Plaintiff sued defendants for trademark infringement and unfair competition, unlawful trade practices, trademark dilution, interference with a business relationship,
Plaintiff produces and markets automobile gauges to the “replicar” and “street rod” car markets. Hettick, plaintiffs president and owner, began designing automobile gauges in 1975 for a replica of a 1927 Bugatti that he had purchased from defendant Classic Motor Carriages, Inc.’s (CMC) predecessor. In 1977, Hettick solicited CMC to purchase his gauges for its replicars. He showed CMC several gauges that he had produced: speedometer, tachometer, fuel, ammeter, oil pressure, battery volt meter and cylinder head temperature. Hettick drew all the gauge face designs, but he did not manufacture the instrument bases or the bodies for the gauges. A manufacturer supplied the bases, and defendant Teleflex, Inc., supplied tachometers and speedometers. In September, 1977, plaintiff registered an assumed business name with the state of Oregon. In March, 1978, it began shipping gauges to CMC. Shipments continued until April, 1981.
In late 1980, CMC requested that defendant VDO-Argo Instruments (VDO), its former gauge supplier, bid for gauges similar to those then being supplied by plaintiff. VDO made about 1,000 gauges on an order from CMC. The primary differences in appearance between plaintiffs and VDO’s gauges were the “Classic” and “VDO” logos on the face of VDO’s gauges, rather than plaintiffs “Classic Instruments” logo. CMC later decided that the VDO gauges were unacceptable, and it purchased none. VDO independently marketed about 500 of its gauges.
In 1981, CMC requested that Teleflex manufacture gauges. In July, 1981, Teleflex began shipping gauges to CMC. Teleflex’s gauges were similar in appearance to plaintiffs, except that the “Classic” logo appeared on the face of the Teleflex gauges and the Teleflex logo, a stylized “T,” appeared on their backside.
Plaintiff publicized its gauges by advertising in magazines that cater to the replicar, street rod and specialty automotive markets. It also had booths at trade shows in various cities. After it terminated its relationship with plaintiff, CMC continued to use plaintiffs gauges in its replicar shows and displays nationwide, and it continued to display plaintiffs gauges in its catalogue.
Plaintiffs several assignments of error present essentially the same legal issue: whether plaintiff presented genuine issues of material fact precluding the granting of defendants’ summary judgment motions. ORCP 47. We view the record in the light most favorable to plaintiff, the party opposing the motions, and draw all reasonable inferences from the affidavits and depositions against defendants, the moving parties, even as to those issues as to which plaintiff would have the burden of proof at trial.
Seeborg v. General Motors Corporation,
Plaintiff’s first assignment of error involves its claims for trademark infringement and unfair competition against all defendants. All defendants are alleged to have directly infringed plaintiffs trademark. As to plaintiffs claim for “intentionally passing off,” CMC is alleged to have acted directly, VDO and Teleflex are alleged to have acted contributorily. 2 Plaintiffs second assignment of error involves its claim for interference with a business relationship against VDO and Teleflex. Plaintiffs third assignment of error involves its claim for breach of fiduciary relationship against Teleflex.
I. UNFAIR COMPETITION; FEDERAL AND STATE TRADEMARK LAW
Plaintiffs first assignment of error raises the questions (1) whether a genuine issue of material fact exists that there is a protectible interest under federal or state law in the name “Classic Instruments,” (2) whether plaintiffs claim for a protectible interest in its gauge designs under state common law is preempted by federal law, (3) whether plaintiff raised a genuine issue of material fact that defendants had “passed off’ their gauges as plaintiffs gauges, and (4) whether a genuine issue of material fact exists that there is a protectible interest under federal law in the overall design of plaintiffs gauges. 3
The law of trademarks is a species of the genus “unfair competition.”
Milgrim Bros. v. Schlesinger,
1. Is There A Protectible Interest Under Federal Or State Law Ln The Name “Classic Instruments”?
For purposes of analysis, terms that are alleged to be trademarks are regarded as falling on a continuum divided into four categories: generic, descriptive, suggestive, arbitrary and fanciful. A generic term refers to the basic nature of goods and, in the majority view, cannot be protected as a trademark.
Abercrombie & Fitch Co. v. Hunting World, Lnc.,
537 F2d 4, 9-11 (2nd Cir 1976); McCarthy,
Trademarks, supra,
§ 12:1. A descriptive term portrays a characteristic of the article to which it refers.
