Scott Fetzer Co. v. House of Vacuums Inc.

• Decision Date: 12 August 2004
• Docket Number: No. 03-51118.,03-51118.
• Parties: The SCOTT FETZER CO., a Delaware Corporation, Plaintiff-Counter Defendant-Appellant-Cross-Appellee, v. HOUSE OF VACUUMS INC., a Texas Corporation, Defendant-Counter Claimant-Appellee-Cross-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

381 F.3d 477

The SCOTT FETZER CO., a Delaware Corporation, Plaintiff-Counter Defendant-Appellant-Cross-Appellee, v. HOUSE OF VACUUMS INC., a Texas Corporation, Defendant-Counter Claimant-Appellee-Cross-Appellant.

No. 03-51118.

United States Court of Appeals, Fifth Circuit.

August 12, 2004.

Appeals from the United States District Court for the Western District of Texas.

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Robert W. Turner, Jones Day, Dallas, TX, Arthur P. Licygiewicz, Robert P. Ducatman (argued), Jones Day, Cleveland, OH, for Scott Fetzer Co.

Eric W. Cernyar (argued), San Antonio, TX, Ted D. Lee, Gunn, Lee & Keeling, San Antonio, TX, for House of Vacuums Inc.

Before SMITH, BENAVIDES and PICKERING, Circuit Judges.

BENAVIDES, Circuit Judge:

The Scott Fetzer Company owns the Kirby Company, a manufacturer of vacuum cleaners, as well as the KIRBY trademark and service marks. House of Vacuums is an independent vacuum cleaner sales and repair shop located in San Antonio. Scott Fetzer sued House of Vacuums for unfair competition, trademark infringement, and trademark dilution after House of Vacuums used the KIRBY mark in an advertisement. The district court granted summary judgment in favor of House of Vacuums on Scott Fetzer's unfair competition and trademark claims but refused to award attorneys' fees to House of Vacuums.

We agree with the district court that no reasonable jury could conclude that House of Vacuums misappropriated the KIRBY mark in any way. We also conclude that the district court did not abuse its discretion in denying attorneys' fees to House of Vacuums. Therefore, we affirm the judgment of the district court.

I. Background

House of Vacuums sells new, used, and reconditioned vacuum cleaners of several brands. Earl Farmer, the owner and sole employee, repairs all types of vacuum cleaners. House of Vacuums is not an authorized Kirby distributor or service center, but Mr. Farmer typically repairs at least one Kirby vacuum cleaner per day and occasionally sells new and slightly used Kirby vacuum cleaners that he has acquired from Kirby distributors or through trade-ins.

Scott Fetzer and House of Vacuums first clashed in 1987, when Scott Fetzer complained to Mr. Farmer about a House of Vacuums yellow pages ad that depicted, among other brand logos, the KIRBY logo. Following an exchange of letters, Scott Fetzer sent Mr. Farmer a proposed agreement. The agreement provided that Mr. Farmer's advertisement could use the word "Kirby" (but not the KIRBY logo) so long as the ad did not create an impression of authorization, affiliation, or sponsorship. The agreement also provided several examples of acceptable use of the KIRBY mark. Mr. Farmer neither signed nor returned the agreement but claims to have resolved the dispute informally through phone calls to Scott Fetzer representatives. In any event, Scott Fetzer took no further action.

Mr. Farmer reviewed the examples of acceptable use listed by Scott Fetzer in the proposed agreement and created a yellow pages ad that, with insignificant changes, has run ever since. The 2001 version of that ad is the subject of the current litigation. The ad begins with the name "HOUSE OF VACUUMS" in large letters. Below this title, two lines—"new • used • rebuilt" and "SALES • SERVICE • PARTS • SUPPLIES"—bracket a list of thirteen different vacuum cleaner brand names, one of which is "Kirby." A cloud encapsulating the words "One Day Service All Makes & Models" hovers to the right side of this listing, and a picture of a nondescript vacuum cleaner sits to the left side of the listing. The ad concludes with a promise of "Free Estimates," a telephone number, an address, and a rudimentary map.

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In January 2002, Scott Fetzer sent a letter objecting to the 2001 yellow pages ad. The letter demanded that House of Vacuums cease and desist all use of the KIRBY mark and disconnect its telephone number. Mr. Farmer refused these demands and reminded Scott Fetzer's attorneys of the parties' previous interactions. Neither party yielded.

In August 2002, Scott Fetzer filed a federal suit alleging, under Texas and federal law, trademark infringement, unfair competition, and trademark dilution. House of Vacuums moved unsuccessfully to dismiss, then filed a counterclaim seeking a declaration that House of Vacuums had not infringed or diluted the KIRBY mark; that laches, estoppel, waiver, and acquiescence barred Scott Fetzer's claims; and that Scott Fetzer abandoned the KIRBY mark. House of Vacuums moved for summary judgment, and Scott Fetzer moved for partial summary judgment solely on the issue of consumer confusion, an issue relevant to trademark infringement.

