Conopco, Inc. v. May Dept. Stores Co.

• Decision Date: 02 January 1992
• Docket Number: No. 90-1475C(3).,90-1475C(3).
• Citation: 784 F. Supp. 648
• Parties: CONOPCO, INC., Plaintiff, v. MAY DEPARTMENT STORES COMPANY, et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

784 F. Supp. 648

CONOPCO, INC., Plaintiff, v. MAY DEPARTMENT STORES COMPANY, et al., Defendants.

No. 90-1475C(3).

United States District Court, E.D. Missouri, E.D.

January 2, 1992.

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Harry O. Moline, Moline Ottsen Mauze Leggat & Shostak, St. Louis, Mo., Berj A. Terzian, Joseph Diamante, Peter D. Vogl, Darren Saunders, Pennie & Edmonds, New York City, for plaintiff.

Stephen J. Horace, St. Louis, Mo., for The May Dept. Stores Co.

Jerome C. Simon, Moser & Marsalek, St. Louis, Mo., for Kessler Containers Ltd.

Edward J. Hejlek, J. Bennett Clark, Senninger Powers Leavitt & Roedel, St. Louis, Mo., for Venture & May Dept. and The Benjamin Ansehl Co. & Kessler Containers Ltd.

Ralph W. Kalish, Jr., Alan S. Nemes, Kalish & Gilster, St. Louis, Mo., for Venture Stores.

MEMORANDUM

HUNGATE, District Judge.

This matter is before the Court to determine the merits of plaintiff's claims after an eight-day bench trial.

Pursuant to 35 U.S.C. ? 271, et seq., and 15 U.S.C. ? 1121, plaintiff alleges substantial claims for patent infringement and trademark and trade dress infringement. Plaintiff is the creator and manufacturer of the original VASELINE INTENSIVE CARE LOTION, as well as a revised version of that product. Plaintiff contends that defendants have sold and are selling their own skin care lotion which infringes plaintiff's recently patented lotion formula. Plaintiff contends further that defendants have sold and are selling the infringing product in a package simulating the overall shape and appearance of plaintiff's revised Intensive Care Lotion packaging, thereby infringing on plaintiff's trademark and trade dress rights. Defendants counter that they are not liable to plaintiff because no infringement has occurred. Defendant Ansehl counterclaims against plaintiff, alleging bad faith prosecution of plaintiff's patent infringement claim.

Plaintiff seeks monetary and injunctive relief, as well as loss of profit damages, prejudgment interest, attorney's fees, and costs.

Having carefully considered the pleadings, testimony, witnesses, documents, and evidence, and being fully advised in the premises, the Court renders the following findings of fact and conclusions of law.

Findings of Fact

1. Plaintiff, Conopco, Inc., doing business as Chesebrough-Pond's USA Co. ("Chesebrough") is incorporated in New York and has its principal place of business at 33 Benedict Place, Greenwich, Connecticut.

2. Defendant, May Department Stores, Inc. ("May") is incorporated in New York and has its principal place of business at 611 Olive Street, St. Louis, Missouri.

3. Defendant, Venture Stores, Inc. ("Venture") is incorporated in Delaware and has its principal place of business at 2001 East Terra Lane, O'Fallon, Missouri.

4. Defendant, The Benjamin Ansehl Company ("Ansehl") is incorporated in Missouri and has its principal place of business at 1555 Page Industrial Boulevard, St. Louis, Missouri.

5. Defendant, Kessler Containers, Ltd. ("Kessler") is incorporated in Missouri and has its principal place of business at 1480 Page Industrial Plaza, St. Louis, Missouri.

6. In 1969, Chesebrough introduced VASELINE INTENSIVE CARE LOTION ("VICL").

7. Chesebrough introduced VICL with a therapeutic image, thus distinguishing it from the other leading cosmetic skin care lotions.

8. The 1969 VICL appeared in its regular "flavor." There are currently four "flavors" or styles of VICL: regular, herbal and aloe, extra strength, and sensitive skin. The regular VICL has always been packaged in a yellow bottle with a blue and green label. This color combination was designed to link VICL to the over one-hundred-year-old reputation of Chesebrough's Vaseline Petroleum Jelly product which is packaged in the same colors.

9. Since its inception in 1969, VICL has been the leading brand in the hand and body lotion market. VICL's sales have steadily increased since its introduction. In 1990, VICL's sales exceeded $109,000,000.

10. In 1974, Chesebrough introduced the herbal and aloe flavor. This flavor was advertised as a therapeutic product also. The extra strength flavor was introduced in 1977 and was directed toward people with exceptionally dry skin. Again, the advertising and promotion focused on therapeutic imagery.

