300 F.3d 517 (4th Cir. 2002), 01-1285, U.S. Search, LLC v. U.S. Search.Com Inc.

Docket Nº:01-1285
Citation:300 F.3d 517
Party Name:U.S. Search, LLC v. U.S. Search.Com Inc.
Case Date:August 16, 2002
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

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300 F.3d 517 (4th Cir. 2002)

U.S. SEARCH, LLC, a Virginia corporation, Plaintiff-Appellant,

v.

US SEARCH.COM INCORPORATED, a California corporation, Defendant-Appellee.

U.S. Search, LLC, a Virginia corporation, Plaintiff-Appellant,

v.

US Search.Com Incorporated, a California corporation, Defendant-Appellee.

Nos. 01-1285, 01-1782.

United States Court of Appeals, Fourth Circuit

August 16, 2002

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Argued June 6, 2002.

ARGUED:

Bradford Elby Kile, Kile, Goekjian, Lerner & Reed, P.L.L.C., Washington, D.C., for Appellant.

Roger E. Warin, Steptoe & Johnson, L.L.P., Washington, D.C., for Appellee.

ON BRIEF:

Andrew J. Sloniewsky, Steptoe & Johnson, L.L.P., Washington, D.C., for Appellee.

Before MICHAEL and GREGORY, Circuit Judges, and BEEZER, Senior Circuit Judge of the United States Court of Appeals for the Ninth Circuit, sitting by designation.

Affirmed by published opinion. Judge GREGORY wrote the opinion, in which Judge MICHAEL and Senior Judge BEEZER joined.

OPINION

GREGORY, Circuit Judge.

U.S. Search, LLC (LLC) brought this action against U.S. Search.com, Inc. (DotCom) alleging false designation of origin under the Lanham Act, 15 U.S.C § 1125(a), and unfair competition under Virginia common law. LLC, claiming first use of the mark "U.S. Search," sought to enjoin DotCom from using the term and asked the district court to direct the Commissioner for Patents and Trademarks to cancel DotCom's previously registered service mark, "1-S00-U.S. Search." The court found that "U.S. Search" was not entitled to service mark protection when used in connection with LLC's executive recruiting services and granted summary judgment in favor of defendant DotCom. Finding no error, we affirm.

I.

Appellant LLC is an executive recruiting and placement firm that specializes in recruiting for the plastics industry. The company, located in Falls Church, Virginia, was formed in December 1998 by Arnold Hiller. Hiller is the company's president and sole recruiter. LLC focuses primarily on placing senior level management candidates, serving both employers seeking applicants and applicants seeking employment. Its fees are usually derived from a percentage of first year compensation, often exceeding $15,000 per placement.1

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Appellee DotCom is a publicly traded corporation that has provided access to online public record information over the Internet and through the use of its toll free telephone number, 1-800-US-SEARCH, since 1995. DotCom is a Delaware corporation with its principal place of business in Los Angeles, California. Traditionally, DotCom's services were marketed and used to locate missing people, such as relatives, friends, or old college roommates.

In October of 1996, DotCom, through its predecessor 800-U.S. Search, Inc., filed a service mark application for the mark "1-800-U.S. Search" for "computer services, namely providing databases in the field of individual telephone numbers, addresses, and social security numbers," in International Class 42. The application listed 1994 as the year of first use, but the date was later amended to February 16, 1995. The mark was registered with the United States Patent and Trademark Office (PTO) on September 29, 1998.

In the last quarter of 1999, DotCom began offering its business customers the ability to verify a prospective employee's credentials and background after the employer had identified the candidate. Dot Com does not interview prospective clients, nor does it present candidates to an employer for placement or negotiate terms of employment. The added services it now offers are merely screening services, where DotCom completes criminal background checks and checks references, after candidates have been identified. The charge for employee screening services begins at approximately $50, and rarely exceeds $200. In 2000, after DotCom began marketing its business services, LLC claims that it received over 325 telephone calls that were intended for DotCom.

On April 3, 2000, LLC filed a two count complaint against Dot Com alleging violations of the Lanham Act, 15 U.S.C. § 1125(a), and unfair competition under Virginia common law. DotCom counterclaimed, alleging infringement of its federally registered mark, 15 U.S.C. §§ 1114, 1116-18, false designation of origin, 15 U.S.C. § 1125(a), and common law unfair competition.

