Court Opinion

ID: 3000179
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:02:01.831094+00
Date Added: 2024-06-11T15:03:21.565081
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 06-2009
CUSTOM VEHICLES, INC.,
                                                Plaintiff-Appellant,
                                 v.

FOREST RIVER, INC.,
                                               Defendant-Appellee.
                          ____________
             Appeal from the United States District Court
      for the Northern District of Indiana, South Bend Division.
          No. 3:04 CV 771—Robert L. Miller, Jr., Chief Judge.
                          ____________
   ARGUED DECEMBER 8, 2006—DECIDED FEBRUARY 7, 2007
                          ____________

  Before EASTERBROOK, Chief Judge, and POSNER and RIPPLE,
Circuit Judges.
  POSNER, Circuit Judge. Custom Vehicles sued Forest
River for trademark infringement, lost on summary
judgment, and appeals. In 1999 Custom (actually a prede-
cessor, but we can ignore that detail) had created a prod-
uct that it called “Work-N-Play.” It was a van the interior
of which could be converted by the owner in about an hour
from a mobile office to a camper, or vice versa, so that he
could, in Custom Vehicles’ words, “work out of it through
the week” and “play out of it on the weekends.” Hence the
name, which Custom Vehicles first registered with the
2                                                  No. 06-2009

Patent and Trademark Office in 2000 as an “intent to use”
trademark—meaning that it would be used in commerce,
in a sense we explain later in this opinion, within six
months. 15 U.S.C. §§ 1051(b), (d); WarnerVision Entertain-
ment Inc. v. Empire of Carolina, Inc., 101 F.3d 259, 260 (2d Cir.
1996).
  Custom Vehicles sold its first van—though not under
the “Work-N-Play” name—that year. The following year
Forest River, a much larger company, decided to build a
towed van with a ramp door at the back and space inside
for a repair shop so that the van’s owner could both
transport his motorcycle or snowmobile and repair it
without taking it to a repair shop. Vans of this sort are
called “toy trailers,” because motorcycles, snowmobiles,
and the like are referred to by aficionados as “adult toys.”
Forest River called its new product “Work and Play,” a
name as apt to its dual use as to Custom Vehicles’.
   Forest River began selling the vans in 2002, and by 2004
their annual sales exceeded $10 million. Meanwhile,
Custom Vehicles sold only one other “Work-N-Play”
van—its demo model, which it sold to a family member
of Custom Vehicles’ owner for $1,000—until 2004, when
it sold six more vans. Those were its first bona fide sales
of vans under the “Work-N-Play” mark, since its first
sale had not been under that name and the second sale,
to a relative for roughly 2.5 percent of the van’s normal
sales price, was not a commercially meaningful sale.
  Both Custom Vehicles and Forest River promoted
their respective products at recreational-vehicle trade
shows. We may assume without having to decide that the
products are sufficiently alike that if “Work-N-Play” is a
valid trademark, Forest River’s use of “Work and Play” as
the name of its van is potentially infringing, though even
No. 06-2009                                                3

if the trademark is valid, Custom Vehicles, to prevail in an
infringement suit, would have to prove that Forest River’s
use of it would be likely to deceive or confuse. 15 U.S.C.
§ 1114(1)(a); Sullivan v. CBS Corp., 385 F.3d 772, 775-77
(7th Cir. 2004); 4 Thomas J. McCarthy, McCarthy on Trade-
marks and Unfair Competition § 23:1 (4th ed. 1996).
  “Work-N-Play” is what in trademark law is called a
“descriptive” mark. That is, it does more than merely name
a brand; it describes the product category to which the
brand belongs (so Maxwell House is a brand, coffee the
product), in this case vans usable both for work and for
play. “Holiday Inn,” “All Bran,” and “American Girl” are
familiar examples of descriptive marks. A descriptive
mark is not a complete description, obviously, but it
picks out a product characteristic that figures prominently
in the consumer’s decision whether to buy the product or
service in question.
  A seller must not be permitted to appropriate as the
name of its brand a term by which the public knows the
product category to which the brand belongs, for that
would make it difficult for other sellers of the same prod-
uct to describe their brands, and this would impair com-
petition. Hence a descriptive mark cannot be registered,
15 U.S.C. 1052(e); Park ‘N Fly, Inc. v. Dollar Park & Fly,
Inc., 469 U.S. 189, 193-94 (1985); Mil-Mar Shoe Co. v. Shonac
Corp., 75 F.3d 1153, 1157 (7th Cir. 1996)—with an important
exception. In time, a term that originally was descriptive
may come to signify to consumers a single brand. A new
product may require a descriptive name to introduce
consumers to it, but if the product catches on, the name
may come to be uniquely associated with the original
seller, and another term may come into use to describe the
product. For example, “All Bran” came to mean not any all-
4                                                   No. 06-2009

