The opinion of the court was delivered by: PRESKA
LORETTA A. PRESKA, United States District Judge:
This trademark and unfair competition case returns to me on vacatur and remand from the Second Circuit Court of Appeals. Forschner Group, Inc. v. Arrow Trading Co., Inc., 30 F.3d 348 (2d Cir. 1994). The pertinent and undisputed facts, having been set out in my original decision and further elucidated above, will not be presented at length here. See Forschner Group, Inc. v. Arrow Trading Co., Inc., 833 F. Supp. 385 (S.D.N.Y. 1993).
Plaintiffs, The Forschner Group, Inc. and its subsidiary Swiss Brands, Ltd. (collectively "Forschner") are the distributors in this country of the well-known "Swiss Army knife," manufactured in Switzerland by Victorinox Cutlery Company ("Victorinox") and Wenger, S.A. ("Wenger").
First designed in 1891 by Victorinox (Wenger began producing its knife in 1908), and thereafter adopted as its exclusive knife of choice by the Swiss Army (which continues today to fill half of its orders from each company), the Swiss Army knife achieved prominence in this country when American G.I.'s returning from World War II brought this well-crafted and highly useful tool home with them. The Swiss Army knife is best known for its name, its familiar red color,
its multiple and multi-purpose blades and utensils, and its cross-and-shield insignia. Forschner has continuously imported Swiss Army knives from Victorinox since 1950.
Early in 1992, the Arrow Trading Company, Inc. ("Arrow") began selling a red pocketknife with multiple and multi-purpose blades and utensils and a cross-and-shield insignia. Arrow calls this knife a "Swiss Army knife." This knife is manufactured in China and is comparatively inexpensive.
The marked difference between the prices of the Forschner Swiss Army knife and the Arrow version reflect a marked difference in quality. See Forschner, 833 F. Supp. at 387 ("Arrow does not dispute the fact that the Chinese knife fails to meet the standard of high quality found in a Swiss Army knife distributed by Forschner.").
In my underlying decision, I found the allegations in Count II sufficiently supported by the record to enjoin Arrow's use of the term "Swiss Army knife" to advertise, promote or sell its knives. Forschner, 833 F. Supp. at 398. I held that the term "Swiss Army knife" had acquired in the mind of the consumer both qualitative and geographic significance as contemplated by 15 U.S.C. § 1125(a)(1)(B). On the strength of expert surveys, testimony and affidavits submitted by Forschner, I ruled that purchasers of a "Swiss Army knife" expect a knife that is both manufactured in Switzerland and of high quality. By holding out as a "Swiss Army knife" a knife that was not Swiss-made and not of high quality, Arrow was falsely advertising its product, misleading the purchasing public by misrepresenting both its geographic origin and its quality.
The Court of Appeals disagreed. It held that the evocation of geographic associations is not by itself sufficient to make a term geographically descriptive. Forschner, 30 F.3d at 355 ("The fact that a composite phrase contains a geographic term does not necessarily mean that the phrase, viewed as a whole, is a geographic designation."). Framing the question as "whether the phrase can be construed to mean that the product is made in a certain locale," id., the Court found Forschner's evidence unpersuasive:
"As used in the phrase Swiss Army knife, 'Swiss' is read more naturally to modify 'Army' than 'knife' -- and probably does. The phrase Swiss Army knife therefore denotes a knife of the type associated with the Swiss Army, rather than a military knife manufactured in Switzerland."
The use of "Swiss Army" to describe a knife was likened to the use of "Black Watch" to describe a whisky, see Scotch Whisky Ass'n v. Majestic Distilling Co., 958 F.2d 594, 596 (4th Cir.) (finding that "Black Watch" does not designate a geographic origin and therefore could not be geographically misdescriptive), cert. denied, 506 U.S. 862, 121 L. Ed. 2d 126, 113 S. Ct. 181 (1992), and to the phrase "American Girl" to describe a shoe. See Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251, 257, 60 L. Ed. 629, 36 S. Ct. 269 (1916) (noting the critical difference between the mark "American Shoes," which could be geographically descriptive, and "American Girl Shoes," which could not be) (cited by the Court of Appeals at 354-55).
