Keds Corp. v. Renee Intern. Trading Corp., 89-1679

• Decision Date: 12 September 1989
• Docket Number: No. 89-1679,89-1679
• Citation: 888 F.2d 215,12 USPQ2d 1808
• Parties: The KEDS CORP., Plaintiff, Appellee, v. RENEE INTERNATIONAL TRADING CORP., Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 215

888 F.2d 215

12 U.S.P.Q.2d 1808

The KEDS CORP., Plaintiff, Appellee, v. RENEE INTERNATIONAL TRADING CORP., Defendant, Appellant.

No. 89-1679.

United States Court of Appeals First Circuit.

Heard Sept. 12, 1989.

Decided Nov. 3, 1989.

As Amended Nov. 6, 1989.

Alfred W. Breiner, with whom Theodore A. Breiner, Mary J. Breiner, Breiner & Breiner, Alexandria, Va., Lee T. Gesmer, and Lucash, Gesmer & Updegrove, Boston, Mass., were on brief, for defendant, appellant.

Robert E. Hillman, with whom Heidi E. Harvey and Fish & Richardson, Boston, Mass., were on brief, for plaintiff, appellee.

Before BOWNES, TORRUELLA and MAYER, ^* Circuit Judges.

BOWNES, Circuit Judge.

Renee International Trading Company (Renee) appeals from a preliminary injunction entered by the District Court of Massachusetts that prohibits it from selling women's canvas sneakers with blue rectangle labels impressed with the word "Apples" attached to the heel. The injunction was entered at the request of the Keds Corporation (Keds). Keds alleged that it was the holder of an incontestable trademark for a blue rectangle label or "kicker" attached to the heel or instep of a shoe that Renee had infringed. Renee claims that the district court did not have personal jurisdiction over it and that Keds did not meet the requirements for a preliminary injunction.

I.

Keds, a Massachusetts corporation, is one of the largest manufacturers and distributors of canvas sneakers in the U.S. and has enjoyed a recent surge in popularity. Since at least 1925, Keds has attached a small (1" X 1 1/2") blue rectangular rubber label impressed with the word "Keds" in raised letters (the blue label) on the heel of most of the shoes it sells. In 1956, Keds attempted to register the blue label, without the word Keds, as a trademark. ¹ The Patent and Trademark Office (PTO) initially refused to register the mark claiming that it was merely background for the word "Keds" and had no secondary meaning. After dogged persistence by Keds, the PTO was convinced that the blue label functions as a trademark at the consumer level and allowed registration. In 1959, the PTO published the blue label as a trademark in the Principal Register with Trademark Registration No. 685,185. After 5 years, Keds filed an affidavit of continued use, which stated that there had been no adverse decisions or existing claims to ownership. Under the provisions of the Lanham Trade-Mark Act (the Act) the mark became "incontestable." 15 U.S.C. Sec. 1065. Keds has renewed its rights in the mark until September 15, 1999.

Renee, a New York corporation, has recently entered the canvas shoe business as an importer. Renee imports canvas sneakers with blue labels impressed with the word "Apples" and with pink labels impressed with the word "Renee." Renee sells its shoes to wholesalers through its office in New York City.

This case was precipitated by the sale of approximately $15,000 worth of Apples shoes (approximately 6000 pairs) to a wholesaler in Massachusetts. The sale was solicited by a telephone call from a Renee salesman to Maxwell Blum (Blum) in Hyde Park, Massachusetts, in January, 1989. After making the sale over the telephone, Renee shipped the shoes to Blum in Massachusetts. Presumably, Renee also sent the invoice to Blum in Massachusetts who paid it. There was also evidence that Renee advertised in a magazine distributed in Massachusetts. Blum sold those shoes to Marshalls Department Store in Boston, where some of the shoes ended up for sale in direct competition with similar Keds shoes.

After its first sale to Blum, Renee again contacted him by telephone and offered to sell him additional shoes. He requested, and was sent, 18 sample shoes on April 13, 1989.

Upon discovery of the Apples shoes in Boston, Keds contacted Marshalls, Blum, and Renee and informed each that Keds had a trademark on the blue label, which it believed the Apples shoes were infringing. Marshalls and Blum apparently agreed to stop selling the shoes. Renee agreed not to manufacture any additional shoes with blue labels but refused to stop selling its remaining inventory of over 100,000 pairs of shoes. ²

Keds brought this diversity jurisdiction suit against Renee alleging trademark infringement and false designation of origin under the Lanham Act, 15 U.S.C. 1051 et seq, and various state law trademark and consumer protection violations. Keds requested a temporary restraining order, which the district court issued. Renee made a motion to dismiss for lack of personal jurisdiction. The district court denied that motion. On Keds's motion, after briefs were filed and oral argument heard, the district court issued a preliminary injunction dated June 23, 1989, that prohibits Renee from selling, distributing or soliciting for sale in the United States canvas footwear that has a blue rectangular kicker. Renee appeals both the denial of its motion to dismiss for lack of jurisdiction and the granting of the preliminary injunction.

