Time Mechanisms, Inc. v. Qonaar Corp.

• Citation: 422 F. Supp. 905
• Decision Date: 27 October 1976
• Docket Number: 1789-73 and 75-896.,Civ. No. 1688-73
• Parties: TIME MECHANISMS, INC., Plaintiff, v. QONAAR CORPORATION, Defendant. QONAAR CORPORATION, Plaintiff, v. TIME MECHANISMS, INC., and Henry R. Stiffel, Defendants.
• Court: U.S. District Court — District of New Jersey

422 F. Supp. 905

TIME MECHANISMS, INC., Plaintiff, v. QONAAR CORPORATION, Defendant.

QONAAR CORPORATION, Plaintiff, v. TIME MECHANISMS, INC., and Henry R. Stiffel, Defendants.

Civ. Nos. 1688-73, 1789-73 and 75-896.

United States District Court, D. New Jersey.

October 27, 1976.

COPYRIGHT MATERIAL OMITTED

James P. Ryther, Melvin M. Goldenberg, McDougall, Hersh & Scott, Chicago, Ill.

Garrett E. Brown, Jr., Stryker, Tams & Dill, Newark, N. J., for plaintiff.

Howard Sommers, Sommers & Sommers, Hackensack, N. J., for defendant.

OPINION

LACEY, District Judge.

This case, a consolidation of three civil actions involving numerous questions of alleged patent and trademark infringement, unfair competition and antitrust violations, was tried in part before this court without a jury from May 17 to May 21, 1976. The antitrust aspects of the case, to the extent that they have not been settled by reason of stipulations, judgments and orders heretofore entered, were severed, and, along with the question of damages, if any, will be tried separately.

A consent judgment was entered into by the parties on May 21, 1976, settling the issues of validity and infringement on 14 of the 17 patent infringement claims; and a license agreement was entered into with respect to the remaining three patent claims, which were then dismissed by consent.

This opinion deals with those remaining issues which were finally tried, namely, Qonaar Corporation's Qonaar claims of trademark infringement and unfair competition; Qonaar's claim that Time Mechanisms, Inc. Time and Henry R. Stiffel Stiffel were in contempt of court; attorneys fees; and an unfair competition counterclaim asserted by Time against Qonaar.

Time is a New Jersey corporation with a place of business in New Jersey; Stiffel is a New Jersey resident; and Qonaar is a Delaware corporation with its principal place of business in Illinois.

Qonaar, a producer of parking meters, seeks to enjoin Time and Stiffel from manufacturing and selling parking meters shaped like the meters produced by Qonaar, i. e., its Duncan meter, produced by Duncan Industries, Division of Qonaar. Qonaar claims that Time, in the marketing of remanufactured parking meters and new and remanufactured parts, prominently displays Qonaar's widely known trademarks and illustrations in certain of its advertising without indicating that Time is not associated with Qonaar. Qonaar charges Time not only with trademark infringement. It also charges Time with unfair competition, in that its parking meter configuration is designed to be confusingly similar to Qonaar's, in order to deceive and mislead the parking meter market into believing that the meters are Qonaar's.

Qonaar asserts trademark rights in its designations "Duncan," "V.I.P.," "Duplex," "Model 50" and "Model 60" and, as well, in the characteristic shape of the top portion of its parking meters. This shape comprises essentially the rounded upper portion of the meter, which spans the time viewing area, and then continues downward on both sides of the meter beyond the viewing area and into the side walls of the meter housing. The witness Mohr referred to this shape as the "ice cream cone shaped top" (Transcript at 147), and it is embodied in the Duncan Model 60, Duplex and V.I.P. meters. Qonaar obtained a mechanical patent on its parking meter configuration (United States Mechanical Patent No. 2,882,682, for "Weather-Tight Enclosure") issued on February 11, 1958 to L. C. Sollenburger, PX-1A, which expired on February 11, 1975, and a design patent (United States Design Patent No. 162,698 for "Parking Meter Casing") issued on March 27, 1951 to J. Teague, DZ-27, which expired on March 27, 1965.

Qonaar, in support of its trademark infringement claim, argues that the "ice cream cone shaped top" of its meters, while not protected by federal trademark registration, has acquired common law trademark status, and is thus entitled to protection because it is distinctive, nonfunctional and has acquired secondary meaning. With respect to its unfair competition claim, it asserts the same arguments, adding the element of Time's alleged "palming off."

