Scandia Down Corp. v. Euroquilt, Inc.

• Decision Date: 13 September 1985
• Docket Number: No. 85-1193,85-1193
• Parties: , 227 U.S.P.Q. 138, 3 Fed.R.Serv.3d 195 SCANDIA DOWN CORPORATION, a California Corporation, and Goose Down, Inc., an Illinois Corporation, Plaintiffs-Appellees, v. EUROQUILT, INC., a New Jersey Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1423

772 F.2d 1423

54 USLW 2220, 227 U.S.P.Q. 138, 3

Fed.R.Serv.3d 195

SCANDIA DOWN CORPORATION, a California Corporation, and Goose Down, Inc., an Illinois Corporation, Plaintiffs-Appellees, v. EUROQUILT, INC., a New Jersey Corporation, Defendant-Appellant.

No. 85-1193.

United States Court of Appeals, Seventh Circuit.

Argued June 11, 1985.

Decided Sept. 13, 1985.

Jeremiah D. McAuliffe, Pattishall, McAuliffe & Hofstetter, Chicago, Ill., for defendant-appellant.

Carl E. Moore, Edward M. O'Toole, et al., Chicago, Ill., for plaintiffs-appellees.

Before COFFEY and EASTERBROOK, Circuit Judges, and GRANT, Senior District Judge. ^*

EASTERBROOK, Circuit Judge.

Scandia Down Corp. franchises a nationwide chain of 56 stores selling bedding products, including down-filled comforters. Since 1976 its principal trademark has been a logo with its name and an outline of a goose.

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Scandia has spent more than $1.5 million in promotions using the trademark. This trademark is not registered, and accordingly questions of infringement concern common rather than statutory law. (Two related marks are registered, one in Illinois and one with the United States, but we need not consider them.)

Euroquilt has three stores on the east coast and for a while had a store in Chicago. It, too, sells bedding products. Until 1982 Euroquilt sold its products under the name Euroquilt and Continental Quilt, although one of its stores used a small sign with the words "The Down Shoppe" to describe a department. In April 1982 Euroquilt adopted a new logo to identify its stores and products.

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The logo precipitated this suit, and in November 1982 the district court entered a preliminary injunction against the use of this logo "or any colorable imitation thereof" in connection with Euroquilt's promotion or sale of comforters or bedding products.

In March 1983 Euroquilt started using a new logo, with the same typeface (Souvenir Bold) but a new goose.

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Scandia almost immediately objected that this logo violated the preliminary injunction, and Euroquilt promptly substituted a third logo.

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This logo brought the parties back to court, with Scandia insisting that "Down Shoppes" in Souvenir Bold, coupled with a goose, was a "colorable imitation" under the injunction. A magistrate agreed, recommending in September 1983 that Euroquilt be held in contempt. The magistrate concluded, after the parties had produced evidence, that the new logo had caused substantial confusion. The magistrate did not comment on the difference between recumbent and airborne geese.

The district court took the magistrate's recommendation under advisement and held a trial in October 1983 on Scandia's request for a permanent injunction. After the trial Euroquilt started using a fourth logo, again in Souvenir Bold but this time sans goose.

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Scandia objected yet again, and the district court held a supplementary hearing on Scandia's request to hold Euroquilt in contempt a second time.

The district court disposed of all pending disputes in a single opinion. The court held Scandia entitled to a permanent injunction on the ground that Euroquilt's first logo was similar to Sandia's logo and had caused confusion, that the infringement was wilful, and that Euroquilt designed its logos "in a deliberate effort to capture [Scandia's] customers." The court adopted the magistrate's recommendation that Euroquilt's third logo violated the preliminary injunction because it was a colorable imitation of the first logo. Because this finding of contempt made Euroquilt a repeat offender, the court concluded that Euroquilt also must stop using its fourth logo. The court enjoined Euroquilt's use of "The Down Shoppe" in Souvenir Bold "or substantially similar typeface." It ordered Euroquilt to turn over to Scandia all profits made between the filing of Scandia's first motion to hold Euroquilt in contempt and the time the infringing logos no longer affected Scandia's sales.

I

Euroquilt was not represented by counsel at trial. Counsel who had represented Euroquilt through the hearing on contempt withdrew before trial, protesting that they had not been paid. The district court gave Euroquilt a month to obtain new counsel but declined to postpone the trial further. Euroquilt did not, and it went to trial "represented" by Monte Dow, its president and sole stockholder. Scandia did not object to this. After trial Euroquilt retained new counsel, who filed a motion for a new trial on the ground that a layman may not represent a corporation. Counsel repeat this argument on appeal.

