S & H Mаrketing appeals from the order of the district court granting a preliminary injunction which precludes them from using promotional post card mailers which are “confusingly similar” to the copyrighted mailers of plaintiff Allied Marketing. For the reasons set forth below, we remand the case to the district court but leave the preliminary injunction in place on the condition that the district court issues a supplementary opinion explaining more fully its reasons for granting the preliminary injunction.
I.
Plaintiff-appellee Allied Mаrketing Group, Inc. (“Allied”) sued defendants-appellants CDL Marketing, Inc., Carl D. Landon, and S & H Marketing Group, Inc. (collectively “S & H”) in the Federal District Court for the Northern District of Texas, alleging copyright infringement, unfair competition under the Lanham Act, common law unfair competition, and civil conspiracy.
Both Allied and S & H are engaged in mail order retail sales and have used postcard mailers to notify consumers that particular goods are available for purchase. Stevan Hammond, the president of Allied,
S & H, on the other hand, claims that it conceived the postcard format in February of 1987. S & H began mailing its postcards in June, 1987.
The allegedly infringing postcards mailed by S & H used a format which the district court found to be “virtually identical” to that used by Allied. Allied and S & H have both printed their cards on different colors of paper.
Allied requested and was granted a preliminary injunction prohibiting S & H from using the allegedly infringing postcard mailer. The district court issued a memorandum opinion and order granting the preliminary injunction on July 11, 1988. The preliminary injunction was issued on July 15, 1988, to remain in effect until plaintiffs application for a permanent injunction could be heard by the court. S & H subsequently moved to “alter, amend, and/or supplement” the preliminary injunction pursuant to Rules 52 and 59 and to stay the injunction pending appeal pursuant to Rule 62. In its motion, S & H argued that the district court had failed to address the validity of Allied’s copyright or the protecta-bility оf its trade dress and asked the court to clarify the grounds of its memorandum opinion of July 11,1988. On September 21, 1988, the district court amended the preliminary injunction to clarify the scope of prohibited activity, but declined to alter its memorandum opinion. The district court also refused to stay the injunction pending appeal. S & H timely filed a notice of appeal from the original and amended orders.
II.
A preliminary injunction may be granted only if the moving party establishes each of the following four factors: (1) a substantial likelihood of success on the merits; (2) a substantial threat that failure to grant the injunction will result in irreparable injury; (3) that the threatened injury outweighs any damage that the injunction may cause the opposing party; and (4) that the injunction will not disserve the public interest.
Blue Bell Bio-Medical v. Cin-Bad, Inc.,
The decision whether to grant a preliminary injunction is within the discretion of the district court. Accordingly, we may reverse the district court’s decision only if it constitutes an abuse of discretion.
Blue Bell Bio-Medical,
In the instant case, the district court properly applied the four-pronged test for determining whether a preliminary injunction is appropriate. S & H contends, however, that the district court committed a number of legal errors in reaching its conclusions under each of the factors. In particular, S & H maintains that the district
Rule 52(а) requires that in granting or refusing a preliminary injunction, the district court must “set forth the findings of fact and conclusions of law which constitute the grounds of its action.” Fed.R.Civ. P. 52(a);
Commerce Park at DFW Freeport v. Mardian Construction Co.,
While the district court in this case did set forth findings of fact and conclusions of law, its failure to address the defenses asserted by S & H impedes our ability to determine whether the district court erred in its decision to grant the рreliminary injunction.
A. Copyright Infringement Claim
Allied’s first claim is that S & H infringed Allied’s copyright in the format of its postcard mailers. To establish the infringement of a copyright, the plaintiff must prove “ownership” of the copyrighted material and “copying” by the defendant.
