Chrysler Corporation v. Silva

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS


                                FOR THE FIRST CIRCUIT


                                ____________________


       No. 95-1926


                                CHRYSLER CORPORATION,


                                Plaintiff, Appellant,


                                         v.


                    JOHN C. SILVA, JR., d/b/a J.C. SILVA DESIGNS,


                                Defendant, Appellee,


                                _____________________


       No. 95-1927


                                CHRYSLER CORPORATION,


                                Plaintiff, Appellee,


                                         v.


                    JOHN C. SILVA, JR., d/b/a J.C. SILVA DESIGNS,


                                Defendant, Appellant,


                                _____________________


       No. 96-1231


                                CHRYSLER CORPORATION,


                                Plaintiff, Appellant,


                                         v.


                    JOHN C. SILVA, JR., d/b/a J.C. SILVA DESIGNS,


                                Defendant, Appellee.


                                ____________________



____________________


APPEALS FROM THE UNITED STATES DISTRICT COURT


                          FOR THE DISTRICT OF MASSACHUSETTS


                  [Hon. Edward F. Harrington, U.S. District Judge]


                                ____________________


                                       Before


                                 Cyr, Circuit Judge,


                    Aldrich and Campbell, Senior Circuit Judges. 


                                ____________________


Jerre B. Swann  with whom Kilpatrick  & Cody, Robert  B. Cultice,

       Goldstein 
                & 
                  Manello, 
                          Eric
                               M. Dobrusin, and Harness, Dickey & Pierce were

       on brief for Chrysler Corporation.

            Anthony M. Fredella with whom Fredella & Wheeler was on brief for

       John C. Silva, Jr.


                                ____________________


                                    July 9, 1997

                                ____________________



ALDRICH, Senior Circuit Judge.  This is an  unusual


            case 
                that 
                     goes 
                         back 
                              a 
                                long while, including a four year history


            prior to suit.   Plaintiff Chrysler Corporation  ("Chrysler")


            filed suit in the Massachusetts District Court in July  1991,


            under 
                 the 
                     Lanham Act, 15 U.S.C. SS 1051 et seq., for trademark


            infringement,
                         specifically trade dress, against John C. Silva,


            Jr. 
               ("Silva"), and a number of other individual defendants who


            have settled out.   At issue  was Chrysler's allegation  that


            Silva copied Chrysler's  innovative "muscle  car," the  Dodge


            Viper.  Silva counter-claimed, alleging that the shoe was  on


            the other  foot; that Chrysler was  the one at fault,  having


            stolen 
                  the 
                     allegedly 
                               infringed design from him.  On December 9,


            1993  the court,  in a   separate  brief memorandum,  ordered


            summary judgment  for Chrysler  on the  counter-claim on  the


            ground of estoppel.1


                      The 
                         first 
                               of 
                                 Chrysler's 
                                            demands was for a preliminary


            injunction 
                      against 
                             violation.  This was denied, and ultimately,


            after a bench trial, the court dismissed Chrysler's complaint


            with 
                a 
                  memorandum 
                            of 
                               findings.  This was initially done on July


            19, 
               1995. 
                      
                      On 
                        August 
                               4 
                                 Chrysler moved to amend the findings and


            to alter or amend the judgment, or, alternatively, for a  new


            trial.  The court took additional testimony and on January 9,


            1996 
                it 
                   again entered judgment for defendant on the complaint.


            Both parties appealed.  We affirm in part.


1.  This went to judgment on December 14, 1995.


                                         -3-



Just prior to oral argument before us, Silva  died.


            At 
              the 
                  argument 
                          date 
                               his 
                                   (former) counsel appeared, saying that


            he had no client.  On his stating that his argument was ready


            we said we  would hear the oral  arguments of both sides  and


            reproduce 
                     them for the files.  This has been done.  We further


            stated that we would  afford time for an administrator to  be


            appointed for  Silva and  move to  continue the  case, if  so


            minded.   This, too,  has been done.   One  Jeanne A.  Silva,


            temporary administratrix of the estate of John C. Silva, Jr.,


            has 
               been 
                    substituted for the deceased Silva in all capacities.


