Warner Bros., Inc. v. Gay Toys, Inc.

• Citation: 724 F.2d 327
• Decision Date: 21 December 1983
• Docket Number: No. 161,D,161
• Parties: WARNER BROS. INC., Plaintiff-Appellee, v. GAY TOYS, INC., Defendant-Appellant. ocket 83-7365.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 327

724 F.2d 327

WARNER BROS. INC., Plaintiff-Appellee, v. GAY TOYS, INC., Defendant-Appellant.

No. 161, Docket 83-7365.

United States Court of Appeals, Second Circuit.

Argued Oct. 26, 1983.

Decided Dec. 21, 1983.

Robert G. Mentag, Detroit, Mich. (Milton Wolson, Bernard Malina, New York City, of counsel), for defendant-appellant.

Arthur J. Greenbaum, New York City (Carol F. Simkin, Louis S. Ederer, Jane Ginsburg, Cowan, Liebowitz & Latman, Michael I. Davis, Weiss, Dawid, Fross, Zelnick & Lehrman, New York City, of counsel), for plaintiff-appellee.

Before LUMBARD, OAKES, and KEARSE, Circuit Judges.

OAKES, Circuit Judge:

This is the rather unusual case of an appeal from the grant of a final injunction after this court had directed the district court to enter a preliminary injunction. Warner Bros. Inc. v. Gay Toys, Inc., 658 F.2d 76 (2d Cir.1981). On remand, the United States District Court for the Southern District of New York, Whitman Knapp, Judge, granted summary judgment for Warner Bros. Inc. (Warner), on its claim under Section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) (1976), that the toy cars marketed by Gay Toys, Inc. (Gay Toys), and patterned after the "General Lee," ¹ an automobile featured in Warner's television series "The Dukes of Hazzard," tended to confuse purchasers as to their source or sponsorship. We affirm.

Our previous opinion held that (1) unregistered trademarks are protected under Sec. 43(a), 658 F.2d at 77-78; (2) protection may extend to symbols associated with specific ingredients of successful television series such as the symbols which identify the "General Lee," id. at 78; (3) to obtain an injunction under Sec. 43(a) only a likelihood of confusion as to source or sponsorship need be shown, id. at 79; and (4) Gay Toys' use of the "General Lee" symbols created a likelihood of confusion as to the source or sponsorship of the toy cars, id. at 78, 79. We rejected Gay Toys' argument that for likelihood of confusion to exist it was necessary that Warner be the manufacturer of the real "General Lee" toy car. Id. at 79. ²

On remand the district court, after questioning the applicability of the Lanham Act in the first instance, 553 F.Supp. 1018 at 1019, said that our opinion "conclusively presumed" both the desire of Warner's audience for officially sponsored toys and the deliberate creation by Gay Toys of sufficient confusion to invoke the Act. Id. at 1020. The court, then, assumed that the consumers' motivation in desiring to buy officially sponsored toys was somehow relevant in establishing the requisite secondary meaning to show identification with a source. It concluded that in our earlier opinion we "presumed" that consumers' desire for the "official" toy demonstrated this motivation. The court then rejected the defense that the design of the "General Lee" is "functional" insofar as the symbols are required to permit children to play "The Dukes of Hazzard" with the toy car. Id. at 1020-21. It also rejected defenses of abandonment and lack of clean hands. 553 F.Supp. at 1020-21.

On this appeal Gay Toys renews the argument of "functionality" made below. It further claims that because "consumer motivation" is a necessary element of secondary meaning required to show identification with a source, and proof of such was lacking here, the district court decision (and by implication, at least, our previous decision) was contrary to a long line of authority in this court. ³ Finally it argues that the district court erred in rejecting as a matter of law the defenses of lack of clean hands and abandonment by "naked licensing."

Functionality

Functional symbols (those that are essential to a product's use as opposed to those which merely identify it) are not protected under Sec. 43(a), see, e.g., Vibrant Sales, Inc. v. New Body Boutique, Inc., 652 F.2d 299, 303 (2d Cir.1981), cert. denied, 455 U.S. 909, 102 S.Ct. 1257, 71 L.Ed.2d 448 (1982). Gay Toys claims the "General Lee" symbols in question are functional in the sense that they are essential to enable children to play "Dukes of Hazzard" with the cars. This is a paradoxical argument, since it is precisely the fact that the symbols provide identification that make them "functional" in the sense urged on us by Gay Toys, while Warner's exclusive right to use its own identifying symbols is exactly what it seeks to protect. Carried to a logical conclusion, Gay Toys' argument would enlarge the functionality defense so as to eliminate any protection for any object, since presumably each feature of any object is designed to serve a particular "function" in Gay Toys' sense of the term.

