Tough Traveler, Ltd. v. Outbound Products
| Decision Date | 21 July 1995 |
| Docket Number | No. 1691,D,1691 |
| Citation | 60 F.3d 964 |
| Parties | , 35 U.S.P.Q.2d 1617 TOUGH TRAVELER, LTD., Plaintiff-Appellee, v. OUTBOUND PRODUCTS, Taymor Industries, Ltd., and Taymor Industries, U.S.A., Inc., Defendants-Appellants. ocket 94-9286. |
| Court | U.S. Court of Appeals — Second Circuit |
Paul C. Rapp, Albany, NY (Susan E. Farley, Nicholas Mesiti, Heslin & Rothenberg, Albany, NY, on the brief), for plaintiff-appellee.
Barry G. Magidoff, New York City (Paul J. Sutton, Sutton, Basseches, Magidoff & Amaral, Reid & Priest, New York City, on the brief), for defendants-appellants.
Before VAN GRAAFEILAND, KEARSE, and JACOBS, Circuit Judges.
Defendants Outbound Products et al. (collectively "Outbound") appeal from an order of the United States District Court for the Northern District of New York, Con. G. Cholakis, Judge, in this action brought for trade dress infringement in violation of Sec. 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) (Supp. IV 1992) ("Lanham Act" or "Act"), and state-law unfair-competition principles, granting the motion of plaintiff Tough Traveler, Inc. ("Tough Traveler"), for a preliminary injunction against defendants' sales of certain allegedly infringing products. On appeal, Outbound contends principally that the injunction was improperly granted because the district court failed to conduct a hearing on the motion and did not apply the correct legal standards. Because we agree that the court did not apply the correct legal standard with respect to whether Tough Traveler had shown a likelihood of irreparable injury, we conclude that the granting of the injunction was an abuse of discretion, and we therefore vacate and remand for further proceedings.
Tough Traveler is a manufacturer and seller of, inter alia, backpacks and child carriers. Outbound Products, a division of defendants Taymor Industries, Ltd., and Taymor Industries, U.S.A., Inc. (collectively "Taymor"), also sells child carriers. According to the complaint, filed in April 1994, Tough Traveler began in 1984 to design, manufacture, and market a backpack-type child carrier referred to as the "Kid Carrier." The complaint alleges that the Kid Carrier, a high quality product, incorporates many inherently distinctive, nonfunctional design features and that, as a result of widespread advertising and promotion, the Kid Carrier has come to be identified by consumers as a Tough Traveler product. The complaint asserts that Outbound copied Tough Traveler's Kid Carrier; that it caused cheaper, inferior, and confusingly similar child carriers to be manufactured abroad; and that it sold the Outbound carriers in the United States in competition with Tough Traveler. It alleges that Outbound's products infringe Tough Traveler's trade dress in violation of the Lanham Act and state unfair-competition laws, and that, "[u]pon information and belief, such acts have already caused confusion, mistake and deception," causing Tough Traveler injury in excess of $300,000.
Outbound filed an answer admitting that it sells a child carrier, which it calls the "Toddler Tote," but denying most of the other material allegations of the complaint.
In August 1994, Tough Traveler moved for a preliminary injunction forbidding Outbound to sell the Toddler Tote or similar child carriers. The motion was supported chiefly by the affidavits of Tough Traveler's president Nancy Gold; its production and purchasing manager Christine Gauss; and a merchant, Joseph Raftis. Gold stated, inter alia, that she had seen sporting goods manufacturers/retailers who had confused the Outbound and Tough Traveler child carriers. Raftis stated that customers in his store had likewise been confused. Gauss stated, inter alia, that in February 1994, she had met a Mr. S.K. Choe, who said his company manufactured Outbound's child carrier in Korea, that "Outbound had sent him 'a Tough Traveler [child] carrier to make,' and that he essentially made a duplicate of the Tough Traveler carrier modifying it only slightly" (Affidavit of Christine Gauss dated August 3, 1994, p 7). Gauss also stated that, according to Choe, Outbound's product is inferior to the Kid Carrier. Because of the lower cost resulting from its foreign manufacture and its inferior materials, Outbound's Toddler Tote was sold at a lower price than the Kid Carrier.
Outbound opposed the motion on various grounds. It submitted, inter alia, the affidavit of a Taymor vice president disputing the Gold affidavit's assertions with respect to public perceptions and the likelihood of confusion; stating that Taymor's records did not indicate that Raftis had ever received the Toddler Tote to sell in his stores; and denying that Outbound's child-carrier products had ever been supplied by Choe or Choe's company.
