REED-UNION CORP. v. TURTLE WAX, INC. No. 91 C 5625.
869 F.Supp. 1304 (1994)
REED-UNION CORPORATION, Plaintiff, v. TURTLE WAX, INC., Defendant.
United States District Court, N.D. Illinois, Eastern Division.
Opinion Supplementing Decision December 13, 1994.
John J. Arado, Craig S. Fochler, John Sheldon Letchinger, Wildman, Harrold, Allen & Dixon, John Bostjancich, Pattishall, McAuliffe, Newbury, Hillard & Geraldson, Patricia Susan Smart, Chicago, IL, for plaintiff.
J. Patrick Herald, Kevin C. Parks, Philip J. Zadeik, David Jonathan Davis, Baker & McKenzie, Chicago, IL, for defendant.
MEMORANDUM OPINION AND ORDER
PLUNKETT, District Judge.
For nearly twenty years, Reed Union has owned and marketed a polish for automobiles styled "NU FINISH." NU FINISH received trademark protection in the mid-1970s. NU FINISH has always been marketed in an orange plastic bottle with black lettering including the name NU FINISH on the upper half of the bottle, and a series of claims about the product on the bottom half (the trade dress). For most of its life, NU FINISH was a minor player in the car wax market. Although Reed Union had always advertised the product on television extensively (one to one and one-half million dollars per year), its sales during the first ten or eleven years remained stagnant. All of that changed in the late 1980s when Reed Union, for the first time, was successful in placing NU FINISH in national mass marketing retail stores such as K-Mart. Thereafter, NU FINISH sales mushroomed until, in 1991, they reached some sixteen million dollars.
Enter Turtle Wax. Throughout the 1970s and 1980s, Turtle Wax had been perhaps the undisputed leader in the car wax market. It had retained that position in part by keeping track of its competitors and developing new products to compete with any interlopers (more about this later). Turtle Wax had largely ignored Reed Union and its NU FINISH because of its low volume of sales. By 1989, it could afford to do so no longer. After its effort to market a new and improved Turtle Wax hard-shell finish in 1989 failed to affect NU FINISH's growing market share, Turtle Wax created a new brand of car wax. It is uncontested that this new product was designed in large part to compete directly against NU FINISH. Turtle Wax's new product was named "FINISH 2001," and Turtle Wax quickly obtained a trademark on that name. The trade dress for FINISH 2001 was created by Turtle Wax's art department (Mr. Campagnolo) with help from its marketing department (Mr. Cusack). FINISH 2001 is in a fluorescent green bottle (somewhat larger than NU FINISH's orange one). The green bottle also has a somewhat different shape. Turtle Wax selected a fluorescent orange-red label (called scarlet by Mr. Campagnolo) and black lettering. FINISH 2001 was successful. Its sales grew steadily if not remarkably in 1990 through 1993. In that same period, NU FINISH sales declined.
The Likelihood of Confusion Between NU FINISH's Mark and Trade Dress with that of FINISH 2001
The touchstone of trademark infringement analysis is "likelihood of confusion," a deceptively simple test. The Seventh Circuit has developed seven factors to evaluate this likelihood of confusion. They are:
Smith Fiberglass Prod., Inc. v. Ameron, Inc.,
I. Similarity of Products and Area and Manner of Concurrent Use
FINISH 2001 and NU FINISH are both car polishes. Each is priced in the five to six dollar range and competes with the other. Each makes similar claims — for example, a once-a-year car polish that has a high shine and excellent protective qualities. When the marks and trade dress in question are used on directly competitive products sold through the same channels of trade, less similarity is required between the marks to establish confusion. Union Carbide Corp. v. Ever-Ready, Inc.,
II. The Strength of the NU FINISH Trademark and Trade Dress
We next consider the strength of the NU FINISH trademark and trade dress.
