USCA1 Opinion
United States Court of Appeals
United States Court of Appeals
For the First Circuit
For the First Circuit
____________________
No. 95-1975
TEC ENGINEERING CORP.,
Plaintiff, Appellee,
v.
BUDGET MOLDERS SUPPLY, INC. AND
PLASTIC PROCESS EQUIPMENT, INC.,
Defendants, Appellants.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
___________________
____________________
Before
Cyr, Boudin and Stahl,
Circuit Judges.
______________
____________________
Louis M. Ciavarra with whom Barry A. Bachrach and Bowditch &
__________________ ___________________ __________
Dewey were on brief for appellants.
_____
James C. Donnelly, Jr. with whom Charles B. Straus, III and
________________________ ________________________
Mirick, O'Connell, Demallie & Lougee were on brief for appellee.
____________________________________
____________________
April 30, 1996
____________________
STAHL, Circuit Judge. Budget Molders Supply, Inc.,
STAHL, Circuit Judge.
_____________
and Plastic Process Equipment, Inc., (collectively "Budget")
appeal from a preliminary order enjoining them from
manufacturing, marketing or distributing certain industrial
conveyors alleged to be confusingly similar to conveyors
manufactured and sold by appellee, TEC Engineering Corp.
("TEC"). Because the district court failed to make findings
of fact and conclusions of law sufficient to support its
decision as required by Fed. R. Civ. P. 52(a), we modify the
injunction and remand for further proceedings.
I.
I.
__
Background1
Background
__________
TEC manufactures a series of conveyors under the
model name "Ultraline," which it markets primarily to the
plastics processing industry. The conveyors are generally
used to transport lightweight plastic products from molding
machines in which they are formed to other machines for
packaging. TEC sells the Ultraline conveyors under the TEC
name through independent sales representatives. In addition,
TEC authorizes an independent distributor, Injection Molders
Supply, Inc. ("IMS"), to advertise, promote and sell
____________________
1. Our recitation of the facts is hampered by the district
court's failure to make any findings in issuing the
injunction. To provide context, we draw the following
statement from what we perceive as essentially undisputed
facts. The statement is not intended to be binding on the
district court.
-2-
2
Ultraline conveyors under the IMS tradename through IMS's own
product catalogues. In 1994, combined domestic and
international sales of Ultraline conveyors exceeded 2,000
units, generating revenues of approximately $3 million.
Budget has competed with TEC and other conveyor
manufacturers in the plastics processing industry market for
over five years. Budget markets its conveyors exclusively
through direct-catalogue sales. About January 1995, Budget
decided to modify the design of its primary line of
conveyors. Consequently, Budget soon began to market a
redesigned conveyor under the "Supraline" model name that
closely resembled TEC's Ultraline conveyor. Budget labels
each Supraline conveyor with the name "Budget Molders Supply,
Inc." in several different places on the machine. While
these Budget labels cannot be seen in every advertisement
photograph of a Supraline conveyor included in the record,
each Supraline advertisement prominently features the Budget
name (although not necessarily on the pictured conveyor), and
several include the statement "Made in the USA by Budget."
It appears largely undisputed that the two
conveyors, when placed side by side, are strikingly similar
in appearance. Many of the similarities shared by the two
machines, however, are to some extent functional. In
addition, the record includes several advertisements for
conveyors sold by companies other than TEC or Budget. These
-3-
3
conveyors, at least as they are presented in the
advertisements, also appear somewhat similar to the Ultraline
and Supraline conveyors. Moreover, apparently several
companies other than TEC or Budget incorporate the suffix
"line" in the model names of their respective conveyors.
Budget notes that, in addition to "Ultraline" and
"Supraline," other model names for conveyors marketed to the
plastics processing industry include "A-line," "Flex-line,"
"Slim-line," "Omni-line," and "Direct-line."
On July 12, 1995, TEC brought this action for
trademark infringement under section 43(a) of the Lanham Act,
15 U.S.C. 1125(a). In its complaint, TEC alleges, inter
_____
alia, that the trade dress of its Ultraline conveyors is a
____
well-established mark in the industry and that, by developing
and marketing its Supraline conveyors, Budget intended to
exploit the goodwill associated with that trade dress. On
July 21, 1995, the district court held a hearing on TEC's
request for preliminary injunctive relief. At the hearing,
an Ultraline and a Supraline conveyor were made available to
the district court for review.
