*1 here to mail confirmations ing.” Not that the the customers suggest

would made, not been

trades The “lull- phony prices. made but at

were limits, no real

ing” rationale thus knows Biesiadecki, this after States United

may be inevitable. DESIGNS, partnership,

ZAZÚ

Plaintiff-Appellee, S.A.,

L’ORÉAL, Defendant-Appellant. 91-2842.

No. Appeals, States Court

United

Seventh Circuit.

Argued May 1992. Nov. 1992.

Decided

As Amended Nov. 1992. Rehearing

Rehearing Suggestion

En Banc Denied Dec.

of hair cosmetics. checking After the Unit- ed States Register conflicts, Trademark suggested Wordmark 250 names. L’Oréal three, this field including narrowed Zazu, investigated their availability. in- This *3 vestigation up turned registra- one federal tion of clothing Zazu as mark for and two registrations state service mark including that word. One of these is Zazú Hair Designs; the other was defunct. Fitzgibbon (argued), Angelo James T. J. Designs Zazú Hair is a hair salon in Bufalino, Kendall, Lockwood, C. Michael Hinsdale, Illinois, a of Chicago. suburb Alex, Fitzgibbon Cummings, Chicago, We call it “zhd” to avoid confusion with the Ill., plaintiff-appellee. for mark, employs an acute accent (zhd Zazú (argued), Thomas P. F. Sullivan Thomas not; and L’Oréal did any- no one makes Cotter, Block, Jenner & Richard A. thing difference.) The salon is a Schnurr, Marshall, Murray, Owen J. partnership Raymond between R. Koubek O’Toole, Gerstein, Bicknell, Murray & Chi- Segretto, hairstylists Salvatore J. who cago, Ill., Falconer, Russell H. Brendan J. joined registered forces in 1979. Leavens, O’Rourke, Bag- Doreen Parker H. with Illinois in 1980 as a trade name for its Graves, ley, Brumbaugh, Ray- Donohue & salon. L’Oréal called the salon to find out mond, City, defendant-appel- New York selling if products. was its own lant. employee reported who that the answered added, salon working was “we’re CUDAHY, POSNER, Before again; on it”. L’Oréal called this time it EASTERBROOK, Judges. Circuit told that zhd had no available EASTERBROOK, Judge. Circuit under the name Zazú. Cosmair, Inc.,