Because the phrase "Swiss Army knife" was found not to designate geographic origin and was therefore not geographically descriptive, it could not be deceptive as to geographic origin under § 43(a) of the Lanham Act, even when used to describe a knife made in China. In effect, the Court of Appeals found that there is no danger that purchasers of a "Swiss Army knife" made in China will be misled into thinking they are purchasing a knife made in Switzerland.
Having stripped the phrase of any geographic descriptiveness, the Court then held that it necessarily lacked any qualitative descriptiveness as well:
the assurance of quality found by the district court to inhere in the phrase Swiss Army knife is purely a function of what the district court deemed to be the geographic descriptiveness of that phrase and does not furnish an independent ground for false advertising under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B)."
Forschner, 30 F.3d at 357.
Absent an inherent connotation of Switzerland, the phrase cannot connote high quality simply because consumers associate high quality with Swiss craftsmen or Swiss companies, or because Victorinox and Wenger do in fact make high quality knives, or because the Swiss Army chooses to buy its knives only from Victorinox and Wenger, since "the phrase does not in itself convey the idea that Victorinox and Wenger are the only purveyors of multi-function pocketknives to the Swiss military." Id. In effect, the Court found that there is no danger that purchasers of Arrow's knife will be misled merely by the use of the phrase "Swiss Army knife" into thinking that they are necessarily buying a high quality (because Swiss) knife.
In sum, I understand the Court of Appeal's opinion to say the following, and no more: Arrow has not falsely advertised. Forschner's allegation that Arrow's use of "Swiss Army knife" is geographically and qualitatively deceptive, and thus constitutes false advertising under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), is unsubstantiated and therefore insufficient to enjoin its use. But this does not mean that Arrow's use of "Swiss Army knife" is beyond the reproach of the law. Whether Forschner's remaining claims -- essentially alleging unfair competition under both Federal law and New York common law
-- have been proved so as to provide alternative grounds to deny, restrict or circumscribe Arrow's use of the phrase remains for this Court now to decide.
It has been accurately noted that "the body of law relating to the Lanham Act has developed into a tangled morass." Coach Leatherware Co., Inc. v. AnnTaylor, Inc., 933 F.2d 162, 171 (2d Cir. 1991). To avoid adding to this tangle, and to clarify what is at stake in this action, I find it useful first to clarify what is not directly at stake.
This is not, strictly speaking, a trademark case. There is no registered trademark at stake and no infringement alleged.
Count I of the complaint is brought under § 43(a) of the Lanham Act "to remedy false descriptions and representations in commerce," Complaint, P 11. It addresses "acts of the defendant [that] are likely to and do cause confusion, deception or mistake." Id., P 18. Count III, alleging unfair competition under New York common law, complains of "the activities of the defendant and the dress of [defendant's] knives." Id., P 40. These are not demands for trademark protection. Yet Forschner in its arguments on remand presses this court to enjoin Arrow from any and all use of "Swiss Army knife" to describe its product. To do so would effectively grant Forschner trademark protection. This aspect of Forschner's argument ignores the prior proceedings of the case, including its own pleadings.
My underlying decision held that "the existence of a trademark is not an issue." Forschner, 833 F. Supp. at 388. The Court of Appeals agreed. See Forschner, 30 F.3d at 358 ("Forschner is not seeking trademark protection for the phrase Swiss Army knife."). The phrase "Swiss Army knife" has never enjoyed trademark protection, as Forschner readily concedes in its complaint.
See Complaint, P 14. Because the issue was not presented, it was never reached, and the Court of Appeals left unanswered the question of whether the mark is registerable.
Falling back to a more defensible position, Forschner argues that "whether there is or is not a trademark does not resolve the question whether consumers might mistake the Arrow knife for one manufactured by Victorinox and Wenger." Id. at 5. In this assertion they are correct. The gravamen of the remaining counts is unfair competition, which by definition does not focus on the strength or registrability of the plaintiff's mark. Therefore I am not required to evaluate the senior user's mark and place it somewhere on the spectrum of distinctiveness by determining if it is arbitrary, fanciful, suggestive, descriptive, or generic. See Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4 (2d Cir. 1976). Rather, an allegation of unfair competition requires an evaluation of the impact upon Forschner of Arrow's use of the same mark and similar dress on the same product sold by Forschner.
