GURFEIN, District Judge.
This is an action to enjoin alleged violation of the Lanham Act (15 U.S.C. §§ 1051-1127), to enjoin alleged unfair competition, and to obtain an accounting of gains and profits derived from the unfair competition, as well as judgment for compensatory and punitive damages against certain of the defendants.
A motion was made for a preliminary injunction. The Court ordered a hearing for the determination of disputed issues of fact. Thereupon, a stipulation was entered into by the parties that the hearing so ordered "may, pursuant to [Fed.R.Civ.P.] 65(a) (2) be considered . . . to be a trial on the merits of this action, except that the trial of the issue of damages is to be deferred until after the trial of the other claims raised in the complaint." A hearing was held and testimony taken. The testimony disclosed the following.
The art of needlepoint involves stitching wool through a pattern which has been drawn on a meshed canvas; different colors of wool are used for each color on the canvas. Depending on its size, the finished canvas can be used for anything from an eyeglass case to a rug. Generally, the larger the canvas the more expensive it is.
Needlepoint sewing has been taken up as a hobby by an increasing number of women, and even by some men. It is, nevertheless, a tiny industry.
Nina is a young woman of great artistic ability who turned her talent for design to the creation of canvasses for needlepoint about fourteen years ago. She has received the Audubon Exhibit award; the New Jersey and Cleveland Museums have exhibited her work. She has received prizes for her needlepoint design from the Lighthouse, which conducts the largest national exhibition of needlepoint in the United States. In their catalog she is described as the designer "Nina."
In 1965, she began the practice of signing all her canvasses with the mark "Nina," which is uniformly in block letters. At that time she also began wholesaling her designs exclusively to Alice Maynard, a well known needlepoint store on Madison Avenue in Manhattan, which in turn sold Nina's designs to stores in Chicago, Minneapolis and Nantucket. Over the years, Nina expanded her market, supplying shops in Westhampton, Baltimore, Philadelphia, Boston and Nantucket. She also sold to shops in California belonging to her sister, Jebba Maes, as will later appear.
Then, in 1970 Nina stopped selling to Alice Maynard, incorporated her own business, locating it on Madison Avenue, and began selling to many more stores from Naples, Florida to Seattle, Washington. She also opened a retail store of her own on Madison Avenue.
Since August 1, 1970 she has opened five Nina Needlepoint franchises at Stonington and Greenwich, Connecticut; Locust Valley, New York; Philadelphia; and Chicago. She gives her franchise dealers a logo and a shopping bag; she puts in their initial stock of yarn and canvasses; she sets them up as an operating store. They use her mark "Nina" in block letters, but must use her marked goods exclusively.
Nina Inc. now possesses an inventory which includes about 800 original designs, of which it reserves about 300 for its franchise dealers. It sells on both a retail and a wholesale basis, most of its sales being wholesale. The total sales of Nina Inc. from August 1, 1970 to July 31, 1971 amounted to approximately $184,000, representing an output of about
Nina Inc. has done some advertising in House & Garden, Town & Country, Cue magazine, WGCH radio station in Greenwich, and the Charleston Evening Post. Local advertisements mentioning Nina also have been run by her customers. While the volume of advertising is not large it is in keeping with the nature of the needlepoint business, a small industry. Nina has received a good deal of media coverage gratis, because of her reputation. She has been written about in Life magazine on May 28, 1971, the New York Times on September 7, 1970 and McCall's magazine in March 1971; as well as the Chicago Daily News on September 17, 1971, the Middletown, New Jersey Daily Register of December 16, 1970, the Charleston News and Courier of March 26, 1970, and the French fashion magazine Elle of November 15, 1971.
The good will of the plaintiff embodied in the mark "Nina" was testified to by several witnesses: Erica Wilson, a writer and owner of needlepoint shops in Nantucket and Southampton; Charles Quaintance, Jr., Vice-President of Alice Maynard; Louise Hendrix, a Nina franchise dealer with stores in Stonington and Greenwich; Shirley Shaffer, buyer for a Great Neck store; Carol Devendorf, a Nina franchise dealer in Locust Valley; and Jebba Maes, the sister of Nina. The defendants, on the other hand, called several of their buyers who testified that they never heard of Nina or Nina Needlepoint, Inc.
The history of the defendant, Nina-Cal, can be recounted more briefly. It was incorporated in California in February 1971 and at once began preparing to produce needlepoint kits, which were first shipped in interstate commerce about May 1, 1971. These kits are sold in plastic bags and contained a canvas, some wool, a needle, a reproduction of the design, and instructions. They are attractive kits; the plastic bag is transparent so that the customer can see the reproduced design of the canvas. The canvasses differ from Nina's in that, inter alia, they are not hand-painted. They are painted by a silk-screen process which is, of course, a much cheaper process than hand-painting. Accordingly, they sell for less than one-quarter of her price. They are, however, like Nina's in that some of the designs appear to be copies of Nina Inc.'s designs.
