The opinion of the court was delivered by: James Orenstein, Magistrate Judge
Plaintiff Imig, Inc. ("Imig") accuses defendant Electrolux Home Care Products, Ltd. ("Electrolux") of improperly disparaging its products -- commercial vacuum cleaners known as the "Perfect P101" and "Perfect P102" (collectively, the "Perfects") -- by telling people in their shared industry that the latter are unlawful copies of Electrolux's own vacuums -- the "Sanitaire" models 866 and 899 (collectively, the "Sanitaires"), respectively -- and thereby interfering with Imig's business relationships. Docket Entry ("DE") 1. Electrolux has responded with counterclaims charging that Imig and its distributor, Nationwide Sales & Service, Inc. ("Nationwide") (collectively, "I&N") deliberately and unlawfully imitated the design of its Sanitaire vacuum cleaners and distributed as its own verbatim copies of the relevant Owner's Guide. DE 5. Both sides now seek summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Specifically, I&N ask for summary judgment in their favor on all of Electrolux's claims against them but do not ask that I enter judgment on their own affirmative claims against Electrolux. Electrolux has cross-moved for summary judgment in its favor on all of the claims in this case, both defensively with respect to Imig's claims against it, and offensively with respect to its counterclaims. For the reasons explained below, I grant Electrolux's motion in part and deny it in part, and I deny Imig's motion in its entirety.
The following facts are drawn from the statements that the parties submitted in compliance with Local Civil Rule 56.1, and are uncontested except where otherwise noted.
Mark and Scott Genoa, brothers, are joint owners, officers, and directors of Imig and Nationwide. Def. Loc. Civ. R. 56.1. Stmt., DE 53 ("Def. Stmt.") ¶ 25. Nationwide is a distributor of cleaning supply products, including vacuum cleaners, and has been in business since 1996. Id. ¶ 26. Sometime after Nationwide's formation, and probably in 2003, Mark and Scott Genoa formed Imig. Id. ¶¶ 28-29. Imig sells vacuum cleaners; at issue here are the P101 and P102 models manufactured under the "Perfect" mark. Id. ¶ 3. Nationwide and other distributors buy the Perfect vacuum cleaners from Imig and other suppliers, and sell them to the public. Nationwide was an authorized distributor of Sanitaires until 2005. Def. Stmt. ¶ 94; Pl. Loc. Civ. R. 56.1 Statement, DE 41 ("Pl. Stmt.") ¶ 27.*fn1
Defendant Electrolux Home Care Products, Ltd. is the successor company -- after several mergers and other corporate transformations -- to The Eureka Company. Def. Stmt. ¶¶ 1-7. Electrolux makes the Sanitaire 886 and 899 vacuum cleaners and sells them under the "Electrolux" mark. It also manufactures vacuum cleaners bearing some degree of similarity to the 866 and the 899, and sells these "private label" machines to others for sale under their own brand names. Id. ¶ 10. For all of its vacuum cleaners, Electrolux manufactures original and replacement parts. Id. ¶ 9.
Late in 2002, the Genoa brothers decided to manufacture vacuums. Def. Stmt., Ex. 18 (Mark Genoa Dep. 116:11-116:23, Sept. 7, 2005). Relying on their experience of the marketplace, they "tried to take the best of all the machines" that they considered to be "good sellers." Id. (Mark Genoa Dep. 123:18-20). Precisely how they went about doing so is in dispute: according to Elexctrolux, rather than create documents or draw up specifications, the Genoa brothers "came up with all the ideas," and transmitted them to manufacturers in China -- who had Sanitaire vacuums on hand for reference -- for further development. Def. Stmt. ¶¶ 106-10. I&N contest this assertion, claiming that although the brothers came up with the ideas, "all the other development work was performed in China" and that development documents existed in China. Pl. Resp. ¶¶ 102, 106. I&N have not produced any evidence of the existence of other development documents.
Electrolux claims that even the most cursory visual inspection demonstrates that the Perfects are unlawfully similar in appearance to the Sanitaires, and moreover, that I&N deliberately infringed on Electrolux's rights in the Sanitaires. Each Sanitaire is an upright commercial vacuum cleaner with the words "HEAVY DUTY COMMERCIAL" in white lettering prominently affixed to a red hanging bag. Def. Stmt., Ex. 15, 16. The base assembly is red with a chrome hood out of which motor vents are cut; on the 899, the chrome hood is topped by a small red and white fixture. Id. On the 886, the base assembly takes a roughly trapezoidal shape, with the front somewhat wider than the back. Def. Stmt., Ex. 15. The 899 base assembly differs somewhat: rather than a gradual widening from back to front, the base assembly widens sharply approximately three-quarters of the way from back to front, such that the front quarter of the base assembly appears to be a rectangle perpendicular to the base itself. Def. Stmt., Ex. 16.
