Lucent Information Mgmt v. Lucent Technologies, 98-7203

• Decision Date: 25 May 1999
• Docket Number: No. 98-7203,98-7203
• Citation: 186 F.3d 311,51 U.S.P.Q.2d 1545
• Parties: (3rd Cir. 1999) LUCENT INFORMATION MANAGEMENT, INC., Appellant v. LUCENT TECHNOLOGIES, INC
• Court: U.S. Court of Appeals — Third Circuit

Page 311

186 F.3d 311 (3rd Cir. 1999)

LUCENT INFORMATION MANAGEMENT, INC., Appellant v. LUCENT TECHNOLOGIES, INC.

No. 98-7203

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued May 25, 1999

Filed: August 3, 1999

On Appeal from the United States District Court for the District of Delaware (D.C. Civ. No. 96-00450) District Judge: Honorable Roderick R. McKelvie Lindsey H. Taylor, Friedman Siegelbaum, 7 Becker Farm Road, Roseland, NJ 07068

Richard I. Samuel (argued), Cobrin, Gittes & Samuel, 750 Lexington Avenue, New York, New York 10022, Attorneys for Appellant

Donald F. Parsons, Jr., Morris, Nichols, Arsht & Tunnell, 1201 North Market Street, P.O. Box 1347, Wilmington, DE 19899

Robert M. Newbury (argued), Mark V.B. Partridge, Bradley L. Cohn, Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, 311 South Wacker Drive, Suite 5000, Chicago, IL 60606, Attorneys for Appellee

BEFORE: GREENBERG and ALITO, Circuit Judges, and ACKERMAN,^* District Judge

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

This trademark case involves the question of what constitutes "use" sufficient to establish common law trademark rights. Lucent Information Management, Inc. ("LIM") argues that it had common law rights in the mark "LUCENT" prior to Lucent Technologies, Inc. ("LTI"), based on its usage of that mark before LTI filed an intent to use ("ITU") application with the United States Patent and Trademark Office ("PTO"), indicating its intention to use the mark LUCENT in commerce. LIM further alleges that LTI did not act in good faith in adopting and using the mark. We find that LIM's limited use of the mark did not constitute prior use in commerce sufficient to establish rights in the mark, and that, as a result, LTI's adoption and use of the mark did not constitute trademark infringement, and was in good faith as a matter of law.

II. FACTUAL AND PROCEDURAL HISTORY

A. LIM's Adoption and Use of the Name and Mark LUCENT

We accept as true the facts set forth by the district court, which drew all reasonable inferences in favor of LIM. In 1995 Norman Feinstein, Samuel Weinberg, Edward Eisen, and Cliff Armstrong formed LIM, a Pennsylvania corporation, to provide document imaging and management services, acting as a consultant on and re-seller of software and hardware. LIM selected the name LUCENT during the summer of 1995 after finding it in a dictionary. Since its formation, LIM has operated out of the Bala Cynwyd, Pennsylvania, office of Feinstein's other business, Corporate Consultants, Inc., an employee benefits company. The four principals are LIM's only employees and Feinstein's employees at Corporate Consultants perform LIM's clerical and bookkeeping work. In the fall of 1995, LIM began using contacts and referrals to inform individuals and companies of its services. On September 5, 1995, Feinstein sent a one- page letter on Corporate Consultants' letterhead to about 50 people to announce the services LIM would offer. On October 5, 1995, Armstrong installed a modem for the Israel Bonds Office in Philadelphia. While Armstrong, not LIM, received the payment of $323.50 for the installation, the purchaser's invoice shows LIM's name and address, and viewed favorably to LIM, this transaction was its first sale.¹

Through the end of 1995, LIM continued to seek clients from existing contacts and referrals. LIM did not do any public or paid advertising, relying instead on word of mouth and its solicitations of business from aquaintances of its principals. In November 1995, LIM made sales presentations to acquaintances at NBC in New York, Aramark in Pennsylvania, and Nixon Uniform in Delaware, but these presentations did not result in sales. From December 1, 1995, to February 5, 1996, LIM made about 12 presentations and continued to promote the new business with people the principals met socially and in business. The date of February 5, 1996, is significant because on that the date AT&T announced the creation of LTI to the public through a huge media campaign. On February 16, 1996, LIM made another sale, entering into a support agreement with a local bank. Finally, on April 29, 1996, LIM filed an application with the PTO to register LUCENT for computer and office-related services.²

B. LTI's Adoption and Use of the Name and Mark LUCENT

LTI is the telecommunication and technology business spun-off from AT&T in 1996. A consultant suggested LUCENT as a potential name for the new business. Frank L. Politano, a trademark attorney, coordinated the trademark clearance. In November 1995, AT&T obtained a trademark name search and two trademark search reports, all of which located companies using the mark LUCENT or variants of it. One of the three search results included a reference to LIM.

