Jeffrey Milstein, Inc. v. Greger, Lawlor, Roth, Inc.

• Citation: 58 F.3d 27
• Decision Date: 19 June 1995
• Docket Number: No. 94-9298,94-9298
• Parties: JEFFREY MILSTEIN, INC., d/b/a Paper House Productions, Plaintiff-Appellant, v. GREGER, LAWLOR, ROTH, INC., d/b/a Triangle Enterprises, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 27

58 F.3d 27

35 U.S.P.Q.2d 1284

JEFFREY MILSTEIN, INC., d/b/a Paper House Productions, Plaintiff-Appellant, v. GREGER, LAWLOR, ROTH, INC., d/b/a Triangle Enterprises,

Defendant-Appellee.

No. 94-9298.

United States Court of Appeals, Second Circuit.

Argued Feb. 22, 1995.

Decided June 19, 1995.

Leon Friedman, New York City (Sharyn Grobman, New York City, on the brief), for plaintiff-appellant.

Jeffrey A. Berchenko, Bogatin, Berchenko & Corman, San Francisco, CA, for defendant-appellee.

Before NEWMAN, Chief Judge, VAN GRAAFEILAND and CABRANES, Circuit Judges.

JON O. NEWMAN, Chief Judge:

This appeal, arising in the context of greeting card designs, poses issues concerning the limits of trade dress protection under section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) (1988).

Plaintiff-appellant Jeffrey Milstein, Inc., d/b/a Paper House Productions ("Paper House"), appeals from the order of the District Court for the Southern District of New York (Kevin Thomas Duffy, Judge), entered December 19, 1994, denying Paper House's motion for a preliminary injunction enjoining defendant-appellee Greger, Lawlor, Roth, Inc., d/b/a Triangle Enterprises ("Triangle"), from copying the unregistered trade dress of Paper House's greeting cards. That dress in essence comprises photographs die cut to the shapes of the objects depicted on the cards. According trade dress protection to this format would effectively grant Paper House a monopoly in the idea of using die-cut photographs on greeting cards. For reasons set forth below, we affirm.

Background

Appellant Paper House is a New York corporation engaged in the business of manufacturing and selling greeting cards and note cards. It started its business in 1982. Its greeting cards are typically a sheet of paper, folded vertically, that has been cut to the outline of an animal, person, or object depicted in a color photograph on the front panel of the card. With this die-cutting technique, the photograph completely fills the front panel. The inside panels and the back panel of the card are usually blank. The cards are packaged in clear cellophane bags.

Appellee Triangle is a California company that has manufactured stationery products for the past eight years. Its products include die-cut gift bags, die-cut stand ups, and die-cut note pads. Some time between May and August 1994, Triangle began to produce and sell "tri-cut" photographic greeting cards. Unlike Paper House's greeting cards, which depict the photographic image only on the front face, Triangle's cards depict the die-cut image on the front of all three panels of each card. Like Paper House's cards, Triangle's cards have blank interiors and are packaged in clear cellophane wrapping.

Paper House instituted this action, alleging that Triangle had copied its greeting card format, in violation of section 43(a) of the Lanham Act and New York's common law of unfair competition. Of Triangle's complete line of tri-cut greeting cards, Paper House selected six that allegedly copied Paper House's trade dress, though, as the District Court noted in its opinion, Paper House is not seeking protection with respect to only the handful of cards depicting photographic images similar to those used by Triangle; rather, Paper House is alleging infringement of the general format of its entire line of die-cut greeting cards.

At the hearing on Paper House's motion for a preliminary injunction, Paper House's president, Jeffrey Milstein, acknowledged that other greeting card companies have either marketed die-cut cards or used photographic images, but he asserted that his company was the first to produce a line of greeting cards that applied the die-cutting process to photographs.

Relying on the two-part test of trade dress infringement applied in Two Pesos, Inc. v. Taco Cabana, Inc., --- U.S. ----, ----, 112 S.Ct. 2753, 2758, 120 L.Ed.2d 615 (1992), and Paddington Corp. v. Attiki Importers & Distributors, Inc., 996 F.2d 577, 582 (2d Cir.1993), the District Court concluded that Paper House had shown neither distinctiveness of its trade dress nor likelihood of consumer confusion.

