ICANN announced recently that it has begun negotiations with an applicant for another ‘sponsored’ (non-open) top level domain, .XXX.

There has been a fair amount of coverage, for and against.

My initial reaction is (with the proviso that the public information to assess these things is always insufficient): .XXX seems plausible for what it is but it isn’t what many probably think it is.

First, the basics.  The applicant is the ICM Registy of Jupiter, Florida.  The sponsoring organization is  The International Foundation for Online Responsibility.  The back-end provider appears to be Afilias (the .info registry, which itself is a consortium of many registrars).  ICM estimates that it will register 500,000 such names so the usual suspects stand to make some money.

The application is here.  It states as its purpose:

 The .xxx TLD is intended primarily to serve the needs of the global online adult-entertainment community. The online adult-entertainment community is defined as those individuals, businesses, and entities that provide sexually-oriented information, services, or products intended for consenting adults or for the community itself. The terms “adult-entertainment” and “sexually-oriented” are intended to be understood broadly for a global medium, and are not to be construed as legal or regulatory categories.  Rather, the referenced Community consists generally of websites that convey sexually-oriented information and for which a system of self-identification would be beneficial.

 

 

 The application goes on to indicate that benefits include:

 “potential defenses in domain-related litigation, enhanced acceptance by search-engines and therefore increased functionality, better opportunities to negotiate with credit card and transaction providers, and new marketing opportunities.”

 

And that’s the key to understanding this.  This TLD is intended to be a trade association and is not a form of regulation.

 

.XXX (and I, for purposes of this conversation) sidestep the hottest hot button issue with porn which is whether it is immoral. 

 

But .XXX also sidesteps other hot button issues.  Consider the various ‘harms’ associated with ‘adult content’:

 

1.  Exposure of porn to minors;

2.  Involuntary exposure to adults, through misleadingly labeled sites, ‘dropped’ domain names, spam, ‘cloaked’ search engines results, etc.;

3.  Workplace exposure;

4.  Harm to consumers (i.e. credit card theft);

5.  Harm to sex industry workers.

 

It seems that the idea of a voluntary .XXX TLD will have little or no effect on issues 1 to 3 and seems only targeted at 4 and 5.

 

It’s true that filtering will be made easier if an ISP can block anything containing an .XXX but of course if someone’s business (or scam) is based on deception of some form, they aren’t going to migrate to .XXX (cf. FTC bulletin “Requiring “ADV” Labeling for Commercial E-Mail Won’t Reduce Spam “  If adolescents (or employees) behind a .XXX filter want to access porn, then it won’t matter that 50% or 95% of the porn in the world has been blocked.

 

To its credit, ICM Registry doesn’t really push filtering as a selling point for .XXX (at least not in its application).  IFFOR does make statements that it wishes to combat child pornography.  I don’t think the TLD itself will do that, maybe giving money to IFFOR will.

 

THe TLD actually targets harms to consumers and to industry workers (which of course serves a public interest).  The registry seeks to become something of a better business bureau for the online sex industry, as it promises to  ‘incorporate a best business practices provision into the registrant’s domain name registration agreement and will develop compliance mechanisms to address non-adherence.’  So perhaps there would be some harm reduction on that score.

 

As to whether ICANN should be doing content-oriented TLDs like this at all, there is much discussion on, for example, ICANNWatch.

 

As to whether Congress may be seek to push all adult content into this TLD, maybe.

 

As to how not to do a voluntary inclusion zone, see .KIDS.US.

 

As to how it affects you?  Probably not that much.

 

 

 

“Bronco Wine Company and Barrel Ten Quarter Circle, Inc. filed a petition for writ of mandate, invoking our original jurisdiction. It seeks declaratory and injunctive relief barring application of the labeling requirements of Business and Professions Code section 25241 to wines produced by Bronco that are destined for interstate commerce because the section is in conflict with Bronco’s federally approved certificates of label approval (COLA)”

from:

BRONCO WINE COMPANY et al., Petitioners, v. JERRY R. JOLLY, as Director, etc., et al., Respondents; NAPA VALLEY VINTNERS ASSOCIATION, Intervenor. C037254 , COURT OF APPEAL OF CALIFORNIA, THIRD APPELLATE DISTRICT , 129 Cal. App. 4th 988;2005 Cal. App. LEXIS 861, (May 26, 2005, as modified June 20, 2005).

