Source: http://law.justia.com/cases/federal/appellate-courts/F2/711/966/302752/
Timestamp: 2013-05-22 03:54:16
Document Index: 666954876

Matched Legal Cases: ['§ 5', '§ 15', '§ 23', '§ 1114', '§ 23', '§ 43', '§ 43', '§ 23', '§ 43', 'art:\n28']

711 F.2d 966: John H. Harland Company, Plaintiff-appellee, Cross-appellant, v. Clarke Checks, Inc., Defendant-appellant, Cross-appellee :: US Court of Appeals Cases :: Justia
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711 F.2d 966: John H. Harland Company, Plaintiff-appellee, Cross-appellant, v. Clarke Checks, Inc., Defendant-appellant, Cross-appellee
United States Court of Appeals, Eleventh Circuit. - 711 F.2d 966
1 The check number is imprinted on the check, the intermediate stub, and the permanent stub
2 Plaintiff's Exhibit 14 (advertising brochure produced by Harland). Harland's advertising also stated that the Memory Stub was "a great little invention that allows you to write checks at home as you normally would, and to write checks away from home with a minimum of error." Id
3 Harland marketed the Memory Stub product in three check styles. Two of the styles, the "Classic" and the "Petals," had artistic background designs, and Harland obtained copyright registrations for those two styles. The third style, the "Ledger," did not have an artistic background design, and Harland did not register that style. Nevertheless, Harland argues that it copyrighted "its original MEMORY STUB expression ... [as well as] the background designs on two of its three styles." Brief of Appellee/Cross-Appellant at 3. Clarke argues that Harland's copyright registrations only protected the background designs. Brief of Appellant/Cross-Appellee at 9-10
4 William Alfaro, a production and methods manager for Clarke during the period when the new product was being developed, indicated that the initial mock-up of Clarke's new product actually was one of Harland's Odyssey Collection products. Record on Appeal, vol. 5, at 219-21
5 The district court did not submit Harland's state law claims to the jury, but entered judgment for Harland on those claims after the jury found that Clarke had engaged in trademark and trade dress infringement
6 Harland does not contend that Clarke has infringed on these artistic background designs
7 Harland admits that it registered the "Classic" and "Petals" Memory Stub check styles under subsection (k) of section 5 of the old Copyright Act, 17 U.S.C. § 5(k) (1947) (effective for registrations prior to January 1, 1978), which covered "[p]rints and pictorial illustrations including prints or labels used for articles of merchandise." Nevertheless, Harland argues that "[r]egistration of a work in one class protects all copyright component parts of that work, even if the other copyrightable components may not fall within that particular class of registration." Reply Brief of Appellee/Cross-Appellant at 2 (emphasis in original). Our conclusion below that the "other components" of the Memory Stub product, besides the background design, were not copyrightable makes it unnecessary for us to consider the validity of Harland's argument
8 Harland contends that recent authority has undermined the rule established in Baker v. Selden, supra, and followed by the Copyright Office since that time, citing Norton Printing Co. v. Augustana Hospital, 155 U.S.P.Q. (BNA) 133 (N.D.Ill.1967), and Harcourt, Brace & World, Inc. v. Graphic Controls Corp., 329 F.Supp. 517 (S.D.N.Y.1971). The district court carefully considered and discussed these decisions, distinguishing the former and declining to follow the latter. See John H. Harland Co. v. Clarke Checks Co., 207 U.S.P.Q. (BNA) 664 (N.D.Ga.1980). We agree with the district court's conclusions and need not repeat that discussion here. Further, we note that the Copyright Office recently reaffirmed the rule of Baker v. Selden, supra, and the regulation quoted in the text, expressly citing the district court's decision in this case as an example of the correct application of the rule. See Notice of Termination of Inquiry Regarding Blank Forms, 45 Fed.Reg. 63297-300 (1980)
9 In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir.1981) (en banc), this court adopted as binding precedent all of the decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981. Id. at 1209
10 Clarke's only objections to the portion of the charge covering trademark infringement are that it was "unduly long and complex" and was "coupled with an incorrect charge on unfair competition." Brief of Appellant/Cross-Appellee at 39. Our review of the record indicates that the district court's charge regarding the elements of trademark infringement was relatively long, covering 17 pages of transcript, but that the charge correctly stated the law and was not so complex that a reasonable juror would have difficulty understanding it. Further, although we conclude below that the district court could have expanded on its discussion of functionality in the unfair competition portion of the instructions, see note 27 infra, we cannot agree that the charge, as given, incorrectly stated the law. In any event, the district court clearly distinguished the trademark infringement portion of the charge from the portion of the charge dealing with trade dress infringement. Thus, we find no error in the district court's charge regarding trademark infringement which would warrant reversal
