Forschner Group, Inc. v. Arrow Trading Co., Inc.
| Decision Date | 04 September 1997 |
| Docket Number | 1382,Nos. 1249,D,s. 1249 |
| Citation | 124 F.3d 402 |
| Parties | The FORSCHNER GROUP, INC.; Swiss Army Brands, Ltd., Plaintiffs-Appellants-Cross-Appellees, v. ARROW TRADING CO., INC., Defendant-Appellee-Cross-Appellant. ockets 96-7945(L), 96-7999(XAP). |
| Court | U.S. Court of Appeals — Second Circuit |
Oliver P. Howes, Jr., Nims, Howes, Collison, Hansen & Lackert, New York City (Karen P. Clancy, Nims, Howes, Collison, Hansen & Lackert, New York City, on brief), for Plaintiffs-Appellants-Cross-Appellees.
Joseph H. Lessem, Cowan, Liebowitz & Latman, P.C., New York City (Louis S. Ederer, Cowan, Liebowitz & Latman, P.C., New York City, on brief), for Defendant-Appellee-Cross-Appellant.
BEFORE: OAKES, KEARSE and ALTIMARI, Circuit Judges.
Plaintiffs-appellants-cross-appellees The Forschner Group, Inc. and its subsidiary Swiss Army Brands, Ltd. (collectively "Forschner") appeal from a judgment and order of the United States District Court for the Southern District of New York (Preska, J.) enjoining defendant-appellee-cross-appellant Arrow Trading Co., Inc. ("Arrow") from advertising, promoting or selling any multifunction pocketknife represented as a "Swiss Army knife" unless: (1) the phrase is immediately preceded by or immediately followed by the name of the defendant in such a way as to clearly designate its origin; (2) the term "original" is not used to describe the knife; and (3) the language "the Swiss Army logo design is a trademark used under license by Arrow Trading Co., Inc.," or any similar language, is not used. Subsequent to the entry of the judgment, the district court found Arrow in contempt for its failure to comply with the judgment and order when Arrow promoted its knives at a trade show without properly designating their origin.
On appeal, Forschner challenges the scope of the district court's injunction, arguing that the district court erred in failing to enjoin Arrow from using the color red on its knife handle or in any marketing materials in conjunction with the phrase "Swiss Army knife." On cross-appeal, Arrow principally challenges the district court's subsequent interpretation of its judgment and order at the contempt hearing, arguing that the district court improperly enjoined Arrow from (1) using another name or mark to indicate the origin of its goods and (2) using the term "Swiss Army knife" in a purely generic sense. Because we find both Forschner's and Arrow's arguments unavailing, we affirm the district court in full. Inasmuch as the cross-appeal seeks relief from the order holding Arrow in contempt, we dismiss the cross-appeal for lack of appellate jurisdiction.
This trademark and unfair competition case returns to this Court after vacatur and remand, see Forschner Group, Inc. v. Arrow Trading Co., 30 F.3d 348 (2d Cir.1994), to the district court, see Forschner Group, Inc. v. Arrow Trading Co., 904 F.Supp. 1409 (S.D.N.Y.1995). The undisputed facts of this appeal are set forth by the district court in its original decision, see Forschner Group, Inc. v. Arrow Trading Co., 833 F.Supp. 385 (S.D.N.Y.1993), and familiarity therewith is presumed. We recapitulate only the facts relevant to this appeal.
Since the beginning of this century, two Swiss firms, Victorinox Cutlery Company ("Victorinox") and Wenger, S.A. ("Wenger"), have been the only purveyors of the well-known "Swiss Army knife" to the Swiss Armed Forces. Victorinox first designed its multifunction pocketknives in 1891, and Wenger began producing its knife in 1908. The While the phrase "Swiss Army knife" has never enjoyed trademark protection, the two Swiss firms have agreed between themselves to share the use of the phrase. Victorinox has exclusive use of the term "original" Swiss Army knife, Wenger may call its knife "genuine," and their American distributors have accepted the same terms with respect to promoting the pocketknives. Forschner has continuously imported Swiss Army knives manufactured by Victorinox since 1950. Precise Imports Corporation, which is not a party to this litigation, distributes Wenger multifunction pocketknives in the United States.
knives achieved prominence in the United States when American soldiers returning from Europe after World War II brought this well-crafted, intricate pocketknife used by the Swiss military home with them. The Swiss Army knife is renowned for its quality and durability, familiar red color, its multi-purpose blades and utensils, and its cross-and-shield insignia.
