Source: https://law.justia.com/cases/federal/appellate-courts/F2/803/778/381504/
Timestamp: 2020-08-11 16:42:21
Document Index: 532776345

Matched Legal Cases: ['§ 1125', '§ 1121', '§ 1338', '§ 1121', '§ 1291', '§ 1117', '§ 1912', '§ 1117', '§ 505']

Standard Terry Mills, Inc., Appellant in 86-1160, v. Shen Manufacturing Company.appeal of Shen Manufacturing Company, Incorporated, 803 F.2d 778 (3d Cir. 1986) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Third Circuit › 1986 › Standard Terry Mills, Inc., Appellant in 86-1160, v. Shen Manufacturing Company.appeal of Shen Manuf...
Standard Terry Mills, Inc., Appellant in 86-1160, v. Shen Manufacturing Company.appeal of Shen Manufacturing Company, Incorporated, 803 F.2d 778 (3d Cir. 1986)
U.S. Court of Appeals for the Third Circuit - 803 F.2d 778 (3d Cir. 1986) Argued Sept. 11, 1986. Decided Oct. 16, 1986. As Amended Nov. 20 and Dec. 19, 1986
Shen Manufacturing Company, importers and distributors of a kitchen towel known as the Ritz Flemish Wonder towel, appeals the district court's judgment denying Shen's unfair competition claim brought pursuant to Sec. 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1982).1 Standard Terry Mills, manufacturers of a competing towel, appeals from the district court's denial of their motion for attorneys' fees or a partial new trial on the issue of such fees.
Standard Terry originally filed this action requesting a declaratory judgment, invoking the district court's jurisdiction under 15 U.S.C. § 1121 (1982) and 28 U.S.C. § 1338(b) (1982). We have jurisdiction pursuant to 15 U.S.C. § 1121 and 28 U.S.C. § 1291 (1982). Because we hold that the district court did not err in its application of Sec. 43(a) nor abuse its discretion in denying attorney's fees, we affirm.
After a bench trial the court held that both the weave and the windowpane check pattern of the Ritz Flemish Wonder towel were functional and therefore could not be protected under Sec. 43(a) of the Lanham Act.4 The court relied on our discussion of the doctrine of "aesthetic functionality" in Keene Corporation v. Paraflex Industries, 653 F.2d 822 (3d Cir. 1981) ("Paraflex Industries"), in reaching its conclusion that the towel's trade dress did not qualify for Sec. 43(a) protection. The court also denied Standard Terry's application for attorneys' fees under Sec. 35 of the Lanham Act, 15 U.S.C. § 1117 (1982).5
To succeed in a claim of trade dress infringement, Shen needed to prove: (i) that the Ritz Flemish Wonder towel's trade dress is nonfunctional; (ii) that its trade dress had acquired a secondary meaning among consumers as a means of identifying the source of the product; and (iii) that public was likely to confuse the Ritz Flemish Wonder with the Supra-Weave towel. See Freixenet, S.A. v. Admiral Wine & Liquor Co., 731 F.2d 148, 151 (3d Cir. 1984). The district court decided this case on the basis of its evaluation of the first factor.
The functionality doctrine accommodates the twin purposes behind the Lanham Act. It protects the manufacturer (and the consumer) from the copying of those features that signify a product's source (and quality) and encourages competition by preventing one manufacturer from acquiring a monopoly by attempting to trademark those features of a design essential to a successful product of that type. See W.T. Rogers Co. v. Keene, 778 F.2d 334, 338-39 (7th Cir. 1985); Paraflex Industries, 653 F.2d at 824. As we previously have observed,
United States Golf Association v. St. Andrews Systems, 749 F.2d 1028, 1033 (3d Cir. 1984), citing Morton-Norwich Products, Inc., 671 F.2d 1332 (C.C.P.A. 1982); see Ives Laboratories, Inc. v. Darby Drug Co., 601 F.2d 631, 643 (2d Cir. 1979) (functional features are those that prove "an important ingredient in the commercial success of the product" rather than simply an "arbitrary embellishment--primarily adopted for the purposes of identification and individuality").
