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Toyo Tire & Rubber Co., Ltd. v. Atturo Tire Corp.

United States District Court, N.D. Illinois, Eastern Division

December 20, 2019

TOYO TIRE & RUBBER CO., LTD, et al., Plaintiffs,
v.
ATTURO TIRE CORPORATION, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          MARY M. ROWLAND, UNITED STATES DISTRICT JUDGE.

         Plaintiffs Toyo Tire & Rubber Co., Ltd. and Toyo Tire U.S.A. Corp. (collectively, “Toyo”), brought this action against Defendants Atturo Tire Corporation (“Atturo”) and Svizz-One Corporation, Ltd., alleging in part that Atturo infringed the trade dress on Toyo's Open Country Mountain Tires (“OPMT tires”). For the reasons set forth below, the Court now rules on six Daubert motions as follows: Atturo's motion to exclude expert opinions of Toyo expert Michael Rappeport [405] is granted; motion as to Larry Chiagouris [411] is granted; and motion as to Charles Patrick [413] is granted. Toyo's Daubert motion as to Atturo expert Aric Rindfleisch [416] is granted in part and denied in part; motion as to Jeffrey Stec [417] is denied in large part; and motion as to Joseph Walter [419] is denied.

         BACKGROUND

         On July 23, 2018, the Court granted Atturo's sanctions motion, barring Toyo from asserting that its trade dress is limited to the two-dimensional surface layer of the OPMT tire's center and shoulder blocks. (Dkt. 502, hereafter, “Sanctions Order”). The Court ruled that “Toyo's failure to disclose the two-dimensional trade dress theory bars Toyo from asserting that the trade dress is limited to the two-dimensional surface layer of the OPMT tread. To the extent that Toyo wishes to proceed with this case, it will be restricted to the definition of trade dress that it disclosed during fact discovery, namely, ‘the overall visual appearance and impression conveyed by the [commercial] Open Country M/T tire tread design.'” (Id.).[1]

         STANDARD

         A. Trade Dress

         The Lanham Act protects trade dress, even if it is not registered, and authorizes civil actions against infringers. See 15 U.S.C. § 1125(a); Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 210, 120 S.Ct. 1339 (2000). “Trade dress, a distinctive appearance that enables consumers to identify a product's maker, is a form of trademark.” Bodum USA, Inc. v. La Cafetiere, Inc., 621 F.3d 624, 626 (7th Cir. 2010). “Trade dress refers to the total image of a product, including features such as size, shape, color or color combinations, texture, graphics, or even particular sales techniques.” Computer Care v. Serv. Sys. Enters., Inc., 982 F.2d 1063, 1067 (7th Cir. 1992) (internal citations and quotations omitted). A product's trade dress “includes a product design that is so distinctive it identifies the product's source.” Bodum USA, Inc. v. A Top New Casting Inc., 927 F.3d 486, 491 (7th Cir. 2019) (citations omitted).

         To prove trade dress infringement of unregistered trade dress, a plaintiff must establish: “(1) its trade dress is ‘inherently distinctive' or has acquired ‘secondary meaning'; (2) the similarity of the defendant's trade dress to that of the plaintiff creates a ‘likelihood of confusion' on the part of consumers; and (3) the plaintiff's trade dress is ‘non-functional'.” Computer Care, 982 F.2d at 1068 (citations omitted); see also Wal-Mart Stores, Inc., 529 U.S. at 210-211.

         Secondary meaning “exists when consumers have come to ‘uniquely associat[e]' the mark with a single maker.” Uncommon, LLC v. Spigen, Inc., 926 F.3d 409, 424 (7th Cir. 2019) (citation omitted). “To decide if there is a likelihood of confusion, we ask whether consumers who might use either product would likely attribute them to a single source.” Id. at 425. As to functionality, the party seeking protection for unregistered trade dress bears the burden of proving that its trade dress is not functional. 15 U.S.C. § 1125(a)(3); TrafFix Devices Inc. v. Marketing Displays, Inc., 532 U.S. 23, 32, 121 S.Ct. 1255 (2001).

