KOZINSKI, Circuit Judge.
The use of trademarks to identify the source of products is as old as the modern market economy. While the use of marks to signify ownership of goods dates back thousands of years,
Throughout the development of trademark law, the purpose of trademarks remained limited and constant: identification of the manufacturer or sponsor of a product. Product features could therefore be divided into two categories. Features that served to identify the source of a product were protected by trademark law, and could not be copied by others. On the other hand, features that served as functional components of a product — if the product could not work or would not be as desirable without them — were unprotected by trademark law. Others were free to copy these features, subject only to whatever protection was available under patent law. In the vast majority of cases, the mutual exclusivity of the categories was airtight. Names of products were source-identifiers, and hence protected; physical attributes of products were functional, and hence unprotected. See, e.g., Best Lock Corp. v. Schlage Lock Co., 413 F.2d 1195 (C.C.P.A.1969) (figure eight configuration of lock functional and therefore unprotected).
Only relatively recently have trademarks begun to leap out of their role as source-identifiers and, in certain instances, have effectively become goods in their own right. When sports fans wear jackets bearing the names of their favorite teams, when listeners of popular music wear T-shirts and buttons emblazoned with the names of musical groups, when followers of fashion wear blue jeans with names of fictitious people sewn into the pockets (a practice which, mercifully, is no longer as popular as it was a decade ago), they are
A small but growing number of cases has recognized this change, and has found no difficulty in applying the source-identifying/functional distinction where trademarks or service marks serve purely as functional features. See International Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir.1980) (insignia of young women's fraternal organization is functional element of jewelry), cert. denied, 452 U.S. 941, 101 S.Ct. 3086, 69 L.Ed. 2d 956 (1981); University of Pittsburgh v. Champion Prods., Inc., 566 F.Supp. 711 (W.D.Pa.1983) (name of university is functional element of shirts); Bi-Rite Enters., Inc. v. Button Master, 555 F.Supp. 1188 (S.D.N.Y.1983) (names of recording artists are functional elements of buttons).
These cases have presented no difficulty for the traditional categories of trademark law because, as in the New York Mets hypothetical, it has been clear that the ordinary purchaser has treated the marks as functional items, not as source-identifiers. This is because the mark and the product have represented radically different industries; reasonable purchasers could not believe or care that the mark holder would be competing in the same market as the product manufacturer. E.g., Job's Daughters (fraternal organization and jewelry production); University of Pittsburgh (educational/athletic services and clothing production); Bi-Rite Enterprises (music services and button production). Where the mark and the product come from the same or similar industries, however, the distinction between the categories blurs, because a mark can serve simultaneously as a source-identifier and a functional element.
This case presents such a situation. We find ourselves at the intersection of what have been, until now, two mutually exclusive areas of trademark law.
This lawsuit was brought by Plasticolor Molded Products, Inc., seeking a declaratory judgment of its rights to use Ford Motor Company trademarks on the automobile accessories it produces. Ford then counterclaimed for trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. §§ 1114, 1125(a) (1982), and under California law. Ford moved for summary judgment, which was denied. Plasti-color Molded Prods. v. Ford Motor Co., 698 F.Supp. 199 (C.D.Cal.1988). On December 29, 1988, the court heard argument on both parties' renewed motions for summary judgment.
A. The Prior Opinion
In its prior ruling on Ford's first motion for summary judgment, the court made six findings of fact. All are relevant to the motions currently under consideration. For convenience, they are reproduced below.
1. Ford is a Delaware corporation with its principal place of business in Dearborn, Michigan. It has for many decades manufactured, advertised and sold motor vehicles, parts and accessories, including floor mats, mudflaps and step treads (collectively, "floor mats"). It has advertised its automotive parts and accessories extensively throughout the country, and has sold them through independent Ford dealers. In addition, it sells its parts through repair
2. Ford has long used various arbitrary and distinctive marks to identify its products, including FORD, AEROSTAR, BRONCO, CAPRI, COUGAR, COURIER, ESCORT, EXP, FIESTA, LYNX, MERCURY, MUSTANG, PINTO, RANGER, TEMPO, THUNDERBIRD, and TOPAZ, as well as certain pictorial designs, among them the Mustang "running horse" and Thunderbird symbols. Through Ford's long and extensive use of these trademarks, they have acquired a secondary meaning signifying Ford and its products, and have acquired substantial good will that increases Ford's recognition and the attractiveness of its products to consumers.
3. Ford has attempted to protect its trademarks through federal trademark registration. It owns federal registrations for the FORD trademark for a variety of automotive products, including a 1929 registration for floor mats. Ford has also registered its BRONCO, CAPRI, COUGAR, COURIER, FIESTA, MERCURY, PINTO, RANGER, and THUNDERBIRD trademarks; these registrations have become incontestable and are conclusive evidence of Ford's exclusive rights to the marks. See 15 U.S.C. §§ 1065, 1115(b) (1982). Ford has also registered its Mustang and Thunderbird designs.
4. Plasticolor is a California corporation with its principal place of business in Fullerton, California. Since 1971 it has engaged in the business of manufacturing and selling plastic automobile accessories, including floor mats. It produces these items in a variety of designs and colors, some bearing designs or other graphics. Plasticolor sells its products through independent Ford dealers, automotive chains, catalog houses, mass merchandisers, van converters, repair shops and garages — many of the same outlets Ford uses for its own similar products or other parts. Plasticolor has promoted its products through brochures and industry trade shows, but has not engaged in substantial media advertising aimed at the consuming public.
