Storck USA, L.P. v. Farley Candy Co.

• Decision Date: 14 January 1994
• Docket Number: No. 93-1700,93-1700
• Citation: 14 F.3d 311
• Parties: STORCK USA, L.P. and August Storck K.G., Plaintiffs-Appellants, v. FARLEY CANDY COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 311

14 F.3d 311

29 U.S.P.Q.2d 1431

STORCK USA, L.P. and August Storck K.G., Plaintiffs-Appellants, v. FARLEY CANDY COMPANY, Defendant-Appellee.

No. 93-1700.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 27, 1993.

Decided Jan. 14, 1994.

Larry L. Saret, John T. Gabrielides, Joseph F. Schmidt (argued), Louis Altman, Diana Flynn, Laff, Whitesel, Conte & Saret, Chicago, IL, for plaintiffs-appellants.

Ann Marie Burke, Chicago, IL, David C. Brezina, Thomas E. Smith, James R. Sweeney (argued), Damian Wasserbauer, Lee, Mann, Smith, McWilliams & Sweeney, Chicago, IL, for defendant-appellee.

Before CUMMINGS and ROVNER, Circuit Judges, and GRANT, District Judge. ^*

CUMMINGS, Circuit Judge.

In this trade dress infringement case plaintiffs Storck USA, L.P. and August Storck K.G. (referred to jointly as "Storck" or "plaintiff") brought suit against defendant Farley Candy Company ("Farley") alleging, among other things, false designation of origin and unfair competition. Storck has already received two injunctions preliminarily enjoining Farley from utilizing certain elements of Storck's trade dress during the pendency of the suit. Plaintiff objected in the district court to defendant's most recent modification of its trade dress and sought a third preliminary injunction, which was denied. This interlocutory appeal followed. The Court has jurisdiction pursuant to 28 U.S.C. Sec. 1292(a)(1).

Background

Storck, which manufactures, distributes and sells candy throughout the United States, brought suit against Farley, a competitor candy manufacturer, for trade dress infringement pursuant to 15 U.S.C. Sec. 1125(a). At issue is the district court's refusal to issue a third preliminary injunction against Farley to protect the trade dress of Storck's "Werther's Original" butter toffee candy until a final judgment on the merits may be had.

In 1980 plaintiff introduced its "Werther's Original" candy into interstate commerce. In 1988 plaintiff modified the Werther's Original packaging and began to advertise the candy aggressively, emphasizing the package's trade dress in the advertisements. The campaign was successful and Storck's sales of Werther's Original candy increased from $3.6 million in 1988 to over $105 million in 1992. Plaintiff describes the current trade dress of Werther's Original as follows (Br. 5-6):

[The package has] a blond background color ..., a Village Design which is oval in shape and is positioned in the left center portion of the package with two pitchers pouring cream into a merged stream, a mound of unwrapped candy pieces extending across the bottom half of the package, the trademark WERTHER'S ORIGINAL positioned in the center and right upper portion of the package with the phrase "the classic candy made with real butter and fresh cream" appearing below it. The mound on the front of the package continues around the back of the package, which contains a clear window displaying the individual pieces of candy wrapped in gold foil.

[The gold foil wrapper around the individual pieces of candy is printed with] [t]he mark WERTHER'S and the design of a pitcher and flowers ... in cream letters.... Storck's television commercial includes a close-up of the wrapper, and one frame of the commercial's story board features a twinkling wrapper to emphasize the gold color.

The "Village Design" to which plaintiff alludes consists of "two brown and orange pitchers pouring their white liquid contents into a merged stream. In the background ... is a 'pastoral' image of a blue sky, green grass, flowers, a mountain range, and an Alpine village." Storck USA, L.P. v. Farley Candy Co., Inc., 785 F.Supp. 730, 732 (N.D.Ill.1992) ("Storck I ").

In 1990 Farley decided to introduce a butter toffee candy of its own. Part of its product development involved designing a package for the new candy. Storck introduced evidence suggesting that Farley intentionally copied elements of Storck's Werther's Original trade dress in designing the package for its own toffee candy. By January 1992 Farley was ready to begin shipping the new candy, but Storck filed suit and obtained a temporary restraining order preventing Farley from shipping its toffee candy in that package. The district court described Farley's first package as follows Defendant Farley's [first] package for its butter toffee candy [was] a bag in the same size (7 ounces) and in the same shape (rectangular) as the bag for Storck's Werther's Original butter toffee candy. A design on the left center portion of the front panel of Farley's butter toffee package depict[ed] a pair of containers, one orange and one brown, pouring their creamy liquid contents into a merged stream onto a mound of unwrapped candy positioned on the lower left portion of the front panel.... The background of Farley's bag [was] light yellow. A clear window in the lower right-hand corner of the front panel of the package display[ed] the candy inside the bag individually wrapped with gold-colored foil.

