Louis Vuitton Malletier v. Dooney & Bourke, Inc.

• Decision Date: 30 June 2006
• Docket Number: Docket No. 04-4941-CV.
• Citation: 454 F.3d 108
• Parties: LOUIS VUITTON MALLETIER, Plaintiff-Appellant, v. DOONEY & BOURKE, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

454 F.3d 108

LOUIS VUITTON MALLETIER, Plaintiff-Appellant, v. DOONEY & BOURKE, INC., Defendant-Appellee.

Docket No. 04-4941-CV.

United States Court of Appeals, Second Circuit.

Argued September 9, 2005.

Decided June 30, 2006.

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Robert E. Shapiro, Chicago, IL (Peter J. Barack, Wendi E. Sloane, Shermin Izadpanah, Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP, Chicago, IL; Theodore C. Max, Charles A. LeGrand, Mintz Levin Cohn Ferris Glovsky and Popeo PC, New York, NY, of counsel), for Plaintiff-Appellant.

Douglas D. Broadwater, New York, N.Y. (Roger G. Brooks, Cravath, Swaine & Moore LLP, New York, NY; Thomas J. McAndrew, Thomas J. McAndrew & Associates, Providence, RI, of counsel), for Defendant-Appellee.

Before CARDAMONE, McLAUGHLIN, and POOLER, Circuit Judges.

CARDAMONE, Circuit Judge.

Louis Vuitton Malletier (Vuitton or plaintiff) appeals from an August 27, 2004 judgment of the United States District Court for the Southern District of New York (Scheindlin, J.) that denied plaintiff's motion for a preliminary injunction in its trademark infringement suit against defendant Dooney & Bourke, Inc. (Dooney & Bourke or defendant).

We deal on this appeal with the trademark of a trendy luxury women's handbag, a handbag so instantly popular with purchasers that legions of imitators quickly appeared on the fashion scene after plaintiff Vuitton introduced it in October 2002. This is the second infringement case we have heard regarding the same trademark, but with a different alleged infringer. We cannot help but observe that for the person carrying it, a handbag may serve as a practical container of needed items, a fashion statement, or a reflection of its owner's personality; it may fairly be said that in many cases a handbag is so essential that its owner would be lost without it.

In the earlier case before us, Louis Vuitton Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532 (2d Cir.2005) (Burlington Coat Factory), we vacated a judgment of the district court that had denied a preliminary injunction to Vuitton in litigation against defendants Burlington Coat Factory Warehouse Corp., et al. In remanding for further proceedings, we emphasized that to determine whether two products are confusingly similar it is improper to conduct a side-by-side comparison in lieu of focusing on actual market conditions and the type of confusion alleged. Id.

This time, Vuitton seeks a preliminary injunction against Dooney & Bourke, another handbag manufacturer. Vuitton's trademark Multicolore handbag design is the same as it was in the earlier case, but the allegedly infringing handbag, Dooney & Bourke's "It-Bag," is different from the one in the earlier case. When the district court decided this case and denied plaintiff's motion for a preliminary injunction, see Louis Vuitton Malletier v. Dooney & Bourke, Inc., 340 F.Supp.2d 415, 453 (S.D.N.Y.2004) (Dooney & Bourke), on August 27, 2004, it was, of course, unaware of our view set out in Burlington Coat Factory, because Burlington was decided on October 12, 2005, over a year after the district court's opinion here.

We now affirm, in part, and vacate and remand, in part. We affirm that part of the district court's order that denied a preliminary injunction on the basis of an alleged dilution of plaintiff's mark under federal law. But, we vacate and remand that portion of the order addressing Vuitton's Lanham Act and New York state trademark infringement and unfair competition claims, as well as that portion of the order assessing plaintiff's state law dilution claims.

BACKGROUND

A. Parties and Facts

Vuitton, a French design firm, began selling trunks and accessories in the United States in 1893. In 1896 it created the Toile Monogram, featuring entwined LV initials with three motifs: a curved diamond with a four-point star inset, its negative, and a circle with a four-leafed flower inset. Vuitton registered trademarks in this design pattern as well as the individual unique shapes with the United States Patent and Trademark Office. Having been used exclusively and continuously, those trademarks, the Louis Vuitton Toile Monogram Designs (Toile marks), are now incontestible. See 15 U.S.C. § 1065 (providing, with certain exceptions, that registered marks in continuous use for five consecutive years after registration are incontestible).

