Full Opinion (html_with_citations)

Case: 22-40376     Document: 00516873137       Page: 1    Date Filed: 08/25/2023




           United States Court of Appeals
                for the Fifth Circuit                                United States Court of Appeals
                                                                              Fifth Circuit

                               ____________                                 FILED
                                                                      August 25, 2023
                                No. 22-40376                           Lyle W. Cayce
                               ____________                                 Clerk

   Whirlpool Corporation; Whirlpool Properties,
   Incorporated,

                                                         Plaintiffs—Appellees,

                                     versus

   Shenzhen Sanlida Electrical Technology Company,
   Limited; Shenzhen Avoga Technology Company,
   Limited,

                                          Defendants—Appellants.
                  ______________________________

                  Appeal from the United States District Court
                       for the Eastern District of Texas
                            USDC No. 2:22-CV-27
                  ______________________________

   Before Barksdale, Southwick, and Higginson, Circuit Judges.
   Stephen A. Higginson, Circuit Judge:
         Plaintiffs-Appellees Whirlpool Corporation and Whirlpool Proper-
   ties, Inc., (collectively, “Whirlpool”) own various trademarks associated
   with the iconic KitchenAid stand mixer, which they manufacture and sell.
   Recently, Defendants-Appellants Shenzhen Sanlida Electrical Technology
   Co., Ltd. and Shenzhen Avoga Technology Co., Ltd. (collectively, “Shen-
   zhen”) introduced their own stand mixers into the market, primarily through
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   online channels. Whirlpool promptly filed a complaint asserting federal- and
   state-law claims for trademark and trade dress infringement along with a mo-
   tion for a preliminary injunction to stop the sale of the allegedly infringing
   mixers. After a hearing at which both parties were present, the district court
   granted the injunction. In addition to its appeal, Shenzhen sought an emer-
   gency stay pending appeal. After granting an initial administrative stay, we
   denied that motion. And now, after considering the appeal on the merits, we
   AFFIRM.
                                                I.
          For decades, the KitchenAid stand mixer, with its signature bullet-
   shaped head, sloped neck, and sleek design, has been a staple on wedding
   registries and the crown jewel in a home cook’s kitchen. Indeed, in 1992, the
   U.S. Patent and Trademark Office (“PTO”) granted Whirlpool (which owns
   the KitchenAid brand) registration of the three-dimensional KitchenAid
   mixer design. 1 This design has been the subject of millions of dollars in
   advertising spending across all media channels, appears prominently in
   various cooking shows and is used by celebrity chefs, and has received
   numerous accolades and awards.
          Shenzhen, a China-based manufacturer, also manufactures and sells
   stand mixers under the brand names “COOKLEE” and “PHISINIC.”




          _____________________


          1
              Whirlpool has also registered a trademark as to the two-dimensional silhouette.


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   Recently, Shenzhen launched a new stand mixer model that is the subject of
   this lawsuit.




      KitchenAid Stand Mixer   COOKLEE Stand Mixer      PHISINIC Stand Mixer

          Accordingly, on January 31, 2022, Whirlpool filed a complaint against
   Shenzhen for claims of trademark infringement and dilution, trade dress
   infringement, and unfair competition under federal and state law. That same
   day, Whirlpool filed a motion for a preliminary injunction prohibiting
   Shenzhen from selling, distributing, advertising, or promoting the allegedly
   infringing mixers.
          On March 14, 2022, Whirlpool requested a preliminary injunction
   hearing. In this motion, Whirlpool stated that Shenzhen had received actual
   notice of the pending motion for a preliminary injunction, claiming that (1)
   both Shenzhen companies’ legal representatives had accepted and signed for
   the documents, (2) these same legal representatives had been notified via text
   message to their confirmed cell phones, and (3) emails containing the
   summons, complaint, and motion for a preliminary injunction had been sent
   to the companies’ active email addresses. The motion was granted, and a
   hearing before a magistrate judge was scheduled for April 19, 2022.
          Counsel for both Whirlpool and Shenzhen attended the preliminary
   injunction hearing. At the hearing, Shenzhen, which did not dispute that they
   had received notice of the proceeding, argued that the preliminary injunction
   should not be granted in the absence of service of process. Additionally,