5. In 1973, Plasticolor began selling small quantities of its accessories bearing Ford's PINTO trademark and Mustang design without license or any other authorization from Ford. Later, still without authorization, Plasticolor began selling mats and other accessories bearing other Ford marks: FORD, CAPRI, BRONCO, MERCURY, COUGAR, COURIER, FIESTA, ESCORT, RANGER, and the Mustang and Thunderbird designs. In choosing to use the Ford trademarks, Plasticolor relied on the success of the genuine Ford products sold under those marks and the good will that Plasticolor would be able to exploit.
6. Most of Plasticolor's mats bearing Ford marks are packaged with cardboard header cards bearing the word "Plasticolor"; some bear as well the description "Ford Custom Carpet Front." The header cards do not indicate that "Plasticolor" is the manufacturer, and there is no indication of any relation to Ford or disclaimer thereof. Plasticolor has distributed a not insubstantial number of mats without any header cards; moreover, it has distributed some bearing Ford trademarks with the designation "O.E.," which is understood in the industry to mean "original equipment," even though the mats were not original equipment or authorized by Ford, the original equipment manufacturer.
On these facts, the prior opinion granted Ford's motion for summary judgment as to the claim for trademark infringement and unfair competition under the Lanham Act. The court found that Plasticolor's use of the Ford trademarks "creates a substantial likelihood of confusion among consumers and the general public as to the source or sponsorship of floor mats bearing the Ford trademarks." 698 F.Supp. at 202. The court was careful to limit its holding to Plasticolor's products as presented at the time. While Plasticolor represented that it intended to change its packaging, the court expressed no view as to a new design.
The prior opinion partially rejected and partially accepted Plasticolor's argument that its use of Ford's trademarks did not constitute infringement because the marks served a functional, rather than a sourceidentifying,
The prior opinion noted that Ford's three state law claims, under California's unfair competition statute, Cal.Bus. & Prof.Code §§ 17000-17500 (West 1987 & Supp.1989), California's dilution statute, Cal.Bus. & Prof.Code § 14330 (West 1987), and the common law of unfair competition, had not been sufficiently addressed by the parties. The court accordingly denied without prejudice Ford's motion as to the state law claims. 698 F.Supp. at 204.
B. The Current Motions
Subsequent to the filing of the prior opinion, Plasticolor has redesigned its packaging and has introduced samples of the new packaging into the record. All other facts remain unchanged. The court thus readopts the first five findings of fact from its prior opinion, and modifies the sixth to read as follows:
6. Most of Plasticolor's mats bearing Ford marks are packaged with cardboard header cards. The header cards identify the product as "floor mats," without specifying that the mats are designed to be used inside Ford cars. The cards do, however, include a photograph of a Ford car, with the Ford logo clearly visible. Beneath the header card, most of the floor mat is visible, including the portion which reads "FORD" (or "MUSTANG," or various other Ford trademarks) in large capital letters. The lower third of the header card bears a two-section disclaimer. The upper section reads, in large letters:
The lower section reads, in smaller letters, "NOTICE," and on the line below, "This product is not authorized, sponsored, or manufactured by Ford Motor Co."
II. The Lanham Act Claim
The Ford trademarks on Plasticolor's floor mats serve two purposes. On one hand, a purchaser could reasonably interpret the marks as source-identifiers, as indicating that Ford has either manufactured or authorized production of the mats. On the other hand, a purchaser could reasonably consider the marks to be functional elements, designed to help the mats contribute to a harmonious ensemble of accessories and decorate the interior of a car. Indeed, a reasonable purchaser could easily interpret the marks both ways simultaneously.
If the marks were solely source-identifiers or solely functional elements, there would be an existing body of law to apply in ruling on the motions for summary judgment. Because the marks incorporate aspects of both, however, the court must first consider what law to apply.
A. The Law
In an ordinary case of trademark infringement, the plaintiff must prove that the alleged infringement creates a likelihood of confusion. 15 U.S.C. § 1114 (1982); Lindy Pen Co. v. Bic Pen Corp., 725 F.2d 1240, 1243 (9th Cir.1984), cert. denied, 469 U.S. 1188,
A number of factors are relevant to this determination, including (1) the strength of the plaintiff's mark; (2) the extent to which the goods are related; (3) the similarity of the marks; (4) evidence of actual confusion; (5) the degree of identity of marketing channels for the goods; (6) the likely degree of purchaser care; (7) the defendant's intent in selecting the mark; and (8) the likelihood of expansion of the product lines. Toho Co. v. Sears, Roebuck & Co., 645 F.2d 788, 790 (9th Cir.1981). In considering whether the buying public is likely to be confused, the factfinder cannot look merely at the point of sale; a mark that is likely to confuse prospective purchasers observing it after the point of sale constitutes no less an infringement. Levi Strauss & Co. v. Blue Bell, Inc., 632 F.2d 817, 822 (9th Cir.1980).
Functional features, on the other hand, are unprotected by trademark law. International Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912, 917 (9th Cir.1980), cert. denied, 452 U.S. 941, 101 S.Ct. 3086, 69 L.Ed.2d 956 (1981). A feature is functional if it embodies the benefit the consumer wishes to purchase, as opposed to an assurance that the product is manufactured or sponsored by a particular entity. Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1506 (9th Cir.1987).
Pagliero v. Wallace China Co., 198 F.2d 339, 343 (9th Cir.1952) (footnotes omitted).
