Opinion ID: 745484
Heading Depth: 3
Heading Rank: 2

Heading: Unfair Competition Involving Unregistrable Marks

Text: 43 Genesee also alleges that, even if Honey Brown is generic, an injunction is justified to prevent Stroh from engaging in unfair competition. The district court rejected this contention summarily: To establish a claim of unfair competition, plaintiff must demonstrate, inter alia, bad faith on the part of the defendant in appropriating the plaintiff's mark. I note only that plaintiff has failed to establish bad faith, and thus has not established an unfair competition claim. 44 The district court was correct that Genesee's state law claim of unfair competition is not viable without a showing of bad faith. See Jeffrey Milstein, Inc. v. Greger, Lawlor, Roth, Inc., 58 F.3d 27, 34-35 (2d Cir.1995). But a plaintiff may recover for unfair competition in violation of federal law without a showing of bad faith. See Johnson & Johnson v. Carter-Wallace, Inc., 631 F.2d 186, 189 (2d Cir.1980) (noting that § 43(a) of the Lanham Act does not require proof of intent to deceive in order to sustain a claim of unfair competition); Girl Scouts v. Bantam Doubleday Dell Publishing Group, Inc., 808 F.Supp. 1112, 1131 (S.D.N.Y.1992) (Under New York law, common law unfair competition claims closely resemble Lanham Act claims except insofar as the state law claim may require an additional element of bad faith or intent.) (internal quotation marks omitted), aff'd, 996 F.2d 1477 (2d Cir.1993). The lack of bad faith is therefore not dispositive of Genesee's federal unfair competition claim. 45 The fact that Genesee's mark is generic as applied to Stroh's product also does not preclude a finding that Stroh has violated the Lanham Act by engaging in unfair competition. While a mark may be generic and not entitled to trademark protection, [a] claim of unfair competition is not foreclosed. Murphy Door Bed Co. v. Interior Sleep Systems, 874 F.2d 95, 102 (2d Cir.1989). 46 Regardless of whether a term is trademarked, a plaintiff may show that the term name is so associated with its goods that use of the same or similar term by another company constitutes a representation that its goods come from the same source. 47 Courts typically grant relief, injunctive or otherwise, for misrepresentations as to the source of a product where a formerly exclusive trademark is no longer protectible because it has become generic. However, as the Supreme Court's decision in Kellogg Co. v. National Biscuit Co. demonstrates, relief is also available when the misrepresentation of source arises through the use of a phrase (like Swiss Army knife) that is generic ab initio. 48 Forschner Group, Inc. v. Arrow Trading Co., 30 F.3d 348, 358-59 (2d Cir.1994) (citations omitted); see also Metric & Multistandard Components Corp. v. Metric's Inc., 635 F.2d 710, 714 (8th Cir.1980). 49 In Kellogg, the Supreme Court held that, while subsequent producers have the right to use generic product names that have traditionally been associated with one manufacturer, those users have an obligation to use every reasonable means to prevent confusion as to the source of the products. Kellogg, 305 U.S. at 121, 59 S.Ct. at 115. Relying on Kellogg, we have explained that if 50 the consumer associates '[Honey Brown]' with a particular manufacturer, perhaps because that manufacturer enjoyed a de facto (or de jure) monopoly for many years, there is a risk that the consumer may erroneously assume that any product entitled '[Honey Brown]' comes from that manufacturer. A second manufacturer may increase the risk of confusion by, for example, using a similar label, similar packaging, misleading advertisements, or simply by failing to state the product's source.... [W]hen there is a likelihood that the newcomer might thus pass its product off as the original manufacturer's ... a court [may] require the newcomer to distinguish its product or to notify consumers explicitly that its product does not come from the original manufacturer. 51 Forschner, 30 F.3d at 359 (quoting Blinded Veterans Ass'n v. Blinded Am. Veterans Found., 872 F.2d 1035, 1045 (D.C.Cir.1989)) (emphasis in Forschner ). In other words--even though Honey Brown is a generic mark at least as to ales--if Honey Brown is closely associated with Genesee's product, then Stroh's use of those words is permissible only to the extent that such use does not engender a likelihood of confusion as to the source of [Stroh]'s product. Id. at 360. 