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Filter Dynamics International v. Astron Battery

MAY 8, 1974.




APPEAL from the Circuit Court of Du Page County; the Hon. GEORGE W. UNVERZAGT, Judge, presiding. MR. JUSTICE SEIDENFELD DELIVERED THE OPINION OF THE COURT:

Filter Dynamics International, Inc., and its subsidiary, Battery Systems of Illinois, Inc. (referred to as FDI unless otherwise noted) sought to preliminarily enjoin the defendant, Astron Battery, Inc. (Astron), and the individual defendants, J. Brosilow, R. Brosilow and J. Levitt, from marketing automotive batteries in a display package which plaintiffs claim copied their own and from using allegedly misappropriated trade secrets. On defendants' motion at the close of plaintiffs' evidence on the hearing for the preliminary injunction, the court denied relief to the plaintiffs. They appeal from the interlocutory order of denial pursuant to Illinois Supreme Court Rule 307(a)(1). Ill. Rev. Stat. 1971, ch. 110A, par. 307 (a)(1).

On appeal plaintiffs contend the proof is sufficient to establish they are entitled to injunctive relief against defendants for acts of unfair competition under the Illinois Deceptive Trade Practices Act (Ill. Rev. Stat. 1971, ch. 121 1/2, par. 311 et seq.) and the Illinois "Anti-Dilution" Statute (Ill. Rev. Stat. 1971, ch. 140, par. 22) and for misappropriation of certain trade secrets. Defendants respond by arguing that the numerous findings of the court justifying denial of the injunction are correct and not against the manifest weight of the evidence.

The first and primary issue presented is whether the marketing of defendants' prototype battery-display box constitutes unfair competition with plaintiffs' battery-display container (referred to as "Vu-Pak"). Plaintiffs claim their Vu-Pak, as equivalent to a trademark under the Illinois Uniform Deceptive Trade Practices Act (Ill. Rev. Stat. 1971, ch. 121 1/2, par. 311 *fn1), was infringed by defendants' prototype box in violation of the Act. Ill. Rev. Stat. 1971, ch. 121 1/2, par. 312. *fn2

The proof adduced by plaintiffs in support of this issue consisted of the testimony of their officers and employees and the testimony of defendant J. Brosilow who was called as an adverse witness under section 60 of the Civil Practice Act. Essentially, the testimony showed that FDI is engaged in the business of manufacturing and marketing automotive parts and accessories, and through its subsidiary, Battery Systems of Illinois, manufactures and sells batteries to retailers and distributors. Much of plaintiffs' battery sales are directed to the self-service mass merchandising market. The batteries are either labeled with an FDI proprietary name such as "LEE" or with the private labels of its merchant customers.

During 1972 plaintiffs sold approximately $2.5 to $3 million worth of automotive batteries, of which approximately $1 million worth were sold in plaintiffs' Vu-Pak display box. The total volume of replacement battery sales in the industry over the same period approximated $600 million. An estimated 20-25% of plaintiffs' batteries are sold under private labels rather than plaintiffs' proprietary labels.

Defendant Astron is a competitor of plaintiffs which also sells batteries to private label merchant customers. J. Brosilow and J. Levitt are the sole principals of Astron. The defendant R. Brosilow, J. Brosilow's uncle, is a carton broker or supplier of boxes. Until early 1972, before Astron was formed, J. Brosilow and Levitt were principals of World Battery Corporation. On May 1, 1972, shortly after J. Brosilow and Levitt left World Battery to form Astron, FDI acquired the assets of World Battery and with them organized Battery Systems of Illinois.

The development and design criteria for plaintiffs' battery display container began in January and February of 1971. Preliminary work on the original display package (called Vu-Pak 1) was done in June of 1971 and a package was put out by plaintiffs that summer. Vu-Pak 1 appeared in a November 1971 trade publication and was shown in a November 1971 Automotive Parts and Accessories Association (APAA) show in Chicago. The form of the original Vu-Pak remained unchanged but it was subsequently redesigned to reduce production costs and to increase its strength. The graphics of Vu-Pak 1, a red and white box with black lettering and a black and white checkerboard stripe, was also changed in Vu-Pak 2. In June of 1972, plaintiffs began marketing their batteries in Vu-Pak 2.

Vu-Pak 2 is essentially a rectangular, corrugated, cardboard box with the front upper corner largely cut away to expose and display the battery. The box is about 12 1/2 inches long, 9 inches high and 10 1/2 inches wide. The cutaway portion takes 7 inches of the length off on top and 7 inches of the height in front, leaving a 2 inch strip covering the bottom front portion of the exposed battery. The sides of the cutaway portion of the box are marked by a straight diagonal edge extending up and back from the 2 inch strip in front to the remaining 5 1/2 inches of the box top. The cutaway portions of the box remain attached to the box but are folded or tucked as flaps to the inside of the box. A large flap from the top of the box folds behind the exposed battery and separates the battery from the dry acid package which is stored in the back of the box, together with instructions and guarantee. The acid is not activated and added to the battery until the time of use.

