Gibson Guitar Corp. v. Paul Reed Smith Guitars, Lp

This is an interlocutory appeal of an injunction granted in a trademark case. The parties agree that the mark purports to include at least the two-dimensional guitar shape set out in the trademark-registration papers. However, they disagree as to whether the mark extends to cover three-dimensional objects where two dimensions of those objects have the same general shape (but not the same exact proportions) as the drawing in the registration papers, and as to whether the mark includes additional product features shown in a photograph accompanying the registration papers.1 Whatever the scope of the mark, the parties also dispute whether the mark is valid and whether it has been infringed.

Plaintiff-Appellee Gibson Guitar Corp. ("Gibson") is the owner of the mark in question, U.S. Trademark Registration No. 1,782,606 (the "LP Trademark"). Defendant-Appellant Paul Reed Smith Guitars, LP ("PRS") manufactures the "Singlecut" line of guitars which Gibson alleges infringes on the LP Trademark. Concluding that there was no issue of fact for trial, the district court granted summary judgment in favor of Gibson on the trademark-infringement claim, denied all of PRS's counterclaims, and issued a permanent injunction preventing PRS from manufacturing, selling, or distributing its Singlecut line guitars.

With respect to Gibson's trademark-infringement claim, we REVERSE the district court's decision granting summary judgment in favor of Gibson, REVERSE the district court's decision denying summary judgment in favor of PRS, and VACATE the permanent injunction issued by the district court. We REMAND the case to the district court with instructions that summary judgment be entered in favor of PRS on Gibson's trademark-infringement claim.2

Certain basic facts are not in dispute. Gibson and PRS both manufacture high-quality guitars. Gibson has been in the business of manufacturing musical instruments for over 100 years. PRS founder Paul Reed Smith ("Smith") began manufacturing custom guitars in the mid-1970s and opened a guitar factory in 1985.

Gibson introduced at least one guitar model under the Les Paul name in 1952. Since that time, Gibson has offered a number of guitar models under the Les Paul name. At least some of these models were solid-body, single-cutaway electric guitars of the type at issue in this litigation.3 For a number of years during the 1960s, Gibson did not manufacture guitars in the Les Paul series. At some time thereafter, Gibson resumed manufacturing solid-body, single-cutaway electric guitars under the Les Paul name. Gibson first applied for registration of what became the LP Trademark — the mark under which Gibson asserts trademark protection for its Les Paul line of solid-body, single-cutaway electric guitars — on July 29, 1987, but the U.S. Patent and Trademark Office did not issue the registration until July 20, 1993. On September 27, 1999, the LP Trademark became "incontestable" within the meaning of 15 U.S.C. §§ 1065 and 1115(b).

PRS is a relatively recent entrant to the solid-body, single-cutaway electric-guitar market. Although PRS had previously manufactured a number of other guitars, it did not offer a single-cutaway guitar in its normal line until January 2000 at the earliest. In February 2000, PRS displayed models of the PRS Singlecut, a solid-body, single-cutaway electric guitar, at a music industry trade show.4 On March 27, 2000, Gibson sent a letter demanding that PRS cease and desist from producing and selling the Singlecut.

The procedural posture of this case is somewhat unusual. We briefly summarize those aspects relevant to this interlocutory appeal. On November 6, 2000, Gibson sued PRS in federal district court in Nashville, Tennessee. The complaint sought injunctive relief, costs, attorney fees, and treble damages for trademark infringement, counterfeiting, false designation of origin, and dilution under the Lanham Act, 15 U.S.C. §§ 1114(1), 1125(a), 1125(c), and for unfair competition, fraud, and deceptive business practices under state law. PRS counterclaimed, seeking declaratory and injunctive relief and asserting that: (1) the LP Trademark is invalid and unenforceable; (2) the LP Trademark is not infringed by the PRS Singlecut; (3) any trade dress associated with the Gibson Les Paul series of guitars cannot be protected under the Lanham Act or is otherwise unenforceable; and (4) the PRS Singlecut guitar does not infringe any such trade dress.

