difficult and is not an exact science. Zobmondo Entmt, LLC , 602 F.3d at 1114 (quoting Lahoti v. VeriCheck, Inc. , 586 F.3d 1190, 1197 (9th Cir. 2009) ;
2 J. Thomas McCarthy, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 11:66 (4th ed.2010) ) ([t]he descriptive-suggestive borderline is hardly a clear one), § 11:71 (observing that the descriptive-suggestive dichotomy is not some kind of concrete and objective classification system) ). But again, Plaintiff provides the Court no differentiation between the various forms.
In the Ninth Circuit, the imagination test is the primary test for determining distinctness. Zobmondo Entmt, LLC , 602 F.3d at 1115-16. That test does not ask what information about the product could be derived from a mark, but rather whether a mental leap is required to understand the marks relationship to the product. Id. at 1116 (quoting Rudolph Intl , 482 F.3d at 1198 ) (emphasis in original). The determination is not made in the abstract but is made with reference to the goods or services that it identifies. Id. at 1114 (quoting Entrepreneur Media, Inc. v. Smith , 279 F.3d 1135, 1142 (9th Cir. 2002) ).
In this context, Plaintiffs COMPHY mark appears more descriptive than suggestive. As it relates to sheets and bedding, COMPHY is descriptive. It describes a quality of the product-that the bedding is comfortable. Dkt. # 34 at ¶ 5 (Plaintiffs own testimony that I chose the name The Comphy Company because it captured my goal of creating the most innovative, luxurious, and comfortable linens possible.); Dkt. # 85 at 34, 76-77. COMPHY could be suggestive where the product makes the term no longer descriptive, such as COMPHY sandpaper. But Plaintiff may not remove a common descriptive word from the public domain by investing his goods with an additional quality, thus gaining the exclusive right to call his wine rose, his whisky blended, or his bread white. Rudolph Intl , 482 F.3d at 1198 (quoting Miller Brewing Co. v. G. Heileman Brewing Co., 561 F.2d 75, 81 (7th Cir. 1977) ). Similarly, Plaintiff does not have the exclusive right to call its goods comfy.
Commercial strength can add strength to distinctive and suggestive marks as strength is based on actual marketplace recognition, and thus advertising expenditures can transform a suggestive mark into a strong mark. Network Automation, Inc. , 638 F.3d at 1149 (citing Brookfield Commcns, Inc. , 174 F.3d at 1058 ).
Plaintiffs arguments as to the commercial strength of its mark are not overly persuasive. Plaintiff argues it is the brand standard for luxury hotels, spas, and bed and breakfasts and that it has expended extensive sums annually since 2003 on advertising to promote its Comphy brand and branded products, via trade shows and other advertising and marketing in industry publications targeting bed and breakfasts. Dkt. # 81 at 6. But again, Plaintiff glosses over its use of the stylized C mark in its advertising which lends distinctiveness to the mark and which Plaintiff does not attempt to account for. Further, Plaintiff provides no authority indicating that its market standing and advertising expenditures in the hospitality sector likewise establishes the strength of its mark in the consumer retail market. As regards the consumer retail market, Plaintiff maintains social media accounts but otherwise does not market to consumers and relies on personal exposure and word of mouth. Dkt. # 34 at ¶¶ 19-34. Nothing indicates that Plaintiffs strength in the luxury hospitality sector translates to mark strength in the consumer retail setting, outside of a limited number of consumers who experience Plaintiffs products in the luxury hospitality sector and later look for Plaintiffs products in the commercial market. On this record, the Court does not find that COMPHY is an overly strong mark.
