Appendix — International Star Class Yacht Racing Ass'n v. Tommy Hilfiger U. S. A., Inc.
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Summary Order of the United States Court of
Appeals for the Second Circuit, dated
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Opinion and Order of the United States District
Court for the Southern District of New York,
dated November 30, 1994 (33 U.S.P.Q.2d 1610). 97a
Statutory Provisions
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Lanham Act, § 43(a), 15 U.S.C. § 1125(a) ...... 126a
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UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
No. 99-7329
Filed January 12, 2000
At a stated term of the United States Court of Appeals
for the Second Circuit, held at the United States Court-
house, Foley Square, in the City of New York, on the 12th
day of January, two thousand.
PRESENT: HONORABLE RALPH K. WINTER,
Chief Judge,
HONORABLE JON O. NEWMAN,
HONORABLE JOHN M. WALKER, JR.,
Circuit Judges.
INTERNATIONAL STAR CLASS YACHT
RACING ASSOCIATION,
Plaintiff-Appellant,
—_—V.— .
TOMMY HILFIGER U.S.A., INC.,
Defendant-Appellee.
i
2a
APPEARING FOR APPELLANT: J. Joseph Bainton, Bain-
ton McCarthy & Siegel,
New York, N.Y.
APPEARING FOR APPELLEE: Louis S. Ederer, Gursky
& Ederer, New York, N.Y.
SUMMARY ORDER
Appeal from the United States District Court for the
Southern District of New York (Robert P. Patterson, Jr.,
Judge).
ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED AND DECREED that the judgment of the Dis-
trict Court is AFFIRMED.
On two prior appeals in this trademark infringement
litigation, we remanded for reconsideration of whether
Defendant-Appellee’s use of the Plaintiff-Appellant’s
~““Star Class” mark was in bad faith, thereby entitling the
Plaintiff-Appellant to an accounting of profits. See Inter-
national Star Class Yacht Racing Ass'n v. Tommy Hilfiger
U.S.A., Inc., 146 F.3d 66, 73 (2d Cir. 1998) (“ISCYRA II”);
International Star Class Yacht Racing Ass'n v. Tommy
Hilfiger U.S.A., Inc., 80 F.3d 749, 754-55 (2d Cir. 1996)
(“ISCYRA I”). Upon the most recent remand, the District
Court found, without the use of judicial notice that we had
ruled erroneous, see ISCYRA II, 146 F.3d at 70-71, that bad
faith had not been established.
1. The Plaintiff-Appellant asks this Court to reconsider
its precedents requiring a showing of bad faith in order to
recover monetary damages. However, we have twice
remanded this case specifically to determine the existence
of bad faith. See ISCYRA II, 146 F.3d at 71, 73; ISCYRA I,
3a
80 F.3d at 753. To change the legal standard at this point in
the litigation would violate the law of the case. See North
River Insurance Co. v. Philadelphia Reinsurance Corp., 63
F.3d 160, 164-165 (2d Cir. 1995). Moreover, precedents of
this Court must be followed by a panel in the absence of in
banc rehearing.
2. A finding of bad faith in a trademark infringement
case is subject to review only for clear error. See ISCYRA
I, 80 F.3d at 753. The District Court found that unrebutted
evidence showed that “the sales of (Hilfiger’s] garments
were driven by the prominent use of defendant’s name,
initials and crests, which identified the garments as
[Hilfiger’s] products, and not the words ‘Star Class.’ ”
International Star Class Yacht Racing Ass’n v. Tommy
Hilfiger U.S.A., Inc., No. 94 Civ. 2663 (RPP), 1999 WL
108739, at *1 (S.D.N.Y. Mar. 3, 1999). From this fact the
Court inferred that “there would be little, if any, motivation
for bad faith appropriation” of ISCYRA’s ma: k by Hilfiger
in order to confuse or deceive consumers o° to profit from
the Association’s reputation. Jd. Moreover, the trademark
search conducted by Hilfiger’s attorneys, which was
restricted to clothing classifications, found no mark for
“Star Class.” Thus, the Court found, there was “no show-
ing that Hilfiger had knowledge of the existence of
[ISCYRA] or of the mark’s association with any entity at
all, let alone any commercial use of the designation Star
Class.” Id.
The District Court also found that, based on the holdings
of contemporary trademark cases, Hilfiger did not have an
obligation to conduct a more extensive trademark search in
1994. The Court found that Hilfiger’s use of the Star Class
mark as a decoration rather than as a trademark was con-
sistent with the advice of Hilfiger’s attorney that “use and
registration” would require a full trademark search. Id. at
*2. Moreover, the Court found that the advice of Hilfiger’s
re 4a
attorney that “Star Class” would be a weak trademark
because of the common use of the terms “Star” and “Class”
encouraged Hilfiger to believe that the use of the term was
permissible. See id. Finally, the Court found that Hilfiger’s
continued sale of infringing garments after it denied
Hilfiger’s motion for summary judgment did not indicate
bad faith. See id. at *3.
From all of these subsidiary findings, the District Court
made its ultimate finding that Hilfiger had not acted in bad
faith.
Although there is some evidence that points toward the
existence of bad faith, we cannot say, after review of
the record, that we are “ ‘left with [the] definite and
firm conviction that a mistake has been committed.’ ”
McNeil-P.C.C., Inc. v. Bristol-Myers Squibb Co., 938 F.2d
1544, 1550 (2d Cir. 1991) (quoting Anderson v. City of
Bessemer City, 470 U.S. 564, 573 (1985)). Accordingly, we
affirm.
FOR THE COURT,
KAREN GREVE MILTON, Acting Clerk _
By: /s/ LUCILLE CARR
Lucille M. Carr, Operations Manager
5a
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Docket No. 99-7329
Filed April 3, 2000
Received April 6, 2000
At a stated Term of the United States Court of Appeals
for the Second Circuit, held at the United States Court-
house, Foley Square, in the City of New York, on the 3rd
day of April, two thousand.
PRESENT: HON. RALPH K. WINTER,
Chief Judge,
HON. JON O. NEWMAN,
HON. JOHN M. WALKER, JR.., '
Circuit Judges.
INTERNATIONAL STAR CLASS YACHT
RACING ASSOCIATION,
Plaintiff-Appellant,
—V.—
TOMMY HILFIGER,
Defendant-Appellee. | |
6a
A petition for panel rehearing and a petition for rehear-
ing en banc having been filed herein by the appellant Inter-
national Star Class Yacht Racing Association.
Upon consideration by the panel that decided the
appeal, it is Ordered that said petition for rehearing is
DENIED. ;
It is further noted that the petition for rehearing en banc
has been transmitted to the judges for the court in regular
active service and to any other judge that heard the appeal
and that no such judge has requested that a vote be taken
thereon.
FOR THE COURT
KAREN GREVE MILTON, Acting Clerk
By: /s/ BETH J. MEADOR
Beth J. Meador,
Administrative Attorney
Ta
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 1997
(Argued: March 5, 1998 Decided: May 29, 1998)
Docket Nos. 97-7761, -7799
INTERNATIONAL STAR CLASS YACHT
RACING ASSOCIATION,
Plaintiff-Appellant-
Cross-Appellee,
—vVi—
TOMMY HILFIGER U:S.A., INC.,
Defendant-Appellee-
Cross-Appellant.
Before:
OAKES, NEWMAN and CABRANES,
Circuit Judges.
8a
The International Star Class Yacht Racing Associa-
tion (“ISCYRA”) appeals from the decision of the United
States District Court for the Southern Disttict of New
York, Robert P. Patterson, Jr., Judge, denying ISCYRA
monetary relief and attorney fees for the infringing use of
ISCYRA’s mark “Star Class” by Tommy Hilfiger U.S.A.,
Inc. (“Hilfiger”). The district court held that ISCYRA had
failed to demonstrate that Hilfiger used the mark in bad
faith. Hilfiger cross-appeals the district court’s calculation
of damages without considering evidence of Hilfiger’s
costs and other deductions and its decision to strike the
testimony of Hilfiger’s lead trial counsel.
Vacated on appeal, vacated in part and affirmed in part
on cross-appeal, and remanded.
J. JOSEPH BAINTON, New York, NY (Thomas
D. Drescher, John G. McCarthy, Ross &
Hardies, of counsel), for Plaintiff-Appel-
lant-Cross-Appellee.
Lou!s S. EDERER, New York, NY (Joseph H.
Lessem, Cowan, Liebowitz & Latman,
P.C.; Steven Gursky, Robert Devlin,
Gursky & Associates, of counsel), for
Defendant-Appellee-Cross-Appellant.
OAKES, Senior Circuit Judge:
The International Star Class Yacht Racing Associa-
tion (“ISCYRA”) appeals from the decision of the United
States District Court for the Southern District of New York,
Robert P. Patterson, Jr., Judge, denying ISCYRA monetary
9a
relief and attorney fees for the infringing use of ISCYRA’s
mark “Star Class” by Tommy Hilfiger U.S.A., Inc.
(“Hilfiger”). The district court held that ISCYRA had
failed to demonstrate that Hilfiger used the mark in bad
faith. Hilfiger cross-appeals the district court’s calculation
of damages without considering evidence of Hilfiger’s
costs or the percentage of profits from sales attributable to
Hilfiger’s mark rather than ISCYRA’s, and its decision to
strike the testimony of Hilfiger’s lead trial counsel. We
vacate and remand the court’s findings as to Hilfiger’s bad
faith because the district court improperly relied on factual
findings from an earlier, unrelated antitrust case. We also
vacate the district court’s determination as to Hilfiger’s
costs and deductions, but affirm the decision to exclude the
testimony of Hilfiger’s counsel.
I. BACKGROUND
ISCYRA is a non-profit corporation created to govern
and promote the sport racing of a class of sail boats known
as “Star Class” yachts. ISCYRA owns the rights to the
design of Star Class boats, and monitors the construction,
certification, and registration of vessels in this class. One
hallmark of a Star Class vessel is that it must display a
solid five-point star on its main sail. ISCYRA also uses the
star along with the words “Star Class” on hats, clothing,
pins, and decals sold to the public. ISCYRA permits yacht
clubs hosting regattas to use the star insignia and the term
“Star Class” on promotional materials, and collects roy-
alties for the use of these marks on clothing and other mar-
ketable materials. ISCYRA has never registered “Star
Class” for federal trademark protection. .
In March 1994, ISCYRA learned that Tommy Hilfiger, a
leading designer and marketer of men’s clothing, was man-
ufacturing and selling garments bearing the words “Star
Class” with the star insignia. Promotional materials issued
10a
with the collection described the clothing as “classic nau-
tical sportswear” with “authentic details taken from the
sport of competitive sailing” and “elements and patterns
taken directly from actual racing sails.' Hilfiger’s name and
logo also appeared on most of the garments.
While designing the clothes, Hilfiger had requested from
its attorneys a trademark screening search for the words
“Star Class.” Hilfiger did not specify its intended use of
the words, nor did it reveal that it had taken the term from
“the sport of competitive sailing.” The search was thus lim-
ited to registered federal trademarks, with a particular
emphasis on trademarks in class 25, a clothing classifica-
tion. One of Hilfiger’s attorneys, Neil A. Burstein, reported
to Hilfiger that he had found no competing marks in his
search, and stated, “At this point, we would not necessar-
ily rule out your use and registration of this mark, subject
to our usual disclaimers regarding the need to first obtain
and review a full trademark search.” (emphasis in origi-
nal). Hilfiger did not conduct a full search of all prior com-
mercial uses of the term until after it was sued by ISCYRA,
at which point it learned that “Star Class” was a mark in
the yachting context.
On April 13, 1994, ISCYRA sued Hilfiger for false des-
ignation of origin under the Lanham Act, 15 U.S.C.
§ 1125(a) (1994), common law trademark infringement,
and injury to its business reputation and trademark dilu-
tion under New York state law. On April 25, 1995, the
district court granted ISCYRA a permanent injunction to
bar Hilfiger’s use of the mark “Star Class,” but declined
to award monetary relief or attorney fees because it deter-
| Hilfiger’s designer admitted at trial to examining books and
other materials on sailboat racing which referred to Star Class racing
and Star Class boats while designing the collection. See ISCYRA v.
Tommy Hilfiger U.S.A., Inc., No. 94 Civ. 2663, 1995 WL 241875, at
*3 (S.D.N.Y. April 26, 1995). *
tn One,
lla
mined that ISCYRA had not sustained any actual damages
and that Hilfiger had not used the mark in bad faith.
ISCYRA appealed to this Court, which affirmed in part
and vacated in part. See ISCYRA v. Tommy Hilfiger, U.S.A.,
Inc., 80 F.3d 749 (2d Cir. 1996). We ruled that the district
court had made erroneous and incomplete findings of fact
and remanded for further consideration of whether Hilfiger
had willfully infringed ISCYRA’s mark. In particular, we
held that the district court should have considered as evi-
dence relevant to determining bad faith Hilfiger’s failure to
follow its attorneys’ advice to conduct a full search and
Hilfiger’s continued marketing of the “Star Class” clothing
after ISCYRA had filed suit. Jd. at 754.
On remand, the district court again determined that
insufficient evidence existed to show that Hilfiger had used
ISCYRA’s mark in bad faith. The district court initially
allowed Hilfiger to reopen the record to present additional
testimony by Hilfiger’s lead counsel, Steven Gursky, relat-
ing to the legal advice received by Hilfiger prior to using
ISCYRA’s mark. However, in its opinion issued on March
4, 1997, the district court rejected this new testimony in
toto, reasoning that Hilfiger was on notice in the first trial
that bad faith was at issue, and should have introduced all
relevant evidence then. The court then considered the two
elements deemed important by this Court—the failure to
conduct a full search in contravention of the disclaimer
contained in Burstein’s letter, and the continued sale of
garments after the commencement of the suit. As to the
failure to conduct a full search, the district court evaluated
the disclaimer letter in light of the court’s understanding of
prevailing industry practice in trademark searches. To
establish industry custom, the district court took judicial
notice, of facts and testimony from Corsearch v. Thomson
& Thomson, 792 F. Supp. 305 (S.D.N.Y. 1992), an antitrust
case that the district judge had tried in 1991 concerning
trademark search firms. The court found that standard
12a
industry practice was to conduct only “knock-out” or “rule-
out” searches of names and symbols in the database of fed-
erally registered trademarks before using a contemplated
mark, and that comprehensive or more sophisticated
searches were reserved, when ordered at all, for-marks that
were seriously being considered for trademark registration.
ISCYRA v. Tommy Hilfiger, U.S.A., Inc., 959 F. Supp. 623,
625-26 (S.D.N.Y. 1997) (citing Corsearch, 792 F. Supp. at
311). The court therefore interpreted Burstein’s disclaimer
as boilerplate cautionary language, referring to the need to
conduct a full search only if Hilfiger intended to register
the term “Star Class” and use it as a stand-alone trademark.
As Hilfiger claimed to use the term “Star Class” only as
decoration and not as a stand-alone trademark, the court
concluded that “there was no reason for Hilfiger to order
its law firm to undertake a full search,” and that its failure
to do so was not inconsistent with its attorneys’ advice.
ISCYRA, 959 F. Supp. at 627-28.
Finally, the court found that Hilfiger’s continued sale of
garments bearing the “Star Class” mark was consistent with
the opinion of Hilfiger’s attorneys that ISCYRA’s non-
registered mark was entitled to “rather weak” protection,
and thus was also not evidence of bad faith. Jd. at 628-29.
Anticipating the possibility that this Court might not agree
on appeal, the district court determined, as evidence of |
damages, that Hilfiger shipped $818,419.85 worth of |
infringing goods after receiving ISCYRA’s cease-and-
desist letter. The court made no deduction for Hilfiger’s
costs because “[djefendant offered no evidence of its costs
attributable to these sales.” Jd. at 629. The court denied
both ISCYRA’s and Hilfiger’s motions for reconsideration
on June 5, 1997. This appeal followed.
/
,
13a
II. DISCUSSION
On appeal, ISCYRA contends that the district court
relied on erroneous conclusions of law and fact in making
its determinations. Among other claims, ISCYRA argues
(1) that it was improper for the court judicially to notice
facts from Corsearch that were outside the record of this
case, and (2) that the court erred in not considering all of
Hilfiger’s profits as evidence of damages, rather than just
profits from sales made after receipt of ISCYRA’s cease-
and-desist letter. Hilfiger cross-appeals the decision to dis-
regard the testimony of its counsel, Steven Gursky, and the
court’s failure to consider evidence of Hilfiger’s costs con-
tained in one of ISCYRA’s exhibits, and evidence of sales
due to the appeal of Hilfiger’s mark in calculating dam-
ages.
A. Judicial Notice
The Federal Rules of Evidence provide that courts may
only take judicial notice of facts outside the trial record
that are “not subject to reasonable dispute.” Fed. R. Evid.
201(b). Such facts must either be “(1) generally known
within the territorial jurisdiction of the trial court or
(2) capable of accurate and ready determination by resort
to sources whose accuracy cannot reasonably be ques-
tioned.” Id.; see also Alvary v. United States, 302 F.2d 790,
794 (2d Cir. 1962). Because the effect of judicial notice is
to deprive a party of the opportunity to use rebuttal evi-
dence, cross-examination, and argument to attack contrary
evidence, caution must be used in determining that a fact is
beyond controversy under Rule 201(b). See Fed. R. Evid.
201(b) advisory committee notes; cf. Brown v. Piper, 91
U.S. 37, 43 (1875) (“Care must be taken that the requisite
notoriety exists. Every reasonable doubt upon the subject
should be resolved promptly in the negative.”).
l4a
In this case, the district court relied on statements of fact
contained in its 1992 Corsearch opinion to establish pre-
vailing trademark search practices in 1993.* This was error.
As we stated in Liberty Mutual Ins. Co. v. Rotches Pork
Packers, Inc., 969 F.2d 1384 (2d Cir. 1992), “A court may
take judicial notice of a document filed in another court
‘not for the truth of the matters asserted in the other liti-
gation, but rather to establish the fact of such litigation and
related filings.’ ” Jd. at 1388 (holding that facts contained
in a bankruptcy court order were an improper subject for
judicial notice) (quoting Kramer v. Time Warner Inc., 937
F.2d 767, 774 (2d Cir. 1991)). Facts adjudicated in a prior
case do not meet either test of indisputability contained in
Rule 201(b): they are not usually common knowledge, nor
are they derived from an unimpeachable source. See, e.g.,
United States v. Jones, 29 F.3d 1549, 1553 (11th Cir. 1994)
(holding that findings concerning the defendant’s work
habits made by another district court in a separate litigation
were not sufficiently indisputable to be judicially noticed);
Holloway v. Lockhart, 813 F.2d 874, 879 (8th Cir. 1987)
2 The court considered such evidence relevant to interpreting
the disclaimer contained in Burstein’s letter and in evaluating Hil-
figer’s response to the letter. While we agree that industry custom is
relevant to determining whether Hilfiger engaged in ‘willful blind-
ness’ by refusing to conduct a more comprehensive search, such evi-
dence would not necessarily be dispositive of the question. For
instance, even if ‘knockout’ searches are sufficient in the usual case,
here Hilfiger was aware that it was lifting “authentic details from the
sport of competitive sailing.” As we said in ISCYRA I, “Given Hil-
figer’s awareness that it was copying. . . ‘from the sport of com-
petitive sailing,’ it should have shown greater concern for the
possibility that it was infringing on another’s mark.” 80 F.3d at 753.
