Opinion
01 Civ. 11295
May 8, 2003
Plaintiffs: Milton Springut Tal S. Benschar Kalow Springut, LLP New York, N.Y.
Defendants: Robert D. Katz Cooper Dunham LLP New York, N.Y.
OPINION
On December 10, 2001, plaintiffs Cartier, a division of Richmont North America, Inc., ("Cartier NA") and Cartier International, B.V. ("Cartier International") (collectively "Cartier" or "plaintiffs") initiated litigation against defendants Four Star Jewelry Creations, Inc., Crown Jewelry Creations, Inc., and Globe Jewelry, Inc. (collectively "defendants"), alleging trade dress infringement under Section 43(a) of the Lanham Act, infringement of a registered mark under Section 32 of the Lanham Act, trademark infringement under Section 349 of the New York General Business Law, patent infringement, false designation of origin, and trademark dilution. These claims relate to Cartier's Tank Francaise, Tank Americaine, and Panthere lines of watches. On April 30, 2002 defendants filed their answer and counterclaims, denying plaintiffs' allegations and seeking declaratory relief ruling that plaintiffs' alleged trade dress and design patents are invalid, are unenforceable, and were not infringed. On December 17, 2002 this case was transferred from United States District Judge Deborah A. Batts to the undersigned. On February 28, 2003, plaintiffs moved by an Order to Show Cause to amend their complaint and for a preliminary injunction ordering, inter alia, cessation of further sales of a watch depicted in defendants' 2002 catalog, which plaintiffs contend infringes upon their alleged trade dress in their Pasha de Cartier watch and a registered trade mark for the associated Grille design.
Cartier manufactures and sells a well-known line of watches referred to as the Pasha de Cartier watches ("Pasha" or "Pasha de Cartier"). Pursuant to their assertion that the Pasha was designed to be instantly recognizable as a unique luxury watch, plaintiffs have enumerated a litany of "elements" or features of the Pasha design which, they contend, significantly distinguish the Pasha from other watches. See Pl.'s Mem. of Law at 4-6. For example, some of the Pasha watches feature what Cartier describes as a highly distinctive grid design on the face of the watch (the "Grille" or "Grille design"). Cartier contends that the design features which, in concert, constitute the Pasha trade dress, are unique to the Pasha and "instantly [associate] the watch with the Cartier Pasha line of watches," presumably in the hearts and minds of a discerning consuming public. Id. at 6.
The Grille design has been registered as a trademark in the U.S. Patent and Trademark Office, Registration No. 2,436,100, issued on March 20, 2001. The registration and the trademark exemplified therein are owned by Cartier International and are valid and subsisting.
Cartier claims that it recently discovered that defendants' 2002 catalog advertises the sale of a watch which allegedly copies the distinctive Pasha design and the associated Grille design. Cartier claims that in August of 2002 its private investigator was informed by defendants that they were out of catalogs and that new catalogs would be available at the end of the year. Id. at 8. Plaintiffs, through their private investigator, ordered a new catalog in December 2002 and received it in January 2003. Cartier claims that its receipt of the catalog first alerted it to the alleged infringements of which it now complains. Plaintiffs assert that the "Book 39 — 2002" catalog is defendants' most recent catalog. Defendants claim that a subsequent catalog was sent out which does not include pictures of the allegedly infringing watches.
Plaintiffs now move this court for leave to amend their complaint to reflect these additional claims and to take care of what amounts to some housekeeping of the pleadings. Plaintiffs also move a for a preliminary injunction with respect to the alleged copying of the Pasha and Grille watch designs. On May 1, 2003, the court held a hearing in order to address plaintiffs' two motions. For the reasons set forth below, Cartier's motion to amend is GRANTED. Plaintiffs' application for a preliminary injunction is GRANTED in part and DENIED in part.
I. PLAINTIFFS' MOTION FOR LEAVE TO AMEND THE COMPLAINT
A. Pasha and Grille Designs
Plaintiffs' motion for a preliminary injunction involves allegations of trade dress infringement and dilution with respect to watch designs — the Pasha and the Grille — which were not included in Cartier's original complaint. Accordingly, Cartier wishes to amend the complaint to reflect these new allegations of infringement. Since plaintiffs' reasons for requesting leave to amend are sound and will cause no discernible undue prejudice to defendants, their motion will be granted.
Under the Federal Rules of Civil Procedure, a party may amend its pleading once as a matter of right before a responsive pleading is served or, if no responsive pleading is permitted and the case has not yet been placed on a trial calendar, within twenty days after the pleading is served. After that point, absent consent from the opposing party, leave to amend must be obtained from the district court. Fed.R.Civ.P. 15(a). Rule 15(a) specifies that "leave shall be freely given when justice so requires." Id. The Supreme Court has emphasized that amendment should normally be permitted. The Court has ruled that refusal to grant leave without justification is "inconsistent with the spirit of the Federal Rules." Foman v. Davis, 371 U.S. 178, 182 (1962). In deciding a motion to amend, a district court "should consider such factors as undue delay, bad faith or dilatory motive on the part of the movant, undue prejudice to the opposing party and futility of the amendment." Henry v. Murphy, 2002 WL 24307 at *2 (S.D.N.Y. Jan. 8, 2002) (citing Rachman Bag Co. v. Liberty Mut. Ins. Co., 46 F.3d 230, 234-35 (2d Cir. 1995)); Tokio Marine Fire Insur. Co. v. Employers Insur. of Wasau, 786 F.2d 101, 103 (2d Cir. 1986). Prejudice to the opposing party is perhaps the most important factor to consider in ruling on a motion to amend. See Rissman v. City of New York, 2001 WL 1398655 at *1 (S.D.N.Y. Nov. 9, 2001). For the purposes of Rule 15(a), prejudice occurs if "the opposing party would experience undue difficulty in defending a lawsuit because of a change of tactics or theories on the part of the movant." See Henry, 2002 WL 24307 at *2 (citing Heslop v. UCB, Inc., 2001 WL 1614154 at *1 (D.Kan. Dec. 13, 2001)). It is well established that "prejudice alone is insufficient to justify a denial of leave to amend; rather the necessary showing is undue prejudice to the opposing party." A.V. by Versace, Inc. v. Gianni Versace. S.p.A., 87 F. Supp.2d 281, 299 (S.D.N.Y. 2000) (internal quotations and citations omitted) (emphasis in original). See also Rissman, 2001 WL 1398655 at *1, n. 1 ("In determining whether a party's interests have been unduly prejudiced, the Second Circuit has instructed district courts to consider `whether the assertion of the new claim would: (i) require the opponent to expend significant additional resources to conduct discovery and prepare for trial; [or] (ii) signficantly delay the resolution of the dispute'") (quoting Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993)) (emphasis added).