11 In Boeing Co. v. Shipman, 411 F.2d at 374, the former Fifth Circuit delineated the standards for determining when the evidence is sufficient so that a case must be submitted to the jury. The court stated
12 "In order to establish secondary meaning[,] the plaintiff 'must show that the primary significance of the term in the minds of the consuming public is not the product but the producer.' " Vision Center v. Opticks, Inc., 596 F.2d 111, 118 (5th Cir.1979) (quoting Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 118, 59 S.Ct. 109, 113, 83 L.Ed. 73 (1938)), cert. denied, 444 U.S. 1016, 100 S.Ct. 668, 62 L.Ed.2d 646 (1980). Descriptive marks must have acquired secondary meaning in order to be protected, but arbitrary or fanciful marks and suggestive marks are protected without evidence of secondary meaning. 1 J.T. McCarthy, supra, § 15:1. On appeal, Clarke does not argue that Harland's Memory Stub mark has not acquired secondary meaning, but simply argues that its Entry Stub mark does not infringe on the Memory Stub mark
13 Clarke emphasizes that Harland knew in advance that its Memory Stub trademark was rather weak, citing an internal memorandum between two Harland officials. The memorandum began by noting that the Memory Stub mark had not been registered previously, but then stated that Harland's trademark counsel "feels the name is somewhat weak because it is so suggestive ...." Defendant's Exhibit 41. (The memorandum then stated, somewhat ironically, that Harland's primary interest in seeking trademark protection was "to inhibit our competitors from copying the idea rather than take serious legal action." Id.)
14 Harland vigorously contends that the two marks carry similar connotations, emphasizing that Clarke even states in its brief that "without the carry-around stub, the check writer would have to rely on their [sic] memory of the transaction unless they [sic] had something to enter it on." Brief of Appellee/Cross-Appellant at 12 (emphasis in original) (quoting Brief of Appellant/Cross-Appellee at 5). We doubt that this use of the two words in the same sentence of a legal brief has any significant probative value in determining whether consumers are likely to confuse the two marks
15 The fact that the names of the parties appear in small print on the checks and the permanent check stubs does not preclude a finding that there is substantial similarity between the design of Harland's Memory Stub product and the design of Clarke's Entry Stub product. See note 24 infra
16 The fact that Clarke copied features of Harland's product does not, in itself, entitle Harland to any relief. "There is nothing wrong with exact copying of an article or a symbol in the public domain. Even if defendant admits that he used plaintiff's package as a model to copy from in designing his own package, this does not necessarily mean that defendant intentionally was passing off his product as plaintiff's. Such an admission is merely evidence relevant to the ultimate test of likelihood of confusion." 2 J.T. McCarthy, supra, § 23:35, at 111-12
17 Harland emphasizes that Clarke "introduced its product with virtually no advertising," Brief of Appellee/Cross-Appellant at 13, and argues that this fact also suggests that Clarke was attempting to trade on the good will associated with Harland's Memory Stub mark. Cf. Menley & James Laboratories v. Approved Pharmaceutical Corp., 438 F.Supp. 1061, 1067 (N.D.N.Y.1977) (evidence of intent to benefit from good will associated with senior user's reputation "is especially convincing when the newcomer ... has spent little or nothing at all in promoting its product"). We have not given any weight to this argument because the uncontradicted testimony of Clarke officials indicated that materials advertising the Entry Stub product were withheld due to the present litigation. Thus, Clarke's "lack of advertising" does not necessarily evidence any intent to deceive or defraud
18 According to the testimony of James Coln, the president of Clarke, Clarke officials rejected two other suggested marks for the intermediate carry-around stub, including "Reminder Stub," because their trademark counsel believed that these marks would be likely to cause confusion. Record on Appeal, vol. 6, at 465-69
