Vynamic, LLC v. Diebold Nixdorf, Inc.

VYNAMIC, LLC, Plaintiff, v. DIEBOLD NIXDORF, INC., Defendant.

CIVIL ACTION No. 18-577

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

January 15, 2019

MEMORANDUM

Schiller, J.

Just how similar is "VYNAMIC" to "VYNAMIC"? That is the question posed in this trademark infringement case. Vynamic offers digital engagement services that help clients improve their marketing and customer services capabilities. Its focus is in the healthcare realm. Diebold Nixdorf ("Diebold") makes, sells, and services items such as automatic teller machines and point of sale systems. It targets the financial services and retail industries with its hardware and software. Vynamic claims that its mark is strong and there is significant overlap in the parties' target markets such that there is a likelihood of confusion regarding the origin of Vynamic's products. Diebold counters with several arguments. First, Vynamic's mark may be strong in the healthcare industry, the companies focus on different customers and do not compete. Moreover, Diebold contends, the products involved here are expensive and are sold to savvy, sophisticated customers who will not be easily fooled. Additionally, the marks have peacefully coexisted for over a year without any confusion.

The parties have filed cross-motions for summary judgment. The lawyers have done an admirable job, both effectively advocating on behalf of their clients. Both sides have taken reasonable positions in most instances. The law of trademark infringement, however, demands a fact-intensive inquiry. And the records, briefs, and arguments have convinced this Court that there are genuine issues of material fact that preclude granting summary judgment for either side. The Court therefore denies both motions for summary judgment.

I. BACKGROUND

Vynamic's Amended Complaint includes four claims: (1) Lanham Act trademark infringement; (2) Lanham Act Unfair Competition; (3) dilution under Pennsylvania law; and (4) unfair competition under Pennsylvania. Vynamic accuses Diebold of using trademarks that are confusingly similar to its registered trademarks, "VYNAMIC®," "VYNAMIC & Design®," and "I AM VYNAMIC&reg."

A. The Companies

Vynamic is a Connecticut LLC formed on January 1, 2004 by Daniel Calista. (Pl.'s Statement of Undisputed Facts in Supp. of Its Mot. for Summ. J. [Pl.'s SOF] ¶ 2.) The entity was originally named Vynamic Solutions, LLC, prior to changing its name on February 20, 2008. (Id.) Vynamic was acquired by UDG Healthcare, a global healthcare company, in 2017. (Def.'s Resp. to Pl.'s Statement of Undisputed Facts [Def.'s SOF Resp.] ¶ 2.) Plaintiff is currently part of UDG Healthcare's Ashfield Healthcare Division. (Def.'s Statement of Undisputed Facts in Supp. of Its Mot. for Summ. J. [Def.'s SOF] ¶ 30.) Vynamic has approximately 110 employees and total sales of $35.4 million for fiscal year 2017. (Pl.'s SOF ¶¶ 3-4.)

Diebold is an Ohio corporation with 23,000 employees worldwide and total sales of over $4.6 billion for fiscal year 2017. (Id. ¶¶ 17-18, 20.)

Vynamic's primary focus is on clients in the healthcare industry. (Id. ¶ 9.) Indeed, it sometimes uses the slogan "All Healthcare All The Time." (Def.'s SOF ¶ 16.) Its website also includes a healthcare industry tab that states, "We focus exclusively on the healthcare industry." (Id. ¶ 17.) Its clients include GlaxoSmithKline, GMAC, Walmart, Five Below, AstraZeneca, andIndependence Blue Cross. (Pl.'s SOF ¶ 10.) However, Plaintiff does not have an active contract with Five Below or Walmart. (Pl.'s Resp. to Def.'s Statements of Undisputed Facts [Pl.'s SOF Resp.] ¶¶ 22-23.)

According to Vynamic, it "offers services related to digital engagement, including digital messaging and content delivery, and digital engagement across multiple channels." (Pl.'s SOF ¶ 11.) It "helps its clients improve their marketing and customer service capabilities using data-driven digital innovation strategies." (Id. ¶ 12.) It does this through strategic planning, vendor selection and management, process design, systems implementation, and organizational change. (Pl.'s SOF Resp. ¶ 19.) Vynamic also "provides management and implementation services related to mobile applications offered by its clients." (Pl.'s SOF ¶ 13.) Finally, the company "provides project management services for clients looking to expand and improve their digital marketing and consumer engagement strategies across channels such as social media, websites, mobile applications, and text messaging." (Id. ¶ 14.)