Both have a black knob affixed to a black plate on the front of the base assembly, with writing and other marks on the knob and the plate in white. Def. Stmt., Ex. 15,16. Above the knob, the word "Sanitaire" is displayed in white lettering, with a red design to the left of the word. Id. At the back of the base assembly, the power switch sits atop the chrome hood. Id.
Like the Sanitaires, the Perfect P101 and P102 models are upright vacuum cleaners with the words "HEAVY DUTY COMMERCIAL" in white lettering prominently displayed in the top right corner of the hanging bag. Def. Stmt. ¶¶ 176, 184.*fn2 The hanging bag on the Perfect vacuums is dark blue, as is the base assembly. Def. Stmt., Ex 15, 16. Both models of Perfect vacuum cleaners have a chrome hood, on top of which -- and at the back of the base assembly -- sits the power switch. Def. Stmt. ¶¶ 175, 183. The shape of the base assembly for the P101 and P102 is the same as that of the 866 and 899, respectively. Def. Stmt. ¶¶ 171, 179. In black capital letters, the word PERFECT is written above the knob and to the right of an American flag on the base assembly of both Perfects; the parties disagree about the prominence with which the word is displayed. Pl. Stmt. ¶ 17; Def. Resp. to Pl. Stmt., DE 57 ("Def. Resp.") ¶ 17.
On May 22, 2003, on behalf of the Genoa brothers, Leonard Holz sought information about the existence of design or utility patents pertaining to the 886 and 899 vacuums, whether or not expired. Def. Stmt., Ex. 32 (Letter from Leonard Holtz dated May 22, 2003).*fn3 Mr. Holz explained that his client "wishe[d] to make a private label vacuum cleaner that is virtually identical in appearance (and perhaps also mechanically identical)" to the Sanitaires. Id. at 1. From this and the similarities between the vacuums, Electrolux concludes that I&N intentionally and unlawfully imitated the Sanitaires.
Owner's Guides accompanying at least the first 400 Perfect vacuum cleaners were "virtually identical" to Electrolux's copyrighted Owner's Guide.*fn4 Def. Stmt. ¶ 120. The text and illustrations are the same, down to the capitalization of the headings for each topic addressed. Id. ¶¶ 121-26. Mark Genoa admitted that the I&N Owner's Guide was a copy of the one produced by Electrolux. Id. ¶ 128. I&N deny that they or their principals had any role in or knowledge of the creation of the I&N Owner's Guide. See id. ¶ 127; Pl. Resp. ¶ 127.
I&N solicited purchasers for the Perfect vacuum cleaners by advertisements in print form.*fn5 Def. Stmt. ¶¶ 215-221. These advertisements contain multiple claims about the quality of the Perfects and their comparative quality with respect to other vacuum cleaners. Id. Specifically, the advertisements claim that the Perfects have three times the motor life and 30% more strength than their "nearest competitors" and that the motor is 9.5 amperes. Id. Like the Perfects themselves, all of the advertisements bear a legend indicating that the vacuums have been tested by ETL, a company that performs tests on machinery to ascertain compliance with various industry standards. Id. One advertisement, circulated in August 2005, draws explicit comparisons between the Perfect P101 and the Sanitaire 866, exhorting the reader to "Accept No Substitutes" and claiming that several of the P101's features demonstrate its superiority over the 866. Def. Stmt., Ex. 53.
Electrolux challenges all of these assertions as literally false, contending that the Genoa brothers deliberately propagated misleading information. ETL conducted two sets of tests on the Perfects, neither of which measured the motor life or the amperage of the motors independently of the vacuums. Def. Stmt. ¶ 233. One test was performed under the "UL 1017" standard, which tests vacuums as a whole. Id. ¶ 234. This test measured the amperage of the vacuum as a whole, under "normal load conditions," and conditions simulating normal use. Id. ¶¶ 292-98. Imig reported the power of each vacuum to be 870 watts, or 7.4 amperes. Id. ¶¶ 309-10, 322. ETL concluded that the P101's measured power was 800 watts and that the P102's measured power was 900 watts, deviations that were within acceptable bounds. Id. ¶¶ 307-10. ETL performed a second set of tests under the UL 1004 standard because the results of the first test identified motors that had not been approved or recognized by the Nationally Recognized Testing Laboratory. Id. ¶¶ 234, 236-37. The purpose of this set of tests was to approve the motors for use in the Perfects, but did not involve any testing of the motors' power. Id. ¶¶238, 269. These were the only tests that ETL performed on the Perfects; ETL never performed tests on motor life, independent motor amperage, and comparisons with the Sanitaires. Id. ¶¶ 244.
