364 F.3d 535 (4th Cir. 2004), 03-1272, Retail Services, Inc. v. Freebies Publishing

Docket Nº:03-1272, 03-1317.
Citation:364 F.3d 535
Party Name:RETAIL SERVICES INC.; Freebie, Incorporated, Plaintiffs-Appellees, v. FREEBIES PUBLISHING; Eugene F. Zannon; Gail Zannon, Defendants-Appellants. Retail Services Inc.; Freebie, Incorporated, Plaintiffs-Appellants, v. Freebies Publishing; Eugene F. Zannon; Gail Zannon, Defendants-Appellees.
Case Date:April 13, 2004
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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364 F.3d 535 (4th Cir. 2004)

RETAIL SERVICES INC.; Freebie, Incorporated, Plaintiffs-Appellees,

v.

FREEBIES PUBLISHING; Eugene F. Zannon; Gail Zannon, Defendants-Appellants.

Retail Services Inc.; Freebie, Incorporated, Plaintiffs-Appellants,

v.

Freebies Publishing; Eugene F. Zannon; Gail Zannon, Defendants-Appellees.

Nos. 03-1272, 03-1317.

United States Court of Appeals, Fourth Circuit

April 13, 2004

Argued: Oct. 29, 2003.

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[Copyrighted Material Omitted]

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ARGUED:

Terence Patrick Ross, Gibson, Dunn & Crutcher, L.L.P., Washington, D.C., for Appellants/Cross-appellees Freebies Publishing, et al.

Alan Charles Raul, Sidley, Austin, Brown & Wood, L.L.P., Washington, D.C., for Appellees/Cross-appellants Retail Services, Inc., et al.

ON BRIEF:

Hill B. Wellford, III, Gibson, Dunn & Crutcher, L.L.P., Washington, D.C., for Appellants/Cross-appellees Freebies Publishing, et al.

Joseph V. Jest, Sidley, Austin, Brown & Wood, L.L.P., Washington, D.C., for Appellees/Cross-appellants Retail Services, Inc., et al.

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

Affirmed by published opinion. Judge Traxler wrote the opinion, in which Chief Judge Wilkins and Judge Duncan joined.

TRAXLER, Circuit Judge:

Retail Services, Inc. and Freebie, Inc. (collectively "RSI") brought this action for declaratory relief against Freebies Publishing, Eugene F. Zannon, and Gail Zannon (collectively "defendants") seeking an order declaring that RSI's use of the domain name ‹freebie.com› did not violate the Anticybersquatting Consumer Protection Act, see 15 U.S.C.A. § 1125(d)(1) (West Supp.2003), that RSI's use of the term "freebie" in its domain name did not infringe upon defendants' registered FREEBIES trademark under the Lanham Act, see 15 U.S.C.A. § 1114 (West 1997 & Supp.2003), and that the term "freebies" is generic and therefore not protectable as a trademark. In response, defendants filed a counterclaim under the Lanham Act based on RSI's use of the word "freebie" in its domain name, asserting claims for trademark infringement and cybersquatting. Additionally, defendants included Lanham Act claims for unfair competition and trademark dilution. See 15 U.S.C.A. § 1125(a), (c) (West 1998 & Supp.2003). Defendants also alleged that RSI's ‹freebie.com› domain name violated section 18.2-500 of the Virginia Code.

The district court concluded that the word "freebies" is generic and not registrable as a federal trademark. Without a valid trademark before it, the court then awarded summary judgment to RSI on all claims and counterclaims. The district court also addressed sua sponte RSI's claim for attorneys' fees and costs that RSI raised in its complaint but did not pursue as part of its summary judgment motion. Finding that defendants harbored no fraudulent intent or bad faith in asserting the counterclaims and that no "exceptional" circumstances otherwise existed, the district court denied RSI's claim for attorneys' fees. 15 U.S.C.A. § 1117(a) (West Supp.2003).

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Defendants appeal the district court's grant of summary judgment on a number of grounds, focusing mainly on the argument that there was a genuine factual dispute over the generic nature of the term "freebies"--a factual dispute created, if nothing else, by the certificate of registration issued to defendants by the Patent and Trademark Office ("PTO") for the FREEBIES trademark.

RSI cross appeals the sua sponte denial of attorneys' fees and costs.

For the reasons set forth below, we affirm the decision of the district court in toto.

I.

Before we recount the facts of this case, a brief discussion of the legal context in which the facts arise is helpful. Trademarks "identify and distinguish" goods produced by one person "from those manufactured or sold by others and ... indicate the source of the goods." 15 U.S.C.A. § 1127 (West Supp.2003). To the purchasing public, a trademark "signif[ies] that all goods bearing the trademark" originated from the same source and "that all goods bearing the trademark are of an equal level of quality." 1 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 3.2 (4th ed.2003) [hereinafter McCarthy]. Because of its role in assuring consumers of the origin and quality of the associated goods, a trademark is also "a prime instrument in advertising and selling the goods." Id.