We believe that Hilfiger’s failure to conduct a full search therefore
must be evaluated not only in light of industry custom, but also in
light of its knowledge that ‘Star Class’ might be a mark in the yacht-
ing context, together with any other factors that might prove or negate -
bad faith.
1Sa
(declining to allow judicial notice of finding in a related
litigation that use of tear gas against a group of inmates
was reasonable and necessary because that fact could only
be ascertained by independent examination and evaluation
of witnesses); Ujvari v. United States, 212 F. Supp. 223,
228 (S.D.N.Y. 1963) (refusing to take judicial notice of
exchange rates found in previous Tax Court cases because
court must independently determine questions of fact in
case before it).’ The suggestion has also been made that
allowing courts to rely on factual findings from previous
cases could render the doctrine of collateral estoppel super-
fluous, see 21 Charles Alan Wright & Kenneth W. Graham,
Federal Practice and Procedure: Evidence § 5106 at 245
(Supp. 1998); Jones, 29 F.3d at 1553, though this may
overstate the case.
Moreover, prevailing trademark search practices may
well have changed or developed in the intervening years
between the Corsearch trial and the events at issue in this
case. ISCYRA cites to at least one article on the subject,
published in 1994, stating that the “usual” practice for
trademark counsel is to conduct a full search once a mark
Passes its initial screening. See Glenn A. Gundersen,
Trademark Searching: A Practical and Strategic Guide to
the Clearance of New Marks in the United States 17
(1994). Since the industry practice is subject to dispute,
ISCYRA is entitled to “have its ‘day in court,’ and,
through time-honored methods, test the accuracy of [Hil-
figer’s] submissions and introduce evidence of its own.”
Oneida Indian Nation of New York v. State of New York,
3 The cases cited by the district court in its opinion denying
the parties’ motions for reconsideration do not apply. In those cases,
the appellant had either waived its right to object to the use of judi-
cial notice, see United States v. Vasquez-Guerrero, 554 F.2d 917, 919
n.1 (9th Cir. 1977), or the decision pre-dated the enactment of Rule
201(b), see, e.g., In re Diversey Hotel Corp., 165 F.2d 655, 657 (7th
Cir. 1948), -
16a
691 F.2d 1070, 1086 (2d Cir. 1982) (favoring this course to
judicial notice where secondary sources are disputed).*
Hilfiger claims that a remand is unnecessary since the
district court relied on Burstein’s trial testimony and prior
case law, as well as facts contained in the Corsearch opin-
ion, to ascertain that defendant’s minimal trademark search
efforts did not constitute willful infringement. While the
district court did consider these other materials, it used
these sources primarily to bolster the conclusions found in
the Corsearch opinion. See ISCYRA, 959 F. Supp. at 626,
627-28. For instance, the court evaluated Burstein’s testi-
mony in light of its agreement with the trade practices
revealed in Corsearch. Id. at 628. Because the district court
did not independently evaluate the significance of this
other evidence, we cannot say that the court would have
reached the same conclusions without relying on the
Corsearch findings. We therefore vacate the lower court
opinion without reaching the bulk of ISCYRA’s other
claims, and remand for further proceedings.
* Our analysis is not changed by ISCYRA’s failure to object
to the district court's consideration of findings from Corsearch at
the second trial because the district court never explicitly informed
the parties that it planned to rely on the Corsearch opinion. Indeed,
in its only comments on the subject, the court appeared to acknowl-
edge that such reliance would be improper. See, e.g., Tr. at 572
(“Let me tell you something that troubled me when I reviewed the
Court of Appeals’ opinion. I think, maybe unbeknownst to myself,
I unwittingly took into account testimony I heard in the Thomson
& Thomson case as to how people go about ordering trademark
searches as a regular course of business, and when they use the scan
and when they go for a full search. And I don’t know how to divorce
what I learned there from the record here. . . . I leave it with you as
maybe you have thoughts about it.”). ISCYRA therefore could not
reasonably be expected to raise the issue until after the district court
issued its opinion. ‘
B. Profits
The one remaining issue in ISCYRA’s appeal that we
address is whether the district court erred by not consid-
ering, as evidence of damages, all of Hilfiger’s profits from
sales of “Star Class” clothing, rather than just profits from
sales made after the receipt of the cease-and-desist letter.
A district court faced with a Lanham Act violation pos-
sesses “some degree of discretion in shaping [the] relief”
according to the principles of equity and the individual cir-
cumstances of each case. George Basch Co. v. Blue Coral,
Inc., 968 F.2d 1532, 1537 (2d Cir. 1992) (citing 15 U.S.C.
§ 1117(a) (1994)). Nevertheless, that discretion must oper-
ate within the parameters for allowing an accounting of
profits in this circuit. Jd.
We have held that an accounting for profits is available,
even if a plaintiff cannot show actual injury or consumer
confusion, “ ‘if the accounting is necessary to deter a will-
ful infringer from doing so again.’ ” Jd. (quoting Burndy
Corp. v. Teledyne Indus., Inc., 748 F.2d 767, 772 (2d Cir.
1984)). As with the decision to award profits at all, the
decision whether to award a full or partial accounting must
be based on what is necessary to deter future misconduct.
In W.E. Bassett Co. v. Revlon, Inc., 435 F.2d 656, 664
(2d Cir. 1970), a case concerning particularly egregious
infringement of a competitor’s mark, we stated that “the
only way the courts can fashion a strong enough deterrent
is to see to it that a company found guilty of willful
infringement shall lose all its profits from its use of the
infringing mark.” (emphasis in original). While this lan-
guage could be read to suggest that a defendant must dis-
gorge all of its profits any time willful infringement is
proved, more recent cases establish that a district court has
discretion to fashion an alternative remedy, or to award
only a partial accounting, if the aims of equity would be
better served. See George Basch, 968 F.2d at 1540 (stating
ee ee
18a
that a finding of willful infringement is necessary but not
sufficient to award an accounting for profits); Allen v.
Men's World Outlet, 679 F. Supp. 360, 371 (S.D.N.Y. 1988)
(declining to award an accounting for profits for willful use
of the plaintiff's likeness in an advertisement because a
permanent injunction would adequately serve the goal of
deterrence). As the record here is unclear as to the egre-
giousness of Hilfiger’s conduct, we express no opinion at
this stage as to the appropriate award of profits that might
be necessary to deter future wrongdoing. We leave this
question for the district court to consider, if necessary, on
remand.
On its cross-appeal, Hilfiger claims that the district court
improperly calculated the profits due to ISCYRA by dis-
regarding evidence of Hilfiger’s costs and other deductions
offered at trial. We are inclined to agree. As to costs, Hil-
figer points to cost figures contained in one of ISCYRA’s
exhibits. Although this evidence was introduced by
ISCYRA to demonstrate Hilfiger’s sales, ISCYRA did not
specify any limitations as to its contents or usage. More-
over, the cost figures in Exhibit 90 were mentioned at one
point during the trial when the sales figures were corrected.
Although defendant’s counsel neglected to alert the District
Judge to its claim that Exhibit 90 provided a basis for
deriving a profit margin, the existence of the cost data in
the record undermines the court’s finding that no evidence
of costs existed. On remand, the district court should con-
sider such evidence, if necessary, according it whatever
weight is appropriate.
Hilfiger further claims that the district court should
have subtracted the percentage of profits attributable to
Hilfiger’s mark rather than ISCYRA’s in assessing any
award to ISCYRA. In Mishawaka Rubber & Woolen Mfg.
Co._v. §.S. Kresge Co., 316 U.S. 203, 206 (1942), the
Supreme Court held that a plaintiff “is not entitled to prof-
its demonstrably not attributable to the unlawful use of his
19a
mark,” but that the burden of proving any deduction for
sales not based on the infringing mark falls upon the
infringer. Jd. at 206-07; see also 15 U.S.C. § 1117 (1994); °
George Basch, 968 F.2d at 1540 (listing the degree of cer-
tainty that the defendant benefitted from its unlawful con-
duct as one factor to consider in determining whether to
order an accounting for profits in cases of willful infringe-
ment). Hilfiger presented evidence at trial through the
testimony of Allan Zwerner, a buyer for a large chain of
department stores, that some portion of the sales of its
nautical sportswear line was attributable to the appeal of
Hilfiger’s well-known mark and reputation. The district
court may consider this evidence on remand in assessing
whether Hilfiger has met its burden of proof.
However, where infringement is especially malicious or
egregious, allowing a defendant, especially a dominant -
competitor who has made use of the mark of a weaker
entity, to deduct profits due to its own market dominance
in some circumstances inadequately serves the goal of
deterrence. See Truck Equipment Service Co. v, F ruehauf
Corp., 536 F.2d-1210, 1222-23 (8th Cir. 1976) (declining
to allow an eighty percent deduction for profits attributable
to strong consumer association with the mark of a well-
known infringer that had copied the distinctive design of a
competitor); cf. W.E. Bassett, 435 F.2d at 664 (ordering a
full accounting of all profits where Revlon deliberately
made use of the mark of a smaller competitor because such
a remedy was “the only way the courts can fashion a strong
enough deterrent”). As with ISCYRA’s argument on dam-
ages, we cannot determine whether this case presents such
a situation without further fact-finding by the district court
as to the degree of bad faith, if any, displayed by Hilfiger.
We therefore leave the issue for the district court to address
on remand.
20a ‘
C. Exclusion of Gursky’s Testimony
Finally, Hilfiger claims that it has been unfairly preju-
diced by the district court’s exclusion of testimony by its
lead counsel. The decision whether to hear additional evi-
dence on remand is within the sound discretion of the trial
court judge. Springs Mills, Inc. v. Ultracashmere House
Ltd., 724 F.2d 352, 355 (2d Cir. 1983). Our review of this
case convinces us that no abuse of discretion occurred
here.
On remand, Hilfiger sought to introduce Gursky’s testi-
mony to rebut any inference that Hilfiger had acted in bad
faith by ignoring its counsel’s advice. This testimony was
rejected because Hilfiger’s intent in using the Star Class
mark was at issue in the first trial, and Hilfiger had ample
opportunity at trial to develop a record and to present any
evidence relevant to assessing whether its use of the mark
was in good faith. Under these circumstances, the district
court could reasonably conclude that the inability to sup-
plement this record on remand would not result in undue
prejudice to Hilfiger.
III. CONCLUSION
For the reasons set forth above, we vacate the opinion of
the district court, and remand for further proceedings con-
sistent with this opinion. %
2la
UNITED STATES COURT OF APPEALS
FOR THE SECOND Circurr
No. 689—August Term, 1995
(Argued December 6, 1995 Decided April 4, 1996)
Docket No. 95-7547
INTERNATIONAL STAR CLASS YACHT
RACING ASSOCIATION,
Plaintiff-Appellant,
—_—V—
TOMMY HILFIGER, U.S.A., INC.,
Defendant-Appellee.
Before:
NEWMAN, Chief Judge,
OAKES and CABRANES, Circuit Judges.
Appeal from a portion of the judgment of the United
States District Court for the Southern District of New York
(Robert P. Patterson, Jr., Judge), denying appellant an
22a
accounting of defendant's profits, attorney fees, and an
injunction against use of its five-pointed star mark under
the Lanham Act.
Affirmed in part, vacated in part, and remanded.
J. JOSEPH BAINTON, New York , NY (Thomas
D. Drescher, John G. McCarthy, Ross &
Hardies, of counsel), for Plaintiff-Appel-
lant.
STEVEN BENNETT BLAU, New York, NY
(Steven R. Gursky, Gursky & Blau, of
counsel), for Defendant-Appellee.
OAKES, Senior Circuit Judge:
This appeal involved the availability of monetary relief
and attorney fees in a trademark infringement action
brought under § 43(a) of the Lanham Act, 15 U.S.C.
§ 1125(a) (1994). The International Star Class Yacht Rac-
ing Association (“ISCYRA”) appeals from a portion of the
judgment of the United States District Court for the South-
ern District of New York (Robert P. Patterson, Jr., Judge),
entered on May 19, 1995. The district court, after a bench
trial, granted ISCYRA’s application for a permanent
injunction against use of its “STAR CLASS” mark by the
appellee Tommy Hilfiger U.S.A., Inc. (“Hilfiger”) but
denied injunctive relief as to ISCYRA’s insignia, a solid
five-pointed star. The district court also denied ISCYRA an
accounting of Hilfiger’s profits, actual damages, and attor-
ney fees.
23a
ISCYRA contends that the district court’s denial of an
accounting and fees was based on its erroneous finding that
Hilfiger showed no bad faith in the use of ISCYRA’s
unregistered mark. ISCYRA also argues that there was suf-
ficient consumer confusion generated by Hilfiger’s prod-
ucts to justify the award of actual damages. Finally,
ISCYRA contests the district court’s conclusion that it
is entitled to no trademark protection for its five-pointed
Star insignia. Because we find that the district court made
erroneous and incomplete factual findings on the issue of
Hilfiger’s bad faith, we vacate its denial of an accounting
of profits and attorney fees and remand for reconsidera-
tion of the bad faith issue. On the other two points, we
affirm.
BACKGROUND
ISCYRA is a non-profit corporation founded in 1922 for
the purpose of governing and promoting the sport of Star
Class yacht racing. Star Class sailboats are sophisticated
one-design racing craft sailed in high-profile regattas and
championship series around the world, including the Sum-
mer Olympics. ISCYRA owns the rights to the design of
Star Class boats and closely monitors the construction, cer-
tification, and registration of each boat in the class. One
requirement of a genuine Star Class boat is that its main
sail bear the solid red five-pointed star which serves as
ISCYRA’s insignia or a star of green, blue, silver or gold
awarded at ISCYRA championship races. The red star is
also used, along with the words “STAR CLASS”, on the
yachting hats, clothing, flags, decals and pins sold by
ISCYRA. ISCYRA permits yacht clubs hosting regattas to
use the insignia and “STAR CLASS” on promotional items,
and has collected royalties for their use in jewelry and
posters.
24a
Hilfiger is a successful designer and marketer of men’s
clothing with sales of over $227 million in 1993. Its 1994
Spring Collection included garments bearing the words
“STAR CLASS” with a solid red five-pointed star. These
garments were marketed as “classic nautical sportswear”
with “authentic details taken from the sport of competitive
sailing” and “elements and pattern taken directly from
actual racing sails.” Hilfiger’s name and flag trademarks
also appeared prominently on all the garments, which were
marketed in the United States and abroad.
While designing the 1994 Spring Collection, Hilfiger
requested a trademark screening search for the words
“STAR CLASS” from its attorneys. Hilfiger did not spec-
ify that it planned to use the words on ‘nautical’ clothing
with details from “competitive sailing,” and the search was
limited to federal trademarks in class 25, a clothing clas- ~
sification. The screening search did not reveal any identi-
cal registered or applied-for federal trademarks, but
Hilfiger’s attorneys advised it to conduct a “full trademark
search” before using the words “STAR CLASS.” Hilfiger
did not conduct such a search until after it was sued by
ISCYRA, at which point it learned that “STAR CLASS”
was indeed a mark in the yachting context.
In April 1994, ISCYRA initiated this action against
Hilfiger for false designation of origin under § 43(a) of the
Lanham Act, 15 U.S.C. § 1125(a) (1994), common law
trademark infringement and unfair competition, and injury
to business reputation and trademark dilution under New
York state law. Despite notice of ISCYRA’s suit and the
results of the full trademark search, Hilfiger did not recall
its allegedly infringing merchandise from retailers and had
sold over $3 million worth of garments bearing the “STAR
CLASS” mark by the time the case came to trial in January
1995. No one from Hilfiger took the witness stand during
the two-day bench trial.
25a
The district court granted ISCYRA’s application for a
permanent injunction under the Lanham Act against use of
its “STAR CLASS” mark by Hilfiger, but denied injunctive
relief as to ISCYRA’s insignia, a solid five-pointed star.
The district court also denied ISCYRA’s request for
accounting of profits, actual damages, and attorney fees,
and dismissed ISCYRA’s state law and unfair competition
claims.
On appeal, ISCYRA argues that the district court erred
in denying an accounting and attorney fees based on
its conclusion that Hilfiger did not act in bad faith in
using the “STAR CLASS” mark. ISCYRA maintains that
(1) Hilfiger’s failure to conduct a comprehensive trademark
search; (2) Hilfiger’s failure to recall garments bearing
“STAR CLASS” from its inventory and its continued sales
of these garments after ISCYRA’s lawsuit put it on notice
of ISCYRA’s common kaw trademark; and (3) the evidence
of Hilfiger’s intentional copying of ISCYRA’s mark were
sufficient to establish bad faith and warrant both an
accounting of Hilfiger’s profits and the award of attorney
fees. ISCYRA further argues that the district court Clearly
erred both in denying actual damages because no actual
confusion was caused by Hilfiger’s merchandise and in
finding that ISCYRA had no protectible trademark rights
in its five-pointed star insignia. We agree with ISCYRA
that the district court’s bad faith finding is based on incom-
plete findings of fact and erroneous conclusions. We there-
fore vacate the denial of an accounting of profits and
attorney fees, which rested on the finding of an absence of
bad faith, and remand the case to the district court for
reconsideration of Hilfiger’s bad faith. We affirm the
remainder of the district court’s decision.
26a
DISCUSSION
| I. The Standards for Monetary Relief and Attorney Fees
Section 35(a) of the Lanham Act governs claims for
monetary relief and attorney fees made by. plaintiffs who
have successfully established a trademark violation. It pro-
vides:
the plaintiff shall be entitled, . . . subject to the prin-
ciples of equity, to recover (1) defendant’s profits,
(2) any damages sustained by the plaintiff, and (3) the
costs of the action. . . . The court in exceptional
cases may award reasonable attorney fees to the pre-
vailing party.
15 U.S.C. § 1117(a) (1994). Applying Section 35(a), the
district court found that ISCYRA could not recover an
accounting of Hilfiger’s profits, actual damages, or attor-
ney fees. We review the district court’s decision for abuse
of discretion. George Basch Co., Inc. v. Blue Coral, Inc.,
968 F.2d 1532, 1537 (2d Cir.), cert. denied, 506 U.S. 991
(1992); Goodheart Clothing Co., Inc. v. Laura Goodman
Enterprises, Inc., 962 F.2d 268, 272 (2d Cir. 1992).
