Court Opinion

ID: 2964046
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:19:34.279355+00
Date Added: 2024-06-11T15:01:33.684680
License: Public Domain

USCA1 Opinion

	

                            United States Court of Appeals
                            United States Court of Appeals
                                For the First Circuit
                                For the First Circuit
                                 ____________________

        No. 95-1975

                                TEC ENGINEERING CORP.,

                                 Plaintiff, Appellee,

                                          v.

                           BUDGET MOLDERS SUPPLY, INC. AND
                           PLASTIC PROCESS EQUIPMENT, INC.,

                               Defendants, Appellants.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                   [Hon. Nathaniel M. Gorton, U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                                Cyr, Boudin and Stahl,
                                   Circuit Judges.
                                   ______________

                                 ____________________

            Louis  M. Ciavarra  with whom  Barry  A.  Bachrach and  Bowditch &
            __________________             ___________________      __________
        Dewey were on brief for appellants.
        _____
            James C.  Donnelly,  Jr. with  whom  Charles  B. Straus,  III  and
            ________________________             ________________________
        Mirick, O'Connell, Demallie & Lougee were on brief for appellee.
        ____________________________________

                                 ____________________

                                    April 30, 1996
                                 ____________________

                      STAHL, Circuit Judge.  Budget Molders Supply, Inc.,
                      STAHL, Circuit Judge.
                             _____________

            and Plastic Process Equipment, Inc.,  (collectively "Budget")

            appeal  from   a  preliminary  order   enjoining  them   from

            manufacturing, marketing or  distributing certain  industrial

            conveyors  alleged  to  be confusingly  similar  to conveyors

            manufactured  and sold  by  appellee,  TEC Engineering  Corp.

            ("TEC").  Because  the district court failed to make findings

            of fact  and  conclusions of  law sufficient  to support  its

            decision as required by Fed. R. Civ. P.  52(a), we modify the

            injunction and remand for further proceedings.

                                          I.
                                          I.
                                          __

                                     Background1
                                     Background
                                     __________

                      TEC manufactures  a series  of conveyors  under the

            model  name "Ultraline,"  which it  markets primarily  to the

            plastics processing industry.   The  conveyors are  generally

            used  to transport lightweight  plastic products from molding

            machines in  which  they are  formed  to other  machines  for

            packaging.  TEC sells  the Ultraline conveyors under the  TEC

            name through independent sales representatives.  In addition,

            TEC authorizes an independent distributor,  Injection Molders

            Supply,  Inc.   ("IMS"),  to  advertise,  promote   and  sell

                                
            ____________________

            1.  Our recitation of the  facts is hampered by the  district
            court's  failure   to  make  any  findings   in  issuing  the
            injunction.    To  provide  context, we  draw  the  following
            statement  from what  we perceive  as essentially  undisputed
            facts.   The statement is  not intended to  be binding on the
            district court.  

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                                          2

            Ultraline conveyors under the IMS tradename through IMS's own

            product   catalogues.    In   1994,  combined   domestic  and

            international  sales of  Ultraline  conveyors exceeded  2,000

            units, generating revenues of approximately $3 million.

                      Budget  has competed  with TEC  and  other conveyor

            manufacturers in the plastics  processing industry market for

            over five  years.   Budget markets its  conveyors exclusively
                                

            through direct-catalogue sales.   About January 1995,  Budget

            decided  to   modify  the  design  of  its  primary  line  of

            conveyors.    Consequently, Budget  soon  began  to market  a

            redesigned conveyor  under the  "Supraline"  model name  that

            closely resembled  TEC's Ultraline  conveyor.  Budget  labels

            each Supraline conveyor with the name "Budget Molders Supply,

            Inc."  in several  different places  on the  machine.   While

            these  Budget labels  cannot be  seen in  every advertisement

            photograph of  a Supraline  conveyor included in  the record,

            each Supraline advertisement prominently features  the Budget

            name (although not necessarily on the pictured conveyor), and

            several include the statement "Made in the USA by Budget."