52 Thus, to recover for unfair competition, Genesee must show: 1) an association of origin by the consumer between the mark and the first user, Forschner Group, Inc. v. Arrow Trading Co., Inc., 904 F.Supp. 1409, 1417 (S.D.N.Y.1995), that is, secondary meaning; and 2) a likelihood of consumer confusion when the mark is applied to the second user's good, id. And Stroh will, nonetheless, escape liability if it has use[d] every reasonable means to prevent confusion as to the source of the products, Kellogg, 305 U.S. at 121, 59 S.Ct. at 115. The district court did not consider whether these factors had been shown. 53 Genesee has, in fact, proffered evidence that might, if believed and not sufficiently countered by Stroh's evidence, support a finding at trial of both secondary meaning 16 and a likelihood of confusion that Stroh has not taken all reasonable steps to prevent. Specifically, Genesee has attempted to show that, intentionally or not, Stroh is marketing its beer in such a way as to lead consumers to believe that they are getting Genesee's product. Cf. Miller Brewing Co. v. Jos. Schlitz Brewing Co., 605 F.2d 990, 997 (7th Cir.1979) (explaining that, notwithstanding the lack of trademark protection for light beer, Miller could have sustained an unfair competition claim if it could have shown: a failure of Schlitz adequately to identify itself as the source of its beer; ... a confusingly similar dress used by Schlitz for its beer, which might result from such factors as the label's style, [or] the relative size of words in the label ...; [or] Schlitz' use of advertising calculated to lead to confusion); American Footwear Corp. v. General Footwear Co., 609 F.2d 655, 662 (2d Cir.1979) (noting that unfair competition liability can arise when a defendant confus[es] the public into mistakenly purchasing the product in the belief that the product is the product of the competitor). 54 Genesee's beer has become the fourth best selling specialty brew in the country, and consumers and bartenders refer to it simply as Honey Brown--a phrase that had apparently never been used to describe a beer before Genesee introduced its product. The words Honey Brown dominate Genesee's labeling and advertising materials, and according to Genesee, consumers expect to get Genesee's product when they order a Honey Brown. 55 Stroh has also chosen to emphasize the words Honey Brown on its label, rather than the words Red River Valley or Honey Brown Ale. Stroh's marketing memoranda to distributors emphasize the need to compete with Genesee's product, and to beat Genesee into certain untapped markets, even though the two products are not, in fact, examples of the same subcategory of beer. And Stroh has arranged to have Safeway Food Stores counter-coupon Genesee's product. (This means that Safeway gives coupons for Red River Valley Honey Brown Ale to any person who purchases JW Dundee's Honey Brown Lager.) Moreover, according to Genesee, many of the restaurants and bars that list Genesee's product simply as Honey Brown on their menus and tap lists--which list brands of beer, not kinds of beer--have switched from Genesee's product to Stroh's less-expensive product without changing their menus. 56 All of this evidence could potentially support a finding that there is a likelihood of confusion and that Stroh has not taken every reasonable precaution to prevent confusion or the practice of deception in the sale of its product. Kellogg, 305 U.S. at 122, 59 S.Ct. at 115. If Genesee can establish this at trial, along with secondary meaning, it may be granted an injunctive remedy that, while allowing Stroh to continue to market its beer and sell it as a honey brown ale, would require Stroh to make more of an effort to ensure that its product is not confused with Genesee's. 57 Nevertheless, the district court did not err in denying the preliminary injunction. For the preliminary relief that Genesee requested--an injunction forbidding Stroh from using the words Honey Brown on its product--is inappropriate in a claim of unfair competition with respect to a generic mark. Where a generic mark is involved, [t]he relief granted should go only so far as to alleviate the source confusion caused by [Stroh] and no further. Forschner, 904 F.Supp. at 1428. While a court may therefore require the newcomer to distinguish its product or to notify consumers explicitly that its product does not come from the original manufacturer, Forschner, 30 F.3d at 359 (emphasis altered, internal quotation marks omitted), or otherwise to use every reasonable means to prevent confusion, Kellogg, 305 U.S. at 121, 59 S.Ct. at 115, it may not prevent the defendant from using the plaintiff's mark altogether, see id. As such, even if Genesee was likely to prevail on this claim, the preliminary injunction sought could not have been granted. Hence, the district court did not abuse its discretion in denying it.