George Basch Co., Inc. v. Blue Coral, Inc.
| Decision Date | 30 June 1992 |
| Docket Number | D,1304,Nos. 1122,s. 1122 |
| Citation | 968 F.2d 1532 |
| Parties | , 23 U.S.P.Q.2d 1351 The GEORGE BASCH CO., INC., Plaintiff-Appellee-Cross-Appellant, v. BLUE CORAL, INC., Simoniz Canada, Ltd., and Michael Moshontz, Defendants-Appellants-Cross-Appellees. ockets 91-9212, 91-9214. |
| Court | U.S. Court of Appeals — Second Circuit |
Frank J. Colucci, New York City (Colucci & Umans), for plaintiff-appellee-cross-appellant.
Louis A. Colombo, Cleveland, Ohio (R. Scott Keller, Michael K. Farrell, Baker & Hostetler; Walter, Conston, Alexander & Green, New York City, of counsel), for defendants-appellants-cross-appellees.
Before: OAKES, Chief Judge, and KEARSE and WALKER, Circuit Judges.
Along with several issues regarding the particulars of injunctive relief, this case presents the general question of whether, in an action for trade dress infringement, a plaintiff may recover a defendant's profits without establishing that the defendant engaged in deliberately deceptive conduct. The district court concluded that bad faith was not a necessary predicate for an accounting. We disagree. Accordingly, we hold that in order to justify an award of profits, a plaintiff must establish that the defendant engaged in willful deception.
The George Basch Co., Inc., ("Basch") manufactures and distributes NEVR-DULL, a cotton wadding metal polish. NEVR-DULL is packaged in a five ounce cylindrical metal can, about 3- 1/2 inches high by 3- 1/2 inches in diameter, and navy blue in color. Along with a product description and directions, the product's name is printed on the can in white block lettering. On either side of the product's name there are two red and white icons that depict what the product may be used for: the radiator grill of a car, silverware, a brass lamp, and a motor boat on a trailer.
Appellants, Blue Coral, Inc., its subsidiary Simoniz Canada Ltd., and their mutual president, Michael Moshontz (hereafter collectively referred to as "Blue Coral") manufacture and distribute a line of automotive wheel cleaning and polishing products. In both the United States and Canada, Blue Coral markets these products under the trademark ESPREE. In 1987, Blue Coral approached Basch with respect to becoming Basch's exclusive NEVR-DULL distributor in Canada. By agreement of the parties, effective July 28, 1987, Blue Coral became NEVR-DULL's exclusive Canadian distributor. NEVR-DULL was not sold under the ESPREE mark, and its Canadian trade dress remained substantially the same as the United States' version, with the exception that the French language was employed on the front of the can.
In April 1988, Blue Coral asked Basch to produce a wadding metal polish for Blue Coral to market in the United States. Blue Coral intended to add the polish to its line of ESPREE products. The parties negotiated through August of that year, at which time they ended their talks unsuccessfully due to an impasse regarding price. Blue Coral ultimately contracted with another manufacturer of metal polish.
On July 25, 1988, Blue Coral introduced EVER BRITE--the new ESPREE wadding metal polish--into the United States market. EVER BRITE was packaged in the same size cylindrical metal can used by Basch to package NEVR-DULL. The base color of the EVER BRITE can was black. On its front appeared an angled silver grid-like background. Superimposed over the center of the grid, also on an angle, were large white block letters which read "EVER BRITE." Five different types of wheel faces were depicted in the upper right hand corner of the grid. To the right of the wheel faces appeared six red and white icons that represented silverware, chrome wheels, brassware, brass beds, copperware, and car bumpers and trim.
Relations between Basch and Blue Coral turned bleak. In March 1989, Basch terminated Blue Coral's Canadian distributorship. Approximately one year later, Blue Coral introduced EVER BRITE into the Canadian market. Blue Coral's Canadian trade dress was also substantially the same as its United States' version--merely substituting French print in some places on the can where English had been used, and placing a hyphen between EVER and BRITE where none had been before.