bran cereal but a particular brand of all-bran cereal. Once
this happens, the term can be appropriated as a trade-
mark because it has come to denote a single brand, not
the entire product, so that its use by other sellers of the
product would confuse consumers about the source of
what they were buying. In trademark parlance the descrip-
tive mark will have acquired “secondary meaning” and
now can be enforced against sellers that use the term or a
confusingly similar variant. Park ‘N Fly, Inc. v. Dollar Park
& Fly, Inc., supra, 469 U.S. at 194; Peaceable Planet, Inc. v. Ty,
Inc., 362 F.3d 986, 988 (7th Cir. 2004); Blau Plumbing, Inc. v.
S.O.S. Fix-It, Inc., 781 F.2d 604, 609 (7th Cir. 1986); Aber-
crombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9-10
(2d Cir. 1976); see 15 U.S.C. § 1052(f).
   So until and unless “Work-N-Play” achieved secondary
meaning as the name of Custom Vehicles’ product, it
could not be a legally protected trademark. And even if
it could be, its use by another firm would not infringe
because, unless Custom Vehicles’ descriptive mark had
achieved secondary meaning, a consumer would not
associate the name with Custom Vehicles and so could not
be confused if someone else used the name. 2 McCarthy
on Trademarks and Unfair Competition, supra, § 15:11. “[I]f
there is no secondary meaning, there is no mark to protect
and confusion is not possible.” Id.
  Forest River could in that event, by dint of heavy ad-
vertising and a large sales volume, acquire secondary
meaning for its use of the name first chosen by Custom
Vehicles. This is the case of “reverse passing off,” where,
as we explained in Peaceable Planet, Inc. v. Ty, Inc., supra,
362 F.3d at 987, “the plaintiff complains that the defendant
is trying to pass off the plaintiff’s product as the defen-
dant’s,” perhaps in order “to obliterate the plaintiff’s
No. 06-2009                                                 5

corporate identity and prevent him from entering new
markets, where the defendant, having appropriated the
plaintiff’s trademark, would claim that the plaintiff was
the infringer.” Another name for this phenomenon is
“reverse confusion,” which “exists when a junior user
uses its size and market penetration to overwhelm the
senior, but smaller, user. The ‘senior user’ [that would be
Custom Vehicles in this case] is the first to adopt and use
a mark anywhere in the country. The ‘junior user’ [Forest
River in this case] is the second user, regardless of wheth-
er it adopts and uses a mark in a geographically remote
location. Reverse confusion doctrine protects the senior
user’s control of its mark and the goodwill created by
the mark from a junior user’s employment of the mark,
and protects the public from being deceived into believ-
ing that the senior user’s product emanates from, is
connected to, or is sponsored by the junior user.” Lucent
Information Management, Inc. v. Lucent Technologies, Inc., 186
F.3d 311, 316 (3d Cir. 1999). That may have happened in
the present case—prospective buyers who approached
Custom Vehicles at recreational-vehicle trade shows
thought when they saw the “Work-N-Play” brand name
that Custom Vehicles was affiliated with Forest River.
  But Forest River’s swamping of Custom Vehicles’
marketing efforts infringes only if “Work-N-Play” is a
legally protected trademark; and it is difficult, maybe
impossible, for a small seller of an unpopular brand—a
seller who has negligible sales—to acquire secondary
meaning for its brand name. Such a seller is better off
adopting a fanciful or arbitrary mark, which is enforce-
able without proof of secondary meaning. When Forest
River launched its “Work and Play” van in 2002, Custom
Vehicles’ predecessor had made only one commercial
6                                             No. 06-2009

