AMF Inc. v. Sleekcraft Boats, 76-1744

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Citation: 599 F.2d 341,204 USPQ 808
• Docket Number: No. 76-1744,76-1744
• Parties: AMF INCORPORATED, a corporation, Plaintiff-Appellant, v. SLEEKCRAFT BOATS, a sole proprietorship, and Bruce E. Nescher, an Individual, Defendants-Appellees.
• Decision Date: 28 June 1979

Page 341

599 F.2d 341

204 U.S.P.Q. 808

AMF INCORPORATED, a corporation, Plaintiff-Appellant, v. SLEEKCRAFT BOATS, a sole proprietorship, and Bruce E.

Nescher, an Individual, Defendants-Appellees.

No. 76-1744.

United States Court of Appeals,

Ninth Circuit.

June 28, 1979.

Robert E. Lyon and Roland N. Smoot, Lyon & Lyon, Los Angeles, Cal., argued, for plaintiff-appellant.

Francis A. Utecht (argued), of Fulwider, Patton, Rieber, Lee & Utecht, Long Beach, Cal., for defendants-appellees.

Appeal from the United States District Court for the Central District of California

Before ANDERSON and HUG, Circuit Judges, and EAST, ^* District Judge.

J. BLAINE ANDERSON, Circuit Judge:

In this trademark infringement action, ¹ the district court, after a brief non-jury trial, found appellant AMF's trademark

was valid, but not infringed, and denied AMF's request for injunctive relief. ²

AMF and appellee Nescher ³ both manufacture recreational boats. AMF uses the mark Slickcraft, and Nescher uses Sleekcraft. The crux of this appeal is whether concurrent use of the two marks is likely to confuse the public. The district judge held that confusion was unlikely. We disagree and remand for entry of a limited injunction.

I. FACTS

AMF's predecessor used the name Slickcraft Boat Company from 1954 to 1969 when it became a division of AMF. The mark Slickcraft was federally registered on April 1, 1969, and has been continuously used since then as a trademark for this line of recreational boats.

Slickcraft boats are distributed and advertised nationally. AMF has authorized over one hundred retail outlets to sell the Slickcraft line. For the years 1966-1974, promotional expenditures for the Slickcraft line averaged approximately $200,000 annually. Gross sales for the same period approached $50,000,000.

After several years in the boat-building business, appellee Nescher organized a sole proprietorship, Nescher Boats, in 1962. This venture failed in 1967. In late 1968 Nescher began anew and adopted the name Sleekcraft. ⁴ Since then Sleekcraft has been the Nescher trademark. The name Sleekcraft was selected without knowledge of appellant's use. After AMF notified him of the alleged trademark infringement, Nescher adopted a distinctive logo and added the identifying phrase "Boats by Nescher" on plaques affixed to the boat and in much of its advertising. (See Appendix A). The Sleekcraft mark still appears alone on some of appellee's stationery, signs, trucks, and advertisements.

The Sleekcraft venture succeeded. Expenditures for promotion increased from $6,800 in 1970 to $126,000 in 1974. Gross sales rose from $331,000 in 1970 to over $6,000,000 in 1975. Like AMF, Nescher sells his boats through authorized local dealers.

Slickcraft boats are advertised primarily in magazines of general circulation. Nescher advertises primarily in publications for boat racing enthusiasts. Both parties exhibit their product line at boat shows, sometimes the same show.

II. ISSUES ⁵

1. What is the standard of review?

2. Has a likelihood of confusion been demonstrated?

3. What relief is warranted?

III. STANDARD OF REVIEW

Nescher contends that "likelihood of confusion" is a question of fact reviewable under the clearly erroneous standard. AMF says it is a question of law reviewable De novo. Both sides have cited case law that supports their position. The sundry formulations utilized by other courts in reviewing the same question are irreconcilable. Cf. Plough, Inc. v. Kreis Laboratories, 314 F.2d 635, 640-41 (CA 9 1963) (expresses uncertainty about what is standard of review). One commentator has severely criticized this court:

"Even within some of the circuits, no consistency is observed, with the court switching from one test to the other, apparently depending upon the court's initial proclivity to reverse or affirm.¹²

"Compare: Fleischmann Distilling Corp. v. Maier Brewing Co. (1963, CA9) 314 F.2d 149 (Court of Appeals can reweigh decision on confusion) with Norm Thompson Outfitters, Inc. v. General Motors Corp. (1971, CA9 Or.) 448 F.2d 1293 (Court of Appeals must adhere to clearly erroneous rule)."

J. T. McCarthy, Trademarks and Unfair Competition § 23:23 (1973). See also United States Jaycees v. San Francisco Junior Chamber of Commerce, 354 F.Supp. 61, 77-78 (N.D.Cal.1972), Aff'd, 513 F.2d 1226 (9 Cir. 1975).

