Cae Incorp. v. Clean Air Engineering, 00-3538

• Citation: 267 F.3d 660
• Decision Date: 02 October 2001
• Docket Number: No. 00-3538,00-3538
• Parties: (7th Cir. 2001) CAE, INCORPORATED, Plaintiff-Appellee, v. CLEAN AIR ENGINEERING, INCORPORATED, Defendant-Appellant
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 660

267 F.3d 660 (7th Cir. 2001)

CAE, INCORPORATED, Plaintiff-Appellee, v. CLEAN AIR ENGINEERING, INCORPORATED, Defendant-Appellant.

No. 00-3538

In the United States Court of Appeals For the Seventh Circuit

ARGUED MAY 9, 2001

DECIDED October 2, 2001

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 C 3264--Warren K. Urbom, Senior Judge.¹ [Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Before RIPPLE, MANION and KANNE, Circuit Judges.

RIPPLE, Circuit Judge.

Appellee CAE, Inc. is a large, Canadian conglomerate whose operating subsidiary companies manufacture, among other things, aircraft simulators, air traffic control systems, medical equipment, and data acquisition systems for various industries. Appellant Clean Air Engineering, Inc. ("Clean Air") is an Illinois corporation whose core business is technical environmental consulting and air emissions testing. CAE, Inc. claims that Clean Air's use of the initials "CAE" infringes CAE, Inc.'s federally registered "CAE" trademark.

After a hearing on CAE, Inc.'s opposition to Clean Air's application to register the CAE mark, the Trademark Trial and Appeal Board ("TTAB") found that, despite CAE, Inc.'s use of the CAE mark since the early 1950s and its federal trademark registration since 1972, Clean Air's use of a "virtually identical" mark was not likely to cause confusion among consumers. R.34, Ex.4 at 5. The district court disagreed; it found that consumers were likely to be confused. The court entered judgment in favor of CAE, Inc. and enjoined Clean Air from future use of the initials absent a disclaimer of any association with CAE, Inc. Clean Air appeals. For the reasons set forth in the following opinion, we affirm the judgment of the district court.

I BACKGROUND

A. CAE, Inc.

CAE, Inc. was formed in 1947 as Canadian Aviation Electronics, Ltd. The company began using the CAE mark in the early 1950s and officially changed its name to CAE, Inc. in 1993. Now a holding and management company, CAE, Inc. owns and controls approximately twenty subsidiary companies, eight of which are headquartered in the United States, and it employs nearly 6,000 people. In the 1980s, CAE, Inc.'s export sales to the United States averaged over $100 million (Canadian), which comprised approximately twenty-five percent of CAE, Inc.'s gross revenue. In the 1990s, this figure rose to $430 million (Canadian), which was forty percent of CAE, Inc.'s gross revenue.

Since the 1950s, CAE, Inc., through its subsidiaries, has designed, produced and sold a variety of testing and measuring equipment in the United States under the CAE name and mark. During the 1960s, CAE, Inc. began to design and to manufacture testing and measuring equipment, including hydrological sampling equipment, portable grain temperature probes and moisture meters. With the purchase of the Link Simulation and Training Systems Division of the Singer Company in 1988, CAE, Inc. became the world leader in simulation training. CAE, Inc. sold the assets of its simulation training operations in 1995.

1. CAE, Inc.'s Registered Trademarks

CAE, Inc. has been using the letters "CAE" as a trade name and service mark since the early 1950s and owns six registered trademarks containing "CAE." The first two trademarks, registered in 1972, are for goods described as "[e]lectronic apparatus and equipment-- namely, simulators, visual display systems and motion systems for use with simulators; supervisory control and data logging equipment and systems; and magnetometers and magnetic anomaly detection equipment." R.34, Ex.4 at 4. One of these trademarks, registration no. 939,840, depicts the following letters without stylization or design: CAE. Registration no. 939,841 depicts the letters CAE within a design. In 1980, CAE, Inc. registered a third trademark, no. 1,135,602, which depicts the letters CAE within a design, for use in connection with "[n]uclear power station training simulators and air traffic control radar data processing and display equipment--namely input receivers, processors, interface units, displays, control stations, line printers, and flight plan entry consoles." Id. at 4- 5.² CAE, Inc. holds three additional trademarks: no. 877,750, registered in 1969 for "DATAPATH CAE," R.38-1, Race Dec., Ex.7; serial no. 74-407,272, registered in 1993 for "CAE SELECT," id. Ex.6; and no. 2,106,086, registered in 1997, which depicts CAE inside a new design, see id. Ex.5. CAE, Inc. features the CAE mark in the names of all twenty of its subsidiaries and divisions, including those headquartered in the United States: CAE Electronics, Inc.; CAE Screenplates, Inc.; CAE McGehee, Inc.; CAE Ransohoff, Inc.; CAE Blackstance, Inc.; CAE Ney, Inc.; CAE Alpheus, Inc.; and CAE Vanguard, Inc.³ Those entities owned by CAE, Inc., but without CAE in their names, feature on their stationery and product literature a reference to their association with CAE, Inc. CAE, Inc. never has sold or assigned any rights in the CAE mark as a trademark, service mark, trade name or otherwise.

