Stuart Hall Co., Inc. v. Ampad Corp.

• Decision Date: 07 April 1995
• Docket Number: No. 94-2618,94-2618
• Citation: 51 F.3d 780
• Parties: , 34 U.S.P.Q.2d 1428 STUART HALL COMPANY, INC., a Missouri corporation, Appellant, v. AMPAD CORP., a Massachusetts corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 780

51 F.3d 780

63 USLW 2653, 34 U.S.P.Q.2d 1428

STUART HALL COMPANY, INC., a Missouri corporation, Appellant, v. AMPAD CORP., a Massachusetts corporation, Appellee.

No. 94-2618.

United States Court of Appeals Eighth Circuit.

Submitted Dec. 12, 1994.

Decided April 7, 1995.

Richard J. Hoskins, Chicago, IL, argued (James A. Clark, Stuart I. Graff, and Susan L. Winger, Chicago, and Robert O. Lesley and W. Bruce Day, Kansas City, MO, on the brief), for appellant.

Arthur F. Dionne, Windsor, CT, argued (Philmore H. Colburn, II, Windsor, CT, and Carter H. Kokjer, Kansas City, MO, on the brief), for appellee.

Before MAGILL and BEAM, Circuit Judges, and PIERSOL, ^* District Judge.

MAGILL, Circuit Judge.

Stuart Hall appeals the district court's denial of its motion for a preliminary injunction against Ampad in this trade dress action brought under Lanham Act Sec. 43(a). Stuart Hall argues that the district court applied an unrecognized legal standard to determine whether its trade dress is inherently distinctive, and that the court failed to consider or to grant appropriate weight to the evidence presented on the other elements of the trade dress infringement standard. We reverse and remand.

I. BACKGROUND

Stuart Hall Company produces and markets a line of specialized pre-bound pads and notebooks designed for mass market sales under the names "Executive" and "Executive Suite." The products at issue in this appeal are the Executive Project Planner and Notebook and the Executive Suite Personal Notebook.

The products were designed to provide the calendars and specialized forms available in expensive personal organizer lines at a price comparable to that of an ordinary legal pad. They are generally displayed in the area of stores dedicated to legal pads, pads of graph paper, and other standard office supply items. Stuart Hall's specialized pads are packaged with a "false cover" that displays the design of the inside forms, differentiating the pads from ordinary lined pads. A substantial advertising and promotional budget is allocated to the Executive and Executive Suite lines: Stuart Hall has spent almost $1.7 million on advertising alone for the two lines. The advertisements and promotional displays feature the design of the products as an element that makes Stuart Hall pads different from other office supply pads. The Executive and Executive Suite products have been very successful in terms of sales volume.

The only other major company producing a mass-market personal planner for some time was Mead Corporation, whose Cambridge line of office supply products includes a Planner Pad. ¹ In the autumn of 1989, however, Ampad Corporation, another large-scale producer of office supply products, introduced its Gold Fibre and Gold Fibre Designer lines. The Gold Fibre line included a Legal Pad, Project Planner and Personal Notebook; the Gold Fibre Designer line included a Project Planner. These items are in direct competition with Stuart Hall's Executive and Executive Suite products. As do the Stuart Hall pads, the Ampad pads include a false cover with a copy of the inside pages on the front. The graphics and text of the Ampad pages are almost identical to that of the Stuart Hall pages, and, according to the testimony of Ampad's president, were copied directly from Stuart Hall's design. Ampad successfully marketed its pads to Wal-Mart, which had previously been a major retailer of Stuart Hall's pads, as a replacement for Stuart Hall products at a lower price.

Stuart Hall brought an action in the district court for a preliminary injunction against Ampad's sales of the Gold Fibre and Gold Fibre Designer pads, alleging trade dress infringement under Sec. 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) (1994). After a three-day hearing, the court denied the motion, finding that Stuart Hall had not shown a likelihood of success on the merits. ²

In reaching this conclusion, the district court first stated the standard for a trade dress infringement recently confirmed by the Supreme Court: to obtain relief, plaintiff must show that (1) its trade dress is either inherently distinctive or has acquired secondary meaning; (2) that the trade dress is nonfunctional; and (3) that defendant's imitation of the trade dress "creates a likelihood of confusion in consumers' minds as to the origin of the services." Prufrock Ltd., Inc. v. Lasater, 781 F.2d 129, 132 (8th Cir.1986); see Two Pesos, Inc. v. Taco Cabana, Inc., --- U.S. ----, ----, 112 S.Ct. 2753, 2758, 120 L.Ed.2d 615 (1992). The court proceeded to find that Stuart Hall was not likely to succeed on the merits on several grounds. The court found that the trade dress was not inherently distinctive because it was not "striking in appearance, or at least memorable," and found that the trade dress had not acquired a secondary meaning because there had been no showing that consumers would "think Stuart Hall" when seeing the trade dress. The court further found that the trade dress was "not purely functional," although it did not address functionality at length because its denial of Stuart Hall's motion rested on the finding that the trade dress was not inherently distinctive and had not acquired a secondary meaning. Finally, the court stated that it did not find Stuart Hall's consumer survey convincing. Because the survey was intended to show likelihood of confusion, this finding merged the likelihood of confusion prong of the three-part standard into the inherent distinctiveness analysis, making it unclear whether a finding was made as to likelihood of confusion.