The district court granted summary judgment to House of Vacuums on all Scott Fetzer's claims and denied Scott Fetzer's cross-motion. With respect to Scott Fetzer's unfair competition and trademark infringement claims, the district court ruled that the ad did not infringe the KIRBY mark because the ad did not create a likelihood of consumer confusion. With respect to Scott Fetzer's trademark dilution claims, the district court ruled that both federal and Texas law require a showing of actual dilution and that Scott Fetzer had made no such showing. Finally, the district court found that Scott Fetzer did not bring its claims in bad faith and therefore refused to award attorneys' fees to House of Vacuums.

Scott Fetzer appealed the grant of summary judgment in favor of House of Vacuums and the denial of its own motion for partial summary judgment. House of Vacuums cross-appealed the denial of attorneys' fees.

II. Trademark Infringement, Unfair Competition, and Trademark Dilution

We turn first to the district court's grant of summary judgment, which we review de novo, New Orleans Assets, L.L.C. v. Woodward, 363 F.3d 372, 374 (5th Cir.2004). We grant summary judgment only if the case presents no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). We must consider the evidence in the light most favorable to the nonmovant, but if no reasonable juror could find for the nonmovant, then summary judgment is warranted. E. & J. Gallo Winery v. Spider Webs Ltd., 286 F.3d 270, 274 (5th Cir.2002). Because we conclude that no reasonable juror could find for Scott Fetzer on any of its claims, we affirm the district court's grant of summary judgment.¹

A. Infringement and Unfair Competition

To prove trademark infringement and unfair competition under federal law, Scott Fetzer must show that the use of the KIRBY mark by House of Vacuums is likely to cause confusion among consumers as to the source, affiliation, or sponsorship of House of Vacuums's products or services. See 15 U.S.C.A. § 1114(1) (West 1997 & Supp.2004); id. § 1125(a) (West 1998); Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658, 663 (5th Cir.2000). A "likelihood of confusion" means that confusion is not just possible, but probable. Westchester, 214 F.3d at 663-64. The likelihood of confusion standard also governs Scott Fetzer's claims for trademark infringement and unfair competition under Texas law. See id. at 663-64 n. 1; Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 193 (5th Cir.1998).

Scott Fetzer's complaints focus on the 2001 House of Vacuums yellow pages ad. Scott Fetzer argues that the words "NEW" and "Kirby," though not juxtaposed, suggest that House of Vacuums sells new Kirby vacuum cleaners. According to Scott Fetzer, this suggestion is likely to confuse consumers in two ways. First, Scott Fetzer asserts that House of Vacuums cannot truthfully claim to sell new Kirby vacuum cleaners because only Kirby dealers are authorized to sell new Kirby vacuum cleaners. Second, Scott Fetzer alleges that the yellow pages ad will create a false impression of affiliation or sponsorship. Neither argument withstands scrutiny.

House of Vacuums may use the KIRBY mark to advertise that it sells new KIRBY vacuum cleaners. Independent dealers and repair shops may use a mark to advertise truthfully that they sell or repair certain branded products so long as the advertisement does not suggest affiliation with or endorsement by the markholder. See Trail Chevrolet, Inc. v. Gen. Motors Corp., 381 F.2d 353, 354 (5th Cir.1967) (per curiam); accord Volkswagenwerk Aktiengesellschaft v. Church, 411 F.2d 350, 352 (9th Cir.1969); see generally 4 J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition § 25:43 (4th ed.2003).² For all its bluster about authorization, Scott Fetzer admits that new Kirby vacuum cleaners sometimes reach independent dealers. These leaks in Scott Fetzer's distribution chain are well documented. See Scott Fetzer Co. v. Williamson, 101 F.3d 549, 552-53 (8th Cir.1996). In light of this admission, Scott Fetzer cannot rebut summary judgment evidence showing that House of Vacuums sometimes obtains new Kirby vacuum cleaners, albeit without authorization, and resells them to customers.³ Because House of Vacuums sells new Kirby vacuum cleaners, House of Vacuums may use the KIRBY mark to advertise that fact so long as the advertisement does not suggest affiliation with or endorsement by Scott Fetzer.

The critical question is whether the advertisement suggests affiliation or endorsement. In assessing whether use of a mark creates a likelihood of confusion as to affiliation or endorsement, we consider the "digits of confusion," a list of factors that tend to prove or to disprove that consumer confusion is likely. Westchester, 214 F.3d at 664. Those factors are: (1) the type of mark allegedly infringed; (2) the similarity between the two marks; (3) the similarity of the products or services; (4) the identity of retail outlets and purchasers; (5) the identity of the advertising media used; (6) the defendant's intent; and (7) any evidence of actual confusion. Id.

The digits are...