Keebler Co. v. Rovira Biscuit Corp.,
624 F2d 366, 374 n 8 (
“ ‘[A] name, mark, or symbol by long and exclusive use and advertising by one person in the sale of his goods * * * may become so associated in the public mind with such goods * * * that it serves to identify them and distinguish them from the goods * * * of others. When such an association exists, the name, mark, or symbol is said to have acquired a “secondary meaning,” in which the original user has a property right which equity will protect against unfair appropriation by a competitor.’ * * *
“ ‘A trade-mark or a trade name may have acquired a secondary meaning in one locality but lack such a meaning in another.’ ” Shoppers Fair of Arkansas, Inc. v. Sanders Co.,328 F.2d 496 , 499 (8th Cir. 1964), quoting from Liberty Mutual Ins. Co. v. Liberty Ins. Co. of Texas,185 F Supp 895 , 903 (ED Ark 1960).
See Carter-Wallace, Inc. v. Proctor & Gamble Company, 434 F2d 794, 802 (9th Cir 1970).
A suggestive term denotes secondarily a particular product type and requires imagination to picture the nature of the product. AMF, Inc. v. Sleekcraft Boats, supra, 599 F2d at 349. An arbitrary term has no logical connection between the name and the product. Suggestive and arbitrary terms do not require proof of secondary meaning in order to be protectible as a trademark. Keebler Co. v. Rovira Biscuit Corp., supra, 624 F2d at 374 n 8; AMF, Inc. v. Sleekcraft Boats, supra, 599 F2d at 349.
Defendants argue that summary judgment was proper on plaintiffs state common law and federal law claims for infringement of its name “Classic Instruments” because, as between plaintiff and CMC, CMC is a “senior user” of the term “Classic” and, therefore, cannot be precluded from its use. Alternatively, defendants VDO and Teleflex argue that the term “Classic” is generic and, therefore, incapable of trademark protection. 5
Although a senior user of a trademark cannot, within the same product line, be said to have infringed on a junior user’s use of the same mark, see McCarthy, Trademarks, supra, § 16:1, CMC has not shown, for the purposes of production and sale of replicar automotive gauges, that it has a trademark in its logo “Classic.” An inherently distinctive mark, such as an arbitrary or suggestive mark, allows protection immediately on adoption and use. McCarthy, Trademarks, supra, § 16:2. However, one obtains rights in a descriptive term only through actual use. In order to prove that a trademark exists in a descriptive term, one must prove the existence of a secondary meaning. Secondly, even assuming that CMC has a trademark in its logo “Classic,” a fact question exists whether CMC’s expansion into the production of replicar gauges was “natural.” See 3 Callman, Unfair Competition, Trademarks and Monopolies, § 19:23 (4th ed 1983). 6
In summary, CMC has not shown that it has trademark rights in its logo “Classic,” either by demonstrating that “Classic” is an inherently distinctive term and, therefore, that protection inhered immediately upon adoption and use, or by demonstrating that a secondary meaning has attached to its logo as a descriptive term. Therefore, it cannot be said as a matter of law that CMC is a senior user of the term “Classic” for trademark purposes in the context of the production of replicar automotive gauges. 7
“Any person who shall * * * use in connection with any goods or services, or any container or container for goods * * * any false description or representation, including words or other symbols tending falsely to describe or represent the same, * * * shall be liable to a civil action by * * * any person who believes that he or she is or is likely to be damaged by the use of any such false description or representation.”
Under federal courts’ interpretation of the Lanham Act, a generic term is incapable of trademark protection. See, e.g., Keebler v. Rovira Biscuit Corp., supra, 624 F2d at 374. Essentially, plaintiff contends that its name “Classic Instruments” should be protected under federal law, because it is either “suggestive” or “descriptive” and because it has acquired a secondary meaning.
Generic names are in the public domain, free for all to use.
Singer Mfg. Co. v. June Mfg. Co.,
“(1) Generic use by competitors which has not been contested by plaintiff.
“(2) Generic usage by plaintiff. If the proponent of trademark status itself uses the term as a generic name, this is strong evidence of genericness.
“(3) Dictionary definitions. While not determinative, dictionary definitions are relevant and sometimes persuasive in determining public usage. But dictionary definitions cannot be conclusive of genericness, ‘if for no other reason than that this would endow editors of such works with the power to destroy trademarks merely by defining them generically.’