In 1985 concluded that registra- L’Oréal took the sole federal young tion, pink Slacks, Inc., women craved blue hair. held Riviera as a seri- demand, anticipated To meet the Cosmair apparel ous obstacle. Some makers have developed cosmetics, a line of migrated “hair cosmetics”—hair and if Riviera were coloring easily (which Ralph washed out. These about follow Lauren makes inexpensive products, perfumes skirts) under the name in addition to shirts and Zazu, might were sold in the cosmetic legitimate complaint against sections of mass have a merchandise Apparently competing Sands, stores. the teen- use of Tay- the mark. agers Quaker of the late 1980s had better taste lor & Wood Co. Oats marketing U.S.P.Q.2d 1001, (7th Cir.1992). than Cosmair’s thought. staff Rivi- product flopped, gave $125,000 but its name charged rise era for a cove- to this trademark suit. Cosmair is the nant if sue L’Oréal used the Zazu L’Oréal, S.A., United States licensee April a mark on cosmetics. In cove- French firm specializing perfumes, beau- nant hand and satisfied that state zhd’s aids, ty products. and related prevent Cosmair trade name did not the introduction placed L’Oréal’s marks on the bottles of a product, national L’Oréal made a small parties ads. For shipment reasons have not ex- interstate hair cosmetics under of. plained, L’Oréal rather than shipment Cosmair is the Zazu name. It used this though defendant application regis- even the events that led the an basis of for federal tration, litigation were .orchestrated in By August New filed on June York rather than prod- Paris. L’Oréal does not L’Oréal had and sold its advertised protest, simplicity, so nationally. we refer to Cos- ucts collectively mair and L’Oréal as “L’Oréal.” L’Oréal, Segret- Unknown to Koubek and Wordmark, consulting L’Oréal hired aspired to had for some time to emulate firm, help it find a name for the by marketing new line Vidal Sassoon shampoos tactics “oppressive and deceitful” salon’s trade their conditioners an additional began meeting litigation, the court awarded Koubek name. punitive damages, topped off products. develop zhd’s million with chemists legal unsuccessful; expenses. to cover Early no one efforts were (L’Oréal changed has law firms zhd. Even- product that satisfied offered a partici- did not acceptable samples appeal; its current counsel tually received Cosmetics, Segret- pate in that the district the events some which Gift unethical.) plain found to be salon to sold to customers taped the he salon’s busi- bottles to which opinion filing of the Between the 1985 and ness card. Between November entry made a judgment, and the February made few other sales. 52(b) for an ad motion under Fed.R.Civ.P. *4 to a friend in shipped two bottles Koubek present hearing. It evi ditional wanted Texas, He also made two paid who $13. dence that it believed would show the stylist friend in Flori- shipments a hair' he the actions and mo that misunderstood shampoo for $78.58. da—40 bottles of lawyers. The this tives of its court denied designed to interest the Floridi- These were judg motion without comment and entered marketing product of the an in the future dissuaded, an ment. Not L’Oréal served could not have been line. These bottles days motion within ten all-but-identical they lacked la- public, the because sold to judgment. years Two later the court weight. listing ingredients bels granted taking this motion. After addition 362(b); 15 See 21 U.S.C. U.S.C. §§ § al the court modified some of its evidence 701.3, 701.13(a). 1453(a); Af- 21 C.F.R. §§ findings, judgment. 1991 but not its WL marketing was under ter L’Oréal’s national Lexis 9433. zhd U.S.Dist. way, representatives thrice visited zhd its legal won an additional fees prod- the salon still had no and found that compensate for the cost of the new hear Zazú name. Which ucts for sale under ing. appealed, par at last and the supine. Late in say that was not ignored potential problem: a ties have 25,000 bottles silk- 1985 had ordered post-trial motion does not extend second Later it screened the name Zazú. with Daley, v. appeal. the time for Charles 799 ingredi- listing the ordered stick-on labels (7th Cir.1986). But because September its In products. ents of . filed after the one these motions was began quantities of sham- to sell small zhd judgment, suspended judgment’s fi (and labeled) by poo in bottles filled hand nality appeal timely, and makes the even year After the turn the salon. zhd though the denial of the first motion shows shampoo supplier directed the duplicate unlikely to succeed. bottles;, the conditioner to fill some record — Ibarra, U.S. -, v. United States many. does reveal how (1991). S.Ct. 116 L.Ed.2d the district court held After bench trial right gave that zhd’s it an exclusive I nationally for hair to use the Zazú name U.S.P.Q.2d (N.D.Ill.1988). registration permits Federal law products. 9 enjoined using regis L’Oréal from trademarks and the enforcement of 43(a) (a gesture, product Through mark since the tered marks. of the Lan- § Act, 1125(a), any provision inter and L’Oréal disclaimed ham U.S.C. bombed § deceit, indirectly again). It also awarded addressed to it also allows est Zazu $100,000 damages unregistered on account of lost the enforcement of marks. pay specify more for cor But until profits and million 1988 federal law acquired advertising to restore luster how one that could be rective Finding registered registrat that L’Oréal had in or enforced mark. ion.† fringed intentionally subject and used That fell zhd’s into domain showing applicant Revision Act of 1988 added on a that the has a “bona fide Trademark Law † provisions allowing registration of a mark intention ... use a trademark in commerce”. law, plus requirement federal common law elabo 1988 modifies use state fur- 43(a). rating ther, this.) word “use” in Two disregard on the but we zhd’s sales of — Cabana, Inc., Pesos, U.S. Inc. v. Taco product are insufficient establish 2753, 2757, -, -, 112 S.Ct. priority over L’Oréal. few bottles sold — (1992); at -, L.Ed.2d 615 id. U.S. Hinsdale, over the counter in and a few (Thomas, J., concur 112 S.Ct. at 2766-67 more mailed to friends in Texas and Flori- (“ ring). See also 15 U.S.C. 1127 ‘trade da, neither link the Zazú mark with mark’ used includes word ... product in the minds of put consumers nor law, person”). At common “use” meant producers other practical on notice. As a product public sales to the of a product, matter period, had no until Cases, 100 mark attached. Trade-Mark months after L’Oréal had embarked on its 82, 94-95, (1879); 25 L.Ed. 550 Menen U.S. campaign. doomed Holt, 514, 520-21, dez v. U.S. S.Ct. 143-44, 32 L.Ed. 526 See also finding that zhd’s few sales se Milling Metcalf, Hanover Star Co. world, rights against cured the district 403, 414, 60 L.Ed. U.S. S.Ct. court relied on cases such Department (1916); Drug United Co. v. Theodore Calspan Corp., Justice 578 F.2d 295 90, 97, Rectanus 39 S.Ct. (C.C.P.A.1978), single which hold that a *5 50, 141 63 L.Ed. sale, proof go combined with of intent to on glitch selling, is neither a in the Lan permit register

