IN THE UNITED STATES DISTRICT COURT
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`FOR THE WESTERN DISTRICT OF NORTH CAROLINA
`CHARLOTTE DIVISION
`CIVIL ACTION N0.: 3:08-CV-003-47—GCM
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`BSN MEDICAL, INCL, a Delaware
`Corporation, and BSN MEDICAL GMBH,
`Plaintiffs,
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`V.
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`ART WITKOWSKI, GROUPHUG
`PRODUCTIONS, INC. d/b/a HEALTHY
`LEGS and HEALTHY LEGS AND FEET
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`T001,
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`Defendants.
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`DEFAULT JUDGMENT AND
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`PERMANENT INJUNCTION
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`This matter is before the Court on the motion of plaintiffs BSN medical, Inc. and BSN
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`medical Gmbi-I (together, “BSN”) for default judgment and permanent injunction. The Court,
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`having conducted a hearing on November 19, 2008,] and having considered the applicable law
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`and the evidence of record, GRANTS plaintiffs’ motions, and makes the following Findings and
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`Fact and Conclusions of Law:
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`1.
`2.
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`This Court has jurisdiction over the parties and the subject matter.
`Defendants have failed to appear or otherwise defend in this action, and pursuant
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`to the motion of plaintiffs and the declaration of plaintiffs’ attorney, default was entered on
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`October 29, 2008.
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`3.
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`BSN has moved the Court for entry of default judgment and a permanent
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`injunction. Because defendants have defaulted, the Court accepts plaintiffs’ allegations against
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`' Defendants were in default at the time of the hearing and accordingiy were not given notice. See Fed. R. Civ. P.
`5(a)(2). Defendants did not appear at the hearing.
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`them as true. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001). The
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`record before the Court therefore demonstrates that BSN is entitled to entry of final judgment
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`and a permanent injunction.
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`4.
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`BSN is a manufacturer of rnedicai hosiery products, which it sells under the
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`trademark and service mark 3OBST®. Plaintiff BSN medical Gmblri is the owner of several
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`trademarks registered with the United States Patent and Trademark Office under U.S. Reg. Nos.
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`72430035, 72173006, and 72091803, which it licenses to BSN medicai, Inc. BSN selis its
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`JOBS"i‘® products through distribution agreements for resale to consumers.
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`5.
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`Defendant Grouphug is operated by defendant Art Witkowski and does business
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`as Healthy Legs and Feet Too! and Healthy Legs. Defendants operate for—profit websites
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`offering for sale a variety of leg health products.
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`in 2003, defendants entered into a distribution
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`agreement (the “/agreement”) with BSN,2 which authorized defendants to represent thernseives
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`as authorized dealers of JOBST® and licensed them to use BSN’s JOBSTCRD wordmark,
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`trademarks, and service marks (the “JOBST® Marks”). The Agreement exprcssiy provided, that
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`“[a]ll inteiiectuai property rights that [defendants] are authorized to use are forfeited immediately
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`upon termination of [defendants’} status as a Jobst Dealer or Distributor .
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`.
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`. and the images must
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`be returned to [Jobst] within thirty (30) days of such termination, at [Healthy Legs’] expense.”
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`6.
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`BSN terminated the Agreement on August 8, 2007. Since that time, there has
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`been no association or affiliation between defendants and BSN. Despite the termination,
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`however, defendants have engaged in a pattern of unauthorized use of the JOBST® Marks.
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`7.
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`When defendants continued to use the IOBST® marks foilowing termination of
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`the Agreement, BSN sent defendants a cease and desist letter in October 2007, informing
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`2 Defendants originaiiy executed the Agreement with BSN-Jobst, Inc. the predecessor—in—interest to BSN rnedicai,
`Inc. A materiaiiy identical agreement was executed between defendants and BSN medical, Inc. on or about May 23,
`2007.
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`2
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`defendants it would initiate legai action if defendants continued their use of the }OBST® Marks.
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`In response, defendants agreed with BSN to cease their unauthorized use of the .iOBST® Marks
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`and to execute a settiement agreement. Although they ceased nearly ali uses the JOBST®
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`Marks, the defendants failed or refused to execute the settlement agreement in November 2007.
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`Because defendants had substantialiy complied with BSN’s demands that they cease using the
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`JOBST® Marks, BSN did not file suit at that time.
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`8.
