Chevron Chemical Co. v. Voluntary Purchasing Groups, Inc.

• Decision Date: 23 October 1981
• Docket Number: No. 80-1729,80-1729
• Citation: 212 USPQ 904,659 F.2d 695
• Parties: CHEVRON CHEMICAL COMPANY, a Delaware Corporation, Plaintiff-Appellant, v. VOLUNTARY PURCHASING GROUPS, INC., a Texas Corporation, and Hi-Yield Chemical Co., Defendants-Appellees. . Unit A *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 695

659 F.2d 695

212 U.S.P.Q. 904

CHEVRON CHEMICAL COMPANY, a Delaware Corporation, Plaintiff-Appellant, v. VOLUNTARY PURCHASING GROUPS, INC., a Texas Corporation, and Hi-Yield Chemical Co., Defendants-Appellees.

No. 80-1729.

United States Court of Appeals, Fifth Circuit.

Unit A ^*

Oct. 23, 1981.

Pillsbury, Madison & Sutro, Thomas E. Haven, W. Robert Buxton, Andrew J. Ogilvie, San Francisco, Cal., Thompson & Knight, Christopher W. Byrd, Gregory S. C. Huffman, Dallas, Tex., for plaintiff-appellant.

Arnold, White & Durkee, Bill Durkee, William Dean Raman, Houston, Tex., for defendants-appellees.

Appeal from the United States District Court for the Northern District of Texas.

Before RUBIN, RANDALL and TATE, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge.

Plaintiff Chevron Chemical Co. ("Ortho") contends that Voluntary Purchasing Groups, Inc., and Hi-Yield Chemical Co. (together, "VPG") copied the packages in which it sells lawn and garden products thus infringing its trade dress and violating § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1976), and the Texas law of unfair competition. ¹ Finding that VPG did deliberately copy Ortho's insignia, the district court denied relief on the grounds that the Lanham Act does not provide a cause of action for trade dress infringement and that Ortho failed to show, as required under applicable Texas law, either that its trade dress had acquired secondary meaning or that there was any likelihood of confusion on the part of consumers as to the respective sources of the competing products.

As to Ortho's federal claim, we conclude that earlier decisions of this Court compel the conclusion that the Act does provide a cause of action for trade dress infringement; Ortho was not required to show "secondary meaning," as that term is understood in trademark law, to prevail under that section; the district court applied an erroneous legal standard in finding no likelihood of confusion, thereby stripping that determination of the protection normally accorded fact findings under Rule 52(a), Fed.R.Civ.P.; and, at least with regard to one of the VPG packagings, Ortho demonstrated such a likelihood of confusion. Turning to Ortho's state claim under the Texas law of unfair competition, we assume arguendo both that Texas law requires proof of secondary meaning and the requisite proof by Ortho, but conclude that Ortho's recovery under state law cannot be greater than the relief accorded it under § 43(a) since both require a similar showing of a "likelihood of confusion." Therefore, we reverse and remand so that the district court may enter an appropriate injunction and hold further proceedings consistent with this opinion.

I.

Ortho manufactures agricultural chemicals. It is, and has been for many years, the leading seller of lawn and garden products, such as pesticides, weed killers, and fertilizers, for home consumption, such as home gardening. ²

Ortho's management decided in 1949 to package and sell its more than 125 lawn and garden products in a uniform "family" trade dress. Since then, with few exceptions, it has packaged its products in trade dresses featuring the colors red and yellow. In 1971, it adopted the trade dress shown in black and white on Diagram 1 below.

VPG and its predecessors have also produced and marketed agricultural chemicals for many years; in 1974 it decided to introduce a new line of lawn and garden products under the trademark "Hi-Yield." ³ The district court found that, in designing its packaging, VPG intended to copy Ortho's trade dress as much as the law would allow, and consulted its attorney for advice in order to accomplish this end without violating the law.

The Ortho package shows a background composed of three horizontal bands of color; the top 20% is white, the next 30% is yellow, and the bottom 50% is red. Ortho's registered trademark, "ORTHO," is printed on the white band in bold black letters, along with the distinctive chevron mark of the Chevron companies. The yellow band contains the name of the particular product, e. g., Bone Meal, which is also printed in black letters. The red band contains the required warnings regarding toxicity, general information about the product and its ingredients, and a drawing suggestive of the uses of the product, e. g., the insects which a particular pesticide will eradicate. The printing in this red band is partly in black and partly in white. The back of the package is white and yellow; the top band is white and is the same width as the top white band on the front, and the rest of the back is yellow. The product's contents and directions for its use are printed on the back. Those Ortho products sold in liquid form come in bottles bearing a label identical to the design just described. The bottle itself is dark brown and has a yellow cap. Diagram 1

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

By March 1976, VPG's new "Hi-Yield" line of lawn and garden products was on the retail shelf in its first trade dress ("Trade Dress No. 1"). The front view of VPG's Trade Dress No. 1 is shown on Diagram 1 above.

