FLAUM, Circuit Judge.
Mil-Mar Shoe Company, Inc., ("Mil-Mar") brought this action against the Shonac Corporation ("Shonac"), in Wisconsin state court, alleging common law trade name infringement, statutory trademark infringement under Wis.Stat. § 132.033, and unfair competition. Mil-Mar, owner of a chain of stores under the name "Warehouse Shoes," sought a temporary restraining order and a preliminary injunction to prevent Shonac from using the name "DSW Shoe Warehouse" (or any similar construction) to designate the retail shoe store that Shonac announced would be opened in the Greater Milwaukee area. The temporary restraining order was granted pending a hearing on the preliminary injunction. Shonac removed the case to federal court on the basis of diversity. 28 U.S.C. § 1332(a)(1). After a hearing on the matter, the district court granted the preliminary injunction, enjoining Shonac from using "DSW Shoe Warehouse," "Shoe Warehouse," or any other name confusingly similar to "Warehouse Shoes" in the Greater Milwaukee area. We reverse.
Mil-Mar is a Wisconsin corporation that operates seventeen stores in the Greater Milwaukee area under the name "Warehouse Shoes" (four of which are called "Super Warehouse Shoes"). At least since 1970, Mil-Mar has continuously used and advertised
Shonac is an Ohio corporation founded in 1969 to operate retail shoe stores throughout the country. Shonac first began operating warehouse-type shoe stores in 1991, when it opened a store in Ohio under the name "Designer Shoe Warehouse." In 1994 the name was changed to "DSW Shoe Warehouse." Shonac has United States trademark registrations for its DSW logo and the name "DSW Shoe Warehouse," though the United States Patent & Trademark Office required Shonac to disclaim any right to exclusive use of "Shoe Warehouse" by itself. Shonac currently operates twenty stores, located throughout the United States, under the name "DSW Shoe Warehouse." Shonac spends millions of dollars advertising these stores each year.
In May 1995, Mil-Mar learned that Shonac planned to open a "DSW Shoe Warehouse" store in Wauwatosa, Wisconsin (i.e., within the Greater Milwaukee area) in October 1995. Mil-Mar promptly contacted Shonac requesting that it not use the "Shoe Warehouse" portion of the name. When Shonac refused to give up the name, Mil-Mar brought this action.
In addition to the above information, the district court considering Mil-Mar's preliminary injunction request had the following facts before it. The shoe stores run by Mil-Mar and Shonac are virtually identical in form, concept, and target customer. Both corporations run large, high-volume retail stores that carry a great variety of name brand shoes at discount prices.
The district court treated Mil-Mar's three claims as follows. First, the court determined that the common law trade name infringement claim and the statutory trademark infringement claim under Wis.Stat. § 132.033 were subject to the same legal analysis. Mil-Mar conceded that registration of a trade name or mark in Wisconsin does not confer specific rights to the holder. Hence the only question was whether "Warehouse Shoes" could be protected as a de facto trademark by temporarily enjoining use of the name "DSW Shoe Warehouse."
As for the trademark and trade name infringement claims (hereinafter treated as a single trademark infringement claim), the court first considered whether Mil-Mar was likely to prevail on the merits. The court found that "Warehouse Shoes" was capable of protection as a trademark. The court
Whether a preliminary injunction should be granted by a district court generally involves a four-part analysis. The district court begins by considering whether the moving party has demonstrated: 1) a reasonable likelihood of success on the merits, and 2) no adequate remedy at law and irreparable harm if preliminary relief is denied. If the moving party clears these hurdles, the court must then consider: 3) the irreparable harm the non-moving party will suffer if the injunction is granted balanced against the irreparable harm the moving party will suffer if the injunction is denied, and 4) the public interest, i.e., the effect that granting or denying the injunction will have on non-parties. Erickson v. Trinity Theatre, Inc., 13 F.3d 1061, 1067 (7th Cir.1994); Wisconsin Music Network v. Muzak Ltd., 5 F.3d 218, 221 (7th Cir.1993); Abbott Lab. v. Mead Johnson & Co., 971 F.2d 6, 11-12 (7th Cir. 1992); Lawson Products, Inc. v. Avnet, Inc., 782 F.2d 1429, 1433 (7th Cir.1986); Roland Machinery Co. v. Dresser Indus., Inc., 749 F.2d 380, 386-87 (7th Cir.1984). The district court properly noted that, "[i]f it is plain that the party seeking the preliminary injunction has no case on the merits, the injunction should be refused regardless of the balance of harms." Green River Bottling Co. v. Green River Corp., 997 F.2d 359, 361 (7th Cir.1993).
