Badger Meter, Inc. v. Grinnell Corp.

• Citation: 29 U.S.P.Q. 1507,13 F.3d 1145
• Decision Date: 18 January 1994
• Docket Number: 92-4074,93-1373 and 93-1555,Nos. 92-3950,s. 92-3950
• Parties: , 29 U.S.P.Q.2d 1507 BADGER METER, INCORPORATED, Plaintiff-Appellant, Cross-Appellee, v. GRINNELL CORPORATION and Mueller Company, Defendants-Appellees, Cross-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 1145

13 F.3d 1145

62 USLW 2484, 29 U.S.P.Q.2d 1507

BADGER METER, INCORPORATED, Plaintiff-Appellant, Cross-Appellee, v. GRINNELL CORPORATION and Mueller Company,

Defendants-Appellees, Cross-Appellants.

Nos. 92-3950, 92-4074, 93-1373 and 93-1555.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 17, 1993.

Decided Jan. 18, 1994.

Wayne E. Babler, Jr. (argued), Anthony A. Tomaselli, Andra J. Palmer, Quarles & Brady, Milwaukee, WI, for Badger Meter, Inc., in Nos. 92-3950, 92-4074.

Jonathan H. Margolies, Gary A. Ahrens (argued), Michael, Best & Friedrich, Milwaukee, WI, for Grinnell Corp., Mueller Co. in Nos. 92-3950, 92-4074, 93-1373 and 93-1555.

Wayne E. Babler, Jr. (argued), Anthony A. Tomaselli, Quarles & Brady, Milwaukee, WI, for Badger Meter, Inc. in Nos. 93-1373 and 93-1555.

Before POSNER, Chief Judge, CUMMINGS, Circuit Judge, and ZAGEL, District Judge. ^*

CUMMINGS, Circuit Judge.

In this trade dress infringement case plaintiff Badger Meter, Incorporated ("Badger"), which received a favorable jury verdict below, appeals from the district court's issuance of a permanent injunction against the defendants that the plaintiff believes is inadequate, from the denial of monetary damages under 15 U.S.C. Sec. 1117(a), and from the denial of its motion for attorneys' fees under that same section. In a separate appeal, consolidated with this one, Badger appeals the district court's determination, upon plaintiff's motion for judicial review, that defendants' redesigned water meter does not violate the terms of the permanent injunction. ¹ The defendants Grinnell Corporation ("Grinnell") and Mueller Company ("Mueller") cross-appeal the judge's denial of their renewed motion for judgment as a matter of law (j.n.o.v.). This Court has jurisdiction over all the appeals pursuant to 28 U.S.C. Sec. 1291.

Background

Plaintiff, the manufacturer of a "positive displacement nutating disk" small water meter, brought suit against defendants, manufacturers of a similar water meter, for trade dress infringement pursuant to 15 U.S.C. Sec. 1125(a). ² In 1989 defendant Grinnell acquired the assets of one of Badger's competitors, Hersey Products, Inc., and together with defendant Mueller (both Grinnell and Mueller are subsidiaries of the same parent, Tyco Laboratories, Inc.) continued to manufacture Hersey's previously-developed small water meters and distribute them under the Hersey name. (The parties sometimes refer to defendants Grinnell and Mueller collectively as "Hersey." This opinion will do likewise.) The meters of which Badger complains were introduced by defendants in January 1992 as their "400 Series II" model meters, referred to by the parties as the "Hersey Series II."

Water meters are used by the providers of water services--such as municipal and private water utilities, trailer parks, and the like--in order to determine the level of consumers' water use. Such meters are manufactured in accordance with standards provided by the American Water Works Association ("AWWA") for different types of water meters. Many water utilities require either extensive testing or a number of years of in-service use before they will accept a new water meter as qualified for their systems.

Water meters are classified as either large or small. Small water meters are primarily used in homes that have an inlet pipe of two inches and under, and such meters make up 95% of meters sold in the United States. Small water meters are further classified as positive displacement or non-positive displacement type. Positive displacement type small water meters constitute over 90% of all small water meters sold. They are covered by AWWA standard C700. Meters that meet AWWA standard C700 can utilize either a nutating disk or an oscillating piston to measure the level of water displacement in the measuring chamber. Both positive displacement small water meters involved in this case utilize nutating disks.