11. Chesebrough introduced the sensitive skin flavor in 1987 as a therapeutic product for people with highly sensitive skin.

12. From 1969 through June 1989, VICL was packaged in a tapered oval bottle which was commonly used by the trade. Chesebrough had no proprietary right or interest in this bottle shape. At times, Chesebrough sold these tapered oval bottles to others.

13. In the early to mid-1980's, Chesebrough began to face substantial competition from major competitors with brands such as Wondra, Nivea, Curel, Jergens Aloe & Lanolin, and Keri. These brands were manufactured and marketed by major competitors such as S.C. Johnson (Curel), Bristol Myers (Keri), and Proctor and Gamble (Wondra). Chesebrough's competitors offered these new products as therapeutic alternatives to the VICL product.

14. Since the late 1970's, Chesebrough conducted annual tracking studies to examine consumer perception of VICL. After major competitors had positioned and promoted their lotions as therapeutic alternatives to VICL, Chesebrough's tracking studies showed that consumers' perceptions of the VICL efficacy were not as positive as they were previously. This erosion in the consumers' confidence in the VICL efficacy was of great concern to Chesebrough since the VICL product was its flagship product and the sales leader in the hand and body lotion market.

15. In 1986, Chesebrough commissioned a comprehensive study referred to as the Market Segmentation Study. This study confirmed that (1) an erosion in VICL's therapeutic imagery had occurred; (2) more consumers were primarily concerned with the therapeutic value of skin care lotions as opposed to their cosmetic value; (3) the VICL product had appeal to a wide range of consumers, from those primarily motivated by price considerations to those who were motivated to purchase because of therapeutic reasons; and (4) the proliferation by major new entrants into the market had eroded the VICL product's therapeutic image.

16. At the time this study was done, none of VICL's major competitors, such as Nivea, Jergens, Curel, and Keri, simulated the trade dress or packaging of the VICL product. Nevertheless, each entrant successfully competed with Chesebrough's VICL product.

17. In the mid 1980's, the private label sector comprised approximately 5% of the total skin care lotion market. In this 5% market sector, there were over 100 separate brands. Thus, on the average, each private label product represented less than .05% of the market.

18. In or about 1986, the most serious concern facing Chesebrough was the erosion of VICL's therapeutic appeal to consumers. Accordingly, senior management, including the president of Chesebrough, decided to relaunch or restage the product. The purpose of the VICL relaunch was to restore the therapeutic image of the VICL product by creating a totally unique and distinctive packaging and by developing an improved formula for the lotion.

19. Chesebrough's senior management wanted the VICL packaging to have an appearance which would differentiate VICL from the store brand lotions. Also, Chesebrough's senior management wanted to create a package which would be protectible and enforceable against all potential future infringers, including but not limited to private label manufacturers.

20. To this end, Stuart Kipperman and Myron Smith, Chesebrough's in-house package designers, began to work on creating a new VICL package in 1987. By mid-1987, Chesebrough's in-house package department had made hundreds of drawings of proposed new bottle designs. From these drawings, Chesebrough produced clay models of various bottle shapes. These bottle shapes were reviewed and considered by Chesebrough's top management, including its president. From the many bottle shapes, Chesebrough's senior management selected one particular bottle shape which was considered the most unique and aesthetically appealing.

21. To insure that the new bottle shape would be regarded as unique by consumers and would help enhance VICL's therapeutic image, Chesebrough embarked upon a series of experimental consumer tests. In the first of these tests conducted in late 1987, consumers were shown photographs of the clay model of the new bottle shape (with the label used on the then current VICL tapered bottle). Consumers overwhelmingly perceived this new bottle as being different in appearance from any other bottles.

22. In February 1988, Chesebrough conducted an important test on its new packaging. Both prior users and non-users of the VICL product participated in the experiment. These users and non-users of VICL were given the new bottle containing the then current lotion. The respondents were also given the old tapered bottle containing the same lotion. Both the new and old bottles had the label which was then being used on the old bottle, since plaintiff wanted to investigate the effect the new bottle shape had on consumers.

23. These tests showed that the new bottle shape had an important effect upon consumers' perceptions of the lotion itself. Consumers believed that the lotion in the new bottle was more therapeutic even though the lotion contained in both the new and the old bottle was identical. Chesebrough's personnel and documents refer to this phenomenon as the "halo" effect since the bottle shape itself affected consumers' perceptions on the lotion's efficacy. Consumers also found that the new bottle shape was different and unique.

24. Throughout 1988, Chesebrough continued its research on the bottle to insure that the bottle had "shelf presence," that is, to verify it...