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Medi-Flex, Inc. v. Nice-Pak Products

April 7, 2006

MEDI-FLEX, INC., PLAINTIFF,
v.
NICE-PAK PRODUCTS, INC. AND PROFESSIONAL DISPOSABLES, INC., DEFENDANTS.



The opinion of the court was delivered by: Kathryn H. Vratil United States District Judge

MEMORANDUM AND ORDER

Medi-Flex, Inc. ("Medi-Flex") brings suit against Nice-Pak Products, Inc. and Professional Disposables, Inc., its healthcare division, (collectively, "Nice-Pak") for trademark infringement, false designation of origin and unfair competition under the Lanham Act, 15 U.S.C. §§ 1114 and 1125. This matter is before the Court on Medi-Flex, Inc.'s Motion For Preliminary Injunction to prevent Nice-Pak from using the name "Chlorascrub" during the pendency of this case. See Doc. #3 filed January 24, 2006. On March 1, 2006, the parties presented oral argument and agreed to submit the matter based on evidence which they submitted at the hearing and in support of their briefs. For reasons stated below, the Court overrules plaintiff's motion.

Preliminary Injunction Standards

The purpose of a preliminary injunction is "to preserve the status quo pending the outcome of the case." Tri-State Generation & Transmission Ass'n., Inc. v. Shoshone River Power, Inc., 805 F.2d 351, 355 (10th Cir. 1986). A preliminary injunction is a drastic and extraordinary remedy, and courts do not grant it as a matter of right. Paul's Beauty Coll. v. United States, 885 F. Supp. 1468, 1471 (D. Kan. 1995); 11A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Fed. Practice & Proc. § 2948, at 128-29 & nn.3, 6-7 (1995). To obtain a preliminary injunction, plaintiff must establish (1) a substantial likelihood that it will eventually prevail on the merits; (2) irreparable injury unless the preliminary injunction issues; (3) that the threatened injury outweighs whatever damage the proposed preliminary injunction may cause defendants; and (4) that the preliminary injunction, if issued, will not be adverse to the public interest. Tri-State, 805 F.2d at 355. The Court must deny injunctive relief if plaintiff fails to establish any requisite element, Packerware Corp. v. Corning Consumer Prods. Co., 895 F. Supp. 1438, 1446 (D. Kan. 1995), and plaintiff must establish by clear and unequivocal proof that it is entitled to injunctive relief.*fn1 Penn v. San Juan Hosp., Inc., 528 F.2d 1181, 1185 (10th Cir. 1975); Paul's, 885 F. Supp. at 1471.

Facts

Based on the record evidence, the Court makes the following findings of fact: On July 5, 1988, Nice-Pak registered a trademark for "Chlorascrub" with the United States Patent and Trademark Office (the "PTO").*fn2 The Chlorascrub mark remained on the PTO register until January 9, 1995, when it was canceled because Nice-Pak did not file an affidavit of continuing use.

In 1995, Medi-Flex registered with the PTO a trademark for "Chloraprep." Before it registered the trademark, Medi-Flex hired legal counsel to search federal trademark records to determine the probable registrability of "Chloraprep" for use in connection with antiseptics. Counsel's search revealed nine marks with a prefix identical or similar to "chlora" -- Cloralex, Chloraderm, Clorital, Clor-o-fen, Chlortergent, Clorpactin, Chlorohex, Chlor-tab and Chlorazene. See letter dated October 7, 1993 from Hovey, Williams, Timmons & Collins to Becky Minion.*fn3 In addition, the search revealed 12 marks which used the suffix "prep." With respect to the number of marks which contained similar prefixes and suffixes, counsel advised as follows:

Although the prefix chlora and the suffix derm*fn4 are used individually in several different trademarks noted during the search, these two word segments are never used together in a single mark in a manner similar to the proposed CHLORAPREP mark. In view of the presence of several marks employing the prefix chlora or the suffix derm separately from one another, it does not appear that the mark will be very strong and others will be able to adopt similar marks by substituting similar prefixes or suffixes. However, we do not believe that there will be a likelihood of confusion between the proposed mark and any of the marks noted during the search, as used in connection with antiseptics.

Id.*fn5 Counsel concluded that the mark appeared clear for use and registration, and so advised plaintiff. Id.

