Opinion ID: 591020
Heading Depth: 1
Heading Rank: 4

Heading: Trebling Waring's Total Profits

Text: 22 There are two separate reasons why the district court erred in awarding Braun three times Waring's total profit.
23 First, the district court's award of treble damages was based on the jury's erroneous determination that Waring willfully infringed Braun's design patent. Whether infringement is willful is a question of fact, CPG Products Corp. v. Pegasus Luggage, Inc., 776 F.2d 1007, 1015 (Fed.Cir.1985), and the jury's determination as to willfulness is therefore reviewable under the substantial evidence standard. Jurgens, 927 F.2d at 1557. Willfulness is determined from the totality of the circumstances, King Instrument Corp. v. Otari Corp., 767 F.2d 853, 867 (Fed.Cir.1985), and must be proven by clear and convincing evidence, E.I. du Pont de Nemours & Co. v. Phillips Petroleum Co., 849 F.2d 1430, 1440 (Fed.Cir.1988). On-going consultation with a patent lawyer is highly probative evidence of good faith. Radio Steel & Manufacturing Co. v. MTD Products, Inc., 788 F.2d 1554, 1559 (Fed.Cir.1986). 24 We must determine whether there is substantial evidence, when viewed as a whole, upon which a jury could determine under the clear and convincing evidence standard that Waring willfully infringed Braun's patent. We find insufficient evidence upon which the jury could rely.
25 In arguing that Waring willfully infringed its design, Braun relies largely on evidence taken out of context and speculative inferences based on that evidence. For instance, Braun says Waring withheld crucial facts from its own patent lawyer, Daniel Sixbey (Sixbey), by not honoring his request, as stated in the letter dated March 17, 1987, for a view of the Waring blender's outside configuration. However, Braun's contention that Waring concealed relevant information from Sixbey is inconsistent with the undisputed fact that Waring, among other things, sent him: (1) a complete blueprint of its blender's final design, (2) a photograph of the blender's final design, and (3) a pre-production prototype of the blender. 26 Braun also says that Waring did not in fact rely on Sixbey's letter, dated March 17, 1987, and merely created a paper trail to suggest such reliance. See Central Soya Co., Inc. v. Geo. A. Hormel & Co., 723 F.2d 1573, 1577 (Fed.Cir.1983) (willfulness finding affirmed where there was no support for [appellant's] assertion of reliance in the record). In support of this assertion, Braun says Waring authorized the production of the blender on March 16, 1987, before it received Sixbey's letter, dated March 17, 1987. However, the letter, when read in its entirety, suggests that Sixbey had previously stated that a proposed design, which contained fewer distinguishing features than the blender's final design, did not infringe Braun's design. 27 Lastly, in arguing that Waring willfully infringed its design patent, Braun relies heavily on Sixbey's letter, dated November 20, 1987, to Braun, which forwarded a pre-production prototype that accurately illustrates the design proposed for the subsequent commercial models. Braun says this letter deliberately misled Braun as to Waring's marketing plans, because it implies that the blender was still in development when, in fact, prior to Sixbey's letter, 1500 commercial units were in the air for delivery from Europe to various retailers in the United States. Waring's conduct at this time is hardly probative evidence of willful infringement, because, as stated supra, Waring received noninfringement opinions long before the units were shipped to the United States.
28 There is ample undisputed evidence that Waring's conduct reflected due care and good faith to avoid infringement. In particular: (1) before learning of Braun's patent, Waring hired an independent design firm to create a distinctive design for its blender, (2) Waring's patent lawyer, Sixbey, was fully involved as a consultant during all stages of the design process, Rexnord, Inc. v. Laitram Corp., 6 USPQ2d 1817, 1846, 1988 WL 141526 (E.D.Wis.1988) (no willfulness where a patent lawyer was consulted during the design process), (3) Sixbey discovered Braun's patent through a search conducted at Waring's request, Studiengesellschaft Kohle v. Dart Industries, Inc., 666 F.Supp. 674, 689 (D.Del.1987) (discovery of patent through own diligence is a factor suggesting reasonableness, not willfulness), (4) Waring rejected a particular design because it look[ed] too much like Braun, (5) Waring received advice in the form of a letter, dated March 17, 1987, from Sixbey, which strongly suggested that its final design did not infringe Braun's design, and (6) Waring received an opinion in the form of a letter, dated July 29, 1987, from Sixbey which stated in extensive detail that its design did not infringe Braun's design, See 3M Corp. v. Research Medical Corp., 679 F.Supp. 1037, 1064-65 (no willfulness where initial legal opinion is followed by later extensive opinion). In light of this evidence, the jury's determination of willful infringement was not supported by substantial evidence.