In evaluating the strength of the mark, we must consider the mark's conceptual and commercial strength on a spectrum ranging from generic to descriptive to suggestive to fanciful or arbitrary. Kozak Auto Drywash, Inc. v. Enviro-Tech Int'l,
Turtle Wax argues that the mark "NU FINISH" is generic. It points out that the term "NU" or correctly spelled "NEW" is so commonly used that it is incapable of distinguishing the source of products. R.J. Reynolds Tobacco Co. v. Brown & Williamson Tobacco Corp., 226 U.S.P.Q. 169, 176 (TTAB 1985). Similarly, the word "FINISH" is generic in the sense that it is synonymous with car wax or polish. Thus, the name NU FINISH and its claims of "The Once A Year Car Polish," and "no rubbing, no buffing" simply denominate a type or category of goods. In this sense, the argument goes, NU FINISH is like the name "Wash Wax," which is generic and not registerable. Turtle Wax, Inc. v. Blue Coral, Inc., 2 U.S.P.Q.2d 1534 (TTAB 1987). We are only partially convinced by this argument. We agree that the claims "Once a Year Car Polish" and "no rubbing or buffing" is not entitled to protection. Those phrases simply define a central characteristic of car waxes in general, and as such are merely generic. See Union Carbide Corp. v. W.R. Grace & Co., 213 U.S.P.Q. 400, 411 (TTAB 1982). To hold otherwise would deprive all car polish manufacturers of claims of a long lasting product or easy applications. This would impoverish the language and cannot be sanctioned. Loctite Corp. v. National Starch & Chem. Corp.,
Having said this, however, we also conclude that the mark "NU FINISH" is not fanciful or even suggestive. Rather, on the continuum of protectability, it is a descriptive mark, i.e., it makes a car's finish appear new. Although the distinction between suggestive and descriptive is somewhat blurred, the Seventh Circuit has distinguished the two concepts as follows:
Union Carbide v. Ever-Ready, Inc., 531 F.2d at 377.
Thus, we conclude NU FINISH is a descriptive mark. It imparts information or a claim of an extraordinary nature. This product will create a new finish for your car. The mark is weak but protectable.
The trade dress of NU FINISH is a more interesting question. Reed Union must prove that its packaging and its commercial are inherently distinctive or have acquired a secondary meaning. Two Pesos, Inc. v. Taco Cabana, Inc., ___ U.S. ___, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992). In examining the trade dress, we must consider whether it is a common or basic shape or design, whether it is unique or unusual in part or whether it is a mere refinement of commonly adopted and well known forms or ornamentation for a particular class of goods. Seabrook Foods, Inc. v. Bar-Well Foods, Ltd.,
NU FINISH markets its car polish in a standard size plastic bottle, which is orange with a white cap. NU FINISH also uses black lettering for its name on the top half of the bottle with text on the bottom half describing its performance. Its black and
Does all of this equate to a distinctive or arbitrary trade dress? A trade dress is not inherently distinctive even where it is unusual or even unique in the industry. Common forms of presentations in a particular field of competition are not protected. Turtle Wax, Inc. v. First Brands Corp.,
However, NU FINISH may have acquired a secondary meaning. A secondary meaning exists when the primary significance of the mark or dress in the mind of the consuming public is not the product but the producer. Eldon Indus., Inc. v. Rubbermaid, Inc.,
III. The FINISH 2001 Mark, Its Trade Dress and Its Similarly to NU FINISH
There can be no question that FINISH 2001 was designed specifically to compete with NU FINISH. All of the Turtle Wax officers and employees who testified admitted exactly that. However, such competition is unlawful only if it interferes with the consumer's ability to identify the source of the goods by their appearance and packaging. Badger Meter, Inc. v. Grinnell Corp.,
We may begin by examining the two competing products. Roulo v. Russ Berrie & Co.,
IV. Degree of Care Exercised by Consumers in Making Purchases of NU FINISH and FINISH 2001
The parties presented little, if any, evidence on this point. The competing products sell in the range of five to seven dollars. When the competing products are relatively low priced, the likelihood of confusion is increased. AHP Subsidiary Holding Co. v. Stuart Hale Co.,
V. Actual Confusion Between NU FINISH and FINISH 2001
Both NU FINISH and FINISH 2001 are leaders in the car polish market. Millions of those products are sold every year. Both Reed Union and Turtle Wax receive hundreds, if not thousands, of letters and phone calls each year commenting on or discussing their products. Yet Reed Union was unable to produce a single written document from a customer or a retailer evidencing confusion. Turtle Wax produced none either, but was able to find several letters from customers that rather clearly demonstrated the particular writer was aware of the different manufacturers of NU FINISH and FINISH 2001.
