Opinion ID: 746222
Heading Depth: 2
Heading Rank: 1

Heading: The Color Red

Text: 22 While the district court on remand found that Forschner was not eligible for trademark protection, the district court did find, and we agree, that Arrow violated § 43(a) of the Lanham Act and New York common law by engaging in unfair competition. On appeal, Forschner argues that because the district court found, based on a multiplicity of similarities including the knife's red color, the trade dress of Arrow's product substantially increased the risk of consumer confusion as to its source, the injunction issued should have enjoined Arrow from using the color red on its multifunction knife in conjunction with the phrase Swiss Army knife. According to Forschner, the district court erred in declining to accord trade dress protection under federal and New York common law to the use of the color red on its multifunction pocketknives. We disagree. 23 The law of trademarks and unfair competition is shaped primarily by two competing public policies--namely, preventing consumer confusion on the one hand while promoting and rewarding healthy competition on the other. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 767-68, 112 S.Ct. 2753, 2756-57, 120 L.Ed.2d 615 (1992). See generally 1 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition §§ 1:1; 2:1 (4th ed.1997). With respect to the federal law of unfair competition, Section 43(a)(1) of the Lanham Act provides protection for unregistered trademarks and trade dress by holding liable in a civil action: 24 Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which-- 25 (A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.... 26 15 U.S.C. § 1125(a)(1)(A). 27 This Section provides a statutory remedy to a party injured by a competitor's false designation of origin of its product, whether or not the party has secured a federally registered trademark. See L. & J.G. Stickley, Inc. v. Canal Dover Furniture Co., 79 F.3d 258, 262 (2d Cir.1996). Protection under this provision extends not only to the name of the product at issue, but may also extend to the product's trade dress which involves the total image and overall appearance of the good. Compare Coach Leatherware Co. v. AnnTaylor, Inc., 933 F.2d 162, 168 (2d Cir.1991) (Section 43(a) extends protection to a product's 'trade dress'--the total image of a good as defined by its overall composition and design, including size, shape, color, texture, and graphics.), with Landscape Forms, Inc. v. Columbia Cascade Co., 113 F.3d 373, 380 (2d Cir.1997) (courts have exercised particular 'caution' when extending protection to product designs). 28 To prevail in an action for trade dress infringement under § 43(a) of the Lanham Act, a plaintiff must demonstrate that (1) its trade dress is distinctive and (2) there exists a likelihood of confusion between its product and the alleged infringer's product. See Tough Traveler, Ltd. v. Outbound Prods., 60 F.3d 964, 967 (2d Cir.1995). Functional packaging and product design are not protected under § 43(a) of the Lanham Act, and functionality may be raised as a defense to a trade dress infringement action. See Coach Leatherware Co., 933 F.2d at 171. 29
30 The threshold issue in the case before us is whether the trade dress of Forschner's Swiss Army knife, in particular the red color as applied to its multipurpose pocketknife, identifies the particular source of the product or distinguishes it from other products. See Two Pesos, Inc., 505 U.S. at 769, 112 S.Ct. at 2757-58. A trade dress may identify the producer in one of two ways: if the good is inherently distinctive or if the product has acquired distinctiveness to the consuming public through a secondary meaning associating the trade dress with the source of the good. See id.; Paddington Corp. v. Attiki Importers & Distribs., Inc., 996 F.2d 577, 582-83 (2d Cir.1993). 31 Under the rubric of inherent distinctiveness, the focus of the inquiry is whether or not the trade dress of a product serves primarily as an indication of origin, such that consumers will readily rely on it to distinguish the product from those of competing manufacturers. See L. & J.G. Stickley, Inc., 79 F.3d at 262; Paddington Corp., 996 F.2d at 585. Thus, a trade dress is inherently distinctive if its intrinsic nature serves to identify a particular source of a product. Two Pesos, Inc., 505 U.S. at 768, 112 S.Ct. at 2757. 32 As an element of trade dress, however, we observe that color is never inherently distinctive, but is capable of identifying a product's source and may be a protected trademark only when it has attained secondary meaning and has come to be associated in the consuming public's mind with a single source of origin. See Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 163, 115 S.Ct. 1300, 1303, 131 L.Ed.2d 248 (1995). 33 Association of origin reflects the goodwill a manufacturer has built up in its product such that prospective consumers associate this product feature with the producer rather than with the product itself. See Inwood Lab., Inc. v. Ives Lab., Inc., 456 U.S. 844, 851 n. 11, 102 S.Ct. 2182, 2187 n. 11, 72 L.Ed.2d 606 (1982). In a case involving secondary meaning, the crucial question is whether the public is moved in any degree to buy an article because of its source. American Footwear Corp. v. General Footwear Co., 609 F.2d 655, 663 (2d Cir.1979); see Coach Leatherware Co., 933 F.2d at 168. 34 With these principles in mind, we find that Forschner has failed to establish that the color red on the handles of Forschner's multifunction pocketknife has acquired secondary meaning. The use of the color red on handles of multifunction pocketknives does not indicate in the minds of the public a single source of origin in Victorinox. The record indicates that for nearly forty years, at least two different and competing Swiss companies, Victorinox and Wenger, have manufactured Swiss Army knives with red handles and the cross-and-shield logos for distribution in the United States. For nearly the same length of time, an American company, Colonial, has marketed a multifunction pocketknife with red handles and a two bar cross design under its SWISS MASTER trademark, and the purchasing public has referred to its product as a Swiss Army knife. As such, the trade dress consisting of the color red as applied to multifunction pocketknives does not serve to primarily designate Forschner as the single source of the product nor does it serve to distinguish Forschner's product from those of its competitors. 35 Although the failure to establish that Forschner's trade dress is distinctive forecloses a claim of unfair competition under § 43(a) of the Lanham Act, this does not conclude our inquiry. Unlike unfair competition claims brought under federal law, a showing of distinctiveness is not required to prove unfair competition under New York State common law. 36
