American Auto. Ass'n (Inc.) v. AAA Ins. Agency, Inc.

• Decision Date: 23 August 1985
• Docket Number: Civ. No. A-84-CA-157.
• Citation: 618 F. Supp. 787
• Parties: AMERICAN AUTOMOBILE ASSOCIATION (INCORPORATED) v. AAA INSURANCE AGENCY, INC.
• Court: U.S. District Court — Western District of Texas

618 F. Supp. 787

AMERICAN AUTOMOBILE ASSOCIATION (INCORPORATED) v. AAA INSURANCE AGENCY, INC.

Civ. No. A-84-CA-157.

United States District Court, W.D. Texas, Austin Division.

August 23, 1985.

COPYRIGHT MATERIAL OMITTED

Richard S. Siluk, Baker & Botts, Houston, Tex., Larry F. York, Baker & Botts, Austin, Tex., for plaintiff.

James N. Rader, James M. Steed & Associates, Austin, Tex., for defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

NOWLIN, District Judge.

This is an action for service mark infringement and unfair competition. Plaintiff contends that Defendant's use of the designation "AAA" in its insurance business is likely to cause confusion and constitutes infringement of Plaintiff's federally registered service marks under Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1), and that such use violates Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), the Texas Deceptive Trade Practices-Consumer Protection Act, Tex.Bus. & Com.Code Ann. §§ 17.41-.63 (Vernon Supp. 1985), and the common law of unfair competition. Plaintiff seeks a permanent injunction and its costs of suit.

Defendant responds that its use of "AAA" is not likely to cause confusion. Defendant also contends that Plaintiff's use of "AAA" for insurance services in Texas is illegal, and that Plaintiff's Service Mark Registration No. 829,265 was fraudulently obtained, because Plaintiff is not licensed to engage in the insurance business in Texas. Finally, Defendant contends that Plaintiff's action is barred by laches and acquiescence.

A trial was held on May 16, 1985, and the parties presented testimony and introduced exhibits at that time. The parties also have stipulated to certain undisputed facts in a Joint Pretrial Order filed with the Court. Upon consideration of the stipulations and the evidence of record, and the applicable legal authorities, the Court finds that Defendant has infringed Plaintiff's federally registered service marks and has committed acts of unfair competition in violation of federal and state law, as more fully detailed in the following findings of fact and conclusions of law. Accordingly, Plaintiffs are entitled to injunctive relief and to their costs of suit.

FINDINGS OF FACT

1. The American Automobile Association (Incorporated) (hereinafter sometimes referred to as "AAA") is a Connecticut corporation having its principal place of business in Virginia. Plaintiff has been doing business under the name and mark "AAA" since at least as early as 1902.

2. Defendant, AAA Insurance Agency, Inc., is a Texas corporation having its principal place of business at 600 Ft. Hood Road, Killeen, Texas 76540. Defendant was incorporated in Texas in 1979 and is owned and operated by Delmer G. Tipps, who is the president of the corporation.

3. Plaintiff AAA is an organization that provides its members with a variety of services throughout the United States and Canada, including the State of Texas. Since at least as early as 1916, AAA has been providing its members with the service of placing insurance with underwriters. Plaintiff's related company, Texas Club Service Agency, Inc. ("TCSA"), and other affiliated agents are duly licensed to act as insurance agents in the State of Texas. TCSA is wholly owned by Automobile Club Service Agency, Inc., a corporation that is wholly owned by Plaintiff. The "AAA" service marks are used prominently in the sale and advertising of TCSA's insurance services in Texas.

4. AAA is a widely known organization that has been extensively advertised and promoted throughout the United States. AAA currently has more than 22 million members, and the "AAA" name has come to be relied upon by a significant segment of the public as indicating AAA and its services. As a result of its widespread public use and recognition, the "AAA" mark has become an asset of substantial value and good will as a symbol of Plaintiff and its services.

5. AAA is the owner of federal service mark registrations for the mark "AAA" for insurance services, including Registration Nos. 547,321 and 829,265, registered in the United States Patent and Trademark Office on August 28, 1951, and May 23, 1967, respectively. (P.Ex. 1 & 2.) These registrations afford constructive notice throughout the United States of Plaintiff's claim to ownership of the "AAA" mark for insurance services. 15 U.S.C. § 1072 (1982). Furthermore, these registrations have become incontestable under Section 15 of the Lanham Act, 15 U.S.C. § 1065, and under 15 U.S.C. § 1115(b) they constitute conclusive evidence of AAA's exclusive right to use the "AAA" marks in connection with insurance services.

