Falcon Stainless, Inc. v. Rino Companies, Inc. , 572 F. App'x 483 ( 2014 )

FILED
NOT FOR PUBLICATION MAY 06 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
FALCON STAINLESS, INC., a California No. 11-56863
Corporation,
D.C. No. 8:08-cv-00926-AHS-
Plaintiff - Appellant, MLG
v.
MEMORANDUM*
RINO COMPANIES, INC., DBA
Performance Sales, a California Corp.,
DBA Rino Flex Connectors; JOHN
NOVELLO, DBA Performance Sales Inc.,
an individual; HARRY RIEGER, an
individual; PERFORMANCE SALES
INC., a California corporation,
Defendants - Appellees.
Appeal from the United States District Court
for the Central District of California
Alicemarie H. Stotler, Senior District Judge, Presiding
Argued and Submitted February 3, 2014
Limited Remand February 14, 2014
Pasadena, California
Before: KLEINFELD, SILVERMAN, and HURWITZ, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Falcon Stainless and Rino Companies are competing manufacturers of
stainless steel water connectors used in plumbing applications. After the jury
returned a verdict in Falcon’s favor, the district court granted judgment as a matter
of law (JMOL) for Rino Companies and its co-owners, John Novello and Henry
Rieger (collectively, Rino), on Falcon’s claims for trademark infringement, false
designation of origin, unfair competition, and intentional interference with
prospective economic advantage. The district court also granted Rino’s motion
under Federal Rule of Civil Procedure 59(a) for a new trial on Falcon’s claims for
false advertising and trade libel/product disparagement. Falcon appealed.
We determined that this court lacked jurisdiction over the appeal because the
order granting a new trial on Falcon’s claims for false advertising and trade
libel/product disparagement is an interlocutory order not appealable as a final
judgment and also not a conditional new trial order under Rule 50(c)(1). See
Schudel v. Gen. Elec. Co., 120 F.3d 991, 994–95 & n.9 (9th Cir. 1997), abrogated
on other grounds by Weisgram v. Marley Co., 528 U.S. 440 (2000). We ordered a
limited remand for the district court to consider whether its order granting Rino’s
motion for JMOL on Falcon’s claims for trademark infringement, false designation
of origin, unfair competition, and intentional interference with prospective
2
economic advantage should be certified as an appealable final judgment under
Rule 54(b). The district court certified its order. We now affirm the JMOL on the
trademark infringement, false designation of origin, and intentional interference
with prospective economic advantage claims. We do not discuss the unfair
competition claim because Falcon abandoned it on appeal.
I.
The district court properly granted JMOL on Falcon’s claims for false
designation of origin under 15 U.S.C. § 1125(a) and common law trademark
infringement related to its “SWC” parts numbers. “A jury’s verdict must be upheld
if it is supported by substantial evidence, which is evidence adequate to support the
jury’s conclusion, even if it is also possible to draw a contrary conclusion.” Pavao
v. Pagay, 307 F.3d 915, 918 (9th Cir. 2002).
Even assuming that Falcon’s parts numbers are a valid mark, there is not
substantial evidence in the record to support the jury’s finding that Rino’s use of its
own parts numbers was likely to confuse customers. 15 U.S.C. § 1125(a)(1)(A).
Although several of the Sleekcraft factors for determining likelihood of confusion
favor Falcon, the most critical ones do not. See AMF Inc. v. Sleekcraft Boats, 599
3
F.2d 341, 348–49 (9th Cir. 1979), abrogated in part on other grounds as recognized
by Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792, 810 n.19 (9th Cir.
2003).
Falcon and Rino sell similar products, through the same marketing channels,
to the same customers. Id. at 348. Some factors, however, “are much more
important than others, and the relative importance of each individual factor will be
case-specific.” Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d
1036, 1054 (9th Cir. 1999). In this case, the weakness of Falcon’s mark, the
dissimilarities between Rino’s and Falcon’s parts numbers, and the lack of
evidence of actual confusion lead us to agree with the district court that the jury’s
verdict was not supported by substantial evidence. Cf. Chesebrough-Pond’s, Inc.
v. Faberge, Inc., 666 F.2d 393, 398-99 (9th Cir. 1982) (affirming summary
judgment notwithstanding conclusion that “product lines are identical and that the
products move through the same marketing channels to the same outlets for
purchase by the same class of customers”).
Falcon’s parts numbers are descriptive terms, which are inherently “weak”
marks. Nutri/Sys., Inc. v. Con-Stan Indus., Inc., 809 F.2d 601, 605 (9th Cir. 1987).
4
Falcon uses the letters “SWC” to indicate that the parts are stainless water
connectors and the numbers to indicate dimensions, e.g., the SWC 10012 part is a
stainless water connector 1 inch in diameter and 12 inches in length. Although
advertising expenditures can strengthen an otherwise weak mark, Brookfield, 174
F.3d at 1058, Falcon does not advertise its parts numbers in the trademark sense to
identify their source. The parts numbers are only used on Falcon’s price lists and
website to identify the different connectors that it sells.