“(4) Generic usage in the media such as in trade journals and newspapers.
“(5) Consumer surveys.” McCarthy, Trademarks, supra, § 12:2 G. (Citations omitted.)
Although, typically, the determination of generic use is a question of fact,
see, e.g., Keebler v. Rovira Biscuit Corp., supra,
624 F2d at 375-76, the question can be decided on summary judgment when there are no material conflicts in the evidence.
See, e.g., Miller Brewing Co. v. Joseph Schütz Brewing Co.,
605 F2d 990, 996 (7th Cir 1979),
cert den
Defendants argue that reasonable minds cannot differ as to the usage of the term “Classic Instruments.” We agree. “Classic” is defined by Webster’s Dictionary, in a colloquial sense, as “an automobile of the period 1925-1942.” Webster’s New World Dictionary of the American Language (2d College ed 1974) 274. There is convincing evidence in the record to show that “classic” is used in trade journals and newspapers to define the genus of products related to the classic car market.
Plaintiff has not provided any relevant evidence that “Classic Instruments” is other than a generic term. Indeed, Hettick testified that he adopted the name “Classic Instruments” because it could be used freely due to the common use in the replicar trade of the word “classic.” Clearly, plaintiff uses “classic” in connection with “instruments” to denote that the instruments it sells are of the type that belong to the genus of automobile known as “classic.” We conclude that summary judgment was proper on plaintiff s federal claim for trademark protection in the name “Classic Instruments.” That conclusion, however, does not, as a matter of law, preclude protection under Oregon common law.
“Unlike most of their other competitors, neither the plaintiff nor the defendants have elected to use manufacturers’ brand names in their own business names, but rather have elected to use words that are essentially synonymous with the kind of service they offer. Accordingly, in this case, it is necessary to decide preliminarily whether such generic names can ever acquire a legally protectible secondary meaning. Despite the defendants’ contentions to the contrary, an arrangement of purely generic or descriptive words can acquire a secondary meaning and thereby create a protectible interest in a trade name. See e.g., The 88¢ Stores, Inc. v. Martinez,227 Or 147 , 152,361 P2d 809 (1961), and cases collected in Annotation,150 ALR 1067 , 1095 (1944). However, where the name in question is one primarily composed of generic or descriptive words, it is much more difficult to prove a secondary meaning than in cases where the words used in the trade name have some distinctive or identifying character of their own. Restatement, 3 Torts, § 731, comment e at 602 (1938). Cf. 3 Callman, Unfair Competition and Trade-Marks, § 77.3 at 1237 (2d ed 1950).” (Emphasis supplied.)
See also Photo Sound Company. v. Corvallis,
Because plaintiffs mark is either generic or descriptive, proof of a secondary meaning is required for it to be protected:
“To meet this burden, plaintiffs must prove that name acquired a special significance to the public so that a substantial number of present or prospective patrons of plaintiffs’ * * * understand the designation when used in connection with its business not in its primary lexicographical sense, but as referring to a particular person or association. 3 Restatement of Torts § 716, comment b, p. 560 (1938).” Frostig v. Saga Enterprises, Inc., supra,272 Or at 570 .
See also Woodburn Const. Co. v. General Development Co.,
Plaintiff submitted affidavit and deposition testimony that its customers purchase its gauges because of the gauges’ “snob appeal,” because other replicar owners have plaintiffs gauges, because plaintiffs gauges have been portrayed in trade magazines and because the majority of replicar manufacturers purchase plaintiffs gauges. Plaintiffs affidavit also states that it has received numerous letters and calls from customers who expressed confusion after having received a substitute gauge, when they anticipated receiving a Classic Instruments’ gauge due to CMC’s advertising, when ordering a replicar kit from CMC.
Although secondary meaning and likelihood of buyer confusion are separate legal issues, actual confusion is an indicium of secondary meaning.
Lift Truck, Inc. v. Bourne, supra,
2. Is Plaintiff’s Common Law Claim For Protection In The Overall Design of Its Gauges Preempted By Federal Law?
Defendants argue that plaintiffs state common law claims for a protectible trademark
“To allow a State by use of its law of unfair competition to prevent the copying of an article which represents too slight an advance to be patented would be to permit the State to block off from the public something which federal law has said belongs to the public. * * * *
“Sears has been held liable here for unfair competition because of a finding of likelihood of confusion based only on the fact that Sears’ lamp was copied from the Stiffel’s unpatented lamp and that consequently the two looked exactly alike. Of course there could be ‘confusion’ as to who had manufactured these nearly identical articles. But mere inability of the public to tell two identical articles apart is not enough to support an injunction against copying or an award of damages for copying that which the federal patent laws permit to be copied.”376 US at 231 .
