Artus Corp. v. Nordic Co., Inc.

• Decision Date: 30 April 1981
• Docket Number: Civ. A. No. 77-1437.
• Citation: 512 F. Supp. 1184
• Parties: The ARTUS CORPORATION, Plaintiff, v. NORDIC CO., INC., Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

512 F. Supp. 1184

The ARTUS CORPORATION, Plaintiff, v. NORDIC CO., INC., Defendant.

Civ. A. No. 77-1437.

United States District Court, W. D. Pennsylvania.

April 30, 1981.

COPYRIGHT MATERIAL OMITTED

Raymond G. Hasley, Pittsburgh, Pa., for plaintiff or petitioner.

James P. Ross, Pittsburgh, Pa., for defendant or respondent.

OPINION

ZIEGLER, District Judge.

I. History of Case

On October 15, 1940, plaintiff, The Artus Corporation, ("Artus"), obtained an exclusive license under a United States patent for a novel shim for spacing milling machinery parts. Included in the patent was the claim that the shim material would be colored, but no specific colors were claimed. Within one month of securing the patent, Artus adopted the following colors to indicate various thicknesses of the shims: silver, amber, purple, red, green, tan, blue, transparent matte, brown, black, pink, yellow, white and coral. Artus has continuously and consistently utilized these plain colors in the advertising, manufacturing and selling of its shims.

In October, 1974, defendant, Nordic Company, ("Nordic"), began to manufacture and sell plain, unmarked color-coded shims. These shims differed from those of Artus in color selection. Nordic's marketing attempt was initially unsuccessful and it abandoned its choice of colors and adopted Artus' plain, unmarked color-coded system with identical thicknesses. Repeated requests by Artus to Nordic to discontinue use of the unmarked color scheme have been ignored.

Artus instituted this action on December 23, 1977, alleging infringement of proprietary rights due to unfair competition in the manufacture and sale of plain, unmarked color-coded shims, gasket shim stock and spacers. On January 24, 1978, Nordic answered and denied infringement and simultaneously set forth affirmative defenses and a counterclaim. In defense, Nordic contends that plaintiff's plain color-coded system for shims is available for privileged imitation and thus not entitled to protection, and also that the action is barred by unclean hands and laches. In its counter-claim, defendant alleges that Artus has unlawfully attempted to monopolize the trade in the industry.

Following discovery, Artus moved for summary judgment. The court denied the motion on January 31, 1980, due to the existence of a genuine issue of a material fact. Thereafter, Artus amended its complaint and additionally charged Nordic with acts of unfair competition and deceptive trade practice under Section 43(a) of the Lanham Act. 15 U.S.C. § 1125(a).

Specifically, Artus alleges that Nordic has been and continues to engage in unfair trade practices and competition by distributing and selling plain, unmarked color-coded shims, identical in appearance to those manufactured, advertised and sold by Artus, with the intention of trading upon the goodwill established by Artus in the marketplace. Artus further contends that its plain, unmarked color-coded system is nonfunctional, has acquired secondary meaning, and is thereby deserving of protection as a matter of law.

Nordic rejoins that it has a legal right to identical use of plaintiff's plain color-coded system since the colors are functional and Nordic has adequately labeled its shims to designate their origin and to eliminate any possible likelihood of confusion. On September 17, 1980, Nordic moved for summary judgment.

Presently before the court is Nordic's motion for summary judgment and Artus' renewed motion for judgment. For the reasons hereinafter set forth, defendant's motion will be denied and plaintiff's renewed motion for summary judgment will be granted in part.

II. Discussion

This case presents the question of whether Nordic has been and continues to engage in acts of unfair competition against Artus by manufacturing and selling plain, unmarked color-coded shims that are virtually identical in colors and sizes to those manufactured and sold by Artus.¹ Before reaching plaintiff's claims of unfair competition and false advertising under the Lanham Act and state law, we will briefly review the well-established federal jurisprudence pertaining to the right to copy goods or products of another.

Federal law permits Nordic to manufacture and sell plain, unmarked color-coded shims which are identical in every detail to those manufactured and sold by Artus. Artus' plain, unmarked color-coded system is neither patented nor copyrighted and thus entirely in the public domain, and Nordic has the right, if it chooses, to copy. Sears, Roebuck & Co. v. Stiffel, 376 U.S. 225, 231-32, 84 S.Ct. 784, 788-89, 11 L.Ed.2d 661 (1964). This principle obtains even if the system became associated with Artus in the public's mind prior to Nordic's entry in the field in 1974. As the Supreme Court stated in Compco Corp. v. Day-Brite Lighting, Inc.:

That an article copied from an unpatented article could be made in some other way, that the design is non-functional and not essential to the use of either article, that the configuration of the article copied may have a secondary meaning which identifies the maker to the trade, or that there may be confusion among purchasers as to which article is which or as to who is the maker, may be relevant evidence in applying a State's law requiring such precautions as labeling; however, regardless of the copier's motives, neither these facts nor any others can furnish a basis for imposing liability for or prohibiting the actual acts of copying or selling.

