Shakespeare Co. v. Silstar Corp. of America, Inc.

• Citation: 802 F. Supp. 1386
• Decision Date: 24 September 1992
• Docket Number: Civ. A. No. 3:90-1695-19.
• Parties: SHAKESPEARE COMPANY, Plaintiff, v. SILSTAR CORPORATION OF AMERICA, INC., Defendant.
• Court: U.S. District Court — District of South Carolina

802 F. Supp. 1386

SHAKESPEARE COMPANY, Plaintiff, v. SILSTAR CORPORATION OF AMERICA, INC., Defendant.

Civ. A. No. 3:90-1695-19.

United States District Court, D. South Carolina, Columbia Division.

September 24, 1992.

COPYRIGHT MATERIAL OMITTED

Frank Rogers Ellerbe, III, and James M. Brailsford, III, Robinson, McFadden & Moore, Columbia, S.C., for plaintiff.

William C. Cleveland, Haynsworth, Marion, McKay & Guerard, Charleston, S.C., for defendant.

MEMORANDUM OPINION AND ORDER

SHEDD, District Judge.

Shakespeare Company ("Shakespeare"), a manufacturer and distributor of fishing rods, is the owner of a federally registered trademark for fishing rods consisting of a whitish-translucent, or clear, tip portion of the rod, combined with an opaque rod base. Shakespeare uses this mark on a variety of types of rods it markets under its "Ugly Stik" line of rods. Shakespeare commenced this action to enjoin Silstar Corporation of America, Inc.'s ("Silstar") attempt to market a fishing rod known as the "Silstar Power Tip Crystal" rod, which has a color configuration similar to that covered by Shakespeare's trademark. Shakespeare asserts three claims for relief: trademark infringement under Section 32(1) of the Lanham Trademark Act of 1946 ("the Lanham Act"), 15 U.S.C. § 1114(1); unfair competition in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); and common law trademark infringement and unfair competition.

Silstar asserts in defense that its use of the clear tip is a fair use and that Shakespeare is precluded from enforcing any rights under the registered trademark based on the doctrine of unclean hands. Silstar has also filed a counterclaim seeking damages and cancellation of Shakespeare's mark, in which it contends that Shakespeare's mark is invalid because the clear tip is both a functional feature and generic of the type of fishing rods at issue, and because the clear tip mark simply consists of two contrasting colors. Silstar further contends that Shakespeare, by allowing third-party manufacturers to sell customized rods on its clear-tipped rod blanks, has not only misrepresented the source of some clear-tipped rods, but has also destroyed any secondary meaning which the mark may have had.

By Order dated October 5, 1990, then District Judge (now Circuit Judge) Clyde H. Hamilton, to whom this case had been assigned, granted Shakespeare's motion for a preliminary injunction, finding that Shakespeare was likely to succeed on its trademark infringement claim. Judge Hamilton enjoined Silstar from "distributing, marketing, advertising, promoting, holding for sale, or selling" either the Silstar Power Tip Crystal rod or any rod bearing or using any colorable imitation or confusingly similar facsimile of Shakespeare's clear-tip rod trademark during the pendency of this action. Judge Hamilton also required Shakespeare to post bond in the amount of $25,000 as security for the payment of costs and damages that Silstar may incur or suffer in the event that the injunction is later determined to have been erroneously issued. See Fed.R.Civ.P. 65(c).

The Court tried this case without a jury on March 19-20, 1992. After thoroughly reviewing the record and carefully considering the controlling legal principles, the Court concludes that Silstar's use of the clear tip is a fair use and, therefore, Silstar is entitled to prevail on Shakespeare's claims. The Court further concludes that the clear tip is a functional feature of the fishing rods involved in this case. In light of this latter conclusion, the Court will order the Commissioner of the Patent and Trademark Office ("PTO") to cancel Shakespeare's trademark.

I. FINDINGS OF FACT

Based on the evidence presented at trial,¹ the Court makes the following findings of fact² pursuant to Rule 52(a) of the Federal Rules of Civil Procedure:

1. Shakespeare is a Delaware corporation with its principal place of business in Columbia, South Carolina. Shakespeare manufactures, distributes and sells fishing tackle equipment, including fishing rods.

2. Since 1976, Shakespeare, as part of its Ugly Stik line of rods, has manufactured, advertised, distributed, and sold rods with a whitish-translucent, or clear, tip and an opaque base. Shakespeare is the owner of United States Trademark Registration number 1,261,786, which is registered on the Principal Register. Shakespeare's trademark provides in pertinent part:

Shakespeare claims no proprietary right in the configuration of the fishing rod itself as a trademark when it lacks the whitish, translucent tip portion feature.

