Peaceable Planet, Inc. v. Ty, Inc.

• Decision Date: 02 April 2004
• Docket Number: No. 03-3452.,03-3452.
• Citation: 362 F.3d 986
• Parties: PEACEABLE PLANET, INC., Plaintiff-Appellant, v. TY, INC. and H. Ty Warner, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

362 F.3d 986

PEACEABLE PLANET, INC., Plaintiff-Appellant, v. TY, INC. and H. Ty Warner, Defendants-Appellees.

No. 03-3452.

United States Court of Appeals, Seventh Circuit.

Argued February 26, 2004.

Decided April 2, 2004.

Charles W. Shifley (argued), Banner & Witcoff, Chicago, IL, for Plaintiff-Appellant.

James P. White (argued), Welsh & Katz, Chicago, IL, for Defendants-Appellees.

Before BAUER, POSNER, and KANNE, Circuit Judges.

POSNER, Circuit Judge.

In the most common type of suit for trademark infringement, the plaintiff complains that the defendant is passing off his (inferior) product as the plaintiff's. But here we have the converse case of "reverse passing off," in which the plaintiff complains that the defendant is trying to pass off the plaintiff's product as the defendant's. Illinois High School Ass'n v. GTE Vantage Inc., 99 F.3d 244, 246 (7th Cir. 1996); Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 957-58 (7th Cir.1992); A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 227-29 (3d Cir.2000); Sterling Drug, Inc. v. Bayer AG, 14 F.3d 733, 740-41 (2d Cir.1994). Why would anyone want to do such a thing? One reason might be to obliterate the plaintiff's corporate identity and prevent him from entering new markets, where the defendant, having appropriated the plaintiff's trademark, would claim that the plaintiff was the infringer. Such would be a case of deliberate reverse passing off, and terms like "passing off" and "reverse passing off" are sometimes reserved for deliberate efforts to confuse the consuming public, but either form of confusion can be actionable without proof of intent to confuse.

The trademark infringement claim is federal, and there is also a claim for false advertising, also under the Lanham Act, plus several claims governed by Illinois law, including one for product disparagement. All the claims were rejected on summary judgment.

The disappointed plaintiff is Peaceable Planet. Like the defendant, the much larger and better known Ty Inc. (there is no comma in Ty's name, but we have left it in the name as it appears in the caption because that is what it is called in the complaint), Peaceable Planet makes plush toys in the shape of animals, filled with bean-like materials to give the toys a soft and floppy feel. Ty's plush toys are, of course, the famous "Beanie Babies."

In the spring of 1999, Peaceable Planet began selling a camel that it named "Niles." The name was chosen to evoke Egypt, which is largely desert except for the ribbon of land bracketing the Nile. The camel is a desert animal, and photos juxtaposing a camel with an Egyptian pyramid are common. The price tag fastened to Niles's ear contains information both about camels and about Egypt, and the Egyptian flag is stamped on the animal.

A small company, Peaceable Planet sold only a few thousand of its camels in 1999. In March of the following year, Ty began selling a camel also named "Niles." It sold a huge number of its "Niles" camels — almost two million in one year — precipitating this suit. The district court ruled that "Niles," being a personal name, is a descriptive mark that the law does not protect unless and until it has acquired secondary meaning, that is, until there is proof that consumers associate the name with the plaintiff's brand. Peaceable Planet did not prove that consumers associate the name "Niles" with its camel.

The general principle that formed the starting point for the district court's analysis was unquestionably sound. A descriptive mark is not legally protected unless it has acquired secondary meaning. 15 U.S.C. §§ 1052(e), (f); Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992); Ty Inc. v. Perryman, 306 F.3d 509, 513-14 (7th Cir.2002); Platinum Home Mortgage Corp. v. Platinum Financial Group, Inc., 149 F.3d 722, 727 (7th Cir.1998); Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 10 (2d Cir.1976). An example is "All Bran." The name describes the product. If the first firm to produce an all-bran cereal could obtain immediate trademark protection and thereby prevent all other producers of all-bran cereal from describing their product as all bran, it would be difficult for competitors to gain a foothold in the market. They would be as if speechless. Had Peaceable Planet named its camel "Camel," that would be a descriptive mark in a relevant sense, because it would make it very difficult for Ty to market its own camel — it wouldn't be satisfactory to have to call it "Dromedary" or "Bactrian."

Although cases and treatises commonly describe personal names as a subset of descriptive marks, Perini Corp. v. Perini Construction, Inc., 915 F.2d 121, 125 (4th Cir.1990); Marker Int'l v. DeBruler, 844 F.2d 763, 764 (10th Cir.1988); Yarmuth-Dion, Inc. v. D'ion Furs, Inc., 835 F.2d 990, 993 (2d Cir.1987); 4 Callmann on Unfair Competition, Trademarks & Monopolies § 22:42 (4th ed.2003), it is apparent that the rationale for denying trademark protection to personal names without proof of secondary meaning can't be the same as the rationale just sketched for marks that are "descriptive" in the normal sense of the word. Names, as distinct from nicknames like "Red" or "Shorty," are rarely descriptive. "Niles" may evoke but it certainly does not describe a camel, any more than "Pluto" describes a dog, "Bambi" a fawn, "Garfield" a cat, or "Charlotte" a spider. (In the Tom and Jerry comics, "Tom," the name of the cat, could be thought descriptive, but "Jerry," the name of the mouse, could not be.) So anyone who wanted to market a toy camel, dog, fawn, cat, or spider would not be impeded in doing so by having to choose another name.