Since 1995, Medi-Flex has continuously and extensively used the Chloraprep trademark in the United States with respect to topical antimicrobial solution applicators. Chloraprep products comprise 21 per cent of the hospital vascular access market and nearly 100 per cent of the hospital vascular access market for FDA approved antiseptic applicators containing chlorhexidine gluconate (CHG) and isopropyl alcohol (IPA). As a result of widespread use of Chloraprep products, the trademark has become well known in the marketplace.

Since 2001, Medi-Flex and Nice-Pak have sold competing products in Canada. Specifically, under the trademark Chlorascrub, Nice-Pak sells a .5 per cent CHG and IPA antiseptic skin preparation product. Under the name Chloraprep, Medi-Flex sells an equivalent product (originally in a .5 per cent CHG formulation and more recently in a 2.0 per cent CHG formulation).

In June of 2005, Nice-Pak issued a press release which stated that it planned to launch an antiseptic skin preparation product called Chlorascrub with 3.15 per cent CHG in the United States.*fn6 This new product will directly compete with Chloraprep in the United States. Both applicators contain a solution of CHG and IPA; both are advertised in the same magazines and journals; and both will be sold and distributed through the same channels. Both will be used in the same manner for the same purpose: to prep patients for surgery, insert intravenous lines ("IVs") or catheters and to perform other medical procedures.

Plaintiff recently commissioned a market awareness study. The study conducted hundreds of structured telephonic interviews with medical professionals in large metropolitan acute care hospitals. Of the respondents, 70 per cent indicated that their hospital used Chloraprep and 89 per cent indicated that they had heard of Chloraprep products and/or readily identified Chloraprep as a new skin preparation antiseptic product which had been introduced in the market in recent years. At least in part, this high level of market awareness results from plaintiff's extensive efforts to advertise and educate the market regarding its flagship line of Chloraprep products. Over the last five years, plaintiff has spent more than $20 million on such efforts.

Plaintiff also hired an expert, Gabriel M. Gelb, to conduct a survey regarding marketplace confusion between Chloraprep and Chlorascrub. The survey included more than 200 registered nurses who conduct preoperative medical procedures which require them to apply topical skin antiseptics. The questionnaire asked the nurses whether they used certain products which are commonly used in such procedures, specifically "Barrett" exam gloves, "Avagard" hand antiseptic and "Chlorascrub" topical antiseptic. Fifteen per cent of the nurses responded that they use Barrett exam gloves. Gelb used Barrett exam gloves as a control product to measure "noise" in the survey, i.e. the proportion of respondents who were inattentive or answered by guessing, because Barrett exam gloves do not exist.*fn7 Forty-three per cent of the nurses responded that they used Avagard hand antiseptics, which are available to and relatively well known by medical professionals.*fn8 Sixty-one per cent (130 nurses) indicated that they used Chlorascrub topical antiseptic, even though -- at the time of the survey -- defendants had marketed Chlorascrub products in trade journals but not yet sold it in the marketplace. Of the 130 nurses who stated that they used Chlorascrub, 27 nurses stated that they knew which company made or marketed the brand. When given a multiple-choice question as to the maker or marketer of Chlorascrub products, 13 nurses chose PDI/Nice-Pak, nine selected Medi-Flex, three chose "other" and two selected "don't know."

Of the nurses who said that they used Chlorascrub but could not name the company which made it, Gelb conducted a follow-up survey. The follow-up survey asked the nurses to check their medical supply areas and state which brand or brands of topical antiseptic they found. Seventy-three nurses responded to the follow-up survey: 22 found Chloraprep alone or together with another product, 30 found generic products and 21 found other products. In other words, of the 73 nurses who claimed to use Chlorascrub but did not know who made or marketed it, 22 were using Chloraprep and 51 were actually using products other than Chloraprep -- suggesting that they might have been confused but maybe not thinking about Chloraprep.*fn9

Based on the survey results, Gelb formed the following opinion: A high likelihood of confusion exists within the relevant population -- registered nurses who use topical antiseptics -- about the Chloraprep and Chlorascrub marks. Six out of ten said they used Chlorascrub but none who went back to look in their medical supplies area found any Chlorascrub products. Even adjusting for "noise," -- those who identified a nonexistent brand -- the extent of confusion is in the 45% range.

Declaration of Gabriel M. Gelb at 3, Exhibit N to Plaintiff's Motion (Doc. #3).

Plaintiff and defendants sell their products through a network of distributors which in turn sell to hospitals and clinics. Plaintiff also sells Chloraprep to kit manufacturers who include the product in pre- packaged kits for medical procedures. The employees who work for these distributors and kit manufacturers are not highly trained medical professionals and do not have extensive knowledge regarding the products which they sell. Chloraprep and Chlorascrub are relatively inexpensive on a per unit basis, i.e. from 50 cents to seven dollars per unit. The parties sell them in cases, however, which range in price from $120 to $1,000 per case.