                      It   appears  largely   undisputed  that   the  two

            conveyors, when  placed side by side,  are strikingly similar

            in  appearance.  Many of  the similarities shared  by the two

            machines,  however,  are  to  some  extent  functional.    In

            addition,  the  record  includes several  advertisements  for

            conveyors  sold by companies other than TEC or Budget.  These

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                                          3

            conveyors,   at  least   as   they  are   presented  in   the

            advertisements, also appear somewhat similar to the Ultraline

            and  Supraline  conveyors.     Moreover,  apparently  several

            companies  other than  TEC or  Budget incorporate  the suffix

            "line"  in the  model  names of  their respective  conveyors.

            Budget   notes  that,   in   addition   to  "Ultraline"   and

            "Supraline," other model names  for conveyors marketed to the

            plastics processing industry  include "A-line,"  "Flex-line,"

            "Slim-line," "Omni-line," and "Direct-line."

                      On  July  12, 1995,  TEC  brought  this action  for

            trademark infringement under section 43(a) of the Lanham Act,

            15  U.S.C.   1125(a).   In its complaint,  TEC alleges, inter
                                                                    _____

            alia,  that the trade dress  of its Ultraline  conveyors is a
            ____

            well-established mark in the industry and that, by developing

            and  marketing  its Supraline  conveyors, Budget  intended to

            exploit the goodwill  associated with that  trade dress.   On

            July 21, 1995,  the district  court held a  hearing on  TEC's

            request for  preliminary injunctive relief.   At the hearing,

            an Ultraline and a Supraline conveyor  were made available to

            the district court for review.

                      At the  close of  the hearing, the  court indicated

            that "it  believed the products are  confusingly similar" and

            that,  therefore, it  was  "inclined to  enter  some sort  of

            injunctive relief."  Nonetheless, the court declined to enter

            a ruling  at that time and  urged the parties to  resolve the

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                                          4

            matter  themselves.    Eventually,  on August  1,  1995,  the

            districtcourt enteredan orderenjoiningBudget from,inter alia,
                                                              _____ ____

                      manufacturing,  distributing,  promoting,
                      advertising, and/or selling:

                           1)    the horizontal,  inclined
                           and  variable  inclined  Budget
                           Supraline Conveyors; and
                           2)  any other conveyor which is
                           likely  to  cause confusion  or
                           mistake  in  the  minds of  the
                           public or to deceive purchasers
                           into   the   belief  that   the
                           defendant's   goods   are   the
                           plaintiff's   goods    or   are
                           affiliated with or sponsored by
                           the plaintiff.2 

                      Budget now appeals from this order.

                                         II.
                                         II.
                                         ___

                                      Discussion
                                      Discussion
                                      __________

                      In  ruling on  a preliminary  injunction motion,  a

            district  court  must  ask   whether  the  moving  party  has

            established  that  (1) it  has  a  substantial likelihood  of

            success  on   the  merits,  (2)  there   exists,  absent  the

            injunction, a  significant risk of irreparable  harm, (3) the

            balance of hardships tilts in its favor, and (4) granting the

            injunction will  not negatively  affect the  public interest.

            See, e.g.,  Hypertherm, Inc.  v. Precision Prods.,  Inc., 832
            ___  ____   ________________     _______________________

            F.2d 697, 699 n.2 (1st Cir. 1987).  Though the district court

                                
            ____________________

            2.  The order  also  enjoins Budget  "from  producing  and/or
            distributing .  . . any advertising  or promotional materials
            which  depict the  Supraline  Conveyor or  any other  product
            which is confusingly similar to the Ultraline Conveyor."

