Plus Products v. Plus Discount Foods, Inc.

• Decision Date: 03 November 1983
• Docket Number: Nos. 1436,1512,1513,D,s. 1436
• Citation: 722 F.2d 999
• Parties: PLUS PRODUCTS, Plaintiff-Appellee-Cross-Appellant, v. PLUS DISCOUNT FOODS, INC., and the Great Atlantic and Pacific Tea Company, Inc., Defendants-Appellants-Cross-Appellees. ockets 83-7238, 83-7292 and 83-7294.
• Court: U.S. Court of Appeals — Second Circuit

Page 999

722 F.2d 999

222 U.S.P.Q. 373

PLUS PRODUCTS, Plaintiff-Appellee-Cross-Appellant, v. PLUS DISCOUNT FOODS, INC., and the Great Atlantic and Pacific Tea Company, Inc. Defendants-Appellants-Cross-Appellees.

Nos. 1436, 1512, 1513, Dockets 83-7238, 83-7292 and 83-7294.

United States Court of Appeals Second Circuit.

Argued June 17, 1983.

Decided Nov. 3, 1983.

James B. Swire and Robert L. Raskoff, New York City (Townley & Updike, New York City, on brief), for plaintiff-appellee-cross-appellant.

Robert M. Newbury and Mark V.B. Partridge, Chicago, Ill., and Henry G. Bisgaier, New York City (Pattishall, McAuliffe & Hofstetter, Chicago, Ill., and Cahill, Gordon & Reindel, New York City, on brief), for defendants-appellants-cross-appellees.

Before OAKES and CARDAMONE, Circuit Judges, and BARTELS, Senior District Judge. ^*

BARTELS, Senior District Judge:

We are again faced with litigation by two major corporations involving the issue of trademark infringement, the senior user seeking to prevent the use of marks employed by the junior user. Defendants Plus Discount Foods, Inc. ("Foods"), a chain of discount supermarkets, and its parent, The Great Atlantic and Pacific Tea Company, Inc. ("A & P"), appeal from a final judgment entered in the United States District Court for the Southern District of New York, 564 F.Supp. 984, (Robert W. Sweet, District Judge ), enjoining them from using the trademark and trade name "PLUS" as its stores' name and as a label on its private label brands. The issue is presented by the plaintiff Plus Products ("Products"), a producer of certain vitamin and mineral food products, which complains that the use of the trademark "PLUS" by defendants is in violation of its federally registered trademark and constitutes unfair competition. Products cross appeals seeking a broader scope of the injunction against the use of Foods of the trademark and also from the district court's denial of costs.

After a three-day bench trial, the district court concluded there was a likelihood of confusion between the parties' products, and it enjoined Foods from using the PLUS logo upon its stores and also upon all brand name products sold by Products unless the word "FOODS" was added to Foods' logo in size and style equivalent to that of the word "PLUS." In addition, Foods was required to post a statement in a prominent location in its stores disclaiming any connection between Products and Foods and specifying that its private label products were not produced by Products. That disclaimer was also required to be included in any advertising material that referred to products of a character manufactured by Products. ¹

FACTS

Products, a California corporation, founded in 1939, is in the business of producing and selling health products, and since its inception, it has continuously operated under the trade name PLUS. At the beginning Products simply sold vitamins, minerals and food fortifiers, but approximately twenty years ago it began expanding its PLUS line. In 1962 it added a variety of health and beauty aids under its PLUS mark, including skin creams, lotions and hair care products. In 1963 it introduced spices and cooking oil products, and in 1972 it added pet food supplements. ² All of the products sold under the PLUS mark are known for their high quality and high price.

Initially Products sold its goods through mail order. However, in 1960 it changed its merchandising approach by selling directly to jobbers and health stores. Currently, the bulk of its sales is to such stores. In 1980 Products was acquired by Richardson-Vicks, Inc. ("RVI"), which established a new company policy of promoting distribution of the PLUS line into supermarket nutrition centers. Up until that time the PLUS line products were sold in nutrition centers in only three retail grocery chains, representing about forty stores. By the end of 1981, as a result of Products' new marketing approach, its products were sold in over thirty-five chains with 923 centers. In large part RVI was recognizing and responding to the increased interest in nutrition and natural products recently developed in this country which has led a significant number of supermarkets to open up nutrition centers within their retail stores. The health food sections, particularly popular on the west coast, are actually self-contained mini-health stores, for the premium-priced products therein are segregated from the grocery's more mundane items, thereby fostering the image of a high quality health food store within a retail supermarket. Products' dispute with Foods is a natural by-product of its expansion into conventional grocery stores.

