Truck Equipment Service Co. v. Fruehauf Corp.

Decision Date09 June 1976
Docket NumberNos. 75-1415 and 75-1428,s. 75-1415 and 75-1428
Citation536 F.2d 1210,191 USPQ 79
PartiesTRUCK EQUIPMENT SERVICE COMPANY, Appellant-Cross-Appellee, v. FRUEHAUF CORPORATION, Appellee-Cross-Appellant.
CourtU.S. Court of Appeals — Eighth Circuit

Theodore L. Kessner, Crosby, Guenzel, Davis, Kessner & Kuester, Lincoln, Neb., made argument and filed brief for Truck Equipment.

John A. Blair, Harness, Dickey & Pierce, Birmingham, Mich., made argument and filed brief for Fruehauf Corp.; Edward R. Casselman, Birmingham, Mich., Robert A. Barlow, Barlow, Watson & Johnson, Lincoln, Neb., and Milton J. Mehl, Mehl, Williams, Cummings & Truman, Fort Worth, Tex., on brief.

Before HEANEY, ROSS and WEBSTER, Circuit Judges.

HEANEY, Circuit Judge.

Truck Equipment Service Company (TESCO) is a closely held corporation, headquartered in Lincoln, Nebraska, engaged in the business of servicing and manufacturing semi-trailers. It is the original manufacturer of a twin hopper bottomed grain or bulk commodity semi-trailer featuring a twin hopper design and structure that has been sold in interstate commerce since 1968 under the label "Cornhusker 800." Fruehauf Corporation is a leading manufacturer of semi-trailers headquartered in Detroit, Michigan. It used photographs of the TESCO trailer in its sales literature to promote its entry into the hopper grain trailer market and copied the exterior design of the Cornhusker 800 in the manufacture of its own twin hopper bottomed grain semi-trailer. The District Court held, upon the suit brought by TESCO, that these acts of Fruehauf constituted unfair competition under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and awarded out-of-pocket expenses exclusive of attorneys fees, taxable costs, nominal compensatory damages, an accounting of profits and an injunction. The injunction was, however, later amended to permit Fruehauf to manufacture and sell twin hopper bottomed grain semi-trailers with an exterior appearance identical to the Cornhusker 800. Both parties appeal. TESCO argues, in substance, that the relief awarded was inadequate. 1 Fruehauf argues in substance, that the District Court erred in finding sy.

I.

The District Court found that the exterior design of the Cornhusker 800 was unique, that portions of the design were nonfunctional, that the unique design had acquired a secondary meaning in the market place, that the actions of Fruehauf tended to cause confusion over the origin of the trailers and that Fruehauf had copied the exterior design of the Cornhusker 800 in order to trade upon the customer acceptance of the TESCO trailer. 2 Each finding is challenged by Fruehauf. It also makes a broader attack. Namely:

(1) The public interest in having competitive sources of identical utilitarian products makes copying privileged, even though the original incorporates nonfunctional features and has acquired a secondary meaning, when the copier clearly labels its product as its own and is not guilty of palming off; and

(2) Even if the use of the photographs of the Cornhusker 800 constituted a false representation, the use was not violative of § 43(a) of the Lanham Act.

A.

Fruehauf's contention that it is privileged to copy the exterior design of the Cornhusker 800 is premised on the companion cases of 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). It relies particularly upon the following language from Compco:

That an article copied from an unpatented article could be made in some other way, that the design is "nonfunctional" and not essential to the use of either article, that the configuration of the article copied may have a "secondary meaning" which identifies the maker to the trade, or that there may be "confusion" among purchasers as to which article is which or as to who is the maker, may be relevant evidence in applying a State's law requiring such precautions as labeling; however, and regardless of the copier's motives, neither these facts nor any others can furnish a basis for imposing liability for or prohibiting the actual acts of copying and selling. (Citation omitted.)

Id. at 238, 84 S.Ct. at 782. Neither case is controlling here. 3

The language relied upon is dictum. The law of trademark and the issues of functionality and secondary meaning were not before the Court. The issue before the Court was whether state law could extend the effective term of patent protection granted by the federal statutes. The focus of the Court was the Supremacy Clause of the Constitution. See Lear v. Adkins, 395 U.S. 653, 668, 89 S.Ct. 1902, 23 L.Ed.2d 610 (1969); Boston Pro. Hockey Ass'n v. Dallas Cap & E. Mfg., Inc., 510 F.2d 1004, 1013 (5th Cir.), cert. denied, 423 U.S. 868, 96 S.Ct. 132, 46 L.Ed.2d 98 (1975); Field Enterprises Educational Corp. v. Cove Industries, Inc., 297 F.Supp. 989, 995-996 (E.D.N.Y.1969).