Warner's position is that functionality should be considered in terms of toy cars generally and not "Dukes of Hazzard" toy cars specifically, so that, for example, the use of wheels cannot be protected, but the Confederate flag marking coupled with the numerals, all on a bright orange background, can be. It cites In re DC Comics, 689 F.2d 1042, 1045 (Cust. & Pat.App.1982) (dolls generally and not Superman dolls are the class by which functionality is determined), and language of this court relying upon a law review note that identifies functional features as those "having value independent of identification." Vibrant Sales, Inc., 652 F.2d at 303 (citing Developments in the Law--Competitive Torts, 77 Harv.L.Rev. 888, 918 (1964)).

Gay Toys relies primarily on a Ninth Circuit case which held that an identifying insignia of a fraternal organization is functional and nonprotectable as a trademark when used on jewelry, at least as long as no one is confused that the jewelry was made or licensed by the fraternity. International Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912, 919 (9th Cir.1980), cert. denied, 452 U.S. 941, 101 S.Ct. 3086, 69 L.Ed.2d 956 (1981). Though the decisions of various circuits are not uniform on this question, we agree with Warner both on grounds of logic and of policy.

While there has been some confusing language in the case law, particularly that linking what is functional to the commercially successful features of a product, see In re DC Comics, Inc., 689 F.2d at 1045 (discussing cases), an examination of the roots and purposes of the functionality doctrine suggests coherent limits to its use. In Singer Manufacturing Co. v. June Manufacturing Co., 163 U.S. 169, 184-85, 16 S.Ct. 1002, 1008, 41 L.Ed. 118 (1896), the Supreme Court held that the form, size, shape, and appearance of sewing machines once protected by various patents fell into the public domain upon expiration of the underlying patents. The shape or form necessary to the once patented features, even though distinctive and identifying, could be copied without competing unfairly.

Applying the teaching of Singer to an attempt to copy design features of an early version of the vacuum cleaner in an unfair competition suit, the Seventh Circuit said in Pope Automatic Merchandising Co. v. McCrum-Howell Co., 191 F. 979, 981-82 (7th Cir.1911):

Development in a useful art is ordinarily toward effectiveness of operation and simplicity of form. Carriages, bicycles, automobiles, and many other things from diversity have approached uniformity through the utilitarian impulse. If one manufacturer should make an advance in effectiveness of operation, or in simplicity of form, or in utility of color; and if that advance did not entitle him to a monopoly by means of a machine or a process or a product or a design patent; and if by means of unfair trade suits he could shut out other manufacturers who plainly intended to share in the benefits of the unpatented utilities and in the trade that had been built up thereon, but who used on their products conspicuous name-plates containing unmistakably distinct trade-names, trade-marks, and names and addresses of makers, and in relation to whose products no instance of deception had occurred--he would be given gratuitously a monopoly more effective than that of the unobtainable patent in the ratio of eternity to 17 years.

See also Flagg Manufacturing Co. v. Holway, 178 Mass. 83, 59 N.E. 667 (1901) (Holmes, C.J.) (holding design of zither not protectable: "In the absence of a patent the freedom of manufacture cannot be cut down under the name of preventing unfair competition.").

More recently courts have continued to understand the functionality defense as a way to protect useful design features from being monopolized. The Supreme Court, in Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 850-51 n. 10, 102 S.Ct. 2182, 2186-87 n. 10, 72 L.Ed.2d 606 (1982) (dictum), defined a functional feature as one that "is essential to the use or purpose of the article or [that] affects the cost or quality of the article." A design feature of a particular article is "essential" only if the feature is dictated by the functions to be performed; a feature that merely accommodates a useful function is not enough. In re Morton-Norwich Products, Inc., 671 F.2d 1332, 1342 (Cust. & Pat.App.1982) (shape of plastic container for spray products not essential to its purpose as a sprayer). And a design feature "affecting the cost or quality of an article" is one which permits the article to be manufactured at a lower cost, e.g., Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 122, 59 S.Ct. 109, 115, 83 L.Ed. 73 (1938) (pillow shape of shredded wheat biscuit functional as cost would be increased and quality lessened by other form), or one which constitutes an improvement in the operation of the goods, e.g., Fisher Stoves Inc. v. All Nighter Stove Works, Inc., 626 F.2d 193, 195 (1st Cir.1980) (two-tier design of woodstove functional because improving the operation of the stove in three respects).

The functionality defense, then, was developed to protect advances in functional design from being monopolized. ⁴ It is designed to encourage competition and the broadest dissemination of useful design features. The question posed is whether...