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DURACO PRODS. v. JOY PLASTIC ENTERPRISES

May 25, 1993

DURACO PRODUCTS, INC., Plaintiff,
v.
JOY PLASTIC ENTERPRISES LTD., d/b/a BACKYARD PRODUCTS, and TRAVIS PRODUCTS, INC., Defendants.



The opinion of the court was delivered by: MAURICE B. COHILL, JR.

 COHILL, D.J.

 This is an action for trade dress infringement and false advertising under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) ("the Act") brought by plaintiff Duraco Products, Inc. ("Duraco") against defendants Joy Plastic Enterprises Ltd. ("Joy"), d/b/a/ Backyard Products ("Backyard") and Travis Products, Inc. ("Travis"). We have jurisdiction pursuant to 28 U.S.C. § 1338.

 Presently before the Court is Duraco's Motion for a Preliminary Injunction, seeking to enjoin the defendants from any further marketing and sales of its Grecian style plastic planters. After a hearing, and pursuant to Fed. R. Civ. P. 52, we make the following findings of fact and conclusions of law.

 I. Findings of Fact

 Duraco, a manufacturer of plastic planters previously doing business as Phillips Products Co., Inc., is a profitable Delaware corporation having its principal place of business in Illinois with roughly $ 35 million in annual sales. About ten percent of Duraco's business is attributable to the sales of its "Grecian Classics" plastic planters, they being the most profitable item sold by the company. Duraco's competitors in the Grecian urn market include, inter alia, Tucker Manufacturing Co., Rubbermaid, Inc. and one of the defendants, Joy d/b/a Backyard Products.

 Defendant Joy Enterprises, located in Erie, Pennsylvania, uses the name "Backyard Products" for its lawn, garden, and patio items. Defendant Travis manufactures the molds for the plastic planters, and Joy sells the planters. The Joy planters are marketed as "Ultimate Urns."

 Duraco Grecian Classics planters or urns are hour-glass shaped, plastic containers that are available on the market in two models having diameters of twelve and eighteen inches and standing roughly ten and fifteen inches high, respectively. Although lightweight because they are made of plastic, they look like they are made of marble, cement or stone. They are also comparatively inexpensive because of their construction. The manufacturing process involves injecting molten plastic into molds or dies, allowing the plastic to cool for a time, and then emitting the planter onto a cooling surface before packaging and shipment.

 Plaintiff Duraco prides itself in its excellent quality control division. For example, quality control workers remove any "flashing," or strips of plastic that form on the sides of the planters as a result of cracks in the molding or overly high production rates. Flashing may have sharp edges which can prove harmful to consumers, and is unsightly and is indicative of poor quality. Richard Husby, the Vice President of Marketing and Sales at Duraco, purchased several of Backyard's planters at a G.C. Murphy store and testified as to their comparatively poor quality, such as drooping flash, poor color and sharp edges and ridges.

 The Grecian Classics planters are structured such that there are two parts, including the top "bowl" section, which the purchasing consumer manually connects at a joint to the "base" or "pedestal" of the planter. The Backyard urns have a similar construction. The Duraco planters vary in color from white, granite, blue and rose via a process in which liquid color is injected into plastic in its molten state. Travis uses a less expensive coloring process in making the Backyard Ultimate Urn.

 Duraco's direct customers are largely retailers, but it also supplies the urns to distributors. Its largest customer for Grecian Classics planters is K-Mart, which buys roughly half of all planters sold by Duraco, followed by Walmart, which buys nearly one-fourth of the total number of planters sold by Duraco. Duraco manufactures the urn for roughly 52 percent of its selling price.

 Duraco and the retailers typically engage in cooperative advertising, whereby they share the cost of advertising, with Duraco giving to the retailer an allowance of advertising funds based on the percentage of sales. Usually the ad allowance is for two percent of sales, whereby the buyer bills Duraco and Duraco, upon proof of advertisement and its cost, in turn gives a credit memorandum for future sales, or sometimes gives cash to the buyer. With K-Mart, Duraco has a less flexible arrangement whereby it pays K-Mart a two percent quarterly fee without actual proof of advertising being required.

 Advertisements for the Duraco Grecian Classics planter appear in Sunday newspaper fliers, magazines, circulars and newspaper ads. They are depicted in concert with other outdoor garden products such as plant food and watering cans. Duraco's advertising is also directed to the retailers to whom Duraco sells its goods. Such retail-directed advertising comes in the form of brochures and trade advertisements.