ii. Not Clear Defendant is Using a Confusingly Similar Mark
Upon establishing a protectable mark, a plaintiff must also establish that Defendants use is confusingly similar. In determining the likelihood of confusion, the Court considers the Sleekcraft factors. Brookfield Commcns, Inc. , 174 F.3d at 1053-54. These include: (1) strength of the mark; (2) proximity of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and the degree of care likely to be exercised by the purchaser; (7) defendants intent in selecting the mark; and (8) likelihood of expansion of the product lines. See AMF Inc. v. Sleekcraft Boats , 599 F.2d 341, 348-49 (9th Cir. 1979) (citations omitted). In the context of internet search engines, the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page are particularly important. Multi Time Mach., Inc. v. Amazon.com, Inc. , 804 F.3d 930, 936 (9th Cir. 2015) (quoting Network Automation, Inc. , 638 F.3d at 1154 ). Further, the Sleekcraft factors are applied in a flexible manner to tailor the consideration to the market context in which confusion may exist. Network Automation, Inc. , 638 F.3d at 1145 ; Dr. Seuss Enters., L.P. v. Penguin Books USA, Inc. , 109 F.3d 1394, 1404 (9th Cir. 1997). Ultimately, confusion must be probable, not simply a possibility. Multi Time Mach., Inc. , 804 F.3d at 935 (quoting Murray v. Cable NBC, 86 F.3d 858, 861 (9th Cir. 1996) ).
a. Strength of the Mark
The confusion analysis brings the Court back to considering the strength of COMPHY. There are few points to add to the Courts earlier consideration. In this context, the strength of the mark is essentially an analog for brand knowledge. For the consuming public to be confused by Defendants uses of COMPHY, the consuming public must know that COMPHY specifies Plaintiffs goods. As discussed above, the Court does not view Plaintiffs use of COMPHY as an overly strong mark and Plaintiff offers nothing more than unsubstantiated conclusions to the contrary. Dkt. # 81 at 9-10. But in this case, the strength of mark factor has increased importance. Plaintiffs arguments are in large dependent on the assumption that the average retail customer is searching for Plaintiffs goods anytime they search COMPHY. Defendants attack this point on two bases.
First, Defendant points out that COMPHY is a common misspelling of comfy and that within reviews on its site, COMPHY is used in reference to bedding only nine-percent of the time and used in reference to Plaintiffs goods only slightly more than one-percent of the time. Dkt. # 84 at 11. The Court agrees that use of COMPHY as a search term does not necessarily indicate an intent to search for Plaintiffs products. This is true even in the more limited situation where COMPHY is used in reference to bedding. C.f. Network Automation, Inc. , 638 F.3d at 1150 (consumers searching for the term are presumably looking for its specific product, and not a category of goods).
Second, Defendant provides the results of a study suggesting that consumers are not particularly familiar with Plaintiffs brand such that they associate COMPHY with Plaintiffs products. Dkt. # 84 at 12-14. Specifically, Defendant had an expert conduct a survey which determined that thirteen-percent of consumers regarded COMPHY as referring to a particular source for bedding, but that more than twelve-percent of those consumers also regarded comfort-a non-existent company also presented-as also referring to a particular source for bedding. Id. Plaintiff attacks the utility of Defendants study on several grounds but does not present countervailing evidence. On this record, the Court again agrees with Defendant.
b. Proximity of the Goods and Similarity of the Marks
These factors likely weigh in favor of Plaintiffs potential success. Plaintiff points primarily to Defendants use of COMPHY and COMPHY COMPANY to sell bedding. Dkt. # 81 at 10. Plaintiff further points out that such [a]ural and semantic similarities increase the likelihood of consumer confusion. Dkt. # 81 at 10 (citing Pom Wonderful Ltd. Liab. Co. v. Hubbard , 775 F.3d 1118, 1129 n.9 (9th Cir. 2014) ). The Court agrees, but still finds the strength of the mark to be a highly relevant factor in this regard.
Consider four scenarios:
1) If Defendant uses COMFY to sell Comfy Sheets to a customer who intends to buy Comfy Sheets and has independently chosen to shop on Defendants site, there is no confusion.
2) If Defendant uses COMPHY to sell Comfy Sheets to a customer who intends to merely buy comfortable sheets and has independently chosen to shop on Defendants site, there is no confusion.
