sales also make it more likely that consumers view the trade dress as indicative of origin.
b. Similarity of the Marks and Trade Dresses
In evaluating the similarity of marks and trade dress, the Court looks to whether, when viewed separately, the marks or dress "create the 'same overall impression.'" Banff, 841 F.2d at 492.
Under this test, I find that the two word marks substantially similar. Clearly, they both use the same words, REAL WHEELS. Differences in design do exist. WarnerVision's mark is written in white lettering against a blue background in a style resembling handwritten capitalized letters. In contrast, Empire's mark is written in double-thickness letters with light borders to create a shadowing, three-dimensional appearance. Empire's words are also written in dark lettering against a light background. I find these differences insufficient to reduce the similarity between the two word marks. A reasonable consumer would be likely to remember the words when making purchasing decisions and differences in style cannot overcome this fact.
I also find that the logos are similar, but much less so than the marks. Two elements lead to this conclusion, but one must be discounted. First, the most striking similarity between the logos is that they are both circular, but I find that use of a circle to indicate a wheel is generic. Second, both marks use the words REAL WHEELS prominently. This element is entitled to protection. Several differences must be noted, though. First, the lettering and coloring, as described above, are different. In addition, the center of WarnerVision's mark contains a gray disk with a horizontal black bar meant to symbolize a spoke. In contrast, Empire's logo contains a large, block-type "RW" in the center. Finally, Empire's logo is accompanied on the packaging by a red triangle with BUDDY L written in large lettering. This additional logo helps to distinguish the trade dress. See Vitarroz Corp. v. Borden, Inc., 644 F.2d 960, 969 (2d Cir. 1981) ("When similar marks are always presented in association with company names, the likelihood of confusion is reduced."); cf. W.W.W. Pharmaceutical, 984 F.2d at 573 (use of words Right Guard before Sport Stick helps to distinguish that mark from Sportstick for lip balm). Despite these differences, I find that these logos would create the same overall impression in the mind of consumers.
c. Competitive Proximity of the Products
This factor looks to whether the products compete with each other. Lang v. Retirement Living Pub. Co., 949 F.2d 576, 582 (2d Cir. 1991). Confusion is more likely if the goods "serve the same purpose, fall within the same general class, or are used together." Id. I find that these products are proximate. Both products are sold in the same toy stores and are part of the same general class of children's toys. A consumer looking for an item to entertain a child may choose either a toy vehicle or a video cassette and be satisfied. Although the products may not be perfect substitutes in the minds of all consumers, that is not required. Cf. Mushroom Makers, 580 F.2d at 47-48 (women's sportswear and shoes are proximate).
d. Likelihood of Bridging the Gap
This factor considers the likelihood that plaintiff will enter the toy vehicle market. Lang, 949 F.2d at 582. I find there is a strong likelihood that WarnerVision will bridge the gap between the video cassette and toy vehicle markets. Both parties agree that there is a great deal of cross marketing between the toy and video markets. In addition, plaintiff has indicated that it has conducted negotiations with toy manufacturers to license the trademark and has filed applications with the PTO. Finally, although I find that the toy premiums attached to the video cassettes do not constitute use of the REAL WHEELS mark and logo in the toy vehicle market, it is reasonable to conclude that the premiums are being used as a way to obtain a toehold in the toy market before actual entrance.
e. Actual Confusion
Evidence of actual confusion is not necessary to state a claim under § 43(a). McGregor-Doniger, 599 F.2d at 1136. However, such evidence does "strongly indicate the likelihood of confusion." Edison Bros., 651 F. Supp. at 1558. Plaintiff has not presented any evidence of actual confusion in the market.