PRS moved for summary judgment on all claims and counterclaims, and Gibson moved for partial summary judgment on the trademark-infringement claim. On January 22, 2004, the district court granted Gibson's motion for partial summary judgment on its trademark-infringement claim and denied PRS's motion for summary judgment in its entirety. Gibson Guitar Corp. v. Paul Reed Smith Guitars, LP, 311 F.Supp.2d 690, 725 (M.D.Tenn.2004) ("Gibson I"). After the district court's summary judgment decision, the parties jointly requested that the district court allow them to: (1) amend Gibson's complaint to state only the trademark-infringement claim; (2) amend PRS's answer to state only trademark-related counterclaims; and (3) dismiss all other claims and counterclaims with prejudice. The district court approved this request, and shortly thereafter Gibson filed an amended complaint and PRS filed an amended answer. As amended, Gibson's complaint seeks injunctive relief, attorney fees, and treble damages for infringement of the LP Trademark. PRS's amended counterclaim seeks declaratory and injunctive relief, costs, and attorney fees, on the basis that the LP Trademark is invalid and unenforceable and that the LP Trademark is not infringed by the PRS Singlecut.

On July 2, 2004, the district court issued an order addressing a motion in limine filed by Gibson and several matters raised in PRS's pretrial brief, including a demand by PRS for a jury trial on the amount of profits to be disgorged. In the course of ruling on Gibson's motion in limine and denying PRS's jury trial demand, the district court entered a permanent injunction against PRS:

This is hereby ORDERED that the Defendant Paul Reed Smith, its partners, employees, agents and all persons in active consent with them are ENJOINED from manufacturing, selling, or distributing, or in any manner[] enabling or aiding others to manufacture, or to sell, or to distribute the PRS Singlecut guitar and all versions thereof, including but not limited to their exterior shapes and features, the designs of which have been determined to violate Plaintiff's rights to protection under the Lanham Act for its incontestable trademark registration, No. 1,782,606 for Les Paul guitar.

Gibson Guitar Corp. v. Paul Reed Smith Guitars, LP, 325 F.Supp.2d 841, 855 (M.D.Tenn.2004) ("Gibson II").5 The district court's order explicitly reserved decision on all other issues remaining in the case pending a hearing on disgorgement of profits.6 In this interlocutory appeal, PRS challenges the July 2, 2004 injunction and the January 22, 2004 order granting partial summary judgment to Gibson and denying summary judgment to PRS.

The district court had jurisdiction over the underlying action pursuant to the Lanham Act, 15 U.S.C. § 1114. As the district court entered a permanent injunction against PRS, we have jurisdiction to hear this interlocutory appeal pursuant to 28 U.S.C. § 1292(a)(1). Although our jurisdiction arises from PRS's interlocutory appeal of the permanent injunction entered below, we may also review the district court's summary judgment rulings because those rulings form the basis for the district court's decision to order injunctive relief.7

In determining whether a district court has properly granted a permanent injunction, we review factual findings for clear error, legal conclusions de novo, and the scope of injunctive relief for abuse of discretion. Worldwide Basketball and Sport Tours, Inc. v. Nat'l Collegiate Athletic Ass'n, 388 F.3d 955, 958 (6th Cir.2004). A district court normally must hold an evidentiary hearing prior to issuing a permanent injunction. Moltan Co. v. Eagle-Picher Indus., Inc., 55 F.3d 1171, 1174 (6th Cir.1995). In this case, it is unclear from the parties' submissions whether the district court held an evidentiary hearing prior to issuing the permanent injunction. However, because an evidentiary hearing is not required when "no factual issues remain for trial," id., the district court's decision to grant a permanent injunction without such a hearing could still be upheld if the entry of summary judgment in favor of Gibson and against PRS was proper. Accordingly, resolution of PRS's interlocutory appeal from the permanent injunction requires us to determine whether summary judgment was properly granted to Gibson. We conclude that it was not, and the district court accordingly erred in granting a permanent injunction.