In
Compco Corp. v. Day-Brite Lighting, Inc.,
Later cases have limited
Sears
and
Compco.
In
Kewanee Oil Co. v. Bicron Corp.,
“The district court, in this case, erred in reaching any element of the state causes of action. The district court should have disposed of these actions, that is, in view of the preemption doctrine as applied in Sears, Roebuck & Co. v. Stiffel Co., * * * (‘[B]ecause of the federal patent laws a State may not, when the article is unpatented and uncopyrighted, prohibit the copying of the article itself or award damages for such copying.’) * * * a* * * * *
“No Supreme Court case * * * limits the effect of the Sears-Compco doctrine with respect to factual situations similar to those at issue in the Sears and Compco cases.
“In the present case, the microwave ovens which Litton alleges that Whirlpool copied are protected by a valid designpatent. The type of design at issue here, therefore, is clearly protectible by federal statute. The key to determining whether the Sears and Compco cases prohibit a state action is whether a design is of the type on which a patent may issue.” 728 F2d at 1448. (Emphasis supplied.)
Plaintiffs contention that Hettick used his own artistic impressions to create a new, innovative gauge design is, essentially, a concession that the “design is of a type on which a patent may issue.” Therefore, summary judgment was proper as to plaintiffs state common law claim for trademark infringement in its product design on the basis of preemption under Sears and Compco. See Litton Systems, Inc. v. Whirlpool Corp., supra, 728 F2d at 1448.
3. Did Plaintiff Raise A Genuine Issue Of Fact Whether Defendants Had “Passed Off” Their Gauges As Plaintiff’s Gauges?
Although plaintiffs state common law claim for trademark infringement in its product design is preempted, its common law claim that defendants “passed off’ CMC’s gauges as plaintiffs is not preempted.
See Compco Corp. v. Day-Brite Lighting, Inc., supra,
“VII.
“Defendants, and each of them, have willfully, wantonly, and intentionally created, manufactured, marketed, and sold lines of automobile gauges and instruments that are nearly identical in name or appearance or both to those of plaintiff. They continue to do so. The use of plaintiffs design and name, both together and apart, have caused and will continue to cause confusion and deception on the part of the consuming public.
“VIII.
“Defendants have relied on plaintiffs advertising campaign, and have falsely advertised their own gauges and instruments as those of plaintiff.”
“Implied passing off’ occurs when someone uses a picture or sample of its competitor’s product, intentionally impliedly representing that its product is that of its competitor. Passing off is a form of unfair competition, McCarthy,
Trademarks, supra
§ 25:1 D., that has been held to be a violation of section 43(a) of the Lanham Act.
See Nike, Inc. v. Rubber Mfrs. Assn., Inc.,
“Classic Motor Carriages continued to show photographs of our products (on which our name Classic Instruments was plainly visible) even after they stopped distributing our product. Their sales brochure was reprinted after they stopped ordering gauges from us, but the same photographs continued to appear without change and the wording “CLASSIC INSTRUMENTS” continued to identify the gauges used in the dash panel of the Bugatti replicar drawing and the drawing of the Gazelle kit car. Classic Motor Carriages continued to consciously display our product in their catalog to take advantage of the consumer’s name-familiarity with our products even though defendant knew facsimile gauges would be shipped to the consumer.
“Classic Motor Carriages continued to advertise and display our products in their airport automobile displays nationwide for the same reasons even though defendant knew facsimiles of our gauges would be shipped to the purchaser.
“Classic Motor Carriages continued to allow cars at kit car shows in their or their distributors’ booths to show gauges manufactured by Classic Instruments, Inc. even though they shipped only facsimile gauges. The latest instance of this of which I am aware was at the display booth of Classic Motor Carriages at Caesar’s Palace, 2nd Annual Kit Car Show, Las Vegas, Nevada, during August 1983 (and being almost two andone-half years after defendant quit using Classic Instruments’ products).”
Hettick’s affidavit raises a genuine issue of material fact as to plaintiffs claim against CMC for passing off. However, there is no allegation in Hettick’s affidavit, and no evidence to show, that either VDO or Teleflex knowingly participated in any passing off. Therefore, as to VDO and Teleflex, summary judgment was appropriate on plaintiffs claims of passing off.