 

From Debevoise press release:

Debevoise & Plimpton LLP successfully represented Novartis Animal Health US, Inc. (“Novartis USA”) in its action against LM Connelly & Sons and National Pet Supplies, Australian businesses that sell Novartis pet medicines made for the Australian market through various Internet websites. The lawsuit – 04 Civ. 10213 (BSJ) – was filed in the United States District Court for the Southern District of New York and alleged that the sale of these foreign medicines constitutes trademark infringement because the foreign medicines differ from those Novartis USA sells in the United States.

In granting Novartis USA’s motion for a preliminary injunction, United States District Judge Barbara S. Jones, found that “Novartis USA has shown that it has valid trademark rights and that Defendant’s sale of Australian medicines is likely to confuse United States consumers and therefore, Novartis USA has a likelihood of success on the merits of this case.” Judge Jones also found that, “the nature of the material differences [between the Australian and American medicines] amply demonstrates irreparable harm to Plaintiff.”

OK, we’re pretty surprised by this outcome.  Blue hexagonal  pills marked STAMINA-Rx and a robot design, sold in a clear bottle not confusingly similar to blue hexagonal pills marked STAMINA-PRO and a robot design, sold in a clear bottle.

The court relies heavily on the absence of evidence of actual confusion.  Actual confusion is an important factor but the absence of evidence is not always the evidence of absence.

2005 U.S. App. LEXIS 9791,*

HI-TECH PHARMACEUTICALS, INC., Plaintiff-Counter-Defendant-Appellant v. HERBAL HEALTH PRODUCTS, INC., d.b.a. Dynamic Life, Inc., Plaintiff-Counter-Claimant-Appellee; DYNAMIC HEALTH PRODUCTS, INC., INNOVATIVE COMPANIES, INC., d.b.a. Innovative Health Products, Inc., ONLINE MEDS RX., INC., f.k.a. Dynamic Life, Inc., Defendants-Appellees

No. 04-11605

UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

2005 U.S. App. LEXIS 9791

 May 26, 2005, Decided

 May 26, 2005, Filed

NOTICE:    [*1]  NOT FOR PUBLICATION

PRIOR HISTORY:   Appeal from the United States District Court for the Northern District of Georgia. D. C. Docket No. 03-02486-CV-WBH-1. Hi-Tech Pharms., Inc. v. Herbal Health Prods., 311 F. Supp. 2d 1353, 2004 U.S. Dist. LEXIS 5833 (N.D. Ga., 2004)

COUNSEL:   For Hi-Tech Pharmaceuticals, Inc., Appellant: Michael Joseph Powell, Baker, Donelson Bearman Caldwell & Berkowitz, ATLANTA, GA
 
For Herbal Health Products, Inc., Appellee: Joshua Tropper, Gambrell & Stolz, L.L.P., ATLANTA, GA
 
For Dynamic Health Products, Inc., Appellee: Joshua Tropper, Gambrell & Stolz, L.L.P., ATLANTA, GA
 
For Innovative Companies, Inc., Appellee: Henry D. Fellows, Jr., Fellows, Johnson & La Briola, Atlanta, GA
 
For Online Meds RX., Inc., Appellee: Joshua Tropper, Gambrell & Stolz, L.L.P., ATLANTA, GA; John Todd Timmerman, Shumaker Loop & Kendrick, TAMPA, FL; Seaton D. Purdom, Gambrell & Stolz, ATLANTA, GA

JUDGES:   Before EDMONDSON, Chief Judge, TJOFLAT and KRAVITCH Circuit Judges.

 OPINION:   PER CURIAM:

Plaintiff-Appellant Hi-Tech Pharmaceuticals (“Hi-Tech”) appeals the district court’s denial of a preliminary injunction against Defendant-Appellee Herbal Health. Hi-Tech alleged that Herbal Health’s product, Stamina Pro, infringed on the trademark and trade dress of Hi-Tech’s male sexual enhancement  [*2]  product, Stamina-Rx. We conclude the district court did not abuse its discretion by denying the preliminary injunction and affirm. We also deny Herbal Health’s motion for sanctions.

