Schwinn Bicycle Company v. Ross Bicycles, Inc.

870 F.2d 1176, 1989 WL 25488
CourtCourt of Appeals for the Seventh Circuit
DecidedMarch 24, 1989
Docket88-1575
StatusPublished
Cited by89 cases

This text of 870 F.2d 1176 (Schwinn Bicycle Company v. Ross Bicycles, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schwinn Bicycle Company v. Ross Bicycles, Inc., 870 F.2d 1176, 1989 WL 25488 (7th Cir. 1989).

Opinion

COFFEY, Circuit Judge.

Plaintiff-appellee Schwinn Bicycle Company brought suit against defendant-appellant Ross Bicycles, Inc., alleging that Ross had taken orders for a prototype of an exercise bicycle that unfairly copied the trade dress of an exercise bicycle produced *1178 by Schwinn in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). 1 Schwinn moved for a preliminary injunction requesting that Ross be prohibited from selling its exercise bicycle, and the district judge designated a magistrate to conduct a hearing and issue proposed findings of fact as well as a recommendation for disposition of the motion pursuant to 28 U.S.C. § 636. After a nine-day hearing the magistrate recommended denial of the preliminary injunction motion. The district judge, after conducting a de novo review of the record, disagreed with the magistrate’s recommendation and granted Schwinn’s preliminary injunction motion. 2 Ross appeals the district court’s order granting the preliminary injunction. We vacate and remand.

I. FACTS

Schwinn Bicycle Company (“Schwinn”), an Illinois corporation, is a bicycle manufacturer whose name and reputation are widely known in the industry. Ross Bicycles, Inc. (“Ross”) likewise is a well-established bicycle manufacturer.

In 1977 Lindsay Hooper (an engineer for Repco, an Australian company) approached the executive vice president of Schwinn with a prototype for a new exercise bicycle. 3 This prototype was unique because, in addition to exercising the rider’s legs like other conventional exercise bicycles, it also enables the rider to exercise his/her upper body by moving the long handle arms back and forth with his/her arms and shoulders. The prototype had air vanes (resembling the blades on an ordinary freestanding fan) mounted on a front bicycle wheel to provide resistance to the pedals and handle arms as the wheel turned which, consequently, required the rider to expend energy (“exercise”). Thus, the resistance was generated by “air displacement.” 4 See Schwinn Bicycle Co. v. Ross Bicycles, Inc., 678 F.Supp. 1336, 1339 (N.D.Ill.1988). Hooper had obtained Australian and United States patents on the “linkage” mechanism connecting the foot pedals to the handle arms which allowed the handle arms to spin the pedals and, in turn, drive the front fan wheel. Hooper, before approaching Schwinn, assigned the patents to Repco (an Australian company). In effect, Hooper’s patented linkage mechanism allowed the front fan wheel to be driven by the handle bars alone only if the rider took his feet off the pedals.

Ultimately, Schwinn obtained the exclusive right to use the linkage mechanism patent and, thereafter, modified the design of Hooper’s exercise bicycle prototype making it more attractive, adding a protective cage around the large (27-inch) front wheel (the “fan”), and adding a locking device to keep the wheel and pedals from inadvertently moving when not being ridden by an exerciser. Schwinn has successfully marketed its version of the air displacement exercise bicycle since late 1978 under the trade name “Air-Dyne” and has spent well over $4 million in advertising the product between 1980 and 1986. 5 The district court trial judge determined that “[u]ntil recently, ... there were more than 100 exercise bicycles on the market” and further that “no other manufacturer sold an exercise bicycle that looks or performs like the Air-Dyne.” 678 F.Supp. at 1339. The district court was silent concerning the reason for *1179 this lack of competition, but the magistrate reported that “a major reason for the lack of competition [with the Air-Dyne] was the Hooper patent.”

In 1986 Jerry Ross, President and Chief Executive Officer of Ross Bicycles, Inc., designed and developed a linkage mechanism that avoided the Hooper patent. It is uncontested that Ross actually purchased a Schwinn Air-Dyne to aid him in designing an exercycle around the patent. 6 After Ross came up with a linkage mechanism design that did not infringe on Schwinn’s patent, it constructed a prototype of its version of an air displacement exercise bicycle and displayed its early prototypes at trade shows in late 1986 and early 1987. According to the district court, Ross intentionally copied the Air-Dyne’s “basic shape, silhouette, and primary features,” 678 F.Supp. at 1342, and stated that “[although some engineering improvements were made by Ross, the basic design — apart from the gear [the linkage mechanism] — was taken from Schwinn.” Id. at 1343 n. 10.

Nonetheless, there are differences between Ross’ final prototype (the “Futura”) and Schwinn’s Air-Dyne. For example, Ross’ linkage mechanism design allows the rider to hold his feet stationary on the pedals while exercising only his upper body without the pedals rotating (“free-wheeling”). Schwinn’s linkage does not allow free-wheeling; thus, the pedals must rotate to turn the wheel because Schwinn’s linkage mechanism connects the handle arms and the pedals. There are foot rests on the Air-Dyne type for the rider to place his feet while exercising his upper body.

Ross’ and Schwinn’s separately patented linkage mechanism designs require that their respective locations and housings (guards) be different: The Schwinn Air-Dyne’s connecting mechanism is between the pedals and the handle arms, but the Ross Futura’s connecting mechanism is in a relatively large enclosure on the front fan-type wheel. The meters that register, calculate and display the amount of time, distance and energy expended by the rider (ergonometers) are of different shapes and sizes. Moreover, the Futura features an electronic ergonometer while the Schwinn’s ergonometer is mechanical. There are also differences in the chain covers and, in addition, the locking devices for the “fans” are of different colors. The Futura’s handle arms are somewhat longer than the Air-Dyne’s; the Futura has toe straps on the pedals; the small wheels located at the front of the exercise bicycles for transporting the entire machine from one location to another are of different size and material; and while the Air-Dyne has black markings on its base, the Futura does not. The handle arms of the two exercise bicycles are of different diameters; the space between the handle arms varies between the Air-Dyne and the Futura; and the seat used on the Air-Dyne is not only larger than on the Futura but also has a different contour. Finally, the Schwinn exercise bicycle displays either “Air-Dyne” or “Schwinn” in ten places while the Ross exercise bicycle displays the name “Futu-ra” and “Ross” or their logo in thirteen places. The 27-inch fan wheels on both exercise bikes is located on the front in the same relation to the rider’s body as on a bicycle, and the district court stated:

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Bluebook (online)
870 F.2d 1176, 1989 WL 25488, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schwinn-bicycle-company-v-ross-bicycles-inc-ca7-1989.