Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

SUNQUEST INFORMATION SYSTEMS v. PARK CITY SOLUTION

August 9, 2000

SUNQUEST INFORMATION SYSTEMS, INC, PLAINTIFF,
V.
PARK CITY SOLUTIONS, INC. AND R. SCOTT HOLBROOK, DEFENDANTS.



The opinion of the court was delivered by: D. Brooks Smith, District Judge.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Plaintiff has filed a motion for preliminary injunction in the above-captioned trademark infringement case, seeking an order enjoining defendant, Park City Solutions ("Park City") from using its current corporate logo. Dkt. no. 2. On June 19 and 20, 2000, I conducted an evidentiary hearing on plaintiff's request for injunctive relief. The following memorandum constitutes my findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a). For the following reasons, I will grant plaintiff's motion for a preliminary injunction.

I. FINDINGS OF FACT

A. Sunquest and its Business

Plaintiff Sunquest Information Systems ("Sunquest") was formed in September 1979. (6/19 Tr. at 16).*fn1 Although its principal place of business is in Tuscon, Arizona, Sunquest also has offices in Johnstown, Pennsylvania. Id. In fact, Sunquest's co-founder, majority shareholder, and current Chief Executive Officer ("CEO"), Dr. Sidney Goldblatt, currently lives in Pennsylvania. (Id. at 17; 6/20 Tr. at 23).

Sunquest is in the medical software business. It is one of the two largest software manufacturers in the hospital and health care industry, and it sells software to help hospitals and other entities run their laboratories more efficiently. (6/19 Tr. at 20). Additionally, Sunquest produces pharmacy information systems, radiology information systems, and other software packages that provide health care providers with rules of good practice. Id.

Sunquest is also in the consulting business. Through numerous divisions, including its Balanced View division ("Balanced View"), Sunquest specializes in "the extended training of clients." Id. at 24. This "extended training" can be broken down into three areas: implementation; integration; and optimization. Implementation is the process of helping clients install their software in accordance with Sunquest's instructions. (6/20 Tr. at 139). Integration involves teaching clients how to make their newly purchased software program interact with other systems or computers that they already use. Id. at 140. Optimization is the process of teaching clients how to use all of the functions of their new Sunquest software, and how to use those functions most efficiently. (6/19 Tr. at 25; 6/20 Tr. at 140-41). As Sunquest's CEO Dr. Goldblatt explained, clients typically use "less than a fourth, sometimes even less than one-fifth of the functionality of the product." (6/19 Tr. at 24-25). By teaching clients how to optimize their newly purchased software, Sunquest helps clients take advantage of all that the product has to offer. At present, Sunquest offers implementation, integration, and optimization services on Sunquest products only. (6/20 Tr. at 147).

In addition to implementation, integration, and optimization, Sunquest offers its clients many other services. For instance, the Balanced View division helps clients identify and emulate the "best practices" of other laboratories and hospitals throughout the nation. (6/19 Tr. at 25). Dr. Goldblatt explained this service as follows:

Sunquest and its laboratory product client base has more than a thousand hospitals and, indeed, most of these are large hospitals, larger than two hundred fifty beds. There may be some particular center of excellence in one or several of those institutions, and other clients would like to be able to emulate that kind of excellent behavior or performance within their operation. Balanced View would act as a conduit for that kind of knowledge, helping clients, in essence, learn from the best of our many clients.

Id. Balanced View also offers laboratory compliance audits to ensure that Sunquest's clients comply with federal and state regulations. Id. at 27. Finally, it has developed programs that aid hospitals in locating new sources of revenue in the surrounding community. Id.

Balanced View is one of Sunquest's fastest growing divisions. In 1999 alone, it generated approximately $10 million of Sunquest's total $138 million in revenues; Balanced View's revenues are expected to double in fiscal year 2000. (Id. at 28-29; 6/20 Tr. at 73). As Dr. Goldblatt explained, Balanced View is "extremely important" to the future of Sunquest's business. (6/19 Tr. at 30). It should come as no surprise, then, that Balanced View's services are "virtually always a part of every proposal to a new client." (Id. at 29; 6/20 Tr. at 7).