5. Electrolux's Statements
When it filed the complaint to commence this action, Imig claimed that it had suffered harm because of certain statements it attributed to Electrolux. Specifically, Imig charged that Electrolux had informed individuals throughout the industry that the Perfects infringed on the Sanitaires and that anyone who purchased the Perfects would be sued along with Imig. Def. Stmt. ¶ 392. None of Imig's employees ever saw such statements in writing. Id. ¶ 397.
When pressed, Imig identified seven individuals who it claimed had purportedly heard or otherwise become aware of the statements attributed to Electrolux and who, together with another individual, had refused to place orders for the Perfects or had cancelled such orders. Id. ¶¶ 395, 398-400. Electrolux has submitted affidavits and deposition testimony from each of the eight individuals identified by Imig and asserts on the strength of that evidence that the alleged statements were never made. With one exception, Imig does not contest Electrolux's conclusion. Seven of the individuals explicitly disavowed hearing the statements or changing purchasing decisions because of the statements. Id. ¶¶ 405-06, 410-11, 414-15, 420-23, 425-26, 429-30, 451. The eighth individual claimed that he had heard the challenged statements from his customers and other sources, but did not claim that he had heard them from Electrolux and could not identify any of the sources. Id. ¶¶ 442-52. Imig characterizes this individual's statements as supporting its position but adduces no other evidence. Pl. Resp. ¶ 442.
Imig commenced this action against Electrolux on January 28, 2005. DE 1. Less than a month thereafter, Electrolux filed its answer, asserting several counterclaims against both Imig and its distributor, Nationwide. DE 5. I&N answered those counterclaims on March 12, 2005. DE 10. On November 20, 2005, the parties consented to have a magistrate judge conduct all proceedings in this case and to order the entry of judgment pursuant to 28 U.S.C. § 636(c)(1). DE 23.
Summary judgment is proper "when, after reviewing the evidence in the light most favorable to the non-moving party, there is no genuine issue as to any material fact." Nabisco, Inc. v. Warner-Lambert Co., 220 F.3d 43 (2d Cir. 2000) (citing Fed. R. Civ. P. 56(c); Tops Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d 90, 95 (2d Cir. 1998)); see Celotex v. Catrett, 477 U.S. 317, 322 (1986). At this phase of the litigation, a court's task does not extend to issue resolution; the inquiry must be tailored accordingly to discern whether material factual issues exist to be tried. PGC Property v. Wainscott/ Sagaponack Property Owners, Inc., 250 F. Supp. 2d 136, (E.D.N.Y. 2003) (citing Gallo v. Prudential Residential Servs. Ltd., 22 F.3d 1219, 1224 (2d Cir. 1994)). Factual disputes are material and will prevent the entry of summary judgment only if, under the governing substantive law, they would affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Two characteristics of the relevant substantive law create reason for caution here. First, the standard for liability in a trademark infringement action is a "probability" of confusion -- not merely a "possibility" -- and summary judgment is appropriate only where the undisputed evidence could support only one conclusion. Cadbury Beverages, Inc. v. Cott Corp., 73 F.3d 474, 482 (2d Cir. 1996). Second, intent is at issue in a suit under the Lanham Act and therefore summary judgment motions should be examined carefully. EMI Catalogue P'ship v. Hill, Holliday, Connors, Cosmopulos, Inc., 228 F.3d 56, 61 (2d Cir. 2000) (citing Resource Developers, Inc. v. Statute of Liberty -- Ellis Island Found., Inc., 926 F.2d 134, 141 (2d Cir. 1991)). Nevertheless, the "mere incantation" of disputed intent cannot fend off summary judgment if "only speculative allegations are offered ... after ample opportunity to engage in relevant discovery." Resource Developers, Inc., 926 F.2d at 141.
