Master Distributors, Inc. v. Pako Corp.

• Citation: 986 F.2d 219
• Decision Date: 05 April 1993
• Docket Number: No. 92-1345,92-1345
• Parties: , 25 U.S.P.Q.2d 1794 MASTER DISTRIBUTORS, INC., a New Hampshire corporation, Appellant, v. PAKO CORPORATION, a Delaware corporation; Pakor, Inc., a Minnesota corporation, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 219

986 F.2d 219

61 USLW 2529, 25 U.S.P.Q.2d 1794

MASTER DISTRIBUTORS, INC., a New Hampshire corporation, Appellant, v. PAKO CORPORATION, a Delaware corporation; Pakor, Inc., a

Minnesota corporation, Appellees.

No. 92-1345.

United States Court of Appeals,

Eighth Circuit.

Submitted Nov. 10, 1992.

Decided Feb. 17, 1993.

Rehearing and Rehearing En Banc

Denied April 5, 1993.

Edward F. Fox, St. Louis, MO, argued (Donald W. Niles, Mark W. Haigh, on brief), for appellant.

David R. Fairbairn, Minneapolis, MN, argued (Thomas J. Stueber and Joseph R. Kelly, on brief), for appellee.

Before JOHN R. GIBSON and MAGILL, Circuit Judges, and VAN SICKLE, ^* Senior District Judge.

JOHN R. GIBSON, Circuit Judge.

Master Distributors, Inc. appeals from an order granting partial summary judgment to the extent MDI claims common law trademark rights in the blue color of its "Blue Max" leader splicing tape. The district court held, as a matter of law, that color alone cannot be protected as a trademark, and that even if it can be protected, the color depletion theory, which assumes that new competitors would be precluded from entering an industry once all colors are used and protected, applies to this situation. 777 F.Supp. 744, 749-50 (D.Minn.1991). We reverse and remand for further proceedings.

MDI manufactures and sells "Blue Max," a blue ¹ leader splicing tape, which is used to attach undeveloped film to a leader card for photoprocessing through a minilab machine that develops the film and prints the photographs. Id. at 745. Blue Max was developed in response to the minilab industry's need for better leader splicing tape. Although leader splicing tape was traditionally black, it can be created in any color, and MDI dyed its Blue Max tape blue. Id. Blue Max is well-known and enjoys a reputation as the industry standard. Id. Both distributors and customers often order Blue Max by asking for "the blue tape" or simply for "blue." Id.

Pakor, Inc., a subsidiary of Pako Corporation, is a photographic supplies distributor, and was one of MDI's distributors with a nonexclusive right to sell Blue Max in the Midwest. Id. When MDI learned that Pakor was manufacturing and selling its own brand of blue leader splicing tape, "Pakor Blue," it brought this suit. MDI alleged infringement of its registered trademark, infringement of its common law trademark in the color blue, illegal "palming off," unfair competition, dilution of trademark deceptive trade practices, false statements in advertising, and unlawful trade practices. Id. at 746. The cardboard core of the MDI tape contains the words "blue max," and the other tape core contains the words "Pakor blue" with a toll-free number. Id. at 745.

Pakor moved for partial summary judgment to the extent MDI claimed trademark rights in the blue color of its Blue Max tape. ² Id. at 746. The district court granted Pakor's motion and dismissed Count II, alleging a common law trademark in the color blue, and Count V insofar as it claimed dilution of a common law trademark in the color blue. Id. at 750. MDI argues on appeal that the district court erred in granting summary judgment before discovery was complete, in adopting a per se rule that color alone can never achieve trademark protection, and in determining that the color depletion theory applies to the facts in this case.

Pakor urges us to affirm the district court's decision by adopting the "better, more widely-accepted rule of law, that a single color cannot function as a trademark." Pakor directs us to many decisions which support its position and distinguishes those that do not. Pakor then argues that even if a single color may be protected under certain circumstances, the district court properly applied the color depletion theory, as a "competitive need" for the color blue exists in the leader splicing tape market.

We review the district court's grant of summary judgment de novo, and will affirm only when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); McKee v. Federal Kemper Life Assur. Co., 927 F.2d 326, 328 (8th Cir.1991). We view the facts in the light most favorable to the nonmovant, and give it the benefit of all reasonable inferences. Schrader v. Royal Caribbean Cruise Line, Inc., 952 F.2d 1008, 1013 (8th Cir.1991). Therefore, we assume, for purposes of this appeal, that the color of leader splicing tape does not affect its function, that MDI can establish secondary meaning in the blue color of its tape, identifying and distinguishing it from other tapes, and that an infringing tape would confuse or mislead consumers. We must decide then (1) whether, as a matter of law, color alone cannot be afforded trademark protection, and (2) if color alone can be protected, whether the district court properly applied the color depletion theory to this case.

