Tools USA and Equipment Co. v. Champ Frame Straightening Equipment Inc.

Citation87 F.3d 654
Decision Date02 July 1996
Docket NumberNo. 95-1698,95-1698
PartiesTOOLS USA AND EQUIPMENT COMPANY, Plaintiff-Appellee, v. CHAMP FRAME STRAIGHTENING EQUIPMENT, INCORPORATED, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

ARGUED: Thomas Matthew Clare, Teague, Campbell, Dennis & Gorham, Raleigh, North Carolina, for Appellant. Jack William Floyd, Floyd, Allen & Jacobs, L.L.P., Greensboro, North Carolina, for Appellee.

                ON BRIEF:  Karen K. Prather, Teague, Campbell, Dennis & Gorham, Raleigh, North Carolina, for Appellant.   Robert V. Shaver, Jr., Floyd, Allen & Jacobs, L.L.P., Greensboro, North Carolina, for Appellee
                

Before WIDENER, NIEMEYER, and MOTZ, Circuit Judges.

Affirmed by published opinion. Judge MOTZ wrote the opinion, in which Judge WIDENER and Judge NIEMEYER joined.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

Tools USA and Equipment Company brought this action against Champ Frame Straightening Equipment alleging trade dress infringement and unfair competition under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1994), and deceptive or unfair trade practices under state law. The jury returned a verdict in favor of Tools USA, finding that Champ had infringed on Tools USA's trade dress. Asserting that there was insufficient evidence to support the jury's verdict, Champ appeals. Because Tools USA presented sufficient evidence that its trade dress was non-functional and had acquired a secondary meaning, and that Champ's infringement created a likelihood of confusion, we affirm.

I.

Tools USA, a North Carolina corporation, engages in the mail order sale of tools and equipment through catalogs distributed to auto body shops nationwide. Champ Frame Straightening Equipment, a California corporation, manufactures and sells frame straightening equipment, and also engages in the mail order sale of tools and equipment through catalogs distributed to auto body shops throughout the country.

Tools USA began publishing its "Tools USA and Equipment" catalog in 1988. Until Champ introduced its "Auto Body Toolmart" catalog in 1991, Tools USA was the only company distributing a catalog of tools and equipment directly to auto body shops. By 1994, Tools USA was mailing over 80,000 copies of each issue of its catalog to a group of customers that included almost every identifiable auto body shop in the country. At that time, Champ was mailing over 67,000 copies of each issue of its catalog to many of the same businesses.

Tools USA's complaint alleged that its catalog has a distinctive design and trade dress. Listing several similarities between the "Tools USA and Equipment" catalog and Champ's "Auto Body Toolmart" catalog, Tools USA charged that Champ had infringed on Tools USA's trade dress. The jury agreed and assessed damages in the amount of $38,387.19. The district court, having denied Champ's motion for judgment as a matter of law at the conclusion of Tools USA's case, also denied Champ's renewed motion following the jury verdict. The parties had stipulated that Tools USA's claim for unfair or deceptive trade practices in violation of N.C. Gen.Stat. § 75-1.1 would not be submitted to the jury but that if the jury awarded damages to Tools USA for trade dress infringement, those damages would be trebled pursuant to N.C. Gen.Stat. § 75-16. Accordingly, the court entered judgment in favor of Tools USA in the amount of $115,161.57. The court also entered a permanent injunction, enjoining Champ from publishing its catalog without making certain modifications. 1

II.

Champ argues that the district judge erred in denying its motions for judgment as a matter of law with respect to both liability and damages. A court may only grant a motion for judgment as a matter of law (formerly j.n.o.v., see O'Neal v. Celanese Corp., 10 F.3d 249, 250 (4th Cir.1993)) if, viewing the evidence in the light most favorable to the non-moving party and drawing every legitimate inference in that party's favor, the court "determine[s] that the only conclusion a reasonable trier of fact could draw from the evidence is in favor of the moving party." Winant v. Bostic, 5 F.3d 767, 774 (4th Cir.1993). See also O'Neal, 10 F.3d at 250; Anheuser-Busch, Inc. v. L & L Wings, Inc., 962 F.2d 316, 318 (4th Cir.), cert. denied, 506 U.S. 872, 113 S.Ct. 206, 121 L.Ed.2d 147 (1992). We review a grant or denial of a motion for judgment as a matter of law de novo. Trandes Corp. v. Guy Atkinson Co., 996 F.2d 655, 661 (4th Cir.), cert. denied, 510 U.S. 965, 114 S.Ct. 443, 126 L.Ed.2d 377 (1993).