Second, the parties’ parts numbers are dissimilar. See M2 Software, Inc. v.
Madacy Entm’t, 421 F.3d 1073, 1082 (9th Cir. 2005) (“the similarity of the marks
has always been considered a critical question in the likelihood-of-confusion
analysis”) (quotations and citations omitted). Rino uses “SWF” while Falcon
alternates between the prefixes “FF” and “SWC”. Though both use “SW,” this in
and of itself is not likely to cause confusion, both because the prefixes are
dissimilar and the parties sell their connectors to wholesale customers and
experienced plumbing professionals. See Brookfield, 174 F.3d at 1060.
Finally, there was no evidence of actual confusion. Although Falcon and
Rino received purchase orders from wholesale customers that used the other
5
party’s parts numbers and name, the only customers who testified said that they
were not confused and that the orders were not misdirected. Falcon’s wholesale
customers testified that they used the numbers interchangeably for convenience
and that their customers ordered product by using the vendor name, not the parts
number. The fact that Falcon received some return requests for Rino products also
does not prove actual confusion. The jury heard testimony that these returns were
a result of wholesale customers not updating their computer systems to reflect the
fact that Rino’s owners were no longer Falcon sales representatives. The lack of
actual confusion in this case is “persuasive evidence that there is no likelihood of
confusion.” Id. at 1050 (emphasis omitted). We affirm the order granting JMOL
on this claim.
II.
We also affirm the district court’s order granting JMOL on Falcon’s
trademark claims related to its diamond F product stamp. We examined both
parties’ product stamps and conclude that they are not similar. Falcon uses an F
surrounded by a flattened diamond shape with sides that are different lengths. In
contrast, Rino uses an S surrounded by a rhombus (a square with all sides the same
6
length.) “Where the two marks are entirely dissimilar, there is no likelihood of
confusion.” Id. at 1054. These marks do not look alike at all.
There was no evidence of actual confusion. No customers testified that they
confused Rino and Falcon products because of the product stamps. The general
manager of a plumbing company testified that his company was confused as to
which manufacturer produced some leaking connectors they installed. But he did
not testify that the confusion was a result of the product stamps. There was no
evidence that could lead a reasonable juror to conclude that Rino’s use of its
visually dissimilar product stamp was “likely to confuse an appreciable number of
people as to the source of the product.” Entrepreneur Media, Inc. v. Smith, 279
F.3d 1135, 1151 (9th Cir. 2002) (emphasis in original); see also Nutri/Sys., 809
F.2d at 607 (holding that the district court properly found that trivial instances of
actual confusion were de minimis); Surfvivor Media, Inc. v. Survivor Prods., 406
F.3d 625, 633 (9th Cir. 2005) (same).
Although the parties sell similar products, use the same marketing channels,
and Falcon’s mark is arbitrary (having no meaning other than a source indicator),
Yellow Cab Co. of Sacramento v. Yellow Cab of Elk Grove, Inc., 419 F.3d 925,
7
927 (9th Cir. 2005), these factors are insufficient to support the jury’s verdict,
because of the dissimilarities between the marks and the lack of evidence of actual
confusion or any likelihood of confusion. See Chesebrough-Pond’s, 666 F.2d at
398-99. The likelihood of confusion must be “probable, not merely possible.”
M2 Software, 421 F.3d at 1085 (quotations and citation omitted). We affirm the
district court’s order granting JMOL on this claim.
III.
The district court correctly granted Rino’s motion for JMOL on Falcon’s
claim for intentional interference with prospective economic advantage. Falcon
contends that Rino advertised that its SWF 118 connector was certified under the
Uniform Plumbing Code and complied with industry standards after it was
determined to be noncompliant and decertified. A plaintiff must prove the
following elements in order to prevail on a claim for intentional interference with
prospective economic advantage: “(1) an economic relationship between plaintiff
and a third party, with the probability of future economic benefit to the plaintiff;
(2) defendant’s knowledge of the relationship; (3) an intentional act by the
defendant, designed to disrupt the relationship; (4) actual disruption of the
relationship; and (5) economic harm to the plaintiff proximately caused by the
8
defendant’s wrongful act.” Edwards v. Arthur Andersen LLP, 189 P.3d 285, 290
(Cal. 2008).
There was no evidence that Rino’s conduct disrupted Falcon’s business
relationships or proximately caused economic harm to Falcon. See Id. Falcon
introduced testimony from two wholesale customers. Neither testified that Rino’s
ads influenced their purchasing decisions. Rather, they testified that they
purchased products based on price and that they stopped buying from Falcon for
this reason. Both customers said that they would not purchase uncertified
products. There was no evidence, however, that they purchased Rino’s SWF 118
connector while it was decertified or, if they did, that they would have bought from
Falcon had they known that it was decertified. This is not substantial evidence to
support the jury’s finding that Rino’s conduct disrupted Falcon’s business
relationships and proximately caused economic harm to Falcon.
AFFIRMED.
9