3M Co. v. Nationwide Source Inc., Case No. 20-cv-2694 (WMW/KMM)

3M Company, Plaintiff, v. Nationwide Source Inc., Defendant.

Case No. 20-cv-2694 (WMW/KMM)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

January 15, 2021

ORDER GRANTING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTIVE RELIEF

This matter is before the Court on Plaintiff 3M Company's (3M) motion for a temporary restraining order and preliminary injunctive relief against Defendant Nationwide Source Inc. (Nationwide). (Dkt. 5). For the reasons addressed below, the Court grants 3M's request for a preliminary injunction.

BACKGROUND

3M is a Delaware corporation that manufactures healthcare and safety products for industries and consumers worldwide. As a result of the COVID-19 pandemic, a high demand exists for 3M's N95 respirator products (N95 masks). To keep them safe while working to mitigate the effects of the pandemic, first responders, healthcare professionals and other frontline workers depend on 3M's N95 masks. In order to meet the rising demand for N95 masks, 3M has increased its annual production of N95 masks to approximately 2 billion.

Nationwide is a Florida corporation with a principal place of business in Delray Beach, Florida. Incorporated in May 2020, Nationwide is in the business of selling healthcare products, including N95 masks.

3M commenced this trademark-infringement action against Nationwide on December 30, 2020. 3M's complaint alleges that Nationwide is using 3M's registered trademarks to advertise and sell counterfeit 3M-branded N95 masks. Most notably, 3M alleges that Hennepin County Medical Center (HCMC), believing that Nationwide was an authentic vendor of 3M products, purchased more than 10,000 counterfeit masks made by Nationwide and paid 625 percent more than 3M's standard price for authentic N95 masks. 3M alleges that Nationwide's activities were unlawful and endangered the lives of essential medical workers.

3M brings nine claims for relief, including five federal claims under the Lanham Act. 3M's first and second claims allege that Nationwide is engaging in trademark counterfeiting and infringement, in violation of 15 U.S.C. § 1114(1), by using spurious designations on its products that are identical to 3M's federally registered trademarks. 3M's third claim alleges that Nationwide is engaging in unfair competition, false endorsement, false association, and/or false designation of origin, in violation of 15 U.S.C. § 1125(a)(1)(A), by falsely representing its products as being affiliated with, connected to, or endorsed by 3M. 3M's fourth claim alleges that Nationwide is engaging in trademark dilution, in violation of 15 U.S.C. § 1125(c), by using 3M's trademarks in the sale of counterfeit products. 3M's fifth claim alleges that Nationwide is engaging in false advertising, in violation of 15 U.S.C. § 1125(a)(1)(B), by making statements to the generalpublic and medical health professionals that contain false, misleading, and/or deceptive statements about the nature and quality of the products Nationwide has for sale.

3M's remaining four claims allege violations of Minnesota state law. 3M's sixth claim alleges that Nationwide is engaging in unlawful trade practices, in violation of Minnesota Statutes § 325D.44, by using 3M's trademarks in a way that is likely to cause confusion among consumers as to the origin and nature of products for sale. 3M's seventh claim alleges that Nationwide is engaging in trademark infringement, in violation of Minnesota Statutes § 333.28, by using 3M's trademarks in a way that is likely to deceive the public as to the nature of Nationwide's and 3M's relationship. 3M's eighth claim alleges that Nationwide is engaging in trademark dilution, in violation of Minnesota Statutes § 333.285, by using 3M's trademarks in the advertising and sale of counterfeit products. 3M's ninth claim alleges that Nationwide is violating the Minnesota Consumer Fraud Act, Minnesota Statutes § 325F.69, by using false pretenses and misrepresentations with the intent that others will rely upon them in connection with the sale of merchandise.

On December 30, 2020, 3M filed the pending motion for a temporary restraining order and preliminary injunctive relief. 3M seeks to enjoin Nationwide from using 3M's trademarks on any goods or services, including, but not limited to, 3M-branded N95 masks. Nationwide has not responded to 3M's motion.

ANALYSIS

Federal Rule of Civil Procedure 65 authorizes a district court to grant injunctive relief in the form of a preliminary injunction or temporary restraining order. When determining whether preliminary injunctive relief is warranted, a district court considersthe four Dataphase factors: (1) the probability that the movant will succeed on the merits, (2) the threat of irreparable harm to the movant, (3) the balance between this harm and the injury that an injunction would inflict on other parties, and (4) the public interest. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981). "A preliminary injunction is an extraordinary remedy," and the party seeking injunctive relief bears the burden of establishing that each factor favors granting such relief. Roudachevski v. All-Am. Care Ctrs., Inc., 648 F.3d 701, 705 (8th Cir. 2011). The core question in this analysis "is whether the balance of equities so favors the movant that justice requires the court to intervene to preserve the status quo until the merits are determined." Dataphase, 640 F.2d at 113.