Outbound also contended that Tough Traveler's motion was unduly belated. In support of this contention, it submitted, inter alia, the affidavit of its sales manager Phillip K. Brown, who said that Gold had called him, inquiring about Outbound's sales of the Toddler Tote, no later than the early or middle part of 1993. Outbound also submitted the affidavit of one Bill Chandler, an independent sales representative for several manufacturers of outdoor products including Outbound, and formerly including Tough Traveler. Chandler stated that Gold had inquired about Outbound's child carrier after she saw it at a February 1993 trade show. Chandler also stated that he did not regard the Outbound and Tough Traveler child carriers as confusingly similar.
Gold replied with a second affidavit, stating that she had no recollection of seeing the Outbound child carrier prior to mid-summer of 1993. She stated that prior to that time, however, Chandler had told her that defendants had copied the Tough Traveler carrier. Gold also stated that after seeing the Outbound carrier, she had been unsure whether there were any sales in the United States, but that just before Tough Traveler filed its injunction motion, she had learned of defendants' The district court, without holding a hearing, granted Tough Traveler's motion for a preliminary injunction. In a Memorandum Decision and Order dated September 23, 1994, the court found that the overall appearance of Tough Traveler's carrier was inherently distinctive and that Tough Traveler had raised sufficiently serious questions going to the likelihood of confusion. The court also found the likelihood of irreparable injury established because
intention to reorder child carriers for distribution in the United States.
speculation as to the amount of lost sales, the future inability to accurately account for the amount of such lost sales, and the uncertain results of consumer confusion, represent unknown and incalculable damages. Accordingly, if defendant restocks its inventory of the allegedly infringing product and is permitted to market that inventory, irreparable harm will occur.
Id. at 3 n. 3. Based on this finding of potential irreparable harm, and "in consideration of the parties' respective sales volumes for child carriers," id. at 5 n. 5, the court concluded that the balance of hardships tipped in favor of Tough Traveler.
The district court denied a motion by Outbound for reconsideration, which included a request for an oral hearing. This appeal followed.
On appeal, Outbound contends that the preliminary injunction should be vacated principally because the district court (1) failed to hold a hearing or permit oral argument before issuing the injunction; and (2) applied incorrect legal standards, in that (a) in assessing the distinctiveness of Tough Traveler's trade dress, it failed to consider the difference between trade dress based on packaging configuration and that based on product configuration, (b) in assessing the likelihood of confusion, it relied on aspects of similarity that are based on the functional requirements of the product, and (c) in assessing the potential for irreparable injury, it failed to consider Tough Traveler's tardiness in seeking an injunction. We find merit in the last contention and need not discuss the others.
The Lanham Act makes it unlawful for a seller of goods to use "any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin" which "is likely to cause confusion ... as to the origin" of the goods. 15 U.S.C. Sec. 1125(a)(1). The Act also protects the "trade dress" of a product, which involves its "total image ... includ[ing] features such as size, shape, color or color combinations, texture, or graphics." LeSportsac, Inc. v. K Mart Corp., 754 F.2d 71, 75 (2d Cir.1985) (internal quotes and alterations omitted). To prevail on a claim of trade dress infringement, a plaintiff must establish (1) that its trade dress is distinctive either (a) because it is inherently so or (b) because it has acquired secondary meaning, and (2) that a likelihood of confusion exists between its product and the defendant's product. See, e.g., Two Pesos, Inc. v. Taco Cabana, Inc., --- U.S. ----, ----, 112 S.Ct. 2753, 2758, 120 L.Ed.2d 615 (1992).
In order to obtain a preliminary injunction, the moving party must show (1) the likelihood of irreparable injury, and (2) either (a) likelihood of success on the merits, or (b) sufficiently serious questions going to the merits and a balance of hardships tipping decidedly in the movant's favor. See, e.g., Fisher-Price, Inc. v. Well-Made Toy Manufacturing Corp., 25 F.3d 119, 122 (2d Cir.1994); Bourne Co. v. Tower Records, Inc., 976 F.2d 99, 101 (2d Cir.1992); Citibank, N.A. v. Citytrust, 756 F.2d 273, 275 (2d Cir.1985). In a trademark case, irreparable injury may be found "where 'there is any likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question.' " Joseph Scott Co. v. Scott Swimming Pools, Inc., 764 F.2d...
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