Id. at 732 (citations to the record omitted). Farley's pouring containers were set against an oval containing an upright milk can and butter churn. The oval had a blue upper background and a green lower background. Pl.App. at 16.

Before the temporary restraining order expired, the district court conducted a preliminary injunction hearing and enjoined Farley from "using any trade dress on any Farley candy package which is in any way similar to the pouring pitchers image in the Village Design used by Storck as trade dress for its Werther's Original butter toffee candy." Storck I, 785 F.Supp. at 736-737.

After the preliminary injunction was entered in Storck I Farley redesigned its package, eliminating the pouring pitchers and stream of liquid and changing the background color in the oval from blue and green to all green. In other respects its trade dress was unchanged. In March 1992 plaintiff filed a Supplemental Complaint alleging that Farley's second package infringed on Storck's trade dress. This time the judge entered an injunction preliminarily enjoining Farley from:

(a) [U]sing any trade dress in the bottom half of the front panel of any Farley candy package which is in any way similar to the image of a mound of unwrapped candy pieces used by Storck as trade dress for its Werther's Original butter candy.

(b) [U]sing any trade dress in the left half of the front panel of any Farley candy package which is in any way similar to the pastoral image or oval-shaped design used by Storck as trade dress for its Werther's Original butter candy.

Storck USA, L.P. v. Farley Candy Co., Inc., 797 F.Supp. 1399, 1415-1416 (N.D.Ill.1992) ("Storck II ").

Farley thereupon redesigned its package a third time. The district court described it as follows:

[A] consumer sees Farley's name near the upper left corner of the front of the Farley's package where Farley's distinctive red and white logo is prominently displayed. The Farley's name is in large white letters inside the horizontally elongated Farley logo oval. The words "Butter Toffee" are on one horizontal line in even larger red letters. The Farley's milk can and butter churn design (which are no longer inside an oval as they were in Storck I and Storck II) are located in the upper right corner of the front of Farley's package which is a different location than the Village Design with the pouring pitchers on the Werther [sic] Original bag.

Storck USA, L.P. v. Farley Candy Co., Inc., 821 F.Supp. 524, 529 (N.D.Ill.1993) ("Storck III "). In August 1992 plaintiff filed a Second Supplemental Complaint alleging that Farley's third package infringed on Storck's trade dress. The judge refused to enter a third preliminary injunction against Farley, and Storck's appeal followed. Farley in turn has moved this Court to dismiss the appeal as frivolous and filed for purposes of delay.

Because the judge made no error of law nor did he make any clearly erroneous findings of fact, we affirm the decision not to grant Storck a third preliminary injunction. Farley's motion to dismiss the appeal, however, is denied.

Analysis

A preliminary injunction is warranted if the movant can make a threshold showing (1) that the case has some likelihood of success on the merits; (2) that no adequate remedy at law exists; (3) that the movant will suffer irreparable harm if the injunction is not granted. If these three conditions are met, then the court must balance the harm to the movant if the injunction is not issued against the harm to the defendant if it is issued improvidently. The balancing involves a "sliding scale" analysis: the greater the movant's chance of success on the merits, the less strong a showing must it make that the balance of harms is in its favor. In addition the court must consider the public interest in whether the injunction is to be granted or denied. See, e.g., Nalco Chemical Co. v. Hydro Technologies, Inc., 984 F.2d 801, 802 (7th Cir.1993); Abbott Laboratories v. Mead Johnson & Co., 971 F.2d 6, 11-12 (7th Cir.1992). "The district court weighs each of these factors, and we defer to that assessment as we perform our review." Nalco Chemical, 984 F.2d at 802. The district court has considerable discretion in deciding whether to issue a preliminary injunction, Computer Care v. Service Systems Enterprises, 982 F.2d 1063, 1067 (7th Cir.1992), and we will reverse its decision only for an abuse of that discretion, including an erroneous conclusion of law or a clearly erroneous finding of fact. Cf. Cooter & Gell v. Hartmarx, 496 U.S. 384, 405, 110 S.Ct. 2447, 2460, 110 L.Ed.2d 359.

In this case the court found in Storck's favor on the threshold issues. Storck II, 797 F.Supp. at 1412; Storck III, 821 F.Supp. at 529, 530. At the balancing stage, however, the court found that the balance of hardships militated against issuing a third preliminary injunction, and therefore denied Storck's motion. Storck III, 821 F.Supp. at 530. Storck objects to this...