II.

In reviewing personal jurisdiction in a diversity case, a federal court must consider whether jurisdiction is authorized by state statute and consistent with due process. We first look to state law. Ealing Corp. v. Harrods Ltd., 790 F.2d 978, 981 (1st Cir.1986); Gray v. O'Brien, 777 F.2d 864, 866 (1st Cir.1985); Hahn v. Vermont Law School, 698 F.2d 48, 49-50 (1st Cir.1983).

A. Long Arm statute.

The Massachusetts long arm statute provides that a non-resident may be subject to the jurisdiction of the Massachusetts courts if they

caus[ed] tortious injury in th[e] commonwealth by an act or omission outside th[e] commonwealth ... [and] derive substantial revenue from goods used or consumed ... in th[e] commonwealth

Mass.Gen.L. ch. 223A Sec. 3(d). Keds alleges that Renee has committed the tort of trademark infringement in Massachusetts and claims jurisdiction based on Sec. 3(d). Keds does not claim jurisdiction based on any of the other possible grounds under the long arm statute. Renee contends that it does not do business in Massachusetts and has not committed a tort there.

First, we examine whether the sale to Blum by Renee could have caused tortious injury in Massachusetts. The Lanham Act prohibits

use in commerce [of] any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with such use that is likely to cause confusion, to cause mistake, or to deceive.

15 U.S.C. Sec. 1114(1)(a). The "tort" of infringement is thus the use of a registered mark in connection with the sale of goods, without the consent of the owner, that is likely to cause confusion. It is not necessary to show actual confusion. Pignons S.A. de Mecanique v. Polaroid Corp., 657 F.2d 482, 490 (1st Cir.1981); See also Squirt Co. v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir.1980); Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1186 (5th Cir.1980) cert. denied, 450 U.S. 981, 101 S.Ct. 1516, 67 L.Ed.2d 816 (1981). All that is required is a likelihood of confusion. The likelihood of confusion creates an injury. The injury in an infringement case is two-fold: to the trademark owner through loss of good will and presumably profits and to the public because of confusion caused by the similar marks. Economic injury in the form of lost sales in the forum state is sufficient to satisfy the injury requirement for jurisdiction. Buckeye Associates v. Fila Sports, Inc., 616 F.Supp. 1484, 1493 (D.Mass.1985).

Renee asserts that because Blum did not know that the shoes he ordered had blue kickers, he was not confused about the origin or maker of the shoes, so there was no tort. But the relevant question is not whether Blum was actually confused, but whether consumers are likely to be confused. On that issue, the court below ruled clearly and correctly. See, infra Section III.

Renee argues extensively that because the title of the goods it sells always passes in New York, it only does business in New York. But even assuming that the title passed outside Massachusetts, that does not prevent jurisdiction under Sec. 3(d). The long arm statute was designed to encompass exactly this type of activity. Mass.Gen.L. ch. 223A Sec. 3(d) requires an act outside of the commonwealth (the sale of the shoes) that causes injury (infringement) within the commonwealth. The key question, which must be answered in the affirmative, is whether Renee was purposely soliciting business in Massachusetts.

The second of the two requirements of the statute, the "substantial revenue" requirement, need not detain us. It is well settled under Massachusetts law that "substantial revenue" is not an absolute amount nor an absolute percentage of total sale. See, e.g., Heins v. Wilhelm Loh Wetzlar Optical Machinery GmbH, 26 Mass.App.Ct. 14, 522 N.E.2d 989, 994 n. 5 review denied, 402 Mass. 1105, 525 N.E.2d 678 (1988). All that is required is literal satisfaction of the statutory requirement. Heins, 26 Mass.App. at 20, 522 N.E.2d at 993. The sale of 6000 pairs of shoes for $15,000 easily meets this requirement. See, e.g., Mark v. Obear & Sons Co., 313 F.Supp. 373, 375-376 (D.Mass.1970) ($5000 in sales enough for statute). Although Renee feebly argues that it has not made any sales in/to Massachusetts including the sales to Blum, because the title passed in New York, it strains credulity to argue that soliciting sales, shipping goods, soliciting additional sales and receiving payment from an individual in Massachusetts does not involve interstate commerce. See, e.g., Heins, 522 N.E.2d at 993-994. The logical extreme of Renee's argument would be that it is not involved in interstate commerce and thus not subject to the provisions of the Act at all.

Renee relies heavily on Droukas v. Drivers Training Academy, Inc., 375 Mass. 149, 376 N.E.2d 548 (1978) to support its lack of jurisdiction argument. This reliance is misplaced because the issue...