Versa v. Bifold Company

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
2-15-1995
Versa v Bifold Company
Precedential or Non-Precedential:
Docket 94-5064
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________
NO. 94-5064
________________
VERSA PRODUCTS COMPANY, INC.
v.
BIFOLD COMPANY (MANUFACTURING) LTD.,
Appellant
___________________________________________________
On Appeal From the United States District Court
For the District of New Jersey
(D.C. Civ. No. 93-cv-02734)
___________________________________________________
Argued: May 12, 1994
Before: BECKER and LEWIS, Circuit Judges, and
POLLAK, District Judge.*
(Filed February 15, 1995)
NORMAN H. ZIVIN, ESQUIRE (ARGUED)
PETER D. MURRAY, ESQUIRE
WENDY E. MILLER, ESQUIRE
Cooper & Dunham
1185 Avenue of the Americas
New York, NY 10036
ROBERT M. AXELROD
Sills, Cummis, Zuckerman, Radin
Tischman, Epstein & Gross, P.A.
One Riverfront Plaza
Newark, NJ 07102-5400
Attorneys for Appellant
*. The Honorable Louis H. Pollak, United States District
Judge for the Eastern District of Pennsylvania, sitting by
designation.
JEFFREY CAMPISI, ESQUIRE (ARGUED)
Sharkey & Campisi
188 Eagle Rock Avenue
P.O. Box 419
Roseland, NJ 07068
Attorneys for Appellee
_______________________________________
OPINION OF THE COURT
_______________________________________
BECKER, Circuit Judge.
This is a trade dress infringement action in which plaintiff
Versa Products Company, Inc. ("Versa") contends that defendant
Bifold Company (Manufacturing) Ltd. ("Bifold") infringed the
trade dress of Versa's B-316 directional control valve, a device
commonly used in control panels of offshore oil-drilling rigs to
facilitate emergency shutdowns, by marketing its Domino Junior
valve, which Versa maintains copies the product configuration of
the B-316.1 The action was brought under section 43(a) of the
Lanham Act, 15 U.S.C. § 1125(a) (West Supp. 1994), New Jersey's
Unfair Competition Law, 56 N.J.S.A. § 4-1 to -2 (1989), and New
Jersey's common law of unfair competition. Following a bench
trial the district court found that the trade dress of Versa's
valves had met the nonfunctionality and distinctiveness
requirements of our trade dress jurisprudence, and that there was
1
. As in Duraco Products, Inc. v. Joy Plastic Enterprises,
Ltd., 40 F.3d 1431, 1439 (3d Cir. 1994), "we will employ the
designation `product configuration' to refer to trade dress
alleged in the product itself, whether in a specific feature or
in some combination or arrangement of features, and to
distinguish that type of trade dress from `product packaging.'"
a likelihood of confusion of the sources of Bifold's Domino
Junior and Versa's B-316 valves. Accordingly, the court entered
a permanent injunction against Bifold, precluding it from selling
its Domino Junior valve (in its present form) anywhere in the
United States. Bifold appeals all aspects of the district
court's rulings.
We need not reach the nonfunctionality and distinctiveness
questions because the appeal may be disposed of on the likelihood
of confusion issue, in connection with which we are called upon
to determine whether the jurisprudence that lowers the standard
to a "possibility of confusion" where the alleged infringer is a
"second comer" applies in the trade dress product configuration
context. We also must explicate the elements of the confusion
standard in this context. We conclude that the lowered standard
(applied by the district court) does not apply and that some but
not all of the "Scott factors," see Scott Paper Co. v. Scott's
Liquid Gold, Inc., 589 F.2d 1225 (3d Cir. 1978), are pertinent,
because of policy considerations applicable in product
configuration cases. Applying this approach we conclude that the
district court's finding of a likelihood of confusion is clearly
erroneous. We will, therefore, reverse the order of the district
court and vacate the permanent injunction.
I. FACTS AND PROCEDURAL HISTORY
Versa, a New Jersey corporation with subsidiaries abroad,
designs and manufactures pneumatic and hydraulic directional
control valves. Bifold, an English corporation, competes with
Versa and markets a line of control valves and related products
and services to the offshore oil industry. Versa alleges that
Bifold has engaged in unfair competition in its marketing of the
Domino Junior -- a valve manufactured by Bifold and adapted to
the harsh offshore oil and petrochemical environments -- by
copying the trade dress, i.e., the distinctive appearance, of the
product configuration of Versa's B-316 valve.
The most significant feature of valves designed for offshore
applications is their stainless steel composition, used to
withstand the corrosive effects of salt air and sour gas fumes.
In offshore drilling platforms these valves are typically aligned
in small control panels containing up to fifty modular valve
bodies with a standard configuration but which, by attaching one
of various actuators and making minor adjustments, may be adapted
to a variety of applications. The panel design engineers devise
the functional specifications of panels around the capacities of
particular valves, selecting valves based on their functionality,
reliability, availability, and price. The valves themselves are
not visible from the front of a control panel when installed;
only knobs, buttons, and status indicator actuators protrude.
A. Versa's B-316 Valve
Versa began producing brass valves (its "V" series) in 1949.
Versa dresses the series, consisting at present of an entire line
of valves well known in the industry, with contoured lines and
shaping that the district court found "form a distinctive product
appearance that has been associated with Versa for decades." In
the late 1970's Versa designed the B-316 line of stainless steel
valves, the subject of this litigation. Versa initially
fashioned them of stainless steel bar stock, and the valves were
plain and unadorned. Because of the waste of valuable metal
associated with the machining process and the substantial manual
labor needed to drill each valve individually, Versa converted to
a cast version of the valve as soon as sales levels justified the
substantial economic investment in a casting mold.
The two versions of the valve serve the same function and
are interchangeable. Versa deliberately set about to give the
cast version of the B-316 the "Versa look," that is, to have it
resemble in appearance the V-series of Versa valves. FF 41.
Versa's desire to have the valve be clearly associated with Versa
in the market was a primary impetus for its election to manu-
facture the cast version of the B-316.
The modular B-316 valve is comprised of a valve body and,
optionally, one or more attached actuators used to manipulate the
moving parts in the valve body. The valve is a three-way valve,
meaning that it has three ports or openings (for the ingress or
egress of gas or fluid), which are threaded to ¼" NPT, a national
standard and industry requirement. The ports open into an inner
chamber in the valve body, which houses a spool moved by an
actuator (such as a button, knob, or electronically controlled
solenoid actuator) to open or close the port, controlling fluid
flow.
The configuration and function of the actuators provided
with a valve are driven by customer demand; however, the use of
certain actuators (most of which Versa purchases from other
vendors) is standard with the B-316. Versa has used the same
knob actuator for 40 years, although many others are available.
It also uses a particular status indicator, which indicates the
valve's position; a particular button actuator, which is shrouded
to prevent accidental actuation; a self-produced manual latch,
which locks the valve spool in the open or closed position; and a
self-produced pilot actuator, which responds to pressure in an
attached fluid line to control the spool's position.
Located at each end of a valve is a flange, both of which
serve as faces to mount the actuators and to provide a flat
surface for attachment to the control panels; holes are drilled
into the flanges to allow the actuators to be securely mounted.
A longitudinal top rib runs along the top of the valve body to
allow customers to attach solenoid (computer controlled)
actuators, to provide strength, and to serve as a casting gate
(an opening in the casting mold through which the molten metal is
poured). A smaller bottom rib was added to provide parallelism
in the product's appearance and to assist in the casting process.
Finally, the valve has three mounting holes which are positioned
to provide stable mounting to a panel or other flat surface.
Each aspect of the valve serves a specific function essential to
the valve's operation, cost, performance, or ease of manufacture.
The design of each actuator is functional. Functionality
dictates the overall cast design, but does not dictate its
external appearance.
The B-316 valve's mold imprints the manufacturer's name
("VERSA") and place of origin ("N.J. U.S.A.") on the valve.
Versa also stamps a date code and rivets a metal label displaying
the Versa name, logo, and part number onto the valve. Versa
currently dominates the United States market for stainless steel
valves. Aside from Bifold, only Versa sells cast stainless steel
valves; other competitors use a cylindrical bar stock.
B. Bifold's DOMINO JUNIOR Series Valve
As part of Bifold's continuing efforts to expand its product
line, in 1985 it introduced the Domino series modular valves.
Although originally machined from standard bar stock (like
Versa's B-316), the Domino valves became sufficiently successful
to warrant the investment needed to design a cast version. An
outside casting company designed the cast version of the Domino;
Bifold had no involvement in the process. Like a B-316, the
Domino valve has three cylindrical ports, a top rib for housing a
solenoid feed, flanges, and a range of actuators.
Because the Domino was too large for many of its customers'
needs, however, Bifold designed the "Domino Junior" modular valve
in 1990, producing it at first from bar stock.2 In late 1991,
eight years after the cast version of the B-316 became available,
Bifold introduced its cast version of the Domino Junior. Bifold
at the time erroneously believed that Versa had a "monopoly" on
the wellhead control panel valve market, and created the cast
version of the Domino Junior to "bury Versa."
Bifold was aware of the B-316's appearance and design
features because it had seen the product at various trade shows.
The district court did not credit Bifold's claims that it de-
signed the Domino Junior as a scaled down version of the Domino
2
. A fact-finding inconsistent with the tenor of the ones
described here is that "Bifold used the Domino Junior bar stock
valve as an excuse to justify its look-alike cast version of the
Domino Junior product."
and that it did not copy the B-316.3 It found instead that,
before and during its design of the Domino Junior cast mold,
Bifold examined and largely copied Versa's B-316 valve, a sample
of which it had obtained through its agent in Denmark. For
example, the court found that Bifold, which regularly uses metric
sizes in its valves, took measurements from the B-316 and used a
metric conversion of the B-316's imperial standard size. Bifold
also sent a cast B-316 valve to Manchester Tool Services, which
it selected to be the manufacturer of the cast version of the
Domino Junior, as a model for the cast version of the Domino
Junior. The two valves (the B-316 and the Domino Junior) are
not, however, interchangeable in the field, and "replacing a
Versa B-316 cast valve with a Bifold Domino Junior cast valve in
an existing control panel could be problematic."
The district court also found that Bifold lacked the
expertise to design the cast version of the Domino Junior, had
presented misleading testimony about who produced a prototype
drawing of the Domino Junior, and had backdated documents to
create the false appearance that it had designed the valve. The
court found that BSA Precision Castings, Ltd. ("BSA"), which had
designed the cast version of the Domino valve, was involved in
the design of the cast version of the Domino Junior valve.
During the time that BSA participated in the design of the cast
version of the Domino Junior, it had in its possession drawings
3
. It also did not credit the claims of Bifold's experts.
and castings of the B-316's major components, as well as Versa's
actuators. BSA had obtained the drawings, actuators, and actual
samples of valve components from Versa three years earlier when
it had provided Versa with a quote for the casting of the B-316.
The court found that BSA used this data to design a casting of
the Domino Junior valve as a look-alike of the Versa B-316,
despite the fact that Bifold had asked BSA to give "due
consideration to the appearance of the larger Domino valves."
Although the Domino Junior and B-316 do, in fact, look quite
similar, the district court described a number of differences
between the two manufacturers' valves. Because the Domino
Junior's ports extend outward from the valve body, whereas the B-
316's ports are flush with the valve body, the Domino Junior is
slightly wider than the B-316. The Domino Junior ports' threads
have metric dimensions. The Domino Junior is made of more metal
and weighs about thirty percent more than the B-316. The stroke
-- the distance an actuator must move the internal spool to
switch the valve's ports -- also differs from that of the B-316.
