Cuisinarts, Inc. v. Robot-Coupe Intern. Corp.

• Decision Date: 16 February 1984
• Docket Number: No. 81 Civ. 731-CSH.,81 Civ. 731-CSH.
• Citation: 580 F. Supp. 634
• Parties: CUISINARTS, INC., Plaintiff, v. ROBOT-COUPE INTERNATIONAL CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of New York

580 F. Supp. 634

CUISINARTS, INC., Plaintiff, v. ROBOT-COUPE INTERNATIONAL CORPORATION, Defendant.

No. 81 Civ. 731-CSH.

United States District Court, S.D. New York.

February 16, 1984.

Goldenbock & Barell, New York City, for plaintiff; Arthur M. Handler, Robert S. Goodman, Michael M. Meadvin, New York City, of counsel.

Alexander & Green and Dewey, Ballantinie, Bushby, Palmer & Wood, New York City, for defendant; Robert E. DeRight, Jr., Kenneth F. Fagan, and Thomas V. Heyman, New York City, of counsel.

MEMORANDUM OPINION AND ORDER

HAIGHT, District Judge:

Six motions await decision in this much litigated case which forms one front in a bitter commercial war between the domestic marketers of two high quality food processors. The combatants are plaintiff Cuisinarts, Inc. and defendant Robot-Coupe International Corp. (hereinafter "RC-I"). The processors they market are called the "Cuisinart" and the "Robot-Coupe" respectively. This Court has announced numerous opinions, oral and written, during the course of the litigation. One is reported at 509 F.Supp. 1036 (S.D.N.Y.1981). Familiarity with all is assumed in what follows.

The six pending motions are:

(1) RC-I's motion under Rule 56, F.R. Civ.P., for partial summary judgment dismissing Cuisinarts' claim for monetary relief and attorney's fees.

(2) Cuisinarts' motion to amend its complaint so as to add as a party defendant Robot-Coupe S.A., a French company, the manufacturer of the Robot-Coupe food processor, and RC-I's corporate parent.

(3) Cuisinarts' motion for an order striking RC-I's third through ninth affirmative defenses.

(4) Cuisinarts' objections to the order of Magistrate Gershon vacating depositions of RC-I's French directors.

(5) Cuisinarts' objections to the magistrate's ruling which refused to compel RC-I to answer a particular interrogatory.

(6) Cuisinarts' motion for a protective order staying discovery on RC-I's affirmative defenses and counterclaims.

I will not describe the prior litigation in detail. It is sufficient for present purposes to say that the parties have mounted elaborate advertising campaigns in efforts to keep or capture the American market. Two of RC-I's ads form the subject matter of this case. Cuisinarts claimed that those particular ads were false and misleading in violation of sections 32 and 43 of the Lanham Act, 15 U.S.C. §§ 1114, 1125. Other RC-I ads were not challenged by Cuisinarts. As to the two ads in question, Cuisinarts sought injunctive relief. It also sought to recover RC-I's profits, an accounting for that purpose, the cost of reparative advertising, and attorney's fees under section 35, 15 U.S.C. § 1117. Finally, pendent claims are asserted under New York statute and common law.

I preliminarily enjoined the two ads in question, while denying a preliminary injunction, broader in scope. Those ads have not been republished. RC-I has represented, first to Magistrate Gershon and now to me, that it would be willing to have those injunctions made permanent. Within that context, RC-I moves for partial summary judgment dismissing Cuisinarts' monetary claims. If that motion is well founded the litigation is at an end and the other pending motions mooted. I shall therefore first address RC-I's partial summary judgment motion.

The motion is made after very considerable discovery. The presidents of Cuisinarts and RC-I have been lengthily deposed. So have RC-I's vice president, executives of its advertising agencies, and attorneys who advised RC-I on possible unfair competition liability in connection with the advertising campaign in general and those ads in particular. Cuisinarts has responded to RC-I's written interrogatories.

On this record, RC-I argues that Cuisinarts' claims for monetary damages and attorney's fees fail as a matter of law. Two reasons are given. The first is that trademark counsel reviewed, edited and approved the ads before they were published. The second is that Cuisinarts "is not able to establish either a loss of profits or sales and thus has not suffered any actual harm." RC-I main brief at 12.

The factual premise for this second proposition is apparently conceded. Cuisinarts makes no claim for lost profits or sales in its answers to interrogatories; and its sur-reply memorandum remarks at 11: "Since Cuisinarts does not base its damage claims on decreased sales, Cuisinarts' sales figures are irrelevant." But Cuisinarts asserts money claims, nonetheless. They are for the cost of advertising to repair the confusion engendered by RC-I's infringing ads; RC-I's profits; and Cuisinarts' attorney's fees and costs.

