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concluding that the "prominent placement of its name ... weigh against a finding of intent to infringe"
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Civ. No. 04-4144 (JNE/SRN).
November 19, 2004
David L. Rein, Jr., Esq., Blackwell Sanders Peper Martin LLP, and J. Eric Durr, Esq., Halleland Lewis Nilan Johnson, appeared for Plaintiffs R.H. Donnelley Inc. and R.H. Donnelley Publishing Advertising, Inc.
Laura Joan Hein, Esq., Gray Plant Mooty Mooty Bennett, appeared for Defendant USA Northland Directories, Inc.
ORDER
This is an action by R.H. Donnelley Inc. and R.H. Donnelley Publishing Advertising, Inc. (collectively, RHDPA) against one of its competitors in the publishing industry, USA Northland Directories, Inc. (USA Northland). RHDPA alleges, inter alia, claims under the United States Trademark Act of 1946 (the Lanham Act), 15 U.S.C. §§ 1051- 1127 (2000), for trademark and trade dress infringement and for false designation of origin. The case is before the Court on RHDPA's motion for a temporary restraining order and preliminary injunction.
At the motion hearing, USA Northland stipulated on the record to a permanent injunction prohibiting it from using "The 1 RED BOOK" on any future telephone directories. Accordingly, the Court hereby enjoins USA Northland from using the slogan "The 1 RED BOOK." Given USA Northland's stipulation, the only remaining issue before the Court relates to USA Northland's use of a red cover and spine on its telephone directories. For the reasons stated below, the Court denies RHDPA's motion for a temporary restraining order.
The Court's conclusion is not intended to provide any opinion as to the ultimate merits of RHDPA's claims. The Court reaches this conclusion based upon the limited record available from both sides at this early stage of the action.
BACKGROUND
RHDPA, a Delaware Corporation, publishes yellow-pages directories for Sprint. USA Northland, a Minnesota corporation, is a competing yellow-pages directory publisher.RHDPA has a long history of using the color red on the front and back cover and spine of its publications. In 1953, it obtained a trademark for "The RED BOOK" and has been using red covers on its directories since 1987. RHDPA owns six federal trademark registrations relevant to this litigation: (1) United States Reg. No. 2852540 for a design which "consists of the colors red and gold as applied to the front cover and the spine of a telephone directory;" (2) United States Reg. No. 2790461 for a design which "consists of the color red as applied to the front cover and the spine of a telephone directory;" (3) United States Reg. No. 2334110 for a design which "consists of the color red as applied to the front and back covers and spine of a telephone directory;" (4) United States Reg. No. 1832720 for a design "lined for the color red;" (5) United States Reg. No. 575391 for use of "the RED BOOK;" and (6) United States Reg. No. 2763715 for use of "The BEST RED YELLOW PAGES." For some time, RHDPA has published and distributed its red telephone directories in parts of Minnesota.
RHDPA's registrations notwithstanding, USA Northland has published and distributed telephone directories in Minnesota that use the color red predominantly on the front and back covers, as well as on the spine. In addition, until March 2004 when it ceased doing so, USA Northland displayed the slogan "The 1 RED BOOK" prominently on the covers of its directories.
RHDPA notified USA Northland by certified letters dated April 14, 2004 and May 25, 2004 that, in its opinion, USA Northland was infringing RHDPA's trademarks. After USA Northland received the letters, it continued to publish its directories. As a result, RHDPA filed a nine-count Complaint in this Court on September 17, 2004. On November 4, 2004, USA Northland's counsel informed RHDPA that USA Northland intended to print another red telephone directory no later than November 26, 2004. In response, RHDPA filed a motion for a temporary restraining order and preliminary injunction.