 The registered trademark of Duraco is the "Garden Scene" logo. Duraco encourages its retailer customers to include either the Duraco tradename or the registered trademark Garden Scene logo in their advertisements, although Duraco has not been able consistently to enforce compliance with the advertising agreement. The agreement with retailers provides that the inclusion of the logo is voluntary on the part of the retailer. When Duraco employees notice that an advertisement fails to include the Duraco logo, they report their complaints to the retailers. The Garden Scene logo appears on over half of the Duraco planters.

 The Duraco urn was first conceived at the suggestion of Robert Armstrong, a K-Mart Senior Buyer who has been with that company for 35 years. He suggested the design of the Duraco planter after having attended a trade show in Cologne, Germany in 1984, when he saw similar urn-shaped planters which he knew were not as yet marketed in the United States. Armstrong met with Duraco officials, including Kenneth Sanderson, who was then the vice president of manufacturing. Sanderson Dep. at 2. *fn1" Armstrong described the urn he had seen as an outdoor planter with much detail.

 In fact, Duraco had previously tried to sell the "Cotswold planter" (Def. Ex. D), an English-made Grecian plastics planter, around 1978 or 1979, after being approached by salesman Colton Hough of Colton Creators. Duraco abandoned the Cotswold planter in 1981 due to poor sales, which may have resulted from its relatively high price, $ 14.99 when compared to the Duraco/Backyard prices of under $ 5.00. The Cotswold planter has a higher base than the Duraco planter, but has a similar hourglass-like design. The Duraco planter has sharper lines, a lower center of gravity and a more realistic texture to it. The Cotswold model may have been in the United States market for sometime thereafter. Robert Armstrong of K-Mart testified that for K-Mart's purposes of introducing a detailed Grecian-style planter into the market, the Cotswold urn would probably have been just as acceptable as the Duraco urn.

 In any event, upon seeing the prototype produced by Duraco, K-Mart made an oral commitment to buy 100,000 Grecian classic planters from Duraco. At the time, there was no plastic urn in the United States which had this look about it. In its first year on the market, sales of the Duraco eighteen inch Grecian Classics planter were quite successful: 460,000 units were sold in the first year, the best-selling item in the Duraco product line. Mr. Armstrong attributes the success of the Duraco urn to the amount of detail work on the urn.

 Initially, K-Mart committed to and purchased the 18 inch planter only, but after its overwhelming success, Duraco manufactured a twelve inch planter which it also sold to K-Mart. Sales continued to soar.

 Duraco first became aware of the existence of the Backyard Products planter in April 1992, when Duraco President and Chief Executive Officer John Licht was shopping in New Jersey at a retail store. Licht saw an urn, which he thought was a Duraco urn, and purchased it because it was defective; one side of it had been flattened. Such flattening is possible, Licht explained, if the product was removed while still hot from the mold and then laid on its side in the shipping carton. Licht then returned to the company and gave it to a company Vice President, asking how such a defective urn could have slipped through the quality control safety net and into the marketplace. The Vice President later came back to Licht with the news that the urn was not Duraco's, but Travis'. Licht then called the company attorney.

 Thomas Gay, the President of defendant Joy Enterprises, testified that he became aware of and was involved in the conception of the Backyard urn in the 1980's, after he saw a color brochure depicting the Cotswold urn. In 1987 or 1988, he approached buyers at K-Mart and McCrory's, who already offered the Duraco product, trying to elicit information about the market possibilities for a competitor to the Duraco urn. To create a Backyard Grecian urn, Gay had access to the Tucker 18 inch urn and other urns on the market, including Duraco's. After studying the urns available on the market at that time, Gay concluded that most urns needed a deeper bowl to hold more soil and water for improved root growth, and that in general, the Duraco urns were too top-heavy. To that end, Travis's employee Joseph Soltesiz developed the plastic injection mold for Backyard, a design which Gay claims achieved the goals of added stability, depth, and maximum volume.

 Several witnesses were asked to compare the appearance of the Duraco 12 inch and 18 inch planters to the appearance of the same-sized Backyard planter, and consistently made the following observations: (1) the fluting on the Duraco planter is higher along the side of the bowl than the Backyard urn; (2) the "landing" or the lip between each flute is wider on the Duraco urn than on the Backyard urn; (3) the Backyard urn has a broader base and a lower center of gravity; (4) the Backyard urn has a 20 percent higher capacity for holding soil than the Duraco; (5) the "egg and dart" patterns on the lips of the bowls are identical, (6) the Backyard urn has a straight-edged side to the bowl, ...


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