court stayed its determination. Nonetheless, the court stayed its determination with specific instructions to be notified when the Ninth Circuit appeal was decided.
While it is true that Yamaha is similar to this case in many respects, it is distinguishable in a very important one: In Yamaha, the defendant's business activities were not restricted by any pending injunction or stipulation. Here, the defendants currently are bound by the March 20, 1996 Stipulation and Order, preventing them from engaging in the very activities Judge Cote has found to be lawful. Shoe Show asserts that it prefers to use the old packaging, that its customers had come to recognize the older packaging, and that its marketing for the fall and holiday season will be hurt if it cannot return to its old packaging. Affidavit of Carolyn Tucker dated March 12, 1997.
I will not defer consideration of Shoe Show's motion pending resolution of the appeal in Marlboro. The Marlboro case included the very same claims of infringement that are pending before me; the Marlboro decision was reached after a full evidentiary hearing at which Aerogroup asserted its arguments (Aerogroup makes no claim that it was not ably represented by counsel); in a decision denying an injunction pending appeal, the Federal Circuit has suggested that Judge Cote correctly applied the relevant legal standards and it has expressly stated that Aerogroup has not demonstrated a likelihood of success on appeal. In light of the above, I see no compelling reason to defer consideration of Shoe Show's motion.
Aerogroup further opposes Shoe Show's motion on the grounds that collateral estoppel should not apply because Shoe Show was not a party to the Marlboro litigation. Aerogroup asserts that an important factor in determining whether infringement has occurred is whether the copier acted in bad faith. See Kurt S. Adler, Inc. v. World Bazaars, Inc., 897 F. Supp. 92, 98, (S.D.N.Y. 1995). Because Shoe Show was not a party to the Marlboro litigation Judge Cote did not consider Shoe Show's intent. Aerogroup argues that because Shoe Show designed and ordered the offending Air Twist shoes from Marlboro, its intent must be analyzed.
To prevail under Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)), a plaintiff must prove (1) that its trade dress is distinctive of this source and (2) that a likelihood of confusion exists between its product and the defendant's product. See Knitwaves, Inc. v. Lollytogs, Ltd., 71 F.3d 996, 1006 (2d Cir. 1995); see also Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 773, 120 L. Ed. 2d 615, 112 S. Ct. 2753 (1992). Similarly, to establish trademark infringement under 15 U.S.C. § 1114 a plaintiff must show that it has a valid mark entitled to protection and that a defendant's use is likely to cause confusion. See Cadbury Beverages v. Cott Corp., 73 F.3d 474 (2d Cir. 1996). The legal standard for trademark and trade dress infringement is comparable. Two Pesos, Inc., 505 U.S. at 767-68, 773.
With respect to evaluating the second prong of this legal standard -- likelihood of confusion -- the Second Circuit has mandated use of the multi-factor balancing test set forth in Polaroid Corp. v. Polaroid Electronics, 287 F.2d 492 (2d Cir.), cert. denied, 368 U.S. 820, 7 L. Ed. 2d 25, 82 S. Ct. 36 (1961). These factors are: strength of the mark (or dress); proximity of the products; likelihood that the first user will want to 'bridge the market gap'; actual confusion; the defendant's good faith; quality; consumer sophistication; and similarity of marks. Thus, the defendants' good faith is but one of eight factors to be considered in evaluating the second prong of the legal standard.
As noted by Judge Cote, evaluating the Polaroid factors "is not a mechanical process 'where the party with the greatest number of factors weighing in its favor wins.' Rather, a court should focus on the ultimate question of whether consumers are likely to be confused." October 21, 1996 Decision at p. 632 (citing Paddington Corp. v. Attiki Importers & Distrib. Inc., 996 F.2d 577, 583 (2d Cir. 1993)). Thus, "the proper approach is to weigh each factor in the context of the others to determine if, on balance, a likelihood of confusion exists." Id. (citing W.W.W. Pharmaceutical Co. v. Gillette Co., 984 F.2d 567, 572 (2d Cir. 1993)).
Judge Cote found that no likelihood of confusion exists. Specifically, she found that "there is not sufficient similarity to believe that any consumer would confuse the logo, name, and design of the Air Twist box with the trademarked twisted shoe design belonging to Aerogroup" and that "the shoe sole used by the Marlboro defendants is not confusingly similar to that used by Aerogroup." October 21, 1996 Decision at p. 655. Because Judge Cote found that no consumer would be confused by the Air Twist shoe box or shoe sole, whether Shoe Show's intent was different than Marlboro's is irrelevant. See id. at p. 651 ("'if a comparison of the [marks] reveals no fair jury issue concerning likelihood of confusion, then intent to copy, even if found from the proffered evidence, would not establish a Lanham Act violation'")(citing Warner Bros. v. American Broadcasting Co., 720 F.2d 231, 246-47 (2d Cir. 1983)).
Moreover, it doesn't appear that Marlboro's culpability was markedly different than that of any customer, including Shoe Show. Marlboro was closely involved in choosing the knock-off styles, including packaging, for its customers. October 21, 1996 Decision at p. 623 ("Marlboro and its agents consulted closely with Marlboro customers on the details of the trade dress.") Indeed, Marlboro provided the menu of selected footwear styles from which the customers picked. Id. Thus, it does not appear that Marlboro was acting separately and/or more innocently that any of its customers (including Shoe Show.) It cannot be said that Marlboro's bad faith was markedly different from its customers.
Indeed, Judge Cote determined that "knocking-off" designer styles is commonplace in the industry. In fact, she determined that Aerogroup itself sells some styles as knock-offs, under different brand names. Thus, Judge Cote determined that the issue is not whether Marlboro intended to copy (clearly it did). Instead, the issue was whether it intended to infringe illegally on Aerogroup's rights.
Aerogroup has argued vigorously that the Marlboro defendants have acted with bad faith and have intentionally copied the Aerosoles trademarks and trade dress and that this entitles them to a presumption of confusion. There is considerable evidence that the Marlboro defendants are intentionally copying the Aerosoles shoes. But it is equally clear that under established shoe industry custom, including Aerosoles' own practice of "Aerosole-izing" other brands, shoe manufacturers commonly copy, or knock off, competitors' shoes. Most knock-offs are copies of the shoe upper, that portion of the shoe that does not include the sole. Thus, the issue is not whether there is evidence that Marlboro intended to copy Aerosoles shoes, but whether Marlboro intended to copy legally protected intellectual property rights owned by Aerogroup. Judge Cote Decision at pp. 651-52.