Sovereign Order of Saint John of Jerusalem, Inc. v. Grady

• Decision Date: 28 August 1997
• Docket Number: 96-5410,Nos. 96-5321,s. 96-5321
• Citation: 119 F.3d 1236
• Parties: SOVEREIGN ORDER OF SAINT JOHN OF JERUSALEM, INC., et al., Plaintiffs-Appellees, Cross-Appellants, v. John L. GRADY, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1236

119 F.3d 1236

43 U.S.P.Q.2d 1462

SOVEREIGN ORDER OF SAINT JOHN OF JERUSALEM, INC., et al., Plaintiffs-Appellees, Cross-Appellants, v. John L. GRADY, Defendant-Appellant, Cross-Appellee.

Nos. 96-5321, 96-5410.

United States Court of Appeals,

Sixth Circuit.

Argued June 5, 1997.

Decided July 14, 1997.

As Amended on Grant of Rehearing in part August 28, 1997.

Hugh J. Moore, Jr. (argued), Douglas E. Peck, Joel A. Conkin (briefed), Witt, Gaither & Whitaker, Chattanooga, TN, for Plaintiff-Appellee.

Bruce H. Wilson (argued and briefed), Akron, OH, Richard P. Jahn, Jr. (briefed), Jahn & Clem, Chattanooga, TN, for Defendant-Appellant.

Before: LIVELY, MERRITT, and SUHRHEINRICH, Circuit Judges.

OPINION

LIVELY, Circuit Judge.

This long-running dispute involves the validity and alleged infringing use of a collective membership trademark registered by the plaintiff, Sovereign Order of Saint John of Jerusalem, Inc., a Delaware corporation (the Corporation). The defendant, John L. Grady, contests the validity of the mark on the ground that he, not the Corporation, represents the "true order" of St. John, and that the Corporation acted fraudulently in submitting the mark for registration. The district court found that the trademark was incontestable, and therefore valid, and that the defendant's use of the mark constituted infringement. The court entered a broad injunction, which the defendant seeks to have set aside even if this court upholds the findings of validity and infringement.

I.

A.

The Sovereign Order of Saint John of Jerusalem (the Order) came into being about the time of the Crusades. While continuing to retain the trappings of its religious origins, the Order appears to have evolved into a fraternal organization. After having had various headquarters in Europe and elsewhere since its founding in the eleventh century, the Order finally made its home in America during the early part of this century. At all times relevant to this lawsuit, the Order's headquarters have been in Pennsylvania. The history of the Order in America was uneventful until the 1950s, when Charles Pichel became its "Grand Chancellor." Pichel established the Corporation in 1956 to serve "as the historical and legal continuity" of the Order. Sovereign Order of Saint John of Jerusalem--Knights of Malta v. Messineo, 572 F.Supp. 983, 985 (E.D.Pa.1983).

In this capacity, the Corporation, which was also controlled by Pichel until 1977, took steps to register the collective membership mark at the heart of this dispute: "Sovereign Order of Saint John of Jerusalem [Maltese Cross symbol] Knights of Malta [Maltese Cross symbol]." The Corporation registered the mark in 1958 and renewed it in 1977. The Trademark Trial and Appeals Board and a federal district court recently upheld the validity of the mark. Coleman v. Sovereign Order of Saint John of Jerusalem, Inc., Cancellation No. 14,038 (June 14, 1990), aff'd, No. 90-5301, 1993 WL 34987 (E.D.Pa. Feb.9, 1993). Aside from controlling the collective membership mark, the Corporation's chief functions have been to grant membership in the Order, maintain membership rolls, and enter into licensing agreements regarding the collective membership mark.

The present controversy stems from the Corporation's exercise of its power to grant or deny these licenses. Between Pichel's 1977 resignation and 1980 the Order was run by a "supreme council," which acted in concert with the Corporation's board of directors. By admitting new members and expelling others, the supreme council completely changed its composition. Messineo, 572 F.Supp. at 986. Beginning in 1981, the Order required its members to obtain a license from the Corporation to use the collective membership mark on publications and other memorabilia.

