The opinion of the court was delivered by: WILLIAM MARTINI, District Judge
This matter comes before the Court on plaintiff M.D. On-Line,
Inc.'s ("M.D. On-Line's") motion for a preliminary injunction to
enjoin defendants from using the service mark "emdeon."
Plaintiff's mark "M.D. ON-LINE" is a federally registered service
mark for the field of "electronic data submission services
required for electronic processing of claims in the healthcare
industry." (Compl. Ex. A). Plaintiff alleges that defendants use
of the "emdeon" mark in the healthcare industry violates federal
and state trademark law, constitutes unfair competition under
federal and state law, and is causing it irreparable harm. For
the reasons set forth below, plaintiff's motion for preliminary
injunction is DENIED.
Plaintiff provides software solutions for healthcare providers.
Its three software packages, WebLINK, WinLINK and ClaimLink 1500,
allow healthcare providers to "electronically submit claims to
insurance companies for payment." (Compl. ¶ 1). Its software also
allows healthcare providers to verify electronically in real-time
the "eligibility of insurance coverage when patients seek
healthcare services from providers." (Compl. ¶ 17).
Defendants, formerly known as WebMD, now trading as some
variation of Emdeon, perform many services and provide many
products to the healthcare industry. Emdeon Corporation
("Emdeon") is the parent company; it is composed of four business
units: Emdeon Business Services, Emdeon Practice Services, WebMD
Health, and Porex. Emdeon's core businesses are dedicated to electronically connecting "healthcare
providers, payers, employers, physicians, and patients, to
simplify the healthcare business process, to provide needed
information at the right time and place, and to improve
healthcare quality." (Defs.' Opp'n Br. at 2). Emdeon provides the
"largest single electronic clearinghouse for healthcare claims in
the U.S." (Compl. ¶ 3). Emdeon processes the electronic claims
submitted by providers and from intermediaries such as M.D.
On-Line. (Id.). Currently, plaintiff and Emdeon have a
contractual relationship whereby plaintiff processes claims
through Emdeon's clearinghouse and Emdeon provides plaintiff with
rebates for those transactions based on volume. (Id. at ¶ 30).
This relationship accounted for approximately 40% of plaintiff's
revenue in 2004. (Defs.' Opp'n Br. at 5).
Emdeon Business Services ("EBS") is the business entity that
competes directly with plaintiff. (Id. at 5). EBS "offers
healthcare providers reimbursement services, allowing them to
interact electronically with healthcare payers." (Id. at 3).
EBS sells only one product that competes with plaintiff's
products WebMD Office. (Id. at 5). It is the marketing and
advertising of that product under the emdeon mark that lead
plaintiff to file suit and seek an injunction.
A preliminary injunction is an extraordinary form of relief
that should be granted in limited circumstances. NutraSweet Co.
v. Vit-Mar Enters., Inc., 176 F.3d 151, 153 (3d Cir. 1999). A
preliminary injunction should issue only when the moving party
establishes each of the following four factors: (1) that the
moving party has a reasonable probability of success on the merits; (2) that the moving party will be irreparably harmed if
denied relief; (3) that the non-moving party will not be harmed
to a greater extent if relief is granted; and (4) granting
preliminary relief will be in the public interest. Id. If the
moving party is unable to show any of those factors,
preliminary relief should be denied. Id.
I. Likelihood of Success on the Merits
In order to show a reasonable probability of success on the
merits, "the burden is on the party seeking relief to make a
prima facie case showing a reasonable probability that it will
prevail on the merits" of the claim. Oburn v. Shapp,
521 F.2d 142, 148 (3d Cir. 1975). "To prevail on a claim for trademark
infringement or unfair competition under the Lanham Act, the
owner of a valid and legally protectable mark . . . must show
that a defendant's use of a similar mark for its goods `causes a
likelihood of confusion.'" Kos Pharms., Inc. v. Andrx Corp.,
369 F.3d 700, 708-09 (3d Cir. 2004).
The Third Circuit has devised a nonexclusive list of factors,
referred to as the Lapp factors,*fn1
that the Court must
consider when analyzing likelihood of confusion. These factors
(1) the degree of similarity between the owner's mark
and the alleged infringing mark;
(2) the strength of the owner's mark;
(3) the price of the goods and other factors
indicative of the care and attention expected of
consumers when making a purchase;
(4) the length of time the defendant has used the
mark without evidence of actual confusion arising; (5) the intent of the defendant in adopting the mark;
(6) the evidence of actual confusion;
(7) whether the goods, competing or not competing,
are marketed through the same channels of trade and
advertised through the same media;
(8) the extent to which the targets of the parties'
sales efforts are the same;
(9) the relationship of the goods in the minds of
consumers, whether because of the near-identity of
the products, the similarity of function, or other
(10) other facts suggesting that the consuming public
might expect the prior owner to manufacture both
products, or expect the prior owner to manufacture a
product in the defendant's market, or expect that the
prior owner is likely to expand into the defendant's
Kos Pharms., 369 F.3d at 709 (quoting A & H Sportswear, Inc.
v. Victoria's Secret Stores, Inc., 237 F.3d 198
, 215 (3d Cir.