II. DISCUSSION

The district court has broad discretion in deciding whether to grant or deny a motion for preliminary relief, and we will reverse only for clear error, an error of law, or an abuse of discretion. Dakota Indus., Inc. v. Dakota Sportswear, Inc., 988 F.2d 61, 63 (8th Cir.1993) (citing General Mills, Inc. v. Kellogg Co., 824 F.2d 622, 625 (8th Cir.1987)). Whether each of the three prongs of the trade dress infringement standard is satisfied is a question of fact. Aromatique, Inc. v. Gold Seal, Inc., 28 F.3d 863, 868 (8th Cir.1994).

Stuart Hall appeals the district court's denial of its motion for a preliminary injunction, arguing that: (1) the court erred as a matter of law in requiring that Stuart Hall show that its trade dress is "memorable or striking" to meet the inherently distinctive standard; (2) the court erred as a matter of law in requiring that Stuart Hall show that consumers "think Stuart Hall" on seeing the products to meet the secondary meaning standard, and in failing to address additional evidence of secondary meaning; (3) the court erred in failing to provide a reason or cite evidence supporting its limited findings on functionality; and (4) the court was clearly erroneous when it completely discounted Stuart Hall's survey evidence designed to show likelihood of confusion. We address each of these issues in turn.

A. Inherent Distinctiveness

The district court stated that its judgment of the merits turned on the requirement of inherent distinctiveness, and found that Stuart Hall's trade dress was not inherently distinctive. The only test of inherent distinctiveness the district court applied was that "[t]he trade dress must ... be striking in appearance, or at least memorable," noting examples of such striking and memorable items as "Durante's nose, Holmes' mustache, Chief Judge Arnold's bow ties and Congressman Leach's sweaters." Mem. and Order at 4 n. 1 (May 23, 1994). The court treated this standard as a threshold test for acquired distinctiveness, because "it seems evident that a trade dress must have sufficient strength of visual impact to impress itself on the mind of a consumer, and thus be subject to recall when the consumer next enters the market" if the trade dress is to be "inherently distinctive in a manner to serve as a source-identifier." Id. A single unreported case from an Illinois district court was cited in support of this "striking or memorable" test. See Hanig & Co. v. Fisher & Co., No. 92 C 1779, 1994 WL 97758 (N.D.Ill. Mar. 24, 1994). The district court, applying this test, found that "it is entirely unlikely that any ordinary consumer would be so fascinated with the inside page layout to remember it and associate it with a known or unknown source." Mem. and Order at 5-6 (May 23, 1994). Finally, the court rejected the widely-used test for inherent distinctiveness derived from Chevron Chemical Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d 695, 702 (5th Cir. Unit A Oct. 1981), cert. denied, 457 U.S. 1126, 102 S.Ct. 2947, 73 L.Ed.2d 1342 (1982), as not creating a "comprehensive and usable definition" of inherent distinctiveness, id., and rejected Stuart Hall's survey evidence as providing no showing of memorableness.

Stuart Hall argues that this "striking or memorable" test is contrary to established law in this circuit and in others, and we agree.

The Supreme Court recently resolved a split in the circuit courts, holding that when a trade dress is inherently distinctive, no additional showing of secondary meaning ³ is required for the trade dress to qualify for protection. Two Pesos, --- U.S. at ----, 112 S.Ct. at 2760. In Abercrombie & Fitch Co. v. Hunting World, Inc., Judge Friendly for the Second Circuit set forth a series of classifications for trademark protections: (1) generic; (2) descriptive; (3) suggestive; (4) arbitrary or fanciful, and held that if a mark is suggestive or arbitrary or fanciful, it is a registerable trademark. 537 F.2d 4, 9 (2d Cir.1976). In Chevron, the Fifth Circuit applied Abercrombie classifications to trade dress, distinguishing between descriptive and arbitrary trademarks, and held that "if the features of the trade dress sought to be protected are arbitrary and serve no function either to describe the product or assist in its effective packaging, there is no reason to require a plaintiff to show consumer connotations...