Mushroom Makers, Inc. v. RG Barry Corp., 76 Civil 1589.

• Decision Date: 22 November 1977
• Docket Number: No. 76 Civil 1589.,76 Civil 1589.
• Citation: 441 F. Supp. 1220
• Parties: MUSHROOM MAKERS, INC., Plaintiff, v. R. G. BARRY CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of New York

441 F. Supp. 1220

MUSHROOM MAKERS, INC., Plaintiff, v. R. G. BARRY CORPORATION, Defendant.

No. 76 Civil 1589.

United States District Court, S. D. New York.

November 22, 1977.

COPYRIGHT MATERIAL OMITTED

Watson, Leavenworth, Kelton & Taggart, New York City, for plaintiff; Leslie D. Taggart, Frank J. Colucci, Howard B. Barnaby, Jr., New York City, David A. Talman, Talamo, Phillips, Silver & Talman, Inc., Worcester, Mass., of counsel.

Watson, Cole, Grindle & Watson, Washington, D. C., Henry B. Roth, Herzfeld & Rubin, P. C., New York City, for defendant; Walter D. Ames, F. M. deRosa, Bernard L. Sweeney, Washington, D. C., of counsel.

OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW

EDWARD WEINFELD, District Judge.

The defendant, R. G. Barry Corporation ("Barry"), is the owner of the registered trademark MUSHROOMS, which it applies to women's shoes, sandals and slippers. The plaintiff, Mushroom Makers, Inc. ("Mushroom Makers"), commenced this action for a declaratory judgment that its use of the trademark MUSHROOM and the trade name Mushroom Makers in the promotion and sale of women's jeans, jackets, skirts and overalls, does not infringe Barry's registered trademark. Barry counterclaimed, charging plaintiff with trademark infringement, unfair competition and false designation of the origin of the plaintiff's goods.¹ At trial, Barry was deemed the lead-off litigant and presented its case first.

The respective products of the parties sold under the trademarks MUSHROOMS and MUSHROOM,² are separate and distinct. Plaintiff sells women's sportswear. It is not engaged in any business other than the sale of women's apparel. Defendant sells women's casual footwear. It is not engaged in any other business than the manufacture and sale of footwear.

The use of the trademarks with respect to the products sold by each is of rather recent origin. Defendant's use preceded that of plaintiff by a little more than one year. Defendant's initial shipments in interstate commerce occurred sometime in 1974.³ The defendant's trademark MUSHROOMS was registered in the United States Patent and Trademark Office on February 4, 1975 and again on January 13, 1976. The registrations covered shoes, sandals and slippers.

The plaintiff first applied MUSHROOM on its women's sportswear in manufacturing samples in July 1975, and first used the trademark in interstate commerce in late October 1975. Mushroom Makers twice applied to the United States Patent and Trademark Office for registration of MUSHROOM, and each time was refused on the ground that the MUSHROOM mark was likely to cause confusion with Barry's mark.⁴

The defendant objected to the plaintiff's application for registration of the MUSHROOM mark on February 2, 1976. Plaintiff then commenced this action for a declaratory judgment that the products sold by it under the name MUSHROOM are entirely different from defendant's goods sold under the name MUSHROOMS and that no likelihood of confusion exists.

DEFENDANT'S USE OF MUSHROOMS

R. G. Barry has been in business since about 1945 and has engaged in the manufacture of various products,⁵ including a range of footwear. At present it manufactures and merchandises only footwear. In 1971, Barry began development of a line of casual footwear distinguished by a new foam rubber "Moleculair" sole. The fruits of this project were various styles of casual shoes, slippers, and sandals using the new sole design, which are sold under the trademark MUSHROOMS.⁶ The mark, as already noted, is registered in the Patent Office in International Class 25, and applies to slippers, sandals and shoes.

In 1974, its first year of sale, Barry's Mushrooms Division sold 11,628 pairs of footwear at a total value of $75,400. Shipments increased considerably in 1975, topping one million dollars. They have reached almost two and a half million dollars for the first half of 1977. Net shipments of MUSHROOMS footwear since the inception of the product line total almost six million dollars.

To promote the sale of the casual footwear, Barry has spent over one million dollars in advertising.⁷ Much of its advertising has been "cooperative," where Barry has shared the cost of promotion with the retail store in various locations throughout the country.⁸ MUSHROOMS footwear is sold at over 2500 retail outlets, sixty per cent of which have participated in cooperative advertising. These advertisements have appeared in major newspapers. Barry has also undertaken $96,000 worth of television advertising of a local nature.⁹ Barry has also sought to make its product known by including, with each pair of shoes sold to the retailers, a brochure containing information about MUSHROOMS' design and sole. It has further used "point-of-purchase" aids and "statement stuffers," which are provided to department stores and mailed out with the monthly bills.