Days after filing suit, LLC submitted an application to the PTO to register "U.S. Search" as a service mark.2 On December 5, 2000, the PTO issued an office action refusing registration because LLC's mark, when used on or in connection with the identified services, so resembled two other marks, "1-800-U.S. Search" and "U.S. Record Search," that it was "likely to cause confusion, to cause mistake, or to

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deceive." J.A. 676.3

After discovery, DotCom moved for summary judgment, raising four grounds. It asserted that 1) LLC's action was time barred, 2) LLC could not claim first use of the mark, 3) LLC's use of the mark is generic, or at best descriptive with no evidence of secondary meaning, and 4) if LLC's mark is protectable, LLC cannot demonstrate a likelihood of confusion. After a hearing, the district court granted summary judgment in favor of DotCom, finding that "U.S. Search" was at best descriptive, and because LLC provided no evidence of secondary meaning, the term was not entitled to service mark protection. On January 26, 2001, the court entered an order dismissing both counts of LLC's complaint with prejudice and ordering the matter to proceed to trial on DotCorn's counterclaims. A month later, DotCom stipulated to the dismissal of its counterclaims. In March 2001, Dot Com moved for an award of costs under Federal Rule of Civil Procedure 54(d). The district court, after a hearing, awarded DotCom $2,482 in costs. This appeal followed.

II.

LLC's main argument on appeal is that the district court erred in finding that its mark was not entitled to service mark protection, and thus erred in granting summary judgment in favor of DotCom.4 We review a district court's grant of summary judgment de novo, applying the same standards employed by the district court. Lone Star Steakhouse & Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 928 (4th Cir. 1995); Perini Corp. v. Perini Construction, Inc., 915 F.2d 121, 123-24 (4th Cir. 1990). Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In evaluating a motion for summary judgment, the court views the record in the light most favorable to the nonmoving party. Lone Star, 43 F.3d at 928.

III.

Section 43(a) of the Lanham Act, prohibiting the use of false designations of origin, protects against service mark infringement even if the mark has not been federally registered. See 15 U.S.C. § 1125(a); MicroStrategy Inc. v. Motorola, Inc., 245 F.3d 335, 341 (4th Cir. 2001) (citing Two Pesos, Inc. v. Toco Cabana,

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Inc., 505 U.S. 763, 768, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992)); Ale House Mgmt. Inc. v. Raleigh Ale House, Inc., 205 F.3d 137, 140 (4th Cir. 2000). A party claiming prior use of a trade or service mark may, as LLC does here, seek to enjoin a defendant's use of its registered mark and cancel that defendant's registration of the mark under § 14 of the Lanham Act, 15 U.S.C. § 1064. See Marcon, Ltd. v. Helena Rubenstein, Inc., 694 F.2d 953, 956 (4th Cir. 1982). However, before a federal registration may be cancelled, the plaintiff must prevail in its infringement action. In order to prevail in an action for service mark infringement and unfair competition under § 43(a) of the Lanham Act, a plaintiff must "first and most fundamentally prove that it has a valid and protectable mark." MicroStrategy, 245 F.3d at 341. If the plaintiff's mark is deemed to be protectable, it still cannot prevail unless it can show that the defendant's use of an identical or similar mark is likely to cause confusion among consumers.5 Perini, 915 F.2d at 124. Here, summary judgment was appropriate because LLC cannot clear the first hurdle; that is, it cannot show that its mark, in relation to the executive recruiting services it provides, is entitled to service mark protection.

To ascertain whether a mark is protected, we must determine whether it is 1) generic, 2) descriptive, 3) suggestive or 4) arbitrary or fanciful. Perini 915 F.2d at 124 (citing Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976)). "The protection accorded trademarks [and service marks] is directly related to the mark's distinctiveness." Sara Lee Corp. v. Kayser-Roth Corp.,81F.3d 455, 464 (4th Cir. 1996). If a term is generic (the common name for a product or service), it is ineligible for protection. The public has an inherent right to call a product or service by its generic name. Perini 915 F.2d at 124; see Sara Lee, 81 F.3d at 464. Fanciful (made-up words expressly coined to serve as trade or service marks), arbitrary (common words applied in unfamiliar ways), and suggestive marks (words that connote, rather than describe, some quality or characteristic of a product or service) are inherently distinctive, and thus receive the greatest protection against infringement.6 Sara Lee, 81 F.3d at 464. A descriptive mark may be eligible for protection, but only if it has acquired a "secondary meaning" in the minds of the public. Id.

The district court found that "U.S. Search," as a composite mark, is not fanciful, arbitrary, or suggestive when used in connection with LLCs services. The court explained that the mark was either generic or descriptive, and even assuming it was descriptive, the record was...

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