The nutating disk positive displacement small water meters in this case have two basic parts: The first is the measuring chamber, assembled as two halves and located inside a closed bronze or plastic chamber. The measuring chamber holds a known volume of water. As one full volume of water flows into the measuring chamber it causes the disk inside to make one complete nutation. The second part of the meter is the register, which records the volume of water passing through the measuring chamber. This register is located above the measuring chamber, and the action of the disk nutating below causes gears contained within the register to rotate, which in turn cause an odometer to display the number of gallons used.

Badger refers to itself as one of the four "historically significant" manufacturers of positive displacement small water meters, generally having a 25-28% market share. Badger characterizes Hersey as a "small player" and does not list it among the four historically significant firms. The water meter that Badger claims Hersey has infringed is its "Recordall" series of meters. These nutating disk positive displacement small water meters are described as having:

[A] raised lens with vertical scoring; a deep cup-shaped cover of plastic or bronze; a register dial face with unused holes in the 0 and 5 positions; gears in the register of various colors with shafts extending through the register dial face and appearing as colored dots; three legs extending from the register dial face to the register bottom plate between which the colored gears are viewable; and a main bronze housing with the measuring chamber of a particular geometric configuration and nutating disk housed inside.

Pl. Opening Br. at 10-11. ³ This version of the Recordall meter was designed in 1986 or 1987 but many of the features described above were utilized in the Recordall meter as early as 1972.

In 1988 Hersey attempted to design a new model positive displacement meter based on existing designs by its competitors, but abandoned the project in 1989 in favor of a private labeling arrangement with Kent, one of the aforementioned historically significant manufacturers of positive displacement water meters. Although the meter was manufactured by Kent it was labeled with the Hersey name and Hersey serial numbers, and in no way indicated any connection with Kent. Kent did, however, sell the same meter under its own name. Plaintiff introduced evidence that the Kent meter sold under the Hersey name was "commonly recognized by water utility personnel as having actually originated with Kent." Pl. Opening Br. at 14.

Hersey apparently became dissatisfied with the Kent meter, and in 1990 resumed examination of its competitors' products in an attempt to design a meter of its own. Plaintiff introduced evidence that Hersey minutely copied the parts of its Recordall meter. Hersey first made drawings of the parts in the Badger measuring chamber, sending the drawings and actual Badger parts out to vendors for tooling and parts estimates. Then it made drawings of the parts in the Badger register, once again sending both drawings and actual Badger parts out for estimates. Badger introduced a handwritten note between two Grinnell employees in charge of developing the new meter that stated the objective of this part of the project was to "Design a water meter register identical to the Badger except for two minor changes. First change is to relocate the low flow indicator to the green spindle. Second change is to modify indicator arm so that it would lend itself to replacement with a sensor magnet." I Pl. Supp. App. 127.

According to Badger,

[The result was] a virtual copy of the Badger meter, in function and form, inside and out.... Even the gear colors, shapes, and numbers of teeth [were] the same. The register dial face [had] the same unused holes at the 0 and 5 positions. The odometer [was] nominally larger [apparently because the supplier believed that Badger owned the tooling for the odometer that Hersey had provided for a cost estimate] ... which led to slightly longer gear shafts and a nominally larger raised lens and register face. The measuring chamber and disk for all intents and purposes were identical to the Badger, and everything was similar, inside and out.

Pl. Opening Br. at 17-18 (citations to the record omitted; bracketed material gleaned from id. at 17). Badger introduced a great deal of evidence that the internal parts of the Hersey meter were interchangeable with the parts of the Badger meter, and that historically the parts of different manufacturers' water meters were not interchangeable. Apparently not much was made of this fact in argument to the jury, but Badger's appeals before this Court rely on it.

The Hersey Series II was marketed to customers that would not require a test period. Hersey wanted to "avoid positioning the [Series II meter] as 'new' product that would then require lengthy testing (up to 5 years) of specifications by municipalities prior to sales." I Pl. Supp. App. 53.

Badger claims that although Hersey copied the Recordall meter, it did not do a very good job. "Badger purchased 12 Hersey 430 Series II meters in February, 1992. Each meter inspected had cellophane adhesive tape around a portion of the register assembly for shimming; six of ten meters tested failed to meet AWWA C700 performance standards, ... several units had paint runs, paint blisters, and areas of rust." Pl. Opening Br. at 20 (citations to the record omitted).

In March 1992 Badger filed this action in the district court, alleging that the Hersey Series II model meters infringed on the trade dress of its Recordall line of meters. Badger's motion for a preliminary injunction was denied on the ground that although Badger had demonstrated a likelihood of success on the merits, there had been no showing of irreparable harm and the balance of harms favored Hersey. In August 1992 a jury trial commenced. After all the evidence had been presented, both parties moved for...