Fuji Kogyo Co., Ltd. v. Pacific Bay Intern., Inc., 05-5854.

• Decision Date: 23 August 2006
• Docket Number: No. 05-5854.,05-5854.
• Citation: 461 F.3d 675
• Parties: FUJI KOGYO CO., LTD, Plaintiff-Appellant, v. PACIFIC BAY INTERNATIONAL, INC., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

461 F.3d 675

FUJI KOGYO CO., LTD, Plaintiff-Appellant, v. PACIFIC BAY INTERNATIONAL, INC., et al., Defendants-Appellees.

No. 05-5854.

United States Court of Appeals, Sixth Circuit.

Argued: April 19, 2006.

Decided and Filed: August 23, 2006.

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ARGUED:

William J. Utermohlen, Oliff & Berridge, Alexandria, Virginia, for Appellant. Hugh F. Bangasser, Preston, Gates & Ellis, Seattle, Washington, for Appellees.

ON BRIEF:

William J. Utermohlen, James A. Oliff, Darle M. Short, Oliff & Berridge, Alexandria, Virginia, William L. Harbison, Sherrard & Roe, Nashville, Tennessee, for Appellant. Hugh F. Bangasser, Preston, Gates & Ellis, Seattle, Washington, Theresa L. Keyes, Preston, Gates & Ellis, Spokane, Washington, Stephen H. Price, Stites & Harbison, Nashville, Tennessee, Mark J. Patterson, Emily A. Shouse, Waddey & Patterson, Nashville, Tennessee, Kent E. Krause, Brewer, Krause, Brooks, Chastain & Burrow, Nashville, Tennessee, for Appellees.

Before: BOGGS, Chief Judge; SUTTON, Circuit Judge; and SCHWARZER, District Judge.^*

OPINION

BOGGS, Chief Judge.

Plaintiff Fuji Kogyo Co., appeals the decision of the district court dismissing its suit to enjoin its competitors, the Defendants, Pacific Bay International, Inc., Batson Enterprises, Inc., and Amtak Limited, from selling fishing line guides that allegedly infringe its registered and unregistered trademarks. The district court cancelled three of Fuji's registered trademarks because it found them to be functional and therefore unprotectable. We affirm.

I

This is a trademark infringement case brought by a Japanese maker of fishing tackle against American distributors of competing goods. The goods at issue are fishing line guides. A line guide, not surprisingly, guides fishing line along the axis of a fishing rod. It consists of a frame and ring. The ring guides the line and the frame holds the ring. The frame has legs that attach to the ring and feet that mount to the rod. Different guides have different fishing uses. For example, lighter guides are used on fly rods or fresh water spinning rods, while heavier guides are used on rods that require little casting or heavier bait. Line guides transmit the force of a caught fish and the weight of the lure to the rod. Strength in several dimensions is as important as flexibility. A line guide should be light, aerodynamic when the rod is in motion, and resist line entanglement.

Fuji is a family run company; the President is the grandson of the founder, Rindtaro Ohmura, who began manufacturing various products, including elastic watch bands, in 1945. In 1960, Fuji began to manufacture fishing tackle and, in 1965, fishing tackle exclusively. Early in its history, Fuji's competitors copied and manufactured an original Fuji watchband design to Fuji's detriment. To avoid this fate, it became Fuji's policy not to manufacture any product without some form of intellectual property protection. Accordingly, with regard to the products concerned in this case, Fuji has been granted three trademark registrations, four utility patents, and seven design patents within the United States.

Fuji initially protected its innovative product design through United States utility patents. Four patents are here relevant and they are depicted, along with their grant dates, in Figure 1. All of these patents teach a method of manufacture where the line guide is formed from a single piece of sheet metal, hole-punched, and bent into the finished shape. The guides at issue in this case are also made by stamping and forming. Figure 1a illustrates how Fuji's model N line guide is made from forming stamped metal.

Figure 1

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Figure 1a

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Next, to achieve further protection from competition, Fuji applied for and was granted seven design patents. These patents, their grant dates, and the models they relate to, if discernible from the record, are illustrated in Figure 2. Figure 2

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At least as early as 1982, Fuji enforced its patents against perceived infringement through letters to competitors and threats of litigation. However, examples of the allegedly infringing designs against which Fuji took action are not included in the record.