Proof of actual confusion is ordinarily required for
recovery of damages for pecuniary loss sustained by the
plaintiff. Restatement (Third) of Unfair Competition § 36
emt. 1 (1995). Such damages may include compensation for
(1) lost sales or revenue; (2) sales at lower prices; (3) harm
to market reputation; or (4) expenditures to prevent,
correct, or mitigate consumer confusion. Jd. at § 36(2).
Because ISCYRA offered no evidence of actual confusion
caused by Hilfiger’s infringing use of the “STAR CLASS”
mark and indeed presented no evidence of pecuniary loss,
remedy for these actual damages is not available.
The unavailability of actual damages as a remedy, how-
ever, does not preclude ISCYRA from recovering an
accounting of Hilfiger’s profits or attorney fees. In order to
hi niaaniinsaiiniiiiiaesleaiiiaalieeiieeaiiiiiadal as
27a
recover an accounting of an infringer’s profits, a plaintiff
must prove that the infringer acted in bad faith. Restate-
ment (Third), supra, § 37 cmt. E; George Basch Co., 968
F.2d at 1540; see also Resource Developers Inc. v. Statute
of Liberty-Ellis Island Foundation, Inc., 926 F.2d 134, 139-
40 (2d Cir. 1991); WE. Bassett Co. vy. Revion, Inc., 435
F.2d 656, 664 (2d Cir. 1970). Similarly, an award of attor-
ney fees may be justified when bad faith infringement has
been shown. Goodheart Clothing, 962 F.2d at 272; Quaker
State Oil Refining Corp. v. Kooltone, Inc., 649 F.2d 94, 95
(2d Cir. 1981) (per curiam). In order to determine whether
the district court abused its discretion denying an account-
ing of Hilfiger’s profits and an award of attorney fees, we
therefore must turn to its finding that Hilfiger did not act
in bad faith when it infringed on ISCYRA’s mark.
II. The District Court’s Bad Faith Finding
The district court’s conclusion that Hilfiger did not act in
bad faith or willfully infringe in its use of the “STAR
CLASS” mark was based on several factual findings which
we review for clear error. Bambu Sales, Inc., v. Ozak Trad-
ing Inc., 58 F.3d 849, 854 (2d Cir. 1995); Nikon, Inc. v.
Ikon Corp.,-987 F.2d 91, 94 (2d Cir. 1993). For the fol-
lowing reasons, we hold these findings to be clearly erro-
neous and incomplete, necessitating a remand to the
district court for further consideration of the issue.
Initially, we note a factual error in the district court’s
opinion which goes directly to the question of the will-
fulness of Hilfiger’s infringement. The district court stated
that the trademark search conducted by Hilfiger prior to its
use of ISCYRA’s “STAR CLASS” mark was of federal and
State marks. In fact, the search was limited solely to reg-
istered or applied-for federal trademarks; despite its attor-
neys’ advice that a wider search be conducted, Hilfiger did
not do one until after ISCYRA filed its suit.
28a
The district court relied on Hilfiger’s limited first search
as proof that Hilfiger did not “engage in a deceptive com-
mercial practice” or otherwise act in bad faith in using
ISCYRA’s mark. We are not convinced, however, that such
a limited search should exonerate Hilfiger, particularly
when Hilfiger ignored the specific advice of its attorneys
to search more thoroughly.
The district court also found that although Hilfiger inten-
tionally copied ISCYRA’s “STAR CLASS” mark, it did not
intend to copy a trademark owned by another. The court
recognized that Hilfiger’s failure to offer a “credible inno-
cent explanation” for its use of ISCYRA’s mark could
support an inference of bad faith under Centaur Commu-
nications, Ltd. v. A/S/M Communications, 830 F.2d 1217,
1228 (2d Cir. 1987). The court nevertheless concluded that
Hilfiger had not willfully infringed on ISCYRA’s mark, cit-
ing as evidence the limited trademark search discussed
above.
In light of Hilfiger’s minimal efforts to ascertain whether
“STAR CLASS” was, in fact, a trademark, we agree with
ISCYRA that the district court clearly erred in finding Hil-
figer guilty only of simple copying and not of intent to
copy a mark. Given Hilfiger’s awareness that it was copy-
ing “authentic details . . .-from the sport of competitive
sailing,” it should have shown greater concern for the pos-
sibility that it was infringing on another’s mark. Hilfiger’s
choice not to perform a full search under these circum-
stances reminds us of two of the famous trio of monkeys
who, by covering their eyes and ears, neither saw nor heard
any evil. Such willful ignorance should not provide a
means by which Hilfiger car evade its obligations under
trademark law.
In addition to the district court’s two clearly erroneous
findings, we believe that its analysis of Hilfiger’s bad faith
was incomplete. First, the district court did not address the
fact that Hilfiger failed to conduct a full trademark search
29a
on “STAR CLASS” before using the mark in direct con-
travention of the advice of its attorneys. Other courts have
found that an infringer who “acts in reasonable reliance on
the advice of counsel” generaily cannot be said to have
acted in bad faith. See, €.g., Sands, Taylor & Wood Co. v,
Quaker Oats Co,. 978 F.2d 947, 962 (7th Cir. 1992), cert.
denied, 507 U.S. 1042 (1993); Cuisinarts, Inc. vy. Robot-
Coupe Int’l Corp., 580 F. Supp. 634, 637-39 (S.D.N.Y.
1984). Conversely, the failure to follow the advice of coun-
sel given before the infringement must factor into an
assessment of an infringer’s bad faith.
Second, the district court gave no consideration to Hil-
figer’s conduct after ISCYRA brought suit for trademark
infringement. The suit gave Hilfiger notice of its potential
trademark violation, and the full trademark search that it
conducted soon thereafter confirmed the existence of
ISCYRA’s mark. Hilfiger nonetheless continued to sell its
merchandise with the infringing mark, racking up over $3
million in sales, without regard for the rights of ISCYRA.
As counsel for Hilfiger admitted during oral argument,
Hilfiger was betting on the fact that ISCYRA would not
Prevail in its suit. Hilfiger lost that bet, and should not
escape the consequences of its conduct. See Stuart vy.
Collins, 489 F. Supp. 827, 832 (S.D.N.Y. 1980) (find-
ing willful infringement when defendant continued to
use plaintiff’s mark after plaintiff’s attorney demanded
that it cease, thereby giving “short shrift to plaintiff’s
claim out of arrogance and confidence that he would
not mount any significant legal attack”); see also Polo
Fashions, Inc. v. Dick Bruhn, Inc., 793 F.2d 1132, 1135
(9th Cir. 1986) (courts should remove economic incentive
to engage in infringing activity); W.E. Bassett Co., 435
F.2d at 664 (an accounting of profits serves to deter will-
ful infringers).
As recognized by the Restatement, an accounting of
profits should be limited to cases of fraudulent infringe-
30a
ment, i.e. “to acts intended to create confusion or deceive
prospective purchasers,” Restatement (Third), supra, § 37
cmt. e., and not be awarded in cases where a defendant
“deliberately but in good faith used a mark.” Jd. We note
that, under this standard, Hilfiger cannot lay claim to a
“good faith” belief that it was not infringing on ISCYRA’s
mark because it neither fully explored others’ rights to
“STAR CLASS” nor ceased its infringing behavior when it
was sued. See Nalpac, Ltd. v. Corning Glass Works, 784
F.2d 752, 755-56 (6th Cir. 1986) (exploitation of another’s
mark after knowledge of its existence suggests bad faith).
We conclude that the district court, in determining
whether Hilfiger acted in bad faith, relied on two clearly
erroneous factual findings and did not consider all the evi-
dence pertaining to the willfulness of Hilfiger’s infringe-
ment. We therefore remand the issue of Hilfiger’s bad faith
for reconsideration in light of our analysis above. As a
result, we cannot review the district court’s denial of an
accounting of profits and attorney fees, but instead must
vacate the denial and remand.
III. Protectibility of ISCYRA’s Five-Pointed Star Mark
ISCYRA contends that the district court “appears” to
hold that ISCYRA enjoys no trademark protection at all in
its five-pointed star insignia, and that the court clearly
erred to the extent that its opinion so holds. ISCYRA main-
tains that it has limited trademark protection of the insignia
when it is used in relation to yachts or professional sailing.
We agree with the district court that Hilfiger cannot be
enjoined from the use of a five-pointed star symbol on its
garments and affirm the district court’s denial of injunctive
relief to ISCYRA as to this mark. We do not read the
court’s opinion to reach beyond Hilfiger’s use of the
insignia on clothing in a manner presented by the facts of
this case. The issue of the insignia’s protectibility in a case
3la
involving yachting or professional sailing, therefore, was
not decided by the district court and is not addressed by
our affirmance.
CONCLUSION
For the foregoing reasons, we vacate the denial of an
accounting of profits and attorney fees, and remand the
question whether Hilfiger acted in bad faith by using
ISCYRA’s “STAR CLASS” mark to the district court for
“reconsideration. In all other respects, we affirm.
32a
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
94 Civ. 2663 (RPP)
INTERNATIONAL STAR CLASS YACHT
RACING ASSOCIATION,
Plaintiff,
—against—
TOMMY HILFIGER U.S.A., INC.,
Defendant.
OPINION AND ORDER
ROBERT P. PATTERSON, JR., U.S.D.J.
Upon second remand from the Second Circuit, and act-
ing as a finder of fact, this Court finds that plaintiff has not
shown that defendant acted in bad faith when it determined
to use the plaintiff’s unregistered mark “Star Class” as a
decoration on certain of its garments.' The Court reaches
this finding of fact excluding from its consideration the
1 Contrary to the Court of Appeals’ finding that “Hilfiger’s-
name and logo also appeared on most of the garments,” /nternational
Star Class Yacht Racing Ass'n v. Tommy Hilfiger U.S.A. Inc., 146
F.3d 66, 68 (2d Cir. 1998), all of the garments had defendant’s label.
One garment, a sweater bearing in large print “Star Class,” did not
have in 3-4 inch high letters “Tommy Hilfiger” or “Tommy” on its
outside, but did have defendant’s label on the inside of the collar, as
well as hang tags denoting its origin. The other garments used large
letters to highlight the Hilfiger name, as well as labels and hang tags.
33a
evidence of ordinary practice in trademark search matters
derived from Corsearch, Inc. y. Thomson & Thomson, 792
F. Supp. 305 (S.D.N.Y. 1992).
According to the unrebutted evidence at trial, the sales of
defendant’s garments were driven by the prominent use of
defendant’s name, initials and crests, which identified the
garments as defendant’s products, and not the words “Star
Class.” In view of the manner of display and labeling, and
the prominent use of the Hilfiger marks, there would be
little, if any, motivation for bad faith appropriation of
plaintiff’s mark by defendant. The evidence does not
demonstrate that Hilfiger willfully intended to Cause con-
fusion or deception or to profit from plaintiff’s reputation.
Cf. Lang v. Retirement Living Publ’g Co., 949 F.2d 576,
583 (2d Cir. 1991) (determination of infringer’s bad faith
“looks to whether the defendant adopted its mark with the
intention of Capitalizing on plaintiff’s reputation and good-
will and any confusion between his and the senior user’s
product”). Tommy Hilfiger U.S.A., Inc. (“Hilfiger”) may
have had knowledge that it was drawing “authentic details
from the sport of competitive sailing,” see 146 F.3d at 70
n.2, but it had orderéd a trademark search of the mark by
its attorneys which did “not reveal any identical federal
trademark registrations or applications in class 25 [a cloth-
ing classification] which would bar your proposed use of
this mark.” (Pl. Ex. 74, quoted in International Star Class
Yacht Racing Ass’n vy, Tommy Hilfiger U.S.A., Inc., 959
F. Supp. 623, 626 (S.D.N.Y. 1997), aff’d in part, vacated
in part, 146 F.3d 66 (2d Cir. 1998).?) There is no showing
that Hilfiger had knowledge of the existence of the
International Star Class Yacht Racing Association (the
“ISCYRA”) or of the mark’s association with any entity at
all, let alone any commercial use of the designation Star
? This caption will hereinafter be referred to as ISCYRA vy.
Hilfiger.
ec
|
34a
Class.’ Even knowledge of another’s mark does not auto-
matically give rise to an inference of bad faith. See W.W.W.
Pharm. Co. v. Gillette Co., 984 F.2d 567, 575 (2d Cir.
1993); Lang, 949 F.2d at 583-84; Sweats Fashions, Inc. v.
Pannill Knitting Co., 833 F.2d 1560, 1565 (Fed. Cir. 1987);
Karmikel Corp. v. May Dep’t Stores Co., 658 F. Supp.
1361, 1375-76 (S.D.N.Y. 1987); Edison Bros. Stores, Inc.
v. Cosmair, Inc., 651 F. Supp. 1547, 1560 (S.D.N.Y. 1987).
As in George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532,
1540-41 (2d Cir.), cert. denied, 506 U.S. 991 (1992), in
which the defendant's intention to imitate the plaintiff’s
trade dress was found insufficient, in itself, to support of
bad faith, Hilfiger’s knowledge that it was copying details
from the sport of sailing does not show that it engaged in
willful deception.
Furthermore, it is not dispositive that Hilfiger failed to
conduct a more extensive search than a Federal Registra-
tion and Application screening within class 25. The Court
finds that Hilfiger did not have an obligation, at the rele-
vant time in 1994, to do a more extensive search in view of
the holdings in Sands, Taylor & Wood Co. v. Quaker Oats
Co., 978 F.2d 947 (7th Cir. 1992), cert. denied, 507 U.S.
1042 (1993). Zazu Designs v. L’Oreal S.A., 979 F.2d 499
(7th Cir. 1992), and Hasbro, Inc. v. Lanard Toys, Ltd., 858
F.2d 70 (2d Cir. 1988); see also Sunenblick v. Harrell, 895
3 _ Hilfiger’s designer admitted at trial to examining books and
other materials on sailboat racing which referred to Star Class racing
and Star Class boats. See 146 F.3d at 68 n.1. This evidence may give
rise to an inference that Hilfiger copied the Star Class mark, but it
does not prove that the marks were known by Hilfiger or its agents to
be trademarks of the ISCYRA or any other entity. See ISCYRA, 959
F. Supp. at 626; ISCYRA v. Hilfger, No. 94 Civ. 2663, 1995 WL
241875, at *3, *11-*12 (S.D.N.Y. April 26, 1995), aff’d in part,
vacated in part, 80 F.3d 749 (2d Cir. 1996). The Star Class mark is a
descriptive mark, see id. at *7, and there is insufficient evidence to
show that when Hilfiger imitated the mark it intended to copy a trade-
mark. See id. at *12.
35a
F. Supp. 616, 633 (S.D.N.Y. 1995) (failure to conduct a
trademark search does not, in itself, support finding of bad
faith), aff'd, 101 F.3d 684 (2d Cir.), cert. denied, 117 S. Ct.
386 (1996); Oxford Indus. Inc. y. JBJ Fabric Inc, 6
U.S.P.Q.2d 1756, 1762 (S.D.N.Y. 1988) (same). This Court
finds that defendant's intent to use the Star Class mark as
a decoration, not as a trademark, was consistent with the
advise of Mr. Burstein, its attorney, who stated, “At this
point, we would not necessarily rule out your use and reg-'
istration of this mark subject to our usual disclaimers
regarding the need to first obtain and review a full trade-
mark search.” (PI. Ex. 74, quoted in ISCYRA v. Hilfger, No.
94 Civ. 2663 (RPP), 1997 WL 297031, at *2 n.1 (S.D.NY.
June 4, 1997), aff’d in part, vacated in part, 146 F.3d 66
(2d Cir. 1998).) “Use and registration” are the requirements
for obtaining a federal registration for a stand alone mark,
see id., and use of the Star Class mark as a decoration with-
out a full search—as opposed to “use and registration” —
was not in disregard of the advice of defendant’s attorneys.‘
Defendant's attorneys indicated only that if defendant was
seeking to protect this mark as its own, it should have a full
trademark search. (Trial Tr. at 336-37.) Defendant had
no intention of using the mark in this fashion. In any case,
Ms. Luparello, a non-lawyer who was an assistant to
Hilfiger’s CEO, and who had responsibilities for interfac-
ing with Hilfiger’s attorneys, was told that a search had
been conducted and there was no bar to defendant’s use of
the mark. Mr. Burstein’s later language was not shown to
have had the significant effect on Ms. Luparello that plain-
tiff has argued for. (Luparello Dep. at 354-356.)
Furthermore, Mr. Burstein’s letter had advised defen-
dant: “STAR CLASS would be a rather weak trademark.
This is because the words “STAR” and “CLASS” are non-
4 It should be noted that the full Thomson & Thomson search
only described ISYCRA’s use of the term as designating “yacht club
membership.” (PI. Ex. 79.)
36a
distinctive terms used extensively in other fields by third
parties.” (Trial Tr. at 310; Pl. Ex. 74, quoted in ISCYRA,
1997 WL 297031, at *5.) This conclusion was not unrea-
sonable. Indeed, as the Court noted in its decision after
trial, it was a “close question” whether or not plaintiff had
any trademark rights. JSCYRA, 959 F. Supp. at 620. While
defendant’s efforts to ascertain whether Star Class was, in
fact, a trademark must be evaluated in conjunction with its
awareness that it was copying details from the sport of sail-
ing, see ISCYRA v. Hilfiger, 80 F.2d 749, 753 (2d Cir.
1996); ISCYRA, 146 F.3d at 70 n.2., they also must be con-
| sidered in light of Mr. Burstein’s advice that any entity’s
| claim to the Star Class mark would be weak. Even had
defendant conducted a full trademark search and acquired
actual knowledge of prior use of the Star Class mark by
plaintiff, a finding of bad faith would not be required if
| defendant had relied on the advice of counsel in choosing
| the mark and not intended to promote confusion or appro-
priate plaintiff’s good will. See W.W.W., 984 F.2d at 575.
Bs Further casting doubt on the proposition that defendant
| acted in bad faith is the minimal value the Star Class mark
added to defendant’s sales, and the improbability that
defendant would choose the mark in the hope of deceiving
consumers or capitalizing on plaintiff’s reputation. See
: Lang, 949 F.2d at 584. In sum, even considering defen-
dant’s knowledge that it was copying details from sailing,
the facts suggest that it is unlikely defendant acted in bad
faith. é
Nor does the continued sale of goods bearing plaintiff’s
marks after this Court denied Hilfiger’s motion for sum-
mary judgment indicate bad faith. In its denial of the
motion for summary judgment, the Court merely held that
whether plaintiff had trademark rights in “Star Class” was
an issue of fact. ISCYRA v. Hilfiger, 33 U.S.P.Q.2d 1610,
1615 (S.D.N.Y. 1994). It did not reject defendant’s argu-
ment that plaintiff had no trademark rights in Star Class.
| ‘ ‘i 7
37a
Indeed, as aforementioned, the Court found it a “close
question” whether or not plaintiff had any trademark rights
at all. Although this Court found the plaintiff’s unregis-
tered mark should merit protection in its opinion and order
of April 26, 1995, ISCYRA v. Hilfiger, No. 94 Civ. 2663,
1995 WL 241875 (S.D.N.Y. April 26, 1995), this Court
does not find that defendant’s conduct in light of Mr.