At the close of the hearing, the court indicated
that "it believed the products are confusingly similar" and
that, therefore, it was "inclined to enter some sort of
injunctive relief." Nonetheless, the court declined to enter
a ruling at that time and urged the parties to resolve the
-4-
4
matter themselves. Eventually, on August 1, 1995, the
districtcourt enteredan orderenjoiningBudget from,inter alia,
_____ ____
manufacturing, distributing, promoting,
advertising, and/or selling:
1) the horizontal, inclined
and variable inclined Budget
Supraline Conveyors; and
2) any other conveyor which is
likely to cause confusion or
mistake in the minds of the
public or to deceive purchasers
into the belief that the
defendant's goods are the
plaintiff's goods or are
affiliated with or sponsored by
the plaintiff.2
Budget now appeals from this order.
II.
II.
___
Discussion
Discussion
__________
In ruling on a preliminary injunction motion, a
district court must ask whether the moving party has
established that (1) it has a substantial likelihood of
success on the merits, (2) there exists, absent the
injunction, a significant risk of irreparable harm, (3) the
balance of hardships tilts in its favor, and (4) granting the
injunction will not negatively affect the public interest.
See, e.g., Hypertherm, Inc. v. Precision Prods., Inc., 832
___ ____ ________________ _______________________
F.2d 697, 699 n.2 (1st Cir. 1987). Though the district court
____________________
2. The order also enjoins Budget "from producing and/or
distributing . . . any advertising or promotional materials
which depict the Supraline Conveyor or any other product
which is confusingly similar to the Ultraline Conveyor."
-5-
5
enjoys considerable discretion in applying this test, its
decision to grant or deny a preliminary injunction must be
supported by adequate findings of fact and conclusions of
law. See Fed. R. Civ. P. 52(a); Knapp Shoes, Inc. v.
___ __________________
Sylvania Shoe Mfg. Corp., 15 F.3d 1222, 1228 (1st Cir. 1994).
________________________
The requirements of Rule 52(a) are intended to
assure that the district court gives appropriate
consideration to all essential relevant factors and provides
an adequate basis for meaningful appellate review of its
decision. See generally 9A Charles A. Wright & Arthur R.
___ _________
Miller, Federal Practice and Procedure 2751, at 478-80 (2d
______________________________
ed. 1994). The rule, however, is not intended to change the
preliminary nature of the proceeding; in the context of a
preliminary injunction motion, the district court's findings
need not be overly detailed, and they do not bind the court
in subsequent proceedings. See Aoude v. Mobil Oil Corp., 862
___ _____ _______________
F.2d 890, 895 (1st Cir. 1988). Moreover, the absence of Rule
52(a) findings and conclusions will not be fatal in all
cases. We may overlook the defect, if our own review of the
record substantially eliminates all reasonable doubt as to
the basis of the district court's decision. See New
___ ___
Hampshire Motor Transp. Assoc. v. Flynn, 751 F.2d 43, 47 (1st
______________________________ _____
Cir. 1984) (citing Pullman-Standard v. Swint, 456 U.S. 273,
________________ _____
292 (1982)); Conservation Law Found., Inc. v. Busey, Nos. 92-
_____________________________ _____
-6-
6
1335, 1464, 95-1019, 1020, 1047, 1048, slip op. at 48-49 (1st
Cir. April 2, 1996) (failure to adhere to requirements of
Rule 52(a) is harmless error where undisputed documentary
evidence combined with district court's extensive discussion
of other findings and conclusions adequately clarifies
otherwise unexplained finding of irreparable harm).
In this case, the district court made no explicit
findings of fact or conclusions of law in granting TEC's
request for a preliminary injunction. In its three-page
written order, the court merely recited the traditional four-
prong preliminary injunction test and summarily stated that
TEC had met its burden in establishing it. The transcript of
the relatively brief hearing on TEC's motion, provides little
further insight into the district court's reasoning. The
total extent of the court's oral findings following the
hearing is limited to its statement that "it believed the two
products were confusingly similar." In the context of this
case, such minimal findings do not provide an adequate basis
for appellate review.