            We continue with the appeals.


                                      I. Facts


                      It is, of course, well known that there is enormous


            competition  that  depends   upon  the  body  appearance   of


            automobiles. 
                         
                         It 
                           is 
                              not 
                                  so well known that this is so important


            to true enthusiasts that custom builders make, or order made,


            special 
                   bodies to place over a standard chassis.  This art can


            produce problems.   See,  e.g., Ferrari  S.P.A. Esercizio  v.


            Roberts, 944 F.2d 1235, 1244-45 (6th Cir. 1991).


                      In 1988, spurred on  by a conversation between  its


            executives the  previous  year, Chrysler  considered  designs


            harking back, in part, to 1960's roadsters.  A prototype  was


            completed 
                     in 
                        time 
                            for 
                                the January 1989 International Automobile


            Show 
                in 
                   Detroit.  Here the reception was so good that Chrysler


            formed TEAM VIPER.  By December 1991, it had four  production


-4-



units  and in  1992 it  produced 200  Vipers.   It had  spent


            approximately  $8,000,000 to  promote this  vehicle and  over


            $75,000,000  to bring  it into  production.   It attracted  a


            special class of buyers.


                      During the trial, as a defense to the  infringement


            claim, Silva testified that he had contacted Chrysler by mail


            in  October 1987  and offered  it the  opportunity either  to


            purchase 
                    his 
                        design for a car Silva had dubbed the "Mongoose,"


            for 
               which 
                     he 
                        included sketches with his letter, or to contract


            with him to build a show car based on the design.  He claimed


            that past experience in building cars for large manufacturers


            instilled in him the necessity of clearly marking the designs


            with proprietary statements of ownership and  confidentiality


            before 
                  forwarding 
                            them 
                                 to Chrysler.  He also included a request


            that the sketches be returned if Chrysler was not interested.


            He 
              received 
                       no 
                         response 
                                  to his letter and the sketches were not


            returned.


                      In early 1989, Ronald Torlone, one of the  original


            defendants, decided  he  wanted a  "new  look" for  his  1979


            Chevrolet Corvette.   For this he  retained a builder,  Motor


            Incorporated,  for  which  Silva  worked  as  an  independent


            contractor.   They  and another  original defendant,  Richard


            Galardi, 
                    produced the Mongoose.2  Also in 1989, after seeing a


2.  The single Mongoose is currently in the hands of Chrysler

            who received it from another original defendant, Leonard

            Legere, who purchased it from Richard Galardi who received it


                                         -5-



picture of Chrysler's prototype  for the Viper, Silva  called


            Chrysler and eventually spoke with an in-house attorney  who,


            after learning of the Mongoose, demanded that Silva stop work


            and 
               destroy 
                       the vehicle.  Silva refused, Chrysler brought this


            suit and Silva counterclaimed for the theft of his design.


                                    II.  Analysis


                      Section 
                             43(a) 
                                   of 
                                     the 
                                         Lanham Act, 15 U.S.C. S 1125(a),


            provides protection against:


                           (1)  Any  person   who,  on  or   in

                      connection with any goods or services, or

                      any container for goods, uses in commerce

                      any word, term, name, symbol, or  device,

                      or any combination thereof, or any  false

                      designation 
                                 of origin, false or misleading

                      description   of  fact,   or   false   or

                      misleading representation of fact,  which

                      --


                           (A) is likely to cause confusion, or

                      to cause mistake, or to deceive as to the

                      affiliation, 
                                  connection, or association of

                      such person with another person, or as to

                      the origin,  sponsorship, or approval  of

                      his or her goods, services, or commercial

                      activities by another person . . . .


            15 U.S.C. S 1125(a).


                      In 
                        1992, 
                              the 
                                 Supreme 
                                         Court held that S 43(a) extended


            to 
              claims 
                     for infringement of trade dress.  Two Pesos, Inc. v.


            Taco Cabana, Inc., 505 U.S. 763, 770 (1992). Trade dress  has


            been defined  as "the design  and appearance  of [a]  product


from Ronald Torlone in satisfaction of amounts due in return

            for Galardi's construction of the mechanicals for the car. 