Early in 1992, Arrow began marketing a red pocketknife containing multiple utensils manufactured in China (the "Arrow knife") and called it a Swiss Army knife. Despite a similar physical appearance, it is undisputed that the Arrow knife is comparatively inexpensive, is markedly inferior and fails to meet the standard of high quality found in a Swiss Army knife distributed by Forschner.
On September 22, 1992, Forschner commenced an action in the United States District Court for the Southern District of New York (Preska, J.) seeking to enjoin Arrow from marketing knives made in China as Swiss Army knives. The Complaint alleged three causes of action: Count I alleged misrepresentation as to the characteristics, qualities and origin of its goods pursuant to § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A) (1988), a claim which included "passing off"; Count II alleged false advertising with respect to geographic origin and quality pursuant to § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B); and Count III alleged unfair competition under New York State common law. After a bench trial, the district court found that Arrow's use of the phrase "Swiss Army knife" in connection with a multifunction pocketknife that was manufactured outside of Switzerland and was of inferior quality constituted a misrepresentation as to geographic origin and quality, in violation of § 43(a) of the Lanham Act. Forschner, 833 F.Supp. at 398. Thus, the district court enjoined Arrow's use of the phrase "Swiss Army knife" to advertise, promote or sell its knives. Id. at 398.
Arrow appealed and this Court vacated the district court's order, holding as a matter of law that the phrase "Swiss Army knife", as applied to a multifunction pocketknife that was not manufactured in Switzerland, was neither geographically nor qualitatively descriptive and thus was not deceptive under § 43(a) of the Lanham Act. Forschner, 30 F.3d at 350. This Court remanded the case for consideration of whether Arrow's remaining claims--essentially alleging unfair competition under both federal law and New York common law--had been proved so as to provide alternative grounds to deny, restrict or circumscribe Arrow's use of the phrase "Swiss Army knife." Id.
On remand, the district court rejected Forschner's trademark claims, but found the trade dress of Arrow's knife, particularly its red color, had substantially increased the likelihood of consumer confusion, and concluded that Forschner had adequately supported its allegations of false designation of origin, under 15 U.S.C. § 1125(a)(1)(A), and unfair competition, under New York common law. Forschner, 904 F.Supp. at 1429. In its decision, the district court defined the scope of relief to which Forschner was entitled as follows:
[t]he relief granted should go only so far as to alleviate the source confusion caused by Arrow, and no further. The relief named here is designed to protect Forschner from unfair competition without unnecessarily burdening Arrow. I thus order that Arrow, although free to use the phrase "Swiss Army knife" to designate its product, must amply distinguish it from the Forschner product. Two salient means that come to mind are changing the color of its knife to a color not used by Forschner Id. at 1428.
and adding its name to its designation of its knife....
Thereafter, the parties submitted proposed judgments, and on April 24, 1996, the district court issued an Order and Judgment (based on Arrow's proposed order) enjoining Arrow from:
advertising, promoting, selling or offering to sell any multifunction pocketknife represented as a Swiss Army knife, UNLESS:
(1) the phrase "Swiss Army knife" is immediately preceded by (as in "Arrow Swiss Army Knife"), or immediately followed by (as in "Swiss Army Knife by Arrow" or "Swiss Army Knife from Arrow Trading Co."), the name of the defendant in such a way as to clearly designate its origin, although in no case should the size or presentation of the type designating origin be smaller or less prominent than the type used in the phrase Swiss Army knife;
(2) the term "original" is not used to describe the knife; and
(3) the language "the Swiss Army logo design is a trademark used under license by Arrow Trading Co., Inc.," or any similar language, is not used.
Thirteen days after entry of Judgment, Arrow promoted its knives as the "Classic" Swiss Army knife at the Premium Show at the Jacob Javits Center in New York. At this trade show, Arrow distributed a flyer which used the phrase "Swiss Army knife," without using any name or designation of origin either before or after it. While the words "Swiss Army knife" were displayed in the center of the heading with great prominence, the words "Arrow Trading Group" were exhibited in small letters in the upper right hand corner of the flyer. The text of the flyer used the term "Swiss Army knife" three times without the name "Arrow" before or after it. In addition, Arrow used a video at the trade show to promote its knives which used the phrase "Swiss Army knives" without mentioning the name "Arrow" at all.
On Forschner's motion, the district court held Arrow in contempt of its order, which required that any use by Arrow of the phrase "Swiss Army knife" must be preceded or followed by "Arrow or Arrow Trading Co." After an evidentiary hearing, the district court found Arrow's contempt to be willful.
On May 6, 1996, Forschner...
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