Opinion ID: 691965
Heading Depth: 3
Heading Rank: 6

Heading: Marketing Considerations (Scott Factors 7-10)

Text: 76 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. 77 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. 78 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. 79 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. 80 C. THE BALANCE OF THE MODIFIED SCOTT FACTORS HERE 81 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. 82 1. The Governing Standard: Likelihood of Confusion The district court held that 83 [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. 84 CL 56 (citations omitted). As we explained above, see supra at 199-201, this standard is inapplicable in product configuration cases. We decline, however, to reverse on this basis. 85 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. 86 2. Viability of the District Court's Similarity Fact Finding 87 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 trademark/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.). 88 Despite the appreciable differences between the valves' appearances, see supra at 195-96, 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 202-03, 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. 89 3. Intent, Competitive Proximity, and Likelihood of Confusion 90 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 trademarks 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 206. 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 196; infra at 213-14, and thus Bifold's intent should not be considered. 91 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 208-09. 92 4. Strength of the Trade Dress and Likelihood of Confusion 93 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 203-04. 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 94 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. 95
96 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 mind (heightened by Carr's former relationship with Versa) as to the relationship between Versa and Bifold. 97 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. 98 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. 99 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. 14 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. 15 100
101 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, 16 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. 17 102
103 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. 104 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. 105
106 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. 107 6. Labeling, Care Expected of Consumers, and Likelihood of Confusion 108 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. 109 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. 110 a. Bifold's Extensive Labeling Precludes Likelihood of Confusion 111 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 202-04. The facts found by the district court clearly show that Bifold took entirely reasonable and adequate steps to prevent confusion. 112 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. 113 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. 114 b. The Manner in Which the Valves Are Sold Virtually Precludes Likelihood of Confusion 115 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: 116 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. 117 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. 118 The appearance of these valves simply plays no role in the ordering process, which instead requires the use of detailed technical specifications and lengthy, manufacturer-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 119 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. 18 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. 120 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 conclude that the district court's contrary finding was clearly erroneous. 121