Reed-Union Corp. v. Turtle Wax, Inc., REED-UNION

• Citation: 77 F.3d 909
• Decision Date: 15 March 1996
• Docket Number: No. 95-1224,REED-UNION,95-1224
• Parties: 1995 Copr.L.Dec. P 27,504, 37 U.S.P.Q.2d 1718 CORPORATION, Plaintiff-Appellant, v. TURTLE WAX, INC., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 909

77 F.3d 909

1995 Copr.L.Dec. P 27,504, 37 U.S.P.Q.2d 1718

REED-UNION CORPORATION, Plaintiff-Appellant, v. TURTLE WAX, INC., Defendant-Appellee.

No. 95-1224.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 13, 1995.

Decided Feb. 16, 1996.

Rehearing and Suggestion for Rehearing En Banc March 15, 1996.

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division; Paul E. Plunkett, Judge.

John J. Arado, Craig S. Fochler (argued), John S. Letchinger, Wildman, Harrold, Allen & Dixon, Chicago, IL, Patricia S. Smart, Chicago, IL, John Bostjancich, Smart & Bostjancich, Chicago, IL, for Plaintiff-Appellant.

J. Patrick Herald (argued), Michael A. Pollard, Kevin C. Parks (argued), Philip J. Zadeik, David J. Davis, Baker & McKenzie, Chicago, IL, for Defendant-Appellee.

Before COFFEY, EASTERBROOK, and RIPPLE, Circuit Judges.

EASTERBROOK, Circuit Judge.

Two manufacturers of car polish have moved their competition from the market to the courtroom. Reed-Union makes NU FINISH 'The Once a Year Car Polish ^TM", which it introduced in 1975. By 1990 NU FINISH was the No. 1 seller, which did not please Turtle Wax, a firm accustomed to success. Early in 1991 Turtle Wax introduced FINISH 2001, whose label boasts: "One Application Lasts One Year." Its ad campaign tracked that for NU FINISH, including a TV commercial that shows a beat-up car revived with new polish, which then lasts through a year of car washes. By 1992 FINISH 2001 was the No. 1 brand. Instead of making changes in its product, promotion (Turtle Wax wooed distributors to secure prominent displays for FINISH 2001), or price (FINISH 2001 costs about $1 per bottle less than NU FINISH), Reed-Union made a beeline for the courthouse.

The district court granted summary judgment to Turtle Wax on the copyright infringement claim, ruling that Reed-Union's commercial is a knockoff of a similar work by Star Brite Distributing, another producer of durable auto finishes, and that its central elements--laboratory test results, the revival of a weatherbeaten car, the imperviousness of the polish to many car washes--are scenes a faire outside the scope of copyright protection. 1993 U.S.Dist.(N.D.Ill.). The judge also rejected contentions that the blue ribbon on bottles of FINISH 2001, and the one-year longevity claim, violate the Lanham Act; an argument based on the Illinois Anti-Dilution law bit the dust at the same time. That left Reed-Union's principal contention: that the shape and color of the FINISH 2001 bottle, and the name of the product, violate Reed-Union's trademarks and trade dress. After a bench trial the district judge concluded that the NU FINISH mark is descriptive--"new finish" is the appearance of a car treated with the product--and therefore does not prevent rivals from combining the word "finish" with a symbol such as "2001" that implies technological progress (or, perhaps, "newer"). 869 F.Supp. 1304. As for trade dress: the products' bottles have similar shapes, but NU FINISH comes in da-glo orange, while FINISH 2001 is a fluorescent lime green. These vibrant colors make the packages distinctive. The FINISH 2001 label is black with orange-red text, close enough to NU FINISH's matte orange label to trouble the judge. But the judge concluded that consumers could tell the difference and attribute each to its maker. The record contains no evidence of actual confusion--the court disbelieved anecdotes offered by Reed-Union--and little evidence that buyers are likely to be confused. Finally, in a brief supplemental order, the court declared Reed-Union's copyright in its own commercial unenforceable, and it directed the Commissioner of Patents and Trademarks to cancel the registration for "The Once a Year Car Polish". Turtle Wax thus has prevailed across the board.