RC-I argues that because Cuisinarts claims neither a loss of profits nor of sales, "no basis exists for monetary relief." Main brief at 12. I cannot accept that submission. It is well settled that monetary relief, in a broader sense, may be awarded in the absence of actual damages suffered by the trademark owner. Specifically, Cuisinarts claims RC-I's profits. "The awarding of profits is designed to be a deterrent to those who would wilfully infringe a competitor's mark." Vuitton et Fils, S.A. v. Crown Handbags, 492 F.Supp. 1071, 1077 (S.D.N.Y.1979), aff'd, 622 F.2d 577 (2d Cir.1980), citing W.E. Bassett Co. v. Revlon, Inc., 435 F.2d 656 (2d Cir.1970). "In a proper case the plaintiff may also be able to recover defendant's profits without demonstrating his own actual damages." Vuitton, supra, at 1077, citing Kiki Undies Corp. v. Promenade Hosiery Mills, Inc., 308 F.Supp. 489 (S.D.N.Y.1969).

The question therefore arises whether this is a "proper case" for the monetary relief Cuisinarts seeks. That is a determination for the Court as Chancellor, since section 35 of the Lanham Act, 15 U.S.C. § 1117, provides that Cuisinarts' remedies are "subject to the principles of equity."¹ The circumstances of each case must be considered. A defendant's infringement of plaintiff's trademark does not automatically entitle plaintiff to an accounting, even where (as here) the parties are direct competitors. Champion Spark Plug Co. v. Sanders, 331 U.S. 125, 67 S.Ct. 1136, 91 L.Ed. 1386 (1947); Monsanto Chemical Co. v. Perfect Fit Products Mfg. Co., 349 F.2d 389, 393 (2d Cir.1965). The trial court's task is to "endeavor to adopt its relief to the general equities of the particular situation, as nearly as is possible to do so, in designing relief for unfair competition..." Dad's Root Beer v. Doc's Beverages, 193 F.2d 77, 82-83 (2d Cir.1951) (Clark, Ct.J.), quoted by Chief Judge Lumbard in Monsanto, supra, at 394.

Judge Lumbard's later opinion in W.E. Bassett Co. v. Revlon, Inc., supra, establishes the guidelines for trial courts' discretion in this circuit. Bassett holds:

"An accounting should be granted if the defendant is unjustly enriched, if the plaintiff sustained damages from the infringement, or if an accounting is necessary to deter a willful infringer from doing so again." 435 F.2d at 664.

These justifications for an accounting are stated in the disjunctive. Any one will do.

Cuisinarts does not claim lost sales or profits. Therefore it has not sustained damages, and the second of the three reasons for an accounting does not arise.² I am left with the first and third rationales for an accounting: the defendant's unjust enrichment, and the need to deter a wilful infringer. The parties focus most of their arguments upon the latter proposition. I address it first.

In doing so, I am led directly to what counsel refer to in the briefs as RC-I's "advice of counsel" defense.

RC-I says, in essence, that it knew Cuisinarts would closely scrutinize RC-I's competitive advertising campaign. RC-I intended to make use of the Cuisinarts name and trademark, without the latter's consent. Such use does not violate the Lanham Act, so long as misrepresentations are not made. Smith v. Chanel, Inc., 402 F.2d 562, 563-64 (9th Cir.1968); Societe Comptoir De L'Industrie Cotonniere Etablissements Boussac v. Alexander's Department Stores, Inc., 299 F.2d 33, 36 (2d Cir. 1962). But the subject is obviously sensitive. RC-I accordingly retained general and trademark counsel to pass upon the legality of each ad which mentioned Cuisinarts. Counsel questioned RC-I executives on the factual accuracy of the advertising copy. Counsel sent further telexes of inquiry to Robot-Coupe, S.A. executives in France. Counsel sat at the side of RC-I's advertising agency creative staff, joggling their elbows and insisting upon text changes when they did not approve of what they saw. No RC-I ad was published until counsel had, in Cuisinarts' accurate word, "vetted" it for legal probity. In these circumstances, RC-I contends, it cannot in law be regarded as a wilful, deliberate, fraudulent infringer of the Cuisinarts trademark.

Cuisinarts replies that the Court found the ads to be facially false: that it is not simply a question of counsel's opinion about "the legal significance of words and phrases," as RC-I pretends (RC-I reply brief at 2). Secondly, Cuisinarts says that the issue of RC-I's intent does not lend itself to disposition by summary judgment.

It is true that I found the two ads in question to be facially and factually false. One is known as the "It Used To Be Pronounced Cuisinart" ad. The other is the "scoreboard" ad: "Robot-Coupe: 21/Cuisinart: 0." I have previously given the reasons for my findings, and do not repeat them here. But it does not follow from those findings alone that RC-I wilfully and deliberately infringed. RC-I's counsel concluded that the ads were not misleading. No one suggests that counsel did not hold that opinion sincerely and in good conscience. I do not agree with counsel's reasoning, but that is a different matter. The ads are misleading because a district judge has said that they are. If an appeal had been taken and the circuit judges — or two of them, for that matter — had disagreed, then the ads would have instantly shed their misleading character and become pure as the driven snow. Such...