On March 7, 1989, Basch brought this action in the United States District Court for the Eastern District of New York, Hon. Jacob Mishler, Judge. In its complaint, Basch alleged trade dress infringement in violation of § 43(a) of the Lanham Act, see 15 U.S.C. § 1125(a), unfair competition under New York law, misappropriation of confidential business information, tortious interference with business relations, and violation of the New York General Business Law, §§ 349(h) and 368-d. Blue Coral moved for summary judgment on all claims. The district court granted summary The action was tried to a jury in July 1991. The district court directed a verdict in favor of Blue Coral with respect to Basch's claim for misappropriation of confidential business information. The court also ruled that, as a matter of law, Basch was precluded from receiving damages on its trade dress infringement claim because it had failed to produce any evidence regarding actual consumer confusion or that Blue Coral acted with intent to deceive the public.
judgment for Blue Coral on the § 349(h) New York General Business Law count, but denied summary judgment on Basch's other claims.
The district court concluded, however, that despite Basch's failure to introduce evidence on either of these points, Basch could recover Blue Coral's profits if it succeeded on its trade dress infringement claim. The case was submitted to the jury by special verdict. The jury exonerated Blue Coral on the tortious interference count, but found against it on Basch's trade dress infringement claim. Accordingly, it awarded Basch $200,000 in Blue Coral's profits, allegedly stemming from Blue Coral's wrongful use of its EVER BRITE trade dress.
Blue Coral timely moved for judgment n.o.v. In its motion, Blue Coral argued that: (1) Basch had failed to prove that its NEVR-DULL trade dress enjoyed secondary meaning; (2) since Basch had not shown actual consumer confusion, or deceptive conduct on Blue Coral's part, Basch could not recover any of Blue Coral's profits; (3) it was for the district judge sitting as a court in equity, and not the jury, to make an award of profits; and (4) in any event, the $200,000 award was grossly in excess of its actual profits.
The district court denied Blue Coral's motion, and entered its judgment which included the $200,000 jury award. The judgment also contained an injunction allowing Blue Coral to sell off its remaining inventory of infringing cans, but prohibiting any future use of the existing trade dress in the United States market. The district court also denied Basch's application for attorney fees. This appeal followed.
As amended and in relevant part, § 43(a) of the Lanham Act provides:
Any person who, or in connection with ... any container for goods, uses in commerce any word, term, name, symbol or device, or any combination thereof ... which ... is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods ... by another person ... shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
15 U.S.C. § 1125(a)(1).
This provision protects what is known as a product's "trade dress" or packaging, which " 'involves the total image of a product and may include features such as size, shape, color or color combinations, texture, [or] graphics.' " LeSportsac, Inc. v. K Mart Corp., 754 F.2d 71, 75 (2d Cir.1985) (quoting John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 980 (11th Cir.1983)). Under § 43(a), in order to establish a defendant's liability for infringing upon an inherently distinctive trade dress, a plaintiff now need only prove that the defendant's trade dress will likely mislead consumers as to the source of the goods. See Two Pesos, Inc. v. Taco Cabana, Inc., --- U.S. ----, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992).
Both in its motion for judgment n.o.v. before the district court, and on appeal, Blue Coral argued that Basch did not prove that its NEVR-DULL trade dress had acquired secondary meaning. Prior to the Supreme Court's recent decision in Two Pesos, absent proof of secondary meaning Basch would have failed to establish a prima facie case of trade dress infringement. See Laureyssens v. Idea Group, Inc., 964 F.2d 131, 136 (2d Cir.1992); Coach Leatherware Co., Inc. v. AnnTaylor, Inc., 933 We are aware, though, that Blue Coral did not have the opportunity to address whether or not the jury's finding of inherent distinctiveness was legally supportable. In a different case, we might order reargument solely on this one point. However, since for reasons that follow we conclude that the jury had sufficient evidence from which it could have reasonably inferred that the NEVR-DULL trade dress enjoyed secondary meaning, reargument is unnecessary. In other words, whether the NEVR-DULL trade dress is inherently distinctive as the jury found or not, Basch established a prima facie case of Lanham Act liability against Blue Coral.
F.2d 162, 168 (2d Cir.1991); Thompson Medical Co., Inc. v. Pfizer Inc., 753 F.2d 208, 217 (2d Cir.1985). However, on appeal, we must apply the law as it exists as of the date of our decision. See United States v. Security Industrial Bank, 459 U.S. 70, 79, 103 S.Ct. 407, 413, 74 L.Ed.2d 235 (1982). Since the jury specifically found that the NEVR-DULL trade dress was inherently distinctive, under Two Pesos, Blue Coral's secondary meaning argument is now moot
A product's trade dress has acquired "secondary meaning" when "the purchasing...
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