DISCUSSION
The owner of a federally registered trademark is authorized by statute to petition for injunctive relief to prevent the use of an infringing mark. See 15 U.S.C. § 1116(a). Injunctive relief may be granted only if the moving party can demonstrate: (1) a likelihood of success on the merits; (2) the movant will suffer irreparable harm absent a restraining order; (3) the balance of harms favors the movant; and (4) the public interest favors the movant. Dataphase Sys., Inc. v. C.L. Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981). Injunctive relief is an extraordinary remedy, see Calvin Klein Cosmetics Corp. v. Lenox Labs, Inc., 815 F.2d 500, 503 (8th Cir. 1987), and the party requesting the injunctive relief bears the "complete burden" of proving all of the factors listed above. Gelco Corp. v. Coniston Partners, 811 F.2d 414, 418 (8th Cir. 1987). While no one factor is determinative, likelihood of success on the merits is generally the touchstone inquiry. Dataphase, 640 F.2d at 113; see also S M Contractors, Inc. v. Foley Co., 959 F.2d 97, 98 (8th Cir. 1981).
A. Likelihood of Success on Merits
RHDPA asserts claims for trademark and trade dress infringement and false designation of origin under 15 U.S.C. §§ 1114 and 1125(a) for USA Northland's use of a red cover and spine. In order to prevail on any of these claims, RHDPA must demonstrate that it owns a valid, protectable trademark or trade dress and that USA Northland's use of the allegedly infringing mark creates a likelihood of confusion. See Hubbard Feeds, Inc. v. Animal Feed Supplement, Inc., 182 F.3d 598, 601 (8th Cir. 1999); Co-Rect Prods., Inc. v. Marvy! Adver. Photography, Inc., 780 F.2d 1324, 1330 (8th Cir. 1985). The Court will address each requirement in turn.
Although RHDPA's Complaint states additional state statutory and common law causes of action, RHDPA seeks a temporary restraining order and preliminary injunction only on the basis of its Lanham Act claims. The Court will not, therefore, address the merits of RHDPA's other claims.
1. Validity
In order to be valid, a trademark or trade dress, whether registered or unregistered, must be both distinctive and nonfunctional. Aromatique, Inc. v. Gold Seal, Inc., 28 F.3d 863, 868 (8th Cir. 1994); Minn. Mining and Mfg. Co., v. Beutone Specialities, Co., 82 F. Supp. 2d 997, 1001 (D. Minn. 2000). A registered trademark or trade dress is entitled to a rebuttable presumption that it is both distinctive and nonfunctional and therefore valid. Aromatique, 28 F.3d at 869. In contrast, the proponent of an unregistered trademark or trade dress bears the burden of demonstrating that his or her mark or dress is distinctive and nonfunctional. See Aromatique, 28 F.3d at 869; Beutone Specialities, 82 F. Supp. at 1001. RHDPA bases its motion on both its registered and unregistered marks.
a. Registered Marks
RHDPA asserts that, when all of its trade dress registrations are considered together, it has a registered trademark in predominantly red telephone directory covers. RHDPA argues, therefore, that it is entitled to a presumption that its trademark in predominantly red telephone directory covers is valid. In response, USA Northland contends that RHDPA's four trademark registrations are for discrete patterns of red on telephone directory covers. Indeed, in each of RHDPA's four registrations, the diagrams are marked for red in different areas. For the reasons cited by USA Northland, the Court finds that, at this point, RHDPA has not satisfied its burden of showing it has a registered trademark or trade dress in predominantly red telephone directory covers. Therefore, the Court concludes that RDHPA is not entitled to a presumption of trademark or trade dress validity for its registered marks.
b. Unregistered Marks
Although RHDPA has not satisfied its burden of demonstrating that it owns a registered trademark or trade dress in predominantly red telephone directory covers, it may nevertheless have a claim that it owns a valid unregistered trade dress in predominantly red telephone directory covers. Indeed, "[t]rade dress, regardless of whether it is registered, is protectable under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)." Aromatique, 28 F.3d at 868. Because RHDPA's trade dress is unregistered, the trade dress does not have a presumption of validity and RHDPA must present affirmative evidence that its alleged trade dress is both distinctive and nonfunctional. See id. at 869.