“Use” the to vendor insisting By ham Act a historical relic. mark. See also Axton-Fisher Tobacco nor Co. rights that firms use marks to obtain Co., v. Fortune Tobacco 82 F.2d 295 them, prevents entrepreneurs from the law (C.C.P.A.1936); Yours, Maternally Inc. v. reserving brand names in order to make Inc., 538, Maternity Shop, Your 234 F.2d marketing costly. their rivals’ more Public (2d Cir.1956); Community Roque sales let others know that should not Santo, (C.C.P.A.1971). 443 F.2d v. fort develop invest resources to a mark similar register But use sufficient to a mark that already to one used the trade. Blue widely necessarily soon distributed is not Bell, Manufacturing Inc. v. Farah enough acquire to in the absence of 1260, (5th Cir.1975); 1264-65 F.2d see registration. only The Lanham Act allows also William M. Landes and Richard A. reg trademarks in commerce” to “used be Posner, Trademark Law: An Economic 1051(a). istered. 15 U.S.C. Courts have § Perspective, 30 J.L. Econ. & 281-84 way read “used” in a that allows to firms (1987). Only active use allows consumers protection investing seek for a mark before particular goods to associate a mark with promotion. substantial sums in See Fort and notifies other firms that the mark is so Paper Kimberly-Clark Howard Co. associated. (C.C.P.A.1968); Corp., 390 cf. Foods, Dandy Jim Co. v. Martha White law, Under the common one must Inc., (C.C.P.A.1972) marketplace win the race to the to establish advertising (party may rely on to show right to a mark. exclusive Blue Bell v. superior registration rights); but see Farah; Anonyme La des Societe Parfums International, Patou, Weight Inc. v. I. Inc., Watchers LeGalion v. Jean Sons, Inc., U.S.P.Q. (2d Cir.1974). Rokeach Registration & 1271-74 (more (T.M.T.A.B.1981) system than minimal slightly, allowing modifies this register slight plus register required use is to because the stat notice to register, only substitute for substantial sales no ute allows “owner[s]” 1051(a). (The legislation ownership depends tice. U.S.C. of a mark on commer- § 1051(b). Filing provide § 15 U.S.C. such an "intent-to- same time the statute was revised to application priority use” establishes as of the that ‘“use in commerce’ means the bona fide filing against already (except date of trade, those ordinary use of a mark in the course of mark), using the but a statement of actual use merely right made and not to reserve months, may must be filed within 6 which mark." 15 U.S.C. 1051(d). extended to 24. 15 U.S.C. At the Corp., 615 King v. Wiener registering marks Liberality in use). cial (C.C.P.A.1980). registration because problematic, latecomers, token gives notice ap- consequences Imagine zhd's only search Firms need does not. in- alone of an that knew Businesses proach. embarking development. on register before entitled not be use would tended could parties registered significant Had zhd first Zazú, they made the mark even if committed L’Oréal before heads negotiated their have it. Businesses use of marketing. however, the actu- on large sand, sums could stand products, their they introduced date al registration applied for in- firms priority over so would applied had after Zazú had not done so. to use a mark tended prod put had also mark but register the knowl- rewarded—and would be Ignorance Efforts market nationwide. uct on though might off even firms back edgeable argument At oral late. too register came unlike- “intent” were “plans” or rivals’ knowledge of that L’Oréal’s suggested investigations Yet ly come to fruition. market hair care plan to enter the cost- prevent zhd’s undertook sort L’Oréal right superior establishes trade- development of ly duplication argument is unavail an Such the name. con- protect marks and consumers mark, like a naked to use a ing. Intent being resulting from two fusion all. rights at no establishes registration, mark. See Natural same under the sold George Putnam Inc. v. Hydro-Dynamics, Marx, Hart, & Ltd. Footwear Shaffner Cir.1985). (Fed.Cir.1987). Co., 811 F.2d (3d (see note the 1988 amendments Even it made off worse because not be should in advance registration †), that, although which allow no one inquiries found plan to use, unregistered products, an contemplated mark for hair yet used an rights. poten- no Just *6 creates use a mark so. Nor should intended to do zhd does of land it learns buy parcel choice its time to a to until intent user have tial bide deal mar- closing the about firms are serious prevent a rival other whether requirement no The use first, product. a mark creates keting to use so an intent getting quickly in respect. act to those who competitor is bound rights a rewards hands of consumers. registra in products in rights no bare new granting statute had a L'Oréal discovered Had be understood plausibly tions cannot zhd Zazú the market product on ei divorced from rights in “intents” grant registered Zazú that zhd mark or Registration registrations. sales or ther have chosen could products, hair pre only a rebuttable itself establishes committing extensive mark before another filing Rol date. use as of the sumption of Knowledge that marketing resources. zhd Younghusband, ley, Inc. v. in future mark planned to use the use of Zazú Cir.1953). made first zhd to L’Oréal’s present an obstacle does in hair services connection Zazú v. Travel- today. Selfway, it Inc. adopting to a translate Illinois, does not this Petroleum, Inc., 579 F.2d ers products hair right to market protectable (C.C.P.A.1978). construed court nationally. The district “bad knowledge suggest zhd’s use of Occasionally of courts L’Oréal’s Zazú knowledge “of a claim adoption a mark defeats for salon faith” services [zhd’s] U.S.P.Q.2d Prod- Cedar rights priority. in the mark.” superior California however, superi- Corp., 724 not, v. Pine Mountain Co. at 1978. zhd ucts Electronics, Cir.1984); applied hair Stern mark as rights in the or (2d Kaufman, such marketed it neither products, because Farah, 508 F.2d at Cir.1982); Blue Bell the mark before registered nor equates L'Oréal’s Although zhd registered was not the mark 1267.. use. Because with “bad knowledge impending of its use products, conjunction with differently. faith,” use the term the cases may have had knowledge any applied the label instance the In King, each Cf. plans is irrelevant. Weiner designed faith” to transactions mere The district “bad court awarded zhd $100,000 mark, ly compensation not to link the name profits. to reserve for lost product ready public. to a to be sold to the Because zhd any did not have track record Products, In for exam preceding Cedar of sales L’Oréal’s campaign, the California sprinted acquire ple, two firms the aban district assumed that zhd would sell shipped doned Duraflame mark. One shampoo 25,000 or conditioner in all of the goods abandoning compa some of its Yet ownership bottles. hardly bottles ny’s wrapper pasted with a new name over establishes that zhd single could sell a days it. later the other commenced Two quart shampoo, let alone that it would bottle, bona fide sales under the Duraflame mark. profit per make ordered zhd disregarded shipment, The court the first 25,000 bottles not any pros because it had calling premature “both bad pect selling them but because the vendor discount, faith”, and held that the quantity offered a zhd did not first firm to make fide bona sales cus present showing evidence that other salons prior tomers was the user. “Bad faith” that have tried to sell hair nation epithet stapled was no more than an ally profits $100,000. made approximating : reserving basic conclusion that a mark is reveals, As far as the ap record zhd forbidden, so producer that' the first to proached only four other salons about sell genuine gets rights. make If ing product. What these salons could parallel dispute, find a these eases our unknown, have sold is zhd’s salon sold occupies place trying of the firm about products per of other firms’ exploitation. reserve a for “intended” year; nothing in the record enables us to samples zhd doled out a few in bottles tell the extent to which these sales would lacking labeling necessary for sale to the displaced by products have been with a public. Such transactions are the sort of mark, profit per or how much more' pre-marketing maneuvers that these cases selling bottle would have made its own rights hold insufficient to establish shampoo rather than Vidal Sassoon’s. trademark. uncle, years since L’Oréal cried has market, nothing done to enter the equating The district court erred in 25,000 Zazú or other mark. The bot support registration a use sufficient storage, empty. tles are in most of them If generate with a use sufficient to nation made, profits there are indeed registration. wide in the absence of *7 . singularly reaping has been lax them Although whether zhd’s use is sufficient to grant rights in ques it Zazú mark is a Nothing conjecture supports a con appellate tion of fact on which review is per clusion that zhd could have made $4 deferential, Products, Cedar California 25,000 bottle on bottles. district court 830; 724 F.2d at Corp. cf. Scandia Down proof aside the lack of on the brushed Inc., 1423, Euroquilt, 772 F.2d 1428-29 speculation rationale “the in that which is (7th Cir.1985),the extent to which zhd used damages herent in plaintiff the award of disputed, the mark is not zhd’s sales of knowingly intentionally brought products hair care were insufficient as a U.S.P.Q.2d upon by defendant at itself.” of law to matter establish national trade Although uncertainty by created put at the time L’Oréal its wrongful wrong acts does not insulate the electric hair colors on the market. liability, “people doer from dam who want them, ages prove have to methodolo