The parties are in sharp dispute as to how the defendant Nina of California, a newcomer in the business, happened to take, as part of its trademark, the name "Nina."
The defendant's President, Donald Leitman, testified that he had previously been in the business of selling automobile tires through leased departments in department stores. He was also employed in late 1970 and early 1971 by Tec Cash Register. He had never had anything to do with needlepoint. His wife suggested one day that needlepoint canvasses produced cheaply would be a saleable item. He telephoned one of Jebba Maes stores in early January 1971 and made an appointment.
The Jebba Maes stores in California sold needlepoint canvasses at retail and featured Nina's designs. Jebba Maes, Nina's sister, ran them. She was also part owner of a company named Pippin Products, Inc., which produced both hand-painted canvasses and others by the silk-screen process, the latter being under the mark "One West."
Leitman told Stephen Alsberg, then production manager of Pippin Products, that he wanted to sell their needlepoint products in leased departments of department stores. Leitman then discovered that there were very few leased departments of that sort. He then offered to sell their One West kits on a trial basis. Dottie Eisenberg, a partner of Jebba Maes, told him she was interested in selling her interest in the business. Leitman asked for figures on their operation and a balance sheet. He elicited from them their costs of production, including the costs of outside silk screening, packaging and raw materials. After three or four meetings he finally decided not to buy into their business.
Leitman testified that, around the end of January, he decided to go into the needlepoint business himself. He got in touch with John Montalbano (John) whom he had known for fifteen years, and invited him to join in starting a new venture. John was in the advertising business and familiar with artwork. His wife, also named Nina, was an artist, as was their daughter, Marguerite, age 24. Nina Montalbano admitted, however, that she had had no previous experience in needlepoint designing.
It is Leitman's version, supported by Nina Montalbano, that the name "Nina" was picked fortuitously from a number under discussion without reference to Nina of Nina Needlepoint, Inc., of whom Nina Montalbano professed never to have heard. Nina Montalbano was to be the designer, and hence the name "Nina." The words "of California" were added at Leitman's suggestion to create a note of "glamour." Leitman denied that he had noticed "Nina" on canvasses when he visited Jebba's store. He testified that he had only noticed the designs, not the "name." He did admit that, before the discussions with John about forming his own business, he had heard of Nina Mortellito and knew that she was a needlepoint designer. He admitted that Jebba had asked him whether he knew she had a sister who had a retail store in New York, and who had started her in business, but he did not recall being told that Nina had drawn the designs he had seen in the Jebba store.
The version put forward by the plaintiffs is in sharp contrast. Robin Alsberg, the wife of Stephen Alsberg, and formerly a salesperson in the Jebba store in Beverly Hills, saw Leitman come in with another man and look around the shop. He stayed in the front of the store, looking at the "Nina" canvasses which were on display there. She identified Nina designs that were in the store when Leitman made his visit. These all bore the signature "Nina." Stephen Alsberg testified that, in his talks with Leitman about his becoming connected with Pippin Products in some manner, he had explained to Leitman that they sold Nina's designs, that she sold well, and that she had a store in New York. He instructed Leitman in the entire production
I accept the plaintiff's version of the disputed matter. I do not accept the defendant's version. I find that Leitman knew about Nina's reputation as a designer in the needlepoint field and that the name "Nina" was chosen to cash in on the plaintiff's reputation. I find also that Nina Montalbano copied, among others, Jebba's gum ball machine design.
There has been testimony of actual confusion as to source, albeit principally from business customers of the plaintiff rather than from ordinary consumers.
The defendant Nina-Cal received notice of infringement as early as May 15, 1971.
At the time the defendant was formally requested to desist, it had about 10,000 plastic bags with the imprint "Nina of California." Leitman did not recall how many catalogs were printed, nor how much of other articles bearing the name "Nina of California" were then in inventory. Leitman claims to have actually started to sell about May 1.
At present, Nina-Cal does have an inventory of articles imprinted with "Nina of California," including numerous silk screens. However, there was testimony from Pippin Products' former production manager, Stephen Alsberg, that it is relatively easy to change the name applied by a silk-screening process. Leitman himself denied knowing how much it would cost to change the name of his product. At the time of the hearing Leitman said that direct advertisements, exclusive of catalogs, had cost $1,500.
While it is a traditional commonplace that in this type of case the facts rather than precedents alone tend to guide the decision, see 1 H. Nims, Unfair Competition and Trade Marks 670 (1947), authority must be sought to find the rubric of both statute and case law.
Regarding the claim under the Lanham Act, it is not a prerequisite that the mark be registered. See Section 45, 15 U.S.C. § 1127. A claim for relief arises if the defendant affixes to the goods a false designation of origin or any false description or representation. The defendant is subject "to a civil action . . . by any person who believes that he is or is likely to be damaged by the use of any such false description or representation" (§ 43(a); 15 U.S.C. § 1125(a)).