Burstein’s advice was so unjustified as to support a finding
of bad faith. In many cases, courts have disagreed with
counsel’s opinion in trademark infringement matters, but
not found defendants to have acted in bad faith. See Estee
Lauder, Inc. v. The Gap, Inc., 932 F. Supp. 595, 615
(S.D.N.Y. 1996), rev’d on other grounds, 108 F.3d 1503
(2d Cir. 1997); Cuisinarts, Inc. v. Robot-Coupe Int’! Corp.,
580 F. Supp. 634, 637 (S.D.N.Y. 1984); Information Clear-
ing House, Inc. v. Find Magazine, 492 F. Supp. 147, 161-
62 (S.D.N.Y. 1980) (Weinfeld, J.); A&H Sportswear Co. v.
Victoria’s Secret Stores, Inc., 926 F. Supp. 1233, 1268
(E.D. Pa. 1996), aff’d, 49 U.S.P.Q.2d 1493 (3d Cir. 1999).
In view of the fact that (1) Hilfiger was only using the
Star Class mark as an embellishment on its Nantucket line
of clothing, which was exceedingly well trademarked with
the Hilfger name designating the source of the goods, (2)
there is no showing that Hilfiger intended to copy a trade-
mark, (3) Hilfiger’s conduct was consistent with the advice
of its attorneys concerning when a-full search would be
required, and (4) Hilfiger was reasonably advised by its
attorneys that the Star Class mark was weak, the Court
finds that the evidence is insufficient to support a finding
of bad faith.
The Second Circuit’s opinion remanding the case also
requested this Court to make determinations as to (1)
whether defendant should account to plaintiff for all of its
profits from sales of clothing using plaintiff’s mark, or
merely for profits from sales made after receipt of plain-
tiff’s cease and desist letter: (2) the propriety of deducting
38a
defendant's costs of sales; and (3) whether some portion of
the sales of nautical sportswear was attributable to the
appeal of Hilfiger’s well known mark and reputation.
Accordingly, since the Second Circuit may not agree
with this Court’s finding of insufficient evidence of bad.
faith or wilful misconduct and may make findings of its
own, the following findings are made:
1. Defendant’s profits from sales of clothing bearing
plaintiff’s mark made prior to receipt of plaintiff’s cease
and desist letter need not be disgorged in order to deter
future misconduct, particularly because there is no show-
ing that defendant knew that plaintiff existed or that any-
one owned the Star Class mark, or that defendant intended
to copy a trademark.
2. According to Exhibit 9, defendant’s sales following
commencement of this action are $818,419.85, and the
cost of such sales is $368,288.93, or 45% of sales. Thus,
Hilfiger’s profits on those sales amounts to $450,130.92.
3. The evidence shows that the defendant’s profits
flowed overwhelmingly from the presence on the clothing
of “TOMMY HILFIGER” in big letters, the initials “T.H,”
and the Hilfiger flag design mark. (Trial Tr. at 255-259.)
Zwerner, a buyer for Burdinee’s, a leading chain of depart-
ment stores, testified, “The bigger, the more prominent the
Tommy Hilfiger designation, crest or name on the garment
the better it sells.” (Jd. at 259.) Zwerner testified that, in
contract, the words “Star Class” on garments “didn’t mean
anything except ‘He’s high class.’ ” (Id.) To the extent it is
pertinent, defendant’s witness Leeds testified that license
fees for use of a trademark license range from 2-1/2 to 6%
of gross sales. (Trial Tr. at 286.)
In this Court’s judgment, the entry of an injunction
against use of plaintiff’s trademark was sufficient to deter
any further infringement of plaintiff's unregistered mark.
39a
As shown by the Zwerner testimony, the use of the Star
Class mark conferred little benefit on Hilfiger. Though this
Court does not award damages, if it is necessary to make
such an award, the Court finds that in light of the small
benefit Hilfiger derived from use of the Star Class mark,
those damages would be 2-1/2% of $818,419.85, the gross
sales of the infringing product after the suit commenced, or
$20,460.50.
Conclusion
The Court finds that plaintiff has not carried its burden
of proving by a preponderance of the evidence that defen-
dant acted in bad faith by selling infringing garments
before or after the cease and desist order, but that if dam-
ages are to be assessed based on bad faith. plaintiff should
receive $20,460.50 from defendant.
IT is SO ORDERED.
Dated: New York, New York
March 2, 1999
/s/
Robert P. Patterson, Jr.
U.S.D.J.
Copies of this Opinion and Order sent to:
Counsel for Plaintiff
BAINTON MCCARTHY & SIEGEL, LLC
130 East 35th Street
New York, NY 10016
By: J. Joseph Bainton, Esq.
John G. McCarthy, Esq.
Tel: 212-725-7780
Fax: 212-725-6920
Counsel for Defendant:
GURSKY & EDERER, P.C.
21 East 40th Street, 15th Floor
New York, NY 10016
By: Louis S. Ederer, Esq.
Steven R. Gursky, Esq.
Tel: 212-213-1234
Fax: 212-213-1245
COWAN, LIEBOWITZ & LATMAN, P.C.
1133 Avenue of the Americas
New York, NY 10036-6799
By: Louis S. Ederer, Esq.
Joseph H. Lessem, Esq.
Tel: 212-790-9200
Fax: 212-575-0671
4la
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
94 Civ. 2663 (RPP)
INTERNATIONAL STAR CLASS YACHT
RACING ASSOCIATION,
Plaintiff,
—against—
TOMMY HILFIGER U.S.A., INC.,
Defendant.
APPEARANCES
Counsel for Plaintiff:
Ross & HARDIES
Park Avenue Tower
65 East 55th Street
New York, New York 1022-3219
By: J. Joseph Bainton
John G. McCarthy
Chike I. Chukwulozie
Tel: (212) 421-5555
Fax: (212) 421-5682
42a
Counsel for Defendant:
COWAN, LIEBOWITZ & LATMAN, P.C.
1133 Avenue of the Americas
New York, New York 100386-6799
By: Louis S. Ederer
Joseph H. Lessem
Tel: (212) 790-9200
Fax: (212) 790-9300
OPINION AND ORDER
ROBERT P. PATTERSON, JR., U.S.D.J.
Plaintiff International Star Class Yacht Racing Associ-
ation (“ISCRYA”) moves for reconsideration of this
Court’s finding in its Opinion and Order entered March 4,
1997 (“March 4, 1997 Opinion”) that defendant Tommy
Hilfiger U.S.A., Inc. (“Hilfiger”) did not copy ISCRYA’s
trademark in bad faith. Defendant Hilfiger moves to alter
and/or amend those parts of the Court’s March 4, 1997
Opinion that (a) failed to deduct from the determination of
Hilfiger’s profits the costs identified in Plaintiff’s Exhibit
90 and (b) sustained the objection of plaintiff’s counsel to
the testimony of Steven Gursky (“Gursky”) at the October
24, 1996 hearing.
For the reasons set forth below, both parties’ motions are
denied:
I. Plaintiff ’s Motion
Plaintiff argues that this Court’s finding in its March 4,
1997 Opinion that Hilfiger did not copy ISCYRA’s trade-
mark in bad faith was based on facts that the Court cannot
correctly consider because the Court improperly took judi-
cial notice of facts arising out of its personal knowledge of
43a
industry practice as revealed in a case tried before it in
1991, Corsearch v. Thomson & Thomson, 792 F.Supp. 305
(S.D.N.Y. 1992).
It is true that generally dicta from past decisions cannot
dispose of factual issues in later cases. See Wooden v., Mis-
souri Pacific R. Co., 862 F.2d 560, 563 (Sth Cir. 1989)
(rejecting appellant’s argument that district judge should
have taken judicial notice, based on dicta in 1949 Supreme
Court opinion, that it was common knowledge in 1950s
that working in cloud of silicon dust without respiratory
gear could cause severe Ming diseases); see also Gasnik
v. State Farm Insurance Co., 825 F.Supp. 245, 247 (E.D.
Cal. 1992) (rejecting defendant's request that court take
judicial notice of its own prior order because prior order is
“not an adjudicative fact of which judicial notice can be
taken”). A court may, however, “properly notice a doctrine
or rule of law from such prior case and apply that principle
under the theory of stare decisis.” M/V American Queen vy.
San Diego Marine Construction Corp., 708 F.2d 1483, 1491
(9th Cir. 1983) (upholding district judge’s use of findings
on reasonableness of certain contract limitations provisions
from unpublished orders from same district as partial sup-
port for finding of reasonableness of similar limitation pro-
vision); cf. United States vy. Vasquez-Guerrero, 554 F.2d
917, 919 n. 1 (9th Cir.) cert. denied 434 U.S. 865 (1977)
(district judge had “held comprehensive factual hearings
regarding [border control] checkpoints” while trying
United States v. Baca, 368 F.Supp. 398 (S.D. Cal. 1973);
same judge applied those findings at suppression hearing
in later unrelated case to determine permissibleness of a
border stop; appellate panel adopted findings with regard
to suppression hearing because district judge had “explic-
itly stated at the suppression hearing that he was relying
upon Baca in holding” that a certain point on the border
was a permanent checkpoint, and defense counsel “did not
object, except to argue that under subsequent cases, the
i
doa
legal conclusion was incorrect”); In re Diversey Hotel
Corp., 165 F.2d 655, 657 (7th Cir.) cert. denied; Kosdon v.
Diversey Hotel Corp., 333 U.S. 861 (1948) (in determining
whether corporate reorganization filing was in good faith,
trial court may take notice of facts brought to its attention
in other reorganization proceedings).
In this case, the Court found that Hilfiger did not act in
bad faith because it did not ignore the advice of counsel.
This finding was based in part on viewing the advice given
by Hilfiger’s counsel in light of the common industry prac-
tice of not always conducting a full trademark search
before use of a trademark. This understanding of common
industry practice was not based, however, on the Court's
own personal knowledge of industry practice. It was based
on both Hilfiger attorney Neil Burstein’s (“Burstein”) tes-
timony that his firm’s disclaimer only recommended that
Hilfiger perform a full trademark search if “Star Class”
was to be used as a “stand-alone mark” (in which case the
trademark would be “used and registered”),' and on indus-
try practice regarding the nature of trademark searches
! In its post-hearing brief to this Court plaintiff mischarac-
terized this advice, stating that “Mr. Burstein told Hilfiger without
qualification not to rely on his ‘screening search’, which was limited
solely to registered and applied-for federal trademarks” (See Plain-
tiff’s Revised Second Post-Trial Brief at 20 (citing Pl. Exs. 72,73 &
74; Trial Tr. at 325) ). There is no evidence that Burstein so advised
Hilfiger. Rather, Burstein's advice to Hilfiger in the August 6, 1993
letter was the following: “At this point, we would not necessarily rule
out your use and registration of this mark subject to our usual dis-
claimers regarding the need to first obtain and review a full trade-
mark search.” (P1. Ex. 74) (emphasis in text).
The Court notes that plaintiff's counsel's Proposed Findings of
Fact purport to quote this letter but omit the important words “and
registration” after the word “sue”. (See Plaintiff's Proposed Findings
of Fact, September 9, 1996 at 428.) Since use and registration are
both required to register a trademark, Burstein's use of this language
is consistent with his testimony that a full search should be conducted
for a stand-alone mark.
45a
conducted before adopting a trademark, as evidenced by
findings in Corsearch, 792 F.Supp. at 307, as well as on
other published judicial opinions which showed that no
court had required that companies perform a full trademark
Search before use and only two courts had previously
required a registered mark search before use. See Inter-
mational Star Class Yacht Racing Association vy. Tommy
Hilfiger, 1997 WL 91082 at *3 (S.D.N.Y. March 4, 1997)
(citing Sands, Taylor & Wood. Co. v, Quaker Oats. Co.,
978 F.2d 947 (7th Cir. 1992) cert. denied, 507 U.S. 1042
(1993) aff’g in part 1990 WL 251914 at *16 (N. D. II.
Dec.20, 1990) (finding bad faith where defendant failed to
conduct registered trademark search until days before air-
ing of commercial and had knowledge trademark was in
use); see also Zazi Designs v. L’Oreal, 979 F.2d 499, 504
(ith Cir. 1992) (“Firms need only search the register before
embarking on development.”); and Hasbro. Inc. v. Lanard
Toys, Ltd., 858 F.2d 70 (2nd Cir. 1988)(upholding lower
court finding that search limited to only registered marks
was not bad faith).)
Moreover, the Court raised the findings of Corsearch at
the hearing (Transcript of Hearing, “Hearing Tr.” at 572)
and invited counsel to comment on those conclusions (id.).
Defendant in its brief on remand discussed Corsearch in
support of its argument that its actions were in good faith
(Defendant’s Post-Trial Memorandum of Law, “Def. Post-
Tual Mem.” at 6). Plaintiff’s argument on this motion that
it had inadequate notice that the issue of what was accepted
industry practice was relevant to the Court’s consideration
of whether Hilfiger acted in bad faith is unavailing. Plain-
tiff did not object when the Court discussed Corsearch at
the hearing, and it presented no case law which either dis-
puted the findings of Corsearch and the other cases cited
by the Court or which set forth any alternative under-
standing of acceptable industry practice. Cf. United States
v. Vasquez-Guerrero, 554 F.2d at 919 n. 1.
46a
Accordingly, plaintiff’s motion for reconsideration is
denied.
II. Defendant’s Motion
Defendant moves for reargument and to alter and/or amend
the Court’s March 4, 1997 Opinion on the grounds that (1)
the Court overlooked evidence in the record of Hilfiger’s -
costs and the apportionment of Hilfiger’s profits; and (2)
the testimony of Gursky should have been admitted into
evidence. The standard for a motion for reconsideration or
reargument is strict, and it “is not a mechanism to allow
parties to relitigate contentions and arguments already
briefed, considered and decided.” Yankelevitz v. Cornell
University, 1997 WL 115651 at *2 (S.D.N.Y.1997).
The Court did not overlook evidence in the record of
Hilfiger’s costs as defendant did not introduce any such
evidence into the record. Plaintiff’s Exhibit 90 was offered
for the purpose of showing Hilfiger’s sales and profits and
not its costs. No evidence of those costs was submitted by
defendant at the hearing, and no reference to those costs
was made by defendant in its post- hearing memorandum.
As the Court pointed out in its March 4, 1997 Opinion,
Gursky’s testimony at the post-trial hearing is not admitted
because it went to the issue of bad faith which defendant
had had ample notice would be an issue prior to trial. Thus,
defendant could have presented evidence on this issue at
trial; by not doing so, it lost its chance. See International
Star Class Yacht Racing Association v. Tommy Hilfiger,
1997 WL 91082 at *1.
Defendant has presented no evidence or controlling deci-
sions that this Court overlooked in its March 4, 1997 Opin-
ion so defendant’s motion for reargument is denied. .
47a
Ill. The Parties’ Proposed F indings of Fact
In its March 4, 1997 Opinion, the Court inadvertently did
not review the parties’ Proposed Findings of Fact on the
Issue of Bad Faith which were based solely on the trial
record and received September 9 and 10, 1996, some weeks
prior to the October 24, 1996 Hearing. The parties are enti-
tled to rulings on these Proposed findings. Accordingly, the
following Findings of Fact are accepted:
1. In its Nantucket line of clothing, Hilfiger used the
phrase “Star Class” as part of a composite logo, imme--
diately in conjunction with both the registered Hilfiger
name trademark (i.e., TOMMY HILFIGER) and a vari-
ant of the registered Hilfiger red, white and blue flag
design trademark. Both the Hilfiger name mark and the
Hilfiger design mark were larger and more prominent
than the phrase “Star Class” (Def. Exh. T-40).
2. The Hilfiger trademark is one of the two leading
apparel trademarks in the United States (Leeds, Tran-
script of Trial, “Trial Tr.” at 287).
3. Kathleen G. Luparello (“Luparello”), an assistant to
the Chief Executive Officer of Hilfiger and Hilfiger’s
director of corporate services, was not a member of its
design department (Luparello Dep., Trial Tr. at 350).
4. Luparello’s responsibilities include interfacing with
Hilfiger’s attorneys on use and protection of Hilfiger’s
trademarks (id.).
5. Luparello transmitted to Hilfiger’s attorneys
Hilfiger’s request that a trademark search be done
on “Star Class” (id., at 352).
6. In 1993, Neil Burstein was of counsel to the law
firm of Gursky & Blau, attorneys for defendant
(Burstein, Trial Tr. at 307).
48a
7. In or about August 1993, Burstein received Hilfiger’s
request to perform a trademark search on the words
“Star Class” (id.).
8. Burstein did not know how Hilfiger intended to use
the term “Star Class” (id. at 322).
9. Burstein was not informed by anyone at Hilfiger
prior to the commencement of the litigation that Hilfiger
intended to market clothing with “Star Class” as con-
taining “authentic details taken from the sport of com-
petitive sailing” (id. at 329).
10. Burstein chose to have a Westlaw trademark
screening search performed for federal trademark reg-
istrations and pending applications (id. at 307, 309,
335; Pl. Exh. 72, 73).
11. Burstein did two such Westlaw trademark screen-
ing searches, one limited to goods in Class 25, cloth-
ing. and another for goods and services in all classes
(Burstein, Trial Tr. at 324-26; Exh. 72, 73).
12. Burstein concluded from the aforementioned
trademark screening searches that (a) there were no
registrations or pending applications covering the
phrase “Star Class,” (b) there were many third-party
usages of marks containing the words “Star” or “Class”,
and (c) any mark that used the words “Star” or “Class”
would be a very weak mark (Burstein, Trial Tr. at 310).
14. The norma! procedures followed by Burstein did
not mandate that a trademark screening search be fol-
lowed up with a full trademark search. A full trade-
mark search would mot be done if the term did not
have trademark significance or would not be used as a
stand-alone trademark (id., at 336-37).
49a
15. Burstein believed that he followed normal pro-
cedures with respect to Hilfiger’s Nantucket line of
clothing including the term “Star Class” (id. at 338).
16. After Hilfiger received a cease and desist letter
from counsel for the plaintiff (“ISCYRA”), Burstein
caused a full trademark search to be performed by
Thomson & Thomson for “Star Class” for clothing and
nautical sporting goods (id. at 310-312).
17. The Thomson & Thomson trademark search cov-
ered federal registrations, federal applications, state
registrations, common law trademarks and trade names
(id. at 311; P1. Exh. 79),
18. The Thomson & Thomson search report was more
than 140 pages in length (P1. Exh. 79).
