The opinion of the court was delivered by: MILTON I. SHADUR
Ohio Art Company ("Ohio Art") has sued three defendants--Lewis Galoob Toys, Inc. ("Galoob"), GALCO International Toys, N.V. ("GALCO") and Vaughn Associates, Inc. ("Vaugh.")--in a multi-count Complaint charging defendants with violations of Ohio Art's intellectual property rights. This Court has conducted an evidentiary hearing occupying several trial days (the "Hearing") to consider Ohio Art's motion for preliminary injunctive relief. In accordance with Fed. R. Civ. P. ("Rule") 65 and the requirements of Rule 52(a), what are set forth here are the findings of fact ("Findings") and conclusions of law ("Conclusions") that constitute the grounds of this Court's action on that motion.
To the extent (if any) that the Findings as stated may be deemed conclusions of law, they shall also be considered Conclusions. In the same way, to the extent (if any) that matters later expressed as Conclusions may be deemed findings of fact, they shall also be considered Findings. In both those respects, see Miller v. Fenton, 474 U.S. 104, 113-14, 88 L. Ed. 2d 405, 106 S. Ct. 445 (1985).
1. Ohio Art is a corporation organized and existing under the laws of Ohio with its principal place of business at 1 Toy Street, Bryan, Ohio 43506. Ohio Art is in the business of manufacturing and marketing toys and games, including the Etch A Sketch drawing toy.
2. Galoob is a corporation organized and existing under the laws of California with its principal place of business at 500 Forbes Boulevard, South San Francisco, California 94080. Galoob is also in the business of manufacturing and marketing toys and games, including the Pocket Play Doodle It drawing toy.
3. GALCO is a corporation organized and existing under the laws of the Netherlands Antilles with its principal place of business at 701-8 South Tower World Finance Center, Harbour City, Tsimshatsui, Kowloon, Hong Kong 201. GALCO is a subsidiary of Galoob.
4. Vaughn is a corporation organized and existing under the laws of Illinois with its principal place of business at 1011 East Touhy Avenue, Suite 235, Des Plaines, Illinois 60018.
Pending Claims and Motions
5. On February 6, 1992 Ohio Art filed a five-count Complaint alleging trademark, service mark and collective membership mark infringement under 15 U.S.C. § 1114
(Count I); false designation of origin under Lanham Act § 43(a), Section 1125(a) (Count II); violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and Deceptive Trade Practices Act (Count III); violation of the Illinois Trademark Act (Count IV); and common law unfair competition and infringement of common law trademarks and trade dress (Count V).
6. All defendants have denied the substantive allegations of the Complaint and have asserted seven affirmative defenses: inexcusable delay in bringing suit; functionality of Ohio Art's mark; descriptiveness of Ohio Art's mark and lack of secondary meaning; estoppel; material misrepresentations to the Patent and Trademark Office ("PTO") by Ohio Art in procuring the registration of the mark at issue; inequitable conduct before the PTO by Ohio Art; and attempted unlawful extension of patent protection. All defendants also filed a counterclaim against Ohio Art for trademark misuse under Section 1120 (First Claim for Relief) and for cancellation of Ohio Art's Trademark No. 1,587,707 (the "Mark") under Section 1119 (Second Claim for Relief).
7. Simultaneously with its filing of the Complaint, Ohio Art filed a motion for preliminary injunction to enjoin defendants from marketing Doodle It. Shortly thereafter defendants filed a motion for summary judgment on all of Ohio Art's claims. Following extensive briefing and the submission of affidavits by the parties on both motions, this Court held the four-day evidentiary Hearing referred to earlier. Both sides have since submitted post-Hearing proposed Findings and Conclusions.
Products in Issue and Their Trade Dress
8. Since 1960 Ohio Art has marketed Etch A Sketch in basically the same configuration: a rectangular (7" x 5") grey opaque drawing screen encased in a nearly rectangular (9-3/4" x 8" x 1") plastic frame with two round knobs protruding from the plastic, located at the lower corners of the frame outside of the drawing screen but inside the outer borders of the frame.
