The opinion of the court was delivered by: PAUL E. PLUNKETT
For nearly twenty years, Reed Union has owned and marketed a polish for automobiles styled "NU FINISH." NU FINISH received trademark protection in the mid-1970s. NU FINISH has always been marketed in an orange plastic bottle with black lettering including the name NU FINISH on the upper half of the bottle, and a series of claims about the product on the bottom half (the trade dress). For most of its life, NU FINISH was a minor player in the car wax market. Although Reed Union had always advertised the product on television extensively (one to one and one-half million dollars per year), its sales during the first ten or eleven years remained stagnant. All of that changed in the late 1980s when Reed Union, for the first time, was successful in placing NU FINISH in national mass marketing retail stores such as K-Mart. Thereafter, NU FINISH sales mushroomed until, in 1991, they reached some sixteen million dollars.
Enter Turtle Wax. Throughout the 1970s and 1980s, Turtle Wax had been perhaps the undisputed leader in the car wax market. It had retained that position in part by keeping track of its competitors and developing new products to compete with any interlopers (more about this later). Turtle Wax had largely ignored Reed Union and its NU FINISH because of its low volume of sales. By 1989, it could afford to do so no longer. After its effort to market a new and improved Turtle Wax hard-shell finish in 1989 failed to affect NU FINISH's growing market share, Turtle Wax created a new brand of car wax. It is uncontested that this new product was designed in large part to compete directly against NU FINISH. Turtle Wax's new product was named "FINISH 2001," and Turtle Wax quickly obtained a trademark on that name. The trade dress for FINISH 2001 was created by Turtle Wax's art department (Mr. Campagnolo) with help from its marketing department (Mr. Cusack). FINISH 2001 is in a florescent green bottle (somewhat larger than NU FINISH's orange one). The green bottle also has a somewhat different shape. Turtle Wax selected a florescent orangered label (called scarlet by Mr. Campagnolo) and black lettering. FINISH 2001 was successful. Its sales grew steadily if not remarkably in 1990 through 1993. In that same period, NU FINISH sales declined.
The Likelihood of Confusion Between NU FINISH's Mark and Trade Dress with that of FINISH 2001
The touchstone of trademark infringement analysis is "likelihood of confusion," a deceptively simple test. The Seventh Circuit has developed seven factors to evaluate this likelihood of confusion. They are:
1. the similarity between the marks in appearance;
2. similarity of the products;
3. area and manner of concurrent use;
4. degree of care likely to be exercised by consumer;
5. strength of complainant's mark;
7. intent of defendant to palm off his product as that of another.
Smith Fiberglass Prod., Inc. v. Ameron, Inc., 7 F.3d 1327 (7th Cir. 1993), quoting AHP Subsidiary Holding Corp. v. Stuart Hale Co., 1 F.3d 611, 616 (7th Cir. 1993). None of these seven factors alone are dispositive, and the weight accorded to each factor will vary from case to case. Schwinn Bicycle Co. v. Ross Bicycles, Inc., 870 F.2d 1176, 1187 (7th Cir. 1989). With this in mind, we consider the critical factors (although somewhat out of order).
I. Similarity of Products and Area and Manner of Concurrent Use
FINISH 2001 and NU FINISH are both car polishes. Each is priced in the five to six dollar range and competes with the other. Each makes similar claims -- for example, a once-a-year car polish that has a high shine and excellent protective qualities. When the marks and trade dress in question are used on directly competitive products sold through the same channels of trade, less similarity is required between the marks to establish confusion. Union Carbide Corp. v. Ever-Ready, Inc., 531 F.2d 366, 377 (7th Cir.), cert. denied, 429 U.S. 830, 50 L. Ed. 2d 94, 97 S. Ct. 91 (1976). These two factors clearly favor NU FINISH. The remaining factors must be evaluated in light of this highly competitive position.
II. The Strength of the NU FINISH Trademark and Trade Dress
We next consider the strength of the NU FINISH trademark and trade dress.
The term "strength" of a trademark refers to the distinctiveness of the mark or more precisely, its tendency to identify the goods sold as coming from a particular source. McGregor-Doniger, Inc. v. Drizzle, Inc., 599 F.2d 1126, 1131 (2d Cir. 1979). Strength of the mark is a crucial factor in the likelihood of confusion analysis because the stronger the mark, the broader protection to which it is entitled. Similarly, the converse is true.