The reluctance to allow personal names to be used as trademarks reflects valid concerns (three such concerns, to be precise), but they are distinct from the concern that powers the rule that descriptive marks are not protected until they acquire secondary meaning. One of the concerns is a reluctance to forbid a person to use his own name in his own business. Sardi's Restaurant Corp. v. Sardie, 755 F.2d 719, 725-26 (9th Cir.1985); Taylor Wine Co. v. Bully Hill Vineyards, Inc., 569 F.2d 731, 735-36 (2d Cir.1978); 2 McCarthy on Trademarks & Unfair Competition § 13:5 (4th ed.2003); cf. L.E. Waterman Co. v. Modern Pen Co., 235 U.S. 88, 95-98, 35 S.Ct. 91, 59 L.Ed. 142 (1914) (Holmes, J.); Herring-Hall-Marvin Safe Co. v. Hall's Safe Co., 208 U.S. 554, 559-60, 28 S.Ct. 350, 52 L.Ed. 616 (1908) (Holmes, J.). Supposing a man named Brooks opened a clothing store under his name, should this prevent a second Brooks from opening a clothing store under his own (identical) name even though consumers did not yet associate the name with the first Brooks's store? It should not. Abraham Zion Corp. v. Lebow, 761 F.2d 93, 104-05 (2d Cir.1985); Creager v. Russ Togs, Inc., 218 U.S.P.Q. 582, 585 (C.D.Cal.1982); D & W Food Corp. v. Graham, 134 Cal.App.2d 668, 286 P.2d 77, 82 (1955); Continente v. Continente, 244 F.Supp. 688, 689 (N.D.Cal. 1965), aff'd, 378 F.2d 279 (9th Cir.1967); cf. Scott Paper Co. v. Scott's Liquid Gold, Inc., 589 F.2d 1225, 1231-32 (3d Cir.1978); S.C. Johnson & Son, Inc. v. Johnson, 116 F.2d 427, 429-30 (2d Cir.1940) (L.Hand, J.); compare Brooks Bros. v. Brooks Clothing of California, 60 F.Supp. 442, 454 (S.D.Cal.) (secondary meaning acquired by "Brooks Brothers") decision supplemented, 5 F.R.D. 14 (S.D.Cal.1945), and aff'd, 158 F.2d 798 (9th Cir.1947).

Another and closely related concern behind the personal-name rule is that some names are so common — such as "Smith," "Jones," "Schwartz," "Wood," and "Jackson" — that consumers will not assume that two products having the same name therefore have the same source, and so they will not be confused by their bearing the same name. 2 McCarthy on Trademarks & Unfair Competition, supra, § 13:4; Restatement (Third) of Unfair Competition § 14, comment e (1995); cf. Scott Paper Co. v. Scott's Liquid Gold, Inc., supra, 589 F.2d at 1231 and n. 4; S.C. Johnson & Son, Inc. v. Johnson, supra, 116 F.2d at 430. If there are two bars in a city that are named "Steve's," people will not infer that they are owned by the same Steve.

The third concern, which is again related but brings us closest to the rule regarding descriptive marks, is that preventing a person from using his name to denote his business may deprive consumers of useful information. Maybe "Steve" is a well-known neighborhood figure. If he can't call his bar "Steve's" because there is an existing bar of that name, he is prevented from communicating useful information to the consuming public. 2 McCarthy on Trademarks & Unfair Competition, supra, § 13:3; cf. Basile, S.p.A. v. Basile, 899 F.2d 35, 38-40 (D.C.Cir.1990); Charles J. Donnelly, Inc. v. Donnelly Bros., Inc., 96 R.I. 255, 191 A.2d 143, 146 (1963).

The scope of a rule is often and here limited by its rationale. Or, to make the same point differently, one way of going astray in legal analysis is to focus on the semantics of a rule rather than its purpose. Case 1 might say that a personal name could not be trademarked in the circumstances of that case without proof of secondary meaning. Case 2 might say that personal names cannot be trademarked without proof of secondary meaning but might leave off the qualifications implicit in the circumstances of the case. And then in Case 3 the court might just ask, is the trademark at issue a personal name? As we observed in AM Int'l, Inc. v. Graphic Management Associates, Inc., 44 F.3d 572, 575 (7th Cir.1995), "rules of law are rarely as clean and strict as statements of them make them seem. So varied and unpredictable are the circumstances in which they are applied that more often than not the summary statement of a rule — the terse formula that judges employ as a necessary shorthand to prevent judicial opinions from turning into treatises — is better regarded as a generalization than as the...