IP Law Daily, TRADEMARK—N.D. Ill.: Walgreen Co. states claims for infringement, dilution against company owned by great-grandson of Walgreen Co.’s founder, (Sep 25, 2024)

By Robert Margolis, J.D.

Scion operates Walgreen Health Solutions, which Walgreen Co. alleges infringes and tarnishes the WALGREENS® registered trademark.

Walgreen Co. has sufficiently pleaded claims that Walgreen Health Solutions LLC (“WHS”), a health services company founded by Charles R. Walgreen (“Charles”), the great-grandson of Walgreen Co.’s founder, is infringing and diluting Walgreen Co.’s registered trademark, a federal district court in Chicago has held. The court denied WHS’s motion to dismiss several Lanham Act and state law claims arising out of WHS’s use of the “Walgreen” name. The court did dismiss a breach of contract claim against Charles individually (Walgreen Co. v. Walgreen Health Solutions, LCC, No. 1:23-cv-17067 (N.D. Ill. Sept. 24, 2024)).

Walgreen dispute. Walgreen Co., founded in 1901, operates the well-known national drug store chain of some 8,600 stores and a nationwide online storefront. In addition to pharmacy services, Walgreen Co. sells a wide variety of health products. It owns U.S. Trademark Registration No. 2096551 for the typed word mark WALGREENS®, which was registered on September 16, 1997. The mark covers a long list of health products, including “skin lotions, skin moisturizers, … inner soles, and hosiery.”

WHS sells medical equipment and health products, and provides general healthcare advice and information. It was founded in 2018 by Charles, the great-grandson of Walgreen Co.’s founder, and began conducting business in 2019. It operates solely online storefronts at walgreenhealthsolutions.com and walgreenhealthsolutionsproducts.com, and on Amazon marketplace. Its products include lotions, cushioned boots, tension straps, compression stockings, elbow suspension pads, and PPE.

Walgreen Co. sued WHS and Charles alleging that they are intentionally using Walgreen Co.’s “goodwill, equity, and fame,” while using the Walgreen name without a license or consent. They brought claims for trademark infringement under 15 U.S.C. § 1114; trademark dilution under 15 U.S.C. § 1125(c); false designation of origin and/or false representation under 15 U.S.C. § 1125(a); Illinois trademark infringement under 765 ICS 1036/60; violation of Illinois Uniform Deceptive Trade Practices Act (“IDPTA”) under 815 ILCS 510; and common law unfair competition against both WHS and Mr. Walgreen. It also brought a claim against Charles for violating a 2013 agreement resolving an earlier dispute over his use of the Walgreen name in connection with different businesses than WHS. WHS and Charles moved to dismiss all claims under Rule 12(b)(6).

Infringement. Because Walgreen’s infringement claim arises from the same conduct as the false designation or origin and/or false representation claim, as well as the Illinois statutory claims, the court addressed these claims together. Because Walgreen Co. has alleged sufficient facts to establish (1) it owns a protectable mark, and (2) WHS’s use of its mark is likely to cause confusion, the court denied the motion to dismiss as to all of these claims.

Protectable mark. As Walgreen Co. has a registration for its mark, it is presumed to be valid. However, a mark such as WALGREENS® that is “primarily merely a surname” is not registrable absent acquiring secondary meaning. 15 U.S.C. § 1052(e)(4). This required Walgreen Co. to plead facts showing the public has come to associate the “Walgreen” name uniquely with Walgreen Co. The court found that Walgreen Co. plausibly alleged facts supporting such secondary meaning, including that that the mark was first registered in 1997, Walgreen Co. has used the mark for more than a century, it generates high sales volume including by filling millions of prescriptions every day, and has made substantial and consistently high advertising expenditures. Therefore, Walgreen Co. pled it has a protectable mark, despite it being based on a surname.

Likelihood of confusion. The court weighed the seven likelihood-of-confusion factors considered in the Seventh Circuit, and found that Walgreen Co. alleged facts supporting at least five of them favoring Walgreen Co. Accordingly the court found the complaint’s allegations of likelihood of confusion passed muster.

As to the similarity of the parties’ marks, the court rejected WHS’s argument that its use of the singular “Walgreen” in contrast to the Walgreen Co.’s use of WALGREENS, as well as WHS’s use of Walgreen in conjunction with “Health Solutions” sufficed to differentiate the parties’ marks. Given the WALGREENS® mark’s secondary meaning, Walgreen Co.’s position as a major player in the healthcare services and health products market, and the fact it has used its mark in conjunction with the phrases “Health” and “Health Services” in the past, the court found the marks to be similar in suggestion.

The court then noted similarities in the parties’ products, including several types of products that both parties sell, such as lotions, compression socks, and orthotics. That Walgreen Co.’s core business is healthcare products, not healthcare services, as WHS argued, did not dissuade the court from finding sufficient similarity in the parties’ products for this factor to support Walgreen Co.

Likewise, the fact that both parties operate online marketplaces selling healthcare goods led the court to find that they use the same channels of commerce and target similar customers. While WHS argued its target audience is healthcare professionals and Walgreen Co.’s is consumers, in fact anyone may purchase products from WHS’s websites, the court pointed out.

As noted above, Walgreen Co. has used its mark for more than a century, and it has obtained substantial notoriety through the operation of stores nationwide. Thus, the court had no trouble finding the WALGREENS® mark to be strong and distinctive.

As for evidence of actual confusion, Walgreen Co.’s complaint provided two examples where its customers directed social media posts to WHS that the customers intended for Walgreen Co. This sufficed for the court to find this factor also favored Walgreen Co.

Dilution. The court also found that Walgreen Co. stated a claim for trademark dilution. The above-described facts of the widespread, century-plus use of the WALGREENS® mark sufficed to plead that mark became famous long before WHS came into existence in 2018. That fame, coupled with WHS’s use of the Walgreen mark in connection with products and services similar to those sold by Walgreen Co., supported an inference that WHS’s inferior mark impairs the ability of the WALGREENS® mark to serve as a unique identifier, thus diluting it, the court held.

Laches. The court also rejected WHS’s laches argument, because it was premised on Walgreen Co. not acting at the moment WHS began operating in 2019 or 2020. That is irrelevant, the court noted; what matters is when Walgreen Co. first knew of the alleged use of mark, which the complaint alleges to be in 2022.

The case is No. 1:23-cv-17067.

Judge: Kendall, V.

Companies: Walgreen Co.; Walgreen Health Solutions, LLC

Cases: Trademark IllinoisNews