Nikon Inc. v. Ikon Corp.

• Decision Date: 25 February 1993
• Docket Number: 92-9356,Nos. 1099,s. 1099
• Citation: 987 F.2d 91,25 USPQ2d 2021
• Parties: NIKON INC., Appellee, v. IKON CORP., Appellant.
• Court: U.S. Court of Appeals — Second Circuit

Page 91

987 F.2d 91

25 U.S.P.Q.2d 2021

NIKON INC., Appellee, v. IKON CORP., Appellant.

Nos. 1099, 92-9356.

United States Court of Appeals, Second Circuit.

Argued Jan. 20, 1993.

Decided Feb. 25, 1993.

Jay H. Begler, New York City (Mark I. Peroff, Andrew V. Galway, Nancy J. Deckinger, and Liddy Sullivan Galway Begler & Peroff, P.C., on the brief), for appellee.

Glenn F. Ostrager, New York City (Dennis M. Flaherty, Dara L. Onofrio, Leon S. Segen, and Ostrager & Chong, on the brief), for appellant.

Before: TIMBERS, WALKER and McLAUGHLIN, Circuit Judges.

TIMBERS, Circuit Judge:

This is an appeal from an order entered in the Southern District of New York, Nina Gershon, Chief Magistrate Judge, permanently enjoining Ikon Photographic Corp. (IPC) from using its Ikon trademark and recalling all of the company's outstanding products. IPC was found liable for trademark infringement against Nikon Inc. (Nikon) under §§ 32 and 43(a) of the Lanham Act and for trademark dilution under § 368-d of the New York General Business Law. On appeal, IPC contends that the magistrate judge improperly deprived it of a jury trial, erred in finding that there was a likelihood of confusion between the marks at issue, misapplied the New York anti-dilution statute, and inappropriately recalled Ikon products.

We reject IPC's claims on appeal. We affirm the district court order in all respects.

I.

We summarize only those facts and prior proceedings believed necessary to an understanding of the issues raised on appeal.

In 1986, Jack Elo founded IPC to market inexpensive 35 mm and 110 mm pocket cameras. He claims that he selected the trademark "Ikon" because of the familiarity of the word and the religious connotations associated with it, despite the rare spelling he chose.

Elo was aware of the existence of the trademark name "Zeiss Ikon" (Zeiss), used by a sophisticated photography equipment company, but he claims that he believed the mark was no longer in use. Elo also was aware of the existence of Nikon camera products, but claims he did not foresee a potential for confusion between the two names because he never intended to compete with such a dominant force in the industry. In 1987, IPC began marketing inexpensive "point and shoot" cameras affixed with the Ikon mark and logo.

In 1987, IPC filed an application with the United States Patent and Trademark Office to register the mark and its logo. The application was rejected because of its similarity with the "Zeiss Ikon" mark. In 1989, IPC entered into an agreement with Zeiss in which Zeiss consented to IPC's use of the mark for 110 mm and basic lens shutter cameras, but restricted IPC from using the mark on more complicated single lens reflex (SLR) cameras. The mark was available for registration and published for opposition on May 1, 1990. Nikon commenced the instant action in September 1989, and opposed the registration. The opposition proceeding was stayed pending disposition of the instant action.

In 1990, IPC filed another application to register a mark with a stylized "I" logo. Nikon originally did not oppose the mark. After the mark was registered, Nikon petitioned for its cancellation. That proceeding also was stayed pending the disposition of the instant case.

IPC markets inexpensive cameras which are widely sold through national chain stores and catalogues. Nikon has a reputation for selling more expensive and more complicated SLR cameras, generally through authorized dealers. Since 1983, Nikon has been marketing cheaper and less complicated point and shoot cameras targeted for amateur photographers, and sold in retail stores and through catalogue services. Just before trial, Nikon further bridged the gap between its products and IPC's by introducing an even less expensive 35mm compact camera which would be directly competitive with IPC's cameras. The new Nikon camera is marketed as the "Smiletaker," and is packaged in a yellow graphic box with a smile face logo.