The gist of the action under this section is a use of the mark or tradename in interstate commerce which is likely to cause confusion or to deceive purchasers as to the source of origin of the goods. Geisel v. Poynter Products Inc., 283 F.Supp. 261, 266-268 (S.D.N.Y. 1968); 1 R. Callmann, Unfair Competition, Trademarks and Monopolies § 18.2 (b), at 622-23 (3d ed. 1967). A false representation or description would be violative of § 43(a) even though the plaintiff is not a direct competitor of the defendant. 1 R. Callmann, supra, at 625. See Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 151 (9 Cir.), cert. denied, 374 U.S. 830, 83 S.Ct. 1870, 10 L.Ed.2d 1053 (1963); L. E. Waterman Co. v. Gordon, 72 F.2d 272, 273 (2 Cir. 1934); Restatement of Torts §§ 730-31 (1938).
Although, on its face, Section 43(a) seems to be for the benefit of the person who believes he is likely to be damaged, the emphasis has largely remained on confusion of the public.
Under the federal guidelines there must be some showing of public confusion. First, it is obvious that Nina, unlike a giant corporation, has not spread her fame into every nook and corner of the land. Yet she has done enough, with her meager means, to become well-known as a designer of needlepoint canvasses. It is true that "Nina" is not the strongest mark imaginable, but it is a rather uncommon name, unlike Mary or Jane. For her name, Nina has acquired a secondary meaning in that her name has been used long and extensively enough to have become known to a substantial number of present or prospective needlepoint purchasers and understood by them to designate the goods of the plaintiffs.
Moreover, in the case at bar it may be presumed from the wilful appropriation that confusion resulted. I hold that the circumstance of there being a deliberate attempt to cash in on Nina's reputation is evidentiary of her standing in the field, and, hence, of secondary meaning, as well as being evidentiary of the confusing similarity. In sum, relief under the federal claim based on § 43(a) is warranted.
With respect to the claim for relief under the New York law of unfair competition, it is, if anything, easier for the plaintiff to prevail. In Santa's Workshop Inc. v. Sterling, 282 App.Div. 328, 329-330, 122 N.Y.S.2d 488, 489 (3d Dept. 1953), the Court said: "The law of unfair competition no longer requires that plaintiff's business and advertising shall have acquired a `secondary meaning.' International News Service v. Associated Press, 248 U.S. 215, 235, 237, 39 S.Ct. 68, 63 L.Ed. 211; Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 404, 36 S.Ct. 357, 60 L.Ed. 713, 718. `The controlling question in all cases where the equity power of the courts is invoked is whether the acts are fair or unfair, according to principles recognized in equity'. Oneida, Ltd. v. National Silver Co., Sup., 25 N.Y.S.2d 271, 276. See also Avon Periodicals, Inc. v. Ziff-Davis Pub. Co., Sup. [27 Misc.2d 160], 113 N.Y.S.2d 737, affirmed 282 App.Div. 200, 122 N.Y.S.2d 92."
When the focus is directed to equitable considerations, the fact that timely warning was given at the threshold of Leitman's activity is not without significance; conversely, consultation with counsel is not a defense. Bennett Bros. v. Floyd Bennett Farmers Market Corp., 22 Misc.2d 833, 836, 197 N.Y.S.2d 882 (N.Y.Co.Sup.Ct.1960).
Also pertinent is the fact that there has been and will be a dilution of the plaintiff's mark. It will be difficult for Nina to maintain a reputation for quality if there is a product with a similar name that is of poorer quality and cheaper. And this detrimental effect will be heightened because, as Judge Motley aptly remarked in Fund of Funds, Ltd. v. First American Fund of Funds, Inc., 274 F.Supp. 517, 526 (S.D.N.Y.1967), "defendant will be operating in an area of normal expansion for plaintiffs to which
New York has an anti-dilution statute which reads:
Dilution is an injury that differs materially from that arising out of the orthodox confusion. Even in the absence of confusion, the potency of a mark may be debilitated by another's use. This is the essence of dilution. Confusion leads to immediate injury, while dilution is an infection which, if allowed to spread, will inevitably destroy the advertising value of the mark. 3 R. Callmann, supra, at 955-57.
Here we find what Judge Geller of the New York Supreme Court called a "`whittling down' [of] the identity and reputation of plaintiffs' names." Renofab Process Corp. v. Renotex Corp., 158 N.Y.S.2d 70, 77 (N.Y.Co.Sup.Ct. 1956). He held that, in New York: "[t]he likelihood of damage through `dilution' of its mark or symbol is enough." (Id.) Therefore, the plaintiffs are certainly entitled to relief under the more lenient state standards, which focus more on notions of equity and dilution than does the Lanham Act.
Accordingly, on state and federal grounds the plaintiffs are entitled to an injunction enjoining the defendants from manufacturing or selling needlepoint products in any combination of words containing the word "Nina."
The foregoing constitutes my findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).
Settle order on notice conforming to Fed.R.Civ.P. 65(d).