Professional Golfers Ass'n of America v. Bankers Life & Cas. Co.
| Decision Date | 13 June 1975 |
| Docket Number | No. 74-2117,74-2117 |
| Citation | 186 USPQ 447,514 F.2d 665 |
| Court | U.S. Court of Appeals — Fifth Circuit |
| Parties | PROFESSIONAL GOLFERS ASSOCIATION OF AMERICA, Plaintiff-Appellee, v. BANKERS LIFE & CASUALTY COMPANY, Defendant-Appellant. |
Alan Meltzer, Lake Park, Fla., William T. Kirby, Chicago, Ill., for defendant-appellant.
William J. Dunaj, Miami, Fla., Stephen M. Sacks, William D. Rogers, Washington, D. C., for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of Florida.
Before GEWIN, BELL and CLARK, Circuit Judges.
The Professional Golfers' Association of America (PGA or the association) brought this suit for trademark infringement and unfair competition against its erstwhile associate in a golf club located at Palm Beach Gardens, Florida. Bankers Life and Casualty Company (Bankers) built the clubhouse and courses that housed the golf association's national headquarters for ten years. The collaboration was never extremely amicable, and final estrangement occurred in February of 1973 when the PGA vacated the premises for good. Bankers refused to remove the initials "PGA" from the title of its golf club after the association's departure. The present lawsuit followed and the district court found that Bankers had infringed the PGA's mark and competed unfairly with it through continued use of the initials. We find the district court's conclusions of law and fact eminently correct and therefore affirm.
Bankers and the PGA first considered working together in 1961, when the PGA desired more sumptuous headquarters than its abandoned supermarket and Bankers needed a selling ploy for its proposed new city. The parties entered into an agreement whereby Bankers would build two golf courses to PGA specifications and the PGA would construct the clubhouse to be used as its national headquarters. Bankers would have full use of the PGA name in its promotional activities for surrounding real estate development. By 1963, however, it was clear that the PGA lacked the financial resources to construct the proposed clubhouse, so Bankers, through its president McArthur, agreed to build the club as well as the golf courses. The second contract stated that the PGA would repay the cost of constructing the facility, $875,672.
Beset by continued monetary doldrums and a newly elected slate of officers who opposed the Palm Beach Gardens site, the PGA abandoned the partially constructed clubhouse/headquarters later that year. Litigation to force the association to live up to its contractual obligations ensued, and finally resulted in a 1964 settlement agreement that cancelled all prior contracts between the parties. As hereinafter discussed, the PGA agreed to rent space in the clubhouse for ten years, and the entire premises would continue to be known as the PGA National Golf Club. In return for the PGA's continued presence in Palm Beach Gardens, Bankers agreed to cancel the association's debt entirely. By this time the clubhouse had been constructed; permanent concrete buttresses on the outside of the building bore the PGA initials, and the controversial three letters were etched in a continuous horizontal line around the outer windows of the club.
This lukewarm symbiosis continued for eight years until the end of 1972 when Bankers announced the PGA had to vacate the premises immediately. Somewhat alarmed at the summary eviction, particularly in view of the winter tournaments and trade show it had scheduled for early 1973, the PGA finally cajoled Bankers into letting it remain until February 28, 1973. This reconciliation (of sorts) was evidenced by the fourth written agreement between the parties, an amendment to the 1964 instruments.
The PGA exited permanently once the winter tournaments were over, and Bankers thereafter changed the nature of the club. It was no longer open to PGA members whenever they wished to play, but became a private country club with the golf course available only to members and their guests. Bankers did, however, retain the PGA's acronym in renaming its facility the PGA Country Club.
Based on its ownership of the mark "PGA", the association brought this suit against Bankers for infringement, unfair competition, and breach of contract. The several questions presented on appeal are: (1) whether the owner of a collective service mark may license it to non-members, (2) if so, what were the terms of the license agreement between the PGA and Bankers, (3) whether Bankers infringed the PGA's mark or competed unfairly with the association, and (4) whether the district court committed prejudicial error in the manner in which it reached its findings of fact and conclusions of law. We shall treat these issues seriatim.