Barry has been an active defender of its mark. It brought suit against a company selling "Mushsoles" shoes, which culminated in a consent decree wherein the defendant admitted infringement. When instances of alleged infringement of its mark have come to Barry's notice, it has asserted its right to priority. On July 14, 1975, Barry advertised in Women's Wear Daily and Footwear News (the major trade journal) that "Only R. G. Barry and Mother Nature can make MUSHROOMS."

PLAINTIFF'S USE OF MUSHROOM

Plaintiff Mushroom Makers is one of a number of companies forming part of a clothing operation conducted by Stevens Sportswear, Inc. ("Stevens") of Worcester, Massachusetts.¹⁰ Stevens had excess plant capacity at its manufacturing facility in Taylorsville, Mississippi, which it decided to devote to production of a misses sportswear line.¹¹ In June 1975 it enlisted the services of one Earle Sheldon to develop, style and sell the line. When preliminary tests proved production was feasible and samples of various items of the new line were prepared, Sheldon, in June or early July 1975, suggested to Stevens officials that MUSHROOM be used as the line's trade name and trademark. The origin of Sheldon's suggestion is discussed hereafter. Plaintiff first applied MUSHROOM, as already noted, on samples in July 1975, following which arrangements were made in August 1975 to offer a MUSHROOM line of women's sportswear to the trade. In September 1975, a showroom was opened in New York City and orders for MUSHROOM sportswear were taken. The first interstate shipments were made in October 1975.

Mushroom Makers' rapid growth and the commercial success of its MUSHROOM products are phenomenal. Sales of MUSHROOM apparel in its first full month of operation, November 1975, totalled $16,200. In 1976, monthly net sales ran from $224,000 to $1 million; net sales for the entire year equalled $6 million. For the first six months of 1977, Mushroom Makers has had net sales of $8.4 million. It is anticipated that sales will reach $20 million for all of 1977. This meteoric rise was accompanied by relatively small advertising expenditures. From the company's inception, it has spent only $174,000 on promotion. Much of plaintiff's success apparently has been the result of personal salesmanship and plaintiff's standing in the women's wear industry. In sharp contrast to Barry, Mushroom Makers has expended small sums for cooperative advertising. While it has placed advertisements in Cosmopolitan, the New York Times and Women's Wear Daily, many advertisements which refer to MUSHROOM apparel have been purchased by department stores such as Gimbels, May Cohen's, Winkelman's, Jordan Marsh and Marshall Field & Company.

BARRY'S COUNTERCLAIMS

The basic issue in this case, however phrased, is whether Barry, the senior user whose trademark MUSHROOMS is applied to casual slippers, sandals and shoes, is entitled to protection against plaintiff, the junior user, whose trademark MUSHROOM is applied to women's sportswear, such as slacks, overalls, shirts, skirts and jackets made of denim, corduroy and other materials.

The touchstone of trademark infringement under the Lanham Act¹² upon which Barry seeks relief is "likelihood of confusion": whether a substantial number of ordinarily prudent purchasers are likely to be misled or confused as to the source of the different products.¹³ As has often been observed, the law of trademark infringement is but part of the law of unfair competition¹⁴ and the same test is applied with respect to each claim.

That the products are not identical does not foreclose relief to the senior owner if they are sufficiently related to make confusion likely.¹⁵ On the other hand, the fact of seniority does not by itself entitle the first user to relief — the determination is to be made on the basis of "the equities involved," which requires an evaluation of the legitimate interests of the senior user, the junior user and the public consumer.¹⁶ As most recently stated by the Second Circuit:

The trademark laws protect three interests . . .: first, the senior user's interest in being able to enter a related field at some future time; second, his interest in protecting the good reputation associated with his mark from the possibility of being tarnished by inferior merchandise of the junior user; and third, the public's interest in not being misled by confusingly similar marks . . ..¹⁷

The senior user has the additional interest of preventing others from getting a free ride on the reputation and good will he has established¹⁸ — from reaping a "harvest which others have sown."¹⁹

While earlier cases may have limited the circumstances under which a trademark owner was entitled to relief against a junior user of the mark on noncompetitive items,²⁰ more recent cases in this Circuit have expanded the factors which are to be evaluated in deciding whether the senior user is entitled to such protection. These include, but are not limited to:

the strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior

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