To demonstrate the distinctiveness of a color, RHDPA must show that its red covers have acquired a secondary meaning among telephone directory consumers. See Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 211-12 (2000) ("Indeed, with respect to at least one category of marks — colors — we have held that no mark can ever be inherently distinctive . . . We held that a color could be protected as a trademark, but only upon a showing of secondary meaning."); Qualitex Co. v. Jacobson Prods. Co., Inc., 514 U.S. 159, 162-63 (1995) ("True, a product's color is unlike `fanciful,' `arbitrary', or `suggestive' words or designs, which almost automatically tell a customer that they refer to a brand."). When determining whether a mark has acquired a secondary meaning, "the chief inquiry is whether in the consumer's mind the mark has become associated with a particular source." Co-Rect Prods., 780 F.2d at 1332-33.
RHDPA asserts that its use of red has a secondary meaning. It points to the fact that it has spent in excess of $12 million since 2001 emphasizing the red cover of its directories in promotions and advertisements. RHDPA also maintains that it has demonstrated secondary meaning by introducing the declarations of two of its employees, in which the employees aver that customers have actually been confused. Finally, RHDPA contends that its survey indicating that 79% of respondents knew, without looking at their yellow page directories, that their Sprint directories have red covers, shows its red covers have secondary meaning. In response, USA Northland asserts that RHDPA's advertising efforts are insufficient to demonstrate secondary meaning, in part, because RHDPA has not presented any evidence to show how much, if any, of that advertising was done in the geographic areas where USA Northland and RHDPA distribute competing directories. Moreover, USA Northland argues that the RHDPA employee declarations are vague and unsubstantiated, and it asserts that RHDPA's survey results are not sufficient evidence of secondary meaning.
The Court concludes that RHDPA has not, at this point, satisfied its burden of convincing the Court that red telephone directory covers have become a source identifier for RHDPA's telephone directories in the relevant geographic regions in Minnesota. With respect to RHDPA's advertising efforts, the Eighth Circuit has expressly held that while such efforts are a relevant factor in determining whether a mark has acquired a secondary meaning, "it is the effect of such advertising that is important, not its extent." Co-Rect, 780 F.2d at 1332. "The desires or intentions of the creator, or even the owner, of a mark are irrelevant. Instead, it is the attitude of the consumer that is important." Id. Although RHDPA has attempted to demonstrate that the effect of its advertising has been to achieve secondary meaning through introduction of the declarations of two of its employees together with the survey results, this evidence is insufficient to show effect. The Eighth Circuit has made clear that affidavits of the type presented by RHDPA are not sufficient to establish secondary meaning. Instead, "[m]ore is needed to establish the necessary consumer association than merely the self-serving testimony of a plaintiff that some of his customers were confused." Id. at 1333. Moreover, RHDPA's survey was not conducted in Minnesota; therefore, the survey results do not demonstrate that RHDPA's use of the color red has acquired secondary meaning in parts of Minnesota. Finally, the fact that the consumers surveyed knew that their Sprint yellow page directories were red does not require the conclusion that red telephone directory covers had become a source identifier for those consumers.
In sum, RHDPA has not satisfied its burden of demonstrating that it has a valid trademark or trade dress. Therefore, RHDPA has not satisfied its burden of demonstrating that it is likely to succeed on the merits of its trademark or trade dress infringement claims, nor on its false designation of origin claim.
Ordinarily, the Court would end its likelihood of success on the merits analysis here. However, because RHDPA does have at least some registered trademarks that could be presumptively valid, the Court believes it is appropriate to address the adequacy of RHDPA's argument that USA Northland's predominant use of the color red on its directories is likely to cause consumer confusion.
