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UHS of Delaware Inc. v. United Health Services Inc.

United States District Court, M.D. Pennsylvania

December 29, 2016

UHS OF DELAWARE, INC., Plaintiff
v.
UNITED HEALTH SERVICES, INC., et al., Defendants

          MEMORANDUM

          Christopher C. Conner, Chief Judge.

         The instant matter arises from a trademark dispute between plaintiff UHS of Delaware, Inc. ("UHS Delaware") and defendants United Health Services, Inc., ("United Health Services"), United Health Services Hospitals, Inc., Professional Home Care, Inc., Twin Tier Home Health, Inc., Ideal Senior Living Center, Inc., Ideal Senior Living Center Housing Corporation, Delaware Valley Hospital, Inc., and United Medical Associates. Before the court are UHS Delaware's motion (Doc. 150) for summary judgment and defendants' motion (Doc. 151) for partial summary judgment.

         I. Factual Background and Procedural History[1]

         The factual background of this case is detailed in several prior opinions, familiarity with which is presumed.[2] UHS Delaware is the healthcare management company for Universal Health Services, Inc. ("Universal"). (Doc. 157, Ex. 1 ¶ 3).[3]Universal's subsidiaries own and operate more than 235 acute care and behavior health facilities and surgery centers in a number of states throughout the country. (Id.) Universal owns no subsidiaries or affiliates, and does not operate, in the state of New York. (See Doc. 153, Ex. D at 3-4). UHS Delaware does not itself provide healthcare services; instead, it manages an affiliated network of healthcare service providers. (See Doc. 157, Ex. 1 ¶ 3).

         UHS Delaware owns federal registrations for two trademarks: (1) the UHS word mark, bearing U.S. Registration No. 1, 696, 433 ("the '433 mark"), and (2) the UHS stylized mark, bearing U.S. Registration No. 2, 741, 663 ("the '663 mark") for use in connection with hospital services and hospital management services. (Id. Exs. 2, 4; see Doc. 155 ¶ 1; Doc. 161-5 ¶ 1). The stylized mark appears as follows:

         (Image Omitted)

         (Doc. 157, Ex. 4). UHS Delaware owns both marks via assignment from its parent, Universal. (Id. Ex. 6). The '433 registration issued on June 23, 1992, and the '663 registration issued on July 29, 2003. (Doc. 153 ¶¶ 27-28; Doc. 157, Exs. 2, 4). The marks have achieved "incontestable" status under the Lanham Act. (Doc. 155 ¶ 1; Doc. 161-5 ¶ 1); see also 15 U.S.C. § 1065.

         Defendants are eight nonprofit corporations which together comprise an integrated healthcare system headquartered in the southern tier of New York. (Doc. 153 ¶¶ 1, 5-14). Defendants include: (1) United Health Services, the healthcare system's parent entity; (2) United Health Services Hospitals, Inc., a subsidiary of United Health Services which operates, inter alia, Binghamton General Hospital, Ideal/Wilson Medical Center, and eighteen physician practice clinics; (3) Delaware Valley Hospital, Inc., a 25-bed critical access hospital; (4) Professional Home Care, Inc., an advanced home care service; (5) Twin Tier Home Health, Inc., a certified home health care agency; (6) Ideal Senior Living Center, Inc., a skilled nursing facility and long term home health care program; (7) Ideal Senior Living Center Housing Corporation, an independent living and adult care facility; and (8) United Medical Associates, P.C., a multi-specialty medical practice group comprising 185 physicians and 128 advanced practice providers. (Id. ¶¶ 5-14). United Health Services does not have any facilities outside of New York state. (Id. ¶ 2).

         The United Health Services healthcare system began using the acronym "UHS" in approximately 1982. An employee newsletter issued that year was titled "UHS Life." (Id. ¶ 17). Defendants issued seven subsequent newsletters titled "The UHS News" between 1983 and 1990. (Id.) United Health Services also used "UHS" in occasional pamphlets and certain annual reporting. (Id.) News articles and reports regularly referred to the system as "UHS" during this time. (Id. ¶ 22). In 1990 or 1991, United Health Services erected monument signs outside of the Binghamton and Wilson hospitals. (Id. ¶ 20). Each sign was approximately six feet tall, boasting a large "United Health Services" seal and the hospital's name, followed by subscript stating "United Health Services Hospitals" and "A Member of the UHS Health Care System." (Doc. 153-3 at 46, 66-67). United Health Services registered its domain name-www.uhs.net-in July 1997. (Doc. 153 ¶ 25).