Judge Batts did not enter an order limiting the time in which the parties could amend the pleadings in this case. The Second Circuit has "held repeatedly that `mere delay' is not, of itself, sufficient to justify denial of a Rule 15(a) motion." Parker v. Columbia Pictures Industries, 204 F.3d 326, 339 (2d Cir. 2000). Moreover, the "`adverse party's burden of undertaking discovery, standing alone, does not suffice to warrant denial of a motion to amend a pleading.'" A.V. by Versace, 87 F. Supp.2d at 299 (quoting United States v. Continental Illinois National Bank and Trust Company, 889 F.2d 1248, 1255 (2d Cir. 1989)). "Allegations that an amendment will require the expenditure of additional time, effort or money do not constitute `undue prejudice.'" Id.
As an initial matter, the parties inform the court that defendants have offered and agreed to stop selling the watch which plaintiffs believe infringes the Pasha and Grille designs. Defendants contend that, accordingly, it is not necessary for Cartier to amend the complaint to add causes of action related to a product which they have voluntarily agreed not to sell. The court disagrees. "A defendant's voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of that practice." Friends of the Earth Inc. v. Laidlaw Env'tl. Servs. (TOC). Inc., 528 U.S. 167, 189 (2000). "A suit will be rendered moot by a defendant's voluntarily change in a policy only if it is `absolutely clear that the alleged wrongful behavior could not reasonably be expected to recur.' . . . The party asserting mootness has a `heavy burden of persuading the court that the challenged conduct cannot reasonably be expected to start up again.'"Dodge v. County of Orange, 208 F.R.D. 79, 85 (S.D.N.Y. 2002) (citingLaidlaw, 528 U.S. at 189). Defendants have failed to meet this burden.
Defendants also contend that, in light of their agreement to stop selling the watch advertised in its 2002 catalog, it is not necessary to grant a preliminary injunction in this case. The court will address this issue below.
Cartier claims that with respect to the addition of claims for infringement, defendants only recently began their alleged infringing activity. Indeed, Cartier claims that it did not become aware of the alleged infringement until late January of 2003. Since defendants have failed to establish undue prejudice, and in light of the brief delay that amendment will cause, it is appropriate to allow leave for amendment. The motion to amend the complaint as to the Pasha and Grille design infringements is therefore GRANTED.
B. Technical Amendments
1. Corporate Reorganization
Cartier further moves the court to make certain "technical" amendments to the complaint which address the following issues:
First, Cartier, Inc., was recently renamed Richemont North America, Inc. The proposed Amended Complaint reflects this change. Whereas defendants do not oppose an amendment which reflects plaintiffs' corporate reorganization, the motion to amend the complaint with respect to this issue is GRANTED.
2. Withdrawal of Certain Claims
Second, Cartier wishes to withdraw one of its claims for infringement of U.S. Patent No. Des. 288,066, since that patent has expired. Although defendants initially opposed this attempt to simply withdraw the claim, on April 15, 2003 the parties submitted a Stipulation of Partial Dismissal ("stipulation") reflecting their resolution of this issue. The court accepts the terms of the stipulation and, in light of it, plaintiffs' motion to amend the complaint with respect to this issue isGRANTED.
3. Common law trademark infringement
Third, Cartier wishes to clarify vis-a-vis an amendment to the complaint its intention, in addition to its other claims, to assert claims under New York common law for trademark infringement. Defendants did not expressly object to this proposed amendment in their papers; the court assumes that this portion of the motion is unopposed. The court does not believe that amending the complaint to reflect this clarification unduly burdens defendants; defendants make no indication to the contrary. Accordingly, plaintiffs' motion to amend the complaint with respect to this issue is GRANTED.
4. Refined Trade Dress Description
Finally, plaintiffs wish to amend the complaint in order to clarify and/or refine their proffered definitions of Cartier's trade dress for the watch designs previously described in the original complaint. Defendants claim that amendment of the complaint to reflect refinements of plaintiffs' trade dress definitions will be unduly prejudicial. Defendants argue that they specifically tailored their document requests and interrogatories during discovery to the trade dress descriptions as they were previously represented by plaintiffs in the original complaint. Moreover, defendants claim that they have conducted extensive searches for watches which include the allegedly distinctive features of the Cartier trade dress as these features were represented by plaintiffs in the original complaint. Defendants argue that allowing Cartier to amend the complaint to include a refined description of the relevant trade dress will prejudice them insofar as it will force defendants to "redo" much of their costly discovery.
Trade dress "encompasses the design and appearance of the product together with all the elements making up the overall image that serves to identify the product presented to the consumer." Fun-Damental Too, Ltd. v. Gemmy Indus. Corp. 111 F.3d 993, 999 (2d Cir. 1997) (citing Jeffrey Milstein Inc. v. Gregor, Lawlor, Roth, Inc., 58 F.3d 27, 31 (2d Cir. 1995)). The legal principles governing the protection of unregistered trade dress are very similar to the principles governing other registered and unregistered marks. See Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 114 (2d Cir. 2001). Section 43(a) protects such trade dress by creating a cause of action against
[any] person who, on or in connection with any goods or services . . ., uses in commerce any word, term, name, symbol, or device, or any combination thereof . . . which is likely to cause confusion, or to cause mistake, or to deceive as to the affirmation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.15 U.S.C. § 1125 (a)(1).
