Mil-Mar Shoe Company, Incorporated v. Shonac Corporation
Docket: 95-3588
Court: Court of Appeals for the Seventh Circuit; February 2, 1996; Federal Appellate Court
Mil-Mar Shoe Company, Inc. initiated legal action against Shonac Corporation in Wisconsin state court, claiming common law trade name infringement, statutory trademark infringement under Wis. Stat. 132.033, and unfair competition. Mil-Mar, which operates under the name "Warehouse Shoes," sought a temporary restraining order and a preliminary injunction to prevent Shonac from using "DSW Shoe Warehouse" or similar names for its upcoming store in the Greater Milwaukee area. The temporary restraining order was granted, and following a hearing, the district court issued a preliminary injunction against Shonac's use of "DSW Shoe Warehouse" or any confusingly similar name.
Mil-Mar, a Wisconsin corporation, has operated 17 stores in the area under "Warehouse Shoes" since at least 1970 and has registered trademarks for these names. With significant advertising expenditures and a notable market share, Mil-Mar's brand is well-established. In contrast, Shonac, an Ohio corporation founded in 1969, operates under the name "DSW Shoe Warehouse," which was first introduced in 1991 and has trademark registrations for its logo and name, although it disclaimed exclusive use of "Shoe Warehouse."
Upon learning of Shonac's plans to open a store in Wauwatosa, Wisconsin, Mil-Mar requested Shonac to abandon the name, which Shonac refused, prompting the lawsuit. The district court noted that the two companies' stores were nearly identical in concept and target customers, and their proximity would result in direct competition. Shonac provided evidence that many businesses use "warehouse" in their names, indicating a crowded marketplace for such terms. Ultimately, the appellate court reversed the district court's decision on the preliminary injunction.
The district court analyzed Mil-Mar's claims of trade name and trademark infringement, concluding that both claims required the same legal evaluation. Mil-Mar acknowledged that merely registering a trade name in Wisconsin does not grant exclusive rights, focusing instead on whether "Warehouse Shoes" could be protected as a de facto trademark against "DSW Shoe Warehouse." The court determined that the unfair competition claim failed because Mil-Mar did not provide evidence that Shonac intended to mislead consumers regarding the association of their products.
The court assessed the likelihood of Mil-Mar's success on the trademark infringement claim, finding that "Warehouse Shoes" was descriptive and could be protected if Mil-Mar proved its secondary meaning in the Greater Milwaukee area. The court concluded Mil-Mar had shown a reasonable likelihood of success and that there was a likelihood of consumer confusion with "DSW Shoe Warehouse." Shonac's defense of fair use was dismissed since likelihood of confusion precludes fair use.
The court granted Mil-Mar a preliminary injunction against Shonac's use of "DSW Shoe Warehouse" and similar names, citing Mil-Mar's lack of adequate legal remedy and potential for irreparable harm. It also noted that the balance of equities favored Mil-Mar. The district court outlined a four-part analysis for granting a preliminary injunction, emphasizing that if the moving party lacks a meritorious case, the injunction should be denied regardless of the balance of harms.
The district court determined that "Warehouse Shoes" is not a generic term for trademark purposes, classifying marks into five categories: generic, descriptive, suggestive, arbitrary, and fanciful. Generic terms receive no trademark protection, while descriptive marks require evidence of "secondary meaning" to be protected. Suggestive, arbitrary, and fanciful marks are inherently distinctive and fully protected. The burden is on the claimant to prove that "Warehouse Shoes" is not generic since it is not federally registered. The appellate court reviews the categorization for clear error, only overturning if it is convinced a mistake was made. The appeal focuses on whether the district court erred in classifying "Warehouse Shoes" as descriptive rather than generic. A generic term identifies a type of goods, whereas a descriptive mark describes the characteristics of a product. Descriptive marks lack distinctiveness and are only protectable if they have acquired secondary meaning within the relevant community.
Mil-Mar contends that "Warehouse Shoes" is a descriptive mark, as it describes their retail store, rather than a generic term. Historically, prior to the 1988 revisions of the Lanham Act, generic terms were referred to as "common descriptive" terms, which were distinguished from "merely descriptive" terms, now termed "descriptive." The revisions aimed to clarify distinctions in trademark law, yet the presence of any descriptive element in a mark does not negate its potential classification as generic. Trademark law prohibits the protection of generic terms as trademarks to ensure competitors can adequately describe their goods. A generic term is one commonly used to identify a category of goods and cannot be trademarked.
The distinction between "generic" and "descriptive" terms lies in their distinctiveness and ability to serve as source identifiers. Courts often reference dictionaries to determine the genericness of terms. The term "warehouse," as defined in Webster's Third New International Dictionary, encompasses both wholesale establishments and retail stores, suggesting that "warehouse" may apply to both Mil-Mar and Shonac, who operate chain stores selling discounted shoes. Mil-Mar disputes the relevance of the retail store definition, arguing it is primarily British, but Shonac presented evidence of the term's widespread usage in the U.S. to describe retail stores, undermining Mil-Mar's argument.
