Paddington Corp. v. Attiki Importers & Distributors, Inc.

• Decision Date: 17 June 1993
• Docket Number: D,No. 386,386
• Citation: 27 USPQ2d 1189,996 F.2d 577
• Parties: , 27 U.S.P.Q.2d 1189 The PADDINGTON CORPORATION, Plaintiff-Appellant, v. ATTIKI IMPORTERS & DISTRIBUTORS, INC., Defendant-Appellee. ocket 92-7348.
• Court: U.S. Court of Appeals — Second Circuit

Page 577

996 F.2d 577

62 USLW 2032, 27 U.S.P.Q.2d 1189

The PADDINGTON CORPORATION, Plaintiff-Appellant, v. ATTIKI IMPORTERS & DISTRIBUTORS, INC., Defendant-Appellee.

No. 386, Docket 92-7348.

United States Court of Appeals, Second Circuit.

Argued Oct. 8, 1992.

Decided June 17, 1993.

Arnold P. Lutzker, New York City (Alan N. Sutin, Cary A. Green, Dow, Lohnes & Albertson, New York City and John M. Brickman, Peirez, Ackerman & Levine, Great Neck, NY, of counsel), for plaintiff-appellant.

Louis S. Ederer, New York City (Mary L. Kevlin, Cowan, Liebowitz & Latman, P.C., of counsel), for defendant-appellee.

Before: VAN GRAAFEILAND, PRATT, WALKER, Circuit Judges.

WALKER, Circuit Judge:

The Paddington Corporation ("Paddington") appeals from a February 18, 1992 judgment of the United States District Court for the Eastern District of New York (Thomas C. Platt, Jr., Chief Judge ) dismissing, pursuant to Fed.R.Civ.P. 52(c), Paddington's trademark and trade dress infringement action brought under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), together with state claims, against a rival in the importation and distribution of the Greek liqueur ouzo.

Paddington argues on appeal that the district court's reliance on lack of secondary meaning in its trade dress analysis is now faulty in light of the Supreme Court's ruling in Two Pesos, Inc. v. Taco Cabana, Inc., --- U.S. ----, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992), handed down after the judgment ordering dismissal was entered in the district court. Paddington also contends that the district court erred in finding no likelihood of confusion on either the trademark or the trade dress claim.

BACKGROUND

Paddington is the United States importer and distributor of No. 12 Ouzo, a brand of the anise-based drink ouzo produced by Kaloyannis Bros., S.A. ("Kaloyannis"). Ouzo is the most popular alcoholic beverage in Greece, and No. 12 Ouzo, with a market share of more than forty percent, is the undisputed market leader in that country. Kaloyannis introduced its ouzo to the United States market with the unregistered mark "No. 12 Ouzo" and the current trade dress in 1969.

Attiki is the United States importer and distributor for Cavino S.A. ("Cavino"), a Greek ouzo producer that seeks, through Attiki, to bring an ouzo branded "#1 Ouzo" to the United States market. Attiki used to be the exclusive United States importer and distributor of No. 12 Ouzo, but in August, 1989, Kaloyannis dropped Attiki in favor of Paddington. Undaunted, in 1990, Attiki held discussions with Cavino about the prospect of introducing a rival ouzo brand into the United States. Cavino showed Attiki three potential labels, from which Attiki selected the #1 Ouzo label at issue in this case. Attiki and Cavino then entered an agreement under which Attiki would hold #1 Ouzo's United States trademark and trade dress rights.

Because the asserted trade dress similarity lies at the heart of this case, it is necessary to describe in some detail the physical appearances of the two ouzo bottles and their labels (see also Exhibit A).

The Ouzo Bottles

No. 12 Ouzo is sold in a clear glass bottle with a large label on its side and a second, smaller label on its neck. Both labels are red, white, and black. The large label consists of a white background, inside of which is a rectangle consisting of a white top half and a red lower half, bordered by a thin black line. In the white half, there is a small "No" and a very large "12" in black block letters made to resemble a stencilled number on a crate or barrel. In the red lower half the word "ouzo" appears in white block letters with black shadowing, under which the word "Kaloyannis" is found in small, thin black letters, along with some other information in fine print. The neck label mirrors the large label in layout, except that a circle is used in place of the rectangle. The overall appearance of the bottle is simple, even stark.

