Fed. Express v. Federal Espresso
| Decision Date | 01 August 1999 |
| Docket Number | Docket No. 98-9430 |
| Citation | 201 F.3d 168 |
| Parties | (2nd Cir. 2000) FEDERAL EXPRESS CORPORATION, Plaintiff-Appellant, v. FEDERAL ESPRESSO, INC., ANNA DOBBS doing business as Federal Espresso, JOHN DOBBS doing business as Federal Espresso, DAVID J. RUSTON doing business as Federal Espresso, Defendants-Appellees |
| Court | U.S. Court of Appeals — Second Circuit |
Appeal from an order of the United States District Court for the Northern District of New York, Rosemary S. Pooler, Circuit Judge, sitting by designation, denying motion of plaintiff Federal Express for preliminary injunction against defendant coffee sellers' use of trade name Federal Espresso, see 15 U.S.C. 1114, 1125(a), and 1125(c); New York Gen. Bus. Law 360-l.
Affirmed.
EDWARD CONAN, Syracuse, New York (Deborah H. Karalunas, Louis Orbach, Bond, Schoeneck & King, on the brief), for Plaintiff-Appellant.
JOSEPH J. HEATH, Syracuse, New York, for Defendants-Appellee.
Before: WINTER, Chief Judge, KEARSE and STRAUB, Circuit Judges.
Plaintiff Federal Express Corporation ("Federal Express") appeals from an order of the United States District Court for the Northern District of New York, Rosemary S. Pooler, Circuit Judge, sitting by designation, denying its motion for a preliminary injunction against defendants Federal Espresso, Inc., and three individuals doing business under the name "Federal Espresso" (collectively "Federal Espresso") for, inter alia, trademark infringement in violation of 32 and 43(a) of the Lanham Act, 15 U.S.C. 1114, 1125(a) (1994), and trademark dilution in violation of New York Gen. Bus. Law 360-l (McKinney Supp. 1999) (formerly 368-d), and 43(c) of the Lanham Act, as amended by the Federal Trademark Dilution Act of 1995, 15 U.S.C. 1125(c) (Supp. III 1997). The district court denied the motion on the ground that Federal Express failed to show that in the absence of such an injunction it would likely suffer irreparable harm. Federal Express challenges this finding on appeal and contends that it presented evidence sufficient to warrant preliminary injunctive relief. For the reasons that follow, we affirm.
The facts, largely as set forth in the district court's opinion, are substantially undisputed. Federal Express, incorporated in 1972, invented the overnight shipping business. It has used the name "Federal Express" since 1973. In 1984, it also registered the mark "FedEx"; and in 1994 it introduced a new corporate logo that included both names. Federal Express currently has 140,000 employees, ships 2.9 million packages per day, and has annual revenues of more than $11 billion.
Federal Express provides service in at least 210 countries and has registrations of, or pending applications to register, the name "Federal Express" in some 175 countries. Federal Express spends $35,000 to $40,000 a month to file, prosecute, and maintain its trademarks. Various stylings of the "Federal Express" mark are registered as trademarks and service marks with respect to a variety of uses, both for those integral to Federal Express's shipping operations, such as pick-up, transportation, storage, tracing, and delivery of documents, packages, and cargo, and for those that are farther removed from Federal Express's core business, such as beach towels, beverage bottles, and clothing. Those marks that are not black-and-white use the colors orange and purple.
Defendants concede that Federal Express's mark is distinctive, famous, and entitled to protection. (See Federal Espresso brief on appeal at 15, 17, 33.)
In March 1994, defendants Anna Dobbs ("Dobbs") and David J. Ruston, her brother, formed a business called New York Espresso in Syracuse, New York, for the wholesale distribution of commercial espresso machines. In April 1994, Dobbs, her husband defendant John Dobbs, and Ruston decided to change the name of the business from New York Espresso to "Federal Espresso." Ruston stated that the name was chosen in part because it was easier to recognize than "New York Espresso." Dobbs testified that the idea of using "Federal Espresso" originated when the partners were considering opening a coffee shop in Syracuse, in a building located across the street from a federal building. She also testified that she thought "Federal Espresso" would be an easy name to remember because of its similarity to the name "Federal Express," which she knew to be a well-known, registered trademark.
