W.W.W. Pharmaceutical Co., Inc. v. Gillette Co.

• Decision Date: 22 January 1993
• Docket Number: 599,D,Nos. 598,s. 598
• Citation: 25 U.S.P.Q.2d 1593,984 F.2d 567
• Parties: W.W.W. PHARMACEUTICAL COMPANY, INC., Plaintiff-Appellant, v. The GILLETTE COMPANY, Defendant-Appellee. ockets 92-7718, 92-7864.
• Court: U.S. Court of Appeals — Second Circuit

Page 567

984 F.2d 567

25 U.S.P.Q.2d 1593

W.W.W. PHARMACEUTICAL COMPANY, INC., Plaintiff-Appellant, v. The GILLETTE COMPANY, Defendant-Appellee.

Nos. 598, 599, Dockets 92-7718, 92-7864.

United States Court of Appeals Second Circuit.

Argued Nov. 30, 1992.

Decided Jan. 22, 1993.

John M. Keene, New York City (Graham, Campaign & McCarthy, of counsel), for plaintiff-appellant.

Marie V. Driscoll, New York City (Douglas A. Coblens, Robin, Blecker, Daley & Driscoll; Raymond J. De Vellis, The Gillette Co., Boston, MA, of counsel), for defendant-appellee.

Before: OAKES, WINTER and WALKER, Circuit Judges.

OAKES, Circuit Judge:

W.W.W. Pharmaceutical Co., Inc. ("WWW") appeals from a judgment as a matter of law granted to defendant-appellee Gillette Co. ("Gillette"). WWW sued Gillette under the Lanham Act for trademark infringement, 15 U.S.C. § 1114 (1988), and false designation of origin, 15 U.S.C. § 1125(a) (1988). WWW also made pendant claims of unfair competition under New York common law and dilution under N.Y.Gen.Bus.L. § 368 (McKinney 1984). Finding that the United States District Court for the Southern District of New York, Constance Baker Motley Judge, properly determined the trademark claims, we affirm.

I. BACKGROUND

WWW's predecessor in interest, Rumby International ("Rumby") began selling Sportstick lip balm in 1978. In 1981, WWW purchased Rumby's interest in the trademark as well as the formula for the lip balm. A Certificate of Registration, applied for by Rumby in 1981, was issued to WWW on May 11, 1982. In January, 1989, the United States Patent and Trademark Office accepted affidavits of use and incontestability filed in support of WWW's Sportstick registration. Gillette does not challenge the validity of WWW's registration.

WWW has been selling lip balm since 1982. The only product WWW sells, the lip balm is packaged in a royal blue tube and bears the registered trademark "Sportstick" in white letters. A tube of Sportstick is 2 5/8 inches long and 5/8 inch in circumference. The product is sold from store aisle shelves, at check-out counters or in point of sale displays in retail outlets.

WWW's sales were erratic in the 1980s. At its highest point, WWW had a total of 75 accounts, including some with major national drug store and grocery chains, and the lip balm was sold in over 40 states. Sales peaked in 1985 with $233,267 in gross sales nationwide. In 1986-1987, however, WWW changed its supplier to reduce costs. As a result of the new supplier's inability to meet demand, WWW lost most of its accounts and suffered a dramatic decrease in sales. WWW acknowledges that this downturn had nothing to do with Gillette's product. After changing suppliers once again, WWW's prospects looked up briefly in early 1988 but then declined in 1989. We note only for purposes of the claims made under New York Law that WWW's gross sales in the state of New York for the years 1984 through 1988 totaled $490, with sales to only four customers.

Gillette has manufactured deodorant under the Right Guard name since 1959 and, in 1986, introduced two other lines of anti-perspirant/deodorants. In late 1986 or early 1987, Gillette decided to launch a new product under its Right Guard line. In previous years, Right Guard had suffered a decline in sales and a loss of market share due to a stodgy image and aerosol packaging. To recover market share, Gillette sought to improve the product's image by developing a "sport" line. To signify that the new product was a solid rather than an aerosol, the company called it "Right Guard Sport Stick." Gillette chose the name to connote an active lifestyle, hoping to appeal to younger consumers. Gillette was also influenced by the experience of an affiliate which had successfully used the name in the United Kingdom. In April 1987, Gillette's advertising agency conducted a series of focus group surveys to evaluate the original Right Guard trademark and the proposed Sport Stick line. The survey results showed enthusiasm for the new line on the part of young males and confirmed traditional Right Guard's loss of appeal.

Before launching the new line, Gillette's in-house trademark attorney had trademark searches done for the terms Sport and GS Sportsline. Over 60 trademarks came to light, including WWW's "Sportstick." Gillette, therefore, knew of WWW's registration of the trademark "Sportstick" for lip balm before it chose a name for its new line of anti-perspirant/deodorants.