Because Bifold electroplates its valves, the Domino Junior body
has a duller finish than the B-316. The Domino Junior also has
thicker flanges and ribs than does the B-316. The valves'
mounting holes have different centers. Bifold purchases its
status indicators from a different company than Versa uses, and
these indicators have a different size, appearance, and
configuration from Versa's. Like Versa, Bifold produces its own
manual latch, but makes it out of two cast pieces and gives it
rounded edges, whereas Versa uses a single piece of rectangular
bar stock material.
The Domino Junior valves are "block-before-bleed" (meaning
fluid flow is completely blocked during the moment required to
change states when the valve is activated), whereas the B-316
includes that feature only as an option. The Domino Junior ports
are universal (meaning that any port can be an inlet or an outlet
port), though Bifold customizes each valve as either normally
open or normally closed; in contrast, Versa offers universal
application only as an option. Like Versa, Bifold casts its name
into the Domino Junior's valve body and bolts onto it a metal
label prominently displaying the Bifold name.
Despite all these differences, the court concluded that
"[t]he Bifold Domino Junior valve and actuators are virtually
identical in external design and visual appearance to the Versa
B-316 valve." It found an identity in general body
configuration, body length, flanges, distance between ports,
valve mounting holes, actuator mounting holes, ribs, spring cap
(which returns the spool back to its original position), buttons,
button caps, status indicators, knobs, manual latching pins, and
pilot caps. The valve bodies, buttons, button caps, knobs,
status indicators, and manual latching mechanism used by other
competitors in the industry look quite different from both the
Domino Junior's and the B-316's. The court discounted the
dissimilarity of the solenoid actuators attached to the valve
bodies by Versa and Bifold because only a small portion of
Versa's B-316 valves sold include solenoid actuators.
C. Marketing and Sales of the Valves
In order to determine whether Bifold had engaged in unfair
competition with Versa, the district court considered whether
consumers were likely to confuse the sources of the two
companies' valves in light of the ways in which the two valves
are marketed and sold. The court found that valves of this sort
are not sold off the shelf or selected on sight. Rather, both
manufacturers sell their valves based on functional
specifications detailed in schematic diagrams, manufacturers'
catalogs, or specification sheets and samples available at trade
shows and sales presentations. The valves are selected by multi-
digit part numbers identifying the particular variation desired.
The purchasers and users of the valves are qualified,
knowledgeable persons who comprehend the installation and use of
the valves. They typically prepare specifications designating
which manufacturer's valve they prefer to use in their system
before placing the order.
Versa, the more established manufacturer, has sold over
100,000 B-316 valves, and is currently selling over 16,000 per
year. This gives it a fifty to fifty-five percent market share
of valves sold for use in emergency shutdown systems in the
United States. Bifold has only recently begun marketing its
Domino Junior valve in the United States, and immediately stopped
its efforts to open the United States market pending the outcome
of this litigation.
Versa and its B-316 valve have an excellent reputation for
producing a high quality product. This quality level is very
important in emergency shutdown offshore drilling, for the
failure of a valve could cause loss of human life and property as
well as severe environmental damage. Versa has therefore
subjected its B-316 valve to rigorous quality control tests, and
the valve has performed faithfully in the field.
The district court found that, because of the availability
and outstanding reputation of the B-316 cast valve for over ten
years, the overall appearance and contours of the B-316 have come
to distinguish the valve as Versa's (in the industry and to
Versa's customers), with the valve body constituting the most
defining aspect of the Versa look. The valve's overall
appearance assists Versa in marketing its product, and Versa
features this appearance widely in trade journals, catalogues,
brochures, bulletins, trade shows, and sales exhibitions. The
court also found that Versa deliberately created the B-316's
distinctive appearance (contrasting with the other valves
available in the market at the time) to identify the valve in the
market as a Versa product.
The district court found that Bifold hired Versa's former
regional marketing manager of six years, James Carr, III, to sell
its new Domino Junior valve. Carr sells both Versa and Bifold
valves, sometimes to the same customers. To solicit Domino
Junior sales in early 1993, Carr approached Gordon Fraleigh, an
employee of the Fraleigh Company, which for years had sold Versa
products to customers in the petroleum industry. Carr
represented to Fraleigh, whom he had known for many years, that
Bifold had developed an "exact copy" of the B-316 which would
"fit in perfect" as a substitute for the B-316, and inquired
whether Fraleigh would like to distribute the Domino Junior.
Thereupon, Fraleigh became confused as to the relationship
between Versa and Bifold. Bifold has also contemplated
contacting other Versa distributors to sell its valves.
D. Likelihood of Confusion
Beyond the confusion on Fraleigh's part, the district court
found that some, but not all, consumers of the B-316 valves are
sophisticated, and that the likelihood of confusion as to the
source of the Domino Junior is enhanced with respect to the
unsophisticated consumers. This finding is undercut by the
district court's finding, see supra p.12, that the purchasers are
knowledgeable and understand the valves. We note, however, that
these findings might be resolved by noting that the latter
finding assumes expansion of Versa's market. Indeed, the opinion
later suggests that any unsophisticated consumers exist only as
"potential new customers" in "untapped" markets, that is, that
all the current customers are sophisticated. See Mem. Op. at 90.
Because there will in those potential expansion markets be no
likelihood of confusion based on the district court's theory
(namely, that consumers familiar with Versa's trade dress will
mistakenly believe Bifold is affiliated with Versa, see infra at
68-74), we will ignore the court's "expansion" finding and
consider only its finding that the purchasers are knowledgeable.
In addition, one customer forwarded to Bifold a telefax
initially addressed to Versa. And Frank Vetter, a Vice President
and Chief Operating Officer of Versa, testified that he was
advised of confusion of the products at trade shows.
Because of the valves' "virtual identity in appearance" and
the fact that Bifold has not sold products in the United States
previously, the district court concluded that a Versa customer in
the United States might reasonably assume that Versa and Bifold
are related companies or that the Domino Junior is otherwise
related to Versa. However, since Bifold had sold only two valves
in the United States, both to distributors, the court found there
had been little opportunity for Versa to document instances of
actual confusion.
II. THE DISTRICT COURT'S LEGAL CONCLUSIONS4
The district court noted at the outset that Section 43(a)
provides a cause of action for unprivileged imitation of trade
dress -- defined as the "overall design or appearance of a
product or its packaging" -- because it involves actual or
potential deception. Trade dress, it held, consists not of
individual features, but of the overall appearance of the
product. We turn then, to the court's more specific legal
conclusions.
Recognizing that unpatented functional features may be
freely copied regardless of any likelihood of confusion -- and
Versa has not patented the design of its B-316 valve -- the
district court first concluded that the trade dress of the B-316
4
. Subject matter jurisdiction was grounded in the federal
question statute, 28 U.S.C.A. § 1331 (West 1993), since Versa's
cause of action arises under Section 43(a) of the Lanham Act, 15
U.S.C.A. § 1125(a) (West Supp. 1994). Personal jurisdiction was
based on the defendant's consent. The court exercised
supplemental jurisdiction over plaintiff's pendent state law
claim.
was nonfunctional. The court next concluded that the B-316's
trade dress was "inherently distinctive,"5 or, in the
alternative, possessed acquired distinctiveness because it had
acquired secondary meaning.6 The distinctiveness finding is
problematic because the district court evaluated inherent
distinctiveness using a legal standard that this court has since
held to be improper. See Duraco Prods., Inc. v. Joy Plastic
Enters., Ltd., 40 F.3d 1431, 1441-42 (3rd Cir. 1994) (rejecting
the trademark distinctiveness taxonomy as the measure of inherent
distinctiveness for trade dress in product configurations). And
although we can scarcely blame the district court, whose analysis
of functionality largely tracked this court's various legal
formulations, its finding of nonfunctionality is also problematic
in view of the conflicting formulations of functionality used, as
5
. The court concluded that the trade dress was inherently
distinctive because it was "arbitrary," meaning it was "not
dictated by functional considerations" (which appears to be the
same standard that the court employed for its functionality
inquiry).
6
. "Secondary meaning" denotes that the purchasing public
associates the design of the product with a particular source.
Secondary meaning need be proven only if the product is not
inherently distinctive. The court held that secondary meaning
was established by the length and continuity of the plaintiff's
use -- here, continuously for 10 years; by the strength of the
buyers' mental associations -- here, purchasers associate the
appearance of the B-316 with Versa; by the extent of sales and
advertising -- here, Versa has sold tens of thousands of B-316
valves and has advertised widely; and, most persuasively
according to the district court, by the evidence of intentional
copying.
outlined in the margin.7 Although we have misgivings about these
two issues, it is the district court's third conclusion that
forms the focus of our opinion today.
7
. The district court determined that a product feature is
functional if and only if "it affects their purpose, action or
performance, or the facility or economy of processing, handling
or using them." Treating functionality as a matter for fact
finding, the court placed the burden on Versa to show that "its
trade dress serves no purpose except to identify Versa." But
then it held that trade dress is functional only "if it is essen-
tial to the use or purpose of the article or . . . affects the
cost or quality of the article," that a design is "essential"
"only if it is dictated by the functions to be performed," and
that a design is "essential to [an item's] use" only if the
particular design of the whole assembly is essential (internal
quotation marks omitted, emphases supplied). The court's inquiry
thus focused on the extent to which the design feature was
related to the usefulness of the product. Then, setting forth
yet a third standard, the court held that a product design is
nonfunctional if, viewed as a whole, the design "primarily serves
a legitimate trademark purpose -- identifying the source of the
product -- . . . even though it might also serve functional
purposes" (internal quotation marks omitted).
The several standards for functionality described by the
district court reflect varying articulations found in opinions of
this court. Compare, e.g., Merchant & Evans, Inc. v. Roosevelt
Bldg. Prods. Co., 963 F.2d at 635 ("`Proof of nonfunctionality
generally requires a showing that the element of the product
serves no purpose other than identification.'") (quoting SK&F,
Co. v. Premo Pharmaceutical Lab., Inc., 625 F.2d 1055, 1063 (3d
Cir. 1980)) with Merchant & Evans, Inc., 963 F.2d at 634 ("`[T]he
question is whether a particular feature of a product is
substantially related to its value as a product or service, i.e.,
if the feature is a part of the "function" served, or whether the
primary value of a particular feature is the identification of
the provider . . . .'") (quoting United States Golf Ass'n v. St.
Andrews Sys., 749 F.2d 1028, 1033-34 (3d Cir. 1984)).
The district court concluded that although a large number of
the B-316's features were functional, their combination into a
particular form was not. It found that the B-316 valves' overall
design did not result from "significant cost and manufacturing
considerations," and that if the appearance of the B-316 were
altered, "nothing of substantial value in the product [would be]
lost." In sum, the district court found that "[t]he appearance
The district court held that to prevail on a trade dress
infringement claim, a plaintiff must demonstrate a likelihood of
confusion, but not actual confusion. It held that Versa could do
so here if it could show that an appreciable number of buyers are
likely to become confused as to the origin of the Domino Junior
valve. Importantly, the court further held that the threshold
for likelihood of confusion is lower when a newcomer (or "second
comer") violates a long-established trade dress.
