Incontestable
Finnegan's monthly review of essential decisions, key developments, evolving trends in trademark law, and more.

October 2010 Issue

Civil Cases


Campbell Sales Group, Inc. v. Gramercy Park Design, LLC,
Case No. 1:10cv55 (M.D.N.C. Oct. 6, 2010)


ABSTRACT
In a case alleging infringement of the unregistered trade dress of four furniture models, the Middle District of North Carolina declined plaintiff’s request for a preliminary injunction, finding the plaintiff had failed to demonstrate a likelihood of success in proving that the various designs had acquired secondary meaning.

CASE SUMMARY

FACTS
Plaintiff Campbell Sales Group, Inc. (“Campbell”) is a leather-furniture wholesaler located in North Carolina.  Among its products are four leather-furniture collections:  the Aspen, the Hanover, the Jensen, and the Parker, all of which were created for Campbell’s Leather Italia USA brand by Creation Furniture Co., Ltd., its Chinese manufacturer.  The Aspen and Jensen models had been available for approximately six years, the Hanover for approximately five years, and the Parker for approximately three years.  Defendant Gramercy Park Design, LLC (“Gramercy Park”) is also a furniture wholesaler.  The individual defendants are former Leather Italia USA sales representatives who now work for Gramercy Park.

Campbell maintained that Gramercy Park infringed the unregistered trade dress in each of the four leather-furniture collections by copying the total image and overall appearance of the sofa, love seat, and chair and ottoman versions from each line.  In particular, Campbell claimed that Gramercy Park copied the “tier drop front facial arm panels and bustle back seating” of the Aspen line; the “scrolled arms, stitched seams in the back of the seats, and a slight camel back” in the Hanover line; the “scalloped front panel, faired front arm panels with inside welt trim and a reverse envelope arm” of the Jensen design; and the “bustle back seating, window pane stitching in the top back pillows, and a bow front appeal” in the Parker design.  In response, Gramercy Park claimed that their designs were based on preexisting “Kasen” frames that were modified according to Gramercy Park’s specifications.

ANALYSIS
To obtain preliminary injunctive relief, a plaintiff must show that, among other things, it is reasonably likely to succeed on the merits of its claim.  To succeed in its claim of infringement of an unregistered product-design trade dress, Campbell was required to show that its trade dress has acquired secondary meaning  and that there is a likelihood that defendants’ use of that trade dress will confuse the public.  For unregistered trade dress, the plaintiff also bears the burden of proving that the trade dress is not functional.  However, as Gramercy Park did not contend that the trade dress in question was functional, the court assumed that it was not for purposes of the pending motion.

Unlike many other circuits, the Fourth Circuit applies a presumption of secondary meaning in trade dress cases where the defendant intentionally copied the plaintiff’s trade dress.  Gramercy Park argued that the presumption should no longer apply in view of the Supreme Court’s decision in Wal-Mart v. Samara Bros., but the court disagreed, finding nothing in the Wal-Mart decision that expressly precluded such a presumption, and that at least one other district court in the Fourth Circuit had applied the presumption post-Wal-Mart.
 
In support of its claim of intentional copying, plaintiff pointed to (1) the similarities of the designs,
(2) a Gramercy Park document showing its products with handwritten notes listing the corresponding Leather Italia USA product, (3) the fact that Gramercy Park sent pictures and samples of the Leather Italia USA models to its Chinese manufacturer, and (4) an email regarding those samples that it was shipping “for copying.”  Although Gramercy Park disputed the evidence, the court found it sufficient to give rise to a presumption of secondary meaning, particularly the email indicating that the samples had been shipped “for copying.”

As the presumption applied, the burden of persuasion shifted to Gramercy Park to prove that the alleged trade dress had not acquired secondary meaning.  In determining whether or not Gramercy Park succeeded, the court relied on the standard factors necessary to establish secondary meaning, namely, (1) advertising expenditures, (2) consumer studies linking the trade dress to its source,
(3) sales figures, (4) unsolicited media coverage of the product, (5) attempts to plagiarize, and (6) the length and exclusivity of use of the trade dress.

Gramercy Park focused its defense on the last factor, length and exclusivity of use.  As mentioned earlier, the various models had been on sale from three to six years.  The court noted that, in the case of product design, it will usually take longer, if it is possible at all, to establish secondary meaning, and that doing so is particularly difficult when there are numerous competing products with similar designs and features.  Thus, exclusivity of use becomes an important consideration.

Here, Gramercy Park succeeded in introducing substantial evidence of the use of similar designs by third parties.  In two instances, the competing designs were sold by a company that previously manufactured Campbell’s products.  While Campbell argued that it was not required to pursue every infringer, the court found it significant that Campbell had not even pursued its own manufacturer for selling competing furniture designs that so closely resembled the Leather Italia USA designs.

The court next considered the sufficiency of Campbell’s advertising and advertising expenditures, and found its evidence lacking.  Campbell did not provide any advertisements for the four models at issue, the sole exception being a Costco ad in which Campbell’s “Parker” collection was identified instead under the mark the “Richfield Leather Collection.”  The court found the fact that the product had been attributed in advertising to a different entity demonstrated that the trade dress was not exclusive to the Leather Italia USA name.

While Campbell offered evidence of substantial advertising expenditures, the court found the evidence insufficient for two reasons.  First, adopting language from an older Sixth Circuit decision, the court proclaimed that advertising expenditures cannot be used to establish secondary meaning “when required merely to survive in a competitive market.”  Instead, according to the court, only extensive advertising that results in consumer association with a single source will suffice.  While Campbell broke down its advertising into various categories, it was unclear whether or not those categories included more Leather Italia USA models than those at issue in the case.  Nor did Campbell prove that the expenditures were “more than what was necessary just to survive in the furniture industry.”

The court also discounted Campbell’s evidence of sales revenues for failure to include information as to how the figures compared to industry norms, how they compared to sales of other Leather Italia USA models, or even what portion of Leather Italia USA’s total sales those figures constituted.

Lastly, the court considered whether or not there was any likelihood of confusion, holding that, absent secondary meaning, a plaintiff cannot establish a likelihood of confusion.  Highlighting the fact that Campbell had allowed Costco to sell the same products under a different name, the court held that Campbell undermined its own likelihood-of-confusion argument.  The court also found the evidence of a significant number of other similar or nearly identical products compelling.

CONCLUSION
This case highlights the high evidentiary burden plaintiffs face when attempting to establish secondary meaning in a product-design trade dress.  Of particular interest, the court found plaintiff’s evidence lacking based upon its failure to submit contextual information on industry standards for sales and advertising in tandem with its own figures.