Ab Electrolux v. Bermil Industries Corp.

• Decision Date: 02 April 2007
• Docket Number: No. 07 Civ. 0199(LAK).,07 Civ. 0199(LAK).
• Citation: 481 F.Supp.2d 325
• Parties: AB ELECTROLUX, Plaintiff, v. BERMIL INDUSTRIES CORPORATION, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

481 F.Supp.2d 325

AB ELECTROLUX, Plaintiff, v. BERMIL INDUSTRIES CORPORATION, et al., Defendants.

No. 07 Civ. 0199(LAK).

United States District Court, S.D. New York.

April 2, 2007.

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James W. Dabney, Julie E. Kamps, Sarah R. Krissoff, Ron Lazebnik, Fried, Frank, Harris, Shriver & Jacobson LLP, New York City, for Plaintiff.

Loretta M. Gastwirth, Jason K. Biasberg, Meltzer, Lippe, Goldstein & Breitstone, LLP, Mineola, NY, Jay Bondell, Schweitzer, Cornman, Gross & Bondell, LLP, New York City, for Defendants.

MEMORANDUM OPINION

KAPLAN, District Judge.

Plaintiff seeks a preliminary injunction to restrain its American distributor from infringing the trademarks under which plaintiff has sold its goods in the United States by selling competitive products under those marks. Likelihood of confusion is not seriously disputed. Defendants contend instead that relief should be denied because plaintiff has acquiesced in its activities or abandoned its marks.

I

A. Background

Since 1960, Bermil Industries Corporation ("Bermil") has been the exclusive American distributor for AB Electrolux ("Electrolux"), a Swedish manufacturer of professional laundry equipment.¹ The current distribution agreement expires in 2010, and Electrolux has informed Bermil that it will not be renewed.² Regrettably, certain aspects of the parties' relationship never have been clarified. As the end of the relationship nears, this litigation commenced over their respective rights. The dispute focuses on two specific trademarks. The first is a stylized, wavy "W" called the "Flying W" by Bermil and the "Electrolux W Device" by Electrolux. In the interest of neutrality, the Court will call it the "Wavy W." The second is Electrolux's registered, incontestible mark WASCOMAT.

Over the decades, Bermil has sold Electrolux's washing machines and other products under the WASCOMAT and Wavy W marks. It has sold also products manufactured by third parties with the Wavy W mark and a name that uses a "Wasco" prefix, such as Wascoclean or WascoDry. The parties dispute whether Electrolux approved these uses of the marks. In any case, however, with very few exceptions, Bermil's use of Wasco prefix marks on products of other manufacturers have occurred only on items as to which Electrolux did not manufacture a competing product.

Bermil currently sells Electrolux-manufactured WASCOMAT dryers. Recently, however, it decided to sell also, under the name Wascoclean, dryers manufactured by an Electrolux competitor.³ Electrolux promptly brought this action for trademark infringement and unfair competition on the grounds that (1) defendants' use of the name Wascoclean to identify professional laundry products that were not manufactured or approved by Electrolux infringes Electrolux's registered WASCOMAT trademark, (2) defendants' use of the Wavy W infringes Electrolux's mark, and (3) defendants' use of the Wasco prefix and the Wavy W constitutes unfair competition.

On January 25, 2007, the Court issued a temporary restraining order enjoining defendants from using "(a) the marks WASCOMAT, WASCOCLEAN, WASCODRY, (b) any other mark containing WASCO, and (c) the Electrolux W Device, in each case on or in connection with professional laundry products not manufactured or approved by plaintiff."⁴

II

A. Preliminary Injunction Standard

"A party seeking injunctive relief ordinarily must show: (a) that it will suffer irreparable harm in the absence of an injunction and (b) either (i) a likelihood of success on the merits or (ii) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the movant's favor."'⁵ In addition, "[w]henever a request for a preliminary injunction implicates public interests, a court should give some consideration to the balance of such interests in deciding whether a plaintiff's threatened irreparable injury and probability of success on the merits warrants injunctive relief."⁶

B. Likelihood of Success on the Merits

To succeed on its claims for trademark infringement under the Lanham Act, Electrolux must establish that the marks are entitled to protection and that Bermil's proposed use is likely to cause consumer confusion as to the origin or sponsorship of Electrolux's products.⁷

1. Entitlement to Protection

The first inquiry, whether the marks are entitled to protection, here hinges on whether Electrolux has established ownership of the marks.⁸

a. WASCOMAT

Electrolux is the undisputed owner of the U.S. trademark WASCOMAT as applied to washing machines, registered in 1962.⁹ The WASCOMAT mark therefore is entitled to protection for professional laundry equipment.¹⁰

b. The Wavy W

The parties dispute the ownership of the Wavy W. Defendant contends that its founder, Bernard Milch, first formulated it.¹¹ In determining ownership of a trademark, however, creation or invention of the mark is irrelevant. The critical question is which party first used the mark in the sale of goods or services.¹²

i. Prior use of the Wavy W

The parties argue different standards to determine "use." Electrolux argues that use is established by physical affixation of the mark to goods in commerce; Bermil contends that use in advertising and marketing suffices.

