Alexander Binzel Corp. v. Nu-Tecsys Corp., 91 C 2092.

• Decision Date: 23 January 1992
• Docket Number: No. 91 C 2092.,91 C 2092.
• Citation: 785 F. Supp. 719
• Parties: ALEXANDER BINZEL CORPORATION, Plaintiff, v. NU-TECSYS CORPORATION and Karl-Heinz Binzel, Defendants.
• Court: U.S. District Court — Northern District of Illinois

785 F. Supp. 719

ALEXANDER BINZEL CORPORATION, Plaintiff, v. NU-TECSYS CORPORATION and Karl-Heinz Binzel, Defendants.

No. 91 C 2092.

United States District Court, N.D. Illinois, E.D.

January 23, 1992.

Daniel W. Vittum, Jr., P.C., Gregory J. Smith, Rhett R. Dennerline, Kirkland & Ellis, Chicago, Ill., for defendants.

John S. Mortimer, J. Ray Wood, Wood, Phillips, Mason, Recktenwald & Vansanten, Chicago, Ill., for plaintiff; Randall G. Litton, Terence J. Linn, James E. Bartek, Price, Heneveld, Cooper, DeWitt & Litton, Grand Rapids, Mich., of counsel.

MEMORANDUM OPINION AND ORDER

HOLDERMAN, District Judge:

Plaintiff Alexander Binzel Corp. ("Binzel") brought this action against defendants Nu-Tecsys Corp. ("Nu-Tecsys") and Karl Heinz Binzel alleging trademark and trade dress infringement. The magistrate judge recommended that Binzel's motion for preliminary injunction be granted in part. After a careful review of the facts and for the reasons set forth herein, Binzel's motion for preliminary injunction is denied.

FACTS

Binzel is the exclusive authorized United States distributor and assembler of genuine Binzel welding equipment manufactured by Alexander Binzel GmbH of Cologne, Germany ("Binzel Germany"). Binzel Germany owns United States trademarks for the Binzel logo and the Binzel name. At least in Europe, Binzel Germany has sold unmarked products for a number of years. This practice continues to date. Karl-Heinz Binzel, a former officer and stockholder of Binzel, is president and owner of defendant Nu-Tecsys. Nu-Tecsys has commenced selling various Metallic Inert Gas ("MIG") welding equipment consisting of "virtually identical copies of both Binzel red-handled and blue-handled MIG welding guns." (Complaint, ¶ 19.) Some of the MIG welding equipment distributed by Nu-Tecsys and sold under the Nu-Tecsys name and in Nu-Tecsys packaging "bears the Binzel product trade dress, the Binzel trademark and/or the Binzel logo."¹ (Complaint, ¶ 20.)

On Binzel's motion for preliminary injunction, the magistrate judge issued a report and recommendation of August 20, 1991 ("Report") recommending that defendants be enjoined from using trademarked Binzel parts as components of their products, but denying other aspects of the requested injunctive relief. The parties have objected to various aspects of the Report. Those objections are discussed below.

DISCUSSION

I. TRADE DRESS CLAIM

Plaintiff Binzel objects to the magistrate judge's report and recommendation insofar as it recommends denial of a preliminary injunction against trade dress infringement. Binzel's trade dress infringement is brought under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Section 43(a) imposes liability on any person who, "on or in connection with any goods ... uses ... any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which is likely to cause confusion ... or to deceive." Binzel disputes the magistrate judge's finding that Binzel has failed to establish secondary meaning for the trade dress in issue. Specifically, Binzel argues that the findings of intentional copying and substantial promotional efforts demonstrate a likelihood of secondary meaning.

Proof of trade dress infringement requires a showing that, inter alia, the plaintiff's trade dress is inherently distinctive or has acquired secondary meaning. Roulo v. Russ Berrie & Co., 886 F.2d 931, 935 (7th Cir.1989). Binzel does not contend that its trade dress is inherently distinctive, but that it has acquired secondary meaning. Secondary meaning requires that the public associates the dress with a single source. Id. at 936. The magistrate judge found this "single source" requirement unsatisfied by Binzel's trade dress claim. See Report at 60 (The "fatal weakness in Binzel's trade dress claim is its failure to provide evidence that consumers associated the trade dress of its MIG guns with a single source, the Binzel companies.") This court agrees with the magistrate judge on this point.