II gies intellectually sophisti that need not be second, sufficient, independently intelligence.” cated but must not insult the requires Schmidt, error judgment. us to set aside the Schiller & Inc. v. Nordisco (7th Cir.1992). Corp., did not establish that L’Oréal’s sales 969 F.2d zhd injured slightest, Pictures, Inc., it in the Bigelow let alone that it is See v. RKO Radio 251, 264, 574, 579, plus hefty attorneys’ entitled to million $2.1 66 S.Ct. (1946); Sands, fees. Taylor L.Ed. 652 & Wood & Dealers, Goodyear Tire Inc. v. 1013-14; v. Tire FDIC U.S.P.Q.2d at Co., 24 (10th Co., 1374-76 (7th Rubber Co., Grace W.R. Comment, Damages and Money Cir.1977); Gun Muskego Big Cir.1989); Boxhorn’s Economic Advertising: An Workers, Corrective Club, Inc. v. Electrical (1988). Ex- 55 U.Chi.L.Rev. Cir.1986). Compensato Analysis, (7th 1016, 1021-23 justified when repair cannot be and rea just penses “a rest on must damages ry car If a the asset. on the value of damage based exceed estimate sonable in a collision $4,000 at crushed U.S. worth Bigelow, data”. relevant $10,000, uncertainty the court awards cost repair Allowance would 580.. at 66 S.Ct. (or, Distributors, $10,000 $4,000, not Fresh damages thing, see Grove one case, $14,- in our Apple happened Products to have England seems New Inc. v. specu Cir.1992), and rank 000). another, no evidence offered lation zhd cor damages pay justify To it would that estimate reasonable a allow show advertising plaintiff must rective prod its nascent made defen by the caused the confusion that zany hair colors sold L'Oréal ucts had that injured plaintiff and dant’s mark mark. under Zazu trademark, than rather the old “repair” of million added $1 court district one, expen least is the a new adoption of compensatory $100,000, total for a nei established way proceed, sive zhd million, theory that on of $1.1 award Although both ther element. zhd effect to counteract needed product as refer to L’Oréal’s district court Although campaign. promotional L'Oréal's not offer evidence did “garish,” correc “for this an award called the court or (even those who found consumers that allows advertising,” judgment tive willing less revolting) would ange hair million; it need with the pleases it do as tastefully marketed shampoo at The court arrived single ad. not run Indeed, not offer name. the same million taking $5 20% million single consumer remem that evidence advertising Zazu spent by the time of bered explanation was coloring. The court’s found L'Oréal district If trial. defendant shows evidence that “[t]he an extent mark to such “injured the circumstances, In these mark. injured the conjunc plaintiff useful may never be it.” try to resurrect is entitled plaintiff merchandising plaintiff’s tion with the *2, 1991 U.S.Dist. 128694at 1991 WL Lexis U.S.P.Q.2d at products”, hair care *4-*5. 9433 at forget about is to course appropriate is an $100,000, million the $1 Like fully damages compensat award number; would $6% an award of arbitrary the time L’Oré mark’s value ing for the Us- supportable. less more nor be neither Broadhurst, Coursey v. pounced. See al unrelated some number ing percentage Cir.1989); Phillips unacceptable injury is an plaintiff's *8 Co., Inc., 863 Oil v.Co. Stokes Petroleum we re- damages, point estimate way to Cir.1988). Choosing ease. in another cently made its to market under which another name Co., U.S.P.Q.2d Sands, Taylor & Wood than million— $1 cost zhd less product will at 1014. imprint this on the less than spent far product, its never advertised bottles, ed de compensatory award Any magni of an order come within and did not treating need for loss, the on pends salon promoting the sum tude of this court over a “loss” advertising existence, no zhd made throughout its can that a trademark principle looked aas salon had suffered claim that “Corrective than zero. less worth few of result of L’Oréal’s Zazu, Defen repair. advertising” is a method plans to market of zhd’s people aware were plaintiff’s value of diminishes the dant name. new products under that trademark, advertising restores cost. at low can be chosen name E.g., Big O thus original its value. mark to advertising actually ex- did not conclude that L’Oréal zhd has made no corrective infringed, that LiOré- knew that its use or either penditures suggesting Zazu — care; whole of in- injure zhd or that it didn’t L’Oréal’s course use of Zazu did not al’s vestigation suggests opposite. a new name than cheaper for to use by caused L’Oré- to correct the confusion during litigation Bad conduct is a al’s use. footing penalty. more secure for a Coun- judge told the the award was sel that L’Oréal sold a sub- The final million of $1 stantial volume punitive. The district court of Zazu hair cosmetics explicitly Illinois, infringed leading northern the court to set an wilfully had found that L’Oréal injunction high post. bond too for and that “its conduct before zhd’s judge litigation oppres- Later the learned that these were during been ha[d] sales; sales, U.S.P.Q.2d at 1979. wholesale local retail which sive and deceitful.” 