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   Shenzhen contended that the preliminary injunction should be denied
   because Whirlpool’s trademarks are invalid because they are functional, and
   there is no likelihood of confusion between KitchenAid and Shenzhen’s
   stand mixers. The magistrate judge stated that he would take these
   arguments under consideration, and then, later that day, issued a report and
   recommendation in favor of granting the preliminary injunction.
          On June 14, 2022, over objections from Shenzhen, the district court
   adopted the magistrate judge’s report and recommendation and issued a
   preliminary injunction. Shenzhen immediately appealed. The initial
   preliminary injunction order required Shenzhen not to just immediately
   cease, inter alia, importing, selling, promoting, and distributing their mixers,
   but also to “recall and destroy and provide proof to the Court of recall and
   destruction” of the allegedly infringing mixers.
          Shenzhen filed an emergency motion to stay this order in the district
   court. In addition to re-raising arguments as to service of process, the validity
   of the trademark, and the likelihood of confusion, Shenzhen contended that
   the district court erred in ordering the allegedly infringing mixers destroyed,
   and in failing to order Whirlpool to post bond in connection with the
   preliminary injunction pursuant to Federal Rule of Civil Procedure 65(c).
   The magistrate judge, after a more detailed analysis as to factors justifying a
   preliminary injunction, recommended denying the motion to stay, although
   he also recommended that the injunction be modified to require Shenzhen
   only to recall and hold (rather than recall and destroy) the allegedly infringing
   mixers and that Whirlpool be ordered to post a bond in the amount of
   $10,000. On August 12, 2022, the district court, again over Shenzhen’s
   objection, adopted this report and recommendation.
          On September 2, 2022, Shenzhen filed an opposed emergency motion
   for a stay of the preliminary injunction pending appeal in our court. On


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   September 12, our court granted an administrative stay. On October 12,
   however, our court ordered that the administrative stay be lifted and
   Shenzhen’s opposed motion for a stay pending appeal be denied.
   Accordingly, the district court’s preliminary injunction has remained in
   effect while this appeal was pending. We now address the merits of that
   appeal.
                                        II.
                                        A.
          First, Shenzhen contends that the district court lacked the power to
   enter a preliminary injunction because, in the absence of either completed
   service of process under the Hague Convention or a voluntary appearance,
   the district court had not yet acquired personal jurisdiction over it. Yet
   Federal Rule of Civil Procedure 65 states that a court “may issue a
   preliminary injunction only on notice to the adverse party.” FED. R. CIV. P.
   65(a)(1) (emphasis added). In other words, as we stated in Corrigan Dispatch
   Co. v. Casa Guzman, S.A., “Rule 65(a) does not require service of process,”
   but rather requires “notice to the adverse party.”
569 F.2d 300, 302
 (5th Cir.
   1978). Here, there is no dispute that Shenzhen received sufficient notice of
   the motion for a preliminary injunction—indeed, Shenzhen appeared at and
   participated in the preliminary injunction hearing. See Harris Cnty. v.
   CarMax Auto Superstores, Inc.,
177 F.3d 306, 325
 (5th Cir. 1999) (explaining
   that Rule 65’s “notice requirement necessarily requires that the party
   opposing the preliminary injunction has the opportunity to be heard and to
   present evidence”).
          Shenzhen does not address Corrigan, but instead relies on Enterprise
   International, Inc. v. Corporacion Estatal Petrolera Ecuatoriana for the
   proposition that Rule 65 merely prescribes the means for issuing an
   injunction and has no bearing on the court’s jurisdiction to exercise such