On November 30, 1995, LTI through its predecessor in interest filed an intent to use application ("ITU") with the PTO for the mark LUCENT for various telecommunications and computer-related goods and services.³ When AT&T announced the spin-off on February 5, 1996, major newspapers and media covered the event. Many articles included LUCENT in the headline and LTI mailed out over 1.2 million announcements to potential customers. Like most of America, LIM learned about LTI in February 1996. On March 15, 1996, LIM's trademark counsel, John Caldwell, sent LTI a letter objecting to LTI's use of the name LUCENT, stating that LIM had adopted and used LUCENT on a "nationwide" basis. This cease-and-desist letter stated in part:

In August and September, 1995, [LIM] began corresponding under the Lucent name . . . . This was a nationwide effort . . . . A copy of the letter sent at that time, with the addresses redacted, is enclosed. I also enclose a brochure available from [LIM] at that time. . . . I look forward to hearing from you with your assurance that a new name will be found for your company . . .

App. 289-90. Caldwell enclosed a copy of a promotional brochure and a letter to solicit clients on LIM letterhead dated September 5, 1995.⁴

On April 12, 1996, R.A. Ryan, AT&T's trademark counsel, responded to the March 15, 1996 letter, stating that she did not agree that LTI's use of the name "Lucent Technologies" created a likelihood of confusion, that the companies' markets did not overlap, and that their services and products are not confusingly similar. As we noted above, LIM thereafter filed an application to register the mark LUCENT. LIM's then-trademark counsel responded to the April 12, 1996 letter with a proposed agreement that each party would refrain from opposing the other parties' registration of the mark, and would use trade dress, advertising and marketing in a manner that would avoid likelihood of confusion. The parties, however, did not enter into that agreement. Shortly thereafter, LIM began this litigation.⁵

C. Procedural History

LIM filed this suit on September 12, 1996, in the district court. LIM alleged that LTI infringed its trademark in violation of 15 U.S.C. S 1125(a), and alleged service mark and trade name infringement and unfair competition and deceptive trade practices under Delaware law (counts I-V). LIM sought injunctive relief, recovery of LTI's profits, and treble damages. LTI answered on October 3, 1996, denying infringement and raising several affirmative defenses, but generally admitting use of the name.⁶

On July 3, 1997, LTI moved for summary judgment as to counts I-V of the complaint, on the ground that LTI had prior rights to the name and mark LUCENT. The district court granted LTI's summary judgment motion as to counts I - V in an opinion and accompanying order dated November 5, 1997, Lucent Info. Management v. Lucent Technologies, Inc., 986 F. Supp. 253 (D. Del. 1997). While there were further proceedings in the district court, this appeal and thus the opinion concerns only those counts.⁷ After the further proceedings LIM filed a timely appeal on April 17, 1998.

III. STANDARD OF REVIEW

We review the district court's order granting summary judgment de novo, and we apply the same test the district court applied in the first instance. See Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1230 (3d Cir. 1993). Consequently, we must determine whether the record, when viewed in the light most favorable to LIM, shows that "there is no genuine issue as to any material fact" and that LTI is "entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). We confine our discussion to the trademark infringement count as LIM has not briefed the case under state law.

IV. DISCUSSION

A. Trademark Infringement

Trademark law protects owners in the exclusive use of their marks when use by another is likely to cause confusion. See A&H Sportswear Inc. v. Victoria's Secret Stores, Inc., 166 F.3d 197, 205 (3d Cir. 1999) (en banc). Thus, to obtain relief a plaintiff in an infringement case must demonstrate its ownership of the mark. In considering who owns the mark LUCENT, the question before us is whether a reasonable trier of fact could find that LIM's activities prior to November 30, 1995, when LTI filed its ITU, established prior rights in the mark through its use in commerce.

We consider events before November 30, 1995, because federal registration of a trademark is prima facie evidence of the mark's validity, the registrant's ownership of the mark, and its exclusive right to use the mark in commerce. 15 U.S.C. S 1115(a). Nevertheless, there are limitations on the right as section 7(c) of the Lanham Act states that "the filing of an application to register [a mark] shall . . . confer[ ] a right of priority, nationwide in effect, . . . against any other person except for a person . . . who, prior to such filing, has used the mark." 15 U.S.C. S 1057(c). Consequently, the parties agree that LIM must establish rights in the name and mark LUCENT by its prior "use [of the mark] in commerce"--"use" being defined as "the bona fide use of a mark in the ordinary course of trade. . ....