Surgicenters of America, Inc. v. Medical Dental Surgeries, Co.

• Decision Date: 16 May 1979
• Docket Number: No. 77-2490,77-2490
• Parties: SURGICENTERS OF AMERICA, INC., an Arizona Corporation, Plaintiff-Appellant, v. MEDICAL DENTAL SURGERIES, CO., an Oregon Corporation dba Medical Dental Surgicenters, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1011

601 F.2d 1011

202 U.S.P.Q. 401

SURGICENTERS OF AMERICA, INC., an Arizona Corporation, Plaintiff-Appellant, v. MEDICAL DENTAL SURGERIES, CO., an Oregon Corporation dba

Medical Dental Surgicenters, Defendant-Appellee.

No. 77-2490.

United States Court of Appeals, Ninth Circuit.

May 16, 1979.

Rehearing Denied Aug. 22, 1979.

John Moran, Phoenix, Ariz., for plaintiff-appellant.

Paul Gerhardt, Portland, Or., for defendant-appellee.

Appeal from the United States District Court for the District of Oregon.

Before GOODWIN and ANDERSON, Circuit Judges, and JAMESON, ^* District Judge.

JAMESON, District Judge:

Appellant, Surgicenters of America, Inc. (Surgicenters), brought this action against appellee, Medical Dental Surgeries Co., dba Medical Dental Surgicenters (Medical), under the Trademark Act of 1946 as amended, 15 U.S.C. § 1051 Et seq., for infringement of its registered service mark, "Surgicenter." The parties filed cross-motions for summary judgment, based upon agreed facts, 45 exhibits, answers to interrogatories, and two depositions. The district court denied appellant's motion and granted appellee's motion, finding "Surgicenter" was not a lawfully registered service mark. We affirm.

Factual Background

The basic facts are undisputed, both parties accepting a summary contained in the opinion of the district court. In March, 1970, a month after operating a "facility for one-day surgical care" in Phoenix, Arizona, Surgicenter, Inc., applied for registration of the service mark "Surgicenter" for "services rendered in an in and out surgical facility." On August 31, 1971 the mark "SURGICENTER" was registered to Surgicenter, Inc. "For: PROVIDING FACILITIES FOR DOCTORS TO PERFORM OPERATIONS ON PATIENTS". ¹ On October 6, 1971, the registration was assigned to appellant.

Since the registration of the service mark, Surgicenters has licensed use of the mark in other states. ² The doctors who formed the original corporation have worked since 1968 to popularize their concept of economical one-day surgical care to insure its acceptance by major insurance carriers.

In 1962 Medical, an Oregon corporation, filed the assumed business name "Medical Dental Hospital Co." and did business under that name until December, 1972, when the name was changed to "Medical Dental Surgeries Co." In January, 1975, Medical changed its name to "Medical Dental Surgicenters" and filed this business name with the Oregon Corporation Commission. Medical provides facilities for out-patient surgical procedures.

On January 28, 1975 Surgicenters notified Medical that Medical's use of the name "Surgicenter" infringed Surgicenters' mark. On June 13, 1975, Surgicenters filed this action to enjoin Medical from further use of the term, to require an accounting and payment of profits for its use since notification, and for damages for infringement

Opinion of District Court

The district court, in its opinion granting appellee's motion for summary judgment, held that the mark "Surgicenter" was not a lawfully registered service mark because it was "generic" and thus not registrable. The court concluded further that if the term were considered "descriptive" rather than "generic", it had not "developed a secondary meaning in this area in which Medical operates". In a judgment based upon its opinion, the court denied the injunction and demand for an accounting and damages.

In determining that the term "Surgicenter" is generic the court concluded that "Surgicenter" is a "coined word of the combination and abbreviation type which clearly connotes a center for surgery". Since the term "surgery center" obviously "would not be capable of registration because it is quite clearly generic", the term "Surgicenter" was likewise found to be generic. ³

The district court held further: "Although there are undoubtedly those who connect 'Surgicenter' with the Arizona corporation, the consuming public generally understands the word to mean exactly what it says. This is amply demonstrated in the exhibits." Among the exhibits upon which the court relied was a proposed rule of the United States Department of Health, Education and Welfare appearing in 38 Fed.Reg. 313-81 (1973) defining "Health Care Facilities". The definition included "facilities providing surgical treatment to patients not requiring hospitalization (surgicenters), which are not part of a hospital but which are organized and operated to provide medical care to out-patients". ⁴ Other exhibits included magazine and medical journal articles, letters and a television transcript which used the term "surgicenter". ⁵

Contentions on Appeal

Appellant contends that it "coined an arbitrary and fanciful word through the combination of two common or ordinary words" and that the trademark Surgicenter is neither generic nor descriptive. It argues that the district court erred in failing to address properly the issue of genericness, used an analysis of descriptiveness to conclude that the word is generic, used "a scalpel technique" as a method of analysis, misapplied the burden of proof, and its opinion is contrary to case law with respect to combination of an abbreviated word.

