Tonka Corp. v. Rose Art Industries, Inc.

• Decision Date: 04 October 1993
• Docket Number: Civ. A. No. 93-544 (AJL).
• Citation: 836 F. Supp. 200
• Parties: TONKA CORPORATION, Plaintiff, v. ROSE ART INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — District of New Jersey

836 F. Supp. 200

TONKA CORPORATION, Plaintiff, v. ROSE ART INDUSTRIES, INC., Defendant.

Civ. A. No. 93-544 (AJL).

United States District Court, D. New Jersey.

October 4, 1993.

COPYRIGHT MATERIAL OMITTED

Carol F. Simkin, Weiss Dawid Fross Zelnick & Lehrman, P.C., New York City and Frederic S. Kessler, Clapp & Eisenberg, P.C., Newark, NJ, for plaintiff.

Robert L. Epstein, James & Franklin, New York City, and Roslyn S. Harrison, McCarter & English, Newark, NJ, for defendant.

OPINION

LECHNER, District Judge.

This is an action brought by plaintiff Tonka Corporation ("Tonka") alleging, inter alia, infringement by defendant Rose Art Industries, Inc. ("Rose Art") of Tonka's Federally-registered trademarks for the modeling compound popularly known as "PLAY-DOH" and its related accessories. Complaint (the "Complaint"), filed 5 February 1993, ¶ 1. Rose Art sells and has sold a modeling compound known in succession as "FUN-DOUGH" and "FUN DOUGH." Affidavit of Robert L. Epstein (the "Epstein Aff."), ¶ 2; Defendant's Local Rule 12G Statement of Material Facts in Opposition to Plaintiff's Rule 12 Motions If Treated as Motions for Summary Judgment (the "Rose Art 12G Statement"), ¶¶ 4-5. Jurisdiction is alleged pursuant to Section 39 of the Lanham Act, 15 U.S.C. § 1121 and pursuant to 28 U.S.C. §§ 1331, 1332 and 1338(a) and (b). Complaint, ¶ 2.

Currently before the court is the motion of Tonka to dismiss the counterclaim of Rose Art pursuant to Fed.R.Civ.P. 12(b)(6) and to strike Rose Art's first, third and fourth affirmative defenses, pursuant to Fed.R.Civ.P. 12(f).¹ For the reasons that follow, the Tonka motion to dismiss the counterclaim of Rose Art is considered as a motion for summary judgment and, pursuant to Fed. R.Civ.P. 56, is denied. The Tonka motion to strike Rose Art's first, third and fourth affirmative defenses is granted in part and denied in part.

Facts

A. Background

Tonka is a Minnesota corporation with its principal place of business located in Pawtucket, Rhode Island. Complaint, ¶ 4. For many years, Tonka and its predecessors have engaged in the business of developing, manufacturing, distributing and selling toys and games. Id., ¶ 6. Tonka is the maker of the modeling compound popularly known as "PLAY-DOH" and its related accessories. Id., ¶ 7-8; see also Kenner Parker Toys, Inc. v. Rose Art Indus., Inc., slip op., 2 (T.T.A.B. 20 March 1986) (hereinafter, Kenner I).

PLAY-DOH is sold in toy stores, school stores, grocery stores, drug stores, department stores, hobby shops and other retail outlets. Kenner Parker Toys, Inc. v. Rose Art Indus., Inc., 963 F.2d 350, 351 (Fed.Cir.) (hereinafter, Kenner II), cert. denied, ___ U.S. ___, 113 S.Ct. 181, 121 L.Ed.2d 126 (1992); see also Kenner I, slip op. at 4. PLAY-DOH products are also advertised on television, in women's magazines and in trade publications and are shown at toy fairs. Kenner I, slip op. at 4. Since 1978, it is alleged sales of PLAY-DOH and PLAY-DOH accessories have exceeded $360,000,000, while advertising and promotional expenditures for PLAY-DOH products have exceeded $15,800,000. Complaint, ¶ 8.

Since 1957 and continuously to date, Tonka and its predecessors have used and have been the registered holders of eight Federally-registered trademarks² for PLAY-DOH products.³Id., ¶¶ 7-8, 11. These registrations are alleged to remain in full force and effect. Id., ¶ 11. In addition, on 19 October 1992, Tonka filed an application, which remains pending, to register "PLAY-DOH and Design" to describe "modeling compound and apparatus to work with said modeling compound sold separately and as a unit." Id.

Rose Art is a New Jersey corporation with its principal place of business in Orange, New Jersey. Answer (the "Answer"), filed 2 March 1993, Counterclaim, ¶ 2. Rose Art sells children's arts and crafts supplies, including crayons, paints, chalkboards, stationary and the like. Kenner II, 963 F.2d at 351. Like Tonka, Rose Art sells its goods to discount and chain toy stores, supermarkets, hobby shops and schools. Id. at 352; Kenner I, slip op. at 6. Rose Art also promotes its products in catalogues and at trade shows, although it appears Rose Art does not engage in print or television advertising. Kenner II, 963 F.2d at 352; Kenner I, slip op. at 6.

