Mushroom Makers, Inc. v. R. G. Barry Corp.

• Citation: 199 USPQ 65,580 F.2d 44
• Decision Date: 11 July 1978
• Docket Number: No. 917,D,917
• Parties: MUSHROOM MAKERS, INCORPORATED, Plaintiff-Appellee, v. R. G. BARRY CORPORATION, Defendant-Appellant. ocket 77-7619.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 44

580 F.2d 44

199 U.S.P.Q. 65

MUSHROOM MAKERS, INCORPORATED, Plaintiff-Appellee, v. R. G. BARRY CORPORATION, Defendant-Appellant.

No. 917, Docket 77-7619.

United States Court of Appeals Second Circuit.

Argued June 8, 1978.

Decided July 11, 1978.

Walter D. Ames, Washington, D. C. (Watson, Cole, Grindle & Watson, Washington, D. C., Henry B. Roth and Herzfeld & Rubin, New York City, of counsel), for defendant-appellant.

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

Before KAUFMAN, Chief Judge, FEINBERG, Circuit Judge, and WERKER, District Judge. ^*

PER CURIAM:

In this appeal from a judgment and order of the United States District Court for the Southern District of New York, Edward Weinfeld, Judge, defendant-appellant R. G. Barry Corporation ("Barry") contends that it was error to dismiss its counterclaims for trademark infringement, unfair competition and false designation of origin and deny a motion for leave to file an additional counterclaim under the New York anti-dilution statute. ¹ Plaintiff-appellee Mushroom Makers, Inc. ("Mushroom Makers"), which instituted this action for a declaration and judgment that its use of the trademark MUSHROOM and tradename MUSHROOM MAKERS in connection with the promotion and sale of women's jeans, jackets, skirts and overalls did not constitute infringement of or unfair competition with Barry's registered MUSHROOMS trademark used to identify Barry's line of casual shoes, sandals and slippers for women, has not appealed from that portion of the district court's decision which requires it to place on all hang tags and in all advertisements for its MUSHROOM sportswear a statement disclaiming any connection with Barry or Barry's MUSHROOMS footwear. ²

I

Judge Weinfeld carefully detailed the facts in an opinion reported at 441 F.Supp. 1222 and no purpose would be served by repeating them here as exhaustively. A brief summary is however in order at the outset.

Barry began to market MUSHROOMS footwear in 1974. On February 4, 1975 and again on January 13, 1976, the MUSHROOMS trademark was registered in the United States Patent and Trademark Office under International Class 25 for use on Barry's slippers, shoes and sandals. Barry's sales of MUSHROOMS footwear from the time it commenced production through the first half of 1977 aggregated almost six million dollars; its advertising costs for the same period totalled more than one million dollars, and much of that amount was spent for advertising purchased in cooperation with its retail outlets, of which there were more than 2500.

Mushroom Makers first contemplated marketing "misses" sportswear under the MUSHROOM trademark and trade name in June or July of 1975. One Earle Sheldon, who was participating in the development of the product line, suggested that it be marketed under the MUSHROOM label because an aunt who had cared for him during childhood was fascinated by that particular fungus. At the time that he recommended this, Sheldon was unaware that Barry was already marketing MUSHROOMS products.

Interstate shipments of MUSHROOM sportswear to retail outlets began in October of 1975 and have risen meteorically since then: in November of 1975, MUSHROOM sales totalled $16,200; at the time of trial, sales for 1977 were projected to reach the twenty million dollar level. In contrast to Barry's sales experience, this dramatic rate of growth was achieved with a total expenditure of less than $200,000 for advertising.

At trial, Mushroom Makers conceded that its mark was identical to the one used by Barry.

