Gaston's White River Resort v. Rush, Civ. No. 87-3060.

• Decision Date: 20 June 1988
• Docket Number: Civ. No. 87-3060.
• Citation: 701 F. Supp. 1431
• Parties: GASTON'S WHITE RIVER RESORT, a corporation, Plaintiff, v. Ted and Dana RUSH, d/b/a Sportsman's on the White River, Defendants.
• Court: U.S. District Court — Western District of Arkansas

701 F. Supp. 1431

GASTON'S WHITE RIVER RESORT, a corporation, Plaintiff, v. Ted and Dana RUSH, d/b/a Sportsman's on the White River, Defendants.

Civ. No. 87-3060.

United States District Court, W.D. Arkansas, Harrison Division.

June 20, 1988.

Van A. Gearhart, Poynter, Huckaba & Gearhart, Mountain Home, Ark., John C. Brezina, Brezina & Buckingham, Chicago, Ill., for plaintiff.

Frank H. Bailey, Mountain Home, Ark., for defendants.

MEMORANDUM OPINION

H. FRANKLIN WATERS, Chief Judge.

This case is before the court on stipulations of the parties. After cross motions for summary judgment had been filed, the parties, at the request of the court, stipulated that the court may decide the issue of liability on the record before it, with the exceptions made by defendants' objection to the affidavits of James Gaston, Shelby Woods, Arthur Law, Roger Faris, and John C. Brezina. After reviewing the pleadings, the briefs in support thereof, the depositions and the exhibits, the court finds that the plaintiff is entitled to relief from the unfair competition caused by defendants' use of a confusingly similar mark.

Gaston's, a fisherman's resort on the White River, brought this action on August 31, 1987, against the defendants, Ted and Dana Rush d/b/a Sportsman's on the White River, alleging unfair competition, trademark infringement, and trademark dilution. The plaintiff specifically alleges six counts citing: 1) 15 U.S.C. § 1125(a) for federal unfair competition and 2) 15 U.S.C. 1114 for federal trademark infringement; 3) common law trademark infringement; 4) common law unfair competition; 5) Ark. Code Ann. § 4-71-112 (1987) for state trademark infringement; 6) and violation of Ark.Code Ann. § 4-71-113 (1987) for state trademark dilution. Jurisdiction is vested in the court under the Lanham Act, 15 U.S.C. §§ 1116, 1125(a), 1114, and 28 U.S.C. 1338(b).

I. BACKGROUND

Gaston's present owners took over the business in 1959 and incorporated under Arkansas law in 1968. The business used a rainbow trout in its advertisements long before 1974, when the advertising firm, Smith, Jennings and Cain, incorporated the trout into a design mark which became at that time and has consistently continued to be the logo used by Gaston's on its promotional material including advertising and product identification. Gaston's applied for trademark registration for the logo in June, 1986, which they received on November 24, 1987, Reg. No. 1,466,622, and, subsequently, on February 5, 1988, registered the trademark under Arkansas law. Trademark registration for the name, Gaston's was granted separately under Trademark Registration No. 1,463,095.

The defendants, Ted and Dana Rush, have operated a similar business within approximately five miles of Gaston's since 1976 when they purchased Sportsman's, a resort managed by various owners since 1958. They used a German brown trout in advertisements designed by Jan Gosnell until 1983 when Roger Faris, a sign painter, developed a logo which incorporated the trout into the design which is the subject of this litigation.

The evidence indicates that the Rushes began to look for a design mark in 1982. They spoke first with a commercial artist from Kansas City, Arthur Law, who testified that, after submitting various designs, he formed the impression that they wanted him to simulate Gaston's logo and that he was indirectly being asked to do something unethical. He testified that the finished product was, in his opinion, a simulation of Gaston's logo.

In February of 1983, the Rushes employed a local sign painter, Roger Faris, who testified that he made approximately a half dozen rough pencil sketches before presenting the accepted logo, the present one with the fish pointing leftward. He testified that, when asked by Dana Rush to change the direction of the fish, he protested to her that the fish should face leftward or the design would be too close to Gaston's. Faris further testified that, thinking the logo too similar to Gaston's, he showed the left-forward-fish pencil sketch to James Gaston who "shrugged his shoulders", and that, after painting the logo on a billboard, he did not paint the logo for Sportsman's again. The Rushes acknowledged that Roger Faris designed the logo which was subsequently duplicated on ashtrays, coffee mugs, matchbooks, shirts, sweatshirts, cups, bank checks, business cards, stationery, road signs, vans, and advertising literature which first appeared as color brochures in January of 1987. Both Ted and Dana Rush testified they had no recollection of conversations with either Law or Faris concerning similarity of the two logos.