6. Defendant also is engaged in the business of placing insurance with underwriters. Without authorization from AAA, and over AAA's objection, Defendant and its predecessors have been doing business under the name "AAA Insurance Agency" since 1970. Defendant was incorporated as "AAA Insurance Agency, Inc." in 1979.

7. Defendant's insurance business is conducted at a single location in Killeen, Texas. Although Defendant has moved the location of its office in the past, Defendant has not expanded its business to more than one office. Defendant's total advertising expenditures from 1970 through 1983 were approximately $10,000, or about $750 per year.

8. Upon learning of Defendant's adoption and use of the "AAA" name in 1970, Plaintiff notified Defendant in writing that its use of "AAA" was an infringement of Plaintiff's federally registered marks. Defendant nevertheless continued to use the name "AAA." Upon learning of Defendant's continued use of that name in late 1983, Plaintiff again requested that Defendant change its name. Defendant refused, and this action followed.

9. Defendant's unauthorized use of the "AAA" designation in connection with its insurance business is likely to cause confusion as to Defendant's connection or affiliation with AAA, or its approval or endorsement by AAA. Mr. Tipps testified that the Defendant receives about two calls a month intended for Plaintiff AAA, even though Plaintiff currently has no office in Killeen, Texas. These misdirected calls show that a significant amount of actual confusion has occurred, and they demonstrate that people seeing or hearing Defendant's name are likely to associate Defendant with Plaintiff.

10. Any finding of fact which is deemed to constitute a conclusion of law is hereby adopted as such.

CONCLUSIONS OF LAW

1. This action arises under the Lanham Act, 15 U.S.C. § 1051 et seq. (1982), and the laws of the State of Texas. The Court has personal jurisdiction over the parties, and the Court has jurisdiction over the subject matter of this action pursuant to 15 U.S.C. § 1121, 28 U.S.C. § 1338, and the doctrine of pendent jurisdiction.

2. Plaintiff has standing under Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1), to prevent the infringement of its registered service marks. Plaintiff also has standing under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), to prohibit Defendant's use of false designations of origin and false descriptions or representations.

I. SERVICE MARK INFRINGEMENT.

3. The parties have stipulated that Plaintiff is the owner of incontestable federal service mark registrations for the mark "AAA." Under Section 33(b) of the Lanham Act, 15 U.S.C. § 1115(b), these registrations constitute conclusive evidence of Plaintiff's exclusive right to use the "AAA" mark in commerce for the services of placing insurance with underwriters, subject to the seven defenses enumerated in that section. See, e.g., Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1184-85 (5th Cir.1980), cert. denied, 450 U.S. 981, 101 S.Ct. 1516, 67 L.Ed.2d 816 (1981). Since Plaintiff's exclusive right to use the mark "AAA" in connection with such services is conclusively established as a matter of law, it remains only to determine whether Defendant has infringed Plaintiff's exclusive rights.

4. Section 32(1)(a) of the Lanham Act, 15 U.S.C. § 1114(1)(a), provides that a person shall be liable for infringement of a registered mark whenever, without the consent of the registrant, he uses in commerce "any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive." The test for infringement therefore is the likelihood of confusion. Sun-Fun Products, Inc. v. Suntan Research & Development Inc., 656 F.2d 186, 189 (5th Cir.1981). Actual confusion is not necessary. Sun-Fun Products, Id. at 191. Moreover, the likelihood of confusion is not limited to confusion as to the actual source of a product or service. The use of a name or mark that suggests an affiliation or connection with a trademark owner, or that causes a likelihood of confusion as to sponsorship or endorsement, also constitutes infringement. Professional Golfers Association of America v. Bankers Life & Casualty Co., 514 F.2d 665, 669-70 (5th Cir.1975).

5. In determining whether a likelihood of confusion exists, the courts consider a variety of factors, including the following:

(1) The strength of the plaintiff's mark;

(2) The degree of similarity between the plaintiff's and the defendant's marks;

(3) The similarity of the plaintiff's and the defendant's goods or services;

(4) The kinds of customers and retail outlets of the plaintiff and defendant;

(5) The similarities in advertising (6) The defendant's knowledge and intent in adopting its mark; and

(7) Actual confusion.

E.g., Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1185 (5th Cir.1980), cert. denied, 450 U.S. 981, 101 S.Ct. 1516, 67 L.Ed.2d 816 (1981). It is sufficient that any of the factors considered demonstrate a likelihood of confusion; it is not necessary that a majority of the factors be present in any given case. See Armco, Inc. v. Armco Burglar Alarm Co., 693 F.2d...