By offering a wide array of exemplary products and services, Sunquest has established an excellent reputation in the medical software industry. (6/19 Tr. at 18, 30-31; 6/20 Tr. at 114). According to Sunquest's annual Form 10-K filing for fiscal year 1999, Sunquest's client base includes virtually every hospital and health care provider in the United States. (Def.'s. Ex. F, at 16). It distributes products and services throughout the United States and Europe. (6/19 Tr. at 36). Sunquest's clients include some of the most notable names in the health care industry. Id. at 31. Sunquest currently enjoys the largest market share of laboratory information systems clients in the large hospital group, with a forty-three percent share. Id. It provides goods and services to all four of the largest commercial laboratories: Quest; Lab Care; Lab Core; and Dynacare. Id. at 31-32. Sunquest's clientele includes over one thousand hospitals and approximately two-hundred commercial laboratories. Id. at 34. Indicative of its solid reputation throughout the industry is the fact that Sunquest has retained all of its original twenty-five clients. Id. at 33. And after twenty-plus years in business, Sunquest has lost only forty-clients, mostly as a result of hospital mergers. Id. at 33-34.

Despite Sunquest's excellent reputation, its clients do not purchase its goods and services without hesitation. Sunquest's goods and services are costly, and health care institutions take their time before making such critical purchases. As Dr. Goldblatt explained:

Our sales cycle is a long sales cycle and clients go through a process that actually takes between six and eighteen months. And a major aspect of that process is the development of confidence in the provider of services and products. . . . I think of it as a confidence-building process and a comfort-building process. And a part of it is to become emotionally involved with all of that information and evidence that would cause the client to finally entrust their institution and, indeed, their reputation and maybe their job, in some instances, on our success with providing service.

(6/20 Tr. at 93).*fn2 Often the buying process involves a selection committee in which Sunquest deals with upper level executives including, at times, the CEO of the institution. Id. at 47, 151. The committee that is charged with making decisions to purchase goods and services almost always negotiates with Sunquest and any of its competitors. Id. at 49. These committees "almost always" ask questions about the products or services being offered by Sunquest. Id. at 48-49, 151. During these negotiations, Sunquest is given every opportunity to set forth its position and to make its pitch to the committee buying the products and services in question. Id. at 50. Attorneys are usually involved in the process, advising these institutions about the written contracts entered into between Sunquest and the health care institution. Id. at 48. Indeed, the decision to purchase is often so important to an institution that it will hire an outside consultant to help it determine if it is purchasing the right goods and services. Id. at 49.

Although Sunquest's customers go through this lengthy process, they are not particularly sophisticated when it comes to medical software.

Sunquest's customers are very sophisticated at their professional work. They are very good at doing laboratory analysis. They are very good at medical imaging. They may be very good at managing outstanding pharmacy services, but they rely heavily on special kinds of professionals for information decisions, and they rely very heavily on vendors like Sunquest to provide them with a variety of services.
So, in regard to those areas where they rely on vendors like Sunquest, I would say they are not sophisticated.

(6/19 Tr. at 65). In fact, as Dr. Goldblatt noted, a client's decision to buy from Sunquest or one of its competitors is often influenced by numerous intangibles, such as relationships, perception, reputation, quality, and experience. (6/20 Tr. at 50). Despite months of discussions, the decision to purchase often turns on the reputation, history, people, and symbols that distinguish one company from its competitors. Id. at 95.

B. The Sun and Mountains Logo

In 1979 Sunquest adopted as its symbol a stylized sun rising over mountains (the "sun and mountains logo"). (6/19 Tr. at 37; Pl.'s Ex. 3). While not indicative of the nature of the medical software business, the sun and mountains logo was meant to symbolize the company's quest for success in the industry. (6/19 Tr. at 37-38; 6/20 Tr. at 44-45). After using the logo continuously in its marketing and advertising, (6/19 Tr. at 40-42, 44), Sunquest filed an application to register it with the United States Patent and Trademark Office ("PTO"). Id. at 47. The application matured into Certificate of Registration No. 1,754,470, dated February 23, 1993. (Id.; Pl.'s Ex. 5). Since that time, the sun and mountains logo has been continuously registered. (6/19 Tr. at 47).