Reed Union through its president, Mr. Goldman, and several of its own marketing representatives testified to several little vignettes (some ten or so in number) relating the existence of confusion with its customers. These stories have several problems. First, consider what Reed Union did not prove through their vignettes. No customer or retailer was called to testify to confusion. Rather, all but one or two of the stories came from individuals who recounted out-of-court conversations with others. The Court admitted these conversations either as nonhearsay (inferential proof of the out-of-court declarant's state of mind) or when a direct assertion of the state of mind of the declarant was made as an exception under F.R.E. 803(3). Yet, we believe they are entitled to little, if any, weight. Smith Fiberglass Prod., Inc. v. Ameron, Inc.,
Turtle Wax presented evidence of meetings with its retailers, introducing FINISH 2001. None suggested that the name or packaging was confusing, and a few criticized the dress as ugly. We give this testimony some limited weight.
The Market Surveys
Each side also presented a survey. Reed Union's was done by Mr. Whitcup, who had fine credentials. His survey found that nearly twenty-eight percent of the interviewees selected NU FINISH as the manufacturer of FINISH 2001. Mr. Whitcup found little "noise" (confusion by the consumer not caused by NU FINISH/FINISH 2001 similarity). Turtle Wax's expert, Dr. Lavidge, also found confusion in slightly more than twenty percent of his interviewees, but also found that the noise was even greater. Thus, Turtle Wax's expert concluded that there was no actual confusion in the market place. We must decide which to accept. We choose the Turtle Wax survey.
Both surveys used essentially the same methodology. Shopping malls in large metropolitan areas throughout the continental U.S. were selected. Interviewees were screened to see if they had purchased car wax within the last year. Between four and five hundred people were selected in each survey. Each survey used a test group and a control group.
Our principal reason for rejecting the Whitcup survey is the selection of the product shown the control group in order to determine the noise. As explained by both Dr. Whitcup and Dr. Lavidge, a control group is essential to determine the noise — the inherent confusion in the market which exists independently of and thus is not caused by confusion between the products being tested. Each survey had a control group set up for the purpose of determining the "noise". Under the survey methodology the noise level is subtracted from those who confuse the tested products. Dr. Whitcup's selection of his product was an Armor-all product with the maker's name Armor-all prominently displayed on the polish product. Yet the test was to determine the existence of confusion between NU FINISH and FINISH 2001, neither of which displayed the manufacturer's name except in small print on the rear of the bottle. As testified to by Plaintiff's expert, Dr. Whitcup's control product could not measure inherent confusion in the marketplace because it prominently identified the maker. The control group using Armor All simply selected other Armor All products, all of which also had that name prominently displayed on the front of the container. As a result, the survey showed a de minimus noise level. This result is particularly difficult to accept given our earlier finding that only a modest amount of care is used in selecting these low-price items.
