little or no analogy' to copyright or patent." Sony, 464 U.S. at 439 n. 19. Accordingly, the Court declines to place any reliance on plaintiff's copyright cases.
In any event, the holding's in plaintiff's cases are not inapposite. In Gershwin, an examination of the relationship between the "vicarious/contributory" infringer and the "primary" infringer reveals a close working relationship between the parties where the vicarious infringer had "pervasive participation in the formation and direction" of the primary infringer's operation. Gershwin, 443 F.2d at 1163. In fact, the court found that the vicarious infringer had knowledge of the infringing acts, id. at 1162-63, and as it believed it had no responsibility for any infringement that might occur, it took no steps obtain the proper copyright clearance. Id. at 1161. WCPI's involvement with the sales representatives does not even begin to approach the degree of pervasiveness as that of the vicarious infringer in Gershwin.
In NCCB, the court found that plaintiff had failed to produce sufficient proofs of direct involvement on the part of the dioceses in the alleged infringing acts of the individual church parishes. In distinguishing the Gershwin case, the NCCB court recognized that in Gershwin, plaintiffs were able to show that the "vicarious" infringer was "involved in every aspect of the planning and production of the infringing performances." NCCB, 466 F. Supp. at 1042. In this Court's view, Inga and WCPI's relationship with it sales representatives is more akin to the relationship between the parties in NCCB than in Gershwin. Although the NCCB court also relied upon the fact that NCCB received no financial benefit from the infringing acts, this Court is not persuaded that WCPI's direct financial benefit from the acts of the sales representatives requires a different outcome in this case. The fact remains that WCPI, like NCCB, is not so directly involved, and practicably cannot be so directly involved, with the operations of the primary infringers so as to warrant the imposition of vicarious liability on WCPI and Inga.
Accordingly, for all of the reasons discussed above, the Court finds that the sales representatives are independent contractors whose misconduct cannot be imputed to WCPI and Inga.
3. Likelihood of Confusion
The Court need not rest solely on its determination that the sales representatives are independent contractors in denying plaintiff's application. To succeed on its trademark infringement claim, one of the elements that plaintiff must establish is that as a result of the infringing acts, consumers are likely to confuse the source of plaintiff's product with that of defendants' product. There is no question that plaintiff submitted sufficient proofs to the Court to establish that consumers have been confused by certain oral misrepresentations made by and written documents provided by the Winback sales representatives. However, the proofs also establish that the cause of such confusion is not solely attributable to the sales representatives.
For instance, the nature of the product itself gives rise to some degree of the confusion. This is not a case where the product is a so-called "knock-off", such as imitation Hard Rock Cafe T-Shirts. WCPI's product is the access to the real thing, the actual AT&T network. Inga's uncontroverted testimony established that not only is access to the network provided, but that in many cases, via the execution of a letter of agency, the end user finds him or herself with virtually the same telephone product and services from AT&T as he or she would have as a direct customer of AT&T. Thus, confusion is a natural incident of the product itself.
In addition, the record suggests that certain actions attributable to AT&T and those who acted on behalf of AT&T also played some role in the creation of the confusion. At the hearing on plaintiff's application for both the TRO and the preliminary injunction much was made about the confusion resulting from the name Winback and Conserve Program, Inc. However, the uncontroverted testimony of Inga established that prior to establishing and incorporating WCPI he received authorization from his AT&T account representative, Joseph Fitzpatrick to use the name Winback & Conserve Program, Inc.
See Inga Certif. 12/15/93 at P 4; Transcript of Proceeding 3/2/94 at 6:6-9:17.
Furthermore, the evidence established that the transfer form and main billed form are provided by AT&T to all aggregators. Transcript of Proceedings 3/1/94 at 80:13-14; 81:23-25; Inga Certif. 12/15/93 at PP 8, 16 & Exhibit A; Inga Certif. 2/15/94 at P 8-9. Apparently, without the completion of such forms AT&T will not process the transfers. The transfer form, as it was originally provided to the aggregators, including WCPI, contained at the top of the page the AT&T initials and the AT&T globe symbol. Inga testified that it was only by letter dated October 13, 1993 that AT&T instructed all of its aggregators to stop using the transfer form with the AT&T logos and to replace it with the transfer form without the logos. Although the proofs also established that the forms were used by some representatives subsequent to that instruction, the fact remains that AT&T first put the document in use in its objectionable form. Significantly, many of the end users who claimed that they believed they were dealing with AT&T cited to the transfer form with the AT&T logos as one of the bases for their beliefs.
