Forschner Group, Inc. v. Arrow Trading Co. Inc.
| Decision Date | 22 July 1994 |
| Docket Number | No. 1371,D,1371 |
| Citation | 30 F.3d 348 |
| Parties | , 31 U.S.P.Q.2d 1614 The FORSCHNER GROUP, INC. and Swiss Army Brands, Ltd., Plaintiffs-Appellees, v. ARROW TRADING CO. INC., Defendant-Appellant. ocket 93-9155. |
| Court | U.S. Court of Appeals — Second Circuit |
Karen P. Clancy, New York City (Oliver P. Howes, Jr., Nims, Howes, Collison, Hansen & Lackert, of counsel), for plaintiffs-appellees.
Joseph H. Lessem, New York City (Louis S. Ederer, Paul R. Levenson, Cowan, Liebowitz & Latman, of counsel), for defendant-appellant.
Before: ALTIMARI, McLAUGHLIN and JACOBS, Circuit Judges.
The phrase "Swiss Army knife" has never enjoyed trademark protection. This appeal considers chiefly whether that phrase is descriptive of geographic origin or product quality, and therefore protectible under the false advertising provision of the Lanham Act.
Victorinox Cutlery Company ("Victorinox") of Switzerland has manufactured multifunction pocketknives since 1892. Another Swiss firm, Wenger, S.A. ("Wenger"), has manufactured multifunction pocketknives since 1908. Since early in this century, these two Swiss firms have been the only purveyors of multifunction pocketknives to the Swiss Armed Forces. American soldiers returning from Europe after World War II coined the phrase Swiss Army knife to describe the intricate and ingenious pocketknives used by the Swiss military.
In 1950, plaintiff-appellee The Forschner Group, Inc. began importing pocketknives manufactured by Victorinox into the United States, and began calling them Swiss Army knives in 1958. The United States distributor of the Wenger knives, Precise Imports Corporation, is not a party to this litigation.
Early in 1992, defendant-appellant Arrow Trading Co., Inc. ("Arrow") began marketing in the United States an inexpensive and shoddy multifunction pocketknife manufactured in China. Arrow nevertheless referred to its knife as a Swiss Army knife and embossed the words "SWISS ARMY" on one side.
The Forschner Group and its subsidiary Swiss Army Brands, Ltd. (collectively "Forschner") immediately brought an action for injunctive relief against Arrow, alleging violations of Sec. 43(a) of the Lanham Act and unfair competition under New York common law. The United States District Court for the Southern District of New York (Preska, J.), found that Arrow's use of the phrase Swiss Army knife in connection with a multifunction pocketknife that was not manufactured in Switzerland and that was not of high quality constituted a misrepresentation as to geographic origin and quality, in violation of Sec. 43(a). The district court therefore enjoined Arrow from representing that its knife was a Swiss Army knife. We vacate the order of the district court because we hold that the phrase Swiss Army knife is neither geographically nor qualitatively descriptive, and we remand for consideration of whether Arrow's use of the phrase Swiss Army knife otherwise amounts to a violation of Sec. 43(a) or unfair competition.
The facts of this appeal are not in dispute and are set forth by the district court in every useful detail, Forschner Group, Inc. v. Arrow Trading Co., 833 F.Supp. 385 (S.D.N.Y.1993). We recapitulate the facts that bear upon the issues decided.
The multifunction pocketknives made by Victorinox and Wenger are renowned for their quality and durability, and are the object of a mystique. As the district court stated, these knives "have taken on the qualities of legend, albeit less regal than Excalibur." Forschner, 833 F.Supp. at 390. Nevertheless, despite the undeniable "association between the knives, on the one hand, and Victorinox and Wenger and their distinctive histories and prominent reputations, on the other hand", id. at 389, no trademark exists--or has ever existed--for the phrase Swiss Army knife. The president and chief executive officer of Forschner testified to his understanding that no attempt has ever been made to register "Swiss Army" as a trademark for a multifunction pocketknife, because "[s]omeone from the company must sign a declaration that the mark is unique and not a mark used by another party." By a handshake agreement, Victorinox and Wenger In January 1992, Arrow began marketing a multifunction knife manufactured in China (the "Arrow knife"). The physical appearance of this knife is similar, albeit distinguishable, from that of a Victorinox or Wenger knife. Forschner, 833 F.Supp. at 387-88. As to quality, the parties do not dispute that the Arrow knife is markedly inferior. Arrow itself describes its knife as The district court, having compared them closely, found that the Arrow knife was in fact more akin to a Yugo. Id. at 388.
have agreed between themselves to share the use of the phrase: only Victorinox may call its knife the "original" Swiss Army knife, but Wenger may call its knife "genuine." Their American distributors litigated the same issue, and settled their dispute by accepting the same terms
The knives distributed by Forschner are distinctive because of (i) their red color, (ii) the cross-and-shield symbol that appears on one side, and (iii) the following inscription found on the tang of the main blade: VICTORINOX / SWITZERLAND / STAINLESS/ROSTFREI.
