First Brands Corp. v. Fred Meyer, Inc.

• Decision Date: 06 February 1987
• Docket Number: No. 85-4146,85-4146
• Parties: , 55 USLW 2496, 1 U.S.P.Q.2d 1779 FIRST BRANDS CORPORATION, Plaintiff-Appellant, v. FRED MEYER, INC. and BASF Wyandotte Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1378

809 F.2d 1378

87 A.L.R.Fed. 1, 55 USLW 2496, 1

U.S.P.Q.2d 1779

FIRST BRANDS CORPORATION, Plaintiff-Appellant, v. FRED MEYER, INC. and BASF Wyandotte Corporation, Defendants-Appellees.

No. 85-4146.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 4, 1986.

Decided Feb. 6, 1987.

Kenneth R. Umans, Thomas A. Kain, Julie A. Lauber, New York City, for plaintiff-appellant.

Thomas A. Smart, New York City, and Randolph C. Foster, Portland, Or., for defendants-appellees.

Appeal from the United States District Court for the District of Oregon (Portland).

Before J. BLAINE ANDERSON, HUG, and CANBY, Circuit Judges.

J. BLAINE ANDERSON, Circuit Judge:

Union Carbide ("Carbide") ¹ manufactures and sells the nationally known PRESTONE II brand antifreeze. Carbide filed a motion for a preliminary injunction against Fred Meyer, Inc. ("Meyer") and BASF Wyandotte Corporation ("Wyandotte") to prevent them from selling their private label antifreeze in yellow-colored, "F-style" shaped, one gallon jugs. Carbide claims that sales of antifreeze in these yellow containers by sellers of private label antifreeze products are an infringement upon the trade dress of PRESTONE II antifreeze under Sec. 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a), the common law of trade dress and the law of unfair competition. The district court denied Carbide's motion for a preliminary injunction. We affirm.

1. DISCUSSION

A. Standard of Review

A district court's order regarding preliminary injunctive relief is subject to limited review. The grant or denial of a preliminary injunction will be reversed only where the district court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact. Sardi's Restaurant Corp. v. Sardie, 755 F.2d 719, 722-23 (9th Cir.1985). See also Apple Computer, Inc. v. Formula Int'l, Inc., 725 F.2d 521, 523 (9th Cir.1984).

B. Preliminary Injunction

To obtain a preliminary injunction, a party must demonstrate either (1) a combination of probable success on the merits and the possibility of irreparable injury if relief is not granted, or (2) the existence of serious questions going to the merits and that the balance of hardships tips sharply in its favor. Sardi's, 755 F.2d at 723; Apple Computer, 725 F.2d at 523. Carbide argues on appeal that it is entitled to a preliminary injunction because it has demonstrated probable success on the merits and possible irreparable injuries. It also contends that the district court applied an incorrect legal standard and clearly erred in some of its findings of fact.

1. Probable Success on the Merits

To establish probable success on the merits in an action for trade dress infringement brought under Sec. 43(a) of the Lanham Act, the common law, or the law of unfair competition, Carbide must demonstrate that PRESTONE II's trade dress is protectable. Carbide must prove that its trade dress: (1) is nonfunctional, (2) has acquired a secondary meaning, and (3) is likely to be confused with Meyer-Wyandotte's private label antifreeze products by members of the consuming public. Freixenet, S.A. v. Admiral Wine & Liquor Co., 731 F.2d 148, 151 (3d Cir.1984). See Vuitton Et Fils S.A. v. J. Young Enterprises, Inc., 644 F.2d 769, 772 (9th Cir.1981).

a. Functionality

The question in the instant action is whether PRESTONE II's trade dress (a yellow, F-style jug) is nonfunctional. If it is, then it may be protectable.

In determining functionality, a product's trade dress must be analyzed as a whole. See California Cooler, Inc. v. Loretto Winery, Ltd., 774 F.2d 1451, 1455 (9th Cir.1985); LeSportsac, Inc. v. K Mart Corp., 754 F.2d 71, 76 (9th Cir.1985). The district court, viewing PRESTONE II's trade dress as a whole, ² held that the F-style design was functional; that the antifreeze packaging industry had a competitive need for the color yellow, thereby making the color yellow functional; and "that this particular combination of [these] otherwise unprotectable elements cannot be deemed protectable trade dress."