The district court then seemed to apply the ten factors for
likelihood of confusion that this court enumerated in Scott Paper
Co. v. Scott's Liquid Gold, Inc., 589 F.2d 1225 (3d Cir. 1978).
See CL 57. Under Scott, the threshold issue is the question of
similarity of product appearances, and the court found that the
Domino Junior's appearance was "virtually identical" to the B-
(..continued)
of the Versa B-316 valve presents a particular combination and
arrangement of design elements that are original to plaintiff's
valve, that identify it as a valve of Versa . . . and that
distinguish it from other valves. This arrangement of features
is not required by the function of the valve itself and is
entitled to protection." Pointing to other competing valves, the
court found that Bifold could compete with Versa's B-316 without
copying Versa's particular configuration.
A party entering a market, the court continued, has a duty
"to so name and dress his product as to avoid likelihood of users
confusing it with the product of the first comer." Since, in its
view, Bifold had overtly and intentionally copied Versa's trade
dress in direct competition with Versa, the court concluded that
Bifold had infringed Versa's trade dress and engaged in unfair
competition. While Bifold could produce a valve with three ports
with modular actuators and solenoid feeds, the court said, Bifold
could not copy the particular, arbitrary combination and
arrangement of design elements that identify and distinguish
Versa valves.
316's and hence that there was a likelihood of confusion. The
district court reasoned that Bifold's clear designation on the
product that it was the manufacturer, while relevant to Bifold's
duty to take reasonable steps to prevent deception, was only one
factor to be assessed in resolving the confusion issue.
The district court found that "[a]n intent to copy trade
dress and/or finding of copying by a junior user is often alone
dispositive of a finding of likelihood of confusion," and that
since Bifold had copied Versa's design there was a likelihood of
confusion. The court also found a likelihood of confusion
because of the "competitive proximity" of the goods, which
"strongly favors a finding of confusion," since the court found
that the Domino Junior can replace the B-316 at the point of
conception of the panels.8
Although the district court concluded that Versa was not
entitled to damages because Bifold had only sold two of its
valves in the United States, it granted Versa permanent
injunctive relief on the ground that the company's good will was
threatened by Bifold's attempt to reap the benefits of Versa's
reputation (by basing the appearance of the Domino Junior on a
8
. The court additionally considered the "strength" of
Versa's trade dress, evidence (albeit slim) of actual confusion,
the method in which the valves are sold, and the labeling of
Bifold's Domino Junior. Finally, the court also essentially held
that New Jersey's Unfair Competition Law, 56 N.J.S.A. § 4-1 to -2
(1989), and its common law of unfair competition parallel the
unfair competition cause of action under Section 43(a), and hence
that Versa prevailed on those causes of action as well.
Versa product). The court determined that the injunction had to
cover not only the appearance of the article actually the subject
of the lawsuit, but also all "confusingly similar" appearances.
It therefore crafted an injunction enjoining Bifold from
manufacturing, selling, etc., any cast valve which "has an
external design and visual appearance confusingly similar to the
cast Versa B-316 valve, described herein and shown in Exhibit A."
Order and Injunction at 5.9
The court then held Versa to be entitled to attorneys' fees.
Recognizing that attorneys' fees can be awarded to the
"prevailing party" only in "exceptional cases," the court found
Bifold's deliberate and willful infringement to be exceptional.
This appeal followed. We have jurisdiction under 28 U.S.C. §
1132.
9
. The court concluded its opinion with the caveat that,
should its injunction be overturned, "an alternate albeit less
efficacious course can be considered," namely, attaching a metal
label providing "made in England" and "not a Versa product" onto
the Domino Junior. Mem. op. at 92 n.3.
III. DISCUSSION
To obtain trade dress protection for the B-316 under section
43(a) of the Lanham Act, Versa had to prove that (a) the design
was non-functional, (b) the design was inherently distinctive or
distinctive by virtue of having acquired secondary meaning, and
(c) there was a likelihood of confusion. See Two Pesos, Inc. v.
Taco Cabana, Inc., 112 S. Ct. 2753, 2758 (1992).10 As discussed
supra, the district court found that Versa had met each of these
requirements, and it therefore permanently enjoined Bifold from
copying the B-316's trade dress and ordered Bifold to pay
attorney's fees. We limit our discussion to the final element
Versa needed to establish to prevail on its trade dress
infringement claim -- the likelihood of consumer confusion as to
the source of Bifold's Domino Junior.
Such consumer confusion is, of course, at the heart of
trademark law. See, e.g., Freixenet, S.A. v. Admiral Wine &
Liquor Co., 731 F.2d 148, 151 (3d Cir. 1984). Likelihood of
confusion is a factual matter, subject to review for clear error,
see Ciba-Geigy Corp. v. Bolar Pharmaceutical Co., 747 F.2d 844,
851 (3d Cir. 1984), which exists when, "giving all due deference
to the opportunity of the trial judge to evaluate the credibility
of witnesses and to weigh the evidence," Litton Sys., Inc. v.
Whirlpool Corp., 728 F.2d 1423, 1445 (Fed. Cir. 1984) (emphasis
10
. New Jersey statutory and common law of unfair
competition require essentially the same elements. See SK&F,
Co.,625 F.2d at 1065.
omitted) (citing Inwood Lab., Inc. v. Ives Lab., Inc., 456 U.S.
844, 855, 102 S. Ct. 2182, 2188 (1982)), we are "left with a
definite and firm conviction that a mistake has been committed,"
Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S. Ct. 1504,
1511 (1985).
A. "Likelihood" vs. "Possibility" of Confusion
Generally, "the law does not require that a competitor
insure against all possible confusion or the likelihood thereof."
CHARLES E. MCKENNEY & GEORGE F. LONG, III, FEDERAL UNFAIR COMPETITION:
LANHAM ACT § 43(A) § 3.08[1], at 3-71 (1989, Release #5, May 1994)
[hereinafter MCKENNEY & LONG, FEDERAL UNFAIR COMPETITION]. Rather, a
plaintiff may prevail in a trade dress infringement action only
if it shows that an appreciable number of ordinarily prudent
consumers of the type of product in question are likely to be
confused as to the source of the goods. See, e.g., Nikon, Inc.
v. Ikon Corp., 987 F.2d 91, 94 (2d Cir. 1993); West Point Mfg.
Co. v. Detroit Stamping Co., 222 F.2d 581, 589 & n.2 (6th Cir.
1955). "The mere possibility that a customer may be misled is
not enough." Surgical Supply Serv., Inc. v. Adler, 321 F.2d 536,
539 (3d Cir. 1963).
Although this usual formulation of trade dress infringement
requires a showing of a likelihood or probability of confusion,
this standard has been relaxed in some cases. Where an alleged
infringer was new to an area and the plaintiff was well-
established, this court has at times replaced the "likelihood of
confusion" requirement with a lower "possibility of confusion"
standard. These cases have all involved actions for trademark or
tradename infringement, not trade dress, and certainly not trade
dress alleged in a product configuration. See Merchant & Evans,
Inc. v. Roosevelt Bldg. Prods. Co., 963 F.2d 628, 637-38 (3d Cir.
1992) (considering "possibility of confusion" with respect to "a
name or mark," in particular, a "`Z' logo" alleged to be
confusingly similar to a "`Zip-Rib' trademark"); Country Floors,
Inc. v. Partnership Composed of Gepner & Ford, 930 F.2d 1056,
1065 (3d Cir. 1991) (directing application of "possibility of
confusion" standard to "Country Tiles" and "Country Floors" names
or marks); Telechron, Inc. v. Telicon Corp., 198 F.2d 903, 908-09
("a case of a first coined word and a second coined word
resembling it"). We must therefore consider whether the
"possibility of confusion" standard should govern product
configuration trade dress cases. Since unfair competition law
regarding product configurations will diverge substantially in
its incidents from the law regarding product packaging, Duraco,
40 F.3d at 1439, we begin our consideration by examining the
rationale underlying the "possibility of confusion" cases.
Telechron, Inc. offered some explanation for the lowering of
the requirements for showing trademark infringement in certain
situations. In that case the plaintiff used the name "Telechron"
starting in 1919 as a trademark for its electric clocks and other
timing and switching devices. The defendant Telicon Corporation
began marketing radio and television sets under the "Telicon"
name for the first time in 1946. Agreeing with the district
court, this court held that "`Telicon' is a colorable imitation
of `Telechron' within the conception of trade-mark infringement."
Telechron, Inc., 198 F.2d at 908.
In an opinion by Judge Hastie, the court explained that the
"`degree of resemblance necessary to constitute an infringement
is incapable of exact definition.'" Telechron, Inc., 198 F.2d at
908 (quoting McLean v. Fleming, 96 U.S. (6 Otto) 245, 251
(1877)). We emphasized the strong aural similarity of the marks
and the evidence of actual confusion, concluding that the
evidence was "adequate substantiation of tendency to confusion
inherent in the obvious similarity of the words themselves."
Telechron, Inc., 198 F.2d at 908. Only then, expressly as an
additional consideration, did we observe that this was "a type of
case where a court properly requires the second comer to stay
clearly away from the original mark," and thus that "`any
possible doubt of the likelihood of damage should be resolved in
favor of the [first user].'" Id. at 908-09 (quoting Lambert
Pharmacal Co. v. Bolton Chem. Corp., 219 F. 325, 326 (S.D.N.Y.
1915) (Learned Hand, J.)).
We recognize that application of the "keep clear" policy
embodied by the trademark "possibility of confusion" standard
would not be entirely senseless in the context of alleged
infringement of trade dress, even where the dress consists not in
a product's packaging but in a nonfunctional product
configuration. To the extent that product configurations are
protectable, a Johnny-come-lately copier arguably creates a
greater risk than one who more promptly markets a copy that
consumers will be misled by a substantially identical
configuration into thinking the newcomer's product to be that of
the established business, for there will have been more time for
the public to come to associate that configuration with a single
source. In and of itself, however, that is no reason to change
the measure of confusion (from "probability" to "possibility")
required to make out a Lanham Act violation. Rather, it is at
most a factor properly taken into account in assessing the
likelihood of confusion.
The trademark "possibility of confusion" standard must
therefore be supported by other considerations. We believe that
the primary reasons for lowering the measure of confusion when a
newcomer copies an established trademark are the general lack of
legitimate reasons for copying a competitor's mark, see, e.g.,
American Chicle Co. v. Topps Chewing Gum, Inc., 208 F.2d 560,
562-63 (2d Cir. 1953) ("`Why [the defendant] should have chosen a
mark that had long been employed by [the plaintiff] and had
become known to the trade instead of adopting some other means of
identifying its goods is hard to see unless there was a
deliberate purpose to obtain some advantage from the trade which
[the plaintiff] had built up.'"), and the high degree of reliance
by consumers on trademarks as indicators of the source of
products. Whether or not these considerations translate to the
realm of product packaging, we think that with respect to product
configurations the significance of each of the factors is greatly
diminished.
First, the mere copying of product configurations does not
suggest that the copier was necessarily trying to capitalize on
the goodwill of the source of the original product. See Duraco,
40 F.3d at 1453; see also infra at 40-48 (discussing implications
of defendant's intent to copy). A presumption to the contrary
would be mandated, if ever, only in the narrow class of cases
where both (1) a product configuration is desirable to consumers
primarily because of the configuration's inherent or acquired
identification with the original source, and (2) the copier
adopts affirmatively misleading labelling and/or marketing for
the copied product, cf. Quaker Oats Co. v. General Mills, Inc.,
134 F.2d 429, 432 (7th Cir. 1943) ("The pirate flies the flag of
the one he would loot. The free and honorable non-pirate flies
the colors of his own distinctive ensign.").
