Piper Aircraft Corp. v. Wag-Aero, Inc.

• Decision Date: 03 August 1984
• Docket Number: No. 83-1797,WAG-AER,INC,83-1797
• Citation: 741 F.2d 925
• Parties: , 16 Fed. R. Evid. Serv. 86 PIPER AIRCRAFT CORPORATION, Plaintiff-Appellee, v., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 925

741 F.2d 925

223 U.S.P.Q. 202, 16 Fed. R. Evid. Serv. 86

PIPER AIRCRAFT CORPORATION, Plaintiff-Appellee, v. WAG-AERO, INC., Defendant-Appellant.

No. 83-1797.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 10, 1984.

Decided Aug. 3, 1984.

Joseph A. Gemignani, Michael, Best & Friedrich, Milwaukee, Wis., for defendant-appellant.

Douglas W. Wyatt, Wyatt, Gerber, Shoup, Scobey & Badie, New York City, for plaintiff-appellee.

Before CUDAHY and POSNER, Circuit Judges, and PELL, Senior Circuit Judge.

PELL, Senior Circuit Judge.

In this trademark action, defendant, Wag-Aero, Inc., appeals from the district court order and judgment granting the plaintiff, Piper Aircraft Corporation, a permanent injunction. 553 F.Supp. 136. The defendant raises three principal issues on appeal. First, defendant asserts that the district court should have ruled the consumer survey introduced by plaintiff to be inadmissible for several reasons. Second, defendant alleges that, due to laches and acquiescence by plaintiff, the district court should have estopped plaintiff from asserting its trademark rights. Finally, defendant claims that plaintiff failed to demonstrate a likelihood of confusion. We will examine these issues in turn.

I. THE FACTS

Piper manufactures and sells aircraft and parts for those aircraft. In 1931, Piper began to produce under the CUB trademark an airplane that became the precursor to a number of other CUB models, most recently, the SUPER CUB. The insignia of the CUB planes is a small bear standing behind the CUB logo. The CUB has been one of the most successful private planes sold in this country, with over 33,000 sold since it first appeared. As the CUB evolved, various earlier models have gone out of production. Piper maintains an inventory of spare parts for the out-of-production aircraft for some time, but eventually their supply becomes exhausted and is not replaced. There is no evidence that Piper ever produced, for domestic consumption, kits from which customers could construct home-built aircraft, although there was some evidence of kit production for foreign markets.

Richard Wagner founded the defendant company in 1960 to sell replacement parts for out-of-production aircraft to restorers. The company began to produce an annual catalog targeted for people who maintain and restore out-of-production aircraft and people who construct home-built aircraft from kits. Defendant acquired some parts from Piper distributors but manfuactured most of the parts that it sold. The only distinction in the catalogs between the two types of parts was that the parts manufactured by Piper carried serial numbers of both parties, while the parts manufactured by Wag-Aero for use in Piper planes had only a Wag-Aero serial number. Beginning in 1973, Wag-Aero prepared kits, which included engineering plans and parts, so that its customers could construct replicas of various out-of-production aircraft, including the early CUB. Defendant called the completed replica of the CUB a Cuby. In its promotional material for the Cuby, defendant's insignia consisted of a small bear slightly different than the one used by plaintiff standing behind and slightly to the side of the logo for the plane, which defendant printed as follows: CUBy.

Because defendant claims laches and acquiescence, we must trace with some particularity the development of the relationship between the parties. Correspondence between Piper and Wag-Aero began in October 1974, when Wagner sought to obtain from plaintiff the machine tools necessary to produce various spare parts. Wagner also mentioned in his early correspondence a "hope" that his company would produce, at some future time, a replica of the early CUB. In early 1975, Wagner again wrote plaintiff and indicated that it was proceeding with its program to build a replica of the CUB, which it intended to call a CUBy. In the response of plaintiff's president to this letter, he made no mention of the CUBy project, referring only vaguely to the spare parts aspect of defendant's business. Similarly, Wagner's February 1975 reply to Piper's letter primarily referred to defendant's spare parts business. Wagner sought to institute a program that would have plaintiff refer inquiries for out-of-production parts to Wag-Aero. Furthermore, Wagner sought to take over the production of items infrequently sold by Piper.

