International Jensen, Inc. v. Metrosound U.S.A., Inc., 92-55490

• Citation: 28 USPQ2d 1287,4 F.3d 819
• Decision Date: 13 September 1993
• Docket Number: No. 92-55490,92-55490
• Parties: INTERNATIONAL JENSEN, INCORPORATED, Plaintiff-Appellant, v. METROSOUND U.S.A., INC., dba L.A. Sound, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 819

4 F.3d 819

28 U.S.P.Q.2d 1287

INTERNATIONAL JENSEN, INCORPORATED, Plaintiff-Appellant, v. METROSOUND U.S.A., INC., dba L.A. Sound, Defendant-Appellee.

No. 92-55490.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted July 12, 1993.

Decided Sept. 13, 1993.

Karen Pszanka-Layng (Robert E. Browne with her on the brief), Vedder, Price, Kaufman & Kammholz, Chicago, IL, for plaintiff-appellant.

Patricia S. Smart, Smart & Bostjancich, Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, Chicago, IL, for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before: WOOD, Jr., ^* REINHARDT, and RYMER, Circuit Judges.

HARLINGTON WOOD, Jr., Senior Circuit Judge:

A manufacturer seeks a preliminary injunction barring a rival company from producing similar looking audio speakers. The district court denied the preliminary injunction and, for the reasons stated below, we affirm.

I. BACKGROUND

International Jensen, Inc., the Appellant, manufactures car and truck loudspeakers. The speakers are covered by a detachable metallic grille; Jensen's name appears in a rectangular box on the lower portion of the grille. Removing the grille exposes the speaker cone. The cone is attached to the speaker housing, the box which encloses the speaker, by means of a "surround." Since the early 1970s Jensen has colored the surround in cyan blue. The company describes this package as being the "Blue Surround trademark and trade dress." The company, for the first time, filed federal applications for trademark registration of the "Blue Surround" in April 1990. The application has not yet been approved.

Late in 1989, Metrosound U.S.A. Inc., the Appellee, introduced a new line of car speakers under the L.A. SOUND label. In its own words, Metrosound tried to link its products with the "fun Southern California lifestyle, including activities associated with the beach and ocean." To that end, the company used a blue wave as part of its L.A. SOUND logo, a surfer figure in its advertising and promotional materials, and a blue surround for its speaker.

Jensen became aware of Metrosound's new product at the 1990 International Summer Consumer Electronics Show in Chicago, Illinois, and subsequently filed a motion for a preliminary injunction against Metrosound in the United States District Court for the Northern District of Illinois in January 1991. Jensen alleged violations of the Lanham Trade-Mark Act ("Lanham Act"), 15 U.S.C. Sec. 1051 et seq., the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS 510/2, and the Illinois Anti-Dilution Statute, 765 ILCS 1035/15. The court transferred the case to the Central District of California.

Judge Waters heard oral arguments in November 1991 and denied the motion for a preliminary injunction in March 1992. The court found that due to functional constraints, most car loudspeakers are generally similar in appearance. Surrounds necessarily mirror the size and shape of the speaker cone and as a result are oval or circular. The court found many companies at one time or another have sold speakers with colored surrounds, including blue surrounds. Jensen was found to have not given any indication on its speakers or promotional materials that it specifically claimed trademark rights in the use of a blue surround. The company also failed to file suit against numerous manufacturers who also sold speakers with blue surrounds.

II. DISCUSSION

On appeal, Jensen claims the district court erred by holding: (1) Jensen failed to establish a reasonable likelihood of success on the merits; (2) the balance of hardships favored Metrosound; and (3) a preliminary injunction to Jensen is not in the public interest.

A. Standard of Review

We will not set aside a trial court's decision in granting or denying a preliminary injunction unless the court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact. Vision Sports, Inc. v. Melville Corp., 888 F.2d 609, 612 (9th Cir.1989); Regents of Univ. of Cal. v. American Broadcasting Cos., 747 F.2d 511, 515 (9th Cir.1984). An abuse of discretion is "a plain error, discretion exercised to an end not justified by the evidence, a judgment that is clearly against the logic and effect of the facts as are found." Washington Capitols Basketball Club, Inc. v. Barry, 419 F.2d 472, 476 (9th Cir.1969) (citation omitted). We will not say the district court abused its discretion in denying a preliminary injunction where there is great doubt as to the validity of the trademark. Dymo Indus., Inc. v. Tapeprinter, Inc., 326 F.2d 141, 143 (9th Cir.1964).