II

It is well settled that the crucial issue in an action for trademark infringement or unfair competition is whether there is any likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question. Maternally Yours, Inc. v. Your Maternity Shop, Inc., 234 F.2d 538, 542 (2d Cir. 1956). The court, in making this determination and fashioning suitable relief, must look not merely to the age of the competing trademarks, but to a host of other factors. As we noted 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):

Where the products are different, the prior owner's chance of success is a function of many variables: the strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant's good faith in adopting its own mark, the quality of defendant's product, and the sophistication of the buyers. Even this extensive catalogue does not exhaust the possibilities the court may have to take still other variables into account. American Law Institute, Restatement of Torts, §§ 729, 730, 731.

Accord, Scarves By Vera, Inc. v. Todo Imports, Ltd., 544 F.2d 1167, 1173 (2d Cir. 1976).

The district court recognized that these were the appropriate factors to be considered and reviewed them carefully before concluding that there was (1) no infringement by Mushroom Makers as the junior user, (2) no likelihood of confusion, (3) no bad faith in Mushroom Makers' use of the MUSHROOM mark, (4) no proximity between the products manufactured by the parties, (5) no prospect that future additions to their respective lines would "bridge the gap" between them, and finally (6) no likelihood that Mushroom Makers' products would subsequently decline in quality and thereby tarnish Barry's reputation. Nevertheless, despite his conclusion that "the scales tip in favor of (Mushroom Makers)," the district judge directed that the cautionary statement noted earlier be adopted in an effort to avoid any further litigation between the parties.

On appeal, Barry argues that the district court erred in holding that there was no trademark infringement, false designation of origin or unfair competition, in finding that Mushroom Makers acted in good faith and consequently in failing to grant an injunction. It is also claimed that the district court abused its discretion by refusing to permit a post-trial amendment of the answer to assert an additional counterclaim. While we agree with certain of Barry's contentions, after careful examination of the record, we hold that they do not shift the balance of interests and therefore affirm the district court's decision.

In considering the proximity of the products, the district court impliedly rejected our decision in Avon Shoe Co. v. David Crystal, Inc., 279 F.2d 607, 612 (2d Cir.), Cert. denied, 364 U.S. 909, 81 S.Ct. 271, 5 L.Ed.2d 224 (1960), in which we indicated that there was no basis for finding that the goods were "so unrelated as to attract different segments of the feminine purchasing public" where the defendant sold sportswear for women under the "Haymaker" trademark to retail outlets which also carried plaintiff's shoes marketed under the "Haymakers" trademark. However, we see no reason to depart from our Avon Shoe holding in the case presently before us. Indeed, since both cases involve trademarks which are merely the singular and plural forms of the same word and substantially identical goods directed at the same market and sold through the same outlets, it is difficult to conceive of any reason to distinguish them. Accordingly, as in Avon Shoe we find not only that the products are proximate, but that likelihood of confusion was as a matter of law established. Id. See also Carlisle Shoe Co. v. Societe Anonyme: Roger Fare & Cie, 278 F.2d 519, 47 CCPA 966 (1960) (women's gloves and shoes); General Shoe Corp. v. Hollywood-Maxwell Co., 277 F.2d 169, 47 CCPA 933 (1960) (brassieres and women's shoes); General Shoe Corp. v. Lerner Brothers Manufacturing Co., 254 F.2d 154, 45 CCPA 872 (1954) (men's footwear and sports shirts); Villager, Inc. v. Dial Shoe Co., 256 F.Supp. 694, 701-02 (E.D.Pa.1966) (women's apparel and shoes).

After recognizing that Barry's MUSHROOMS mark was "arbitrary and fanciful," and therefore conceptually strong when applied to footwear, the district court proceeded to consider "its true strength" in the market place, finding that it had not "caught on" in a commercial sense. However, having established that its mark was conceptually strong, Barry met its burden with regard to the first Polaroid variable. See Kiki Undies Corp. v. Promenade Hosiery Mills, Inc., 411 F.2d 1097, 1100 (2d Cir. 1969), Cert. dismissed,396 U.S. 1054, 90 S.Ct. 707, 24 L.Ed.2d 698 (1970). See also Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976); 3 R. Callmann, The Law of Unfair Competition, Trademarks and Monopolies § 77.1, at 336-37 (3d ed. 1969). Consequently,...