Naturally, Products was vigilant in attempting to restrict others from using the word "PLUS" even before its entrance into conventional grocery store sales. It is the proprietor of three organizations for the trademark PLUS and one registration for the trademark PLUS ONE-UP, ³ and since 1970 it has forwarded cease and desist letters to companies relating to over 130 different uses of the word "PLUS," and has filed numerous opposition proceedings in the Patent and Trademark Office. See, e.g., American Dietaids Co. v. Plus Products, 412 F.Supp. 691 (S.D.N.Y.), aff'd, 551 F.2d 299 (2d Cir.1976) ("ACEROLA PLUS" and "CAMU PLUS"); Plus Products v. Natural Organics, Inc., 204 U.S.P.Q. (BNA) 773 (T.T.A.B.1979) ("NATURE'S PLUS"); Plus Products v. Redken Laboratories, Inc., 199 U.S.P.Q. (BNA) 111 (T.T.A.B.1978) ("ph PLUS").

Defendant Foods, a chain of discount grocery stores, incorporated in New Jersey, is the latest company whose use of the word PLUS, Products is challenging. Foods has a markedly different public image from the high quality image of Products' PLUS line, its chain of discount stores offering consumers lower prices in exchange for an absence of amenities. ⁴ For instance, customers must select their merchandise from cartons and bins, they must pay by cash and must bag their own goods. Foods stocks national brands with which it utilizes shelf talkers bearing the PLUS mark, and it also has hundreds of private label items that are sold under its PLUS logo. Only a few of these items overlap with goods sold by Products, to wit, spices, food oils and pet foods.

This particular concept of "bargain basement" grocery stores was originated by a large German food retailer, the Tenglemann group. For several years Tenglemann had been successfully operating a chain of discount food stores in Germany under the name PLUS, which carries private label items also identified by the PLUS logo. Foods' logo features the word "PLUS" with a blue and orange border derived from the slogan "Priced Low-U Save," while the Products' logo also features the word "PLUS" but is in block letters with a plus symbol over a red dot inside of the loop of the "P." In January, 1979, Tenglemann purchased operating control of A & P, and after the takeover, A & P began investigating the possibility of beginning a PLUS line of discount stores in the United States. However, a trademark registration search revealed Products' registrations, and when Foods attempted to register PLUS for supermarket services, the U.S. Patent and Trademark Office examiner refused registration because of likely confusion with Products' registration. A & P retained the services of trademark counsel who advised against utilizing the PLUS logo on vitamins, shampoos, beauty preparations and beauty soaps, ⁵ and subsequently A & P incorporated Foods as its wholly owned subsidiary, and decided to adopt PLUS as the trade name of its stores and trademark on its brand name items.

The trigger for the instant action was an article published by The Wall Street Journal on July 9, 1979, in which appeared an announcement of A & P's plans to open a chain of PLUS stores. The article was brought to the attention of Products' counsel who wrote to A & P on September 17, 1979, expressing concern that Foods' stores might be identified with Products. A & P responded by stating its position that there was no prospect of confusion. This litigation followed.

DISCUSSION

As in all trademark and trade name infringement cases, the crucial issue 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." Mushroom Makers, Inc. v. R.G. Barry Corp., 580 F.2d 44, 47 (2d Cir.1978), cert. denied, 439 U.S. 1116, 99 S.Ct. 1022, 59 L.Ed.2d 75 (1979); 3A Callman, The Law of Unfair Competition, Trademarks & Monopolies Sec. 21.07 (4th ed. 1983) ("Callman"). The solution of this problem does not become easier with time and depends upon a consideration of the facts and circumstances in each case. See McGregor-Doniger, Inc. v. Drizzle, Inc., 599 F.2d 1126, 1130 (2d Cir.1979). The gravamen of plaintiff's complaint is chiefly directed to reverse confusion as to the source of its products. It is plaintiff's claim that consumers will perceive that Products' line of health products is associated with or emanates from Foods. If they conclude that defendant Foods is the source of Products' goods, Products' reputation for high quality merchandise may well become tarnished because of Foods' bargain basement no-frills image. See Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365, 1371-72 (10th Cir.1977), cert. dismissed, 434 U.S. 1052, 98 S.Ct. 905, 54 L.Ed.2d 805 (1978); Callman at Sec. 21.09.

There are a few added wrinkles to this case. The parties are not competitors in the usual sense. Products manufactures goods, some of which are sold in retail grocery stores while Foods is a retailer that carries some goods under its own brand name. Moreover, with the exception of spices, pet food and oils, the products involved are related but non-competing. It is clear, however, that related but non-competing products can become associated in consumers' minds, Lever Bros. v. American Bakeries...