American Heritage Life Ins. Co. v. Heritage Life Ins. Co.

• Citation: 494 F.2d 3
• Decision Date: 13 May 1974
• Docket Number: No. 73-1106.,73-1106.
• Parties: AMERICAN HERITAGE LIFE INSURANCE COMPANY, Plaintiff-Appellant-Cross Appellee, v. HERITAGE LIFE INSURANCE COMPANY, Defendant-Appellee-Cross Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

494 F.2d 3 (1974)

AMERICAN HERITAGE LIFE INSURANCE COMPANY, Plaintiff-Appellant-Cross Appellee, v. HERITAGE LIFE INSURANCE COMPANY, Defendant-Appellee-Cross Appellant.

No. 73-1106.

United States Court of Appeals, Fifth Circuit.

May 13, 1974.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Murray Robinson, David Alan Rose, Maynard A. Powell, Houston, Tex., Nelson M. Harris, Jr., Jacksonville, Fla., for plaintiff-appellant.

Jack C. Goldstein, John F. Lynch, Houston, Tex., for defendant-appellee.

Before THORNBERRY, GODBOLD and CLARK, Circuit Judges.

THORNBERRY, Circuit Judge:

Fundamentally, this appeal turns on the labels which the law of service marks and unfair competition ascribes to a single word. Unfortunately, the law is sometimes confusing, and consequently, the parties to this suit have been in legal combat for years in an attempt to convince the courts that the word means what each wants it to mean. Both parties have appealed from the decision of the district court because neither is entirely satisfied with the result reached there. The district court found that the word "Heritage," as used in the corporate names of these two parties, is generic or descriptive, rather than distinctive, of life insurance, that Heritage Life Insurance Company (HLIC) used the word in commerce before American Heritage Life Insurance Company (AHLIC) used the word before the public, that there is no secondary meaning in the word "Heritage" which the public associates with AHLIC or its insurance services, that HLIC is not barred by res judicata or collateral estoppel from defending in this action or counterclaiming for cancellation of AHLIC's registered service mark, that HLIC is guilty of neither service mark infringement nor unfair competition, and that HLIC is not entitled to a cancellation of AHLIC's service mark registration.

Undaunted, AHLIC renews its contentions below that HLIC is infringing upon its registered service mark in violation of 15 U.S.C. §§ 1114, 1116, that HLIC is infringing upon its common law trade name, and that prior proceedings before the Patent Office and the court bar both HLIC's defense and its counterclaim. While AHLIC seeks no damages, it does seek injunctive relief to prevent HLIC from doing business without using a prefix with the word "Heritage." Not wholly content with its victory below, HLIC challenges only that part of the district court's order denying cancellation of AHLIC's service mark registration.¹

I

The history of these two insurance companies is a litigious one. AHLIC was incorporated in accordance with the laws of the State of Florida on September 11, 1956, and has its principal offices in Jacksonville, Florida. HLIC was incorporated on July 26, 1957, in Arizona and has its executive offices in Los Angeles, California. The parties first became aware of each other's existence in March of 1959 when AHLIC's president visited HLIC's vice president. HLIC initially operated only as a reinsurer, but is presently involved in the direct sale of life insurance in twenty-two states. AHLIC has, since its inception, been dealing in the direct sale of life insurance, and is presently admitted to do business in forty-nine states.

In 1960, HLIC sued the Heritage Life Insurance Company of California for trade name infringement. The suit was settled when the latter agreed to change its name to Peoples Heritage Life Insurance Company. At the same time, HLIC filed an application to register "Heritage" as a service mark, alleging first use in interstate commerce in January of 1958. In 1961, HLIC's application was published by the Patent Office and AHLIC announced its opposition, claiming superior rights in the service mark "American Heritage."

On May 1, 1964, while the HLIC application was still pending, AHLIC applied for registration of the service mark "Heritage" for the service of planning and underwriting life and health insurance, alleging first use in interstate commerce in July 1957. The Patent Office Trademark Trial and Appeal Board sustained AHLIC's opposition to HLIC's application on July 30, 1964. 143 U.S.P.Q. 244. Subsequently, on December 22, 1964, AHLIC's application was published, and there was no opposition.

