                                                                                                                           Opinions of the United
1995 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


2-15-1995

Versa v Bifold Company
Precedential or Non-Precedential:

Docket 94-5064




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                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT
                        ________________

                           NO. 94-5064
                        ________________

                  VERSA PRODUCTS COMPANY, INC.

                                v.

              BIFOLD COMPANY (MANUFACTURING) LTD.,

                                 Appellant

       ___________________________________________________

         On Appeal From the United States District Court
                  For the District of New Jersey
                    (D.C. Civ. No. 93-cv-02734)
       ___________________________________________________

                      Argued: May 12, 1994

          Before: BECKER and LEWIS, Circuit Judges, and
                     POLLAK, District Judge.*

                   (Filed   February 15, 1995)


                    NORMAN H. ZIVIN, ESQUIRE (ARGUED)
                    PETER D. MURRAY, ESQUIRE
                    WENDY E. MILLER, ESQUIRE
                    Cooper & Dunham
                    1185 Avenue of the Americas
                    New York, NY 10036

                    ROBERT M. AXELROD
                    Sills, Cummis, Zuckerman, Radin
                    Tischman, Epstein & Gross, P.A.
                    One Riverfront Plaza
                    Newark, NJ 07102-5400
                         Attorneys for Appellant



    *.    The Honorable Louis H. Pollak, United States District
Judge for the Eastern District of Pennsylvania, sitting by
designation.
                        JEFFREY CAMPISI, ESQUIRE (ARGUED)
                        Sharkey & Campisi
                        188 Eagle Rock Avenue
                        P.O. Box 419
                        Roseland, NJ 07068
                             Attorneys for Appellee


                 _______________________________________

                          OPINION OF THE COURT
                 _______________________________________


BECKER, Circuit Judge.

        This is a trade dress infringement action in which plaintiff

Versa Products Company, Inc. ("Versa") contends that defendant

Bifold    Company   (Manufacturing)   Ltd.   ("Bifold")    infringed   the

trade dress of Versa's B-316 directional control valve, a device

commonly used in control panels of offshore oil-drilling rigs to

facilitate emergency shutdowns, by marketing its Domino Junior

valve, which Versa maintains copies the product configuration of

the B-316.1      The action was brought under section 43(a) of the

Lanham Act, 15 U.S.C. § 1125(a) (West Supp. 1994), New Jersey's

Unfair Competition Law, 56 N.J.S.A. § 4-1 to -2 (1989), and New

Jersey's common law of unfair competition.          Following a bench

trial the district court found that the trade dress of Versa's

valves     had    met   the   nonfunctionality    and     distinctiveness

requirements of our trade dress jurisprudence, and that there was

    1
     .    As in Duraco Products, Inc. v. Joy Plastic Enterprises,
Ltd., 40 F.3d 1431, 1439 (3d Cir. 1994), "we will employ the
designation `product configuration' to refer to trade dress
alleged in the product itself, whether in a specific feature or
in some combination or arrangement of features, and to
distinguish that type of trade dress from `product packaging.'"
a   likelihood     of   confusion    of   the   sources   of   Bifold's     Domino

Junior and Versa's B-316 valves.            Accordingly, the court entered

a permanent injunction against Bifold, precluding it from selling

its Domino Junior valve (in its present form) anywhere in the

United    States.       Bifold   appeals    all   aspects      of   the   district

court's rulings.

      We need not reach the nonfunctionality and distinctiveness

questions because the appeal may be disposed of on the likelihood

of confusion issue, in connection with which we are called upon

to determine whether the jurisprudence that lowers the standard

to a "possibility of confusion" where the alleged infringer is a

"second comer" applies in the trade dress product configuration

context.     We also must explicate the elements of the confusion

standard in this context.           We conclude that the lowered standard

(applied by the district court) does not apply and that some but

not all of the "Scott factors," see Scott Paper Co. v. Scott's

Liquid Gold, Inc., 589 F.2d 1225 (3d Cir. 1978), are pertinent,

because     of     policy    considerations        applicable       in     product

configuration cases.        Applying this approach we conclude that the

district court's finding of a likelihood of confusion is clearly

erroneous.       We will, therefore, reverse the order of the district

court and vacate the permanent injunction.
                     I. FACTS   AND   PROCEDURAL HISTORY

      Versa, a New Jersey corporation with subsidiaries abroad,

designs   and   manufactures          pneumatic   and      hydraulic   directional

control valves.       Bifold, an English corporation, competes with

Versa and markets a line of control valves and related products

and services to the offshore oil industry.                    Versa alleges that

Bifold has engaged in unfair competition in its marketing of the

Domino Junior -- a valve manufactured by Bifold and adapted to

the   harsh   offshore   oil     and     petrochemical       environments   --   by

copying the trade dress, i.e., the distinctive appearance, of the

product configuration of Versa's B-316 valve.

      The most significant feature of valves designed for offshore

applications    is    their     stainless      steel       composition,   used   to

withstand the corrosive effects of salt air and sour gas fumes.

In offshore drilling platforms these valves are typically aligned

in small control panels containing up to fifty modular valve

bodies with a standard configuration but which, by attaching one

of various actuators and making minor adjustments, may be adapted

to a variety of applications.             The panel design engineers devise

the functional specifications of panels around the capacities of

particular valves, selecting valves based on their functionality,

reliability, availability, and price.               The valves themselves are

not visible from the front of a control panel when installed;

only knobs, buttons, and status indicator actuators protrude.
                       A.    Versa's B-316 Valve

     Versa began producing brass valves (its "V" series) in 1949.

Versa dresses the series, consisting at present of an entire line

of valves well known in the industry, with contoured lines and

shaping that the district court found "form a distinctive product

appearance that has been associated with Versa for decades."          In

the late 1970's Versa designed the B-316 line of stainless steel

valves,   the   subject     of   this   litigation.    Versa   initially

fashioned them of stainless steel bar stock, and the valves were

plain and unadorned.        Because of the waste of valuable metal

associated with the machining process and the substantial manual

labor needed to drill each valve individually, Versa converted to

a cast version of the valve as soon as sales levels justified the

substantial economic investment in a casting mold.

     The two versions of the valve serve the same function and

are interchangeable.        Versa deliberately set about to give the

cast version of the B-316 the "Versa look," that is, to have it

resemble in appearance the V-series of Versa valves.             FF 41.

Versa's desire to have the valve be clearly associated with Versa

in the market was a primary impetus for its election to manu-

facture the cast version of the B-316.

     The modular B-316 valve is comprised of a valve body and,

optionally, one or more attached actuators used to manipulate the

moving parts in the valve body.         The valve is a three-way valve,

meaning that it has three ports or openings (for the ingress or
egress of gas or fluid), which are threaded to ¼" NPT, a national

standard and industry requirement.           The ports open into an inner

chamber in the valve body, which houses a spool moved by an

actuator (such as a button, knob, or electronically controlled

solenoid actuator) to open or close the port, controlling fluid

flow.

     The configuration and function of the actuators provided

with a valve are driven by customer demand; however, the use of

certain    actuators   (most   of    which   Versa   purchases   from   other

vendors) is standard with the B-316.              Versa has used the same

knob actuator for 40 years, although many others are available.

It also uses a particular status indicator, which indicates the

valve's position; a particular button actuator, which is shrouded

to prevent accidental actuation; a self-produced manual latch,

which locks the valve spool in the open or closed position; and a

self-produced pilot actuator, which responds to pressure in an

attached fluid line to control the spool's position.

     Located at each end of a valve is a flange, both of which

serve as faces to mount the actuators and to provide a flat

surface for attachment to the control panels; holes are drilled

into the flanges to allow the actuators to be securely mounted.

A longitudinal top rib runs along the top of the valve body to

allow     customers    to   attach     solenoid      (computer   controlled)

actuators, to provide strength, and to serve as a casting gate

(an opening in the casting mold through which the molten metal is
poured).     A smaller bottom rib was added to provide parallelism

in the product's appearance and to assist in the casting process.

Finally, the valve has three mounting holes which are positioned

to provide stable mounting to a panel or other flat surface.

Each aspect of the valve serves a specific function essential to

the valve's operation, cost, performance, or ease of manufacture.

The   design      of    each   actuator      is   functional.         Functionality

dictates    the    overall      cast   design,    but    does   not     dictate   its

external appearance.

      The   B-316       valve's     mold   imprints   the   manufacturer's        name

("VERSA")    and       place   of   origin   ("N.J.     U.S.A.")   on    the   valve.

Versa also stamps a date code and rivets a metal label displaying

the Versa name, logo, and part number onto the valve.                           Versa

currently dominates the United States market for stainless steel

valves.     Aside from Bifold, only Versa sells cast stainless steel

valves; other competitors use a cylindrical bar stock.
                 B.    Bifold's DOMINO JUNIOR Series Valve

        As part of Bifold's continuing efforts to expand its product

line, in 1985 it introduced the Domino series modular valves.

Although    originally     machined       from   standard    bar    stock    (like

Versa's B-316), the Domino valves became sufficiently successful

to warrant the investment needed to design a cast version.                      An

outside casting company designed the cast version of the Domino;

Bifold had no involvement in the process.                   Like a B-316, the

Domino valve has three cylindrical ports, a top rib for housing a

solenoid feed, flanges, and a range of actuators.

        Because the Domino was too large for many of its customers'

needs, however, Bifold designed the "Domino Junior" modular valve

in 1990, producing it at first from bar stock.2                    In late 1991,

eight years after the cast version of the B-316 became available,

Bifold introduced its cast version of the Domino Junior.                    Bifold

at the time erroneously believed that Versa had a "monopoly" on

the wellhead control panel valve market, and created the cast

version of the Domino Junior to "bury Versa."

        Bifold   was   aware   of   the    B-316's   appearance      and    design

features because it had seen the product at various trade shows.

The district court did not credit Bifold's claims that it de-

signed the Domino Junior as a scaled down version of the Domino


    2
     .    A fact-finding inconsistent with the tenor of the ones
described here is that "Bifold used the Domino Junior bar stock
valve as an excuse to justify its look-alike cast version of the
Domino Junior product."
and that it did not copy the B-316.3                   It found instead that,

before and during its design of the Domino Junior cast mold,

Bifold examined and largely copied Versa's B-316 valve, a sample

of which it had obtained through its agent in Denmark.                          For

example, the court found that Bifold, which regularly uses metric

sizes in its valves, took measurements from the B-316 and used a

metric conversion of the B-316's imperial standard size.                     Bifold

also sent a cast B-316 valve to Manchester Tool Services, which

it selected to be the manufacturer of the cast version of the

Domino Junior, as a model for the cast version of the Domino

Junior.         The two valves (the B-316 and the Domino Junior) are

not, however, interchangeable in the field, and "replacing a

Versa B-316 cast valve with a Bifold Domino Junior cast valve in

an existing control panel could be problematic."

          The   district      court   also   found    that   Bifold   lacked    the

expertise to design the cast version of the Domino Junior, had

presented misleading testimony about who produced a prototype

drawing of the Domino Junior, and had backdated documents to

create the false appearance that it had designed the valve.                    The

court found that BSA Precision Castings, Ltd. ("BSA"), which had

designed the cast version of the Domino valve, was involved in

the       design   of   the   cast    version   of   the   Domino   Junior   valve.

During the time that BSA participated in the design of the cast

version of the Domino Junior, it had in its possession drawings

      3
      .         It also did not credit the claims of Bifold's experts.
and castings of the B-316's major components, as well as Versa's

actuators.       BSA had obtained the drawings, actuators, and actual

samples of valve components from Versa three years earlier when

it had provided Versa with a quote for the casting of the B-316.

The court found that BSA used this data to design a casting of

the Domino Junior valve as a look-alike of the Versa B-316,

despite    the    fact    that   Bifold          had   asked   BSA    to    give   "due

consideration to the appearance of the larger Domino valves."

     Although the Domino Junior and B-316 do, in fact, look quite

similar, the district court described a number of differences

between    the    two    manufacturers'          valves.       Because     the   Domino

Junior's ports extend outward from the valve body, whereas the B-

316's ports are flush with the valve body, the Domino Junior is

slightly wider than the B-316.                  The Domino Junior ports' threads

have metric dimensions.          The Domino Junior is made of more metal

and weighs about thirty percent more than the B-316.                        The stroke

-- the distance an actuator must move the internal spool to

switch the valve's ports -- also differs from that of the B-316.