10. Etch A Sketch is sold in a pyramid-shaped box covered with shrink wrap plastic that displays the entire front of the toy itself through the clear-plastic-covered open front of the box. As for the sides of the box, they are in the traditional red Etch A Sketch color marked with yellow horizontal lines. Also on the sides of the box are the Ohio Art logo, the Etch A Sketch product name and photographs depicting the toy. In this instance the Ohio Art logo is a red square with a white border and the words "Ohio Art The World of Toys" imprinted in yellow. As for the back of the box, it is bright yellow with a border of the traditional red Etch A Sketch color marked with yellow horizontal lines. It displays the Etch A Sketch product name, a large photograph depicting the toy and two Ohio Art logos. One of the logos is like that appearing on the toy itself (see Finding 9), while the other is like that appearing on the sides of the box and described in this Finding. Neither logo includes the Mark's simple configuration of a rectangle within a rectangle with two small circles at the lower corners between the rectangles (see Finding 18 and Finding 29 n.7).
11. In mid-1990 independent inventors presented Galoob with a new idea for a product called Lite Mite--a portable, low cost activity toy. Impressed with the idea and with its sales force's reaction to the toy, Galoob decided to develop a full line of similar easy-to-carry toys. At its request an outside design firm created a style setting the tone for what would become its Pocket Play line. Doodle It and Line Shines were the next two products introduced into the line, each having a design consistent with that developed for the other products in the Pocket Play line. As a result of the success of the first three products, in 1992 Galoob added Power Doodle It and Mini Doodle It to its line of portable products.
12. At the time that Doodle It was being developed, Galoob was aware that the Grandjean patent on Etch A Sketch had expired and that the Clark patent was about to expire.
It did not know of Ohio Art's configuration trademark registration of the Mark, however, until it received a letter from Ohio Art in February 1991. Notice of that Mark did not appear on Ohio Art's packaging until some time in 1991.
13. Galoob began marketing Doodle It in late 1990. Doodle It has a squarish frame (measuring 5.3" x 5.5") with rounded corners and a nearly square drawing screen measuring 3.75" x 3.3". Its control knobs extend outward from the frame at its lower corners, where they are nearly flush with the upper surface of the frame.
14. Doodle It is marketed in bold eye-catching colors: neon orange with bright blue knobs; hot pink with neon lime green knobs; bright blue with neon orange knobs; and neon lime green with hot pink knobs. Doodle It is packaged in a blister pack, with the toy being mounted on cardboard approximately double the size of the toy itself. Its packaging is consistent with the packaging of the other Pocket Play line products, which are color-coded by price (bright blue, pink and orange). Doodle It's cardboard mounting has a front in bright blue with a narrow border of alternating neon orange and bright blue, and it prominently displays Galoob's name and logo, the product line name, the product name and a photograph depicting the toy in operation. As for the back of the cardboard mounting, it is white in color and also displays the Galoob name and logo, the product line name and the product name. Also featured there are graphics illustrating how to operate Doodle It and depicting two other Pocket Play products, Mini Lites and Line Shines. Designed to be hung from a rack, the cardboard mounting has a "J hook" at the top. Doodle It's knobs are exposed and can be manipulated without breaking the blister package, which is labeled "Try Me." Doodle It is typically sold at about half the price of Etch A Sketch.
15. Doodle It and Etch A Sketch use the same basic action mechanism. Each toy's interior apparatus comprises four pulleys and two cords connected to a pair of crossed rods, set perpendicularly to one another, which move a stylus in vertical and horizontal directions across a screen dusted with a fine powder. That movement of the stylus across the screen creates dark line drawings.