Conflicts between the two companies, although slow in developing, began to arise in 1976. In August of that year, the Federal Aviation Administration sent to Piper's FAA coordinator an inquiry as to Wag-Aero's advertisement in its parts catalog for Piper Identification Plates. Shortly thereafter, Wagner sent to Piper a copy of its catalog, a brochure of the CUBy project, and copies of his previous correspondence with Piper. At that time, Wagner reiterated his interest in producing any Piper parts that Piper ceased producing. To this letter, Piper's director of customer services responded on September 27, 1976 (the Graham letter), stating inter alia: "[W]e do not intend to respond to your inquiry. Certainly you are at liberty to take any action that you consider to be in the best interest of Wag-Aero." Two days later, however, plaintiff's patent counsel wrote defendant (the Walsh letter) and, referring to a prior telephone conversation, stated: "I have indicated that Piper had not given permission to your company for use of its name and, therefore, we requested that you delete these Piper items from your catalog." Counsel went on to request information from Wagner as to how and when defendant obtained its claimed authorization to use "the Piper designation" as well as "the number and identification of articles that you are selling under the designation Piper."

From late 1976 until the institution of this suit, the parties engaged in intermittent and, ultimately, fruitless correspondence apparently designed to achieve an accommodation. In early 1977, plaintiff wrote to defendant stating that "we fail to see any benefits to Piper in releasing the type certificate of [an early Piper plane that defendant wanted to replicate] to Wag-Aero. Therefore, we feel there is no basis on which to approve your request." Wagner then indicated an intent to continue production of the replica, despite Piper's refusal to agree to the procedure. Subsequently, Piper informed defendant that defendant was not authorized to produce and sell the Piper Identification Plates, to which we earlier referred, and that the use of those plates constituted an infringement of Piper's trademark rights. Piper then requested that defendant "discontinue advertising and selling these placards." By February 1977, defendant had retained counsel to represent the company in the continuing negotiations.

II. THE DISTRICT COURT PROCEEDINGS

Plaintiff filed its complaint in district court in October 1980. The complaint contains two counts. Count I alleges trademark infringement and unfair competition under the Lanham Act. 15 U.S.C. Secs. 1111-1121. Piper's allegations centered on Wag-Aero's use of the registered names Piper, CUB, and SUPER CUB, as well as the bear cub insignia in its parts catalog and marketing of the CUBy kit. Count II alleges that Wag-Aero's use of the Piper marks constitutes a false designation of origin, in violation of another provision of the Lanham Act. 15 U.S.C. Sec. 1125(a). Plaintiff's prayer sought preliminary and permanent injunctive relief to prevent defendant's use of plaintiff's various names in connection with aircraft kits and spare parts. Plaintiff also sought the destruction of all infringing materials in defendant's possession an accounting for profits, costs, and attorney's fees.

The only pretrial matters relevant to this appeal were the proceedings related to the survey data offered by Piper. The purpose of the survey was to help establish likelihood of confusion. All persons interviewed were owners of private planes. The survey consisted of an interviewer giving to an interviewee a copy of Wag-Aero's 1980 parts catalog, allowing time for examination of the catalog, and then directing attention to pages where Piper parts were advertised before asking the interviewees what company they believed to have manufactured the parts and kits advertised in the catalog. All the parts on the indicated pages had, in fact, been manufactured by defendant.

Piper filed a motion in limine, in accordance with the process recommended in Union Carbide Corp. v. Ever-Ready, Inc., 531 F.2d 366 (7th Cir.1976), for the district court to determine the admissibility of the survey before plaintiff undertook the great expense of conducting an actual survey. Only several days before the deadline established by the district court for the close of discovery, plaintiff produced to defendant a copy of the survey questions as well as the results of a preliminary survey. Among several grounds of objection, defendant asserted in opposition to plaintiff's motion that the subjects of the interviews constituted an improper survey universe and that the survey results were hearsay.

The district court granted plaintiff's motion in limine. The court ruled that the survey results were not hearsay because the survey merely recorded the present sense impression and existing state of mind of the interviewees and, thus, was admissible under rules 803(1) and 803(3) of the Federal Rules of Evidence. The court also refused to bar introduction of the survey on the ground that the interviewers might not be present to testify, although their testimony might be important to determine the credibility of the survey. The court determined that "the better course of action is to admit the survey with a caution to the plaintiff that the court may be obliged to entertain a motion to strike if Piper fails to establish the interviewers' credibility to the court's satisfaction." Finally, the court stated that, since plaintiff filed its complaint in 1980...