9 judge wanted to use as the Believing the time that L’Oréal’s net measure million, opined injunction keeping the bond for an the court worth was $20 Zazu territory, sum neces- hair cosmetics out zhd’s home that an of this award 5% judge much smaller. The accused conduct in the future. were sary to deter such Although pro- counsel of deceit. counsel damages problematic are because Punitive test, Act, although providing saying they for that were misunderstood the Lanham (and judge, damages, for- that told the when asked trebling compensatory 1117(a)'; sales, they had unexpectedly about penalties. other 15 U.S.C. bids numbers), accept the Corp. v. Barto Petrole- wholesale we Getty Petroleum (2d Cir.1988); judge’s finding. Counsel commit- cf. district Corp., um misrepresentation ted a clearer about Distilling Corp. v. Maier Fleischmann worth, Co., sought net 87 S.Ct. L’Oréal’s Brewing pitch hefty punitive to make a The district court order 18 L.Ed.2d lawyers opposed the damages. L’Oréal’s punitive found a award authorized information, request representing explaining where law of Illinois firm, privately parties under French law the as a such authorization. The one finds business, right keep such greater Be- held have of no assistance. been judge secret. The district then say cases that Illinois law matters cause some old rough-and-ready million as a esti- supports punitive in trademark used $20 awards cases, learned that L’Oréal Lamp mate. Later the court Mfg. Aladdin Co. v. Mantle firm, glossy (7th Cir.1941); publicly is a traded whose 716-17 ex- Products, report ballyhoos a net worth Linings Rubber annual Keller Inc. v. (7th Cir.1954), ceeding did not bother Counsel Corp., billion. their client and the status of has not asked us to revisit the ascertain The court regaled judge with fable. subject, press forward. we attorneys also concluded that stating con that L’Oréal’s to the Trademark made false statements wilful, district seems to duct was negotiate unethically tried to Office and knowing equated this term with or partners rather than directly with many intentional. Wilful is a word through lawyer. communicating law, but even the weaker conno uses court, Contempt of Fed.R.Civ.P. knowledge imply tations of unlawfulness princi law, provide and not and 28 U.S.C. or reckless indifference to pal penalizing misconduct E.g., McLaughlin acts. vehicles simply intentional *9 128, imposing sanctions a Co., litigation, and before 486 U.S. v. Richland Shoe ques 1677, (1988); judge ought to and answer the v. ask 100 L.Ed.2d 115 TWA S.Ct. Still, pose. call 111, 613, these of law Thurston, 105 S.Ct. 83 tions bodies in penalty “punitive damages” is ing that the L.Ed.2d 523 L’Oréal found out NASCO, mark, given consequential not Chambers v. was Zazu as a service — 2123, -, Inc., rights in a U.S. S.Ct. protected that Zazú as (1991), judges which holds that products. care The district L.Ed.2d mark for hair a defendant’s of account take Courts au express without impose may sanctions to sufficient amount when wealth “[a]n Busi also See or rule. thority statute may be one individual to deter punish or Guides, Communi v. Chromatic ness Iovino, 219 Black v. another.” trivial to 533, Inc., 498 U.S. Enterprises, cations 162 Ill.Dec. Ill.App.3d (1991). Is 922, 112 L.Ed.2d 111 S.Ct. N.E,2d Dist.1991). (1st 139, 150 counsel’s for right penalty the million Inc., Magazine, Hustler Douglass also may sanctioning misconduct judge acts? Cir.1985). For (7th 1128, 1145 ¿Ether but the a number not draw utility of marginal the persons natural to its by reference choice explain the must increases, so as wealth money decreases or wronged party the compensating role to deter may be needed fines higher that judicial injures the that deterring conduct be” (“May wealth. great possessing those Amoco by the Spill Oil system. In re entire penal the qualifier; important anis Cir.1992); (7th Cadiz, F.2d consequences, extra-judicial ty includes Powerlifting States v. United cf. Frantz other future of as loss business such Cir. Federation, 836 greater to income, likely be that is Insur Mutual 1987). After Life Pacific how defendants.) Corporations, wealthier — U.S. -, 111 S.Ct. Haslip, v.Co. ance that sense wealthy ever, not are be (1991),courts should 1032, 113L.Ed.2d are abstrac Corporations persons are. of level justify careful especially of worth own net tions; investors punitive awards. pay any punitive investors These business. decreas (the their shares awards justi be value cannot dollars One million average wealth. be es), may or compensation necessary to either fied as funds, aggre mutual trusts and Pension neither. discussed deterrence. of aver of millions investments gating the per a award as he calculated Instead large many the bulk own age persons, net (supposed) L’Oréal’s centage of corporation as Seeing the corporations. were net large worth having a if worth—as mi illusion, like other an wealthy is dam Punitive wrong be deterred! astray. people leads frequently rages wrongful some when appropriate ages are then detection; multiplier a opera- evades ongoing conduct finance Corporate assets Punitive deters. compensates injury to either both are unrelated tions and the con when appropriate also are size of award awards or the the victim done antisocial, for wholly managers question corporate duct cause needed border deter cannot awards is a measure excessive worth then law. Net obey the FDIC may beneficial. yet been distributed that not line conduct profits that in- damages Why should