The Court does not intend to suggest, however, that either the nature of the product or the arguably unwise decisions of the AT&T marketing department would justify acts of infringement by WCPI or those who market the WCPI product. Indeed, the Court makes no determination as to the primary cause of the actual confusion which was proven to exist. The Court only raises these issues to support its conclusion that the issuance of a preliminary injunction in this matter, which would require a finding of likelihood of confusion, would be improper given that certain decisions by the plaintiff played at least some substantive role in the creation of the confusion. Cf. Holiday Inns, Inc. v. Trump, 617 F. Supp. 1443, 1475 (D.N.J. 1985).
B. Other Equitable Considerations
It has been said that "there is no power the exercise of which is more delicate, which requires greater caution, deliberation, and sound discretion, or more dangerous in a doubtful case than the issuing [of] an injunction." Falter v. Veterans Administration, 632 F. Supp. 196, 201 (D.N.J. 1986) (quotations omitted). The power to issue an injunction is "the strong arm of equity." Id. This being the case it is essential that the equitable factors which influenced the Court's decision be addressed.
The Court finds significant the uncontroverted testimony and documentary proof that in the instances where plaintiff brought objectionable acts of the sales representatives to the attention of Inga, Inga took appropriate steps to reprimand and discipline the sales representative.
See, e.g., Inga Certif. 12/15/93 at P 10; Inga Certif. 2/15/94 at PP 5, 9, 10, 11, 13; Transcript of Proceedings 3/1/94 at 29-34, 79-80 & Defendants' Exhibit 1 admitted into evidence at the hearing; Certification of Joseph Feroli at PP 8-9 (recognizing his error and acknowledging that his superior admonished his use of a certain document).
Furthermore, unlike the Hydrolevel case, relied upon by plaintiff, where the Court determined that the Society was in the best position to prevent acts of anti-competitive behavior among its committee members, see Hydrolevel, 456 U.S. at 572, the testimony in this case established that the WCPI product was marketed through a sprawling web of sales representatives either employed by or under contract with the individual sales/marketing agencies. Inga testified that "due to the fact that it takes several months to a year or two to get your residuals up to a point where you can make a living," it is not economically practicable to have salaried sales persons on staff. See Transcript of Proceedings 3/1/94 at 63. Thus, in order to remain competitive, Inga utilizes independent agencies to perform the marketing aspect of the business. Inga and Salzano, the President of one such marketing agency, testified that most aggregators market through these agencies and that the agencies market on behalf of many aggregators.
Given this structure with multiple levels of sales representatives over whom Inga has no control, making voluminous numbers of solicitations on a daily basis, it is hard to imagine what more AT&T would have Inga do to prevent these independent agencies from engaging in objectionable marketing tactics in the first instance. In this regard, the Court reiterates and stresses that there has been insufficient proof placed before it at this time to support a claim that Inga induced the acts of infringement, was wilfully blind to the acts of infringement, or was negligent in not preventing the acts of infringement. In fact, the uncontroverted proofs offered by defendants indicate that Inga took steps to direct the sales agencies not to misrepresent the origin of the product. Furthermore, defendants established that in instances where Inga was informed of objectionable representation, Inga dealt swiftly and appropriately with the sales representatives engaging in the such acts. Without sufficient evidence to establish that Inga was aware of, encouraged, ratified or participated in the acts of infringement it would be difficult for this Court to justify the imposition of preliminary restraints against Inga and WCPI.
Finally, the Court notes that AT&T is not left without an effective avenue of relief. AT&T remains free to pursue preliminary injunctive relief against the sales/marketing agencies which develop the marketing material and employ or contract the representatives that are engaging in the allegedly misleading practices.
The Court has concluded that at this stage in the litigation plaintiff has not established a likelihood of success on the merits. Thus, it is not necessary to consider whether plaintiff has satisfied its burden of proving irreparable harm, nor is it necessary to address the additional elements of public interest and the possibility of harm to others.
Accordingly, for all of the foregoing reasons, plaintiff's application is DENIED. The Court expresses no opinion at this time as to the ultimate success of plaintiff's cause of action at trial. The parties should not rely upon comments expressed in this opinion to preclude the Court from revisiting any issues which may arise at the time of final hearing when the Court will have the advantage of reviewing a more fully developed testimonial and documentary record.
NICHOLAS H. POLITAN
ORDER - May 12, 1994, Filed
This matter having come before the Court on plaintiff's application for a preliminary injunction, and the Court having reviewed the submissions of the parties, and having conducted a hearing thereon, and for the reasons more fully explained in the accompanying Letter Opinion dated May 12, 1994, and for good cause shown,
IT IS on this day of May, 1994
ORDERED that plaintiff's application for a preliminary injunction be and hereby is DENIED.
NICHOLAS H. POLITAN