PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

RFE INDUSTRIES, INCORPORATED,

Plaintiff-Appellant,

v. No. 95-2665

SPM CORPORATION,

Defendant-Appellee.

Appeal from the United States District Court

for the Western District of Virginia, at Lynchburg.

Jackson L. Kiser, Chief District Judge.

(CA-94-20-L)

Argued: October 31, 1996

Decided: January 29, 1997

Before WIDENER and HALL, Circuit Judges, and

THORNBURG, United States District Judge for the

Western District of North Carolina, sitting by designation.

_________________________________________________________________

Affirmed in part, vacated in part, and remanded with instructions by

published opinion. Judge Hall wrote the opinion, in which Judge Widener and Judge Thornburg joined.

_________________________________________________________________

COUNSEL

ARGUED: David Marc Freeman, NAGEL, RICE & DREIFUSS,

Livingston, New Jersey, for Appellant. Michael Francis Urbanski,

WOODS, ROGERS & HAZLEGROVE, P.L.C., Roanoke, Virginia,

for Appellee. ON BRIEF: Bruce H. Nagel, NAGEL, RICE & DREI-
FUSS, Livingston, New Jersey; GENTRY, LOCKE, RAKES &

MOORE, Roanoke, Virginia, for Appellant. Dudley F. Woody, Frank

K. Friedman, Paul C. Kuhnel, WOODS, ROGERS & HAZLEGROVE, P.L.C., Roanoke, Virginia, for Appellee.

_________________________________________________________________

OPINION

HALL, Circuit Judge:

RFE Industries, Inc., a New Jersey corporation, filed this action

against SPM Corporation of Montvale, Virginia, in the district court

for the District of New Jersey, alleging that SPM had violated federal

and state law by infringing on RFE's "Popcorn" trademark, used by

RFE to denote certain of the silver anodes that it manufactures and

distributes for use in electroplating. SPM successfully maintained that

it was not subject to personal jurisdiction in New Jersey, and the case

was transferred to the Western District of Virginia on February 25,

1994. RFE's motion for retransfer was denied by the district court

below, and that court subsequently entered a final order granting

SPM's motion for summary judgment on all claims. RFE timely filed

a notice of appeal.

We conclude that the district court did not abuse its discretion by

denying the motion for retransfer, and we affirm its grant of summary

judgment to SPM on RFE's state-law claim for tortious interference

with contractual relations. We vacate the court's judgment and

remand the case with respect to the remaining claims, however,

because its finding that RFE's trademark is merely descriptive is

clearly erroneous.

I.

Both RFE and SPM supply anodes to the electroplating industry.

These anodes are small pieces of metal that, when placed in a plastic

or titanium basket, subjected to an electric current, and submerged

into a potassium cyanide "bath," ionize, dissolve, and accumulate on

the surface to be plated.

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RFE developed a process in early 1989 to make silver anodes in

shapes that vaguely resemble cereal flakes or, perhaps, popped corn.

Later that year, RFE began to market its new product, which it called

"Popcorn." In June 1990, RFE applied to register the mark with the

United States Patent and Trademark Office (PTO).

During September 1991, SPM began selling the identical product

under the same name; it mailed solicitation letters, containing samples

of its product, to prospective purchasers. A few of those letters

reached some of RFE's customers, one of which forwarded a copy to

RFE in March 1992. RFE filed suit soon thereafter, asserting claims

for trademark infringement and for unfair competition under the Lanham Act, 15 U.S.C. § 1051 et seq. The complaint also alleged statelaw claims for infringement and for tortious interference with contractual relations.

Upon learning of the suit, SPM changed the name of its product

from "Popcorn" to "Snowflake." On November 9, 1993, the PTO

issued a certificate of registration to RFE for its"Popcorn" trademark,

without requiring RFE to submit any proof that the mark had acquired

a secondary meaning. See Section III-A, infra.

The PTO's certification failed to convince the district court, which

found the "Popcorn" mark, as it pertains to silver anodes, undeserving

of protection from infringement. The court's finding necessitated the

entry of summary judgment for SPM on three of RFE's four claims;

the fourth claim, that for tortious interference with contractual relations, was also held by the district court to be without merit. RFE

appeals.

II.

At the threshold, we must determine whether the district court

abused its discretion by denying RFE's motion to retransfer the case

to the District of New Jersey. See Linnell v. Sloan, 636 F.2d 65, 67

(4th Cir. 1980) (stating applicable standard of review).