FACTS

The parties do not dispute these factual findings by the district court. HiTech began manufacturing Stamina-Rx in 2001. See Hi-Tech Pharms., Inc. v. Herbal Health Prods., Inc., 311 F. Supp.2d 1353,1355 (N.D. Ga. 2004). Hi-Tech’s president, Jared Wheat, registered the Stamina-Rx mark with the United States Patent and Trademark office on 5 August 2003. The Stamina-Rx pill is blue and in the shape of a hexagon. It is packaged in a clear bottle with a white top. The bottle also contains an image, which the district court described as “a robot-like being with arms raised holding a sphere, and the words ‘maximum sexual stimulant.'” Hi-Tech Pharms., Inc., 311 F. Supp.2d at 1355.

Until about late winter or spring of 2003, Herbal Health bought and distributed Stamina-Rx. After that, Herbal Health began “manufacturing, marketing, and selling their own dietary supplement for improving sexual performance called Stamina Pro.” Hi-Tech Pharms., Inc., 311 F. Supp.2d at 1355.  [*3]  Stamina Pro is a blue pill in hexagonal form, and it too is sold in a clear bottle with a white top. The district court described the Stamina Pro bottle as having an “image of a robot-like being with his arms by his sides and the words ‘maximum male sexual enhancement formula.’ … [and containing] the statement ‘compare to Stamina-Rx TM.'” Id. at 1355-56.

Hi-Tech sought a preliminary injunction to prevent Herbal Health from producing, marketing, advertising, promoting and selling Stamina Pro. The district court denied that motion, and Hi-Tech appealed to this Court.

STANDARD OF REVIEW

The decision to grant or deny a motion for preliminary injunction is reviewed for an abuse of discretion. Cumulus Media, Inc. v. Clear Channel Communications, Inc., 304 F.3d 1167, 1171-72 (11th Cir. 2002). We review the district court’s legal conclusions de novo. Id. Findings of fact are reviewed for clear error. Id. at 1171.

DISCUSSION

To be entitled to a preliminary injunction, Hi-Tech must demonstrate (1) a substantial likelihood of success on the merits; (2) a substantial threat of irreparable injury without the injunction; (3)  [*4]  that the harm to Hi-Tech outweighs the harm to Herbal Health; and (4) that an injunction would be in the interest of the public. Palmer v. Braun, 287 F.3d 1325, 1329 (11th Cir. 2002). To show a likelihood of success on the merits for both the trademark and trade dress infringement, Hi-Tech must show that consumers will likely confuse the Stamnia-Rx mark or dress with Stamina Pro. See Carnival Brand Seafood Co. v. Carnival Brands, Inc., 187 F.3d 1307, 1309 (11th Cir. 1999) (trademark); Wal-Mart Stores, Inc., v. Samara Bros., Inc., 529 U.S. 205, 146 L. Ed. 2d 182, 120 S. Ct. 1339,1343 (2000) (trade dress). Likelihood of confusion is ultimately a question of fact that we review for clear error. Cumulus Media, Inc., 304 F.3d at 1172 n.5. Hi-Tech argues that the district court legally erred by requiring it to show actual consumer confusion instead of the proper threshold of a likelihood of confusion. We disagree. The district court said that actual confusion was one of the “most important factors in the likelihood of confusion analysis,” but it also said that Hi-Tech has “not presently demonstrated a substantial likelihood of success.” 311 F. Supp.2d at 1357  [*5]  (emphasis added). We have long said that the type of mark and evidence of actual confusion are the most weighty of considerations. Frehling Enters., Inc., v. Int’l Select Group, Inc., 192 F.3d 1330, 1335 (11th Cir. 1999). Accordingly, the district court made no legal error and did not clearly err by finding no likelihood of confusion. Thus, Hi-Tech cannot show a substantial likelihood of success on the merits.

We also agree with the district court that Hi-Tech did not demonstrate that irreparable harm would occur without the injunction. Hi-Tech relies on McDonald’s Corp. v. Robertson, 147 F.3d 1301 (11th Cir. 1998), and it argues that irreparable harm may be presumed when a likelihood of confusion is established. Robertson is distinguishable; the district court there found “substantial likelihood of confusion” existed. Id. at 1310. No such showing was made here. And, as noted by Judge Hunt, Hi-Tech’s own evidence indicated that “sales of Stamina-Rx … exceeded $ 3 million in the last month, and the product is currently on back order.” 311 F. Supp.2d at 1357. Hi-Tech did not challenge this finding on appeal. We are,  [*6]  therefore, unconvinced that irreparable harm will befall Hi-Tech without the preliminary injunction.

Herbal Health filed a motion for sanctions pursuant to Federal Rules of Appellate Procedure 38. That motion is denied.

AFFIRMED.