Bank of Texas v. Commerce Southwest, Inc., 83-1388

• Decision Date: 17 September 1984
• Docket Number: No. 83-1388,83-1388
• Citation: 741 F.2d 785
• Parties: BANK OF TEXAS, Plaintiff-Appellant, v. COMMERCE SOUTHWEST, INC. et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 785

741 F.2d 785

223 U.S.P.Q. 1174

BANK OF TEXAS, Plaintiff-Appellant, v. COMMERCE SOUTHWEST, INC. et al., Defendants-Appellees.

No. 83-1388.

United States Court of Appeals, Fifth Circuit.

Sept. 17, 1984.

Locke, Purnell, Boren, Laney & Neely, John McElhaney, William B. Steele, III, Dallas, Tex., for plaintiff-appellant.

Akin, Gump, Strauss, Hauer & Feld, John L. Hauer, L. Kim Jamison, Kenneth R. Glaser, Dallas, Tex., Tony G. Powers, Miami, Fla., for defendants-appellees.

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

Before RANDALL, TATE and WILLIAMS, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge:

Plaintiff, Bank of Texas, obtained a favorable jury verdict in an action against Commerce Southwest, Inc. and its subsidiary banks in Dallas County for service mark infringement and unfair competition. The district court, however, granted judgment notwithstanding the verdict in favor of Commerce Southwest, Inc. on the ground that the jury verdict finding a secondary meaning in the name "Bank of Texas" was against the clear weight of the evidence. We affirm.

Bank of Texas is a neighborhood bank in northeast Dallas. It has operated under the name "Bank of Texas" since 1973. In 1981, Commerce Southwest, Inc. ("CSI"), a bank holding company, decided to rename its member banks so that customers would be able to tell that the banks were members of that bank group. After a marketing study CSI decided to use the root designation "BancTEXAS" coupled with a geographic designation to identify its member banks as BancTEXAS Dallas, N.A. (National Association), BancTEXAS Richardson, N.A., etc. The day after CSI announced its proposed name change, Bank of Texas wrote to CSI and objected to the proposed change. A few days after that, Bank of Texas filed suit in district court against CSI and the individual member banks for violation of the Lanham Act, 15 U.S.C. Sec. 1125(a), and the Texas common law of unfair competition.

The court ruled before trial that former Section 30 of the National Banking Act, 12 U.S.C. Sec. 30 (since amended), preempted both the Texas common law of unfair competition and Sec. 43(a) of the Lanham Act as far as determining the similarity of the three federally chartered defendant banks' complete formal names to plaintiff's name. Section 30 gave the Comptroller of the Currency the task of approving the names of national banks. The Comptroller could consider, among other things, the likelihood of a new name being confused with present bank names. Because of the trial court's ruling, the jury considered only CSI's use of "BancTEXAS," rather than its use of the individual names such as "BancTEXAS Richardson, N.A." The jury found that the name "Bank of Texas" had acquired a secondary meaning within all of Dallas County, which is the trade area it claimed. The jury further found that the name "BancTEXAS" would be likely to confuse the ordinary consumer as to the source of banking services. The trial judge granted judgment for CSI notwithstanding the verdict, or in the alternative a new trial, should this Court hold that judgment n.o.v. was inappropriate.

On appeal Bank of Texas claims that there was sufficient evidence to support the jury's finding that the trade name "Bank of Texas" had acquired a secondary meaning in all of Dallas County, and that former section 30 of the National Banking Act does not preempt the provisions of the Lanham Act and the state common law of unfair competition.

I.

The initial question in a case based on claims of unfair competition and infringement is whether the plaintiff has a protectable property right in the name it seeks to defend from use by others. Names or marks which are inherently distinctive are regarded as capable of functioning immediately upon use as a symbol of origin ... [and] are given legal protection immediately upon adoption and use .... However, if a given symbol or word is not inherently distinctive, it can be registered or protected as a mark only upon proof that it has become distinctive. This acquisition of distinctiveness is referred to as "secondary meaning."

1 J. McCarthy, Trademarks and Unfair Competition Sec. 15.1(a) (1973) (emphasis in original). A name such as Bank of Texas is not inherently distinctive, in that it combines the generic term "bank" with the geographical term "Texas." Rather, the name is descriptive of the type of services offered and the place from which such services originate. However,

[r]egardless of whether a word or words adopted and used as a trademark or trade name could be characterized as geographical in nature, where such words have acquired a "secondary meaning," the courts will afford equitable protection to the party whose use of the word has created secondary meaning .... It deserves protection when, because of association with a particular product or firm over a period of time, the word has in the mind of the public come to stand as a name or identification for that product or firm .... Protection is warranted on what it has come to signify regardless of any original weakness, actual or supposed. (Citations omitted).

Continental Motors Corp. v. Continental Aviation Corp., 375 F.2d 857, 861 (5th Cir.1967). In order to establish secondary meaning for a term, a plaintiff must show that the primary significance of the term in the mind of the consuming public is not the product but the producer. Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 118, 59 S.Ct. 109, 113, 83 L.Ed. 73 (1938). Because the name Bank of Texas is descriptive, not inherently distinctive, "the evidentiary burden necessary to establish secondary meaning ... is substantial." Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 794 (5th Cir.1983); see also Vision Center v. Opticks, Inc., 596 F.2d 111, 118 (5th Cir.1979), cert. denied, 444 U.S. 1016, 100 S.Ct. 668, 62 L.Ed.2d 646 (1980). In determining whether a name has acquired secondary meaning, it is proper to consider the length and manner of use of the name, the nature and extent of advertising and promotion of the name, Volkswagenwerk Aktiengesellschaft v. Rickard, 492 F.2d 474, 478 (5th Cir.1974), survey evidence, Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 795 (5th Cir.1983), the volume of sales, and instances of actual confusion, American Scientific Chemical, Inc. v. American Hospital Supply Corp., 690 F.2d 791, 793 (9th Cir.1982).

Appellant argues that the testimony of expert witnesses, the results of a consumer opinion poll, evidence of advertising, growth of bank assets, length of time of Bank of Texas's exclusive use of that name, and instances of actual confusion provided substantial evidence proving that the name "Bank of Texas" had acquired a secondary meaning throughout Dallas County so that ordinary consumers associated it with particular banking services. CSI argues the direct opposite: it urges a lack of evidence to show a secondary meaning throughout Dallas County, criticizes the methodology of the consumer poll, claims the number of instances of actual confusion were inflated, and stresses the difficulty of establishing secondary meaning for a geographical designation. CSI also argues that the monogram BancTEXAS is sufficiently visually different from "Bank of Texas" to prevent confusion.

The standard for review of judgment n.o.v. is established in Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969) (en banc), in which we stated:

On motions for directed verdict and for judgment notwithstanding the verdict the Court should consider all of the evidence--not just that evidence which supports the non-mover's case--but in the light and with all reasonable inferences most favorable to the party opposed to the motion. If the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict, granting of the motions is proper. On the other hand, if there is substantial evidence opposed to the motions, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motions should be denied, and the case submitted to the jury.

After carefully reviewing the entire record, we conclude that the trial judge was correct, and that a reasonable jury could not find that Bank of Texas had established a secondary meaning to its name throughout Dallas County, the area in which it sought to preclude others from using that name.

We do not feel it necessary to recount and appraise the evidence at great length. The district court did this admirably for the benefit of the parties. We do, however, respond to several of appellant's concerns. Appellant believes that the district court improperly focused on the amount of money Bank of Texas spent on advertising as compared to CSI's expenditures, and overlooked Bank of Texas's extensive word-of-mouth promotion. W...