4. Is There A Protectible Interest Under Federal Law In Plaintiff’s Gauge designs?
Plaintiffs federal law claim for trademark infringement in its product design is similar to its state common law claim. However, there is no conflict between federal patent laws and trademark infringement claims under section 43(a) of the Lanham Act.
Truck Equipment Serv. Co. v. Fruehauf Corp.,
536 F2d 1210, 1214-15 (8th Cir 1976),
cert den
Defendants do not contend that no issue of fact exists as to the first element, i.e., whether defendants’ and plaintiffs product designs are confusingly similar. 9 As to the third element, “secondary meaning,” our conclusion under the state law analysis, that a question of fact exists, is applicable. 10 The second element, functionality, is the primary issue under the federal statutory claim. In order to determine whether there is a genuine issue of material fact, we must define the term “functionality.”
The requirement of nonfunctionality in section 43(a) claims for trade dress infringement or product design imitation was imported into Lanham Act actions from the common law of unfair competition.
See Note,
“The Problem of Functional Features: Trade Dress Infringement Under Section 43(a) of the Lanham Act,” 82 Col L Rev 77, 81 (1982). Functionality has its genesis in the judicial theory that there is a fundamental right to compete through imitation.
The concept of functionality is broadly divided into mechanical and aesthetic. Those categories roughly correlate with utility and design patent subject matter. However,
“regardless of what ‘kind’ of functionality we speak, we are, in all cases, dealing with the perception of a conflict between the right of the public to use unpatented subject matter in a competitive economy, on the one hand, and the desirability of protecting the entrepeneur’s investment in his good will and the public from confusion on the other. The decisions in all of the cases lie along this central dividing line. Most turn upon the definition of functionality adopted by the court and the application of that definition to the facts.” Zelnick, “The Doctrine of ‘Functionality,’ ” 73 Trademark Reporter 128,129-30 (1983).
Section 742 of the Restatement of Torts defines functionality:
“A feature of the goods is functional * * * if it affects their purpose, action or performance, or the facility or economy of processing, handling or using them; it is non-functional if it does not have any of such effects.”
The comment to Section 742 notes, in relevant part:
“[A] feature is non-functional if, when omitted, nothing of substantial value in the goods is lost. A feature which merely associates goods with a particular source may be, like a trademark or a tradename, a substantial factor in increasing the marketability of the goods. But if that is the entire significance of the feature, it is non-functional; for its value then lies only in the demand for goods associated with a particular source rather than for goods of a particular design.”
The Restatement definition of functionality provides little help in analyzing complex product configuration problems, because it is so broad as to limit protection to those features of goods that are little more than trademarks affixed to the goods. See Zelnick, “The Doctrine of ‘Functionality,’ ” supra, 73 Trademark Reporter at 131-32.
Defendants argue that each aspect of plaintiffs gauges is “functional” and, therefore, that the gauges themselves are “functional”:
“[T]he bezel holds the lens in place, which in turn, protects the dial face from dust and dirt * * *. The needle * * * indicates what the gauge is designed to measure. * * * The numerals * * * indicate the quantity the gauge is to measure. Radically extending lines * * * serve to indicate the quantity the gauge is designed to measure. The names on the gauge * * * describe what the gauge is to measure and distinguish the function of one gauge from another.” CMC brief at 20.
Having defined the utilitarian elements of plaintiff s gauges, defendants argue that no genuine issue of material fact exists as to functionality and, therefore, that summary judgment was appropriate. We reject defendants’ definition of functionality, as well as their conclusion that plaintiff s gauges are, as a matter of law, de jure functional.
In In re Morton-Norwich Products, Inc., supra, 671 F2d at 1337, the court noted that the label “functional” has dual significance: it is used in the lay sense to indicate utilitarian characteristics (de facto functionality), and it is used to denote a legal conclusion (de jure functionality). Defendants’ reference to the utilitarian characteristics of plaintiffs product, while probative, is not dispositive:
“[A] discussion of ‘functionality’ is always in reference to the design of the thing under consideration (in the sense of its appearance) and not the thing itself. One court, for example, paraphrasing Gertrude Stein, commented that ‘a dish is a dish is a dish.’ Hygenic Specialties Co. v. H.G. Salzman, lnc., 302 F2d 614, 621,133 USPQ 96 , 103 (2nd Cir 1962). No doubt, by definition, a dish always functions as a dish and has its utility, but it is the appearance of the dish which isimportant in a case such as this * * *.” 671 F2d at 1338. (Emphasis in original.)