The first alternative has been adopted in a case very similar to this one. In National Football League Properties, Inc. v. Wichita Falls Sportswear, Inc., 532 F.Supp. 651 (W.D.Wash.1982), the defendant, without authorization from the plaintiff, manufactured replicas of professional football jerseys. The court found that the jerseys' design, colors and use of team names created a likelihood of confusion as to sponsorship. Id. at 662. The court then discussed, without deciding, whether the jersey attributes were functional features, and concluded: "Even assuming the marks are functional[, this assumption] does not, however, preclude trademark protection. A functional feature may additionally serve as a trademark and be protected as such." Id. at 663.
We are unable to adopt this reasoning. Affording the same degree of protection against mixed-use copying as against purely source-identifying copying has the effect of protecting functional features, a result clearly contrary to established trademark law. If we apply straightforward trademark law, we would enjoin the production of articles likely to cause public confusion as to source or sponsorship both at and after the point of sale. Confusion after the point of sale, however, is inherent in a partial functional use: A mixed-use article that eliminates the likelihood of confusion after the point of sale also defeats much of the feature's functionality. Consider some examples: A football jersey bearing the words "Seattle Seahawks (Not Affiliated with the Seattle Seahawks)"; a shoulder patch reading "Boston Bruins (Not Sponsored by the Boston Professional Hockey Association)"; a floor mat reading "Ford (Not Manufactured by Ford Motor Company)." These disclaimers would probably end confusion as to source, but would also effectively negate the functional aspects of the marks. Treating mixed uses exactly like source-identifying uses would thus protect functional features, a result contrary to established principles of trademark law. See p. 1336 supra. The reasoning of National Football League flies in the face of this authority.
15 U.S.C. § 1114(1) (1982). Any use of a registered mark which causes confusion, whether additionally functional or not, is plainly covered by this language. Were we to treat mixed uses as purely functional, and thus withdraw all protection, we would be decimating a cause of action explicitly provided by Congress. We must accordingly reject the implicit holdings of Keene and Schwinn.
In searching for an appropriate middle ground, we have little guidance beyond the fundamental principles discussed above; research does not disclose any cases that have embarked on a similar journey. We do have, however, some assurance that the search is not misguided. The Ninth Circuit has twice posited the existence of the situation we confront today, and has twice suggested that there may be a middle ground between pure functionality and pure source-identification. International Order of Job's Daughters, after reaffirming that functional features are unprotected, cautioned:
633 F.2d at 919 (citations omitted). The following year, the court observed that "a trademark which identifies the source of goods and incidentally serves another function may still be entitled to protection."
By indicating that mixed uses are entitled to some protection, Job's Daughters and Vuitton preclude the alternative of treating mixed uses as pure functional uses. But neither Job's Daughters nor Vuitton suggest that mixed uses are to be afforded full trademark protection. Satisfied that the answer lies somewhere in between, we begin our search for this middle ground.
In finding a solution, we must reconcile two principles that often pull in opposite directions. The Lanham Act requires that we protect trademark registrants from confusion as to source or sponsorship, to the greatest extent consistent with the functionality doctrine. The functionality doctrine requires that we permit the copying of functional features to the greatest extent consistent with the Lanham Act. We must look, therefore, for a solution that permits trademarks to be copied as functional features, but minimizes the likelihood that the public will associate the copied mark with the registrant.
There need be no conflict between the two principles at the point of sale. The functional use of a trademark does not preclude a clear indication at the point of sale (in the form of a label, packaging, or other identification easily removed or concealed by the consumer) that the product is not manufactured or sponsored by the registrant. Floor mat purchasers can fully enjoy the functional use of a FORD floor mat even though the mat bears a removable notice disclaiming any affiliation with the Ford Motor Company. Applying a likelihood of confusion test at the point of sale will therefore not significantly deter the purchase of an article using a trademark as a functional feature.
It is only after the point of sale that the likelihood of confusion standard must be tempered. As discussed above, requiring the manufacturer to eliminate the likelihood of confusion past the point of sale will, in most cases, entirely eliminate the possibility that the mark could serve a functional purpose. A floor mat whose upper surface reads "FORD (not authorized by Ford Motor Company)" would obviously attract few customers. Protecting functional copying of trademarks will therefore require that we tolerate at least some confusion as to source or sponsorship after the point of sale.
The potential for confusion can be diminished, however, by requiring that the manufacturer of a product that employs a trademark for functional purposes take all reasonable steps to eliminate post-sale confusion consistent with the functional use of the mark. The manufacturer will, for example, often be able to place a disclaimer on a portion of the article not generally visible while the article is in use. A notice of non-authorization on the underside of a floor mat, or a disclaimer affixed to the inside of a football jersey, will not hinder the functional use of a trademark, but may somewhat reduce the likelihood of post-sale confusion. In other cases, the copier may be able to place its own name alongside the copied trademark without interfering with the mark's functionality. There may also be cases where a visible disclaimer will not detract from the functional purpose of the trademark. Whatever the method chosen, it must be the most effective reasonably available that does not materially interfere with the trademark's functional purpose.
What constitutes reasonable measures will vary with the nature of the product and its market. In some cases, no reasonable measures may be available. A concealable
B. The Summary Judgment Motions
We have determined that the mixed use of a trademark constitutes infringement where the likelihood of confusion exists as to source or sponsorship at the point of sale, or where the alleged infringer has not taken reasonable steps to eliminate the likelihood of confusion after the sale. We can now apply this standard to Plasticolor's use of Ford's trademarks.
