$2.3 million award affirmed in unusual trade dress case

United States of America
In Cosmos Jewelry Ltd v Po Sun Hon Co (Cases 06-56338, 06-56240 and 07-55333, March 24 2009), the US Court of Appeals for the Ninth Circuit has affirmed a district court decision in which the latter had held that the defendant had infringed the plaintiff’s common law trade dress in its jewellery, but not the plaintiff’s copyright in the jewellery. 

Trade dress law protects a product's commercial image or packaging (or even the design of a building) and its physical appearance. Examples of products protected by trade dress law include the appearance and décor of a chain of Mexican-style restaurants, the glass Coca-Cola bottle and the cover of the National Geographic magazine. Under Section 43(a) of the Lanham Act, a product's common law trade dress can be protected without formal registration with the US Patent and Trademark Office

The parties are direct competitors in the jewellery business. Cosmos Jewelry Ltd filed suit against Po Sun Hon Co alleging infringement of its copyright and trade dress in its plumeria jewellery.
In a short memorandum not appropriate for publication and not precedent, except as provided by Rule 36-3, the Ninth Circuit reviewed only the district court's findings of fact to determine whether they were clearly erroneous. The Ninth Circuit noted that:

"in the hyperbolic language we first used in a trademark case, '[t]o be clearly erroneous, a decision must [...] strike us as wrong with the force of a five-week old, unrefrigerated dead fish'".
Regarding the copyright claim, the district judge had held Cosmos’s and Po Sun’s jewellery in her hand, examined them closely and said that they did not look alike. While both designs resembled the plumeria flower, the district court concluded that the sandblast finish on the body of the petals and high polish finish on their edges, either individually or in combination, were “standard, stock or common” to the medium of gold jewellery making. The Ninth Circuit held that this factual finding was not clearly erroneous.
Regarding the trade dress claim, the district court had found Cosmos’s trade dress (“plumeria flowers in yellow gold in a specific size and shape with a sandblasted matte finish on the petals and high-polished shiny edges”) to be distinctive. The Ninth Circuit found that this finding was not clearly erroneous. Cosmos’s distinctive use of common manufacturing techniques (eg, shiny edges and sandblasting) were for the purpose of creating the distinctive aesthetic appearance of its jewellery and identified its source. Therefore, the Ninth Circuit also affirmed the finding of trademark infringement and unfair competition.
The Ninth Circuit further held that "the standard of review, and not any determinations on the law, compels affirmance". It agreed with the district court that this was an “exceptional case” under 15 USC §1117(a), because Po Sun’s actions were wilful and deliberate. Therefore, the award of attorneys' fees to Cosmos was not an abuse of discretion.
On the issue of damages, the district court had found Po Sun’s testimony to be unreliable and the records that it had produced to be "limited, illegible and subject to a credibility determination themselves". The Ninth Circuit held that the damages determination at trial did not require reversal in light of Cosmos's credible evidence and the poor quality of the evidence submitted by Po Sun. Po Sun’s evidence showed that it sold some jewellery that did not infringe Cosmos’s trade dress, but neither Cosmos nor the district court could reasonably account for Po Sun’s profits or sales from infringing jewellery. Therefore, Cosmos was entitled to the award of the total amount of profits from the infringing period, as "to hold otherwise would give a windfall to the wrongdoer". The $2.3 million award was thus affirmed.

Brian E Banner, Rothwell Figg Ernst & Manbeck PC, Washington DC

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