752 F.2d 145 (5th Cir. 1985), 83-1687, Conan Properties, Inc. v. Conans Pizza, Inc.

• Citation: 752 F.2d 145
• Party Name: 225 U.S.P.Q. 379 CONAN PROPERTIES, INC., Plaintiff-Appellant, v. CONANS PIZZA, INC., Defendant-Appellee.
• Case Date: February 04, 1985
• Court: United States Courts of Appeals, U.S. Court of Appeals — Fifth Circuit

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752 F.2d 145 (5th Cir. 1985)

225 U.S.P.Q. 379

CONAN PROPERTIES, INC., Plaintiff-Appellant,

v.

CONANS PIZZA, INC., Defendant-Appellee.

No. 83-1687.

United States Court of Appeals, Fifth Circuit

February 4, 1985

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[Copyrighted Material Omitted]

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Lieberman, Rudolph & Nowak, L. Michael Rudolph, David A. Kalow, New York City, for plaintiff-appellant.

McGinnis, Lochridge & Kilgore, David L. Orr, Arnold, White & Durkee, Michael T. McLemore, Austin, Tex., for defendant-appellee.

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

Before CLARK, Chief Judge, JOHNSON and WILLIAMS, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge:

Conan Properties, Inc. (CPI) owns the literary property rights in the fictional character "CONAN THE BARBARIAN" and licenses others to use the character in various commercial and entertainment works. CPI sued Conans Pizza, Inc. (Conans) for infringement of its federal trademark and for unfair competition and misappropriation of its property under Texas common law. By a special verdict, the jury found trademark infringement and unfair competition but refused to award damages, concluding that CPI had unreasonably delayed instituting this suit and had acquiesced in Conans' conduct. After the trial, CPI moved for injunctive relief, but the district court denied the motion. CPI appeals from that judgment, claiming that it was entitled to injunctive relief notwithstanding the jury's findings of laches and acquiescence. Conans asserts that the jury's implicit finding of likelihood of confusion was unsupported by the evidence. We affirm in part but we find the district court's denial of all injunctive relief was in error, and we reverse to that extent. In all other respects, the judgment of the district court is affirmed.

I.

The CONAN character was created in 1929 by Robert Howard. But the character remained relatively dormant until the 1950's, when L. Sprague deCamp, a contemporary author, rediscovered and began

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writing books featuring CONAN THE BARBARIAN. As the title might suggest, deCamp's CONAN THE BARBARIAN series told the tales of a gigantic, sword and battle-ax wielding barbarian adventurer who roamed the world in search of foes. Many of deCamp's works were illustrated by Frank Frazetta, an artist famous for his "sword and sorcery" style artwork. In 1970, the Howard estate licensed Marvel Comics to publish a series of comic books featuring CONAN THE BARBARIAN. To avoid litigation over who had rights in CONAN THE BARBARIAN, the Howard estate and deCamp united their interests in the CONAN character in 1976 and formed CPI. DeCamp is one of the two 50% shareholders of CPI. In that same year the United States Patent and Trademark Office (USPTO) granted CPI a federally registered trademark for the title "CONAN THE BARBARIAN" for comic books.

Also in this same year, Scott Leist and Jerry Strader opened "Conans Pizza", a restaurant in Austin, Texas. The restaurant's menus, signs, promotional material, specialty items, and general decor featured a barbarian-like man who closely resembled CPI's CONAN character. For example, Conans Pizza's menus depicted a loincloth-clad, sword wielding, sandal wearing, barbarian-like muscleman, and they described one of the featured pizzas as the "Savage, Barbaric, All the Way Pizza." The owners decorated the restaurant with dozens of reproductions of Frank Frazetta's artwork, although only a few of the reproductions actually represented CONAN THE BARBARIAN.

While visiting relatives in Austin approximately one month after Conans Pizza opened, deCamp noticed the restaurant. He stopped by the restaurant, spoke with Jerry Strader, and identified himself as one of the creators of the CONAN character. He wished Strader success with his business and had a photograph taken of Strader and himself in front of one of the restaurant's signs. Later, deCamp sent Strader a copy of the photograph, on which he wrote: "With best wishes to Jerry Stader and Scott Leist from one of Conan's creators--L. Sprague deCamp."

At trial deCamp testified that he informed CPI's attorney about the existence of Conans Pizza in late 1976 and that the CPI board of directors from time to time at meetings discussed the trademark issue raised by the existence of Conans Pizza. In January 1981, CPI wrote to Conans Pizza and for the first time objected to Conans' use of CPI's mark. CPI demanded Conans cease using the mark. Later in 1981, Conans discontinued using much, but certainly not all, of the CONAN THE BARBARIAN indicia. It continued using "Conan" in its trade name and describing the featured pizza as "The Savage". It removed only those Frazetta prints that actually depicted CONAN, though the remaining prints closely resembled those few that featured CONAN. CPI filed this suit in March 1982, approximately 5 1/2 years after deCamp first saw Conans Pizza.