Apple Barrel Productions,
In the instant case, the district сourt found that Allied’s certificate of registration established a prima facie case of “ownership” of the postcard. The district court also found that Allied had established a “substantial likelihood” that S & H “copied” the postcard. The district court noted that "S & H stipulated that it received at least one version of Allied’s postcard as early as August 1986” and found that “[t]he record also indicates that each of the defendants had access to and was specifically aware of Allied’s postcard promotions prior to the alleged conception” of the S & H postcard. The district court further found that the two post cards were “substantially — indeed, strikingly — similar.” The district court concluded that Allied had therefore demonstrated a substantial likelihood that it would prevail on the merits of the copyright infringement claim.
S & H, however, raised numerous defenses to the copyright claim, none of which was addressed by the district court. Most significantly, 2 S & H contends that Allied was not the original author of the post card mailer and that a substantial number of Allied’s postcards — over one million — were mailed without any copyright notice affixed to them. 3
S & H maintains that the postcard mailer at issue here was first developed, but not copyrighted, by Burke & Co. and was disseminated to two million consumers at least six months before the Allied mailers were first distributed. S & H argues that the Allied postcard is strikingly similar to the Burke card, compelling a finding that Allied copied the Burke card and is therefore entitled to no copyright in the cards.
Donald v. Zack Meyer’s TV. Sales & Service,
Allied, on the othеr hand, claims that the pre-existing Burke postcard was not substantially similar to its postcard and that although Burke did subsequently mail a postcard substantially similar to the Allied card, the second Burke card was a copy of Allied’s card. Although the district court made no finding on this point, Allied asserts that the facts necessary to resolve this dispute are contained in the evidence submitted to the district court and that we should therefore assume that the district court implicitly resolved this issue in their favor.
While we appreciate Allied’s candor in its characterization of the district court’s opinion, we must, for the reasons explained below, decline to judge the merits of this appeal based on such “implied” findings of fact by the district court.
S & H maintains that even if Allied is the original author of the postcard, Allied lost any protection it may have had in the postcard mailer as a result of its failure to affix copyright notice to a significant number of its cards. S & H observes correctly that if a work has passed into the public domain as a result of fаilure to provide notice of copyright, it may freely be copied. Thus, if S & H’s defense is valid, Allied could not prevail on its copyright infringement claim.
Section 405(a) of the Copyright Act provides that omission of copyright notice will not invalidate a copyright if one of three conditions is met:
(1) the notice has been omitted from no more than a relatively small number ofcopies or phonorecords distributed to the public; or
(2) registration for the work has been made before or is made within five years after the publication without notice, and a reasonable effоrt is made to add notice to all copies or phonorecords that are distributed to the public in the United States after the omission has been discovered; or
(3) the notice has been omitted in violation of an express requirement in writing that, as a condition of the copyright owner’s authorization of the public distribution of copies or phonorecords, they bear the prescribed notice.
17 U.S.C. § 405(a);
Canfield v. Ponchatoula Times,
Allied argues that although the district court made no specific findings regarding the omission of copyright notice, it “could not have ... overlooked” the issue which was discussed at length in the parties’ briefs to the district court. Allied maintains that because the district court found that there was a substantial likelihood that Allied would prevail on its copyright infringement claim, we may “assume” that the district court “impliedly” found that Allied had made reasonable efforts to cure the omission of copyright notice and that the copyright was therefore valid. What constitutes a “reasonable effort” under section 405(a)(2) varies from case to сase,
Canfield,
There is substantial disagreement between the parties on both of these issues, including some matters which may require a determination of the credibility of witnesses whose deposition testimony was submitted to the district court. 4 We therefore conclude that these questions must be resolved in the first instance by the district court. Absent a specific determination by the district court, we cannot know whether Allied has actually carried its burden of persuading the trial court that it is likely to prevail on the merits of its copyright claim. We therefore remand this question to the district court for further findings of fact and conclusions of law. 5
B. Trade Dress Infringement Claim
Allied’s second claim is that S & H’s postcard mailers infringed upon the trade dress of Allied’s mailers in violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). “Trade dress” refers to the image and overall appearance of a product.
