Resorts of Pinehurst, Inc. v. Pinehurst Nat. Corp.

Decision Date15 July 1998
Docket Number97-1955 and 97-2195,Nos. 97-1915,s. 97-1915
Citation148 F.3d 417
PartiesRESORTS OF PINEHURST, INCORPORATED, a North Carolina corporation, Plaintiff-Appellee, v. PINEHURST NATIONAL CORPORATION, a North Carolina corporation; Pinehurst National Development Corporation, a North Carolina corporation; Pinehurst National Golf Club, Incorporated, a North Carolina corporation; U.S. Golf Pinehurst Plantation Limited, a Florida limited partnership, Defendants-Appellants, and Pinehurst Plantation, Incorporated, a North Carolina corporation, Defendant. RESORTS OF PINEHURST, INCORPORATED, a North Carolina corporation, Plaintiff-Appellant, v. PINEHURST NATIONAL CORPORATION, a North Carolina corporation; Pinehurst National Development Corporation, a North Carolina corporation; Pinehurst National Golf Club, Incorporated, a North Carolina corporation; U.S. Golf Pinehurst Plantation Limited, a Florida limited partnership, Defendants-Appellees, and Pinehurst Plantation, Incorporated, a North Carolina corporation, Defendant. RESORTS OF PINEHURST, INCORPORATED, a North Carolina corporation, Plaintiff-Appellee, v. PINEHURST NATIONAL CORPORATION, a North Carolina corporation; Pinehurst National Development Corporation, a North Carolina corporation; Pinehurst National Golf Club, Incorporated, a North Carolina corporation; U.S. Golf Pinehurst Plantation Limited, a Florida limited partnership, Defendants-Appellants, and Pinehurst Plantation, Incorporated, a North Carolina corporation, Defendant.
CourtU.S. Court of Appeals — Fourth Circuit

ARGUED: W. Thad Adams, III, Adams Law Firm, P.A., Charlotte, North Carolina; Rodrick John Enns, Kilpatrick & Stockton, L.L.P., Winston-Salem, North Carolina, for Appellants. James Donald Cowan, Jr., Smith, Helms, Mulliss & Moore, L.L.P., Greensboro, North Carolina, for Appellee. ON BRIEF: John Scott Evans, Adams Law Firm, P.A., Charlotte, North Carolina; John H. Hasty, Waggoner, Hamrick, Hasty, Montieth & Kratt, P.L.L.C., Charlotte, North Carolina, for Appellant. Lyn K. Broom, Lisa Frye Garrison, Smith, Helms, Mulliss & Moore, L.L.P., Greensboro, North Carolina; Stephen M. Trattner, Lewis & Trattner, Washington, D.C., for Appellee.

Before WILKINS and MICHAEL, Circuit Judges, and BUTZNER, Senior Circuit Judge.

Affirmed in part, reversed in part, and remanded by published opinion. Senior Judge BUTZNER wrote the opinion, in which Judge WILKINS and Judge MICHAEL joined.

OPINION

BUTZNER, Senior Circuit Judge:

In this interlocutory appeal pertaining to the Lanham Act, codified as 15 U.S.C. §§ 1051-1127 (1994), we must decide whether the district court correctly held that Resorts of Pinehurst (Resorts) has valid service marks in the name PINEHURST. We must also decide whether Pinehurst National Development Corporation, Pinehurst National Corporation, and Pinehurst National Golf Club, Inc. (collectively National) and U.S. Golf Pinehurst Plantation, Ltd. (Plantation) have infringed Resorts' service marks. In an action brought by Resorts, the district court (Judge Beaty) granted summary judgment in favor of Resorts on the validity of its marks, its infringement claim, and on National's and Plantation's defenses of fraudulent procurement and fair use. It concluded that there were genuine issues of material fact pertaining to the defenses of laches and acquiescence, and it denied Resorts' prayer for immediate, injunctive relief. In its cross-appeal Resorts seeks summary judgment on the issues of laches and acquiescence as well as an immediate, complete injunction.

We affirm the district court's judgment that Resorts' service mark, PINEHURST, is valid and that National and Plantation have infringed the mark. We reverse the district court's denial of injunctive relief and remand the case for further proceedings, including an evidentiary hearing on the defenses of laches and acquiescence, and decision of Resorts' claim for damages.

I

In the 1890s, James Walker Tufts acquired nearly 6,000 acres of land in an unincorporated area of Moore County, North Carolina. He developed a golf resort and neighboring village community. The area was called Tuftstown until 1895 when Tufts changed the name to Pinehurst. In 1903, Tufts opened the first of several golf courses. Four years later, he commissioned the noted golf course architect, Donald Ross, to design Pinehurst No. 2, which soon became internationally famous. The Tufts family held the resort until 1970 when it sold its interest to Diamondhead Corporation. Resorts purchased Diamondhead's interest in 1984. Resorts registered federal service marks for PINEHURST with respect to resorts, golfing, and related services in 1990. See § 1051(a). Resorts also claims ownership of common-law service marks in PINEHURST.