Hospitals generally stock products by either Chloraprep or Chlorascrub, not both.*fn10 The purchasers and users of Chloraprep and Chlorascrub are highly trained medical and administrative professionals at hospitals, blood banks and medical clinics. They receive detailed information and training regarding such products directly from manufacturers. The selection process for new medical products in a hospital is generally quite involved. For an antiseptic product, the first step is usually to introduce the product to the persons in charge of infection control. Upon approval by infection control, the product may be introduced to end-users or to an evaluation committee to determine whether the hospital has an interest in the product. If so, the hospital will typically conduct a short term trial of the product for limited procedures. If the hospital determines that it desires the product, it will place an order with an independent healthcare distributor.

Before a product can enter actual use in a hospital, it is put "in stock," i.e. delivered to the area of use or central storage area. Before a new product is put in stock, users typically receive some type of in service training. For a product like Chlorascrub, such training would include (1) how to open the product to prevent contamination; (2) proper techniques for use; and (3) an explanation of features and benefits.

Chloraprep and Chlorascrub products are packaged differently. Chloraprep is packaged in solid blue boxes with white and yellow lettering. Chlorascrub boxes are white with a purple stripe and purple lettering. In addition, the individual units are packaged differently. Chloraprep units are in white packaging with blue and/or black lettering. Chlorascrub units are in white packaging with purple lettering and a purple strip with the name "Chlorascrub" in white lettering.

Chloraprep and Chlorascrub also sell different sized product units, at least some of which appear different in function and appearance. Chloraprep is packaged in a 0.67 mL SEPP ampule; a 1.5 mL FREPP sponge pad applicator; 1.75 mL single swabstick applicator; 5.25 mL triple swabsticks; a10.5 mL applicator; and a 26 mL applicator. See Plaintiff's Exhibits 601-05; Defendants' Exhibits 430- 431. Chlorascrub is packaged in a 1.0 mL swab (pad); a 1.6 mL swabstick; and a 5.1 mL maxi swabstick. See Defendants' Exhibits 433-34; Fleming Declaration, Doc. #20 at ¶ 20.

Plaintiff claims that the following events demonstrate actual marketplace confusion between Chloraprep and Chlorascrub:

* On January 25, 2006, a Medi-Flex customer requested the catalog part number for a 5 mL applicator. Chlorascrub is available in a 5 mL maxi swabstick. Medi-Flex responded that it made 3 mL and 10.5 mL applicators, but not a 5 mL applicator. The customer replied that he thought Medi-Flex made a 5 mL applicator.

* On February 8, 2006, an unidentified caller inquired regarding a Medi-Flex prep pad. Nice-Pak offers a prep pad under the name Chlorascrub. Medi-Flex responded that it did not make a prep pad. The caller stated that she thought Medi-Flex made a prep pad.

* On February 13, 2006, Christine Waring, a Medi-Flex sales representative, conducted an operating room evaluation for the Rhode Island Veterans Affairs Medical Center. After she had finished educating surgeons and nurses on the proper application of 10.5 mL and 26 mL Chloraprep applicators, she was paged over the intercom as follows: "Could the Chloraprep wipe girl please come back to the O.R." Waring returned to the operating room and found that the nurse anesthetist needed equipment cleaning wipes for the anesthesia cart. When the nurse saw her, she stated, "Wait, you're the rep that sells the skin preps, not the cloth to clean the tables." The nurse stated that the previous week, a representative talked about cleaning wipes and also discussed Chlorascrub patient preparation. The nurse asked Waring whether she sold Chlorascrub products and worked for the same company.

* On February 15, 2006, Waring met with Dr. Richard Ellison, III at the University of Massachusetts Medical Center, which uses Chloraprep for preoperative procedures. Waring began talking with Dr. Ellison about expanding the hospital's use of Chloraprep into the anesthesiology unit. Dr. Ellison responded, "Are you the one that's half the price and presented this morning?" Waring replied that she was with Chloraprep and did not present a product that morning.

* After Waring met with Dr. Ellison, she had a telephone conversation with Fatima Muriel, an infection control practitioner at the Women and Infants Hospital in Providence, Rhode Island. Muriel suggested that Waring make a presentation at the next meeting for infection control practitioners of South New ...


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