Clamp Mfg. Co., Inc. v. Enco Mfg. Co., Inc.

• Citation: 870 F.2d 512,10 USPQ2d 1226
• Decision Date: 14 March 1989
• Docket Number: No. 88-5559,88-5559
• Parties: CLAMP MANUFACTURING COMPANY, INC., Plaintiff-Appellee, v. ENCO MANUFACTURING COMPANY, INC., Colex, Inc., Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 512

870 F.2d 512

10 U.S.P.Q.2d 1226

CLAMP MANUFACTURING COMPANY, INC., Plaintiff-Appellee, v. ENCO MANUFACTURING COMPANY, INC., Colex, Inc., Defendants-Appellants.

No. 88-5559.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 8, 1989.

Decided March 14, 1989.

Seymour Rothstein, Charles C. Kinne, Allegretti and Witcoff, Ltd., Chicago, Ill., for Enco Mfg. Co. and Colex, Inc., defendants-appellants.

Allan Gabriel, Ronald M. St. Marie, Ervin, Cohen & Jessup, Beverly Hills, Cal., for Clamp Mfg. Co., plaintiff-appellee.

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

Before FARRIS, FERGUSON and BEEZER, Circuit Judges.

FARRIS, Circuit Judge:

Enco Manufacturing Co. appeals from the district court's judgment against it in favor of Clamp Manufacturing Co. Clamp sued Enco for trademark infringement of its clamps. Following a bench trial, the district court granted injunctive relief and damages to Clamp. We affirm.

BACKGROUND

Clamp, a California corporation principally located in Los Angeles, manufactures and distributes clamps. Clamp and its predecessor, Saxton Manufacturing Co., have manufactured and distributed cantilevered "C" clamps in various sizes and styles since the early 1950's. A patent for the clamp, more precisely described as a "single screw actuated pivoted clamp," was issued in 1955 and expired in 1972. ¹ In January 1974, Clamp obtained a trademark registration, valid for twenty years, for the term "KANT-TWIST." No. 977,118, Principal Register, U.S. Patent Office (noting 1954 as date of first use of clamp).

Enco, an Illinois corporation principally located in Chicago, manufactures and distributes machine tools, parts, and accessories. Colex, Inc., the additional defendant-appellant, was a California corporation principally located in Los Angeles and the wholly-owned West Coast subsidiary of Enco. Colex was merged into Enco following trial.

In 1976 or early 1977, Enco began purchasing and distributing a line of cantilevered "C" clamps manufactured in Korea. The clamps were virtually identical to the Kant-twist clamps manufactured by Clamp and were designated as "Enco NO-TWIST clamps" in the Enco sales catalog.

In November 1977, Clamp wrote Enco demanding that Enco cease selling its No-twist clamps, because Enco's clamps were confusingly similar to Clamp's Kant-twist clamps. Enco refused, stating that the Clamp patent had expired and the "no-twist" term was used descriptively. In December 1977, Clamp again asked Enco to cease marketing its No-twist clamps; Enco did not respond.

Following the exchange of correspondence, Clamp took several actions in response to Enco's efforts. In May 1978, Clamp filed a complaint with the Federal Trade Commission, alleging the palming off of confusingly similar copies of its clamps by several wholesale distributors, including Enco. Clamp attempted to persuade its customers, through advertising and direct contacts, that its products were superior to those of Enco, and made changes to the appearance of some parts of its clamps. Clamp also sought incontestable status for its Kant-twist mark, including filing a required affidavit with the U.S. Patent Office stating that no litigation concerning its mark was pending. See 15 U.S.C. Sec. 1065(2). Subject to certain exceptions, incontestable status provides the mark with a conclusive presumption of validity and prevents a defense to infringement on the grounds that the mark is merely descriptive. See Park 'N Fly v. Dollar Park & Fly, Inc., 469 U.S. 189, 193-97, 205, 105 S.Ct. 658, 661-63, 667, 83 L.Ed.2d 582 (1985); 2 McCarthy, Trademarks and Unfair Competition Sec. 32.44 (1984 and 1988 supp.).

In August 1982, after the FTC decided to take no action on Clamp's complaint, Clamp filed suit against Enco, Colex, and seven other machine tool supply companies, alleging infringement of its registered Kant-twist trademark, in violation of 15 U.S.C. Sec. 1114(1) (Sec. 32(1) of the Lanham Act); infringement of its configuration trademark, false designation of origin, false description, and false representation, in violation of 15 U.S.C. Sec. 1125(a) (Sec. 43(a) of the Lanham Act); and unfair competition and infringement of trademark rights under California law. The claims against the seven other defendants were withdrawn prior to the trial in October 1986. On August 10, 1987, Findings of Fact and Conclusions of Law were entered in favor of Clamp. Clamp Mfg. Co. v. Enco Mfg. Co., 5 U.S.P.Q.2d 1643 (C.D.Cal.1987). On November 24, 1987, the trial court awarded Clamp $578,689 plus prejudgment interest of $378,077 and issued a permanent injunction prohibiting Enco from using the No-twist name and from promoting or selling confusingly similar cantilevered "C" clamps. Id. at 1649.

