June 8, View this post on Instagram. Also Read. Monthly Package. Annual Package. Subscribe to our newsletter Stay updated with Vulcan Post weekly curated news and updates. Angela Teng 14 Jan Michael Petraeus 14 Jan Sea Ltd. Joycelyn Tan 13 Jan Ishan Singh 13 Jan From toasted bread. Joanna Rita 12 Jan Customers would browse through a small catalog, call a number and order the movie of their choice. The following day, the customer could pick up the cassette at the Fotomat kiosk of their choice along with their photos.
Fotomat notably preferred to hire female employees to work in their small kiosks. It was a pretty common summer job for local high school kids in suburbia. The Fotomat characterizes the suburban spirit of the mid-eighties and a handful of nostalgic urbanists seem to be quite dedicated to documenting what has become of the kiosks. While most have been demolished, there are former-Fotomats still standing, possibly in their hundreds dotted across the United States.
Some urbanists even make a point of seeking them out, to see what has become of this forgotten architectural relic of the 20th century…. This fact also distinguishes and renders unpersuasive Fotomat's reliance on Bowman Transp. Arkansas-Best Freight System, Inc. Miller, F. Fotomat contends that exchange after trial is too late and that this timing transgressed the due process requirement that notice and opportunity to be heard "be granted at a meaningful time and in a meaningful manner.
Shevin, U. However, we are of the opinion that exchange of trial briefs at the conclusion of trial is a sufficiently meaningful time for purposes of due process analysis. None of Fotomat's authority on this issue suggests otherwise. See, e. Illinois Racing Board, F. That the delayed exchange of trial briefs procedure is not inconsistent with Rule 5 a , Fed. Indeed, we are of the opinion that exchange of trial briefs at the time they are filed with the court is sounder procedure, being one more consistent with the elimination of gamesmanship aspects of litigation and, indeed, with the quest for truth, presumably the ultimate aim of adversarial litigation.
Any benefits that a delayed exchange may provide are outweighed by the increased potential for prejudice and by the added difficulties resulting from postponing until after trial the curing of any real prejudice caused by the trial briefs. The district court judge, particularly in the case of a long and complex trial, who has entertained incorrect concepts about some aspects of the case during the course of the trial because of an ex parte brief, is placed in the difficult position of returning to a status quo ante position prior to engaging in the decisional process.
The district court judge in the present case explained his reasons for the procedure on the first day of trial:. I have to go back and give you the basis for my position in the District for not exchanging briefs. That was basically the background of the rule that I have followed on exchange of briefs. Although we are somewhat sympathetic to the problem for which the delayed exchange procedure was designed, that problem can be mitigated to some degree by merely requiring the parties to submit their briefs for exchange simultaneously.
Moreover, we are more concerned with assuring that a party at all times is as well advised of his opponent's arguments as is the trial judge than we are with the problems of the "counterpuncher. For these reasons under our supervisory power we hereby direct any district court of this circuit which now follows the practice of delayed exchange of trial briefs to require in all future cases each party to serve his trial brief on all other parties at some reasonably short time before or after he files the brief with the court or provides a copy to the judge.
We find no reason to reverse the district court in the present case on this issue because although we deem more desirable the procedure just announced, the district court's procedure in this case had not been demonstrated to have prejudiced the defendant. The delayed exchange procedure was abandoned early in the trial.
Photovest gave Fotomat an edited version of its trial brief on the ninth day of trial, and after a two month recess in the trial, gave it the full, unedited version on the tenth day of trial. As to the first nine days of trial, Fotomat was given the right to call any Photovest witness who had testified during that portion of the trial.
Indeed, in all of its briefs and arguments in this appeal, Fotomat has failed to demonstrate any specific instance of prejudice resulting from the trial brief procedure. Code Generally, a plaintiff claiming that the defendant violated this section must prove specific intent and conduct manifesting that intent to monopolize and a dangerous probability of success in a relevant market.
Before discussing the specific intent and dangerous probability of success elements, we will first address the relevant market issue, one which the parties have vigorously contested. A definition of the relevant market is essential because "without a definition of that market there is no way to measure the defendant's ability to lessen or destroy competition. There is some authority for the proposition that in an attempt to monopolize case, as distinguished from a monopolization case, a definition of the relevant market is not necessary.