The Arrow knife, which is also red in color, contains the embossing "SWISS ARMY" on one side. Above those words is a cross-and-shield design distinguishable from the one that appears on knives distributed by Forschner. A small "TM" is placed between the cross-and-shield design and the letter "M" in "SWISS ARMY." The tang of the main blade of Arrow's knife is marked: STAINLESS/CHINA. The top of the box in which Arrow distributes its knives shows the words "SWISS ARMY" together with Arrow's cross-and-shield design. Adjacent to this design are the words: 11 FUNCTION/SWISS ARMY KNIFE. The side of the box states that "THE SWISS ARMY LOGO DESIGN IS A TRADEMARK USED UNDER LICENSE BY ARROW TRADING CO., INC. NEW YORK, N.Y. 10010, USA." Below this appear the words "Made in China."
The small "TM" on the side of Arrow's knife and the licensing statement on the box supposedly reference the cross-and-shield design, not the words "SWISS ARMY." Arrow allegedly uses the cross-and-shield design pursuant to a licensing agreement with its sister company (Colony Corporation), which has submitted a trademark application for the design.
On August 18, 1992, Forschner sent a cease and desist letter to Arrow. Forschner objected to the licensing statement that appears on the side of the box in which the Arrow knife is packaged. Since the phrase "Swiss Army" is not a registered trademark, Forschner asserted that Arrow did not (and could not) have a license to use "Swiss Army" as a trademark under license on its pocketknife. Accordingly, Forschner requested that Arrow
stop representing that "Swiss Army" or the Swiss Army design logo used on Arrow's packaging is a trademark used by it under license; and from using the term "Swiss Army" or "Swiss Army Knife" on or in connection with the advertising, promotion, offering for sale or sale of knives not manufactured in Switzerland.
Arrow refused.
On September 22, 1992, Forschner filed a complaint in the Southern District of New York seeking to enjoin Arrow from marketing the Arrow knife as a Swiss Army knife. Although the complaint is not entirely clear, we read Count I to allege misrepresentation as to manufacturer or source under Sec. 43(a), 15 U.S.C. Sec. 1125(a)(1)(A) (1988), a claim which includes "passing off"; Count II to allege false advertising in respect of geographic origin and quality under Sec. 43(a), 15 U.S.C. Sec. 1125(a)(1)(B); and Count III to allege unfair competition under New York common law.
The proceedings in the district court focused almost exclusively on Count II, in which Forschner alleged that, with reference to a multifunction pocketknife, the phrase Swiss Army denotes a knife that is manufactured in Switzerland and that is of the same high quality as the knives produced by Victorinox and Wenger. Therefore, Forschner contended, Arrow's use of the phrase Swiss Army knife in connection with Arrow's poorly-crafted During the bench trial, Forschner and Arrow presented the results of consumer surveys prepared by their respective experts. While each party disputes the significance of the other's survey, it is sufficient for purposes of this appeal to note that (i) roughly 40% of the relevant public believes that a Swiss Army knife is manufactured in Switzerland, 1 and (ii) between 34% and 43% of the relevant public believes that the phrase Swiss Army knife denotes a knife of "high quality."
Chinese-manufactured knife constitutes false advertising.
Arrow argued that this survey evidence demonstrates that a Swiss Army knife does not necessarily signify Swiss manufacture or high quality. Instead, Arrow argued that the phrase Swiss Army knife is a generic term for a multifunction pocketknife, of any quality, manufactured anywhere.
After trial, the district court made the following findings of fact:
-- There is a "clear association between the term 'Swiss Army knife' and knives of high quality manufactured in Switzerland." Forschner, 833 F.Supp. at 390.
-- "[C]onsumers perceive the [Arrow] knife to be of high quality and produced in Switzerland because Arrow represents it to be a Swiss Army knife through the use of the words 'SWISS ARMY' and the cross-and-shield design." Id. at 391.
-- There is a likelihood that ordinary consumers will be "misled, or indeed simply confused as to the geographic origin and quality of the [Arrow] knife." Id.
-- The Arrow knife, "whether considered alone or in its box, is perceived by the purchasing public to be a Swiss Army knife--a high-quality, Swiss-made product--which it is not." Id. at 392.
Thereupon, the district court enjoined Arrow from...
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