Trade dress consists of the " total image of a good as defined by its overall composition and design, including size, shape, color, texture, and graphics." Coach Leatherware Co. Inc. v. AnnTaylor, Inc., 933 F.2d 162, 168 (2d Cir. 1991) (emphasis added). A product's trade dress is not, in a legal sense, the combination of words which a party uses to describe or represent this "total image." Rather, the trade dress is that image itself, however it may be represented in or by the written word. Inasmuch as a description which closely approximates, represents, or encapsulates the total image may aid the finder of fact in considering a trade dress infringement claim, it is not uncommon for courts to permit trade dress claimants to alter their formulations of what constitutes a given trade dress See e.g., Coach, Inc. v. We Care Trading Co. Inc., 2001 WL 812126 at *1, n. 3 (S.D.N.Y. 2001) ("Coach has provided various formulations of [its] trade dress in its pre-trial papers but offered this definition at the pre-trial conference when asked by the Court for a final statement of its trade dress."), aff'd without opinion, No. 01-7698 (2d Cir. May 20, 2002). Pursuant to bringing a trade dress claim under the Lanham Act, then, "the plaintiff must precisely articulate the specific elements that comprise its distinct trade dress, so that courts can evaluate claims of infringement and fashion relief that is appropriately tailored to the distinctive combination of elements that merit protection." Best Cellars Inc. v. Wine Made Simple Inc., LJG, 2002 WL 1212815, *4 (S.D.N.Y. Mar. 14, 2003). See also Landscape Forms Inc. v. Columbia Cascade Co., 113 F.3d 373, 381 (2d Cir. 1997) (plaintiffs must articulate "a precise expression of the character and scope of the claimed trade dress"). As Judge Lynch observed in Best Cellars, the articulation requirement "helps to ensure that claims of trade dress infringement are pitched to the appropriate level of generality, for `just as copyright law does not protect ideas but only their concrete expression, neither does trade dress law protect an idea, a concept, or a generalized type of appearance.'"Id. at *5 (quoting Jeffrey Milstein, 58 F.3d at 32).
In the instant case, plaintiffs' proposed changes do not alter the alleged trade dress itself; rather, they may serve to refine plaintiffs' articulation and representation of the "total image" which constitutes the trade dress. Defendants have had access to this "total image" since this case was filed, inasmuch as it exists independent of and apart from the words which plaintiffs previously used to describe it or may wish to use to describe it in the future.
Plaintiffs' refinement of the written description of their claimed trade dress does not unduly prejudice defendants. Notwithstanding their contentions to the contrary, defendants fail to demonstrate that their discovery requests in this case were "tailored" to the rhetorical descriptions of the trade dress which appeared in the original complaint. See Pl.'s Mem. in Opp. at 4. Defendants' discovery requests made no explicit or implicit reference to the description which appears in the original complaint. Rather, defendants broadly requested documents and information with respect to broadly defined terms such as "intellectual property" and "plaintiffs' products." See Def. Document Production Requests. In addition, defendants fail to demonstrate that their "search" for watches which feature elements of Cartier's alleged trade dress was expressly based upon the written description of the trade dress which appeared in the original complaint. The "`adverse party's burden of undertaking discovery, standing alone, does not suffice to warrant denial of a motion to amend a pleading. . . . Allegations that an amendment requires expenditure of additional time, effort or money do not constitute `undue prejudice.'" A.V. by Versace, Inc., 87 F. Supp.2d at 299 (quoting United States v. Continental Illinois National Bank and Trust Company, 889 F.2d 1248, 1255 (2d Cir. 1989)). The clarification of plaintiffs' trade dress definitions does not unduly prejudice defendants. The motion to amend the complaint with respect to this issue is GRANTED.
II. PLAINTIFF'S MOTION FOR A PRELIMINARY INJUNCTON
A. PRELIMINARY INJUNCTION STANDARD
Cartier seeks a preliminary injunction to stop continued infringement and dilution of its trade dress in the Pasha design and the Grille design. "It is well established that trade dress can be protected under federal law." TrafFix Devies Inc. v. Marketing Displays Inc., 532 U.S. 23, 28 (2001). It is also protected under the laws of the State of New York.See Ideal Toy Corp. v. Chinese Arts Crafts, 530 F. Supp. 375, 379 (S.D.N.Y. 1981) (Motley, J.). "A preliminary injunction may issue to prevent trade dress infringement." Masterfoods USA v. Arcor USA Inc., 230 F. Supp.2d 302, 306 (W.D.N.Y. 2002).
As noted above, defendants argue that injunctive relief is unnecessary in light of the fact that they have already offered and agreed to stop selling the allegedly infringing products. Again, the court disagrees. "[A] bare promise by a party in the course of litigation to discontinue past or ongoing misconduct does not justify denial of injunctive relief, since such unilateral action hardly suffices to ensure that the party will not, in the future, reverse course and resume its challenged activities." Lon Tai Shing Co. Ltd. v. Koch + Lowy, 1991 WL 170734, *38 (S.D.N.Y. 1991). Indeed, "if [the defendant] sincerely intends not to infringe, the injunction harms [it] little; if [it does], it gives [plaintiff] substantial protection of its trademarks." Levi Strauss Co. v. Shilon, 121 F.3d 1309, 1314 (9th Cir. 1997) (quoting Polo Fashions Inc. v. Dick Bruhn Inc., 793 F.2d 1132, 1135-36 (9th Cir. 1986)). Moreover, plaintiffs' injunction request is not limited to a prayer for cessation of sales. Rather, as the court shall discuss below, plaintiffs request more extensive relief, asking the court to order defendants to modify all remaining copies of the relevant 2002 catalog by, e.g., placing a black sticker on the picture of the offending product; to send each recipient of the catalog a copy of the preliminary injunction if it is ultimately granted; to send each recipient of the catalog stickers or other means to cover up pictures of the allegedly infringing products; to send each recipient of the catalog "an accompanying letter"; and to send plaintiffs' counsel a copy of each such letter sent. Pl.'s Mem. of Law at 28.