In Lessig v. Tidewater Oil Co. Empire Gas Corp. Morton Bldgs. Chrysler Corp. Whitten, Jr. Paddock Pool Builders, Inc. Balax, Inc. Indeed, one commentator has concluded that the Lessig approach "reeks of overkill. Antitrust L. We are similarly unpersuaded by Lessig and thus shall proceed to analyze the relevant market in the present case.
The district court concluded that Fotomat attempted to monopolize "the drive-thru retail photo processing submarket in the Indianapolis metropolitan area. In United States v. Grinnell Corp. United States, U. Charles O. Balfour Co. The outer boundaries of a product market are determined by the reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it.
However, within this broad market, well-defined submarkets may exist which, in themselves, constitute product markets for antitrust purposes. The boundaries of such a submarket may be determined by examining such practical indicia as industry or public recognition of the submarket as a separate economic entity, the product's peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes, and specialized vendors.
The market definition problem in the present case is whether Drive-thru photo processing is, as found by the district court, a relevant submarket. One of the most important indicia suggested in Brown Shoe is whether drive-thru photo processing is offered at prices distinct from other methods of photo processing. This is in essence asking whether there is a low level of cross-elasticity of demand between drive-thru and other methods.
The concept of cross-elasticity, defined and explained in the margin, 12 first appeared in the case law in Times-Picayune Publishing Co.
High cross-elasticity between two products suggests that they are in the same market. Retail processing delivered to the amateur photographic consuming public by the drive-thru method has a very low or no significant price cross-elasticity with other methods of retailing processing.
Fotomat contends that this finding is largely unsupported in the record. We cannot agree. Yet Fotomat was able to grow despite its significantly higher prices. Similar price differentials were found to be very significant in defining the submarket in Avnet, Inc. One of the issues in Avnet was whether rebuilt or reconditioned used components auto electrical units such as generators, alternators, etc. This court upheld the F.
Moreover, it noted the absence of any substantial interaction in price between the two lines. These factors are sufficient to support the finding that they should be placed in different submarkets. See also Cass Student Advertising, Inc. National Educational Advertising Service, Inc. Although Fotomat argues that the record establishes substantial similarity and interaction in prices between drive-thru and other retailers of processing, it has failed to provide any citation to the record in support of this argument, and in our independent review of the record we have not discovered any.
Therefore, Fotomat's ability to charge distinctive prices, albeit not determinative of a submarket, 14 is an important factor suggesting that the district court's delineation of a submarket was correct. Because a primary aspect of the service at issue, photo processing, is nearly identical whether done by drive-thru kiosks or conventional retailing methods, we might have been inclined to afford the price differential less weight than in other situations where the products appear to be less similar.
Our inclination derives from the possibility that the reason for the price differential may be price-insensitive consumers. Columbia Metal Culvert Co. However, since there is no conclusive evidence that consumers in this market are price insensitive, we must afford the price differential its due weight. Moreover, a closer analysis of the products show that although the end product of the drive-thru and the conventional method is nearly identical, the total service is quite different.
The differences in the total service provided by drive-thru as compared to conventional retailing are reflected by industry perception of the drive-thru submarket as a separate economic entity, another Brown Shoe factor suggesting a relevant submarket.
The district court found that "the drive-thru retail photographic processing business has achieved recognition within the photographic industry as a separate method of doing business and a separate market. Expert testimony indicated that consumers do treat drive-thru as a separate submarket. The convenience and service of drive-thru kiosks apparently segregate them from other forms of retailing. Consumers are willing to pay a premium for the convenience of drive-thru service.
And the Fotomate, with whom a customer deals, is more of a specialist than salespersons in many drug stores or discount stores that offer photo processing. Another Brown Shoe factor, "specialized vendors," also supports the district court's finding of a drive-thru submarket. It is quite clear that kiosks are a specialized method of retailing distinct from other conventional methods. Fotomat is disturbed by the district court's finding of a drive-thru submarket in view of the fact that the district court found that a given customer might purchase photo processing from both drive-thru and conventional retailers depending on which is more convenient under the circumstances.