The basic proposition is correct. A "corporation" is an abstraction, and abstractions cannot appear pro se. The corporation is just a convenient name for a complex web of contracts among managers, workers, and suppliers of equity and debt capital. Dow may have been the sole equity investor in Euroquilt, but he did not represent other interests such as those of creditors. Cf. Upjohn Co. v. United States, 449 U.S. 383, 390-92, 101 S.Ct. 677, 683-84, 66 L.Ed.2d 584 (1981) (rejecting the proposition that senior managers and the corporation have identical interests). We have held that corporations must appear by counsel or not at all. Strong Delivery Ministry Ass'n v. Board of Appeals, 543 F.2d 32, 33-34 (7th Cir.1976). See also, e.g., Palazzo v. Gulf Oil Corp., 764 F.2d 1381, 1385-86 (11th Cir.1985); 28 U.S.C. Sec. 1654. If Scandia had objected to Dow's representation of Euroquilt, the district court would have been required to prevent Euroquilt from appearing at trial.

The upshot of this would have been the entry of a default judgment for Scandia, unless the district court was required to give Euroquilt more time to obtain counsel. But Euroquilt had had counsel before, and its decision to put its lawyers' bills at the bottom of the stack caused the problem of which it now complains. A corporation may not grant itself a continuance by manipulating things so that it has no counsel. The district judge would have been entitled to dismiss the case--which she said she would have done--rather than force Scandia to wait indefinitely for Euroquilt to retain counsel. Cf. National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 96 S.Ct. 2778, 49 L.Ed.2d 747 (1976) (whether to dismiss a case for plaintiff's procedural failings rests in the discretion of the district court); Trakas v. Quality Brands, Inc., 759 F.2d 185, 189-91 (D.C.Cir.1985) (Scalia, J., dissenting).

At all events Euroquilt cannot protest its own decision to proceed with Dow in the courtroom. See Schifrin v. Chenille Mfg. Co., 117 F.2d 92, 94-95 (2d Cir.), cert. denied, 313 U.S. 590, 61 S.Ct. 1114, 85 L.Ed. 1545 (1941). If Dow's decision injured creditors of Euroquilt, they might have an action against him, but this is not a good reason to put Scandia through a second trial. Given its alternative of a default judgment, Euroquilt may not say that any technical error in permitting Dow to appear in court--if this is an error when the adversary does not object--was harmful within the meaning of Fed.R.Civ.P. 61.

One more preliminary matter. Euroquilt says that we should review the district court's findings about the similarity of the logos and the likelihood of confusion for "error" and should not defer to the district court's findings or apply the clearly erroneous principle of Fed.R.Civ.P. 52(a). Euroquilt offers several reasons, none persuasive.

First Euroquilt draws a distinction between "factual" issues governed by Rule 52(a) and "mixed questions of law and fact," which should be reviewed more freely. Although the existence of confusion in the past is a factual issue, Euroquilt insists that the likelihood of confusion in the future is a mixed issue. It points to Piper Aircraft Corp. v. Wag-Aero, Inc., 741 F.2d 925, 935 (7th Cir.1984), which holds not erroneous a finding of likelihood of confusion while holding not clearly erroneous a finding of actual confusion. If the "clearly erroneous" rule applied to findings of likely confusion, Euroquilt insists, the court would not have spoken of error in Piper.

This is altogether too much weight to put on the omission of a word. Opinions are not bond indentures. Reiter v. Sonotone Corp., 442 U.S. 330, 341-42, 99 S.Ct. 2326, 2332-33, 60 L.Ed.2d 931 (1979); Zenith Radio Corp. v. United States, 437 U.S. 443, 459-62, 98 S.Ct. 2441, 2449-51, 57 L.Ed.2d 337 (1978). Judges become weary of the endless repetition of the same formulas, and they have the liberty to omit a word or two in a sentence without causing avulsive changes in the law. The likelihood of confusion in the future is a question of fact to which this circuit has applied the clearly erroneous rule. See Piper, supra, 741 F.2d at 939 (Posner, J., concurring); Henri's Food Products Co. v. Kraft, Inc., 717 F.2d 352, 354 (7th Cir.1983); Processed Plastic Co. v. Warner Communications, Inc., 675 F.2d 852, 857 (7th Cir.1982). We need not determine when, if ever, "mixed" questions are reviewed under a different standard; the question of likelihood of confusion is all fact and no law.

Euroquilt also tells us that likelihood of confusion is an "ultimate" issue and therefore should be reviewed more carefully. The Federal Circuit apparently takes this position. E.g., Litton Systems, Inc. v. Whirlpool Corp., 728 F.2d 1423, 1445 (Fed.Cir.1984); Giant Foods, Inc. v. Nation's Foodservice, Inc., 710 F.2d 1565, 1569 (Fed.Cir.1983). The proposition that "ultimate" findings should be reviewed with special vigor has drifted in and out of appellate cases for decades. Although we should think carefully before disagreeing with the views of the Federal Circuit, a...