16. Some 32 years after Ohio Art first began marketing Etch A Sketch and more than a year after Galoob began selling Doodle It and had achieved sales of 600,000 units in the United States, Ohio Art introduced a new product--Travel Etch A Sketch--at the New York Toy Fair in February 1992. Travel Etch A Sketch is much smaller than Etch A Sketch and is substantially less rectangular in appearance because of the combined effect of the greater rounding of its corners and its much smaller dimensions. Travel Etch A Sketch's outer casing measures 6-1/4" x 5-3/8", and its screen measures 4-1/2" x 3-1/4". In further contrast to Etch A Sketch, the knobs of Travel Etch A Sketch have been shifted outward and downward. That newer toy was not available for consumers to purchase at retail stores until late March or early April 1992.
17. For many years Etch A Sketch enjoyed the protection of two United States patents: the Grandjean patent (No. 3,055,113), which issued on September 25, 1962 and expired on September 25, 1979, and the Clark patent (No. 3,760,505), which issued on September 25, 1973 and expired on September 25, 1990. Those patents described and depicted the apparatus utilized in Etch A Sketch.
18. On December 11, 1987 Ohio Art applied to the PTO to register the Mark: a trademark consisting of a line drawing showing the bare outlines of the Etch A Sketch configuration, comprising two unadorned rectangles, with two circles in the lower corners of the outer rectangle.
19. Twice the PTO refused to register the Mark, first stating that it "consists of a common geometrical shape [without] any trademark significance," and later saying that "the square screen and round dials appear to be the easiest and best design for this type of sketching toy." Accordingly the PTO directed Ohio Art to "indicate whether the proposed mark is the subject of either a design or utility patent" and, if so, said that Ohio Art should provide all information concerning the patent. In addition the PTO asked Ohio Art to state "whether alternative designs are available for the feature embodied in the proposed mark" and, if so, "whether the alternative designs are equally efficient and whether alternatives are more costly to produce."
20. In response to the PTO's second refusal to register, on January 29, 1989 Ohio Art submitted a brief entitled "Response to Office Action" accompanied by exhibits. Ohio Art there made repeated representations to the PTO as to the scope of its claimed mare. It urged that the configuration it was seeking to register--the same one that had been depicted as the "preferred embodiment" in the Grandjean patent--was nonfunctional, by contrasting that configuration with other alternatives that would also utilize the same mechanism disclosed by the Grandjean patent:
The outer perimeter could be square, round, oblong, scalloped, square, have side or top handles, or a number of other shapes without detracting from the invention disclosed in the Grandjean Patent. The stylus controls could bear different proportions to the frame's shape, could be executed in the form of cross-shaped, T-shaped or star-shaped knobs, or could be placed at the different locations on the toy's surface. For example, the knobs could, with a gear change, be located on the lateral sides, to achieve a completely flat top surface. The inner screen border could also be executed in a number of different shapes, and in different positions or proportions in relation to the outer rectangle and the stylus controls.
21. In support of its contention that Etch A Sketch's function could be performed just as easily and economically by toys that used different shapes, Ohio Art cited five existing toys, two of which had round drawing screens while the others were square or rectangular.
Ohio Art represented to the PTO that those toys "performed basically the same function" as Ohio Art's toy yet "have surface configurations different from the one claimed by Applicant as a trademark." In emphasizing that "Other alternative designs are available," Ohio Art went on to say (emphasis added):
It is significant that a toy with a square (instead of rectangular) screen design operates just like Applicant's toy and is available in the marketplace.
And in identifying the "alternative designs" that purportedly showed the nonfunctional nature of its own configuration, it expressly pointed to the fact that the competing Electra Doodle toy had a "square, rather than rectangular TV-shaped screen."
22. In reliance upon Ohio Art's representations as to the exclusivity of its use of the claimed shape, the lack of functionality of that shape and the availability of alternative designs, on March 20, 1990 the PTO registered the Mark as No. 1,587,707.