Reed-Union's brief, a model of bad appellate advocacy, presents 12 issues for review--many with sub-parts, for a total of 21 principal contentions. Posing so many issues ensures that each is superficially argued. To weaken its position still further, Reed-Union concentrates its fire on the findings the district judge made at the conclusion of the bench trial. For example, issue No. 8 reads: "Did the lower court err by arbitrarily giving no credibility to testimony regarding actual confusion incidents?" But unless a judge believes physically impossible things, or disbelieves testimony supported by unrefuted documents, the "finding, if not inconsistent, can virtually never be clear error." Anderson v. Bessemer City, 470 U.S. 564, 575, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518 (1985). The district court thought he had heard a series of tall tales. Here is one example:

[One witness related] the story of an elderly gentleman in Massachusetts who approached a Reed Union sales representative at a gas station to compliment him in the shine of his car. The Reed Union representative said, "Why I use NU FINISH," to which the old gentleman responded, "I do too, but I don't get the same shine." The old gentleman then went to the trunk of his car where he produced FINISH 2001. This story might be a fine commercial, but it is inherently unbelievable to this Court.

The principal issue in a case such as this is whether consumers are likely to be confused about the identity or source of the products in the marketplace. The district court did not commit clear error in finding that there is no credible evidence of actual confusion. What of future buyers? Likelihood of confusion, too, is an issue of fact, with deferential appellate review. Scandia Down Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1428-29 (7th Cir.1985). Confusion is possible: the products' names are similar, the claims on bottles and in ads are all but identical, a bottle sells for less than $10 (so consumers may not devote much time to selection), and so on. One can reply that the colors of the bottles differ and that consumers pay extra attention because the product is used to preserve the value of an expensive auto (so there may be very large consumer surplus, which concentrates the mind). Which hypothesis is correct? Because confusion is a factual matter, the plaintiff must produce proof; a theory about how consumers might be confused will not do, unless evidence supports the theory. Libman Co. v. Vining Industries, Inc., 69 F.3d 1360, 1362-63 (7th Cir.1995); August Storck K.G. v. Nabisco, Inc., 59 F.3d 616, 618-19 (7th Cir.1995). Because the party complaining about infringement bears this factual burden, skepticism or disbelief by the trier of fact is fatal. And the district judge, as trier of fact, disbelieved Reed-Union's proof--not only its anecdotal evidence of actual confusion but also its expert evidence of the potential for confusion in the future.

Each side engaged a marketing expert, who conducted a survey. Each survey concluded that some consumers who set out to buy one product would end up with the other, because of confusion; each survey concluded that some consumers who wanted to buy a product made by one firm would end up with a product made by the other. Each, indeed, measured the error rate at approximately 25%. Is 25% large or small? Compared to what? Befuddlement is part of the human condition. No matter how clear the markings, no matter how different the names, no matter how distinctive the bottles, some confusion is inevitable. Each expert therefore set out to measure the amount of "natural" confusion among consumers. Turtle Wax would be in trouble only if the confusion between NU FINISH and FINISH 2001 exceeded that base, and by a significant amount--significant both in the statistical sense (so that we are confident that a rerun of the tests would show confusion) and in the legal sense (because the trademark laws do not forbid minuscule effects on confusion, even if they can be measured reliably). Cf. Gammon v. GC Services Limited Partnership, 27 F.3d 1254 (7th Cir.1994) (concurring opinion).

To estimate the "normal" rates of confusion, each expert used a different pair of products. Reed-Union's expert used ARMOR ALL car wax as the control product and found little natural confusion. Turtle Wax's expert selected PRISM wax as the control and found confusion exceeding 20%, implying that the name and packaging of FINISH 2001 could not be faulted. The district judge preferred the latter study, because ARMOR ALL bore the name of the manufacturer prominently on the front of the bottle, while both NU FINISH and FINISH 2001 carry the manufacturer's name inconspicuously on the back, as does PRISM. ARMOR ALL is a well known brand name, which reduces confusion. In other words, the court concluded that Reed-Union's expert introduced a bias into the study, producing an artificially low estimate of the normal degree of confusion affecting the purchase of products of this kind. Reed-Union argues...