3) If Defendant uses COMPHY to sell Comfy Sheets to a customer who intends to buy Comphy Sheets and has independently chosen to shop on Defendants site, there may or may not be confusion. Such a customer may have intended to buy Comphy Sheets and elected instead to buy Comfy Sheets because Defendant-the retailer the customer chose-only sold Comfy Sheets. On the other hand, the customer may have intended to buy Comphy Sheets, seen Comfy Sheets available, and bought Comfy Sheets intending to receive Comphy Sheets.
4) If Defendant uses COMPHY to advertise Comfy Sheets to a customer who intends to buy Comphy Sheets, knows that Comfy Sheets are not the same, and departs Defendants website to find Comphy Sheets elsewhere, there is no confusion.
Only where the customer knows that Comphy Sheets are Plaintiffs sheets is there a possibility of actual confusion. And, the Court can only determine whether a customer knows of Plaintiffs sheets based upon the strength of the mark.
c. Actual Confusion
Plaintiffs strongest argument regards instances of actual confusion. Dkt. # 81 at 11-13. Plaintiff points to three main indices of actual confusion. First, Plaintiff relies on its direct contact with consumers through phone and email. Dkt. # 40. Second, Plaintiff relies on reviews from Defendants website referencing Plaintiff. Dkt. # 41. Third, Plaintiff relies on the Declaration of Michael Shinn, who has extensive experience shopping with Defendant, detailing his experience intending to purchase Plaintiffs sheets, ending up on Defendants website, buying Comfy Sheets, realizing the mistake when the sheets arrived, and returning the Comfy Sheets. Dkt. # 42.
There is no question that Plaintiff presents evidence of actual confusion that is often compelling, including written reviews by verified purchasers. Defendant has little retort for the fact other than to point out that the evidence is only that a small percentage of purchasers indicate they were confused. Dkt. # 84 at 14. Defendant argues that trademark laws tolerate a certain degree of confusion on the part of consumers, especially where an originally descriptive term was selected to be used as a mark. ... If any confusion results, that is a risk the plaintiff accepted when it decided to identify its product with a mark that uses a well known descriptive phrase. Id. at 14-15 (quoting KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc. , 543 U.S. 111, 122, 125 S.Ct. 542, 160 L.Ed.2d 440 (2004) and Cosmetically Sealed Indus., Inc. v. Chesebrough-Ponds USA Co., 125 F.3d 28, 30 (2d Cir. 1997) ). The Court agrees that some actual confusion may exist even if a reasonably prudent consumer would not be confused.
d. Marketing Channels Used
Plaintiff argues that most customers are routed to its site by search results and that Defendant, through keyword advertising with search engines, diverts customers to its own site. Dkt. # 81 at 13-14. There is no dispute that Plaintiff and Defendant both utilize keyword advertising with search engines to drive business to their sites and thus directly compete in this marketing channel. But Plaintiffs primary marketing channels have been identified as word of mouth and first-hand exposure. To the extent this factor is applicable, it favors Plaintiff.
e. Type of Goods and the Degree of Care
Plaintiff argues that its customers are not a certain, specialized, sophisticated group of people and that they are very likely to be confused. Dkt. # 81 at 14. Yet Plaintiff markets itself as a luxury company, relies on customer exposure at luxury spas, hotels, and bed and breakfasts, and its products are not discounted, and are not offered with free shipping. Dkt. # 34 at ¶¶ 2, 19, 26. The Court is not persuaded that Plaintiffs customers are wholly unsophisticated. Multi Time Mach., Inc. , 804 F.3d at 937 (relevant consumer is a reasonably prudent consumer accustomed to shopping online where purchase price is several hundred dollars) (quoting Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610 F.3d 1171, 1176 (9th Cir. 2010) ). This factor is largely neutral.
f. Defendants Intent in Selecting the Mark
Plaintiff argues that Defendant is intentionally confusing consumers to benefit from Plaintiffs reputation and associated goodwill because Defendant has solicited Plaintiff to sell through Defendants platforms. Dkt. # 81 at 14-15. The Court does not find this evidence adequate to draw conclusions beyond the facts that Defendant knew of Plaintiff and solicited a business relationship. Plaintiff has not provided any evidence that the prior business inquiries are related to Defendants current actions. This factor is essentially neutral.
iii. Not Clear that Plaintiff is Likely to Succeed on the Merits
Overall, there are simply too many holes for the Court to conclude, on this limited record, that Plaintiff is likely to succeed on the merits of its trademark infringement claim.