376 U.S. 234, 238, 84 S.Ct. 779, 782, 11 L.Ed.2d 669 (1964).

While federal (patent) law prevents a state from prohibiting the copying and selling of unpatented articles, it does not preclude a state, either statutorily or judicially, from requiring that those who make and sell copies must take precautions to adequately identify their products. SK&F Co. v. Premo Pharmaceutical Lab., 625 F.2d 1055, 1964 (3d Cir. 1980); Ives Laboratories, Inc. v. Darby Drug Co., Inc., 601 F.2d 631, 640 (2d Cir. 1979); Gum, Inc. v. Gumakers of America, Inc., 136 F.2d 957, 959 (3d Cir. 1943). We now move to the crux of the dispute — unfair competition under Pennsylvania law.

(A)

Pennsylvania jurisprudence with respect to unfair competition and the Lanham Act, 15 U.S.C. § 1125(a), are identical except for the federal requirement of interstate commerce, an element not here in dispute. The test for unfair competition is the existence of a secondary meaning and the likelihood of confusion as to the source of the product. Donsco, Inc. v. Casper Corp., 587 F.2d 602, 605 (3d Cir. 1978). Unfair competition goes to the question of marketing, not to the question of manufacturing. One may be within his legal rights in producing an item and yet act extralegally if the item is marketed in such a way that confusion is generated as to the source of the goods. B. H. Bunn Co. v. AAA Replacement Part Co., 451 F.2d 1254, 1263 (5th Cir. 1971); McCarthy, Trademarks and Unfair Competition, Section 8:1, at 230-31 (1973).

Artus has the burden of proving that its plain, unmarked color scheme is entitled to protection against imitation, and the Nordic's plain, unmarked color scheme is so similar that confusion is likely. Stroehmann Bros. v. Manheck Baking Co., 331 Pa. 96, 200 A. 97 (1938). Artus is not required to prove actual palming-off; a showing of likelihood of confusion is sufficient. Parkway Baking Co. v. Freihofer Baking Co., 255 F.2d 641, 649 (3d Cir. 1958).

To establish a claim for unfair competition under Pennsylvania law, two elements must be present: (1) the public's recognition that a plaintiff's mark or feature is identified with his product and distinguishable from those of others, i. e., a secondary meaning, and (2) activities that cause a likelihood of confusion among relevant purchasers. L'Aiglon Apparel, Inc. v. Lana Labelle, Inc., 214 F.2d 649 (3d Cir. 1954). The first element can be shown primarily in two ways: (a) the mark is inherently distinctive, (i. e., trademark in the classic sense), or (b) even if not inherently distinctive, the feature has acquired a secondary meaning in the minds of customers. John Wright, Inc. v. Casper Corp., 419 F.Supp. 292, 317 (E.D.Pa.1976), modified on other grounds, 587 F.2d 602 (3d Cir. 1978); McCarthy, supra, Section 15:4, at 524.

Nordic contends, and Artus concedes, that Artus' original decision to color its various shims was functional. The coloring was, and still is employed to denote thickness. It decreases the probability of "thickness" error and saves the user set-up time. Since coloring affects handling, it is in this context functional.

Section 742 of the Restatement of Torts defines functionality as follows:

A feature of the goods is functional, under the rule stated in 741, if it affects their purpose, action or performance, or the facility or economy of processing, handling or using them; it is non-functional if it does not have any of such effects.

If the right to color was at issue, Artus concedes that Nordic would be entitled to employ colors to denote shim thickness. That concession is mandated by Ives Laboratories, Inc. v. Darby Drug Co., Inc., supra, 601 F.2d at 643. "Where the features are functional there is normally no right to protection or relief .... If the particular feature is an important ingredient in the commercial success of the product, the interest in free competition permits its imitation in the absence of a patent or copyright ...." However, Artus objects to the use of a particular combination of unmarked colors, without adequate distinguishing characteristics or labeling, and not to the use of colors, per se. Artus' use of plain, unmarked colors serves to distinguish its product from that of other manufacturers and sellers, just as the use of Artus' colors with the application of dots and stars distinguish the products of other manufacturers from Artus.

Artus contends that the particular selection and arbitrary application of 14 varying unmarked colors is nonfunctional and, over the...