29 Assuming arguendo that there is substantial evidence that Waring willfully infringed Braun's design, the district court nevertheless erroneously awarded Braun three times Waring's total profit. 14 Braun elected to recover Waring's total profits under 35 U.S.C. § 289, 15 not 35 U.S.C. § 284, which provides that a patentee may recover damages adequate to compensate for the infringement which the court may increase ... up to three times. 16 Nothing in 35 U.S.C. § 289 authorizes an increase in a patentee's total profit. In fact, 35 U.S.C. § 289 explicitly precludes a patentee from twice recover[ing] the profits made from the infringement. See Bergstrom v. Sears, Roebuck and Co., 496 F.Supp. 476, 496 (D.Minn.1980) (the purpose of this latter phrase is to insure that a patentee not recover both the profit of an infringer and some additional damage remedy from the same infringer, such as reasonable royalty). As a result, by trebling Waring's total profit, the district court clearly exceeded its statutory authority. 17 30 In trebling Waring's total profits, the district court implicitly reasoned: (1) there is little, if any, substantive difference between damages under 35 U.S.C. § 284 and profits under 35 U.S.C. § 289, and (2) as a result, it may increase profits as well as damages. However, this analysis ignores the longstanding distinction in patent law between damages and profits. In sum, recovery of compensatory damages for infringement evolved in courts of law and could be increased, but recovery of an infringer's profits evolved in courts of equity and could not be increased. Birdsall v. Coolidge, 93 U.S. (3 Otto) 64, 68-70, 23 L.Ed. 802 (1876); New England Fibre Blanket Co. v. Portland Telegram, 61 F.2d 648, 650 (9th Cir.1932). See generally D. Chisum, Patents § 20.02[d] (1991); Georgia Pacific Corp. v. United States Plywood Corp., 243 F.Supp. 500, 518 (S.D.N.Y.1965) (the Patent Act of 1870, reprinted in D. Chisum, 6 Patents app. 14 (1991), drew a sharp cleavage between profits and damages). For instance, although a utility patentee could recover an infringer's profit prior to 1946, just as a design patentee may do so today, courts uniformly held that the infringer's profit could not be increased. Amusement Corp. v. Mattson, 138 F.2d 693, 697 (5th Cir.1943); Sutton v. Gulf Smokeless Coal Co., 77 F.2d 439, 442 (4th Cir.1935); New England Fibre, 61 F.2d at 651; Yesbera v. Hardesty Manufacturing Co., 166 F. 120, 128 (6th Cir.1908). In Aro Manufacturing Co. v. Convertible Top Replacement Co., 377 U.S. 476, 505, 84 S.Ct. 1526, 1542, 12 L.Ed.2d 457 (1964), the Supreme Court further distinguished damages from profits by explicitly holding that only damages were recoverable under 35 U.S.C. § 284.V. Trade Dress 31 As stated supra, the jury found that: (1) Waring's blender design infringed Braun's blender trade dress, and (2) Waring's carton design infringed Braun's packaging trade dress. Under prior Second Circuit law, to prevail on a trade dress claim, under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), a plaintiff was, in all circumstances, required to demonstrate that: (1) the product's appearance had acquired secondary meaning, namely