Money Store v. Harriscorp Finance, Inc.

• Decision Date: 20 September 1982
• Docket Number: Nos. 81-2937,81-3002,s. 81-2937
• Citation: 689 F.2d 666,216 USPQ 11
• Parties: The MONEY STORE, a New Jersey corporation, Plaintiff-Appellant-Cross-Appellee, v. HARRISCORP FINANCE, INC., an Illinois corporation, Defendant-Appellee-Cross- Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 666

689 F.2d 666

216 U.S.P.Q. 11

The MONEY STORE, a New Jersey corporation Plaintiff-Appellant-Cross-Appellee, v. HARRISCORP FINANCE, INC., an Illinois corporation Defendant-Appellee-Cross- Appellant.

Nos. 81-2937, 81-3002.

United States Court of Appeals, Seventh Circuit.

Argued May 24, 1982.

Decided Sept. 20, 1982.

Daniel W. Vittum, Jr., Kirkland & Ellis, Chicago, Ill., for plaintiff-appellant-cross-appellee.

Dean A. Olds, Hume, Clement, Brinks, William & Olds, Ltd., Chicago, Ill., for defendant-appellee-cross-appellant.

Before CUMMINGS, Chief Judge, PELL, Circuit Judge, and FOREMAN, Chief District Judge. ^*

PELL, Circuit Judge.

The Money Store, the plaintiff-appellant in this action, appeals from the district judge's cancellation of its federally registered service mark, ¹ "THE MONEY STORE," and the issuance of a permanent injunction against utilization of the mark by the plaintiff in the defendant's market area. The appellant also challenges the district court's award of attorneys' fees to the defendant pursuant to 15 U.S.C. § 1120 (1976).

On cross-appeal, the defendant, Harriscorp Finance, Inc. (Harriscorp), challenges the district court's holding that "THE MONEY STORE" is suggestive rather than merely descriptive, that the plaintiff's action is not barred by laches and/or estoppel, and that the assignment of rights in the mark from United Bank of America (United Bank or United) to Harriscorp was ineffective because no goodwill passed pursuant to the assignment. The cross-appellant also challenges the district judge's refusal to grant the full amount of claimed attorneys' fees.

The principal issues on this appeal are: (1) whether the district judge correctly concluded that the plaintiff-appellant acted fraudulently in asserting that to the best of its knowledge and belief, no other person had the right to use the mark, "THE MONEY STORE," in commerce at the time the plaintiff applied for federal registration; (2) whether the mark is suggestive or merely descriptive; (3) whether the present action is barred by laches or estoppel; and (4) whether Harriscorp is a good faith junior user of the mark pursuant to the assignment from United.

I. FACTS

A. The Plaintiff and Its Adoption of the Service Mark

The Money Store, plaintiff-appellant in this action, is a New Jersey corporation which offers a range of lending and financial services. The corporation was originally organized as Modern Acceptance and subsequently changed its name to The Money Store. ² In 1972, Modern Acceptance's advertising manager wanted to create a unitary advertising image for Modern Acceptance and its three subsidiaries which then operated under different names. "THE MONEY STORE" was chosen as the company's service mark, and the plaintiff began using that mark on January 2, 1972, at its New Jersey and Pennsylvania offices and in newspaper and radio advertisements.

Costa, the advertising manager, was authorized to determine whether the mark could be registered nationally. He consulted Robert Paulson, a New York attorney specializing in trademark law. Paulson obtained a trademark search. This search indicated no federal registrations or other interstate uses of "THE MONEY STORE" in connection with money-lending services. The search did disclose a pending application for federal registration of the mark for advertising and public relations services filed by Henry J. Kaufman & Associates (Kaufman). The search also disclosed the following state registrations: "THE MONEY STORE" for financial and insurance services, registered since 1959 in Utah by Peoples Finance & Thrift Co. of Salt Lake City, Utah (Peoples); "THE MONEY STORE SERVICE" for insurance and financial services, registered since 1966 in Virginia by Diversified Mountaineer Corporation (Diversified); "THE MONEY STORE" for advertising services, registered in West Virginia since 1965 by Diversified; and "THE MONEY HOUSE" for services Paulson concluded that "THE MONEY STORE" was eligible for federal registration by the plaintiff because of the differences between plaintiff's services and those offered by Kaufman and because of the intrastate character of those "MONEY STORE" registrations pertaining to financial services. Paulson so advised the plaintiff, noting that the holders of state registrations of the mark might have superior rights over the plaintiff in their local areas.

regarding money and loans, registered in Minnesota since 1963 by Wilson Loan Plan, Inc. ³

Before Costa actually filed the application for federal registration, he received a telephone call from a Kaufman representative who offered him an advertising package for banking institutions using "THE MONEY STORE" mark. Kaufman said that no money lending had yet been conducted in association with his project but that he anticipated a bank in Indiana would be using the package shortly. He also mentioned advertisements utilizing the mark in Bank Ad News and Bank Ad Age. The latter advertisement had run for the first time in 1971.