The graphics, or color scheme and design of the box, consist principally of a pastel nine-striped 4-inch-wide rainbow over a black box background. The rainbow or stripe extends over the front, top, and sides of the box, curving on the top and sides and running straight at an angle on the front. The rainbow consists of three white, two green, two lavender, one yellow and one yellow over lavender stripes of varying widths. On the front strip of the box to the left side of the rainbow, written in lavender over the black background are the words "DRY CHARGED BATTERY". Underneath these in white letters are the words, "LIFE BEGINS WHEN ACTIVATED". On the top of the box following the curve of the rainbow are the words in white letters "FRESH POWER". On the sides of the battery container, written in the same colors as the rainbow, are the words "FRESH FRESH DRY CHARGED BATTERY", and in smaller letters, "LIFE BEGINS WHEN ACTIVATED" and "ACTIVATOR PACK AND INSTRUCTIONS INCLUDED".

Batteries sold in plaintiffs' Vu-Pak 2 container clearly expose either the LEE or private name label printed on the battery. The Vu-Pak 2 container itself is not marked with any brand name. Batteries sold in Vu-Paks are generally sold in the display rack with a number of the same label batteries side by side on shelves. Published brochures and advertisements including a television commercial submitted in evidence clearly show the LEE brand name on the battery and the rainbow on the Vu-Pak 2 container. As shown, the front rainbow stripe is always noticeable and the stripe on other portions of the box is noticeable in varying degrees depending on the particular advertisement. Other LEE products are displayed and advertised in different-shaped containers according to the nature of the product, but each container bears the same or a similar nine-striped rainbow usually over a black background.

Plaintiffs have spent over $200,000 in developing and advertising their Vu-Pak battery display package, of which $40,000 was allocated to design, printing, art work, construction and graphic costs and the balance to marketing and advertising directed to the mass retailer as well as to directly influence the consumer. Vu-Pak 2 had won three design and packaging awards.

The design was directed toward attracting the customer, allowing him to see the battery which he was purchasing and also to provide a carton for him to carry the battery and acid package home after purchase.

The testimony of J. Brosilow established that Astron started work on the concept of marketing batteries in display boxes in early April or late March of 1972. J. Brosilow was aware of plaintiffs' marketing efforts with Vu-Pak 1, but testified he was concerned about marketing a side-terminal battery instead of a regular post-type battery and therefore wanted a package to display this new type of battery. Six prototype boxes were made at his request and displayed at the APAA show in Los Angeles in November, 1972. At the time of the hearing the prototype boxes were the only ones defendants had made.

Defendants' prototype box is quite similar in form or shape to plaintiffs'. It has the cutaway upper front corner, leaving a 2-inch strip below and a 5 1/2-inch box behind the display battery to carry the acid pack. The graphics of the box, however, are not similar to plaintiffs'. The color scheme is all red around the cutaway portions and black toward the back and bottom of the box, with a 1/4-inch wide, straight white line separating the two colors. All lettering is straight and in white. The lower front strip says, "DRY CHARGED BATTERY" and below this "complete ready to install". On top of the box is lettered, "activator fluid pack included". The sides contain "100% FRESH POWER", and below this line, "the instant fluid is added". No brand name is labeled on the box. Five of defendants' boxes were displayed at the Los Angeles APAA show with a header-card that fits onto the box and describes the contents of the box. The sixth box was on a metal rack, with the header-card attached to the rack instead of the box. The batteries used in the display boxes were dummy batteries with side terminals.

Astron incurred almost no cost in the marketing research of its display box. J. Brosilow testified that he relied on his 15 previous years of experience in the battery business. He readily fashioned in court a type of display box similar in form to his prototype box and plaintiffs' Vu-Pak by cutting away the upper front corner of a plain battery box.

John Vargo, a corporate Vice-President of FDI, testified for plaintiffs that one of the goals in designing the Vu-Pak container was to create a package that was unique, distinctive and recognizable with whatever brand was sold in it. Plaintiffs wanted to create with Vu-Pak a subliminal effect for secondary purchase of the package. The customer would know the battery is available; he would recognize it in a certain fashion; and when he desired to purchase, would be stimulated to return to purchase plaintiffs' battery package. The customer would recognize the package even if used with several different private label brands because of the same shape display box he had seen before. On cross-examination, Vargo testified that the goal in selling batteries in Vu-Pak containers is to get the purchasers to believe from the package that when he purchases the private label battery he is purchasing a LEE battery despite the private brand name; that the goal was source identification and not brand ...

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