Fotomat suggests that this precludes the existence of a submarket. The law does not require an exclusive class of customers for each relevant submarket. Aluminum Company of America, U. Moreover, in the present case it is significant that at a given time a customer who finds a kiosk convenient will use it regardless of its higher prices. Recognizing that in defining the relevant submarket the legal "guidelines offer no precise formula for judgment and that they necessitate, rather than avoid, careful consideration based on the entire record," 15 we conclude that the district court properly defined the relevant submarket.
Having affirmed the district court's delineation of the drive-thru submarket we turn now to the issue of whether Fotomat intended to monopolize the market. Although the case law contains some confusing dicta regarding the need to prove specific intent in an attempt to monopolize case, the Supreme Court has stated that:. Times-Picayune Publishing Co. Accord, United States v. Griffith, U. Although the specific intent requirement has been criticized, See, e.
Turner, Antitrust Law P , and the requisite proof to establish it is not well-settled, the district court found, and the record supports its finding of, the requisite intent, and Fotomat has not argued error in this regard. Fotomat directs its argument to the district court's finding of predatory conduct and contends that either the finding is not supported by the record or that its conduct was not the sort which is proscribed by the antitrust laws. Photovest's theory, accepted by the district court, was that when Fotomat determined that owning the kiosks was more profitable then franchising them, Fotomat, among other things, saturated the market with company-owned kiosks to reduce severely the profitability of Photovest's kiosks and thereby attempted to reduce substantially the value of Photovest's kiosks so that Fotomat could buy them at a low price.
Saturating the market was not the only method that Fotomat used, according to the district court, to reduce the profitability of Photovest's kiosks. It found that Fotomat engaged in the following conduct in an intentional attempt to do so:. Each of these was designed to reduce plaintiff's profits for purposes of reacquiring plaintiff's stores at the lowest possible price.
Although we will discuss only the primary components of Fotomat's attempt to monopolize, an analysis of these components requires a thorough review of the factual context in which they occurred. From its inception in , Fotomat intended to "blitz the industry," that is, to preempt the desirable sites for drive-thru kiosks nationally.
Because it did not have a vast capital supply with which to do this, it established a franchising arrangement to provide capital and operating management for its rapidly expanding network and to permit simultaneous development of many metropolitan areas. During its initial years of operation, the bulk of Fotomat's revenue was derived from the sale of franchises, not from operations.
By about June , Fotomat concluded that the profits it derived from company-owned kiosks were significantly greater than those it derived from franchised stores. After , no significant franchise sales were made except to fulfill commitments to "block" franchisees who had rights to purchase additional stores. In , a new franchise relations director was employed by Fotomat with instructions to "work himself out of a job.
The franchise arrangement with Photovest began in The investors who ultimately formed Photovest responded to an advertisement in the Wall Street Journal in which Fotomat solicited the purchase of franchises in several states including Indiana. The Photovest principals made two trips to Fotomat's headquarters in La Jolla, California, where they were given an extensive sales talk.
Fotomat represented that each store had a "market area" consisting of the geographic area from which the store drew its customers and that as a general rule no store would be constructed within two miles of any existing store so as not to infringe on the market area of the existing store.
It represented that it would select sites for the franchisees based on sophisticated demographic studies which it and others had conducted. On August 26, , Photovest signed a master franchise purchase agreement obligating it to purchase fifteen franchises to operate fifteen Fotomat stores in Marion County, Indiana.
Each store was made subject to the standard Fotomat franchise agreement and the standard Fotomat lease agreement which would be separately signed when each store was opened.
The agreement expressly required that the franchisee "purchase all merchandise, photo-processing services and other services from Fotomat or from such other sources as have been approved in writing by Fotomat.
Expiration or termination of the lease would terminate the franchise. Fotomat agreed to perform "general services including frequent pickup and delivery of film, frequent delivery of inventory, maintenance of inventories, and regular merchandising services. Photovest had a right of first refusal which could be exercised on any additional stores Fotomat offered for sale in Marion County.
In , Fotomat's executives in charge of site selection believed that Fotomat had an obligation to the franchisees "to not intentionally pull customers from the franchisee's operating stores to ours company stores and to act in good faith in the performance of our positioning of the units relative to franchised stores. As of June 16, , there were eighteen Fotomat stores in the Indianapolis vicinity; fifteen were Photovest's franchised stores, all located in Marion County, and three were company stores located in adjoining counties.