Costa told Paulson of this conversation. Paulson said that, because Modern Acceptance had commenced interstate use of the mark for money lending services prior to Kaufman's use for such services, it should pursue the application for federal registration. Paulson noted that the scope of rights Modern Acceptance would obtain in the mark might depend in part on whether Kaufman had amended its application to cover financial services.

An officer of Modern Acceptance subsequently applied for federal registration. The application which he executed included the statutory oath that:

(N)o other person, firm, corporation, or association, to the best of his knowledge or belief, has the right to use such mark in commerce either in the identical form thereof or in such near resemblance there as to be likely, when applied to the goods of such other person, to cause confusion, or to cause mistake, or to deceive.

15 U.S.C. § 1051 (1976). The application was filed on February 4, 1972. The United States Patent and Trademark Office (Patent Office) found no conflict with the Kaufman mark which had in the interim become federally registered. The plaintiff's application was published for opposition; no one responded. Registration for "THE MONEY STORE" issued to Modern Acceptance on April 2, 1974.

The plaintiff's business increased dramatically after adoption of the mark, both in terms of the amount of money it lent and the geographic area in which it operated under "THE MONEY STORE" mark.

B. The Defendant and Its Adoption of the Service Mark

Defendant-appellee Harriscorp is a Delaware corporation. It is a wholly owned subsidiary of Harris Bank corporation and an affiliate of Harris Bank. In 1972, Theodore Roberts, the principal Harris executive responsible for the Harriscorp Finance retail lending project, selected "THE MONEY STORE" as his preferred name for money-lending service facilities the Bank planned to open in the metropolitan Chicago area. A trademark search conducted in mid-1973 disclosed the state registrations that had also been revealed by Modern Acceptance's search. Kaufman's registration and Modern Acceptance's pending application were also disclosed in the search. Because Harris found no evidence of any use of "THE MONEY STORE" in the Chicago area, it tentatively decided to use the mark.

In September 1972, Roberts learned that United Bank in Chicago was using "THE MONEY STORE" mark. United had first used the mark in August, 1972, eight months after the plaintiff's first use. In January, 1974, United assigned its rights in the mark to Harris. Although the evidence Having obtained the assignment from United, Harris made a final decision to use the mark and in December, 1974, Harriscorp opened three lending offices in the Chicago area utilizing the mark "THE MONEY STORE."

indicated that United had decided to discontinue use of the mark, it similarly indicated that United was still using "THE MONEY STORE" at the time of the assignment. In fact, at the time of the assignment, United was featuring the marks on three billboards located on major Chicago streets. The assignment recited that "for good and valuable consideration, the receipt of which is hereby acknowledged ... (the mark is assigned) together with the goodwill of the business symbolized by the mark." Harris did not acquire customer lists, real estate, receivables, accounts or any other tangible assets in return for the one dollar consideration it actually paid to United.

In January, 1975, Modern Acceptance sent Harriscorp a letter requesting it to cease and desist from using the mark. After a five-month exchange of letters between the parties, a meeting was held in New York. This meeting did not resolve the dispute. For the next twenty-two months, Modern Acceptance did not communicate with Harriscorp regarding use of the mark. During that period, the defendant expended a considerable sum to advertise the mark. Harriscorp made numerous business decisions, allegedly based on its conclusion that its use of "THE MONEY STORE" would not be challenged. In April, 1977, the plaintiff renewed its infringement claim and the instant suit was filed in August of that year.

II. THE OATH

The judge below enjoined plaintiff's use of the mark in the Chicago area, cancelled the plaintiff's registration pursuant to 15 U.S.C. § 1064 (1976), and awarded damages pursuant to 15 U.S.C. § 1120 (1976), because he believed that the plaintiff had "made a false and fraudulent oath that no person, to the best of its knowledge and belief, had the right to use the mark in commerce." The district judge so held because he concluded that Peoples and Kaufman were prior users of the mark, "THE MONEY STORE," that the plaintiff was aware of this usage at the time its representative signed the oath, that the plaintiff had no reason to believe that these prior users were not using the mark in commerce, and that Modern Acceptance "intentionally failed to make...