We have more confidence in the Defendant's survey which while also showing twenty percent confusion was able to demonstrate that was the approximate amount of noise in
Dr. Lavidge also criticized Dr. Whitcup for testing for reverse confusion. The proper procedure is to show the senior product (NU FINISH) and ask the consumer to chose another product made by the same manufacturer. Dr. Whitcup did the reverse — showing FINISH 2001 and asking the interviewee to choose other products by the makers of FINISH 2001. While we are unable to quantify what precise difference this made, the procedure causes us to lose confidence in the conclusions of Dr. Whitcup's study. The whole theory of Plaintiff's confusion argument is that NU FINISH buyers mistakenly selected FINISH 2001. Yet its survey didn't really test for proof of that proposition. The particular order is important because the survey attempts to focus on what actually occurs in the marketplace. Worthington Foods, Inc. v. Kellogg Co.,
We also believe that Dr. Lavidge was a more convincing witness. His extensive work with marketing surveys for the business community, together with his inclusion of questioning those who experienced confusion, lead us to accept Dr. Lavidge's testimony and reject that of Dr. Whitcup, whose background is predominantly academic.
Reed Union also contends that its significant loss of sales after the introduction of FINISH 2001 also demonstrates confusion. The crux of the argument is that the car polish market is stagnant, and FINISH 2001's dramatic growth came at a time when NU FINISH sales declined. While this argument has a superficial appeal, it does not survive in the face of the evidence. At the time of FINISH 2001's climb in the market (1990-1991) several things were occurring. First, colored waxes had been introduced and immediately became popular. Although these new products expanded the car polish market to some extent, we also find these new products were responsible for some of the loss in sales by NU FINISH. Secondly, Reed Union got into an argument with one of its retailers (Pep Boys — a large chain of automobile aftercare products) and NU FINISH was removed from Pep Boys shelves for the 1991 selling season. At the same time, Turtle Wax, which had long been conscious of relationships with the retailers (and had spent millions to improve them), launched several campaigns with the mass retailers to secure more shelf space and end caps. (End caps are free-standing displays at the end of counters which display only one product, often at a sales price). End caps attract buyers who otherwise might not be coming to the store with the express purpose of purchasing such a product. Those efforts were successful and FINISH 2001 sales at K-Mart mushroomed. NU FINISH did not cultivate retailer relationships and more importantly did not pay the additional premiums for end caps displays. Turtle Wax also stepped up its allowances to the retailers for co-op advertising. NU FINISH devoted little to such advertising. When we examine the Defendant's exhibits showing sales of NU FINISH and FINISH 2001 at the thirteen largest retailers (accounting for over fifty percent of all the sales of both products), we find no common thread tying NU FINISH's lost sales to FINISH 2001's gains. We are convinced that NU FINISH's decline in sales after FINISH 2001's introduction cannot be traced to confusion among consumers seeking to buy NU FINISH and winding up with FINISH 2001. Thus, at the end of this analysis we do not find the existence of actual confusion causing NU FINISH customers to purchase FINISH 2001, believing they are buying a NU FINISH or Reed Union product. It is proper to infer from the absence of any credible evidence of actual confusion that there is no likelihood of confusion. Ohio Art Co. v. Lewis Galoob Toys, Inc.,
VI. Turtle Wax's Intent to Palm Off Its Product As That of Reed Union
Evidence of wrongful intent is not required to establish likelihood of confusion, Wesley-Jessen Div. of Schering Corp. v. Bausch & Lomb, Inc.,
Here, several facts are clear. Turtle Wax designers and marketing people knew of the NU FINISH mark and trade dress. In 1989 and even before they studied NU FINISH's new-found success, Turtle Wax had decided to fight NU FINISH's success. After the failure of Turtle Wax Super Hard Shell Finish to cut into the NU FINISH market share, Turtle Wax decided to create a new brand designed to win back what was directly affecting its market share. So far so good. Knowledge of another's product and an intent to compete with it is not equivalent to an intent to mislead the consumer. Henri's Food Prod. Co. v. Kraft, Inc.,
When Turtle Wax set about the business of designing a new product it considered a myriad of names. The evidence shows there was no effort to copy NU FINISH's name. The final name was chosen because, like the word FINISH in NU FINISH, it described the product. After working with its advertising firm it came up with the number 2001, perhaps drawn from the motion picture 2001, A Space Odyssey. Turtle Wax's interest as testified to by several of its witnesses was to create a product that appeared futuristic. To that end it chose the futuristic fluorescent green bottle with a modern shape. We credit that testimony and find no intent to copy or palm off its product by copying or using the NU FINISH name or mark.
