Co-Rect Products, Inc. v. Marvy! Advertising Photography, Inc.

• Decision Date: 20 December 1985
• Docket Number: Nos. 85-5074,CO-RECT,85-5083,s. 85-5074
• Citation: 780 F.2d 1324,228 U.S.P.Q. 429
• Parties: Page 1324 780 F.2d 1324 228 U.S.P.Q. 429 PRODUCTS, INC., Appellee, v. MARVY! ADVERTISING PHOTOGRAPHY, INC., Brian W. Stewart, Sabes & Richman, Inc., Michael G. Sabes, and Steven I. Richman, Appellants. PRODUCTS, INC., Appellant, v. MARVY! ADVERTISING PHOTOGRAPHY, INC., Brian W. Stewart, Sabes & Richman, Inc., Michael G. Sabes, and Steven I. Richman, Appellees. United States Court of Appeals, Eighth Circuit
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1324

780 F.2d 1324

228 U.S.P.Q. 429

CO-RECT PRODUCTS, INC., Appellee v MARVY! ADVERTISING PHOTOGRAPHY, INC., Brian W. Stewart,

Sabes & Richman, Inc., Michael G. Sabes, and

Steven I. Richman, Appellants.

CO-RECT PRODUCTS, INC., Appellant v MARVY! ADVERTISING PHOTOGRAPHY, INC., Brian W. Stewart,

Sabes & Richman, Inc., Michael G. Sabes, and

Steven I. Richman, Appellees.

Nos. 85-5074, 85-5083.

United States Court of Appeals, Eighth Circuit.

Submitted Sept. 11, 1985.

Decided Dec. 20, 1985.

Rehearing Denied Jan. 22, 1986.

Richard O. Bartz, Minneapolis, Minn., for appellants.

Herman H. Bains, Minneapolis, Minn., for appellee.

Before LAY, Chief Judge, FLOYD R. GIBSON, Senior Circuit Judge and BOWMAN, Circuit Judge.

FLOYD R. GIBSON, Senior Circuit Judge.

Marvy! Advertising Photography, Inc., Brian Stewart, Michael Sabes, Steven Richman, and Sabes & Richman, Inc. (S & R) brought this action against Co-Rect Products, Inc. alleging copyright infringement, antitrust violations, and unfair competition with respect to an advertising brochure prepared by Marvy and Stewart for S & R, and duplicated by Co-Rect. Co-Rect filed a counterclaim against S & R for unfair competition. The district court ¹ entered judgment in favor of Co-Rect on the copyright and antitrust claims, and in favor of S & R on its unfair competition claim and on Co-Rect's counterclaim. Co-Rect appeals and S & R cross appeals. For the reasons discussed below, we reverse the court's judgment in favor of S & R on the unfair competition claim, but affirm the judgment in all other respects.

I. FACTS

The district court's findings disclose that Co-Rect has manufactured bar supplies since 1970, and sells its products directly and through distributors to the restaurant and tavern trade. One of its products is the Co-Rect Control Pourer, which dispenses a measured volume of liquor from a bottle into a glass. The pourer eliminates the use of a conventional shot glass and allows the bartender to pour a mechanically measured volume of liquor directly into the customer's glass, thereby controlling waste and over-pouring. In 1978, S & R became a distributor of the Co-Rect Control Pourer. There was no written agreement and no restrictions placed on either S & R or Co-Rect with respect to geographical markets or the type of customers to whom each could sell the control pourers. Consequently, Co-Rect and S & R immediately became competitors in that they both sold the pourers in the same market.

Co-Rect supplied its distributors, including S & R, with a brochure depicting the control pourer and setting forth special instructions on its use. These brochures were mailed by the distributors to their customers, the names of which were supplied by Co-Rect. S & R became dissatisfied with Co-Rect's brochure and requested the services of Stewart and Marvy to create and produce a new one. The new brochure was multi-colored and pictured a bartender standing behind a bar looking at a control pourer inserted in the top of a liquor bottle that he was holding in his hand. The headline expression read, "With the Cheapshot he can save you enough money to pay his own salary." Below this headline, a close-up of the control pourer appeared with a brief description of its characteristics. The back of the brochure consisted of additional pictures and copy describing the advantages of using the product. The Co-Rect Control Pourer was depicted throughout the brochure, but it was referred to as the "Cheapshot," a name created by Stewart specifically for S & R's brochure.

Despite warnings by Marvy and Stewart that a copyright notice should be placed on the new brochure, in April of 1979 S & R authorized the printing and distribution of 25,000 copies without such a notice. Later in 1979, 50,000 additional copies were printed and distributed, none of which contained a copyright notice.

