Supreme Assembly, Order of Rainbow for Girls v. J. H. Ray Jewelry Co.

• Decision Date: 28 May 1982
• Docket Number: No. 81-1281,81-1281
• Citation: 676 F.2d 1079
• Parties: The SUPREME ASSEMBLY, ORDER OF RAINBOW FOR GIRLS, and Stange Company, Inc., Plaintiffs-Appellants, v. J. H. RAY JEWELRY COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1079

676 F.2d 1079

217 U.S.P.Q. 757

The SUPREME ASSEMBLY, ORDER OF RAINBOW FOR GIRLS, and Stange Company, Inc., Plaintiffs-Appellants, v. J. H. RAY JEWELRY COMPANY, Defendant-Appellee.

No. 81-1281.

United States Court of Appeals Fifth Circuit.

May 28, 1982.

Thomas L. Cantrell, Dallas, Tex., John D. Pope, III, St. Louis, Mo., for plaintiffs-appellants.

Weinberg, Sandoloski & McManus, Sandy M. Sandoloski, Dallas, Tex., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before THORNBERRY, REAVLEY and RANDALL, Circuit Judges.

RANDALL, Circuit Judge:

This is an appeal of a judgment in favor of J. H. Ray Jewelry Company in an action brought by The Supreme Assembly, Order of Rainbow for Girls, and Stange Company, Inc., alleging trademark infringement, false designation of origin and unfair competition in Ray's sale of jewelry bearing the registered collective mark of the Rainbow Order, which jewelry was not manufactured by Stange, the "official jeweler" of the Rainbow Order. The district court found no "likelihood of confusion," within the meaning of the relevant statutes, from Ray's sale of the non-Stange Rainbow jewelry. Having determined that this finding was not clearly erroneous, we affirm the district court's judgment.

I. Statement of Facts.

The Supreme Assembly, Order of Rainbow for Girls (Rainbow) is a fraternal organization incorporated in Oklahoma, having as members girls between the ages of 12 and 20 whose families have Masonic connections. It is divided organizationally into several Grand Assemblies, one of which is the Grand Assembly of Texas. In 1930, Rainbow adopted an emblem (the Rainbow mark) consisting of a representation of clasping hands, on top of which sits a triangle enclosing the letter "R". Over the hands and the triangle is a rainbow containing the letters "B", "F", "C" and "L". This emblem was registered by Rainbow in 1962 with the United States Patent Office as a "collective membership mark," ¹ No. 736,173.

Stange Company, Inc. (Stange) is a Missouri corporation which, according to Rainbow, has been Rainbow's "official jeweler" since 1930, a relationship confirmed in a 1973 agreement. Under the agreement, Stange was licensed to manufacture jewelry bearing the Rainbow mark described above (Rainbow jewelry) and Rainbow agreed to purchase its jewelry requirements from Stange. ² In exchange, Rainbow is given price discounts (also referred to at trial as royalties) on merchandise Stange sells to Rainbow. Stange also guarantees, under the agreement, the quality of material and workmanship of the merchandise it sells Rainbow. Stange manufactured jewelry is identified by Stange's own trademark, the letter "S".

Rainbow jewelry includes a wide array of items, primarily pins, charms, medals and rings, bearing the Rainbow mark, which indicate membership or special status within the Rainbow Order. It is distributed in several ways. Rainbow purchases some Rainbow jewelry from Stange for its own distribution and sale. Rainbow also markets Rainbow jewelry at the annual meetings of its General Assemblies. In addition to selling Rainbow jewelry to and through the Rainbow organization, Stange markets most of its Rainbow jewelry, with the exception of those items which Rainbow requires to be earned, directly to or for members through direct mail sales and through retail jewelers. In regard to the approximately two hundred retail jewelers who carry Rainbow jewelry, no evidence was submitted as to how many sell Stange manufactured Rainbow jewelry and how many sell Rainbow jewelry all or some of which is obtained elsewhere, although Ray did submit testimony that it receives at least thirty to thirty-five catalogs a year offering Rainbow jewelry along with the jewelry of other fraternal associations.

J. H. Ray Jewelry Co. (Ray) is a sole proprietorship doing business in Dallas, Texas. From 1952 to 1977, Ray was authorized to display and to sell Rainbow jewelry at the annual meetings of the Grand Assembly of Texas. In addition, Ray sold Rainbow jewelry from its retail jewelry store in Dallas. In 1977, Ray was informed by the Grand Assembly of Texas that it would no longer be permitted to sell jewelry at the annual meetings. While discontinuing its sales at the annual meetings, Ray continued to sell Rainbow jewelry at its retail store. Ray did not manufacture Rainbow jewelry, but instead purchased it from Stange and, "for the past 15 to 18 years," from manufacturers other than Stange. Ray discontinued its purchases of Stange manufactured jewelry in 1977, although it still had a substantial inventory of that jewelry. In 1980, Stange requested that Ray discontinue selling items bearing the Rainbow mark which were not secured from Stange. Ray refused to honor that request and Stange and Rainbow brought this action against Ray.