3M moves for both a temporary restraining order and preliminary injunctive relief. The legal standards for a temporary restraining order and a preliminary injunction are the same. See S.B. McLaughlin & Co. v. Tudor Oaks Condo. Project, 877 F.2d 707, 708 (8th Cir. 1989); Wachovia Sec., L.L.C. v. Stanton, 571 F. Supp. 2d 1014, 1031 (N.D. Iowa 2008) ("As this court has explained in past cases, it is well-settled in this circuit that applications for preliminary injunctions and temporary restraining orders are generally measured against the same factors, which were set forth in the seminal decision in Dataphase. . . ."). A court "may issue a preliminary injunction only on notice to the adverse party." Fed. R. Civ. P. 65(a)(1). Because Nationwide is on notice of the pending motion and was given an opportunity to respond, the Court will evaluate whether a preliminary injunction is warranted.

I. Likelihood of Success on the Merits

3M contends that it is likely to succeed on the merits because 3M has valid registered trademarks and Nationwide's conduct involves counterfeit N95 masks that are likely to cause confusion.

In deciding whether to grant a preliminary injunction, the "likelihood of success on the merits is most significant." S & M Constructors, Inc. v. Foley Co., 959 F.2d 97, 98 (8th Cir. 1992). The moving party need not "prove a greater than fifty per cent likelihood that [it] will prevail on the merits," Dataphase, 640 F.2d at 113, rather the moving party must demonstrate a "fair chance of prevailing," Paisley Park Enters. v. Boxill, 253 F. Supp. 3d 1037, 1043 (D. Minn. 2017) (internal quotations marks omitted).

In the present case, 3M's primary claim for relief is a federal trademark-infringement claim pursuant to the Lanham Act, 15 U.S.C. § 1114(1). To establish a claim for trademark infringement, 3M must show that: (1) it has a valid, protectable trademark, and (2) the unauthorized use of that trademark creates a likelihood of confusion. See Davis v. Walt Disney Co., 393 F. Supp. 2d 839, 843 (D. Minn. 2005). The Court addresses each element in turn.

A. Valid and Protectable Trademark

3M contends that its trademark registrations demonstrate conclusive evidence of 3M's ownership of valid federal trademarks.

After a trademark is registered with the United States Patent and Trademark Office (USPTO) and the mark has become incontestable, "the registration shall be conclusive evidence of the validity of the registered mark and of the registration of the mark, of theregistrant's ownership of the mark, and of the registrant's exclusive right to use the mark in commerce." 15 U.S.C. § 1115(b). To make a trademark "incontestable," after registration, the owner of the mark must have used the mark continuously for five consecutive years and have filed an affidavit of incontestability with the USPTO within one year after any five-year period of continuous use. 15 U.S.C. § 1065. 3M has provided persuasive evidence in support of its representation that it has made its marks incontestable.

Accordingly, 3M is likely to establish that it has a valid and protectable trademark, the first element in a federal trademark-infringement claim.

B. Unauthorized Use that Creates a Likelihood of Confusion

The second element of a federal trademark-infringement claim is whether the unauthorized use creates a likelihood of confusion among consumers. 3M alleges that Nationwide's use of 3M's trademarks creates a likelihood of confusion among consumers. Courts consider six factors to determine whether a likelihood of confusion exists: "(1) the strength of the owner's mark; (2) the similarity of the owner's mark and the alleged infringer's mark; (3) the degree of competition between the products; (4) the alleged infringer's intent to 'pass off' its goods as the trademark owner's; (5) incidents of actual confusion; and, (6) the type of product, its cost, and conditions of purchase." Everest Cap. Ltd. v. Everest Funds Mgmt., L.L.C., 393 F.3d 755, 759-60 (8th Cir. 2005). The Court addresses each factor in turn.

1. Strength of Plaintiff's Mark

3M alleges that its trademarks are both conceptually and commercially strong because of the uniqueness of the 3M name and global recognition of the 3M commercial brand.

"A strong and distinctive trademark is entitled to greater protection than a weak or commonplace one." SquirtCo. v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir. 1980). A trademark's strength is measured by both the mark's conceptual and commercial strength. Lovely Skin, Inc. v. Ishtar Skin Care Prods., LLC, 745 F.3d...