The most difficult question comes from Turtle Wax's selection of a fluorescent orange-red label with black lettering and a list of claims. Why did Turtle Wax's marketing vice president select orange-red and black on a brand that was designed to compete with a product with an orange and black trade dress? Was it just another effort to create a futuristic appearing product? If so, there are other colors that surely could do just as well. Mr. Cusack denied an intent to copy. Apparently no one at Turtle Wax discussed the possibility of confusion when the color scheme was selected and the label was designed. Yet, Turtle Wax designed the product to compete with NU FINISH, which used the color scheme.
We have carefully weighed the credibility of the Turtle Wax executives most of whom were called by Reed Union. We reviewed the myriad of documents pertaining to the creation of FINISH 2001. Turtle Wax had already selected a fluorescent green bottle, larger and quite different from that used by NU FINISH. The label included several entries absent from NU FINISH, such as "Urethane Enriched Formula" prominently displayed, and a graph at the bottom with a chartreuse insert. Although the intent of Turtle Wax's employees and agents, like other issues in this case, is close, we conclude that Turtle Wax did not intend to copy or palm off. Rather, it intended to come close without stepping over the line. We conclude it did so, although just barely. Thus, while there was no bad faith by Turtle Wax, its intent to come close is probative on the likelihood of confusion issue. John H. Harland Co. v. Clarke Checks, Inc.,
So Is There a Likelihood of Confusion?
Turtle Wax's FINISH 2001 and Reed Union's NU FINISH are the same product — car polish. They are both market leaders and compete for the same consumers in the same stores, often on the same shelf. The marks and trade dress have far more differences than similarities, but there are two important similarities (orange and black labels and the word "FINISH"). Consumers exercise some modest care in selecting these low-priced car polishes. There is no credible evidence of actual confusion, but Turtle Wax did go to the very edge of what the law allows in designing its trade dress. Thus, four factors (similarity of product, area of competition, a weak mark and dress with a secondary meaning, and only modest care by the consumer) favor Reed-Union. Two factors (no actual confusion and no intent to palm off) favor Turtle Wax. One remaining
Three of these factors in the likelihood of confusion analysis are generally considered the most important — the intent of the alleged infringer, evidence of actual confusion, and similarity of trade dress. Eldon Indus., Inc. v. Rubbermaid, Inc.,
Accordingly, judgment is entered in favor of Defendant Turtle Wax and against Plaintiff Reed Union on all remaining charges contained in the Complaint.
This a final and appealable order under Fed.R.Civ.P. 54(b).
SUPPLEMENTAL MEMORANDUM OPINION AND ORDER
On November 14, 1994, we entered judgment in favor of Turtle Wax and against Reed-Union on all claims remaining in the complaint.
Turtle Wax's first counterclaim seeks cancellation of U.S. Supplemental Trademark Registration No. 1,061,450 for "once a year car polish" on the grounds that the mark is generic. We agree. As discussed in the original opinion, the mark is not entitled to protection because the phrase defines a "central characteristic of car waxes in general." Reed-Union Corp. v. Turtle Wax, Inc.,
For the reasons already discussed in the Court's original memorandum opinion and order, the mark "NU FINISH" is entered for Reed-Union and against Turtle Wax on the second counterclaim.
Turtle Wax's third counterclaim alleges copyright misuse — use of Reed-Union's registration of a "junkyard" commercial to restrain Turtle Wax's use of a similar commercial — was, we believe, decided in the decision granting summary judgment on this claim.
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