Blue Bell Bio-Medical,
We have held that a court must follow a two-step analysis in determining whether there has been an infringement of trade dress under the Lanham Act. First, the court must determine whether the trade dress is protected under the Act. This first inquiry encompasses three issues: (1) distinctiveness, (2) “secondary meaning,” and (3) “functionality.”
Blue Bell Bio-Medical,
A trade dress is functional and therefore not entitled to protection if it consists of a “design or feature superior or optimаl in terms of engineering, economy of manufacture, or accomodation of utilitarian function or performance.”
Sicilia,
If a trade dress is not functional, it is entitled to protection if it is distinctive or has аcquired a “secondary meaning” such that the consuming public associates the trade dress with a particular source.
6
Proof of secondary meaning is not required if a trade dress is “sufficiently distinctive of itself to identify the producer,”
Sicilia,
If a court determines that the trade dress is protected — because it is nonfunctional and is either distinctive or has acquired secondary meaning, the court must then determine whether the trade dress has been infringed. Infringement is shown by demonstrating that the substantial similarity in trade dress is likely to confuse consumers.
Blue Bell Bio-Medical,
similarity of products, identity of retail outlets and purchasers, identity of advertising media, type (i.e., strength) of trademark or trade dress, defendant’s intent, similarlity [sic] of design, and actual confusion. In addition, it is often appropriate to consider the degree of care exercised by purchasers: confusion is more likely, for example, if the products in question are ‘impulse’ items or are inexpensive.
Blue Bell Bio-Medical,
In the instant case, the district court found that the mailers used by S & H were “virtually identical” to those usеd by Allied, that the use of the mailers had been profitable to S & H, and that Allied and S & H were likely to mail their promotions to the same group of consumers. The district court further found that the substantial similarity between the two mailers had resulted in “[a]ctual confusion on the part of consumers.”
The district court was correct in noting that likelihood of confusion is central to determining whether a trade dress has been infringed, and we agree
Allied again argues that because the district court found that there was a substantial likelihood that Allied would prevail on the merits of the Lanham Act claim, this court may “presume” that the district court determined that its trade dress was protected.
We must again decline Allied’s invitation to evaluate the district court’s decision on the basis of “presumed” findings of fact and conclusions of law. Whatever we may think of the strength of S & H’s arguments, we do not think that questions such as distinctiveness, functionality, or secondary meaning should be addressed in the first instance by an appellate court.
See Inverness,
We agree that the “appropriate procedure” in this situаtion is to remand the case to the district court for an explanation of its decision.
Inverness,
As a finаl point, we note that we have previously declined to fault a district court for issuing a preliminary injunction “despite the existence of a plausible defense.”
Dallas Cowboys Cheerleaders,
In contrast, the defendants in this сase presented several well-developed defenses below and the trial on the merits was originally scheduled to begin more than a year after the preliminary injunction was issued. It has now been continued until June of 1990 — nearly two years after the entry of the original injunction. While we do not construe Rule 52(a) to require a district court in granting or denying a preliminary injunction to address every nuance of the parties’ arguments with the same detail as it would following a full trial on the merits, the district court must at least make clеar that it has considered plausible defenses which are fully briefed and argued by defendants. While a preliminary injunction may be appropriate even in the face of potentially significant defenses, it is frequently desirable in such cases to expedite the trial on the merits. See 11 C. Wright & A. Miller, Federal Practice & Procedure § 2950, at 484 (1973 & Supp.1988).
III.
For the foregoing reasons, we REMAND the case to the district court for further findings of fact and conclusions of law consistent with this opinion. The preliminary injunction will remain in place, subject to the conditions set forth above. Each party shall bеar its own costs.
