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Posted on 07/18/2003 1:45:24 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
One of the strongest brands ever to be developed in Minnesota is under attack.
The trademark for the Honeywell Round T87 Thermostat, released 50 years ago this August and still made in Golden Valley, is being challenged in court.
An Indiana startup manufacturing company is suing Morristown, N.J.-based Honeywell for the right to make and sell a round thermostat and overturn Honeywell's trademark.
Eco Manufacturing Inc., based in Lebanon, Ind., won the first round in court June 20 when U.S. District Court Judge David Hamilton in Indianapolis declined to uphold an injunction filed by Honeywell. If granted, the injunction would have prevented Eco from selling its round thermostat.
The conflict began in January when Eco set up a booth at an industry trade show to sell its new round EcoStat thermostat.
After the show, Honeywell sent the company a cease-and-desist letter. Eco countered with a pre-emptive lawsuit asking the court to declare that its product doesn't infringe or dilute Honeywell's trademark and asking the court to cancel Honeywell's federal trademark registration.
The full case is expected to go to trial in the fall. In the meantime, Honeywell is appealing the ruling on the injunction.
Officials at Honeywell are taking seriously this two-person manufacturing company's challenge to its flagship mark.
"We disagree strongly with the district court's decision denying the motion for a preliminary injunction prohibiting Eco from manufacturing and selling round thermostats. Honeywell has used the round thermostat design for 50 years, in which time it has become recognized around the world for its high quality and association with Honeywell," a statement released by the company said.
Honeywell was granted a trademark for a round thermostat in 1990, after several unsuccessful attempts.
Chasing a big market
Honeywell has sold more than 85 million of its round thermostats. According to varying sources, it generates between $40 million and $80 million per year in sales to consumers and contractors.
"There's still a big market for round thermostats, and the big problem with Honeywell's thermostats is that they have mercury in them," said Bill Daniels, president of Eco Manufacturing.
"We saw the need for one that was environmentally friendly and less expensive," he said.
The EcoStat uses an electromechanical switch and doesn't contain mercury, a poisonous substance for humans and wildlife. In addition, the EcoStat has color-coded backlighting, glow-in-the-dark numerals and will be sold for about half the price, he said.
Eco estimates that the product could generate $9 million to $10 million in sales in the first year.
Besides Eco, Daniels owns a Lebanon, Ind., firm, called USA Manufacturing Inc., that distributes heating and ventilation products. His business partner is Steve Peabody, who owns a product-design firm called CMI Engineering, also in Lebanon. The duo plans to outsource manufacturing of their thermostat to a Chinese firm and use a network of U.S. distributors to get the product to market.
The men are using personal funds to pay for the more than $1 million Eco has racked up in legal fees so far.
To the high court?
In his 69-page ruling to deny the injunction, Hamilton said the shape of Honeywell's round thermostats cannot be protected by a valid trademark and that Honeywell is unlikely to win on the merits of its case at trial.
"Eco and other competitors are entitled to copy that useful and functional shape so long as they do not take other steps to create the impression that their round thermostats are made by or associated with Honeywell," he wrote.
Steve Bergerson, an intellectual property attorney at Minneapolis-based Fredrikson & Byron, said he was surprised by the decision.
Honeywell's round thermostat has been used for decades in law school texts as a classic example of how a product can become distinctive enough to serve as a trademark, he said.
The exception, he said, is when a product is deemed to be a functional design because "functionality belongs to the world, and no one person can own it."
Bergerson suspected that Honeywell suffered a little bit because Eco was in a hometown courtroom. He believes Honeywell will appeal its case to the U.S. Supreme Court, if necessary.
"This was their bread and butter. It's why they got basically on the map. And for many, many, many years, that was the only thermostat, more or less, that you'd find on anybody's wall. And when you saw it, you knew it was a Honeywell thermostat."
Cliff Browning, a partner at Indianapolis law firm Woodard Emhardt, said Hamilton's ruling is a big setback for Honeywell. The company thought it had a "slam-dunk case" because it's been down this road so many times before with other companies, he said.
Browning, who also teaches a course in trademark law at Indianapolis University, said recent Supreme Court rulings have put that lock on the trademark in jeopardy.
Browning also said he wouldn't be surprised if Honeywell appeals the case to the Supreme Court because of the product's significance to the company.
"They've been staking out this position for more than 50 years. I would think that, if it's still economically viable to them, they'll press on."
sblack@bizjournals.com | (612) 288-2103
What a crock of $hit!!!
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| Lighten Up, Francis! |
| Fundraising posts only happen quarterly, and are gone as soon as we meet the goal. Help make it happen. |
It is not a patent that is at issue here, it is a trademark. Entirely different set of laws involved...
OTOH, I can understand why Pepsi should not be permitted to infringe on the unique and distinctive shape of the classic Coca-Cola bottle.
The difference is that neither Coke nor Pepsi have established registered trademarks for cylindrical cans. So the example that you have given is not germane to the issue that is under dispute. The fact that Honeywell has been issued a registered trademark on the round thermostat should increase the burden on the other thermostat manufacturer. I'm a bit surprised that they have gotten as far as they have - but I would expect that it would be an even steeper uphill battle for them from this point.
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