sale, and that sale wasn’t even made under the name
“Work-N-Play.” Few consumers could have thought that
“Work and Play” designated Custom Vehicles’ brand
rather than an indefinitely larger set of products usable
for both work and recreation.
   We acknowledge that the difficulty of obtaining sec-
ondary meaning in a mark equally descriptive of a range
of products made by established firms may create a
dilemma for the producer of a genuinely novel product. As
we noted earlier, a descriptive mark will facilitate intro-
ducing a new product to the public, and so it is a natural
choice for a start-up, but if he adopts such a mark he may
find himself drowned out, as may have happened to
Custom Vehicles. However, a product that is genuinely
novel will be sheltered from competition (to a degree
anyway) by patent or trade secret law, or more com-
monly just by the headstart created by its being first in
the market; and so it will not be drowned out by a prod-
uct sold by a larger competitor. Custom Vehicles’ basic
problem is that the only novel feature of its van—that it
can be used as both a mobile office and a recreational
vehicle—did not satisfy a large pent-up demand that, had
it materialized, might have conferred secondary meaning
on Custom Vehicles’ mark before anyone else could get
in on the act. Furthermore, the someone else was not a
competitor—Forest River was seeking to satisfy a dif-
ferent consumer demand. There was and is nothing
to prevent Custom Vehicles from adopting a new mark,
even a new descriptive mark—such as “Office-N-Rec”—
that might acquire secondary meaning. Its “Work-N-Play”
mark, however, described too much.
 Having insufficient evidence to demonstrate secondary
meaning, Custom Vehicles falls back on its registered
No. 06-2009                                                7

trademark, noting that such a trademark, like a patent,
carries a presumption of validity. 15 U.S.C. § 1115(a);
CAE, Inc. v. Clean Air Engineering, Inc., 267 F.3d 660, 672-
73 (7th Cir. 2001). In the case of a registered descriptive
mark, therefore, the presumption is that it has acquired
secondary meaning. Packman v. Chicago Tribune Co., 267
F.3d 628, 638-39 (7th Cir. 2001). But the act of registration
merely begins the process that leads to the presumption.
Bare registration is not enough. Trademarks cannot be
“banked” or “warehoused”—that is, you cannot register
thousands of names, unrelated to any product or service
that you sell, in the hope of extracting a license fee from
sellers of products or services for which one of your names
might be apt. Cf. Harrods Ltd. v. Sixty Internet Domain
Names, 302 F.3d 214 (4th Cir. 2002). You must certify
that the product is in use in commerce—defined as “the
bona fide use of a mark in the ordinary course of trade,
and not made merely to reserve a right in a mark,” 15
U.S.C. § 1127—within six months after the trademark
was registered. 15 U.S.C. § 1051(d). Within those six
months Custom Vehicles sold a grand total of one van,
and the trademark was not used in the sale. Even if it had
been, that would not have been enough to place the
trademark in the “ordinary course of trade.” Lucent Infor-
mation Management, Inc. v. Lucent Technologies, Inc., supra,
186 F.3d at 315-17.
  We suppose that one sale of a $150 million airplane or
yacht within the first six months might be sufficient use,
see 3 McCarthy on Trademarks and Unfair Competition, supra,
§ 19:110, for it would be enough to seize the attention of
the relevant market. See General Healthcare Ltd. v. Qashat,
364 F.3d 332, 334-35 (1st Cir. 2004); New England Duplicating
Co. v. Mendes, 190 F.2d 415, 418 (1st Cir. 1951). But not one
8                                               No. 06-2009