STANDARD OF REVIEW

The district court's decision denying laches is reviewed for abuse of discretion. Russell v. Price, 612 F.2d 1123, 1125 (9th Cir.1979), cert. denied, 446 U.S. 952, 100 S.Ct. 2919, 64 L.Ed.2d 809 (1980). Issues concerning the correct test to be used in evaluating trademark infringement are reviewed de novo. Lindy Pen Co. v. Bic Pen Corp., 796 F.2d 254, 255 (9th Cir.1986). Mixed questions of fact and law that are largely fact-driven are reviewed under the clearly erroneous standard. United States v. McConney, 728 F.2d 1195, 1203-04 (9th Cir.) (en banc), cert. denied 469 U.S. 824, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984). The district court's findings of fact are reviewed under the clearly erroneous standard. Fed.R.Civ.P. 52(a). The clearly erroneous standard also applies to the district court's findings on the elements of infringement: nonfunctionality, secondary meaning, and likelihood of confusion. See Fuddruckers, Inc. v. Doc's B.R. Others, Inc., 826 F.2d 837, 843 (9th Cir.1987) (functionality); Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1355-56, 1358 (9th Cir.1985) (en banc) (likelihood of confusion, secondary meaning). The clearly erroneous standard means that the reviewing court will not disturb the district court's decision unless after reviewing all of the evidence the reviewing court "is left with the definite and firm conviction that a mistake has been committed." United States v. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948).

DISCUSSION

A. Laches

Enco argues that laches bars Clamp's recovery of monetary damages; Enco does not argue that laches also bars the injunctive relief granted by the district court. We recognize estoppel by laches as a valid defense to an infringement action on behalf of an incontestable trademark. Pyrodyne Corp. v. Pyrotronics Corp., 847 F.2d 1398, 1402 (9th Cir.), cert. denied, --- U.S. ----, 109 S.Ct. 497, 102 L.Ed.2d 533 (1988); E-Systems, Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir.1983) (laches may bar injunctive relief). A successful assertion of the defense requires Enco to show an unreasonable delay by Clamp in filing suit, with resulting prejudice to Enco. See Whittaker Corp. v. Execuair Corp., 736 F.2d 1341, 1347 (9th Cir.1984); E-Systems, 720 F.2d at 607; 2 McCarthy at Sec. 31.2. More specifically, a variety of factors are weighed: the strength and value of Clamp's trademark rights; Clamp's diligence in enforcing its mark; the harm to Clamp if relief is denied; whether Enco acted in good faith ignorance of Clamp's rights; competition between Clamp and Enco; and the harm suffered by Enco because of Clamp's delay. See E-Systems, 720 F.2d at 607.

The district court made no express findings or conclusions on Enco's laches defense. This court may assume that the district court's failure to discuss the laches defense is equivalent to a refusal, because there is no doubt that (1) the district court rejected the defense, and (2) a full understanding of the issue may be obtained from the district court's findings, which did address the relevant factors. See Vance v. American Hawaii Cruise, Inc., 789 F.2d 790, 792 (9th Cir.1986). The district court found that (1) Clamp's trademark rights were strong, (2) Clamp acted promptly in writing to Enco, filing its FTC complaint, and filing suit after the FTC completed its investigation, (3) Clamp was damaged substantially by Enco's actions, (4) Enco was aware of Clamp's rights, and (5) Clamp and Enco were in direct competition. Clamp Mfg., 5 U.S.P.Q.2d at 1645-46 (Findings of Fact 16-22, 25). The district court made no express finding concerning the harm suffered by Enco as a result of Clamp's delay. In finding that Enco was aware of Clamp's continuing objections and that No-twist clamp sales were less than .7% of its total sales, the district court implicitly determined that Enco suffered no harm. See id. (FOF 14, 23).

Enco argues that injury to it should be presumed if the waiting period exceeds that of the analogous statute of limitations period. Other circuits have applied such a presumption to reject a defense of laches when the delay period is less than the analogous statute of limitations. See Ambrit, Inc. v. Kraft, Inc., 812 F.2d 1531, 1546 (11th Cir.1986), cert. denied, 481 U.S. 1041, 107 S.Ct. 1983, 95 L.Ed.2d 822 (1987); Tandy Corp. v. Malone & Hyde, Inc., 769 F.2d 362, 365-66 (6th Cir.1985), cert. denied, 476 U.S. 1158, 106 S.Ct. 2277, 90 L.Ed.2d 719 (1986). This circuit has applied such a presumption only in patent cases, where the analogous statute of limitations, 35 U.S.C. Sec. 286, runs for six years and explicitly limits the recovery period of damages for patent infringement. See, e.g., Whitman v. Walt Disney Productions, Inc., 263 F.2d 229, 231-32 (9th Cir.1958). Even if we assume the district court was clearly erroneous in not presuming that Enco suffered harm as a result of Clamp's delay, the district court's findings on the other factors weigh against a determination of laches. ² The district court's implicit conclusion that laches should not apply was not an abuse of discretion.

B. Validity of the Clamp Configuration Trademark

The...