We begin by reviewing the district court's determination that "Warehouse Shoes" is not generic for trademark purposes. Marks are classified into five categories of increasing distinctiveness: 1) generic, 2) descriptive, 3) suggestive, 4) arbitrary, and 5) fanciful. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 767-68, 112 S.Ct. 2753, 2757, 120 L.Ed.2d 615 (1992); Dunn v. Gull, 990 F.2d 348, 351 (7th Cir.1993). In general, the level of trademark protection available accords with the distinctiveness of the mark. Consequently, generic terms receive no trademark protection; descriptive marks are protected only if the mark has achieved "secondary meaning" in the relevant community; and suggestive, arbitrary, and fanciful marks are deemed inherently distinctive, and thus entitled to full protection. Two Pesos, 505 U.S. at 767-68, 112 S.Ct. at 2757; Henri's Food Products Co. v. Tasty Snacks, Inc., 817 F.2d 1303, 1305 (7th Cir.1987). When the mark claimed as a trademark is not federally registered — "Warehouse Shoes" is not — the burden is on the claimant to establish that it is not an unprotectable generic mark. Technical Publishing Co. v. Lebhar-Friedman, Inc., 729 F.2d 1136, 1139 (7th Cir.1984); National Conference of Bar Examiners v. Multistate Legal Studies, Inc., 692 F.2d 478, 488 (7th Cir.1982), cert. denied, 464 U.S. 814, 104 S.Ct. 69, 78 L.Ed.2d 83 (1983).
We have held that placement of a mark in a particular category is subject to review for clear error, and thus may be set
A generic term is one that is commonly used to name or designate a kind of goods. Liquid Controls Corp. v. Liquid Control Corp., 802 F.2d 934, 936 (7th Cir. 1986); Miller Brewing Co. v. G. Heileman Brewing Co., 561 F.2d 75, 79 (7th Cir.1977), cert. denied, 434 U.S. 1025, 98 S.Ct. 751, 54 L.Ed.2d 772 (1978). "Unlike a trademark, which identifies the source of a product, a generic term merely specifies the type, or genus, of thing into which common linguistic usage consigns that product." Gimix, Inc. v. JS & A Group, Inc., 699 F.2d 901, 905 (7th Cir.1983). A descriptive mark, on the other hand, is one that merely describes the ingredients, qualities, or characteristics of an article of trade or a service. Id. at 906. Such marks are generally not protectable as trademarks, "both because they are poor means of distinguishing one source of services from another and because they are often necessary to the description of all goods or services of a similar nature." Liquid Controls, 802 F.2d at 936 (quoting M.B.H. Enters. v. WOKY Inc., 633 F.2d 50, 54 (7th Cir.1980)). As such, descriptive marks are only protectable where the holder can establish that the mark has acquired "secondary meaning" in the collective consciousness of the relevant community. Gimix, 699 F.2d at 907.
Mil-Mar suggests that because "Warehouse Shoes" describes their store, the name is a descriptive mark rather than a generic one. Prior to the 1988 revisions of the Lanham Act, we regularly referred to generic terms (category 1 above) as "common descriptive" terms; and we distinguished them from "merely descriptive" terms, which we now simply designate as "descriptive" (category 2 above). See Trademark Law Revision Act of 1988, Pub.L. No. 100-667, 102 Stat. 3935 (codified as amended at 15 U.S.C. §§ 1064, 1065 (1995)) (replacing "common descriptive name" with "generic name"); see also Liquid Controls, 802 F.2d at 935-36; Technical, 729 F.2d at 1139; National Conference, 692 F.2d at 487. While two categories containing the word "descriptive" sometimes led to confusion (and thus precipitated the change), assuming that any element of description within a mark automatically precludes that mark from being found to be generic is factually and legally inaccurate and opposed to the tradition and purposes of trademark law.