Of the factors relevant to the determination of whether confusion at the point of sale is likely, all but one remain unchanged since the prior opinion. Ford's marks are still strong. See Plasticolor Molded Prods. v. Ford Motor Co., 698 F.Supp. 199, 200 (C.D.Cal.1988). Plasticolor and Ford still sell nearly identical products, through many of the same channels. See id. at 201. It is still true that Plasticolor intentionally uses Ford trademarks to attract customers who own Ford automobiles. See id. The only change since the prior opinion is that Plasticolor has redesigned its packaging, requiring a reevaluation of the court's finding, based on the old packaging, of substantial evidence of actual confusion. See id. at 202.
The only evidence relevant to actual confusion are the mats themselves.
We are similarly unable to rule, as a matter of law, whether Plasticolor has taken adequate steps to avoid the likelihood of post-sale confusion. As discussed above, Plasticolor has affixed disclaimers to the underside of the mats, so that the disclaimers are not visible while the mats are in ordinary use. Anyone inspecting the mats' underside, however, would easily be able to see the disclaimer. Without any evidence as to whether the public is likely to remain confused despite the disclaimer, and without any evidence as to the mats' salability with a more prominent disclaimer, we are unable to ascertain whether the current disclaimer represents the most effective reasonable step to reduce post-sale confusion.
The motions for summary judgment as to the Lanham Act claim are accordingly denied.
III. The State Law Claims
Ford claims that Plasticolor's use of the Ford trademarks constitutes unfair competition, a deceptive trade practice and a violation of California's anti-dilution statute. We consider the cross-motions for summary judgment as to each claim in turn.
A. Unfair Competition
California unfair competition law, Cal.Bus. & Prof.Code §§ 17200-17208
Analysis of the unfair competition claim, therefore, tracks analysis of the Lanham Act claim. To prevail, Ford will have to prove (1) the likelihood of consumer confusion at the point of sale, and (2) that Plasticolor has not taken reasonable steps to eliminate the likelihood of confusion after the point of sale. Because each of these inquiries involves unresolved issues of fact, the cross motions for summary judgment are denied as to the unfair competition claim as well.
B. Deceptive Trade Practices
It is far from clear that California provides a cause of action for deceptive trade practices distinct from the cause of action for unfair competition. If the deception alleged by Ford consists of Plasticolor's advertising and marketing of its mats, Ford's cause of action is a branch of the tort of unfair competition which also requires Ford to show likelihood of confusion in order to prevail. Toho Co. v. Sears, Roebuck & Co., 645 F.2d 788, 793-94 (9th Cir.1981); Cal.Bus. & Prof.Code §§ 17200, 17500 (West 1987). Because deceptive advertising can cause consumer confusion only before or at the point of sale, we need not consider post-sale confusion: Ford can prevail on this claim by showing that Plasticolor's advertising is likely to cause confusion among potential purchasers as to the mats' source or sponsorship. Because the existence of the likelihood of confusion at the point of sale remains to be resolved, the motions for summary judgment are denied as to this claim as well.
Ford alleges that Plasticolor's use of Ford's marks dilutes the marks' distinctive quality, in violation of Cal.Bus. & Prof. Code § 14330 (West 1987). Ruling on the motions for summary judgment as to dilution will necessitate a four-part inquiry. First, we must determine whether Ford can state a claim under the statute. Second, we must address Plasticolor's contentions that the dilution statute is preempted by the Lanham Act and by the federal patent laws. Third, we must discern the effect of the 1985 amendment to section 14330, which added a new subsection (b) in response to International Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir.1980), cert. denied, 452 U.S. 941, 101 S.Ct. 3086, 69 L.Ed.2d 956 (1981). Fourth, we must apply the results of our analysis to the motions presented.
1. A Dilution Cause of Action
Section 14330(a) provides:
Cal.Bus. & Prof.Code § 14330(a) (West 1987). While the statute speaks in terms of protecting against two distinct harms—injury to business reputation and dilution of a mark's distinctive quality—the first harm has consistently been deemed subsumed in the second. Courts have interpreted the statute to include injury to business reputation as one of the possible elements supporting a cause of action for dilution. See, e.g., Toho Co. v. Sears, Roebuck & Co., 645 F.2d 788, 793 (9th Cir.1981) (rejecting claim of dilution where "Sears' use of the reptilian monster character on its garbage bag packages [does not] link Godzilla with something unsavory or degrading").
What differentiates dilution from trademark infringement and unfair competition is that it dispenses with the need to show likelihood of confusion. The dilution statute protects against an injury less immediate than the loss of sales due to purchaser confusion; it protects against what is frequently termed "the gradual diminution or whittling away of the value of a trademark, resulting from use by another." 2 J.T. McCarthy, Trademarks and Unfair Competition § 24.13, at 213 (2d ed. 1984). Similar metaphors abound: Courts speak in terms of "blurring," McFly Inc. v. Universal City Studios, Inc., 228 U.S.P.Q. (BNA) 153, 161 (C.D.Cal.1985), "tarnishing," Nutri/System, Inc. v. Con-Stan Indus., Inc., 228 U.S.P.Q. (BNA) 859, 863 (C.D.Cal.1985) (quoting Toho, 645 F.2d at 793), aff'd, 809 F.2d 601 (9th Cir.1987), and even "infection," Sykes Laboratory, Inc. v. Kalvin, 610 F.Supp. 849, 859 (C.D.Cal.1985) (quoting Mortellito v. Nina of California, Inc., 335 F.Supp. 1288, 1296 (S.D.N.Y.1972)). Dilution thus refers to copying which, while not sufficiently confusing to divert sales in the short run, will tend to divert them in the long run by weakening the instantaneous favorable associations the public makes with highly regarded products. See Exxon Corp. v. Exxene Corp., 696 F.2d 544, 549-50 (7th Cir.1982).
