The opinion of the court was delivered by: SOTOMAYOR
SONIA SOTOMAYOR, U.S.D.J.
Plaintiff, a manufacturer of metal-frame stacking chairs, alleges that defendant, a competitor, has "slavishly copied" its chair design and thereby infringed its trade dress under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a).
The plaintiff, Krueger International, Inc. ("KI"), moves for a preliminary injunction against the defendant, Nightingale Inc. ("NI"), on the grounds that the KI design is distinctive and that NI's design is confusingly similar. KI seeks to enjoin NI from advertising, manufacturing or selling copies of the KI chair. For the reasons discussed below, KI's motion is DENIED.
The parties to this action are established manufacturers of office and industrial furniture. KI, founded in 1941, is headquartered in Green Bay, Wisconsin. NI is a Canadian corporation established in 1928. Both companies produce numerous lines of chairs for commercial use. At issue here is KI's Matrix
chair, which competes in the "high density" stacking chair market. High density chairs are strong, lightweight chairs, capable of being stacked up to 40 units high. The stacking feature of the chairs makes them easy to transport and efficient to store. The chairs are sold in large volume, often through a competitive bidding process, to convention centers, school systems and other institutions that must accommodate crowds. There is no direct retail market for the chairs, although some of these chairs are sold to furniture dealers.
The Matrix chair was introduced in 1976, received a design patent in 1978, and quickly became KI's single most successful product.
At least 10 other designs currently compete in this market.
Although the Matrix design patent expired in 1991, no competitor has attempted to produce an exact copy of the Matrix chair until the NI chair.
This Court held oral argument on January 17, 1996, at which the parties produced specimens of their own chairs as well as those of two competitors. The defendant's chair, called the Beetle 300, is a virtual carbon copy of the Matrix chair. The other competing designs are visually distinguishable. Although they all have a thin metal frame made of chrome-covered steel, and a seat and back made of molded plastic, the Matrix and Beetle chairs share three other features which KI claims as trade dress. One feature is a pair of Z-shaped metal rods that zig-zag in and out, connecting the seat and the back. (Competitors use straight connecting rods between the seat and back.) The second feature is the shape of the seat, which has an unusually deep "dip," and the third is the shape of the back, which suggests a trapezoid.
At a pre-bid conference organized by Unicor in December, 1994, Gregory Wallis, a Unicor executive, opened the meeting by addressing Unicor's general concerns, including the following:
One issue that we typically are concerned about is if there is any kind of patent or proprietary rights for the products that we are buying. We have had some history with that and we want to be made aware of that up front if there is anything that we would not be allowed to either produce ourselves or purchase elsewhere and combine with maybe your component parts, something of that nature. If there is any kind of restrictive rights under the products that we will be buying, we need to know that up front.
(Tr. of Unicor Pre-Bid Conf. at 13-14 (emphasis added).) Later in the same meeting, another Unicor spokesman, Michael Campanale, answered five written questions from prospective bidders. Two of the five questions concerned the Matrix chair and its prominent place in Unicor's specifications.
Q: The RFP [Request for Proposal] indicates that all offerors will be evaluated per the minimum specification requirements. Yet many of the [technical requirements] are either proprietary or highly restrictive. Are we to propose what we have that we believe is best for Unicor or are we to force our products to meet Krueger Manufacturing methods and specifications? To do so will cause higher costs for us and a significant competitive advantage to Krueger.
A: All of the indicated specifications and requirements are not intended to be restrictive. This is exactly why we developed it as an RFP, Request for Proposal, and not simply as a bid package. All samples will be considered that fall within a competitive range of pricing and technical factors. . . .
Q: Section C [of the Request] is obviously a set of specifications for the Krueger Matrix . . . chair. Are these considered hard specifications or can a product which does not meet these exact specifications, but is an equal or even superior product, be proposed and awarded? . . .
A: Yes. All proposals which indicate equal or even superior specifications will be considered.
(Id. at 20-21, 23.) Campanale explained that the specifications were meant to ensure quality and to maintain "a general consistency with the hundreds of thousands of high density stacking chairs" (i.e., Matrix chairs) that Unicor had already sold to federal agencies. "There is also a need to consider the customer's concern and possible preference to be able to have chairs which meet, reasonably match in the areas of color, stackability, style, quality and performance." (Id. at 24-25.) Two employees of KI attended this conference.
In March 1995, Unicor awarded the contract to NI, having ranked KI's bid third, below competitor CPSI. The contract is worth at least $ 7.7 million over five years.
A few days later, KI Vice President Daniel Schiltz visited Unicor and saw the Beetle prototype. (Schiltz Aff. at 1.) Schiltz was sufficiently alarmed to protest to Campanale, a Unicor executive, that "it appeared to be a KI chair." (Campanale Decl. at 2.) Campanale said that the chair was only a prototype and that NI would soon be making its own parts for the seat and back. (Id.)
