Springs Mills, Inc. v. Ultracashmere House, Ltd., 178

• Decision Date: 23 December 1983
• Docket Number: No. 178,D,178
• Parties: SPRINGS MILLS, INC., Plaintiff-Appellant, v. ULTRACASHMERE HOUSE, LTD., and Bart Schwartz, Defendants-Appellees. ocket 83-7333.
• Court: U.S. Court of Appeals — Second Circuit

Page 352

724 F.2d 352

221 U.S.P.Q. 577

SPRINGS MILLS, INC., Plaintiff-Appellant, v. ULTRACASHMERE HOUSE, LTD., and Bart Schwartz, Defendants-Appellees.

No. 178, Docket 83-7333.

United States Court of Appeals, Second Circuit.

Argued Sept. 12, 1983.

Decided Dec. 23, 1983.

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

Bart Schwartz, pro se.

Before KAUFMAN, MESKILL and PIERCE, Circuit Judges.

PIERCE, Circuit Judge:

This is an appeal from a judgment of the United States District Court for the Southern District of New York entered on March 31, 1983. Previously, plaintiff-appellant Springs Mills, Inc. ("Springs Mills") had appealed from a judgment entered in that court, Springs Mills, Inc. v. Ultracashmere House, Ltd., 532 F.Supp. 1203 (S.D.N.Y.1982), which resulted in a reversal and remand by this court, 689 F.2d 1127 (2d Cir.1982). For the reasons set forth below, the judgment of March 31, 1983, is affirmed in part and reversed and remanded in part.

I. BACKGROUND

The details relevant to this litigation are set forth in the above-mentioned reported opinions and familiarity therewith is assumed. We summarize only those facts that are necessary for the disposition of the issues on this appeal.

Springs Mills is the owner of the registered trademark "Ultrasuede," under which it markets a highly popular fabric. Defendant-appellee Ultracashmere House, Ltd. ("UHL") manufactures women's garments from a spun rayon fabric and markets them under the label "Ultracashmere." Defendant-appellee Bart Schwartz is the president of UHL.

Springs Mills originally commenced this action by filing a complaint which alleged four causes of action: (1) trademark infringement in violation of the Lanham Trademark Act of 1946, 15 U.S.C. Sec. 1114(1) (1976); (2) false designation of origin, false representation, or false advertising in violation of section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) (1976); (3) unfair competition; and (4) common-law trademark infringement. In its prayer for relief, Springs Mills sought, inter alia, an order enjoining defendants "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 a trademark or in advertising or selling of fabric or wearing apparel ...." Springs Mills also sought an order directing the defendants to deliver up for destruction all labels, tags and promotional materials in their possession. In addition, Springs Mills asked for an accounting of UHL's profits.

On January 20, 1982, following a bench trial, the district court entered judgment for defendants with respect to all causes of action. Springs Mills appealed. Upon review, we determined "that the district court erred in its determination that the marks Ultrasuede and Ultracashmere were not substantially similar when taken in the context of the setting in which they are displayed." Spring[s] Mills, Inc., 689 F.2d at 1136. We reversed the district court's "determination that defendants did not act in bad faith when adopting their mark and trade dress" and the district court's conclusion that "there was no likelihood of confusion." Id. We remanded to the district court and reserved to that court "the task of devising an appropriate injunction," while noting that our holding was not to be construed as granting "Spring[s] Mills ... any exclusive trademark rights to the use of the prefix 'Ultra' when used in conjunction with fabrics other than 'suede.' " Id. We also stated that Springs Mills' claims of false designation of origin, false representation, or false advertising in violation of section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) (1976), and unfair competition, which were dismissed by the district court, should be remanded "for such further action as is consistent with this opinion." Id. (footnote omitted). We noted further that the district court found that Springs Mills had failed to meet the burden of proof in its section 1125(a) claim by failing to offer evidence of competitive injury, but that, in our view, competitive injury was not required for recovery under section 1125(a). Id. at n. 13.

Following our reversal and remand, Springs Mills petitioned for rehearing. The petition was denied.