         Functionality “imposes a critical limit on trade dress rights because ‘product design almost invariably serves purposes other than source identification.' Because trademark protection for trade dress has no time limit, giving one competitor a perpetual and exclusive right to a useful product feature would result in a perpetual competitive advantage.” Arlington Specialties, Inc. v. Urban Aid, Inc., 847 F.3d 415, 418 (7th Cir. 2017) (citations omitted). See also Traffix Devices, 532 U.S. at 29 (“[I]n Wal-Mart Stores, Inc., 529 U.S. 205, we were careful to caution against misuse or over-extension of trade dress.”). In the Seventh Circuit, the factors considered in the functionality analysis are:

(1) the existence of a utility patent, expired or unexpired, that involves or describes the functionality of an item's design element; (2) the utilitarian properties of the item's unpatented design elements; (3) advertising of the item that touts the utilitarian advantages of the item's design elements; (4) the dearth of, or difficulty in creating, alternative designs for the item's purpose; (5) the effect of the design feature on an item's quality or cost.

Bodum USA, Inc., 927 F.3d at 492 (citation omitted).

         B. Daubert Standard

         Under Daubert v. Merrell Dow Pharms., 509 U.S. 579 (1993), the requirements of Federal Rule of Evidence 702 must be met before an expert can testify. The court evaluates the expert's qualifications, reliability of the methodology, and relevance of the testimony: “In performing its gatekeeper role under Rule 702 and Daubert, the district court must engage in a three-step analysis before admitting expert testimony. It must determine whether the witness is qualified; whether the expert's methodology is scientifically reliable; and whether the testimony will assist the trier of fact to understand the evidence or to determine a fact in issue.” Gopalratnam v. Hewlett-Packard Co., 877 F.3d 771, 779 (7th Cir. 2017) (internal citations and quotations omitted). District courts have “significant discretion under the flexible Daubert inquiry.” Lapsley v. Xtek, Inc., 689 F.3d 802, 818 (7th Cir. 2012). The burden is on the party seeking to admit the expert to show by a preponderance of the evidence that the expert meets the requirements of Rule 702 and Daubert. Gopalratnam, 877 F.3d at 782.[2]

         As the Seventh Circuit has explained:

(t)he purpose of the Daubert inquiry is to scrutinize proposed expert witness testimony to determine if it has ‘the same level of intellectual rigor that characterizes the practice of an expert in the relevant field' so as to be deemed reliable enough to present to a jury. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). A Daubert inquiry is not designed to have the district judge take the place of the jury to decide ultimate issues of credibility and accuracy. If the proposed expert testimony meets the Daubert threshold of relevance and reliability, the accuracy of the actual evidence is to be tested before the jury…

Lapsley, 689 F.3d at 805. Because “there are many different kinds of experts, and many different kinds of expertise, . . .the gatekeeping inquiry must be ‘tied to the facts' of a particular case.” Kumho Tire Co., 526 U.S. at 150 (quoting Daubert, 509 U.S. at 591). Courts therefore review each conclusion of the expert in relation to the expert's education, skill, and training, and ask “not whether an expert witness is qualified in general, but whether his qualifications provide a foundation for [him or her] to answer a specific question.” Gayton v. McCoy, 593 F.3d 610, 617 (7th Cir. 2010) (internal citations and quotations omitted). With regard to reliability, “the key to the gate is not the ultimate correctness of the expert's conclusions. Instead, it is the soundness and care with which the expert arrived at her opinion.” C.W. v. Textron, Inc., 807 F.3d 827, 834 (7th Cir. 2015) (internal citations and quotations omitted). The Court is also mindful of its “responsibility [under Fed.R.Evid. 403] to screen expert evidence for reliability and to determine the total effects of proposed evidence, weighing its probative value against its potential to (among other things) confuse the jury.” United States v. Schiro, 679 F.3d 521, 529 (7th Cir. 2012). In this case, each party has the burden to show its expert testimony is admissible under Daubert and for Toyo, that its expert testimony is admissible under this Court's Sanctions Order.[3]