Recently, however, the proper standard of review has been delineated with more clarity, and the cases in this circuit have been reconciled. In J. B. Williams Co., Inc. v. Le Conte Cosmetics, Inc., 523 F.2d 187 (CA 9 1975), Cert. denied, 424 U.S. 913, 96 S.Ct. 1110, 47 L.Ed.2d 317 (1976), we established dichotomous tests dependent on whether the facts were disputed at trial:

"Whether likelihood of confusion is more a question of law or one of fact depends on the circumstances of each particular case. To the extent that the conclusion of the trial court is based solely upon disputed findings of fact, the appellate court must follow the conclusion of the trial court unless it finds the underlying facts to be clearly erroneous. ⁶ Thus, this Court has refused on many occasions to decide De novo the facts underlying the trial court's determination of whether likelihood of confusion existed. See Carter-Wallace, Inc. v. Proctor & Gamble Co., 434 F.2d 794, 799 (9th Cir. 1970); Paul Sachs Originals Co. v. Sachs, 325 F.2d 212, 214 (9th Cir. 1963); Plough, Inc. v. Kreis Laboratories, 314 F.2d 635, 641 (9th Cir. 1963). However, if the facts are not in dispute, the appellate court is 'in as good a position as the trial judge to determine the probability of confusion'. ⁷ Fleischmann Distilling Corp. v. Maier Brewing Co., supra, 314 F.2d (149) at 152, quoting Miles Shoes, Inc. v. R. H. Macy & Co., 199 F.2d 602 (2d Cir. 1952)."

523 F.2d at 190 (footnote in original omitted). The court then added a "corollary test":

"(W)here the conclusion of the trial court is based solely upon disputed findings of fact, the appellate court need not follow the conclusion of the trial court where it finds the underlying facts to be clearly erroneous."

Id. at 191.

Here, the facts were disputed at trial, and still are on appeal. Thus, we must first review the district court's findings of fact, then assess its conclusion regarding the likelihood of confusion.

Before reviewing the factors relating to likelihood of confusion, we are confronted with one other argument concerning the proper standard of review. AMF argues that we should pay less deference to the district court's findings than we ordinarily do because the court simply endorsed the findings prepared by appellee's counsel. Although the legal proposition pressed by AMF has been recognized by some courts, ⁸ it is inapposite to the procedure followed below. Before the proposed findings prepared by counsel were submitted, the district judge filed a Memorandum Opinion (R. 335) covering virtually all the issues litigated. The proposed findings are taken, often

verbatim, from the court's Memorandum Opinion. Thus, there is no reason to doubt that these findings are a product of the district court's own deliberations to which we should defer

IV. FACTORS RELEVANT TO LIKELIHOOD OF CONFUSION

When the goods produced by the alleged infringer compete for sales with those of the trademark owner, infringement usually will be found if the marks are sufficiently similar that confusion can be expected. ⁹ When the goods are related, ¹⁰ but not competitive, several other factors are added to the calculus. If the goods are totally unrelated, there can be no infringement because confusion is unlikely.

AMF contends these boat lines are competitive. Both lines are comprised of sporty, fiberglass boats often used for water skiing; the sizes of the boats are similar as are the prices. Nescher contends his boats are not competitive with Slickcraft boats because his are true high performance boats intended for racing enthusiasts.

The district court found that although there was some overlap in potential customers for the two product lines, the boats "appeal to separate sub-markets." Slickcraft boats are for general family recreation, and Sleekcraft boats are for persons who want high speed recreation; thus, the district court concluded, competition between the lines is negligible. Our research has led us to only one case in which a similarly fine distinction in markets has been recognized, Sleeper Lounge Co. v. Bell Manufacturing Co., 253 F.2d 720 (CA 9 1958). Yet, after careful review of all the exhibits introduced at trial, we are convinced the district court's finding was warranted by the evidence.

The Slickcraft line is designed for a variety of activities: fishing, water skiing, pleasure cruises, and sunbathing. The promotional literature emphasizes family fun. Sleekcraft boats are not for families. They are low-profile racing boats designed for racing, high speed cruises, and water skiing. Seating capacity and luxury are secondary. Unlike the Slickcraft line, handling capability is emphasized. The promotional literature projects an alluring, perhaps flashier, racing image; absent from the pictures are the small children prominently displayed in the Slickcraft brochures.

Even though both boats are designed for towing water skiers, only the highly skilled enthusiast would require the higher speeds the Sleekcraft promises. We therefore affirm the district court's finding that, despite the potential market overlap, the two lines are not competitive. Accordingly, we must consider all the relevant circumstances in assessing the likelihood of confusion. See Durox Co. v. Duron Paint Manufacturing Co., 320 F.2d 882, 885 (CA 4 1963).

V. FACTORS RELEVANT TO LIKELIHOOD OF CONFUSION

In determining whether confusion between related goods is likely, the following factors are relevant: ¹¹

1. strength of the mark;

2. proximity of the goods;

3. similarity of the marks;

4. evidence of actual confusion;

5. marketing channels used;

6. type of goods...