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.
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
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.
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.
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
(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
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
(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.
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
[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
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 ...