19 Frances Lawrence of the Dunwoody, Georgia, Branch of Fulton National Bank testified that she had filled out this order form for a customer and placed it in an envelope for delivery to Clarke checks. (Ms. Lawrence had used one of Harland's pre-printed order forms, lining out the Harland name, writing in Clarke, and typing the information regarding the "Deskette" product and "World of Beauty" background design; this procedure in itself does not suggest any confusion between the Memory Stub and Entry Stub products because Ms. Lawrence's testimony indicates that she routinely used one check printing company's pre-printed form to place orders with another check company.) Ms. Lawrence testified that the card with the words "Cover and Memory Case" was not attached to the order form when she placed it in the envelope. Thus, the card apparently was attached either by one of Ms. Lawrence's associates at the bank or by a Clarke employee processing the order
20 Clarke argues that the new accounts representative who completed this form stated in a deposition that there was no confusion in her mind between the Clarke and Harland products and that she simply "wrote down the wrong thing" by mistake. See Record on Appeal, vol. 5, at 236. We do not see the relevance of the distinction Clarke is attempting to draw because the Lanham Act prohibits use of a mark which is "likely ... to cause mistake" as well as a mark which is likely to cause confusion or to deceive. See 15 U.S.C.A. § 1114(1)
21 In both instances, the new accounts representatives clearly intended to place an order with Clarke, not with Harland. At trial, Harland did produce numerous reorder forms for Memory Stub products which banks had sent to Clarke and which Clarke then had filled with Entry Stub products. This evidence does not necessarily suggest that there was any actual confusion between the products, however, because the record indicates that check printing companies routinely fill orders which have been placed on another company's reorder form. Assume, for example, that a bank which has been doing business with Harland decides to do business with Clarke instead. Subsequently, many of the bank's customers will bring in check reorder forms which were prepared by Harland and placed near the back of the package of checks provided by Harland. The bank, however, will send these reorder forms to Clarke, which then will fill the order with a similar product. Most check printing companies, including Harland and Clarke, follow this procedure. Indeed, one of Harland's plant managers testified that his plant typically receives 50 to 300 orders a day on the order forms of other companies and almost always fills these orders with Harland products. Record on Appeal, vol. 7, at 612-13. Thus, the fact that Clarke received and filled reorders which asked for Harland's products merely indicates that Clarke was able to produce similar products, not that bank personnel and customers were confused by any similarity between the Entry Stub and Memory Stub marks
22 One of the problems in determining whether there is a likelihood of confusion in this case is that the parties have not clearly identified the persons who are (or are not) likely to be confused. (This problem also makes it difficult to analyze the degree of care purchasers use when buying the parties' products. Cf. Sun-Fun Products, Inc. v. Suntan Research & Development Inc., 656 F.2d at 189 (stating that another factor courts should use in assessing the likelihood of confusion is "the degree of care purchasers are likely to exercise when selecting products of the type sold by the parties")). The rule courts usually apply is that infringement occurs when "there is a likelihood of confusion in the mind[s] of an appreciable number of 'reasonably prudent' buyers." 2 J.T. McCarthy, supra, § 23:27, at 87-88. In this case, however, although the ultimate buyers of the products are checking account customers, banking institutions actually decide whether to carry check products made by Harland, Clarke, or some other check stationery company. Consequently, many, if not most, actual buyers only see (and only can choose from) the products of one check printing company because their bank uses that company's products exclusively. Moreover, even if a bank carries several companies' products, customers may not be presented with an opportunity to choose between the products because new accounts personnel at the bank may show them only one company's catalog. See Record on Appeal, vol. 5, at 232-33 (new accounts representative testified that although her bank carried both Harland and Clarke checks, she only showed customers the Clarke catalog as she preferred doing business with Clarke)
23 Both parties also presented "expert" witnesses on the likelihood of confusion issue. Harland's expert, Fred Corley, president of the Midland City Bank in Midland, Alabama, testified that he believed that there was a likelihood of confusion between the Memory Stub and Entry Stub products, although he was unaware of any actual confusion among his bank's customers or employees. Clarke's expert, Abraham Beaugarad, a trademark lawyer from Washington, D.C., testified that there was no likelihood of confusion between the two products, but admitted that he had no background in the check printing business and had not conducted any survey regarding the likelihood of confusion among consumers. We do not believe that the testimony of either expert is entitled to much weight in analyzing whether the evidence was sufficient to support the jury's verdict