Although it is permissible to infer that there is no likelihood from an absence of actual confusion, I decline to do so given the fact that the products have been on the market simultaneously for only a few months. McGregor-Doniger, 599 F.2d at 1136. Thus this factor favors neither party.
f. Good Faith
I find that Empire acted in good faith in developing the REAL WHEELS mark and logo. It appears that both parties developed the marks and logos at roughly the same time, the late-summer and early fall of 1994. Thus, there was no intentional copying. In addition, Buddy L conducted a full trademark search which supports the good faith contention. See W.W.W. Pharmaceutical Co. v. Gillette Co., 984 F.2d 567, 575 (2d Cir. 1993).
g. Quality of the Goods
As the Second Circuit noted in W.W.W. Pharmaceutical, a senior user is entitled to protect its reputation for quality from possible damage by inferior goods produced by the junior user. Id. WarnerVision does not contend that Empire's goods are not of high quality. Plaintiff claims only that it has no control over the quality of Empire's products. This is true in every case and does not help plaintiff. Having been presented with no evidence contrary to Empire's claim that its goods are of a high quality, I find that this factor weighs for defendants. Id.
h. Sophistication of the Buyers
The Court considers the sophistication of the buyers in analyzing the likelihood of confusion because "the more sophisticated the consumers of the product are, the less likely it is that similarities in trade dress or trade mark will result in confusion concerning the source or sponsorship of the product." Paddington, 996 F.2d at 587. Both parties assert that the persons making purchasing decisions with respect to toys are often children, but they draw different conclusions from this fact. Plaintiff claims that children are not sophisticated, while defendant argues that they are knowledgeable about toys. Empire also adds that parents are likely to consider carefully the toys they give to their children. I agree with Empire and find that toy purchases are made by reasonably sophisticated buyers. First, Empire is correct that children are often extremely discriminating about toys. Second, parents, though perhaps often tired and stressed when shopping for toys, generally do pay significant attention to the products they give to their children.
i. Overall Analysis of the Polaroid factors
After considering all of the above factors and weighing them together in an effort to determine the likelihood of confusion, I find that WarnerVision is entitled to preliminary injunctive relief.
In the Second Circuit, where the marks are nearly identical and the products are proximate, likelihood of confusion is established as a matter of law. Mushroom Makers, 580 F.2d at 47-48. This does not automatically entitle the senior user to injunctive relief, however, because the Court must still consider all of the Polaroid factors. See Vitarroz, 644 F.2d at 966. Here, unlike in Mushroom Makers and Vitarroz and other cases where injunctive relief was denied even though the marks were nearly identical and the products proximate, there is a likelihood that the senior user will bridge the gap between the two product markets. As the Lanham Act protects senior users against "loss of patronage, loss of reputation, and limitation on business expansion," id. at 967 (emphasis added), WarnerVision has a protectable interest in the use of the REAL WHEELS mark on toy vehicles. Therefore, I find that WarnerVision is entitled to an injunction prohibiting Empire's use of the REAL WHEELS mark on toy vehicles.
The trade dress claim is a much closer question. However, on consideration of the Polaroid factors, I also conclude that there exists a likelihood of confusion between the two logos.
4. Empire's Motion For Preliminary Injunction
Empire seeks a preliminary injunction barring WarnerVision from entering the toy vehicle market under the REAL WHEELS trademark and trade dress. As discussed above, however, Empire has not established ownership rights to the mark and dress. Therefore, there is neither a likelihood Empire will succeed on the merits nor a significant question going to the merits. Empire's motion is denied.
B. State Law Claims
1. Unfair Competition
WarnerVision brings a claim for unfair competition under New York law. This doctrine protects a plaintiff against the misappropriation of its labors and expenditures by another. Saratoga Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1044 (2d Cir. 1980). This claim shares many of the same elements as a claim under the Lanham Act. W.W.W. Pharmaceutical, 984 F.2d at 576. In addition to proving a likelihood of confusion, however, see Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1048 (2d Cir. 1992), a plaintiff must also demonstrate bad faith. Saratoga Vichy Spring, 625 F.2d at 1044. As discussed above, WarnerVision has not established bad faith by Empire. Therefore, plaintiff's unfair competition claim is denied.
2. Injury to Business Reputation and Dilution
WarnerVision also brings a claim for injury to business reputation and dilution under the law of all states in which Empire markets its products, including under N.Y. Gen. Bus. L. § 368-d. To state a claim for dilution under § 368-d, a plaintiff must show three elements:
(1) distinctiveness of the mark, either that the mark is 'truly of distinctive quality' or has acquired secondary meaning in the eyes of the public; (2) likelihood of dilution, either as the result of blurring of product identification or the tarnishing of an affirmative association that a mark has come to convey; and (3) predatory intent.