B. False Designation of Origin and Contributory Trademark Infringement Claims
The Court does not find it necessary to analyze Plaintiffs false destination of origin and contributory trademark infringement claims in depth. Plaintiff makes limited arguments and Plaintiffs are not likely to prevail for the same reasons discussed above.
3. Likelihood of Irreparable Harm
Plaintiff bears the burden of demonstrating that irreparable injury is likely in the absence of an injunction. Herb Reed , 736 F.3d at 1249 (quoting Winter , 555 U.S. at 22, 129 S.Ct. 365 ) (emphasis in original). The mere possibility of irreparable harm is too lenient of a standard. Id. Here, the Court does not find that Plaintiff has established a likelihood of irreparable harm.
Plaintiff argues that [e]vidence of loss of control over business reputation and damage to goodwill can establish irreparable harm when grounded in evidence. Dkt. # 81 at 17 (citing Herb Reed , 736 F.3d at 1250 ). While true, Plaintiff fails to equally appreciate that irreparable harm is not established by platitudes that do not establish whether irreparable injury is likely in the absence of an injunction ... [or] whether legal remedies, such as money damages, are inadequate. Herb Reed , 736 F.3d at 1250 (quoting Winter, 555 U.S. at 22, 129 S.Ct. 365 ) (emphasis in original). Here, Plaintiff has not made a sufficient showing that irreparable harm is likely to occur in the absence of a preliminary injunction.
Plaintiff presents two main theories of irreparable harm. First, Plaintiff argues that, through the first half of the year, its online sales are falling short of a growth estimate made before the year. Dkt. # 34 at ¶¶ 29-30. Plaintiff anticipated that its online sales would grow by 34%, but as of the middle of 2018, Plaintiff was only seeing 24.2% growth in its online sales. Id. at ¶ 29. Second, Plaintiff argues that Defendants actions mean Plaintiff loses control over its trademarks, reputation, and goodwill. Dkt. # 81 at 18. Plaintiff argues that customers are left believing that it sells its products on Defendants platforms and believing that the inferior products they receive are Plaintiffs. The Court is not persuaded that either are irreparable harms, that an injunction would prevent the harms, or that final remedies are inadequate.
As pertains to Plaintiffs growth target, Defendant aptly questions whether failing to meet an ambitious growth rate can constitute irreparable harm. Dkt. # 84 at 21. The Court agrees and further finds that Plaintiff has not adequately tied its decreased sales to Defendants actions. Defendants actions could possibly be the sole cause for the reduction in Plaintiffs anticipated sales and an injunction could possibly result in an uptick in sales. But it may not. Indeed, Plaintiff only conveys its belief that it would not fall short of its growth target in the absence of Defendants actions. Dkt. # 81 at 17-20. Lastly, and as Defendant points out, Plaintiff does not demonstrate why money damages are inadequate to remedy a mainly financial harm.
As pertains to Plaintiffs trademarks, reputation, and goodwill, the Court finds that Plaintiff merely asks this Court to presume that irreparable harm is imminent. But misuse of a trademark no longer results in a presumption of irreparable harm. Herb Reed , 736 F.3d at 1250 (evidence of customer confusion does not necessarily imply irreparable harm). Plaintiff presents evidence of consumer confusion and dissatisfaction. Evidence of consumer confusion alone goes primarily to Plaintiffs likelihood of success. Id. When combined with consumer dissatisfaction that may be attributed to Plaintiffs brand, the harm is cognizable but still must be presumed on the record before the Court. Further, Plaintiff does not explain why final remedies cannot adequately remedy any harm to Plaintiffs trademarks, reputation, and goodwill. Indeed, this case appears quite distinct from prior cases where interaction with confused consumers cannot be remedied because those consumers are unknown to the parties. Here, there seems to be a much higher chance that, if liable, Defendant could contact almost every purchaser of the allegedly inferior products and seek to repair any damage that may have been done to Plaintiffs brand.