24 Clarke points out that the Clarke name appears in the lower left corner of each check and the lower left corner of each permanent stub, as well as on notices and packaging materials which are sent to customers and on a calendar which is placed in the desk-style checkbook. Clarke contends that these facts require reversal of the judgment for trade dress infringement, citing Bose Corp. v. Linear Design Labs, Inc., 467 F.2d 304 (2d Cir.1972), for the proposition that "when a competitor marks its products with its name no cause of action ... under § 43(a) can lie." Brief of Appellant/Cross-Appellee at 15. We disagree. The presence of a manufacturer's name on a product is just one of many factors relevant to determining whether there is a likelihood of confusion. See, e.g., Truck Equipment Service Co. v. Fruehauf Corp., 536 F.2d at 1214 n. 2, 1220-21 (fact that defendant labeled trailer as its own product did not preclude action under § 43(a) or make lower court's finding of likelihood of confusion clearly erroneous); cf. 2 J.T. McCarthy, supra, § 23:15(H), at 61 ("The fact that defendant places its own name on a label together with the symbol alleged to be an infringement does not dictate that there can be no possible confusion."). In fact, the subsequent history of the case cited by Clarke demonstrates that placement of the manufacturer's name on a product does not preclude a finding of infringement. See Bose Corp. v. Linear Design Labs, Inc., 194 U.S.P.Q. (BNA) 339 (S.D.N.Y.1977) (noting that a consent judgment of trademark infringement was entered on remand). In this case, Clarke's name appears in very small print on the checks and permanent stubs. Cf. SK & F Co. v. Premo Pharmaceutical Laboratories, Inc., 625 F.2d at 1061 (affirming district court's finding that logos on capsules "were so small that they would be ineffective to prevent confusion as to source or passing off"). In addition, Clarke's name appears on a variety of other materials, much of which is not received by the ultimate consumer until after an order is placed. Thus, although such evidence is relevant to the likelihood of confusion issue, we do not believe that it precludes a finding of trade dress infringement
25 Several courts, including the former Fifth Circuit in a decision which is not binding on us, have held that the plaintiff in a trade dress infringement action need not prove secondary meaning when the product's trade dress is inherently distinctive. See, e.g., Chevron Chemical Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d at 702 (stating that "[i]f the features of the trade dress sought to be protected are arbitrary and serve no function either to describe the product or assist in its effective packaging, there is no reason to require a plaintiff to show consumer connotations associated with such arbitrarily selected features."); Perfect Fit Industries, Inc. v. Acme Quilting Co., 618 F.2d at 952-54 (concluding that, under New York law, a plaintiff need not prove secondary meaning to obtain relief for trade dress infringement when the trade dress, in itself, is distinctive and memorable). Although we believe this approach has merit, we need not consider it to resolve the case before us
26 We recognize that there is some confusion in the courts regarding whether the plaintiff has the burden of proving nonfunctionality as part of the prima facie case or whether the defendant has the burden of proving functionality as a defense. Compare, e.g., Vibrant Sales, Inc. v. New Body Boutique, Inc., 652 F.2d 299 (2d Cir.1981) (placing burden on plaintiff), cert. denied, 455 U.S. 909, 102 S.Ct. 1257, 71 L.Ed.2d 448 (1982), with Ives Laboratories, Inc. v. Darby Drug Co., 601 F.2d 631, 643 (2d Cir.1979) (stating, in affirming the denial of a preliminary injunction, that "[t]he case for functionality ... depends on the evidence proffered by defendants that copying [certain colors] served a number of utilitarian purposes"). Cf. Fisher Stoves, Inc. v. All Nighter Stove Works, Inc., 626 F.2d 193, 195-96 (1st Cir.1980) (expressing some doubt about where the burden should be placed). In this case, the district court instructed the jury that Harland had the burden of proving nonfunctionality, and Harland has not objected to that instruction on appeal. Thus, we need not decide whether the instruction correctly stated the law. Cf. Note, The Problem of Functional Features: Trade Dress Infringement Under § 43(a) of the Lanham Act, 82 Colum.L.Rev. 77, 87 n. 78 (1982) [hereinafter cited as The Problem of Functional Features ] (arguing that the defendant should have the burden of proving functionality)
