MicroStrategy Incorporated v. Motorola, Incorporated

United States Court of Appeals for the Fourth Circuit
245 F.3d 335 (2001)

ELI5:

Rule of Law:

To obtain a preliminary injunction for trademark infringement, especially when the balance of hardships does not decidedly favor the plaintiff, the plaintiff must make a strong showing of likelihood of success on the merits, which includes proving that the purported mark was actually used consistently and distinctly to identify the source of goods or services.

Facts:

MicroStrategy, a communication software producer, asserts it had been using the phrase “Intelligence Everywhere” as a common law trademark since at least 1998.
In June 2000, Motorola, an electronics company, decided to create a new global brand to unify its corporate identity.
In August 2000, the advertising agency Ogilvey & Mather suggested the phrase “Intelligence Everywhere” to Motorola and stated that a trademark search revealed no conflicting uses.
Motorola's in-house counsel conducted its own trademark searches, found no conflicting uses, and on October 5, 2000, advised that the phrase was available for use.
On October 19, 2000, Motorola filed an intent-to-use application with the U.S. Patent and Trademark Office to register “Intelligence Everywhere” as a trademark.
On December 10, 2000, Motorola registered the domain name “intelligenceeverywhere.com”.
On January 8, 2001, MicroStrategy sent a letter to Motorola, notifying Motorola of its claim to the “Intelligence Everywhere” trademark and asserting that Motorola's intended use would be unlawful infringement.
Motorola responded that it did not believe its use would be unlawful and expressed its intent to proceed with its planned global advertising campaign using the phrase.

Procedural Posture:

MicroStrategy, Inc. filed suit against Motorola, Inc. in the United States District Court for the Eastern District of Virginia, alleging trademark infringement, trademark dilution, and cybersquatting.
MicroStrategy moved the district court for a preliminary injunction to prevent Motorola from using the phrase “Intelligence Everywhere”.
After a hearing, the district court denied MicroStrategy's motion for a preliminary injunction.
MicroStrategy filed an interlocutory appeal of the denial of the injunction on its trademark infringement claim to the United States Court of Appeals for the Fourth Circuit.

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Issue:

Does a company's limited, sporadic, and inconsistent use of a phrase in corporate materials constitute sufficient trademark use to establish a strong likelihood of success on the merits required for a preliminary injunction against an alleged infringer?

Opinions:

Majority - Judge Diana Gribbon Motz

No. A company's limited, sporadic, and inconsistent use of a phrase does not constitute sufficient trademark use to establish a strong likelihood of success on the merits. To obtain a preliminary injunction, a plaintiff must satisfy the four-factor test from Blackwelder. Here, the balance of hardships does not decidedly favor MicroStrategy, as an injunction would cause significant harm to Motorola's planned global campaign and multi-million dollar investment. Therefore, MicroStrategy must make a 'strong showing of likelihood of success' on its infringement claim. The fundamental requirement of a trademark claim is proving a valid and protectable mark, which requires showing that the phrase was used to identify the source of goods. MicroStrategy's use of 'Intelligence Everywhere' was infrequent, inconsistent, often buried in text, and not presented in a consistent pattern that would make its function as a trademark readily apparent. Characterizing the phrase as a 'mission' or 'slogan' does not automatically confer trademark status; it must function to identify source, which MicroStrategy failed to demonstrate.

Dissenting - Judge Niemeyer

Yes. A company's consistent use of a phrase in connection with a specific product and on its business cards is sufficient to raise serious questions on the merits, which should be enough for a preliminary injunction when the balance of hardships favors that company. The majority miscalculates the balance of harms; Motorola's financial losses are largely self-inflicted because it continued spending after receiving notice of MicroStrategy's claim, which demonstrates bad faith. Denying the injunction will allow Motorola's massive campaign to permanently destroy MicroStrategy’s senior rights in the mark. MicroStrategy has a good chance of succeeding on the merits, as it used the mark consistently with its 'Broadcaster' software and on business cards. The mark is suggestive, not descriptive, and there is a high likelihood of 'reverse confusion,' where Motorola's junior use would overwhelm MicroStrategy's senior use, leading consumers to associate the mark with Motorola.

Analysis:

This decision reinforces the fundamental trademark principle that rights are acquired through actual use of a mark in commerce to identify the source of goods, not merely by adopting a slogan. The court's analysis demonstrates that for a phrase to be protectable, its use must be consistent, prominent, and clearly intended to function as a source-identifier in the minds of consumers. The ruling serves as a cautionary tale for companies, especially smaller ones, that failing to use and protect a potential mark deliberately can result in an inability to stop a larger competitor from adopting the same mark. It also highlights the high evidentiary burden a plaintiff faces in seeking a preliminary injunction when the balance of hardships is not decisively in its favor.

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