Interlocutory appeal from an order of the United States District Court for the Eastern District of New York, Edward R. Neaher, Judge, granting a preliminary injunction on behalf of plaintiff-appellee in an action for trademark infringement and unfair competition.
Kearse, Pierce and Pratt, Circuit Judges.
Masel Supply Co. Corp. (Masel) appeals from an order of the United States Edward R. Neaher, Judge, entered October 1, 1982, granting a preliminary injunction in favor of Bell & Howell: Mamiya Co. (BHMC)*fn1 and enjoining Masel from distributing products bearing certain trademarks and from engaging in certain related activities. Masel alleges that the district court erred in issuing a preliminary injunction against it. Although not raised by Masel, the principal issue addressed by this court is a threshold question of whether the district court properly applied the standard in this circuit for granting a preliminary injunction. For the reasons set forth below, we vacate the grant of the preliminary injunction and remand for further proceedings.
A. Distribution of Mamiya Cameras in the United States
BHMC is a Delaware corporation and is the registered owner of three "MAMIYA" trademarks in the United States: "MAMIYA" (No. 785,979); "MAMIYA-SEKOR" (No. 795,165); and "MAMIYA C" (No. 812,970). It imports and sells a variety of photographic equipment under these marks, including so-called "medium format photographic equipment."*fn2 All of this equipment is manufactured in Japan by the Mamiya Camera Co. (Mamiya Co.), a Japanese corporation, which sells the equipment to its exclusive worldwide distributor, J. Osawa & Co. Ltd. (Osawa Japan), a Japanese corporation,*fn3 which, in turn, sells the equipment to BHMC. By oral agreement between Osawa Japan and BHMC, the latter is the exclusive authorized distributor of MAMIYA cameras in the United States. BHMC also markets Bell & Howell and Osawa photographic equipment. BHMC claims to have spent in excess of five million dollars in national and local promotion and advertising of the products it marketed in 1980, but claims to have reduced that figure in 1981 due to the depressed economy and the "drastic adverse effect of 'so-called genuine' goods importation."
Masel, a New York corporation whose business office is located in Brooklyn, New York, is a wholesaler of cameras. Since early 1981, Masel has been engaged in the business of importing MAMIYA medium format cameras, lenses, and accessories by purchasing them from an international dealer in Hong Kong, who, in turn, had purchased them lawfully from Osawa Japan. According to Masel, prior to importing any MAMIYA products, it inquired of the United States Customs Service whether the MAMIYA trademark was registered with Customs and was informed that the mark was not registered. Thus, Masel asserts it appeared that MAMIYA cameras could be imported without restriction. After importation, Masel apparently sold the photographic equipment, as received and at prices substantially below those charged by BHMC, to retail dealers in New York and other United States metropolitan areas. The district court preliminarily found that the equipment sold by Masel was made by Mamiya Co. and was distributed by Osawa Japan.
B. Corporate Relationship -- Control of BHMC
Osawa USA, a New York corporation which is a wholly owned subsidiary of Osawa Japan, currently owns 93% of BHMC's stock. Mamiya Co. owns the remaining 7%.
There is no formal written agreement between Osawa Japan and BHMC. Rather, BHMC orders products from Osawa Japan by individual purchase orders. An oral agreement does, however, exist. Under the terms of the oral agreement, BHMC is the exclusive distributor of MAMIYA products in the United States and BHMC is to purchase all of its requirements from Osawa Japan.
Osawa Japan influences BHMC's business in MAMIYA goods bearing the above-mentioned trademarks in several important areas: (1) packaging of the product; (2) warranty; and (3) price.
The MAMIYA brand products purchased by BHMC from Osawa Japan are not repackaged by BHMC. The only change in the packaging made by BHMC is that it affixes a label to the product indicating a "part number reference." An instruction booklet is ...