Second, although a product's trade dress in the form of its
configuration could function as an indicator of the product's
source, product configurations in general are not reliable as
source indicators, for functional configurations are not
protected and thus may be freely copied, see Duraco, 40 F.3d at
1441, 1448-49, 1451, and inherently distinctive configurations
will be rare, see id. at 1446. Since substantially identical
products are often sold by different manufacturers under
different names, consumers are accustomed to relying on product
packaging and trademarks to identify product sources. Indeed, if
any modification of the likelihood of confusion standard is
justified in the product configuration context, the standard
might well be heightened, perhaps to a "high probability of
confusion." Nevertheless, we see no need to adopt such a
standard today, preferring for now merely to reject the
"possibility of confusion" standard for product configuration
infringement cases, and adhering to the conventional "likelihood
of confusion" standard.
B. The Scott Factors in the Product Configuration Context
Having concluded that the appropriate standard in this
product configuration trade dress infringement action is a
likelihood of confusion, we must determine what that inquiry
entails in this context. Although the law of trade dress in
product configurations will differ in key respects from the law
of trademarks or of trade dress in product packaging, settled law
provides the starting point for our analysis.
We stated in Ford Motor Co. v. Summit Motor Prods., Inc.,
930 F.2d 277, 297 (3d Cir.), cert. denied, 112 S. Ct. 373 (1991),
that the analysis of the likelihood of confusion requires a court
to evaluate a number of factors:
(1) the degree of similarity between the owner's mark and
the alleged infringing mark; (2) the strength of [the]
owner's mark; (3) the price of the goods and other factors
indicative of the care and attention expected of consumers
when making a purchase; (4) the length of time [the]
defendant has used the mark without evidence of actual
confusion arising; (5) the intent of the defendant in
adopting the mark; (6) the evidence of actual confusion; (7)
whether the goods, though not in competition, are marketed
through the same channels of trade and advertised through
the same media; (8) the extent to which the targets of the
parties' sale efforts are the same; (9) the relationship of
the goods in the minds of the public because of the
similarity of function; (10) other facts suggesting that the
consuming public might expect the prior owner to manufacture
a product in the defendant's market.
Id. at 293 (citing Scott Paper Co. v. Scott's Liquid Gold, Inc.,
589 F.2d 1225, 1229 (3d Cir. 1978)); accord Charles Jacquin et
Cie, Inc. v. Destileria Serralles, Inc., 921 F.2d 467, 474-75 (3d
Cir. 1990); cf. RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 21 (Tent.
Draft No. 2, Mar. 23, 1990). This test was developed not for
product configuration cases but for "cases of alleged trademark
infringement and unfair competition by a producer of a non-
competing product," see Fisons Horticulture, Inc. v. Vigoro
Indus., Inc., 30 F.3d 466, 473 (3d Cir. 1994), and not all of the
factors will be appropriate for or function the same way with
respect to trade dress inhering in a product configuration, so we
consider them in turn.
1. Similarity of Appearance (Scott Factor 1)
In trademark infringement cases, the first and primary
factor to be considered in the likelihood of confusion inquiry is
"the degree of similarity between the owner's mark and the
alleged infringing mark." See Ford Motor Co., 930 F.2d at 293.
In trade dress infringement cases where product packaging is at
issue, the corresponding factor is the similarity of the
protectable trade dress. Similarity of appearance is properly
considered paramount in trademark and product packaging trade
dress infringement cases, for unless the allegedly infringing
mark or dress is substantially similar to the protectable mark or
dress, it is highly unlikely that consumers will confuse the
product sources represented by the different marks or trade
dresses.
For the same reason, substantial similarity of appearance is
necessarily a prerequisite to a finding of likelihood of
confusion in product configuration cases. Unlike in trade mark
or product packaging trade dress cases, however, a finding of
substantial similarity of trade dress in a product configuration
does not by itself strongly suggest a likelihood of confusion.
Consumers have grown accustomed to relying on trademarks as
trustworthy indicators of the source of the product: that is the
point of a trade mark. Perhaps to a somewhat lesser extent,
consumers also rely on other aspects of product packaging to
identify the manufacturer. Such behavior is rational, for in a
trade mark or product packaging case, all the consumer usually
has to go on to identify the source of the product is the
trademark and packaging (and any marketing featuring that mark or
packaging).
In a product configuration trade dress infringement case, by
contrast, consumers do not have to rely on a potentially
distinctive configuration to identify the source of the
product;11 rather, they can generally look to the packaging,
trademarks, and advertising used to market the product, which are
typically much less ambiguous. Consumers therefore have less
need, and so are much less likely, to rely on a product
configuration as an indicator of the product's source.
Accordingly, they are less likely to be confused as to the
sources of two products with substantially similar
configurations. Thus, in trade dress infringement suits where
the dress inheres in a product configuration, the primary factors
to be considered in assessing likelihood of confusion are the
product's labeling, packaging, and advertisements.12 "The most
common and effective means of apprising intending purchasers of
11
. The product configuration may have acquired
distinctiveness, or it may be inherently distinctive.
12
. This observation is consistent with our discussion of
the Scott factors (also known as the Lapp factors, after
Interpace Corp. v. Lapp, Inc., 721 F.2d 460 (3d Cir. 1983)) in
Fisons Horticulture, Inc., 30 F.3d at 476 n.11, where we stated:
"The weight given to each factor in the overall picture, as well
as its weighing for a plaintiff or defendant, must be done on an
individual fact-specific basis."
the source of goods is a prominent disclosure on the container,
package, wrapper, or label of the manufacturer's or trader's name
. . . [and when] that is done, there is no basis for a charge of
unfair competition." Venn v. Goedert, 319 F.2d 812, 816 (8th
Cir. 1963), quoted in Litton Sys., Inc., 728 F.2d at 1446.
Indeed, except where consumers ordinarily exercise virtually
no care in selecting a particular type of product (as may be the
case with inexpensive disposable or consumable items, cf. Venn,
supra (cookies)), clarity of labeling in packaging and
advertising will suffice to preclude almost all possibility of
consumer confusion as to source stemming from the product's
configuration. Cf. Bose Corp. v. Linear Design Labs, Inc., 467
F.2d 304, 309 (2d Cir. 1972) ("The presence of [the source's]
name on the product [stereo speaker cabinets] goes far to
eliminate confusion of origin.") (emphasis supplied); id. at 310
("[T]here is hardly likelihood of confusion or palming off when
the name of the manufacturer is clearly displayed.").
2. Strength of the Owner's Mark (Scott Factor 2)
In trademark cases, the strength of the owner's mark
directly affects the likelihood that consumers will be confused
as to the sources of products bearing substantially similar
marks. Strength includes both "[d]istinctiveness on the scale of
trademarks" and "[c]ommercial strength, or marketplace
recognition." Fisons Horticulture, Inc., 30 F.3d at 479. A
strong trademark is thus one that carries widespread, immediate
recognition that one producer (even if unknown) is associated
with the mark, and so with the product. If a second comer adopts
a mark substantially identical to a strong mark, there is a
correspondingly high likelihood that consumers will mistakenly
associate the newcomer's product with the owner of the strong
mark. The same may be said of a "strong" trade dress consisting
of a product's packaging.
But these observations do not translate literally into the
product configuration context. As we have explained elsewhere,
the trademark distinctiveness scale is ill-suited for application
to trade dress inhering in a product configuration. See Duraco,
40 F.3d at 1440-42. Having rejected the distinctiveness scale in
this context, we are left with commercial strength as the measure
of trade dress strength in a product configuration. Yet strength
of a product configuration must mean more than the ability of
large numbers of consumers to identify the configuration as
coming from a particular producer. This would sanction too much
reliance by consumers on product designs that, lacking the
protection of a patent, are in large measure copyable at will.
Cf. Duraco, 40 F.3d at 1447-48 (criticizing the "capable of
distinguishing" interpretation of distinctive trade dress).
Rather, "strength" of product configuration as relevant to
determining likelihood of confusion on the part of ordinarily
careful consumers should be found only if consumers rely on the
product's configuration to identify the producer of the good.
This may perhaps be the case with products purchased largely
because of their appearance, such as "Carebears," cf. American
Greetings Corp., 807 F.2d at 1142. Such focus, however, is not
generally found in and should not be encouraged in the industrial
design context, where product appearance typically plays a lesser
role in buyers' selection processes. Hence, to differentiate
between these types of product configuration cases, courts should
require evidence of actual reliance by consumers on a particular
product configuration as a source indicator before crediting that
configuration's "strength" toward likelihood of confusion.
3. Attention Expected of Consumers (Scott Factor 3)
The third Scott factor is "the price of the goods and other
factors indicative of the care and attention expected of
consumers when making a purchase." "The greater the care and
attention, the less the likelihood of confusion." Fisons
Horticulture, Inc., 30 F.3d at 476 n.12. We believe that this
factor takes on enhanced importance when a claim is made for
infringement of trade dress in a product configuration, both as a
result of the intersection of the patent laws with the Lanham
Act, and as a function of the difference between a trademark and
a product configuration.
The penumbra of the federal patent laws restricts the degree
to which courts may grant legal recognition of consumer reliance
on product configurations as source indicators, for their limited
scope of protection impliedly imposes restraint on the workings
of Section 43(a). Accordingly, we must bear in mind the Supreme
Court's counsel that "mere inability of the public to tell two
identical articles apart is not enough to support an injunction
against copying . . . that which the federal patent laws permit
to be copied." Sears, Roebuck & Co. v. Stiffel Co., 376 U.S.
225, 232, 84 S. Ct. 784, 789 (1964).13 "[T]he federal policy,
13
. We recognize that we deal here not only with state
unfair competition law but also with a federal statute. It is
therefore true that the Supremacy Clause does not, as in Sears,
Roebuck & Co., 376 U.S. at 225, and Compco Corp. v. Day-Brite
Lighting, Inc., 376 U.S. 234, 84 S. Ct. 779 (1964), operate to
bar Section 43(a) from protecting trade dress in the form of the
product configuration of Versa's B-316 valve.
found in Art. I, § 8, cl. 8, of the Constitution and in the
implementing federal statutes, of allowing free access to copy
whatever the federal patent and copyright laws leave in the
public domain," Compco Corp. v. Day-Brite Lighting, Inc., 376
U.S. 234, 237, 84 S. Ct. 779, 782 (1964), is "an ever-present
consideration," MCKENNEY & LONG, FEDERAL UNFAIR COMPETITION § 5.03, at
5-25.
Furthermore, one expects a consumer exercising ordinary care
to ascertain the source of a product to rely much more on
packaging, trademarks, and advertising, which if not deceptive
tend to reveal the product's source unambiguously, than on the
product configuration, which usually does not contain an explicit
statement of the producer's identity. While it might be shown
that consumers in fact rely on a particular product's
configuration to identify its source, such deviation from the
normal pattern (i.e, from reliance on trademarks, packaging, and
advertising) would be rare. Because clear labeling thus should
generally be legally and factually sufficient to remedy confusion
where unpatented product configurations are at issue, clarity of
labeling (and marketing) must be taken into account in
considering whether there is a likelihood that consumers
exercising ordinary care will be confused as to the sources of
substantially identical products.
