Court Opinion

ID: 9475609
Source: CourtListenerOpinion
Date Created: 2023-08-05 05:32:30.085919+00
Date Added: 2024-06-11T17:44:48.702423
License: Public Domain

ALTIMARI, Circuit Judge,
concurring in part and dissenting in part:
I most respectfully dissent from the opinion of the majority which reverses the district court’s decision and remands for a hearing on the question of damages. I concur, however, in so much of the decision *397as affirms the district court’s denial of Rule 11 sanctions.
The majority concludes as a matter of law that the shoes, although manufactured at the direction of the plaintiff-trademark holder and labelled, as authorized, with plaintiff’s federally registered trademark, were not genuine CANDIE’S shoes, and thus that the sale of these shoes constituted trademark infringement. The majority’s classification of the question of genuineness as one of law rather than of fact and its underinclusive definition of genuine prompts this dissent. More generally, I disagree with the application of federal trademark law to cases, such as the instant one, in which a retailer purchases goods bearing a registered trademark from a manufacturer who is under contract with the trademark owner to produce those goods and who is authorized to affix the trademark.
1. Finding of Fact — Genuineness
Trademark infringement actions by their nature require courts to weigh and resolve factual questions and thus are subject to review under the “clearly erroneous” standard of Federal Rule of Civil Procedure 52(a). See Sheila’s Shine Products, Inc. v. Sheila Shine, Inc., 486 F.2d 114, 122 (5th Cir.1973). Courts must for instance resolve the ultimate factual question in trademark infringement cases of “whether there is any likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused as to the source of the goods in question.” Mushroom Makers, Inc. v. R.G. Barry Corp., 580 F.2d 44; 47 (2d Cir.1978) (citing Maternally Yours, Inc. v. Maternity Shop, Inc., 234 F.2d 538, 542 (2d Cir.1956), cert. denied, 439 U.S. 1116, 99 S. Ct. 1022, 59 L.Ed.2d 75 (1979). When evaluating the likelihood of such confusion, courts apply the factors laid out in the well-known case of Polaroid Corp. v. Polaroid Electronics Corp., 287 F.2d 492 (2d Cir.), cert. denied, 368 U.S. 820, 825 S.Ct. 36, 7 L.Ed.2d 25 (1961):
Where the products are different, the prior owner’s chance of success is a function of many variables: the strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant’s good faith in adopting its own mark, the quality of defendant’s product, and the sophistication of the buyers.
Id. at 495 (citing Restatement of Torts §§ 729-731). The assessment of these factors consistently has been held to be a question of fact reviewable under the clearly erroneous standard, see, e.g., Plus Products v. Plus Discount Foods, Inc., 722 F.2d 999, 1004 (2d Cir.1983), and only the question of the “relative weight ... of [these] findings is reviewable ... as a matter of law.” Id. at 1005 (citations omitted).
Courts must consider factual questions closely akin to those raised when evaluating the likelihood of purchaser confusion when determining whether a product is genuine: similarity of the marks, product proximity and quality. Determinations of genuineness, in addition, frequently necessitate an assessment of another factual question — the trademark owner’s intent when farming out its manufacturing and labelling duties. In the instant case, the district court sifted through evidence regarding the following questions: authorization to manufacture and label, the extent that the goods were completed, the quality of the product, and the nature of the instructions given as to the disposal of can-celled goods. See generally Anderson v. City of Bessemer City, North Carolina, 470 U.S. 564, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518 (1985) (where disputed questions of fact exist, district court’s findings subject to clearly erroneous standard even if based on physical or documentary evidence rather than on credibility determinations). Accordingly, I suggest that the question of genuineness should have been reviewed by the majority not as a question of law but instead as a question of fact subject to the “clearly erroneous” standard.