" 'Trade dress' involves the total image of a product, and may include features such as size, shape, color or color combinations, texture, graphics, or even particular sales techniques." Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 764 n. 1, 112 S.Ct. 2753, 2755 n. 1, 120 L.Ed.2d 615 (1992) (quoting John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 980 (11th Cir.1983)). See also Restatement (Third) of Unfair Competition § 16 cmt. a (1995). Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), creates a federal cause of action for trade dress infringement. See Elmer v. ICC Fabricating, Inc., 67 F.3d 1571, 1578 (Fed.Cir.1995); John H. Harland Co., 711 F.2d at 980. See also Two Pesos, 505 U.S. at 773, 112 S.Ct. at 2759-60.

A claim of trade dress infringement requires proof of three elements: (1) the trade dress is primarily non-functional; 2 (2) the trade dress is inherently distinctive or has acquired a secondary meaning; and (3) the alleged infringement creates a likelihood of confusion. See Two Pesos, 505 U.S. at 765-67, 112 S.Ct. at 2755-57. See also Elmer, 67 F.3d at 1578; Computer Care v. Service Systems Enters., 982 F.2d 1063, 1067-68 (7th Cir.1992); Woodsmith Publishing Co. v. Meredith Corp., 904 F.2d 1244, 1247 (8th Cir.1990); Allied Marketing Group, Inc. v. CDL Marketing, Inc., 878 F.2d 806, 813 (5th Cir.1989); Hartford House, Ltd. v. Hallmark Cards, Inc., 846 F.2d 1268, 1271 (10th Cir.), cert. denied, 488 U.S. 908, 109 S.Ct. 260, 102 L.Ed.2d 248 (1988); American Home Products Corp. v. Barr Labs., Inc., 834 F.2d 368, 370 (3rd Cir.1987); Fuddruckers, Inc. v. Doc's B.R. Others, Inc., 826 F.2d 837, 842 (9th Cir.1987); Harlequin Enters. v. Gulf & Western Corp., 503 F.Supp. 647, 649 (S.D.N.Y.1980), aff'd, 644 F.2d 946 (2nd Cir.1981).

III.

The district court submitted to the jury special interrogatories, which required the jury to make separate findings as to each element of trade dress infringement. The jury first found that the Tools USA catalog's trade dress was non-functional. The jury then found that although the trade dress was not inherently distinctive and had not been intentionally copied, it had acquired a secondary meaning by the time Champ introduced its Toolmart catalog. Finally, the jury found that there was a likelihood of confusion created by the similarities in the parties' catalogs. Champ now claims that the jury erred in its findings as to each of the three elements necessary to establish a trade dress claim. We address each element in turn.

A.

"[A] product feature is functional if it is essential to the use or purpose of the article or 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). In other words, a feature is functional "if exclusive use of the feature would put competitors at a significant nonreputation-related disadvantage." Qualitex Co. v. Jacobson Products Co., --- U.S. ----, ----, 115 S.Ct. 1300, 1304, 131 L.Ed.2d 248 (1995). See also, Clamp Mfg. Co. v. Enco Mfg. Co., 870 F.2d 512, 516 (9th Cir.) ("Functional features of a product are features which constitute the actual benefit that the customer wishes to purchase, as distinguished from an assurance that a particular entity made, sponsored, or endorsed a product") (internal quotations and citations omitted), cert. denied, 493 U.S. 872, 110 S.Ct. 202, 107 L.Ed.2d 155 (1989). The non-functionality requirement for trademark or trade dress protection "prevents trademark law, which seeks to promote competition by protecting a firm's reputation, from instead inhibiting legitimate competition by allowing a producer to control a useful product feature." Qualitex, --- U.S. at ----, 115 S.Ct. at 1304.

In support of its argument that the jury erred in finding that Tools USA's trade dress was non-functional, Champ focuses on individual aspects of the "Tools USA" catalog trade dress. Champ explains at some length why it believes each feature is functional. This tactic ignores the fact that the critical functionality inquiry is not whether each individual component of the trade dress is functional, but rather whether the trade dress as a whole is functional. See LeSportsac, Inc. v. K Mart Corp., 754 F.2d 71, 76 (2nd Cir.1985) ("by breaking [plaintiff's] trade dress into its individual elements and then attacking certain of those elements as functional, [defendant] misconceives the scope of the appropriate inquiry"); Fuddruckers, 826 F.2d at 842 ("We examine trade dress as a whole to determine its functionality; functional elements that are separately unprotectable can be protected together as part of a trade dress") (internal citation omitted); Hartford House, 846 F.2d at 1272 ("a trade dress may be a composite of several features in a certain arrangement or combination which produces an overall distinctive appearance. In this context, the question is whether the combination of features comprising the trade dress is functional"); AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531, 1538 (11th Cir.1986) ("That individual elements of packaging are functional does not, however, render the package as a whole unprotect[a]ble"), cert. denied, 481 U.S. 1041, 107 S.Ct. 1983, 95 L.Ed.2d 822 (1987).

The trade dress of the Tools USA catalog consists of a number of elements, combined in a particular fashion. Consequently,...

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