4. The Court Need Not Consider the Balance of Equities and Public Interest
Because Plaintiff has not established a likelihood of success on the merits or a likelihood of irreparable harm in the absence of an injunction, the Court does not find it necessary to address the balance of equities or whether a preliminary injunction serves the public interest.
5. Defendants Motion to File Documents Under Seal
Defendant has also filed an Unopposed Motion to File Documents Under Seal. Dkt. # 82. Defendant seeks to file its response and certain exhibits under seal to protect Defendants confidential business material. Id. To minimize the material filed under seal, Defendant has filed redacted versions of the documents. Dkts. # 87-# 89. Defendants Motion notes that some information filed under seal was done so at the request of Plaintiff and takes no position on the merits of maintaining the material under seal. Dkt. # 82 at 4. Plaintiff, in conference with Defendant, would not withdraw its confidential designation but has failed to respond in support of maintaining its confidential material under seal.
There is a strong presumption of public access to the courts files. Local Civil Rule 5(g). The party seeking to seal a judicial record must overcome the strong presumption of public access by establishing a compelling reason justifying sealing. Kamakana v. City & Cnty. of Honolulu , 447 F.3d 1172, 1178 (9th Cir. 2006). What constitutes a compelling reason is best left to the sound discretion of the trial court. Center for Auto Safety v. Chrysler Group, LLC , 809 F.3d 1092, 1097 (9th Cir. 2016) (quoting Nixon v. Warner Commcns, Inc. , 435 U.S. 589, 98 S.Ct. 1306, 55 L.Ed.2d 570 (1978) ). However, the trial court must articulate a factual basis for its ruling, without relying on hypothesis or conjecture. Kamakana , 447 F.3d at 1179. Even after finding a compelling reason, [t]he court must then conscientiously balance[ ] the competing interests of the public and the party who seeks to keep certain judicial records secret. Center for Auto Safety , 809 F.3d at 1097 (quoting Kamakana , 447 F.3d at 1179 ) (alterations in original).
The Court concludes that Defendant has met its burden. Defendant has complied with the requirements of Local Civil Rule 5(g), has provided a factual basis supporting its confidential designation, and has limited the amount of material filed under seal. Dkts. # 82 and # 83. Further, the material filed under seal is only tangentially related to Plaintiffs Motion and does not significantly impact the publics interest in and access to judicial records.
The Court concludes that Plaintiff has not met its burden. Local Civil Rule 5(g)(3) specifically provides that Defendant need not justify the sealing of Plaintiffs records, but that the party who designated the document confidential must satisfy [the relevant standards] in its response to the motion to seal or in a stipulated motion. Plaintiffs failure to respond leaves the Court with no factual basis for maintaining Plaintiffs allegedly confidential material under seal.
IV. CONCLUSION
This is not an easy decision. Many of Defendants actions toe exceedingly narrow legal and equitable lines. But, on the record presented by Plaintiff, there are simply too many pitfalls for the Court to map an equitable course. Accordingly, and having reviewed Plaintiffs Motion, the briefing and supplemental filings, the declarations and attached exhibits, and the remainder of the record, the Court finds and ORDERS that:
1. Plaintiffs Second Amended Motion and Memorandum for Entry of Preliminary Injunction (Dkt. # 81) is DENIED.
2. Defendants Unopposed Motion to File Documents Under Seal (Dkt. # 82) is GRANTED IN PART and DENIED IN PART, as indicated above.
a. Defendants Response (Dkt. # 87) and the Declaration of Kim Wilber (Dkt. # 89) shall REMAIN UNDER SEAL.
b. The Clerk shall immediately UNSEAL Exhibit A to the Declaration of Joseph Gratz (Dkt. # 88).
c. No later than seven (7) days from the date of this Order, Defendant shall file an amended version of Defendants Response (Dkt. # 87) that DOES NOT REDACT the material previously redacted on page 2, line 4; page 20, line 27; and page 21, lines 1, 12, 13, and 15. All other redactions may remain.