Summary judgment should be granted whenever "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). On a motion for summary judgment in a trademark-infringement case, we conduct de novo review of both (1) the district court's determination of what material facts are in dispute; and (2) the legal conclusions the district court drew from the undisputed facts. Jet, Inc. v. Sewage Aeration Sys., 165 F.3d 419, 422 (6th Cir.1999). In conducting this review of a summary judgment motion, we draw all reasonable inferences in favor of the party opposing the motion. Johnson v. Karnes, 398 F.3d 868, 873 (6th Cir.2005).

Prior to conducting our substantive inquiry, we take this opportunity to clarify a fundamental issue. The district court appears to have confused trademark law and trade-dress law when it concluded that the LP Trademark covered the entire guitar, rather than the two-dimensional silhouette included in the registration papers, Gibson I, 311 F.Supp.2d at 719; see also Gibson II, 325 F.Supp.2d at 852. This affected the remainder of the district court's reasoning and prevented proper analysis of the parties' claims. Specifically, we do not believe that the two-dimensional drawing included in the LP Trademark should be construed to create a trademark on the entire guitar as depicted in photographs accompanying the trademark application (including the location and style of knobs, switches, and other hardware).8

The district court's error rests on an overly broad reading of In re ECCS, Inc., 94 F.3d 1578, 1581 (Fed.Cir.1996).9 As PRS correctly argues, the district court relies on ECCS to justify its decision to expand Gibson's trademark on the guitar's body shape to cover other aspects or design features of the guitar (such as the placement and style of knobs and switches, and the color of the guitar) which would normally qualify as trade dress. However, trademark and trade dress are two distinct concepts under the Lanham Act. See Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 209-210, 120 S.Ct. 1339, 146 L.Ed.2d 182 (2000). The Lanham Act defines a trademark as "any word, name, symbol, or device, or any combination thereof" which is used or intended to be used by a person "in commerce ... to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown." 15 U.S.C. § 1127. By contrast, trade dress is not explicitly defined in the Lanham Act, but has been described by the Supreme Court as the "design or packaging of a product" which has acquired a "secondary meaning" sufficient "to identify the product with its manufacturer or source." TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 28, 121 S.Ct. 1255, 149 L.Ed.2d 164 (2001).10

D. Trademark Infringement Under the Lanham Act

To establish trademark infringement within the meaning of the Lanham Act, Gibson must demonstrate that the PRS Singlecut "is likely to cause confusion among consumers regarding the origin [of the Singlecut]." Daddy's Junky Music Stores, Inc. v. Big Daddy's Family Music Ctr., 109 F.3d 275, 280 (6th Cir.1997) (citing 15 U.S.C. § 1114). We determine whether such confusion is likely by examining the eight Frisch factors: (1) "strength of the plaintiff's mark," (2) "relatedness of the goods or services," (3) "similarity of the marks," (4) "evidence of actual confusion," (5) "marketing channels used," (6) "likely degree of purchaser care," (7) "the defendant's intent in selecting its mark," and (8) "likelihood of expansion of the product lines." Jet, 165 F.3d at 422 (citing Frisch's Rests., Inc. v. Elby's Big Boy of Steubenville, Inc., 670 F.2d 642, 648 (6th Cir.), cert. denied, 459 U.S. 916, 103 S.Ct. 231, 74 L.Ed.2d 182 (1982)).11 In conducting the Frisch balancing test, we must remember that "[t]hese factors imply no mathematical precision, but are simply a guide to help determine whether confusion is likely." Homeowners Group, Inc. v. Home Mktg. Specialists, Inc., 931 F.2d 1100, 1107 (6th Cir.1991).

