Lever Bros. Co. v. American Bakeries Co.

Citation693 F.2d 251
Decision Date03 November 1982
Docket NumberNo. 223,D,223
PartiesLEVER BROTHERS COMPANY, Plaintiff-Appellant, v. AMERICAN BAKERIES COMPANY, Defendant-Appellee. ocket 82-7334.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Joseph D. Garon, Brumbaugh, Graves, Donohue & Raymond, New York City (Joseph D. Garon, Eugene V. Handy, Jr., New York City, of counsel), for plaintiff-appellant.

Dennis McWilliams, McWilliams, Mann & Zummer, Chicago, Ill. (Holland, Armstrong, Wilkie & Previto, Joseph J. Previto, New York City, McWilliams, Mann & Zummer, Thomas F. McWilliams, Dennis M. McWilliams, James R. Sweeney, Chicago, Ill., of counsel), for defendant-appellee.

Before KAUFMAN, MESKILL, and FAIRCHILD, * Circuit Judges.

IRVING R. KAUFMAN, Circuit Judge:

The initial purpose of the trademark law was protection against application of the owner's mark "to goods of the same description." Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 412, 36 S.Ct. 357, 360, 60 L.Ed. 713 (1916). The idea, born of common sense, was that the purchaser had come to associate the relevant good qualities of the product with the mark. Use of the same, or a substantially similar, mark could deprive the first user of sales of the goods which the purchaser intended to buy. It was not long, however, before common sense also revealed the need to extend the protection of a mark to use on different, but related, products. Just one year after the Hanover case, this Court had no difficulty rejecting the argument that because "no one wanting [pancake] syrup could possibly be made to take [pancake] flour," a trademark infringement action could not lie. Aunt Jemima Mills Co. v. Rigney & Co., 247 F. 407, 409-10 (2d Cir.1917), cert. denied, 245 U.S. 672, 38 S.Ct. 222, 62 L.Ed. 540 (1918). It is by now obvious that related but noncompeting products may become associated in a purchaser's mind. Recognizing the first user's interest in the reputation of his mark and the possibility that he might wish to capitalize on the success of his product by entering the market the second user had begun to exploit, courts adopted the Aunt Jemima reasoning. See S.C. Johnson & Son v. Johnson, 175 F.2d 176, 179-80 (2d Cir.) (Learned Hand, J.) (construing 15 U.S.C. Sec. 1114), cert. denied, 338 U.S. 860, 70 S.Ct. 103, 94 L.Ed. 527 (1949).

The principle proved easier to state than apply. See King Research, Inc. v. Shulton, Inc., 454 F.2d 66, 67 & n. 5 (2d Cir.1972) (collecting and comparing inconsistent cases). Finally, in 1961, Judge Friendly set forth an extensive list of criteria useful in weighing a prior owner's claim that use on a noncompeting product amounts to an infringement:

Where the products are different, the prior owner's chance of success is a function of many variables: the strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant's good faith in adopting its own mark, the quality of defendant's product, and the sophistication of the buyers.

Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961). The wisdom of this approach is its recognition that each trademark infringement case presents its own unique set of facts. No single Polaroid factor is preeminent, nor can the presence or absence of one determine, without analysis of the others, the outcome of an infringement suit. Rather, the trial court is required to sift the evidence relevant to each of the criteria, in the particular circumstances before it. The crucial issue is whether there exists a likelihood that an appreciable number of ordinary prudent purchasers will be misled, or simply confused, as to the source of the goods in question, Mushroom Makers, Inc. v. R.G. Barry Corp., 580 F.2d 44, 47 (2d Cir.1978), cert. denied, 439 U.S. 1116, 99 S.Ct. 1022, 59 L.Ed.2d 75 (1979). With reference to this ultimate question, and from a balancing of the determinations reached on all of the Polaroid factors, a conclusion is reached whether the parties have a right to the relief sought. Kiki Undies Corp. v. Promenade Hosiery Mills, Inc., 411 F.2d 1097, 1099 (2d Cir.1969), cert. denied, 396 U.S. 1094, 90 S.Ct. 707, 24 L.Ed.2d 698 (1970).

In this appeal from a judgment and order of the United States District Court for the Eastern District of New York, Edward R. Neaher, Judge, Lever Brothers Company contends it was error to deny its request for injunctive relief, for alleged infringement of its mark AUTUMN. Specifically,

Lever asserts that Judge Neaher's factual findings were clearly erroneous within the meaning of Fed.R.Civ.P. 52(a) 1 and the district court improperly applied the Polaroid factors. For the reasons hereinafter stated, we reject both these claims, and affirm the judgment of the district court, 537 F.Supp. 248.