19. The Thomson & Thomson search report revealed
extensive usages of the words “Star” and “Class”,
including instances where “Star Class” was used by
third parties as a trademark (Burstein, Trial Tr. at 313-
15; Pl. Exh. 79).
20. No reference to ISCYRA’s use of the phrase “Star
Class” appeared in the federal registration portion of
the Thomson & Thomson search report (P1. Exh. 79).
21. No reference to ISCYRA’s use of the phrase “Star
Class” appeared in the federal application portion of
the Thomson & Thomson search report (id.).
22. No reference to ISCYRA’s use of the phrase “Star
Class” appeared in the state registration portion of the
Thomson & Thomson search report (id.).
23. The only reference in the Thomson & Thomson
search report to ISCYRA’s use of the phrase “Star
Class” was a listing under “company name” for “yacht
club membership” (Burstein, Trial Tr. at 345: Pl. Exh.
79).
50a
24. ISCYRA is not and does not intend to be a com-
mercial manufacturer or seller of clothing or apparel
(Stip. Facts 9 (1V)(0)).
25. Total sales by ISCYRA of merchandise bearing
the phrase “Star Class” was $10,388 in 1992 (Stip.
Facts 4 (I1V)(L)).
26. Total sales by ISCYRA of merchandise bearing
the phrase “Star Class” was $11,783 in 1993. (Id.)
27. Burstein also caused a trademark search to be
done on a design consisting of a five-pointed star
(Burstein, Trial Tr. at 318).
28. Burstein testified that he believed that search
revealed thousands of marks that had stars in them
(id.).
29. If, at the time he performed the Westlaw trade-
mark screening search, Burstein had known about
ISCYRA’s use of the term “Star Class” and a five-
pointed star what he knew at the time of the trial, his
legal conclusion would have been that ISCYRA’s use
of the words “Star Class” and/or a five-pointed star
had no trademark significance (id., at 339-40).
30. Assuming that prior to receiving ISCYRA’s cease
and desist letter, Burstein had known of (a) ISCYRA’s
existence and its use of “Star Class” as it appears in
the Thomson & Thomson search report, (b) Hilfiger’s
intention to use “Star Class” on garments in the Nan-
tucket line and Hilfiger’s intention to advertise the
Nantucket line as containing “authentic details taken
from the sport of competitive sailing,” and (c) had had
an exampie of the use of that phrase, Burstein would
not necessarily have precluded Hilfiger from using
“star class” in connection with the Hilfiger mark (id.
at 343-45).
Sla
31. Luparello read the letter from Burstein marked as
Plaintiff’s Exhibit 74 (id. at 354).
32. Burstein’s letter stated the following:
The screening search for the mark STAR
CLASS did not reveal any identical federal trade-
mark registrations or applications in class 25
which would bar your Proposed use of this mark.
At this point, we would not necessarily rule out
your use and registration of this mark subject to
. Also to
be considered is that STAR CLASS would be a
rather weak trademark. This is because the words
“STAR” and “CLASS” are non-distinctive terms
used extensively in other fields by third parties
(P1. Exh. 74) (emphasis in text).
33. Luparello understood the phrase “our usual dis-
claimers” in Burstein’s letter to mean “attorney para-
noia,” i.e., “overcautiousness” (Luparello Dep., Trial
Tr. at 354),
34. Luparello did not know the differences between a
“trademark screening search” and a “full trademark
search” (id., at 355-56).
35. Luparello could not recall Burstein or his firm
ever sending her a trademark search report that was in
a format similar to the ful] Thomson & Thomson
trademark search report for “Star Class” in response to
a request by her for a trademark search (id. at 357).
36. Luparello could not recall ever having asked any
law firm or lawyer to do “a more in-depth search than
a usual trademark search” (id. at 358).
52a
37. ISCYRA commenced the present action by a com-
plaint served on defendant on April 14, 1994 (Civil
Docket Sheet No. 5).
38. $2,334,892.20 worth of sales of clothes in Hilfiger’s
Nantucket line using the phrase “Star Class” were
made before May 1994, approximately two weeks
after ISCYRA commenced its lawsuit against Hilfiger
(Exh. to Plaintiffs’ Post-Trial Brief).
39. Only $818,492.85 worth of sales of clothes in
Hilfiger’s Nantucket line using the phrase “Star Class”
were made after May 1994 (Exh. to Plaintiffs’ Post-
Trial Brief).
40. ISCYRA never requested that Hilfiger recall
clothing using the term “Star Class” or sought judicial
relief to that effect (Complaint; Order to Show Cause
entered April 14, 1994).
Conclusion
For the reasons stated above, both parties’ motions are
denied, and this case is hereby closed.
IT 1s SO ORDERED.
Dated: New York, New York
June 3, 1997
/s/) ROBERT P. PATTERSON, JR.
Robert P. Patterson, Jr.
U.S.D.J.
53a
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
94 Civ. 2663 (RPP)
INTERNATIONAL STAR CLASS YACHT
RACING ASSOCIATION,
Plaintiff,
—against—
TOMMY HILFIGER U.S.A., INC.,
Defendant.
APPEARANCES
Counsel for Plaintiff:
Ross & HARDIES
Park Avenue Tower
65 East 55th Street
New York, New York 1022-3219
By: J. Joseph Bainton ,
John G. McCarthy
Chike I. Chukwulozie
Tel: (212) 421-5555
Fax: (212) 421-5682
54a
Counsel for Defendant:
COWAN, LIEBOWITZ & LATMAN, P.C.
~ 1133 Avenue of the Americas
New York, New-York 100386-6799
By: Louis S. Ederer
Joseph H. Lessem
Tel: (212) 790-9200
Fax: (212) 790-9300
OPINION AND ORDER
ROBERT P. PATTERSON, JR., U.S.D.J.
On April 4, 1996 the Second Circuit affirmed in part,
vacated in part, and remanded the judgment this Court
entered on May 19, 1995. The Second Circuit found that
the District Court’s conclusion that there was no evidence
of bad faith or wilful infringement in defendant Tommy
Hilfiger, U.S.A., Inc.’s (“Hilfiger”) use of the “Star Class”
marks was based on two erroneous factual findings: (1)
that the trademark search that defendant undertook was of
both federal and state marks, when in fact it was of federal
marks only, see International Star Class Yacht Racing
Association v. Hilfiger, 80 F.3d 749, 752 (2d Cir. 1996);
and, (2) that although Hilfiger intentionally copied plain-
tiff International Star Class Yacht Racing Association’s
(“ISCYRA”) “Star Class” mark, it did not intend to copy a
trademark owned by another. Jd. at 753. The Second Cir-
cuit found this to be clearly erroneous given Hilfiger’s
minimal efforts to ascertain whether “Star Class” was a
trademark. Id.
The Second Circuit also found that the District Court’s
analysis of Hilfiger’s bad faith was incomplete, as the Dis-
trict Court did not address Hilfiger’s failure to conduct a
55a
full trademark search on Star Class “in direct contravention
of the advice of its attorneys,” id. at 754, and did not take
into consideration Hilfiger’s continued sale of allegedly
infringing merchandise after initiation of this suit. Jd.
On remand, the defendant moved to present additional
evidence on the issue of its alleged bad faith and the
amount of damages to be imposed, based on the Second
Circuit’s statement that after plaintiff instituted this action
Hilfiger continued to utilize plaintiff’s mark on its apparel,
“racking up over $3 millon in sales”. Id.
The District Court granted defendant’s motion and allowed
the presentation of additional evidence on October 24,
1996. The evidence consisted of the testimony of Steven R.
Gursky (“Gursky”), counsel to defendant, whose testimony
was designed to rebut the Second Circuit’s statement that
defendant ignored the advice of his firm in its use of the
“Star Class” mark. Also, a witness from Hilfiger’s con-
trollers’ office presented records showing defendant shipped
only $818,492.85 worth of goods bearing the words “Star
Class” after the commencement of the action (Transcript of
October 24, 1996 Hearing, “Hearing Tr.” at 557-60), not the
“over $3 million in sales” stated by the Circuit Court.
The Court rejects in toto the testimony of Gursky at the
October 24, 1996 hearing. Defense counsel had‘adequate
notice at trial of the plaintiff’s claim of bad faith and made
a record at trial as to the advice defendant received from its
counsel on the use of “Star Class”. Contrary to defendant’s
contention in its Post-Trial Memorandum of Law on
Remand (“Post-Trial Mem.” at 2-3 n. 1) requesting the evi-
dentiary hearing, prior to trial the plaintiff did raise the
issue of the defendant’s bad faith, albeit in a less direct
fashion than suggested by the Second Circuit. The plain-
tiff’s complaint filed on April 13, 1994 charged a violation
of the Lanham Act, which should have alerted defense
counsel to the probability of a claim of bad faith, a factor
considered under Lanham Act analysis. See Paddington
56a
Corp. v. Attiki Importers & Distributors, Inc., 996 F.2d
577, 584 (2d Cir. 1993). Also, in its Memorandum in Sup-
port of Its Motion For a Preliminary Injunction (“Mem. in
Supp. of Prelim. Inj.”) filed with the complaint, in sections
entitled “Defendant’s Bad Faith” (Mem. in Supp. of Prelim.
Inj. at 16) and “Predatory Intent” (/d. at 21), as well as in
its Memorandum Opposing Summary Judgment, plaintiff
disputed defendant’s claim of no evidence of intentional
copying. Similarly plaintiff leveled charges in the Pre-Trial
Order of “wilful and deliberate” copying and “deception”,
and in its Proposed Findings of Fact and Conclusions of
Law, plaintiff charged Hilfiger acted with predatory intent.
All of these statements should have put defendant’s coun-
sel on notice that at trial plaintiff would be charging bad
faith. The fact that defendant’s counsel did not realize
at trial that plaintiff was offering evidence which could
show bad faith is irrelevant. Defendant’s counsel had an
opportunity to counter such claims with proof from the
defendant’s executives as to their state of mind in utilizing
the mark “Star Class” and chose not to do so, but to rely
instead on counter-designations in the deposition testi-
mony of defendant’s director of design Michael Sondag
(“Sondag”)! to the effect that he did not know that the Star
Class existed as a class of racing yachts. (Transcript of
Trial of January 9, 10, 1995, “Trial Tr.” at 233-34.) The
defense also called Neil Burstein (“Burstein”), of counsel
on intellectual property matters to the law firm represent-
ing defendant and an adviser to defendant in this matter, to
show that the defendant had proceeded to use “Star Class”
only after its attorneys had conducted two trademark
screening searches. The fact that defendant employed
counsel with insufficient trial experience is no excuse for
its failure to call additional witnesses.
l
227.)
Sondag reported directly to Tommy Hilfiger. (Trial Tr. at
Ere ener
57a
Accordingly, the evidence presented at the trial is the
sole basis on which plaintiff’s bad faith claim should be
evaluated, and only the evidence at trial (not the evidence
at the October 24, 1996 hearing) will be reconsidered in
light of the Second Circuit’s Opinion.
Discussion
In its Findings of Fact and Conclusions of Law, this
Court did commit a clear mistake in finding that a trade-
mark search of federal and state registrations had been con-
ducted by the defendant, as Opposed to just a federal
trademark search.” The Court’s recollection of the nature of
the “knock-out” trademark search conducted for the defen-
dant was clearly incorrect, but this error is not one of any
moment, as a state trademark search would not have
revealed any trademark of plaintiff’s (Plaintiff’s Exhibit,
“Pl. Ex.” 79),? and so this error by the Court does not bear
on the issue of defendant’s bad faith.
The Second Circuit’s suggestion that, in light of Hilfiger’s
minimal efforts to ascertain whether “Star Class” was in
fact a trademark, this Court erred in finding Hilfiger guilty
only of simple copying and not intent to copy a mark, does
not take into account the change in industry practice in
trademark searches that took place in the late 1980s and
early 1990s of which the District Court was aware.
2 Two trademark search companies, Thomson & Thomson,
through Dialog Information Services, Inc., and Trademark Research
Corporation, did offer both federal and state trademark screening
searches for all fifty states at the time. See Corsearch v. Thomson &
Thomson, 792 F.Supp. 305, 307 (S.D.N.Y. 1992) (discussed infra).
3
A full search performed after the initiation of this lawsuit by
Thomson & Thomson revealed only common law trademark use by
plaintiff. (Transcript of January 9, 10, 1995 Trial, “Trial Tr.” at 317;
Pl. Ex. 79.)
58a
- Corsearch v. Thomson & Thomson, 792 F.Supp. 305
(S.D.N.Y. 1992), an antitrust case, was tried before this
Judge over a period of about four weeks in late 1991. in
that case it was uncontested that after the fall of 1989
industry practice in trademark searches underwent a sig-
nificant metamorphosis following the general release by
the federal patent and trademark office of its computerized
data base of all federally registered marks and pending
applications. See Corsearch v. Thomson & Thomson, 792
F.Supp. at 308, 323- 25. Thereafter, several firms, includ-
ing Corsearch, Mead Data Central and Dun & Bradstreet,
entered the trademark screening search field in competition
with Thomson & Thomson which had held “monopoly
power in the ‘comprehensive trademark search market’ ”
and had had an exclusive right, as had Trademark Research
Corporation, to license the computerized version of the
federal trademark search which they helped develop. Jd. at
308. Testimony in Corsearch revealed that a number of
“trademark search firms” now offer only screening
searches of the federal data base, id. at 323, and that such
firms are widely used by in-house and trademark counsel to
conduct “knock-out” or “rule out” searches of names and
symbols, and comprehensive or “more sophisticated
searches are reserved for marks which have passed knock
out tests and are being seriously considered for trademark
registration.” Jd. at 311 (quoting Affirmation of Dr. Mar-
ion Stewart 9q 21-22).
Indeed, industry statistics demonstrated that a multitude
of federal trademark applications are regularly filed with-
out a full search being conducted.‘ Jd. at 307. It was thus
4 As the Corsearch opinion stated:
(T]housands of federal trademark applications are filed each
year without ordering a full search from any trademark infor-
mation service. . . Corsearch and [Thomson & Thomson]
combined performed only approximately 60,000 compre-
hensive searches in 1990, a substantial number of which did
Hhiiennminnsiii ila aioe ase
59a
common practice for businesses to use trademarks and
apply for federal registration without conducting a full
trademark search and to rely instead on computerized
screening searches, or “knock-out” searches, comprised
only of federal trademarks and pending applications, before
such use and registration. Id. at 307.
Indeed, the Court has been unable to find any case prior
to the Second Circuit decision which has held that a party
in Hilfiger’s position had a duty to conduct a full search of
prior uses of a trademark before use, and has only found
two explicitly requiring the search for existing registered
marks. See Sands, Taylor & Wood. Co. v. Quaker Oats, Co..,
978 F.2d 947 (7th Cir. 1992) cert. denied, 507 U.S. 1042
(1993) (aff’g 1990 WL 251914 at * 20 (N. D. Ill. Dec.20,
1990)); see also Zazu Designs v. L’Oreal, 979 F.2d 499,
504 (7th Cir. 1992) (“Firms need only search the register
before embarking on development.”); Hasbro, Inc. vy.
Lanard Toys, Ltd., 858 F.2d 70 (2nd Cir. 1988) (upholding
lower court finding that search limited to only registered
marks was not bad faith). Court Opinions such as these,
although principally dicta, evidently were relied upon in
business and by trademark counsel, especially by those
anxious not to maximize their costs with full searches and
anxious not to delay production while a comprehensive
search was conducted.
In light of the common practice in the industry as
revealed in Corsearch and Supported by the case law,
defendant's efforts to ascertain whether “Star Class” was a
mark of another do not appear to be inadequate. Moreover,
defendant's conduct does not appear in any other way to
evince an intent to copy the mark of another. There is no
question Hilfiger advertised the Nantucket Line as “com-
not result in trademark applications. 127,000 trademark
applications were filed with the [United States Patent and
Trademark Office} in 1990.
Corsearch, 792 F.Supp. at 307.
60a
bining classic nautical sportswear with a variety of authen-
tic details taken from the sport of competitive sailing.”
(Trial Tr. at 34, 229.) There was no evidence, however, that
Hilfiger had reason to believe that the designation “Star
Class” was anything other than a certain type of sailboat
used in racing. Hilfiger’s designer admitted examining
Stars and Stripes: The Official Record, a coffee table book
published by Dennis Connor Sports, a recognized author-
ity on sailboat racing (Pl. Ex. 88; Trial Tr. at 230), which
referred to Star Class racing and Star Class boats but gave
no indication of the affiliation of that phrase with
ISCYRA, and treated the phrase generically on many of its
pages. See International Star Class Yacht Racing Associ-
ation v. Tommy Hilfiger U.S.A., Inc., 1995 WL 241875 at *
7 (S.D.N.Y. April 26, 1995). Designer Sondag stated that
he had not determined that Star Class as a class of sailing
yachts existed.° (Trial Tr. at 233-34.) There was no show-
ing that the defendant knew ISCYRA existed. Even
Burstein, who was a member of a yacht club, testified he
had no such knowledge (Jd. at 330, 339), and plaintiff
offered no evidence anyone else at Hilfiger had such
knowledge. _
Counsel for plaintiff’s reliance on the testimony of
designer Sondag (a layperson) to the effect that he copied
another logo, to show predatory intent to copy the mark of
another, is almost laughable. (/d. at 239 (quoting Sondag
> In view of Sondag’s testimony, the Court does not find-that
defendant’s failure to call Tommy Hilfiger, Sondag’s immediate
supervisor, warrants drawing an adverse inference that Mr. Hilfiger’s
testimony would have been unfavorable to defendant. There was no
showing that Mr. Hilfiger’s testimony would not “merely have
repeated other testimony and evidence already before” the Court
through Sondag’s deposition, and so an adverse inference would be
inappropriate. See 3 Leonard B. Sand et al., Modern Federal Jury
Instructions 975.01 (Instruction 75-3) (1996). Counsel advised that
all of defendant’s executives were unavailable as it was “market
week” in the industry. (Trial Tr. at 223.)
6la
Deposition).) The North Sails logo discussed in the
designer’s testimony consists of a round circle with a slash
mark separating the letters “N” and “S”. (Id. at 35.) Use
of a round circle with a slash mark Separating letters or
distinctive symbols is a very common trademark design.
Hilfiger used the round circle with a double slash mark
to enclose and separate the letters “T” and “H” (Jd. at 35-
37), and the double slash mark incorporated the word
“HILFIGER” .* (See Def. Ex. 40 (attached as Ex. A).) The
- letters “N” and “S” do not resemble “T” and “H”, and the
mark may not be considered a “copy” as a matter of law,
despite the witness’s use of the vernacular: There is no
evidence that this action of Hilfiger’s evinced an intent to
copy the mark of another.