*3982. “Genuineness ”
The majority in considering whether the shoes at issue were “genuine” focuses on the fact that the plaintiff-trademark owner had not given its final stamp of approval, in the form of an inspection certificate, to the manufactured goods. The majority holds that in the absence of such an inspection certificate, which the majority characterizes as “an integral part of the [trademark owner’s] effort at quality control,” the goods were distributed in an unauthorized manner and thus could not be considered genuine. I submit that this holding is incorrect and thus would affirm the district court’s decision.
Generally, goods are characterized as either “genuine” or “spurious”, with the former designation indicating that the goods are of a “reputed ... quality” or are “actually produced by or proceed[] from the alleged source,” Webster’s Ninth New Collegiate Dictionary 512 (1984), and the latter connoting a “deceitful nature or quality” or a “falsified or erroneously attributed origin.” Id. at 1143; see Monte Carlo Shirt, Inc. v. Daewoo International (America) Corp., 707 F.2d 1054, 1058 (9th Cir.1983) (Genuine products are “planned and sponsored by [the trademark holder] and produced for it on contract for future sale.”); see also 3A Callmann, Unfair Competition Trademarks and Monopolies § 21.06 at 23 (L. Altman 4th ed. 1983) (Genuine goods are those “which emanate from the plaintiff or his affiliates.”).
As long as the goods are manufactured under the direction of the trademark owner, bear the trademark, registered and issued by the trademark owner, and are not of an inferior quality, the products are considered genuine. It is not necessary to a finding of genuineness that the goods be distributed with the trademark holder’s express authorization. See Olympus Corp. v. United States, 792 F.2d 315, 321 (2d Cir.1986) (goods manufactured and marked abroad by parent of trademark holder and imported without permission adjudged genuine since they did not bear “counterfeit or spurious trademarks”); Monte Carlo, 707 F.2d 1054 (goods manufactured according to trademark owner’s specifications and bearing its label but distributed to discount retailers without permission of trademark owner deemed “genuine”); DEP Corp. v. Interstate Cigar Co., 622 F.2d 621, 621 & 622 n. 1 (2d Cir.1980) (goods considered genuine as there was “no difference between the product sold by [trademark owner] and that sold by [alleged infringer],” although source of goods not trademark owner but “European middlemen”); cf. Adolph Coors Co. v. A. Genderson & Sons, Inc., 486 F.Supp. 131 (D.Colo.1980) (unauthorized sale of beer manufactured and trademarked by trademark owner constituted an infringement since sold in a damaged and inferior condition).
In the instant case, the plaintiff-trademark owner contracted with Brazilian manufacturers for the production of its shoes, and as part of this arrangement permitted the manufacturers to affix its trademark labels to the shoes. The manufacturers completed and labelled the shoes as specified, but as the district court found, the order was cancelled not for substandard quality but for the “reason of late delivery only.” No directions regarding the disposal of such cancelled goods were provided to the manufacturers, nor were the manufacturers unambiguously restricted from independent distribution. Most importantly, the facts indicate that the shoes were not inferior imitations produced by defendant or an entity independent of the trademark owner. The goods were not altered, reconditioned, repackaged, or resold. See Champion Spark Plug Co. v. Sanders, 331 U.S. 125, 67 S.Ct. 1136, 91 L.Ed. 1386 (1947); see generally Callmann, supra § 21.13-16 at 62-73.
As Justice Holmes stated,
A trade mark only gives the right to prohibit the use of it so far as to protect the owner’s good will against the sale of another’s product as his____ When the mark is used in a way that does not deceive the public we see no such sanctity in the word as to prevent its being used to tell the truth.
*399Prestonettes, Inc. v. Coty, 264 U.S. 359, 368, 44 S.Ct. 350, 351, 68 L.Ed. 731 (1924) (citations omitted). The defendant did not attempt to deceive purchasers. Instead, the defendants, in what appears to be good faith, purchased shoes of a good quality from a manufacturer who was under contract with the trademark owner to produce the shoes and affix labels to them. Based on these facts, I would not impose liability on defendant-retailer for trademark infringement and would affirm the district court’s decision in its entirety.