Rose Art Industries Inc. v. Swanson
| Decision Date | 13 December 2000 |
| Docket Number | No. 98-6489,98-6489 |
| Citation | 235 F.3d 165 |
| Parties | (3rd Cir. 2000) ROSE ART INDUSTRIES, INC., a New Jersey Corporation; WARREN INDUSTRIES, INC., an Indiana Corporation v. CARL SWANSON, an individual; THE SWANSON GROUP, INC., a Delaware Corporation; RAYMOND GEDDES & COMPANY, INC., a Maryland Corporation Rose Art Industries, Inc., Appellant |
| Court | U.S. Court of Appeals — Third Circuit |
Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 98-cv-02263) District Judge: Honorable Joseph A. Greenaway, Jr. [Copyrighted Material Omitted]
Roslyn S. Harrison, Esquire (Argued) Joseph F. Falgiani, Esquire Joan T. Pinaire, Esquire Nicholas Albano III, Esquire McCarter & English, LLP Four Gateway Center 100 Mulberry Street Newark, New Jersey 07102, Attorneys for Appellant
Kathryn Miller Goldman, Esquire (Argued) Donna M.D. Thomas, Esquire Astrachan, Gunst, Goldman & Thomas, P.C. 20 South Charles Street, 6th Floor Baltimore, Maryland 21201, Attorneys for Appellee
Before: ROTH and WEIS, Circuit Judges SHADUR,1 District Judge
The issue in this appeal is colorful. The appellant, Rose Art Industries, Inc. (Rose Art), claims that the appellee, Raymond Geddes and Company (Geddes), engaged in unfair competition in violation of section 43(a) of the Lanham Act. Specifically, Rose Art, a distributor of crayons, markers, and colored pencils, seeks to enjoin Geddes from distributing various stationery products (markers, crayons, and colored pencils) in packaging that Rose Art alleges infringes its trade dress.
The District Court held that Rose Art's packaging did not have a "consistent overall look" and thus did not constitute recognizable trade dress. The District Court denied Rose Art's motion for a preliminary injunction because it found that Rose Art had not demonstrated a reasonable probability of success on the merits.
We conclude that the District Court misapplied the legal standard in determining whether the characteristics of three types of Rose Art's packaging constituted recognizable trade dress. We will reverse the District Court's denial of Rose Art's motion for a preliminary injunction and remand this case for further proceedings consistent with this opinion.
Rose Art Industries, Inc., a New Jersey corporation, has been manufacturing and selling stationery products, including crayons, colored pencils, and markers, for over sixty years. Rose Art is currently the second-largest seller in the United States of children's crayons, markers, and chalks.
Raymond Geddes and Company, a Maryland corporation, was founded in 1923 and originally sold novelty items. Geddes subsequently expanded its operations in order to sell office supplies and stationery products to elementary school bookstores. Initially, Geddes did not have its own line of crayons. It purchased crayons from third parties, such as Crayola or Sargent, for resale to schools. In 1994, however, Geddes developed its own line of crayons called Spectrum, which it marketed and sold to elementary school bookstores in packaging designed by an independent designer.2
In 1996, hoping to expand its sale of stationery products into national mass merchandise retail outlets, Geddes hired Chris Blackmon as its national sales manager to develop mass market distribution channels for Geddes's products. Under Blackmon's direction, Geddes's Creative Director, Aleksandra Gulan, developed a product line under the name KidStuf 1. KidStuf 1 included markers and colored pencils, but not crayons.
In 1997, Geddes decided to further expand its mass market offerings by designing an art supply line, including a full range of markers, colored pencils, and crayons. Geddes targeted older children, ages 10-12, for its new line and named it "ARTiculates," suggesting a more sophisticated arts and crafts product. Because Geddes felt that the KidStuf 1 package design was not suitable for a mass market line, it decided to create a new package design for ARTiculates. Before creating the new design, Gulan and Blackmon obtained samples and catalogs of other manufacturers' retail stationery products, including Rose Art's.
Gulan completed the design of the ARTiculates packaging in September 1997, in time for Geddes to show the new line at the industry trade show in November. The ARTiculates packaging was characterized by a yellow background with a contrasting bold, bright color illustration of the product on the box and the product type written in white letters on a black oval-shaped band. The ARTiculates package also featured the legend "since 1923" and the statement: Both of these legends were new additions to the Geddes product design.