B. Preliminary Injunction

Traditionally, a court may issue a preliminary injunction if it determines: (1) the moving party will suffer irreparable injury if the relief is denied; (2) the moving party will probably prevail on the merits; (3) the balance of potential harm favors the moving party; and, depending on the nature of the case, (4) the public interest favors granting relief. Cassim v. Bowen, 824 F.2d 791, 795 (9th Cir.1987). This court has also adopted an "alternative standard" under which the moving party may meet its burden by demonstrating either: (1) a combination of probable success on the merits and the possibility of irreparable injury if relief is not granted; or (2) the existence of serious questions going to the merits and that the balance of hardships tips sharply in its favor. Id. The alternative standards "are not separate tests but the outer reaches of a single continuum." Regents of Univ. of Cal., 747 F.2d at 515. Essentially, the trial court must balance the equities in the exercise of its discretion. Id.

Judge Waters found that under the traditional and alternative standards, Jensen failed to meet its burden of demonstrating it was entitled to a preliminary injunction.

C. Probability of Success on the Merits

Jensen argues the district court erred in concluding it was not likely to prevail on the merits of its claims. Those claims include both federal and state law actions; we will address each separately.

1. Lanham Act

In the Lanham Act, Congress defined the word "trademark" as being a mark that identified a product's source and distinguished the product from others. The definition now reads as follows:

The term "trademark" includes any word, name, symbol, or device, or any combination thereof--

(1) used by a person, or

(2) which a person has a bona fide intention to use in commerce and applies to register on the principal register established by this chapter,

to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.

15 U.S.C. Sec. 1127.

In contrast to a trademark, "trade dress" refers to the "total image of a product" and may include features such as size, shape, color, color combinations, texture or graphics. Vision Sports, 888 F.2d at 613. A seller's adoption of a trademark or trade dress that is confusingly similar to a competitor's constitutes unfair competition and is actionable under section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a). See Le Sportsac, Inc. v. K Mart Corp., 754 F.2d 71, 75 (2d Cir.1985).

Jensen maintains the blue surround is its unregistered trademark and argues that the "blue surround in combination with a black case, a black speaker cone, a dark metallic grille, and the product name in a rectangular box on the lower portion of the grille is fully protectable as a trade dress." Jensen claims Metrosound has infringed on both its unregistered trademark and trade dress by production and marketing of the L.A. Sound speakers.

While the scope of trade dress has been said to exceed that of trademark, the analysis for trade dress and an unregistered trademark under section 43(a) of the Lanham Act is very similar. See Two Pesos, Inc. v. Taco Cabana, Inc., --- U.S. ----, 112 S.Ct. 2753, 2760, 120 L.Ed.2d 615 (1992) (section 43(a) "provides no basis for distinguishing between trademark and trade dress"); Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1506 (9th Cir.1987) (section 43(a) provides unregistered trademark in product's trade dress); Vaughan Mfg. Co. v. Brikam Int'l Inc., 814 F.2d 346, 348 n. 2 (7th Cir.1987) (courts look to trademark cases for guidance on trade dress and vice versa).

Under either theory Jensen must show the "Blue Surround trademark and trade dress": (1) is nonfunctional; (2) is either inherently distinctive or has acquired a secondary meaning; and (3) is likely to be confused with Metrosound's products by members of the consuming public. Two Pesos, --- U.S. at ----, 112 S.Ct. at 2758; HWE Inc. v. JB Research, Inc., 993 F.2d 694, 696 (9th Cir.1993); First Brands Corp. v. Fred Meyer, Inc., 809 F.2d 1378, 1381 (9th Cir.1987). We review the district court's factual determinations on each of these three issues for clear error. Ocean Garden, Inc. v. Marktrade Co., 953 F.2d 500, 509 (9th Cir.1991); Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1355-56 (9th Cir.1985) (en banc).

a. Functionality

A trademark or trade dress is functional if it is essential to the product's use or purpose or if it affects the cost or quality of the article. Fuddruckers, Inc. v. Doc's B.R. Others, Inc., 826 F.2d 837, 842 (9th Cir.1987); see also Vaughan Mfg. Co., 814 F.2d at 349 (functional feature is one competitors find necessary to incorporate in order to compete effectively). In determining functionality, a product's trade dress must be analyzed as a whole. First Brands, 809 F.2d at 1381. Our inquiry is not directed at whether the individual elements are functional but whether the whole collection of elements taken together are functional. Fuddruckers, Inc., 826 F.2d at 842.

Factors to be considered include: (1) whether a particular design yields a utilitarian advantage; (2) whether alternative designs are available...