As the Second Circuit stated, the fact that Hilfiger went
ahead with the use of the phrase “Star Class” after receiv-
ing defendant’s counsel’s letter of August 6, 1993 to Hilfiger
trademark liaison Kathleen Luparello (“Luparello”) must
be considered in evaluating Hilfiger’s bad faith. (Letter of
Gursky & Blau to Luparello of August 6, 1993, Pl. Ex. 74.)
Prior to sending the letter, defendant’s counsel had per-
formed a trademark screening search by computer of federal
trademark registrations and pending applications for the
trade names “Star Class” and “Haberdasher”. (P]. Ex. 72.)'
It advised its client in the letter of August 6, 1993 against
the use of the trade name “Haberdasher” because of prior
use. (PI. Ex. 74.) With respect to “Star Class” it advised:
6 The numbers “0” and “42” were added within the circle, the
latter designating Mr. Hilfiger’s age. (Trial Tr. at 240 (quoting Sondag
Deposition).)
In fact, two screening searches were performed on Westlaw
on August 3, 1993. Plaintiff’s Exhibit 72 covered all federal regis-
tered and pending applications for “Star” and “Class” (Trial Tr. at
307-8), and Plaintiff’s Exhibit 73 covered “Star Class” for Interna-
tional Class 25 (clothing) and U.S. Class 39 (clothing). (Trial Tr. at
324-36.)
62a
The screening search for the mark STAR CLASS
did not reveal any identical federal trademark regis-
trations or applications in class 25 which would bar
your proposed use of this mark. At this point, we
would not necessarily rule out your use and registra-
tion of this mark subject to our usual disclaimers
regarding the need to first obtain and review a full
trademark search. Also to be considered is the fact
that STAR CLASS would be a rather weak trademark.
This is because the words “STAR” and “CLASS” are
non-distinctive terms used extensively in other fields
by third parties.
Please do not hesitate to call me directly if you have
any questions about the screening search. If you want
to proceed with a full search for STAR CLASS, please
advise.
(Pl. Ex. 74) (emphasis in text).
Defendant’s reaction to this letter must be considered
in light of the growing use of knock-out searches and
the greatly reduced use of full searches by businesses and
law firms after 1989. See, e.g., Corsearch v. Thomson &
Thomson, 732 F.Supp. at 307, 321 (Thomson & Thomson’s
revenues from full searches dropped from ninety-five per-
cent to sixty percent of total revenues between 1983 and
1991). In light of this custom and practice in the trademark
search field, the underlined section in the letter need not be
interpreted as advice to conduct a comprehensive trade-
mark search before any use of “Star Class” but more as
a “cover your backside” lawyer’s disclaimer of responsi-
bility, intended to protect the lawyer in the event of
adverse consequences from the adoption of the mark, rather
than to advise the client to conduct a full search before
using and registering*® “Star Class” as a trademark. Indeed,
8 In order for rights to be perfected in a registered trademark,
both use and registration must be shown. See Anne C. Hiaring, “Prin-
Lciseimemnnnecnmnhiiimiaaiiiiiis aes ace ti ns
63a
Luparello, in the pre-trial deposition read into the record
by plaintiff’s attorney, testified she regarded the disclaimer
language as “attorney paranoia”. (Trial Tr. at 354 (quoting
Luparello Deposition).) At trial, Burstein, the author of the
letter, explained the disclaimer as follows during cross-
€Xamination:
Q: . . . Would you please tell me . . . what the
“usual disclaimers” regarding a need to first obtain
and review a full trademark search were?
A: Well, generally before a mark is used and regis-
tered as a stand alone mark, we recommend that a full
trademark search be conducted. It’s pretty much the
gist of the disclaimers.
(Trial Tr. at 327.)
Here, Star Class was not used as a “stand alone mark” by
Hilfiger to identify the source of goods or to identify a
line of goods, nor was it intended to be “used and regis-
tered”. The T/H circle symbol, which contains the name
“HILFIGER” in good-sized type, was used for decoration,
evidently to give the goods “panache”. Another decorative
symbol used in a similar manner was a decorated crest
bearing the word “NANTUCKET”, under which were two
small flags, one of which contained “T * H”. The deco-
ration which gave rise to this Suit was a yacht club-type
pennant bearing the initials “TH” and the number 42
(Hilfiger’s age), capped by the words “TOMMY HIL-
FIGER” in large letters and underlined by the words
“STAR * CLASS” in slightly smaller letters. On the left
side of the pennant was the notation “EST.”, and on the
right, “MCMLXXXV”. The most logical interpretation of
this decoration was that the product was from Hilfiger’s
ciples of Trademark Law” in Understanding Basic Trademark Law
1996, at 9, 16-17 (PLI Pat., Copyrights, Trademarks, and Literary
Prop. Course Handbook Series No. G-451, 1996).
64a
best class of products. The name “Star Class” was not reg-
istered or attempted to be registered by Hilfiger, and the
words were not for use to designate a class of goods. The
line of goods was called the “Nantucket Line”, and Hilfiger
prominently displayed its stand-alone mark, the name
“Tommy Hilfiger”, in large letters on the outside surface of
its goods in addition to labeling them inside the collar. If
the mark was not intended to be “used and registered as a
stand alone mark”, then, according to Burstein’s testimony,
there was no reason for Hilfiger to order its law firm to
undertake a full search.
Burstein’s trial testimony supports the conclusion that
his letter was not intended to advise Hilfiger to have a full
search done before using “Star Class” unless it was to be
used as a “stand alone mark”. While Burstein’s testimony
as to the meaning of his firm's disclaimer represents more
conservative advice than industry practice in late 1991 and,
inferentially, in 1993, since full searches were no longer
ordered as a matter of course even when a mark was
intended to be used and registered, that advice is not incon-
sistent with industry practice when the mark was not
intended to be used and registered and only used for dec-
oration. Thus, since Hilfiger was only using “Star Class” as
a decoration and not as a trademark, its subsequent use of
“Star Class” without ordering a full search is not incon-
sistent with its attorney’s advice and was consistent with a
common industry practice.
With respect to the issue of whether defendant’s bad
faith is evidenced by its continued sale of the clothes that
bore the words “Star Class” after the filing of this lawsuit,
the continued sale is consistent with the defendant’s attor-
neys’ opinion in the letter of August 6, 1993 (Pl. Ex. 74)
that plaintiff’s non-registered mark was “rather weak”.
Indeed, the Thomson & Thomson search had revealed that
federal registered marks for “Star Class” existed for use on
paper goods and printed matter, as well as for interiors, and
65a
that an application for “Star Classics” was then pending
covering toys and sporting goods (Trial Tr. at 314), and
“Star Class” was registered for advertising and business
services in Pennsylvania. (Pl. Ex. 79.) As Burstein testi-
fied, the comprehensive trademark search had revealed
widespread use of “Star” and “Class” by others and evi-
denced no use of “Star Class” by plaintiff with respect to
apparel but only with respect to yacht club membership.
(Jd, at 317.) Plaintiff did not undertake a consumer survey
to show that ISCYRA or its mark were widely known to
persons interested in purchasing sportswear with a nautical
ambiance. See Hilfiger I 1995 WL 241875 at * 8. No evi-
dence showed that the defendant acted with the aim of
securing customers who were customers or members of
plaintiff’s organization,® or that the conduct of defendant
was an attempt to engage in deceptive commercial prac-
tices. See id. at *11. As the Court’s Conclusions of Law
reveal, the issue of whether the term “Star Class” was
generic or was descriptive and had acquired secondary
meaning was a close question. See id. at *4-*9. The Court
does not find bad faith based on defendant’s continued dis-
tribution of already manufactured goods following the
receipt of plaintiff’s notice of trademark claim letter and
the initiation of this action. There is no evidence or sug-
gestion that defendant’s attorneys suggested that such dis-
tribution and sale be discontinued.
Accordingly, the Court finds the plaintiff did not prove
defendant’s bad faith in its use of “Star Class” on its gar-
ments offered for sale prior to this Court’s decision, and
denies plaintiff’s request for an accounting of Hilfiger’s
9
Defense witness Allan Zwerner, Senior Vice President of
Burdine’s, a Miami department store chain, testified that although
Burdine’s purchased $24.5 million worth of defendant’s products in
1994 for 40 retail stores, it never received any inquiries as to Possi-
ble sponsorship or affiliation with plaintiff. (Trial Tr. at 254-66); see
Hilfiger, 1995 WL 241875 at * 12.
66a
profits. Plaintiff’s request for an award of attorneys’ fees
is denied as well.'°
Since the Circuit may not agree with this Court’s finding
that plaintiff offered insufficient evidence of defendant's
bad faith, the Court will make findings on the evidence of
damages. As shown by Defendant’s Exhibit 45 (Hearing Tr.
at 438-45), the defendant shipped only $818,419.85 worth
of goods bearing the phrase “Star Class” after March 31,
1994, two weeks after plaintiff’s cease and desist letter
dated March 16, 1994 (Plaintiff’s Revised Fost-Trial Brief
at 23) and two weeks before the filing of this lawsuit.
Defendant offered no evidence of its costs attributable to
these sales. Accordingly, no deduction will be made for
such costs. See 15 U.S.C. § 1117; see also Louis Vuitton
S.A. v. Spencer Handbags Corp., 765 F.2d 966, 973 (2d Cir.
1985).
Conclusion
For the reasons stated above, plaintiff has not shown by
a preponderance of the evidence that defendant acted in
bad faith in using plaintiff’s trademark. Accordingly, plain-
tiff’s request for an accounting of defendant’s profits or an
order that defendant pay attorneys’ fees is denied.
In any event, plaintiff has not shown damages of more
than $818,419.85. No evidence has been offered as to the
attorneys’ fees incurred by plaintiff in this action, so no
determination of fees can be made at this time.
IT 1s SO ORDERED.
10 No evidence has been offered as to the attorneys’ fees plain-
tiff incurred in this action.
es
67a
Dated: New York, New York
February 28, 1997
/s/
Robert P. Patterson, Jr.
U.S.D.J.
69a
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
94 Civ. 2663 (RPP)
INTERNATIONAL STAR CLASS YACHT
RACING ASSOCIATION,
Plaintiff,
—_—V—
TOMMY HILFIGER U.S.A., INC.,
Defendant.
APPEARANCES
Counsel for Plaintiff:
Ross & HARDIES
65 East 55th Street
New York, NY 10022-3219
By: J. Joseph Bainton
Phone: 212-421-5555
Fax: 212-421-5682
70a
Counsel for Defendant:
GURSKY & BLAU
21 East 40th Street
New York, NY 10016
By: Steven B. Blau
Phone: 212-213-1234
Fax: 212-213-1245
OPINION AND ORDER
ROBERT P. PATTERSON, JR., U.S.D.J.
Plaintiff International Star Class Yacht Racing Associ-
ation (the “Association”) brings this action for damages
and injunctive relief against Defendant Tommy Hilfiger
U.S.A., Inc. ¢“Hilfiger”) pursuant to Section 43(a) of
the Lanham Act, 15 U.S.C. § 1125, Section 368-d (Injury
to Business Reputation and Dilution) of the New York
General Business Law, and common law trademark
infringement and unfair competition.' Jurisdiction of the
Court is invoked under the Lanham Act and 28 U.S.C.
§§ 1332 and 1338(b) in that this action arises under an Act
of Congress relating to trademarks, and Plaintiff is assert-
ing state law claims in conjunction with said trademark
infringement claims. Venue is pled in this district pursuant
to 28 U.S.C. § 1391(b) and (c).
The Complaint charges common law trademark infringe-
ment and unfair competition, false designation of origin
under Section 43(a) of the Lanham Act, and injury to busi-
ness reputation and dilution of trademark under Section
Plaintiff's motion to amend the Complaint to substitute
Tommy Hilfiger U.S.A. for Tommy Hilfiger, Inc. was granted on the
eve of trial.
Tla
368-d of the New York General Business Law, arising out
of the Defendant’s causing the words “Star Class” and the
emblem “%*” to be placed on its garments which Plaintiff
asserts infringes on its emblem and non-registered trade-
mark “Star Class.” Trial was held on January 9 and 10,
1995. .
This Opinion and Order constitutes the Findings of Fact
and Conclusions of Law of the Court.
Background
Plaintiff is a not-for-profit corporation duly organized
and existing in Illinois in 1922 and with its principal place
of business in that state. Stip. Facts at 4 (II)(A). Defendant
is a corporation duly incorporated and existing in the state
of New Jersey. Id. at q (II)(B). .
Prior to the formation of the Association, a man named
George Corry, together with other yachting enthusiasts,
designed a small yacht for racing in 1910 to improve on
another class of small yachts called the “Bug,” and named
the new boat the “Star.” PI. Bx. 1 (C. Stanley Ogilvy,
A History of the Star Class [Association 1991} ) at 8.
The first “Star” was built in Port Washington, New York,
and the following year the first 22 Star yachts ordered to
be built according to the new design were delivered to buy-
ers. Id. The single design was important to racing enthu-
Siasts since it sought to eliminate the equipment variable in
racing and to increase the importance of a two-person
crew’s prowess in Sailing races confined to boats of that
class.
Since 1911 over 7700 Star boats have been built and
almost 2000 are still in use throughout the world. The
Association, whose stated object is “to promote, develop
and govern Star Class racing throughout the world, under
uniform rules,” Stip. Facts at 1(IV)(B), has prospered
accordingly. It is divided into twenty districts, each com-
72a
prising a group of fleets in a given locality, and consisting
of nine districts in North America, six in Europe, three in
South America, and one each in Australia and Africa.
These districts include 170 fleets with over 2000 members.
In the United States there are almost 600 members. Tr. at
49 (Burgess); 203 (MacCausland).?
The Association does not manufacture, build or sell Star
yachts, Stip. Facts at 49. (1V)(G-H), but maintains a regis-
ter of existing “Star Class” boats. In order to be registered,
a builder must purchase from the Association an official set
of plans and specifications and an identification number for
the boat. Tr. at 86-105 (MacCausland). The builder’s meth-
ods must be approved before construction begins. After
construction the boat is measured and weighed by Asso-
ciation representatives, and the Association issues a mea-
surement and weight certificate and a vessel number if its
specifications are met. The boat’s sails must also comply
with strict measurement and construction requirements, and
must display the vessel’s number and the “Star Class” num-
ber and Emblem, a solid red five-point star (unless the
owner’s racing record warrants the display of a solid green,
blue, silver or gold five- point star). “A yacht is eligible
and considered to be in the Star Class only if it has been
properly registered, conforms to measurement rules and is
owned by a qualified active or life member recorded at the
time as in good standing with the Association.” Stip. Facts
at 1 (IV)(E) (Rules of the Association at 42.1). The Asso-
ciation supports itself by charges to boat manufacturers for
the use of design plans, royalty fees for certifications, and
by the dues of its members.
In addition to Star Class races conducted by each fleet,
the Association holds annual championships and other
regattas around the world. Before any championship race
2
References to transcript pages of the trial held on January 9
and 10, 1995 will appear in this Opinion and Order as “Tr. at __.”
73a
the weight and measurements of each Star Class entry are
checked. With the exception of 1976, Star Class yachts
have raced in each Summer Olympic game since 1932.
These races receive considerable media coverage. See
Plaintiff’s First Request to Take Judicial Notice, Volumes
One and Two, Filed July 1, 1994.
The Association publication “Log of the Star Class,”
first published in 1922, contains records of all Star Class
regattas, the Star Class constitution and by-laws, a set of
Star Class racing rules and a register of the existing Star
Class yachts. See Pl. Ex. 2 (“1993 Log of the Star Class”).
The “Log of the Star Class” Specifies the manner in which
Association and fleet officers are to wear the appropriate
solid five-point star on their caps and sleeves. See Opinion
and Order dated November 30, 1994 at 3-4. The Associa-
tion sells “Star Class” flags and decals to its members and
advertises and sells through the annual publication of “Log
of the Star Class,” and the Association’s monthly newslet-
ter “Starlights,” neckties, blazer patches and lapel pins
featuring its emblem, the solid five-point red star, and the
Association’s initials I.S.C.Y.R.A. or a sail motif (“class
merchandise”). Gross sales of class merchandise in 1992
was $10,388 at a cost of $5,076, and in 1993 sales were
$11,783 at a cost of $6,271. Stip. Facts at 4 (IV)(L); Def.
Ex. F at $C000114. i
The Association also permits host yacht clubs holding
regattas under the sanction of the Association to defray
their costs by selling t-shirts, sweatshirts, Caps, jackets and
other related items which bear the marks in issue or vari-
ations thereof (“collateral items”) as part of the promotion
of the racing events. Stip. Facts at qq (IV)(M-N). The Asso-
ciation does not intend to become a commercial manufac-
turer or seller of clothes or apparel items. Stip. Facts at
q(IV)(O). :
Hilfiger is an extremely successful designer and dis-
tributor of high quality men’s clothing. Hilfiger’s sales
74a
exceeded 227 million dollars in the year ending March 31,
1994. Pl. Ex. 87 at 17. Hilfiger is among the two or three
most successful promoters of lines of men’s sports
clothing today, ranking with Ralph Lauren. Tr. at 287
(Leeds). The Defendant’s garments bear labels prominently
displaying the name “Tommy Hilfiger.” The colors of
Defendant’s clothing are predominantly red, white and
blue.
The words “Star Class” were used in the first and
only instance by Defendant in the Tommy Hilfiger (®)
1994 Spring Collection, particularly on garments in its
Nantucket Line. Hilfiger marketed the Nantucket Line as
“classic nautical sportswear” containing “authentic details
taken from the sport of competitive sailing” and “elements
and patterns taken directly from actual racing sails.” PI.
Ex. 70. Plaintiff’s Exhibit 88, a book about sailboat racing
admittedly used by Defendant in research for its Nantucket
line, contains pictures of yachts with sails bearing the reg-
istered trademark of North Sails, an approved sailmaker for
Star Class yachts. See Tr. at 230 (Sondag Dep.). The North
Sails trademark depicted is an “N” and an “S” contained in
a circle. A mark similar to that of North Sails was placed
on some of the Nantucket Line clothing, but bearing the
letters “T” and “H” instead of “N” and “S,” and not as a
label of origin but in the form of a decoration on the sides
of garments. The garments also were decorated with a
diminutive “burgee” (a burgee is a yachting flag usually
denoting a yacht club) bearing the initia)s “T.H.,” and the
words “Star * Class.” See Def. Exs. 26, 28, 31, 32, 33.
The words “Tommy Hilfiger (®)” were prominently placed
on all garments.