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   power.
762 F.2d 464, 470
 (5th Cir. 1985). Specifically, Shenzhen reads
   Enterprise to require that a district court must have “both subject matter
   jurisdiction and in personam jurisdiction over the party against whom the
   injunction runs,” which, where the party is the defendant, requires either a
   voluntary appearance or effective service of process.
Id.
 (internal quotation
   marks and citation omitted).
             In Enterprise, one of the defendants (the official state-operated oil
   company of the Republic of Ecuador) challenged the district court’s ability
   to exercise personal jurisdiction over it pursuant to the Foreign Sovereign
   Immunities Act,
28 U.S.C. § 1605
. Enterprise,
762 F.2d at 465, 470
. In other
   words, the defendant in Enterprise argued that the district court would never
   have personal jurisdiction over it. In this scenario, we found it error for the
   district court to “postpone[] any consideration of the issue of personal
   jurisdiction” before issuing the preliminary injunction.
Id. at 471
. We
   explained, “Where a challenge to jurisdiction is interposed on an application
   for a preliminary injunction[,] ‘[t]he plaintiff is required to adequately
   establish that there is at least a reasonable probability of ultimate success
   upon the question of jurisdiction when the action is tried on the merits.’”
Id.
   (quoting Visual Scis., Inc. v. Integrated Commc’ns Inc.,
660 F.2d 56
, 59 (2d Cir.
   1981)).
             But here, and unlike the defendant in Enterprise, Shenzhen does not
   dispute that once service is effectuated, personal jurisdiction will exist.
   Instead of arguing that the district court will never have personal jurisdiction,
   Shenzhen contends that the district court simply had to wait until service of
   process was perfected before ordering any, even emergency, relief. Yet,
   because “formal service of process under the Hague Convention . . . can take
   months,” adopting Shenzhen’s position could result in the “unfortunate
   effect of immunizing most foreign defendants from needed emergency
   injunctive relief.” H-D Mich., LLC v. Hellenic Duty Free Shops S.A.,
694 F.3d 
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   827, 842 (7th Cir. 2012). And, as already noted, Shenzhen’s position directly
   contradicts both the plain text of Rule 65 and our precedent as established in
   Corrigan. Accordingly, we find that the district court did not err in
   concluding that a preliminary injunction requires only notice, not perfected
   service of process.
                                          B.
          Additionally, Shenzhen contends that the district court abused its
   discretion in granting the preliminary injunction. For issuance of the
   preliminary injunction to be proper, Whirlpool had to show:
          (1) a substantial likelihood of success on the merits, (2) a substantial
          threat of irreparable injury if the injunction is not issued, (3) that the
          threatened injury if the injunction is denied outweighs any harm that
          will result if the injunction is granted, and (4) that the grant of an
          injunction will not disserve the public interest.
   Speaks v. Kruse,
445 F.3d 396, 399-400
 (5th Cir. 2006) (citation omitted). We
   review “the grant or denial of a preliminary injunction for abuse of discretion,
   with any underlying legal determinations reviewed de novo and factual
   findings for clear error.” Topletz v. Skinner,
7 F.4th 284, 293
 (5th Cir. 2021).
                                          i.
          We begin with the first factor—likelihood of success on the merits. To
   obtain an injunction for a claim of trademark infringement, a party must show
   that it (1) possesses a valid trademark and (2) that the defendant’s products
   create a likelihood of confusion as to source, affiliation, or sponsorship. Nola
   Spice Designs, LLC v. Haydel Enters., Inc.,
783 F.3d 527, 536
 (5th Cir. 2015)
   (citing Nat’l Bus. Forms & Printing, Inc. v. Ford Motor Co.,
671 F.3d 526, 532
   (5th Cir. 2012)).




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                                                 a.
           Here, Whirlpool has a registered design mark as to the KitchenAid
   mixer, specifically its exterior styling. “[P]roof of the registration of a mark
   with the PTO constitutes prima facie evidence that the mark is valid,”
   although “[t]his presumption of validity may be rebutted.” Amazing Spaces,
   Inc. v. Metro Mini Storage,
608 F.3d 225, 237
 (5th Cir. 2010) (citations
   omitted). 2 Nonetheless, Shenzhen contends that that this mark is invalid as
   functional because the parts of the mixer (which Shenzhen describes as “a
   mixer head, an L-shaped pedestal[] including a base portion and an
   upstanding support arm”) are required for the mixer to work.
           “The Supreme Court has recognized two tests for determining
   functionality.” Bd. of Supervisors for La. State Univ. Agric. & Mech. Coll. v.
   Smack Apparel Co.,
550 F.3d 465, 485
 (5th Cir. 2008). First, the Court has
   held that “‘a product feature is functional,’ and cannot serve as a trademark,