Grace to the investors. W.R. infringements its earn- Cir.1989). firm reinvested Some crease because the worth, off a passing also is concealed; example, size, net like ings? Absolute are per an copy of more to extract product reason quality questionable lower however, 10,000 conduct, prod- introduces L’Oréal’s mark. case. If other’s try infringe someone ucts, not these type. perhaps 10 of not of this was ordinary and there Awards product trademark. its else’s zhd’s, palm off wrongful adver cases national in all 10 deter damages L’Oréal’s chance little firm bill of escape judgment notice. net conduct. sales would tisements without wrongs, detected its easily increase will use was larger damages. If a punitive benefi potentially need in the class also wrong on likely to commit discouraged by ex firm is more could be cial uses transaction, dam- its total then too, any given So, its conduct awards. cessive proportionally more than Employ increase ages will to zhd. known was well litigation augmentation starting size worth net ing L’Oréal’s equally or case; larger if a firm identify given con the court help point did transaction, per tort likely to commit less misled may have offenses cealable manag- praise ought then the the award. size of appropriate about *10 See, product.1 closely e.g., related Re penalty. firm’s multiply the than ers rather (Ohio), Inc., larger Shoppes 837 F.2d 463 Hyper is much Motors General Consider: (Fed.Cir.1988)(affirming register defec- makes more refusal Chrysler, and so than compensation furni- cars, goals “closely related” marks: one for two tive firms general are achieved both other for merchandise deterrence ture and the injury pro- damages the by awarding as included the sale of furni- services size is Corporate ture); Steelcase, Steelcare, Inc., car. per defective duced damages only magnify (TMTAB1983)(mark when U.S.P.Q. reason to used for likely less larger firms are wrongs refinishing likely furniture service to be any rarely yet judges punished; to be used for office furni- confused with mark this, the court in this suppose ture); reason to McCarthy, see also J. Thomas none. case had Competition Trademark and Unfair 24:6, (2d Supp.1991) at 71 ed. 1984 & § $100,000 the awards—not None of “[wjhere (stating that the services consist million for cor- profits, lost not the $1 services, likelihood of confu- of retail million advertising, and not the $1 rective is found when another mark is used on sion adequate on an punitive damages —rests goods commonly through are sold which I, Part our conclusion in foundation. Given outlet”). retail A service and a such a and is on the merits prevails , buyers likely are related if are product size, any or to damages not entitled sponsorship. source or assume a common Act. the' Lanham attorneys’ fees under Inn, Inc., Hotels, Inc. v. Americana Tisch so that the district The case is remanded (7th Cir.1965); 2 McCar- is a sanction may consider whether (“The at 183 ‘related thy, supra, 24:6 dur- appropriate for L’Oréal’s misconduct ultimate goods’ merely test is a facet of the litigation. ing the of confu- final test of ‘likelihood and Remanded. Reversed ”). prod- The salon services and sion.’ case, nearly are at issue in this ucts CUDAHY, dissenting. Judge, Circuit be, product can kindred as a service and as faith, good important issue of On the paradigmatic illustration offer very merits a hard conduct here L’Oréal’s closely Thus the things that are related. Riviera, a men’s cloth- look. In the case of disregard for ZHD’s substantial majority’s retailer, pay careful to ing L’Oréal was in connection with salon ser- use of ZAZU Yet agreement not to sue. for an is unfounded. vices clothing and hair cosmetics marketed men’s hardly seem related at all. On to women notes, correctly the stan- majority As the hand, hair salon devel- other a women’s registration federal granting dard products care oping a line of hair exacting that for es- less than somewhat that seem purveyor goods and services rights. tablishing common law There- to hair cosmetics. closely related Anonyme des le La Societe Parfums fore, knowledge of ZHD’s use Patou, Inc., v. Jean Galion may have to any claim L’Oréal defeats (2d Cir.1974). distinction is so But that priority. inconsequential here. While slight as to be than that is more fide transaction bona the use keys here seems One of will, when combined with a “mere sham” mark connected with of ZAZU as a service use, support suffice to to continue by ZHD. A intent of salon services provision registration, v. Southern infringed by use on federal can be service mark Avakoff 1988). Sands, "pro This Cir. opinion Taylor Wood & 1. Our recent ability product U.S.P.Q.2d mar Quaker to enter Co. v. Oats tects the owner’s 1992), explicitly trade might reasonably that modern Cir. states be ex kets ... into which prohibits user’s Sands, the use of a senior mark law Taylor pected expand in the future.” closely products that are related mark on 1011; Wood, U.S.P.Q.2d at 2 J. Thomas user’s, well those in direct senior competition. Competition McCarthy, and 1984). Trademark Unfair 1010; U.S.P.Q.2d Inter See 24 24:5, (2d at 177 ed. Star, Inc., Club, Mighty Inc. v. national Kennel *11 510 local because area products in (Fed.Cir. hair on 1097, 1098 F.2d Co., 765