            While Chrysler has possession of the Mongoose apparently as

            part of a consent decree with Legere, Galardi retains title

            to the vehicle because Legere defaulted on his payments.


                                         -6-



together with the  elements making up the overall image  that


            serves to  identify the product  presented to the  consumer."


            Fun-Dametal Too, Ltd. v. Gemmy Indus., 111 F.3d 993, 999  (2d


            Cir. 1997) (internal citation omitted).  In order to  warrant


            protection, trade dress must be either inherently distinctive


            or 
              have 
                   become 
                         so 
                            by 
                               acquiring a secondary meaning.  Two Pesos,


            505 
               U.S. 
                    at 
                       769.  Inherently distinctive trade dress cannot be


            functional, and to  prevail on a  claim of infringement,  the


            defendant's 
                       product 
                              must 
                                   have created a likelihood of confusion


            with 
                regard 
                       to its source.  See id.; Tec Eng'g Corp. v. Budget


            Molders Supply, Inc., 82 F.3d 542, 545 (1st Cir. 1996).


                      The 
                         court 
                               found 
                                    that 
                                         the 
                                             Viper "had acquired inherent


            distinctiveness 
                           through 
                                  secondary meaning, that the trade dress


            was 'non-functional,'" and therefore entitled to trade  dress


            protection, 
                       but 
                          that 
                               Chrysler failed to prove the likelihood of


            confusion between the  two cars.  It made several  individual


            findings of fact.  Relevant ones include:


                      11.  Mr. Silva saw and/or read the  press

                      coverage of the Viper concept car in  the

                      Spring and Summer of 1989.


                                        * * *


                      13. 
                         Photographs of the Dodge Viper concept

                      car served as the starting point for  the

                      car body designed  by Mr.  Silva for  Mr.

                      Torlone.


                      14.   Mr.    Silva    made    significant

                      modifications to the design of the  Dodge

                      Viper in his  creation of  the car  body,

                      including,  but   not  limited  to:   the

                      windshield; the  rollbar; the nose  area;


-7-



the wrap-around area of the mirrors;  and

                      the cut lines.


                      15. Mr. Silva did not intend to duplicate

                      or otherwise copy the Dodge Viper.


                      With these findings in hand, the court moved to the


            test 
                for 
                    likelihood of confusion, consisting of eight relevant


            factors, see Aktiebolaget Electrolux v. Armatron Int'l, Inc.,


            999 F.2d  1, 3  (1st  Cir. 1993);  Boston Athletic  Ass'n  v.


            Sullivan
                   , 
                     867 F.2d 22, 29 (1st Cir. 1989), and determined that


            each party was entitled to prevail on four, as follows:


                      1.   Similarity of  the marks  (dress)  -

                           Chrysler


                      2.   Similarity of goods - Chrysler


                      3.   Channel of trade - Silva


                      4.   Channel of advertising - Silva


                      5.   Class  of  prospective  purchaser  -

                           Silva


                      6.   Evidence  of   actual  confusion   -

                           Chrysler


                      7.   Defendant's intent  in adopting  the

                           dress - Silva


                      8.   Strength of the dress - Chrysler.


                      On this basis, unless Silva prevails because of his


            lack  of bad  intent  in  adopting Chrysler's  dress,  it  is


            difficult to understand why  Chrysler, who prevailed here  on


            similarity 
                      and strength of dress, should lose its case, it not


            being necessary, since the  Lanham Act's amendment, to  prove


            purchaser confusion, post.  Beyond this seeming inconsistency


-8-



it is hard to explain  how the court could say, "[T]he  Court


            rules, as a matter of law, that plaintiff did not establish a


            likelihood of  confusion between  its vehicle  and the  Silva


            vehicle."  (emphasis supplied.)  If the court meant matter of


            law, it was clearly  wrong.  There were ample lay  witnesses,


            notably the other original defendants, expressly mentioned by


            the 
               court, 
                      whose evidence  precluded ruling as a matter of law


            in Silva's favor.