Communications Between the Parties
23. On February 14, 1991 counsel for Ohio Art sent a letter to Galoob by facsimile transmission, charging that the Doodle It configuration infringed the Mark.
24. Galoob promptly forwarded the letter to its counsel for consideration. On February 26, 1991 its counsel responded to Ohio Art by facsimile letter, explaining that (a) the shape of Doodle It is distinctive and radically different from that of Etch A Sketch, (b) the price points of the two products are far apart, (c) the trademarks on the two products have no similarity and (d) the Etch A Sketch patents had expired.
25. During the following month counsel for Ohio Art and Galoob exchanged more facsimile communications and phone conversations. In addition, Ohio Art was provided with a sample of the Doodle It product. After Galoob's last letter dated March 25, 1991 there was no further oral or written communication from Ohio Art for nearly seven months. It was not until October 14, 1991 that Galoob's counsel next received a letter from Ohio Art's counsel, purporting to respond to the arguments raised by Galoob in February and March 1991. Galoob's counsel replied on November 19, 1991, asking Ohio Art to provide answers to the questions previously raised as to the Mark's file history and stating that the long period of silence had prejudiced Galoob. Ohio Art did not respond to that letter, instead filing this action three months later.
Secondary Meaning: the Mark
26. There is a presumption of secondary meaning in the Etch A Sketch configuration as a result of the PTO's registration of the Mark on the Principal Register. That presumption has been rebutted, however, by evidence presented to this Court though not previously submitted by Ohio Art's lawyers to the PTO. Thus Ohio Art is not at all likely to prevail on the issue of secondary meaning at trial.
27. Any analysis of secondary meaning must start with the fact that the Mark consists of three simple geometric figures having a plain and common configuration. Ohio Art's Mark did not embellish the basic shape of the toy as depicted in the Grandjean and Clark patent drawings. As the PTO recognized, such a shape is not inherently "distinctive" in the trademark sense and is not protectible absent a showing of secondary meaning.
(a) For example, the PTO assumed that Ohio Art had exclusively used the Mark for nearly 30 years.
But at least three other toys that used the same mechanism and that were nearly identical in shape and size to Etch A Sketch were marketed before the registration of the Mark. Easy Writer I and Easy Writer II have been marketed since at least 1988. Better Sketch was introduced in late 1989 and was sold until the latter part of 1991.
In addition, Pocket Artist is available in this country and also uses the rectangle within a rectangle configuration, albeit with different knob shape and placement.
(b) In addition, the PTO did not have the opportunity to review the same advertising evidence that has been presented to this Court. Moreover, because registration is an ex parte proceeding, the PTO did not have the benefit of cross-examination of that evidence. All of that evidence discloses that Ohio Art's extensive advertising of its toy has always prominently featured its word trademarks "Etch A Sketch" and "Ohio Art" and has almost invariably featured Etch A Sketch's traditional red color.
29. Nor has any of Ohio Art's Etch A Sketch advertising ever used any of the familiar methods of drawing consumers' attention to the product's configuration--such things as "Look for the Union Label" [AFL-CIO], "Get a Piece of the Rock" [Prudential] or "You Can Trust Your Car to the Man Who Wears the Star" [Texaco]. Ohio Art never publicly claimed any trademark right in the shape of its product until some time in 1991--after the development of Doodle It by Galoob in mid-1990 and long after Easy Writer and Better Sketch had been introduced on the market.
30. It was not surprising, then, that Ohio Art presented no evidence whatever during the Hearing that its advertising has been effective in teaching consumers that the product's shape --as contrasted with the name Etch A Sketch--signifies a single producer. Ohio Art presented no secondary meaning survey, despite the fact that the Mark has been the subject of litigation for nearly two years. No consumer has ever returned any of the 600,000 Doodle It products to Ohio Art or its distributors, nor has any consumer returned any of the other rectangular drawing toys (Easy Writer, Easy Writer II, Better Sketch or Pocket Artist) to Ohio Art for repair or refund.