Fun-Damental Too, Ltd. v. Gemmy Industries Corp.

Fun-Damental Too, Ltd. (Fun-Damental) (plaintiff) manufactured the Toilet Bank, a novelty piggy bank that resembled a toilet. The product, which retailed for $15–$20, was packaged in a blue, triangular-shaped box with Toilet Bank written in yellow letters. The box had an open design, allowing consumers to see the product and flush the toilet’s handle. Kay-Bee Toy & Hobby Shops, Inc. (Kay-Bee) (defendant) expressed interest in buying Toilet Bank but later changed its mind. Subsequently, Gemmy Industries Corp. (Gemmy) (defendant) began manufacturing a very similar toilet-shaped piggy bank called the Currency Can. Gemmy sold Currency Cans to Kay-Bee for lower wholesale prices, allowing Kay-Bee to retail the Currency Can at $9.99. The Currency Can was packaged in a box with identical dimensions to the Toilet Can box and the same open design displaying the almost-identical product. Gemmy’s packaging had a dark-blue background with yellow squares and yellow lettering. Fun-Damental sued Gemmy and Kay-Bee for trade-dress infringement. To establish actual confusion, Fun-Damental’s sales manager offered testimony that some retail customers complained because they thought Fun-Damental was selling the Toilet Bank at a lower price to other retailers. The district court admitted the evidence over Gemmy’s and Kay-Bee’s objection that it was inadmissible hearsay. The district court also issued a preliminary injunction prohibiting Gemmy and Kay-Bee from manufacturing or selling the Currency Can in its present packaging while the suit was pending. Gemmy and Kay-Bee appealed, arguing that the preliminary injunction was improper because there was insufficient evidence that Fun-Damental was likely to succeed on the merits of its claim.