Much as courts are required to police the boundaries of
similarity within which a jury may be permitted to find a
likelihood of confusion under the Lanham Act, Country Floors,
Inc., 930 F.2d at 1063, courts must also establish the perimeters
of ordinary care that constrain likelihood of confusion. The
following non-exhaustive considerations should guide a court's
determination of the standard of ordinary care for a particular
product. Inexpensive goods require consumers to exercise less
care in their selection than expensive ones. The more important
the use of a product, the more care that must be exercised in its
selection. In addition, "the degree of caution used . . .
depends on the relevant buying class. That is, some buyer
classes, for example, professional buyers . . . will be held to a
higher standard of care than others. Where the buyer class
consists of both professional buyers and consumers, . . . . the
standard of care to be exercised by the reasonably prudent
purchaser will be equal to that of the least sophisticated
consumer in the class." Ford Motor Co., 930 F.2d at 293.
4. Actual Confusion or Lack Thereof (Scott Factors 4 & 6)
The fourth Scott factor is "the length of time defendant has
used the mark without evidence of actual confusion arising."
While we hold that this factor applies to product configuration
cases as well as to trade mark and product packaging cases (for
it is obviously relevant), we take this opportunity to underscore
the role of the "lack of actual confusion" factor. If a
defendant's product has been sold for an appreciable period of
time without evidence of actual confusion, one can infer that
continued marketing will not lead to consumer confusion in the
future. The longer the challenged product has been in use, the
stronger this inference will be.
"Evidence of actual confusion" (the sixth Scott factor
bearing on likelihood of confusion) is similarly relevant: the
more evidence of actual confusion that a plaintiff can muster,
the stronger the likelihood of confusion in the future, but lack
of evidence of actual confusion (at least where the time period
that the two products have been in competition is short or "when
the particular circumstances [do not] indicate such evidence
should have been available," AMF Inc. v. Sleekcraft Boats, 599
F.2d 341, 353 (9th Cir. 1979)) does not raise an inference that
there is no likelihood of confusion. As the case law makes
clear, proof of actual confusion is not required for a successful
trade dress infringement action under the Lanham Act. Ford Motor
Co., 930 F.2d at 292 (quoting Opticians Ass'n v. Independent
Opticians, 920 F.2d 187, 195 (3d Cir. 1990)); accord 2 J. THOMAS
MCCARTHY, TRADEMARKS AND UNFAIR COMPETITION § 23:2 (2d ed. 1984); id. §
23:20.
We see no reason that these factors would not also apply to
product configuration cases. However, we emphasize again, see
supra at 35-37, that to make out unfair competition a plaintiff
must show a likelihood that a consumer exercising ordinary care
to discover the identity of the source would suffer confusion or
be mistaken because of the appearance of the allegedly infringing
product configuration. Thus, instances of actual confusion may
not weigh in favor of a finding of likelihood of confusion unless
the confused consumer was acting with the care expected of
consumers purchasing the type of good at issue. See G.D. Searle
& Co. v. Hudson Pharmaceutical Corp., 715 F.2d 837, 840 & n.6
(1983) (ignoring testimony of witness who "was not acting as a
reasonably prudent consumer of the type of goods in issue when
purchasing the product").
5. Defendant's Intent (Scott Factor 5)
The fifth Scott factor is "the intent of the defendant in
adopting the mark." Whatever merit this factor may have in the
context of trade mark and product packaging trade dress cases, we
doubt that it is an appropriate consideration in a trade dress
infringement case where the trade dress is alleged in the product
configuration itself. In the likelihood of confusion inquiry in
trademark cases and product packaging trade dress cases, we do
not focus on a defendant's bare intent to adopt a mark or product
packaging substantially identical to a plaintiff's mark or
packaging, since there is little basis in fact or logic for
supposing from a defendant's intent to copy (without more) that
the defendant's actions will in fact result in confusion. Thus,
what we have held is that a defendant's intent to confuse or
deceive consumers as to the product's source may be highly
probative of likelihood of confusion. See American Home Prods.
v. Barr Lab., Inc., 834 F.2d 368, 371 (3d Cir. 1987) (product
packaging case -- color of pain relief medication); see also
Fisons Horticulture, Inc., 30 F.3d at 479-80 (identifying "intent
of promoting confusion and appropriating the prior user's good
will" as appropriate inquiry in forward confusion cases)
(internal quotation marks omitted) (trademark case -- marks
"Fairway" and "Fairway Green"); Sands, Taylor & Wood Co. v.
Quaker Oats Co., 978 F.2d 947, 960 (7th Cir. 1992) ("[T]he
defendant's intent is relevant to the issue of likelihood of
confusion only if he intended to palm off his products as those
of another." (internal quotation marks omitted) (trademark case
-- words "Thirst Aid" used in advertising campaign); First Brands
Corp. v. Fred Meyer, Inc., 809 F.2d 1378, 1385 (9th Cir. 1987)
("Intent of a defendant in adopting his trade dress is a critical
factor, since if the trade dress were adopted with the intent of
depriving benefit from the reputation of the plaintiff, that fact
alone may be sufficient to justify the inference that there is a
confusing similarity.") (emphasis supplied) (product packaging
case -- color and shape of antifreeze jug).
Because American Home Products involved a claim that the
color of a rival producer's ibuprofen tablet infringed the trade
dress of the plaintiff's Advil tablet, we believe that the case
is closer to a product packaging case than a product
configuration case. Even were we to consider it a product
configuration case, however, American Home Products is consistent
with our present discussion of defendant's intent. Judge Seitz's
opinion did not hold that independent significance must be
accorded a defendant's mere intent to copy; rather, it held that
"intent to confuse might be highly probative of likelihood of
confusion" and that "[a]t most, defendant's intent is a factor
tending to suggest likelihood of confusion." American Home
Prods., Inc., 834 F.2d at 371 (emphases supplied). In what
follows, we simply clarify this circuit's intent-to-confuse rule
for product configuration cases, delineating the circumstances
under which a defendant's intent to confuse or deceive consumers
may be considered a factor in the likelihood of confusion
inquiry.
We realize that some courts have adopted a broader rule
holding that a defendant's intent to copy strongly supports an
inference of likelihood of confusion. See, e.g., Bauer Lamp Co.
v. Shaffer, 941 F.2d 1165, 1172 (11th Cir. 1991); Mobil Oil Corp.
v. Pegasus Petroleum Corp., 818 F.2d 254, 258 (2d Cir. 1987).
Like the intent-to-confuse rule, this intent-to-copy rule relies
essentially on a (rebuttable) presumption of efficacy -- although
the intent-to-copy rule requires a double inference, see, e.g.,
Perfect Fit Indus., Inc. v. Acme Quilting Co., 618 F.2d 950, 954
(2d Cir. 1980) ("If there was intentional copying the second
comer will be presumed to have intended to create a confusing
similarity of appearance and will be presumed to have
succeeded.") -- since the defendant's intent standing alone
(without reference to the defendant's competence and the nature
of the defendant's actions) reveals little about the probable
outcome of the defendant's conduct.14
14
. Thus we must disagree with one commentary, which,
relying on case law (but not attempting to defend or explain its
assertion), states: "Once intent to benefit or capitalize under
Section 43(a) is found, the presumption or inference of
likelihood of confusion logically ensues." MCKENNEY & LONG, FEDERAL
UNFAIR COMPETITION § 3.08[11][c] (emphasis supplied). Indeed, we
note that this treatise contains a passage that, at least when
generalized, illustrates the fallacy of the intent presumption:
"the fact of likelihood of confusion [or lack thereof] among
members of the relevant trade and purchasing public may be
discerned by a court even if a defendant intended to realize a
contrary result." Id. § 3.08[11][a].
 The justification for these inferences in a trade mark or
product packaging case is that there is little or no competitive
need to copy another's distinctive symbol or presentation to sell
one's product, and that anyone who does so is most likely trying
to cash in on the competitor's good will attached to the
competitor's mark or packaging in order to sell his or her own
product. See, e.g., 2 MCCARTHY, TRADEMARKS AND UNFAIR COMPETITION
§ 23.33 ("[W]e can readily read into defendant's choice of a
confusingly similar mark the intent to get a free ride upon the
reputation of a well known mark."). This presumption largely
duplicates the weight given to the substantial-identity-of-
appearance factor (Scott factor 1) in the likelihood of confusion
inquiry, and the extra weight assigned to the intent to deceive
is somewhat punitive. Cf. 2 MCCARTHY, TRADEMARKS AND UNFAIR COMPETITION
§ 23.32 ("Where there is hard evidence of defendant's intention
to get a free ride on plaintiff's reputation, the court is free
to engage in the traditional rhetoric which accompanies punishing
the evildoer[.]").
Although these two types of inference from defendant's
intent do not directly serve the purpose of preventing consumer
confusion or misappropriation of a producer's good will -- either
of which might arise from good faith or bad faith actions -- the
inferences may serve as a deterrent to infringement. But where
product configurations are concerned, we believe there is little
room for deterrence if appropriate labeling and marketing are
undertaken.
One primary purpose of the Lanham Act is to foster fair
competition. See, e.g., Merchant & Evans, Inc., 963 F.2d at 640
n.13 (citing Park 'N Fly, Inc. v. Dollar Park and Fly, Inc., 469
U.S. 189, 193, 105 S. Ct. 658, 661 (1985), and Jay Dratler, Jr.,
Trademark Protection for Industrial Designs, 1988 U. ILL. L. REV.
887, 926 n.10). Indeed, we have said that prevention of unfair
competition is the doctrinal basis for trade dress infringement
suits under the Act. American Greetings Corp., Inc., 807 F.2d at
1140-41 & n.2. Where product configurations are concerned, we
must be especially wary of undermining competition. Competitors
have broad rights to copy successful product designs when those
designs are not protected by (utility or design) patents. It is
not unfair competition for someone to trade off the goodwill of a
product, see Kellogg Co. v. National Biscuit Co., 305 U.S. 111,
121, 59 S. Ct. 109, 115 (1938); it is only unfair to deceive
consumers as to the origin of one's goods and thereby trade off
the good will of a prior producer. See also Duraco, 40 F.3d at
1445.
Unless very narrowly tailored, deterrents to copying of
product designs -- as opposed to product packaging or trademarks
-- would inhibit even fair competition, thus distorting the
Lanham Act's purpose. We believe that the best way to further
Congress's intent is to limit carefully the scope of any possible
deterrence of competition. Cf. Merchant & Evans, Inc., 963 F.2d
at 640 ("[C]ourts should tailor trademark remedies to decrease
the likelihood of confusion without unnecessarily inhibiting
competition."). Recognizing that trade mark and trade dress
cases on one hand and patent cases on the other do not involve
identical considerations, we nevertheless turn for guidance in
this task to patent cases concerning defendants' intent, for, as
we have noted, we must decide product configuration cases so as
harmonize with the federal patent laws. See supra at Error!
Bookmark not defined.-36.
In patent infringement cases, a defendant's bad intent is
relevant in at least two contexts. First, under the doctrine of
inequitable conduct, infringement claims may be rendered
unenforceable if a plaintiff intended to deceive the Patent
Office by failing to disclose material evidence. See, e.g.,
Braun, Inc. v. Dynamics Corp. of America, 975 F.2d 815, 822 (Fed.