As the District Court noted, Paper House described its trade dress as "straight-on color photographs of animals, plants, people or objects, die-cut to the shape of the image of the photograph, with the inside of the card being a blank white color." Jeffrey Milstein, Inc. v. Greger, Lawlor, Roth, Inc., No. 94 Civ. 8003 (KTD), mem. dec. at 4, 1994 WL 698214 (S.D.N.Y. Dec. 12, 1994) ("Dist.Ct.Op."). Evaluating these characteristics for distinctiveness, the District Court determined that Paper House's trade dress was "generic," id. at 5, 1994 WL 698214, at * 2, consisting solely of common and functional elements such as die-cutting, photographs, and blank white interiors. The District Court also found that Paper House had not demonstrated that its dress had acquired a secondary meaning.

With respect to the likelihood of confusion, the District Court applied the eight-factor test set forth in Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961), and concluded that the only factors favoring Paper House were "proximity/bridging the gap" and the relative lack of sophistication among consumers of greeting cards. Dist. Ct. Op. at 7.

As to the other factors, the District Court found that Paper House's trade dress was weak at best, and any similarity between the two brands of greeting cards could be explained by "[t]he fact that Plaintiff's and Defendant's products depict similar natural objects, die-cut to form." Id. at 7-8. The District Court found no support for Paper House's allegations of deliberate copying, ¹ and it found no evidence of actual confusion. In addition, the District Court noted that a visual inspection of Paper House's and Triangle's greeting cards failed to disclose an appreciable disparity in quality. Because Paper House had not satisfied the standard for trade dress infringement, the District Court found, Paper House could not show a likelihood of success on the merits of its Lanham Act claim. Moreover, in light of plaintiff's failure to prove either actual or likely confusion as to source, the District Court ruled that Paper House also had not shown a likelihood of success on the merits of its unfair competition claim. Finally, the District Court concluded that Paper House had not established that it would suffer irreparable harm in the event that the preliminary injunction was not granted, or that the balance of hardships tipped in its favor. Accordingly, the District Court denied Paper House's motion.

Discussion

A. Standard of Review

A party seeking a preliminary injunction must demonstrate (1) irreparable harm should the injunction not be granted, and (2) either (a) a likelihood of success on the merits, or (b) sufficiently serious questions going to the merits and a balance of hardships tipping decidedly in the movant's favor. See King v. Innovation Books, 976 F.2d 824, 828 (2d Cir.1992). In the trade dress context, a showing of likelihood of confusion as to source will establish a risk of irreparable harm. See LeSportsac, Inc. v. K Mart Corp., 754 F.2d 71, 79 (2d Cir.1985). We review a decision denying a preliminary injunction "for an abuse of discretion which, when found, usually consists of the application of an incorrect legal standard or the reliance on clearly erroneous findings of fact." Chemical Bank v. Haseotes, 13 F.3d 569, 573 (2d Cir.1994).

B. Lanham Act Claim

Section 43(a) of the Lanham Act, "[t]hough enacted as part of the Trademark Act, ... functions as a federal law of unfair competition for unregistered goods ... [and] extends protection to a product's 'trade dress.' " Coach Leatherware Co. v. AnnTaylor, Inc., 933 F.2d 162, 168 (2d Cir.1991). It provides a cause of action against any person who "in connection with any goods ... or 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 origin, sponsorship, or approval of his or her goods ... by another person." 15 U.S.C. Sec. 1125(a) (1988).

At one time, "trade dress" referred only to the manner in which a product was "dressed up" to go to market with a label, package, display card, and similar packaging elements. However, "trade dress" has taken on a more expansive meaning and includes the design and appearance of the product as well as that of the container and all elements making up the total visual image by which the product is presented to customers. See LeSportsac, 754 F.2d at 75. Thus, trade dress is "essentially [a product's] total image and overall appearance," Two Pesos, --- U.S. at ---- n. 1, 112 S.Ct. at 2755 n. 1, "as defined by its overall composition and design, including size, shape, color, texture, and graphics." AnnTaylor, 933 F.2d at 168. To prevail in an action for trade dress infringement under section 43(a) of the Lanham Act, a plaintiff must prove (1) that its dress is distinctive and (2) that a likelihood of confusion exists between its product and the defendant's product. See Two Pesos, --- U.S. at ----, ----, 112 S.Ct. 2753, 2758; Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1038-39 (2d Cir.1992). However, functional packaging and product designs are unprotected, and the functionality of a design may be raised as a defense to an action for trade dress infringement. See LeSportsac, 754 F.2d at 75-76.

(1) Distinctiveness. We evaluate the distinctiveness of trade dresses according to the test set forth by Judge Friendly in Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir.1976). See Paddington, 996 F.2d at 583. Under this test, dresses are classified as either: (1) generic; (2) descriptive; (3) suggestive; or (4) arbitrary or fanciful. See Abercrombie, 537 F.2d at 9....