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`Defendants resumed widespread unauthorized use of the JOBST® Marks in the
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`Spring of 2008. In the Spring and Summer of 2008, and after the filing of this lawsuit,
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`defendants’ website, Www.hea1thy1egs.com, represented to site Visitors that it was affiliated with
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`$OBST® products. Among other things, defendants’ website copied verbatim the following
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`ianguage from the J€)BST® product website, wwwjobst-usa.com:
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`o
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`“iobst is committed to total satisfaction for its recornrnenders and wearers. That is
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`why each product comes with our unique Total Satisfaction Guarantee.”
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`o
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`“For over 50 years, IOBSTGB is dedicated to meeting your needs. We offer the
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`highest quality products that range from medical hosiery to bandages. We research
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`our products to make sure they meet our promise of the highest efticacy.”3
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`These statements falseiy implied that defendants’ website and JOBST® are operated by a single
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`entity, permitting defendants to trade off BSN’s consumer goodwili associated with the JOBST®
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`Marks and products.
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`9.
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`When BSN iearned that defendants were again making extensive use of the
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`IOBST® Marks and faisely implying that they were affiliated with or endorsed by BSN, it sent
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`defendants another cease and desist letter, to which defendants failed or refused to respond,
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`3 Defendants tater modified the second sentence of this statement to read “Jobst offers the highest quality products
`that range from medical hosiery to bandages” before removing it from their website.
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`3
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`although they made several changes to their website. The present lawsuit and motion for default
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`judgment and permanent injunction foilowed.
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`10.
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`The Court finds that entry ofjudgment on plaintiffs’ trademark infringement and
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`unfair competition claims is appropriate. In order to prove trademark infringement and unfair
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`competition under the Lanharn Act, plaintiffs must prove (i) that they have a valid and
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`protectable mark and (2) that defendants’ use of a colorable imitation of that mark is likely to
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`cause confusion among consumers. Lone Star Steakhouse & Saloon, Inc. 12. Alpha of Virginia,
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`Inc, 43 F.3d 922, 930 (4th Cir. 1995).
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`ii.
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`The first prong of this test is satisfied here by Plaintiff‘ S registration of the
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`JOBS"l“® Marks with the United States Patent and Trademark Office. See US. Search, LLC v.
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`US Searchcom, Inc, 300 F.3d 517, S24 (4th Cir. 2002).
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`12.
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`The Court also finds that defendants’ use of the .l0BST® Marks is iikely to cause
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`confusion among consumers. Defendants’ use of the terms “we” and “our” on their website in a
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`manner that faisely implies that defendants are affiliated with BSN or are authorized JOBST®
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`distributors will confuse consumers concerning (1) the origin of the products provided by
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`defendants in connection with the J()BST® Marks, in that customers and potential customers are
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`likely to believe that such products are provided by, sponsored by, approved by, licensed by,
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`affiliated or associated with, or in some other way legitimately connected to plaintiffs; and (2)
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`the relationship between defendants and plaintiffs, in that customers and potential customers are
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`likely to believe that there is a sponsorship, approval, licensing, affiliation, association, or some
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`legitimate connection between them. Numerous courts have concluded that that “continued
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`trademark use by one whose trademark license has been cancelled satisfies the iikelihood of
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`confusion test and constitutes trademark infringement.” Burger King Corp. 1:. Mason, 710 F.2d
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`1480, 1493 (1 1th Cir. 1983), cert‘. denied, 465 U.S. 1102 ( 1984); See also U.S. Structures, Inc. v.
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`J.P. Structures, Inc, 130 F.3d 1185, 1190 (6th Cir. 1997). Likewise, a former distributor’s use
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`of a trademark that falsely suggests it is part of a manufacturer’s authorized dealer network
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`creates consumer confusion and constitutes infringement. See, :2. g., Australian Gold, Inc. v.
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`Hatfield, 436 F.3d 1228, 1238-41 (10th Cir. 2006); Bemina 0fAm., Inc. v. Fashion Fabrics Int ’l,
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`Inc, No. 01-C-585, 2001 WL 128164 (ND. Ill. Feb. 9, 2001).
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`13.
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`The Court likewise concludes that judgment should be granted on plaintiffs’
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`copyright infringement claim.
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`in order to prove copyright infringement, BSN must show that it
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`has a valid copyright that defendants have copied without authorization. Towler v. Sayles, 76
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`F.3d 579, 581 (4th Cir. 1996). Both eiements are satisfied here. BSN owns a valid copyright for
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`the content of its website, wWw.jobst—usa.corn. And, as detaiied above, defendants have used
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`statements copied directly from BSN’s website on their own website without authorization.
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`E4.