Cir. 1992); Allen Organ Co. v. Kimball Int'l, Inc., 839 F.2d
1556, 1567-68 (Fed. Cir. 1988). Second, a plaintiff may receive
increased damages where a defendant willfully infringed its
patent. See, e.g., Braun, Inc., 975 F.2d at 822; E.I. du Pont de
Nemours & Co. v. Phillips Petroleum Co., 849 F.2d 1430, 1440
(Fed. Cir. 1988). In either case, however, the plaintiff must
prove by clear and convincing evidence that the defendant had the
relevant bad intent. See, e.g., Braun, Inc., 975 F.2d at 822
(intent to deceive Patent Office and willful infringement); Allen
Organ Co., 839 F.2d at 1567 (intent to deceive Patent Office);
E.I. du Pont de Nemours & Co., 849 F.2d at 1440 (willful
infringement). Although in the present context we are not
dealing with increased damages or actions taken by the Patent
Office, product configuration trade dress cases nonetheless
implicate patent-like restrictions on competition. Like the
doctrine of inequitable conduct, a heightened evidentiary
standard would serve to ensure that deviations from the "the
federal policy . . . of allowing free access to copy whatever the
federal patent and copyright laws leave in the public domain,"
Compco Corp., 376 U.S. at 237, 84 S. Ct. at 782, are not casually
countenanced. And much as the burden of proof for willful
infringement assures that competitors are not penalized by
increased damage awards without compelling evidence, we think it
similarly important to competitors -- as well as the public --
that competition not be hobbled by monetary damages or injunctive
prohibitions absent similarly compelling evidence.
Accordingly, for all the foregoing reasons, we hold that in
the product configuration context, a defendant's intent weighs in
favor of a finding of likelihood of confusion only if intent to
confuse or deceive is demonstrated by clear and convincing
evidence, and only where the product's labeling and marketing are
also affirmatively misleading. Of course, a plaintiff might
succeed in proving likelihood of confusion without evidence of
affirmative deception. We only hold that, to be considered as
evidence of a likelihood of confusion in a product configuration
case, the defendant's intent must meet the conditions we have set
forth.
6. Marketing Considerations (Scott Factors 7-10)
The remaining factors identified by Scott as bearing on the
likelihood of confusion address various aspects of the marketing
of the products. In the product configuration context, none of
these four factors tends to establish a probability of confusion,
rather than a mere possibility, and thus we conclude that they
should be treated as necessary but insufficient conditions for
showing a likelihood of confusion.
The seventh Scott factor is "whether the goods, though not
competing, are marketed through the same channels of trade and
advertised through the same media." We believe that this factor,
which is explicitly formulated for application to non-competing
products, serves primarily to establish the possibility of
confusion and carries little weight toward establishing the
probability of confusion; if not shown, it may exonerate a
defendant, but if established, it merely allows the plaintiff's
case to go forward. Moreover, it will rarely need to be
considered in a product configuration trade dress infringement
case, for the goods at issue will almost by definition be in
competition.
"The extent to which the targets of the parties' sale
efforts are the same" is the eighth Scott factor. Like the
marketing channel inquiry, this factor was developed largely for
non-competing products, see, e.g., Interpace Corp. v. Lapp, Inc.,
721 F.2d 460, 462-63 (3d Cir. 1983); Scott Paper Co., 589 F.2d at
1229-30, and relates more to the possibility than the probability
of confusion. Particularly in a product configuration case, this
factor should be considered necessary but not sufficient: If
different consumers buy the defendant's product and the
plaintiff's product, the defendant will typically win; if
substantially overlapping audiences buy the products, the
plaintiff does not automatically win, but will usually have the
opportunity to further develop its case for likelihood of
confusion.
"The relationship of the goods in the minds of the public
because of the similarity of function" and "other facts
suggesting that the consuming public might expect the prior owner
to manufacture a product in the defendant's market" are the ninth
and tenth Scott factors for determining likelihood of confusion.
Bearing in mind that these factors also were developed for non-
competing products, we believe that they are largely superfluous
in product configuration cases. The requisite similarity of
trade dress in the product designs themselves would in most cases
presuppose a similarity of function between the products at
issue. Hence, some measure of so-called "competitive proximity"
will always be present in product configuration trade dress
infringement cases and therefore, while a necessary condition for
there to be a likelihood of confusion, this factor is not a
sufficient condition, nor does it by itself create a strong
presumption that confusion is likely to ensue.
C. The Balance of the Modified Scott Factors Here
In this case, "[t]he dispositive issue is . . . consumer
confusion as to source. Regardless of how much secondary meaning
it possesses, a product's trade dress will not be protected from
an imitator that is sufficiently different in its features to
avoid such confusion." Freixenet, S.A. v. Admiral Wine & Liquor
Co., 731 F.2d at 151. For the reasons we explained above, we
believe that the district court committed legal error in
initially applying a "possibility of confusion" standard, and,
applying the (modified) Scott factors, we conclude that it
clearly erred in inferring from the evidence and testimony that
an appreciable number of buyers are likely to be confused as to
the origin of Bifold's Domino Junior valve. See CL 55, 62, 64.
1. The Governing Standard: Likelihood of Confusion
The district court held that
[a] lower standard for "likelihood of confusion" is applied
where a newcomer to an area already occupied by a long
established entity is the alleged violator. The Third
Circuit uses the phrase "possibility of confusion" to
describe this standard.
CL 56 (citations omitted). As we explained above, see supra at
23-28, this standard is inapplicable in product configuration
cases. We decline, however, to reverse on this basis.
Although the district court announced the "possibility of
confusion" standard in its Conclusions of Law, it appears that
the court might not have relied on the lowered threshold in
finding for the plaintiff. None of the other "Conclusions"
bearing on the issue of confusion included the "possibility"
language; those that mentioned any measure used "likelihood" of
confusion, the correct standard. Accordingly, in an excess of
caution, we treat Conclusion of Law 56 as surplusage, and review
the judgment for clear error with respect to the conclusion that
Bifold's actions present a likelihood of confusion, Ciba-Geigy
Corp., 747 F.2d at 851. We apply the Scott factors as modified,
see supra Section II.B.
2. Viability of the District Court's Similarity Fact Finding
The district court correctly identified the similarity of
product appearances (Scott factor 1) as the threshold inquiry in
ascertaining likelihood of confusion. However, it improperly
imported the trade mark/product packaging standard for the weight
to be assigned this factor, holding that "if the overall
impression created by the trade dress is essentially the same, it
is very probable that the products are confusingly similar."
From there, it apparently reasoned that because "[t]he overall
appearance of the Versa B-316 valve and the Bifold Domino Junior
valve is virtually identical[,] there is a likelihood of
confusion." See also CL 64 ("Bifold Domino Junior valves have a
very similar appearance to Versa B-316 valves; there is a
likelihood of confusion.").
Despite the appreciable differences between the valves'
appearances, see supra at 10-11, we do not hold the district
court's finding of similarity of appearance to be clearly
erroneous. But in a product configuration case, the similarity
of the product designs does not alone give rise to a strong
inference of likelihood of confusion, see supra at 30-32, since
the greatest weight must be given to the primary means by which
consumers identify the products' sources: packaging, trademarks,
and advertising. Accordingly, the similar appearance of the two
valves' designs allows Versa to argue -- but does not establish
-- a likelihood of confusion. The district court's findings
concerning the trade channels and advertising media used by
Bifold and Versa (Scott factor 7) and Bifold's targeting of the
same customer group (Scott factor 8) similarly do little to
establish likelihood of confusion.
3. Intent, Competitive Proximity, and Likelihood of Confusion
Compounding its error regarding the effect of the similarity
of the valves' appearances, the court asserted that "[a]n intent
to copy trade dress and/or finding of copying by a junior user is
often alone dispositive of a finding of likelihood of confusion."
Even as concerns trade marks and product packaging, however, only
an intent to deceive or confuse consumers can suffice to raise a
presumption of likelihood of confusion in this circuit. See
supra at 41. Moreover, in a product configuration case the
defendant's intent (Scott factor 5) is not relevant to the issue
of likelihood of confusion absent affirmatively misleading
labeling and marketing. Here, Bifold's identification of its
Domino Junior valves is by no means misleading, see supra at 11;
infra at Error! Bookmark not defined.-65, and thus Bifold's
intent should not be considered.
Similarly, the district court erred in holding that "[w]hen
products are used in the same application, such a competitive
proximity of goods strongly favors a finding of likelihood of
confusion" (emphasis supplied). This proposition finds no
support in the two decisions of this court cited by the district
court, see Interpace Corp., 721 F.2d at 462; Scott Paper, 589
F.2d at 1229, and at all events it is not applicable where trade
dress consists in a product configuration, as our previous
discussion explains. See supra at Error! Bookmark not defined..
4. Strength of the Trade Dress and Likelihood of Confusion
Turning to the Scott factors that are relevant to the
likelihood of confusion in this product configuration case, we
first note that the "strength" of Versa's trade dress in its B-
316 valves' configuration (Scott factor 2) may not support a
conclusion of likelihood of confusion because there is no
evidence that consumers rely on the appearance of the B-316 valve
to identify it. See supra at 33-34. To the contrary, all the
evidence shows that consumers order valves by multi-digit part
and model numbers peculiar to the manufacturer. In selecting the
valves buyers do not specify the desired appearance but rather
designate functional specifications listed in schematic diagrams,
specification sheets, and manufacturers' catalogues. Such
precision in ordering is necessary, for Versa offers many
variations of its valves. Thus, the "strength" of the B-316's
trade dress does not bolster Versa's case for a likelihood of
confusion.
5. The Evidentiary Role of Actual Confusion
This brings us to evidence of actual confusion (Scott
factor 6) or the lack thereof (Scott factor 4). The district
court correctly noted that Versa need not prove actual confusion,
only a likelihood of confusion. Although the district court did
not address the pertinent evidence in its Conclusions of Law or
explicitly rely there on evidence of actual confusion, we will
address the Findings of Fact arguably relevant to actual
confusion that might support the district court's conclusion of
likelihood of confusion. Our examination confirms that the
district court's ultimate conclusion was clearly erroneous, not
supported by record evidence, let alone evidence cited anywhere
in the opinion.
a. Carr's Involvement Reflects No Actual or Likely
Confusion
The district court commenced the "Likelihood of Confusion"
section of its Findings of Fact by discussing Bifold's "sole
sales representative in the United States." The court found (and
there is record evidence to support) that Bifold hired James
Carr, III, a former Versa regional marketing manager; that Carr
has already tried to sell Bifold products to Gordon Fraleigh, a
Versa distributor who knew Carr for a number of years while Carr
was a regional sales manager for Versa; and that Carr told
Fraleigh that the Bifold valve was an "exact copy" of the Versa
B-316, as a result of which there was confusion in Fraleigh's
(heightened by Carr's former relationship with Versa) mind as to
the relationship between Versa and Bifold.
This depiction of the facts, however, is misleading. It
presents only a snapshot of Fraleigh's mental processes, taken
from a particular angle at a single instant in time. Examining
Fraleigh's uncontested testimony from a different angle reveals
the situation more fully: First, the telephone call in question
occurred sometime around the early part of 1993, but Fraleigh
knew that Carr left Versa's employ in 1990. Thus, at the time of
this call, Fraleigh knew Carr was not with Versa; indeed, during
the call, Carr told Fraleigh that he was with Bifold, an English
company, and he did not say that Bifold was connected with Versa
or that its valves were made by Versa. Second, Fraleigh's
employer, the Fraleigh Company, distributes the products of about
seventy companies, including Versa, and before the call in
question Carr had phoned Fraleigh representing various non-Bifold
product lines competitive with Versa. Fraleigh was apparently
confused only because he had not previously seen duplicate
products in the fluid power industry and because Carr had once
been a Versa representative.