In short, defendants' voluntary and preemptive cessation of sales does not effectively moot Cartier's request for relief which includes an order precluding future sales of the offending product and more expansive relief. A defendants' promise to stop selling the offending products, while perhaps a nice gesture, does not prevent a federal district court from ordering it to act pursuant to a party's request for injunctive relief. This is so even if the court only orders that party to act in accordance with a promise which it previously made in good faith.
The purpose of a preliminary injunction is to prevent irreparable injury and preserve a court's ability to render a meaningful decision on the merits. See Warner Vision Entm't v. Empire of Carolina Inc., 101 F.3d 259, 261-62 (2d Cir. 1996). A preliminary injunction is "one of the most drastic tools in the arsenal of judicial remedies." Hanson Trust PLC v. SCM Corp., 774 F.2d 47, 60 (2d Cir. 1985). Whereas it is an extraordinary measure, it ought not to be routinely granted. See Mazurek v. Armstrong, 520 U.S. 968, 972 (1997); see also Ringling Brothers-Barnum Bailey Combined Shows Inc. v. B.E. Windows Corp., 937 F. Supp. 204, 207 (S.D.N.Y. 1996) ("Because of the great potential for harm which may occur from the issuance of a preliminary injunction, the party seeking the injunction must sustain a heavy burden"). The decision to grant a preliminary injunction rests squarely within the discretion of the trial judge. See ImOn, Inc. v. ImaginOn Inc., 90 F. Supp.2d 345, 349 (S.D.N.Y. 2000).
The standards that govern the issuance of a preliminary injunction are well established. In cases involving claims of trademark infringement and dilution, as in other types of cases, "a party seeking preliminary injunction must demonstrate (1) the likelihood of irreparable injury in the absence of such an injunction, and (2) either (a) likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation plus a balance of hardships tipping decidedly toward the party requesting the preliminary relief." Federal Express Corp. v. Federal Espresso Inc., 201 F.3d 168, 173 (2d Cir. 2000). To show a likelihood of success on the merits, Cartier "need not show that success is certain, only that the probability of prevailing is `better than fifty percent.'" BigStar Entm't v. Next Big Star Inc., 105 F. Supp.2d 185, 191 (S.D.N.Y. 2000) (quoting Wali v. Coughlin, 754 F.2d 1015, 1025 (2d Cir. 1985)).
Perhaps in light of the fact that they have already agreed to stop selling the allegedly infringing watch, defendants in this case have not explicitly opposed Cartier's contention that it will both experience irreparable harm from the alleged infringing activity and that Cartier is likely to succeed in its infringement and dilution claims. Rather, defendants appear to take issue with (1) Cartier's contention that an order enjoining sale of the watch is necessary under the particular circumstances of the case and (2) the additional relief Cartier seeks as a part of its injunction application. The court interprets defendants' challenge to the necessity of issuing an injunction as implicit opposition to plaintiffs' attempt to make out a case for the requested injunctive relief. Accordingly, the court will consider plaintiffs' arguments.
B. DISCUSSION
a. Standard
1. Trade Dress Infringement
Section 43(a) of the Lanham Act prohibits a person from using "any word, term, name symbol or device, or any combination thereof" that is "likely to cause confusion . . ., as to the origin, sponsorship, or approval of his or her goods." 15 U.S.C. § 1125 (a). The Second Circuit has warned that the courts must exercise particular "caution, when extending protection to product designs." Yurman Design, Inc. v. Paj, Inc., 262 F.3d 101, 114 (2d Cir. 2001) (citing Landscape Forms, Inc. v. Columbia Cascade Co., 113 F.3d 373, 380 (2d Cir. 1997)). Whereas trade dress claims raise a risk that relief will "impermissibly afford a level of protection that would hamper efforts to market competitive goods," Landscape Forms, 113 F.3d at 380, courts must construe the Lanham Act "in light of a strong federal policy in favor of vigorously competitive markets." Id. at 379.
In order to prevail in an action for trade dress infringement of a product design under Section 43(a) of the Lanham Act, a plaintiff must demonstrate that (I) the mark is distinctive as to the source of the good; and (2) that there is a likelihood of confusion between its good and defendant's. See Yurman Design, Inc. v. Paj, Inc., 262 F.3d 101, 115-16 (2d Cir. 2001). In addition, functional product design is not protected under Section 43(a) of the Lanham Act. See 15 U.S.C. § 1125 (a)(3) ("In a civil action for trade dress infringement under this chapter for trade dress not registered on the principal register, the person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional"). The Supreme Court has stated that placing the burden of proof as to functionality on the party asserting infringement "gives force to the well-established rule that trade dress protection may not be claimed for features that are functional." TrafFix Devices Inc. v. Mktg. Displays, Inc., 532 U.S. 23 (2001).
Claims under Section 32 require the additional showing that the relevant mark is registered. As stated above in n. 1, the Grille design is, indeed registered.
b. Analysis
Secondary Meaning
Cartier has met its burden with respect to this claim. Cartier has sufficiently established the distinctiveness of the relevant designs insofar as they have acquired "secondary meaning." A mark acquires "secondary meaning" when "in the minds of the public, the primary significance of a [mark] is to identify the source of the product rather than the product itself." Wal-mart Stores Inc. v. Samara Brothers, 529 U.S. 205, 211 (2000) (citing Inwood Laboratories Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982)). "The factors relevant to the inquiry of secondary meaning include advertising expenditures, consumer studies, sales, competitors' attempts to plagiarize the mark, and the length and exclusivity of the mark's use." Friesland Brands, 228 F. Supp.2d at 405 (quoting Arrow Fastener Co. Inc. v. Stanley Works, 59 F.3d 384, 393 (2d Cir. 1995)).
