332 F.3d 264 (4th Cir. 2003), 02-1483, Emergency One, Inc. v. American Fire Eagle Engine Co., Inc.

Docket Nº:02-1483
Citation:332 F.3d 264
Party Name:Emergency One, Inc. v. American Fire Eagle Engine Co., Inc.
Case Date:June 16, 2003
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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332 F.3d 264 (4th Cir. 2003)

67 U.S.P.Q.2d 1124

EMERGENCY ONE, INCORPORATED, d/b/a American Eagle Fire Apparatus Company, Incorporated, Plaintiff-Appellant,

v.

AMERICAN FIRE EAGLE ENGINE COMPANY, INCORPORATED, Defendant-Appellee.

No. 02-1483.

United States Court of Appeals, Fourth Circuit

June 16, 2003

Argued: Jan. 21, 2003.

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ARGUED:

Brendan Joseph O'Rourke, Proskauer Rose, L.L.P., New York, New York, for Appellant.

L. Lawton Rogers, III, Duane Morris, L.L.P., Washington, D.C., for Appellee.

ON BRIEF:

Hugh Stevens, Everett, Gaskins, Hancock & Stevens, L.L.P., Raleigh, North Carolina, for Appellant.

Patrick D. McPherson, Mark C. Comtois, Donald J. English, Duane Morris, L.L.P., Washington, D.C.; Mark A. Finkelstein, Herring, Mcbennett, Mills & Finkelstein, Raleigh, North Carolina, for Appellee.

Before WILKINS, Chief Judge, and MICHAEL and TRAXLER, Circuit Judges.

Vacated and remanded by published opinion. Judge TRAXLER wrote the opinion, in which Chief Judge WILKINS and Judge MICHAEL joined.

OPINION

TRAXLER, Circuit Judge:

Emergency One, Inc. ("E-One") appeals from a nationwide injunction entered by the district court prohibiting E-One from

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using its AMERICAN EAGLE mark in connection with the sale of its fire trucks or from otherwise infringing upon the trademark rights of American FireEagle, Ltd. ("AFE"). We vacate the injunction and remand the case for further proceedings.

I.

E-One, a manufacturer of fire trucks and rescue vehicles, sued AFE for trademark infringement. The parties agree that AFE's AMERICAN FIREEAGLE mark, which depicts a bald eagle superimposed over an American flag, and E-One's AMERICAN EAGLE mark "are sufficiently similar as to create a likelihood of confusion among potential purchasers of fire trucks." J.A. 129. AFE counterclaimed on the grounds that E-One had abandoned its mark, that AFE had then acquired ownership through use of the mark, and that E-One's subsequent renewed use of the mark infringed on AFE's common-law trademark rights. A jury initially determined that E-One had not abandoned the AMERICAN EAGLE mark and, therefore, AFE was infringing on E-One's mark. Based on the verdict, the district court entered an injunction against AFE's continued use of its AMERICAN FIREEAGLE mark. The injunction was unlimited in its geographical scope.

AFE appealed. This court concluded that there was sufficient evidence for a jury to find "that E-One had discontinued use of the AMERICAN EAGLE mark." Emergency One, Inc. v. American FireEagle, Ltd., 228 F.3d 531, 537 (4th Cir. 2000) ("American FireEagle I "). We explained, however, that "the case does not end there because E-One did produce evidence that it intended to resume use of the mark on fire trucks." Id.; see 15 U.S.C.A. § 1127 (West Supp.2002) (providing that a trademark is abandoned when "its use has been discontinued with intent not to resume such use"). On the issue of E-One's intent to resume use of the mark, we held that the jury instructions "fail[ed] to instruct the jury ... that in order to avoid abandonment a trademark owner who discontinues use of the mark must have an intent to resume use in the reasonably foreseeable future." American FireEagle I, 228 F.3d at 540 (emphasis added). We also concluded that the jury instructions failed to advise the jury that "the type of use that is relevant to determining whether a trademark owner has discontinued use is use in the course of trade in a particular good." Id. (emphasis added). We vacated the judgment and the injunction and remanded for a new trial.

