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AB Electrolux v. Bermil Industries Corp.

April 2, 2007

AB ELECTROLUX, PLAINTIFF,
v.
BERMIL INDUSTRIES CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Lewis A. Kaplan, District Judge.

MEMORANDUM OPINION

Plaintiff seeks a preliminary injunction to restrain its American distributor from infringing the trademarks under which plaintiff has sold its goods in the United States by selling competitive products under those marks. Likelihood of confusion is not seriously disputed. Defendants contend instead that relief should be denied because plaintiff has acquiesced in its activities or abandoned its marks.

A. Background

Since 1960, Bermil Industries Corporation ("Bermil") has been the exclusive American distributor for AB Electrolux ("Electrolux"), a Swedish manufacturer of professional laundry equipment.*fn1 The current distribution agreement expires in 2010, and Electrolux has informed Bermil that it will not be renewed.*fn2 Regrettably, certain aspects of the parties' relationship never have been clarified. As the end of the relationship nears, this litigation commenced over their respective rights. The dispute focuses on two specific trademarks. The first is a stylized, wavy "W" called the "Flying W" by Bermil and the "Electrolux W Device" by Electrolux. In the interest of neutrality, the Court will call it the "Wavy W." The second is Electrolux's registered, incontestible mark WASCOMAT.

Over the decades, Bermil has sold Electrolux's washing machines and other products under the WASCOMAT and Wavy W marks. It has sold also products manufactured by third parties with the Wavy W mark and a name that uses a "Wasco" prefix, such as Wascoclean or WascoDry. The parties dispute whether Electrolux approved these uses of the marks. In any case, however, with very few exceptions, Bermil's use of Wasco prefix marks on products of other manufacturers have occurred only on items as to which Electrolux did not manufacture a competing product.

Bermil currently sells Electrolux-manufactured WASCOMAT dryers. Recently, however, it decided to sell also, under the name Wascoclean, dryers manufactured by an Electrolux competitor.*fn3 Electrolux promptly brought this action for trademark infringement and unfair competition on the grounds that (1) defendants' use of the name Wascoclean to identify professional laundry products that were not manufactured or approved by Electrolux infringes Electrolux's registered WASCOMAT trademark, (2) defendants' use of the Wavy W infringes Electrolux's mark, and (3) defendants' use of the Wasco prefix and the Wavy W constitutes unfair competition.

On January 25, 2007, the Court issued a temporary restraining order enjoining defendants from using "(a) the marks WASCOMAT, WASCOCLEAN, WASCODRY, (b) any other mark containing WASCO, and (c) the Electrolux W Device, in each case on or in connection with professional laundry products not manufactured or approved by plaintiff."*fn4

II.

A. Preliminary Injunction Standard

"A party seeking injunctive relief ordinarily must show: (a) that it will suffer irreparable harm in the absence of an injunction and (b) either (i) a likelihood of success on the merits or (ii) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the movant's favor."*fn5 In addition, "[w]henever a request for a preliminary injunction implicates public interests, a court should give some consideration to the balance of such interests in deciding whether a plaintiff's threatened irreparable injury and probability of success on the merits warrants injunctive relief."*fn6

B. Likelihood of Success on the Merits

To succeed on its claims for trademark infringement under the Lanham Act, Electrolux must establish that the marks are entitled to protection and that Bermil's proposed use is likely to cause consumer confusion as to the origin or sponsorship of Electrolux's products.*fn7

1. Entitlement to Protection

The first inquiry, whether the marks are entitled to protection, here hinges on whether Electrolux has established ownership of the marks.*fn8

a. WASCOMAT

Electrolux is the undisputed owner of the U.S. trademark WASCOMAT as applied to washing machines, registered in 1962.*fn9 The WASCOMAT mark therefore is entitled to protection for professional laundry equipment.*fn10

b. The Wavy W

The parties dispute the ownership of the Wavy W. Defendant contends that its founder, Bernard Milch, first formulated it.*fn11 In determining ownership of a trademark, however, creation or invention of the mark is irrelevant. The critical question is which party first used the mark in the sale of goods or services.*fn12

i. Prior use of the Wavy W

The parties argue different standards to determine "use." Electrolux argues that use is established by physical affixation of the mark to goods in commerce; Bermil contends that use in advertising and marketing suffices.

"A designation is 'used' as a trademark . . . when the designation is displayed or otherwise made known to prospective purchasers in the ordinary course of business in a manner that associates the designation with the goods, services, or business of the user."*fn13 Although direct physical affixation to goods is the traditional manner of establishing priority of use, the modern trend is to recognize that use in advertising or other marketing materials can establish the identification of the mark with the user and put others on notice of the user's potential rights.*fn14 The question thus becomes which party's use first established consumers' identification of the Wavy W with that party.*fn15

Unfortunately, the relevant evidence is sparse. Bernard Milch testified at his deposition that he sent Electrolux a drawing of the Wavy W, that Electrolux affixed the mark to WASCOMAT machines, and that such affixation by Electrolux continues to the present day.*fn16 The date of the first affixation is unclear, though it appears to have been in the 1960s. Affixation of the mark to the product clearly identifies the goods ...


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