Because Bifold electroplates its valves, the Domino Junior body

has a duller finish than the B-316.                    The Domino Junior also has

thicker    flanges      and   ribs       than   does   the   B-316.        The   valves'

mounting holes have different centers.                       Bifold purchases its

status indicators from a different company than Versa uses, and

these     indicators      have       a    different      size,    appearance,       and

configuration from Versa's.               Like Versa, Bifold produces its own
manual latch, but makes it out of two cast pieces and gives it

rounded edges, whereas Versa uses a single piece of rectangular

bar stock material.

        The Domino Junior valves are "block-before-bleed" (meaning

fluid flow is completely blocked during the moment required to

change states when the valve is activated), whereas the B-316

includes that feature only as an option.                   The Domino Junior ports

are universal (meaning that any port can be an inlet or an outlet

port), though Bifold customizes each valve as either normally

open or normally closed; in contrast, Versa offers universal

application only as an option.             Like Versa, Bifold casts its name

into the Domino Junior's valve body and bolts onto it a metal

label prominently displaying the Bifold name.

        Despite   all     these    differences,      the    court   concluded     that

"[t]he Bifold Domino Junior valve and actuators are virtually

identical in external design and visual appearance to the Versa

B-316     valve."          It     found    an    identity      in     general    body

configuration,       body     length,     flanges,    distance      between     ports,

valve mounting holes, actuator mounting holes, ribs, spring cap

(which returns the spool back to its original position), buttons,

button caps, status indicators, knobs, manual latching pins, and

pilot    caps.      The    valve      bodies,   buttons,     button   caps,     knobs,

status indicators, and manual latching mechanism used by other

competitors in the industry look quite different from both the

Domino    Junior's      and     the   B-316's.       The    court   discounted     the
dissimilarity of the solenoid actuators attached to the valve

bodies    by   Versa    and   Bifold     because    only    a   small    portion      of

Versa's B-316 valves sold include solenoid actuators.

                 C.     Marketing and Sales of the Valves

      In order to determine whether Bifold had engaged in unfair

competition with Versa, the district court considered whether

consumers      were    likely    to     confuse     the    sources      of    the   two

companies' valves in light of the ways in which the two valves

are marketed and sold.           The court found that valves of this sort

are not sold off the shelf or selected on sight.                        Rather, both

manufacturers         sell      their     valves      based       on         functional

specifications        detailed    in    schematic    diagrams,       manufacturers'

catalogs, or specification sheets and samples available at trade

shows and sales presentations.            The valves are selected by multi-

digit part numbers identifying the particular variation desired.

The     purchasers      and     users    of   the     valves     are         qualified,

knowledgeable persons who comprehend the installation and use of

the valves.       They typically prepare specifications designating

which manufacturer's valve they prefer to use in their system

before placing the order.

      Versa,    the    more   established     manufacturer,       has        sold   over

100,000 B-316 valves, and is currently selling over 16,000 per

year.    This gives it a fifty to fifty-five percent market share

of valves sold for use in emergency shutdown systems in the

United States.         Bifold has only recently begun marketing its
Domino Junior valve in the United States, and immediately stopped

its efforts to open the United States market pending the outcome

of this litigation.

       Versa and its B-316 valve have an excellent reputation for

producing a high quality product.             This quality level is very

important    in    emergency     shutdown    offshore      drilling,     for   the

failure of a valve could cause loss of human life and property as

well   as   severe    environmental       damage.       Versa    has   therefore

subjected its B-316 valve to rigorous quality control tests, and

the valve has performed faithfully in the field.

       The district court found that, because of the availability

and outstanding reputation of the B-316 cast valve for over ten

years, the overall appearance and contours of the B-316 have come

to distinguish the valve as Versa's (in the industry and to

Versa's customers), with the valve body constituting the most

defining    aspect    of   the    Versa     look.      The   valve's      overall

appearance assists Versa in marketing its product, and Versa

features this appearance widely in trade journals, catalogues,

brochures, bulletins, trade shows, and sales exhibitions.                      The

court also found that Versa deliberately created the B-316's

distinctive       appearance     (contrasting       with   the   other     valves

available in the market at the time) to identify the valve in the

market as a Versa product.

       The district court found that Bifold hired Versa's former

regional marketing manager of six years, James Carr, III, to sell
its new Domino Junior valve.             Carr sells both Versa and Bifold

valves,    sometimes   to    the    same   customers.         To   solicit   Domino

Junior sales in early 1993, Carr approached Gordon Fraleigh, an

employee of the Fraleigh Company, which for years had sold Versa

products     to    customers       in   the   petroleum       industry.       Carr

represented to Fraleigh, whom he had known for many years, that

Bifold had developed an "exact copy" of the B-316 which would

"fit in perfect" as a substitute for the B-316, and inquired

whether Fraleigh would like to distribute the Domino Junior.

Thereupon,    Fraleigh      became      confused    as   to    the   relationship

between    Versa    and     Bifold.        Bifold    has      also   contemplated

contacting other Versa distributors to sell its valves.
                        D.    Likelihood of Confusion

      Beyond the confusion on Fraleigh's part, the district court

found that some, but not all, consumers of the B-316 valves are

sophisticated, and that the likelihood of confusion as to the

source of the Domino Junior is enhanced with respect to the

unsophisticated      consumers.          This    finding     is   undercut      by   the

district court's finding, see supra p.12, that the purchasers are

knowledgeable and understand the valves.                   We note, however, that

these    findings    might    be   resolved       by     noting   that    the   latter

finding assumes expansion of Versa's market.                  Indeed, the opinion

later suggests that any unsophisticated consumers exist only as

"potential new customers" in "untapped" markets, that is, that

all the current customers are sophisticated.                  See Mem. Op. at 90.

Because there will in those potential expansion markets be no

likelihood of confusion based on the district court's theory

(namely, that consumers familiar with Versa's trade dress will

mistakenly believe Bifold is affiliated with Versa, see infra at

68-74),    we    will   ignore     the    court's      "expansion"       finding     and

consider only its finding that the purchasers are knowledgeable.

        In addition, one customer forwarded to Bifold a telefax

initially addressed to Versa.            And Frank Vetter, a Vice President

and   Chief     Operating    Officer     of     Versa,    testified      that   he   was

advised of confusion of the products at trade shows.

        Because of the valves' "virtual identity in appearance" and

the fact that Bifold has not sold products in the United States
previously, the district court concluded that a Versa customer in

the United States might reasonably assume that Versa and Bifold

are related companies or that the Domino Junior is otherwise

related to Versa.          However, since Bifold had sold only two valves

in the United States, both to distributors, the court found there

had been little opportunity for Versa to document instances of

actual confusion.



               II. THE DISTRICT COURT'S LEGAL CONCLUSIONS4

        The district court noted at the outset that Section 43(a)

provides a cause of action for unprivileged imitation of trade

dress    --    defined         as   the   "overall       design     or     appearance      of    a

product       or    its   packaging"         --    because     it   involves     actual         or

potential      deception.            Trade     dress,     it   held,       consists    not      of

individual         features,        but   of      the    overall     appearance       of     the

product.           We   turn    then,     to      the   court's     more    specific    legal

conclusions.

        Recognizing       that       unpatented         functional       features     may       be
freely copied regardless of any likelihood of confusion -- and

Versa has not patented the design of its B-316 valve -- the

district court first concluded that the trade dress of the B-316

    4
     .    Subject matter jurisdiction was grounded in the federal
question statute, 28 U.S.C.A. § 1331 (West 1993), since Versa's
cause of action arises under Section 43(a) of the Lanham Act, 15
U.S.C.A. § 1125(a) (West Supp. 1994). Personal jurisdiction was
based on the defendant's consent. The court exercised
supplemental jurisdiction over plaintiff's pendent state law
claim.
was nonfunctional.         The court next concluded that the B-316's

trade    dress     was     "inherently       distinctive,"5     or,   in     the

alternative, possessed acquired distinctiveness because it had

acquired   secondary       meaning.6     The    distinctiveness    finding   is

problematic      because     the   district     court    evaluated    inherent

distinctiveness using a legal standard that this court has since

held to be improper.          See Duraco Prods., Inc. v. Joy Plastic

Enters., Ltd., 40 F.3d 1431, 1441-42 (3rd Cir. 1994) (rejecting

the trademark distinctiveness taxonomy as the measure of inherent

distinctiveness for trade dress in product configurations).                  And

although we can scarcely blame the district court, whose analysis

of   functionality       largely   tracked     this   court's   various    legal

formulations, its finding of nonfunctionality is also problematic

in view of the conflicting formulations of functionality used, as



     5
     .    The court concluded that the trade dress was inherently
distinctive because it was "arbitrary," meaning it was "not
dictated by functional considerations" (which appears to be the
same standard that the court employed for its functionality
inquiry).
     6
     .    "Secondary meaning" denotes that the purchasing public
associates the design of the product with a particular source.
Secondary meaning need be proven only if the product is not
inherently distinctive. The court held that secondary meaning
was established by the length and continuity of the plaintiff's
use -- here, continuously for 10 years; by the strength of the
buyers' mental associations -- here, purchasers associate the
appearance of the B-316 with Versa; by the extent of sales and
advertising -- here, Versa has sold tens of thousands of B-316
valves and has advertised widely; and, most persuasively
according to the district court, by the evidence of intentional
copying.
outlined in the margin.7   Although we have misgivings about these

two issues, it is the district court's third conclusion that

forms the focus of our opinion today.

    7
     .    The district court determined that a product feature is
functional if and only if "it affects their purpose, action or
performance, or the facility or economy of processing, handling
or using them." Treating functionality as a matter for fact
finding, the court placed the burden on Versa to show that "its
trade dress serves no purpose except to identify Versa." But
then it held that trade dress is functional only "if it is essen-
tial to the use or purpose of the article or . . . affects the
cost or quality of the article," that a design is "essential"
"only if it is dictated by the functions to be performed," and
that a design is "essential to [an item's] use" only if the
particular design of the whole assembly is essential (internal
quotation marks omitted, emphases supplied). The court's inquiry
thus focused on the extent to which the design feature was
related to the usefulness of the product. Then, setting forth
yet a third standard, the court held that a product design is
nonfunctional if, viewed as a whole, the design "primarily serves
a legitimate trademark purpose -- identifying the source of the
product -- . . . even though it might also serve functional
purposes" (internal quotation marks omitted).
     The several standards for functionality described by the
district court reflect varying articulations found in opinions of
this court. Compare, e.g., Merchant & Evans, Inc. v. Roosevelt
Bldg. Prods. Co., 963 F.2d at 635 ("`Proof of nonfunctionality
generally requires a showing that the element of the product
serves no purpose other than identification.'") (quoting SK&F,
Co. v. Premo Pharmaceutical Lab., Inc., 625 F.2d 1055, 1063 (3d
Cir. 1980)) with Merchant & Evans, Inc., 963 F.2d at 634 ("`[T]he
question is whether a particular feature of a product is
substantially related to its value as a product or service, i.e.,
if the feature is a part of the "function" served, or whether the
primary value of a particular feature is the identification of
the provider . . . .'") (quoting United States Golf Ass'n v. St.
Andrews Sys., 749 F.2d 1028, 1033-34 (3d Cir. 1984)).
     The district court concluded that although a large number of
the B-316's features were functional, their combination into a
particular form was not. It found that the B-316 valves' overall
design did not result from "significant cost and manufacturing
considerations," and that if the appearance of the B-316 were
altered, "nothing of substantial value in the product [would be]
lost." In sum, the district court found that "[t]he appearance
     The district court held that to prevail on a trade dress

infringement claim, a plaintiff must demonstrate a likelihood of

confusion, but not actual confusion.   It held that Versa could do

so here if it could show that an appreciable number of buyers are

likely to become confused as to the origin of the Domino Junior

valve.   Importantly, the court further held that the threshold

for likelihood of confusion is lower when a newcomer (or "second

comer") violates a long-established trade dress.

     The district court then seemed to apply the ten factors for

likelihood of confusion that this court enumerated in Scott Paper

Co. v. Scott's Liquid Gold, Inc., 589 F.2d 1225 (3d Cir. 1978).