The mark is used by applying it to the goods in that the mark is the color configuration of the fishing rod as shown in the drawing in which the tip portion of the shaft between the tip and the second line guide elements consists of a whitish, translucent material in contrast to the opaque remainder of the shaft.

This trademark is the subject of this lawsuit.

3. Shakespeare has sold millions of Ugly Stik rods, making the Ugly Stik its biggest selling and most profitable line of rods. Shakespeare sells Ugly Stiks for freshwater and saltwater use, with freshwater rods comprising approximately 85-90% of Shakespeare's annual sales. The large majority of freshwater Ugly Stiks have clear tips, while most saltwater Ugly Stiks do not. Approximately 80-90% of all Ugly Stiks have clear tips. The length of the clear tip on these rods varies depending on the type of action for which the rod is designed. In many instances, the clear tip extends above or below the second line guide.

4. Silstar is a South Carolina corporation with its principal place of business in Lexington, South Carolina. Silstar is owned by Silver Star, a Korean corporation that manufactures fishing rods. Silstar sells rods manufactured by Silver Star in competition with Shakespeare.

5. Until the late 1940s, fishing rods were made primarily of steel or bamboo; however, during that period, fiberglass rods were introduced into the market. For many years thereafter, fiberglass was the primary material from which fishing rods were made. Fiberglass rods consisted of two types: solid and hollow. The advantage of solid fiberglass rods was their strength. The disadvantage was their expense and weight. Hollow fiberglass rods were less expensive and lighter than solid fiberglass rods, but they were also less durable since they tended to break more easily, especially at the tip, which is the most vulnerable part of the rod. The fiberglass rods were predominantly white in color.

6. Shakespeare was one of the first companies that developed a process for making a hollow fiberglass rod with a solid fiberglass tip. This process is called the "Howald process"³ and involves essentially two steps: first, a fiberglass cloth is wrapped around a steel mandrel to form the hollow core of the rod; and second, longitudinal fiberglass fibers are placed along the length of the rod and extended beyond the hollow core, thereby forming a solid fiberglass tip.

7. The Howald process produced a white, hollow fiberglass tube with a white, solid fiberglass tip. The Howald process rods had solid fiberglass tips very similar to the Ugly Stik, except for the color, and were a vast improvement over entirely hollow fiberglass rods; however, they still suffered from being weaker than solid fiberglass rods.

8. The Howald process was the subject of various patents. Because of the protection afforded by these patents, which have now expired, Shakespeare was for many years one of the only manufacturers to offer hollow rods with solid fiberglass tips.

9. The Ugly Stik rods which bear Shakespeare's trademark are made of a hollow graphite tube and a solid fiberglass tip. The process of making this type of rod was developed by Monroe Lindler, a former engineer for Shakespeare, and is the subject of the Lindler U.S. Patent No. 4,061,806, which was issued on December 6, 1977. Lindler's development of the process for manufacturing Ugly Stik rods is the result of his adaptation of the Howald process.

10. At the time that Lindler developed his process, graphite was expensive; however, Lindler experimented with it because of its extreme strength and lightness. After unsuccessfully trying several different graphite combinations, Lindler used graphite in the Howald process and the result was a rod which was significantly stronger than Shakespeare's rods at that time. The use of graphite substantially improves the strength of the rods compared to fiberglass rods, while still maintaining the light weight which is desirable to fishermen.

11. Prior to the development of the Ugly Stik, neither Shakespeare nor any other rod distributor manufactured or sold rods with a clear fiberglass tip.

12. Shakespeare sold the Ugly Stik with the natural appearance which resulted from the manufacturing process for approximately one year. The graphite base was charcoal gray, which is the natural color of graphite and the tip was whitish-translucent, or clear, which is the natural color of the fiberglass and resin combination used by Lindler.

13. The natural color of resin, which is the liquid component which subsequently becomes solid and holds the rod together, depends on the type of curing agents and chemicals used; it is not necessarily clear.

14. In manufacturing rods, there are only two types of fiberglass which may be used: polyester resin compatible fiberglass or epoxy resin compatible fiberglass. Prior to the Ugly Stik, Shakespeare used polyester resin compatible fiberglass, the natural unpigmented color of which is a whitish-frosty (not clear) color. For the Ugly Stik, Shakespeare used epoxy resin compatible fiberglass because this is the best fiberglass and resin for use with graphite in the manufacturing process. Shakespeare did not add or subtract any pigment to the resin and did not intentionally design the process to create a clear tip.

15. The index of light refraction through the specific...