Spraying Systems Co. v. Delavan, Inc.

• Decision Date: 17 September 1992
• Docket Number: No. 91-1919,91-1919
• Citation: 975 F.2d 387,24 USPQ2d 1181
• Parties: SPRAYING SYSTEMS COMPANY, Plaintiff-Appellant, v. DELAVAN, INCORPORATED, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 387

975 F.2d 387

24 U.S.P.Q.2d 1181

SPRAYING SYSTEMS COMPANY, Plaintiff-Appellant, v. DELAVAN, INCORPORATED, Defendant-Appellee.

No. 91-1919.

United States Court of Appeals Seventh Circuit.

Argued Jan. 9, 1992.

Decided Sept. 17, 1992.

Dennis R. Schlemmer (argued), Lawrence S. Wick, Mary C. Merz, Leydig, Voit & Mayer, Chicago, Ill., for plaintiff-appellant.

Daniel M. Riess (argued), Daniel R. Pastirik, Lockwood, Alex, Fitzgibbon & Cummings, Chicago, Ill., for defendant-appellee.

Before CUDAHY and KANNE, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

CUDAHY, Circuit Judge.

Spraying Systems Company sued Delavan, Incorporated for trademark and trade dress infringement and unfair competition under the Lanham Act and for cancellation of Delavan's two federal trademark registrations. The Trademark Trial and Appeal Board granted summary judgment in favor of Delavan, finding no genuine issue of confusing similarity between Delavan's COLOR JET mark and Spraying Systems' several marks, which include TEEJET, AIRJET, FOAMJET, CONEJET and QUICKJET. The district court, after considering additional evidence, also granted summary judgment in favor of Delavan. We affirm.

I.

Both parties manufacture and sell spray nozzles and related equipment for use in industrial and agricultural markets. Since 1938, Spraying Systems has held and used a number of valid federal trademarks containing the suffix "-JET." It now owns more than 35 such trademark registrations, most of which are incontestable. ¹ Many of Spraying Systems' customers know the company by the name "TEEJET," a trademark first used in 1948. Spraying Systems' annual sales of goods marketed under the "-JET" suffix names have exceeded $20 million since 1981 and $30 million since 1986.

Delavan owns two trademark registrations for the mark COLOR JET, ² used in connection with spray nozzles designed primarily for agricultural applications. Delavan concedes that its goods are similar to those of Spraying Systems and that the goods share essentially the same channels of trade and purchasers. It is undisputed, however, that Delavan and Spraying Systems use significantly different packaging in the marketing of their goods. Delavan's packaging is red, white and blue, while Spraying Systems' is yellow with black labeling. In addition, each company clearly marks the source of the product with the trademark "Delavan" or "Spraying Systems" on the packaging.

Spraying Systems and Delavan both color-code their spray nozzles to designate specific nozzle capacities and flow rates. Delavan's color-coding system, which came into use in 1982, is registered under the trademark COLOR-BRATE. Spraying Systems began using its system, which it promotes under the trademark VISIFLO, in 1983. Although Delavan's COLOR-BRATE system and Spraying Systems' VISIFLO system use many of the same colors, the colors do not correspond to the same nozzle capacities.

On January 26, 1988, Spraying Systems petitioned the Trademark Trial and Appeal Board of the United States Patent and Trademark Office (TTAB or Board) to cancel Delavan's two COLOR JET registrations. Spraying Systems argued that the COLOR JET mark so resembled its own "-JET" suffix marks as to be likely to cause confusion, mistake or deception. The TTAB, finding no genuine issue of material fact as to the likelihood of confusion, granted summary judgment for Delavan. The Board noted that the sole similarity in the marks was the "JET" formative, which it found to be descriptive. It also relied on evidence of numerous third-party registrations and uses of marks containing the "JET" formative for spray nozzles and related goods.

Pursuant to § 21(b) of the Lanham Act, 15 U.S.C. § 1071(b), Spraying Systems sought review of the TTAB's decision in the district court. (A party may appeal an adverse decision of the Board either to the U.S. Court of Appeals for the Federal Circuit or to a federal district court. An appeal to a district court is in part an appeal and in part a new action, since additional relief may be requested and additional evidence may be presented. See 2 J. Thomas McCarthy, Trademarks and Unfair Competition § 21:5, at 14-15 (2d ed. 1984).) In the district court, Spraying Systems again pursued its claim of infringement of its "-JET" trademarks and, in addition, sought protection of its color-coding scheme as a trademark and its overall product image as trade dress. The district court applied a "thorough conviction" standard to the TTAB's decision on infringement of Spraying Systems' "-JET" trademarks, concluding that summary judgment for Delavan was proper. As to the infringement claim premised on Spraying Systems' color-coding scheme and the trade dress claim, the court found no genuine issue of material fact and entered summary judgment against Spraying Systems. Spraying Systems Co. v. Delavan, Inc., 762 F.Supp. 772 (N.D.Ill.1991).