37 Under New York common law, the essence of unfair competition is the bad faith misappropriation of the labors and expenditures of another, likely to cause confusion or to deceive purchasers as to the origin of the goods. Jeffrey Milstein, Inc. v. Greger, Lawlor, Roth, Inc., 58 F.3d 27, 34 (2d Cir.1995) (quotations and citations omitted). A likelihood of confusion exists when consumers are likely to assume that a product is associated with a manufacturer other than its actual source because of similarities between the related goods. See id. at 34. 38 Significantly, we held in our previous ruling that Arrow's use of the phrase Swiss Army knife is permissible only to the extent that such use does not engender a likelihood of confusion as to the source of Arrow's product. Forschner, 30 F.3d at 360; see also Liquid Controls Corp. v. Liquid Control Corp., 802 F.2d 934, 939 (7th Cir.1986); Metric & Multistandard Components Corp. v. Metric's, Inc., 635 F.2d 710, 714 (8th Cir.1980). Accordingly, while Arrow may use the phrase Swiss Army knife to denote its multifunction pocketknives, it may be enjoined from passing its product off as its competitor's. See Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 119, 59 S.Ct. 109, 113-14, 83 L.Ed. 73 (1938); see also KingSeeley Thermos Co. v. Aladdin Indus., Inc., 321 F.2d 577, 581 (2d Cir.1963). 39 In examining whether there is a likelihood of confusion, we are not so much concerned with dissecting the competing trade dress and enumerating discrete points of similarity, but rather we focus on the overall image created. See Merriam-Webster, Inc. v. Random House, Inc., 35 F.3d 65, 70-72 (2d Cir.1994). As the district court found, the combination of Arrow's use of the phrase Swiss Army knife to describe its multifunction knife and its use of a similar trade dress (consisting of the cross-and-shield logo and red handles) added up to an actionable cumulative absence of differentiation. Forschner, 904 F.Supp. at 1424 (internal quotations and citations omitted). 40 To alleviate the source of confusion caused by Arrow and to protect Forschner from unfair competition without unnecessarily burdening Arrow, the district court fashioned an injunction requiring, inter alia, that Arrow clearly designate its origin in the same size or presentation as the type used for the phrase Swiss Army knife on its multifunction knives. Forschner, 904 F.Supp. at 1428. While the district court initially observed that changing the color of its knife to a color not used by Forschner was another means to distinguish Arrow's product from Forschner's knives, the district court declined to issue an injunction against the use of the color red. Id. 41 The focal point of Forschner's appeal is the allegedly predatory use of the color red on Arrow's multifunction knives. In order to establish that a likelihood of confusion remains unless the injunction is expanded to prohibit Arrow from using the color red, Forschner would have to demonstrate that prospective consumers--(1) seeing a display of multifunction pocketknives; (2) with red handles (and a cross-and-shield insignia); (3) and with the phrase Arrow Swiss Army Knife or Swiss Army Knife by Arrow or Swiss Army Knife from Arrow Trading Co. embossed on the knife--would likely be misled into purchasing an Arrow knife instead of a Forschner Swiss Army knife. Such a scenario appears unlikely. 42 The color red does not act as a symbol to distinguish Forschner's knives from its competitors, nor does it identify Forschner as the source because, as discussed above, there are numerous companies that manufacture red multifunction pocketknives. In addition, even assuming arguendo the identical appearances of two multifunction pocketknives, such designs, particularly the use of the color red, are insufficient by themselves to show confusion as to source as a matter of law. A trade dress claimant's right is solely in protecting its identity as the originator of its product. See Restatement (Third) of Unfair Competition § 16 cmt. b (1995). 43 A careful review of the law of unfair competition and the record in this case satisfies us that the district court was within its discretion and devised an appropriate injunction. The district court's injunction precludes Arrow from using the phrase Swiss Army knife unless it adds its name to its designation of its knife with equal prominence. It cannot be said that the district court abused its discretion in concluding that this restriction would distinguish Arrow's knife from the Forschner product and thereby alleviate the risk of confusion as to source of origin. See Kellogg Co., 305 U.S. at 120-21, 59 S.Ct. at 114-15 (finding prominent display in bold script of Kellogg name on packages of shredded wheat helped distinguish its product); Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1045-46 (2d Cir.1992) (finding despite similar trade dress elements, the prominence of the trade names on the two packages weighs heavily against a finding of consumer confusion). 44 Moreover, to the extent the public has come to view red handles as a familiar feature of Swiss Army knives, we find that because foreclosing Arrow's use of the color red would significantly restrict the range of alternative colors necessary for Arrow and other competitors to compete effectively in the Swiss Army knife market, the district court did not abuse its discretion. See Wallace Int'l Silversmiths, Inc. v. Godinger Silver Art Co., 916 F.2d 76, 81 (2d Cir.1990) ([W]here an ornamental feature is claimed as a trademark and trademark protection would significantly hinder competition by limiting the range of adequate alternative designs, the aesthetic functionality doctrine denies such protection.). 45 In summary, by striking a reasonable balance between Arrow's and Forschner's conflicting interests, focusing upon hindrances to legitimate competition as well as assuring sufficient product differentiation to avoid source confusion, the district court did not abuse its discretion in devising an appropriate injunction. 46