Accordingly, in April 1994, the Dobbses and Ruston filed an application to do business as Federal Espresso; in July 1995, they formed the defendant corporation with that name. The coffee shop envisioned for the building across from the federal building did not materialize. However, in November 1995, Dobbs opened a coffee shop, called "Federal Espresso," at a different Syracuse location (the "Pearl Street" shop). The sign over the entrance displayed the name "FEDERAL ESPRESSO" in bright yellow capitals on a dark blue background. Dobbs stated that she chose typeface and colors that were different from the Federal Express typeface and colors in order to avoid confusion. The company fashioned a circular logo consisting of a stylized lion's head inside of three rings: an outer ring formed by repetitions of the letters "OWTU," a middle ring depicting cups poised to catch falling coffee beans, and an inner ring reading "FEDERAL ESPRESSO YOUR LOCAL ROASTER." The logo was used in various color combinations for various purposes. For example, a combination of yellow, green, navy blue, brown and white were used on a sign in the shop; silver and purple were used on coffee bags; and beige and purple were used on frequent-customer discount cards.
In 1996, defendants applied to the Patent and Trademark Office ("PTO") for registration of "Federal Espresso" as a service mark. Federal Express formally opposed the application and sent defendants a cease-and-desist letter. In April 1997, Federal Express and Federal Espresso entered into a settlement agreement before the PTO Trademark Trial and Appeal Board, in which defendants withdrew their application and agreed to cease, on or before June 1, 1997, all use of "Federal Espresso." Federal Express waived its rights to seek monetary damages from defendants unless defendants subsequently breached the agreement.
In June 1997, defendants changed the name of their store to "Ex Federal Espresso." They bought yellow letters "E" and "X" and placed them at a 45-degree angle to the left of "Federal Espresso" on signs at the Pearl Street store. Dobbs testified that defendants chose that alteration because it would be inexpensive. Defendants retained supplies bearing the name "Federal Espresso," but they handwrote "EX" on most of them before using them. Some items were used without the addition of "EX"; some store signs still read "Federal Espresso" in November 1997; and the corporation's name was not changed until December 1997.
Defendants opened a second store on Water Street in Syracuse in August 1997. They have stated that they would like eventually to open additional retail operations, including in cities other than Syracuse, such as New York City.
Having learned that defendants continued after June 1, 1997, to use the mark "Federal Espresso" and were using "Ex Federal Espresso," Federal Express commenced the present action in August 1997. It principally asserted claims of service mark infringement, trademark infringement, and unfair competition under 15 U.S.C. 1114, 1125(a) and state law, and claims of dilution of the distinctive quality of its famous mark under 15 U.S.C. 1125(c) and New York Gen. Bus. Law 360-l; and it moved for a preliminary injunction.
Following limited discovery and an evidentiary hearing, the district court denied the motion in a Memorandum Decision and Order dated September 30, 1998 ("Order"), reported at 1998 WL 690903 (N.D.N.Y. Sept. 30, 1998). The court stated that if a plaintiff establishes that it is likely to prevail on a claim of infringement or dilution, irreparable harm is to be presumed. It found that Federal Express had not produced any independent evidence of likely irreparable harm, and hence a finding of such harm hinged on its likelihood of success on those claims. The court concluded that Federal Express was not likely to succeed on either type of claim.
As to the infringement claims, the court analyzed the evidence before it in light of the eight factors set forth in Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492, 495 (2d Cir.) ("Polaroid"), cert. denied, 368 U.S. 820 (1961), in order to determine whether there was a likelihood of consumer confusion. Those factors are:
1) the strength of the plaintiff's mark; 2) the similarity of plaintiff's and defendant's marks; 3) the competitive proximity of the products; 4) the likelihood that plaintiff will "bridge the gap" and offer a product like defendant's; 5) actual confusion between products; 6) good faith on the defendant's part; 7) the quality of defendant's product; and 8) the sophistication of buyers.
Gruner + Jahr USA Publishing v. Meredith Corp., 991 F.2d 1072, 177 (2d Cir. 1993); see, e.g., Arrow Fastener Co. v. Stanley Works, 59 F.3d 384, 391 (2d Cir. 1995).
The court concluded that only the first factor, the strength of the Federal Express mark, favored Federal Express. As to the second factor, the court found that
although the words FEDERAL ESPRESSO and FEDERAL EXPRESS are somewhat similar in content and sound, those similarities are far outweighed by the dissimilarities evident in the parties' use of the marks. The words are entirely different in meaning, they are different in pronunciation, and they appear different in use. The marks appear in different typefaces and colors, and as part of distinctly different logos. In addition, defendants' use of their mark is always accompanied by other indicia of origin, such as a logo, pictures of coffee cups,...
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