As its utility and design patents began to expire, the company learned of a competitor using trademark law to protect its designs. See, e.g., 15 U.S.C. §§ 1051-1141. So, in 1993, Fuji began to register its product designs as trademarks. However, only three of the four claimed trademarks in this case were eventually registered because Fuji found that the registration process was costly and time consuming, taking more than nine years. Some of this expense can be attributed to defendant Pacific Bay's opposition to Fuji's registration. Fuji's registered and claimed trademarks are illustrated in Figure 3. Fuji's trademark claims were limited, covering only a portion of the entire design—the solid portions of the LV, SV, and N models in the illustrations. The mark that is claimed is represented by legs that "essentially form[] a V-configuration." See, e.g., U.S. Trademark Reg. No. 2,499,250.

Figure 3

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Fuji distributes its products in the United States exclusively through Anglers Resource. None of the defendants manufactures line guides. The three defendants, Pacific Bay, Batson, and Amtak, all compete against Anglers Resource by importing and reselling allegedly infringing line guides.

Fuji's complaint was filed January 11, 2002. It stated causes of action for trademark infringement pursuant to 15 U.S.C. § 1114, counterfeiting of goods in violation of 15 U.S.C. § 1125(a), and parallel claims under the laws of Tennessee. All of the claims proceeded to a bench trial conducted by Judge Haynes in September 2003. In a lengthy memorandum opinion and judgment issued April 22, 2005, the district court dismissed the trademark claims at issue here and cancelled all of Fuji's asserted trademark registrations pursuant to 15 U.S.C. § 1119. See Fuji Kogyo Co. v. Pac. Bay Int'l, No. 02-42 (M.D.Tenn.) [hereinafter Fuji]. It is from this judgment that Fuji appeals.

The district court concluded that the trademarked product configurations were functional and therefore could not be protected. Id. at 61. The district court looked mainly to Fuji's own statements within its expired utility patents to make its functionality determination. Ibid. Additionally, the court noted Fuji's statements in advertising and other documents introduced as further evidence of the functionality of the product configurations. Id. at 62. The court noted that Fuji's proof reflected consumer recognition of the functionality of the designs. Ibid. Finally, the court noted that since the expert witnesses at trial were divided about the functionality of the trademarked configurations (with the court crediting the plaintiff's expert more) it held that this evidence was outweighed by Fuji's statements within its patents. Id. at 63. The court held that "the curved legs of Fuji's four line guides are wholly functional and thus are not entitled to continued trademark protection," "with any aesthetics being a byproduct" of that function. Ibid.

II

We review the legal conclusions of the district court de novo. United States v. Morgan, 435 F.3d 660, 663 (6th Cir.2006) (citing United States v. Harris, 192 F.3d 580, 584 (6th Cir.1999)). In this regard, "a district court's allocation of the burden of proof is a question of law subject to de novo appellate review." First Tenn. Bank Nat. Ass'n v. Barreto, 268 F.3d 319, 326 (6th Cir.2001). "Functionality [in a trademark case] is a factual determination reviewed only for clear error." Ferrari S.P.A. v. Roberts, 944 F.2d 1235, 1246 (6th Cir.1991) (citing LeSportsac, Inc. v. K Mart Corp., 754 F.2d 71, 77 (2d Cir.1985)). A factual conclusion is clearly erroneous only when we are "left with the definite and firm conviction that a mistake has been committed." Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948)).

III

A

A United States utility patent grants the holder a monopoly right to an invention for a term of years, generally twenty years from the date of filing. See Uruguay Round Agreements Act, § 532(a)(1), 35 U.S.C. § 154(a)(2) (1994). "[T]he ultimate goal of the patent system is to bring new designs and technologies into the public domain through disclosure." Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 151, 109 S.Ct. 971, 103 L.Ed.2d 118 (1989). "From their inception, the federal patent laws have embodied a careful balance between the need to promote innovation and the recognition that imitation and refinement through imitation are both necessary to invention itself and the very lifeblood of a competitive economy." Id. at 146, 109 S.Ct. 971. Importantly, grant of a patent requires disclosure of a specification that can be copied by future imitators:

The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.

35 U.S.C. § 112. When the patent requirements of novelty, nonobviousness, and utility are met, and the applicant reveals the "best mode contemplated" of harnessing the invention, an exclusive right is granted. See Bonito Boats, 489 U.S. at 150, 109 S.Ct. 971. However, when that period expires, the other component of the "carefully crafted...