Spraying Systems appeals, challenging several aspects of the district court's decision. ³

II.

We must begin by addressing the standard of review, an issue that has generated some confusion in this case. The review mechanisms of 15 U.S.C. § 1071 are unique. Review of a TTAB decision in a federal district court is considered de novo because the parties are permitted to present new evidence and even enlarge the pleadings. See Teter, Inc. v. Rheem Mfg. Co., 334 F.2d 784, 786 (7th Cir.1964); Standard Pressed Steel Co. v. Midwest Chrome Process Co., 418 F.Supp. 485, 489 (N.D.Ill.1976). That characterization can be misleading, however, because deference is owed to the findings of the TTAB. In particular, this Court has declared that the Board's decision "must be accepted as controlling upon a finding of fact about confusing similarity of trademarks, unless the contrary is established by testimony which in character and amount carries thorough conviction." Fleetwood Co. v. Hazel Bishop, Inc., 352 F.2d 841, 844 (7th Cir.1965) (citing Morgan v. Daniels, 153 U.S. 120, 125, 14 S.Ct. 772, 773-74, 38 L.Ed. 657 (1894)).

Contrary to Spraying Systems' assertion, the "vast majority of courts" apply the thorough conviction standard to such findings made by the Patent and Trademark Office. 2 McCarthy § 21:5, at 17. Spraying Systems argues that the thorough conviction standard should not apply to new evidence presented in the district court. It is true that new evidence must itself be considered de novo by the district court--in the sense of being fairly weighed without placing a thumb on the scales or dismissing it out of hand. But the evidence must then be weighed against the Board's findings under the thorough conviction standard. Unless the new evidence leads to a thorough conviction that a finding of the Board is incorrect, that finding is controlling. Velsicol Chemical Corp. v. Monsanto Co., 579 F.2d 1038, 1042 (7th Cir.1978); Watkins Prods., Inc. v. Sunway Fruit Prods., Inc., 311 F.2d 496, 498-99 (7th Cir.1962), cert. denied, 373 U.S. 904, 83 S.Ct. 1291, 10 L.Ed.2d 199 (1963); Yale Elec. Corp. v. Robertson, 26 F.2d 972, 973 (2d Cir.1928) (L. Hand, J.); 2 McCarthy § 21:5, at 17.

Finally, Spraying Systems argues that it is illogical for the district court's review of the TTAB's grant of summary judgment to be under the thorough conviction standard, while this court's review of the district court's summary judgment is de novo. Here Spraying Systems is on to something (although it does not seem to be sure of what, for it fails to explain what is illogical about this state of affairs). The problem is this: the thorough conviction standard applies to findings of the TTAB; a grant of summary judgment, however, does not yield any factual findings, but only a conclusion that there are no genuine issues of material fact. But perhaps such a conclusion of the Board is entitled to the same deference as a true finding of fact. After all, the thorough conviction standard is premised on the expertise of the Patent and Trademark Office, and that expertise may be employed for a conclusion that there are no issues of material fact just as it is for a factual finding.

However, although it is a difficult question, we conclude that the thorough conviction standard cannot apply to the TTAB's grant of summary judgment. The thorough conviction standard applies to "finding[s] of fact about confusing similarity of trademarks," and there are no such findings on summary judgment. It is helpful to consider by analogy this court's review of district court decisions. We review findings of fact under the clearly erroneous standard and conclusions of law de novo. A grant of summary judgment is reviewed de novo on the theory that a "finding" of no genuine issue of material fact is not a true finding of fact, but more like a legal conclusion. Moreover, the TTAB follows the same procedure and standards for summary judgment as the federal courts. See David J. Kera, Tips from the TTAB: Summary Judgment, 71 Trademark Rep. 59 (1981). We have found no cases that address this point, although some cases in the Federal Circuit have reviewed grants of summary judgment by the TTAB under what appears to be a de novo standard. Sweats Fashions, Inc. v. Pannill Knitting Co., 833 F.2d 1560, 1567-68 (Fed.Cir.1987); Pure Gold, Inc. v. Syntex (U.S.A.), Inc., 739 F.2d 624, 627-28 (Fed.Cir.1984).

Because the TTAB granted summary judgment, the district court should have applied a de novo standard instead of a thorough conviction standard. But the district court's error does not require reversal. Our review of the district court's grant of summary judgment is de novo in any event, and any undue deference given to the TTAB below becomes moot at this point. We are obliged to draw reasonable inferences in favor of the nonmoving party, and will affirm the entry of summary judgment only if there are no genuine issues as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Allensworth v. General Motors...