Courts were suspicious of California's dilution statute in the years immediately following its 1967 enactment. Despite the broad wording of the statute, it was not unusual for courts to express reluctance about giving the section an "overly broad application lest it swallow up all competition in the claim of protection against trade name infringement." Coffee Dan's, Inc. v. Coffee Don's Charcoal Broiler, 305 F.Supp. 1210, 1217 n. 13 (N.D.Cal.1969). See also Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 803 (9th Cir. 1970). The concern was a legitimate one; if dilution were treated simply as unfair competition minus the need to show likelihood of confusion, the doctrine would effectively render unfair competition and trademark law superfluous for redressing claims of trade name copying.
Dilution doctrine has accordingly been limited by the principle that only the most distinctive marks are eligible for protection. 2 J.T. McCarthy § 24.14. See, e.g., Accuride Int'l, Inc. v. Accuride Corp., 871 F.2d 1531, 1539 (9th Cir.1989) (ACCURIDE insufficiently distinctive to merit protection under section 14330); Grey v. Campbell Soup Co., 650 F.Supp. 1166, 1175 (C.D.Cal. 1986) (GODIVA mark for chocolate strong enough to be entitled to protection against dilution), aff'd mem., 830 F.2d 197 (9th Cir.1987); Builders Square, Inc. v. Wickes Cos., 227 U.S.P.Q. (BNA) 644, 649, 1985 WL 5469 (C.D.Cal.1985) (BUILDERS EMPORIUM not distinctive enough to be protected by dilution statute). So limited, dilution coexists peaceably with unfair competition as an adjunct doctrine providing a greater measure of protection for the most distinctive trade names.
This limitation poses no obstacle for Ford. The name FORD and Ford's other marks used by Plasticolor on its floor mats (CAPRI, BRONCO, MERCURY, COUGAR, COURIER, FIESTA, ESCORT, RANGER,
Neither is Ford hindered by two other asserted obstacles. The fact that Ford and Plasticolor are competitors in the same market does not preclude protection; a cause of action for dilution can exist where the plaintiff and defendant provide the same product or service. See Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1180 (9th Cir.1988) (name of one real estate brokerage firm can dilute mark of another). See also Jordache Enters., Inc. v. Hogg Wyld, Ltd., 828 F.2d 1482, 1489 (10th Cir.1987) (interpreting New Mexico dilution statute). But see EZ Loader Boat Trailers, Inc. v. Cox Trailers, Inc., 746 F.2d 375, 380 (7th Cir.1984) (reaching opposite result applying Illinois statute); Smithkline Beckman Corp. v. Procter & Gamble Co., 591 F.Supp. 1229, 1246-47 (N.D.N.Y.1984) (reaching opposite result applying New York statute), aff'd mem., 755 F.2d 914 (2d Cir.1985).
Nor does the fact that Plasticolor's use of Ford's marks is partially functional preclude protection. The statute itself makes no distinction between source-identifying and functional uses; indeed, the fact that the likelihood of confusion as to source is explicitly not an element of the cause of action is a strong indication that the statute is intended to protect against functional uses of trademarks. Functional copying, moreover, can often constitute the very sort of injury the statute is designed to prevent. See, e.g., Coca-Cola Co. v. Gemini Rising, Inc., 346 F.Supp. 1183, 1191 (E.D.N.Y.1972) (reproduction on poster of COCA-COLA mark, along with distinctive script and format, where mark is altered to read "Enjoy Cocaine," dilutes mark) (applying New York statute); Bi-Rite Enters., Inc. v. Button Master, 555 F.Supp. 1188, 1196 (S.D.N.Y.1983) (applying New York dilution statute to sale of buttons bearing names of musical groups, but finding that the plaintiffs had made no showing of harm). The purely functional copying of a trademark, such as the sale of shirts bearing the FORD name and logo, could dilute the mark's distinctive quality as surely as the sale of Ford beer or Ford aftershave. Section 14330 thus affords protection.
A more difficult question concerns what the statute protects against. Courts have interpreted the statute to protect the holder of a distinctive mark against four overlapping types of injury. We consider each in turn.
First, the statute protects the mark against association with something unsavory or degrading. See, e.g., Toho Co. v. Sears, Roebuck & Co., 645 F.2d 788, 793 (9th Cir.1981) (finding no dilution in part because use of GODZILLA in connection with garbage bag packages is not unsavory or degrading); Grey v. Campbell Soup Co., 650 F.Supp. 1166, 1175 (C.D.Cal.1986) (DOGIVA name for dog biscuits causes dilution of GODIVA mark for chocolate, in part because of injury to business reputation caused by associating food for animals with food for human consumption), aff'd mem., 830 F.2d 197 (9th Cir.1987); Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200, 205 & n. 8 (2d Cir.1979) (use of distinctive cheerleading uniform in "sexually depraved film" is ground for injunction under New York dilution statute).