The essential difference between "generic" terms and "descriptive" terms was and is the degree of distinctiveness, and thus their relative ability to serve as a source-identifier of particular goods and services. Because generic use implies use consistent with common understanding, we have often looked to dictionaries as a source of evidence on genericness. See, e.g. Liquid Controls, 802 F.2d at 937 (relying on Webster's Third New International Dictionary); Gimix, 699 F.2d at 905-06 (noting lack of dictionary evidence and finding "auto page" not generic); Miller Brewing, 561 F.2d at 80-81 (relying on Webster's Third New International Dictionary).
Webster's Third New International Dictionary defines the noun "warehouse" as follows:
WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 2576 (1993). The word "warehouse," as it is being used by both Mil-Mar and Shonac, thus would seem to potentially fit both the 1(a) and the 1(b) definitions. Both companies run chain stores that sell large inventories of goods (i.e., shoes) at wholesale, or at least "discounted," prices. Furthermore, the second definition, "retail store," obviously fits the stores at issue. Mil-Mar strenuously argues against this dictionary evidence, pointing out that the "retail store" definition is a British use of the word. It is true that of the many dictionary definitions presented to us, dictionaries that recognize a "retail store" or simply "store" meaning of "warehouse" generally note that this use is "British" or "chiefly British."
When the district court considered the evidence on genericness, it seemed to focus upon the fact that the primary meaning of warehouse, the one that appears first in the dictionaries, is that of a large structure used for storage — not that of a retail store. It also noted that "warehouse" has multiple dictionary meanings.
Shonac put on evidence that, nationally, over 8000 retail stores use the word "warehouse" in their names. Such names include: Furniture Warehouse, Warehouse Electronics, Just Plants Warehouse, Jewelry Warehouse, Mattress Warehouse, Carpet Warehouse, Warehouse Carpet, Warehouse Fragrances, Auto Parts Warehouse, Tire Warehouse, Bedding Warehouse, Warehouse Liquors, Pasta Warehouse, Warehouse Antiques, Warehouse Furniture and Bedding, Warehouse Fabrics, Warehouse Carpet & Tile, Warehouse Beer & Wine, The Clothing Warehouse, Bridal Warehouse, Wallpaper Warehouse, Book Warehouse, etc. Such widespread retail usage indicates that the American public commonly understands the term "warehouse" to apply to retail stores that sell any of a wide range of products. See Technical, 729 F.2d at 1138 (finding "Software News" generic after noting widespread use of "software" in periodical titles). When consumers hear the word "warehouse" in the retail context, as in the names listed above, they generally expect goods to be sold in high volume, from a relatively large store, at discount prices. The word "warehouse" is thus being used generically to denote a particular type or genus of retail store.
Significant use of a term by competitors in the industry has traditionally been recognized, along with dictionary evidence, as indicating genericness. Miller Brewing, 561 F.2d at 80; 2 J. THOMAS McCARTHY, McCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 12.02[b] (3d ed.1995). Shonac has presented evidence that hundreds of retail shoe stores use some form of either "Shoe Warehouse" or "Warehouse Shoes" in their names. Although none of these stores were competing directly with Mil-Mar's "Warehouse Shoes" stores in the Greater Milwaukee area, and thus Mil-Mar had no incentive or standing to challenge these names, the breadth of the use nationally by other shoe retailers further substantiates our ultimate conclusion that both "Shoe Warehouse" and "Warehouse Shoes" are generic.
Both parties make much of the fact that Mil-Mar's "Warehouse Shoes" and Shonac's "Shoe Warehouse" are different terms. Shonac argues strenuously on appeal (as it did at the hearing below) that even if "Warehouse Shoes" is not generic, their own store name — "Shoe Warehouse" — is generic, and thus its use cannot possibly be enjoined. The decision of the district court ignores this argument, focussing its entire genericness analysis on whether "Warehouse Shoes" is protectable as a trademark. Shonac is correct that "Shoe Warehouse," like "Shoe Outlet" or "Shoe Mart,"
On the other hand, the district court found 1) that "Warehouse Shoes" was descriptive, rather than generic, 2) that the term had developed secondary meaning, and 3) that there was a likelihood of confusion between "Warehouse Shoes" and "Shoe Warehouse." Thus the court enjoined Shonac's use of "Shoe Warehouse" and the like. This raises an interesting analytical question. Can the holder of a legitimate trademark enjoin the use of a similar term that is likely to be confused with the trademark if the similar term is itself generic? Such a situation brings into conflict two fundamental principles of trademark law: the right of a trademark holder to protection of its mark and the right of all persons to use generic terms in their generic sense to name their products or services. Neither party presents controlling authority on the issue. We need not today decide this question, however, since we conclude that the district court clearly erred when it found "Warehouse Shoes" not to be generic.