II. Proceedings Below.

Stange and Rainbow alleged in their complaint that, despite their attempts to secure discontinuance of Ray's use of the Rainbow mark, Ray sold items bearing the mark, thus creating confusion and mistake, and the likelihood of confusion and mistake, among purchasers as to the source of origin or responsibility for Ray's goods and thus causing Ray's goods to be passed off as a product from Stange or a product sponsored by Rainbow. In this way they contended that Ray had competed unfairly with them and infringed Rainbow's trademark rights. Stange and Rainbow sought injunctive relief, actual and punitive damages and attorneys' fees. Jurisdiction was predicated on 15 U.S.C. § 1121 and 28 U.S.C. § 1338, as well as 28 U.S.C. § 1332. The district court, in a bench trial, entered judgment in favor of Ray.

III. Trademark Infringement.

This case involves a simple failure of proof. Lawsuits for infringement of a registered trademark are governed by Lanham Act § 32(1), 15 U.S.C. § 1114(1). Exxon Corp. v. Texas Motor Exchange of Houston, Inc., 628 F.2d 500, 504 (5th Cir. 1980). Section 1114(1) provides, in pertinent part:

Any person who shall, without the consent of the registrant-

(a) use 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 ; ...

....

shall be liable in a civil action by the registrant for the remedies hereinafter provided.

The standard established by the provision emphasized above is referred to as "likelihood of confusion" and is the key element in an action for trademark infringement. "When there is no likelihood of confusion, there can be no trademark infringement." Sun Banks of Florida, Inc. v. Sun Federal Savings & Loan Association, 651 F.2d 311, 319 (5th Cir. 1981). As stated in Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 388 (5th Cir. 1977):

Trademark infringement occurs only when the use sought to be enjoined is likely to confuse purchasers with respect to such things as the product's source, its endorsement by the plaintiff, or its connection with the plaintiff. ³

The district court found that Stange and Rainbow had failed to adduce evidence justifying an inference of likelihood of confusion as to origin, approval, endorsement or other association. This court has stated numerous times that the presence of a likelihood of confusion is a question of fact and that a district court's finding on this issue can, therefore, be set aside only if clearly erroneous. ⁴ See, e.g., Chevron Chemical Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d 695, 703 (5th Cir. 1981); Exxon Corp. v. Texas Motor Exchange of Houston, Inc., 628 F.2d 500, 504 (5th Cir. 1980); Armstrong Cork Co. v. World Carpets, Inc., 597 F.2d 496, 501 (5th Cir.), cert. denied, 444 U.S. 932, 100 S.Ct. 277, 62 L.Ed.2d 190 (1979). See also Fed.R.Civ.P. 52(a). "A finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948). In this case, we are not left with such a conviction.

In this case, Appellants simply failed to prove that there was any likelihood of confusion. The district court noted two facts which support the finding that there was no likelihood of confusion from Ray's sale of non-Stange Rainbow jewelry and which distinguish this case from Boston Professional Hockey Association, Inc. v. Dallas Cap & Emblem Manufacturing, Inc., 510 F.2d 1004 (5th Cir.), cert. denied, 423 U.S. 868, 96 S.Ct. 132, 46 L.Ed.2d 98 (1975) (Boston Hockey ). First, the district court found, on the basis of the evidence presented, that there is no historical custom or practice-either as to fraternal jewelry or Rainbow jewelry-that would provide a reasonable basis for buyers of Rainbow jewelry to assume that such jewelry can only be manufactured with Rainbow's sponsorship or approval. The district court noted evidence that most fraternal associations exercise little control over the manufacture of jewelry bearing their fraternal emblems and that until recently Rainbow's policy toward unauthorized Rainbow jewelry was similar to that of most fraternal associations. Second, the district court found that Stange's status as Rainbow's "official jeweler" is well advertised, and that this advertising combined with the use of Stange's own distinctive trademark, the letter "S", on Stange manufactured Rainbow jewelry, created the inescapable inference for purchasers that all other Rainbow jewelry is not endorsed, sponsored, approved or otherwise associated with Rainbow. ⁵

Appellants make several arguments in support of their position that the district court erred in finding no likelihood of confusion. First, they contend that the evidence...