"[A] product feature is functional if it is essential to the [product's] use ... or if it affects the cost or quality of the article." Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 850 n. 10, 102 S.Ct. 2182, 2187 n. 10, 72 L.Ed.2d 606 (1982). The parties agree that the shape of the F-style jug is functional. The parties have stipulated that its shape is conducive to stacking for shipping, displaying and storage. The shape is convenient for consumer use and the F-style jug is less expensive to manufacture. Carbide argues, however, that the district court erred in determining that the color yellow was a functional feature. Specifically, Carbide contends that the district court should not have used the color depletion theory and erroneously applied the "aesthetic" functionality test. ³ Carbide argues that the combination of the concededly functional F-style shape and the nonfunctional color yellow make these containers, as a whole, nonfunctional and thereby a protectable trade dress.

Under the color depletion theory, there are a limited number of colors in the palette which may be depleted if trademark registrants are allowed to prevail. In re Owens-Corning Fiberglas Corp., 774 F.2d 1116, 1120 (Fed.Cir.1985). The district court held that there was a competitive need for the color yellow in the antifreeze packaging industry and therefore yellow was not protectable trade dress. Carbide argues that under Owens-Corning, the color depletion theory is no longer valid. That case, however, specifically held that the color depletion theory "is not faulted for appropriate application." Id. (emphasis added). On the contrary, Owens-Corning continues to apply the color depletion theory unless there is no competitive need for the color in a particular industry. The Federal Circuit merely declined to establish a per se prohibition against registering colors as trademarks. Id.

Confronted with an unusual set of facts the court in Owens-Corning established a very limited rule that in certain situations a particular color could itself be registered as a trademark. Using a two-step analysis, the Federal Circuit court determined first that there was no competitive need in the insulation industry for the color pink to remain available to all insulation producers and, second, that pink insulation, following the extraordinary and intense advertising campaigns featuring the "Pink Panther," had acquired a secondary meaning. Owens-Corning, 774 F.2d at 1122-27. In the present case, the district court held that a "competitive need for the color yellow" existed for the antifreeze packaging industry and, as we discuss below, that the color yellow in combination with the F-style jug had not achieved a secondary meaning.

Other than in extraordinary situations, such as that presented in Owens-Corning, the general rule remains that an element of distinctiveness of shape in combination with the color still exists before a trademark will be granted. ⁴ "It is a matter of degree how well defined must be the design ... upon which the color is imposed. The use of one color merely as a background on a package ... is usually rejected as having no trademark significance." 1 J. McCarthy, Trademarks and Unfair Competition, 7:17 (citing numerous cases). The F-style jug is the predominant container design in the antifreeze industry. It was not an abuse of discretion for the district court to conclude, for purposes of a preliminary injunction, that if Carbide were granted protection of its PRESTONE II trade dress, it would in effect be getting a trademark on the color yellow as a background color for an ordinary-shaped container. As the district court found, this would deplete a primary color available to competitors and deprive them of a competitive need. That finding, and the district court's use of the color depletion theory, are not clearly erroneous. Even if there were no competitive need for the color yellow in the antifreeze packaging industry, Carbide would still need to prove that its yellow, F-style jug had acquired a secondary meaning. The district court found no such secondary meaning and, as we discuss below, that finding was not clearly erroneous.

b. Secondary Meaning

Whether a particular trade dress has acquired secondary meaning is a question of fact subject to the clearly erroneous standard of review. Brooks Shoe Mfg. Co. v. Suave Shoe Corp., 716 F.2d 854, 860 (11th Cir.1983); Volkswagenwerk Aktiengesellschaft v. Rickard, 492 F.2d 474, 477-78 (5th Cir.1974). A product's trade dress attains secondary meaning when the purchasing public associates the dress with a single producer or source rather than just the product itself. Inwood Laboratories, 456 U.S. at 851 n. 11, 102 S.Ct. at 2187 n. 11; LeSportsac, 754 F.2d at 78. Carbide contends that PRESTONE II's trade dress had attained secondary meaning through millions of dollars in advertising PRESTONE II and because Carbide had been the exclusive user of the yellow, F-style jug for more than five years. Evidence of sales, advertising and promotional activities may be relevant in determining whether a trade dress has acquired a secondary meaning. Brooks, 716 F.2d at 860. See also LeSportsac, 754 F.2d at 78. However, the advertising and promotional activities must involve "image advertising," that is, the ads must feature in some way the trade dress itself. Brooks, 716 F.2d at 860. Otherwise, even evidence of extensive advertising or other promotional efforts would not necessarily indicate that prospective buyers would associate the trade dress with a particular source. Id. "[A] 'large expenditure of money does not in itself create legally protectable rights.' [citation omitted]." Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 800 (9th Cir.1970). The test of secondary meaning is the effectiveness of the effort to create it. Id. at 802. The district...