Cartier has presented evidence that both the Pasha and the associated Grille Design have been extensively promoted and advertised over the past fifteen years. In fiscal year 2002, Cartier spent more than $2,300,000 on advertising. In fiscal year 2001, Cartier spent more than $1,200,000 in advertising. Moreover, since 1987, Cartier has sold more than 42,000 Pasha de Cartier watches for more than $180 million. In recent years, about 12% of the Pasha de Cartier watches sold featured the Grille Design as part of the watch. Cartier has produced no evidence of consumer studies linking these marks to the Cartier name. Cartier does claim, however, that it has received extensive exposure and commentary in newspapers, magazines, and trade publications which have featured the Pasha de Cartier in articles and reviews. For example, in a recent article in a publication dedicated to expressing enthusiasm for watches, the author, comparing the Pasha to two other watches, stated:
the world-renowned Cartier brand bases its strategy on the virtue of being instantly recognizable. Cartier burnishes its cosmopolitan image by marketing Pasha chromographs whose parentage will be instantly identifiable . . ., by even the most lightweight watch lover. The centrally located lugs, together with the shiny blue spinel cabochons atop the crown and push pieces, have become indispensable components of the image cultivated by the elegant brand cultivated by the Rue de la Paix [Cartier's Paris address].
Rudiger Bucher, Comparative Test: Chronos with the Frederic Piguet Caliber 1185, WatchTime, June 2001.
This would appear to be a fine example of secondary meaning.
Cartier contends that because the Grille design mark is registered, it is entitled to a presumption that its registered trademark is "inherently distinctive." Sporty's Farm L.L.C. v. Sportsman's Market Inc., 202 F.3d 489, 497 (2d Cir. 2000). Therefore, Cartier argues, it has acquired secondary meaning. As the Court observed in Wal-Mart, however, "[t]he judicial differentiation between marks that are inherently distinctive and those that have developed secondary meaning has a solid foundation" in the Lanham Act. 529 U.S. at 211. The fact that a mark is "inherently distinctive" does not address the issue of the strength of the mark because a finding of inherent distinctiveness "does not guarantee . . . that the mark is a strong one." Streetwise Maps Inc. v. Vandam Inc., 159 F.3d 739, 744 (2d Cir. 1998) (quoting WWW.Pharmaceutical Co. Inc. v. Gillette Co., 984 F.2d 567, 572 (2d Cir. 1993)); Lang v. Retirement Living Pub. Co., Inc., 949 F.2d 576, 581 (2d Cir. 1991) (suggestiveness is not necessarily dispositive on the issue of a mark's strength). Rather, "the strength of the mark turns on its origin-indicating quality, in the eyes of the purchasing public." Id. (internal quotation marks and citation omitted). Taking this distinction into account, the court concludes that Cartier has made a sufficient showing of secondary meaning of the Grille design.
Likelihood of Confusion
The likelihood of confusion inquiry entails consideration of the factors set forth by Judge Friendly in Polaroid Corp. v. Polaroid Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961) ("Polaroid"), cert denied, 368 U.S. 820 (1961): (1) the strength of plaintiff's mark; (2) the degree of similarity between plaintiffs and defendant's marks; (3) the proximity of the products; (4) the likelihood that either owner will bridge the gap, using the mark on products closer to the other's area of commerce; (5) the sophistication of the buyers and the quality of defendants' product; (6) actual confusion; and (7) good or bad faith. See TCPIP Holding Co., Inc. v. Haar Communications Inc., 244 F.3d 88, 100 (2d Cir. 2001). A court's evaluation of these factors ought not to be mechanical, nor is any factor determinative. See Nora Beverages Inc. v. Perrier Group of America Inc., 269 F.3d 114, 119 (2d Cir. 2001); Plus Prods. v. Plus Discount Foods Inc., 722 F.2d 999, 1004 (2d Cir. 1983); Friesland Brands B.V. v. Vietnam National Milk Co., 228 F. Supp.2d 399, 404 (S.D.N.Y. 2002). Rather, a court "should focus on the ultimate question of whether consumers are likely to be confused." Tactica, 154 F. Supp.2d at 602 (citing Paddington Corp. v. Attiki Importers Distributors Inc., 996 F.2d 577, 584 (2d Cir. 1993)). The court now turns to this analysis.
(1) Strength of the Trade Dress
The strength of a suggestive mark refers to its ability to identify the goods being sold as emanating from a particular source. See Masterfoods USA v. Arcor USA. Inc., 230 F. Supp.2d 302, 310 (W.D.N.Y. 2002). The strength of a suggestive mark must be viewed with reference to its commercial context. See Bristol-Myers Squibb Co. v. McNeil-P.P.C. Inc., 973 F.2d 1033, 1044 (2d Cir. 1992). "[A] mark may be conceptually strong and yet commercially weak if the mark lacks the requisite `origin-indicating' quality in the eyes of consumers." Sunenblick v. Harrell, 895 F. Supp. 616, 626 (S.D.N.Y. 1995) (citation omitted). Pursuant to its application for a preliminary injunction in this case, Cartier asserts that the relevant trade dress mark and trademark are distinctive insofar as they have acquired "secondary meaning." Again, a mark acquires "secondary meaning" when "in the minds of the public, the primary significance of a [mark] is to identify the source of the product rather than the product itself." Wal-mart Stores Inc. v. Samara Brothers, 529 U.S. 205, 211 (2000) (citing Inwood Laboratories Inc. v. Ives Laboratories Inc., 456 U.S. 844 (1982)). Again, "[t]he factors relevant to the inquiry of secondary meaning include advertising expenditures, consumer studies, sales, competitors' attempts to plagiarize the mark, and the length and exclusivity of the mark's use." Friesland Brands, 228 F. Supp.2d at 405 (quoting Arrow Fastener Co., Inc. v. Stanley Works, 59 F.3d 384, 393 (2d Cir. 1995)).
