Sara Lee Corporation v. Kayser-Roth Corporation

81 F.3d 455, 38 U.S.P.Q. 2d (BNA) 1449, 1996 U.S. App. LEXIS 8266, 1996 WL 181418
CourtCourt of Appeals for the Fourth Circuit
DecidedApril 17, 1996
Docket94-2562
StatusPublished
Cited by208 cases

This text of 81 F.3d 455 (Sara Lee Corporation v. Kayser-Roth Corporation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sara Lee Corporation v. Kayser-Roth Corporation, 81 F.3d 455, 38 U.S.P.Q. 2d (BNA) 1449, 1996 U.S. App. LEXIS 8266, 1996 WL 181418 (4th Cir. 1996).

Opinions

Reversed and remanded with instructions by published opinion. Judge HALL wrote the majority opinion, in which Judge WILKINS concurred. Judge WIDENER wrote a separate dissenting opinion.

OPINION

K. K. HALL, Circuit Judge:

Sara Lee Corporation appeals the district court’s entry of judgment for Kayser-Roth Corporation in Sara Lee’s action for trademark infringement. The district court found that Kayser-Roth’s use of the mark Leg Looks® on a line of its No nonsense® hosiery products sold in food, drug, and mass merchandising outlets did not infringe on Sara Lee’s L’eggs® trademark. Because the court’s finding was clearly erroneous, we reverse its judgment and remand the case with directions to enter judgment for Sara Lee. We further instruct the district court to grant Sara Lee’s request that Kayser-Roth be permanently enjoined from using its Leg Looks® trademark in a manner that infringes on the L’eggs® mark.

I.

Sara Lee manufactures pantyhose and other hosiery products for retad sale under the Hanes® and L’eggs® trademarks. Until L’eggs® penetrated the “FDM market”1 in the early 1970s, women’s hosiery was sold only in department stores. Sara Lee’s most [459]*459popular L’eggs® product is its Sheer Energy® line of light support pantyhose, made from nylon and spandex. Sara Lee also manufactures nylon-only products, but its nylon-and-spandex brands account for the largest share of its profits from hosiery sales. Sara Lee dominates the nylon-and-spandex pantyhose market; about three of every four pairs sold are Sheer Energy® products.

Kayser-Roth is Sara Lee’s only nationwide competitor. It followed Sara Lee into the FDM market in 1973, when it introduced its No nonsense® line of pantyhose. In contrast to Sara Lee’s, Kayser-Roth’s sales of nylon-only products far exceed those of its nylon-and-spandex lines.

Over the last twenty-odd years, Kayser-Roth and Sara Lee have spent hundreds of millions of dollars in advertising their hosiery products. As a result, the companies have reaped billions in sales, and both No nonsense® and L’eggs® have become household names.

Sara Lee and Kayser-Roth are intense rivals and frequent court opponents. In early 1992, Kayser-Roth learned of Sara Lee’s plan to introduce L’eggs Everyday®, a new line of nylon-only hosiery. Kayser-Roth decided to respond by simultaneously introducing its own new line of nylon-and-spandex hosiery, designed to be priced lower than Sheer Energy®.

The new line required a name. Kayser-Roth had, during the previous summer, applied to the United States Patent and Trademark Office to register the designations “Sheer Vigor” and “Sheer Invigoration.” Sara Lee learned of the applications, and it filed the instant suit for declaratory and in-junctive relief on July 22, 1992, alleging that Kayser-Roth had violated Sections 32 and 43(a) of the Lanham Act, 15 U.S.C. § 1051 et seq.2

Kayser-Roth instead marketed its new product as “Leg Looks®,” a trademark that it already owned. Undaunted, Sara Lee amended its complaint on September 9,1992, to assert that the name Leg Looks® infringed on its L’eggs® mark, and that the product’s packaging was confusingly similar to the trade dress of its Sheer Energy® line. See note 2, supra, Sara Lee also amended its prayer for relief to request money damages. Kayser-Roth counterclaimed, alleging that Sara Lee had engaged in numerous antitrust violations and in false advertising.

The case was assigned to a magistrate, who recommended that Kayser-Roth be preliminarily enjoined from continuing to sell [460]*460Leg Looks® as packaged. The district court adopted the magistrate’s recommendation; Kayser-Roth thereafter recalled .its Leg Looks® products and changed the packaging.3 Kayser-Roth nevertheless continued to affix the Leg Looks® mark to its new nylon- and-spandex product.

On January 11, 1993, Sara Lee moved to supplement its amended complaint to reassert all of its federal and state claims as to the repackaged Leg Looks® product; in March, it once again moved for a preliminary injunction. The magistrate conducted a ten-day hearing on the motion in August 1993. At the conclusion of the hearing, the parties and the district court agreed, inter alia, that (1) Sara Lee would waive all claims for money damages, (2) Sara Lee’s remaining claims for equitable relief would be bifurcated from Kayser-Roth’s counterclaims, and (3) the just-concluded hearing would be treated as a trial on the merits of Sara Lee’s equitable claims, with the matter referred to the magistrate for decision, subject to de novo review by the district court.4

On November 30, 1993, the magistrate issued a report and recommendation; he advised the district court to enter judgment for Sara Lee on all claims. The magistrate recommended that Kayser-Roth be permanently enjoined from using its Leg Looks® trademark in the FPM market.5

Kayser-Roth objected to the magistrate’s report and recommendation. The district court examined the record anew, and, on October 13, 1994, filed an opinion that adopted many of the magistrate’s underlying findings, yet disagreed with his conclusions.

The court found, as an initial matter, that Sara Lee’s federal trademark claim was foreclosed by the doctrines of laches and acquiescence; it further determined that, even if Sara Lee’s trademark claim were not equitably barred, Kayser-Roth’s use of the Leg Looks® mark did not violate the Lanham Act. The court likewise saw no merit in Sara Lee’s claim that Kayser-Roth’s marketing of Leg Looks® in the redesigned package infringed on the trade dress of Sara Lee’s Sheer Energy® products.6 Consequently, the district court entered judgment for Kayser-Roth on all of Sara Lee’s claims. Sara Lee appeals.

II.

Although trademark law is imbued with numerous idiosyncracies, the standard governing our review of the district court’s findings of fact in a trademark case is familiar. Generally speaking, we may set aside such findings only if they are clearly erroneous, Fed.R.Civ.P. 52(a); Pizzeria Uno Corp. v. Temple, 747 F.2d 1522, 1526 (4th Cir.1984). However, we owe no deference to the district court’s findings if they are derived as a result of the court’s misapplication of the law. Pizzeria Uno at 1526:

III.

We must address at the threshold the district court’s findings that Sara Lee slept on [461]*461its rights or, alternatively, that it acquiesced to Kayser-Roth’s current use of the Leg Looks® mark.

A.

During the 1980s, Kayser-Roth used the Leg Looks® mark on a line of “fashion” nylon-only hosiery products in competition with Sara Lee’s Hanes® line; after peaking in 1985, sales of Leg Looks® dropped precipitously throughout the remainder of the decade. In their original incarnation, Leg Looks® products were available only in upscale department stores. No L’eggs® products have ever been sold in such outlets.

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81 F.3d 455, 38 U.S.P.Q. 2d (BNA) 1449, 1996 U.S. App. LEXIS 8266, 1996 WL 181418, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sara-lee-corporation-v-kayser-roth-corporation-ca4-1996.