In October 2002 plaintiff launched a series of handbags featuring "new signature designs" created by Marc Jacobs and Japanese artist Takashi Murakami. The new bags (Murakami handbags) incorporated an update on the fashion house's famous Toile marks. The fresh design — coined the Louis Vuitton Monogram Multicolore pattern (Multicolore mark) — was a modified version of the Toile marks, printed in 33 bright colors (Murakami colors) on a white or black background.

Plaintiff states that it spent over $4 million in 2003-2004 advertising and promoting the Multicolore mark and associated handbags. In addition, the new design garnered significant media attention. CBS's The Early Show and publications ranging from USA Today and The New York Times to People, Women's Wear Daily, Marie Claire, and Vogue all featured the Murakami handbags. Celebrities including Jennifer Lopez, Reese Witherspoon, and Madonna were photographed with the bags in tow.

At the time plaintiff filed its complaint, it had sold nearly 70,000 handbags and accessories with the Multicolore mark design in the United States for between $360 and $3,950 each, amounting to over $40 million. Of that sum, $25 million was attributable to the white background design and $16 million to the black background design.

Defendant Dooney & Bourke, an American handbag designer and manufacturer, was founded in 1975. Since 2001 as part of the Dooney & Bourke's "Signature" and "Mini Signature" lines, the company has sold bags featuring the DB monogram of interlocking initials, a registered trademark, in a repeated pattern. The handbags sell for between $125 and $400.

In the fall of 2002 Peter Dooney, president and chief designer of Dooney & Bourke, began collaborating with Teen Vogue magazine on a joint promotional project as the magazine was being launched. The magazine selected a group of teenaged girls to travel with Dooney to Italy in March 2003 to help develop Dooney & Bourke handbags appealing to teenagers. The group, dubbed the "It Team," was photographed looking into Vuitton's store window display featuring handbags with the Multicolore marks on a white background. Another photograph taken during the trip showed the group in a factory viewing a swatch of fabric with the Multicolore mark on a black background.

A year later, in late July 2003 Dooney & Bourke introduced its "It-Bag" collection, which featured the DB monogram in an array of bright colors set against a white background. The intertwined initials, with the "D" and the "B" displayed in contrasting colors, were printed forward and backward in repeating diagonal rows. The handbags also sported a multicolor zipper, with fabric similar to that used by Vuitton, and a small pink enamel heart bearing the legend "Dooney & Bourke" on a tag hanging from the handle. In October 2003 Dooney & Bourke began selling the handbags with a black background. The It-Bag collection now includes a variety of colored backgrounds (periwinkle, bubble gum, grape) in addition to black and white.

B. District Court Proceedings

After becoming aware of Dooney & Bourke's It-Bag and investigating through counsel the likelihood of infringement, plaintiff sent a cease-and-desist letter to defendant on April 16, 2004 and filed this action in the Southern District of New York on April 19, 2004. Vuitton claimed trademark infringement, unfair competition and false designation, and trademark dilution, under federal and New York state law. Plaintiff moved for a preliminary injunction on April 28, 2004, but before ruling on the motion, the district court granted defendant time to conduct its own survey. The court held a seven-day hearing on the motion for a preliminary injunction.

On August 27, 2004 the trial court issued an opinion denying Vuitton's motion for a preliminary injunction. It held that plaintiff's Multicolore mark, consisting of the traditional LV pattern in the 33 Murakami colors on a white or black background, was an inherently distinctive mark that had achieved secondary meaning in the marketplace. Dooney & Bourke, 340 F.Supp.2d at 438. Despite this finding, the trial court determined that there was no likelihood of confusion between defendant's It-Bag pattern and plaintiff's Multicolore mark. Id. at 447. It also ruled that plaintiff had not proven dilution under either its federal or state law claims. Id. at 452-53.

This appeal followed.

DISCUSSION

I Preliminary Injunction and Standard of Review

To obtain a preliminary injunction, plaintiff must show irreparable harm absent injunctive relief, and either a likelihood of success on the merits, or a serious question going to the merits to make them a fair ground for trial, with a balance of hardships tipping decidedly in plaintiff's favor. Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979) (per curiam). We review for abuse of discretion the district court's denial of a preliminary injunction. 1-800 Contacts, Inc. v. WhenU.Com, Inc., 414 F.3d 400, 406 (2d Cir.2005). A district court abuses its discretion when it rests its decision on a clearly erroneous finding of fact or makes an error of law. Id.

Vuitton contends the district court applied the wrong standard for its requested preliminary injunction, requiring it to meet the heightened burden of proof necessary for a mandatory injunction rather than a prohibitory injunction. It takes this position based on the district court's comment that a party seeking an injunction must show not only a likelihood, but a "clear" or "substantial" likelihood, of success on the...