By Brian Craig, J.D.
3M showed it would likely prevail on its claims for trademark infringement and false advertising against a New Jersey company for attempted price-gouging.
In one of many lawsuits now pending in federal courts across the country, the federal district court in New York City has granted 3M Company a preliminary injunction against an unauthorized reseller of 3M-brand N95 respirators amid the global COVID-19 pandemic. The court concluded that 3M would likely prevail on its claims for trademark infringement and false advertising against a New Jersey company attempting to perpetrate a deceptive price-gouging scheme on unwitting consumers, including government agencies, in connection with the attempted sale of 3M’s N95 respirators (3M Co. v. Performance Supply, LLC, May 4, 2020, Preska, L.).
3M is a leading manufacturer of N95 respirators, which are considered the "gold standard" by medical workers and public health officials. 3M has invested hundreds of millions of dollars in advertising and promoting its 3M-brand product, including its 3M-brand N95 respirators.
3M has obtained numerous federal trademark registrations for its products, including its 3M marks. Performance Supply, LLC, a company based in New Jersey that apparently sells automobiles, submitted a bid to New York City offering to sell seven million 3M N95 respirators amid the COVID-19 pandemic. The prices in the bid are more than five times 3M’s listed single-case prices. 3M has agreed not to inflate prices amid the pandemic. The New Jersey company is not an authorized distributor of 3M-brand N95 respirators. 3M fills orders for its N95 respirators by accepting purchase orders from 3M’s authorized distributors and wholesalers, or directly from the government.
3M filed a complaint against the New Jersey company for engaging in a false and deceptive price-gouging scheme on unwitting consumers, including New York City, in connection with the attempted sale of 3M’s N95 respirators. Additionally, 3M has taken legal action in federal courts in California, Texas, Florida, Indiana, and Wisconsin against third parties who use the 3M marks and are not authorized 3M distributors. 3M has also set up a complaint form on its website and a hotline to report suspected price-gouging and unauthorized sellers. In its complaint, 3M alleges trademark infringement, false advertising, and other related claims against the New Jersey company. 3M filed a motion for preliminary injunction.
Trademark infringement. The court concluded that 3M would likely prevail on its trademark infringement claim and related claims for unfair competition, false endorsement, false association, and false designation of origin. Each of the relevant likelihood of confusion factors strongly favor 3M. The court recognized that 3M’s marks are commercially strong and famous. The unauthorized use of the 3M marks irreparably jeopardizes the reputation of the 3M brand and marks. The defendant is using the 3M marks in bad faith. The defendant actually confused New York City officials into identifying it as a 3M vendor. The defendant purported to sell the same products that 3M is widely known for selling and reproduced the 3M marks and slogan in their entirety. This powerful showing of a likelihood of confusion, combined with the overwhelming strength and validity of the 3M marks, and the defendant’s bad faith, establish that 3M is likely to succeed on the merits of its claims for trademark infringement.
False advertising. Additionally, the court found that 3M is likely to succeed on its claims for false advertising under both federal law and New York state law. In its bid to New York City, the New Jersey company stated that due to the national emergency, acceptance of the purchase order is at the full discretion of 3M. The New Jersey company further represented in the bid that 3M allegedly ships its products and that 3M will determine the production site for the order. However, these representations are false on their face. In addition to creating confusion about the source and quality of the purported 3M-brand N95 respirators, the defendant’s conduct results in diversion of critical public resources, which places lives at risk. Because the defendant’s trademark infringement, unfair competition, and false advertising presents a substantial threat to public health and safety, 3M also is likely to prevail on the merits of claims for deceptive acts and practices, and false advertising, under New York state law.
Balance of hardships. The court also found that the balance of hardships tips decidedly in 3M’s favor. It would not be a hardship for the New Jersey company to refrain from engaging in unlawful activities related to 3M’s brand, especially given that the company sells products unrelated to 3M’s brand. 3M would suffer substantial hardship in the absence of an injunction by irreparably harming the 3M brand and marks.
Public interest. Finally, the court concluded that issuing a preliminary injunction would serve the public interest of avoiding confusion and protecting healthcare workers, first responders, and critical infrastructure operations from the risk of receiving protective equipment of unknown quality and inflated prices. The public has an interest in preventing companies that attempt to exploit the fact that consumers are making rapid purchasing decisions during COVID-19 by falsely representing themselves as authorized distributors of 3M-brand products, as well as offering to sell those products at exorbitantly high prices.
Therefore, the court granted the motion for a preliminary injunction.
This case is No. 1:20-cv-02949-LAP.
Attorneys: Carmine R. Zarlenga (Howrey LLP) for 3M Co.
Companies: 3M Co.; Performance Supply, LLC
MainStory: TopStory Trademark GCNNews NewYorkNews Covid19
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