The factual findings by the court below reveal that the Nu-Tecsys handles were actually purchased from Binzel and Binzel affiliates. (Report at ¶¶ 39-46; see Defendants' Ex. 27-30: invoices of sales to Nu-Tecsys from Binzel affiliates.) The magistrate judge determined that "defendants have deliberately copied the Binzel trade dress and used genuine Binzel components on Nu-Tecsys' MIG guns in order to create the impression that Nu-Tecsys' MIG guns are genuine Binzel products." (Report at ¶ 93.) The court shares defendants' confusion over the magistrate judge's conclusion that defendants intentionally copied the Binzel trade dress. The fact that the MIG handles, the subject of the trade dress, were purchased from Binzel and its affiliates vitiates Binzel's allegations of intentional copying. The sale of these handles by Binzel companies to Nu-Tecsys demonstrates a willingness and implies an authorization by Binzel to permit Nu-Tecsys to use Binzel handles in its business. Binzel cannot now charge that handles legitimately purchased by Nu-Tecsys cannot be used by Nu-Tecsys without fearing allegations of deliberate copying. Moreover, even if such sales have ceased since February 1990, Binzel has not established that its trade dress has developed secondary meaning in the short time since February 1990.

Binzel also sells welding guns to a number of customers who then resell them under private labels. (Report at ¶¶ 36, 61.) One of those arrangements involves a MIG gun having a black handle with the same configuration as the red handle used by Nu-Tecsys. An Illinois appellate court explained the harm that private labeling has on a plaintiff's attempt to establish secondary meaning:

We are aware of no authority which has held that a secondary meaning can be established when a plaintiff permits those who distribute his product and use his package to apply their own proprietary labels to it and therefore lead the consumer to believe the product is not the plaintiff's but that of another in whose store the product is sold. Rather the rule is to the contrary. A plaintiff who would enjoin others from imitation under trademark and unfair competition laws should not himself be guilty of misrepresenting the source of his own article.

Filter Dynamics Int'l, Inc. v. Astron Battery, Inc., 19 Ill.App.3d 299, 311 N.E.2d 386, 395 (2d Dist.1974). The court agrees with this reasoning.

Binzel has demonstrated a willingness to allow consumers to associate the trade dress of its MIG handles with more than one source. Binzel's sales of MIG handles to Nu-Tecsys and to companies that sell MIG guns under private labels impair Binzel's ability to establish that consumers associate the trade dress of Binzel MIG guns with a single source, the Binzel companies.

Furthermore, the magistrate judge apparently found that Binzel could not demonstrate that its substantial promotional efforts were successful enough to establish secondary meaning. (Report at 38.) See Echo Travel, Inc. v. Travel Associates, Inc., 870 F.2d 1264, 1270 (7th Cir.1989) ("it is the effect or success of the advertising, not the mere fact of advertising, that is the test of secondary meaning").

Binzel also argues that the magistrate judge should have recommended entry of preliminary injunction on the trade dress issue under the Illinois Uniform Deceptive Trade Practices Act (the "Illinois Act"), Ill.Ann.Stat. ch. 121½, ¶ 311. Under the Illinois Act, the issue of intentional copying presents an obstacle to establishing secondary meaning for the same reasons as discussed above. Moreover, Binzel's private label sales defeat its claim of secondary meaning. See Filter Dynamics Int'l, 311 N.E.2d at 395.

For these reasons, the court finds no sufficient basis to disturb the magistrate judge's finding that there is a minimal likelihood of establishing secondary meaning for Binzel's trade dress. The court finds that Binzel has failed to demonstrate that the likelihood of success on the merits of its trade dress claim under either the Lanham Act or the Illinois Act is better than negligible.

II. TRADEMARK CLAIM

Binzel brought its claim of trademark infringement under §§ 32(1) and 43(a) of the Lanham Act, 15 U.S.C. §§ 1114(1) and 1125(a). Section 32(1)(a) forbids the use of any "reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale ... of any goods where such use is likely to cause confusion ... or to deceive."

In granting Binzel's motion for a preliminary injunction regarding the trademark claim, the magistrate judge found that defendants' use of small consumable genuine Binzel parts bearing genuine Binzel trademarks as components of an otherwise unmarked product states a claim of trademark infringement. (Report at p. 45.) This court believes that the magistrate judge's evaluation of this issue was in error.

The magistrate judge relied on General Electric Co. v. Speicher, 877 F.2d 531, 534 (7th Cir.1989), for the proposition that a person having possession of a genuine trademark may still be an infringer for using it. The court in General Electric described two scenarios that exemplify this proposition, both involving distributors:

A distributor licensed to sell a trademarked product may decide to sell another product in the trademarked containers in which he received the trademarked product from his supplier.... Or the distributor's trademark license may have expired ... and ... the ex-licensee may continue to use the trademark.

Id. at 534. In General Electric, defendant Speicher used plaintiff GE's registered trademark, stamped on boxes supplied to him by a third party, in connection with goods that were not GE goods. Id. The district court held that Speicher had not infringed GE's trademark because GE placed its own mark on the boxes, and Speicher had not copied it. Id. In reversing the district court and holding that Speicher had infringed GE's...