                      Study 
                           of 
                              its 
                                  opinion as a whole leads us to conclude


            that 
                the 
                    court really meant "find," or "conclude," and we will


            so  address  its  decision.    Chrysler  says,  as  it  must,


            Aktiebolaget 
                        Electrolux
                                 , 
                                   that such a finding was plainly wrong.


                      A 
                       substantial part of the court's opinion is devoted


            to listed factors 3, 4 & 5, ante, concluding that  purchasers


            would not  be confused or  misled.   Chrysler concedes  this;


            indeed it offered no evidence to the contrary.3  Rather,  its


            case 
                depends 
                        on 
                          what 
                               is 
                                  known as post-sale confusion -- viewers


            who  have an  interest from  the standpoint  of the  original


            creator's reputation and may be misled.  Chrysler  introduced


            persuasive 
                      evidence 
                              that 
                                   the Viper added greatly to its general


            reputation, quite apart from sales.  Infringers who do a poor


3.  We devote a footnote to the court's giving weight to its

            finding that Silva did not intend to copy.  Strictly, intent,

            or lack thereof, does not affect the eyes of the viewer.  See

            Lois Sportswear, U.S.A. v. Levi Strauss & Co., 799 F.2d 867,

            875 (2d Cir. 1986).  Proof of bad intent may,

            psychologically, hurt as an admission.  Proof of good intent

            does not change appearance.


                                         -9-



job 
               mechanically, 
                            or 
                               introduce differences that detract, but do


            not 
               change 
                      the apparent origin, were recognized by Congress in


            enlarging the statute.  See Roberts, 944 F.2d at 1244-45.  In


            disregard of  Fed. R. Civ. P.  52(a), this confusion was  not


            mentioned, let alone discussed by the court, although it  was


            part of Chrysler's main case and was adequately supported  by


            expert 
                  testimony.4  We see no possible fair resolution of this


            basic 
                 inadequacy 
                           short 
                                 of giving Chrysler a whole new trial, to


            be 
              before 
                     a 
                       new judge because of the extensive interlocking of


            the evidence.


                      This brings us to Silva's temporary  Administratrix


            entering the  case  to pursue  the  appeal from  the  summary


            judgment  disposing of  the counterclaim  for taking  Silva's


            design. 
                    
                    If 
                      Silva's 
                              testimony of significant variances by which


            the Mongoose departed from the Viper is correct, and on which


            the court ultimately relied,  it is hard to see how  Chrysler


            pirated 
                   the 
                      Mongoose's 
                                 design.  While a party's pleading may be


            inconsistent, in the  last analysis one  cannot have it  both


            ways.   The  court was  impressed by  Silva's submission  and


            pretrial evidence  contrary to  the counterclaim,  committing


            himself to inconsistencies, and held him estopped5.


4.  The court did give some attention to Chrysler's expert

            during trial.  "I was . . . not paying too much attention to

            the cross-examination, but the last question was a good one,

            it woke me up."


            5.  The district court found in relevant part:


-10-



We  are   not   moved  by   Silva's   explanations;


            particularly 
                        not by the use he made of the fact that initially


            he was  without counsel,  and  we are  much troubled  by  his


            charging  Chrysler  with  making  "an  especially   egregious


            misstatement 
                        of fact" in saying his answers to interrogatories


            were under  oath when  they were  unsigned.   Silva fails  to


            mention 
                   that 
                        in 
                          his 
                              deposition, obviously under oath, he agreed


            to their correctness.


                      The judgment dismissing the complaint is  reversed;


            Chrysler 
                    to 
                       have 
                           a 
                             new 
                                 trial.  The judgment for Chrysler on the


            counterclaim 
                        is 
                          affirmed, with leave to the succeeding judge to


            reconsider if so minded.  Costs to Chrysler.


Defendant Silva repeatedly made

                      judicial admissions negating his

                      misappropriation counterclaim, and, thus,

                      is estopped from raising said claim at

                      this time.  The Defendant Silva

                      repeatedly conceded in pleadings and

                      other papers filed with this Court that

                      his vehicle is "significantly different"

                      than the Viper and was based on design

                      elements in the public domain.


                                        -11-