Burndy Corp. v. Teledyne Industries, Inc.
| Decision Date | 15 November 1984 |
| Docket Number | 200,Nos. 143,D,s. 143 |
| Citation | 748 F.2d 767 |
| Parties | BURNDY CORPORATION, Plaintiff-Appellant, Cross-Appellee, v. TELEDYNE INDUSTRIES, INC., a California Corporation, Defendant-Appellee, Cross-Appellant. ockets 84-7436, 84-7474. |
| Court | U.S. Court of Appeals — Second Circuit |
John M. Calimafde, New York City (Francis J. Murphy, Hopgood, Calimafde, Kalil, Blaustein & Judlowe, New York City, of counsel), for plaintiff-appellant, cross-appellee.
John McN. Cramer, Pittsburgh, Pa. (Thomas C. Wettach, Reed Smith Shaw & McClay, Pittsburgh, Pa., of counsel), for defendant-appellee, cross-appellant.
Before FEINBERG, Chief Judge, and MANSFIELD and KEARSE, Circuit Judges.
Burndy Corporation ("Burndy"), which brought an action in the District of Connecticut against Teledyne Industries, Inc. ("Teledyne") alleging false advertising and unfair competition in violation of Sec. 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a), appeals from a decision and judgment entered by Judge Peter C. Dorsey, before whom the case was tried without a jury. Judge Dorsey found that Teledyne had violated the Act but he denied Burndy damages and injunctive relief. 584 F.Supp. 656. We affirm.
At all relevant times Burndy and Teledyne (through its "Penn-Union" division) were competitors in the manufacture and sale of split bolt connectors ("SB connectors"), which are devices designed to facilitate the efficient flow of electricity between wire or cable conductors by reducing resistance in connections between them. Excessive resistance generates heat, which can present a fire hazard and decrease the functional capacity of the connectors and conductors. The salability of connectors is improved when they are approved by Underwriters Laboratory ("UL"), an independent industry-wide non-profit organization that establishes standards in the electrical field. SB connectors tested and approved by UL may be marketed as "UL approved," which is deemed essential by many purchasers.
Prior to August 1981, UL standard No. 486 applied to SB connectors. Because aluminum wires joined by connectors tend to "creep" or "cold flow," a phenomenon that loosens the connection and creates heat, UL developed an enhanced standard, No. 486B, which applied to connectors marketed for use with aluminum conductors. The new standard applied to connectors manufactured after August 1981. Both Burndy and Teledyne developed a line of SB connectors that met the new UL standard and advertised them as such. Teledyne priced its comparable-sized SB connectors substantially lower than those marketed by Burndy.
In April 1981, Teledyne moved its SB connector production from Ansonia, Connecticut to Edinboro, Pennsylvania. Commercial production of connectors designed to meet the UL 486B standard began in November of that year. The Edinboro plant had problems producing connectors with the Ansonia molds; as a result, the production process was adjusted sometime following November and new molds and dies were developed and used. As the inventory of each size of Ansonia-made components and of connectors made from the Ansonia molds and tools was depleted, Teledyne began to use the corresponding items made from the new molds. The Edinboro-made connectors were advertised as complying with the 486B standard and were labeled with a code ("AL9CU") indicating their compliance. However, the redesign of the Edinboro molds and dies caused a reduction in the size of three versions of SB connectors (SW 5, SW 6, and SW 7), with the result that these were eventually proved to fail to meet the 486B standard by a wide margin. At the time, however, the down-sized products were not retested nor was the down-sizing reported to UL. There is no evidence that Teledyne sought or realized any cost savings by decreasing the size of SB connectors.
In June 1982, after Burndy became aware of complaints about certain sizes of Teledyne connectors and tested some of them, it notified UL that the Teledyne SW 6 and SW 7 connectors failed to meet the 486B standard, a finding that UL confirmed. Later testing of Teledyne's SW 5 connector in 1983 revealed that it too was not in compliance with the 486B standard. The connectors did, however, meet the original UL 486 standard. UL then contacted Teledyne, which immediately delisted the controversial connectors and ceased marketing them as meeting the UL 486B standard. Although other models made by Teledyne (SW 1 through SW 4), which had not been reduced in size, were also temporarily delisted, the listing was reinstated when testing revealed that they complied with the UL 486B standard.
