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BRETFORD MFG., INC. v. SMITH SYSTEM MFG. CO.

June 23, 2000

BRETFORD MANUFACTURING, INC., PLAINTIFF
V.
SMITH SYSTEM MANUFACTURING COMPANY DEFENDANT.



The opinion of the court was delivered by: Grady, District Judge.

MEMORANDUM OPINION

Before the court are cross-motions for summary judgment. For the following reasons, defendant's motion is granted and plaintiffs motion is denied.

BACKGROUND

Defendant Smith System Manufacturing Company ("Smith"), a Delaware corporation, also manufactures desks, work stations, tables and other furniture. In 1996, Smith developed the FLEXLINE series of computer work tables, using the leg design of Bretford's CONNECTIONS table as a basis for developing its FLEXLINE tables. While the FLEXLINE table is quite similar to the CONNECTIONS table, the FLEXLINE table has a slightly thicker top and thicker molding. Further, FLEXLINE tables currently have labels with the Smith logo affixed to the modesty panel, though the tables were not so labeled initially.*fn1

Bretford was the only manufacturer to make a computer table with a V-shaped leg from 1990 until 1997. Bretford claims that as the exclusive manufacturer of computer tables featuring the V-shaped leg, it aggressively marketed the design, spending over $4,000,000 on advertising and promotional materials focused on the leg. Smith admits that it modeled its line after Bretford's to better compete with Bretford in the institutional user market. Both parties, as well as several dealers, are in agreement that uniformity is important to end-users such as schools when purchasing decisions are made. Smith states that it copied the Bretford design, in part, to appeal to consumers seeking to purchase new computer desks to match the ones already in their schools. Smith disputes that Bretford aggressively marketed the V-design because Bretford only provides two examples of promotional literature where the V-design is mentioned. See Plaintiff's Appendix, at Tab 3.

How Computer Work Tables Reach End-Users*fn2

Both companies sell computer tables to schools and other institutional end-users, largely through dealers, distributors, and wholesalers (collectively, "dealers").*fn3 Dealers use catalogs provided by manufacturers or their own catalogs, which include inserts paid for by the manufacturers, to present to customers and institutional users the products they sell. "Catalog Allowances," or the payment to dealers of money in exchange for space in their catalogs, are among manufacturers' largest annual promotional expenditures. Smith states that its merchandise never appears in a catalog where it is not featured on a dedicated page, prominently featuring its company name and trademarks as well as pictures of the product being sold. Bretford does not dispute Smith's statement, but claims that manufacturers do not have control over the advertisements created by dealers. Bretford's CONNECTIONS table has appeared in dealer catalogs without the Bretford or CONNECTIONS marks or logos.

In a typical sales transaction, an end-user, such as a school, first formulates a bid specification, setting forth the requirements of the equipment the end user seeks to purchase. This is typically done with the assistance of a dealer or manufacturer's sales representative, using the manufacturer's specification sheet, catalogs and promotional materials as a guide.*fn4 In the educational furniture market, dealers make suggestions as to the language of the bid request. A bid may specifically identify a manufacturer, or it may simply describe a particular item. Bid requests regularly specify that "equivalents" may be bid.

Once the end-user completes its bid specification it typically sends the specification out to several dealers. The dealers contact manufacturers, like Bretford or Smith, and the manufacturers quote prices to the dealers. The dealers determine their mark-up on each item, then complete and submit the bid sheet to the end-user. Bid sheets typically disclose the name of the manufacturer and the model number of the furniture.*fn5 When a bid is successful, a purchase order issues from the end-user to the successful dealer, usually specifying the manufacturer and model numbers of the products being purchased. The manufacturer's name and model are repeated in the invoice and shipping list sent to the end-user.

When a purchaser orders either Bretford's or Smith's furniture, the furniture is delivered in boxes that display the name of the manufacturer. Bretford marks its computer table shipping containers with a label approximately 12 inches long and four inches high. The label states Bretford's name, the model number of the contents, and a brief description of the product. In addition to the computer table, the shipping container contains an assembly instruction sheet with the BRETFORD name on it. Likewise, Smith ships its FLEXLINE tables in boxes prominently featuring a 12 inch by three inch SMITH SYSTEM company name and logo, and a packing list attached to the box contains in its heading the SMITH SYSTEM company name, address, and telephone and fax numbers, as well as a description of the contents.

Events Precipitating This Lawsuit

In late 1996 or early 1997, the Dallas, Texas Independent School District issued a request for proposals to supply 300 computer work centers. The bid request specified Bretford tables as the reference product but allowed that substitutes could be bid. Various dealers bid on the contract, providing the school district with samples. In April, 1997 the Dallas Independent School District awarded the contract to J & S Equipment, a Texas dealer, which agreed to provide Smith FLEXLINE computer tables to meet the specifications.

The Pending Actions

In January, 1998 Bretford filed this suit alleging that Smith had engaged in trade dress infringement, unfair competition/false advertising, and reverse passing off in violation of Section 43(a) of the United States Trademark Act of 1946, 15 U.S.C. § 1125(a) and under the common law. The complaint also alleged unfair and deceptive business practices and deceptive trade practices in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS ยงยง 505/1-12, as well as similar claims under the ...


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