2. Likelihood of Confusion
Courts consider six factors, none of which are dispositive, when determining whether a likelihood of confusion exists: (1) the strength of the owner's mark; (2) the similarity between the owner's mark and the alleged infringer's mark; (3) the degree to which the products compete with each other; (4) the alleged infringer's intent to "pass off" its goods as those of the trademark owner; (5) incidents of actual confusion; and (6) the type of product, its costs and conditions of purchase. See Co-Rect, 780 F.2d at 1330; Gateway, Inc. v. Companion Prods., Inc., 384 F.3d 503, 509 (8th Cir. 2004). "The ultimate inquiry always is whether, considering all the circumstances, a likelihood exists that consumers will be confused about the source of the allegedly infringing product." Hubbard Feeds, 182 F.3d at 602.
1. Strength of Owner's Mark
The first factor this Court must consider is the strength of RHDPA's marks. See Co-Rect, 780 F.2d at 1330. Generally, "[a] strong and distinctive trademark is entitled to greater protection than a weak or commonplace one." SquirtCo v. The Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir. 1980).
RHDPA contends that because it has several trademark registrations wherein the predominant color of the telephone directory cover and spine is marked for red, it is entitled to a presumption that its marks are strong. Moreover, RHDPA argues that the fact that it has spent significant sums of money in advertising developing an association of its directories with the color red is evidence of the strength of its marks. After all, RHDPA maintains, it would not spend millions of dollars on a campaign destined for failure. In response, USA Northland asserts that RHDPA's registrations are for specific configurations of the color red and not generally for the predominant use of the color red on telephone directory covers and spines. As a result, USA Northland contends that RHDPA is not entitled to any presumption that its trade dress is strong. USA Northland has also introduced evidence that the use of red telephone directory covers is common in the United States, which it maintains rebuts any claim by RHDPA that its mark is strong.
The Court acknowledges that it is generally "no defense to an action for trademark infringement that third parties are also infringing the plaintiff's trademark." J.M. Huber Corp. v. Lowery Wellheads, Inc., 778 F.2d 1467, 1471 (10th Cir. 1985). Nevertheless, the Eighth Circuit has expressly held that "evidence of third party usage of similar marks on similar goods is admissible and relevant to show that the mark is relatively weak and entitled to a narrower scope of protection." Gen. Mills, Inc. v. Kellogg Co., 824 F.2d 622, 626 (8th Cir. 1987); see also J.M. Huber Corp., 778 F.2d at 1471 (holding that evidence that other manufacturers use similar trade dress is relevant to the question whether there is a likelihood of confusion). Because USA Northland has introduced evidence that the use of red on telephone directory covers is common, RHDPA has not convinced the Court that this factor weighs in its favor, even assuming its various registrations give rise to a rebuttable presumption of strength. 2. Similarity Between Marks
RHDPA argues that United States Reg. No. 1832720 gives rise to a conclusive presumption that its trademark for the predominant use of the color red on its directory covers is strong. However, "the incontestability of a mark does not affect its strength." Woodroast Sys., Inc. v. Restaurants Unlimited, Inc., 793 F. Supp. 906, 912 n. 10 (D. Minn. 1992). "Thus, although an incontestable mark is not subject to invalidity based solely on its descriptiveness, the mark may be found weak to the point of enabling the owner only to assert rights to the use of the exact mark." Id.
The second factor this Court must consider is the similarity between RHDPA's telephone directory covers and USA Northland's telephone directory covers. See Co-Rect, 780 F.2d at 1330. When examining the similarity between marks, the Court must examine the marks as a whole, including visual impression and sound. SquirtCo., 628 F.2d at 1091. That is, the Court must look to the overall impression created by the marks and not merely compare individual features. Gen. Mills, 824 F.2d at 627.
RHDPA maintains that because the products in this case — telephone directories — are identical, less similarity is necessary to support a finding of infringement. See SquirtCo., 628 F.2d at 1091. RHDPA also argues that USA Northland's use of the color red is identical to RHDPA's registered trade dress. USA Northland agrees that less similarity in trademarks is necessary to support a finding of infringement where the products are the same; however, it asserts that its directory covers are not sufficiently similar to RHDPA's trade dress, registered or unregistered, to warrant a finding of infringement. Both parties agree that, at this stage of the litigation, the Court is required to make its own independent determination of whether the trade dress of each of their products is sufficiently similar to warrant a finding of infringement.