RFE contends that the case was ripe for retransfer when, during the

latter stages of discovery, it finally came to light that SPM had failed

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to timely disclose its business relationship, beginning in 1990, with

Englehard Corporation, a New Jersey wholesaler of silver salts. It was

also revealed that SPM had purchased silver from another New Jersey

company in November 1992, and that it had sold silver cyanide to a

New Jersey customer about a year prior to the February 1994 transfer

order.

The district court below observed that, had the district court in New

Jersey known of SPM's then-existing contacts with the putative

forum state, it nonetheless need not have determined that those contacts were so substantial as to require it to assert personal jurisdiction

over SPM. We agree that, even had the New Jersey court been fully

apprised of the nature and quality of SPM's contacts, it could have

nevertheless exercised its sound discretion to grant the transfer

motion.

We note also that RFE failed to demonstrate below that, as of the

date it moved for retransfer, it had been or would be prejudiced by

being compelled to litigate in Virginia. Moreover, there has been no

showing that SPM perpetrated a fraud on the court by intentionally

concealing its contacts with New Jersey. In light of the above considerations, we hold that the district court below did not abuse its discretion by denying the motion for retransfer.

III.

A.

We turn now to the merits of RFE's contention that the designation

"Popcorn," pertaining to its line of oddly shaped silver anodes, is a

mark worthy of legal safeguarding. We have noted previously that the

protection accorded such marks is a function of the mark's distinctiveness. Sara Lee Corp. v. Kayser-Roth Corp. , 81 F.3d 455, 464 (4th

Cir.), cert. denied, 117 S. Ct. 412 (1996)."Fanciful," "arbitrary," or

"suggestive" marks are distinctive; marks that are merely "descriptive" or "generic" are not, unless, in the case of the former, the primary significance of the product feature described by the mark is to

identify the source of the product, rather than the product itself. Id.

Such descriptive marks -- Coca-Cola(R), for example -- are said to

have acquired "secondary meaning" in the minds of the public. Id.

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The controversy here, typical of trademark disputes, centers on

whether RFE's "Popcorn" mark is suggestive (and therefore distinctive) or merely descriptive. The district court found that the "Popcorn"

designation, as applied to silver anodes, "describes a characteristic of

the product -- its shape or appearance -- rather than suggest[s] it."

The court found further that "Popcorn" had not acquired a secondary

meaning in the silver anode market, identifying RFE as its single

source. The district court's findings may be disturbed on appeal only

if they are clearly erroneous. Sara Lee at 460; Pizzeria Uno Corp. v.

Temple, 747 F.2d 1522, 1526 (4th Cir. 1984).

We agree with the district court that the proper focus in this case

is on the product's shape. Any similarity between"Popcorn" anodes

and actual popped corn begins and ends with shape; the designation

is in no way intended to indicate that RFE's anodes have the color,

weight, or texture of popcorn. The question to be answered, then, is

the one posed by the district court: Does the term"Popcorn" suggest

the anodes' shape, or merely describe it?

We begin by acknowledging that basic, "common" shapes are not

generally accorded trademark protection. Wiley v. American Greetings Corp., 762 F.2d 139, 141-42 (1st Cir. 1985) ("It is hornbook law

that `ordinary geometric shapes such as circles, ovals, squares, etc.,

. . . are regarded as non-distinctive and protectable only upon proof

of secondary meaning.'"), quoting J. Thomas McCarthy, Trademarks

and Unfair Competition, § 7:12, at 172; Brooks Shoe Mfg. Co., Inc.

v. Suave Shoe Corp., 716 F.2d 854, 858 (11th Cir. 1983) (quoting

McCarthy).

Our acknowledgment does not, however, end our inquiry. The

word "popcorn" is not generally used to denote a shape, much less a

common or ordinary one like a circle or square; we doubt, for example, that geometry students are routinely asked to bisect a "popcorn."

Moreover, popcorn does not admit of a paradigmatic shape. Like

snowflakes (both real and SPM's anode version), it might be said that

no two of the popped kernels are exactly alike.

Even were the shape at issue one that is both common and constant, an important distinction must be made when the product only

resembles, and does not replicate, the shape. No one would mistake

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RFE's anodes for popcorn, even if they were the same color and texture, drenched in butter, and salted.