Thus, a proposed mark cannot acquire trademark protection unless the mark is distinctive, that is, unless it serves the traditional trademark functions of "distinguishing the applicant's goods from those of others" and identifying the source of the goods. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992); see 15 U.S.C.A.§ 1052 (West 1997). The antithesis of a distinctive mark is a "generic" mark which merely employs "the common name of a product or service," Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 464 (4th Cir. 1996), or "refers to the genus of which the particular product is a species," Park 'N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 194, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985). Because a generic mark, by definition, neither signifies the source of goods nor distinguishes the particular product from other products on the market, a generic term cannot be protected as a trademark nor registered as one. See Two Pesos, 505 U.S. at 768, 112 S.Ct. 2753; Sara Lee, 81 F.3d at 464; Larsen v. Terk Techs. Corp., 151 F.3d 140, 148 (4th Cir. 1998) (noting that " 'generic marks' are accorded no protection at all...."). "The concepts of 'generic name' and 'trademark' are mutually exclusive" because a generic term "can never function as a mark to identify and distinguish the products of only one seller." 2 McCarthy at § 12:1. From a policy standpoint, of course, if a business were permitted to appropriate a generic word as its trademark, it would be "difficult for competitors to market their own brands of the same product. Imagine being forbidden to describe a Chevrolet as a 'car' or an 'automobile' because Ford or Chrysler or Volvo had trademarked these generic words." Blau Plumbing, Inc. v. S.O.S. Fix-It, Inc., 781 F.2d 604, 609 (7th Cir. 1986).

Whether trademark protection extends to a proposed mark is tied to the mark's distinctiveness. See Sara Lee, 81 F.3d at 464. In determining the distinctiveness of a given mark, courts use a categorical approach, placing the mark in one of four classifications that increase in distinctiveness as follows: generic, descriptive, suggestive, and arbitrary or fanciful. See Pizzeria Uno Corp. v. Temple, 747 F.2d 1522, 1527 (4th Cir. 1984). On the

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opposite end of the spectrum from the generic category are marks that are fanciful or arbitrary--inherently distinctive marks. Fanciful marks are, for the most part, nonsense "words expressly coined for serving as a trademark." Sara Lee, 81 F.3d at 464 (offering "Clorox TM, Kodak TM, Polaroid TM, and Exxon TM" as examples). Arbitrary marks consist of recognizable words used in connection with products for which "they do not suggest or describe any quality, ingredient, or characteristic," as if the trademark was "arbitrarily assigned." Id. (citing "Camel TM cigarettes" and "Apple TM computers" as examples).

Between the generic and the arbitrary or fanciful categories are descriptive marks and suggestive marks, which are often difficult to distinguish from each other. Descriptive marks "merely describe a function, use, characteristic, size, or intended purpose of the product." Id. (mentioning "After Tan post-tanning lotion" and "5 Minute Glue"). Descriptive marks are not inherently distinctive; the Lanham Act "accord[s] protection only if they have acquired a 'secondary meaning.' " Larsen, 151 F.3d at 148; see 15 U.S.C.A. § 1052(e)(1) (registration may be refused if the proposed mark, "when used on or in connection with the goods of the applicant[,] is merely descriptive or deceptively misdescriptive of them"). Saying that a trademark has acquired "secondary meaning" is shorthand for saying that a descriptive mark has become sufficiently distinctive to establish "a mental association in buyers' minds between the alleged mark and a single source of the product." 2 McCarthy at § 15:5; see Two Pesos, 505 U.S. at 769, 112 S.Ct. 2753 ("This acquired distinctiveness" necessary for a descriptive mark to be protected "is generally called 'secondary meaning.' "); Sara Lee, 81 F.3d at 464 (explaining that "secondary meaning" exists when, "in the minds of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product itself" (internal quotation marks omitted)).

In contrast to descriptive marks, suggestive marks are inherently distinctive and, like arbitrary or fanciful marks, qualify for registration without any showing of "secondary meaning." See Pizzeria Uno, 747 F.2d at 1529. A mark is suggestive if it "connote[s], without describing, some quality, ingredient, or characteristic of the product." Sara Lee, 81 F.3d at 464 (providing the following examples: "Coppertone TM, Orange Crush TM, and Playboy TM"). A helpful rule of thumb is that " 'if the mark imparts information directly, it is descriptive,' " but " '[i]f it stands for an idea which requires some operation of the imagination to connect it with the goods, it is suggestive.' " Pizzeria Uno, 747 F.2d at 1528 (quoting Union Carbide Corp. v. Ever-Ready, Inc., 531 F.2d 366, 379 (7th Cir. 1976)).

With these concepts in mind, we consider the facts.

II.

In 1979, the Zannons purchased the right to publish Freebies Magazine, a periodical providing information about free mail-order offerings. The Zannons also acquired ownership...

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