Diebold's target audience is "generally substantial operations with dozens or hundreds of locations." (Id. ¶ 45.) It targets financial institutions and retailers. (Def.'s SOF ¶ 52; Def.'s SOF Resp. ¶ 45.) Included in this group is "drug stores, grocery stores, and other sub-segments that use point-of-sale systems." (Def.'s SOF Resp. ¶ 52.) Its market is broad-based and not aimed at specific companies. (Id.) Its customers include Bank of America, J.P. Morgan Chase, Citi Group, HSBC, and PNC. (Def.'s SOF ¶ 60.) Diebold derives no revenue from healthcare companies, does not have employees in the healthcare field, and has not attempted to market its Vynamic software portfolio to the healthcare industry. (Def.'s SOF Resp. ¶ 9.)

Diebold has three lines of business: (1) services, which refers to break and fix services; (2) systems, which refers to hardware such as ATM and point-of-sale machines; and (3) software,which encompasses software portfolios. (Def.'s SOF ¶ 51.)¹ Its products and service offerings are expensive. (Id. ¶ 58.)

Defendant markets its Vynamic software and related services at trade shows, including the National Retail Federation Big Show. (Pl.'s SOF ¶ 50.) According to Plaintiff, some of Vynamic's clients attend this trade show. (Id. ¶ 51.)

B. The Marks

1. Vynamic

Vynamic has used its mark continuously from at least January 2004. (Id. ¶ 7.) Vynamic registered the "VYNAMIC" mark on February 21, 2006, for:

Management services, consulting, planning, project management, and information related thereto; business marketing advice; commercial and business consulting and information thereto; business consulting regarding new ventures and mergers and acquisitions; business analysis; market analysis; business evaluations; economic research and analysis; drafting business expert reports; administrative management of projects in the field of developing, specifying, installing and implementing business solutions; business consulting in the area of trade in technological products; providing information related to consulting in the area of enterprise organization; business consultation and private consultation in the field of executive coaching; the aforementioned services rendered through a nationwide network of resources[.]

(Id. ¶ 5.) Vynamic registered the "VYNAMIC & Design" and "I AM VYNAMIC" marks on February 26, 2013 for: "Business management consulting; Providing information in the fields of business management, business marketing, and business mergers and acquisitions consulting, the foregoing information pertaining to the healthcare industry." (Id.)

2. Diebold

In April of 2017, Diebold hired Brand Acumen Solutions to come up with a new name for its existing suite of banking software. (Pl.'s SOF ¶ 24; Def.'s SOF ¶ 38.) During this rebranding, Diebold elected to include the company's existing retail software suite in the rebranding. (Pl.'s SOF ¶ 26.) Based on Brand Acumen's market research, a list of four possible names, including VYNAMIC, was prepared on June 29, 2017. (Def.'s SOF Resp. ¶ 27; Def.'s SOF ¶ 40.) Alan Kerr, Diebold's Senior Vice President, Software, and Chief Revenue Officer, narrowed the list to two names. (Pl.'s SOF ¶ 28.) The two finalists, one of which was VYNAMIC, were presented to Andreas Mattes, Diebold's CEO, on August 22, 2017, during which time he performed a Google search on the two finalists, only to learn that both names were already being used. (Id. ¶ 31.) This date is the first time Diebold learned of Vynamic. (Id. ¶ 32.) Diebold launched use of DN VYNAMIC and VYNAMIC at a conference on October 23, 2017. (Id. ¶ 47.)

The parties hotly dispute the import of Diebold's internal discussions and decision-making process regarding the selection of the VYNAMIC mark. Because the Court considers Defendant's intent on this subject to be vital to the infringement analysis and because each side will be entitled to present its version to the factfinder, the Court will not spend a great deal of ink on each side's version of the events. Rather, to make two long stories short, there was some concern internally at Diebold about using the VYNAMIC mark and some form of legal counsel was sought after Diebold learned of Vynamic's existence to seek clearance to use the selected mark. (Def.'s SOF Resp. ¶¶ 33-35; Pl.'s SOF Resp. ¶ 43.) However, a trademark search performed by Diebold's inhouse counsel failed to return Vynamic's existing trademark registrations. (Pl.'s SOF ¶ 39.)

Plaintiff sent Defendant a cease and desist letter on October 27, 2017, to which Defendant responded on November 10, 2017. (Def.'s SOF ¶ 48.)

3. The look of the marks

For the viewing pleasure of the reader, here are some examples of the marks. The first example is Defendant's mark, the second example is Plaintiff's mark, and the third example features Plaintiff's on the left and Defendant's on the right.

Image materials not available for display.

II. STANDARD OF REVIEW

Summary judgment is appropriate when the admissible evidence fails to demonstrate a genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). When the movant does not bear the burden of persuasion at trial, it may meet its burden on summary judgment by showing that the nonmoving party's evidence is insufficient to carry its burden of persuasion. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

...