Co-Rect's president received a copy of S & R's brochure and gave it to his printer with the instruction to make "something like this or better." Co-Rect's president selected the photographs and the copy that were to appear on its new brochure. The end result was a brochure that was identical to S & R's brochure with respect to the theme, format, and most of the photographs. Where S & R had used the word "Cheapshot," Co-Rect used the words "Co-Rect Control Pourer," even in the headline expression, which read, "With the Co-Rect Control Pourer he can save you enough money to pay his own salary." Co-Rect authorized the printing of 100,000 copies of this brochure in February of 1980 and an additional 50,000 during the following September. Co-Rect used the brochure in magazine advertisements and distributed it to customers from March of 1980 until March of 1981, when it was phased out in favor of a new brochure.

In April of 1980, S & R began ordering control pourers exclusively from another supplier, Magnuson Industries. In June, S & R authorized the printing and distribution of an additional 10,000 copies of its brochure, affixing a copyright notice for the first time. Marvy and Stewart filed for and obtained copyright registration on S & R's brochure in February of 1981. The following August, Marvy, Stewart, Sabes, Richman, and S & R brought this action against Co-Rect for copyright infringement, antitrust violations, and unfair competition. Co-Rect filed a counterclaim alleging unfair competition by S & R for the unauthorized use of photographs of the Co-Rect Control Pourer in S & R's brochure. It was not until June of 1983 that Marvy and Stewart assigned to S & R an interest in their copyright registration of the S & R brochure.

The district court found that Marvy, Stewart, and S & R knowingly omitted the copyright notice on the first 75,000 copies of S & R's brochure, and that affixing such a notice to the last 10,000 copies was merely an attempt to comply with the prerequisites of a copyright infringement action. ² The court concluded that the plaintiffs had failed to comply with the copyright laws and that such failure was not excused pursuant to 17 U.S.C. Sec. 405(a)(2) (1982). The court, therefore, dismissed the copyright infringement claim. ³ The court also found that Co-Rect did not interfere with S & R's customers and that the evidence did not establish that Co-Rect intended to or did in fact control prices or destroy competition. The court therefore concluded that S & R had failed to establish any antitrust violations. ⁴ The court found, however, that Co-Rect deliberately duplicated S & R's brochure, and that the brochure's headline expression, "With the Cheapshot he can save you enough money to pay his own salary," had acquired a secondary meaning, designating S & R as the origin of the pourer depicted in the brochure. The court concluded that S & R owned common law trademark rights in the expression, and that Co-Rect's duplication of the brochure constituted a false designation of origin in violation of section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) (1982). The court determined that S & R was entitled to damages in an amount equal to the costs it incurred in creating and producing the original brochure and in printing the first 75,000 copies. The court trebled that amount pursuant to 15 U.S.C. Sec. 1117. Finally, with respect to Co-Rect's counterclaim, the court found that Co-Rect had implicitly consented to the use of photographs of the Co-Rect Control Pourer in S & R's brochure. The court concluded, therefore, that S & R had not violated section 43(a) of the Lanham Act.

On appeal, Co-Rect contends that the only evidence to support the court's finding that the headline expression had acquired a secondary meaning ⁵ is the testimony of S & R's Michael Richman that some of its customers were confused after Co-Rect distributed its new brochure, that 85,000 brochures were distributed, and that S & R used the expression as a mark for approximately one year. Co-Rect argues that this evidence is insufficient to establish secondary meaning. With respect to the court's finding that Co-Rect consented to the use of photographs of its pourer, Co-Rect contends that because its relationship with S & R had changed, it could not have given S & R its consent. Co-Rect contends that S & R used those photographs to sell Magnuson Control Pourers, which Co-Rect argues is a clear violation of section 43(a). S & R cross appeals, contending that the court erred in calculating the damage award because it failed to award S & R its attorney fees and Co-Rect's profits.

II. APPLICABLE LAW

The term "trademark" is defined as "any word, name, symbol, or device or any combination thereof adopted and used by a manufacturer or merchant to identify and distinguish his goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown." 15 U.S.C.A. Sec. 1127 (West Supp.1985). Only distinctive marks are entitled to protection. In determining whether a mark is entitled to protection, courts have employed several approaches, including the categorization of the mark as either generic, descriptive, suggestive, or arbitrary. See Anheuser-Busch Inc. v. Stroh Brewery Co., 750 F.2d 631, 634 (8th Cir.1984); WSM, Inc. v. Hilton, 724 F.2d 1320, 1325 (8th Cir.1984); Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9-11 (2d Cir.1976).

A generic mark is one that refers to the common name or the nature of an article, and most courts hold that it is not entitled to trademark protection. See Thompson Medical Co. v. Pfizer Inc., 753 F.2d 208, 213 (2d Cir.1985); Abercrombie & Fitch Co., 537 F.2d at 9. A descriptive mark designates the characteristics, qualities, effects, or other features of the product, and is protectable only if shown to have become distinctive, that is, shown to have acquired a secondary meaning. Thompson Medical Co., 753 F.2d at 213-14; Miller Brewing Co. v. G. Heilman Brewing Co., 561 F.2d 75, 79 (7th Cir.1977), ...