Time's argument in opposition to Qonaar's contentions is two-fold: that Qonaar's parking meter configuration is not a federally registered trademark and therefore is not protectable, under the holdings in Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964) and Compco Corp. v. Day-Brite Lighting, 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669 (1964); and alternatively, that even if common law trademarks are protectable, notwithstanding Sears and Compco, Qonaar has not acquired such. With respect to the unfair competition claim, Time contends that it clearly labels its parking meters and advertising literature as its own; therefore, it is not "palming off" and no likelihood of confusion exists between the two product lines.

I turn to Time's initial argument that, in the absence of a federally registered trademark, Sears and Compco bar Qonaar's claim for protection of its parking meter configuration.

In Sears, supra, the issue before the Court was whether a state unfair competition law "can, consistently with the federal patent laws, impose liability for or prohibit the copying of an article which is protected by neither a federal patent nor a copyright." Id. 376 U.S. at 225, 84 S.Ct. at 786. Stiffel obtained design and mechanical patents on a pole lamp which had been successfully marketed. Sears then marketed its pole lamps, which were substantially identical to Stiffel's, at a lower price. Stiffel sued Sears for patent infringement and unfair competition. Evidence revealed that identifying tags were not attached to the Sears lamps although Sears labels appeared on their delivery cartons, that customers had asked Stiffel whether its lamps differed from those of Sears, and that customers who had bought Stiffel lamps had complained to Stiffel on learning that Sears was selling a substantially identical yet less expensive lamp. The district court found the patents invalid but held Sears guilty of unfair competition. No review was sought of the court's ruling on the invalidity of the patents.

The Supreme Court, taking a broad preemption approach with respect to the unfair competition claim, found that "(a)n unpatentable article, like an article on which the patent has expired, is in the public domain and may be made and sold by whoever chooses to do so." Id. at 231, 84 S.Ct. at 789. A state may not, therefore, when an article is not patented or copyrighted, prohibit the copying of the article itself or award damages for such copying. Id. at 232-33, 84 S.Ct. 784. The Court permitted an exception to its rule, however:

A State may, in appropriate circumstances, require that goods, whether patented or unpatented, be labeled or that other precautionary steps be taken to prevent customers from being misled as to the source, just as it may protect businesses in the use of their trademarks, labels, or distinctive dress in the packaging of goods so as to prevent others, by imitating such markings, from misleading purchasers as to the source of the goods.

Id. at 232, 84 S.Ct. at 789.

Similarly, in Compco Corp. v. Day-Brite Lighting, supra, which involved the imitation of a reflector on fluorescent lighting fixtures, the Court held that the copying of an unpatented industrial design, even when the trial court found that the configuration had acquired a "secondary meaning," cannot be forbidden under state unfair competition laws. The lower court had invalidated the design patent of Day-Brite but had found a likelihood of confusion to exist because of the similarity of the fixtures; Compco was adjudged guilty, therefore, of unfair competition. Again the Supreme Court allowed that:

A State of course has power to impose liability upon those who, knowing that the public is relying upon an original manufacturer's reputation for quality and integrity, deceive the public by palming off their copies as the original.

Id. 376 U.S. at 238, 84 S.Ct. at 782. It narrowly limited this exception, however, precluding copied articles which had acquired, for example, "nonfunctional" designs or "secondary meaning" or which might cause confusion among purchasers as to the maker, from protection. These factors may be relevant evidence in the application of state law requiring such precautions as labeling but they cannot furnish a basis for prohibiting the acts of copying and selling. Id.

Qonaar, responding to Time, argues that Sears and Compco are inapplicable in the present context, in that here, unlike the circumstances in those cases, the validity of a trademark, rather than a patent, is in issue and that the Duncan meter ice cream cone shape has achieved common law trademark status and is therefore entitled to protection.

Qonaar's position finds expression in Application of Mogen David Wine Corp., 372 F.2d 539, 54 CCPA 1086 (1967). There, on appeal from a denial of an application to grant the registration under the Lanham Act, 15 U.S.C. § 1052, of a configuration of the Mogen David decanter bottle on the Principal Register, the court affirmed the findings of the Trademark Trial and Appeal Board that there had been no promotional advertisement or display of the configuration itself without a band at the neck of the bottle with the name prominently featured and that the decanter itself had not acquired a secondary meaning so as to function as a trademark. Judge Smith, in a concurring opinion, analyzed the application of Sears and Compco to trademark cases. In his view the Supreme Court "did not purport to consider or decide the boundaries between federal patent law and federal trademark law." Id. at 543. Differentiating the purposes of federal design patent law, which is to encourage the creation of ornamental designs and to give the creator the right to exclude others from making, using or selling the design, from the...