Based on a review of the limited evidence before it, the Court concludes that RHDPA's and USA Northland's directory covers are sufficiently different to avoid consumer confusion. Based on the two samples provided to the Court, the color of the parties' directory covers appears to be the same. However, the font on the covers is different in both size and style; RHDPA's directory is longer and wider than USA Northland's; USA Northland has placed a large ad on the bottom of its directory, whereas RHDPA's directory cover has no ad; and RHDPA's directory has a large photograph of a forest covering the left side of the directory, whereas USA Northland's directory has no such photograph. Perhaps most significantly, however, USA Northland has prominently displayed its name on its directory. In light of these differences and the overall effect that they create, RHDPA has not satisfied its burden at this stage of demonstrating that this factor weighs in its favor.
In light of the injunction granted herein enjoining USA Northland from using "The 1 RED BOOK" on any future telephone directories, the Court ignores the mark "The 1 RED BOOK" written across the USA Northland's directory provided to the Court.
3. Degree of Competition of Products
The third factor this Court must consider is the degree of competition of RHDPA's products with USA Northland's products. See SquirtCo., 628 F.2d at 1091 ("Competitive proximity is one factor to be considered, even though infringement may be found in the absence of direct competition.").
RHDPA argues that this factor weighs in its favor because its directories and USA Northland's directories directly compete in five geographic areas. In addition, RHDPA argues that even where USA Northland's directories do not directly compete with its directories, USA Northland distributes its directories in areas that border RHDPA's distribution areas, thereby causing confusion in areas where RHDPA does distribute its directories. USA Northland does not disagree with RHDPA's assertions. The Court, therefore, concludes that RHDPA has satisfied its burden of demonstrating that this factor weighs in its favor.
4. Infringer's Intent
The fourth factor this Court must consider when making a determination on the likelihood of confusion is whether USA Northland intended to infringe RHDPA's trademark. See SquirtCo., 628 F.2d at 1091. Intent is not an element of a claim for trademark infringement. However, if RHDPA can demonstrate that USA Northland intended to infringe RHDPA's trademark, RHDPA is entitled to an inference of likelihood of confusion. See id. ("Intent on the part of the alleged infringer to pass off its goods as the product of another raises an inference of likelihood of confusion, but intent is not an element of a claim for trademark infringement.").
RHDPA claims that because its directories have had predominantly red covers and slogans calling attention to the color red since 1987, USA Northland's similar but later use of a red cover and slogans cannot be accidental. In fact, RHDPA argues that even if USA Northland did not have actual knowledge of RHDPA's distinctive use of red covers and slogans, USA Northland was on constructive notice that RHDPA's red cover was a trademark.
Although USA Northland did not directly respond to this argument, the Court concludes that this factor does not weigh decisively in favor of either party. On one hand, RHDPA astutely asserts that USA Northland's use of "The 1 Red Book" is relevant evidence of USA Northland's intent to mimic RHDPA's trade dress. On the other hand, USA Northland's prominent placement of its name in the center of its directory cover and its significantly different layout weigh against a finding of intent to infringe. See Aromatique, 28 F.3d at 871 (holding that the defendant's conspicuous placement of its identifying marks must be seen as an attempt to distinguish its product from the plaintiff's). Similarly, the fact that many directory publishers across the United States have chosen to use and emphasize the color red on its covers weighs against a finding of intent to infringe. In short, RHDPA has failed to demonstrate that this factor weighs in its favor.
For example, US A Northland has introduced evidence that there is a yellow pages publishing company in Florida named Best Publications, LLP that advertises its product as "The Best Red Phone Book in Town!"