As one of seven registrations, the PGA owns a collective service mark in the configuration "PGA." Its application for registration explains that the mark is to be used in connection with golf instruction and entertainment in the nature of golfing exhibitions. Members display the mark in professional golf shops, at tournaments, and for the sale of services generally.
The Lanham Act defines a collective mark as a "trade-mark or service mark used by the members of a cooperative, an association, or other collective group or organization . . . ." 15 U.S.C. § 1127. A service mark, in turn, "means a mark used in the sale or advertising of services to identify the services of one person and distinguish them from the services of others." Id. Thus, a collective service mark such as "PGA" serves not to identify particular merchandise produced by members, but to guarantee the quality of service provided by members. Once registered, collective service marks are entitled to the same protection as other trademarks. 15 U.S.C. §§ 1053-4; see Boston Professional Hockey Association v. Dallas Cap and Emblem Manufacturing, Inc., 510 F.2d 1004 (5th Cir. 1975).
Bankers contends that the owner of a collective service mark has no authority to license it to anyone except members of the association. In essence it claims that an organization has the power to allow its members who have met certain qualifications to utilize the mark, but that it cannot authorize non-members to employ the mark for any purpose. We, however, are unable to discern any reason, based either in statutory construction or logic, why the licensing of collective service marks should be so limited.
First, the Lanham Act clearly contemplates that owners of collective marks and service marks receive the same treatment as holders of more orthodox trademarks. See 15 U.S.C. §§ 1053 and 1054, supra. Since merchandise marks have long been the subject of licensing arrangements, see 3 R. Callman, The Law of Unfair Competition, Trademarks and Monopolies § 78.2 (3d ed. 1969) (hereinafter Callman), the statute itself provides no comfort for Bankers' position. Secondly, though no court has explicitly passed on the question, decisions in other circuits have recognized that owners of collective marks may license non-members to use their marks. In Future Farmers of America v. Romack, 211 F.2d 925 (7th Cir. 1954), the court held that both the national organization and the Texas chapter had the right to authorize a non-member to manufacture seals, emblems, and badges bearing the nationally-approved symbol "FFA." Similarly, the Second Circuit has acknowledged the Boy Scouts' right to license a single company to manufacture its official knives. Adolph Kastor & Bros. v. FTC, 138 F.2d 824 (2d Cir. 1943). Obviously, neither the emblem manufacturer nor the cutlery producer was a member of Future Farmers or the Boy Scouts. Bankers has asserted no policy in favor of its proposed rule, and this court can perceive none. Hence, we hold that the owner of a collective service mark may license non-members to use the mark under its aegis and subject to proper control.
Bankers' second asserted error concerns the district court's interpretation of the several contracts entered into by the parties. As mentioned above, the 1964 settlement agreement states: "All prior agreements between the said parties . . . shall no longer be of force or effect, the said agreements are hereby cancelled and forever discharged, and the parties to said agreements are relieved of all responsibility thereunder." Despite Bankers' contention that its "perpetual" license stemming from the 1961 contract continued unabated, we believe the documented language demonstrates a definite, unequivocal desire to cancel the 1961 and 1963 contracts. Thus, our analysis begins with a construction of the October 30, 1964 settlement agreement and lease.
The settlement agreement sets out a number of reciprocal duties on the part of the respective parties. During the term of the lease the clubhouse and courses would be known as the "PGA National Golf Club." The PGA agreed to hold a number of official tournaments at the facility each year and to use its efforts to further development of the surrounding real estate. One crucial sentence states, "The terms of this agreement shall terminate at the expiration of said lease or any extension thereof." The lease, in turn, contains a provision limiting its term to ten years. Reading the two instruments in conjunction, rudimentary principles of contract law demand the conclusion that under the 1964 agreements Bankers had the right to use the PGA name for only ten years.
The 1964 agreement and lease were expressly modified by amendments dated January 24, 1973, following the notice of eviction. Bankers claims that the circumstances surrounding the drafting of the amendments demonstrate that it had the right to continue using the PGA's collective mark perpetually. The initial draft of the 1973 agreement, as drawn by counsel for the PGA, contained a paragraph stating that Bankers would no longer use the designation "PGA" in reference to its golf club. Upon...
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