Plaintiff has requested oral argument, but the Court finds oral argument unnecessary to its resolution of the Motion.
Defendant indicates that it has ceased this practice. Dkt. # 84 at 6. Plaintiff argues that a preliminary injunction is warranted to assure that Defendant does not resume this activity during the pendency of this case. Dkt. # 95 at 1 n.2. The Court believes that Defendant will continue to act in the manner represented to the Court. Regardless, Defendant does not stipulate to a preliminary injunction in this regard and Plaintiff must still meet the standards applicable to the issuance of a preliminary injunction.
To the extent the Ninth Circuit still applies a sliding scale test, see Alliance for the Wild Rockies v. Cottrell , 632 F.3d 1127, 1135 (9th Cir. 2011), Plaintiff only passingly mentions its possible relevancy, and only in its Reply. Dkt. # 95 at 3. Neither party addresses whether Alliance provides for a separate test-a point on which there is some question. See A Womans Friend Pregnancy Res. Clinic v. Becerra , 901 F.3d 1166, 1167 (9th Cir. 2018) (plaintiff may also obtain a preliminary injunction by showing serious questions go[ ] to the merits of its claims and a balance of hardships that tips sharply towards the plaintiff, so long as it makes a showing on the other two factors) (quoting Alliance , 632 F.3d at 1135 ) (emphasis added). In the absence of argument from either party, the Court does not address the question.
Plaintiffs claims would seem more akin to Applied Infor Scis. Corp. if Plaintiff was asserting that Defendants use of COMPHY was interfering with its sale of linens and bedding to luxury hotels, health spas, and bed and breakfasts-the goods specified in its federal registration.
Plaintiff asserts rights to the use of its registered trademark, the COMPHY word mark, the COMPHY COMPANY name, and for the COMPHY SHEETS mark and variations thereof. Dkt. # 81 at 6. The Court does not consider COMPHY SHEETS as Plaintiff presents no evidence that it has ever used those words in conjunction.
Consideration of COMPHY COMPANY or COMPHY CO. may alter the Courts analysis but as Plaintiff addresses them interchangeably, the Court considers the broadest term.
Plaintiff mentions initial interest confusion as a more targeted approach to confusion in contexts such as these. Dkt. # 81 at 8-9. Plaintiff notes that within the Ninth Circuit, initial interest confusion is eliminated by clear labeling. Id. (citing Multi Time Mach., Inc. , 804 F.3d at 938. While Plaintiff makes a brief argument for initial interest confusion, Plaintiff abandons a deeper analysis to consider the Sleekcraft factors. Plaintiff further abandons any mention of initial interest confusion on Reply. Dkt. # 95. The Court therefore does not address the doctrine in depth.
Plaintiff addresses these two Sleekcraft factors in tandem and the Court does so as well.
The Court notes again that its analysis may differ profoundly if the Court were to consider independently (1) Defendants use of keyword advertising to direct consumers to its website by placing ads for Comphy Co. Sheets at Amazon or (2) Defendants use of the search term comphy sheets within its own website to offer consumers comfy brand sheets or other sheets marketed as comfy or comfortable. Network Automation, Inc. , 638 F.3d at 1148 (It would be wrong to expand the initial interest confusion theory of infringement beyond the realm of the misleading and deceptive to the context of legitimate comparative and contextual advertising.). As noted previously, Plaintiff has elected to lump the contexts and uses together, and the Court declines the invitation to scour the limited record to craft a legally defensible injunction.
The Court also does not find the likelihood of expansion of the product lines to be an informative consideration in this case.
In general, compelling reasons sufficient to outweigh the publics interest in disclosure and justify sealing court records exist when such court files might have become a vehicle for improper purposes, such as the use of records to gratify private spite, promote public scandal, circulate libelous statements, or release trade secrets. Kamakana , 447 F.3d at 1179 (quoting Nixon , 435 U.S. at 598, 98 S.Ct. 1306 ).