TEC Engineering Corp. v. Budget Molders Supply, Inc., 95-1975

• Decision Date: 11 January 1996
• Docket Number: No. 95-1975,95-1975
• Citation: 82 F.3d 542
• Parties: , 38 U.S.P.Q.2d 1787 TEC ENGINEERING CORP., Plaintiff, Appellee, v. BUDGET MOLDERS SUPPLY, INC. and Plastic Process Equipment, Inc., Defendants, Appellants. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 542

82 F.3d 542

34 Fed.R.Serv.3d 1580, 38 U.S.P.Q.2d 1787

TEC ENGINEERING CORP., Plaintiff, Appellee, v. BUDGET MOLDERS SUPPLY, INC. and Plastic Process Equipment Inc., Defendants, Appellants.

No. 95-1975.

United States Court of Appeals First Circuit.

Heard Jan. 11, 1996.

Decided April 30, 1996.

Appeal from the United States District Court for the District of Massachusetts; Hon. Nathaniel M. Gorton, U.S. District Judge.

Louis M. Ciavarra with whom Barry A. Bachrach and Bowditch & Dewey were on brief, Worcester, MA, for appellants.

James C. Donnelly, Jr. with whom Charles B. Straus, III and Mirick, O'Connell, Demallie & Lougee were on brief, Worcester, MA, for appellee.

CYR, BOUDIN and STAHL, Circuit Judges.

STAHL, Circuit Judge.

Budget Molders Supply, Inc., and Plastic Process Equipment, Inc., (collectively "Budget") appeal from a preliminary order enjoining them from manufacturing, marketing or distributing certain industrial conveyors alleged to be confusingly similar to conveyors manufactured and sold by appellee, TEC Engineering Corp. ("TEC"). Because the district court failed to make findings of fact and conclusions of law sufficient to support its decision as required by Fed.R.Civ.P. 52(a), we modify the injunction and remand for further proceedings.

I. Background ¹

TEC manufactures a series of conveyors under the model name "Ultraline," which it markets primarily to the plastics processing industry. The conveyors are generally used to transport lightweight plastic products from molding machines in which they are formed to other machines for packaging. TEC sells the Ultraline conveyors under the TEC name through independent sales representatives. In addition, TEC authorizes an independent distributor, Injection Molders Supply, Inc. ("IMS"), to advertise, promote and sell Ultraline conveyors under the IMS tradename through IMS's own product catalogues. In 1994, combined domestic and international sales of Ultraline conveyors exceeded 2,000 units, generating revenues of approximately $3 million.

Budget has competed with TEC and other conveyor manufacturers in the plastics processing industry market for over five years. Budget markets its conveyors exclusively through direct-catalogue sales. About January 1995, Budget decided to modify the design of its primary line of conveyors. Consequently, Budget soon began to market a redesigned conveyor under the "Supraline" model name that closely resembled TEC's Ultraline conveyor. Budget labels each Supraline conveyor with the name "Budget Molders Supply, Inc." in several different places on the machine. While these Budget labels cannot be seen in every advertisement photograph of a Supraline conveyor included in the record, each Supraline advertisement prominently features the Budget name (although not necessarily on the pictured conveyor), and several include the statement "Made in the USA by Budget."

It appears largely undisputed that the two conveyors, when placed side by side, are strikingly similar in appearance. Many of the similarities shared by the two machines, however, are to some extent functional. In addition, the record includes several advertisements for conveyors sold by companies other than TEC or Budget. These conveyors, at least as they are presented in the advertisements, also appear somewhat similar to the Ultraline and Supraline conveyors. Moreover, apparently several companies other than TEC or Budget incorporate the suffix "line" in the model names of their respective conveyors. Budget notes that, in addition to "Ultraline" and "Supraline," other model names for conveyors marketed to the plastics processing industry include "A-line," "Flex-line," "Slim-line," "Omni-line," and "Direct-line."

On July 12, 1995, TEC brought this action for trademark infringement under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). In its complaint, TEC alleges, inter alia, that the trade dress of its Ultraline conveyors is a well-established mark in the industry and that, by developing and marketing its Supraline conveyors, Budget intended to exploit the goodwill associated with that trade dress. On July 21, 1995, the district court held a hearing on TEC's request for preliminary injunctive relief. At the hearing, an Ultraline and a Supraline conveyor were made available to the district court for review.

At the close of the hearing, the court indicated that "it believed the products are confusingly similar" and that, therefore, it was "inclined to enter some sort of injunctive relief." Nonetheless, the court declined to enter a ruling at that time and urged the parties to resolve the matter themselves. Eventually, on August 1, 1995, the district court entered an order enjoining Budget from, inter alia,

manufacturing, distributing, promoting, advertising, and/or selling:

1) the horizontal, inclined and variable inclined Budget Supraline Conveyors; and

2) any other conveyor which is likely to cause confusion or mistake in the minds of the public or to deceive purchasers into the belief that the defendant's goods are the plaintiff's goods or are affiliated with or sponsored by the plaintiff. ²

Budget now appeals from this order.

II. Discussion

In ruling on a preliminary injunction motion, a district court must ask whether the moving party has established that (1) it has a substantial likelihood of success on the merits, (2) there exists, absent the injunction, a significant risk of irreparable harm, (3) the balance of hardships tilts in its favor, and (4) granting the injunction will not negatively affect the public interest. See, e.g., Hypertherm, Inc. v. Precision Prods., Inc., 832 F.2d 697, 699 n. 2 (1st Cir.1987). Though the district court enjoys considerable discretion in applying this test, its decision to grant or deny a preliminary injunction must be supported by adequate findings of fact and conclusions of law. See Fed.R.Civ.P. 52(a); Knapp Shoes, Inc. v. Sylvania Shoe Mfg. Corp., 15 F.3d 1222, 1228 (1st Cir.1994).

The requirements of Rule 52(a) are intended to assure that the district court gives appropriate consideration to all essential relevant factors and provides an adequate basis for meaningful appellate review of its decision. See generally 9A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2571, at 478-80 (2d ed. 1994). The rule, however, is not intended to change the preliminary nature of the proceeding; in the context of a preliminary injunction motion, the district court's findings need not be overly detailed, and they do not bind the court in subsequent proceedings. See Aoude v. Mobil Oil Corp., 862 F.2d 890, 895 (1st Cir.1988). Moreover, the absence of Rule 52(a) findings and conclusions will not be fatal in all cases. We may overlook the defect, if our own review of the record substantially eliminates all reasonable doubt as to the basis of the district court's decision. See New Hampshire Motor Transp. Assoc. v. Flynn, 751 F.2d 43, 47 (1st Cir.1984) (citing Pullman-Standard v. Swint, 456 U.S. 273, 292, 102 S.Ct. 1781, 1792, 72 L.Ed.2d 66 (1982)); Conservation Law Found., Inc. v. Busey, 79 F.3d 1250, 1271 (1st Cir.1996) (failure to adhere to requirements of Rule 52(a) is harmless error where undisputed documentary evidence combined with district court's extensive discussion of other findings and conclusions adequately clarifies otherwise unexplained finding of irreparable harm).

In this case, the district court made no explicit findings of fact or conclusions of law in granting TEC's request for a preliminary injunction. In its three-page written order, the court merely recited the traditional four-prong preliminary injunction test and summarily stated that TEC had met its burden in establishing it. The transcript of the relatively brief hearing on TEC's motion, provides little further insight into the district court's reasoning. The total extent of the court's oral findings following the hearing is limited to its statement that "it believed the two products were confusingly...