The Defendant did not call any witnesses to the stand to
deny that its use of the emblem, a five-point red star, was
derived from observations of Plaintiff’s mark, or that the
term “Star Class” was not similarly utilized. Accordingly,
the Court may draw the inference that Defendant inten-
hi eeeerrneeereeineiiiaiiiiiieeiiiiiiiiiiial
75a
tionally copied the unregistered marks in question. See
Lauratex Textile Corp. v. Allton Knitting Mills Inc., 517
F.Supp. 900, 904 (S.D.N.Y. 1981) (negative inference
drawn that infringement of copyrighted design was willful
because defendant’s president failed to testify). There is no
showing, however, that the marks were known by the
Defendant or its agents as trademarks of the Association.
The Defendant did present evidence that it had ordered a
trademark search of “Star Class” by its outside attorneys;
that the search conducted was for federal and state trade-
marks; that the search did not reveal Plaintiff’s use of the
mark; and that Defendant was advised by its attorneys in
August 1993, prior to using the mark, that the search did
not reveal that “Star Class” was a trademark and thus “pro-
posed use of this mark... . [is] not necessarily rule[d]
out... .” Pl. Ex. 74 (letter regarding “Trademark Screen-
ing Searches” from Neil Burstein to Kathleen Luparello
at Tommy Hilfiger U.S.A., Inc.). This is some evi-
dence contradicting Plaintiff’s claim that the Defendant
intended to use a trademark belonging to another, namely
Plaintiff.
Discussion
A. LANHAM ACT CLAIM
Section 43(a) of the Lanham Act proscribes “false
designation of Origin” in relation to goods or services. 15
U.S.C. § 1125(a)3 A plaintiff must first demonstrate that
> Section 43(a)(1) of the Lanham Act prohibits any person
from using
in connection with amy goods . . . or any container for
goods, . . . any word, term, name, symbol, or device, or any
combination thereof, or any false designation of origin, false
76a
its mark deserves protection under the Lanham Act in
order to allege infringement. Bristol-Myers Squibb Co. v.
McNeil-P.P.C., Inc., 973 F.2d 1033, 1039 (2d Cir. 1992).
“[T]he general principles qualifying a mark for registration
under § 2 of the Lanham Act are for the most part appli-
cable in determining whether an unregistered mark is
entitled to protection under § 43(a).” Two Pesos, Inc. v.
Taco Cabana, Inc., 112 S.Ct. 2753, 2757 (1992) (citations
omitted).
The central issue in a trademark dispute is generally
whether there is a likelihood of confusion between the two
marks. Lang v. Retirement Living Publishing Co., Inc., 949
F.2d 576, 579 (2d Cir. 1991). A trademark owner may
receive judicial protection if “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.” Jd. at 579-80 (quoting
McGregor-Doniger Inc. v. Drizzle Inc., 599 F.2d 1126,
1130 (2d Cir. 1979).* Judge Friendly specified a nonex-
clusive list of factors to consider when examining the like-
lihood of confusion between two dissimilar products:
or misleading description of fact, or false or misleading rep-
resentation of fact, which—
(A) is likely to cause confusion, or to cause mistake, or
to deceive as to the affiliation, connection or associa-
tion of such person with another person, or as to the
origin, sponsorship, or approval of his or her goods
. . . by another person[.] .
15 U.S.C. § 1125(a)(1).
* A non-profit corporation may also have unfair use of its
name enjoined to protect related property rights. See Cape May
Yacht Club v. Cape May Yacht Club and Country Club, 86 A. 972
(N.J. Ch. 1913), Girls Clubs of America, Inc. v. Boys Clubs of Amer-
ica, Inc., 683 F.Supp. 50 (S.D.N.Y.), aff’d mem., 859 F.2d 148 (2d
Cir. 1988).
————E
77a
[1] the Strength of [the prior Owner's] mark, [2] the
degree of Similarity between the two marks, [3] the
likelihood that the prior owner will bridge the gap
[between the two Products], [4] actual confusion,
[5] the reciprocal of defendant’s good faith in adopt-
ing its own mark, [6] the quality of defendant’s prod-
uct, and [7] the sophistication of the buyers.
Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492,
495 (2d Cir.), cert. denied, 368 U.S. 820 (1961). No single
factor is determinative, “{rJather a court should focus on
the ultimate question of whether consumers are likely to be
confused.” Paddington Corp. v. Attiki Importers and Dis-
tributors, Inc., 996 F.2d 577, 584 (2d Cir. 1993) (citation
omitted). The Polaroid factors will be examined to evalu-
ate the likelihood of confusion between the parties’ marks.
1. Strength of Plaintiff's Mark
The first step in determining whether an unregistered
mark is entitled to protection is to categorize the strength
of the mark according to the nature of the term itself.
“Marks are often classified in categories of generally
increasing distinctiveness; following the classic formula-
tion set out by Judge Friendly, they may be (1) generic;
(2) descriptive; (3) suggestive; (4) arbitrary; or (5) fanci-
ful.” Two Pesos, 112 S.Ct. at 2757 (citing Abercrombie &
Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 [2d Cir.
1976]). Suggestive, arbitrary and fanciful marks are enti-
tled to protection as inherently distinctive, while descrip-
tive marks are eligible for protection only after acquiring
distinctiveness referred to as “secondary meaning,” and
generic marks are ineligible for protection. Jd.
Analysis of the distinctiveness of Plaintiff’s marks is
complicated by their use in a fashion Similar to that of
licensed trademarks or certification marks because they
designate that boats built by various manufacturers meet
78a
specifications set by the Association, and thus the usual
test for secondary meaning which examines the link by
consumers of goods to a specific source is not directly
applicable. Secondary meaning is normally acquired when
“the mark comes to identify not only the goods, but the
source of those goods, even though the relevant consuming
public might not know the name of the producer.” Centaur
Communications, Ltd. v. A/S/M Communications, Inc., 830
F.2d 1217, 1221 (2d Cir. 1987); see also Zatarains, Inc. v.
Oak Grove Smokehouse, Inc., 698 F.2d 786 (Sth Cir. 1983)
(secondary meaning arises when the mark comes “to be
known by the public as specifically designating that prod-
uct.”). Plaintiff’s mark may be analyzed as analogous to
a certification mark, and “[a] certification mark is dis-
tinctive if prospective purchasers recognize the mark as an
indication that a particular person, whether known or
anonymous, has certified that the goods or services meet
the standards established for authorized use of the mark.”
Restatement Third, Unfair Competition §11, cmt. b
(1995). Widespread recognition of “Star Class” boats in
media reports and their continuing popularity (albeit on a
much smaller scale than Defendant’s fame) more than 70
years after the original design indicate that prospective
purchasers of “Star Class” boats do recognize the mark as
an indication that the boats have been certified, even
though prospective purchasers’ knowledge of the Associ-
ation or its role may be limited.
5
Collective marks are similar to certification marks in many
respects, and may be eligible for trademark protection even if unreg-
istered. See Opticians Ass'n of America v. Independent Opticians of
America, 920 F.2d 187, 193 n. 8 (3d Cir. 1990) (“[I]t is entirely pos-
sible for a collective trademark to legitimately function as a certifi-
cation mark, or vice versa.”); Int’! Order of Job’s Daughters v.
Lindeburg & Co., 633 F.2d 912 (9th Cir. 1980) (no infringement of
unregistered collective mark since consumers were not misled about
origin, sponsorship or endorsement of defendant’s jewelry), cert.
denied, 452 U.S. 941 (1981).
|
79a
Plaintiff argues that its marks are arbitrary and deserv-
ing of the highest level of trademark protection due to
its continuing efforts to ensure the quality and standards
of yachts identified by these marks. See Tr. at 86-105
(MacCausland). However, the word “class” is a generic
term, and the “Star Class” mark is closer to a superlative
designation of the boat since the word “star” adopted for
the boat and its graphic symbol are commonly used to
denote excellence. See Opinion and Order dated November
30, 1994 at 9-10: McCarthy on Trademarks and Unfair
Competition § 15.02(2) (1993) (the hypothetical mark
“Best” on milk would be a self-laudatory and descriptive
term, but it could acquire distinctiveness by developing a
secondary meaning to consumers). “[L]audatory words,
such as ‘best,’ ‘outstanding,’ or ‘supreme’ cannot of their
own force indicate the source or origin of the labelled
goods. . . . ‘Common expressions which can indicate
nothing but high quality surely would not be indicative of
origin to the purchasing public.’ “ Supreme Wine Co. vy.
American Distilling Co., 310 F.2d 888, 889 (2d Cir. 1962)
(citations omitted) (“supreme” lacked distinctiveness, orig-
inality and uniqueness, and required compelling proof of
secondary meaning for trademark protection); see also
Murphy v. Provident Mutual Life Ins. Co. of Philadelphia,
923 F.2d 923, 927 (2d Cir. 1990) (“Marks that are lauda-
tory and that describe the alleged qualities or characteris-
tics of a product or service are descriptive marks.”), cert.
denied, 502 U.S. 814 (1991); In re Royal Viking Line A/S,
216 U.S.P.Q 795 (TTAB 1982) (registration of the term
“World Class” refused as a descriptive mark rather than
one indicating origin).
Extensive third party use of a mark also weighs against
a finding that the mark is strong. Lang, 949 F.2d at 581. A
recent decision noted that 196 federally registered trade-
marks utilized a five pointed star symbol, and concluded
that an inference of such a mark’s Strength “is somewhat
80a
_
rebutted by the prevalence of similar five pointed star
symbols used to decorate athletic clothing and footware.”
Starter Corp. v. Eurostar Inc., 28 U.S.P.Q.2d 1844, 1846
(C.D. Cal. 1993) (sharing of star symbol and term was not
sufficient to find confusing similarity where marks were
visually dissimilar, evidence of actual confusion was weak,
and defendant adopted the mark in good faith); see also
Sun Banks of Florida v. Sun Federal Savings & Loan, 651
F.2d 311, 316-17 (Sth Cir. 1981) (widespread use of term
“sun” militated against finding of confusion); Pl]. Ex. 79
(Trademark Research Report by Thomson & Thomson of
the mark “Star Class”); Tr. at 313-17 (Burstein) (search
revealed thousands of marks incorporating the term “star”’).
“{Sjuch marks as a star or the sun in word or picture are of
such long standing in the business world and have been
used in so many lines of business that neither can be con-
sidered the exclusive mark of one manufacturer or trades-
man so as to deny its use by others.” 3 Callmann, Law of
Trademarks § 82.1(1) at 765-66 (quoted in Sun Banks, 651
F.2d at 317). Extensive third-party use of “star” and its
graphic symbol weakens the inherent distinctiveness of the
mark and ind:cates that the mark’s primary meaning is
laudatory and therefore descriptive.
Defendant argues that Plaintiff’s marks are generic and
thus not entitled to protection under the Lanham Act. For
unregistered marks, the burden of proving non-genericness
is on the proponent of trademark rights where the opponent
contends that the term was in common usage as a generic
term before its alleged use as a trademark. Murphy Door
Bed Co., Inc. v. Interior Sleep Systems, Inc., 874 F.2d 95
(2d Cir. 1989). Defendant maintains that because Star
yachts were produced for racing beginning in 1911, prior
to the formation of the Association in 1922, the term “Star
Class” had already become part of the public domain and
thus a generic mark. Although Defendant’s argument might
have been effective in 1922, it is not the proper basis for
8la-
evaluating the distinctiveness of Plaintiff’s mark today
because by definition secondary meaning arises only after
a mark is already in use, and the Strength of marks and
their secondary meaning may change over time.® See Sec-
tion (A)(1)(a), infra. Plaintiff’s evidence at trial showed
that the Association has taken action to object to unau-
thorized use of the mark “Star Class” when used in
connection with sailboats. Pl. Exs. 100-01. Efforts by the
Plaintiff to maintain quality and control of the boat’s
specifications distinguish the mark “Star Class” from the
Thistle mark, which was held to have “passed into the lex-
icon of the boating industry” for its failure to contro] third-
party use of the designation. See Thistle Class Association
v. Douglas & McLeod, Inc., 198 U.S.P.Q. 504 (TTAB
1978); Tr. at 86-105 (MacCausland).
Defendant also contends that mention of “Star Class”
without reference to pictures in Plaintiff’s Exhibit 88
(Stars and Stripes, The Official Record, America’s Cup
XXVIII [Dennis Connor Sports, Inc.1992] ), a publication
by a recognized authority in sailboat racing, indicates
generic use by using the term as “a common descriptive
name for the product,” thus estopping the Plaintiff from
claiming that the mark is distinctive. Def. Post-Trial Mem.
at 3-6; Pl. Ex. 88 at 61, 63, 69, 72, 95, 144, 147, 148: see
also Birtcher Electro Medical Systems, Inc. v. Beacon Lab-
oratories, Inc., 738 F.Supp. 417, 420 (D. Colo. 1990)
(plaintiff’s use of mark as a noun indicated its generic-
6 Defendant's argument is also undercut by availability of the
common law certification mark which Provides equitable rights in “a
mark to certify . . . mode of manufacture, quality, accuracy or other
characteristics of such goods or services,” and may eventually arise
from successful promotion of a mark. 15 U.S.C. § 1127; see also Sta-
bilisierungsfonds Fur Wein v. Kaiser Stuhl Wine Distributors Pty.
Ltd., 647 F.2d 200, 202 n. 1 (D.C.Cir. 1981) (Ginsburg, J.) (common
law certification marks designated wine from a region in Germany)
(citing Florida v. Real Juices, Inc., 330 F.Supp. 428 [M.D.Fla.1971}).
82a
ness). This book however was not published by the Plain-
tiff. Although newspaper and magazine use of a term in a
generic sense is a strong indication of the general public’s
perception that the term is a generic name, American
Thermos Products Co. v. Aladdin Industries, Inc., 207
F.Supp. 9, 20 (D. Conn. 1962), aff’d, 321 F.2d 577 (2d Cir.
1963); Loctite Corp. v. National Starch & Chemical Corp.,
516 F.Supp. 190 (S.D.N.Y. 1981), “[iJt is the use and
understanding of the term in the context of purchas-
ing decisions, however, that determines the primary sig-
nificance of a designation.” Restatement Third, Unfair
Competition § 15, cmt. c (1995).’ The buyers of products in
competition with those of Defendant are in the market for
sports leisure wear, not sailboats, and no evidence of con-
sumers’ use of the term “Star Class” in the context of such
purchasing decisions indicates that Plaintiff’s marks are
generic.
After considering these indicators of distinctiveness, the
mark “Star Class” is found to be descriptive rather than
suggestive, and secondary meaning must be established for
Plaintiff’s marks to be protected under trademark law.
a. Secondary Meaning of “Star Class”
oe 6
Usually secondary meaning is acquired when “ ‘the mark
comes to identify not only the goods, but the source of
those goods,’ even though the relevant consuming public
might not know the name of the producer.” Centaur Com-
. Dictionary definitions may also be an indication of gener-
icness. Murphy Door Bed Co., 874 F.2d at 101. Webster’s Third New
International Dictionary (Merriam-Webster 1986) defines “star” as:
10: one of a class of international one-design sharp-chined
racing sloops that are Marconi rigged and approximately 22
feet 9 inches in overall length with a sail area of 281 square
feet[.]
There is no mention of Plaintiff or its certification role.
83a
munications, Ltd. v. A/S/M Communications, Inc., 830 F.2d
1217, 1221 (2d Cir. 1987) (citing 20th Century Wear, Inc.
v. Sanmark-Stardust Inc., 815 F.2d 8, 10 (2d Cir. 1987} ).
However, since the Association does not produce any
goods, and the “Star Class” marks function Similarly to
certification marks, the appropriate test is whether con-
sumers of men’s sportswear associate the Plaintiff’s marks
with the “mode of manufacture, quality, accuracy or other
characteristics” that in sum comprise the “Star Class”
boat’s specifications as defined by the Association. See 15
U.S.C. § 1127: see also note 5, supra.
“[{P]roof of secondary meaning entails vigorous eviden-
tiary requirements” and the proponent bears the burden of
showing that secondary meaning existed at the time of the
alleged infringement. 20th Century Wear, Inc., 747 F.2d
at 90 (citation Omitted). Factors to be considered in
determining whether secondary meaning exists for a
mark include: (1) advertising expenditures; (2) consumer
Studies linking the mark to a source; (3) unsolicited media
“The plaintiff is not required to establish that all con-
sumers relate the product to its producer; it need only show
that a substantial segment of the relevant consumer group
makes this connection.” Coach Leatherware Co., Inc. v.
AnnTaylor, Inc., 933 F.2d 162, 168 (2d Cir. 1991) (empha-
Sis in original) (citing Centaur Communications, Ltd., 830
F.2d at 1222). Defendant argues that the relevant group of
consumers in this case consist of “al] actual and prospec-
tive purchasers of defendant Tommy Hilfiger (®) prod-
ucts.” Def. Post-Trial Mem. at 8. This is too broad a group.
“In evaluating confusion in a trademark infringement case,
it is important to remember that the courts are dealing with
84a
confusion as to source, and that the only ‘relevant popu-
lation’ is potential purchasers of the junior user’s goods or
services.” Hutchinson v. Essence Communications, Inc.,
769 F.Supp. 541, 546 (S.D.N.Y. 1991) (citing Lobo Enter-
prises, Inc. v. Tunnel, Inc.; 693 F.Supp. 71, 77 [S.D.N.Y.
1988] ) (Haight, J.) (relevant population in trademark case
consisted of rap music fans who were “ccnsumers of the
junior user’s services” since the junior user was a rap
music performer); cf. Boston Athletic Ass'n v. Sullivan, 867
F.2d 22, 30-31 (1st Cir. 1989) (relevant population con-
sisted of “the general public that is the market for shirts
commemorating the Boston Marathon.”’). Here the Defen-
dant’s sales literature for the Nantucket Line described the
clothing as “classic nautical sportswear with a variety of
authentic details taken from the sport of competitive sail-
ing. . . .” Pl. Ex. 70. Thus the segment of the population
for whom the Defendant’s sales strategy was designed to
appeal—those clothing purchasers likely to be enticed by
the nautical theme of Defendant’s clothing—and not all
actual and prospective clothing purchasers would appear to
be the relevant population. Such persons might have some
familiarity with the Plaintiff and be more prone to confu-
sion regarding sponsorship or association between the
marks. See Opinion and Order dated November 30, 1994 at
13. The composition of the relevant population of con-
sumers at which Defendant aimed its advertising increases
the likelihood of confusion among a significant segment of
that population as to any association with or sponsorship of
Defendant’s clothing by Plaintiff.
(1) Advertising Expenditures
Secondary meaning for the “Star Class” marks is not
supported by advertising expenditures by the Association.
85a
(2) Consumer Studies
“[I]t is significant that (the Plaintiff] did not undertake
a consumer survey, a failure which strongly suggests that
a likelihood of confusion cannot be shown.” E.S. Originals
Inc. v. Stride Rite Corp., 656 F.Supp. 484, 490 (S.D.N.Y.