         United Health Services adopted a new system wide brand in 1997. (See Doc. 155 ¶ 5; see also Doc. 161-5 ¶ 5). The rebranding initiative aimed to create a unified corporate identity, structured around the following logo:

         (Image Omitted)

         (See Doc. 157, Ex. 47). The branding guidelines issued to all United Health Services entities stated: "There should be no variation in the logo. This will maintain clarity and consistency throughout our system." (Id. at 4).

         Christina Boyd ("Boyd"), Vice President of Community Relations for the United Health Services system, testified that system entities were required to and did comply with the new branding policy, except for isolated incidents of "rogue" advertisements by individual system entities. (Doc. 155 ¶ 7; Doc. 161-5 ¶ 7). The record reflects that from 1997 until 2010, United Health Services displayed the new logo on its website and included the logo in weekly employee newsletters, system periodicals, annual reports, and advertisements. (Doc. 163, Ex. A, UHSHI 30(b)(6) Dep. (Boyd) 70:15-76:19, 79:5-82:18, 96:12-15, 99:4-102:23, 108:22-110:7 (Jan. 14, 2016)).

         United Health Services began a new rebranding effort in 2009. (Doc. 155 ¶ 8; Doc. 161-5 ¶ 8). The 2009 rebranding initiative was led by Boyd and a centralized steering committee-called Integration, Too!-which included members of each subsidiary's executive team as well as certain business unit leaders. (Doc. 155 ¶ 8; Doc. 161-5 ¶ 8; see also Doc. 157, Ex. 19, UHSHI 30(b)(6) Dep. (Carrigg) 35:25-37:11 (Jan. 15, 2016)). On August 20, 2009, the Integration, Too! committee agreed to adopt the following system wide logo:

         (Image Omitted)

         (Doc. 155 ¶ 8; Doc. 161-1 ¶ 8; see also Doc. 157, Ex. 29 at 6). To achieve a unified corporate identity, Integration, Too! also decided to rename each system entity to include the "UHS" title followed by a specific location or services delimiter, i.e., "UHS Delaware Valley Hospital." (Doc. 157, Ex. 35 at 3). United Health Services introduced "UHS" and the stylized logo as its "new name" in June 2010. (Id. Ex. 61 at 2).

         UHS Delaware instituted this action with the filing of a complaint (Doc. 1) on March 16, 2012, subsequently filing an amended complaint (Doc. 9) on April 26, 2012, and a second amended complaint (Doc. 14-3) on June 6, 2012. UHS Delaware asserts the following claims: federal trademark infringement of the '433 mark (Count I) and the '663 mark (Count III) under 15 U.S.C. § 1114; federal unfair competition as to the '433 mark (Count II) and the '663 mark (Count IV) under 15 U.S.C. § 1125(a) and common law; state law infringement of the '663 mark under 54 Pa. Stat. & Cons. Stat. Ann. § 1123 (Count V); and contributory infringement under federal and state statutory law and common law against United Health Services alone (Count VI). In the alternative, UHS Delaware seeks a declaration of the parties' respective rights pursuant to 28 U.S.C. § 2201 (Count VII).

         Defendants filed individual answers and affirmative defenses (Docs. 114-20) on March 3, 2015. Among other defenses, each defendant asserts that it has senior rights to the "UHS" mark against UHS Delaware in New York state. (See id.) United Health Services separately asserted counterclaims against UHS Delaware, seeking cancellation of the '433 and '663 marks. (Doc. 114). The court dismissed United Health Services' counterclaims with leave to amend by memorandum and order dated November 19, 2015. UHS of Delaware, Inc., 2015 WL 7294454. United Health Services elected not to amend its counterclaims.

         Following a period of discovery, the parties filed the instant cross-motions (Docs. 150-51) for summary judgment, together with supporting papers.[4] The motions are fully briefed and ripe for disposition.