The issue of genericness has been vigorously argued by the litigants throughout this litigation. When the action is properly cast, however, neither Forschner nor Arrow stands or falls on genericness alone. Given the pleadings and the proofs offered by the parties, however, and for the reasons discussed below, I find it necessary to a fair disposition of this case to assume that the phrase "Swiss Army knife" is generic.
A term is generic if it simply names the thing to which it is ascribed. See Abercrombie & Fitch, 537 F.2d at 9 ("[a] generic term is one that refers, or has come to be understood as referring, to the genus of which the product is a species."). As such, it "is the very antithesis of a mark," 1 J. Thos. McCarthy, Trademarks and Unfair Competition, § 12:1, at p.250 (2d ed. 1984) (hereinafter McCarthy), the purpose of which is to distinguish the seller's particular version of a given type of good. ("Car," for example, is generic; "Mustang" is not.) To allow one party to claim a generic name for its exclusive use would be tantamount to granting it a monopoly over the thing it named. Thus trademarks, which guarantee exclusive use, are not granted for generic terms. See, e.g., Kellogg Co. v. Nat'l Biscuit Co., 305 U.S. 111, 116, 83 L. Ed. 73, 59 S. Ct. 109 (1938).
In framing the issues on remand, and in guidance to this court, the Court of Appeals assumed arguendo that "Swiss Army knife" was a generic phrase for a multipurpose pocketknife. Forschner, 30 F.3d at 359. Its purpose in doing so is clear. Were it eligible for trademark protection, the weakest that the phrase "Swiss Army knife" could rate on the "spectrum of distinctiveness" is generic. See Abercrombie & Fitch, 537 F.2d at 9. Generic terms, for the reasons discussed above, traditionally receive the least protection from trademark and unfair competition law. If Forschner's use of the phrase "Swiss Army knife" merits some protection when it is assumed to be generic, it will receive no less if later -- when properly before a court or the Patent and Trademark Office -- it is determined to be otherwise.
Assuming genericness establishes a baseline for unfair competition beneath which newcoming competitors cannot stray without violating § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A).
Forschner in its arguments on remand chafes against the "minimum" level of protection afforded by genericness. But the restriction is self-imposed. Plaintiff's pleadings do not allow it to ask for more; nor do its proofs indicate that it would be entitled to more. In addition, to consider more protection would be to confer upon Forschner the de jure trademark protection that plaintiff, this court and the Court of Appeals agree is not available.
The question is whether the law of unfair competition -- under Federal law or New York common law -- protects one company's longtime and exclusive use of an unregistered and presumably unregisterable mark from the later and allegedly predatory use of the same mark on the same product similarly dressed.
Assuming "Swiss Army knife" to be generic opens rather than closes my inquiry.
Although genericness prevents a word or phrase from attaining trademark protection, it does not prevent a court from determining whether a competitor's later use of that word or phrase is unfair. See Kellogg Co. v. Nat'l Biscuit Co., 305 U.S. 111, 83 L. Ed. 73, 59 S. Ct. 109 (1938); Murphy Door Bed Co., Inc. v. Interior Sleep Systems, Inc., 874 F.2d 95, 102 (2d Cir. 1989); Blinded Veterans Ass'n v. Blinded Am. Veterans Found., 277 U.S. App. D.C. 65, 872 F.2d 1035 (D.C. Cir. 1989); Miller Brewing Co. v. Joseph Schlitz Brewing Co., 605 F.2d 990 (7th Cir. 1979), cert. denied, 444 U.S. 1102, 62 L. Ed. 2d 787, 100 S. Ct. 1067 (1980). The public policies which shape the law of trademarks and unfair competition -- primarily preventing consumer confusion on the one hand while promoting and rewarding healthy competition on the other, see generally McCarthy, § 1:1 (unfair competition) and § 2:1 (trademark) -- are as appropriate with generic terms as any other.
II. Unfair Competition under Federal Law
Unfair competition is conceptually broader than trademark protection. See Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 60 L. Ed. 713, 36 S. Ct. 357 (1916); S.C. Johnson & Son v. Johnson, 175 F.2d 176, 178 (2d Cir.) cert. denied, 338 U.S. 860, 94 L. Ed. 527, 70 S. Ct. 103 (1949); Jean Patou, Inc. v. Jacqueline Cochran, Inc., ...