Ideal Toy Corp. v. Plawner Toy Mfg. Corp.

• Decision Date: 26 July 1982
• Docket Number: No. 81-3119,81-3119
• Citation: 216 USPQ 102,685 F.2d 78
• Parties: IDEAL TOY CORPORATION v. PLAWNER TOY MFG. CORP., Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 78

685 F.2d 78

216 U.S.P.Q. 102

IDEAL TOY CORPORATION v. PLAWNER TOY MFG. CORP., Appellant.

No. 81-3119.

United States Court of Appeals, Third Circuit.

Argued June 16, 1982.

Decided July 26, 1982.

Carella, Byrne, Bain & Gilfillan, Franklyn C. Steinberg, III, Newark, N. J., on the brief, for appellant; John N. Bain, Newark, N. J. (argued), of counsel.

Curtis, Morris & Safford, P. C., New York City, for appellee; Lewis H. Eslinger, New York City (argued), Pasquale A. Razzano, Richard M. Goldberg, Dickerson M. Downing, James A. Finder, New York City, of counsel.

Before ALDISERT, GIBBONS, and HIGGINBOTHAM, Circuit Judges.

OPINION OF THE COURT

ALDISERT, Circuit Judge.

The major question for decision in this appeal from a preliminary injunction order barring a toy distributor from marketing a puzzle allegedly infringing upon the trademark rights of a competitor is whether the district court's order is sufficiently specific to give the parties fair notice of the conduct prohibited. A threshold issue is whether the district court erred in granting the preliminary injunction. We decide that the preliminary injunction was properly entered, but we will amend the language of the order. We affirm the judgment of the district court as modified.

I.

Pursuant to an exclusive arrangement with the Hungarian inventor, Erno Rubik, appellee Ideal Toy Corporation distributes the "Rubik's Cube" puzzle. Ideal packages its puzzle in a clear plastic cylinder that is sealed to a black plastic base by a strip of black and gold tape displaying the legend "Rubik's Cube." The cube itself is composed of 26 smaller cubes presenting a total of 54 faces colored with six primary colors-red, blue, green, yellow, orange, and white-on a black gridwork. When sold, the cube is aligned to present six monochromatic faces, the "start position." Ideal holds no patent rights to Rubik's Cube. Appellant Plawner Toy Manufacturing Corporation imports and distributes an identical cube which it calls the "Wonderful Puzzler" and sells in packaging identical to Ideal's, except for the lettering on the tape strip which reads "Wonderful Puzzler" instead of "Rubik's Cube." Unlike Ideal, Plawner sells its cube puzzle in a variety of sizes and configurations.

Seeking to enjoin distribution of the Wonderful Puzzler, Ideal sued Plawner in the district court claiming unfair competition and common law trademark infringement under New Jersey law, appending these claims to a complaint that Plawner had violated § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). ¹ Specifically, Ideal alleged that Plawner had, without consent, imitated the packaging and trade dress ² of Rubik's Cube so as to confuse the public and to palm off Plawner's product as Ideal's. Pending resolution of these claims, Ideal moved for a preliminary injunction. The district court found, inter alia, that Ideal was likely to prevail on the merits of its claims, and it granted the preliminary injunction. ³ Plawner appeals, invoking our jurisdiction under 28 U.S.C. § 1292(a)(1).

II.

A.

In SK&F, Co. v. Premo Pharmaceutical Laboratories, 625 F.2d 1055, 1066 (3d Cir. 1980), we set forth the limitations of our review:

(T)he scope of our review of a trial court's discretionary ruling on an application for preliminary injunctive relief is narrow.

Unless the trial court abuses (its) discretion, commits an obvious error in applying the law, or makes a serious mistake in considering the proof, the appellate court must take the judgment of the trial court as presumptively correct.

A. O. Smith Corp. v. FTC, 530 F.2d 515, 525 (3d Cir. 1976). Moreover, the burden on an appellant seeking reversal of a trial court's determination on an application for a preliminary injunction is a heavy one. Oburn v. Shapp, 521 F.2d 142, 147 (3d Cir. 1975); Scooper Dooper, Inc. v. Kraftco Corp., 460 F.2d 1204, 1205 (3d Cir. 1972) (per curiam).

We turn now to appellant's principal contentions.

B.

Plawner accuses Ideal of attempting to circumvent its lack of a patent monopoly by using trademark law as a device to secure equivalent insulation from competition. Plawner relies on Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964), and its companion, Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669 (1964), in which the Supreme Court held that state laws of unfair competition may not be used to impose liability for copying an unpatented product and thereby effectively to produce a perpetual patent. Because of the strong policy against affording this equivalent protection, Plawner contends that the district court should have required Ideal to demonstrate likelihood of success on the merits by clear and convincing evidence.