In about , Fotomat began to modify its previous procedures and began to overlap franchised stores on a systematic basis. In , Fotomat devised a "four point program" in response to a Kansas City franchisee's objection to Fotomat's placement of stores in proximity to a franchised store.
Photovest did exercise the option to buy, and that store became its sixteenth store. It believed at the time that the location was not good, but hoped to deter Fotomat from placing additional overlapping stores in Marion County and purchased to "set a precedent.
In , two other stores were installed within two miles of a Photovest store. Neither was offered to Photovest under the four point program, and when such omission was called to Fotomat's attention, its response was to ignore Photovest's requests. Beginning on October 17, , and up to the date of trial of this case, Fotomat opened ten more stores in and around Marion County.
It was not economically feasible for Photovest to accept new stores on those terms, a fact which was known to Fotomat. Since March , Fotomat has opened fourteen new stores in the Indianapolis metropolitan area.
Twelve of these represent new sites, while two of them are relocations. Over one-half of the new stores since have physically overlapped existing stores in Marion County, Indiana. It was valued by professional business appraisers as worthless and the district court agreed. The record supports this finding. Fotomat poses the issue as whether the antitrust laws are violated by locating a store close to a competitor in the hopes of taking some customers from the competitor.
It argues that the law does not proscribe such behavior because the antitrust laws specifically encourage competitive store locations and condemn competitors who allocate territories among themselves. It attempts to draw support for its arguments primarily from three cases, none of which we find provides persuasive support. National Society of Professional Engineers v.
Pueblo Bowl-O-Mat, Inc. Topco Associates, Inc. Topco Associates was a cooperative association of regional supermarket chains. Its basic function was to serve as a purchasing agent for its members and to obtain for them high quality merchandise under private labels to make them competitive with larger national and regional chains.
The territorial allocations effectively insulated members from competition in Topco-brand goods. The district court had found for Topco in part because "by limiting the freedom of its individual members to compete with each other, Topco was doing a greater good by fostering competition between members and other large supermarket chains. DT-5 consists of seven photographs of one Photo Drive-Thru kiosk which has been identified as the standard Photo Drive-Thru design for approximately 49 of the 57 retail outlets at issue in this litigation.
This design consists of a small booth on a concrete platform, covered with an overhanging roof. The roof is trapezoidal in shape whether viewed from the front or sides and is flat on top. An ornamental fence goes around the top of the roof a so-called "widow's walk" , with a flagpole and flag raised from each of the four corners of the fence on the top of the roof. Visually, the posts of the fence on the roof and flagpoles continue the lines of each corner of the booth below, interrupted by the overhanging roof.
There is also evidence that some Photo Drive-Thru kiosks employ different designs. The roof has the words "Photo Drive-Thru" on front and back and in lettering of approximately equal size "Kodak Film" on each side. The Court considers the photographs of Ex. DT-5 to be a representative depiction of the standard Photo Drive-Thru design. Scale models of one of the Fotomat units and one of the Photo Drive-Thru units were introduced into evidence as Exs.
DT-3 and DT-4 respectively. The parties have stipulated, and the Court accepts, that these Exhibits are accurate scale models of a Fotomat building and a Photo Drive-Thru building, but that each party has some actual kiosks which vary from the respective models.
The Court finds that there are substantial, decisive differences between the standard building designs employed by Fotomat and Photo Drive-Thru. The Court finds that the building designs are similar in functional respects only; i. Both designs have an overhanging roof in common, which is functionally necessary to protect the booth, its occupant and the customer from the elements. The Court finds that in neither booth is the amount of this overhang exaggerated sufficiently to be regarded as fanciful, artistic, creative or nonfunctional.
These functional advantages of the overhangs justify this similarity. The rectangular shape of the Photo Drive-Thru base structure is similar only in functional aspects of permitting easy construction and maximizing the area of contact with customers at the sides of the booth. The base structures differ significantly in window design and lighting arrangement.
The building designs, when viewed as a whole in the context of an actual functioning retail structure, are dominated by functional considerations. Prohibiting similarity in the functional aspects such as sloped, overhanging roofs and rectangular bases would foreclose broad alternatives necessary to the efficient conduct of defendants' competitive business. The test of confusing similarity in building design protection, accordingly, is confined to the design elements which do not contribute principally to functional utility.