2. CAE Electronics, Ltd.

CAE Electronics, Ltd. ("CAE Electronics"), the largest of CAE, Inc.'s subsidiaries, is a world leader in the design of advanced technology products and systems. It is comprised of four divisions: commercial flight simulation, military simulation systems, marine control systems, and energy control systems. CAE Electronics' core products include supervisory control and data acquisition ("SCADA") systems. SCADA systems are mechanical and electrical systems used to automate processes and to provide operators with continuous real-time monitoring information. Using sensors, monitoring equipment and control devices, these systems optimize operator and system efficiency, allow users to evaluate processes and maximize use of resources to reduce operating costs and to increase profits of SCADA customers. CAE Electronics customizes each SCADA system to meet the customer's needs and the requirements of the particular industry and process in which it is used. CAE Electronics prints the CAE mark on each SCADA system component and its packaging.

Since the 1960s, CAE Electronics has developed, manufactured, and sold its SCADA products and systems for applications in the telecommunications, oil and gas, and hydro-electric power industries. In 1973, CAE Electronics adapted its SCADA technology for the New Brunswick Electric Power Commission to monitor and control an oil-fired thermal generating plant. The SCADA system designed by CAE Electronics for this utility gathered, processed, and displayed data from three generating units, and it monitored more than 2,000 parameters of generator performance, including emissions. Also in the 1970s, CAE Electronics adapted its SCADA technology to monitor and control nuclear power generating systems, to monitor environmental variables in arctic environments, and to assist air traffic control systems. In the 1980s, CAE Electronics introduced marine control systems for naval vessels, using SCADA technology to monitor air quality; to detect dangerous conditions, such as smoke, ionization, and explosive gases; and to optimize vessel fuel usage. CAE, Inc. maintains that CAE Electronics' SCADA systems are capable of monitoring and controlling environmental variables such as smokestack emissions and other gaseous or aqueous emissions. At this time, however, CAE Electronics does not manufacture or market its SCADA systems for use in air emissions testing.

3. CAE Fibreglass Products, Ltd.

CAE Fibreglass Products, Ltd. ("CAE Fibreglass") designs, engineers, and manufactures various fiberglass products, including storage tanks, tank covers, washer hoods, air ducts and chimney stacks for use in the pulp and paper, chemical, oil and gas, and mining industries. Between the late 1960s and the 1980s, CAE Fibreglass designed and manufactured large-diameter fiberglass- reinforced plastic ("FRP") pipe for companies in the pulp and paper and electric power industries, including Kimberly Clark, Weyerhauser, International Paper, and Niagara Mohawk Power. In 1979, CAE Fibreglass designed FRP pipe for the Jacksonville Electrical Authority to address the environmental problems created by underwater discharge of heated water. In 1980, CAE Fibreglass entered into a joint venture with Construction International Limited ("CIL") to promote stack analysis, system engineering, installation, scrubber and dust design, fabrication, and quality control. The CIL/ CAE joint venture characterized its business as "TOTAL TECHNOLOGY IN POLLUTION CONTROL" and actively marketed its products and services through product literature, client meetings, conferences and trade shows. R.38-1, Lothamer Dec., Ex.1 at 3. The CIL and CAE logos appeared on all joint venture materials such as stationery, envelopes, business cards and invoices. The joint venture resulted in several contracts in the United States, including contracts with Onyx Chemicals in Illinois, SeaWorld Marine Park in Florida, Leaf River Forest Products in Mississippi, and Texas Utilities Services. CAE, Inc. and CIL terminated the venture by mutual agreement in 1983.

4. CAE Screenplates, Inc.

CAE Screenplates, Inc. ("CAE Screenplates"), a wholly owned subsidiary of CAE, Inc., designs, manufactures, and sells screenplates, screen cylinders, and screen media used in the pulp and paper, chemical, food processing, petroleum and mining industries. The company's precision-engineered screenplates are important components in machinery used in the production of pulp and paper. Its high-strength drilled screenplates are also critical components in "closed" washing and bleaching machinery, which reduces air and water emissions in the pulp-washing and pulp-bleaching process and thus assists pulp and paper manufacturers in complying with environmental regulations. The CAE mark appears on CAE Screenplates' products...