The court believes that its discussion above concerning the secondary meaning of the relevant products is dispositive of this factor in thePolaroid analysis. The Pasha design is of significant strength. While the evidence of the strength of the Grille design is not overwhelming, its association with the strong Pasha mark suggests that this mark is of at least moderate strength.
(2) Similarity of the Marks
"The comparison of marks is an inquiry designed to determine the `general impression conveyed to the purchasing public by the respective marks.'" Hasbro Inc. v. Lanard Toys Ltd., 858 F.2d 70, 77 (2d Cir. 1988) (quoting C.L.A.S.S. Promotions Inc. v. D.S. Magazines Inc., 753 F.2d 14, 18 (2d Cir. 1985)). In assessing the similarity between two marks, a court must look to whether the similarity is likely to cause customer confusion. See Sports Auth. Inc. v. Prime Hospitality Corp., 89 F.3d 955, 962 (2d Cir. 1996). "[C]ourts must appraise the overall impression created by . . . the context in which they are found and consider the totality of factors that could cause confusion among prospective purchasers." Friesland Brands, 228 F. Supp.2d at 405 (internal citations and quotations omitted). The court finds that there is strong similarity between the Pasha and Grille designs and defendants' watch. Generally, consumers will not see watches such as plaintiffs' and defendants' displayed side-by-side; rather, the watches will often be viewed in isolation in display cases, in catalogs, on wearers' wrists, and wherever else today's watch consumer might wish to wear his or her time piece. In these multifarious contexts, the court finds that even consumers who are familiar with Cartier's designs would be unlikely to notice small but nonetheless significant differences between, e.g., the Pasha and a copy. Rather, it is likely that they would believe that, e.g., defendants' watches are somehow associated with Cartier. This factor favors Cartier.
(3) Proximity of the Products
This factor "addresses whether, due to the commercial proximity of the competitive products, consumers may be confused as to their source."Hasbro, 858 F.2d at 77 (2d Cir. 1988). Proximity is measured by "the nature of the products themselves and the structure of the relevant market." Tactica, 154 F. Supp.2d 602 (quoting Vitarroz Corp. v. Borden Inc., 644 F.2d 960, 967 (2d Cir. 1981)). Both Cartier's and defendants' products are what might be termed luxury watches. Pasha de Cartier watches sell for an average of $5,000, and some sell for as much as $20,000 to $30,000. Defendants' watches are advertised to cost $7,000 to $10,000. The products in question are quite similar and are designed for the same purpose. The proximity of the watches is therefore sufficiently close to create a likelihood of confusion.
(4) Bridging the Gap
"The issue here is whether the two companies are likely to compete directly in the same market." Charles of the Ritz Group Ltd. v. Quality King Distribs. Inc., 832 F.2d 1317, 1322 (2d Cir. 1987). To the extent that Cartier's and defendants' products compete in the same market, there is no gap to be bridged.
(5) Sophistication of Buyers
In assessing this factor, the court must consider "[t]he general impression of the ordinary purchaser, buying under the normally prevalent conditions of the market and giving the attention such purchasers usually give in buying that class of goods. . . .'" Gillette, 984 F.2d at 575 (citation omitted). Consumers of expensive goods may be held to a high standard of purchasing care. See McGregor-Doniger Inc. v. Drizzle Inc., 599 F.2d 1126, 1137 (2d Cir. 1979). Whereas Cartier's products are relatively expensive, this factor would presumably weigh against a finding of a likelihood of confusion.
The Lanham Act "outlaw[s] the use of trademarks which are likely to cause confusion, mistake or deception of any kind, not merely of purchasers nor simply as to source of origin." Syntex Labs. Inc. v. Norwich Pharmacal Co., 437 F.2d 566, 568 (2d Cir. 1971). Confusion is actionable, then, in a number of circumstances, including where "(1) prospective purchasers believe that the senior user sponsored or otherwise approved of the junior user's trademark; (2) potential consumers initially are attracted to the junior user's mark by virtue of its similarity to the senior user's mark, even though these consumers are not actually confused at the time of purchase; and (3) customers are confused as to the source of the junior user's product when this product is observed in the post-sale context." Jordache Enters., Inc. v. Levi Strauss Co., 841 F. Supp. 506, 514-15 (S.D.N.Y. 1993) (internal citations omitted).
Cartier asserts that all three of these types of confusion — confusion as to sponsorship, initial interest confusion, and post-sale confusion — are present in this case and are actionable, not in spite of, but indeed because of, the sophistication of the relevant consumer group. "[R]ecognition of [plaintiffs'] sophisticated consumer base does not necessarily bolster . . . [the] claim that confusion is unlikely." Coach Leatherware Company, Inc. v. AnnTaylor Inc., 933 F.2d 162, 170 (2d Cir. 1991). Indeed, when rejecting such an argument raised by a designer jeans manufacturer which had incorporated a pocket stitching pattern which was nearly identical to the one made famous by Levi Strauss Co., the Second Circuit concluded that it is the sophisticated consumer "who is most likely to assume that the presence of appellee's trademark stitching pattern on appellants' jeans indicates some sort of association between the two manufacturers. Presumably it is these sophisticated jeans buyers who pay the most attention to back pocket stitching patterns and their `meanings.'" Lois Sportswear U.S.A. Inc. v. Levi Strauss Co., 799 F.2d 867, 875 (2d Cir. 1986). See also Goodheart Clothing Company, Inc. v. Laura Goodman Enterprises Inc., 1988 WL 85469, *5 (S.D.N.Y. Aug. 10, 1988).