In 1988, Gillette began to market its new line. The sport line includes deodorants and anti-perspirants sold in both aerosol and stick forms. The words "Right Guard" appear most prominently on the front label of the stick forms of the product. Located directly below the brand name and in smaller letters is the word "Sport" which is separated from the word "Stick" by a picture of a running figure. On the back label, the words "Sport" and "Stick" appear to the right of the Right Guard brand name. Here also, the name "Right Guard" is in larger print than the words "Sport Stick".

Gillette engaged in extensive advertising for the new line beginning in May 1988. Using prominent athletes on its television commercials, Gillette marketed the product nationally on such prime time programs as Monday Night Football. In addition, Gillette ran advertisements in newspapers and magazines. In all these advertisements, the words "Right Guard" immediately precede the words "Sport Stick" or "Sport Sticks". After an expensive advertising campaign, Gillette's product began to sell very well.

WWW protested Gillette's use of the mark by letter on May 12, 1988. Gillette did not stop its use of the mark. WWW began this suit on March 21, 1989, claiming that Gillette's unauthorized use of the term "Sport Stick" in the packaging and promotion of its Right Guard deodorant products had damaged WWW's federally registered trademark for lip balm. After discovery had concluded, Gillette moved for summary judgment, claiming that its use of the mark was a "fair use" as a matter of law. Judge Kenneth Conboy denied the motion in an order dated Dec. 5, 1989.

In 1991, the case was transferred for trial to Judge Motley who divided the trial into two stages, with the issue of liability to be decided prior to the hearing on damages. After WWW presented its case, Gillette moved to dismiss WWW's damage claim for failure to prove real and precise actual confusion, to dismiss WWW's complaint in its entirety for failure to establish liability as a matter of law and, pursuant to Rule 50(a) of the Federal Rules of Civil Procedure, for judgment as a matter of law on the ground that there was no legally sufficient basis for a reasonable jury to find for the plaintiff. Gillette also argued that no evidence supported an award of damages and that liability should therefore be decided by the court since only equitable relief was in issue. Judge Motley granted the motion regarding WWW's damage claim and reserved decision on the issue of injunctive relief. She then dismissed the jury. The district court ultimately found for Gillette on the remaining equitable claims. W.W.W. Pharmaceutical Co., Inc. v. Gillette Co., 808 F.Supp. 1013 (S.D.N.Y.1992). ¹

WWW appeals Judge Motley's adverse rulings on its Lanham Act claims of trademark infringement and false designation of origin and its state law claims of unfair competition and dilution. ²

II. DISCUSSION

A. Lanham Act Claims

In order to prevail on its claims of false designation of origin under 15 U.S.C. § 1125(a) or trademark infringement under 15 U.S.C. § 1114, ³ WWW must show a likelihood of confusion. Thus, WWW must show 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." McGregor-Doniger Inc. v. Drizzle Inc., 599 F.2d 1126, 1130 (2d Cir.1979) (quoting Mushroom Makers, Inc. v. R.G. Barry Corp., 580 F.2d 44, 47 (2d Cir.1978) (per curiam), cert. denied, 439 U.S. 1116, 99 S.Ct. 1022, 59 L.Ed.2d 75 (1979)).

WWW's trademark and unfair competition claims are based on the allegation that Gillette's use of "Sport Stick" caused WWW's potential customers to assume that Gillette was the source of WWW's mark and thus to believe that WWW was the infringer. This type of confusion has been dubbed "reverse confusion." Lang v. Retirement Living Pub. Co., 949 F.2d 576, 583 (2d Cir.1991). Such a claim is actionable under the Lanham Act in this circuit. Banff, Ltd. v. Federated Dept. Stores, Inc., 841 F.2d 486, 491 (2d Cir.1988). Reverse confusion has been thought to injure the reputation of the prior user of the mark by causing potential customers to consider it a trademark infringer. Id. at 490.

Federal Rule of Civil Procedure 50(a) allows either party to move for judgment as a matter of law. The rule reads as follows:

If during a trial by jury a party has been fully heard with respect to an issue and there is no legally sufficient evidentiary basis for a reasonable jury to have found for that party with respect to that issue, the court may grant a motion for judgment as a matter of law against that party on any claim, counterclaim, cross-claim, or third party claim that cannot under the controlling law be maintained without a favorable finding on that issue.

Our role in reviewing a district court's decision on such a motion, formerly known as a judgment n.o.v., was set forth in Howes v. Great Lakes Press Corp., 679 F.2d 1023, 1030 (2d Cir.), cert. denied, 459 U.S. 1038, 103 S.Ct. 452, 74 L.Ed.2d 605 (1982). We are to follow the same guidelines followed by district courts in deciding Rule 50 motions:

[T]he trial court cannot assess the weight of conflicting evidence, pass on the credibility of the witnesses, or substitute its judgment for that of the jury. Rather, after viewing the evidence in a light most favorable to the non-moving party (giving the non-movant the benefit of all reasonable inferences), the trial court should grant...