Since 1988, IPC had been marketing a line of point and shoot 110 mm cameras known as its "Smile" line. IPC claims that prior to learning of the Smiletaker camera, it had planned to market a 35 mm "Smile" camera, which it introduced in the fall of 1992. The IPC cameras also are packaged in cardboard boxes, with the word "SMILE" in large letters, but no smile face. The name Ikon appears at the bottom of the box. IPC filed a counterclaim, alleging that Nikon's deliberate adoption of the secondary name "Smiletaker" fosters confusion between Nikon's camera and IPC's. IPC further alleged that Nikon is such a dominant force in the camera market that the confusion would have a severely adverse affect on the Ikon product. IPC sought a preliminary injunction to enjoin Nikon from using the Smiletaker mark. This motion was denied. IPC also made a jury demand for its counterclaim. Nikon moved to strike this demand. The magistrate judge denied Nikon's motion, but severed IPC's counterclaim and scheduled a bench trial on Nikon's claim to be held prior to the jury trial on IPC's counterclaim.

She held that the IPC mark infringed the Nikon mark. On December 18, 1992, the magistrate judge entered a permanent injunction, effective immediately, enjoining IPC from using the Ikon mark and providing for the recall of all IPC products from the marketplace. The judgment was stayed pending consideration of a motion for an extension of the stay by this Court. On December 29, 1992, a panel of this Court denied the motion but ordered this expedited appeal.

On appeal, IPC contends that (1) the district court erred in finding that there was a likelihood of confusion between the two marks, and therefore there was no infringement; (2) the New York anti-dilution law is inapplicable because the parties to the instant case are competitors and the law should apply only to noncompetitors; (3) the district court erred in severing IPC's counterclaim against Nikon's use of the "Smiletaker" name, precluding it from its right to a jury trial; and (4) the recall of IPC products was inappropriate.

II.

On this appeal from a permanent injunction, our function is limited to a review for abuse of discretion. Abuse of discretion can be found if the district court relied upon a clearly erroneous finding of fact or incorrectly applied the law. Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1038 (2 Cir.1992). We must determine therefore whether the court applied the correct standard of law and, if so, whether its determination of the facts was clearly erroneous.

(A) INFRINGEMENT UNDER §§ 32 AND 43(A) OF THE LANHAM ACT

Sections 32 and 43(a) of the Lanham Act, 15 U.S.C. §§ 1114 & 1125 (1988) prohibit trademark infringement and false designation of origin, respectively. The key issue in these types of trademark cases is whether an appreciable number of consumers are likely to be misled or confused about the source of the product in question. Lang v. Retirement Living Pub. Co., 949 F.2d 576, 579-80 (2 Cir.1991).

It is well settled that in cases involving a claim under the Lanham Act the trier of fact must consider and balance the factors set forth in Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492, 495 (2 Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961) to determine the "likelihood of confusion." The Polaroid test examines eight factors, including the strength of the senior user's mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the senior user will bridge the gap between the products, the sophistication of buyers, quality of defendant's product, actual confusion, and the defendant's bad faith in adopting the mark. Polaroid, supra, 287 F.2d at 495. This list, however, is not exhaustive, nor is any one factor determinative. Each factor must be balanced with the others to determine the likelihood of confusion. Lang, supra, 949 F.2d at 580.

The court applied the Polaroid test in the instant case, thus correctly applying the applicable law for this claim. In reviewing a district court's determination of the Polaroid factors, the findings of fact are subject to reversal only if they are clearly erroneous, while the ultimate balancing of the factors is reviewed de novo by our Court. Bristol-Myers, supra, 973 F.2d at 1043. We now turn to the factual findings as to each factor.

(1) Strength of the Nikon Mark.

There is no dispute over the strength of the Nikon mark. As such, it deserves broad protection against infringement. Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 258 (2 Cir.1987).

(2) Similarity Between the Marks.

When evaluating the similarity of marks, it is necessary to show that the products are not only similar, but that they also are likely to provoke confusion. Bristol-Myers, supra, 973 F.2d at 1046; Western Publishing Co. v. Rose Art Indus., 910 F.2d 57, 61 (2 Cir.1990). The court found that, although one of IPC's marks uses a stylized "I" and is not visually very similar to the Nikon mark, the stylized "I" is not used on all of IPC's cameras or packaging. Many advertisements and displays for IPC omit the stylized "I" and the shutter wheel design used on the "o". In several contexts, therefore, the marks are similar.

Further, the court found that the sounds of both marks are extremely similar, differing only by one letter. That letter is easily obscured in statements such as "This is an Ikon," and "This is a Nikon." The court also found that there was similarity in the appearance of the cameras, and the cameras often are displayed outside of their packaging. This latter fact, combined with logos used in advertising, demonstrates that the court did look at the products in their commercial context, despite IPC's assertion that the court looked at the products "divorced from the commercial world." There is sufficient evidence to show that the court's finding was not clearly erroneous.

(3) Proximity of the Products.

This factor...