Inverness Corp. v. Whitehall Laboratories
| Decision Date | 21 May 1987 |
| Docket Number | D,No. 1092,1092 |
| Citation | 819 F.2d 48 |
| Parties | , 2 U.S.P.Q.2d 1952 INVERNESS CORPORATION, Plaintiff-Appellee, v. WHITEHALL LABORATORIES and American Home Products Corporation, Defendants-Appellants. ocket 87-7209. |
| Court | U.S. Court of Appeals — Second Circuit |
Steven B. Pokotilow, New York City (Blum Kaplan, New York City, Laura E. Goldbard, Anita K. Yeung, of counsel), for plaintiff-appellee.
Michael J. Sweedler, New York City (Darby & Darby, New York City, Beverly B. Goodwin; American Home Products Corp., New York City, Egon E. Berg, Steven J. Baron, of counsel) for defendants-appellants.
Before LUMBARD, MESKILL and MAHONEY, Circuit Judges.
This case once again demonstrates the need for the district courts to make findings of fact and conclusions of law sufficient to permit this court to review their decisions on appeal.
Defendants Whitehall Laboratories and American Home Products Corporation (collectively "Whitehall") appeal from an order, entered in the Southern District by Judge Kevin Thomas Duffy on March 3, 1987, preliminarily enjoining them from selling or distributing a new roll-on hair-remover in a particular container. Whitehall primarily claims that because the district court "failed to make the necessary findings to support its conclusion that [Inverness Corporation's] ONE TOUCH [depilatory] applicator is entitled to protection," the preliminary injunction should be vacated. Whitehall also attacks as an abuse of discretion Judge Duffy's decision to require only a $1,000 bond as security for the preliminary injunction; and argues that the district court's insistence on holding an evidentiary hearing on the preliminary injunction only three days after Whitehall received notice deprived it of a fair and adequate opportunity to be heard. We remand the case to the district court for a more complete statement of the court's findings of fact and conclusions of law. As we have every expectation that the district court will act with appropriate expedition, we leave the injunction as granted, pending further review, for which purpose we retain jurisdiction.
We briefly summarize the underlying dispute and the history of the case: In March, 1985, Inverness Corporation, a health and beauty aid manufacturer, introduced into the market a new hair-remover applicator under the tradename "ONE TOUCH." ONE TOUCH's unusual flat white container and cylindrical roller permit the user to grasp the container easily and to spread a wide band of depilatory liquid onto the skin, usually on the legs or underarms. The white applicator bears a label which employs either an aqua and white, or lavender and white color scheme and prominently displays a sitting woman. Transparent plastic sheeting attaches the applicator to an aqua or lavender backing card--a "temporary marketing device."
In the summer of 1985, Whitehall, which manufactures NEET, the second leading depilatory in the United States, approached Inverness about the possibility of Inverness manufacturing a similar product for Whitehall. Whitehall apparently became interested in Inverness's product after it obtained samples through normal commercial channels. The parties agree that no confidential relationship developed during these negotiations. When the talks between the two companies failed, Whitehall proceeded to develop and to manufacture its own product under its NEET label, using a similar product shape and a similar cylindrical roller head, covered by a transparent plastic cap. Whitehall's product retains the aqua and white, lavender and white, and brown and white color schemes traditionally used with the NEET product line, but neither uses a backing card nor bears a picture of a woman on its label; instead, its product clearly displays the NEET tradename.
After receiving a flyer advertising NEET's new product, Inverness filed suit in the Southern District on February 19, 1987, and on the same day served Whitehall with an order to show cause why a preliminary injunction should not issue, returnable the following Monday, February 23. On Monday, Whitehall appeared before Judge Duffy and objected that it would be deprived of an adequate opportunity to prepare its case if a hearing were held on that day. Judge Duffy offered to postpone the hearing, but stated that he would issue a temporary restraining order in the interim. Whitehall withdrew its objection and proceeded with the hearing as scheduled.
At its conclusion, Judge Duffy read into the record his three-page ruling. He concluded that Whitehall's product was "a knockoff [of Inverness's ONE TOUCH depilatory] with a few minor changes, and those features would not be functional nor distinctive." He continued: Also finding "no equity on the part of [Whitehall], none whatsoever," Judge Duffy granted Inverness's request for a preliminary injunction, over Whitehall's objection that the amount of the security bond--$1,000--was unreasonably low, and entered an order to that effect on March 3, 1987.
Rule 52(a) of the Federal Rules of Civil Procedure mandates that "in granting or refusing interlocutory injunctions the court shall ... set forth the findings of fact and conclusions of law which constitute the grounds of its action." This rule serves two purposes relevant here: First, Rule 52(a) aids "the appellate court by affording it a clear understanding of the ground or basis of the decision of the trial court." 9 C. Wright & A. Miller, Federal Practice and Procedure: Civil Sec. 2571 at 679 (1971) (footnote omitted). See also Lemelson v. Kellogg Co., 440 F.2d 986, 988 (2d Cir.1971). " 'Without this information the defendant is unable properly to exercise the appellate rights conferred by statute and the court is equally unable to make appropriate appellate review.' " Fuchstadt v. United States, 434 F.2d 367, 370 (2d Cir.1970), quoting Alexander v. Nash-Kelvinator Corp., 261 F.2d 187, 191 (2d Cir.1958).
Second, the rule also encourages the trial judge to...
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