Summary Judgment

Summary judgment is appropriate where no material issues of fact exist and where a party is entitled to judgment as a matter of law. Rule 56(c), F.R.Civ.P. Here the parties made cross-motions for summary judgment following extensive discovery. As appellant states in its reply brief The case was submitted on stipulated facts and the parties agreed that there were no genuine issues of material fact. Where the matter is submitted to the court based upon affidavits, exhibits and certain stipulated facts, and where no testimony was taken, the determination by the court is a question of law, readily reviewable by the appellate court. . . . It is this legal proposition (the conclusion that two abbreviated, ordinary words into a single word created a generic term) which appellant requests this court to review along with other issues of law raised in appellant's opening brief.

In other words, this was a trial on a stipulated record and was so intended by the parties. ⁶ There are no genuine issues of material facts. It is a proper case for disposition through summary judgment. ⁷

Validity of the Service Mark

(a) Effect of Registration

15 U.S.C. § 1057(b) provides that:

A certificate of registration of a mark . . . shall be prima facie evidence of the validity of the registration, registrant's ownership of the mark, and of registrant's exclusive right to use the mark in commerce in connection with the goods or services specified in the certificate, subject to any conditions and limitations stated therein.

The district court properly recognized that a "properly registered service mark is presumed to be valid". ⁸

(b) Categories of Marks

The cases identify four categories of terms with respect to trademark protection: (1) generic, (2) descriptive, (3) suggestive, and (4) arbitrary or fanciful. As the district court correctly noted, the lines of demarcation are not always clear, and the "entire area of trade or service marks . . . is fraught with difficulties and ambiguities". ⁹

The basic principles of trademark law, including a description of the four categories of mark, are set forth in Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9-11 (2 Cir. 1976). The different categories may be summarized as follows:

A "generic" term is one that refers, or has come to be understood as referring, to the genus of which the particular product or service is a species. It cannot become a trademark under any circumstances. Abercrombie & Fitch, supra, 537 F.2d at 9-10.

A merely "descriptive" term specifically describes a characteristic or ingredient of an article or service. It can, by acquiring a secondary meaning, i. e., becoming "distinctive of the applicant's goods", become a valid trademark. Id. at 10.

A "suggestive" term suggests rather than describes an ingredient, quality, or characteristic of the goods and requires imagination, thought, and perception to determine the nature of the goods. A suggestive term is entitled to registration without proof of secondary meaning. Id. at 10-11.

An "arbitrary or fanciful" term is usually applied to words invented solely for their use as trademarks and enjoys all the rights accorded to suggestive terms without the need of debating whether the term is "merely descriptive" and with ease of establishing infringement. Id. at 11. ¹⁰

(c) Determination of Genericness

In concluding that the term "Surgicenter" is generic the district court found "most pertinent" the case of Cummins Engine Company, Inc. v. Continental Motors Corp., 359 F.2d 892, 894, 53 CCPA 1167, 1169 (1966), where the court affirmed a decision of the Trademark Trial and Appeal Board canceling the registration of the mark "Turbodiesel". In that case the court said in part:

We rely primarily upon the 1935 Funk & Wagnalls New Standard Dictionary definitions of "turbine," its combining form "turbo," and of "diesel," and a March 1953 "Flight" magazine article, all of which are reproduced in the board's decision as reported, 132 USPQ at 557. In our view, the definitions alone indicate that "turbodiesel" is a word which by its nature will convey a specific and correct meaning which is such that it cannot become a trademark as a result even of origination and first use. . . . The term "turbodiesel," as we see it, is a natural composite form for a class of engines into which appellant's engines fall.

The district court here similarly concluded from dictionary definitions that appellant has "taken two generic terms and combined them into a term which is still generic". The court said:

"Surgical" is an adjective defined as "relating to, or concerned with surgeons or surgery." Webster's Third New International Dictionary (1966). "Center" is a noun defined as "a place, area, person, group, or concentration marked significantly or...