At all times here involved SB connectors were made and sold in competition not only by Burndy and Teledyne but also by Reliable Electrical Company, Blackburn Manufacturing Company, and Mercury-Greeves Company. There also were in the market other types of connectors that perform the same function as SB connectors. However, the record is either unclear or devoid of proof as to the capacity and market shares of these other competitors, the extent to which their products competed against each other and the extent to which they satisfied the UL 486B standard.
In June 1982, two of Burndy's customers, Ilsco Corporation and Ideal Industries, complained to it that they had been unable to move their respective inventories of SB connectors purchased from it for resale, because Teledyne's price for its SB connectors (advertised as meeting the 486B standard) was 14.5% less than their price for Burndy's comparable connectors, which they resold under private labels. In July 1982, Burndy, not knowing whether Teledyne would delist its non-complying SB connectors, gave Ilsco and Ideal a retroactive price cut of 14.5% on their inventories, which it paid in the form of free SB connectors worth $118,000 at its regular sales prices to them. Burndy advised them that if Teledyne did not delist the non-complying SB connectors Burndy would lower its prices on future sales to meet those of Teledyne. At or about this time Teledyne delisted its non-complying SB connectors, thereby removing as a competitive factor its misrepresentation as to compliance.
On November 8, 1982, Burndy commenced the present action, claiming that Teledyne, by listing certain of its SB connectors as meeting the UL 486B standard, had engaged in false advertising and unfair competition in violation of Sec. 43(a) of the Lanham Act. The complaint sought (1) money damages for Burndy's actual losses as a result of the false advertising from November 1981 through June 1982; (2) disgorgement of Teledyne's profits on the falsely advertised connectors during that period; (3) injunctive relief in the form of corrective advertising and a product recall; (4) multiple damages; and (5) attorney's fees. Teledyne, in turn, contended that injunctive relief should be denied because of Burndy's unclean hands in its own mislabeling of its SB connectors when in fact they failed to meet UL standards. There was evidence that some of Burndy's connectors that did not meet the UL 486B standard were packaged and sold in boxes labeled to indicate such compliance. (The connectors themselves, however, bore a code indicating that they met only the less demanding 486 standard.)
After a 3-day non-jury trial Judge Dorsey filed a reasoned opinion in which he found that Burndy had established a violation of Sec. 43(a) by Teledyne but had failed to sustain its burden of proving that the violation had caused it appreciable damages. He concluded that, although Teledyne's employees should have known that the change in design of the SB connectors in issue (SW 5, SW 6 and SW 7) made by it in Pennsylvania would result in a reduction in size and probable non-compliance with UL 486B, it was not shown that Teledyne acted in bad faith or with the intent of evading the UL 486B standard. Nevertheless the court concluded that since customers were misled by Teledyne's representation that SW 6 and SW 7 connectors complied with UL 486B, Sec. 43(a) of the Lanham Act had been violated. However, Judge Dorsey further concluded that Burndy had failed to establish that its product rebates to its customers, Ilsco and Ideal, were caused by Teledyne's mislabeling since Teledyne had ceased its misconduct in June 1982 at the time when the credits were given by Burndy and since the credits would have been necessary to meet Teledyne's prices, even if Teledyne's connectors were able to perform as advertised.
The district court also rejected Burndy's claim for lost profits based on the theory that Teledyne's misrepresentation of UL 486B compliance diverted to it sales which would otherwise have been made by Burndy. Judge Dorsey found "no evidence that even a reasonably identifiable percentage of defendant's allegedly ill-gotten sales would have gone to the plaintiff," in view of the existence of other competitors and competing products in the market, or that buyers, if they had been informed of Teledyne's non-compliance as to certain sizes, would have bought all or any particular sizes from Burndy instead of from Teledyne.