The Morton-Norwich court reasoned that most designs result in the production of articles containing features that are utilitarian. Examination of the possibility of trademark protection is not primarily concerned with the existence of pure utility, but with the degree of design utility:
“Thus, it is the ‘utilitarian’ design of a ‘utilitarian’ object with which we are concerned, and the manner of the use of the term ‘utilitarian’ must be examined in each occurrence.” 671 F2d at 1339. (Emphasis in original.)
In that context, “utilitarian” is defined as “superior in de facto function or economy of manufacture”; “superiority” is determined “in light of competitive necessity to copy”:
“What this phrase must mean is not that the generic parts of the article * * * are essential, but * * * that the particular design of the whole assembly must be essential.” 671 F2d at 1339. (Emphasis in original.)
The Morton-Norwich court listed a number of factors relevant to a determination of whether a particular design is de jure functional: utilitarian advantage of a design, other available design alternatives and inexpensive or simple manufacturing techniques. 671 F2d at 1339. Other factors may also be relevant.
Although defendants’ evidence of the utilitarian elements of plaintiffs gauges is probative on the issue of de jure functionality, it is not conclusive. In a product design imitation case, the functionality inquiry must ultimately focus on the competitive need to imitate the overall design of plaintiffs gauges, in light of other available design alternatives. See In re Morton-Norwich Products, supra 671 F2d at 1341. As one court noted, “[t]he issue of functionality has been consistently treated as an issue of fact.” Vuitton et fils S.A. v. J. Young Enterprises, Inc., 644 F2d 769, 775 (9th Cir 1981). 11
In so defining “functionality,” we have implicitly rejected the line of cases relied on by defendants, from
Pagliero v. Wallace China Co.,
198 F2d 339 (9th Cir 1952), through
International Order of Job’s Daughters v. Lindeburg & Co.,
633 F2d 912 (9th Cir),
cert den
II. COMMON LAW INTERFERENCE WITH BUSINESS RELATIONSHIP.
Plaintiffs second assignment of error contends that the trial court erred in granting summary judgment on plaintiffs claims against VDO and Teleflex for interference with a business relationship. Plaintiffs complaint alleges that it had a business relationship with CMC and that VDO and Teleflex intentionally and wilfully interfered with that relationship.
The elements of intentional interference with a business relationship are: the defendant intentionally interfered with the relationship; the defendant interfered either with an improper motive or by using improper means; and, as a result, the plaintiff was damaged beyond the fact of the interference itself.
Ron Tonkin Gran Tourismo, Inc. v. Wakehouse Motors, Inc.,
As to Teleflex, the question is somewhat closer. The evidence shows that the business relationship between plaintiff and CMC began to fracture as early as 1979, due to plaintiffs apprehension about the timeliness of CMC’s payments. Hettick testified that there were disagreements over the resolution of CMC’s payment problems. In December, 1980, CMC demanded a specific date for January, 1981, deliveries; plaintiff did not meet that delivery date. In February, 1981, CMC solicited a bid for automotive gauges from Teleflex. In April, business relations between plaintiff and CMC terminated. Teleflex did not sell any gauges to CMC until July, 1981.
In summary, the evidence shows that the business relationship between plaintiff and CMC was strained at the time when CMC solicited a bid from Teleflex. Still, we cannot say, as a matter of law, that the relationship had terminated. The improper means alleged, the use of plaintiffs alleged trademark, rises or falls with plaintiffs trademark infringement allegations. As to the damage element of the claim, Hettick’s deposition testimony states that plaintiffs market share diminished from 97% to 70% during the relevant time period. Hettick estimated that 21% to 23% of the market share belonged to Teleflex on the basis solely of its new business relationship as CMC’s automotive gauge supplier. We conclude that the evidence presents a genuine issue of material fact as to whether Teleflex intentionally interfered with the business relationship between plaintiff and CMC. Therefore, the trial court erred in granting summary judgment on plaintiffs claim against Teleflex for intentional interference with a business relationship.