Gaston testified that he first saw the Sportsman's logo on a road sign in Bull Shoals either late in 1983 or early 1984 and that he phoned the law firm of Young, Patton and Folsom in Texarkana to look into the matter. After approximately a year and a half when he decided the law firm was not doing anything, he contacted a local attorney, Van Gearhart. Soon thereafter, he employed the present firm, a specialist in trademark litigation, and a cease-and-desist letter was sent to the defendants in May, 1987. The present suit was filed in August, 1987.

Plaintiff seeks a preliminary and permanent injunction against defendants' further use of the logo or any similar design which might be adopted in the future and against any actions which might indicate to the general public Gaston's support or affiliation with the defendant; written evidence of compliance to be filed within 30 days after injunctive relief; surrender to the court of all matter using the logo; an accounting since notice of infringement; and a judgment reflecting the profits realized by defendant and damages suffered by plaintiff due to the use of the offending logo. Defendants assert the affirmative defenses of waiver, estoppel and laches.

II. THE ISSUES

The court now moves to the question of whether the plaintiff is entitled to relief. Plaintiff has alleged that defendants' use of the mark constitutes unfair competition under federal statute and state common law, trademark infringement under common law, state and federal law and trademark dilution under state law.

A. Unfair Competition and Trademark Infringement. Plaintiff bases its claim for unfair competition in the federal statute proscribing false designation of origin:

Any person who shall affix, apply, or annex, or use in connection with any goods or services, or any container or containers for goods, a false designation of origin, or any false description or representation including words or other symbols tending falsely to describe or represent the same and shall cause such goods or services to enter into commerce, and any person who shall with knowledge of the falsity of such designation of origin or description or representation cause or procure the same to be transported or used in commerce or deliver the same to any carrier to be transported or used, shall be liable to a civil action by any person doing business in the locality falsely indicated as that of origin or in the region in which said locality is situated, or by any person who believes that he is or is likely to be damaged by the use of any such false description or representation.

15 U.S.C. 1125(a).

Plaintiff contends that the defendants, by use of a similarly confusing design mark, falsely designated the origin of their services. It is not when imitation occurs, but it is only when imitation is a misappropriation of another's assets, either tangible or intangible, that the tort of unfair competition arises. Plaintiff and defendants supply similar services to fishermen including resort hotel and restaurant accommodations, boat rental and dock facilities as well as guide services. The businesses are located within a five mile radius and directly compete with each other. Plaintiff alleges that defendants' use of a confusingly similar logo constitutes a "misappropriation of the distinguishing and identifying features" of the logo which was created through considerable expense and effort. Plaintiff further contends that defendants by using the logo falsely represent the origin of their services, and appropriate the reputation and good will of the plaintiff to themselves thereby harming the plaintiff and deceiving the public.

The purpose of the federal statute is to protect both consumers and competitors against all forms of misdescription or misrepresentation of products and services. C.B.S., Inc. v. Springboard Intern. Records, 429 F.Supp. 563, 199 U.S.P.Q. 422 (S.D.N.Y.1976). The protection provided by this section of the federal laws governing unfair competition is broader than 1114 which applies specifically to trademark owners. This law protects competitive users of trademarks regardless of trademark ownership. D & M Antique Import Corp. v. Royal Saxe Corp., 311 F.Supp. 1261, 166 U.S.P.Q. 302 (S.D.N.Y.1970). Congress intended to create a statutory remedy against unfair competition previously protected by common law. Norman M. Morris Corp. v. Weinstein, 466 F.2d 137, 175 U.S.P.Q. 130 (5th Cir.1972).

Plaintiff alleges that defendants' conduct not only violated federal law, but also violates state common law and the general common law of unfair competition. Plaintiff's allegations of unfair competition therefore sound in both the federal statute and the general common law which is codified therein. Insofar as plaintiff's action rests on the state common law of unfair competition, the Arkansas law is orthodox and in accord with the general principles of the law of unfair competition. Shoppers Fair of Arkansas, Inc. v. Sanders Company, 207 F.Supp. 718, 134 U.S.P.Q. 545 (W.D.Ark.1962) aff'd; 328 F.2d 496, 140 U.S.P.Q. 637 (8th Cir. Ark.1964); Liberty Mutual Insurance Co. v. Liberty Ins. Co. of Texas, 185 F.Supp. 895, 903, 127 U.S.P. Q. 312 (E.D.Ark.1960); Beneficial Loan Corporation v. Personal Loan & Finance Corporation, 100 F.Supp. 838, 845, 92 U.S. P.Q. 14 (E...