In July 1997, Dollar General Corporation (Dollar General)3 conducted its standard annual bid process. During the bid process, also known as a line review, Dollar General accepted bids from different manufacturers seeking to supply Dollar General with stationery products for 1998. Rose Art instructed its manufacturer representative, Carl Swanson, to submit bids to Dollar General for Rose Art's products. Unbeknownst to Rose Art, Swanson was also Geddes's manufacturer representative. Rose Art alleges that Swanson failed to submit bids for a number of Rose Art's products but that he did submit bids to Dollar General on behalf of Geddes for its stationery products. 4
In August 1997, Chris Blackmon and Swanson met with Gail Moore, the buyer for Dollar General's stationery department. At this meeting, Blackmon showed Moor e the KidStuf 1 line of products. In a second meeting on October 2, 1997, Blackmon showed Moore some crayon and marker samples in the ARTiculates packaging. Moore expressed interest in Geddes's ARTiculates line but did not like the ARTiculates packaging because it was too wordy, busy, and dull. She told Blackmon that she was looking for a package that was more basic, simple, and colorful with a design that would appeal to younger children. Moore instructed Blackmon to create a package that looked more like Crayola's package.5 Blackmon agreed to provide Moore with a revised package design.
Based on Moore's directions, Blackmon instructed Gulan to redesign the ARTiculates packaging using the KidStuf name and modifying the package to make it brighter and simpler. The new design, which the parties refer to as KidStuf 2, consists of the following characteristics: a bright yellow background on the top half of the package with a bright contrasting color on the bottom, the product type in white letters on a black band in the middle of the package, a rainbow backdrop (referred to by the District Court as a "swish") on which the KidStuf mark is superimposed, the statement that the product is "Certified Non-Toxic," the legend "since 1923", and the statement
On October 6, 1997, Geddes sent artwork, depicting the KidStuf 2 package design, to Dollar General. On October 10, Geddes sent forty-eight mock-up packages. The mock- ups comprised other manufacturers' crayon packages, including Rose Art's, with Geddes's KidStuf 2 package design wrapped around the other manufacturers' packages. The forty-eight Geddes mock-up packages were used by Dollar General in its planogram room (where the company displayed products as if they were on a shelf in a store) for review by Dollar General's executives in their selection of new vendors. In December 1997, after completing its standard annual bid process, Dollar General selected Geddes as its primary supplier of stationery products for 1998.
On May 20, 1998, Rose Art filed suit in U.S. District Court for the District of New Jersey, claiming unfair competition in violation of section 43(a) of the Lanham Act. Rose Art alleged that Geddes's KidStuf 2 packaging and its ARTiculates packaging were confusingly similar to Rose Art's packaging, especially Rose Art's Primary Color Packaging.
In an attempt to settle this litigation, Geddes in July of 1998 created a new package design for its stationery products (New Package Design). Geddes's New Package Design prominently displays the "Raymond Geddes" logo below the product's name. The box is characterized by a gold-yellow color on the top portion of the box and a contrasting purple-magenta color on the bottom; the product's type (e.g., crayons) is featured in white letters on top of a multi-tiered band of shades of blue. In addition, the New Package Design displays the products themselves either through a die cut, which reveals the markers or pencils, or through crayon illustrations, arranged in a rainbow design. Despite Geddes's efforts to settle, however, Rose Art now alleges that the New Package Design is also confusingly similar to Rose Art's packaging, especially the Rose Art Neon Color Packaging.
On August 3, 1998, Rose Art filed a motion for a preliminary injunction to stop Geddes from selling the alleged infringing packaging. The District Court denied the motion. See Rose Art Indus., Inc. v. Raymond Geddes & Co., 31 F. Supp. 2d 367 (D.N.J. 1998).
Rose Art claims on appeal that its trade dress for crayons, markers, and colored pencils is composed of the following elements: (1) a prominent band that is either straight or wavy and often black in color that cuts across the middle of the front of the package, extending to the sides with the words "CRAYONS" or "WASHABLE MARKERS" or other descriptive term in white letters imprinted on the band (the "Band and Letter feature"); (2) a yellow background on the top of the package with a contrasting background color (either red, purple, pink, or a combination of purple fading to red) on the...
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