See CL 57.   Under Scott, the threshold issue is the question of

similarity of product appearances, and the court found that the

Domino Junior's appearance was "virtually identical" to the B-

(..continued)
of the Versa B-316 valve presents a particular combination and
arrangement of design elements that are original to plaintiff's
valve, that identify it as a valve of Versa . . . and that
distinguish it from other valves. This arrangement of features
is not required by the function of the valve itself and is
entitled to protection." Pointing to other competing valves, the
court found that Bifold could compete with Versa's B-316 without
copying Versa's particular configuration.
     A party entering a market, the court continued, has a duty
"to so name and dress his product as to avoid likelihood of users
confusing it with the product of the first comer." Since, in its
view, Bifold had overtly and intentionally copied Versa's trade
dress in direct competition with Versa, the court concluded that
Bifold had infringed Versa's trade dress and engaged in unfair
competition. While Bifold could produce a valve with three ports
with modular actuators and solenoid feeds, the court said, Bifold
could not copy the particular, arbitrary combination and
arrangement of design elements that identify and distinguish
Versa valves.
316's and hence that there was a likelihood of confusion.                     The

district court reasoned that Bifold's clear designation on the

product that it was the manufacturer, while relevant to Bifold's

duty to take reasonable steps to prevent deception, was only one

factor to be assessed in resolving the confusion issue.

        The district court found that "[a]n intent to copy trade

dress and/or finding of copying by a junior user is often alone

dispositive of a finding of likelihood of confusion," and that

since Bifold had copied Versa's design there was a likelihood of

confusion.       The   court    also   found    a   likelihood      of   confusion

because    of   the    "competitive    proximity"      of     the   goods,   which

"strongly favors a finding of confusion," since the court found

that the Domino Junior can replace the B-316 at the point of

conception of the panels.8

        Although the district court concluded that Versa was not

entitled to damages because Bifold had only sold two of its

valves     in   the    United   States,    it       granted    Versa     permanent

injunctive relief on the ground that the company's good will was

threatened by Bifold's attempt to reap the benefits of Versa's

reputation (by basing the appearance of the Domino Junior on a


    8
     .    The court additionally considered the "strength" of
Versa's trade dress, evidence (albeit slim) of actual confusion,
the method in which the valves are sold, and the labeling of
Bifold's Domino Junior. Finally, the court also essentially held
that New Jersey's Unfair Competition Law, 56 N.J.S.A. § 4-1 to -2
(1989), and its common law of unfair competition parallel the
unfair competition cause of action under Section 43(a), and hence
that Versa prevailed on those causes of action as well.
Versa product).      The court determined that the injunction had to

cover not only the appearance of the article actually the subject

of the lawsuit, but also all "confusingly similar" appearances.

It   therefore     crafted    an   injunction    enjoining     Bifold     from

manufacturing,     selling,    etc.,   any    cast   valve   which   "has   an

external design and visual appearance confusingly similar to the

cast Versa B-316 valve, described herein and shown in Exhibit A."

Order and Injunction at 5.9

         The court then held Versa to be entitled to attorneys' fees.

Recognizing      that   attorneys'     fees    can   be   awarded    to     the

"prevailing party" only in "exceptional cases," the court found

Bifold's deliberate and willful infringement to be exceptional.

This appeal followed.         We have jurisdiction under 28 U.S.C. §

1132.




     9
     .    The court concluded its opinion with the caveat that,
should its injunction be overturned, "an alternate albeit less
efficacious course can be considered," namely, attaching a metal
label providing "made in England" and "not a Versa product" onto
the Domino Junior. Mem. op. at 92 n.3.
                               III. DISCUSSION

        To obtain trade dress protection for the B-316 under section

43(a) of the Lanham Act, Versa had to prove that (a) the design

was non-functional, (b) the design was inherently distinctive or

distinctive by virtue of having acquired secondary meaning, and

(c) there was a likelihood of confusion.                See Two Pesos, Inc. v.

Taco Cabana, Inc., 112 S. Ct. 2753, 2758 (1992).10                   As discussed

supra, the district court found that Versa had met each of these

requirements, and it therefore permanently enjoined Bifold from

copying    the     B-316's   trade     dress   and    ordered      Bifold    to     pay

attorney's fees.          We limit our discussion to the final element

Versa     needed    to    establish    to     prevail    on   its    trade     dress

infringement claim -- the likelihood of consumer confusion as to

the source of Bifold's Domino Junior.

     Such    consumer      confusion    is,    of   course,   at    the     heart   of

trademark law.           See, e.g., Freixenet, S.A. v. Admiral Wine &

Liquor Co., 731 F.2d 148, 151 (3d Cir. 1984).                       Likelihood of

confusion is a factual matter, subject to review for clear error,

see Ciba-Geigy Corp. v. Bolar Pharmaceutical Co., 747 F.2d 844,

851 (3d Cir. 1984), which exists when, "giving all due deference

to the opportunity of the trial judge to evaluate the credibility

of witnesses and to weigh the evidence," Litton Sys., Inc. v.
Whirlpool Corp., 728 F.2d 1423, 1445 (Fed. Cir. 1984) (emphasis

    10
     .    New Jersey statutory and common law of unfair
competition require essentially the same elements. See SK&F,
Co.,625 F.2d at 1065.
omitted) (citing Inwood Lab., Inc. v. Ives Lab., Inc., 456 U.S.

844, 855, 102 S. Ct. 2182, 2188 (1982)), we are "left with a

definite and firm conviction that a mistake has been committed,"

Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S. Ct. 1504,

1511 (1985).

            A.   "Likelihood" vs. "Possibility" of Confusion

     Generally,      "the   law     does    not    require   that   a   competitor

insure against all possible confusion or the likelihood thereof."

CHARLES E. MCKENNEY & GEORGE F. LONG, III, FEDERAL UNFAIR COMPETITION:

LANHAM ACT § 43(A) § 3.08[1], at 3-71 (1989, Release #5, May 1994)

[hereinafter MCKENNEY & LONG, FEDERAL UNFAIR COMPETITION].              Rather, a

plaintiff may prevail in a trade dress infringement action only

if it shows that an appreciable number of ordinarily prudent

consumers of the type of product in question are likely to be

confused as to the source of the goods.                   See, e.g., Nikon, Inc.

v. Ikon Corp., 987 F.2d 91, 94 (2d Cir. 1993); West Point Mfg.

Co. v. Detroit Stamping Co., 222 F.2d 581, 589 & n.2 (6th Cir.

1955).   "The mere possibility that a customer may be misled is

not enough."       Surgical Supply Serv., Inc. v. Adler, 321 F.2d 536,

539 (3d Cir. 1963).

     Although this usual formulation of trade dress infringement

requires a showing of a likelihood or probability of confusion,

this standard has been relaxed in some cases.                   Where an alleged

infringer    was    new   to   an    area    and    the    plaintiff    was   well-

established, this court has at times replaced the "likelihood of
confusion" requirement with a lower "possibility of confusion"

standard.      These cases have all involved actions for trademark or

tradename infringement, not trade dress, and certainly not trade

dress alleged in a product configuration.                      See Merchant & Evans,

Inc. v. Roosevelt Bldg. Prods. Co., 963 F.2d 628, 637-38 (3d Cir.

1992) (considering "possibility of confusion" with respect to "a

name    or    mark,"     in   particular,      a    "`Z'   logo"     alleged    to   be

confusingly similar to a "`Zip-Rib' trademark"); Country Floors,

Inc. v. Partnership Composed of Gepner & Ford, 930 F.2d 1056,

1065 (3d Cir. 1991) (directing application of "possibility of

confusion" standard to "Country Tiles" and "Country Floors" names

or marks); Telechron, Inc. v. Telicon Corp., 198 F.2d 903, 908-09

("a    case   of    a    first     coined   word    and    a    second   coined    word

resembling      it").         We    must    therefore      consider      whether     the

"possibility        of    confusion"        standard      should    govern     product

configuration trade dress cases.                   Since unfair competition law

regarding product configurations will diverge substantially in

its incidents from the law regarding product packaging, Duraco,

40 F.3d at 1439, we begin our consideration by examining the

rationale underlying the "possibility of confusion" cases.

       Telechron, Inc. offered some explanation for the lowering of
the requirements for showing trademark infringement in certain

situations.        In that case the plaintiff used the name "Telechron"

starting in 1919 as a trademark for its electric clocks and other

timing and switching devices.               The defendant Telicon Corporation
began marketing radio and television sets under the "Telicon"

name for the first time in 1946.                   Agreeing with the district

court, this court held that "`Telicon' is a colorable imitation

of `Telechron' within the conception of trade-mark infringement."

Telechron, Inc., 198 F.2d at 908.

      In an opinion by Judge Hastie, the court explained that the

"`degree of resemblance necessary to constitute an infringement

is incapable of exact definition.'"               Telechron, Inc., 198 F.2d at

908   (quoting      McLean      v.   Fleming,    96    U.S.    (6    Otto)      245,   251

(1877)).      We emphasized the strong aural similarity of the marks

and   the     evidence     of      actual   confusion,        concluding     that      the

evidence was "adequate substantiation of tendency to confusion

inherent in the obvious similarity of the words themselves."

Telechron, Inc., 198 F.2d at 908.                  Only then, expressly as an

additional consideration, did we observe that this was "a type of

case where a court properly requires the second comer to stay

clearly     away    from     the     original    mark,"   and       thus   that    "`any

possible doubt of the likelihood of damage should be resolved in

favor of the [first user].'"                 Id. at 908-09 (quoting Lambert
Pharmacal Co. v. Bolton Chem. Corp., 219 F. 325, 326 (S.D.N.Y.

1915) (Learned Hand, J.)).

      We recognize that application of the "keep clear" policy

embodied by the trademark "possibility of confusion" standard

would   not    be    entirely        senseless    in   the     context     of    alleged

infringement of trade dress, even where the dress consists not in
a   product's          packaging        but     in       a     nonfunctional       product

configuration.          To the extent that product configurations are

protectable,      a     Johnny-come-lately              copier    arguably    creates       a

greater risk than one who more promptly markets a copy that

consumers       will     be      misled       by     a       substantially     identical

configuration into thinking the newcomer's product to be that of

the established business, for there will have been more time for

the public to come to associate that configuration with a single

source.      In and of itself, however, that is no reason to change

the measure of confusion (from "probability" to "possibility")

required to make out a Lanham Act violation.                         Rather, it is at

most   a     factor    properly     taken      into      account    in    assessing       the

likelihood of confusion.

       The    trademark       "possibility         of    confusion"       standard    must

therefore be supported by other considerations.                          We believe that

the primary reasons for lowering the measure of confusion when a

newcomer copies an established trademark are the general lack of

legitimate reasons for copying a competitor's mark, see, e.g.,

American Chicle Co. v. Topps Chewing Gum, Inc., 208 F.2d 560,

562-63 (2d Cir. 1953) ("`Why [the defendant] should have chosen a

mark that had long been employed by [the plaintiff] and had

become known to the trade instead of adopting some other means of

identifying      its     goods     is    hard      to    see     unless    there    was     a

deliberate purpose to obtain some advantage from the trade which

[the plaintiff] had built up.'"), and the high degree of reliance
by   consumers   on   trademarks    as   indicators    of   the    source   of

products.     Whether or not these considerations translate to the

realm of product packaging, we think that with respect to product

configurations the significance of each of the factors is greatly

diminished.

      First, the mere copying of product configurations does not

suggest that the copier was necessarily trying to capitalize on

the goodwill of the source of the original product.               See Duraco,

40 F.3d at 1453; see also infra at 40-48 (discussing implications

of defendant's intent to copy).            A presumption to the contrary

would be mandated, if ever, only in the narrow class of cases

where both (1) a product configuration is desirable to consumers

primarily because of the configuration's inherent or acquired

identification    with   the    original    source,   and   (2) the    copier

adopts affirmatively misleading labelling and/or marketing for

the copied product, cf. Quaker Oats Co. v. General Mills, Inc.,

134 F.2d 429, 432 (7th Cir. 1943) ("The pirate flies the flag of

the one he would loot.         The free and honorable non-pirate flies

the colors of his own distinctive ensign.").