The sun and mountains logo is comprised of "a sun emerging from behind two mountains." (Pl.'s Ex. 5). The sky behind the sun and mountains is bordered in the shape of a square with ragged edges or "stippling." (6/20 Tr. at 64; Pl.'s Exs. 3 & 5). Although the mark clearly describes the company's name, "Sunquest," (6/19 Tr. at 38), this name is not a part of the mark registered with the PTO. (Pl.'s Ex. 5). In fact, Sunquest's sun and mountains logo has appeared over the past twenty-one (21) years with and without writing next to it. (6/20 Tr. at 34-37).*fn3 Color is also not a part of the mark registered with the PTO. (Pl.'s Ex. 5). In the past, the Sunquest logo has appeared in white, orange, blue, gold, brown, beige, and black. (6/19 Tr. at 46 47; 6/20 Tr. at 6, 38, 63, 135). Whenever materials with the sun and mountains logo are transmitted by facsimile, the logo will appear, as it does in the trademark registration, in black and white. (6/20 Tr. at 67).

Since adopting its logo in 1979, Sunquest has made continuous and uninterrupted use of it, and has actively advertised and promoted it. (6/19 Tr. at 39, 40-44).*fn4 Over the years, Sunquest has expended millions of dollars advertising and promoting its mark. (Id. at 43-45; 6/20 Tr. at 101; Pl.'s Ex. 4). Sunquest has used its sun and mountains logo in several channels of advertising, including corporate stationery used in correspondence with existing and prospective customers, business cards, pamphlets, travel bags, golf shirts, lapel pins, trade publications, and trade show booths. (6/19 Tr. at 40-42; 6/20 Tr. at 100; Pl.'s Ex. 1). The logo appears on Sunquest's website. (6/19 Tr. at 34-35, 41; Pl.'s Ex. 2). The website is used as a marketing and recruiting tool. (6/19 Tr. at 35-36). Sunquest's logo has also appeared on its software packaging and on computer screens where various versions of Sunquest's software are loaded. (6/20 Tr. at 80, 99-100). Based on this extensive distribution of the sun and mountains logo, Sunquest's customers and prospective customers associate the logo with Sunquest. Id. at 106. In fact, Sunquest's logo is easily identifiable to those in the health care information systems market. (6/19 Tr. at 39).*fn5

In 1996, Sunquest began to use its sun and mountains logo to promote Balanced View's products and services. (6/20 Tr. at 6-7, 42). Dr. Goldblatt explained this decision during the preliminary injunction hearing:

[W]e viewed the Balanced View Division as the highest level of service offered by the company. As the consulting division of the company, the — usually the most, most experienced people in the installation and in the interfacing and in the product management group have graduated, in essence, to Balanced View.
So, we view that area as being sort of the best and the brightest of the company, and the mark was continued with that group to be emblematic of the excellence of that group. . . .
We discussed at the time the importance of continuing the use of the mark and, indeed, continuing to use the mark for the highest level of service that the company offers.

So, we felt, if anything, it elevated the use of the mark within the company. Id. at 6-7. Since 1996, Balanced View has used the sun and mountains logo continuously without interruption. (Id. at 6; Pl.'s Ex. 1; Def.'s Exs. Y-Z). As used by Balanced View at present, the sun and mountains logo appears in a single color: gold. (6/20 Tr. at 6, 38).

C. Park City Solutions Associates Itself With Sunquest

Defendant R. Scott Holbrook ("Holbrook") worked for Sunquest from 1991 to 1996. (6/19 Tr. at 33, 48; 6/20 Tr. at 97-99). When he started at Sunquest he was a senior vice-president of field services. By 1994, he became executive vice president. (6/19 Tr. at 48-49; 6/20 Tr. at 97-98). Soon thereafter, he was promoted to the head of Sunquest's sales and marketing department. (6/19 Tr. at 49; 6/20 Tr. at 98). In that position, Holbrook managed Sunquest's entire sales staff, and was responsible for the preparation of requests for proposals ("RFPs"), the negotiation of all contracts for the sale or licensing of Sunquest's products and services, and the renewal of existing clients' maintenance agreements. (6/19 Tr. at 49).

Throughout his tenure at Sunquest, Holbrook was familiar with Sunquest's sun and mountains logo. (Id. at 50; 6/20 Tr. at 100). During that time, Sunquest displayed the sun and mountains logo in its sales brochures, in other written marketing materials, and at its trade shows. (6/20 Tr. at 99-100). Sunquest employees had logos on their briefcases and on articles of clothing. Id. Mr. Holbrook himself used company letterhead and carried business cards and a briefcase with the sun and mountains logo on them. (Id.; 6/19 Tr. at 50). Quite simply, the logo was "a part of . . . very nearly everything he ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.