We acknowledge that the genericness issue is a closer call with "Warehouse Shoes" than with "Shoe Warehouse." At first glance, it appears that "warehouse" is functioning as an adjective in Mil-Mar's "Warehouse Shoes," which makes it seem more descriptive. An easy "noun versus adjective" test to signify a mark as either generic or descriptive, respectively, does not, however, adequately characterize the law of this circuit,
The district court relied on our finding, in Henri's Food Products Co. v. Tasty Snacks, Inc., that "tasty" and "TAS-TEE" as applied to salad dressings were not generic. 817 F.2d at 1305. We noted that, in order for a term to be generic, it "must serve to denominate a type, a kind, a genus or a subcategory of goods." Id. at 1306. We concluded, however, that "tasty," in connection with salad dressing, simply did not play this role:
Id. As the above analysis shows, "Warehouse Shoes" and "Shoe Warehouse" are more like French dressing than tasty dressing.
We have recognized in the past that the genericness of composite terms must be evaluated by looking at the term as a whole. Union Carbide Corp. v. Ever-Ready Inc., 531 F.2d 366, 379 (7th Cir.) ("Dissecting marks often leads to error. Words which could not individually become a trademark may become one when taken together."), cert. denied, 429 U.S. 830, 97 S.Ct. 91, 50 L.Ed.2d 94 (1976).
While Mil-Mar would have us believe that placing the word "warehouse" first in the name makes all the difference, this argument simply does not hold up. The substantial number of other retailers, including many shoe retailers, who position the word "warehouse" first in their names belies any attempt to draw much significance from such placement. In fact, one court has already held that the name "Warehouse Foods" is generic. Warehouse Foods, Inc. v. Great Atlantic and Pacific Tea Co., 223 U.S.P.Q. 892, 893, 1984 WL 63624 (N.D.Fla.1984) (noting that the phrase has been "widely used in the trade as a generic designation for a type of food store"). We leave open the possibility that changing the order of terms in a name or phrase may make the difference between genericness and trademark potential.
Because we find that "Warehouse Shoes" and "Shoe Warehouse" are generic, we need not address the district court's finding that "Warehouse Shoes" had secondary meaning in the Greater Milwaukee area and that the two store names were likely to be confused. We also do not address the district court's legal conclusion that fair use can never serve as a defense to a trademark infringement claim where a likelihood of confusion is established.
Allowing a generic term to have trademark protection would overstep the purposes of trademark law and violate fundamental concepts of fair competition. "[I]t is no purpose of trademark protection to allow a firm to prevent its competitors from informing consumers about the attributes of the competitors' brands.... [A company] cannot appropriate the English language, and by doing so render a competitor inarticulate." Blau Plumbing, Inc. v. S.O.S. Fix-It, Inc., 781 F.2d 604, 609-10 (7th Cir.1986). Because we conclude that both "Warehouse Shoes" and "Shoe Warehouse" are generic terms as used by Mil-Mar and Shonac, Mil-Mar has no probability of success on the merits. Miller Brewing, 561 F.2d at 81. Thus we REVERSE the district court's grant of the preliminary injunction against Shonac.
2 J. THOMAS McCARTHY, McCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 12.05 (3d ed. 1995).
1. "Brit. a large retail store." RANDOM HOUSE UNABRIDGED DICTIONARY 2142 (2d ed. 1993).
2. "Chiefly British. A large, usually wholesale shop."
THE AMERICAN HERITAGE DICTIONARY 2013 (3d ed. 1992).
3. "esp. Brit. a wholesale or large retail store." THE OXFORD ENCYCLOPEDIC ENGLISH DICTIONARY 1629 (1991).
4. "Brit. a large store where wholesale goods are sold."
NEW WEBSTER'S DICTIONARY 1119 (1981).
5. "a wholesale store or, sometimes, a large retail store. [Chiefly Brit.]"
WEBSTER'S NEW TWENTIETH CENTURY DICTIONARY 2060 (2d ed. 1974).
WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 1308 (1993). It is not until we get down to the tenth definition of "light" as an adjective that we find a meaning that could apply to a liquid like beer: "