Second, the statute protects against the tarnishing of a mark, and resulting injury to business reputation, caused by association with a poorly manufactured product. See, e.g., McFly, Inc. v. Universal City Studios, Inc., 228 U.S.P.Q. (BNA) 153, 161 (C.D.Cal.1985) (use of surname McFly in popular film "Back to the Future" not dilutive of mark used by group of restaurants and bars, in part because of relevance of "the high quality of a junior user's goods and services"); Sally Gee, Inc. v. Myra Hogan, Inc., 699 F.2d 621, 625 (2d Cir.1983) (affirming finding of no dilution under New
Third, the statute protects against genericide,
Fourth, the statute protects against the gradual impairment of a trademark when it is used to identify unaffiliated products, a practice that tends to diffuse the public's immediate association of the mark with the source. See, e.g., Toho Co. v. Sears, Roebuck & Co., 645 F.2d 788, 793 (9th Cir. 1981); Ameritech, Inc. v. American Information Technologies Corp., 811 F.2d 960, 965 (6th Cir.1987) (applying Ohio common law); Exxon Corp. v. Exxene Corp., 696 F.2d 544, 549-50 (7th Cir.1982) (applying Illinois statute).
Section 14330 speaks of the likelihood of dilution, not actual dilution. Cal.Bus. & Prof.Code § 14330(a); Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1180 (9th Cir.1988). Thus, unless the statute is preempted by federal law, and unless the 1985 amendment materially alters the statute's coverage, Ford can prevail on its dilution claim if it proves that Plasticolor's use of its marks causes the likelihood of any of these four types of injury.
Plasticolor contends that because the dilution statute dispenses with the requirement of proving a likelihood of confusion, it is preempted by the Lanham Act or, to the extent that the dilution statute purports to prohibit the copying of functional features, the federal patent law. Both of these contentions misapprehend the nature of federal preemption.
Any discussion of preemption must start with Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964), and Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669 (1964), where the Supreme Court held that state unfair competition law cannot prohibit the copying of an unpatentable article. To let a state do so, the Court observed, "would be to permit the State to block off from the public something which federal law has said belongs to the public." Sears, 376 U.S. at 232, 84 S.Ct. at 789. The Court found that in enacting the patent laws, Congress had balanced the twin needs of spurring invention and promoting free competition. Id. at 230-31, 84 S.Ct. at 788. State protection of articles Congress has declared unprotectable would upset the balance; just as a state law extending the life of a patent beyond the expiration date set by Congress would clash with the objectives of the patent law, so would a more indirect extension of protection as was available under state unfair competition law. Id. at 231, 84 S.Ct. at 788.
Subsequent cases have made it clear, however, that the supremacy clause does not require full congruence between federal and state intellectual property protections. See Goldstein v. California, 412 U.S. 546, 93 S.Ct. 2303, 37 L.Ed.2d 163 (1973) (federal copyright law does not preempt state copyright law providing greater protection); Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974) (federal patent law does not preempt state trade secret law protecting unpatentable processes); Aronson v. Quick Point Pencil Co., 440 U.S. 257, 99 S.Ct. 1096, 59 L.Ed.2d 296 (1979) (federal patent law does not preempt state contract law enforcing royalty agreement as to unpatentable invention). State regulation is preempted only where the Constitution expressly provides that federal regulatory power is exclusive, where the Constitution expressly prohibits the states from
It is accordingly necessary to examine the objectives underlying federal trademark and patent protection, to determine whether federal law preempts California's dilution statute as applied to the partially functional copying of a trademark.
a. The Lanham Act
The Lanham Act does not, by its terms, foreclose broader protection afforded under state law. Indeed, the Act explicitly contemplates the continued existence of state law protection. See 15 U.S.C. § 1065 (1982) (under certain conditions right to use mark becomes incontestable "except to the extent, if any, to which the use of a mark registered on the principal register infringes a valid right acquired under the law of any State"). We can thus infer that the goal of nationwide uniformity, while undoubtedly one of the objectives of the Lanham Act, see S.Rep. No. 1333, 79th Cong., 2d Sess., reprinted in 1946 U.S.Code Cong. Serv. 1274, 1276-77, was not paramount. Instead, the Act serves the goal of national uniformity by providing a nationwide floor, assuring the public and trademark owners at least a minimum level of protection. See id. at 1277 ("a sound public policy requires that trade-marks should receive nationally the greatest protection that can be given them").
Nor does the existence of state law protection interfere with the two major purposes of the Lanham Act:
Id. at 1274. See also Keebler Co. v. Rovira Biscuit Corp., 624 F.2d 366, 372 n. 3 (1st Cir.1980); Mariniello v. Shell Oil Co., 511 F.2d 853, 858 (3d Cir.1975). State law providing greater protection clearly does not conflict with either of these objectives. See Golden Door, Inc. v. Odisho, 646 F.2d 347, 352 (9th Cir.1980).
Moreover, unlike the strict specifications of the patent laws (the requirements of novelty, utility and nonobviousness and the 17-year time limit), which embody a congressional balancing of the benefits of free competition with those of promoting invention, the requirements of the Lanham Act embody no such balancing. While there is a public interest in promoting competition
This lack of patent-like balancing in the Lanham Act manifests itself in the absence of patent-like requirements. Trademarks need not represent any advance in the state of the art of trade names to be eligible for protection; there is no requirement that a trademark be clever or creative. Even the most mundane mark, if recognized by consumers, is entitled to protection. The Lanham Act places no limit on the duration of the monopoly; a mark that is widely associated with its owner is protected in perpetuity. State trademark protection cannot upset any sort of delicate balance in the Act, as it can regarding the patent law, because the Act incorporates no such balance.
The Lanham Act thus does not preempt state trademark protection greater than that provided by the Act. "By extending to federal registrants greater protection than is available under the Lanham Act, California law, like the Act, protects both the public from confusion about the services and products it is receiving and the public relations investment of plaintiff." Golden Door, Inc. v. Odisho, 646 F.2d 347, 352 (9th Cir.1980). State law is preempted only where it provides less protection than the Lanham Act, where it permits federal trademarks to be infringed. Id. (quoting Mariniello v. Shell Oil Co., 511 F.2d 853, 858 (3d Cir.1975)). Otherwise, the states are free to provide forms of protection not included in the Lanham Act. International Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912, 916 (9th Cir.1980), cert. denied, 452 U.S. 941, 101 S.Ct. 3086, 69 L.Ed.2d 956 (1981).