           _____________________


           2
              To the extent that Whirlpool’s claims are predicated on unregistered trade dress
   rights in the shape of the KitchenAid stand mixer, “[i]t is well established that trade dress
   can be protected under federal law” and that the design of a product “may acquire a
   distinctiveness which serves to identify the product with its manufacturer or source.”
   TrafFix Devices, Inc. v. Mktg. Displays, Inc.,
532 U.S. 23, 28
 (2001); see also Amazing Spaces,
   Inc.,
608 F.3d at 251
 (“Trade dress refers to the total image and overall appearance of a
   product and may include features such as the size, shape, color, color combinations,
   textures, graphics, and even sales techniques that characterize a particular product.”
   (citation omitted)). When this occurs, much like a trademark, the trade dress “may not be
   used in a manner likely to cause confusion as to the origin, sponsorship, or approval of the
   goods.” TrafFix,
532 U.S. at 28
. We apply the same analysis as to a claim for trade dress
   infringement as we do to a claim for trademark infringement. See Blue Bell Bio-Medical v.
   Cin-Bad, Inc.,
864 F.2d 1253, 1256
 (5th Cir. 1989) (describing the two-step analysis to
   resolve a claim for trade dress infringement, noting that “[t]he first question is whether the
   product’s trade dress qualifies for protection” and that the second question is whether that
   dress has been infringed, which occurs when there is a likelihood of confusion between the
   competing products).


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   ‘if it is essential to the use or purpose of the article or if it affects the cost or
   quality of the article.’” TrafFix Devices, Inc. v. Mktg. Displays, Inc.,
532 U.S. 23, 32
 (2001) (quoting Qualitex Co. v. Jacobson Prods. Co.,
514 U.S. 159, 165
   (1995)). Here, nothing in the record demonstrates that the exterior styling of
   the mixer is “the reason the device works.” 3 See Eppendorf-Netheler-Hinz
   GMBH v. Ritter GMBH,
289 F.3d 351, 355
 (5th Cir. 2002) (quoting TrafFix,
532 U.S. at 34
). Moreover, there are numerous competing products in the
   market, including some produced by Shenzhen. Notably, there is no showing
   in the record that the specific shape of the mixer head or slope of the stand
   otherwise affects the cost, quality, or function of these competitors as would
   be required to demonstrate functionality.
           The second test for functionality looks less to use, and more to
   competition, stating that “a functional feature is one the exclusive use of
   which would put competitors at a significant non-reputation-related
   disadvantage.” Smack Apparel,
550 F.3d at 486
 (citation omitted). But again,
   the presence of competing products with other design motifs cuts against this
   argument. And, critically, these other designs are “equally usable” even if
   potentially less desirable or aesthetically pleasing. See Qualitex,
514 U.S. at 166
. KitchenAid’s design mark and trade dress cover “ornamental,
   incidental, or arbitrary aspect[s] of the device,” and are accordingly not
   functional. See TrafFix,
532 U.S. at 30
.


           _____________________


           3
             Shenzhen’s reliance on a (now expired) 1939 utility patent detailing the internal
   mechanics of the mixer and a 2018 utility patent for a damper mechanism on the stand to
   demonstrate functionality is misplaced. Although a “utility patent is strong evidence that
   the features therein claimed are functional,” TrafFix,
532 U.S. at 30
, the mark and trade
   dress at issue concern the external decorative features, not the claim elements contained
   within the patent.


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           In sum, we do not find clear error with the district court’s finding that
   KitchenAid’s registered mark (or the associated trade dress), which covers
   the exterior design of the mixer, is not functional and is therefore a valid
   mark, satisfying the first requirement.
                                                b.
           Shenzhen also contends that the district court erred in granting the
   preliminary injunction because, in Shenzhen’s view, there is no likelihood of
   confusion between its products and the KitchenAid mixer, the second factor.
   When assessing the likelihood of confusion, we consider the following non-
   exhaustive elements, also known as the “digits of confusion”:
           (1) the type of mark infringed, (2) the similarity between the
           marks, (3) the similarity of the products, (4) the identity of the
           retail outlets and purchasers, (5) the identity of the advertising
           media used, (6) the defendant’s intent, (7) evidence of actual
           confusion, and (8) the degree of care exercised by potential
           purchasers.
   Future Proof Brands, L.L.C. v. Molson Coors Beverage Co.,
982 F.3d 280, 289
   (5th Cir. 2020) (citation omitted). “A finding of a likelihood of confusion
   need not be supported by a majority of the digits,” and district courts may
   weigh the digits on a case-by-case basis, “depending on the particular facts
   and circumstances involved.”
Id.
 (cleaned up).
           Again, we review the district court’s factual determination as to the
   likelihood of confusion for clear error. 4 Rolex Watch USA, Inc. v. Meece, 158