         ANALYSIS

         A. Atturo's Motion to Exclude Michael Rappeport's Expert Opinions

         Atturo seeks to exclude the opinions of Toyo's proffered secondary meaning expert Michael Rappeport. Dr. Rappeport has his Ph.D. in Statistics and is a founding partner of RL Associates, a survey research and consulting firm. (Dkt. 405-2, Rappeport Report). Atturo does not challenge Dr. Rappeport's qualifications, but challenges his opinions as unreliable and not relevant. Atturo also argues that based on the Sanctions Order, the Court should bar Dr. Rappeport's testimony describing the wrong trade dress, meaning the two-dimensional surface configuration, and his conclusions based on the wrong trade dress. For the reasons stated below, Dr. Rappeport's opinions and testimony are barred.

         Dr. Rappeport opined that “the tire tread of the Toyo Open Country M/T off-road tire has developed secondary meaning. In particular, it is my opinion that the appearance of the two-dimensional surface configuration of the tread (‘Tread Pattern') [of the OPMT tire], has achieved secondary meaning as trade dress.” (Rappeport Report ¶15) (emphasis added). He concluded that “the surface configuration of the tire tread of the Toyo OPMT tire, which is what Toyo has asserted as trade dress, has clearly developed secondary meaning.” (Id. ¶43). Dr. Rappeport reached his opinion after conducting a “mystery shopper” survey of tire salespeople. (Id. ¶¶19, 20, 38.)

         Atturo argues that Dr. Rappeport's survey of Toyo salespeople is unreliable and would confuse a jury because Dr. Rappeport surveyed the wrong universe-tire salespeople who are likely to associate the OPMT tire with Toyo. (Dkt. 405-1). Toyo responds that Dr. Rappeport's survey was appropriate since customers often buy tires in an “assisted buy” situation. (Dkt. 449; see also February 27, 2019 Transcript, Dkt. 553 (Feb. 27 Tr. at 16)).[4] Toyo disputes that there are any flaws in Dr. Rappaport's methodology. With regard to the trade dress definition, Toyo responds that Dr. Rappeport's opinion is not limited only to the two-dimensional surface and instead is consistent with “Toyo's position that the overall tread design is made distinctive by the surface appearance of its configuration.” (Dkt. 513 at 10) (emphasis added).

         1. The Sanctions Order

         The Sanctions Order precludes Dr. Rappeport's opinions about the two-dimensional trade dress. That order was clear that Toyo cannot “assert[] that the trade dress is limited to the two-dimensional surface layer of the OPMT tread.” (Sanctions Order at 21). Dr. Rappeport's opinion is based on that exact definition of the trade dress. Toyo argues that, if anything, Dr. Rappeport should only be prevented from testifying that the trade dress is two-dimensional. (Dkt. 513 at 12). But allowing him to opine anew that the tread design is made distinctive by the surface appearance is inappropriate. Indeed the reason for the Sanctions Order was that Toyo disclosed a new definition of its trade dress in its expert reports. (Sanctions Order at 9, 16). Toyo cannot now offer another new definition of its trade dress.

         2. Rule 26(a)(2)(B)

         Under Rule 26(a)(2)(B), an expert's written report must contain “a complete statement of all opinions the witness will express and the basis and reasons for them.” and “the facts or data considered by the witness in forming them.” Fed.R.Civ.P. 26(a)(2)(B). Fed.R.Civ.P. 26(a)(2)(B)(i)-(ii). “This requirement ensures that the opposing party has an adequate basis to examine the expert.…A party is barred from introducing evidence or testimony that it failed to disclose without substantial justification unless the failure was harmless.” Stollings v. Ryobi Techs., Inc., 725 F.3d 753, 765 n.3 (7th Cir. 2013) (citing Fed.R.Civ.P. 37(c)(1)).