In the mid-1980s, Rose Art decided to develop a water-based modeling compound. Kenner II 963 F.2d at 351. In January 1986, Rose Art adopted and began to use the mark "FUNDOUGH" in connection with this modeling compound. Id. at 351-32; Kenner I, slip op. at 5. In March 1986, Rose Art sought Federal registration of the FUNDOUGH trademark to describe "toys — namely, modeling compound and related accessories for use with modeling compound sold as a unit." Complaint, ¶ 14. The registration of FUNDOUGH was opposed by Kenner, Tonka's predecessor. See Kenner I, slip op. at 1-2. Commercial shipments of FUNDOUGH commenced in or about August 1987. Complaint, ¶ 12; Answer, ¶ 12; Kenner I, slip op. at 5. FUNDOUGH sales rose from $50,000 on 1987 to $500,000 in 1988. Kenner I, slip op. at 6.

B. Kenner I: The Opposition Proceeding

On 5 December 1986, Kenner filed a Notice of Opposition in the United States Patent and Trademark Office (the "Trademark Office") contesting Rose Art's application for registration of FUNDOUGH.⁴ Complaint, ¶ 16. Kenner argued the FUNDOUGH trademark so resembled the PLAY-DOH trademark that, when applied to Rose Art's products, it was likely to cause confusion, to cause mistake or to deceive the public because "the public was likely to believe that FUNDOUGH products had their origin with Kenner and such goods were approved, endorsed or sponsored by Kenner or were associated in some way with Kenner." Id., ¶ 16; see also Kenner I, slip op. at 2.

On 29 April 1991, after extensive discovery, the Trademark Trial and Appeal Board (the "TTAB") recognized PLAY-DOH was a famous trademark. The TTAB stated:

At one time the most advertised product in the toy industry, the PLAY-DOH product is still well-known in the toy field and is a market leader with sixty to seventy percent of the modeling compound market. There is high unaided brand awareness of this toy.... Repeat purchases are common partially because the product is used up.

Kenner I, slip op. at 4 (citations omitted). The TTAB also determined that "there can be no question that, for our purposes, the goods of the parties must be considered substantially identical, and are sold in the same types of retail outlets." Id. at 7-8.

Nevertheless, the TTAB found that FUNDOUGH was "sufficiently different" from PLAY-DOUGH that "confusion is unlikely." Id. at 8. The TTAB explained:

We base this conclusion in part upon the fact that the only common element in the marks is the generic element "DOUGH," or its phonetic equivalent "DOH" in the suffix of Kenner's mark. The record establishes that "dough" is a type of modelling compound which is water-based.... Kenner itself has used the term ... generically.

If the only common element in marks is a generic term, such similarity is generally insufficient to cause likelihood of confusion because the generic matter is not likely to be understood by the public as an indication of common affiliation or trade identity, but rather is likely to be viewed as indicative or characteristic of the products. Differences in the remaining parts of the marks are likely to avoid confusion in such cases.⁵

Id. at 8-9 (emphasis added). The TTAB concluded:

Given this fact and the fact that consumers, presumably aware of the use of other marks containing this generic word or its phonetic equivalent, would look to the remaining portions in an effort to distinguish source, we believe that the sound and appearance of the respective marks are sufficiently dissimilar.

Id. at 9.

The TTAB also stated that the terms "fun" and "play" "are not usually interchanged in everyday speech and we believe their use in the respective marks will not be likely to cause confusion." Id. at 10. The TTAB further stated:

In view of the renown of Kenner's mark, we believe few would pause to analyze any similarity in meaning of the prefixes "PLAY" and "FUN" in the marks. Rather, purchasers, viewing the marks in their entireties, are likely to immediately recognize the substantial differences.

Id. at 11.

The TTAB concluded that, having "considered the renown of Kenner's mark with respect to modeling compound," this fame did not require registration of FUNDOUGH be denied. The TTAB stated:

The fame which Kenner claims for its mark has so familiarized the public with the PLAY-DOH name and logo that any deviation is immediately detected and perceived as different.... The differences are made more noticeable because of the extreme familiarity with PLAY-DOH: many adults purchasing the product have played with it as a child or purchased it repeatedly for their children. Such consumers are simply not likely to be confused because of their long term acquaintance with Kenner's mark.

Id. at 11-12. Accordingly, the TTAB dismissed the opposition to the trademark registration of FUNDOUGH. Id. at 13.

C. Kenner II: The Federal Circuit Opinion

Kenner appealed the TTAB decision to the United States Court of Appeals for the Federal Circuit (the "Federal Circuit"). See Kenner II, 963 F.2d at 352. On 15 April 1992, finding that the TTAB "treated the fame of Kenner's mark as a liability and otherwise improperly weighed the factors showing confusing similarity," id. at 351, the Federal Circuit reversed the TTAB decision.

Discussing the thirteen factors set forth in In re E.I. Du Pont de Nemours & Co., 476 F.2d 1357, 1361 (C.C.P.A.1958) for determining likelihood of confusion, the Federal Circuit recognized that "the fifth Du Pont factor, fame of the prior mark, plays a dominant role in cases featuring a famous or strong mark." Kenner II, 963 F.2d at 352. On this point, the Federal Circuit recognized that "famous or strong marks enjoy a wide latitude of legal protection."...