5 Actual Confusion
The fifth factor this Court must consider is whether RHDPA has presented evidence of actual confusion. See SquirtCo., 628 F.2d at 1091. While proof of actual confusion is not necessary to a finding of trademark infringement, it is positive proof of likelihood of confusion. See id.
In support of its argument that there has been actual confusion as a result of USA Northland's introduction of its directory, RHDPA relies on, as discussed above, the affidavits of two employees who claim to know of instances of actual customer confusion and on the customer survey results. At this stage and for the reasons discussed above, the Court finds that this evidence is insufficient to establish actual confusion.
6. Type of Product and Conditions of Purchase
Finally, when making a determination of the likelihood of customer confusion, the Court must consider the type of product and conditions of purchase involved in this case. See SquirtCo., 628 F.2d at 1091. "In a trademark infringement action the kind of product, its costs and the conditions of purchase are important factors in considering whether the degree of care exercised by the purchaser can eliminate the likelihood of confusion which would otherwise result." Id. In other words, the Court must stand "in the shoes of the ordinary purchaser, buying under the normally prevalent conditions of the market and giving the attention such purchasers usually give in buying that class of goods." Gen. Mills, 824 F.2d at 627.
RHDPA asserts that this factor weighs in its favor because the average consumer receives a telephone directory free and unsolicited. As a result, it argues that consumers exercise little care when making a decision of which yellow page directory to retain. Moreover, RHDPA suggested at the hearing on this motion that because advertisers place ads in directories which are likely to be kept, USA Northland had an incentive to create a directory similar to RHDPA's. In response, USA Northland claims that while consumers may tend to discard duplicate copies of phone directories, they do so because they have multiple copies, not because of the color of the cover of the directories they receive. That is, USA Northland contends that consumers will not choose one directory over another because of the trade dress of the directories.
The Court notes that, at this point, both RHDPA's and USA Northland's arguments are speculative and lack solid evidentiary support. The Court, therefore, concludes at this stage that RHDPA has not satisfied its burden of demonstrating that this factor weighs in its favor. B. Remaining Dataphase Factors
Having concluded that RHDPA has not met its burden of establishing a likelihood of success on the merits of its claims, the remaining factors can be dealt with briefly. "The basis of injunctive relief in the federal courts has always been irreparable harm and inadequacy of legal remedies. Thus, to warrant . . . [injunctive relief], the moving party must demonstrate a sufficient threat of irreparable harm." Bandag, Inc., Jack's Tire Oil, Inc., 190 F.3d 924, 926 (8th Cir. 1999). Irreparable harm can be presumed where a trademark plaintiff demonstrates a likelihood of consumer confusion. See Gen. Mills, 824 F.2d at 625. Because RHDPA has not demonstrated likelihood of success on the merits, the Court does not find that RHPDA will be irreparably harmed absent the issuance of a temporary restraining order. Cf. Saint Mary's Press of Minn. v. Devore Sons, Inc., Civ. No. 04-1561, 2004 WL 1490424, at *4 (D. Minn. June 29, 2004). In light of this conclusion, the Court concludes that RHDPA has not demonstrated that the balance of harms weighs in its favor. Finally, the public interest is best served by denying the temporary restraining order and preserving the status quo at this time given that issues remain with respect to the validity of RHDPA's marks. See id. at *5. For these reasons and based on the limited record available to the Court at this time, the Court denies RHDPA's motion for a temporary restraining order.
CONCLUSION
Based on the foregoing, and all of the files, records and proceedings herein, IT IS ORDERED that:
1. RHDPA's motion for a temporary restraining order [Docket No. 16] is DENIED.
2. USA Northland is hereby permanently enjoined and restrained from using the slogan "The 1 RED BOOK" on any of its telephone directories.
RHDPA need not post a bond because no bond is required for a permanent injunction. See Forest Park II v. Hadley, 336 F.3d 724, 734 (8th Cir. 2003).