On March 30, 1995, KI filed a formal protest with the Government Accounting Office (the "GAO"), challenging the contract award to NI. The essence of KI's protest was that Unicor had improperly favored NI in the bidding process by waiving certain requirements for NI but not for other bidders, and had given more weight to price considerations than the specifications had indicated. KI also protested the fact that Nightingale had submitted a prototype using KI parts.
KI's protest effected an immediate stay of the contract and Unicor directed NI to stop production until further notice. In the meantime, NI began preparing photographs of the Beetle chair for promotional purposes. In May 1995, as part of the bid protest process, NI sent an updated copy of its entire chair product line to the GAO and to KI's attorney. (Kunzi Decl. at 1.) Included was a photograph of the Beetle chair. Although a KI lawyer knew what the Beetle chair looked like as of May 1995, the lawyer maintains that this photograph was subject to a GAO protective order, which barred attorneys from disclosing competitive information to their clients during the bid protest process. NI's lawyer disagrees, contending that a publicity brochure does not constitute competitive information subject to the protective order.
Wholly apart from the bid protest, however, NI soon began sending new product catalogues to its representatives and dealers. (Breen Decl. at 6.) These catalogues also contained photographs of the Beetle chair. In June, a shipment of catalogues arrived at Unicor, where Campanale placed them on a table. Sometime thereafter, Schiltz, the same KI executive who had seen the Beetle prototype and had expressed concern, visited Campanale. This time Schiltz looked through the catalogue, "noticed the photographs of the Beetle chair," and took a copy with him. (Campanale Decl. at 2.)
In July 1995, although the bid protest was still pending, Unicor instructed NI to begin immediate performance on the contract "in the best interests of the Government." In September, Unicor notified both the GAO and KI's attorney that NI had begun production. In October, the GAO dismissed KI's bid protest because Unicor had agreed to reopen bidding on technical considerations. Between September and December, 1995, Nightingale shipped enough chair parts to Unicor to produce 10,000 Beetle chairs. Its contract, however, is still subject to termination if its product samples fail Unicor testing. (Ralston Decl. at 3.)
In November 1995, Nightingale displayed the Beetle chair at trade shows in New York City and Toronto. It was at these trade shows, the first on November 2 and the second on November 17, KI asserts, that it first saw the Beetle chair. Not until December 7, 1995, however, did an investigator for KI attempt to find a Beetle chair and not until about December 11, 1995, was KI's Canadian counsel successful in securing a chair. (Jaraczewski Aff. at 6; Jameson Aff. at 1-2.) KI filed a Complaint in this action on December 19, 1995, and requested a preliminary injunction two days later.
I. Merits of the Lanham Act Claim
A. Inherent Distinctiveness.
This case presents one of the most difficult analytical issues in all of trade dress law: how to determine whether a product design is "inherently distinctive." The issue is particularly pressing and unresolved in this circuit, whose rule for trade dress protection was upended three and a half years ago by the Supreme Court in Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 112 S. Ct. 2753, 120 L. Ed. 2d 615 (1992). Prior to Two pesos, a plaintiff seeking trade dress protection in this circuit had to prove that the dress had acquired secondary meaning. Two Pesos, which unified the standard for trademark and trade dress law, held that protection for trade dress requires either inherent distinctiveness or secondary meaning, but not both. Two Pesos, 112 S. Ct. at 2760.
The general rules of trade dress protection had been long established. Section 43(a) of the Lanham Act protected the "trade dress" of a product, which is defined as the product's "total image," including "features such as size, shape, color or color combinations, texture, [or] graphics." LeSportsac, Inc. v. K Mart Corp., 754 F.2d 71, 75 (2d Cir. 1985) (citations omitted). It was equally well settled that trade dress includes both product packaging and product design, and that trade dress is protected only when the infringer's product threatens to confuse customers about the source of the goods. Id. Two Pesos clarified the standard for trade dress protection as follows: a plaintiff must show (1) that its trade dress is distinctive, either because it is inherently so or because it has acquired secondary meaning, and (2) that there is a likelihood of confusion between its product and the defendant's product. Tough Traveler, Ltd. v. Outbound Products, 60 F.3d 964, 967 (2d Cir. 1995) (citing Two Pesos, 112 S. Ct. at 2758). A defendant may avoid liability, however, by showing that the trade dress is functional. Two Pesos at 2758.
The classic test for determining the distinctiveness of a trademark was outlined in Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976), and the test has since been extended to trade dress as well. See Jeffrey Milstein, Inc. v. Greger, Lawlor, Roth, Inc., 58 F.3d 27, 31 (2d Cir. 1995); Paddington Corp. v. Attiki Importers & Distribs., Inc., 996 F.2d 577, 583-84 (2d Cir. 1993); accord, Two Pesos, 112 S. Ct. at 2760. Under the Abercrombie test, marks are classified as either (1) generic, (2) descriptive, (3) suggestive, or (4) arbitrary or fanciful. Abercrombie, 537 F.2d at 9. Suggestive, arbitrary and fanciful marks and dresses are always considered inherently distinctive, in that their "intrinsic nature serves to identify a particular source of a product" or they are "capable of identifying a particular source of the product," whether or not the trade dress has acquired secondary meaning ...