Unpublished Disposition, 865 F.2d 1271 (9th Cir. 1989)

MEMORANDUM^* 

Appellant Parfums de Coeur, Ltd., timely appeals from a preliminary injunction prohibiting it from airing a 30-second television commercial. The district court had jurisdiction of the case under 28 U.S.C. § 1338(a) (1982) and 15 U.S.C. § 1121 (1982), and we now have jurisdiction under 28 U.S.C. § 1292(a) (1) (1982). We affirm.

FACTS

Both Giorgio, Inc., and Parfums de Coeur, Ltd., manufacture and market women's fragrances. Giorgio sells its fragrance, "GIORGIO," in three-ounce bottles for $45; Parfums de Coeur sells its fragrance, "PRIMO!," in one-ounce bottles for $7.50. This case arises out of Parfums de Coeur's comparative advertising campaign that began running in selected magazines in October 1985. For various reasons Giorgio objected to these advertisements as violating its proprietary rights. Giorgio did not object to Parfums de Coeur's advertising that PRIMO! cost $37.50 less than GIORGIO even though the advertisements failed to disclose that the PRIMO! bottle contained two ounces less than the GIORGIO's bottle. That is, Giorgio did not complain until November 1987 when Parfums de Coeur extended its advertising compaign to the three major television networks. Parfum de Coeur's television commercial depicts two fragrance bottles, one GIORGIO and the other PRIMO!, that appear to be about equal size discussing their relative merits. As part of their conversation the two bottles reveal that GIORGIO costs $45 while PRIMO! costs only $7.50. Only a brief two-second "super," or visual message, discloses the relative quantities of the two bottles.

Giorgio filed an action against Parfums de Coeur for violating section 43(a) of the Lanham Act. The district court issued a temporary restraining order and soon thereafter considered Giorgio's motion for a preliminary injunction. The district court ruled first that Giorgio's motion was not barred by the doctrines of estoppel or laches because, although Giorgio failed to object to the misleading price-quantity comparisons in the print advertisements, the television commercial was "qualitatively different." The district court ruled next that Giorgio demonstrated a likelihood of succeeding on the merits and that it would be irreparably harmed without an injunction prohibiting Parfums de Coeur from airing its television commercial. The district court then ordered that an injunction should issue, conditioned on Giorgio posting a $100,000 bond pursuant to Fed. R. Civ. P. 65(c). From this order Parfums de Coeur appeals.

ANALYSIS

The grant of a preliminary injunction may be reversed if the district court abused its discretion or based its decision on an erroneous legal standard or clearly erroneous findings of fact. Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1421 (9th Cir. 1984). Appellant contends that the district court committed reversible error because: (1) it did not apply the doctrines of estoppel and laches to bar Giorgio's motion for a preliminary injunction; (2) it granted the injunction even though Giorgio failed to demonstrate a likelihood of success on the merits or that the balance of hardships tipped in its favor; and (3) it required Giorgio to post inadequate security after granting the injunction. Each contention is addressed separately.

The equitable doctrine of estoppel is available to an individual under the following circumstances:

(1) the party to be estopped must know the facts; (2) he must intend that his conduct shall be acted on or must so act that the party asserting the estoppel has a right to believe it is so intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on the former's conduct to his injury.

Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1096 (9th Cir. 1985). The related equitable doctrine of laches is available to an individual who can "show there was inexcusable delay in the assertion of a known right and that the party asserting laches has been prejudiced." Trustees for Alaska Laborers-Constr. Indus. Health & Sec. Fund v. Ferrell, 812 F.2d 512, 518 (9th Cir. 1987). The district court here rejected application of either doctrine, reasoning that "the television commercial represents a qualitatively different form" of advertisement than the print advertisements.

Unlike Parfums de Coeur, we believe that a television commercial may be misleading even though its counterpart in the print media is not. While readers have ample opportunity to study the import of a print advertisement, viewers have no opportunity to review a misleading message conveyed in a television commercial. For this reason, we believe there is nothing peculiar about Giorgio waiting until Parfums de Coeur extended its advertising campaign to television before complaining about the misleading price-quantity comparison. On these facts, therefore, the district court correctly ruled that neither doctrine bars Giorgio's claim.