The protection accorded by the law of trademark and unfair competition is greater than that accorded by the law of patents because each is directed at a different purpose. The latter protects inventive activity which, after a term of years, is dedicated to the public domain. The former protects commercial activity which, in our society, is essentially private. As stated in Application of Mogen David Wine Corporation, 328 F.2d 925, 929 (C.C.P.A.1964):

"(T)he law recognizes that the protection accorded to a design under the patent laws and that accorded to what amounts to a trademark under the common law doctrine of secondary meaning are separate and distinct, and that the rights conferred by law in the one in no way exclude the rights conferred by law in the other."

The underlying purpose and the essence of patent rights are separate and distinct from those appertaining to trademarks. No right accruing from the one is dependent upon or conditioned by any right concomitant to the other. The longevity of the exclusivity of one is limited by law while the other may be extended in perpetuity.

Free competition is served in both cases. 4

Full and fair competition requires that those who invest time, money and energy into the development of goodwill and a favorable reputation be allowed to reap the advantages of their investment. See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 492, 493, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974); 2 Callmann, Unfair Competition, Trademarks and Monopolies § 60.4(b) at 516 (3rd Ed. 1968). As the legislative history of the Lanham Act states:

Trade-marks, indeed, are the essence of competition, because they make possible a choice between competing articles by enabling the buyer to distinguish one from the other. Trade-marks encourage the maintenance of quality by securing to the producer the benefit of the good reputation which excellence creates. To protect trade-marks, therefore, is to protect the public from deceit, to foster fair competition, and to secure to the business community the advantages of reputation and good will by preventing their diversion from those who have created them to those who have not.

Senate Report No. 1333, 1946 U.S.Code Cong.Serv., p. 1275.

To protect TESCO against the misappropriation of the exterior design of the Cornhusker 800, portions of which are nonfunctional and which is possessed of a secondary meaning, will be in furtherance of this Congressional purpose. 5 Potato Chip Institute v. General Mills, Inc., 333 F.Supp. 173, 179 (D.Neb.1971), aff'd per curiam, 461 F.2d 1088 (8th Cir. 1972); L'Aiglon Apparel v. Lana Lobell, Inc., 214 F.2d 649 (3rd Cir. 1954). Contrary to the situation in Sears and Compco, there is in the instant controversy no conflict with federal statutory policy. 6 Fruehauf's contention that it is privileged to copy the exterior design of the Cornhusker 800 must fail.

B.

The contention that the use of photographs of the Cornhusker 800 in Fruehauf's sales literature is not a false representation prohibited by § 43(a) of the Lanham Act must also fail.

Fruehauf argues that its use of photographs of TESCO's product was privileged because its trailer was not inferior in quality to the Cornhusker 800 and because there was no evidence that its trailer was purchased by a consumer under the belief that the trailer was made by TESCO. 7 Fruehauf asserts that this absence of any misrepresentation of quality and palming off is fatal to TESCO's claim because § 43(a) prohibits only false representations by a party respecting its own product. The misrepresentation of the photographs, that Fruehauf made the Cornhusker 800 therein depicted, is not of that nature.

Fruehauf's argument is premised upon a restrictive reading of the applicable law. It relies upon, inter alia, Bernard Food Industries, Inc. v. Dietene Company, 415 F.2d 1279 (7th Cir. 1969), cert. denied, 397 U.S. 912, 90 S.Ct. 911, 25 L.Ed.2d 92 (1970), for its proposition but fails to recognize the decision's limitation:

"But (§ 43(a)) should be construed to include only such false descriptions or representations as are of substantially the same economic nature as those which involve infringement or other improper use of trademarks. It should not be interpreted so as to bring within its scope any kind of undesirable business practice which involves deception, when such practices are outside the field of the trade-mark laws(.)" 8

Id. at 1283, cited from Samson Crane Co. v. Union National Sales, Inc., 87 F.Supp. 218 (D.Mass.1949), aff'd per curiam, 180 F.2d 896 (1st Cir. 1950).

The deception practices by Fruehauf is of the same economic nature as trademark infringement. As stated by the District Court:

The unfairness of (Fruehauf's) conduct, however, must be seen as using the photograph of (TESCO's) trailer to trade upon the reputation of (TESCO) and to confuse potential customers as to the source of origin of the trailer pictured on the sales literature.

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