The district court concluded that, with the exception of actual confusion (factor four), all factors on which it made a finding favored Gibson for summary judgment purposes.12 Because there was no evidence of point-of-sale confusion, factor four would have favored PRS. Gibson I, 311 F.Supp.2d at 709-10, 723. However, the district court nonetheless concluded that "[g]iven the striking similarity of the PRS Singlecut to Gibson's Les Paul and the instant market recognition of Gibson's Les Paul ... initial confusion would occur in the marketplace between parties' products as to the `Singlecut' guitar's source. This factor favors Gibson." Gibson I, 311 F.Supp.2d at 724. Having made this substitution of "initial confusion" for actual confusion at the point of sale, the district court went on to determine that summary judgment in favor of Gibson was appropriate on Gibson's claim that the PRS Singlecut infringed the LP Trademark. We disagree with the district court's conclusion that "initial confusion" (or, as discussed below, any of its variants) can apply in this case. Moreover, as Gibson has conceded that no purchaser would be confused at the point of sale,13 we conclude that there is no theory of confusion upon which Gibson can prevail. In other words, Gibson's concession that there is no point-of-sale confusion (which goes to the fourth Frish factor, actual confusion) is dispositive of Gibson's claim.14 Accordingly, it is not necessary for us to discuss the remaining seven Frisch factors.

Gibson argues that despite the lack of actual confusion at the point of sale, the district court's decision can be affirmed under a theory of either initial-interest confusion (the theory relied on by the district court), post-sale confusion, or some combination of the two. Initial-interest confusion takes place when a manufacturer improperly uses a trademark to create initial customer interest in a product, even if the customer realizes, prior to purchase, that the product was not actually manufactured by the trademark-holder. See PACCAR Inc. v. TeleScan Techs., L.L.C., 319 F.3d 243, 253 (6th Cir.2003); see also J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 23:6 (4th ed. 1996 & Supp.2005) ("MCCARTHY ON TRADEMARKS") (collecting cases). Post-sale confusion occurs when use of a trademark leads individuals (other than the purchaser) mistakenly to believe that a product was manufactured by the trademark-holder. See Esercizio v. Roberts, 944 F.2d 1235, 1245 (6th Cir.1991), cert. denied, 505 U.S. 1219, 112 S.Ct. 3028, 120 L.Ed.2d 899 (1992); see also MCCARTHY ON TRADEMARKS § 23:7 (collecting cases). We conclude that neither initial-interest confusion, nor post-sale confusion, nor any combination of two, is applicable in this case.

a. Initial-Interest Confusion

The one case where we arguably have applied initial-interest confusion involved facts strikingly different than those involved in the present dispute. In PACCAR, we were faced with a dispute between Telescan, a company operating used-truck-locator web sites, and PACCAR, a truck manufacturer which also operated its own used-truck-locator website. In PACCAR, Telescan was using trademarks owned by PACCAR as part of the domain name of some of its used-truck-locator web sites. Noting that "[a]n infringing domain name has the potential to misdirect consumers as they search for web sites associated with the owner of a trademark," we suggested that initial-interest confusion analysis might appropriately be applied. PACCAR, 319 F.3d at 253. However, our decision that PACCAR had established a likelihood of success on the merits on the likelihood-of-confusion issue did not rest on initial-interest confusion.15 Instead, we focused primarily on three other Frisch factors that we judged to be particularly important in an Internet-domain-name case. See id. at 254-55. As always, our concern was with "whether the defendant's use of the disputed mark is likely to cause confusion among consumers regarding the origin of the goods offered by the parties." Id. at 249 (quotations omitted). Other circuits applying the initial-interest confusion doctrine have generally focused on that same issue: whether the consumer might be misled about the source of the relevant product or service.16

Gibson essentially argues that the shape of the PRS guitar leads consumers standing on the far side of the room in a guitar store to believe they see Gibson guitars and walk over to examine what they soon realize are PRS guitars. See, e.g., J.A. at 1451 (Carter Dep.) ("Just looking at the guitars on the wall, I initially thought I was looking at Les Pauls, and[] on a closer look, I saw I wasn't."). We decline to adopt such a broad reading of the initial-interest-confusion doctrine. Many, if not most, consumer products will tend to appear like their competitors at a sufficient distance. Where product shapes themselves are trademarked,17 such a theory would prevent competitors from producing even dissimilar products which might appear, from the far end of an aisle in a warehouse store, somewhat similar to a trademarked shape. Accordingly, we hold that initial-interest confusion cannot substitute for point-of-sale confusion on the facts of this case.