           _____________________


           4
            Neither the initial report and recommendation nor the first preliminary injunction
   order contained an analysis as to the “digits of confusion.” Although the failure to give due
   consideration to the “digits of confusion” could have been in error, see Rolex Watch USA,
   Inc. v. Meece,
158 F.3d 816, 831
 (5th Cir. 1998) (“The district court erred by failing to


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                                          No. 22-
40376 F.3d 816
, 829 (5th Cir. 1998). As noted above, the allegedly infringing mixers
   have similar slopes and geometries, are sold to similar purchasers (namely,
   they are sold for personal, rather than commercial, use), and are marketed in
   the same or similar channels (specifically, online retailers). It is true, as
   Shenzhen notes, that other factors may support that there is no confusion—
   for instance, Shenzhen’s mixers have other distinguishable features, like
   additional nobs or visible branding. Nevertheless, that there is a debate as to
   how to weigh the elements is not enough for us to find clear error in the
   district court’s determination that this factor ultimately went in Whirlpool’s
   favor.
                                                ii.
            Having addressed the question of Whirlpool’s likelihood of success on
   the merits, we briefly discuss the remaining three factors—the threat of
   irreparable injury, the balance of harms, and the public interest. 5
            Under the Lanham Act, a plaintiff seeking a preliminary injunction
   against infringement “shall be entitled to a rebuttable presumption of

            _____________________


   consider and weigh all of the digits of confusion.”), the second report and recommendation
   (addressing Shenzhen’s motion to stay the preliminary injunction) explicitly addressed
   several of these factors, specifically the nature of the marks, the similarities between the
   mixers, and the overlap between the markets for the products, and found that they all
   supported the conclusion that there is a likelihood of confusion.
            5
            Although Shenzhen did not challenge these elements as to the original report and
   recommendation, we note that it did raise these issues in its motion to stay the preliminary
   injunction. Because the report and recommendation (later adopted by the district court) as
   to the motion to stay addressed these objections before modifying the preliminary
   injunction to the current operative order, we find it appropriate to address these challenges
   on appeal. We do not find that Shenzhen is “raising [these arguments] for the first time on
   appeal” such that it is forfeited. Thomas v. Ameritas Life Ins. Corp.,
34 F.4th 395, 402
 (5th
   Cir. 2022) (citation omitted).


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   irreparable harm . . . upon a finding of likelihood of success on the merits.”
15 U.S.C. § 1116
; see also Nichino Am., Inc. v. Valent U.S.A. LLC,
44 F.4th 180, 183
 (3d Cir. 2022) (explaining how the Trademark Modernization Act
   of 2020 created a rebuttable presumption of irreparable harm for plaintiffs
   who have shown a likelihood of success on the merits of their infringement
   claim). In attempting to rebut this presumption, Shenzhen alleges, for the
   first time on appeal and without any factual support, that their products and
   KitchenAid’s mixers have coexisted in the market for years and that
   Whirlpool’s delay in bringing an enforcement action necessarily shows the
   lack of any such harm. Even assuming this argument is properly raised, we
   do not find it convincing, let alone enough for us to find that the district court
   abused its discretion in finding that the second factor weighed in favor of
   Whirlpool.
          We similarly find no abuse of discretion as to the district court’s
   finding on the balance of harms. Shenzhen lists the harms resulting from the
   preliminary injunction as primarily the loss of the use of their own markets to
   sell their own products, resulting in “loss of market shares, immediate and
   almost complete loss of revenue stream from the sale of products,
   interruption of the normal course of business . . . and loss of invested capital.”
   Such harms are pecuniary in nature, and thus presumptively reparable. See
   Janvey v. Alguire,
647 F.3d 585, 600
 (5th Cir. 2011) (“In general, a harm is
   irreparable where there is no adequate remedy at law, such as monetary
   damages.”). Accordingly, the balance of harms weighs in favor of Whirlpool
   and its presumption of irreparable harm.
          Finally, although we recognize that the public has an interest in
   encouraging commercial competition, the public also has an interest in the
   effective enforcement of our trademark laws. See Eli Lilly & Co. v. Nat.
   Answers, Inc.,
233 F.3d 456, 469
 (7th Cir. 2000) (“Finally, the public interest



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   is served by the injunction because enforcement of the trademark laws
   prevents consumer confusion.” (citation omitted)).
         Therefore, the district court did not abuse its discretion in granting
   the preliminary injunction.
                                      III.
         For the foregoing reasons, we AFFIRM.




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