"In this circuit, preliminary injunctive relief is available to a party who demonstrates either (1) a combination of probable success and the possibility of irreparable harm, or (2) that serious questions are raised and the balance of hardship tips in its favor." Arcamuzi v. Continental Air Lines, Inc., 819 F.2d 935, 937 (9th Cir. 1987). The district court here relied on the first formulation in granting the preliminary injunction. Parfums de Coeur contends that the district court incorrectly found that Giorgio would likely succeed on the merits, and that it therefore should have applied the second formulation. If it had applied the second formulation, Parfums de Coeur continues, the district court would have found that the balance of hardships disfavors Giorgio. Parfums de Coeur thus concludes that the district court abused its discretion by granting the preliminary injunction. We find this argument unpersuasive.

Giorgio's claim under section 43(a) of the Lanham Act would succeed once it proved the following elements:

(1) in its advertisements, [Parfums de Coeur] made a false statement of fact about either [Parfums de Coeur] or [Giorgio] products;

(2) these advertisements actually deceived or have the tendency to deceive a substantial segment of their audience;

(3) such deception is material in that it is likely to influence the purchasing decision;

(4) the falsely advertised goods are in interstate commerce; and

(5) [Giorgio] has been or is likely to be injured as the result of the ads either by direct diversion of sales from itself to [Parfum de Coeur] or by lessening of good will.

U-Haul Int'l, Inc. v. Jartran, Inc., 522 F. Supp. 1238, 1243 (D. Ariz. 1981), aff'd, 681 F.2d 1159 (9th Cir. 1982).

Parfums de Coeur contends first that the district court incorrectly concluded that its commercial made a false statement of fact. Parfums de Coeur argues that the commercial depicts the two fragrance bottles in their actual size and, in addition, the "super" reveals the actual volume of the two bottles. The district court ruled, however, that the commercial contains false representations of fact because it "disguises" the actual price-quantity comparison, thus leading consumers erroneously to believe that GIORGIO is six times more expensive than PRIMO!. Case law supports the district court's decision because a truthful statement, if misleading, can support a claim under section 43(a) of the Lanham Act. See, e.g., id. at 1247 (" [t]he Courts have also recognized that a statement can be literally true, but nevertheless misleading in the way it is presented").

Parfums de Coeur next contends that there is no solid evidence that the commercial misleads consumers or that the commercial will influence consumers' purchasing decisions. Parfums de Coeur argues that Giorgio failed to produce any dissatisfied customer, and therefore its commercial did not mislead anyone. The district court concluded, however, that many consumers would be deceived by the commercial and that it would influence their purchasing decision. Parfums de Coeur's argument that the district court cannot rely on Giorgio's survey in reaching this conclusion is frivolous. As noted by the district court, " [S]urveys constitute judicially approved methods of obtaining evidence of confusion in trademark cases." See id. at 1249.

We hold that the district court did not abuse its discretion in ruling that Giorgio would likely succeed on the merits, and therefore we do not need to reach Parfum de Coeur's alternative claim that the balance of hardships disfavors Giorgio.

A preliminary injunction cannot issue without "the giving of security by the applicant, in such sum as the court deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained." Fed. R. Civ. P. 65(c). The district court here required Giorgio to post $100,000 security. Parfums de Coeur now claims that the district court abused its discretion in setting this amount, arguing that $100,000 is inadequate to protect the company from costs and damages it may incur. We see nothing in the record, however, that would establish that Parfums de Coeur's potential damage is anything but speculative. Thus, the district court's determination of $100,000 security, particularly in light of Giorgio's ability to respond financially to any claim Parfums de Coeur may later make, was not an abuse of discretion.

CONCLUSION

We AFFIRM the district court's granting of Giorgio's motion for a preliminary injunction.

AFFIRMED.