III. COMMON LAW BREACH OF FIDUCIARY RELATIONSHIP.
Plaintiffs third assignment of error contends that the trial court erred in granting
Although, in a technical sense, Teleflex was neither a fiduciary nor an agent, we conclude that it had a duty not to use plaintiffs blueprints or specifications in
“The fact that the idea was already developed by others may make it less valuable in the market. Yet the information or knowledge may give to the possesser a commercial advantage over his competitors. This advantage constitutes value, and the disclosure of the information which creates the advantage may be sufficient to raise the implied agreement not to appropriate it.”
In
Booth v. Stutz Motor Car Co., 56
F2d 962 (7th Cir 1932), the plaintiff had designed a new car. He sent the blueprints and plans for the car to the defendant for possible production of the car in the defendant’s plant. Subsequently, the defendant informed the plaintiff that the defendant was no longer interested in his plans. However, the defendant then produced a car that contained features of the plaintiffs blueprints and designs. Reversing a judgment of dismissal, the court held that, to the extent that the plaintiffs plans, communicated in
confidence to the defendant, did enter into the design of the car, the defendant had inequitably appropriated those plans and it should account to him.
See also Schreyer v. Casco Products Corp.,
190 F2d 921 (2nd Cir 1951),
cert den
Teleflex’s second argument, that it could not have breached any duty, because plaintiffs gauges are sold on the open market and the face designs are obvious, lacks merit. The relevant inquiry is whether Teleflex used plaintiffs blueprints and specifications communicated to it in confidence to plaintiffs detriment:
“Defendants argue that plaintiff had disclosed his alleged improvements in design by advertising and by the sale of the trucks to others, and that the defendants or anyone else could ascertain from those sources the nature of the alleged improvements. The fact that the design and process of manufacturing a truck body similar to plaintiffs could have been ascertained from these sources does not foreclose plaintiff from a remedy for unfair competition. As the court in Franke v. Wiltschek, 209 F2d 493, 495 (2d Cir 1953) pointed out, the real question is not whether the disclosee could have obtained the disclosed information elsewhere, but rather whether in fact he did so obtain it. * * * *
“The cases adopting the higher standard of ‘commercial morality’ emphasize the breach of the confidence reposed in the defendant, rather than the existence of the trade secret. As the court stated in Vulcan Detinning Co. v. American Can Co., 72 NJ Eq 387, 67 A 339, 343 (1907), ‘too much emphasis has perhaps been placed upon the element of absolute secrecy in the process, and that not enough stress has been laid upon the inequitable character of the defendants’ conduct in making a use of such process that was inimical to the complainant’s interests. * * * [T]he secrecy with which a court of equity deals is not necessarily that absolute secrecy that inheres in discovery, but that qualified secrecy that arises from mutual understanding, and that is required alike by good faith and by good morals.’ On similar grounds the element of novelty has been minimized, the emphasis being placed upon the unfairness to plaintiff if defendant is permitted to appropriate the plaintiff’s idea.” Kamin v. Kuhnau, supra,232 Or at 149, 151 . (Citations omitted; emphasis in original.)
Similarly, in
Smith v. Dravo Corp.,
203 F2d 369 (7th Cir 1953),
in response to the defendant’s claim that it could not have breached any fiduciary duty because 100 of the plaintiffs devices were in public use at the time of the action, the court stated that the correct inquiry should be how the defendant learned of the plaintiffs design. The court stated further that, in order for a
Teleflex’s third argument is that there was insufficient evidence to raise an issue of fact whether it had used plaintiffs blueprints or specifications. We conclude that the similarity of plaintiffs and Teleflex’s gauges is sufficient to raise an issue of fact.
See International Industries, Inc. v. Warren Petroleum Corp.,
Reversed and remanded for trial on plaintiffs claims for common law trademark infringement of plaintiffs name “Classic Instruments” against CMC, VDO-Argo and Teleflex; common law intentional “implied passing off’ against CMC; Lanham Act, section 43(a), trademark infringement of plaintiffs product design against CMC, VDO-Argo and Teleflex; Lanham Act, section 43(a), intentional “implied passing off’ against CMC; intentional interference with business relationship against Teleflex; and breach of fiduciary relationship against Teleflex; otherwise affirmed.
