Jellibeans, Inc. v. Skating Clubs of Georgia, Inc.

• Decision Date: 03 October 1983
• Docket Number: No. 81-7637,81-7637
• Citation: 222 U.S.P.Q. 10,716 F.2d 833
• Parties: JELLIBEANS, INCORPORATED, a Georgia Corporation, Plaintiff-Appellee, Cross-Appellant, v. SKATING CLUBS OF GEORGIA, INC., a Georgia Corporation, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 833

716 F.2d 833

222 U.S.P.Q. 10

JELLIBEANS, INCORPORATED, a Georgia Corporation Plaintiff-Appellee, Cross-Appellant, v. SKATING CLUBS OF GEORGIA, INC., a Georgia Corporation Defendant-Appellant, Cross-Appellee.

No. 81-7637.

United States Court of Appeals Eleventh Circuit.

Oct. 3, 1983.

Jones, Bird & Howell, Kevin E. Grady, Atlanta, Ga., for defendant-appellant, cross-appellee.

Haas, Holland, Lipshutz, Levison & Gibert, William R. King, Atlanta, Ga., Caesar, Rivise, Bernstein & Cohen, Ltd., Stanley H. Cohen, Philadelphia, Pa., for plaintiff-appellee, cross-appellant.

Appeals from the United States District Court for the Northern District of Georgia.

Before RONEY, TJOFLAT and FAY, Circuit Judges.

TJOFLAT, Circuit Judge:

Skating Clubs of Georgia, Inc. appeals from a district court order enjoining it from using "Lollipops" as a name for one of its roller skating rinks because that name is too easily confused by consumers with the service mark ¹ used by Jellibeans, Inc. to identify its roller rink, "Jellibeans." Jellibeans, Inc. cross-appeals the district court's denial of attorney fees. We affirm on both points.

I.

In November 1979, Jellibeans, Inc. opened a roller rink in Atlanta, Georgia, named "Jellibeans." It advertised Jellibeans extensively, spending over $50,000 in November and December alone, and over $100,000 during the first year of the rink's operation. Jellibeans, Inc. spent most of this money on radio advertisements, and the rest on newspaper advertisements and local promotional activities. Jellibeans, Inc.'s extensive advertising, and its use of a candy name for its rink, were unique among Atlanta roller rinks. The rink was a success from the outset.

Skating Clubs of Georgia, Inc., operates six roller rinks in the Atlanta area. Skating Clubs established its first rink in 1959, another in 1971, two in 1973, and a fifth rink in 1975. It called each of these rinks "Skating Clubs" and named them after the communities in which they were located, e.g., South Cobb Skating Club. In early 1980, a few months after Jellibeans opened, Skating Clubs decided to build its sixth rink. It purchased land for this new rink approximately 8-9 miles from Jellibeans and immediately began construction. It placed a sign on the site announcing the future opening of "Lollipops Disco Roller Rink." The sign also stated, in small print, that Skating Clubs owned the rink. Skating Clubs later replaced this sign with one that omitted the word "Disco" from the name of the rink, and stated in much larger letters that Skating Clubs owned Lollipops, and that Albert Couey owned Skating Clubs.

Several patients and a business acquaintance of Dr. Ronald Feinman, a principal shareholder of Jellibeans, Inc., saw the Lollipops sign. ² They thought the name Lollipops was very similar to the name Jellibeans and therefore called Dr. Feinman to inquire whether he was opening a new rink. Dr. Feinman replied that he was not. He later became concerned that others, especially Jellibeans' present and future customers, might also become confused by the similarity of the names and thus referred the matter to Jellibeans, Inc.'s counsel. Counsel concluded that Skating Clubs' use of the name Lollipops infringed upon the company's service mark, Jellibeans. Accordingly, on May 15, 1980, counsel requested that Skating Clubs stop using the name Lollipops. Skating Clubs replied that its use of the name did not infringe on Jellibeans, Inc.'s service mark and therefore refused to comply with the request.

On September 26, 1980, Jellibeans, Inc. brought a four-count complaint in the district court alleging that Skating Clubs' use of the name Lollipops: (1) constituted a false description or representation of Skating Clubs' services, in violation of the Lanham Act, 15 U.S.C. Sec. 1125(a) (1976); ³ (2) infringed Jellibeans, Inc.'s service mark in violation of Georgia trademark law, 106 Ga.Code Ann. Sec. 111; ⁴ (3) constituted a deceptive trade practice in violation of the Georgia Uniform Deceptive Trade Practices Act, 106 Ga.Code Ann. Sec. 702; ⁵ and (4) constituted unfair competition under the common law of Georgia. ⁶ Jellibeans, Inc. sought a declaratory judgment that Skating Clubs' conduct was unlawful as alleged, and an injunction. It also sought attorney fees under 15 U.S.C. Sec. 1117 (1976) and 106 Ga.Code Ann. 703(b). ⁷ Skating Clubs denied these allegations, and the case proceeded to trial.

