The United States District Court for the District of Colorado refused to grant an injuntion preventing Phillip Morris from using the trademark Altria. The investment company Altira Group sued Phillip Morris after it annonuced on November 15, 2001 that it was changing its corporate name to Altria. Altira Group, an investment firm, had registered the trademark Altira in March of 1998.

Altira's business was providing investment vehicles to high end investors. As a seller of unregulated securites, Altira was limited to securing investments from sophisticated investors, those with a net worth of over $1 million dollars, and is further prevented from soliciting to the general public. Phillip Morris is the largest consumer goods company in the world selling Marlboro cigarettes, Miller beer, and food products under the names Oscar Myer, Kraft, Nabisco and Oreo.

Altira's complaint alleged that Phillip Morris, by using the trademark Altria, had violated the Lanham Act in derogation of its rights in the Altria mark. The Lanham Act provides: any person who uses in commerce any work, term, name, symbol, or device, ..which ..is likely to cause confusion, or to cause mistake, or to decieve as to the affiliation, connection , or association of such person with another person, or as the the origin, sponsorship, or approval of his or her goods, services, or commerical activities by another person... shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. 15 USC 1123(a).

The Court was forced to make a decision on a preliminary injunction, which Altira filed during the pendency of its lawsuit for trademark infringement and unfair competition. In order to grant a preliminary injunction, the person seeking such relief must establish : (1) substantial likelihood that it will prevail on the merits; (2) a showing that it will suffer irreparable injury unless the injunction is granted; (3) proof that the threatened injury to it outweighs whatever damage the proposed injunction may cause to the enjoined party; and (4) a showing that the injunction, if issued, would not be adverse to the public interest.

The case had an interesting twist, because the junior user Phillip Morris is a much larger company that the senior user Altira. Thus the case was not the typical "forward confusion" case where the junior user of the mark is seeking to elevate itself by associating with a more established company; but instead, in this matter the senior user was alleging that use by the junior user would injure it by causing confusion to its customers, and by associating its mark with a company known for tobacco products. "Reverse confusion", occurs where a large junior user saturates the market with a trademark similar or identical to that of a smaller, senior user. In such a case, the junior user does not seek to profit from the goodwill associated with the senior user's mark. Nonetheless the senior user is injured becase the public comes to assume that the senior user's products are really the junior user's or that the former has become somehow connected to the later. Sands Talyor and Wood Co. v Quaker Oats Co. 978 F. Ed 947 (7th Cir 1992).

The Court's analysis focused on the likelihood of success factor contained in preliminary injuntion test. Specifially the court ruled that because Altira and Altria are words without independent meaning in the English language, the sight and sound analysis of trademark infringement militated in favor of the Plaintiff and that use of both words would cause confusion on that basis.

As part of the larger decision on whether Altira could demonstate a likelihood of success on the merits, the Court was confronted with the question of what test for intent to infringe should be used in a reverse confusion case. The Court rejected Phillip Morris's contention that the normal intent test in forward confusion cases should be applied. In those cases, the plaintiff must prove that the defendent had the intent to derive benefit from the reputaton or goodwill of the plaintiff. The Court agreed with the Plaintiff that this test should not be used in reverse confusion cases. The Court found that insisting on the forward intent test would immunize from liability the well established company that had the economic power to extensively advertise a product name which was confusingly similar to a competitor's name.

The Court decided that the test in reverse confusion cases is whether the defendant acted carelessly or otherwise culpably in selecting the allegedly infringing mark. However, while deciding with Altira on the standard to be used the Court nevertheless found that they could not meet this test for intent to infringe, because Phillip Morris demonstrated that it conducted a thorough trademark search after selecting its name, and that corporate cousel for Philip Morris were of the opinion that the proposed mark did not infringe on the Altira mark.

Another part of the trademark infringment analysis is evidence of actual confusion. Since Phillip Morris had not acutally started using the mark, the Court recognized that the Plaintiff would be hard pressed to demonstrate acutal confusion. The Court stated that evidence that one potential customer of the plaintiff did an internet seach and was temporarily confused by the proposed Phillip Morris mark, was not sufficient to find that this factor went in favor of the Plaintiff. The Court also noted that the Plaintiff could have done a survey to bolster its proof on that point.

Next the Court was required to analyze the relation in use of the products and the means by which the parties market the products. While Phillip Morris does have a capital leasing division, it does not engage in venture capital activities of the nature that Altira concentrates on, and the evidence at hearing was that Phillip Morris did not intend to use the mark in that aspect of its business.

The degree of care likely to be exercised by the purhcasers is another factor to be analyzed in a deciding the likelihood of confusion. In this matter, the customers of the Plaintiff were all extremely sophisticated investors, and the Court found that the potential confusion caused in the minds of prospective customers of the Plaintiff was mere conjecture.

The fact that the case was one involving revese confusion also compelled the court to decide which test to use when trying to analyze the strength of the marks involved. Phillip Morris argued that the court should analyze the strength of the senior user's mark, while Altira argued that the junior user's mark should be analyzed. The Court decided once again with the Plaintiff as to which analysis to use, finding that in reverse confusion cases the strength of the junior user's mark should be analyzed in order to determine its ability to overpower that of the senior user. The Court also found that the economic power of Phillip Morris lead to the conclusion that their Altria mark would be strong, and the Court therefore found that this factor wieghed in favor of the Plaintiff.

In balancing the factors regarding the trademark infringement claim, the Court found that Altira had failed to establish a likelihood of success on the merits of its reverse confusion claim under the Lanham act. The Court nonetheless analyzed the other elements of the test for an injuction.

The Court was understanding of Altira group's argument that it would suffer irreparable inujury if the injuction was not granted. The economic power Phillip Morris would place behind the new mark, and the potential taint of the Plaintiff's Company with the tobacco image. However, because of the fact that at that stage of the litigation there was no indication that Phillip Morris' use of its proposed name was unlawful, the potential harm to the Plaintiff was not great enough, particilary given the fact that the name change could ultimately be retracted if they won the underlying claim. Finally, the balance of harm did not favor the Plaintiff because Phillip Morris would also be harmed by having to delay or scrap its planned name change.

Copyright 2003, The Gauss Law Firm.