"A designation is `used' as a trademark ... when the designation is displayed or otherwise made known to prospective purchasers in the ordinary course of business in a manner that associates the designation with the goods, services, or business of the user."¹³ Although direct physical affixation to goods is the traditional manner of establishing priority of use, the modern trend is to recognize that use in advertising or other marketing materials can establish the identification of the mark with the user and put others on notice of the user's potential rights.¹⁴ The question thus becomes which party's use first established consumers' identification of the Wavy W with that party.¹⁵

Unfortunately, the relevant evidence is sparse. Bernard Milch testified at his deposition that he sent Electrolux a drawing of the Wavy W, that Electrolux affixed the mark to WASCOMAT machines, and that such affixation by Electrolux continues to the present day.¹⁶ The date of the first affixation is unclear, though it appears to have been in the 1960s. Affixation of the mark to the product clearly identifies the goods with the user to the consuming public, so if this affixation was the first usage, Electrolux is the senior user.

Bermil argues, however, that it used the mark in marketing materials in manner sufficient to identify the mark with its distributorship and repair service before Electrolux affixed the Wavy W to its equipment. Both sides have submitted a scattering of brochures, manuals, advertisements, and letterhead displaying the Wavy W. But only a few of the documents have identifiable dates, and there is no evidence of the manner or extent of circulation of any document. On this record, neither party has established use of the mark in marketing or advertising materials before Electrolux's first affixation. Further discovery may or may not remedy this weakness of the evidence — few individuals actually present at the relevant time appear to be available to testify, and if corporate records existed they likely would have been discovered by now. Electrolux thus appears likely to establish prior use of the Wavy W.

ii. The Diamond W

Defendants offer a second theory in support of their ownership of the Wavy W mark. They assert that Bermil used and owned a "Diamond W" mark prior to creating the Wavy W.¹⁷ They argue that Bermil modified and modernized this Diamond W mark into the Wavy W.¹⁸

Defendants could defeat Electrolux's ownership claim over the Wavy W mark upon a showing that (1) Bermil owned the Diamond W mark prior to Electrolux's first affixation of the Wavy W, and (2) the Wavy W is a modernization of the Diamond W mark.¹⁹

Bermil's evidence of its use of the Diamond W is no better than its evidence for the Wavy W. The Court is not persuaded from the scant proof that the Diamond W mark existed before Electrolux first affixed the Wavy W to its equipment.

Even if Bermil had demonstrated a likelihood of establishing prior use of the Diamond W mark, defendants nevertheless would be obliged to establish that "the new and old forms [i.e., the Diamond W and the Wavy W] create the same, continuing commercial impression."²⁰ Courts have looked at the resemblance of the old and new forms to determine whether they constitute such a continuing commercial impression. For example, a lion drawing constituted a modernization of a realistic lion where "[t]he drawing strongly resembles the realistic lion [used] in the TV ads." ²¹

The Diamond W is an angular, sharp symbol that looks like three diamonds enclosed by a circle.²² The Wavy W has soft edges and looks like a ribbon with ripples.²³ The overall effect of the two marks is entirely different, and neither looks particularly like a W. The Court's initial comparison of the two marks leaves it doubtful that they create a continuing commercial impression.

Accordingly, the Court finds that defendants are unlikely to succeed in establishing priority based on the Diamond W.

2. Likelihood of Confusion

It cannot seriously be contested that defendants' use of the Wavy W and of "Wasco" prefix names on professional laundry equipment manufactured by parties other than Electrolux will cause confusion. Indeed, defendants do not dispute this, at least with any degree of seriousness. A cursory look at three of the Polaroid²⁴ factors demonstrates why.

Strength of the marks: Strong marks are those which are "arbitrary or fanciful in relation to the products ... on which they are used ... [and are not] generic, descriptive or suggestive as to those goods."²⁵ The Wavy W is a highly stylized, distinctly shaped W. WASCOMAT is a meaningless, made-up word. Neither...