Moreover, our own review of the relatively sparse
record does not allow us to affirm the district court's order
in the absence of Rule 52(a) findings. Suffice it to say, we
believe that the pertinent issues are close and that the
evidence in the record does not compel a ruling for either
side. Indeed, in a case such as this one, where a proper
-7-
7
evaluation of the plaintiff's claim requires a careful
balancing of a number of nondispositive factors by the
district court, the absence of any subsidiary findings of
fact or conclusions of law renders it virtually impossible
for this court to do anything but speculate as to the basis
of the district court's ruling. Accordingly, because we are
unable to engage in meaningful appellate review, we remand
the case to the district court for further findings of fact
and conclusions of law. See Allied Mktg. Group, Inc. v. CDL
___ _________________________ ___
Mktg., Inc., 878 F.2d 806, 813-14 (5th Cir. 1989) (remand for
___________
findings in trade dress infringement action); Inverness Corp.
_______________
v. Whitehall Labs., 819 F.2d 48, 50-51 (2d Cir. 1987) (same);
_______________
cf. Knapp Shoes, 15 F.3d at 1228-29 (decision to dissolve
___ ___________
preliminary injunction in unfair competition case vacated for
lack of detailed findings). On remand, the district court
will have to apply the four-part preliminary injunction test
and set forth the basis for its ruling on each prong. In
this case, TEC alleges that Budget has impermissibly copied
the trade dress of its Ultraline conveyor in violation of
section 43(a) of the Lanham Act, 15 U.S.C. 1125(a). To
establish such a violation, TEC must prove (1) that its
design is inherently distinctive or has acquired a secondary
meaning, and (2) that there is a likelihood that prospective
purchasers of conveyors will be confused as to the source of
the Budget conveyor. See Two Pesos, Inc. v. Taco Cabana,
___ _______________ _____________
-8-
8
Inc., 505 U.S. 763, 769 (1992); Mana Prods., Inc. v. Columbia
____ _________________ ________
Cosmetics Mfg., Inc., 65 F.3d 1063, 1068 (2d Cir. 1995);
_____________________
Duraco Prods., Inc. v. Joy Plastics Enters., Ltd., 40 F.3d
____________________ ___________________________
1431, 1439 (3d Cir. 1994). Whether a violation ultimately
exists will also depend on the functionality of the copied
design. See Two Pesos, 505 U.S. at 769.3 In addressing
___ _________
TEC's likelihood of success, the district court should make
subsidiary findings of fact and conclusions of law sufficient
to explain its evaluation of the evidence with respect to
each of these three factors.
Furthermore, we think that on remand the district
court should also give specific consideration to Budget's
claim that, even if the injunction was rightly entered, the
second paragraph is overbroad. Similar language has been
disapproved in John H. Harland Co. v. Clarke Checks, Inc.,
____________________ ____________________
711 F.2d 966, 984-85 (11th Cir. 1983). See also 1 J.
___ ____
McCarthy, Trademarks and Unfair Competition 8.01[1][c]
____________________________________
(1995). There is no compelling reason for us to resolve the
____________________
3. We find it unnecessary to decide at this juncture whether
functionality is an element of the plaintiff's claim or an
affirmative defense to be raised by the defendant. See
___
Fisher Stoves, Inc. v. All Nighter Stove Works, Inc., 626
____________________ _______________________________
F.2d 193, 196 (1st Cir. 1980) (assuming arguendo that
________
defendant bears burden to prove functionality); see also 3
___ ____
Louis Altman, Callman on Unfair Competition Trademarks and
_______________________________________________
Monopolies 19.33 (4th ed. 1994) (discussing split in
__________
circuits on whether functionality is an affirmative defense).
In either event, we think it is a factor that the district
court should consider in ruling on the preliminary
injunction.
-9-
9
issue at this time, and we express no view on the merits of
this overbreadth claim.
III.
III.
____
Conclusion
Conclusion
__________
For the foregoing reasons, we remand the case to
the district court for further findings of fact and
conclusions of law consistent with this opinion. For the
moment, we leave the preliminary injunction in place, but
modify the order such that the injunction will expire two
months from the issuance of this court's mandate, absent
further action by the district court. See Allied Mktg., 878
___ ____________
F.2d at 814.
So ordered.
So ordered.
___________
-10-
10