The Court finds that confusion between the building designs has occurred or is likely to occur only with respect to the gross functional aspects which the designs have in common and not with respect to the nonfunctional, artistic or fanciful aspects which so clearly differentiate them.
Plaintiffs have demonstrated generalized confusion between Fotomat and Photo Drive-Thru in affidavits of customers Exs. The Court first considers the testimony of Mr.
Horn and Mrs. Horn's confusion stemmed from his belief that all film processing stores in parking lots are Fotomats. Any time I saw a small building in a parking lot that processed films, I thought they were all Fotomat.
Horn made reference to the sloped roof effect as a source of confusion, such that when he saw a Photo Drive-Thru kiosk, the sloped roof was a contributing factor. His awareness of Fotomat's slanted roof design undoubtedly was enhanced by the fact that as a construction contractor, Mr. Horn had been approached by Fotomat regarding construction of a roof for one of their kiosks.
At any rate, the witness, an amateur photographer, said that his confusion was not so great that he ever actually approached the Photo Drive-Thru booth to make a transaction Tr.
Miley testified for Fotomat that she had once seen a kiosk in the middle of a big parking lot which she assumed was a Fotomat because she had never seen any other type of stores in her county that were drive through photo stores Tr. The witness also felt that the roof appeared oversize for the size of the building, that the shape and slant of the roof made her think it was a Fotomat Tr. As in the case of witness Horn, Mrs. Miley never mistakenly approached the store or transacted business, nor did she come within yards of the Photo Drive-Thru kiosk.
Miley also testified that she made no mistake about a second Photo Drive-Thru kiosk when she drove past it closely enough to read the sign identifying it as such.
The Court has also reviewed affidavits of customers attributing confusion to the appearance of the Photo Drive-Thru kiosk. In the affidavits which allege confusion, the source of the confusion is not specified beyond the general statement that the Photo Drive-Thru and Fotomat kiosks look alike.
See, e. G, G, G Furthermore, these customer affidavits generally fail to indicate that customers have mistakenly made purchases at Photo Drive-Thru thinking it to be Fotomat; in some cases, the confusion was dissipated upon seeing the Photo Drive-Thru name, while in others the confusion was not great enough that the affiants actually made purchases at Photo Drive-Thru.
Likewise, the strikingly similar affidavits of Fotomat employees do not convince the Court that customer confusion is likely to occur due to any aspects of Photo Drive-Thru's building design which are similar to any distinctive elements of Fotomat's building design.
For example, several Fotomat employees reported conversations with customers who believed that the kiosk damaged in the windstorm was a Fotomat store when in fact it was a Photo Drive-Thru. Again, general appearance alone is mentioned. No affiant traced the similarity to any aspect of the Fotomat design which could be capable of distinguishing Fotomat from other rectangular small drive-in photo processing booths in parking lots. Where the overall similarities between Fotomat and Photo Drive-Thru are based upon functional considerations, the Court is unwilling to conclude that similarities in distinctive, fanciful or artistic design characteristics have caused or are likely to cause confusion where no such particularized confusion is apparent from the evidence.
While proof of confusion stemming from similarities in distinctive aspects of the building designs may be forthcoming at a full hearing on the merits, the Court is unconvinced by the evidence now before it that such similarities in distinctive, non-functional features exist or that confusion is likely to result.
The Court has jurisdiction over the subject matter of this action since it arises under the trademark statutes of the United States. The Court also has injunctive power to prevent the violation of plaintiff's alleged rights as registrant of a work registered in the Patent and Trademark Office. A preliminary injunction is warranted if there is an affirmative showing of four elements: probability of success on the merits at trial; irreparable injury pendente lite if the injunction is not granted; maintenance of the status quo; and a balance of equities in favor of plaintiff.
Coffee Dan's, Inc. Coffee Don's Charcoal Broiler, F. Products International Co. Chip-Chip, Ltd. Because the preliminary injunction is an extraordinary remedy, the Court should not grant a petitioner's request if it finds that these equitable requirements are not met. See Dymo Industries, Inc.
Tapeprinter, Inc. The owner of a registered trademark or service mark is entitled to relief in a civil action, pursuant to 15 U. The defendants have offered no evidence which rebuts the statutory presumption of 15 U.