Upon remand, the district court granted E-One's request for bifurcation of the trial. The only issue submitted to the jury was whether E-One had abandoned its rights in the AMERICAN EAGLE mark prior to the time that AFE began using its similar mark. Specifically, the second jury was asked to decide if E-One "intend[ed] to resume use of the American Eagle trademark on fire trucks in the reasonably foreseeable future." J.A. 205. The jury determined that E-One had not intended to resume use of the mark. Following the verdict, AFE requested that the district court impose an unlimited injunction, virtually identical to the one imposed against AFE after the first trial, against E-One's continued use of its mark. E-One objected, however, arguing that a nationwide injunction was inappropriate and that an evidentiary hearing was necessary to establish the proper geographical scope of the injunction. The district court concluded that E-One had waived the right to challenge the geographical scope of the injunction, that E-One was therefore not entitled to an evidentiary hearing on the

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issue, and that a nationwide injunction was appropriate. The district court noted that jury issues still remained with respect to whether AFE was entitled to monetary relief from E-One on AFE's trademark infringement claim or its claims under the North Carolina Unfair and Deceptive Trade Practices Act, see N.C. Gen.Stat. § 75-1.1, and North Carolina common law. E-One immediately appealed the district court's entry of the injunction. See 28 U.S.C.A. § 1292(a)(1) (West 1993).

II.

We review the entry of an injunction by the district court for abuse of discretion. See Wilson v. CHAMPUS, 65 F.3d 361, 363-64 (4th Cir. 1995). E-One argues that because common law trademark rights extend only to the geographical areas in which AFE has made bona fide use of the mark, AFE is not entitled to injunctive relief in any market where it has not established such use. E-One asserts that the district court therefore abused its discretion by entering a blanket, nationwide injunction against E-One without any evidence of the localities in which AFE used the mark.

A.

Before considering the scope of the injunction entered against E-One, a brief review of the governing principles of trademark law is in order. AFE and E-One both asserted trademark rights in an unregistered mark. Common law determines who enjoys the exclusive right to use an unregistered trademark, the extent of such rights, and the proper geographical scope of any injunctive relief necessary to protect against the infringement of such rights. See Spartan Food Sys., Inc. v. HFS Corp., 813 F.2d 1279, 1282 (4th Cir. 1987) (explaining that the "geographical extent" of an injunction against infringement of an unregistered mark is "governed by common law as expounded by the Supreme Court").

At common law, trademark ownership is acquired by actual use of the mark in a given market. See United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 97-98, 39 S.Ct. 48, 63 L.Ed. 141 (1918). "To acquire ownership of a trademark it is not enough to have invented the mark first or even to have registered it first; the party claiming ownership must have been the first to actually use the mark in the sale of goods or services." Sengoku Works Ltd. v. RMC Int'l, Ltd., 96 F.3d 1217, 1219 (9th Cir. 1996); see Homeowners Group, Inc. v. Home Mktg. Specialists, Inc., 931 F.2d 1100, 1105 (6th Cir. 1991) ("[O]wnership rights flow only from prior appropriation and actual use in the market."); see generally 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, §§ 16:1, 16.18 (4th ed.2003). The owner of a mark acquires "both the right to use a particular mark and the right to prevent others from using the same or a confusingly similar mark." Homeowners Group, 931 F.2d at 1106. Accordingly, trademark ownership confers an exclusive right to use the mark. See United Drug, 248 U.S. at 98, 39 S.Ct. 48. 1

When more than one user claims the exclusive right to use an unregistered trademark, priority is determined by "the first actual use of [the] mark in a genuine commercial transaction." Allard Enters., Inc. v. Advanced Programming Res., Inc., 146 F.3d 350, 358 (6th Cir. 1998); see United Drug, 248 U.S. at 100, 39 S.Ct. 48

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("[T]he general rule is that, as between conflicting claimants to the right to use the same mark, priority of appropriation determines the question."); see also Blue Bell, Inc. v. Farah Mfg. Co., 508 F.2d 1260, 1265 (5th Cir. 1975) ("The exclusive right to a trademark belongs to one who first uses...

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