that the consuming public identified the product with its maker, and (2) purchasers were likely to confuse the imitating goods with the originals. Coach Leatherware Co. v. AnnTaylor, Inc., 933 F.2d 162, 168 (2d Cir.1991); Litton Systems, 728 F.2d at 1444-45. However, while this case was pending on appeal the Supreme Court held that proof of secondary meaning is not required to prevail on a claim under § 43(a) of the Lanham Act where the trade dress at issue is inherently distinctive. Two Pesos, Inc. v. Taco Cabana, --- U.S. ----, ----, 112 S.Ct. 2753, 2761, 23 USPQ2d 1081, 1086, 120 L.Ed.2d 615 (1992). Thus, if the trade dress at issue is inherently distinctive, 18 the plaintiff need only show that purchasers are likely to confuse it with the allegedly imitating goods. See Chevron Chemical Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d 695, 702-03 (5th Cir.1981). 19 32 The jury's determination of secondary meaning is one of fact, Malcolm Nicol & Co. v. Witco Corp., 881 F.2d 1063, 1065 n. 4 (Fed.Cir.1989), and therefore warrants a substantial evidence standard of review. Jurgens, 927 F.2d at 1557. The determination of likelihood of confusion, however, is the ultimate conclusion of law to be decided by the court and, as a result, a de novo standard of review is applicable. Giant Food, Inc. v. Nation's Foodservice, Inc., 710 F.2d 1565, 1569 (Fed.Cir.1983). 20 Applying these standards, the jury's determination of trade dress infringement, as to both Braun's design and packaging, constitutes reversible error. A.
33 Although, as discussed infra, there is no probative evidence that Braun's blender design had, at the time of Waring's infringement, acquired secondary meaning, the issue of trade dress infringement as to the blender design must be remanded to the district court in light of the Supreme Court's intervening decision in Two Pesos. As stated supra, in Two Pesos, the Supreme Court held that a plaintiff need not prove secondary meaning to prevail on a trade dress infringement claim if the trade dress is inherently distinctive. Here, because prior Second Circuit law required proof of secondary meaning as to all trade dress infringement claims, Braun had no reason to show that its trade dress as to the blender design was inherently distinctive. 21 1] Thus, because Braun and Waring's blender designs may be confusingly similar, the issue of trade dress as to Braun's blender design must be remanded so that the district court can address the issue of inherent distinctiveness in line with Two Pesos. See generally Salaam v. Lockhart, 856 F.2d 1120, 1123 (8th Cir.1988) (remand of 42 U.S.C. § 1983 claim warranted when intervening decision by the Supreme Court alters applicable First Amendment law); Smalls v. United States Environmental Protection Agency, 861 F.2d 60 (3d Cir.1988) (remand was required of Federal Tort Claims Act action when relevant Court of Appeals decision was reversed by the Supreme Court); Alexander v. Whitley, 940 F.2d 946, 948 (5th Cir.1991) (similar). If the blender designs are confusingly similar and Braun's blender design is found to be inherently distinctive, then Braun will prevail on its trade dress infringement claim.