      Second, although a product's trade dress in the form of its

configuration could function as an indicator of the product's

source, product configurations in general are not reliable as

source   indicators,     for     functional    configurations       are     not

protected and thus may be freely copied, see Duraco, 40 F.3d at
1441, 1448-49, 1451, and inherently distinctive configurations
will be rare, see id. at 1446.                     Since substantially identical

products      are        often     sold     by    different         manufacturers          under

different names, consumers are accustomed to relying on product

packaging and trademarks to identify product sources.                             Indeed, if

any    modification           of   the    likelihood     of       confusion      standard       is

justified         in    the    product     configuration          context,      the   standard

might      well    be       heightened,    perhaps      to    a    "high    probability         of

confusion."             Nevertheless,       we    see   no     need    to    adopt       such    a

standard      today,          preferring     for      now     merely       to    reject     the

"possibility           of    confusion"     standard     for      product       configuration

infringement cases, and adhering to the conventional "likelihood

of confusion" standard.

      B.   The Scott Factors in the Product Configuration Context

       Having          concluded    that    the    appropriate         standard       in   this

product      configuration          trade     dress     infringement            action     is    a

likelihood of confusion, we must determine what that inquiry

entails in this context.                   Although the law of trade dress in

product configurations will differ in key respects from the law

of trademarks or of trade dress in product packaging, settled law

provides the starting point for our analysis.

       We stated in Ford Motor Co. v. Summit Motor Prods., Inc.,
930 F.2d 277, 297 (3d Cir.), cert. denied, 112 S. Ct. 373 (1991),

that the analysis of the likelihood of confusion requires a court

to evaluate a number of factors:
     (1) the degree of similarity between the owner's mark and
     the alleged infringing mark; (2) the strength of [the]
     owner's mark; (3) the price of the goods and other factors
     indicative of the care and attention expected of consumers
     when making a purchase; (4) the length of time [the]
     defendant has used the mark without evidence of actual
     confusion arising; (5) the intent of the defendant in
     adopting the mark; (6) the evidence of actual confusion; (7)
     whether the goods, though not in competition, are marketed
     through the same channels of trade and advertised through
     the same media; (8) the extent to which the targets of the
     parties' sale efforts are the same; (9) the relationship of
     the goods in the minds of the public because of the
     similarity of function; (10) other facts suggesting that the
     consuming public might expect the prior owner to manufacture
     a product in the defendant's market.


Id. at 293 (citing Scott Paper Co. v. Scott's Liquid Gold, Inc.,

589 F.2d 1225, 1229 (3d Cir. 1978)); accord Charles Jacquin et
Cie, Inc. v. Destileria Serralles, Inc., 921 F.2d 467, 474-75 (3d

Cir. 1990); cf. RESTATEMENT (THIRD)    OF   UNFAIR COMPETITION § 21 (Tent.

Draft No. 2, Mar. 23, 1990).        This test was developed not for

product configuration cases but for "cases of alleged trademark

infringement   and   unfair   competition    by   a   producer   of   a   non-

competing   product,"   see   Fisons   Horticulture,      Inc.   v.   Vigoro

Indus., Inc., 30 F.3d 466, 473 (3d Cir. 1994), and not all of the

factors will be appropriate for or function the same way with

respect to trade dress inhering in a product configuration, so we

consider them in turn.
1.   Similarity of Appearance          (Scott Factor 1)

       In   trademark     infringement       cases,       the     first    and    primary

factor to be considered in the likelihood of confusion inquiry is

"the   degree     of    similarity    between       the    owner's        mark   and    the

alleged infringing mark."            See Ford Motor Co., 930 F.2d at 293.

In trade dress infringement cases where product packaging is at

issue,      the   corresponding       factor       is    the      similarity      of    the

protectable trade dress.             Similarity of appearance is properly

considered paramount in trademark and product packaging trade

dress infringement cases, for unless the allegedly infringing

mark or dress is substantially similar to the protectable mark or

dress, it is highly unlikely that consumers will confuse the

product     sources     represented    by    the        different       marks    or    trade

dresses.

       For the same reason, substantial similarity of appearance is

necessarily       a    prerequisite     to     a    finding        of    likelihood      of

confusion in product configuration cases.                      Unlike in trade mark

or product packaging trade dress cases, however, a finding of

substantial similarity of trade dress in a product configuration

does not by itself strongly suggest a likelihood of confusion.

Consumers     have     grown   accustomed      to       relying    on    trademarks      as

trustworthy indicators of the source of the product:                        that is the

point of a trade mark.            Perhaps to a somewhat lesser extent,

consumers also rely on other aspects of product packaging to

identify the manufacturer.            Such behavior is rational, for in a
trade mark or product packaging case, all the consumer usually

has   to    go    on    to    identify       the    source     of     the      product     is   the

trademark and packaging (and any marketing featuring that mark or

packaging).

        In a product configuration trade dress infringement case, by

contrast,        consumers       do    not        have   to    rely       on    a     potentially

distinctive           configuration          to     identify        the        source      of   the

product;11       rather,      they     can    generally        look    to       the   packaging,

trademarks, and advertising used to market the product, which are

typically much less ambiguous.                       Consumers therefore have less

need,      and    so    are    much     less       likely,     to     rely       on    a   product

configuration           as     an     indicator          of    the     product's           source.

Accordingly,          they    are     less   likely       to   be     confused        as   to   the

sources          of     two         products         with      substantially               similar

configurations.              Thus, in trade dress infringement suits where

the dress inheres in a product configuration, the primary factors

to be considered in assessing likelihood of confusion are the

product's labeling, packaging, and advertisements.12                                    "The most

common and effective means of apprising intending purchasers of


      11
     .    The product configuration may have acquired
distinctiveness, or it may be inherently distinctive.
      12
     .    This observation is consistent with our discussion of
the Scott factors (also known as the Lapp factors, after
Interpace Corp. v. Lapp, Inc., 721 F.2d 460 (3d Cir. 1983)) in
Fisons Horticulture, Inc., 30 F.3d at 476 n.11, where we stated:
"The weight given to each factor in the overall picture, as well
as its weighing for a plaintiff or defendant, must be done on an
individual fact-specific basis."
the source of goods is a prominent disclosure on the container,

package, wrapper, or label of the manufacturer's or trader's name

. . . [and when] that is done, there is no basis for a charge of

unfair competition."          Venn v. Goedert, 319 F.2d 812, 816 (8th

Cir. 1963), quoted in Litton Sys., Inc., 728 F.2d at 1446.

        Indeed, except where consumers ordinarily exercise virtually

no care in selecting a particular type of product (as may be the

case with inexpensive disposable or consumable items, cf. Venn,

supra     (cookies)),    clarity        of   labeling   in     packaging     and

advertising will suffice to preclude almost all possibility of

consumer     confusion   as   to   source    stemming   from   the   product's

configuration.      Cf. Bose Corp. v. Linear Design Labs, Inc., 467

F.2d 304, 309 (2d Cir. 1972) ("The presence of [the source's]

name    on   the   product    [stereo    speaker   cabinets]    goes   far    to

eliminate confusion of origin.") (emphasis supplied); id. at 310

("[T]here is hardly likelihood of confusion or palming off when

the name of the manufacturer is clearly displayed.").
2.   Strength of the Owner's Mark           (Scott Factor 2)

      In    trademark      cases,   the     strength   of    the   owner's   mark

directly affects the likelihood that consumers will be confused

as   to    the   sources    of   products    bearing   substantially     similar

marks.     Strength includes both "[d]istinctiveness on the scale of

trademarks"         and     "[c]ommercial      strength,      or    marketplace

recognition."        Fisons Horticulture, Inc., 30 F.3d at 479.                A

strong trademark is thus one that carries widespread, immediate

recognition that one producer (even if unknown) is associated

with the mark, and so with the product.            If a second comer adopts

a mark substantially identical to a strong mark, there is a

correspondingly high likelihood that consumers will mistakenly

associate the newcomer's product with the owner of the strong

mark.      The same may be said of a "strong" trade dress consisting

of a product's packaging.

      But these observations do not translate literally into the

product configuration context.              As we have explained elsewhere,

the trademark distinctiveness scale is ill-suited for application

to trade dress inhering in a product configuration.                 See Duraco,

40 F.3d at 1440-42.         Having rejected the distinctiveness scale in

this context, we are left with commercial strength as the measure

of trade dress strength in a product configuration.                Yet strength

of a product configuration must mean more than the ability of
large     numbers    of    consumers   to   identify   the    configuration   as

coming from a particular producer.             This would sanction too much
reliance   by   consumers    on    product   designs   that,    lacking    the

protection of a patent, are in large measure copyable at will.

Cf.   Duraco,   40   F.3d   at   1447-48   (criticizing   the   "capable    of

distinguishing" interpretation of distinctive trade dress).

      Rather, "strength" of product configuration as relevant to

determining likelihood of confusion on the part of ordinarily

careful consumers should be found only if consumers rely on the

product's configuration to identify the producer of the good.

This may perhaps be the case with products purchased largely

because of their appearance, such as "Carebears," cf. American

Greetings Corp., 807 F.2d at 1142.           Such focus, however, is not

generally found in and should not be encouraged in the industrial

design context, where product appearance typically plays a lesser

role in buyers' selection processes.            Hence, to differentiate

between these types of product configuration cases, courts should

require evidence of actual reliance by consumers on a particular

product configuration as a source indicator before crediting that

configuration's "strength" toward likelihood of confusion.
3.   Attention Expected of Consumers        (Scott Factor 3)

      The third Scott factor is "the price of the goods and other

factors   indicative      of   the   care   and    attention     expected   of

consumers when making a purchase."            "The greater the care and

attention,   the   less    the   likelihood       of    confusion."    Fisons

Horticulture, Inc., 30 F.3d at 476 n.12.                We believe that this

factor takes on enhanced importance when a claim is made for

infringement of trade dress in a product configuration, both as a

result of the intersection of the patent laws with the Lanham

Act, and as a function of the difference between a trademark and

a product configuration.

      The penumbra of the federal patent laws restricts the degree

to which courts may grant legal recognition of consumer reliance

on product configurations as source indicators, for their limited

scope of protection impliedly imposes restraint on the workings

of Section 43(a).      Accordingly, we must bear in mind the Supreme

Court's counsel that "mere inability of the public to tell two

identical articles apart is not enough to support an injunction

against copying . . . that which the federal patent laws permit

to be copied."      Sears, Roebuck & Co. v. Stiffel Co., 376 U.S.

225, 232, 84 S. Ct. 784, 789 (1964).13                 "[T]he federal policy,

     13
     .    We recognize that we deal here not only with state
unfair competition law but also with a federal statute. It is
therefore true that the Supremacy Clause does not, as in Sears,
Roebuck & Co., 376 U.S. at 225, and Compco Corp. v. Day-Brite
Lighting, Inc., 376 U.S. 234, 84 S. Ct. 779 (1964), operate to
bar Section 43(a) from protecting trade dress in the form of the
product configuration of Versa's B-316 valve.
found in Art. I, § 8, cl. 8, of the Constitution and in the

implementing federal statutes, of allowing free access to copy

whatever    the    federal     patent       and       copyright      laws    leave    in the

public domain," Compco Corp. v. Day-Brite Lighting, Inc., 376

U.S. 234, 237, 84 S. Ct. 779, 782 (1964), is "an ever-present

consideration," MCKENNEY & LONG, FEDERAL UNFAIR COMPETITION § 5.03, at

5-25.

        Furthermore, one expects a consumer exercising ordinary care

to   ascertain      the    source     of    a     product       to   rely    much    more    on

packaging, trademarks, and advertising, which if not deceptive

tend to reveal the product's source unambiguously, than on the

product configuration, which usually does not contain an explicit

statement of the producer's identity.                       While it might be shown

that     consumers        in   fact        rely       on   a     particular         product's

configuration to identify its source, such deviation from the

normal pattern (i.e, from reliance on trademarks, packaging, and

advertising) would be rare.                 Because clear labeling thus should

generally be legally and factually sufficient to remedy confusion

where unpatented product configurations are at issue, clarity of

labeling     (and     marketing)           must       be   taken      into     account       in

considering       whether      there       is     a     likelihood      that        consumers

exercising ordinary care will be confused as to the sources of
substantially identical products.