The Lanham Act thus does not preempt California's dilution statute. We now turn to the question of whether the statute, as applied to the functional copying of trademarks, is preempted by the patent laws.
b. The Patent Laws
There is no doubt that the patent laws preempt state laws that provide greater protection against the copying of articles. Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964); Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669 (1964). As the Court subsequently explained, Sears and Compco involved "the question [of] whether a State could, under principles of a state unfair competition law, preclude the copying of mechanical configurations which did not possess the qualities required for the granting of a federal design or mechanical patent." Goldstein v. California, 412 U.S. 546, 569, 93 S.Ct. 2303, 2316, 37 L.Ed.2d 163 (1973) (emphasis added). Plasticolor would have us extend the holdings of Sears and Compco beyond mechanical configurations, to require the preemption of state protection of any functional aspect of a product, including a word such as Ford. Such an extension, however, has been foreclosed by Goldstein and by Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974).
In both of these cases, the Court drew a distinction between items that are within the sphere of the patent laws, but are unprotected, and items that fall outside of that sphere. Goldstein rebuffed a claim that the patent laws preempted state protection against record piracy, observing:
Goldstein, 412 U.S. at 569-70, 93 S.Ct. at 2316.
While Goldstein involved the question of whether state protection was preempted by federal copyright law, it established a distinction which Kewanee carried over into patent law. Kewanee was concerned with whether patent law preempts state trade secret law to the extent that state law protects unpatented items. The Court first divided unpatented items into two categories, the first of which was "items which would not be proper subjects for consideration for patent protection under 35 U.S.C. § 101."
The distinction could not be more plain. States cannot, consistent with the patent law, prohibit the copying of product features that fall within the general subject matter of the patent laws. But states can prohibit the copying of features that are ineligible for patent protection by virtue of the fact that they fall entirely outside the scope of the patent laws. As to these features, state protection does not conflict with any objective of federal patent law.
A trademark clearly falls into this second category. A trademark is not a process, machine, manufacture or composition of matter; it therefore does not fall within the broad category of items statutorily eligible for patent protection. A trademark or service mark is a word or a group of words identifying the source of goods or services. Even when used functionally, trademarks are items to which the patent laws do not speak. Enhanced state protection is not precluded.
As section 14330(a) is not preempted by federal trademark or patent law, it is applicable to Plasticolor's use of Ford's marks. We next consider the effect, if any, of the 1985 amendment to the statute.
3. The 1985 Amendment
In 1985 the California legislature amended section 14330 by adding subsection (b), which reads:
Cal.Bus. & Prof.Code § 14330(b) (West 1987) (emphasis added; footnote omitted). This amendment was proposed by legislators concerned about cases in the federal courts, particularly Job's Daughters in the Ninth Circuit, which allowed the functional use of trademarks by competitors. These legislators intended to provide a dilution cause of action where, because a mark is used functionally, federal trademark law affords no redress. Whether they accomplished this purpose is, as we shall see, another question entirely.
Subsection 14330(b), as enacted, is not easy to comprehend. The subsection begins by authorizing an injunction against anyone who "uses or unlawfully infringes upon" a registered trademark; this phrase appears to prohibit all uses of trademarks, whether or not they constitute an infringement under federal law. The second clause, however, takes away everything the first has given, by exempting anyone who uses a trademark "in an otherwise noninfringing manner." What we are left with is a prohibition against those ornamental uses that constitute infringements under federal law. So construed, the 1985 amendment leaves the law exactly as it found it.
Puzzled by this result, we turn to the legislative history, which is instructive. As originally drafted, the statute did not contain the phrase underscored above. Absent that phrase, the statute would be quite clear: It would prohibit all ornamental uses of registered trademarks, regardless of whether they constituted an infringement under federal law. The legislative record discloses that the original version of the statute ran into opposition from the state bar, which argued that the statute would sweep too broadly, prohibiting some innocuous uses of trademarks.
When drafting a statute, the legislature must embody its intentions in precise statutory language; the parties and the court must not be left to guess what the legislature meant. Where, as here, a statute incorporates competing concerns, the legislature must resolve those concerns in a meaningful way and select statutory language that clearly reflects the nature of that resolution. This it failed to do here. As best we can tell, one faction supported the statute as originally written, another thought it too broad. In attempting to satisfy both sides, the legislature added language that nullified the language already there. By trying to say everything, the legislature succeeded in saying nothing at all.
It is not the function of the courts to draw distinctions that the legislature failed to draw. Separating what is prohibited from what is permitted requires an exercise of policy judgment, a weighing of conflicting considerations. That is the responsibility of the political branches under our tripartite system of government. Having found no such line drawn by subsection 14330(b), we conclude that it neither adds to nor subtracts from the law as it stood prior to its enactment. We disregard it.