The proper characterization of the towel's windowpane check design is governed by the related doctrine of aesthetic functionality. In this circuit, a particular design is nonfunctional, and therefore entitled to common law trademark protection, if the design "is not significantly related to the utilitarian function of the product, but is merely arbitrary." Paraflex Industries, 653 F.2d at 825. Thus, we held in Paraflex Industries that the shape of an outdoor luminaire could not be the subject of Sec. 43(a) protection when the evidence showed that its shape functioned to enhance its architectual compatibility with the structures on which it could be mounted. Id. at 826. Standard Terry presented evidence that the colored stripes in the windowpane check were made of plain woven fabric which gave the towel strength and durability, two features that are lacking in pure huckaback fabric. Standard Terry also demonstrated that windowpane check is a generic term in the textile industry as well as a favorite pattern for kitchen textiles. Faced with this evidence, the trial court concluded that Standard Terry's check pattern served to make the Supra-Weave towel strong, durable, and compatible with contemporary kitchen decor. The court recognized that Standard Terry could have made some slight variations in the check pattern without sacrificing the workability of its product. However, relying on our decision in Paraflex Industries, the court concluded that Standard Terry's failure to make such miniscule changes did not render its design nonfunctional. See, id. at 827. We cannot say the district court's finding regarding the functionality of the check pattern was clearly erroneous. See Ciba-Geigy Corp. v. Bolar Pharmaceutical Co., 747 F.2d 844, 850 (3d Cir. 1984), cert. denied, --- U.S. ----, 105 S. Ct. 2678, 86 L. Ed. 2d 696 (1985) (functionality is a question of fact). We therefore conclude that Standard Terry's imitation did not constitute unfair competition or trademark infringement.
Before we review the district court's decision, we face the initial question whether attorney's fees may be awarded at all in a suit for unfair competition under the Lanham Act. The general or "American" rule is that a prevailing party ordinarily may not recover attorneys' fees absent statutory authorization. In 1975, Congress amended Sec. 35 to provide for awards of attorneys' fees in "exceptional cases" in registered trademark infringement suits. Standard Terry argues that Sec. 35 should apply as well to actions for common law trademark infringement brought under Sec. 43(a) despite the statute's clear requirement that the trademark be one "registered in the Patent and Trademark Office."6 Although Sec. 35's language seems clearly to preclude an award of attorneys' fees brought for actions to enforce unregistered trademarks, a number of appellate courts have extended Sec. 35 in this manner. See Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1025-26 (9th Cir. 1985), cert. denied, --- U.S. ----, 106 S. Ct. 802, 88 L. Ed. 2d 778 (1986); Rickard v. Auto Publisher, Inc., 735 F.2d 450, 453-58 (11th Cir. 1984); Metric & Multistandard Components v. Metric's Inc., 635 F.2d 710, 715-16 (8th Cir. 1980). While these courts observed that the extension of Sec. 35's remedial scheme to Sec. 43(a) actions is consistent with Congress's underlying goals in passing the Lanham Act, see Rickard, 735 F.2d at 457, the motivation behind this judicial gloss is the realization that the federal courts would face the undesirable prospect of creating a common law remedy for Sec. 43(a) rights were they to hold that Sec. 35's remedies did not apply in common law trademark infringement suits. See Rickard, 735 F.2d at 457; Metric & Multistandard Components, 635 F.2d at 715.
Like the district court below, we have doubts whether we should rectify Congress's oversight and hold that attorney's fees are available in this case. We previously have assumed without holding that Sec. 35 applies to common law trademark actions brought under the Lanham Act, see Donsco, Inc. v. Casper Corporation, 587 F.2d 602, 608 (3d Cir. 1978), and we refrain today from deciding the issue because the record does not reveal that the district court abused its discretion in denying Standard Terry's application for fees. We cannot agree with Standard Terry that Shen's claim of common law trademark protection was groundless or brought primarily for the purpose of harassing Standard Terry. The record reveals that Shen's conduct is consistent with the vindication of rights that it believed in good faith were infringed by Standard Terry's Supra-Weave towel. Nor do we believe that Shen's temporary use of a copyright symbol should be a factor in the calculation as there is no showing that it has any connection with this suit: Shen never claimed that Standard Terry had infringed a registered copyright. In short, Standard Terry has not shown that this is an exceptional case that warrants attorneys fees award.7
Finally, Standard Terry urges that we charge Shen for the costs of this appeal pursuant to 28 U.S.C. § 1912 (1982) and damages under Fed. R. App. P. 38. Such an award is appropriate only when the appeal is wholly without merit, however. See Sauers v. Commissioner of Internal Revenue, 771 F.2d 64, 70 n. 9 (3d Cir. 1985). In light of our discussion above, we do not believe that the issues raised by Shen's appeal are completely frivolous and therefore accordingly decline to award either costs or damages to Standard Terry.