27 The jury's verdict need not be affirmed, of course, if the jury was not properly instructed, and Clarke makes a strong argument that the jury was inadequately instructed on the issue of functionality. Our review of the record indicates that the trial court clearly instructed the jury that it must find that Clarke had copied nonfunctional features of Harland's product before it could find trade dress infringement. The instructions stated in relevant part:
28 Harland's own marketing materials indicate that the concept of an intermediate carry-around stub, designed to solve the portability problem associated with desk checkbooks, is functional. See note 2 and accompanying text supra. Harland cannot appropriate this functional innovation under the guise of trade dress. Further, although Harland has argued that Clarke could have placed the carry-around stub in a different location, such as at the top or the bottom of the check, we believe the evidence demonstrates that the placement of the carry-around stub between the check and the permanent stub is functional
29 The lines for recording the date, the amount, the payee and the purpose of the check correspond to the lines for recording information on traditional check stubs and are functional
30 The vertical size of the stub is functional because it must correspond to the vertical size of the check and the permanent stub. Further, although it may be technically feasible for Clarke to vary the vertical size of all three components, i.e., the check, the permanent stub and the carry-around stub, the record suggests that the size Clarke selected is standard throughout the industry. For example, the check and permanent stub in Clarke's Entry Stub product are the same size as the check and permanent stub in Clarke's traditional three-check-to-a-page checkbook, which was on the market long before Harland's Memory Stub product. Thus, even if Clarke could have varied the size of its check and permanent stub without affecting the utility of the product or the production costs, Harland could not claim that the size of these components was protectable trade dress because no reasonable jury could conclude that this particular check size had acquired secondary meaning
31 Harland vigorously argues that the horizontal size of its carry-around stub is nonfunctional, and we agree that Clarke probably could have made its carry-around stub wider without affecting its utility or the production costs. There are functional limits on the horizontal size of the carry-around stub, however, and those limits would soon be reached if each check printing company was required to widen its stub sufficiently to distinguish it from stubs which already had been successfully marketed by its predecessors. Cf. Morrissey v. Procter & Gamble Co., 379 F.2d 675, 678 (1st Cir.1967) ("When the uncopyrightable subject matter is very narrow, so that 'the topic necessarily requires' ... if not only one form of expression, at best a limited number, to permit copyrighting would mean that a party or parties, by copyrighting a mere handful of forms, could exhaust all possibilities of future use of the substance.") (citations omitted; quoting Sampson & Murdock Co. v. Seaver-Radford Co., 140 F. 539, 541 (1st Cir.1905)). Moreover, the size and shape of the carry-around stub may be functional because of the nature of the check printing industry. As discussed in note 22, supra, check companies routinely fill reorders from consumers who initially had obtained their check products from a competitor. It would be very inefficient if each such reorder for desk-style checkbook checks with carry-around stubs had to include a new carry-around case, and possibly even a new desk-style checkbook, in order to accommodate the different-sized carry-around stubs
32 There is no evidence in the record indicating that the decorative box which appears on both parties' products serves any functional purpose
33 Clarke's carry-around case appears to be an exact copy of Harland's case except that it is made from a slightly darker brown vinyl. Admittedly, the carry-around case serves a function, but the particular design of the case is not functional. Cf. Dallas Cowboys Cheerleaders v. Pussycat Cinema Ltd., 604 F.2d at 203 ("It is well established that, if the design of an item is nonfunctional ..., the design may become a trademark even if the item itself is functional."). In fact, Clarke has developed and marketed a differently designed carry-around case since this litigation began. Further, Clarke easily could have chosen a different color for its carry-around case rather than the dark brown which makes Clarke's case almost indistinguishable from Harland's dark brown case
34 In fashioning its order, the district court will of course be guided by this opinion, including our holding in Part IV supra that certain features of the trade dress of Harland's product are functional and, therefore, are not protectable under the Lanham Act