         Toyo argues that paragraph 15 of Dr. Rappeport's report shows that he opined “that the OPMT tire tread, not just the ‘Tread Pattern' acquired a secondary meaning that was driven by the impression created by the appearance of the tread surface.” (Dkt. 513 at 11). The Court disagrees. Dr. Rappeport expressly defined the “Tread Pattern” as the “two-dimensional surface configuration of the tread.” (Rappeport Report ¶15). He tested whether that “Tread Pattern of the Toyo OPMT tire has acquired secondary meaning as a trade dress.” (Id. ¶17) (emphasis added). His hypothesis was that “[a] significant proportion of an appropriate universe is able to identify the source of the Toyo Open Country M/T tire based solely on its Tread Pattern.” (Id.) (emphasis added). He was clear that the “surface configuration of the tire tread” has developed secondary meaning. (Id. ¶43) (emphasis added). Toyo cannot now re-write Dr. Rappeport's report as providing two different opinions-one about a two-dimensional trade dress and one about a three-dimensional trade dress “driven by” the two-dimensional surface.

         At his deposition, Dr. Rappeport testified that he understood the trade dress to be the “two-dimensional surface configuration.” (Rappeport Dep. p. 66). When asked whether “any portion of the OPMT tire tread, which is shown in the OPMT survey picture, had more of an impact on the recognition of the tread pattern as a source indicator, ” he responded “no, I don't know anything about anything other than the totality.” (Id. at p. 67). So Toyo's new interpretation of Dr. Rappeport's opinion is contradicted by Dr. Rappeport's own report and deposition testimony. To allow him to testify as Toyo requests would be to allow him to offer an opinion not previously disclosed. Atturo argues that this request must be denied under Rule 26(a)(2)(B). Toyo did not respond to that argument.[5] Moreover, this Court already ruled, stressing Toyo's use of the word “has” in defining its trade dress, that Toyo “plainly implied that the blocks were some of the components of the trade dress.” (Sanctions Order at 12-13) (emphasis added). Therefore under Rule 26(a)(2)(B), Dr. Rappeport cannot testify about a “dominant” or “distinctive” component theory.[6]

         3. “Anti-dissection rule”

         Under the “anti-dissection rule”, where a plaintiff seeks protection for the overall appearance of its trade dress, the trier of fact's focus is the total appearance instead of individual elements in isolation. The Supreme Court in Estate of P.D. Beckwith, Inc. v. Comm'r of Patents explained: “The commercial impression of a trade-mark is derived from it as a whole, not from its elements separated and considered in detail. For this reason it should be considered in its entirety.” 252 U.S. 538, 545-46 (1920). In Autozone, Inc. v. Strick, the Seventh Circuit noted that the ‘anti-dissection rule' “requires [trademarks] to be viewed in their entirety.” 543 F.3d 923, 931 (7th Cir. 2008). In Bodum USA, Inc., 927 F.3d at 492, the Seventh Circuit cited its prior decision in Comput. Care, 982 F.2d 1062 for the proposition that “where plaintiff seeks to protect overall appearance of its trade dress, [the] focus of analysis is on that total appearance rather than individual design elements in isolation.”

         Toyo concedes that its trade dress must be viewed as a whole (Dkt. 508), but argues that the anti-dissection rule does not bar it from asserting that certain features of its trade dress dominate. (Dkt. 513). But the Sanctions Order restricted Toyo to one trade dress definition-“the overall visual appearance” of the tread design-so Toyo now must prove that the overall appearance, or the elements in combination, acquired secondary meaning, and the similarity of Atturo's trade dress to Toyo's is likely to confuse consumers. See Roulo v. Russ Berrie & Co., 886 F.2d 931, 936 (7th Cir. 1989) (combination of elements “sufficiently unique to warrant trade-dress protection.”); Abbott Labs. v. Mead Johnson & Co., 971 F.2d 6, 20 (7th Cir. 1992) (“[plaintiff] must demonstrate that [its product's] overall image…has acquired distinctiveness through secondary meaning.”). “[T]he ultimate decision on infringement of trade dress is different from that of patent law and ...


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