b. Post-Sale Confusion

The one published case where we have applied post-sale confusion is also clearly distinguishable from the present case. Esercizio, a trade-dress case, involved Ferrari sports cars which were manufactured in deliberately limited quantities "in order to create an image of exclusivity." Esercizio, 944 F.2d at 1237. The alleged infringer built fiberglass kits intended to be "bolted onto the undercarriage of another automobile such as a Chevrolet Corvette or a Pontiac Fiero" in order to make the "donor car" look like a far-more-expensive Ferrari. Id. at 1238. Our concern in Esercizio was that "Ferrari's reputation in the field could be damaged by the marketing of Roberts' [clearly inferior] replicas." Id. at 1245. Such a concern is not present here, where Gibson concedes that PRS guitars are not clearly inferior to Gibson guitars. See, e.g., Gibson Br. at 5, 23. Accordingly, post-sale confusion cannot serve as a substitute for point-of-sale confusion in this case.

c. Gibson's Smoky-Bar Theory of Confusion

Finally, Gibson argues that, taken together, the initial-interest-confusion and post-sale-confusion doctrines should be extended to include something that we can only describe as a "smoky-bar theory of confusion." Initial-interest-confusion doctrine, which we have already rejected on the facts of this case, applies when allegedly improper use of a trademark attracts potential purchasers to consider products or services provided by the infringer. Post-sale-confusion doctrine, which we have also rejected on the facts of this case, applies when allegedly improper use of protected trade dress on a lower-quality product diminishes the reputation of the holder of the rights to that trade dress.18 In the smoky-bar context, however, Gibson does not suggest that consumer confusion as to the manufacturer of a PRS guitar would lead a potential purchaser to consider purchasing a PRS, rather than a Gibson, or that Gibson's reputation is harmed by poor-quality PRS guitars. Rather, Gibson argues that this confusion occurs when potential purchasers see a musician playing a PRS guitar and believe it to be a Gibson guitar:

In the context of guitar sales, initial interest confusion is of real consequence. Guitar manufacturers know that they can make sales by placing their guitars in the hands of famous musicians. On a distant stage, a smoky bar, wannabe musicians see their heroes playing a guitar they then want.

Gibson Br. at 20-21. As Gibson concedes that PRS produces high-quality guitars, we do not believe such an occurrence could result in confusion harmful to Gibson. If a budding musician sees an individual he or she admires playing a PRS guitar, but believes it to be a Gibson guitar, the logical result would be that the budding musician would go out and purchase a Gibson guitar. Gibson is helped, rather than harmed, by any such confusion.

We have determined as a matter of law that initial-interest confusion, post-sale confusion, and Gibson's "smoky-bar theory of confusion" cannot be used to demonstrate infringement of the trademark at issue in this case. Gibson has conceded that point-of-sale confusion does not occur between these high-priced guitars, and our review of the record does not suggest otherwise. Accordingly, there is simply no basis on which Gibson can show confusion that would demonstrate trademark infringement in violation of the Lanham Act. See KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 125 S.Ct. 542, 547, 160 L.Ed.2d 440 (2004) (noting that a claim of trademark infringement under the Lanham Act "requires a showing that the defendant's actual practice is likely to produce confusion in the minds of consumers about the origin of the goods or services in question"). Accordingly, PRS, rather than Gibson, must be granted summary judgment on Gibson's trademark-infringement claim.

With respect to Gibson's trademark-infringement claim, we REVERSE the district court's decision granting summary judgment in favor of Gibson, REVERSE the district court's decision denying summary judgment in favor of PRS, and VACATE the permanent injunction issued by the district court. We DENY all other claims and motions AS MOOT, and REMAND the case to the district court with instructions that summary judgment be entered in favor of PRS on Gibson's trademark-infringement claim.