34 If on remand it is determined that Braun's blender design is not inherently distinctive, then Braun cannot prevail on the trade dress claim, because there is simply no probative evidence that the blender design had, at the time of Waring's infringement, acquired secondary meaning. Thus, the jury's implicit finding that Braun's blender design acquired secondary meaning was not supported by substantial evidence. 35 A claim of trade dress infringement fails if secondary meaning did not exist before the infringement began. Saratoga Vichy Spring Co., 625 F.2d 1037, 1043 (2d Cir.1980). Braun began selling its blender in nine west coast test markets, including Seattle, San Francisco, Los Angeles, and Chicago in the spring of 1986 and December 1986, respectively. Waring and Braun both began selling their blenders nationally during the 1987 Christmas season. Braun must therefore show that its blender design acquired secondary meaning during the approximately 18 months preceding the introduction of Waring's blender. 36 At trial, Braun sought to demonstrate secondary meaning by introducing evidence that, during 1986 and 1987: (1) it advertised its blender on television and in newspapers, 22 McGregor-Doniger, Inc. v. Drizzle, Inc., 599 F.2d 1126, 1132, 1133 n. 4 (2d Cir.1979) (advertising expenditures evidence of secondary meaning), (2) its blender sold at a brisk pace in various test markets, Harlequin Enterprises Ltd. v. Gulf & Western Corp., 644 F.2d 946, 949 n. 1 (2d Cir.1981) (sales success evidence of secondary meaning), and (3) it received unsolicited media coverage of the blender in a trade journal, id. at 950 (unsolicited media attention evidence of secondary meaning). Demonstrating secondary meaning requires the satisfaction of rigorous evidentiary requirements. Thompson Medical Co. v. Pfizer, Inc., 753 F.2d 208, 217 (2d Cir.1985). Braun's limited evidence as to advertising, sales and media attention, standing alone, is not sufficient to demonstrate that the consuming public identified the blender design with its maker, Braun. 37 First, while not impossible, it is difficult for a product to acquire secondary meaning during an 18-month period. Cicena, Ltd. v. Columbia Telecommunications Group, 900 F.2d 1546, 1552 (Fed.Cir.1990) (use of only 18 months is evidence point[ing] strongly away from a finding of secondary meaning); Sunbeam Corp. v. Equity Industries, 635 F.Supp. 625, 630 (E.D.Va.1987) (same). Therefore, giving due deference to what the jury could have reasonably relied on as a basis for its determinations, the short period during which Braun's blender was on the market prior to the infringement is inconsistent with a finding of secondary meaning. 38 In addition, the fact that Braun spent an arguably large sum of money on advertising is of limited probative value. Braun did not proffer evidence establishing that the advertising effectively created secondary meaning as to the blender. First Brands Corp. v. Fred Meyer, Inc., 809 F.2d 1378, 1383 (9th Cir.1987) (a large expenditure of money does not in itself create legally protectable rights. The test of secondary meaning is the effectiveness of the efforts to create it); American Footwear Corp. v. General Footwear Co., 609 F.2d 655, 663 (2d Cir.1979) (mere presence of extensive advertising does not resolve issue of secondary meaning). 23 39 Similarly, the fact that there was an apparently large consumer demand for Braun's blender does not permit a finding the public necessarily associated the blender design with Braun. Cicena, 900 F.2d at 1552 (strong market demand for a product usually indicates product desirability not secondary meaning). Furthermore, the fact that only a single trade journal published an article about Braun's blender does not add probative strength to Braun's argument. 40 Braun proffered no surveys, quantitative evidence or testimony suggesting the existence of secondary meaning as to the blender design. American Television and Communications Corp. v. American Communications and Television, Inc., 810 F.2d 1546, 1549 (11th Cir.1987) (plaintiff's failure to submit survey evidence of secondary meaning supported finding that none existed); Investacorp, Inc. v. Arabian Investment Banking Corp., 722 F.Supp. 719, 723-24 (S.D.Fla.1989) (plaintiff's failure to provide survey evidence is compelling evidence of no secondary meaning). In light of Braun's failure to offer probative evidence showing secondary meaning, the jury's implicit finding that Braun's blender design acquired secondary meaning was based on speculation and not supported by substantial evidence. As a result, the jury's finding of trade dress infringement as to blender design must be reversed. B. 41 As stated supra, likelihood of confusion is a question of law, reviewed de novo on appeal. Giant Food, 710 F.2d at 1569. Thus, the Court may make an independent evaluation as to whether Waring and Braun's packaging is confusingly similar. We reject the jury's implicit finding that Braun established such likelihood of confusion, and therefore its finding of trade dress infringement as to the packaging must be reversed. 