In 1987, National began development of a golf course area that it would call Pinehurst National Golf Club. The course opened in 1988. The company opened another course, Pinehurst Plantation, in 1993. Resorts and National negotiated about the purchase of the new courses. National ultimately sold Pinehurst Plantation to U.S. Golf Pinehurst Plantation, Ltd., declining to sell to or become a partner with Resorts.

II

An appellate court reviews de novo the grant or denial of summary judgment in accordance with the familiar provisions of Fed.R.Civ.P. 56(c). See Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 928 (4th Cir.1995).

A mark shall be canceled if its registration was fraudulently obtained. See §§ 1064(3) and 1120. National and Plantation allege that Resorts made false statements in its application for registration of PINEHURST. To prevail, National and Plantation must prove by clear and convincing evidence that Resorts "knowingly ma[de] false, material representations of fact" and intended to deceive the Patent and Trademark Office. See Metro Traffic Control, Inc. v. Shadow Network Inc., 104 F.3d 336, 340 (Fed.Cir.1997). An applicant is required to state under oath that "to the best of his knowledge and belief" no one else has the right to use the mark. § 1051(a)(1)(A). "The oath is phrased in terms of a subjective belief, such that it is difficult ... to prove ... fraud so long as the affiant or declarant has an honestly held, good faith belief." 5 J. Thomas McCarthy, Trademarks and Unfair Competition § 31:76, p. 31-116 to 117 (4th ed.1998).

National and Plantation point out that Pinehurst has been used by many entities and that a Diamondhead attorney found a Pinehurst Country Club in Denver, Colorado. Resorts introduced testimony that John Gray, its vice president who signed the application, believed that Resorts had superior rights to PINEHURST for resort and golf services going back to the Tufts' use.

In an unrelated action brought by Resorts and other golf course owners, charging that Tour 18 infringed their marks, the court held that Resorts did not commit fraud in its application for registration of PINEHURST. Pebble Beach Co. v. Tour 18 I, Ltd., 942 F.Supp. 1513, 1537-38 (S.D.Tex.1996) (hereafter Tour 18). In the case before us, the district court also concluded that Plantation and National had offered no evidence to show that Gray knowingly made a misrepresentation in his declaration in support of the PINEHURST registration. In agreement with both Tour 18 and the district court's conclusion in this case, we affirm the grant of summary judgment for Resorts on the issue of fraudulent procurement.

III

To prove trademark infringement, Resorts must first establish that it has a valid, protectible interest in PINEHURST. See Lone Star, 43 F.3d at 930. The parties introduced conflicting evidence concerning whether PINEHURST is geographically descriptive or inherently distinctive. Resorts points out that the Patent and Trademark Office did not require proof of secondary meaning, as it must when presented with a descriptive mark. Resorts concludes, therefore, that the Patent and Trademark Office determined that PINEHURST was inherently distinctive. Cf. id. at 934. National and Plantation point out that Pinehurst is the name of a village in North Carolina in which there are a number of golf courses. Finding that the evidence on this issue was in conflict, the district court noted that even if PINEHURST were geographically descriptive, Resorts could establish a protectible use if it could prove that the term had acquired secondary meaning.

"[S]econdary meaning has been established in a geographically descriptive mark where the mark no longer causes the public to associate the goods with a particular place, but to associate the goods with a particular source." Boston Beer Co. Ltd. Partnership v. Slesar Bros. Brewing Co., Inc., 9 F.3d 175, 181 (1st Cir.1993). To determine whether PINEHURST had achieved secondary meaning, the district court observed that the undisputed evidence showed that PINEHURST had been used in connection with Tufts' golf courses since the turn of the century. The district court continued:

Plaintiff and its predecessors have undertaken significant efforts to publicize these courses, which have been described as "the most famous in the world" by one professional golfer, by spending millions of dollars in their promotion. Plaintiff's advertisements declare in this vein that "There is only one Pinehurst." Plaintiff has also proffered survey evidence here indicating that "Pinehurst" is famous throughout the country for golf services and that a substantial portion of the golfing public has confused Defendants' courses with those of Plaintiff. Evidence of actual confusion is also significant in the secondary meaning inquiry. See Lone Star Steakhouse & Saloon v. Alpha of Virginia, 43 F.3d 922, 936 n. 16 (4th Cir.1995).

While Defendants do not offer any evidence disputing Plaintiff's showing of secondary meaning, they appear to contend that the term "Pinehurst" has become famous for golf in general as opposed to the Tufts courses in particular. While there are...

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