PHS West, LLC v. ServerLift Corporation

Background

This trademark dispute concerns the plaintiffs’ use of “server lift” and “server lifter” on their websites. ServerLift manufactures and sells products that transport and position data-center equipment, including computer servers. The opinion states that PHS West, LLC, R on I, LLC, and ServerLift are direct competitors.

ServerLift registered the domain name “serverlift.com” in 2002 and owned the SERVERLIFT trademark for data-storage lifting equipment as of April 14, 2015. The opinion states that ServerLift filed a declaration of use and incontestability with the United States Patent and Trademark Office in May 2021, and that the parties appeared to agree that the mark was incontestable.

Before 2021 or 2022, PHS West and R on I marketed their products under names such as “Ergo-Express Lifter,” “LIFT-O-Flex Motorized Lifter,” and “Data Center Lifters.” The opinion states that PHS West later began prominently using “server lift” and “server lifter,” and that R on I followed. ServerLift claimed that these uses redirected internet traffic, confused consumers, and caused potential customers to go to the plaintiffs instead of ServerLift.

ServerLift sent the plaintiffs a letter in May 2022 accusing them of trademark infringement. The plaintiffs then filed a declaratory-judgment action seeking a declaration that they did not infringe and cancellation of ServerLift’s trademarks. ServerLift moved for a preliminary injunction barring the plaintiffs from using “server lift,” “server lifter,” or any phrase placing a form of “server” immediately before a form of “lift” in advertising, labeling, instructions, or packaging.

Preliminary-Injunction Standard

The court applied four factors used to decide whether to issue a preliminary injunction: the likelihood that the moving party will ultimately succeed, the threat of irreparable harm without relief, the balance of harms, and the public interest. The court emphasized that no single factor controls and that the central question is whether the equities favor intervention to preserve the status quo until the merits are determined.

Likelihood of Success

For trademark infringement under 15 U.S.C. § 1114, the court stated that a claimant must show a valid trademark and a likelihood of confusion. The court found no credible dispute that the SERVERLIFT mark was presumptively valid and focused on likelihood of confusion.

The court considered six factors:

- Strength of the mark: Although the mark described the use of ServerLift’s products, the court found that the record showed it had become a recognized brand and source indicator. - Similarity: The parties used the same words in immediate sequence, with the plaintiffs generally adding only a space. The court found that the phrases conveyed the same meaning and sounded indistinguishable when spoken. The prominent, bold, and large display of the terms on the plaintiffs’ websites also supported treating them as marks rather than merely product descriptions. - Competition: The parties did not dispute that they directly competed, which favored ServerLift. - Intent to confuse: The court inferred, at this stage, that the plaintiffs intended to confuse consumers because they had marketed their products for more than a decade without using the challenged phrases, then began using them after ServerLift became an industry leader. The court also noted evidence suggesting that internet searches for ServerLift were redirected to the plaintiffs’ websites. The court acknowledged that discovery could produce other explanations for the plaintiffs’ marketing decisions. - Consumer care: The products were expensive and used by businesses, suggesting that customers were relatively sophisticated. This weighed against confusion but did not overcome the other factors. The court also reasoned that customers looking for ServerLift’s authorized resellers might mistakenly believe that the plaintiffs were authorized resellers. - Actual confusion: ServerLift had not presented evidence of actual confusion. The court nevertheless found that actual confusion was not required to establish a likelihood of confusion.

The court concluded that these factors favored a finding that consumers were likely to be confused.

Fair Use

The plaintiffs argued that the fair-use defense applied. That defense requires showing that the term was used other than as a trademark, that it described the plaintiffs’ goods, and that the plaintiffs used it fairly and in good faith only to describe those goods or services.

The court found that the plaintiffs could not meet that burden at that stage. It had already found that the phrases appeared to be used as marks, and it identified an unresolved question about whether the plaintiffs acted in good faith when they recently changed their websites. The court said that discovery was needed to investigate that issue and that the fair-use argument did not defeat the motion.

Other Injunction Factors

The court applied a statutory presumption of irreparable harm after finding a likelihood of success on the trademark claim. The plaintiffs did not offer evidence or argument rebutting that presumption, so the court found that ServerLift would face irreparable harm without an injunction.

The balance of harms favored ServerLift. Without an injunction, ServerLift could face further marketplace confusion and erosion of its market share and goodwill. If the injunction issued, the plaintiffs would need to edit their materials to stop using the phrases in immediate succession. The court found that this would be inconvenient but possible and not unduly burdensome.

The court found that the public interest in protecting trademarks and preventing consumer misrepresentations made the public-interest factor neutral or favorable to ServerLift. Although the public also has an interest in competition, the court stated that the plaintiffs might be engaged in unfair competition.

Order

The court granted ServerLift’s motion for a preliminary injunction. It enjoined PHS West, LLC, R on I, LLC, their officers, directors, members, shareholders, agents, and employees, and persons acting in concert or participation with them, from using ServerLift’s trademark in advertising, labeling, instructions, or packaging. The prohibition covered “SERVER LIFT,” “SERVER LIFTER,” and any other phrase containing a form of “SERVER” immediately followed by a form of “LIFT.”

The court also ruled that ServerLift was not required to post a bond to secure the injunctive relief and directed that judgment be entered accordingly.