Notes
. S & H also claims that the district court erred in concluding that each of the three remaining factors militated in favor of a preliminary injunction. First, S & H notes that the central inquiry in deciding whether there is a substantial threat of irreparable harm to the plaintiff is whether the plaintiffs injury could be compensated by money damages,
City of Meridian v. Algernon Blair, Inc.,
S & H аlso claims that it will suffer greater harm as a result of the granting of the preliminary injunction than Allied would suffer as a result of a denial of the injunction. While S & H is correct that a showing of substantial likelihood of success on the merits does not create a presumption that harm to the plaintiff outweighs harm to the defendant,
Apple Barrel Productions,
Finally, S & H claims that the public interest would be disserved by granting a preliminary injunction in favor of Allied. S & H relies primarily on the fact that Allied’s postcard mailers "drew the ire of the Texas Attorney General’s office" because of their similarity to notices used by the United States Postal Service and by United Parcel Service. It is not clear, however, how S & H hopes to benefit from this argument since it seeks to use postcards with a substantially similar format. Wе cannot conclude that the district court abused its discretion in holding that the public interest would be served by "preserving the integrity of the copyright laws.” The district court’s conclusion properly reflects the policy judgment implicit in copyright and unfair competition laws that the public’s interest in competition may be outweighed by the public's interest in preserving rights in intellectual property. We note, however, that the public interest calculus would be different if Allied has failed to carry its burden of persuasion regarding its likеlihood of success on the merits.
. S & H also claims that Allied's copyright is invalid because (1) the samples filed with the copyright office did not bear a copyright notice, and (2) Allied misrepresented to the copyright office that it had not previously copyrighted the same materials. S & H further claims that even if the copyright is valid, it is unenforceable because of Allied’s unclean hands.
. S & H also claims that Allied mailed an additional 8 million copies of its postcards with defective notice.
. Allied and S & H disagree as to the аccuracy of Stevan Hammond’s testimony regarding the last date on which Allied sent out the mailers which lacked copyright notice. The parties also disagree as to whether the "substantially similar” Burke postcard was disseminated to consumers before the Allied postcard. The district court issued an order on April 4, 1988 announcing that pursuant to Rules 43(e) and 78, the request for a preliminary injunction would be decided on the basis of affidavits and depositions and without a hearing "unless the court determines that a hearing is necеssary to resolve conflicts in the evidence or to make credibility determinations.” S & H does not argue on appeal that the district court erred in refusing to conduct an evidentiary hearing and we do not so hold. We simply direct the district court to consider whether resolution of these issues would require an evidentiary hearing under the standard set forth in
Commerce Park,
. Allied relies on our decision in
Plains Cotton Coop
v.
Goodpasture Computer Service, inc.,
. In
Sicilia,
we noted that a configuration or design that is sufficiently distinctive cannot also be functional in a legal sense.
. S & H asserts that the evidence of actual confusion — consisting of less than 10 examples —is manifestly inadequate in light of the millions of postcard mailers that have been disseminated by both parties. As we note above, however, a party need not prove actual confusion in order to prevail in a trade dress infringement action. Although the district court refers to the evidence of actual confusion, it is clear from the opinion that the district court did not rely on that evidence alone and recognized that a showing of likelihood of confusion is sufficient. Moreover, although the district court opinion does not explicitly apply the "digits of confusion” test, its findings address three of the factors — similarity of design, identity of purchasers, and actual confusion — we have deemed to be relevant and would be sufficient to establish a likelihood of confusion under our standard. “Intent” is the only relevant factor on which the district court did not make a finding. We have held that failure to make a specific finding with respect to one factor is not reversible error where the ultimate finding of likelihood of confusion is not clearly erroneous.
Blue Bell Bio-Medical,
We find no clear error in the district court’s ultimate finding of likelihood of confusion and therefore do not disturb the district court's conclusion on this point. We agree that if Allied’s trade dress is protected, there is a substantial likelihood that Allied would prevail on the merits of its infringement claim.
. The parties are instructed to file with the district court copies of their briefs heretofore filed on appeal to this court.