This argument need not long detain us. We examined the effect of the intersection of federal patent law and state trademark law in SK&F, noting that although the Supreme Court held that state unfair competition laws must accommodate federal patent law policies, it recognized and did not disturb the states' power to prevent consumers from being misled as to the source of a product. 625 F.2d at 1064 (citing Sears, 376 U.S. at 232, 84 S.Ct. at 789). Thus, even after Sears and Compco, an element of a product cannot be afforded trademark protection if it is functional, see Keene Corp. v. Paraflex Industries, 653 F.2d 822, 824 (3d Cir. 1981), but where the infringed design element is non-functional, i.e., "(w)hen the design itself is not significantly related to the utilitarian function of the product, but is merely arbitrary, then it is entitled to protection as a design trademark if it has acquired the distinctiveness necessary to achieve a secondary meaning," id. at 825. Sears and Compco do not preclude a court from affording protection from infringement of a design element that has achieved secondary meaning and is non-functional, notwithstanding the absence of a patent. Those decisions may limit the number and scope of the situations in which state trademark law protection will be available, but they do not diminish the level of protection available to those plaintiffs for whom the state trademark laws retain protective power, and they do not affect the quantum of evidence that is prerequisite to protection.

C.

We turn now to appellant's contentions that the district court erred in determining non-functionality. The Supreme Court has recently reminded us that, in general, a product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article. Inwood Laboratories v. Ives Laboratories, --- U.S. ----, ---- n. 10, 102 S.Ct. 2182, 2186 n. 10, 72 L.Ed.2d 606 (1982). This formulation is congruent with our recent statement that a feature of goods is considered non-functional if "the element of the product serves no purpose other than identification." SK&F, 625 F.2d at 1063.

The district court acknowledged that some distinctive marks are necessary to differentiate the faces of the cube, but it found that "given the wide variety of possible marks, the actual colors and patches used are non-functional." Ideal Toy Corp. v. Plawner Toy Mfg. Corp., Civ. No. 81-1431 (D.N.J. Oct. 21, 1981), reprinted in app. at 204a, 207a. In other words, the district court effectively found that the particular colors used in Ideal's puzzle serve "no purpose other than identification." The court found that if the colors are non-functional, it would follow that the start position, too, is non-functional: "Any designation which would enable the user to return to a given starting point would suffice. By its very nature, to satisfactorily complete the puzzle, one must end where one has begun." Id. at 208a. The court also found the packaging to be "almost incidental" and therefore non-functional. Within the narrow limits of our review of a preliminary injunction, we conclude that the district court did not err when it found the Rubik's Cube packaging and trade dress non-functional. ⁴

D.

Ideal was also required to demonstrate that secondary meaning had attached to these elements. "To establish secondary meaning, a manufacturer must show that, in the minds of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product itself." Inwood Laboratories, --- U.S. at ---- n.11, 102 S.Ct. at 2186 n.11. When the primary significance of the trade dress to a consumer is in designating not the product but its producer, the trade dress has acquired secondary meaning. Alfred Dunhill of London, Inc. v. Kasser Distillers Products Corp., 350 F.Supp. 1341, 1359 (E.D.Pa.1972), aff'd mem., 480 F.2d 917 (3d Cir. 1973). In testing secondary meaning, the court may consider factors such as length of use, buyer association, extent of sales and advertising, and the fact of copying. Faberge, Inc. v. Saxony Products, Inc., 605 F.2d 426, 428 (9th Cir. 1979); Locatelli, Inc. v. Tomaiuoli, 129 F.Supp. 630, 634 (D.N.J.1955).

That there has been extensive copying of Rubik's Cube was demonstrated by an admission made by appellant's counsel at the hearing on the preliminary injunction:

So in answer to the question that started this whole dissertation, yes, (defendant's cube puzzle is) a "knockoff" (of Ideal's Rubik's Cube puzzle), the same size, same shape, same colors. There's no doubt about that. And the law gives me the right to do that because it's a hot selling thing.

Transcript at 40. Although this admission of copying is itself persuasive evidence of secondary meaning, Ideal proffered other circumstantial evidence that the public associated the appearance of the cube with Ideal's product: that it had directed public attention to the trade dress via almost two million dollars worth of advertising; that Ideal had used the trade dress and package design for approximately one year; and that its puzzle was highly successful, achieving over five million unit sales in...