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`The Court further concludes that judgment is appropriate on plaintiffs’ breach of
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`contract claim. In executing the Agreement, defendants agreed that in exchange for the valuable
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`right to use the 3OBST® Marks, “[a]ll intellectual property rights that [defendants] are
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`authorized to use are forfeited immediately upon termination of [defendants’] status as a
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`JOBST® Dealer or Distributor.” By continuing to use the JOBST® Marks on their website and
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`by holding falsely representing that they are endorsed by or affiliated with BSN’s IOBST®
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`products, defendants are in breach of the Agreement.
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`15.
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`Plaintiffs have aiso moved for a permanent injunction. The grant of permanent
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`injunctive relief lies within the equitable discretion of the Court. Christopher Phelps & Assocs,
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`LLC v. Galloway, 492 F.3d 532, 543 (4th Cir. 2007). In order to obtain a permanent injunction,
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`plaintiffs must proof that (1) they suffered an irreparable injury; (2) the remedies available at
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`iaw, such as monetary damages, are inadequate compensation for that injury; (3) considering the
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`balance of hardships between the parties, equitable relief is warranted; (4) the public interest
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`would not be disserved by a permanent injunction. Id.
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`16.
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`The Court finds that BSN has demonstrated that it has suffered irreparable harm
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`as the result of defendants infringement of plaintiffs’ trademarks, copyrights, and breaches of the
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`distribution agreement, and that monetary damages are inadequate compensation for that harm.
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`The Fourth Circuit has recognized that “In Lanham Act cases involving trademark infringement,
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`a presumption of irreparable injury is generaliy applied once the plaintiff has demonstrated a
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`likelihood of confiision.” Scotrs Ca, 315 F.3d at 273; see also Lone Star, 43 F.3d at 939 (4th
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`Cir. 1995) (recognizing that “irreparable injury regularly follows from trademark infringement").
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`As explained above, BSN has demonstrated that defendants‘ conduct is likely to confuse
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`consumers viewing defendants’ websites into believing that defendants are affiliated with,
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`licensed by, or in some other way approved or authorized by BSN, when in fact no such
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`reiationship exists.
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`17.
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`irreparable injury also foiiows from defendants’ infringement of BSN’s
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`copyrights in the content of the JOBST® product website, www.jobst—usa.corn. “irreparable
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`injury often derives from the nature of copyright violations, which deprive the copyright holder
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`of intangibie exciusive rights.” Christopher Phelps, 492 F.3d at 544. For the same reason,
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`irreparable injury follows from defendants’ breaches of the distribution agreement.
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`18.
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`Consideration of the balance of hardships between the parties also leads to the
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`conclusion that injunctive reiief is appropriate.
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`In this case, if an injunction does not issue, BSN
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`wiil suffer irreparable harm in the form of consumer confusion and resulting loss of sales and
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`goodwiil. Defendants wiil suffer the harm of being prohibited from falsely representing to
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`6
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`consumers that they are affiliated with or endorsed by BSN, and of being prohibited from trading
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`off of the JOBST® brand name. In light of defendants’ demonstrated history of infringement,
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`the Court concludes that that harm to defendants caused by this injunction does not outweigh the
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`harm to BSN if defendants’ conduct is not enjoined.
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`19.
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`Finaliy, the Court determines that the pubiic interest lies squarely in favor of
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`enjoining defendants’ conduct, since it is the public that is deceived and confused by defendants’
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`false designation of source or sponsorship. “In a trademark case, the public interest is ‘most
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`often a synonym for the right of the public not to be deceived or confused.’ .
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`.
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`. Where a
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`iikeiihood of confusion arises out of the concurrent use of a trademark, the infringer’s use
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`damages the public interest.” S&R, 968 F.2d at 379 (quoting Opticians Ass ’n, 920 F.2d at 197~
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`98)). If an injunction is not issued here, the public wiil be at risk of suffering deception and
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`confusion as the result of defendants’ unauthorized and misleading uses of the JOBST® Marks
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`on their website, which is not sponsored or affiliated in any way with BSN or its JOBST®
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`products.
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`20.
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`Accordingly, the Court concludes that a permanent injunction is the appropriate
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`remedy. The fact that defendants have ceased some of their infringing conduct does not alter this
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`conclusion. “[I]t is well established that the voiuntary discontinuance of chalienged activities by
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`a defendant does not necessarily moot a iawsuit.” United States v. Jones, 136 F.3d 342, 348 (4th
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`Cir.l998) (internal citation omitted); see also Elvis Presley Enters, Inc. v. Capece, 141 F.3d 188,
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`198 (5th Cir. 1998) (“Ceasing the infringing activity does not aliow an infringing party to escape
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`liability”) (internal quotation and citation omitted). Although an injunction is unnecessary when
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`“there is no reasonable expectation that the wrong will be repeated,” a defendant resisting an
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`injunction bears a “heavy burden” of demonstrating this exception. Lyons Leadership, LP. v.