                                         -5-
                                          5

            enjoys  considerable  discretion in  applying this  test, its

            decision  to grant or  deny a preliminary  injunction must be

            supported  by adequate  findings of  fact and  conclusions of

            law.    See Fed.  R.  Civ. P.  52(a);  Knapp  Shoes, Inc.  v.
                    ___                            __________________

            Sylvania Shoe Mfg. Corp., 15 F.3d 1222, 1228 (1st Cir. 1994).
            ________________________

                      The  requirements of  Rule  52(a)  are intended  to

            assure   that   the   district   court    gives   appropriate

            consideration to all essential relevant factors  and provides

            an  adequate basis  for  meaningful appellate  review of  its

            decision.  See  generally 9A  Charles A. Wright  & Arthur  R.
                       ___  _________

            Miller, Federal Practice and Procedure    2751, at 478-80 (2d
                    ______________________________

            ed. 1994).   The rule, however, is not intended to change the

            preliminary nature  of the  proceeding; in  the context  of a

            preliminary injunction motion,  the district court's findings

            need not be overly detailed, and  they do not bind the  court

            in subsequent proceedings.  See Aoude v. Mobil Oil Corp., 862
                                        ___ _____    _______________

            F.2d 890, 895 (1st Cir. 1988).  Moreover, the absence of Rule

            52(a)  findings  and conclusions  will  not be  fatal  in all

            cases.   We may overlook the defect, if our own review of the

            record substantially  eliminates all  reasonable doubt  as to

            the  basis  of  the  district  court's  decision.    See  New
                                                                 ___  ___

            Hampshire Motor Transp. Assoc. v. Flynn, 751 F.2d 43, 47 (1st
            ______________________________    _____

            Cir. 1984)  (citing Pullman-Standard v. Swint,  456 U.S. 273,
                                ________________    _____

            292 (1982)); Conservation Law Found., Inc. v. Busey, Nos. 92-
                         _____________________________    _____

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                                          6

            1335, 1464, 95-1019, 1020, 1047, 1048, slip op. at 48-49 (1st

            Cir. April  2, 1996)  (failure to adhere  to requirements  of

            Rule  52(a) is  harmless  error where  undisputed documentary

            evidence  combined with district court's extensive discussion

            of  other  findings  and  conclusions   adequately  clarifies

            otherwise unexplained finding of irreparable harm).

                      In this  case, the district court  made no explicit

            findings of  fact  or conclusions  of law  in granting  TEC's

            request  for a  preliminary  injunction.   In its  three-page

            written order, the court merely recited the traditional four-

            prong preliminary injunction  test and summarily  stated that

            TEC had met its burden in establishing it.  The transcript of

            the relatively brief hearing on TEC's motion, provides little

            further  insight into  the district  court's reasoning.   The

            total  extent  of the  court's  oral  findings following  the

            hearing is limited to its statement that "it believed the two

            products were confusingly similar."   In the context of  this

            case, such  minimal findings do not provide an adequate basis

            for appellate review.

                      Moreover, our  own review of the  relatively sparse

            record does not allow us to affirm the district court's order

            in the absence of Rule 52(a) findings.  Suffice it to say, we

            believe  that the  pertinent issues  are close  and that  the

            evidence  in the record does  not compel a  ruling for either

            side.  Indeed,  in a case  such as this  one, where a  proper

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                                          7

            evaluation  of  the  plaintiff's  claim  requires  a  careful

            balancing  of  a  number  of nondispositive  factors  by  the

            district  court, the  absence of  any subsidiary  findings of

            fact or  conclusions of  law renders it  virtually impossible

            for this court to do anything  but speculate as to the  basis

            of the district court's ruling.  Accordingly, because  we are

            unable to  engage in  meaningful appellate review,  we remand

            the case to the  district court for further findings  of fact

            and conclusions of law.  See Allied Mktg.  Group, Inc. v. CDL
                                     ___ _________________________    ___