         II. Standard of Review

         Through summary adjudication, the court may dispose of those claims that do not present a "genuine dispute as to any material fact" and for which a jury trial would be an empty and unnecessary formality. Fed.R.Civ.P. 56(a). The burden of proof tasks the non-moving party to come forth with "affirmative evidence, beyond the allegations of the pleadings, " in support of its right to relief. Pappas v. City of Lebanon, 331 F.Supp.2d 311, 315 (M.D. Pa. 2004); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). This evidence must be adequate, as a matter of law, to sustain a judgment in favor of the non-moving party on the claims. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-57 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-89 (1986). Only if this threshold is met may the cause of action proceed. See Pappas, 331 F.Supp.2d at 315.

         Courts are permitted to resolve cross-motions for summary judgment concurrently. See Lawrence v. City of Phila., 527 F.3d 299, 310 (3d Cir. 2008); see also Johnson v. Fed. Express Corp., 996 F.Supp.2d 302, 312 (M.D. Pa. 2014); 10A Charles Alan Wright et al., Federal Practice and Procedure § 2720 (3d ed. 2014). When doing so, the court is bound to view the evidence in the light most favorable to the non-moving party with respect to each motion. Fed.R.Civ.P. 56; Lawrence, 527 F.3d at 310 (quoting Rains v. Cascade Indus., Inc., 402 F.2d 241, 245 (3d Cir. 1968)).

         III. Discussion

         Claims for trademark infringement and unfair competition share the same essential elements under both the Lanham Act and Pennsylvania law. See A&H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir. 2000); Harp v. Rahme, 984 F.Supp.2d 398, 409-10 (E.D. Pa. 2013). To prevail on either claim, a plaintiff must establish that (1) the marks in dispute are valid and legally protectable; (2) plaintiff owns the marks; and (3) defendant's use of a similar mark generates "a likelihood of confusion." A&H Sportswear, 237 F.3d at 210. The court will address threshold issues of validity and ownership before delving into the more nuanced likelihood of confusion inquiry and United Health Services' junior user defense.

         A. UHS Delaware's Motion: Ownership and Validity of the Marks

         United Health Services does not challenge UHS Delaware's ownership of the '433 and '663 marks. (Doc. 155 ¶ 1; Doc. 161-5 ¶ 1). Nor does it dispute that the marks are valid and legally protectable. (Doc. 155 ¶ 1; Doc. 161-5 ¶ 1). Instead, United Health Services remonstrates throughout its papers that UHS Delaware does not use either mark. (See Doc. 161-1 at 2-3, 14-15, 19).[5] United Health Services accordingly denies UHS Delaware's factual assertions concerning advertising and promotional use of the marks. (See Doc. 161-5 ¶¶ 2-3). It further asserts that UHS Delaware has not produced any evidence proving that its associated facilities are licensed users of the '433 and '663 marks. (See Doc. 161-1 at 3). This preliminary issue permeates many of United Health Services' Rule 56 arguments.

         The Lanham Act extends its protections to registered marks in legitimate use by a registrant's "related companies." 15 U.S.C. § 1055. When a related company uses a mark with a registrant's permission, that use "shall inure to the benefit of the registrant, " so long as the registrant maintains sufficient control over the licensee's use. Id. Authorized use by a related party will maintain a trademark owner's rights even when the only use of the mark is by the related party. 3 J. Thomas McCarthy, Trademarks and Unfair Competition §§ 18:45.50, 18:46 (4th ed. 2016). Trademark licensing agreements between a registrant and related parties, whether written or implied, will avail the registrant of the Act's protections. See Doeblers' Pa. Hybrids, Inc. v. Doebler, 442 F.3d 812, 824 (3d Cir. 2006).

         UHS Delaware need not establish its own use of the trademarks to defend them against infringement. It is sufficient to establish use by its licensee affiliates and subsidiaries. UHS Delaware has submitted the affidavit of its associate general counsel attesting that Universal's subsidiaries use both the '433 and '663 marks with permission from UHS Delaware, pursuant to its healthcare management contracts with the subsidiary entities. (Doc. 170, Ex. AA ¶¶ 2-3). This authorized use of the '433 and '663 marks by parent and subsidiary corporations of UHS Delaware inures to its benefit as owner of the marks. Consequently, the court rejects United Health Services' assertion that UHS Delaware cannot establish "use" of the marks.

