163 F.3d 27 (1st Cir. 1998), 98-1334, I.P. Lund Trading ApS v. Kohler Co.

Docket Nº:98-1334, 98-1492.
Citation:163 F.3d 27
Party Name:49 U.S.P.Q.2d 1225 I.P. LUND TRADING ApS and Kroin Inc., Plaintiffs, Appellees, v. KOHLER CO. and Robern, Inc., Defendants, Appellants. I.P. Lund Trading ApS and Kroin Inc., Plaintiffs, Cross-Appellants, v. Kohler Co. and Robern, Inc., Defendants, Cross-Appellees.
Case Date:December 22, 1998
Court:United States Courts of Appeals, Court of Appeals for the First Circuit
 
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163 F.3d 27 (1st Cir. 1998)

49 U.S.P.Q.2d 1225

I.P. LUND TRADING ApS and Kroin Inc., Plaintiffs, Appellees,

v.

KOHLER CO. and Robern, Inc., Defendants, Appellants.

I.P. Lund Trading ApS and Kroin Inc., Plaintiffs, Cross-Appellants,

v.

Kohler Co. and Robern, Inc., Defendants, Cross-Appellees.

Nos. 98-1334, 98-1492.

United States Court of Appeals, First Circuit

December 22, 1998

Heard July 28, 1998.

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David H. Gibbs, with whom Cornelius J. Moynihan, John V. Snellings, Jason C. Kravitz, and Peabody & Brown were on briefs, for plaintiffs.

Hugh Latimer, with whom Michael L. Sturm, Karyn K. Ablin, Wiley, Rein & Fielding, Stephen H. Lash, Jager, Smith & Stetler, James R. Kieckhefer, and Kohler Co. were on briefs, for defendants.

Before TORRUELLA, Chief Judge, BOUDIN and LYNCH, Circuit Judges.

LYNCH, Circuit Judge.

This is an appeal from the district court's issuance of a preliminary injunction enjoining defendants Kohler Company and Robern, Inc. from selling the Kohler Falling Water faucet, a faucet resembling plaintiff Lund's VOLA faucet. The VOLA faucet mounts on a wall, has been in the design collection at the Museum of Modern Art, and has a certain cachet among those who enjoy bathrooms and kitchens beautiful. Kohler intended to produce a faucet like Lund's, but not identical to it, and hence designed the now-enjoined Falling Water faucet. There were two basic claims before the trial court: that the Falling Water faucet "diluted" the VOLA faucet's trade dress within the meaning of the Federal Trademark Dilution Act of 1995 ("FTDA"), 15 U.S.C. § 1125(c), and that the Falling Water faucet infringed the VOLA's trade dress. Lund won a preliminary injunction on the first ground, but not on the second. See I.P. Lund Trading ApS v. Kohler Co., 11 F.Supp.2d 112, 127 (D.Mass.1998) ("Lund I ").

This difference in results was not anomalous. The district court found, as to the infringement claim, that while the VOLA faucet was not inherently distinctive, it had acquired secondary meaning and thus was protectable, but that there was no infringement because there was no confusion on the part of consumers. In contrast, under the FTDA, where no confusion need be shown, the court found the VOLA faucet was famous and that Kohler's faucet diluted the identity of the VOLA faucet.

This case presents complex issues arising in areas of intellectual property law recently extended and not yet well demarcated. Few courts of appeals have yet interpreted the FTDA and this court has never addressed certain key issues, under both the infringement and FTDA claims, necessary to the resolution of the case. The district court wrote thoughtfully, and, particularly as to the FTDA issues, without much appellate guidance. The claim for protection here comes not from traditional marks such as names but from the very design of the faucet itself--that design is said to give the faucet its identity and distinctiveness. Although Lund may have been able to obtain a design patent and so protect its VOLA faucet in that way, at least for a period of fourteen years, see 35 U.S.C. § 173, it chose not to. Rather, it chose to turn for protection to legal doctrines of trademark and trade dress, originally crafted without product designs in mind. The trade dress of product designs, unlike other forms of trade dress, cannot be separated from the product itself. Kohler has raised serious constitutional concerns, saying that this use of the FTDA against a competing product essentially gives a perpetual monopoly to product design, a perpetual monopoly prohibited by the Patent Clause.

Kohler and Robern (collectively "Kohler") argue that the district court erred in its determination that plaintiffs I.P. Lund Trading ApS and Kroin Incorporated (collectively "Lund") demonstrated a likelihood of success on the merits of their claim under the FTDA that the Falling Water faucet dilutes the trade dress of Lund's VOLA faucet. 1 Lund cross-appeals, arguing that the district court erred in determining that Lund was unlikely to succeed on the merits of its infringement claim. We affirm the denial of the preliminary injunction on the infringement claim. We vacate the grant of the injunction on the FTDA claim.