The #1 Ouzo bottle also is clear, of a similar shape, and displays a large main label and a smaller neck label in the same tones of red, white, and black as found on the No. 12 Ouzo bottle. The large label is rectangular, with a white background and a red border. In the center of the label is a large ellipse, separated into a white top half and a red bottom half, and bordered by a thin black line. In the white half there is a small "#" and a large "1" in black block letters. In the red half of the circle the word "ouzo" appears in plain white block letters. Above the ellipse is the word "LIQUEUR" in small black letters, and below it is miscellaneous fine print in black. The neck label contains a circle with a configuration identical to the ellipse on the bottle's large label. The overall appearance of the #1 Ouzo dress, like the No. 12 Ouzo bottle, is simple and clean.

Proceedings in the District Court

Paddington brought suit against Attiki on June 7, 1991, claiming trademark and trade dress infringement in violation of § 43(a) of the Lanham Act, and under New York law for common law unfair competition, dilution of a distinctive mark in violation of N.Y. General Business Law § 368-d, and deceptive acts in violation of N.Y. General Business Law § 349. It sought temporary and permanent injunctions against the use of the name "#1 Ouzo" and against the use of any trade dress that resembles that of No. 12 Ouzo. Paddington moved for a preliminary injunction on July 2, 1991, but this motion was withdrawn after Attiki agreed not to distribute #1 Ouzo pending the resolution of this action.

A bench trial was held by the district court on November 7, 1991. At the close of Paddington's case, Attiki moved for dismissal under former Fed.R.Civ.P. 41(b). The court granted the motion and entered judgment for Attiki on February 18, 1992. We note that on December 1, 1991, Rule 41(b)'s procedure for involuntary dismissal at the close of a plaintiff's case during a bench trial was replaced This appeal followed.

                with Rule 52(c), which for purposes of this case is substantively identical.   The district court should have converted the motion to a Rule 52(c) motion, and we will refer to it as such.   The court concluded that Paddington had failed to prove that its trade dress and trademark had acquired secondary meaning, that is, that they had come to be identified by the public as Kaloyannis's product, as required by Second Circuit case law at the time.   Also, applying the analysis set forth in Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961), the court found that there was no likelihood of confusion between either the trade dresses or the trademarks.   The court then dismissed Paddington's pendent state claims for lack of an independent basis of federal subject matter jurisdiction
                

DISCUSSION

I. Trade Dress Infringement

Unregistered trademarks and trade dresses are protectable under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), which provides a private 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. § 1125(a).

To prevail in an action for infringement of a trademark or trade dress under Lanham Act § 43(a), a plaintiff must prove (1) that its mark is distinctive and (2) that a likelihood of confusion exists between its product and the defendant's. Two Pesos, --- U.S. ----, ----, 112 S.Ct. 2753, 2758; Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1038-39 (2d Cir.1992). Additionally, functional packaging and product design are unprotected, and functionality may be raised as a defense to an action for trade dress infringement. LeSportsac, Inc. v. K Mart Corp., 754 F.2d 71, 75-76 (2d Cir.1985).

A. Distinctiveness of the No. 12 Ouzo Trade Dress

A product's trade dress is its "total image ... includ[ing] features such as size, shape, color or color combinations, texture, [or] graphics." Id. at 75 (quoting John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 980 (11th Cir.1983) (second alteration in original)).

Prior to the Supreme Court's decision in Two Pesos, the Second Circuit required a plaintiff seeking § 43(a) protection of a trade dress to establish distinctiveness by proving secondary meaning. See, e.g., Stormy Clime Ltd. v. ProGroup, Inc., 809 F.2d 971, 974 (2d Cir.1987). If a plaintiff proved secondary meaning, then the plaintiff could recover if it could establish a likelihood of confusion between the two trade dresses. This stood in contrast to our treatment of trademark infringement under § 43(a), where a plaintiff can reach the likelihood-of-confusion issue if the mark either is inherently distinctive or has acquired secondary meaning.

The district court below, relying on our precedent, held that Paddington's action must fail because it had not established that its trade dress had acquired secondary meaning.

In Two Pesos, the Supreme Court specifically rejected the Second Circuit approach, reasoning that there is "no basis for requiring secondary meaning for inherently distinctive trade dress protection under § 43(a) but not for other distinctive words, symbols, or devices capable of identifying a producer's product." --- U.S. at ----, 112 S.Ct. at 2760. A secondary meaning requirement, the Court reasoned, would disfavor new market entrants who possessed a unique trade dress that had not become widely known, while favoring those who had enjoyed market success, without any basis for such a distinction in the Lanham Act. Id. at ----, ----, 112 S.Ct. at 2759, 2761. What is critical for Lanham Act § 43(a) analysis, the Court noted, is not whether a trade dress has in fact come to identify a specific producer, but Courts often...