HLIC appealed the denial of its request for registration to the United States District Court for the Southern District of Florida, and AHLIC counterclaimed for infringement. But HLIC's suit was dismissed with prejudice and without findings, for failure to state a claim upon which relief could be granted. The Florida district court also entered a voluntary dismissal without prejudice of AHLIC's counterclaim. Soon thereafter, on June 1, 1965, the Patent Office granted AHLIC's application for service mark registration. AHLIC filed this suit on June 20, 1966, and on August 30, 1972, after a full trial, the Texas district court denied the relief requested by AHLIC and denied HLIC's petition for cancellation of AHLIC's service mark registration.

II

We are thus faced with (1) a dismissal with prejudice by the Florida district court of HLIC's petition for registration, (2) a dismissal without prejudice by the Florida district court of AHLIC's counterclaim for infringement, (3) a Trademark Trial and Appeal Board decision sustaining AHLIC's opposition to HLIC's petition for registration, (4) an ex parte Patent Office proceeding permitting registration of AHLIC's mark, and (5) the Texas district court action below involving AHLIC's infringement claim and HLIC's counterclaim for cancellation. At the outset we must deal with AHLIC's contention that HLIC is barred by the res judicata and collateral estoppel effects of the prior proceedings before the Patent Office and the Florida district court from defending or counterclaiming in this action.

Under the doctrine of res judicata, a judgment on the merits in one suit bars a subsequent suit involving the same parties or their privies based on the same cause of action. Under the doctrine of collateral estoppel, on the other hand, such a judgment precludes relitigation of issues actually litigated and determined in the prior suit, regardless of whether the second suit is based on the same cause of action as the first. Lawlor v. National Screen Service Corp., 1955, 349 U.S. 322, 326, 75 S.Ct. 865, 867, 99 L.Ed. 1122, 1126. In the words of Mr. Justice Field, in "a second action between the same parties . . . upon a different claim or demand, the judgment in the prior action operates as an estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered." Cromwell v. County of Sac, 1877, 94 U.S. 351, 353, 24 L.Ed. 195, 198. It forecloses inquiry only as to those issues which were necessarily determined. Exhibitors Poster Exchange, Inc. v. National Screen Service Corp., 5th Cir. 1970, 421 F.2d 1313, 1319.

In Lawlor, the Supreme Court held that a judgment dismissing a suit with prejudice constitutes an adjudication of the merits as fully and completely as if the order had been entered after trial and bars a later suit between the same parties on the same cause of action. But the Court noted that where the judgment is not accompanied by findings, the judgment does not bind the parties on any issue which might arise in connection with another cause of action. Lawlor v. National Screen Service Corp., supra, 75 S.Ct. at 868. Thus, such a judgment has only the most limited res judicata and collateral estoppel effect.

The Florida district court dismissed with prejudice and without any findings HLIC's registration suit, and subjected AHLIC's counterclaim for infringement to a voluntary dismissal without prejudice. Clearly, the voluntary dismissal of the counterclaim without prejudice has no res judicata or collateral estoppel effect on the present suit since it did not constitute an adjudication or a judgment on the merits. Public Service Commission v. Brashear Freight Lines, 1941, 312 U.S. 621, 626, 61 S.Ct. 784, 787, 85 L.Ed. 1083, 1086. The effect of the dismissal with prejudice of HLIC's registration action depends upon whether the present suit is based upon the same cause of action. A claim for service mark and trade name infringement and a claim for registration present different questions of law and fact, and the relief sought in one action is fundamentally different from the relief sought in the other. Speed Products Co. v. Tinnerman Products, 2nd Cir. 1955, 222 F.2d 61, 67. While the same parties are fighting over the same word in the two suits, in substance, the causes of action are not the same. In this circumstance, the dismissal warrants no res judicata treatment. See Exhibitors Poster Exchange, Inc. v. National Screen Service Corp., supra, 421 F.2d at 1316.² And consequently, it raises no collateral estoppel specter either, because the dismissal without findings does not bind the parties on any issues which have arisen in this different cause of action. Lawlor v. National Screen Service Corp., supra. Similarly, the prior dismissal has no res judicata or collateral estoppel effect on HLIC's counterclaim for cancellation.

This does not end the matter, however, for we must still determine the effect of the decisions of the Patent Office on the present litigation. The Supreme Court has held that

. . . when an administrative agency is acting in a judicial capacity and resolves disputes of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose.

United States v. Utah Construction and Mining Co., 1966, 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642, 660. That case, however, involved an appeal from a decision by the Advisory Board of Contract Appeals to whose findings the Wunderlich Act of 1954 gives "final and conclusive" effect. 41 U.S.C. § 321. And the Court had previously determined that with respect to this statutory...