The likelihood of public confusion as to the source of goods is, of course, the ultimate test in an action for trademark infringement. Johnson Publishing Co. Before reaching the ultimate issue of the likelihood of confusion, however, a court must be satisfied that federal trademark protection shelters the particular use of a service mark which is alleged to be infringed.
In short, "the validity and nature of the mark for which protection is sought must be determined before the issue of infringement can be properly resolved. The Court's inquiry cannot stop with the discovery of a valid registration, despite the fact that the registration carries a strong presumption of validity under the federal trademark laws, see e.
Patricelli, F. Dura Electric Lamp Co. In deciding whether Fotomat has demonstrated probable success on the merits to support a preliminary injunction against service mark infringement, the Court will first discuss whether the defendants have infringed Fotomat's registered service mark see Appendix A by use of a similar symbolic logo see Appendix B.
Whether it is probable that Fotomat will prevail in its claim of unfair competition due to defendant's alleged palming off of its goods and services for those of Fotomat is considered in part III. D, infra. Protection for service marks is provided for by section 3 of the Lanham Act, 15 U.
Service mark infringement is governed by the general principles applicable to trademark infringement. Boston Professional Hockey Ass'n. Whether the Photo Drive-Thru logo infringes upon Fotomat's registered service mark depends upon the likelihood of public confusion as to the source of Fotomat's services occasioned by defendant's use of a confusingly similar mark, Tefal, S.
In assessing the likelihood of confusing similarity between a trademark and an allegedly infringing mark, several factors are to be weighed: the degree of similarity of the marks in appearance, the intent of the alleged infringer, the relation in use and manner of marketing between the goods, the similarity of trade channels, and the fame of the prior mark.
Tefal, S. The likelihood of confusion is to be tested in the eyes of "ordinary purchasers, buying with ordinary caution," McLean v. Fleming, 96 U. Heraeus Engelhard Vacuum, Inc. The plaintiff need not prove that instances of actual confusion have occurred; it is enough for relief that plaintiff prove only that such confusion is likely to be caused by use of a similar mark.
In the instant case, the Court has considered each party's logo as a whole, to determine the general sense impressions made by the respective symbols. See Q-Tips, Inc. The Court has found as a matter of fact that the Photo Drive-Thru logo bears a high degree of similarity to the Fotomat service mark. A great similarity has also been found to exist in the use of each mark both as an advertising symbol and as a corporate identification on numerous service-related forms, envelopes and the like.
Each party uses its logo in connection with retail photographic services of a nearly identical scope. Finally, Fotomat has promoted its service mark symbol or a reasonable likeness thereof in advertising to a degree sufficient to justify recognition of the fame of Fotomat's mark. Furthermore, the Court has found that confusion by the average purchaser due to defendant's use of its logo is likely, as demonstrated by actual confusion involving advertisements, coupons and other items bearing the logo.
Accordingly, the Court finds that Fotomat has demonstrated probable success on the merits of its service mark infringement action with respect to the Photo Drive-Thru logo. The question of whether federal trademark protection extends to Fotomat's entire retail outlet structure is now considered. Fotomat alleges that the Fotomat kiosk is itself a symbol of Fotomat's services, a "three-dimensional billboard" which identifies Fotomat as distinguished from all other providers of film processing.
The kiosk itself has become a "famous mark" according to Fotomat due to extensive advertising of the concept with photographs of the Fotomat kiosk. The Court's hesitation to adopt this view stems in part from the difference between the two-dimensional service mark as registered and the three-dimensional structure as utilized for the functional purpose of retailing, notwithstanding the resemblance between the registered mark and the actual constructed building.
As explained below, the Court cannot say that it is probable that federal trademark law was meant to extend its protection to Fotomat's kiosks in their entirety or at least to the elements of the Fotomat building design that are generally functional in design, appearance and use. In the instant case, extending service mark protection to all aspects of a retail outlet merely because a line drawing of the building has been federally registered as a service mark would sweep a protective path more widely than the Lanham Act allows for reasons now discussed.
At the hearing in this matter, the Court invited the parties to address the issue of protectability of a building design as a service or trademark. Fotomat directed the Court's attention to only one such judicial decision.
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