Tools USA and Equip v. Champ Frame Straight, 4th Cir. (1996)
Tools USA and Equip v. Champ Frame Straight, 4th Cir. (1996)
Tools USA and Equip v. Champ Frame Straight, 4th Cir. (1996)
No. 95-1698
III.
The district court submitted to the jury special interrogatories,
which required the jury to make separate findings as to each element
of trade dress infringement. The jury first found that the Tools USA
catalog's trade dress was non-functional. The jury then found that
although the trade dress was not inherently distinctive and had not
been intentionally copied, it had acquired a secondary meaning by the
time Champ introduced its Toolmart catalog. Finally, the jury found
that there was a likelihood of confusion created by the similarities in
the parties' catalogs. Champ now claims that the jury erred in its findings as to each of the three elements necessary to establish a trade
dress claim. We address each element in turn.
A.
"[A] product feature is functional if it is essential to the use or purpose of the article or it affects the cost or quality of the article."
Inwood Laboratories, Inc. v. Ives Laboratories, Inc. , 456 U.S. 844,
850 n.10 (1982). In other words, a feature is functional "if exclusive
use of the feature would put competitors at a significant nonreputation-related disadvantage." Qualitex Co. v. Jacobson Products
Co., 115 S. Ct. 1300, 1304 (1995). See also , Clamp Mfg. Co. v. Enco
Mfg. Co., 870 F.2d 512, 516 (9th Cir.) ("Functional features of a
product are features which constitute the actual benefit that the customer wishes to purchase, as distinguished from an assurance that a
particular entity made, sponsored, or endorsed a product") (internal
quotations and citations omitted), cert. denied , 493 U.S. 872 (1989).
The non-functionality requirement for trademark or trade dress protection "prevents trademark law, which seeks to promote competition
by protecting a firm's reputation, from instead inhibiting legitimate
competition by allowing a producer to control a useful product feature." Qualitex, 115 S. Ct. at 1304.
In support of its argument that the jury erred in finding that Tools
USA's trade dress was non-functional, Champ focuses on individual
aspects of the "Tools USA" catalog trade dress. Champ explains at
some length why it believes each feature is functional. This tactic
ignores the fact that the critical functionality inquiry is not whether
each individual component of the trade dress is functional, but rather
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B.
Champ asserts that Tools USA failed to prove that its trade dress
had acquired a secondary meaning.
If a particular product's trade dress has acquired a secondary
meaning, then the consuming public associates that product
with a certain producer, and, most importantly, is likely to
make that same association when the trade dress is used on
another producer's product. The public need not be able to
identify the name of the manufacturer that produces the
product; it is enough if the public perceives that the product
emanates from a single source.
M. Kramer Mfg. v. Andrews, 783 F.2d 421, 449 (4th Cir. 1986). In
determining whether a product's trade dress has acquired secondary
meaning, a court considers four factors: "(1) long use; (2) advertising;
(3) sales volume; and (4) identity of service or origin in the minds of
the purchasing public." Pizzeria Uno Corp. v. Temple, 747 F.2d 1522,
1528 n.3 (4th Cir. 1984), cited in Nabisco Brands, Inc. v. Conusa
Corp., 722 F. Supp. 1287, 1290 n.3 (M.D.N.C.), aff'd, 892 F.2d 74
(4th Cir. 1989).
The evidence as to the first three factors, while perhaps not overwhelming, supports the jury's finding that Tools USA's trade dress
had acquired a secondary meaning. As to the first factor, it is undisputed that Tools USA's catalog had been in existence for approximately three years before Champ began publishing its catalog. As to
the second, although there does not appear to be any evidence that
Tools USA conducted any advertising campaign separate from its catalog, advertisement of one's products constitutes the very purpose of
a catalog. Tools USA's catalog was mailed directly to over 80,000
potential customers in 1994. With respect to sales volume, the third
factor, Champ notes that Tools USA's sales have increased every year
since 1989, with gross sales of approximately $3.5 million in 1993.
Only the fourth factor seems to be seriously disputed in this case.
Evidence offered as to actual customer confusion, although also probative of likelihood of confusion, certainly tends to show that the relevant purchasing public associated Tools USA's trade dress with Tools
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USA. For example, customer Larry Overby testified that he had discussed a particular piece of equipment on the telephone with Tools
USA's president, Clyde White. He subsequently received Champ's
"Auto Body Toolmart" catalog, and became confused when the catalog featured the equipment at a different price than had been quoted
to him. Believing the Champ "Toolmart" catalog to be a Tools USA
catalog, he took it with him to the Tools USA warehouse to resolve
the discrepancy. He showed the catalog to White, who informed him
that it was not Tools USA's catalog. Customer Sid Lowe testified as
to a comparable experience. Similarly, customer Richard Draughn
testified that he received the Toolmart catalog and, thinking it was a
Tools USA catalog, threw away the previous issue of the Tools USA
catalog, as was his practice whenever a new issue came out. Even
Champ's president, Michael Doughty, acknowledged at trial that
"there is no doubt" that there was confusion in the marketplace and
that "this confusion [wa]s created by" the two catalogs.
In light of this and other evidence as to customer confusion, a reasonable jury could have found that Tools USA's trade dress had
acquired a secondary meaning.
C.
Champ maintains that Tools USA failed to present sufficient evidence to show that the similarities between the two catalogs created
a likelihood of confusion. Champ asserts that "a visual inspection of
plaintiff's and defendant's catalogs reveal[s] that there is no likelihood of confusion since the catalogs are distinct in appearance." Brief
of Appellant at 28. A visual inspection of the catalogs is certainly a
way to evaluate "the similarity of the trade dresses," which is one of
the factors to be considered "[i]n assessing the likelihood of marketplace confusion." See Badger Meter, Inc. v. Grinnell Corp., 13 F.3d
1145, 1152 (7th Cir. 1994) (internal quotation and citation omitted).
See also, Woodsmith, 904 F.2d at 1249 ("Visual inspection is permissible as an aid to a district court's determination of likelihood of confusion, but should not constitute the sole basis for the conclusions
made"). In this case, although the two catalogs do differ in some
respects, visual inspection of them does not lead to the inescapable
conclusion that there is no likelihood of confusion.
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the charge was listed under "Toolmart." When Acres told him, "we're
not Toolmart," the customer's reaction was incredulous, "I always
order from you . . . How could I have not ordered from you?"
Based on the evidence in the record as to actual customer confusion and similarity of the trade dress of the two catalogs, the jury's
finding of likelihood of confusion was amply supported. We note that
much less pervasive evidence of actual confusion than this has been
held sufficient to allow a reasonable jury to infer that there was a likelihood of confusion. Harland, 711 F.2d at 978-79. (Plaintiff presented
evidence as to only two instances of actual confusion. The court
found that "the jury reasonably could have inferred" likelihood of
confusion, "although the evidence . . . was not sufficient to compel"
such a finding. (emphasis added)).
Furthermore, there was also support in the record as to the other
factors that may be considered in making this determination. The district court instructed the jury that it could consider seven factors in
assessing likelihood of confusion, although all seven were not necessary to support such a finding. Those factors adapted from Pizzeria
Uno, 747 F.2d at 1527, are:
(1) the strength or distinctiveness of the plaintiff's trade
dress;
(2) the similarity between the trade dress of the parties'
product[s];
(3) the similarity of [the] goods which the trade dress
identified;
(4) the similarity of [the] retail facilities and trade channels used to market the two lines of products;
(5) the similarity in advertising used by the sellers of each
line of product;
(6) the defendant's intent; and
(7) customer reaction indicating actual confusion.
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