The evidence presented does not convince the court that the factor favors or disfavors the plaintiffs in this case. The court suspects, though, that there may be differences between the sophisticated denim purchaser and the sophisticated watch purchaser, or differences in the contexts in which they make their purchases, which could make a difference in a court's consideration of this factor. It may be expedient, for example, to consider the prevalence of copying of the relevant product. A sophisticated watch buyer may be more wary of knock-offs than a sophisticated blue jean buyer if there is a robust market for sales of knock-offs or products which copy elements of a recognizable design.
(6) Quality of Defendants' Product
Whereas Cartier has presented no evidence with respect to the quality of defendants' products, this factor cannot be assessed.
(7) Actual Confusion
The Lanham Act does not require evidence of actual confusion as a prerequisite to recovery. See Lois Sportswear, 799 F.2d at 875 ("[I]t is black letter law that actual confusion need not be shown to prevail under the Lanham Act, since actual confusion is very difficult to prove and the Act requires only a likelihood of confusion as to source"). Cartier has not presented any evidence of actual confusion.
(8) Good or bad faith
This factor concerns whether defendants adopted the marks with the intention of capitalizing on Cartier's reputation and goodwill, as well as any customer confusion as to the source of the products. See Cadbury Beverages Inc. v. Cott Corp., 73 F.3d 474, 482-83 (2d Cir. 1996). Cartier contends that defendants began selling products bearing Cartier's trade dress only after the present litigation began, that is, after defendants were aware of Cartier's other trade dress claims. Whereas there are numerous other watch designs available to use and copy, Cartier argues that "the only conclusion" is that defendants have blatantly attempted to trade on Cartier's good will. See Pl.'s Mem. at 20. It is not necessary, however, to infer bad faith from this set of circumstances. It is possible, for example, that defendants did not believe that they were illegally copying a protected trade dress or trade mark, notwithstanding Cartier's previous claims. It is possible that defendants did not believe that the relevant alleged trade dress and trademark are protected. Cartier has presented insufficient evidence to warrant giving this factor substantial weight in its favor.
Weighing all of the Polaroid factors, the court concludes that defendants' use of the allegedly infringing designs is likely to cause customer confusion.
Non-Functionality
Finally, Cartier must meet the congressionally-imposed requirement that a plaintiff prove that an unregistered trade dress is "not functional."See Trademarks Amendments Act of 1999 § 5, Pub.L. 106-43 (August 5, 1999), codified at 15 U.S.C.A. § 1125(a)(3) (West Supp. 2001). "[A] product feature is functional, and cannot serve as a trademark, if it is essential to the use or purpose of the article or if it affects the cost or quality of the article." Yurman, 262 F.3d at 116 (quoting TrafFix, 532 U.S. 23 (2001)). In cases involving aesthetic features, the dress is functional if the right to use it exclusively "would put competitors at a significant non-reputation-related disadvantage." Id.
The Grille design mark is registered. Defendants do not oppose plaintiffs' claim that it is nonfunctional. The court therefore presumes that it is nonfunctional. See Goscicki v. Custom Brass Copper Specialties, 229 F. Supp.2d 743, 748 (E.D. Mich. 2002) (registered marks are presumed to be nonfunctional).
With respect to the Pasha trade dress, the court agrees that the design elements enumerated by Cartier are not essential to the use or purpose of the article. The court detects some inconsistency between Cartier's claims that (1) the elements which constitute the trade dress are highly distinctive and immediately identify the product with its source, i.e., Cartier, and that (2) these elements do not affect the cost or quality of the watch. Indeed, it is the secondary meaning, which Cartier so forcefully asserted pursuant to the court's analysis above, which presumably increases the value of the Pasha in to the consuming public. Although Cartier failed to adequately address this point, the court might fairly presume that the relevant trade dress refers to aesthetic features. Cartier would appear to satisfy the nonfunctionality prong of the analysis.
2. New York Common Law Trade Dress Infringement Claims
a. Standard and Analysis
In general, claims for trade dress infringement under New York law are similar to those under the Lanham Act. See Neutrik AG v. Switchcraft Inc., 2001 WL 286772 *1, n. 2 (S.D.N.Y. Mar. 23, 2001), aff'd, 2002 WL 315032 (Fed. Cir. 2002). Under New York common law, however, there is no requirement to show secondary meaning for distinctive designs. Id. See also Ideal Toy, 530 F. Supp. at 379 ("Under New York law, even if plaintiff does not show secondary meaning, it is sufficient to sustain the issuance of an injunction that plaintiff show that the trade dress of a second comer is confusingly similar to its own") (Motley, J.); Commerce Foods Inc. v. PLC Commerce Corporation, 504 F. Supp. 190, 193 (S.D.N.Y. 1980) (Motley, J.) ("`Under New York law, . . . an junction may issue against a confusingly similar trade dress, even if no secondary meaning is shown"). In any event, the court is satisfied that Cartier has established secondary meaning.
3. New York Statutory Dilution Claim
a. Standard
New York General Business Law § 360-1 (formerly 368-d) provides that a "[l]ikelihood of injury to business reputation or of dilution of the distinctive quality of a mark or trade name shall be a ground for injunctive relief . . ., notwithstanding the absence of competition between the parties or the absence of confusion as to the source of the goods." N.Y. Gen. Bus. Law § 360-1 (McKinney Supp. 1999). Dilution refers to the loss of the ability to distinguish one source clearly and unmistakably. Nabisco, 191 F.3d at 216. The statute was enacted to prevent the "gradual whittling away of a firm's distinctive trademark or name." Merriam-Webster. Inc. v. Random House Inc., 35 F.3d 65, 73 (2d Cir. 1994) (citation omitted).