The anodes are not themselves popcorn. They are not made of popcorn, and they are not used in the manufacture of popcorn. In the context of silver anodes, then, the name "Popcorn" is neither a generic

term nor an actual description of any "function, use, characteristic,

size, or intended purpose of the product." See Sara Lee, 81 F.3d at

464. RFE's "Popcorn" mark is instead a metaphor; it cleverly conjures or suggests an image that its product vaguely resembles. The

name therefore "reinforces the association between the product and its

source -- a sure sign of a mark entitled to protection." Id. at 465.

Lastly, we note that we find ourselves confronted yet again with a

case where a trademark has been ruled descriptive, notwithstanding

that the PTO has issued a certificate of registration for the mark without requiring proof of secondary meaning. We have said at least twice

before that the PTO's taking of such an action is powerful evidence

that the registered mark is suggestive and not merely descriptive. See

Sara Lee at 465 n.12; Pizzeria Uno at 1529 ("this essential fact . . .

must be considered prima facie correct by a court in considering the

validity of a trademark[.]") (citations omitted).

It must by now be apparent that a district court should not freely

substitute its opinion for the PTO's. See Sara Lee at 465 n.12 ("The

inescapable conclusion is that either the Patent and Trademark Office

or the district court has made a mistake; we are convinced that it was

the latter."). We conclude that the PTO has again correctly determined the mark at issue to be suggestive, and that the district court's

finding to the contrary is clearly erroneous.

B.

Our holding today does not, in light of the record before us, mandate the entry of judgment for RFE on the three claims to which the

strength or distinctiveness of its mark is relevant. The district court,

in ruling that SPM was entitled to summary judgment based solely

upon the perceived weakness of RFE's mark, did not consider factors

other than distinctiveness that may be pertinent to resolving the question of whether SPM's use of the "Popcorn" trademark was likely to

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have resulted in anode purchasers confusing its product with RFE's.

See Sara Lee at 463-64 (cataloging a non-exclusive list of potential

factors). A likelihood of confusion must be established in order for a

plaintiff to prevail on claims of trademark infringement and unfair

competition under the Lanham Act. Id. at 463. The same is true of

common-law infringement claims. See, e.g., Rosso & Mastracco, Inc.

v. Giant Food Shopping Center of Va., 104 S.E.2d 776, 781 (Va.

1958).

For the purposes of remand, then, we instruct the district court only

that it must consider the distinctiveness of RFE's"Popcorn" trademark to be conclusively established. Whether RFE may ultimately

prevail on its claims, along with the nature and extent of any relief

to which it may be entitled, are among those issues left for the district

court to determine.

IV.

We turn finally to the district court's grant of summary judgment

to SPM on RFE's state-law claim for tortious interference with contractual relations. The essence of this claim is that SPM made unsolicited mailings and telephone calls to some of RFE's customers,

offering to sell them "Popcorn" at a lower price than RFE was asking.

The tort has four elements:

(1) the existence of a valid contractual relationship or business expectancy; (2) knowledge of the relationship or expectancy on the part of the interferor; (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damage to the party

whose relationship or expectancy has been disrupted.

Chaves v. Johnson, 335 S.E.2d 97, 102 (Va. 1985).

In this case, the affected customers had, in the past, simply ordered

their anodes from RFE on an "as needed" basis; they had not committed to any future purchases of "Popcorn" at all. RFE thus had only the

weakest kind of business expectancy. All that it could expect is that

it would retain its customers only so long as it met their demand for

a quality product at a competitive price.

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Moreover, RFE's witnesses conceded that its former customers

began purchasing "Popcorn" anodes from SPM solely because the latter offered a lower price for precisely the same product. Thus, it has

been established that SPM's mailings and letters were not a proximate

cause of any business loss suffered by RFE. We conclude that RFE

has failed to adduce evidence of the first and third Chaves elements

sufficient to withstand the entry of summary judgment against it.

V.

The summary judgment entered on behalf of SPM by the district

court is affirmed as to RFE's claim under state law for tortious interference with contractual relations. The court's judgment is vacated,

however, on the claims for trademark infringement and for unfair

competition under the Lanham Act, and on the state-law infringement

claim. The case is remanded for further proceedings, with instructions

for the district court to treat the distinctiveness of RFE's "Popcorn"

trademark as conclusively established.

AFFIRMED IN PART, VACATED IN PART,

AND REMANDED WITH INSTRUCTIONS

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