        Much as courts are required to police the boundaries of

similarity    within       which    a      jury    may     be    permitted     to     find   a
likelihood of confusion under the Lanham Act, Country Floors,

Inc., 930 F.2d at 1063, courts must also establish the perimeters

of ordinary care that constrain likelihood of confusion.                            The

following non-exhaustive considerations should guide a court's

determination of the standard of ordinary care for a particular

product.        Inexpensive goods require consumers to exercise less

care in their selection than expensive ones.                    The more important

the use of a product, the more care that must be exercised in its

selection.        In   addition,       "the    degree    of    caution     used   . . .

depends    on    the   relevant       buying   class.         That   is,   some   buyer

classes, for example, professional buyers . . . will be held to a

higher standard of care than others.                     Where the buyer class

consists of both professional buyers and consumers, . . . . the

standard    of    care      to   be   exercised   by    the     reasonably    prudent

purchaser       will   be    equal    to   that   of    the    least   sophisticated

consumer in the class."           Ford Motor Co., 930 F.2d at 293.
4.    Actual Confusion or Lack Thereof          (Scott Factors 4 & 6)

      The fourth Scott factor is "the length of time defendant has

used the mark without evidence of actual confusion arising."

While we hold that this factor applies to product configuration

cases as well as to trade mark and product packaging cases (for

it is obviously relevant), we take this opportunity to underscore

the   role    of   the   "lack    of   actual   confusion"   factor.      If   a

defendant's product has been sold for an appreciable period of

time without evidence of actual confusion, one can infer that

continued marketing will not lead to consumer confusion in the

future.      The longer the challenged product has been in use, the

stronger this inference will be.

      "Evidence     of   actual    confusion"    (the   sixth   Scott    factor

bearing on likelihood of confusion) is similarly relevant:                  the

more evidence of actual confusion that a plaintiff can muster,

the stronger the likelihood of confusion in the future, but lack

of evidence of actual confusion (at least where the time period

that the two products have been in competition is short or "when

the   particular    circumstances       [do   not]   indicate   such   evidence

should have been available," AMF Inc. v. Sleekcraft Boats, 599
F.2d 341, 353 (9th Cir. 1979)) does not raise an inference that

there is no likelihood of confusion.                 As the case law makes

clear, proof of actual confusion is not required for a successful

trade dress infringement action under the Lanham Act.              Ford Motor

Co., 930 F.2d at 292 (quoting Opticians Ass'n v. Independent
Opticians, 920 F.2d 187, 195 (3d Cir. 1990)); accord 2 J. THOMAS

MCCARTHY, TRADEMARKS   AND   UNFAIR COMPETITION § 23:2 (2d ed. 1984); id. §

23:20.

      We see no reason that these factors would not also apply to

product configuration cases.            However, we emphasize again, see

supra at 35-37, that to make out unfair competition a plaintiff

must show a likelihood that a consumer exercising ordinary care

to discover the identity of the source would suffer confusion or

be mistaken because of the appearance of the allegedly infringing

product configuration.          Thus, instances of actual confusion may

not weigh in favor of a finding of likelihood of confusion unless

the   confused   consumer       was   acting   with   the   care   expected   of

consumers purchasing the type of good at issue.               See G.D. Searle

& Co. v. Hudson Pharmaceutical Corp., 715 F.2d 837, 840 & n.6

(1983) (ignoring testimony of witness who "was not acting as a

reasonably prudent consumer of the type of goods in issue when

purchasing the product").
5.   Defendant's Intent   (Scott Factor 5)
     The fifth Scott factor is "the intent of the defendant in

adopting the mark."           Whatever merit this factor may have in the

context of trade mark and product packaging trade dress cases, we

doubt that it is an appropriate consideration in a trade dress

infringement case where the trade dress is alleged in the product

configuration itself.           In the likelihood of confusion inquiry in

trademark cases and product packaging trade dress cases, we do

not focus on a defendant's bare intent to adopt a mark or product

packaging      substantially         identical      to    a     plaintiff's         mark   or

packaging, since there is little basis in fact or logic for

supposing from a defendant's intent to copy (without more) that

the defendant's actions will in fact result in confusion.                             Thus,

what we have held is that a defendant's intent to confuse or

deceive    consumers     as     to    the   product's         source    may    be    highly

probative of likelihood of confusion.                    See American Home Prods.

v. Barr Lab., Inc., 834 F.2d 368, 371 (3d Cir. 1987) (product

packaging case -- color of pain relief medication); see also

Fisons Horticulture, Inc., 30 F.3d at 479-80 (identifying "intent

of promoting confusion and appropriating the prior user's good

will"     as   appropriate       inquiry       in      forward     confusion          cases)

(internal      quotation      marks    omitted)        (trademark       case    --    marks

"Fairway"      and   "Fairway    Green");      Sands,         Taylor    &    Wood    Co.   v.
Quaker    Oats   Co.,   978     F.2d    947,     960     (7th    Cir.       1992)   ("[T]he

defendant's intent is relevant to the issue of likelihood of

confusion only if he intended to palm off his products as those
of another." (internal quotation marks omitted) (trademark case

-- words "Thirst Aid" used in advertising campaign); First Brands

Corp. v. Fred Meyer, Inc., 809 F.2d 1378, 1385 (9th Cir. 1987)

("Intent of a defendant in adopting his trade dress is a critical

factor, since if the trade dress were adopted with the intent of

depriving benefit from the reputation of the plaintiff, that fact

alone may be sufficient to justify the inference that there is a

confusing similarity.") (emphasis supplied) (product packaging

case -- color and shape of antifreeze jug).

     Because American Home Products involved a claim that the

color of a rival producer's ibuprofen tablet infringed the trade

dress of the plaintiff's Advil tablet, we believe that the case

is   closer     to     a     product       packaging         case    than    a   product

configuration     case.           Even    were    we    to   consider   it   a   product

configuration case, however, American Home Products is consistent

with our present discussion of defendant's intent.                      Judge Seitz's

opinion   did    not       hold    that    independent        significance       must   be

accorded a defendant's mere intent to copy; rather, it held that

"intent to confuse might be highly probative of likelihood of

confusion" and that "[a]t most, defendant's intent is a factor
tending   to    suggest      likelihood          of    confusion."      American    Home

Prods., Inc., 834 F.2d at 371 (emphases supplied).                               In what

follows, we simply clarify this circuit's intent-to-confuse rule

for product configuration cases, delineating the circumstances

under which a defendant's intent to confuse or deceive consumers
may    be    considered   a    factor   in   the    likelihood   of   confusion

inquiry.

           We realize that some courts have adopted a broader rule

holding that a defendant's intent to copy strongly supports an

inference of likelihood of confusion.               See, e.g., Bauer Lamp Co.

v. Shaffer, 941 F.2d 1165, 1172 (11th Cir. 1991); Mobil Oil Corp.

v. Pegasus Petroleum Corp., 818 F.2d 254, 258 (2d Cir. 1987).

Like the intent-to-confuse rule, this intent-to-copy rule relies

essentially on a (rebuttable) presumption of efficacy -- although

the intent-to-copy rule requires a double inference, see, e.g.,

Perfect Fit Indus., Inc. v. Acme Quilting Co., 618 F.2d 950, 954

(2d Cir. 1980) ("If there was intentional copying the second

comer will be presumed to have intended to create a confusing

similarity       of    appearance     and    will    be   presumed    to    have

succeeded.")      --   since    the   defendant's     intent   standing    alone

(without reference to the defendant's competence and the nature

of the defendant's actions) reveals little about the probable

outcome of the defendant's conduct.14

      14
       .     Thus we must disagree with one commentary, which,
relying on case law (but not attempting to defend or explain its
assertion), states: "Once intent to benefit or capitalize under
Section 43(a) is found, the presumption or inference of
likelihood of confusion logically ensues." MCKENNEY & LONG, FEDERAL
UNFAIR COMPETITION § 3.08[11][c] (emphasis supplied). Indeed, we
note that this treatise contains a passage that, at least when
generalized, illustrates the fallacy of the intent presumption:
"the fact of likelihood of confusion [or lack thereof] among
members of the relevant trade and purchasing public may be
discerned by a court even if a defendant intended to realize a
contrary result." Id. § 3.08[11][a].
      The justification for these inferences in a trade mark or

product packaging case is that there is little or no competitive

need to copy another's distinctive symbol or presentation to sell

one's product, and that anyone who does so is most likely trying

to   cash   in    on   the     competitor's       good    will     attached     to   the

competitor's mark or packaging in order to sell his or her own

product.     See,      e.g.,    2   MCCARTHY, TRADEMARKS     AND       UNFAIR COMPETITION

§ 23.33 ("[W]e can readily read into defendant's choice of a

confusingly similar mark the intent to get a free ride upon the

reputation of a well known mark.").                     This presumption largely

duplicates       the   weight      given    to    the    substantial-identity-of-

appearance factor (Scott factor 1) in the likelihood of confusion

inquiry, and the extra weight assigned to the intent to deceive

is somewhat punitive.           Cf. 2 MCCARTHY, TRADEMARKS       AND   UNFAIR COMPETITION

§ 23.32 ("Where there is hard evidence of defendant's intention

to get a free ride on plaintiff's reputation, the court is free

to engage in the traditional rhetoric which accompanies punishing

the evildoer[.]").

      Although     these     two    types    of    inference      from      defendant's

intent do not directly serve the purpose of preventing consumer

confusion or misappropriation of a producer's good will -- either

of which might arise from good faith or bad faith actions -- the

inferences may serve as a deterrent to infringement.                          But where

product configurations are concerned, we believe there is little
room for deterrence if appropriate labeling and marketing are

undertaken.

      One primary purpose of the Lanham Act is to foster fair

competition.    See, e.g., Merchant & Evans, Inc., 963 F.2d at 640

n.13 (citing Park 'N Fly, Inc. v. Dollar Park and Fly, Inc., 469

U.S. 189, 193, 105 S. Ct. 658, 661 (1985), and Jay Dratler, Jr.,

Trademark Protection for Industrial Designs, 1988 U. ILL. L. REV.

887, 926 n.10).        Indeed, we have said that prevention of unfair

competition is the doctrinal basis for trade dress infringement

suits under the Act.       American Greetings Corp., Inc., 807 F.2d at

1140-41 & n.2.        Where product configurations are concerned, we

must be especially wary of undermining competition.              Competitors

have broad rights to copy successful product designs when those

designs are not protected by (utility or design) patents.             It is

not unfair competition for someone to trade off the goodwill of a

product, see Kellogg Co. v. National Biscuit Co., 305 U.S. 111,

121, 59 S. Ct. 109, 115 (1938); it is only unfair to deceive

consumers as to the origin of one's goods and thereby trade off

the good will of a prior producer.            See also Duraco, 40 F.3d at

1445.

      Unless   very    narrowly   tailored,    deterrents   to   copying    of

product designs -- as opposed to product packaging or trademarks

--   would   inhibit    even   fair   competition,   thus   distorting     the

Lanham Act's purpose.          We believe that the best way to further

Congress's intent is to limit carefully the scope of any possible
deterrence of competition.             Cf. Merchant & Evans, Inc., 963 F.2d

at 640 ("[C]ourts should tailor trademark remedies to decrease

the   likelihood   of      confusion     without     unnecessarily          inhibiting

competition.").        Recognizing that trade mark and trade dress

cases on one hand and patent cases on the other do not involve

identical considerations, we nevertheless turn for guidance in

this task to patent cases concerning defendants' intent, for, as

we have noted, we must decide product configuration cases so as
harmonize with the federal patent laws.                     See supra at Error!
Bookmark not defined.-36.

      In patent infringement cases, a defendant's bad intent is

relevant in at least two contexts.             First, under the doctrine of

inequitable     conduct,       infringement         claims    may      be     rendered

unenforceable    if    a    plaintiff     intended     to    deceive    the    Patent

Office by failing to disclose material evidence.                        See, e.g.,

Braun, Inc. v. Dynamics Corp. of America, 975 F.2d 815, 822 (Fed.