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`7
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`Morris Costumes, Inc. , 243 F.3d 789, 800 (4th Cir. 2001) (internal quotations and citations
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`omitted). As the defendants have faiied to appear in this action, and have promised in the past to
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`discontinue their infringing activities, only to resume them after the threat of a lawsuit had
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`apparentiy passed, the Court concludes that application of the exception here is inappropriate.
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`WHEREFORE, it is ORDERED, ADJUDGED AND DECREED that plaintiffs shall
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`have judgment against the defendants, and further that:
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`1.
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`Defendants Art Witkowski and Grouphug Productions, Inc. d/b/a Heaithy Legs and
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`Heaithy Legs and Feet Tool, their officers, agents, servants, employees, representatives and
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`attorneys, and any other person in active concert or participation with them, are enjoined from:
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`a. Committing any acts of unfair competition, inciuding, but not Eirnited to:
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`i.
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`implying a false designation of origin or a false description or representation
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`with respect to BSN’s JOBST® Marks;
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`ii. Passing off or inducing or enabling others to sell or pass off goods/services
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`that are not BSN’s goods as those of BSN;
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`b. Committing any acts of trademark infringement, including, but not Iirnited to:
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`i. Using the JOBST® Marks as a keyword or adwords in any part of any website
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`operated by or affiliated with defendants, including but not limited to their use
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`in such websites’ text, HTML heading tags, links, page title, aiternative text or
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`meta tags;
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`ii. Paying for the use of any JOBST® Marks as a keyword or adword with any
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`Internet Search engine, including, but not limited to, Google, Yahoo, and
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`Askcom;
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`8
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`iii. Committing any acts or making any representation caiculated to cause
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`members of the trade or purchasing public to believe that defendants’ goods
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`are the goods of BSN or are sponsored by or associated with, or reiateci to, or
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`connected With, or in some way endorsed or promoted by BSN or under the
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`supervision or control of BSN;
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`iv. Committing any acts or making any representation calculated to cause
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`members of the trade or purchasing public to believe that defendants are
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`sponsored by or associated with, or reiated to, or connected With, or in some
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`way endorsed or promoted by BSN or under the supervision or control of
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`BSN;
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`c. Committing any acts of copyright infringement, including, but not limited to, using
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`any copyrighted portion of BSN’s JOBST® product website, www.jobst-usa.com, on
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`their websites without the permission of BSN;
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`(1. Making any statements on promotional materials or advertising for defendants’ goods
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`that are false or misleading as to those goods’ source or origin;
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`e. Committing any acts, making any representations, or using any designation that is
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`iikely to disparage, tarnish or dilute the distinctive quality of BSN’s .lOBST® Marks;
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`f. Trading off the .lOBST® Marks in any way, including, but not limited to, using the
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`fOBST® Wordrnark or the .lOBST® stylized mark on or within any part of any
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`website operated by or affiliated with defendants.
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`2.
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`Furthermore, the Court ORDERS that defendants Art Witkowski and Grouphug
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`Productions, Inc. d/b/a Healthy Legs and Healthy Legs and Feet Tool, their officers, agents,
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`servants, employees, representatives and attorneys, and any other person in active concert or
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`9
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`participation with them, shall prominently display the following disclaimer on every page of
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`every website on which defendants display the JOBST® Marks: “This website is not licensed,
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`approved, endorsed, or otherwise affiliated with JOBST® or its manufacturer, BSN medical,
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`inc, and is not an authorized reseller of any JOBST® products.” This disclaimer shall be
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`displayed in typeface at least as large as that of the largest lettering on each page.
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`3.
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`Defendants shall immediately return all images obtained from plaintiffs upon execution
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`of the Agreement, as required by the Agreement.
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`4.
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`Within thirty (30) days after issuance of this Judgment, defendants are required to tile
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`with the Clerk of this Court and serve on plaintiffs a regort, in writing and under oath, setting
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`forth in detail the manner and form in which defendants have complied with the foregoing
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`injunction.
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`5.
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`Plaintiffs shall recover from defendants their reasonable attorney’s fees and the costs of
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`_
`. 114%,
`l n. Graham C. Mullen
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` .
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`this action.
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`7/5
`This thegi day ofNovember, 2008.
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`Senior United States District Judge
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`10