FACTS

Lever Brothers is a Maine corporation which has its headquarters in New York. It manufactures and sells a wide variety of consumer products, including detergents, soaps, toothpaste, and food products. It also markets margarine under the trademark AUTUMN, the subject of the litigation before us. AUTUMN margarine, as well as Lever's other products, are sold directly to large retail store chains and through wholesalers to small retail outlets.

AUTUMN represents Lever's third entry into the margarine market. Its IMPERIAL margarine is promoted largely by a description of its taste, the more recent addition PROMISE for its low cholesterol content. Beginning in late 1974, Lever commenced developing a margarine which would combine the taste qualities of the former with the health advantages of the latter. Once the product had been developed, Lever considered various names, eventually settling on AUTUMN. Lever initiated sales of its product in February, 1975, and shortly thereafter introduced it on a test basis in the Los Angeles metropolitan area market. Buoyed by initial sales figures, Lever expanded into other geographic areas in California, and also into Oregon and Washington. AUTUMN has since been sold in eight other states, although the majority of sales have been in the west coast states. The AUTUMN mark was accepted by the Patent and Trademark Office and was registered for use on margarine on October 21, 1975.

In 1977, responding to the success of a competitor's "grain-type" bread in the Charlotte, North Carolina market, American Bakeries began the development of its own bread. American's southeast division, Merita, 2 produced a similar, as yet unnamed grain-type bread. A trademark search was conducted, at American's request, by the Patent and Trademark Office, on each potential mark. Eventually, American chose the name AUTUMN GRAIN. It ordered the production of bread wrappers bearing that name before it had received a final report on the mark. AUTUMN GRAIN bread was not offered for sale to the general public, however, before the trademark search had been completed and American received the opinion of counsel that the mark was available for use on bread. The search, completed on April 14, 1977, of course revealed the existence of Lever's registered AUTUMN mark for use on margarine, as well as numerous other uses of the word "autumn," either singly or in combination with other words. The Patent and Trademark Office apparently agreed with American's attorney, that AUTUMN GRAIN was available and registrable for use on bread, since it passed the trademark application on August 23, 1977. 3 American continued the sale of AUTUMN GRAIN bread.

American sells its bread primarily in the southeastern portion of the country. As indicated, Lever's AUTUMN margarine sales occur principally in the three west coast states. There has, however, been at least some sales overlap. Joseph McGinley, Executive Vice-President of American, testified at trial that AUTUMN GRAIN was sufficiently successful in the initial test market, North Carolina, that American began selling it in other areas, including parts of California. Moreover, Lever, in its brief, does not appear to dispute the existence of at least some sales area overlap, but merely states that "the two products in issue [were] not sold in any particularly large quantities in the same geographic regions ...." Brief on Behalf of Plaintiff-Appellant at 14-15 (emphasis added). Lever conceded the same point at oral argument. 4

Both Lever and American expended large sums advertising their respective products. Their efforts were highly successful. In a period of approximately five years, from the time AUTUMN GRAIN bread was first introduced in April, 1977, American sold more than fifty million loaves, at a wholesale price of about sixty-five cents each, for a total value of approximately $43,000,000. In Lever's case, "next day recall tests" disclosed that viewers recalled the AUTUMN margarine commercials at the rate of 30%, well above the average 20% recall experienced for most food products. Thirteen million dollars worth of AUTUMN margarine has been sold since 1975.

In response to American's use of the mark AUTUMN GRAIN, Lever instituted this suit for injunctive relief, alleging trademark infringement, 15 U.S.C. Sec. 1114, and false designation of origin, 15 U.S.C. Sec. 1125. 5 After a bench trial, Judge Neaher concluded that Lever had not borne its burden of demonstrating a likelihood of confusion as to the source of the two products, 537 F.Supp. 248, 256 (E.D.N.Y.1982), and refused to grant an injunction. 6 This appeal followed.

DISCUSSION

Lever Brothers concedes, as it must, that the district court utilized the proper test in assessing the likelihood of source confusion. It contends, however, that Judge Neaher employed some of the Polaroid factors incorrectly, and applied clearly erroneous factual findings to others.

(1) Strength of the Mark

"Strength" refers to the "distinctiveness" of the mark,...

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