VPG's packaging shows a background virtually identical to Ortho's; i. e., it is composed of three horizontal bands of white, yellow and red. The widths of the bands and the shades of the colors are practically indistinguishable from those on the Ortho packaging. VPG's trademark, "Hi-Yield," printed in red capital and small letters, appears in the white band. The yellow band, like Ortho's, contains the product name printed in similar black letters. The red band, also like Ortho's, contains warnings and descriptions of the product in small print. Again like Ortho's, the printing on VPG's Trade Dress No. 1 is vertically aligned on the left, but not on the right. The back of VPG's Trade Dress No. 1, unlike Ortho's, is solid white. VPG's bottles are dark brown, substantially the same size and shape as Ortho's, but the color of the cap is white, not yellow.

After Ortho protested VPG's use of Trade Dress No. 1, VPG revised it. By August 1976, VPG began using Trade Dress No. 2, below, which also features red, yellow, and white bands in shades virtually identical to those found on Ortho packaging, but in a five band combination: white, red, yellow, red, white. On Trade Dress No. 2, VPG's trademark "Hi-Yield" (in red) and the product name (in black) both appear on the large middle yellow band.

Shortly after August 1976, VPG, on its own initiative, made another revision. Trade Dress No. 3, shown below, uses only the colors red and yellow (although again in shades practically indistinguishable from those used by Ortho) arranged this time in a three band pattern of red, yellow, red. As in Trade Dress No. 2, the red "Hi-Yield" trademark and black product name appear in the middle yellow band.

VPG's final revision, Trade Dress No. 4, shown below, was adopted after this suit was filed, and is still used. Trade Dress No. 4 again uses the same shades of red and yellow, but now in only two bands: the top two-thirds of the package is yellow, and contains the red "Hi-Yield" mark and the black product name; the bottom third is red.

Diagram 2

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Ortho's complaint alleges that VPG's trade dresses constituted "false designations of origin" and "false representations" under § 43(a) of the Lanham Act and infringed Ortho's common law rights in its trade dress. Ortho demanded injunctive relief and an accounting. The trial was to the court, on the issue of liability alone.

Ortho first sought to prove that its trade dress had acquired secondary meaning. It offered evidence showing use of its trade dress from 1971 until the time of trial, evidence of extensive advertising depicting the packaged products, and the substantial amount of its sales of products thus packaged.

To show the likelihood of confusion, Ortho relied on the visual similarity between Ortho's and VPG's trade dresses and presented evidence demonstrating that Ortho's and VPG's products are sold through similar retail outlets to similar purchasers; Ortho's and VPG's products are advertised in at least one similar manner; ⁴ and employees of Ortho as well as those of independent retail outlets had been confused by the similarity in the trade dresses. Ortho did not, however, offer any evidence of actual consumer confusion.

The district court concluded that "merely using a confusingly similar trade dress does not constitute a false designation of origin or a false description or representation under § 43(a) of the Lanham Act." As to Ortho's state claim of unfair competition, the court concluded that Ortho failed to prove that its trade dress had acquired secondary meaning, saying there was "no evidence that consumers recognize the Ortho trade dress as distinctive or that the trade dress says 'Ortho' to them." Furthermore the district court found that none of VPG's trade dresses was likely to cause confusion. In making this determination with regard to Trade Dress No. 1, the court compared those "digits," or factors, tending to establish such confusion with those tending to diminish it. Among the former, the court listed "the similarity of the front of the packages" and the "inference of intentional copying." Those listed as diminishing the likelihood of confusion were VPG's "consistent display of its 'Hi-Yield' trademark," the "higher than average degree of care used by consumers in purchasing (lawn and garden) products," and the "absence of any evidence of actual consumer confusion after four years of competition." "In sum," the court concluded, "the factors against likelihood of confusion substantially outweigh the factors tending to show such likelihood." As to Trade Dresses Nos. 2-4, the court concluded that they were not confusingly similar to Ortho's, "and even dissimilar."

II.

Section 43(a) provides:

Any person who shall ... use in connection with any goods or services,...