At trial, Jellibeans, Inc. called two patients and a business acquaintance of Dr. Feinman to testify. They stated that they saw Lollipops' sign, believed that Jellibeans, Inc. was opening a new rink because of the similarity of the names, and called Dr. Feinman to inquire whether he was opening a new rink. Jellibeans, Inc. also produced a survey that showed 96% of those interviewed had heard of Jellibeans and 48% of them believed that the Lollipops rink was related to it. Skating Clubs objected to the introduction of this survey in evidence, contending that it was so flawed that it lacked probative value. ⁸ The court admitted the survey, however, ruling that the deficiencies impacted the weight to be accorded the survey and not its admissibility, a ruling Skating Clubs challenges on appeal.

In its defense, Skating Clubs presented the testimony of owner, Albert Couey, and his nephew Jerry Taylor, who brokered the sale of the real estate where Lollipops was being built and who served as Skating Clubs' insurance agent. Both Couey and Taylor testified that Taylor suggested the name Lollipops. Both denied that they had considered the similarity of the names Lollipops and Jellibeans. They admitted, however, that they had been aware of Jellibeans. Couey testified that the original sign announcing the construction of Lollipops stood only two days before it was burned by a fire of unknown origin. He testified that Skating Clubs replaced it with an identical sign, except for the word "Disco" which was omitted from the name of the rink. Jellibeans, Inc. materially impeached this testimony, however, by introducing pictures of the two signs that showed the substantial differences between the two, particularly with regard to the ownership of the rink. Finally, Couey testified that he promoted, and would in the future promote, the Lollipops rink only by circulating brochures to local schools and PTA's, giving luncheons and teas for community groups, and newspaper advertisements. ⁹ He stated that he had promoted his other rinks in this manner and intended to do the same with Lollipops.

On May 15, 1981, the district court rendered its decision. It dismissed the state law trademark infringement count because Jellibeans, Inc. had not registered its service mark in Georgia. ¹⁰ The court then held that Jellibeans, Inc.'s, claims under the Lanham Act, the Georgia Uniform Deceptive Trade Practices Act, and the Georgia law of unfair competition turned on the same question--whether rollerskaters, the purchasers of Jellibeans' and Lollipops' services, were likely to confuse Lollipops with Jellibeans. ¹¹ The court found that rollerskaters were likely to confuse the two. It therefore declared Skating Clubs' use of the name Lollipops unlawful and permanently enjoined its further use. The court denied Jellibeans, Inc.'s request for attorney fees under 15 U.S.C. Sec. 1117, however, holding that Skating Clubs did not possess the type of intent that warranted a fee award. It did not rule on Jellibeans, Inc.'s request for attorney fees under 106 Ga.Code Ann. Sec. 703(b).

Skating Clubs appeals. It contends that the district court was clearly erroneous in finding that rollerskaters are likely to confuse Lollipops with Jellibeans. ¹² Jellibeans, Inc. cross-appealing, contends that the district court abused its discretion in denying it attorney fees under 15 U.S.C. Sec. 1117. Jellibeans, Inc. does not question, however, the district court's failure to rule on its right to attorney fees under 106 Ga.Code Ann. Sec. 703(b).

II.

We note subject matter jurisdiction in this case. Jurisdiction of Jellibeans, Inc.'s Lanham Act claim is conferred by the Lanham Act itself, 15 U.S.C. Sec. 1121. ¹³ This statutory grant of jurisdiction, however, may not exceed the constitutional limitations on the power of Congress to regulate service marks; rather, it reaches and is coincident with the constitutional boundary embodied in the commerce clause. The Lanham Act proscribes the false description or representation of services that "enter into commerce." 15 U.S.C. Sec. 1125(a). The use of "[t]he word 'commerce' [in the Act] means all commerce which may lawfully be regulated by Congress." 15 U.S.C. Sec. 1127. This grant of jurisdiction has been construed to be "at least as broad as the definition of commerce employed in any other federal statute." Shatel Corp. v. Mao Ta Lumber & Yacht Corp., 697 F.2d 1352, 1356 n. 3 (11th Cir.1983); Bulova Watch Co. v. Steele, 194 F.2d 567, 570 n. 11 (5th Cir.1952), aff'd, 344 U.S. 280, 73 S.Ct. 252, 97 L.Ed. 252 (1952). Nonetheless, purely intrastate disputes do not fall within the commerce clause and therefore are not subject to the Lanham Act's regulation. Iding v. Anaston, 266 F.Supp. 1015, 1019 (N.D.Ill.1967).

We are, accordingly, required to determine in this case whether: (1) the district court's finding of fact as to the amount of interstate contact can be accepted as not clearly erroneous; and (2) whether as a matter of law the interstate contacts are sufficient to satisfy the jurisdictional requirements of the Lanham Act, 15 U.S.C. Secs. 1121, 1125. The district court found that Jellibeans drew patrons from an area that was within 60 miles of Atlanta, and included parts of Alabama, as well as receiving some out-of-state convention business. In addition, the trial court found that Jellibeans received some free publicity in national magazines. None of the evidence on which these conclusions were based was rebutted at trial. Therefore, we accept the...