The district court's analysis of the term "Warehouse Shoes" focused on the primary dictionary definition of "warehouse" as a storage structure, noting its multiple meanings. It concluded that "Warehouse Shoes" lacked a common public understanding to be considered generic. Mil-Mar argued that "warehouse" primarily evokes the image of storage rather than retail. However, trademark law does not limit genericness to a word's primary definition. Previous cases, such as Miller Brewing, established that terms can be considered generic based on various common uses, irrespective of their primary meanings.
Shonac presented evidence of over 8,000 retail establishments using "warehouse" in their names, indicating that the public commonly associates "warehouse" with retail stores offering a variety of products at discount prices. This widespread usage demonstrates that "warehouse" functions generically to describe a specific type of retail outlet. The court noted that significant industry use, along with dictionary definitions, contributes to a term's generic status. Shonac also highlighted that many retail shoe stores utilize "Shoe Warehouse" or "Warehouse Shoes," reinforcing the conclusion that these terms are generic, despite Mil-Mar's inability to challenge them directly in its local market.
Mil-Mar's "Warehouse Shoes" and Shonac's "Shoe Warehouse" are at the center of a trademark dispute, with Shonac asserting that "Shoe Warehouse" is a generic term, making its use immune to injunction. The district court, however, deemed "Warehouse Shoes" descriptive rather than generic, determined it had acquired secondary meaning, and found a likelihood of confusion with "Shoe Warehouse," leading to an injunction against Shonac. This situation raises a complex issue in trademark law regarding whether a trademark owner can prevent the use of a similar term that is generic. The analysis indicates that "Warehouse Shoes" is, in fact, generic as it describes a category of retail stores selling shoes at discounted prices, similar to the terms "light beer" and "lite beer," which are also generic despite their descriptive adjectives. The court's reliance on precedent, where terms like "tasty" were found not to be generic, does not apply here as "Warehouse Shoes" and "Shoe Warehouse" clearly denote a specific type of retail store. Thus, the conclusion is that "Warehouse Shoes" is generic and should not have been afforded trademark protection.
Composite terms must be evaluated as a whole to determine their genericness, as dissecting them can lead to errors in trademark classification. While certain combinations may be viewed as generic, others may not be, depending on context. Specifically, "Warehouse Shoes" and "Shoe Warehouse" are deemed generic because their components collectively signify a store that sells shoes, lacking distinctiveness. The argument that the order of the words affects their meaning is unsupported, as many retailers use "warehouse" prominently without suggesting uniqueness. Previous rulings confirm that similar names, like "Warehouse Foods," are also generic. Consequently, since both terms are classified as generic, the district court's finding of secondary meaning and likelihood of confusion becomes irrelevant. Generic terms cannot receive trademark protection, regardless of their association with a specific source or any promotional efforts. Allowing trademark protection for generic terms would undermine fair competition principles, as it would restrict competitors from accurately describing their products. Thus, Mil-Mar lacks a valid claim, leading to the reversal of the district court's preliminary injunction against Shonac.
The district court determined that Mil-Mar and Shonac offer identical products and compete in the same cost-conscious market. Mil-Mar did not contest this finding or the court's approach to the claims on appeal. The court mandated that Mil-Mar post a $20,000 security bond. Shonac has opened a store named "DSW Shoes." Mil-Mar's counsel suggested that "Warehouse Shoes" might be a descriptive term, but they maintained that it is not generic. The court concluded that the term is generic, which affects the possibility of other designations. Shonac contends that even if "Warehouse Shoes" is not generic, "Shoe Warehouse" is and should be available for use. The text discusses the nuanced distinction between descriptive and generic terms, noting that generic designations ultimately describe the item itself. The district court's decision appears to hinge on the varying definitions of "warehouse," but it is unclear which specific definition influenced the conclusion that "Warehouse Shoes" is not generic. Additionally, a discussion on the definitions of "light" as an adjective is included, noting that the relevant meanings for retail contexts are lower on the list of definitions.
"Mart" has been established as a generic term in the First Circuit, as affirmed in S.S. Kresge Co. v. United Factory Outlet, Inc. The distinction between generic and descriptive terms is not effectively captured by a 'part of speech' test, as illustrated by the example of "Apple Computers," which retains trademark status despite its components being generic. The term "Warehouse Shoes" is deemed equally generic as "Shoe Warehouse" due to the minimal cognitive leap required for consumers to recognize its meaning, influenced by common naming conventions in retail. Furthermore, there is a noted split in authority regarding the implications of fair use in trademark law, particularly in Wisconsin. It is highlighted that trademark claimants must demonstrate likelihood of confusion, while fair use serves as a defense against claims of infringement. However, under the district court's reasoning, the fair use defense appears ineffective, as it either overlaps with likelihood of confusion or becomes unnecessary if confusion is absent.