1987) (Sprizzo, J.); see also Reebok Int'l v. K-Mart Corp.,
849 F.Supp. 252, 268-69 (S.D.N.Y. 1994), Indeed, Plaintiff
has not offered evidence to Show that the International Star
Class Yacht Racing Association is widely known to persons
interested in Purchasing sportswear with a nautical
ambiance. This factor weighs against secondary meaning
for Plaintiff’s marks.
(3) Unsolicited Media Coverage
Unsolicited media coverage of the “Star Class” marks is
extensive (see Plaintiff’s First Request to Take Judicial
Notice, Volumes One and Two, filed on July 1, 1994) and
is evidence of secondary meaning for this design of racing
Sailboats and to some extent the plaintiff in this action. See
also Int’l Kennel Club y. Mighty Star, Inc., 846 F.2d 1079,
1086 (7th Cir. 1988). These media reports indicate that sec-
Ondary meaning exists for Plaintiff's marks based on the
boat’s specifications as set and controlled by the Associ-
ation because Prospective purchasers of racing sailboats
appear to recognize the mark as an indication that a par-
ticular entity certified the boats as meeting standards estab-
lished for its authorized use in competition. See
Restatement Third, Unfair Competition § 11, cmt. b (1995).
(4) Sales Success
The sales success of this yacht based on recognition of
the “Star Class” marks over more than 70 years and their
- continued importance in sailboat racing is evidence of sec-
ondary meaning of the mark as designating this design of
racing sailboats.
86a
(5) Attempts to Plagiarize Plaintiff's Marks
As discussed above, the Court infers that the alleged
copying of Plaintiff’s mark was an intentional act, but does
not find that Defendant intended to copy a trademark
owned by another. This “imitative intent can help support
a finding of secondary meaning.” Bristol-Myers Squibb
Co., 973 F.2d at 1042 (citing Centaur Communications,
Ltd., 830 F.2d at 1224); Orion Pictures Co., Inc. v. Dell
Publishing Co., Inc., 471 F.Supp. 392 (S.D.N.Y. 1979).
(6) Length and Exclusivity of Use
The “Star Class” marks have been used for more than
seven decades, and exclusivity of their use on sailboats is
indicated by the Association’s letter to Catalina Yachts in
January 1992 seeking to enforce its sole use of “Star” as a
mark, thus supporting secondary meaning of the mark with
respect to yachts. See Pl. Exs. 100-01. The connotation
attributable to the “Star Class” marks due to efforts by the
Association supports a finding of secondary meaning
among sailboat racing enthusiasts.
Defendant argues that the limited sales of Class Mer-
chandise by the Association of Class Merchandise dimin-
ishes any claims of consumer confusion related to the
parties’ marks. However, “the relatively small size of a
senior user’s advertising budget or sales volume will not
diminish the strength of its valid mark, and the scope of
protection will not be narrowed because of such evidence.”
McGregor-Doniger Inc. v. Drizzle Inc., 599 F.2d .1126,
1132 (2d Cir. 1979) (citation omitted).
The “Star Class” marks have acquired secondary mean-
ing over the past 70 years as a result of work by the Asso-
ciation and its members to promote the boat's
characteristics, and thus the marks are sufficiently dis-
tinctive to be eligible for trademark protection as desig-
nating these sailboats.
ee
87a
2. Similarity between the Parties’ Marks
The second Polaroid factor evaluates the risk of confu-
sion from similarity between the two marks. “[I]n assess-__
ing the similarity of two marks, it is the effect upon
Prospective purchasers that is important. . . . It is suffi-
cient if the impression which the infringing product makes
upon the consumer is such that (the consumer] is likely to
believe the product is from the Same source as the one
(known) under the trade-mark.” McGregor-Doniger, 599
F.2d at 1133-34 (citing Restatement of Torts § 728, Com-
ment b at 591, and Stix Products, Inc. v. United Merchants
& Mfrs., Inc., 295 F.Supp. 479, 494 [S.D.N.Y. 1968] )
(emphasis in original); see also Restatement Third, Unfair
Competition § 21(a)(i) (1995) (overall impression created
by conflicting designations is to be considered in com-
paring the degree of Similarity between the marks). In
McGregor-Doniger the district court was held to have
Properly considered the effect of differently presented
marks, and the plaintiff’s frequent and close association of
its brand and manufacturing names reduced the likelihood
of confusion with defendant’s similar brand name also used
as a source identification. 599 F.2d at 1134. Defendant
argues that the prominent location of “Tommy Hilfiger” on
the label should prevent confusion. Since this is not a case
concerning competing goods, but rather an issue of false
association, juxtaposition of “Tommy Hilfiger” does not
avoid confusion regarding an endorsement by the Associ-
ation. Although prominent placement of “Tommy Hilfiger”
on the top of Defendant’s label serves to distinguish the
parties’ marks, a consumer may nevertheless infer an
agreement between Defendant and the Association to use
the words “Star Class” in conjunction with a red star (the
“Star Class Insignia”) on the label. See Dallas Cowboys
Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200,
204- 5 (2d Cir. 1979) (public’s belief that mark owner
sponsored or approved its use satisfies the confusion
88a
requirement); Warner Bros., Inc. v. Gay Toys, Inc., 658
F.2d 76 (2d Cir. 1981) (likelihood of confusion existed as
to source or sponsorship of toy car by television show);
Int’l Kennel Club v. Mighty Star, Inc., 846 F.2d 1079 (7th
Cir. 1988) (presence of defendant’s mark did not reduce
likelihood of confusion as to sponsorship). The potential
for confusion is fostered in this case by the nautical theme
and sailing-type flag containing “TH” above the number 42
on Defendant’s label.
3. Will the Association “Bridge the Gap?”
The current sales of related merchandise by the Associ-
ation are at a minimal level, and the Association stipulated
that it has no intent to market or license its marks for use
on clothing sold to the general public. See Stip. Facts at
1(IV)(O). This factor does not support the likelihood of
confusion between the parties’ marks.
4. Actual Confusion
A showing of actual consumer confusion is strong proof
of the fact of a likelihood of confusion between contested
marks. “In order to be confused, a consumer need not
believe that the owner of the mark actually produced the
item and placed it on the market. The public’s belief that
the mark’s owner sponsored or otherwise approved the use
of the trademark satisfies the confusion requirement.” Dal-
las Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd.,
604 F.2d 200, 204-5 (2d Cir. 1979) (citations omitted). The
Fifth Circuit applied a test of confusion in circumstances
similar to those in the instant case by asking whether “pur-
chasers purchased [Defendant’s merchandise] as a direct
result of the presence of [Plaintiff’s] emblem. . . believ-
ing that the [merchandise] was in any way endorsed, spon-
sored, approved or otherwise associated with [Plaintiff]
. . . .” Supreme Assembly, Order of Rainbow for Girls v.
i It i Sa etc rar eat
89a
J.H. Jewelry Co., 676 F.2d 1079, 1084 (Sth Cir. 1982) (tes-
timony by organization member that she did not know or
care about connection of jewelry to plaintiff organization
failed to show consumer confusion); cf. Boston Profes-
sional Hockey Assoc., Inc. y, Dallas Cap & Emblem Mfg.,
510 F.2d 1004 (Sth Cir.) (consumer knowledge of mark’s
source and origin in plaintiff meets confusion/mistake/
deception requirement, confusion as to product source not
required), cert. denied, 423 U.S. 868 (1975).8
A plaintiff normally has the burden of showing that
many consumers are likely to be misled by the defendant’s
infringement. Scarves by-Vera, Inc. v. Todo Imports, Ltd.
(Inc.), 544 F.2d 1167, 1175 (2d Cir. 1979). However, upon
a proper showing of a defendant’s deliberate conduct to
engage in a deceptive commercial practice, the plaintiff
need not introduce evidence of actual consumer confusion,
and in such circumstances the burden shifts to the defen-
dant to demonstrate an absence of consumer confusion.
Resource Developers, Inc. y. Statute of Liberty-Ellis Island
Foundation, Inc., 926 F.2d 134, 140 (2d Cir. 1991). The
Second Circuit has explained that:
Where a second-comer acts in bad faith and inten-
tionally copies a trademark or trade dress, a pre-
sumption arises that the copier has succeeded in
Causing confusion. In determining a defendant’s
intent, “actual or constructive knowledge” of the prior
user’s mark or dress may indicate bad faith. Where
such prior knowledge is accompanied by similarities
8 The Ninth Circuit observed “that there is some danger that
the consumer may be more likely to infer endorsement or sponsorship
when the consumer is a member of the group whose collective mark
or trademark is being marketed. Actordingly, a court must closely
examine the articles themselves, the defendant’s merchandising prac-
tices, and any evidence that consumers have actually inferred a con-
nection between the defendant's product and the trademark owner.”
International Order of Job’s Daughters, 633 F.2d at 919.
90a
so strong that it seems plain that deliberate copying
has occurred, we have upheld findings of bad faith.
Paddington Corp., 996 F.2d at 586-87 (citations omitted)
(district court’s finding was clearly erroneous that bad faith
was absent in copying trade dress of competing brand of
ouzo with the apparent aim of securing customers).
The “Star Class” name and insignia may have been
obtained from Defendant’s research, and thus expropriated
to benefit the clothes’ “nautical” design. However, the
Defendant also had a trademark search conducted prior to
its use of Plaintiff’s unregistered trademark. Tr. at 307-10
(Burstein); Pl. Ex. 74. Furthermore, no evidence showed
that Defendant acted with the aim of securing customers
who were customers or members of Plaintiff’s organi-
zation. Although Defendant intentionally sought “authen-
tic details taken from the sport of competitive sailing” and
researched “coffee-table books” including Plaintiff’s
Exhibit 88, Tr. at 230 (Sondag Dep.), Plaintiff has not
made a proper showing of deliberate conduct by Defendant
to engage in a deceptive commercial practice which would
shift the burden to the Defendant to demonstrate the
absence of consumer confusion. See Resource Develop-
ment, 926 F.2d at 140 (plaintiff could not utilize this bur-
den-shifting doctrine because it failed to establish intent to
deceive); Sweats Fashions, Inc. v. Pannill Knitting Co.,
Inc., 833 F.2d 1560, 1565 (Fed. Cir. 1987) (“[A]Jn inference
of ‘bad faith’ requires something more than mere knowl-
edge of a prior similar mark.”); cf. Gucci America, Inc. v.
Action Actionwear, Inc., 759 F.Supp. 1060, 1065 (S.D.N.Y.
1991) (“Where the evidence ‘shows or requires the infer-
ence that another’s name was adopted deliberately with a
view to obtain some advantage from the good will, good
name, and good trade which another has built up. . . then
the adopter has indicated that he expects confusion and
resultant profit.’ “ [citation omitted] ); Cullman Ventures,
Inc. v. Columbian Art Works, Inc., 717 F.Supp. 96, 130
) 0 Te
9la
(S.D.N.Y. 1989) (defendant “deliberately copied [plain-
tiff’s] Trademarks with. . . the intent to improve their
competitive position” and thus actual confusion was
presumed).
The only evidence presented by Plaintiff at trial of actual
or likely confusion was the testimony of Richard Burgess,
a member of the Association who has never purchased any
of Defendant’s merchandise.? Tr. at 60 (Burgess). Burgess
testified that after he saw “Star Class” on Hilfiger items
for sale in a department store he inquired of the Associa-
tion whether an agreement had been entered with Hilfiger
regarding the use of Plaintiff’s mark. Tr. at 28-32 (Burgess).
The confusion Burgess described concerned the existence
of a royalty agreement and is not directly relevant to the
trademark infringement claim in this action which concerns
purchase decisions in the mistaken belief that Plaintiff
sponsored, approved or was otherwise associated with
Defendant’s merchandise. Tr. at 30 (“I asked. . . if the
Star class cut a deal for royalties of some sort with Tommy
Hilfiger.”), see also Supreme Assembly, 676 F.2d at 1084.
In any event, “[gliven significant volume of sales over
time, isolated instances of actual confusion may be disre-
garded as de minimis.” Inc. Publishing Corp. v. Manhattan
% The Second Circuit noted that a likelihood of confusion may
rest upon “the probability that potential purchasers would be misled
into an initial interest in [the defendant). Such initial confusion works
a sufficient trademark injury.” Mobil Oil Corp. v. Pegasus Petroleum
Corp., 818 F.2d 254, 260 (2d Cir.1987) (citation omitted). However,
Burgess was not shown to be even a potential purchaser of Defen-
dant’s merchandise. Tr. at 60 (Burgess testified that he had never pur-
chased any Hilfiger merchandise). The remainder of Plaintiff’s
evidence about confusion between the marks consisted of the receipt
of inquiries from several members as to whether Plaintiff had made
a sponsorship deal with Defendant. Tr. at 125 (MacCausland). Mac-
Causland also testified that Defendaut’s competitor Nautica (R) has
made such a deal with the sponsors of the America’s Cup. Tr. at 75,
214-15 (MacCausland); see also PI.Ex 89 ai 40; Pl.Ex. 106.
92a
Magazine, Inc., 616 F.Supp. 370, 386 (S.D.N.Y. 1985)
(emphasis in original, citation omitted) (court discounted
as “de minimis” the testimony of a single witness with a
possible bias who did not purchase the defendant’s maga-
zine but described his initial confusion after seeing it dis-
played), aff’d mem., 788 F.2d 3 (2d Cir. 1986). Defendant
called Allan Zwerner, Senior Vice President of Burdines,
who purchased $24.5 million worth of Defendant’s prod-
ucts in 1994 for 40 retail stores, and testified that he never
received any reports of confusion as to possible sponsor-
Ship or affiliation with Plaintiff. Tr. at 266 (Zwerner). Evi-
dence of actual confusion between the parties’ marks may
be discounted in the instant action as “de minimis.” This
factor does not support a likelihood of confusion between
the parties’ marks.
5. Defendant’s Good Faith in Adopting the Mark
Intentional copying gives rise to a presumption of a like-
lihood of confusion. Mobil Oil Corp. v. Pegasus Petroleum
Corp., 818 F.2d 254 (2d Cir. 1987); cf. Lois Sportswear
U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 875 (2d
Cir. 1986) (intent largely irrelevant concerning the likeli-
hood of confusion). An inference of bad faith is bolstered
if the junior user, with knowledge of the senior user’s
mark, “proffered no credible innocent explanation” for its
choice of the mark. Centaur, 830 F.2d at 1228. Defendant’s
imitative intent is also shown by its admitted intentional
imitation of the North Sails logo. However, there. is no
showing that Defendant intended to copy a trademark. See
Section (A)(4), supra. This factor may support a likelihood
of confusion between the parties’ marks.
6. Quality of Defendant’s Product
Plaintiff did not present evidence showing that the qual-
ity of Defendant’s products contributed to confusion
93a
between the marks, and this factor does not support the
likelihood of confusion between the parties’ marks.
7. Sophistication of the Buyers
Usually sophistication of consumers weighs against
potential confusion in distinguishing between contested
marks. See Plus Products v. Plus Discount Foods, Inc., 722
F.2d 999, 1007 (2d Cir. 1983). However, the issue in this
case concerns the likelihood of confusion as to affiliation,
sponsorship or approval of Defendant’s goods by the Asso-
ciation, and increased sophistication of the relevant con-
sumers may actually increase the potential for such
confusion. This factor does not weigh against the likeli-
hood of confusion.
8. Other Factors
The Polaroid factors are not exhaustive, and since the
Court acts as a court of equity in infringement cases other
equitable factors may be taken into consideration, includ-
ing relative harm to the junior user as opposed to relative
benefit to the senior user that would result from the
requested relief. In this case Defendant has not shown the
harm from an injunction against use of the “Star Class”
marks to be significant, and the harm to Plaintiff from con-
fusion by the use of its marks in a market related to com-
petitive sailing could deprive Plaintiff of potential
economic benefit. Furthermore, many of the problems of
proof and the limited quantum of confusion shown in this
case are traceable to the small size of Plaintiff’s organi-
zation. However, it would be unfair to base protection of an
organization’s mark solely on the size of its membership,
and the alleged infringement must be viewed in this con-
text. Thus, a balance of the equities favors action protect-
ing the Plaintiff’s marks against infringement in a market
linked to competitive Sailing.
94a
In sum, four of the Polaroid factors do not support a
likelihood of confusion between the parties’ marks, and
four factors support the likelihood of confusion to varying
degrees. After weighing these factors together, the Court
finds some likelihood of confusion between the contested
marks, but only de minimis or negligible actual confusion. |
B. RELIEF FOR PLAINTIFF UNDER THE
LANHAM ACT
A plaintiff who seeks money damages must introduce
evidence of actual consumer confusion, while a plaintiff
seeking injunctive relief need only prove a likelihood of
confusion. Resource Developers, Inc. v. Statute of Liberty-
Ellis Island Foundation, Inc., 926 F.2d 134, 139 (2d Cir.
1991).
1. Injunctive Relief
Plaintiff has shown that a likelihood of confusion exists
between the two marks, and is therefore entitled to injunc-
tive relief. Defendant is ordered to cease production and
sale of clothing bearing the mark “Star Class” in its
Nantucket line, however Defendant is not enjoined from
use of the star symbol. See Star Bedding Co. v. Englander
Co., 239 F.2d 537, 542-43 (8th Cir. 1957) (trademark
incorporating a star did not give bedding company a
general monopoly on the use of this symbol).
2. Monetary Damages
Plaintiff argues that an award of Defendant’s profits from
the Nantucket Line is an appropriate award for infringe-
ment of the “Star Class” marks, and is necessary to deter
such infringement. See George Basch Co., Inc. v. Blue
Coral, Inc., 968 F.2d 1532, 1539 (2d Cir. 1992) (“By
awarding the profits of a bad faith infringer to the rightful
owner of a mark, we promote the secondary effect of deter-
ce
95a
ring public fraud regarding the source and quality of con-
sumer goods and services.”), cert. denied, 113 S.Ct. 510
(1992). However, the evidence at trial did not show such
bad faith infringement by Defendant. Furthermore, Plain-
tiff did not prove actual confusion as required to recover —
money damages. Resource Developers, 926 F.2d at 139; Tin
Pan Apple, Inc. v. Miller Brewing Co., Inc., 737 F.Supp.
826 (S.D.N.Y. 1990). Because the evidence of actual con-
fusion was “de minimis” in this case, Plaintiff has not met
the requirements for an award of monetary damages, and
Plaintiff’s claim for monetary damages is denied.
C. RELIEF FOR PLAINTIFF UNDER STATE LAW
1. Unfair Competition
“The state law cause of action for unfair competition
Shares many common elements with the Lanham Act
claims of false designation of origin and trademark
infringement, including proof of actual confusion to
recover damages, and proof of a likelihood of confusion for
equitable relief.” W.W.W. Pharmaceutical Co., Inc. v.
Gillette Co., 984 F.2d 567, 576 (2d Cir. 1993) (citations
omitted). Plaintiff’s failure to show actual confusion
between the parties’ marks renders its claim of unfair com-
peti
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