24 42 Indeed, examination of Braun and Waring's respective packaging reveals they are, when viewed as a whole, not confusingly similar. Braun and Waring's packaging, that is their cartons, both show white blenders, positioned vertically, against a white background in conjunction with various food items. 25 However, in all other respects, the cartons share little, if any, similarities. Braun identifies its product as a hand blender in horizontal red letters directly below the brand name Braun and the product named Multipractic in plain black lettering. The name Braun also appears in stylized black lettering on the white background at the bottom of the carton. In contrast, Waring refers to its product by its registered trademark Blendor preceded by the words Hand Held in vertical white lettering on a grey stripe of the front panel that is bordered by a red stripe. Its Waring name appears in logo form in white letters on a red rectangle. All of Waring's products, including its Juice Extractor and Vortex Blendor, share this trade dress, which Waring has used since 1985, that is one full year before the introduction of Braun's blender. 43 In addition, Waring's prominent labelling of the carton with its brand name and trademark logo is probative evidence that the cartons are not confusingly similar. Litton, 728 F.2d at 1446 ([t]he most common and effective means of apprising intending purchasers of the source of goods is a prominent disclosure ... of the manufacturer's or trader's name [and when] that is done, there is no basis for the charge of unfair competition); Bose Corp. v. Linear Design Labs, Inc., 467 F.2d 304, 310 (2d Cir.1972) (there is hardly likelihood of confusion or palming off when the name of the manufacturer is clearly displayed); Black & Decker, Inc. v. North American Philips Corp., 632 F.Supp. 185, 193 (D.Conn.1986) (conspicuous use of well-known Norelco trademark on $20-$40 vacuum cleaner is evidence of no likelihood of confusion). 44 In addition, Braun's failure to proffer survey evidence, empirical studies, or disinterested testimony from consumers or members of the trade as to this issue, suggests that the public is not likely to be confused with respect to source by reason of any resemblance between the cartons. Essence Communications, Inc. v. Singh Industries, Inc., 703 F.Supp. 261, 269 (S.D.N.Y.1988) (plaintiff's failure to provide survey evidence gives rise to inference of no likelihood of confusion); Lever Brothers Co. v. American Bakeries Co., 693 F.2d 251, 258 (2d Cir.1982) (three years of sales without one documented instance of actual confusion warrants inference of no likelihood of confusion).
45 At first blush, it may seem inconsistent that empirical evidence regarding likelihood of confusion is of considerable significance in determining trademark and trade dress infringement, yet it is, as stated in Part II(C), of less significance in determining design patent infringement. However, the difference in weight given to empirical evidence is fully understandable in light of the stark differences between the elements required to show design patent infringement and trademark and trade dress infringement. 46 In particular, as was previously stated in Part V(A), purchasers' likelihood of confusion as to the source of a good is a necessary factor for determining trademark and trade dress infringement. Coach Leatherware, 933 F.2d at 168. To show infringement, the holder of a trademark or trade dress therefore must have progressed to the manufacture and distribution of a purchasable product. As a result, consumer behavior in the marketplace is a highly relevant factor in determining trademark and trade dress infringement. Since surveys and other empirical studies are ordinarily probative evidence of consumer behavior in the marketplace, such evidence has significance in determining trademark and trade dress infringement. 47 In contrast, as suggested in Part II(A), a different quantum of proof applies to design patent infringement, which does not concern itself with the broad issue of consumer behavior in the marketplace. Unette, 785 F.2d at 1029. The single element here required to show design patent infringement involves a much narrower field of inquiry. In short, a design patentee may prove infringement simply by showing that an ordinary observer would be deceived by reason of an accused device's ornamental design. Gorham, 81 U.S. at 528. Therefore, in showing design patent infringement there is ordinarily no compelling need for empirical evidence.
48 The term passing off has been used loosely by courts as a common law basis for liability in several different situations. See J.T. McCarthy, 2 Trademarks and Unfair Competition § 25:1A (2nd ed. 1984). However, as applied to the facts of this case, the parties agree that Waring's liability under the common law doctrine of passing off is contingent on its being liable under section 43(a) of the Lanham Act. See generally Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 109 S.Ct. 971, 103 L.Ed.2d 118 (1989). Thus, to the extent that Braun's trade dress claim must be remanded, so too must its passing off claims. However, to the extent that we have determined that Waring is not liable under section 43(a) of the Lanham Act, it is also not liable under the doctrine of passing off.