Several questions of first impression are resolved in this opinion. We hold that the

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burden of showing non-functionality of a product for which trade dress protection is sought rests on the party seeking that protection. Here that is the plaintiff Lund. In analyzing inherent distinctiveness in the context of product design, we hold that while the well-known Abercrombie test provides a useful analogy, strict application of the test is not required; we reiterate this court's adherence to the Seabrook Foods test. We emphasize that, in any case where the trade dress is said to arise from the product design, there must be separate analyses as to (1) whether a design is inherently distinctive and (2) whether it has nonetheless acquired distinctiveness through secondary meaning. As to secondary meaning said to stem from the design of the product itself, we hold that the plaintiff must show that the primary significance of the design is to signify its source.

Under the FTDA, we hold that a party who wishes to establish fame of the trade dress for which protection is sought bears a significantly greater burden than the burden of establishing distinctiveness for infringement purposes. The FTDA creates an exceptional anti-dilution remedy for truly famous marks. Once this greater burden of establishing fame has been met under the FTDA, the issue of dilution must be addressed. We reject the use of the "Sweet factors" as the test for dilution and instead require an inquiry into whether target customers will perceive the products as essentially the same. We hold that the dilution standard is a rigorous one, and Lund has not shown that it is likely to succeed. While we acknowledge serious constitutional concerns about application of the FTDA to a dilution claim against a competing product which does not confuse consumers, the resolution of the case obviates the as applied constitutional issue, and we decline to address any residual facial challenge.

I. Standard of Review

The district court "enjoys considerable discretion" in determining whether to grant a preliminary injunction, but its decision "must be supported by adequate findings of fact and conclusions of law." TEC Eng'g Corp. v. Budget Molders Supply, Inc., 82 F.3d 542, 544-45 (1st Cir.1996); see also Camel Hair & Cashmere Institute of America, Inc. v. Associated Dry Goods Corp., 799 F.2d 6, 12-13 (1st Cir.1986). "On appellate review of the grant or denial of a preliminary injunction, the deferential standard of 'abuse of discretion' applies to judgment calls, by the district court, such as those that involve the weighing of competing considerations." Public Serv. Co. v. Patch, No. 98-1764, --- F.3d ----, 1998 WL 823177, at * 5 (1st Cir. Dec. 3, 1998). As explained in Ocean Spray Cranberries, Inc. v. Pepsico, Inc., 160 F.3d 58 (1st Cir.1998), "[t]he usual rubric refers to abuse of discretion ... but this phrasing is most pertinent to issues of judgment and the balancing of conflicting factors; rulings on abstract legal issues remain reviewable de novo, and findings of fact are assessed for clear error." Id. at 61 n. 1 (citations omitted). If findings are made under incorrect standards, little or no deference is due those findings. Cf. Uno v. City of Holyoke, 72 F.3d 973, 978 (1st Cir.1995). Further, "[a]buse of discretion occurs ... when a material factor deserving significant weight is ignored, when an improper factor is relied upon, or when all proper and no improper factors are assessed, but the court makes a serious mistake in weighing them." Foster v. Mydas Assocs., Inc., 943 F.2d 139, 143 (1st Cir.1991) (internal quotation marks omitted).

A party seeking a preliminary injunction must establish that (1) it is substantially likely to succeed on the merits of its claim; (2) absent the injunction there is "a significant risk of irreparable harm"; (3) the balance of hardships weighs in its favor; and (4) the injunction will not harm the public interest. TEC Eng'g Corp., 82 F.3d at 544 (discussing a claim for trade dress infringement). In the trademark context, "irreparable harm may be shown even in the absence of actual injury to plaintiff's business based on plaintiff's demonstration of a likelihood of success on the merits on its claim." Calamari Fisheries, Inc. v. The Village Catch, Inc., 698 F.Supp. 994, 1013 (D.Mass.1988) (citing Camel Hair & Cashmere Institute, 799 F.2d at 14). There is no argument that the district court applied the wrong test for injunctive relief; there is considerable dispute

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over the subsidiary tests which the court applied in determining whether there was probability of success on the various elements of the claims.

II. Facts and Procedural History

Lund, a Danish corporation, manufactures bathroom and kitchen fixtures and accessories, including faucets. Lund has been a family-owned corporation since its establishment in 1873. In 1969, Lund introduced the VOLA faucet, designed by the noted architect Arne Jacobsen. The faucet, which has received numerous awards over the past quarter-century, is Lund's principal revenue-producing product. Lund has sold a total of more than 600,000 VOLA faucets. The faucet has been regularly advertised and featured in numerous magazines. Kroin Incorporated is the sole United States distributor of the VOLA.

Kohler is the largest supplier of plumbing fixtures in this country, selling...

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