Spring Mills, Inc. v. Ultracashmere House, Ltd.

Decision Date01 October 1982
Docket NumberNo. 1156,D,1156
Citation217 USPQ 298,689 F.2d 1127
PartiesSPRING MILLS, INC., Plaintiff-Appellant, v. ULTRACASHMERE HOUSE, LTD. and Bart Schwartz, Defendants-Appellees. ocket 82-7085.
CourtU.S. Court of Appeals — Second Circuit

Allan Zelnick, New York City (Weiss, Dawid, Fross, Zelnick & Lehrman, New York City, of counsel), for plaintiff-appellant.

On Submission (Hiram G. Shields and Leo Gitlin, New York City, of counsel), for defendants-appellees.

Before LUMBARD, OAKES and PIERCE, Circuit Judges.

PIERCE, Circuit Judge:

Spring Mills, Inc., plaintiff in this action, appeals from a judgment entered in the District Court for the Southern District of New York dismissing its complaint alleging trademark infringement, false designation of origin, and unfair competition. After a bench trial, Judge David N. Edelstein issued an opinion finding that Spring Mills was not entitled to injunctive relief, and that the defendants were entitled to judgment on the merits.

We reverse and remand the matter to the district court.

I

Spring Mills, Inc. ("Spring Mills") is a South Carolina corporation which has been in the business of manufacturing and marketing fabrics and textiles for over 80 years. The company is the owner of the registered trademark "Ultrasuede", 1 which it applies to "non-woven suede-like fabrics", made by embedding polyester fibers in a polyurethane sheet. Ultrasuede enjoys a widespread reputation as a high-quality "luxury" fabric which is sold to fashionable "designer" garment houses for manufacture into items of apparel for the retail trade. 2 Spring Mills does not manufacture Ultrasuede but instead imports the material on a non-exclusive basis from Toray Industries, 3 the Japanese manufacturer of the material. Spring Mills has been marketing Ultrasuede since 1971, and between that time and September of 1981, the company had sold approximately $190 million worth of the material at wholesale. The particular traits that apparently have made Ultrasuede so popular and saleable are, as the district court found, that it is more durable than suede and it is machine washable. Spring Mills has done relatively little by way of advertising Ultrasuede, relying instead on its customers, the garment manufacturers and retailers, who have promoted and advertised the product extensively. 4

Defendant-appellee Ultracashmere House, Ltd. ("UHL") was formed in 1978 by individual defendant Bart Schwartz, who is now President of the company, 5 UHL manufactures women's garments from Ultracashmere, which UHL described in its 1978 trademark registration application as "woven, cashmere-like fabrics ... containing synthetic fibers impregnated with synthetic resins." This description was false. Schwartz admitted during deposition that the Ultracashmere fabric, which UHL imports from Italy, is in fact simply spun rayon. He further testified that he knew of the falsehood when UHL applied to register the mark. The United States Patent and Trademark Office initially approved "Ultracashmere" for registration, but, after receiving opposition from Spring Mills, the Patent and Trademark Office suspended registration pending the outcome of this action.

On August 28, 1979, Spring Mills commenced the present suit, alleging four causes of action: (1) trademark infringement in violation of section 32(1) of the Lanham Trademark Act of 1946, 15 U.S.C § 1114(1); (2) false designation of origin, false representation, or false advertising in violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (3) unfair competition; and (4) common law trademark infringement. Jurisdiction was predicated under 15 U.S.C. §§ 1121, 1338.

In its prayer for relief, Spring Mills demanded inter alia that defendants be enjoined "from using the term ULTRACASHMERE or any term confusingly similar thereto, including any term containing the element "ULTRA" combined with the generic name of a fiber or fabric, alone or in combination with any other words, symbols and devices in respect of any aspect of its business, including but not limited to use as a corporate or trading name or as a trademark or in the advertising or selling of fabric or wearing apparel...." Spring Mills also sought an order directing defendants to deliver up for destruction all labels, tags and promotional materials in their possession. In addition, Spring Mills asked for an accounting of profits.