         B. UHS Delaware's Motion: Likelihood of Confusion

         To prove likelihood of confusion, a plaintiff must demonstrate that, after viewing both marks, consumers "would probably assume" that the products or services bearing the marks share the same source. Checkpoint Svs., Inc. v. Check Point Software Techs., Inc., 269 F.3d 270, 280 (3d Cir. 2001) (quoting Scott Paper Co. v. Scott's Liquid Gold, Inc., 589 F.2d 1225, 1229 (3d Cir. 1978), superseded on other grounds by Shire U.S. Inc. v. Barr Labs., 329 F.3d 348, 352 n.10 (3d Cir. 2003)), aff'g 104 F.Supp.2d 427 (D.N.J. 2000). Courts within the Third Circuit Court of Appeals apply a familiar, nonexhaustive list of factors (the "Lapp factors") to determine whether there is a likelihood of confusion between competing marks:

(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, though 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 because of the similarity of function; [and] (10) other facts suggesting that the consuming public might expect the prior owner to manufacture a product in the defendant's market, or that he is likely to expand into that market.

Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir. 1983) (citing Scott Paper Co., 589 F.2d at 1229). The inquiry is qualitative: no single factor is dispositive, and not all factors are relevant in every case. See Checkpoint Sys., 269 F.3d at 280. As the factors illustrate, likelihood of confusion is a decidedly fact-intensive issue. Courts have thus cautioned that "summary judgment for either party is unlikely, absent a particularly one-sided factual record." 800-JR Cigar, Inc. v. GoTo.com, Inc., 437 F.Supp.2d 273, 285 (D.N.J. 2006); see also Country Floors, Inc. v. P'ship Composed of Gepner & Ford, 930 F.2d 1056, 1062-63 (3d Cir. 1991). We address the salient Lapp factors seriatim.

         1. Factor 1: Similarity of Marks

         The Third Circuit Court of Appeals ranks similarity of marks as "the single most important" of the ten Lapp factors. A&H Sportswear, 237 F.3d at 216 (citing Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 476 (3d Cir. 1994)). Its importance, however, does not render the factor dispositive. See Checkpoint Sys., 269 F.3d at 281. Rather than a "side-by-side comparison, " the court must endeavor to "move into the mind of the roving consumer" and ask whether the consumer- encountering one of the two marks in isolation with only general recollection of the other-would likely confuse the two. Id.; A&H Sportswear, 237 F.3d at 216. A court measuring similarity must "compare the appearance, sound and meaning of the marks." Checkpoint Sys., 269 F.3d at 281 (citation omitted).

         In considering a mark's appearance, courts look to "visual characteristics such as the layout and format of lettering." Harp, 984 F.Supp.2d at 411-12 (citing A&H Sportswear, 237 F.3d at 217). Courts measure the "sound" and "auditory impressions" of a mark by examining the number of words and syllables employed and the different (or similar) uses of those words and syllables. See id. "Meaning" is determined by assessing whether the combination of words in each mark offers "a different denotative or connotative meaning." IcL at 413.

         Defendants' UHS logo bears resemblance to UHS Delaware's '433 word mark and '663 stylized mark against all sight, sound, and meaning metrics. The marks contain the same three capitalized letters-UHS-separated by neither punctuation nor spacing and accompanied by no other text. Each mark differs marginally in style: UHS Delaware's stylized mark comprises three hollowed-out and rounded letters with no attendant graphic, while United Health Services' logo displays a solid, serif font accompanied by a small leaf graphic in the upper left region of its letter "U." The marks are otherwise indistinct. Read aloud, the marks produce identical auditory impressions. As a result of their simplicity, neither mark evokes a unique denotative or connotative meaning in isolation.

         The record evidence concerning mark similarity is undisputed. There exists near identity between the parties' marks. United Health Services effectively concedes as much in its briefing, rejoining only that "[similarity in name is only the beginning of the analysis." (Doc. ...


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