This section includes within its scope common law, or unregistered, trademark infringement. See United States Golf Association v. St. Andrews Systems, 749 F.2d 1028 (3d Cir. 1984).
"Huckaback" is defined in A Dictionary of Textile Terms by DAN RIVER (12th ed. 1976) as " [c]loth [that] has a honeycomb effect; the filling yarns are slackly twisted to aid absorption. Material is heavy.... In white or colors. Very absorbent, durable, serviceable for towels and will withstand rough use. Made of linen or cotton." The Manchester Textile Institute's Textile Terms and Definitions (7th ed. 1975) similarly defines the term as " [a] weave used principally for towels and glass-cloths in which a rough-surface effect is produced on a plain-ground textile by short floats, warp on one side and weft on the other."
Standard Terry argues that Shen has not shown that it owns any interest in the trade dress of the Ritz Flemish Wonder towel because it did not prove that John Ritzenhaler designed the towel. Because Standard Terry did not raise this issue at trial, we will not consider it here. See Newark Morning Ledger Co. v. United States, 539 F.2d 929, 932 (3d Cir. 1976)
Shen also asserts its common law trademark rights under Sec. 1126 of the Pennsylvania Trademark Act, 54 Pa.Stat.Ann. Secs. 1101-26 (Supp.1986). The parties appear to agree that the elements of common law trademark infringement under Pennsylvania and federal law are identical, a conclusion reached by a number of district courts. See University of Pittsburgh v. Champion Products, Inc., 566 F. Supp. 711, 719 (W.D. Pa. 1983); Artus Corp. v. Nordic Co., Inc., 512 F. Supp. 1184, 1187-88 (W.D. Pa. 1981): International Society for Krishna Consciousness, Inc. v. Stadium Authority, 479 F. Supp. 792, 798 (W.D. Pa. 1979). Our review of these cases and Pennsylvania decisions, see, e.g., Zimmerman v. Holiday Inns of America, Inc., 438 Pa. 528, 534-35, 266 A.2d 87, 90 (1970), cert. denied, 400 U.S. 992, 91 S. Ct. 456, 27 L. Ed. 2d 440 (1971), leads us to conclude that except for the element of interstate commerce required to support a claim under the Lanham Act, the two causes of action are sufficiently similar to permit us to restrict our discussion to the federal claim alone
In 1984, after this suit was filed, Congress added a treble damages provision for the knowing use of a counterfeit trademark and redesignated the above provision as Sec. 1117(a). See 15 U.S.C. § 1117 (Supp. III 1985).
In their reply brief, Standard Terry argues that our recent decision in Lieb v. Topstone Industries, Inc., 788 F.2d 151 (3d Cir. 1986) concerning attorneys' fees awards under Sec. 101 of the Copyright Act, 17 U.S.C. § 505 (1982), controls this issue. Although Lieb is certainly instructive, it does not provide the legal precepts governing attorney fees under Sec. 35 of the Lanham Act. Unlike the Lanham Act provision, the Copyright Act does not restrict attorneys' fees to "exceptional cases." According to the Senate Report, Congress intended the Lanham Act attorneys' fees provision to encompass cases such as where the trademark infringement was " 'malicious,' 'fraudulent,' 'deliberate,' or 'willful.' " S.Rep. No. 1400, 93d Cong., 2d Sess., reprinted in 1974 U.S. Code Cong. & Ad. News 7132, 7133, or where the trademark owner brings an "unfounded suit" to harass a competitor. Id. at 1974 U.S. Code Cong. & Ad. News at 7136. This language indicates that bad faith is a relevant inquiry for the purposes of Sec. 35. We cannot say on this record that Shen's claims were either groundless or brought in bad faith