Moreover, a slightly broadened temporal focus exposes the
manifest error in the district court's fact finding. Initially,
we note that Fraleigh's testimony reveals that he did not even
know whether Carr was referring to Bifold's Domino Junior valve.
Nor did Fraleigh see the valve, for he and Carr conversed by
telephone. Fraleigh's testimony, then, cannot be evidence that
the appearance of the Domino Junior was so like Versa's trade
dress that it would confuse consumers as to the sources of the
valves. Furthermore, Fraleigh testified that, because of his
confusion, he called Versa Products to find out what was going
on. Versa's sales manager, Joe Sudol, explained that Bifold was
a competing company from England that had copied the B-316.
Indeed, he asked Fraleigh to try to get information on Bifold's
valve.
Plainly, then, Fraleigh's testimony does not represent an
instance of "actual confusion." It reflects only fleeting
uncertainty as to the relationship between Bifold and Versa, not
a mistaken belief that there was any affiliation between the two
companies. Fraleigh was able with minimal effort to procure the
modicum of information he needed to dispel his uncertainty.15 We
believe that Fraleigh acted as a prudent distributor-customer of
these sorts of valves, and as a result was not confused in the
Lanham Act sense.16
15
. In the absence of evidence to the contrary, it is also
most likely that Carr himself would have told Fraleigh the truth
-- that Bifold is an unaffiliated competitor of Versa -- had
Fraleigh asked. Courts may not simply presume that individuals
will lie in direct violation of trademark and unfair competition
laws. Indeed, Versa's counsel conceded that "I'm not and cannot
offer to this Court that we have proof of a distributor that has
done that [i.e., falsely indicated that Bifold is associated with
Versa's products]." Nor did Versa even offer other instances in
this industry where such misrepresentation had occurred. (Versa
Vice-President and Chief Operating Officer Frank Vetter opined
only that "it becomes very easy for a Bifold perhaps distributor
[sic] to go in and, as you might hear later on in testimony,
[say] that this valve is a direct interchange with a Versa valve,
it fits in the same place, it performs the same function." This
is a far cry from evidence that distributors mispresent the
sources of the valves they sell. The district court therefore
correctly characterized such testimony as "highly speculative,"
and Versa's expert witness Gerald Murphy as not qualified to
"opine as to whether somebody's going to lie or not."
Pharmaceutical cases relying on possible substitution of one
maker's drug for another by pharmacists filling prescriptions are
not to the contrary. In such cases, the finding of likelihood of
confusion is supported by evidence that improper substitution
commonly occurs in prescription filling, and that the minuscule
markings on pills with similar trade dress are sufficiently
difficult to read by many customers that the markings do not
reduce the likelihood of confusion. See, e.g., SK&F, Co., 625
F.2d at 1059 & n.2, 1061.
16
. Thus, aside from its bearing on the channels of trade
and target audiences, see supra at 48-49, evidence that Carr has
still been able to get access to Versa valve products and has
recently sold Versa valves to the same customers to whom he will
be selling Bifold valves is irrelevant to likelihood of
confusion.
b. The Wentworth Fax Reflects No Actual Confusion
Second, the district court asserted that at least one
customer has forwarded to Bifold a telefax that was initially
addressed to Versa. The fax from Trevor Wentworth opened with
the following statement: " Derek reference our telecon this
morning here are the requirements for the above referenced
project." The original addressee was Versa, "Attention: Dave,"
and after those names were crossed out, the same fax was sent to
Bifold, "Attention: Derek Close"; the fax number -- "Auto" --
was unchanged. But this fax may have been a request for
competitive bids,17 including only Versa's part numbers because
Wentworth had spoken to Bifold's sales representative by
telephone and had not yet been sent any spec sheets; or (although
unlikely) it might reflect a customer so befuddled that he could
not remember to whom he had spoken that morning, and thus not a
customer exercising ordinary care. At all events, there is no
evidence that the customer had even seen the appearance of
Bifold's Domino Junior valve to be able to confuse it with
Versa's trade dress on its B-316 valve. For these reasons, and
because there was no testimony at trial concerning this
unexplained fax, the district court clearly erred when it used
this evidence to buttress its conclusion that there was confusion
-- actual or likely -- as to the sources of the valves or the
relationship (or lack thereof) between Versa and Bifold.18
17
. Bifold explains on appeal, and Versa does not contest,
that the fax "was a request for a price quote, and the customer
c. The Hearsay Evidence Constitutes No Evidence of
Confusion
(..continued)
was seeking competitive bids." Br. of Appellant, at 38. We do
not, however, determine that this explanation is true; rather, we
cite it only as a possibility. There was no explanation offered
at trial, for the district court at the outset admitted (without
discussion) all documentary evidence appearing on a list prepared
by either party and not objected to.
18
. Since the fax referred to B-series and V-series valves
and was sent initially to Versa, we believe that the competitive
bid explanation is the only plausible one in the absence of
evidence to the contrary. By contrast, a fax sent initially to
Versa but asking for a quote on Domino Junior valves would
suggest confusion.
Third, the district court erred in relying on hearsay
evidence for the proposition that there was actual confusion.
The district court recorded as a finding of fact that "When Mr.
Frank Vetter was asked by Bifold's attorney for examples of
actual confusion between Bifold's Domino Junior valve and Versa's
B-316 valve, Mr. Vetter related that he had been advised of
confusion at trade shows." We agree that the record reflects
Vetter's response. But his answer is pure hearsay: Vetter's
testimony upon which the district court relied was that "I have
been advised by our sales manager in Europe that there was
confusion at trade shows, that people had indicated that the
valves resembled, were identical and they would lead to
confusion." Vetter could not even identify the people allegedly
confused, instead referring Bifold's attorney to "the brief."
Moreover, Vetter's response only proves that people thought the
valves' appearances were similar, not that they were actually
confused by the similar appearances. In this light, even if
Vetter's testimony were not hearsay, it still would not
demonstrate confusion as to the sources of the valves engendered
by the similarity in appearance of the valves.
The district court similarly erred in making a finding of
fact that "Hans Albert, Sales Manager for Versa, B.V.,
substantiated that he had discussions with people at the
Stavanger, Norway trade show regarding the issue of confusion,
including Mr. Ellingston of Hark & Ellingston, a major competitor
in Norway[,] and Mr. Ungerskruge, an employee of a company named
Holter that manufacture[s] wellhead control panels." Again, this
testimony is hearsay, to which Bifold objected. Versa then
offered it solely to prove that Alberts had a conversation with
two identifiable people, and the district court ruled that
Albert's testimony must not concern the substance of the
conversation. Accordingly, this testimony has no bearing on the
issue of the likelihood of consumer confusion as to the sources
of the valves, and it was therefore error for the district court
to include it as the basis for a finding of fact. Even were the
substance of the testimony admissible, Vetter testified only that
he spoke with people "with regard to the issue of confusion."
Thus, the testimony is not probative of a likelihood of confusion
as to source as a result of the alleged trade dress infringement.
d. Summary Concerning Actual Confusion
In sum, we believe that there was no evidence of actual
consumer confusion as to source upon which the district court
could have relied to find a likelihood of confusion. Moreover,
as the district court found, "[o]nly two Domino Junior valves
have been sold to date in the United States and those have been
sold to Versa's sales representative so that there has been
little, if any, opportunity to develop evidence of further
confusion in the United States." Accordingly, evidence of actual
confusion or lack thereof does not weigh in favor of or against a
finding of likelihood of confusion. We turn to the final
relevant Scott factor.
6. Labeling, Care Expected of Consumers, and Likelihood of
Confusion
As noted above, the third Scott factor is "the price of the
goods and other factors indicative of the care and attention
expected of consumers when making a purchase." As we have
described, this factor is fundamental in product configuration
cases, where the most important facts are the marketing and
labeling of the similarly configured products. As we now
explain, the district court clearly erred in not finding these
factors dispositive in this case.
The district court was technically correct in stating that
"[t]he fact that the source of the product is clearly designated
on the product does not establish that plaintiff has failed to
demonstrate a likelihood of confusion as such an element is
simply one factor to be assessed when resolving the confusion
issue." However, it failed to appreciate the converse
proposition, that a court need not consider all these elements
when some are dispositive. See Freixenet, S.A., 731 F.2d at
151-52. Here, as the court properly observed, "[i]n selling a
competing valve, Bifold's duty is to take reasonable steps to
prevent deception." Under the circumstances, Bifold more than
adequately met its duty to take reasonable steps to prevent
deception.
a. Bifold's Extensive Labeling Precludes Likelihood of
Confusion
Although the configurations of Versa's B-316 and Bifold's
Domino Junior valves are quite similar in appearance, we deal
here with a product configuration case, and thus the labeling of
the products takes on a heightened importance. See supra at
Error! Bookmark not defined.-32. The facts found by the district
court clearly show that Bifold took entirely reasonable and
adequate steps to prevent confusion.
The district court found that "[t]he name VERSA and the
place of origin, `N.J., U.S.A.,' are cast into the metal [of the
B-316 valve body] to identify Versa as the valve's source."
Moreover, "[e]very valve body that Versa sells bears a label
displaying the VERSA name, logo and part number." Similarly, the
court noted that "Bifold casts its name into the DOMINO JUNIOR
valve body, and bolts onto the body a metal label displaying the
BIFOLD name."
But this brief recitation fails to convey the adequacy of
Bifold's efforts. "In the case of a relatively high-priced,
single-purchase article, . . . there is hardly likelihood of
confusion or palming off when the name of the manufacturer is
clearly displayed." Merchant & Evans, Inc., 963 F.2d at 636
(internal quotation marks omitted); see also Bose Corp., 467 F.2d
at 310 (same). Here, the metal label bolted onto the Domino
Junior valves does more than "display[] the BIFOLD name." The
name appears in a logo of sorts in a font markedly different from
that used in the Versa logo. The label also contains Bifold's
part number and a valve serial number, the place of origin
(Wigan, England), Bifold's telephone number, and its fax number.
Moreover, this is not a case where "[t]he items are relatively
inexpensive and consumers cannot be expected to examine the
labels carefully," Scott Paper Co., 589 F.2d at 1230, and even a
quick glance at the permanently affixed label reveals that Bifold
is the source of the Domino Junior valve. Thus, Bifold's labeling
will suffice to dispel any confusion about the valve's source
that the configuration of the Domino Junior valve might otherwise
engender in purchasers who exercise ordinary care.
b. The Manner in Which the Valves Are Sold Virtually
Precludes Likelihood of Confusion
In addition to the clear labeling, the manner in which the
valves are marketed further nullifies any likelihood of
confusion. As the district court found:
The Versa B-316 and Bifold DOMINO JUNIOR valves are not sold
on a shelf or selected on sight. Buyers order the valves
based on functional specifications as shown on schematic
diagrams, manufacturer's catalogs or specification sheets
and samples available at trade shows and sales
presentations.