New York law accords protection to marks that are distinctive as a result of acquired secondary meaning as well as those that are inherently distinctive. In order to prevail on a dilution claim under New York statutory law, Cartier must show that the trade dress is either inherently distinctive or has acquired secondary meaning and that there is a likelihood of dilution. Id. See also Allied Maint. Corp. v. Allied Mech. Trades Inc., 42 N.Y.2d 538, 399 N.Y.S.2d 628, 369 N.E.2d 1162, 1166 (1977). In order to prevail on a dilution claim, a plaintiff is not required to prove a likelihood of confusion. Trademark dilution statutes are designed to
cover those situations where the public knows that the defendant is not connected to or sponsored by the plaintiff, but the ability of the plaintiffs mark to serve as a unique identifier of the plaintiff's goods or services is weakened because the relevant public now also associates that designation with a new and different source. . . . Thus, where the classic likelihood of confusion test leaves off, the dilution theory begins.Sports Auth. Inc. v. Prime Hospitality Corp., 89 F.3d at 965-66 (discussing New York law) (internal quotation marks and brackets omitted).
As the discussion above indicates, the court is satisfied with Cartier's showing that the Pasha trade dress and the Grille design have attained a secondary meaning.
Dilution under New York law can involve either blurring or tarnishment. See New York Stock Exchange Inc. v. New York, New York Hotel LLC, 293 F.3d 550, 557-58 (2d Cir. 2002) (citing Mead Data Cent. Inc. v. Toyota Motor Sales U.S.A. Inc., 875 F.2d 1026, 1031 (2d Cir. 1989)). Blurring occurs "where the defendant uses or modifies the plaintiffs trademark to identify the defendant's goods and services, raising the possibility that the mark will lose its ability to serve as a unique identifier of that plaintiff's product." Deere Co v. MTD Products, 41 F.3d 39, 43 (2d Cir. 1994) (emphasis omitted). Although Cartier does not explicitly say so, its dilution claim appears to involve blurring as opposed to tarnishment.
b. Analysis
In order to determine the likelihood of dilution involving blurring, courts in this Circuit have considered six factors, including: (1) the similarity of the marks; (2) the similarity of the products covered; (3) the sophistication of the consumers; (4) the existence of predatory intent; (5) the renown of the senior mark; and (6) the renown of the junior mark. See New York Stock Exchange Inc., 293 F.3d at 558 (citingSports Auth., Inc., 89 F.3d at 966). Notwithstanding the absence of evidence of predatory intent, the court believes that its discussion of infringement is suggestive of the possible disposition of the dilution claim.
C. CONCLUSION
Although defendants may ultimately prevail in this action, a limited preliminary injunction is appropriate. "Generally, once a likelihood of confusion is shown for a trademark or trade dress infringement claim, the requisite irreparable harm is established." Tactica Int'l. Inc. v. Atlantic Horizon Int'l. Inc., 154 F. Supp.2d 586, 604 (S.D.N.Y. 2001);see also Toy Mfrs. of Am. v. Helsley-Spear, Inc., 960 F. Supp. 673, 678 (S.D.N.Y. 1997) (a presumption of irreparable harm arises where "`there is any likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question'") (quoting Joseph Scott Co. v. Scott Swimming Pools, Inc., 764 F.2d 62, 66 (2d Cir. 1985)); Fun-Damental Too, Ltd., 111 F.3d 993, 999 ("[A] showing of a high probability of confusion creates a presumption of irreparable harm"). As the court discussed above, plaintiffs have made a strong showing of a likelihood of confusion. In addition, Cartier has made a sufficient showing that defendants' sales may cause financial and reputational losses and dilution of its distinctive trade dress in the Pasha. This satisfies the "irreparable harm" requirement, while it cannot be said that defendants would suffer any similar harm were they to be enjoined from offering their watch for sale.
In addition, whether or not plaintiffs' likelihood of success on the merits is pellucidly clear, after considering the parties' submissions and argument at the May 1, 2003 hearing, the court believes that there are sufficiently serious questions going to the merits to make them a fair ground for litigation. See Penguin Books U.S.A., Inc. v. New Christian Church of Full Endeavor Ltd., 2000 WL 1028634 (S.D.N.Y. July 25, 2000) (granting limited preliminary injunction in light of sufficiently serious questions going to the merits to make them fair ground for litigation). In addition, the balance of hardships with respect to cessation of sales certainly tips in favor of plaintiffs. Defendants appear to have recognized as much, as they have offered and agreed to stop selling the allegedly infringing watches. Accordingly, an order enjoining future sales of the allegedly infringing watch is wholly appropriate. In addition, the court believes that an order enjoining further advertising of the allegedly infringing designs is warranted. This requested preliminary relief is therefore GRANTED.
The same is not true, however, with respect to the other relief requested by plaintiffs. Cartier submits that the preliminary injunction should include an order enjoining defendants from selling, offering for sale, advertising, or distributing any watches which bear any design or trade dress confusingly similar to those of Cartier. Plaintiffs also request that the court order defendants to modify all copies of their "Book 39 — 2002" Globe Jewelry, Inc. catalog still in their possession in such a way that the infringing watches are covered or blacked out. Plaintiffs suggest that defendants accomplish this by placing stickers on the offending photographs in the catalog or otherwise redacting pictures of the offending watch. In addition, plaintiffs submit that the preliminary injunction should order defendants to send to each recipient of the "Book 39 — 2002" catalog (1) a copy of the court's preliminary injunction; (2) stickers or other means to cover the pictures of the allegedly infringing watches depicted in the catalog; and (3) "an accompanying letter . . ., and ordering Defendants to provide plaintiffs' counsel with a copy of each such letter sent." Pl.'s Mem. of Law at 28.
Plaintiffs have failed to meet the standard for issuance of the additional requested preliminary relief. Indeed, plaintiffs have failed to establish that the balance of hardships tips decidedly in favor of awarding the additional requested relief. Plaintiffs have not convinced the court of the likelihood of irreparable injury in the absence of the additional requested relief. Accordingly, this portion of plaintiffs' application is DENIED.