Cir. 1992); Allen Organ Co. v. Kimball Int'l, Inc., 839 F.2d

1556, 1567-68 (Fed. Cir. 1988).             Second, a plaintiff may receive

increased    damages       where   a    defendant    willfully      infringed     its

patent.     See, e.g., Braun, Inc., 975 F.2d at 822; E.I. du Pont de
Nemours & Co. v. Phillips Petroleum Co., 849 F.2d 1430, 1440

(Fed. Cir. 1988).          In either case, however, the plaintiff must

prove by clear and convincing evidence that the defendant had the

relevant bad intent.          See, e.g., Braun, Inc., 975 F.2d at 822

(intent to deceive Patent Office and willful infringement); Allen
Organ Co., 839 F.2d at 1567 (intent to deceive Patent Office);

E.I.   du   Pont    de    Nemours     &    Co.,     849        F.2d   at     1440       (willful

infringement).           Although    in     the    present        context         we    are   not

dealing with increased damages or actions taken by the Patent

Office,     product      configuration        trade       dress       cases       nonetheless

implicate    patent-like       restrictions         on     competition.                Like   the

doctrine     of    inequitable        conduct,        a        heightened         evidentiary

standard would serve to ensure that deviations from the "the

federal policy . . . of allowing free access to copy whatever the

federal patent and copyright laws leave in the public domain,"

Compco Corp., 376 U.S. at 237, 84 S. Ct. at 782, are not casually

countenanced.         And    much    as    the    burden        of    proof       for   willful

infringement       assures    that        competitors          are    not     penalized        by

increased damage awards without compelling evidence, we think it

similarly important to competitors -- as well as the public --

that competition not be hobbled by monetary damages or injunctive

prohibitions absent similarly compelling evidence.

       Accordingly, for all the foregoing reasons, we hold that in

the product configuration context, a defendant's intent weighs in

favor of a finding of likelihood of confusion only if intent to

confuse     or    deceive    is     demonstrated          by    clear       and    convincing

evidence, and only where the product's labeling and marketing are

also affirmatively misleading.                    Of course, a plaintiff might

succeed in proving likelihood of confusion without evidence of

affirmative deception.            We only hold that, to be considered as
evidence of a likelihood of confusion in a product configuration

case, the defendant's intent must meet the conditions we have set

forth.

6.   Marketing Considerations           (Scott Factors 7-10)

       The remaining factors identified by Scott as bearing on the

likelihood of confusion address various aspects of the marketing

of the products.           In the product configuration context, none of

these four factors tends to establish a probability of confusion,

rather than a mere possibility, and thus we conclude that they

should be treated as necessary but insufficient conditions for

showing a likelihood of confusion.

       The seventh Scott factor is "whether the goods, though not

competing, are marketed through the same channels of trade and

advertised through the same media."                 We believe that this factor,

which is explicitly formulated for application to non-competing

products,      serves      primarily    to    establish        the     possibility     of

confusion      and      carries   little     weight     toward       establishing      the

probability        of   confusion;     if    not   shown,      it    may   exonerate    a

defendant, but if established, it merely allows the plaintiff's

case   to     go   forward.       Moreover,        it   will   rarely      need   to   be

considered in a product configuration trade dress infringement

case, for the goods at issue will almost by definition be in

competition.

       "The    extent     to   which   the    targets     of     the    parties'     sale

efforts are the same" is the eighth Scott factor.                             Like the
marketing channel inquiry, this factor was developed largely for

non-competing products, see, e.g., Interpace Corp. v. Lapp, Inc.,

721 F.2d 460, 462-63 (3d Cir. 1983); Scott Paper Co., 589 F.2d at

1229-30, and relates more to the possibility than the probability

of confusion.          Particularly in a product configuration case, this

factor should be considered necessary but not sufficient:                                  If

different        consumers       buy        the    defendant's       product      and     the

plaintiff's          product,    the        defendant      will   typically        win;    if

substantially             overlapping       audiences      buy    the     products,       the

plaintiff does not automatically win, but will usually have the

opportunity          to    further     develop      its    case   for     likelihood       of

confusion.

       "The relationship of the goods in the minds of the public

because     of       the     similarity       of    function"      and        "other    facts

suggesting that the consuming public might expect the prior owner

to manufacture a product in the defendant's market" are the ninth

and tenth Scott factors for determining likelihood of confusion.

Bearing in mind that these factors also were developed for non-

competing products, we believe that they are largely superfluous

in product configuration cases.                      The requisite similarity of

trade dress in the product designs themselves would in most cases
presuppose       a    similarity       of    function      between      the    products    at

issue.    Hence, some measure of so-called "competitive proximity"

will   always        be    present     in    product      configuration        trade    dress

infringement cases and therefore, while a necessary condition for
there to be a likelihood of confusion, this factor is not a

sufficient      condition,   nor    does   it   by   itself    create    a   strong

presumption that confusion is likely to ensue.

          C.    The Balance of the Modified Scott Factors Here

     In this case, "[t]he dispositive issue is . . . consumer

confusion as to source.           Regardless of how much secondary meaning

it possesses, a product's trade dress will not be protected from

an imitator that is sufficiently different in its features to

avoid such confusion."        Freixenet, S.A. v. Admiral Wine & Liquor

Co., 731 F.2d at 151.             For the reasons we explained above, we

believe     that     the   district    court    committed      legal     error   in

initially applying a "possibility of confusion" standard, and,

applying       the   (modified)    Scott   factors,    we     conclude    that   it

clearly erred in inferring from the evidence and testimony that

an appreciable number of buyers are likely to be confused as to

the origin of Bifold's Domino Junior valve.             See CL 55, 62, 64.

1.   The Governing Standard:          Likelihood of Confusion

     The district court held that
     [a] lower standard for "likelihood of confusion" is applied
     where a newcomer to an area already occupied by a long
     established entity is the alleged violator.      The Third
     Circuit uses the phrase "possibility of confusion" to
     describe this standard.

CL 56 (citations omitted).            As we explained above, see supra at
23-28, this standard is inapplicable in product configuration

cases.     We decline, however, to reverse on this basis.

      Although the district court announced the "possibility of

confusion" standard in its Conclusions of Law, it appears that
the court might not have relied on the lowered threshold in

finding      for   the   plaintiff.        None    of   the   other     "Conclusions"

bearing on the issue of confusion included the "possibility"

language; those that mentioned any measure used "likelihood" of

confusion, the correct standard.                  Accordingly, in an excess of

caution, we treat Conclusion of Law 56 as surplusage, and review

the judgment for clear error with respect to the conclusion that

Bifold's actions present a likelihood of confusion, Ciba-Geigy

Corp., 747 F.2d at 851.            We apply the Scott factors as modified,

see supra Section II.B.

2.     Viability of the District Court's Similarity Fact Finding

        The district court correctly identified the similarity of

product appearances (Scott factor 1) as the threshold inquiry in

ascertaining likelihood of confusion.                     However, it improperly

imported the trade mark/product packaging standard for the weight

to     be   assigned     this    factor,    holding       that   "if     the   overall

impression created by the trade dress is essentially the same, it

is very probable that the products are confusingly similar."

From there, it apparently reasoned that because "[t]he overall

appearance of the Versa B-316 valve and the Bifold Domino Junior

valve       is   virtually      identical[,]      there    is    a    likelihood      of

confusion."        See also CL 64 ("Bifold Domino Junior valves have a
very    similar     appearance      to   Versa     B-316      valves;    there   is    a

likelihood of confusion.").
       Despite    the   appreciable      differences    between    the      valves'

appearances, see supra at 10-11, we do not hold the district

court's    finding      of   similarity    of   appearance    to       be   clearly

erroneous.       But in a product configuration case, the similarity

of the product designs does not alone give rise to a strong

inference of likelihood of confusion, see supra at 30-32, since

the greatest weight must be given to the primary means by which

consumers identify the products' sources:              packaging, trademarks,

and advertising.        Accordingly, the similar appearance of the two

valves' designs allows Versa to argue -- but does not establish

-- a likelihood of confusion.              The district court's findings

concerning   the     trade    channels    and   advertising      media      used   by

Bifold and Versa (Scott factor 7) and Bifold's targeting of the

same   customer    group     (Scott   factor    8)   similarly    do    little     to

establish likelihood of confusion.
3.   Intent, Competitive Proximity, and Likelihood of Confusion

        Compounding its error regarding the effect of the similarity

of the valves' appearances, the court asserted that "[a]n intent

to copy trade dress and/or finding of copying by a junior user is

often alone dispositive of a finding of likelihood of confusion."

Even as concerns trade marks and product packaging, however, only

an intent to deceive or confuse consumers can suffice to raise a

presumption of likelihood of confusion in this circuit.                           See

supra at 41.        Moreover, in a product configuration case the

defendant's intent (Scott factor 5) is not relevant to the issue

of   likelihood     of      confusion       absent   affirmatively    misleading

labeling and marketing.              Here, Bifold's identification of its

Domino Junior valves is by no means misleading, see supra at 11;
infra    at   Error!    Bookmark      not    defined.-65,    and   thus    Bifold's

intent should not be considered.

        Similarly, the district court erred in holding that "[w]hen

products are used in the same application, such a competitive

proximity of goods strongly favors a finding of likelihood of

confusion"     (emphasis         supplied).      This   proposition       finds    no

support in the two decisions of this court cited by the district

court, see Interpace Corp., 721 F.2d at 462; Scott Paper, 589
F.2d at 1229, and at all events it is not applicable where trade

dress    consists      in   a    product    configuration,    as   our     previous
discussion explains.            See supra at Error! Bookmark not defined..
4.   Strength of the Trade Dress and Likelihood of Confusion

     Turning      to    the   Scott    factors   that   are   relevant    to   the

likelihood of confusion in this product configuration case, we

first note that the "strength" of Versa's trade dress in its B-

316 valves' configuration (Scott factor 2) may not support a

conclusion     of      likelihood     of   confusion    because   there   is     no

evidence that consumers rely on the appearance of the B-316 valve

to identify it.         See supra at 33-34.         To the contrary, all the

evidence shows that consumers order valves by multi-digit part

and model numbers peculiar to the manufacturer.               In selecting the

valves buyers do not specify the desired appearance but rather

designate functional specifications listed in schematic diagrams,

specification       sheets,    and     manufacturers'     catalogues.          Such

precision    in     ordering    is     necessary,   for   Versa    offers      many

variations of its valves.             Thus, the "strength" of the B-316's

trade dress does not bolster Versa's case for a likelihood of

confusion.
5.   The Evidentiary Role of Actual Confusion

     This    brings    us     to    evidence    of   actual    confusion      (Scott

factor 6) or the lack thereof (Scott factor 4).                     The district

court correctly noted that Versa need not prove actual confusion,

only a likelihood of confusion.             Although the district court did

not address the pertinent evidence in its Conclusions of Law or

explicitly rely there on evidence of actual confusion, we will

address     the    Findings    of    Fact      arguably   relevant       to   actual

confusion that might support the district court's conclusion of

likelihood    of    confusion.        Our   examination       confirms    that   the

district court's ultimate conclusion was clearly erroneous, not

supported by record evidence, let alone evidence cited anywhere

in the opinion.
     a.       Carr's    Involvement       Reflects   No    Actual      or   Likely
Confusion


       The district court commenced the "Likelihood of Confusion"

section of its Findings of Fact by discussing Bifold's "sole

sales representative in the United States."               The court found (and

there is record evidence to support) that Bifold hired James

Carr, III, a former Versa regional marketing manager; that Carr

has already tried to sell Bifold products to Gordon Fraleigh, a

Versa distributor who knew Carr for a number of years while Carr

was    a   regional   sales   manager     for   Versa;    and   that   Carr   told

Fraleigh that the Bifold valve was an "exact copy" of the Versa

B-316, as a result of which there was confusion in Fraleigh's

(heightened by Carr's former relationship with Versa) mind as to

the relationship between Versa and Bifold.

       This depiction of the facts, however, is misleading.                     It

presents only a snapshot of Fraleigh's mental processes, taken

from a particular angle at a single instant in time.                    Examining

Fraleigh's uncontested testimony from a different angle reveals

the situation more fully:          First, the telephone call in question

occurred sometime around the early part of 1993, but Fraleigh

knew that Carr left Versa's employ in 1990.               Thus, at the time of

this call, Fraleigh knew Carr was not with Versa; indeed, during

the call, Carr told Fraleigh that he was with Bifold, an English

company, and he did not say that Bifold was connected with Versa

or    that   its   valves   were   made   by    Versa.     Second,     Fraleigh's

employer, the Fraleigh Company, distributes the products of about
seventy    companies,       including     Versa,      and   before    the    call   in

question Carr had phoned Fraleigh representing various non-Bifold

product lines competitive with Versa.                  Fraleigh was apparently

confused    only    because    he   had    not     previously     seen      duplicate

products in the fluid power industry and because Carr had once

been a Versa representative.

