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WINNER INTERN. LLC v. OMORI ENTERPRISES

August 20, 1999

WINNER INTERNATIONAL LLC, PLAINTIFF,
v.
OMORI ENTERPRISES, INC., SUPER LUNG, INC., XIN XIHU INVESTMENT & CO., LTD. AND JUN WANG, DEFENDANTS.



The opinion of the court was delivered by: Nickerson, District Judge.

MEMORANDUM AND ORDER

Plaintiff brought this action for unfair competition and trade dress infringement under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), unfair competition and trade dress infringement under New York General Business Law §§ 349, 350, and 368-d, and injury to business reputation and trademark dilution pursuant to state and federal common law.

Plaintiff is the maker of auto anti-theft devices that attach to a motor vehicle's steering wheel so as to inhibit it from moving. Plaintiff markets the devices under such trademarks as "The Club," "The Super Club," "The Ultra Club," "The Premier Club," and "The Club LX" (collectively "The Club"). The price tag on The Club that plaintiff submitted to the court says $39.99.

Defendants market "Global America Steering Wheel Lock" ("Global America"), which closely resembles The Club and performs the same function. Defendants' product sells at a price of about $10 to $19, markedly lower than that of plaintiff's product.

The court has jurisdiction pursuant to 28 U.S.C. § 1338(a), giving federal courts jurisdiction over, among other matters, trademark cases, and 28 U.S.C. § 1338(b), providing jurisdiction over a claim of unfair competition when joined with, among other claims, a substantial and related trademark claim.

Plaintiff has moved for a preliminary injunction immediately to restrain defendants from manufacturing, selling, distributing, disseminating, and advertising Global America.

Plaintiff claims (1) Global America's trade dress, specifically its shape, red and black color combination, and its packaging, constitute unfair competition under the Lanham Act, 15 U.S.C. § 1125(a) and the New York General Business Law §§ 349, 350 and 368-d; (2) defendants' false and deceptive marketing practices violate the New York General Business Law §§ 349, 350 and 368-d; and (3) defendants' use of confusingly similar trade dress and packaging constitute (a) unlawful dilution of the trademark "The Club" and its trade dress, (b) unfair business practice, and (c) false advertising pursuant to federal and New York law.

I. The Competing Products

The record shows, in substance, the following. Plaintiff is the market leader in automobile anti-theft devices and has been marketing The Club since April 28, 1986, advertising the device on television, in newspapers, on radio, and in direct consumer mailings. The Club is sold in stores nationally and internationally, with gross sales and gross advertising expenses exceeding $649,276,000 and $195,109,000 respectively.

The Club, as displayed in its package, consists of a metal rod covered in vinyl, red in color, about one foot, eight and a-half inches long but adjustable in length, with a hook attached or molded off to the right side of the top of the device, and an upside-down hook attached or molded off to the right side of the middle. Just above the middle hook is a black lock mechanism, with a "W," presumably a logo for the company's name, Winner, emblazoned above the lock. On the side of the red rod is the "The Club" in black letters. On the bottom of the device is a black plastic grip with undulating grooves on the side, suggesting finger-placement. Plaintiff says the grooved plastic grip at the base makes the device look like a club, and hence the name.

The packaging for The Club consists of an outer clear plastic package, a cardboard insert, and a hole at the top to hang the product on display. The cardboard is predominantly gold, with a black band at the top and the bottom. "The Club" is in one and a-quarter inch lettering in gold at the top. A picture featuring The Club in red, with "The Club" clearly visible in black letters, attached to a steering wheel of a vehicle in black-and-white, appears in the upper part of the front of the package.

The product claims on the front and back of the package are written in English and French. Included in the written claims on the front of the package is a white starburst at the top that says, in red lettering, "Police Say `Use It'." Also at the top is the slogan "Guaranteed up to $500," with $500 in bright red. In the middle under the heading "The Club" is a list of the product's features:

• Highly Visible

• Tough to defeat

• No false alarms

• Field tested

• Easy to use

• Police tested

• Police recommended

• Unbeatable Protection

• Guaranteed up to $500.00 towards deductible.

See back for details.

  At the bottom are endorsements, in small gold lettering, from policemen and Autotech Magazine.

The back of the package includes written instructions and diagrams on how to use the device, along with an explanation of the guarantee. Additionally there is a sketch of the device, with its various features listed with arrows pointing to their location on the device. Over the sketch it says "The Club," "The Original . . .," and below it says "Ask For The Club By Name", "Fully Guaranteed, Details Inside." The keys to the device are visible on the back enclosed in clear plastic. At the very bottom in small print appears "Winner International Corp."

Plaintiff sells The Club in color combinations other than red and black, but ninety-percent of its sales are in the red and black product. It is this color combination of red and black that is chiefly at issue.

Defendants sell the Global America steering wheel lock primarily to Strauss Auto Discount Stores and in flea markets with total revenues of about $162,500 and an advertising investment of about $1200. In Strauss Auto Discount Stores it lists for $19 but is usually sold at a sales price of $10. The Club sells at Strauss for a price of $39.99.

The general manager of Strauss says that The Club products are sold together in their own "planogram," apparently a separate display structure, and not grouped together with Global America or other competing products.

Defendants' device, as displayed in its package, consists of a metal rod covered in vinyl, red in color, about one foot, seven inches long but adjustable in length, with a u-shaped prong centered at the top of the device and a hook — in the shape of a partial "u" jutting off to the right side of the middle of the rod. Above the middle hook is a black lock mechanism. In black letters on the red rod facing the front of the package, is the name "Global America." On the bottom is a black plastic grip with raised bumps. The name "Global America" is etched onto the grip, facing the front of the package.

The packaging of Global America consists of an outer clear plastic package, a cardboard insert, and a hole at the top to hang the product on display. The cardboard is completely black. The name "Global America," in dim gold, appears twice on the top of the cardboard insert and in one and a-quarter inch lettering sideways to the left of the device. There is a picture of a car towards the top of the insert, with the following list of features underneath, in English only:

• Easy to Use

• High Visibility

• Maximum Protection

• 3(4) Way Keys for High Security

• Tough Hardened

• Vinyl Coated to protect against damage to car.

There is a dimly lit picture of the device on a vehicle's steering wheel, and the keys are visible from the front of the package enclosed in clear plastic.

The back of the package has instructions for use, in English and French, with two small black-and-white photographs, one showing the device fully on the steering wheel and one showing it either half-on or half-off. The name "Global America" appears twice at the top and twice at the bottom. "Omori Enterprises Inc." appears in small print at the bottom.

Defendants also sell their device in color combinations other than red and black, but admit that "they don't sell," meaning that consumers do not prefer the product in other colors.

II. Legal Criteria

To obtain a preliminary injunction, a plaintiff must show (1) likelihood of irreparable harm should the injunction be denied and (2) either (a) likely success by plaintiff on the merits or (b) sufficiently serious questions going to the merits and a balance of hardship tipping decidedly in the plaintiff's favor. Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979). A preliminary injunction is an extraordinary remedy and not granted routinely.

Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), provides, in pertinent part, for a private cause of action against any person who:

  in connection with any goods . . . or any container
  for goods, uses in commerce any word, term, name,
  symbol, or device, or any combination thereof . . .
  which . . . is likely to cause confusion, or to cause
  mistake, or to deceive . . . as to the origin,
  ...

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