4. The Summary Judgment Motions
Ford has never suggested that there is anything unsavory or degrading about floor mats. See Toho Co. v. Sears, Roebuck & Co., 645 F.2d 788, 793 (9th Cir.1981). Indeed, the fact that Ford itself is in the floor mat business would render any such claim frivolous. Neither has Ford suggested that Plasticolor's floor mats are poorly manufactured, see McFly, Inc. v. Universal Studios, Inc., 228 U.S.P. Q. (BNA) 153, 161 (C.D.Cal.1985), or that any of Ford's marks are in danger of becoming the generic term for floor mats, see Sykes Laboratory, Inc. v. Kalvin, 610 F.Supp. 849, 856-59 (C.D.Cal.1985). Ford can thus prevail on its dilution claim only by proving that Plasticolor's use of its marks is likely to diminish the marks' effectiveness
"Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Ford bears the burden of establishing dilution. After nearly four years of litigation and two rounds of summary judgment motions, Ford has failed to introduce the least bit of evidence supporting its claim that Plasticolor's use of its marks dilutes their distinctive quality. The only evidence on this point is the floor mats themselves, and their appearance raises precisely the opposite inference. The mats contain clear, legible and accurate depictions of various Ford trademarks and logos. They are sold to the public for use in conjunction with Ford products, giving consumers the opportunity to express their allegiance to their Ford-manufactured automobiles. If anything, such use is likely to increase the distinctiveness of Ford's marks. As Judge Sofaer noted in rejecting a similar claim that the sale of buttons bearing the trademarked names of musical groups diluted the marks' distinctive quality, "defendants' use only operates to strengthen plaintiffs' marks. Rather than clouding the distinctive message of quality that plaintiffs' marks carry, defendants provide fans of the various Performers an opportunity to announce their allegiance to the groups, thereby publicizing the popularity of the groups." Bi-Rite Enters., Inc. v. Button Master, 555 F.Supp. 1188, 1196 (S.D.N.Y.1983).
Ford has had ample opportunity to introduce evidence of the likelihood of dilution and has utterly failed to do so. Plasticolor's summary judgment motion as to Ford's counterclaim for dilution is accordingly granted.
IV. Damages for Past Infringement
The last opinion, dated May 9, 1988, determined that Plasticolor's sale of floor mats bearing Ford trademarks, as the mats were packaged at the time, constituted trademark infringement. 698 F.Supp. at 204. Ford claims it is entitled to damages and an accounting of wrongful profits flowing from this infringement.
Section 35 of the Lanham Act, 15 U.S.C. § 1117(a) (Supp. IV 1986), provides, in relevant part:
15 U.S.C. § 1117(a) (Supp. IV 1986). Because Plasticolor's use of the Ford marks was intentional, 698 F.Supp. at 201, Ford can recover damages under this section. Faberge, Inc. v. Saxony Prods., Inc., 605 F.2d 426, 429 (9th Cir.1979) (per curiam); Maier Brewing Co. v. Fleischmann Distilling Corp., 390 F.2d 117, 123 (9th Cir.), cert. denied, 391 U.S. 966, 88 S.Ct. 2037, 20 L.Ed.2d 879 (1968).
If this were a case of pure trademark infringement, Ford would be entitled to an accounting of Plasticolor's profits from sales of the infringing floor mats. See, e.g., Playboy Enters., Inc. v. Baccarat Clothing Co., 692 F.2d 1272, 1274-75 (9th Cir.1982). But because the Lanham Act does not prohibit functional copying, Ford cannot recover profits from sales to consumers who were not confused as to the source of the floor mats. These consumers were interpreting the Ford marks in their functional, hence unprotected, capacity; Ford is not entitled to any recovery flowing from these sales.
Ford can recover, however, to the extent that Plasticolor's uses of the Ford marks
Sorting out one type of sale from another should not be too difficult. The parties have submitted surveys indicating levels of purchaser confusion: We need simply determine an appropriate overall percentage of confusion and apply it to Plasticolor's total profits in order to arrive at a figure representing profits attributable to confusion.
V. Attorneys' Fees
Section 1117(a) authorizes the award of attorneys' fees "in exceptional cases." 15 U.S.C. § 1117(a) (Supp. IV 1986). Such an award is appropriate where "the defendant's acts `constituted extraordinary, malicious, wanton, and oppressive conduct.'" U-Haul Int'l, Inc. v. Jartran, Inc., 793 F.2d 1034, 1043-44 (9th Cir.1986) (quoting Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1026 (9th Cir.1985), cert. denied, 474 U.S. 1059, 106 S.Ct. 802, 88 L.Ed.2d 778 (1986)). There is nothing exceptional about this case; Plasticolor's conduct has not been particularly egregious. Cf. Transgo, 768 F.2d at 1026 (affirming award of attorneys' fees where defendants had conspired to pass off goods as plaintiffs'); Playboy Enters., Inc. v. Baccarat Clothing Co., Inc., 692 F.2d 1272, 1276 (9th Cir.1982) (reversing denial of attorneys' fee award where defendants had deliberately deceived the public); Noxell Corp. v. Firehouse No. 1 Bar-B-Que Restaurant, 771 F.2d 521, 526-27 (D.C.Cir.1985) (awarding attorneys' fees where plaintiff engaged in abusive litigation tactics). The legal issues presented were novel and their resolution not easily predictable. While Plasticolor's use of Ford's marks was deliberate, there is no evidence suggesting that Plasticolor intended to deceive the public. Ford is thus not entitled to recover attorneys' fees under section 1117(a).
Plasticolor's motion for summary judgment is granted as to Ford's counterclaim for dilution. All other motions for summary judgment are denied. Ford is entitled to recover damages and costs proportionate to the percentage of Plasticolor's sales before May 9, 1988, attributable to consumer confusion as to the source of the floor mats. Ford is not entitled to recover attorneys' fees.
Taylor v. Carpenter, 23 F.Cas. 742, 744 (C.C.D. Mass.1844) (No. 13,784).