      Moreover, a slightly broadened temporal focus exposes the

manifest error in the district court's fact finding.                     Initially,

we note that Fraleigh's testimony reveals that he did not even

know whether Carr was referring to Bifold's Domino Junior valve.

Nor did Fraleigh see the valve, for he and Carr conversed by

telephone.       Fraleigh's testimony, then, cannot be evidence that

the appearance of the Domino Junior was so like Versa's trade

dress that it would confuse consumers as to the sources of the

valves.     Furthermore, Fraleigh testified that, because of his

confusion, he called Versa Products to find out what was going

on.   Versa's sales manager, Joe Sudol, explained that Bifold was

a   competing     company    from   England   that      had   copied     the   B-316.

Indeed, he asked Fraleigh to try to get information on Bifold's

valve.

      Plainly, then, Fraleigh's testimony does not represent an

instance    of    "actual    confusion."         It    reflects      only    fleeting

uncertainty as to the relationship between Bifold and Versa, not

a mistaken belief that there was any affiliation between the two

companies.       Fraleigh was able with minimal effort to procure the
modicum of information he needed to dispel his uncertainty.15   We

believe that Fraleigh acted as a prudent distributor-customer of

these sorts of valves, and as a result was not confused in the

Lanham Act sense.16




    15
     .    In the absence of evidence to the contrary, it is also
most likely that Carr himself would have told Fraleigh the truth
-- that Bifold is an unaffiliated competitor of Versa -- had
Fraleigh asked. Courts may not simply presume that individuals
will lie in direct violation of trademark and unfair competition
laws. Indeed, Versa's counsel conceded that "I'm not and cannot
offer to this Court that we have proof of a distributor that has
done that [i.e., falsely indicated that Bifold is associated with
Versa's products]." Nor did Versa even offer other instances in
this industry where such misrepresentation had occurred. (Versa
Vice-President and Chief Operating Officer Frank Vetter opined
only that "it becomes very easy for a Bifold perhaps distributor
[sic] to go in and, as you might hear later on in testimony,
[say] that this valve is a direct interchange with a Versa valve,
it fits in the same place, it performs the same function." This
is a far cry from evidence that distributors mispresent the
sources of the valves they sell. The district court therefore
correctly characterized such testimony as "highly speculative,"
and Versa's expert witness Gerald Murphy as not qualified to
"opine as to whether somebody's going to lie or not."
     Pharmaceutical cases relying on possible substitution of one
maker's drug for another by pharmacists filling prescriptions are
not to the contrary. In such cases, the finding of likelihood of
confusion is supported by evidence that improper substitution
commonly occurs in prescription filling, and that the minuscule
markings on pills with similar trade dress are sufficiently
difficult to read by many customers that the markings do not
reduce the likelihood of confusion. See, e.g., SK&F, Co., 625
F.2d at 1059 & n.2, 1061.
    16
     .     Thus, aside from its bearing on the channels of trade
and target audiences, see supra at 48-49, evidence that Carr has
still been able to get access to Versa valve products and has
recently sold Versa valves to the same customers to whom he will
be selling Bifold valves is irrelevant to likelihood of
confusion.
       b.   The Wentworth Fax Reflects No Actual Confusion


       Second,     the    district        court     asserted          that     at   least     one

customer has forwarded to Bifold a telefax that was initially

addressed to Versa.             The fax from Trevor Wentworth opened with

the following statement:                  " Derek reference our telecon this

morning     here    are    the       requirements         for    the       above    referenced

project."     The original addressee was Versa, "Attention:                               Dave,"

and after those names were crossed out, the same fax was sent to

Bifold, "Attention:             Derek Close"; the fax number -- "Auto" --

was    unchanged.         But    this     fax      may    have        been    a    request    for

competitive bids,17 including only Versa's part numbers because

Wentworth     had    spoken          to   Bifold's            sales     representative         by

telephone and had not yet been sent any spec sheets; or (although

unlikely) it might reflect a customer so befuddled that he could

not remember to whom he had spoken that morning, and thus not a

customer exercising ordinary care.                       At all events, there is no

evidence    that    the    customer          had   even        seen    the     appearance      of

Bifold's    Domino       Junior      valve    to    be    able        to     confuse   it    with

Versa's trade dress on its B-316 valve.                          For these reasons, and

because     there    was        no    testimony          at     trial        concerning      this

unexplained fax, the district court clearly erred when it used

this evidence to buttress its conclusion that there was confusion

-- actual or likely -- as to the sources of the valves or the

relationship (or lack thereof) between Versa and Bifold.18

      17
     .    Bifold explains on appeal, and Versa does not contest,
that the fax "was a request for a price quote, and the customer
     c.     The   Hearsay   Evidence   Constitutes   No   Evidence   of
Confusion




(..continued)
was seeking competitive bids." Br. of Appellant, at 38. We do
not, however, determine that this explanation is true; rather, we
cite it only as a possibility. There was no explanation offered
at trial, for the district court at the outset admitted (without
discussion) all documentary evidence appearing on a list prepared
by either party and not objected to.
    18
     .    Since the fax referred to B-series and V-series valves
and was sent initially to Versa, we believe that the competitive
bid explanation is the only plausible one in the absence of
evidence to the contrary. By contrast, a fax sent initially to
Versa but asking for a quote on Domino Junior valves would
suggest confusion.
       Third,     the    district       court      erred      in    relying       on    hearsay

evidence for the proposition that there was actual confusion.

The district court recorded as a finding of fact that "When Mr.

Frank    Vetter    was    asked        by    Bifold's    attorney         for   examples        of

actual confusion between Bifold's Domino Junior valve and Versa's

B-316 valve, Mr. Vetter related that he had been advised of

confusion at trade shows."                    We agree that the record reflects

Vetter's response.              But his answer is pure hearsay:                        Vetter's

testimony upon which the district court relied was that "I have

been    advised    by     our    sales       manager    in    Europe       that    there      was

confusion at trade shows, that people had indicated that the

valves     resembled,       were        identical       and    they        would       lead     to

confusion."       Vetter could not even identify the people allegedly

confused, instead referring Bifold's attorney to "the brief."

Moreover, Vetter's response only proves that people thought the

valves' appearances were similar, not that they were actually

confused by the similar appearances.                         In this light, even if

Vetter's     testimony          were        not   hearsay,     it     still        would       not

demonstrate confusion as to the sources of the valves engendered

by the similarity in appearance of the valves.

       The district court similarly erred in making a finding of

fact     that     "Hans     Albert,          Sales     Manager       for     Versa,          B.V.,

substantiated       that        he   had      discussions          with    people       at    the

Stavanger, Norway trade show regarding the issue of confusion,

including Mr. Ellingston of Hark & Ellingston, a major competitor
in Norway[,] and Mr. Ungerskruge, an employee of a company named

Holter that manufacture[s] wellhead control panels."            Again, this

testimony   is   hearsay,   to   which   Bifold   objected.     Versa    then

offered it solely to prove that Alberts had a conversation with

two   identifiable   people,     and   the   district   court   ruled    that

Albert's    testimony   must     not   concern    the   substance   of    the

conversation.    Accordingly, this testimony has no bearing on the

issue of the likelihood of consumer confusion as to the sources

of the valves, and it was therefore error for the district court

to include it as the basis for a finding of fact.             Even were the

substance of the testimony admissible, Vetter testified only that

he spoke with people "with regard to the issue of confusion."

Thus, the testimony is not probative of a likelihood of confusion

as to source as a result of the alleged trade dress infringement.
       d.    Summary Concerning Actual Confusion


       In sum, we believe that there was no evidence of actual

consumer confusion as to source upon which the district court

could have relied to find a likelihood of confusion.                                   Moreover,

as the district court found, "[o]nly two Domino Junior valves

have been sold to date in the United States and those have been

sold   to    Versa's          sales   representative         so     that    there      has    been

little,      if     any,      opportunity        to    develop      evidence      of     further

confusion in the United States."                      Accordingly, evidence of actual

confusion or lack thereof does not weigh in favor of or against a

finding      of    likelihood         of     confusion.        We    turn    to     the      final

relevant Scott factor.
6.   Labeling, Care Expected                     of    Consumers,     and    Likelihood         of
Confusion


       As noted above, the third Scott factor is "the price of the

goods and other factors indicative of the care and attention

expected      of    consumers         when      making   a   purchase."           As    we    have

described, this factor is fundamental in product configuration
cases,      where       the    most   important        facts   are    the    marketing        and

labeling      of        the   similarly         configured     products.          As     we    now

explain, the district court clearly erred in not finding these

factors dispositive in this case.

       The district court was technically correct in stating that

"[t]he fact that the source of the product is clearly designated

on the product does not establish that plaintiff has failed to

demonstrate         a    likelihood        of    confusion     as    such    an   element       is
simply one factor to be assessed when resolving the confusion

issue."          However,          it   failed      to     appreciate    the    converse

proposition, that a court need not consider all these elements

when some are dispositive.                   See Freixenet, S.A., 731 F.2d at

151-52.     Here, as the court properly observed, "[i]n selling a

competing valve, Bifold's duty is to take reasonable steps to

prevent deception."                Under the circumstances, Bifold more than

adequately       met   its     duty     to   take    reasonable       steps   to prevent

deception.
     a.    Bifold's           Extensive      Labeling       Precludes    Likelihood   of
     Confusion


        Although the configurations of Versa's B-316 and Bifold's

Domino Junior valves are quite similar in appearance, we deal

here with a product configuration case, and thus the labeling of

the products takes on a heightened importance.                            See supra at
Error! Bookmark not defined.-32.                 The facts found by the district

court    clearly       show    that     Bifold      took    entirely    reasonable    and

adequate steps to prevent confusion.

        The district court found that "[t]he name VERSA and the

place of origin, `N.J., U.S.A.,' are cast into the metal [of the

B-316    valve    body]       to    identify     Versa     as   the   valve's   source."

Moreover, "[e]very valve body that Versa sells bears a label

displaying the VERSA name, logo and part number."                        Similarly, the

court noted that "Bifold casts its name into the DOMINO JUNIOR

valve body, and bolts onto the body a metal label displaying the

BIFOLD name."
       But this brief recitation fails to convey the adequacy of

Bifold's efforts.          "In the case of a relatively high-priced,

single-purchase       article,     . . .    there   is   hardly   likelihood     of

confusion or palming off when the name of the manufacturer is

clearly displayed."         Merchant & Evans, Inc., 963 F.2d at 636

(internal quotation marks omitted); see also Bose Corp., 467 F.2d

at 310 (same).         Here, the metal label bolted onto the Domino

Junior valves does more than "display[] the BIFOLD name."                      The

name appears in a logo of sorts in a font markedly different from

that used in the Versa logo.               The label also contains Bifold's

part   number   and    a   valve    serial    number,    the    place   of   origin

(Wigan, England), Bifold's telephone number, and its fax number.

Moreover, this is not a case where "[t]he items are relatively

inexpensive     and   consumers     cannot     be   expected    to   examine   the

labels carefully," Scott Paper Co., 589 F.2d at 1230, and even a

quick glance at the permanently affixed label reveals that Bifold

is the source of the Domino Junior valve. Thus, Bifold's labeling

will suffice to dispel any confusion about the valve's source

that the configuration of the Domino Junior valve might otherwise

engender in purchasers who exercise ordinary care.
     b.   The Manner in Which the Valves Are Sold                       Virtually
     Precludes Likelihood of Confusion


       In addition to the clear labeling, the manner in which the

valves    are    marketed     further        nullifies    any     likelihood     of

confusion. As the district court found:
     The Versa B-316 and Bifold DOMINO JUNIOR valves are not sold
     on a shelf or selected on sight.    Buyers order the valves
       based on functional specifications as shown on schematic
       diagrams, manufacturer's catalogs or specification sheets
       and   samples  available   at   trade  shows   and  sales
       presentations.