The defendant, John L. Grady, joined the Order in 1979 after having started the "American Christian Church and Order," which he hoped would become a legal affiliate of the Order. In 1982 Grady proposed to Salvatore T. Messineo, the President of the Corporation and Lieutenant Grand Master of the Order, that the Corporation issue a license for Grady's organization to use its trademark. Messineo denied the request because of Dr. Grady's alleged participation in para-military and white supremacist groups, and the Corporation's board of directors expelled Grady from the Order in 1983. Despite his expulsion, the defendant continued to use the trademark, name, and other symbols of the Corporation and Order on, among other things, his letterhead and a newsletter that he published. He also claims to have represented the Order in such activities as signing a "Treaty of Amity" with a person alleged to be the exiled president of Poland. The defendant contends that his conduct was appropriate because the Corporation had been taken over and the Order ruined by several members of the Messineo family and that it was therefore "incumbent on a certain group of members of the Order, known as Hereditary Knights, to come forward and restore order." At a "Chapter General" meeting in 1991, this faction of "Hereditary Knights" purportedly elected the defendant to serve as the 75th Grand Master of the Order.

B.

The Corporation originally filed this Lanham Act suit in 1983 seeking a declaratory judgment that the defendant had infringed its registered trademark in violation of 15 U.S.C. § 1114. The district court stayed the action pending resolution of collateral litigation. Inexplicably, the Corporation did not move to lift the stay until 1994. On April 19, 1994, the Corporation finally filed an amended complaint and joined the Order as a co-plaintiff. In addition to Lanham Act claims for trademark infringement and false designation of origin, the amended complaint contained claims for RICO violations and Tennessee common law unfair competition. The defendant asserted three counterclaims based on his belief that the registration of the collective membership mark was fraudulently obtained and that the Order's leadership is illegitimate.

The district court granted summary judgment for the defendant on the RICO allegations and for the plaintiffs on all of the defendant's counterclaims. More specifically, the court ruled as a matter of law that the collective membership mark is incontestable pursuant to 15 U.S.C. § 1065, and that there had been no fraud in its registration. A jury ultimately found that the defendant had knowingly infringed the collective membership mark in violation of 15 U.S.C. § 1114, had falsely designated the origin of the collective membership mark in violation of 15 U.S.C. § 1125, and had unfairly competed with the Corporation. Although the jury declined to award damages, the district court provided broad injunctive relief in a judgment entered on October 20, 1995.

The district court subsequently denied the defendant's motion for judgment as a matter of law and for a new trial and the plaintiffs' motion for attorney fees under 15 U.S.C. § 1117. The defendant appealed from this order insofar as it denied his motions, and the plaintiffs cross-appealed the denial of attorney fees.

II.

Although the defendant's motion for judgment as a matter of law and a new trial attributes 29 different errors to the trial court, the defendant makes three primary assignments of error on appeal: (1) the district court erred in ruling that the Corporation's collective membership mark is incontestable under 15 U.S.C. § 1065; (2) the court erred in holding as a matter of law that the defendant had not offered sufficient evidence of fraud in the procurement of the trademark for that defense and counterclaim to survive summary judgment; and (3) the court abused its discretion by enjoining the defendant from using unregistered names and symbols of the Order. We review the first and second rulings de novo, as they were made in response to cross-motions for summary judgment. Daddy's Junky Music Stores, Inc. v. Big Daddy's Family Music Ctr., 109 F.3d 275, 280 (6th Cir.1997).

A.

The Lanham Act provides that a trademark becomes "incontestable" if not successfully challenged within five years of its registration. 15 U.S.C. § 1065; Daddy's Junky Music, 109 F.3d at 282. Once a trademark becomes incontestable, its registration constitutes "conclusive evidence of the validity of the registered mark and ... of the registrant's ownership of the mark ... [and] exclusive right to use the registered mark in commerce." 15 U.S.C. § 1115(b). Once incontestability is established, only those eight defenses enumerated in § 1115(b) can be interposed in an action for trademark infringement. The purpose of incontestability in federal trademark law is, quite simply, to avoid having the validity of trademarks litigated endlessly.

The district court ruled as a matter of law that the Corporation's mark is incontestable. This ruling had the practical consequence of foreclosing any attempt by the defendant to convince the jury that the trademark was invalid on the following grounds which he sought to assert: (1) that the Corporation did not exercise legitimate control over the collective membership mark when it registered the mark in 1958; (2) that the name used in the mark falsely suggests a connection with institutions, beliefs, or national symbols; (3) that the mark impermissibly embodies the insignia of a foreign nation; (4) that the name used in the mark is the generic name of a religion and hence not subject to exclusive appropriation; and (5) that the Corporation cannot be the owner of common law trademarks which embody either the name of a geographic location or a patron saint.

The defendant contends that § 1115(b) should not preclude the presentation of these defenses to the jury. Grady notes that 15 U.S.C. § 1065, which provides for incontestable trademark status, refers to 15 U.S.C. § 1064(3), which in turn refers to § 1052. These statutes enumerate certain defenses that prevent a trademark from becoming incontestable, several of which ...