SEIKO SPORTING GOODS USA v. KABUSHIKI, ETC.

Decision Date26 July 1982
Docket NumberNo. 82 Civ. 3766 (RLC).,82 Civ. 3766 (RLC).
Citation545 F. Supp. 221
PartiesSEIKO SPORTING GOODS USA, INC., Plaintiff, v. KABUSHIKI KAISHA HATTORI TOKEITEN, also known as K. Hattori & Co., Ltd., and Seiko Corporation of America, Defendants.
CourtU.S. District Court — Southern District of New York

Taggart & Colucci, New York City, for plaintiff; Leslie D. Taggart, Jeanne T. Fennell, Susan Progoff, New York City, of counsel.

Blum, Kaplan, Friedman, Silberman & Beran, New York City, for defendants; Harold I. Kaplan, Michael I. Wolfson, New York City, of counsel.

Ronald J. Thomas, New York City, for Seiko Corp.

OPINION

ROBERT L. CARTER, District Judge.

FACTS

This is a trademark infringement action. Plaintiff, which is charged with infringing defendant's trademark, commenced this action on June 8, 1982, seeking a declaratory judgment entitling it to use the mark "Seiko" on its tennis racquets and other sporting goods and in its trade name. Plaintiff claims that it has been selling goods in the United States with the Seiko mark affixed thereon since 1978. Defendants moved for preliminary and permanent relief seeking to enjoin plaintiff from using the Seiko trademark or Seiko in its trade name. The hearing on the motion for preliminary and permanent relief was merged, and the matter came on for hearing on July 15 and 16.

At the close of the hearing the court announced that it was satisfied that defendants were entitled to preliminary relief and set forth its reasons on the record. The court stated, however, that it would file a written opinion with case citations which would set out its reasons in a more cogent fashion than was possible in the announcement from the bench. What follows is that opinion.

Defendant K. Hattori & Co., Ltd. is a Japanese company. Defendant Seiko Corporation of America is the wholly owned subsidiary of the Japanese defendant, and the American corporation markets and promotes all Seiko brand products in this country, which include clocks, watches and various other electronic products. Seiko Time Corporation ("Seiko Time") is a wholly owned subsidiary of Seiko Corporation of America. Its function is to import, distribute and market Seiko brand and Seiko LaSalle brand watches and clocks in the United States.

K. Hattori has used the trademark Seiko in this country in connection with the sale and distribution of watches and clocks since 1949, and owns a number of registrations for the mark Seiko. The first registration is # 686,264, issued on October 6, 1959, and renewed on October 6, 1979. It relates to watches and clocks. Registration # 910,057, renewed on March 16, 1971, is on metronomes. Registration # 948,878, renewed on December 19, 1972, is on electric shavers. Registration # 953,110, renewed on February 13, 1973, is on camera shutters. Registration # 987,344, renewed on July 2, 1974, is on calculating machines, cash registers and desk top computers. Registration # 1,168,362, issued on September 8, 1981, is on pens. Registration # 1,122,960, issued on July 24, 1979, covers cigarettes and pipe lighters. There are several additional registrations covering various classes of watches and clocks and cameras apparently not embraced in the above registrations.

The suggested retail price range of the Seiko watches goes from moderate to expensive. Some Seiko watches retail for $1,000. In 1978 and 1979, Seiko Time sold 2,000,000 watches and 100,000 clocks in this country for a gross of $154,000,000. In 1980 Seiko Time sold 2,000,000 watches and 150,000 clocks for a gross of $155,000,000, and in 1981 it sold 2,500,000 watches and 300,000 clocks for a gross of $210,000,000.

Its annual advertising budget is in excess of 20 million dollars, and the bulk of its promotion is via television (85 percent of the 20 million dollar budget is spent on television advertising). About 50 percent of its television advertising expenditures consists of time bought on televised sporting events, e.g., Baseball World Series, World Soccer Championship, Volvo Grand Prix (tennis), NFL Football, etc. Its commercials will usually display a Seiko clock or watch accompanied by some blurb about the precision of Seiko watches and clocks, or a Seiko Time piece will be featured as the official timer of the sports telecast. A Seiko clock is on permanent display at Madison Square Garden and Yankee Stadium, among other locales. Part of its television advertising is on news programs and on such other assorted T.V. programs as "60 Minutes", "Today Show," etc.