Pacific confusion between of likelihood at of the 19:37 supra, McCarthy, 1985); § 1 services, salon and ZHD’s will minimis still de those than greater any use between the any ab confusion apart from protection even trademark warrant v. deferen- products. Given See SweeTarts registration. parties’ of two sence ques- Cir. 929 on the factual Inc., review Sunline, 380 standard tial not be therefore, “need it clear that (market penetration use, I think 1967) tion enough to “significant penetration large” but must market has achieved ZHD confusion”); 1 likelihood at the real mark pose ZAZU rights exclusive 723; 16:2(B) 16.- at § McCarthy, supra, Chicago § area. very least in market Thus, fide test bona 2(C) at 726. rights in its that contention ZHD’s indeed, experimental or small sales— ing is area beyond the local mark extend ZAZU or token—can not nominal is any use that not, did L’Oréal that by evidence enhanced Nemours de Pont E.I. du satisfy test. faith. The noted, good act as we U.S.P.Q. Co., 199 Murphy v. & Co. G.C. good faith majority’s consideration McCarthy, 1978); su 1 (TMTAB 812 good important role minimizes issue 16:2(B) at 723. pra, § particu- disputes, plays in faith of the ZAZU case, use ZHD’s In this unregistered involving disputes larly salon highly successful mark, in its both at 26:4 McCarthy, supra,' 2 See marks. some out-of- business, drew service (cid:127) “signifi- faith has good' (noting thát 292 and interstate clients, local in its state importance” cant, independent, if not poten ato to customers product sales marks). unregistered involving disputes de min- than marketer, surely is more tial priority. claims defeat faith can Bad in of ZHD’s evidence The imis. extensive Honickman, v. See, Co. e.g., A.J. Canfield sales—such step up product tent Cir.1986) (stating the (3rd F.2d 291 808 bot 25,000 ZAZU-emblazoned order its enforce- user “has a senior that doctrine advertising rates inquiry about its tles junior user who against rights able this as magazine national in a —bolsters its knowledge of mark with adopted the fail to demon if ZHD Even sessment. Farms, Inc. v. Cit- use”); Johanna senior pen market minimis a de than more strate Bowl, Inc., F.Supp. 468 rus very it least suc nationally, at etration users (stating junior that (E.D.N.Y.1978) rights with exclusive cessfully established good mark in faith adopt the do not sa who operation. area of primary exploit right accorded increasing not be “will advertising, substantial lon’s un- previously mark, in areas even product preliminary and staff revenue McCarthy, user”); senior penetration market touched indicate sufficient 289; 292. Con- 26:4 at in that re 26:3 protection supra, § to afford trademark Hart, characteriza- narrow majority’s, v. Ltd. trary Footwear gion. Natural Cir.) (3d employed concept Marx, faith as tion of bad Schaffner law to reserve marks attempts common solely user can establish (senior to.deter sales, where areas have exam- courts geographic genuine rights prior denied, variety of cert. penetration), faith in a good achieved market junior ined users’ L.Ed.2d that fact, held S.Ct. this court has contexts. (plain SweeTarts, F.2d at that (1985); simply one junior user faith a good given knowledge trademark within prior using tiff’s a mark begins exclusive use it to entitles using area it. already market party another that area); Food & VV Finance, Inc., that within Harriscorp Money Store Co., Products, Cacique Cheese Cir.1982); see . (N.D.Ill.1988) F.Supp. 662 (equating at 292 26:4 McCarthy, supra, § lack junior user’s “the faith to good exclusive ZHD has concedes knowledge such And knowledge”). while services for salon ZAZU to use rights faith, good automatically negate may exclusive Those area. the Hinsdale encom- situations unusual most the mark preclude also *12 good faith. knowledge and pass both Williams, Corp. v.

GTE -, Cir.), denied, - U.S. cert. 557, 112 L.Ed.2d 564

S.Ct. sum, ZAZU I ZHD’s sale of

In believe products constituted sufficient

services and

use to establish exclusive area, nationally. if Chicago event, line of pursuit knowledge of spite of its

hair cosmetics position. defeats L’Oréal’s

ZHD’s use

Therefore, respectfully I dissent. BORST, A. OF Daniel

ESTATE

Plaintiff-Appellee, Richard

River Police Officer Grove

O’BRIEN, 16, in his individual Star No. Defendant-Appel capacity,

and official

lant. 91-3087,

Nos. 91-3383. Appeals,

United States Court

Seventh Circuit.

Argued Sept. 6, 1992.

Decided Nov.