On October 17, 1980, Judge Lowe, to whom the case was initially assigned, denied Spring Mills' motion for a preliminary injunction on the ground that Spring Mills had not demonstrated that it was likely to suffer irreparable injury. The case was subsequently transferred to Judge Edelstein, before whom a three-day bench trial was held commencing September 22, 1981. On January 20, 1982, Judge Edelstein filed an opinion in which defendants prevailed on all causes of action. Judgment was entered accordingly by the district court on January 26, 1982. Spring Mills noticed this appeal on February 22, 1982.

II

Spring Mills maintains, inter alia, that the trial judge committed clear error when he determined that UHL had not infringed upon the Ultrasuede trademark in violation of section 32(1) of the Lanham Act. In addressing this issue we note, as the trial judge stated, that "the central inquiry in all cases of alleged trademark infringement and unfair competition is the likelihood of confusion, or the '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.' " (quoting 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)). The trial judge also noted that in cases such as this, where the junior user of a mark's product is not in direct competition with that of the senior user, the question of likelihood of confusion " 'does not become easier of solution with the years,' " (quoting McGregor-Doniger, Inc. v. Drizzle, Inc., 599 F.2d 1126, 1130 (2d Cir. 1979)); Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961).

A number of different factors must be considered when assessing the likelihood that ordinarily prudent purchasers will confuse two different marks in cases where the products are not in direct competition. See Polaroid Corp. v. Polarad Electronics Corp., supra, 287 F.2d at 495, where Judge Friendly stated that,

(w)here the products are different, the prior owner's chance of success is a function of many variables: the strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant's good faith in adopting its own mark, the quality of defendant's product, and the sophistication of the buyers. Even this extensive catalogue does not exhaust the possibilities-the court may have to take still other variables into account.

Judge Edelstein considered each of the Polaroid factors in reaching his decision, including bridging the gap, actual confusion, and quality of defendant's product. We need not address these particular factors given the strength of the showing with respect to the other factors, as discussed herein.

a. Strength of the Mark

A finding was made that "ULTRASUEDE is a strong mark and entitled to broad protection." The court determined that "Ultrasuede" is a "suggestive" mark, a category exceeded in strength only by "arbitrary or fanciful" marks. Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976). The district court also determined that the Ultrasuede mark had acquired further strength through widespread exposure to the public. In this regard, this Court has stated that

"(t)he term 'strength' as applied to trademarks refers to the distinctiveness of the mark or more precisely, its tendency to identify the goods sold under the mark as emanating from a particular, although possibly anonymous, source." McGregor-Doniger Inc. v. Drizzle Inc., supra, 599 F.2d at 1131.

Appellees do not substantially dispute the district court's finding on this question and we agree that the record suggests that "Ultrasuede" is a strong mark entitled to broad protection.

b. The Degree of Similarity Between the Marks

The district court found that the two marks in question were not substantially similar. In reviewing this finding, we note that "(t)o the degree that the determination of 'likelihood of confusion' rests upon a comparison of the marks themselves, the appellate court is in as good a position as the trial judge to decide the issue." Miss Universe, Inc. v. Patricelli, 408 F.2d 506, 509 (2d Cir. 1969); McGregor-Doniger v. Drizzle, supra, 599 F.2d at 1133.

We agree with the district judge that the ordinary consumer would perceive that "ULTRASUEDE connotes a suede-like fabric whereas ULTRACASHMERE connotes a cashmere-like fabric." This is, however, beside the point: appellant does not claim that the marks connote similar products beyond denoting both as "luxury" fabrics; rather, appellant maintains that UHL's mark is likely to confuse consumers as to the source of the Ultracashmere product. See American Home Products v. Johnson Chemical Co., 589 F.2d 103, 107 (2d Cir. 1978).

In this regard, an inquiry into the degree of similarity between two marks does not end with a comparison of the marks themselves. As this Court has stated, "the setting in which a designation is used affects its appearance and colors the impression conveyed by it." McGregor-Doniger, supra, 599 F.2d at 1133 (quoting the Restatement of Torts § 729, Comment b at 593). Since "it is the effect upon prospective purchasers that is important," Id., the "impression" conveyed by the setting in which the mark is used is often of critical importance.

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