I.

The United States Supreme Court has never expressly denied the possibility that color can be protected as a trademark. In A. Leschen & Sons Rope Co. v. Broderick & Bascom Rope Co., 201 U.S. 166, 170-71, 26 S.Ct. 425, 426-27, 50 L.Ed. 710 (1906), overruled on other grounds, United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), the Court denied infringement protection to a trademark consisting of an unspecified colored streak woven into a wire rope. The Court noted that "a trademark could not be claimed of a rope, the entire surface of which was colored," but also stated that it might have sustained the registration if the plaintiff's claimed trademark was restricted to one specific color, such as red. Id. 201 U.S. at 170, 26 S.Ct. at 426. Ultimately, the Court declined to decide the color protection issue because the plaintiff's claim was much broader than protecting one distinctive color. Id. at 172, 26 S.Ct. at 427. This pre-Lanham Act opinion does not answer the color protection issue.

Likewise, we have not established a per se prohibition against protecting color as a trademark. Although we affirmed Deere & Co. v. Farmhand, Inc., 560 F.Supp. 85, 96-98 (S.D.Iowa 1982), aff'd, 721 F.2d 253 (8th Cir.1983) (per curiam), our decision was not based on protection of color alone. The district court had found that the specific shade of green used on John Deere front end loaders was functional because farmers preferred to match the color of their loaders to the color of their tractors, and therefore, protection would hinder competition. 560 F.Supp. at 96 n. 19, 98. Our per curiam opinion did not discuss whether color alone could be protected. 721 F.2d at 253.

In 1985, the Federal Circuit allowed Owens-Corning to register the color pink as a trademark for fibrous glass insulation. In re Owens-Corning Fiberglas Corp., 774 F.2d 1116 (Fed.Cir.1985). After an historical review of attempts to register or protect color trademarks, the court, in a detailed and persuasive discussion of the Lanham Act, concluded that color met the Act's definition of "trademark," ³ and was not specifically excluded from protection. Id. at 1118-19. The court recognized the color depletion theory as an argument against the protection of color, but concluded that "[c]ontrary to an absolute prohibition on registrability of color marks, ... each case [should be] decided upon its facts." Id. at 1120. The court also rejected the traditional shade confusion argument, stating that "deciding likelihood of confusion among color shades ... is no more difficult or subtle than deciding likelihood of confusion where word marks are involved." Id. at 1123 (quoting In re Owens-Corning Fiberglas Corp., 221 U.S.P.Q. 1195, 1198 (TTAB 1984)).

The dissent in Owens-Corning was relied upon by the Seventh Circuit in the only other decision to squarely face this issue. ⁴ In NutraSweet Co. v. Stadt Corp., 917 F.2d 1024, 1027 (7th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1640, 113 L.Ed.2d 735 (1991), the manufacturer of a sugar substitute product that was packaged in a blue, single-serving packet brought suit to enjoin another manufacturer from packaging its sugar substitute in a blue, single-serving packet. Id. at 1026. The district court granted the defendant's motion for summary judgment, holding that color alone could not be protected. Id. Following Life Savers Corp. v. Curtiss Candy Co., 182 F.2d 4, 9 (7th Cir.1950), and the dissent's reasoning in Owens-Corning, the Seventh Circuit affirmed and discussed four reasons for prohibiting the protection of color alone, as a matter of law. Id. at 1027-28. First, the court stated that protecting color as a trademark would change the law in the Seventh Circuit and prejudice lawyers and clients who had acted in reliance on the old rule. Id. at 1027. Second, the court did not see a need for change because color could be protected as long as it was used in connection with a symbol or design or impressed in a particular design. Id. Third, the court reasoned that shade confusion could only be resolved through litigation. Id. Finally, the court stated that the facts in the NutraSweet case were not appropriate for changing the law because color depletion would deter new entrants from lawful competition in the tabletop sweetener market. Id. at 1028. Although NutraSweet contended that the possibility of color depletion was a factual issue, the court rejected the standard as "unworkable, for there is no way for a court to predict the likelihood of future competitors in a particular market." Id.

The district court in this case was also persuaded by the Owens-Corning dissent, and followed the Seventh Circuit's decision to prohibit protection of a specific color. 777 F.Supp. at 749. The court reasoned that protecting Blue Max blue could hinder competition, particularly because leader splicing tape is available in a variety of colors. Id. The court was concerned that even if Pakor selected another shade of blue, it would be difficult to decide how different that shade...