sale of a van. That sale would have been too obscure an
event to alert any significant number of consumers that
“Work-N-Play” had a definite referent (even if the name
had been used in the sale); and until that happens, the
creator of the mark should not be able to appropriate it. For
such a practice, by creating a trademark thicket, would
make it difficult for new producers to find suitable names
for their products that had not already been appropriated
to no worthier end than providing the premise for an
infringement suit.
  We acknowledge that Chance v. Pac-Tel Teletrac Inc., 242
F.3d 1151, 1157 (9th Cir. 2001), holds that “where a mark
has been placed on goods, a single sale or shipment may
be sufficient to support an application to register the
mark, providing that this shipment or sale has the color
of a bona fide transaction and is accompanied or followed
by activities which would tend to indicate a continu-
ing effort or intent to continue such use and place the
product on the market on a commercial scale within a
time demonstrated to be reasonable in the particular
trade.” But the court derived this wordy formula (what is
“the color” of a “bona fide transaction”?) from Hydro-
Dynamics, Inc. v. George Putnam & Co., 811 F.2d 1470, 1472-
74 (Fed. Cir. 1987), a case decided before Congress in
1989 amended the trademark law to require that to be
entitled to the presumption of validity a trademark must be
used in the “ordinary course of trade.” Unless, as in our
yacht example, the product is unusually expensive, a
single sale, followed by frenetic but futile efforts to make
a second sale, hardly justifies allowing the seller to ap-
propriate the mark, denying its use to sellers who can
actually sell.
 The formula is especially inapt to a descriptive mark, for
without significant sales (always excepting the case of
No. 06-2009                                                   9

the superexpensive prototype) the mark could not achieve
secondary meaning. Cf. PaperCutter, Inc. v. Fay’s Drug Co.,
900 F.2d 558, 562-65 (2d Cir. 1990). This is critical, because
the presumption of validity that registration creates is
easily rebuttable, since it merely shifts the burden of
production to the alleged infringer. Door Systems, Inc. v.
Pro-Line Door Systems, Inc., 83 F.3d 169, 172 (7th Cir. 1996);
KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 408
F.3d 596, 604 (9th Cir. 2005); Retail Services, Inc. v. Freebies
Publishing, 364 F.3d 535, 542 (4th Cir. 2004). Exclusive use
of such a mark, in contrast to exclusive use of a fanciful
mark, such as “Exxon” (that is, a made-up word), or of an
arbitrary mark, such as “Apple Computer” (arbitrary
because a computer has nothing to do with an apple), or
even of a suggestive mark, such as “Mr. Clean” or “Gleam
Toothpaste” (suggestive because it calls to mind some
attribute of the products), can, as we said, by appropriating
the term by which consumers know the product space in
which the sellers compete, impair competition by imped-
ing the ability of competitors to indicate that their brands
are in the same product space. Even if Custom Vehicles’
registration were in force, it would not overcome the
overwhelming evidence that “Work-N-Play” never be-
came associated in consumers’ minds with Custom Vehi-
cles’ vans to the exclusion of other dual-use vans. See, e.g.,
Petro Stopping Centers, L.P. v. James River Petroleum, Inc.,
130 F.3d 88, 93-94 (4th Cir. 1997); PaperCutter, Inc. v. Fay’s
Drug Co., supra, 900 F.2d at 562-65.
  In the absence of registration, a producer can still obtain
relief by proving that the defendant is using a mark that
“is likely to cause confusion . . . as to the origin, sponsor-
ship or approval of his or her goods.” Lanham Act, § 43(a),
15 U.S.C. § 1125(a); Wal-Mart Stores, Inc. v. Samara Bros.,
10                                                No. 06-2009

Inc., 529 U.S. 205, 209 (2000); 5 McCarthy on Trademarks
and Unfair Competition, supra, § 27:14. But as we said earlier,
without proof of secondary meaning there is no basis
for thinking a descriptive mark the name of a brand—no
basis therefore for supposing that consumers would
think Forest River’s van “Work and Play” had been
produced by Custom Vehicles instead.
                                                   AFFIRMED.

A true Copy:
        Teste:

                           _____________________________
                           Clerk of the United States Court of
                             Appeals for the Seventh Circuit

                     USCA-02-C-0072—2-7-07