Notes
In its first, second and third claims, against defendants VDO-Argo Instruments and VDO Instruments (collectively, VDO), Teleflex, Inc. (Teleflex) and Classic Motor Carriages, Inc. and Classic Motor Carriages Leasing Co. (collectively, CMC), plaintiff alleged trademark infringement and unfair competition, unlawful trade practices and trademark dilution. Plaintiffs fourth claim, against VDO and Teleflex, alleged interference with a business relationship. Plaintiffs fifth and sixth claims, against Teleflex, alleged breach of contract and breach of fiduciary relationship. Plaintiff does not appeal the entry of summary judgment for defendants on its claims for unlawful trade practices or trademark dilution.
The trial court found that there was no just reason for delay and that judgment should be entered disposing of all claims, except the breach of contract claim against Teleflex. ORCP 67B. GGL Industries was voluntarily dismissed from the case. However, the record does not contain a final judgment as to that defendant.
While plaintiffs trademark infringement allegations blur the distinctions between these claims, it is apparent that the parties understand that there were separate allegations.
Plaintiffs claim for trademark protection in the overall appearance of its gauges includes the design of the gauges as well as the descriptions on their face: “dynamo” on the ammeter gauge and “engine” on the tachometer. Plaintiff argues that those facial descriptions are unique, because they are technically inaccurate and because they had not previously appeared on similar gauges.
A tradename is used to denote a company, business or partnership and its goodwill; a trademark identifies goods and services. McCarthy, Trademarks, supra, §4.4.
CMC expressly takes no position on this alternative argument.
The parties have not addressed the effect of CMC’s expansion into the production of replicar automotive gauges on the issue of priority of rights in the putative mark.
CMC contends that plaintiff originally agreed to allow its gauges to be advertised by CMC as though they were CMC’s product and that plaintiff imposed no reservations on the use of its name. Although an agreement between the parties similar to that alleged by CMC would be fatal to. plaintiff s claim, see 3 Callman, The Law of Unfair Competition, Trademarks and Monopolies, § 19.48 (4th ed 1983), Hettick’s deposition testimony contradicts that allegation and, thus, raises an issue of material fact.
The apparent anomaly under Oregon law, that a generic term has the capacity to acquire a secondary meaning, may be due to what McCarthy describes as confusion caused by some courts’ referring to generic and descriptive categories as synonymous. See McCarthy, Trademarks, supra, § 12:5, n. 12.
Defendants argue that there can be no trademark infringement under state or federal law when the name of the manufacturer is “clearly displayed.” They cite American Rolex Watch Corp. v. Ricoh Time Corp., 491 F2d 877 (2d Cir 1974) and Litton Systems, Inc. o. Whirlpool Corp., supra. Those cases are distinguishable. In American Rolex, the Court of Appeals affirmed after concluding that the trial court’s finding that the defendant had clearly labeled its product was not clearly erroneous. 471 F2d at 78. In Litton Systems, the Court of Appeals reversed, holding that the trial court had committed clear error in its finding as to likelihood of confusion. 728 F2d at 146. The Court of Appeals noted that the “legal effect of labelling a product with its manufacturer’s name depends or may depend on both the prominence of the label and the type of the product.” 728 F2d at 146. Whether CMC’s name and logo are adequately displayed on its gauges to prevent confusion must be based on several factors, including the prominence of CMC’s name and logo and the type of advertising and sales promotions utilized by CMC. The question cannot be resolved on this record.
Although we previously concluded that plaintiff raised a genuine issue of material fact as to secondary meaning in the name “Classic Instruments,” the evidence offered equally supports the conclusion that an issue of fact remains as to the existence of a secondary meaning in plaintiffs product design.
Citing Hettick’s deposition testimony, defendants characterize plaintiffs claim for trademark protection in its gauge design as one for protection against production of any light-faced, antique-appearing gauge. Plaintiff stressed in its brief and at oral argument that it only sought protection against production of any confusingly similar gauge.
In view of our conclusion that it is the overall design of plaintiffs gauges that forms the basis for its trademark protection claim, defendant’s contention that lightfaced, antique-appearing car gauges have been manufactured in the past and that plaintiffs gauge designs are “in the public domain” must fail. Defendants have not demonstrated, as a matter of law, that existing light-faced, antique-appearing gauge designs of VDO or other gauge manufacturers are indistinguishable from plaintiffs designs. Cf. Application of World’s Finest Chocolate, Inc., 474 F2d 1012, 1014 (CCPA 1973).
In view of our disposition of this case, plaintiffs fourth assignment of error, that the trial court abused its discretion in failing to delay its ruling on defendants’ summary judgment motions until after plaintiff had obtained discovery of allegedly relevant documents, is moot.