From 1976 to 1980, Conans had opened four additional "Conans Pizza" restaurants in the Austin area. In April 1980, before CPI had sent its letter objecting to the use of the name "Conans Pizza", Conans filed with the USPTO an application for the service mark "CONANS PIZZA" for restaurant services. That application was granted by the USPTO in July 1982, after this suit had been filed. In the meantime, in January 1982, before this suit was filed but after Conans had received CPI's letter of objection, Conans opened a Conans Pizza restaurant in San Antonio, Texas. This restaurant was the sixth in the chain and the first outside the Austin area. Conans' combined sales from its six restaurants increased thirty-fold from 1976 to 1982, accounting for gross annual sales exceeding $3,000,000.

In its suit CPI sought injunctive relief, damages, and an accounting for profits. CPI alleged that the name Conans Pizza and Conans' activities infringed CPI's federally registered trademark under section 32(1) of the Lanham Trademark Act, 15 U.S.C. Sec. 1114(1) (1982), created a false designation of origin under section 43(a) of the

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Lanham Act, 15 U.S.C. Sec. 1125(a) (1982), and constituted unfair competition and misappropriation of its merchandising property under Texas common law. Conans denied each of CPI's allegations and asserted the equitable defenses of laches and acquiescence.

Prior to trial Conans moved for partial summary judgment on CPI's common law claim for misappropriation of a merchandising property. The district court granted the motion and dismissed this claim. The remaining issues were tried and submitted to the jury. By a special verdict, the jury found that CPI had proved all of the elements of both a trademark infringement claim under the Lanham Act and an unfair competition claim under Texas common law. The jury found, however, that CPI had not proved all of the elements under the Lanham Act of its false designation of origin claim. In response to other special interrogatories, the jury determined that Conans' acquiescence and laches defenses were valid and precluded either the recovery of damages or an accounting for profits by CPI. After the trial CPI moved for injunctive relief, seeking to prevent Conans from using the mark CONANS PIZZA both locally and nationally. A nationwide injunction was particularly important to CPI because Conans was tentatively planning a national franchising scheme. The district court denied CPI's post-trial motion for injunctive relief.

II.

1. The Jury's Findings of Trademark Infringement and Unfair Competition

   The initial issue in this appeal is whether the jury's findings of trademark infringement under 15 U.S.C. Sec. 1114(1) and unfair competition under Texas common law can stand against the claim that they were in error as a matter of law. Conans Pizza argues that the jury's implicit finding of likelihood of confusion for both the trademark infringement and the unfair competition claims was against the great weight of evidence and must be reversed.

   The standard of an appellate court's review of a jury's verdict is narrow and exacting. The verdict must be upheld unless the facts and inferences point so strongly and so overwhelmingly in favor of one party that reasonable persons could not arrive at a contrary verdict. Western Co. of North America v. United States, 699 F.2d 264, 276 (5th Cir.), cert. denied, --- U.S. ----, 104 S.Ct. 237, 78 L.Ed.2d 228 (1983). Even if the jury's verdict was based on sharply conflicting evidence and the court of appeals determines that reasonable persons might reach a contrary result, the jury verdict must be upheld. Slavin v. Curry, 690 F.2d 446, 449 (5th Cir.1982); United States v. 6,162.78 Acres of Land, 680 F.2d 396, 398 (5th Cir.1982). Our task, therefore, is limited to determining whether the jury had before it any competent and substantial evidence that fairly supports the verdict. Stewart v. Thigpen, 730 F.2d 1002, 1007 (5th Cir.1984).

   To prevail on its trademark infringement and unfair competition claims, CPI needed to demonstrate that Conans' use of the CONAN THE BARBARIAN mark and image was likely to create confusion in the mind of the ordinary consumer as to the source, affiliation, or sponsorship of Conans' service and product. See, e.g., Amstar Corp. v. Domino's Pizza, Inc., 615 F.2d 252, 258 (5th Cir.) (likelihood of confusion test applies to common law unfair competition claims as well as to claims under 15 U.S.C. Secs. 1114(1), 1125(a)), cert. denied, 449 U.S. 899, 101 S.Ct. 268, 66 L.Ed.2d 129 (1980). A nonexhaustive list of factors to be considered in determining whether a likelihood of confusion exists includes: (1) the type of trademark alleged to have been infringed, (2) the similarity of design between the two marks, (3) similarity of the products or services, (4) the identity of the retail outlets and purchasers, (5) the identity of the advertising medium utilized, (6) the defendant's intent, and (7) evidence of actual...