On February 17, 1983, the district court--after requesting that the parties submit proposed judgments--met with the parties in a brief conference. Springs Mills' proposed judgment provided, among other things, that defendants be enjoined permanently "[f]rom adopting or using the designation ULTRACASHMERE or any mark substantially similar thereto as a trademark for fabrics or garments or other products made in whole or in part of fabric." Springs Mills' proposed judgment also contained a paragraph that ordered that Springs Mills be "awarded its reasonable attorneys' fees as well as an accounting of Defendants' profits as provided in said Section 35 of the Lanham Act."

During the February 17 conference, the district judge rejected the proposed judgment after noting that it was not consistent with the decision of this court. The district judge asked the parties "to submit another proposed order in good faith viewing closely the spirit and intent of the order from the Court of Appeals."

By letter dated February 23, 1983, Springs Mills' counsel wrote to the district judge and asked him to: (1) hold a hearing for the purpose of demonstrating that a disclaimer was an inappropriate remedy or (2) give Springs Mills an opportunity to devise an order which would give it effective relief. Without further ado, the district court entered a final judgment dated March 30, 1983. The judgment permanently enjoined the defendants from using or adopting any hang tag, label or promotional material that simulates, copies or creates a relationship to any label, hang tags, or promotional materials used by Springs Mills; and enjoined the defendants from adopting or using the designation "Ultracashmere" in their trade dress, advertisements or promotional literature, unless accompanied by a disclaimer. ¹ Springs Mills appeals from the entry of this judgment.

II. DISCUSSION

The principal issues presented on this appeal are: (1) whether the district court erred in devising a limited injunction with respect to the defendants' use of "Ultracashmere"; (2) whether the district court erred in not considering Springs Mills' request for attorneys' fees and for an accounting; and (3) whether the district court erred in not considering Springs Mills' false advertising claim under section 43(a) of the Lanham Act. Springs Mills also contends that the district court erred in denying its request for a hearing made at the February 17 conference and made again in counsel's letter of February 23. We see no merit in these hearing contentions. The district court, having conducted a bench trial in the first instance, had wide discretion in determining whether a hearing was necessary on remand for the purpose of evaluating Springs Mills' contentions regarding the effectiveness of a limited, disclaimer injunction. Cf. Skehan v. Board of Trustees of Bloomsburg State College, 590 F.2d 470, 478 (3d Cir.1978) (appellate court's "failure to specify that further evidence should be taken on remand could, at most, be construed as leaving a decision on the need to reopen the record to the sound discretion of the trial court."), cert. denied, 444 U.S. 832, 100 S.Ct. 61, 62 L.Ed.2d 41 (1979). Our review convinces us that the district court did not abuse that discretion. Consequently, these latter contentions warrant no additional discussion.

A. The Injunction

Springs Mills contends that the district court erred in granting a limited injunction, rather than an absolute injunction, against defendants' use of "Ultracashmere"; that the disclaimer remedy is ordered only in rare cases different from the case at bar; that the disclaimer remedy violates the rule that an intentional infringer must forfeit the benefits of its fraud and move far away from its prior infringement; and that an absolute injunction against defendants would not give Springs Mills a monopoly on "Ultra" marks. To bolster these contentions, Springs Mills complains that "[t]he District Court, without granting any hearing, treated the mere 'suggestion' of this Court as an order, and granted an injunction allowing defendants ... to use ULTRACASHMERE with a disclaimer"; and asserts that this court should reverse and order the District Court to enter an absolute injunction against defendants' use of "Ultracashmere."

We have considered Springs Mills' contentions with regard to an absolute injunction and find them uniformly without merit. Therefore, we hold that the district court did not err in devising an appropriate limited injunction. A district court has a wide range of discretion in framing an injunction in terms it deems reasonable to prevent wrongful conduct, Seibert v. Sperry Rand Corp., 586 F.2d 949, 951 (2d Cir.1978), and appellate review of the terms of the injunction must focus upon whether there has been an abuse of that discretion. A review of the terms of the injunction herein satisfies us that, first, the court did not abuse its discretion. Second, when analyzed in the context of our previous decision, the district court's use of discretion in framing the injunction was well within the spirit and intent of that previous decision. ² Spring[s] Mills, Inc., 689 F.2d at 1136. In our previous decision, we carefully noted that Springs Mills was not entitled to any exclusive trademark rights regarding the prefix "Ultra," but nevertheless that Springs Mills was entitled to some relief from UHL's flagrant...