            Mktg., Inc., 878 F.2d 806, 813-14 (5th Cir. 1989) (remand for
            ___________

            findings in trade dress infringement action); Inverness Corp.
                                                          _______________

            v. Whitehall Labs., 819 F.2d 48, 50-51 (2d Cir. 1987) (same);
               _______________

            cf.  Knapp Shoes,  15 F.3d at  1228-29 (decision  to dissolve
            ___  ___________

            preliminary injunction in unfair competition case vacated for

            lack of detailed findings).   On  remand, the  district court

            will have to apply  the four-part preliminary injunction test

            and  set forth the  basis for its  ruling on each  prong.  In

            this case,  TEC alleges that Budget  has impermissibly copied

            the trade dress  of its  Ultraline conveyor  in violation  of

            section  43(a) of the  Lanham Act, 15  U.S.C.    1125(a).  To

            establish  such a  violation,  TEC must  prove  (1) that  its

            design is inherently distinctive  or has acquired a secondary

            meaning, and (2) that there  is a likelihood that prospective

            purchasers  of conveyors will be confused as to the source of

            the Budget conveyor.   See  Two Pesos, Inc.  v. Taco  Cabana,
                                   ___  _______________     _____________

                                         -8-
                                          8

            Inc., 505 U.S. 763, 769 (1992); Mana Prods., Inc. v. Columbia
            ____                            _________________    ________

            Cosmetics  Mfg., Inc.,  65 F.3d  1063,  1068 (2d  Cir. 1995);
            _____________________

            Duraco Prods.,  Inc. v. Joy  Plastics Enters., Ltd.,  40 F.3d
            ____________________    ___________________________

            1431, 1439 (3d  Cir. 1994).   Whether a violation  ultimately

            exists will  also depend on  the functionality of  the copied

            design.  See  Two Pesos,  505 U.S.  at 769.3   In  addressing
                     ___  _________

            TEC's likelihood  of success, the district  court should make

            subsidiary findings of fact and conclusions of law sufficient

            to  explain its  evaluation of  the evidence with  respect to

            each of these three factors.

                      Furthermore, we think  that on remand  the district

            court  should also  give specific  consideration  to Budget's

            claim that,  even if the injunction was  rightly entered, the

            second  paragraph is  overbroad.   Similar language  has been

            disapproved in  John H. Harland  Co. v. Clarke  Checks, Inc.,
                            ____________________    ____________________

            711  F.2d  966, 984-85  (11th  Cir.  1983).   See  also 1  J.
                                                          ___  ____

            McCarthy,  Trademarks  and  Unfair  Competition    8.01[1][c]
                       ____________________________________

            (1995).  There is no compelling reason for us to resolve  the

                                
            ____________________

            3.  We find it unnecessary to decide at this juncture whether
            functionality  is an element  of the plaintiff's  claim or an
            affirmative  defense  to be  raised  by the  defendant.   See
                                                                      ___
            Fisher Stoves,  Inc. v.  All Nighter  Stove Works,  Inc., 626
            ____________________     _______________________________
            F.2d  193,  196  (1st  Cir.  1980)  (assuming  arguendo  that
                                                           ________
            defendant bears  burden to  prove functionality); see  also 3
                                                              ___  ____
            Louis Altman, Callman  on Unfair  Competition Trademarks  and
                          _______________________________________________
            Monopolies     19.33  (4th  ed. 1994)  (discussing  split  in
            __________
            circuits on whether functionality is an affirmative defense).
            In either event,  we think it  is a factor that  the district
            court   should  consider   in   ruling  on   the  preliminary
            injunction.

                                         -9-
                                          9

            issue  at this time, and we express  no view on the merits of

            this overbreadth claim.

                                         III.
                                         III.
                                         ____

                                      Conclusion
                                      Conclusion
                                      __________

                      For the  foregoing reasons,  we remand the  case to

            the  district   court  for  further  findings   of  fact  and

            conclusions of  law consistent  with this  opinion.  For  the

            moment,  we leave  the preliminary  injunction in  place, but

            modify  the order  such that  the injunction will  expire two

            months  from the  issuance  of this  court's mandate,  absent

            further  action by the district court.  See Allied Mktg., 878
                                                    ___ ____________

            F.2d at 814.

                      So ordered.
                      So ordered.
                      ___________

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