Moreover, purchasers cannot buy Versa B-316 or Bifold Domino

Junior valves by name only.                 B-316 valves can be purchased only

by    specifying      a    multi-digit      part     number    pursuant         to     Versa's

comprehensive part numbering system.                   Similarly, Bifold requires

the   use     of   its     own   part    numbering     system,      with    the        numbers

obtainable only by reference to a Bifold specification sheet.

Finally, as the district court also found, "[t]he purchasers and

users    of    Versa's         B-316    valves   are    qualified,         knowledgeable

personnel who understand how the valves are to be installed and

operated."

       The appearance of these valves simply plays no role in the

ordering process, which instead requires the use of detailed

technical specifications and lengthy, manufactuer-specific part

numbers.           Under       these    circumstances,        we    find        it     utterly

inconceivable that one of -- let alone an appreciable number of

-- the professional buyers of these valves will be confused, by

the     appearance        of     the    Domino     Junior,     as    to     the       valves'

manufacturers or the relationship between them.
     c. Summary of the Labeling and Care Expected of Consumers


       The     foregoing         evidence     must     be     viewed       as        virtually

precluding any likelihood of confusion.                       These valves are not

bought by children or casual consumers, nor are they purchased

solely by name.            There is no likelihood of confusion -- indeed,
virtually no possibility that the appearance of the Bifold Domino

Junior valve body will mislead purchasers into thinking that they

are ordering a Domino Junior valve from Versa or a B-316 valve

from Bifold, and the enormous safety concerns surrounding the

applications where these valves are used increase the already

great care used by purchasers of these valves.19              Typically, they

are    found      in    offshore   oil   drilling   control     applications,

hazardous and demanding environments where loss of human life,

major environmental damage (and consequent liability), and huge

property loss may be at stake if a valve does not function

properly     in    an    emergency   shutdown.      Because    of    the   dire

consequences of using an improper valve, engineers who design the

control panels would be expected to exercise a high degree of

caution in selecting valves, and thus would be highly unlikely to

mistake a Versa B-316 for a Bifold Domino Junior.

       Therefore, in light of the importance of the valves, the

process by which they are purchased, the sophistication of the

consumers, and the clarity of Bifold's labeling, there is no

likelihood        (or   even   a   realistic   possibility)     of    consumer

confusion as to the source of Versa's or Bifold's valves, and we




      19
     .    Although Versa intended its witnesses' testimony to
highlight the hazards of confusing a Versa valve with a Bifold
valve -- which would be product confusion, not source confusion
as required for a Lanham Act violation -- the testimony is
nonetheless indicative of the care that ordinarily prudent valve
consumers may be expected to use.
conclude that the district court's contrary finding was clearly

erroneous.
7.    Private   Labeling   Theories   Do   Not   Support   Likelihood    of
Confusion


     We must still address one additional theory under which the

district court found a likelihood of confusion:                 the private

labeling theory.      The district court concluded, ostensibly as a

finding of fact, that
     [g]iven the virtual identity in appearance of the Versa B-
     316 cast valve and the Bifold DOMINO JUNIOR cast valve and
     the fact that Bifold has not previously sold products in the
     United States, anyone in the industry might reasonably
     assume that Versa had manufactured but privately labelled
     the Bifold DOMINO JUNIOR valve or that the DOMINO JUNIOR
     valve is otherwise associated with Versa.


FF 232.   The court further concluded that
     [t]he 'second comer" Bifold DOMINO JUNIOR valve looks so
     similar to the established Versa B-316 valve that it looks
     like a private label manufactured by Versa. The two valves
     could be confused; consumers would think that there is some
     relationship between the two valves and two companies.


FF 233   (citations   omitted).   Although       we   believe   that   these

conclusions present mixed questions of fact and law, for the

district court focused upon what consumers might "reasonably"

assume, we need not invoke plenary review, for we are firmly

convinced that they represent clear error, and that the theory of

confusion in which they are grounded does not support a claim

under the Lanham Act or New Jersey law.

     In FF 232, the district court concluded from coincidence of

similarity of appearance and recency of entry into a market that
consumers might reasonably assume private labelling or some other

relationship between the Domino Junior and Versa valves.                   The

district court is correct that the Lanham Act protects against

confusion not only as to source but also as to connection between

manufacturers of similar products.          See, e.g., Institute for

Scientific Info., Inc. v. Gordon & Breach, Science Publishers,

Inc., 931 F.2d 1002, 1007 (3d Cir. 1991).                    But the court's

inference would potentially subject any new competitor with a

product whose appearance resembles that of an established product

to an injunction on this private labeling theory.              We have simply

been presented with no evidence that "private labeling" occurs

today on a scale significant enough to justify such a sweeping

extension of the law of unfair competition.

     Even a presumption of more limited scope would not support

the district court's inference.       Where product configurations are

at issue, consumers are not generally likely to jump to the

"private   labeling"   conclusion;    consider     for   example    Oreo   and

Hydrox brand sandwich cookies, which are strikingly similar in

appearance.      Consumers    would   not   have    assumed      upon   later

emergence of one brand that the first producer had marketed a

slight variation of its cookie under a private label.              Rather, as

in situations like the present one, consumers generally are more

likely   to   conclude,   quite   reasonably,    that    a    competitor   has

entered the market with a substantially identical product.
       Second, the record evidence does not support the district

court's conclusion.             Versa's counsel's opening statement at trial

fairly summarized the content of Gerald Murphy's testimony, which

formed      the    sole    evidentiary       basis    for     the   district       court's

private labeling conclusion:
     Mr. Murphy [Versa's expert witness] will also tell that as a
     result of his experience, look-alike products are naturally
     associated   by  way    of  operating  characteristics   and
     reputation. Just because the valves look alike, the Bifold
     Domino Junior valve will command attention from sales
     representatives and others that it would not otherwise
     obtain. That it will get sales opportunities from people in
     this industry that otherwise would not be available to the
     Bifold Domino Junior product, except for the fact that the
     Bifold Domino Junior product looks exactly like the Versa B-
     316 product and is then able to trade off the reputation of
     the Versa B-316 product.


What Versa and the district court have failed to come to grips

with   is    the    precept      that     "[e]xploiting       the   `goodwill       of the

article,' Kellogg Co., 305 U.S. at 121, 59 S. Ct. at 115 -- the

attractive features, of whatever nature, that the product holds

for consumers -- is robust competition; only deceiving consumers,

or   exploiting      the    good     will    of     another    producer,      is    unfair
competition."         Duraco, 40 F.3d at 1445 (one emphasis omitted).

Moreover, and most importantly, all of Murphy's non-speculative

testimony supported (as Versa said in its opening) a finding of

exploitation        of    the    goodwill     of,    at   most,     the     Versa    B-316

product, not the Versa identification itself.

       Murphy      testified      about    past     situations      where   misfortunes

involving valves of one producer led to sales difficulties for

other manufacturers of similar valves.                    He did not testify about
incidents where one producer copied another's trade dress, but

rather about instances where negative perceptions associated with

a particular type of valve were transferred to valves of the same

type made by other manufacturers.             Thus, his testimony showed the

possibility of the ill will of one valve's diminishing the good

will of a similar valve.           But even had Murphy testified that the

valves he was discussing had confusingly similar trade dress --

which he did not -- that would not suffice to show that consumers

abandoned the type of valve that had manifested defects because

they thought all valves of that type came from related sources.

Rather,     consumer     may   have     abandoned   the   valves    because   they

assumed     that   all   valves    of    a   similar   type    shared   "operating

characteristics."

       It is true that in Badger Meter, Inc. v. Grinnell Corp., 13

F.3d 1145 (7th Cir. 1994), the Court of Appeals for the Seventh

Circuit relied in part on a private labeling theory to uphold a

finding of likelihood of confusion in a trade dress infringement

suit   by   a   water    meter    manufacturer      against    a   competitor who

copied the appearance of one line of meters.                  There, however, the

defendant was known within the relevant market to have previously
sold water meters of another manufacturer under its own label.

Id. at 1152.       Here, in contrast, there is no evidence that Bifold

is known in the American market as having a history of selling

other valve manufacturers' products under its own label.                      Thus

Versa may not rely on the inference that consumers familiar with
an established defendant with a known history of private labeling

will assume that it is selling an established plaintiff's product

under a private label agreement.

        Unable to avail itself of the Badger Meter inference, Versa

attempts to ensnare Bifold by arguing that because Bifold is not

yet known in the American market, valve purchasers may assume

that Versa has manufactured the Domino Junior but is selling it

under a private label.         A rule sanctioning this inference would

tend to strangle competition by adopting what is in essence a

presumption that consumers will believe an established business

has a greater market share than it really does.                 The district

court's conclusion that "anyone in the industry might reasonably

assume that Versa had manufactured but privately labelled the

Bifold DOMINO JUNIOR valve or that the DOMINO JUNIOR valve is

otherwise associated with Versa," represents a dramatic extension

of the law of unfair competition, one which we cannot believe

that Congress intended or that New Jersey would adopt.

     We doubt that a company truly concerned about the quality of

its valves and its putatively distinctive product configuration

would    use   private     labeling.      The   use    of   private   labeling

undermines     a   claim   that   a    product's   appearance    denotes   its

source, because consumers will be less likely to associate the

multifariously labeled product with a single source.              See, e.g.,

Tone Bros., Inc. v. Sysco Corp., 23 U.SP.Q.2d 1184, 1190-91 (S.D.

Iowa 1992), and cases cited therein.                  And if Versa were to
contend       that    all     the   purchasers     know   that   in     fact    Versa

manufactures the valves identified by a private label, we are not

certain what the private labelling would accomplish.                      Moreover,

it would seem that any manufacturer employing private labeling

for its product necessarily exercises control over that practice,

and if it is the plaintiff's actions that cause the confusion,

the plaintiff will not be heard to complain.                Cf. Weil Ceramics &

Glass, Inc. v. Dash, 878 F.2d 659, 676 (3d Cir. 1989) (Becker,

J., concurring) ("[The plaintiff] has in effect engineered the

possibility          of   a    likelihood     of    confusion     and      therefore

infringement in this case.               This is not the sort of injury

trademark infringement actions under the Lanham Act were intented

to remedy.").         We decline to establish a rule that would allow a

plaintiff to expand its own rights by using private labeling to

assure    a    design       monopoly   even   despite     adequate    labeling      by

competitors.

     We       have    explained     elsewhere      that   "the   primary       concern

[behind the trademark act] was to protect consumers and trademark

holders from spurious imitations."               Id. at 673 (Higginbotham, J.,

for the court).           Where, as here, a second comer has taken steps

to conspicuously label its product (however similar to that of an

established manufacturer), the newcomer has hardly represented

its product to be that of its competitor, and so has not offered

a "spurious imitation."             Thus, even if there were evidence that

Versa uses private labeling, we do not believe that it could form
the basis for a finding of likelihood of confusion.          As it is,

however, there is absolutely no evidence that Versa or any other

competitor of Bifold's in the offshore oil well industry uses

private labeling.    Accordingly, the district court clearly erred

when it accepted Versa's argument that Bifold's labeling will not

prevent consumer confusion.20



                          IV. CONCLUSION

     To    have   prevailed   in   its     action   for   trade   dress

infringement, Versa needed to show the existence of a likelihood

that an appreciable number of consumers of the relevant type of

valves would probably be confused as to the source of Bifold's

Domino Junior valve or its affiliation (or lack thereof) with

Versa.    Upon reviewing the trial record, with due regard for the

labeling actually used by Bifold, we conclude that Versa failed

to meet its burden, and that the district court's finding that

Versa had shown a likelihood of confusion is clearly erroneous.

We therefore will reverse the order of the district court, and

vacate the permanent injunction and award of attorneys' fees

against Bifold.
    20
     .    New Jersey's commmon law and statutory prohibitions of
unfair competition (which address, inter alia, "passing off"
one's goods as those of another manufacturer and unprivileged
imitation) generally parallel the federal cause of action for
unfair competition under section 43(a) of the Lanham Act. See
SK&F, Co., 625 F.2d at 1065 (3d Cir. 1980). Thus, "private
labeling" does no more work for Versa under its state law unfair
competition claim (see supra at 2, 22 & n.10) than it does under
federal law.