Moreover, purchasers cannot buy Versa B-316 or Bifold Domino
Junior valves by name only. B-316 valves can be purchased only
by specifying a multi-digit part number pursuant to Versa's
comprehensive part numbering system. Similarly, Bifold requires
the use of its own part numbering system, with the numbers
obtainable only by reference to a Bifold specification sheet.
Finally, as the district court also found, "[t]he purchasers and
users of Versa's B-316 valves are qualified, knowledgeable
personnel who understand how the valves are to be installed and
operated."
The appearance of these valves simply plays no role in the
ordering process, which instead requires the use of detailed
technical specifications and lengthy, manufactuer-specific part
numbers. Under these circumstances, we find it utterly
inconceivable that one of -- let alone an appreciable number of
-- the professional buyers of these valves will be confused, by
the appearance of the Domino Junior, as to the valves'
manufacturers or the relationship between them.
c. Summary of the Labeling and Care Expected of Consumers
The foregoing evidence must be viewed as virtually
precluding any likelihood of confusion. These valves are not
bought by children or casual consumers, nor are they purchased
solely by name. There is no likelihood of confusion -- indeed,
virtually no possibility that the appearance of the Bifold Domino
Junior valve body will mislead purchasers into thinking that they
are ordering a Domino Junior valve from Versa or a B-316 valve
from Bifold, and the enormous safety concerns surrounding the
applications where these valves are used increase the already
great care used by purchasers of these valves.19 Typically, they
are found in offshore oil drilling control applications,
hazardous and demanding environments where loss of human life,
major environmental damage (and consequent liability), and huge
property loss may be at stake if a valve does not function
properly in an emergency shutdown. Because of the dire
consequences of using an improper valve, engineers who design the
control panels would be expected to exercise a high degree of
caution in selecting valves, and thus would be highly unlikely to
mistake a Versa B-316 for a Bifold Domino Junior.
Therefore, in light of the importance of the valves, the
process by which they are purchased, the sophistication of the
consumers, and the clarity of Bifold's labeling, there is no
likelihood (or even a realistic possibility) of consumer
confusion as to the source of Versa's or Bifold's valves, and we
19
. Although Versa intended its witnesses' testimony to
highlight the hazards of confusing a Versa valve with a Bifold
valve -- which would be product confusion, not source confusion
as required for a Lanham Act violation -- the testimony is
nonetheless indicative of the care that ordinarily prudent valve
consumers may be expected to use.
conclude that the district court's contrary finding was clearly
erroneous.
7. Private Labeling Theories Do Not Support Likelihood of
Confusion
We must still address one additional theory under which the
district court found a likelihood of confusion: the private
labeling theory. The district court concluded, ostensibly as a
finding of fact, that
[g]iven the virtual identity in appearance of the Versa B-
316 cast valve and the Bifold DOMINO JUNIOR cast valve and
the fact that Bifold has not previously sold products in the
United States, anyone in the industry might reasonably
assume that Versa had manufactured but privately labelled
the Bifold DOMINO JUNIOR valve or that the DOMINO JUNIOR
valve is otherwise associated with Versa.
FF 232. The court further concluded that
[t]he 'second comer" Bifold DOMINO JUNIOR valve looks so
similar to the established Versa B-316 valve that it looks
like a private label manufactured by Versa. The two valves
could be confused; consumers would think that there is some
relationship between the two valves and two companies.
FF 233 (citations omitted). Although we believe that these
conclusions present mixed questions of fact and law, for the
district court focused upon what consumers might "reasonably"
assume, we need not invoke plenary review, for we are firmly
convinced that they represent clear error, and that the theory of
confusion in which they are grounded does not support a claim
under the Lanham Act or New Jersey law.
In FF 232, the district court concluded from coincidence of
similarity of appearance and recency of entry into a market that
consumers might reasonably assume private labelling or some other
relationship between the Domino Junior and Versa valves. The
district court is correct that the Lanham Act protects against
confusion not only as to source but also as to connection between
manufacturers of similar products. See, e.g., Institute for
Scientific Info., Inc. v. Gordon & Breach, Science Publishers,
Inc., 931 F.2d 1002, 1007 (3d Cir. 1991). But the court's
inference would potentially subject any new competitor with a
product whose appearance resembles that of an established product
to an injunction on this private labeling theory. We have simply
been presented with no evidence that "private labeling" occurs
today on a scale significant enough to justify such a sweeping
extension of the law of unfair competition.
Even a presumption of more limited scope would not support
the district court's inference. Where product configurations are
at issue, consumers are not generally likely to jump to the
"private labeling" conclusion; consider for example Oreo and
Hydrox brand sandwich cookies, which are strikingly similar in
appearance. Consumers would not have assumed upon later
emergence of one brand that the first producer had marketed a
slight variation of its cookie under a private label. Rather, as
in situations like the present one, consumers generally are more
likely to conclude, quite reasonably, that a competitor has
entered the market with a substantially identical product.
Second, the record evidence does not support the district
court's conclusion. Versa's counsel's opening statement at trial
fairly summarized the content of Gerald Murphy's testimony, which
formed the sole evidentiary basis for the district court's
private labeling conclusion:
Mr. Murphy [Versa's expert witness] will also tell that as a
result of his experience, look-alike products are naturally
associated by way of operating characteristics and
reputation. Just because the valves look alike, the Bifold
Domino Junior valve will command attention from sales
representatives and others that it would not otherwise
obtain. That it will get sales opportunities from people in
this industry that otherwise would not be available to the
Bifold Domino Junior product, except for the fact that the
Bifold Domino Junior product looks exactly like the Versa B-
316 product and is then able to trade off the reputation of
the Versa B-316 product.
What Versa and the district court have failed to come to grips
with is the precept that "[e]xploiting the `goodwill of the
article,' Kellogg Co., 305 U.S. at 121, 59 S. Ct. at 115 -- the
attractive features, of whatever nature, that the product holds
for consumers -- is robust competition; only deceiving consumers,
or exploiting the good will of another producer, is unfair
competition." Duraco, 40 F.3d at 1445 (one emphasis omitted).
Moreover, and most importantly, all of Murphy's non-speculative
testimony supported (as Versa said in its opening) a finding of
exploitation of the goodwill of, at most, the Versa B-316
product, not the Versa identification itself.
Murphy testified about past situations where misfortunes
involving valves of one producer led to sales difficulties for
other manufacturers of similar valves. He did not testify about
incidents where one producer copied another's trade dress, but
rather about instances where negative perceptions associated with
a particular type of valve were transferred to valves of the same
type made by other manufacturers. Thus, his testimony showed the
possibility of the ill will of one valve's diminishing the good
will of a similar valve. But even had Murphy testified that the
valves he was discussing had confusingly similar trade dress --
which he did not -- that would not suffice to show that consumers
abandoned the type of valve that had manifested defects because
they thought all valves of that type came from related sources.
Rather, consumer may have abandoned the valves because they
assumed that all valves of a similar type shared "operating
characteristics."
It is true that in Badger Meter, Inc. v. Grinnell Corp., 13
F.3d 1145 (7th Cir. 1994), the Court of Appeals for the Seventh
Circuit relied in part on a private labeling theory to uphold a
finding of likelihood of confusion in a trade dress infringement
suit by a water meter manufacturer against a competitor who
copied the appearance of one line of meters. There, however, the
defendant was known within the relevant market to have previously
sold water meters of another manufacturer under its own label.
Id. at 1152. Here, in contrast, there is no evidence that Bifold
is known in the American market as having a history of selling
other valve manufacturers' products under its own label. Thus
Versa may not rely on the inference that consumers familiar with
an established defendant with a known history of private labeling
will assume that it is selling an established plaintiff's product
under a private label agreement.
Unable to avail itself of the Badger Meter inference, Versa
attempts to ensnare Bifold by arguing that because Bifold is not
yet known in the American market, valve purchasers may assume
that Versa has manufactured the Domino Junior but is selling it
under a private label. A rule sanctioning this inference would
tend to strangle competition by adopting what is in essence a
presumption that consumers will believe an established business
has a greater market share than it really does. The district
court's conclusion that "anyone in the industry might reasonably
assume that Versa had manufactured but privately labelled the
Bifold DOMINO JUNIOR valve or that the DOMINO JUNIOR valve is
otherwise associated with Versa," represents a dramatic extension
of the law of unfair competition, one which we cannot believe
that Congress intended or that New Jersey would adopt.
We doubt that a company truly concerned about the quality of
its valves and its putatively distinctive product configuration
would use private labeling. The use of private labeling
undermines a claim that a product's appearance denotes its
source, because consumers will be less likely to associate the
multifariously labeled product with a single source. See, e.g.,
Tone Bros., Inc. v. Sysco Corp., 23 U.SP.Q.2d 1184, 1190-91 (S.D.
Iowa 1992), and cases cited therein. And if Versa were to
contend that all the purchasers know that in fact Versa
manufactures the valves identified by a private label, we are not
certain what the private labelling would accomplish. Moreover,
it would seem that any manufacturer employing private labeling
for its product necessarily exercises control over that practice,
and if it is the plaintiff's actions that cause the confusion,
the plaintiff will not be heard to complain. Cf. Weil Ceramics &
Glass, Inc. v. Dash, 878 F.2d 659, 676 (3d Cir. 1989) (Becker,
J., concurring) ("[The plaintiff] has in effect engineered the
possibility of a likelihood of confusion and therefore
infringement in this case. This is not the sort of injury
trademark infringement actions under the Lanham Act were intented
to remedy."). We decline to establish a rule that would allow a
plaintiff to expand its own rights by using private labeling to
assure a design monopoly even despite adequate labeling by
competitors.
We have explained elsewhere that "the primary concern
[behind the trademark act] was to protect consumers and trademark
holders from spurious imitations." Id. at 673 (Higginbotham, J.,
for the court). Where, as here, a second comer has taken steps
to conspicuously label its product (however similar to that of an
established manufacturer), the newcomer has hardly represented
its product to be that of its competitor, and so has not offered
a "spurious imitation." Thus, even if there were evidence that
Versa uses private labeling, we do not believe that it could form
the basis for a finding of likelihood of confusion. As it is,
however, there is absolutely no evidence that Versa or any other
competitor of Bifold's in the offshore oil well industry uses
private labeling. Accordingly, the district court clearly erred
when it accepted Versa's argument that Bifold's labeling will not
prevent consumer confusion.20
IV. CONCLUSION
To have prevailed in its action for trade dress
infringement, Versa needed to show the existence of a likelihood
that an appreciable number of consumers of the relevant type of
valves would probably be confused as to the source of Bifold's
Domino Junior valve or its affiliation (or lack thereof) with
Versa. Upon reviewing the trial record, with due regard for the
labeling actually used by Bifold, we conclude that Versa failed
to meet its burden, and that the district court's finding that
Versa had shown a likelihood of confusion is clearly erroneous.
We therefore will reverse the order of the district court, and
vacate the permanent injunction and award of attorneys' fees
against Bifold.
20
. New Jersey's commmon law and statutory prohibitions of
unfair competition (which address, inter alia, "passing off"
one's goods as those of another manufacturer and unprivileged
imitation) generally parallel the federal cause of action for
unfair competition under section 43(a) of the Lanham Act. See
SK&F, Co., 625 F.2d at 1065 (3d Cir. 1980). Thus, "private
labeling" does no more work for Versa under its state law unfair
competition claim (see supra at 2, 22 & n.10) than it does under
federal law.