Burndy's evidence was also found deficient in various other respects, including its failure to show the number of non-complying connectors sold by Teledyne or the period during which the down-sized connectors were on the market, failure to take into account that some customers might purchase Teledyne's non-complying SW 6 and SW 7 products for uses not involving the UL 486B standard (e.g., use with copper conductors), reliance on sales figures that included products not sold for uses in which compliance with UL 486B was relevant, and use of profit margin figures that were deficient in a variety of respects.
The district court rejected Burndy's claim to recovery of Teledyne's profits, based on 15 U.S.C. Sec. 1117, which provides that upon establishing a defendant's violation of a plaintiff's registered trademark ...
To continue reading
Request your trial
-
Barr Laboratories, Inc. v. Quantum Pharmics, Inc., No. CV-90-4406.
...818 F.2d at 271-72)), and (2) that the plaintiff's injury was caused by the defendant's false advertising, Burndy Corp. v. Teledyne Indus., Inc., 748 F.2d 767, 771 (2d Cir.1984). At this juncture, this Court cannot determine that Barr will be unable to demonstrate, under any set of facts, t......
-
PaF Srl v. Lisa Lighting Co., Ltd.
...on other grounds, Maier Brewing Co. v. Fleischman Distilling Corp., 359 F.2d 156, 165 (9th Cir.1966)); Burndy Corp. v. Teledyne Industries, Inc., 748 F.2d 767, 772 (2d Cir. 1984). Moreover, in the instant case an accounting is unnecessary. Of the 4500 lamps that KI ordered from LTS, it sold......
-
HEATHER K. BY ANITA K. v. City of Mallard, Iowa
...readjusted, because the potential for economic or other harm to the movant has been eliminated. Id. (citing Burndy Corp. v. Teledyne Indus., Inc., 748 F.2d 767, 774 (2d Cir.1984), which held that injunctive relief was "wholly unnecessary" when the defendant had voluntarily brought his produ......
-
Brunswick Corp. v. Spinit Reel Co.
...because by drastically altering the SR 210 cover, it solved the confusion problem in the design. See Burndy Corp. v. Teledyne Indus., Inc., 748 F.2d 767, 774 (2d Cir.1984). Regardless of whether the unfair conduct has stopped and is not likely to recur, the trial court still has the discret......
-
Private Remedies for False or Misleading Advertising: Lanham Act Section 43(a)
...in part, rev ‘d in part, 997 F.2d 949 (D.C. Cir. 1993); Burndy Corp. v. Teledyne Indus., 584 F. Supp. 656, 664-67 (D. Conn.), aff’d, 748 F.2d 767 (2d Cir. 1984) (refusing to award plaintiff actual damages for cost of free goods allowances because such allowances resulted from lower prices o......
-
Table of Cases
...Indus. v. Milliken & Co., 690 F.2d 380 (4th Cir. 1982), 803 Burndy Corp. v. Teledyne Indus., 584 F. Supp. 656 (D. Conn.), aff’d, 748 F.2d 767 (2d Cir. 1984), 1308 Burndy Corp. v. Teledyne Indus., 748 F.2d 767 (2d Cir. 1984), 1310, 1313, 1320 Burnett v. Mortgage Elec. Registration Sys., 2009......
-
Who Should Decide? Judges and Juries in Trademark Dilution Actions - David S. Welkowitz
...or "to deter a willful infringer from doing so again." 968 F.2d 1532, 1537 (2d Cir. 1992) (quoting Burndy Corp. v. Teledyne Indus., Inc., 748 F.2d 767, 772 (2d Cir. 1984)). 128. George Basch Co., 968 F.2d at 1539. 129. Lanham Act § 43(c)(5), 15 U.S.C. §§ 1117(a); Lanham Act § 35(a), 15 U.S.......
-
"unknown Unknowns" and "known Unknowns": Untethered Trademark Monetary Remedies After Tma Enactment and Romag
...Caledonian Airways, 704 F. Supp. 178 (S.D. Cal. 1988) (no evidence of lost sales) (citing Burndy Corp. v. Teledyne Industries, Inc., 748 F.2d 767, 771 (2d Cir. 1984) (wrongful profits case); Can Am Engineering Company v. Henderson Glass, Inc., 814 F.2d 253, 257-58 (6th Cir.1987)).10. H. REP......