In addition to its 20 million dollar annual advertising budget, Seiko Time over the past four years has spent approximately 30 million dollars in what is called cooperative advertising. Under this program Seiko Time assumes 50 percent of the cost, and the distributor and retailer 25 percent each of such advertising. This advertises the Seiko mark in connection with the retailer and/or distributor.

Seiko Time distributes Seiko watches and clocks through some 16 distributors with approximately 18,000 retail outlets in the United States. Seiko products are sold in department stores such as Saks Fifth Avenue, Lord and Taylor, and Neiman Marcus, and such jewelry stores as Tourneau.

On May 16, 1982, Seiko Time became aware of an advertisement in a circular by Caldor, Inc. displaying tennis racquets bearing the mark Seiko. In response to communication by defendants' counsel, plaintiff was identified as the source of the goods. A conference with a Chicago attorney for plaintiff and Christopher Stoller, an officer of plaintiff, and Seiko's counsel followed. The matter was not resolved and this lawsuit was commenced.

Defendants bought a number of these tennis racquets, and supplied one to Tracy Leonard, who is equipment editor for Tennis Magazine, requesting that he test it. Leonard tests every tennis racquet introduced on the United States market and reviews its strengths and weaknesses in an issue of the magazine. His method of testing is to play with the racquet himself, and to have the person or persons he is playing with use the racquet. In this way, he measures his own reactions against others as to how the racquet feels under playing conditions. Then he tests various parts of the racquet in his laboratory. This procedure was followed in the testing of plaintiff's product. Leonard concluded that the racquet was of inferior quality. He testified that it is light and flexible, which are not necessarily bad features, but the racquet transmits a great deal of shock to the arm, which is very bad.

Defendant also secured the services of Michael Rappaport to do a hurried opinion survey for this case. Rappaport has been engaged in survey research since 1969 and market research since 1979. He was asked to determine whether the public was likely to be confused as to the source of plaintiff's goods.

He had only nine days to complete the assignment. He prepared a questionnaire consisting of eight questions, hired and trained three interviewers who, over a three day span, interviewed 149 tennis players. Seven sites were chosen in Mercer and Middlesex Counties, New Jersey. Apparently these sites are close to where Rappaport resides or works and were chosen as a convenience.

The interviewers were told to interview at random any tennis players 16 years old or older when they were going on the court to play or were leaving. They were to interview each person privately, and no interviews were to take place in the presence of another being questioned. They were instructed to read from the form and fill out the questionnaire based on what was said. After the first three general questions, the interviewers were to show the plaintiff's tennis racquet and ask questions 4, 5, 6, and 7, which relate to the interviewee's recognition and knowledge concerning plaintiff's product. The interviewers returned the forms to Rappaport and were debriefed. Rappaport numbered the forms 1-149, made copies and then tabulated the answers. While Rappaport knew the reason for the survey, those doing the actual interviewing had no such knowledge.

The most likely confusion was found by him to be expressed when "watch" was answered to question 5 and "Japan" to question 7. There were 75 such responses or 50 percent of the total. Next in order he placed those who responded "watch" to question 5, but did not mention "Japan" in answer to question 7. There were 15 of these responses or 10 percent of the total. Third were listed those who failed to mention "watch" in answer to question 5, but mentioned "watch" in answer to question 6 and "Japan" in answer to question 7. There were 26 such responses or 17 percent of the total.1

Leonard Stoller testified as President of plaintiff organization. He stated that the company had been in the business of selling Seiko tennis racquets since 1978; that plaintiff had selected the name Seiko in 1977, and that the mark was first used in the summer of 1978. He testified that his gross dollar sales of Seiko tennis racquets in 1979 was $20,000. Two invoices purporting to show sales in 1978 were introduced, as were ledger cards separated from plaintiff's other ledger records purporting to show promotional sales. He testified that Seiko was first used as part of his company's name in 1981. Price lists purporting to represent 1979, 1980 and 1981 were offered. Photographs of tennis racquets which Stoller was alleged to have designed and marketed since 1978 were offered. Photographs purporting to show plaintiff displaying the Seiko mark over booths at sporting goods exhibition shows in 1979 and 1980 were introduced. Stoller testified that he had attended various sporting goods shows since 1979 at which the Seiko trade name was used and Seiko tennis racquets displayed.

DISCUSSION

Trademark rights come through use. Time Mechanisms, Inc. v. Qonaar Corp., 422 F.Supp. 905 (D.N.J.1976). Ownership of a registered trademark creates a presumption of validity, National Auto. Club v. National Auto Club, Inc., 365...

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