2000)). None of these factors alone determines whether there is a
likelihood of confusion. Rather, the Court must consider all of
these factors and give them the weight appropriate under the
particular circumstances before the Court. Id.
Plaintiff argues that it is likely to succeed at trial because
its M.D. ON-LINE mark is valid and legally enforceable, and
defendant's use of the emdeon mark is likely to cause confusion.
Defendants respond by arguing that plaintiff's mark is not
enforceable, and even if it is, there is no likelihood of
confusion between the marks M.D. ON-LINE and emdeon. The fact
that M.D. ON-LINE is a federally registered mark, see Fed. Reg.
No. 2,274,698, constitutes prima facie evidence of the mark's
validity. See 15 U.S.C. § 1115(a). Thus, for purposes of this motion, the Court will assume plaintiff's mark is valid and
enforceable. As a result, in order to resolve this dispute, the
Court must weigh and balance the Lapp factors.
1. Degree of Similarity Between the Marks
"The single most important factor in determining likelihood of
confusion is mark similarity." A & H, 237 F.3d at 216. Marks
"are confusingly similar if ordinary consumers would likely
conclude that [the two products] share a common source,
affiliation, connection or sponsorship." Fisons Horticulture,
Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 477 (3d Cir. 1994).
The proper test is "not side-by-side comparison" but "whether the
labels create the `same overall impression' when viewed
separately." Id. (quoting Banff, Ltd. v. Federated Dep't
Stores, Inc., 841 F.2d 486, 492 (2d Cir. 1988)). Courts should
"compare the appearance, sound, and meaning of the marks" in
assessing their similarity. Kos Pharms., 369 F.3d at 713.
The Court finds there is no similarity in appearance between
"M.D. ON-LINE" and "emdeon". Indeed, they are visually distinct.
Plaintiff's mark is two words, including two periods and one
hyphen; defendant's mark is one word without punctuation. They
are spelled differently. They differ in length (six versus eight
letters). They begin and end with different letters. M.D. ON-LINE
consists of all uppercase letters, emdeon contains none. Further,
M.D. ON-LINE often appears on two separate lines, M.D. over
ON-LINE, whereas emdeon does not.
The Court finds that the two marks do not have a similar
meaning. M.D. ON-LINE describes a service involving doctors on
the internet. Emdeon is a fanciful term that has no apparent
meaning. Plaintiff argues that emdeon has a similar meaning,
relying in part on a script that was generated for WebMD Business
Services. In that script, Emdeon states that its new name "suggests a grounding in e-healthcare." (O'Sullivan Cert. at
Ex. A). However, that script is inapposite. First, the script
details a branding effort by Emdeon in which it seeks to imbue a
certain meaning into the otherwise meaningless term "Emdeon."
Second, plaintiff takes the quote out of context in order to
establish some small degree of similarity. When the meaning
suggested by the script is looked at as a whole, there could be
no confusion between the two marks:
Our new name, Emdeon, references our history as WebMD
and formerly, Healtheon. It also suggests a grounding
in e-healthcare and denotes a solid organization
focused on improving healthcare and exceeding the
expectations of its business partners.
Plaintiff essentially argues that any differences in appearance
and meaning should be trumped by the marks' phonetic similarity.
Plaintiff bases this argument on the fact that the allegedly most
significant form of marketing performed by the parties is
telemarketing. Plaintiff also argues that word-of-mouth is
critical to its products' success. However, in making these
arguments, plaintiff appears to ignore the commercial reality of
how these software products are marketed. There is no dispute
that plaintiff's LINK products, as well as defendant's WebMD
Office, are used only over the internet, no physical
documentation is involved. Therefore, in order to market these
products, the parties would need to provide the website address
from which customers could read about, and potentially register
to use their products.*fn2 Thus, the appearance of the marks plays a role in the commercial setting, thereby
greatly diminishing the affect that sound alone may have on
Furthermore, the Court disagrees with plaintiff's underlying
premise that the marks are confusingly similar. Although
plaintiff is correct that the first three syllables of each mark
are pronounced similarly, by focusing on only the first three
syllables, plaintiff takes its whole mark out of context. See
Kos Pharms., 369 F.3d at 713 ("But the proper legal test is not
whether there is some confusing similarity between sub-parts of
the marks; the overarching question is whether the marks,
`viewed in their entirety,' are confusingly similar.")
(emphasis in original) (quoting A & H, 237 F.3d at 216). Its
mark is M.D. ON-LINE, not "M.D. ON". When the marks are heard in
their entirety, they are not confusingly similar. Plaintiff's
mark contains four syllables, emdeon contains only three. M.D.
ON-LINE is spoken as two separate letters and a two syllable
word, whereas emdeon is ...