Electrolux seeks summary judgment on each of the claims brought in this litigation, while Imig seeks summary judgment only on Electrolux's counterclaims. I consider each motion independently, drawing all inferences in favor of the non-moving party, and discuss each in turn. Morales v. Quintel Ent'ment, Inc., 249 F.3d 115, 121 (2d Cir. 2001).
1. Trade Dress Infringement
Section 43(a) of the Lanham Act prohibits the use of "any word, term, name, symbol, or device, or any combination thereof" against imitation in a manner that is "likely to cause confusion ... as to the origin, sponsorship, or approval" of goods. 15 U.S.C. § 1125(a). The Lanham Act's regime of protection for trademarks and trade dress serves an insulating function, protecting manufacturers of socially desirable products from the kind of imitation that "capitaliz[es] on a consumer's inability quickly to evaluate the quality of an item offered for sale." Qualitex Co. v. Jacobson Prods Co., Inc., 514 U.S. 159, 163 (1995). This aim must be balanced, however, with the social benefits that can flow from some forms of imitation -- for example, the sort that operates to prevent an innovator from obtaining a monopoly over features that improve the product for practical reasons -- and thus, such protection should be granted only where it will promote competition. TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 28-29 (2001). Invitations to extend trade dress protection to the specific configuration of a product's features must be viewed with special caution because of the risk presented: protecting ordinary product designs would be tantamount to creating a monopoly in the actual goods. Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 213 (2000) ("Consumers are aware of the reality that, almost invariably, even the most unusual of product designs -- such as the cocktail shaker shaped like a penguin -- is intended not to identify the source, but to render the product itself more useful or more appealing.").
The likelihood that the primary function of a product's design is more useful than symbolic mandates a heightened standard of proof. To prevail on an action for trade dress protection of a product's design, a party must make a two-part showing: "(1) that the mark is distinctive as to the source of the good, and (2) that there is a likelihood of confusion between its good and the defendant's." Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 115 (2d Cir. 2001). To be deemed differentiable from goods produced by other manufacturers, and therefore "distinctive," a product design must be nonfunctional and must contain characteristics that, over time, come "to identify and distinguish the goods -- i.e., to indicate their source[.]" Qualitex Co., 514 U.S. at 163 (internal quotation marks omitted). Functionality is statutorily presumed; a party seeking trade dress protection under the Lanham Act thus bears "the burden of proving that the matter sought to be protected is not functional." 15 U.S.C. § 1123(a)(3). To do so, the party must show that the product design -- or at least, the elements thereof that purportedly comprise the trade dress -- is not "essential to the use or purpose of the article" and does not "affect the cost or quality of the article[.]" TrafFix Devices, Inc., 532 U.S. at 32-33 (quoting Qualitex, 514 U.S. at 165); see Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 850 n.10 (1982). Moreover, to the extent that the primary purpose of any feature is aestheticthe design must be deemed functional "if the right to use it exclusively would put competitors at a significant non-reputation-related disadvantage." Yurman, 262 F.3d at 116 (quoting TrafFix Devices, Inc., 532 U.S. at 32-33) (internal quotation marks omitted); see Qualitex, 514 U.S. at 170; Eliya, Inc. v. Kohl's Dept. Stores, 2006 WL 2645196, at *3 (S.D.N.Y. Sept. 13, 2006). The behavior of other participants in the pertinent market is sometimes instructive; the existence of any alternative product designs is relevant to assessing whether a feature affects cost or quality, although decidedly not relevant after any finding of functionality. See, e.g., Major League Baseball Props., Inc. v. Salvino, Inc., 420 F. Supp. 2d 212, 222 (S.D.N.Y. 2006). Once deemed functional, a product's design is not a protectable trade dress and any secondary meaning the design might have acquired is irrelevant. TrafFix Devices, Inc., 532 U.S.at 33. If the court deems a product's design to be non-functional, however, its inquiry turns to assessing whether the design possesses "secondary meaning" -- in other words, whether the particular configuration of features has come, over time, to identify the source of the product in the minds of consumers. Qualitex, 514 U.S. at 163 (citing Inwood Labs., Inc., 456 U.S. at 856 n.11).
In addition to establishing the distinctiveness of product design, a party must demonstrate that the allegedly infringing product is likely to confuse consumers about the source or identity of the product. Nora Beverages, Inc. v. Perrier Group of America, Inc., 269 F.3d 114, 118-19 (2d Cir. 2001). Critical to such analysis are eight so-called "Polaroid factors." ...