Champions Golf Club, Inc. v. The Champions Golf Club, Inc.

• Decision Date: 21 March 1996
• Docket Number: No. 94-6197,94-6197
• Citation: 78 F.3d 1111
• Parties: CHAMPIONS GOLF CLUB, INC., Plaintiff-Appellant, v. THE CHAMPIONS GOLF CLUB, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1111

78 F.3d 1111

38 U.S.P.Q.2d 1161

CHAMPIONS GOLF CLUB, INC., Plaintiff-Appellant, v. THE CHAMPIONS GOLF CLUB, INC., Defendant-Appellee.

No. 94-6197.

United States Court of Appeals,

Sixth Circuit.

Argued Dec. 5, 1995.

Decided March 21, 1996.

On Appeal from the United States District Court for the Eastern District of Kentucky; Henry R. Wilhoit, Jr., District Judge.

Robert W. Willmott, Lexington, KY, Thomas P. Alexander (argued and briefed), Daniel V.S. McEvily, Alexander & McEvily, Clayton J. Bushman, Browning, Bushman, Anderson & Brookhart, Houston, TX, for plaintiff-appellant.

Steven F. Vicroy (argued), Joseph B. Murphy (briefed), Murphy & Enlow, Lexington, KY, for defendant-appellee.

Before: KENNEDY, GUY, and RYAN, Circuit Judges.

RYAN, Circuit Judge.

The plaintiff, Champions Golf Club, Inc., of Houston, Texas, brought suit pursuant to the Lanham Act, 15 U.S.C. § 1051 et seq., alleging that the defendant, The Champions Golf Club, Inc., of Nicholasville, Kentucky, committed service mark infringement and unfair competition through false designation. The district court issued a judgment for Nicholasville following a bench trial, concluding that there was no likelihood of confusion in the parties' use of the CHAMPIONS mark.

On appeal, Houston claims that the district court erred in concluding that there was no likelihood of confusion in the parties' simultaneous use of the CHAMPIONS mark, and that Houston had not proved the elements of a Lanham Act unfair competition claim based on a theory of false designation. We also consider Nicholasville's argument that, even if Houston's arguments are well-taken, Nicholasville is entitled to a prior user defense, an issue resolved against Nicholasville by the district court. For the reasons that follow, we will vacate the district court's opinion, and remand for further proceedings.

I.

Jimmy Demaret, now deceased, and Jack Burke Jr. are two former golfing champions who, in 1957, retired from the professional tour and opened a golf club in Houston, Texas. They named the club "Champions Golf Club" at the suggestion of an advertising and consulting agency, meaning to allude to the championship status of Demaret and Burke. Houston opened for play in 1959, and began using the CHAMPIONS mark in 1960 to designate its golfing and golfing-related services. On December 13, 1978, Houston registered the mark with the State of Texas.

From the time of its opening, Houston was recognized as an excellent golf course and club facility. It hosted, for example, the 1969 U.S. Open. However, because Demaret and Burke "shunned commercial exploitation of the game," they did not attempt to attract other professional tours until the 1990 Nabisco Open. Nonetheless, Houston has actively sought national events, and has hosted a number of them. For example, the Champions Cup has been held at Houston 27 times; the Houston Champions International has been held at Houston five times; the Southern Amateur Championship was played at Houston in 1973 and 1980; and the U.S. Amateur Championship was played there in 1993.

The Houston club hosts national tournaments for marketing promotion purposes rather than for profit-making. Houston derives the bulk of its revenue from its members. Although the majority of its members are residents of Texas, the Houston club has members from 27 states, the Virgin Islands, and Singapore. Moreover, approximately 10% of its gross revenue comes from visiting golfers.

In 1985, Thomas Heilbron began planning a residential subdivision and golf course in Nicholasville, Kentucky, near Lexington. The name of the subdivision is "Champions." Nicholasville first used the CHAMPIONS mark in relation to golfing services on February 26, 1986. On July 1, 1986, Nicholasville registered the mark with the Commonwealth of Kentucky.

The Nicholasville club, like Houston, a private, members-only club, opened for play on June 3, 1988, and immediately began soliciting the USGA, the PGA, and other sanctioning organizations for tournaments. Since its opening, Nicholasville has hosted several tournaments, including the Kentucky Open and U.S. Senior Challenge National Tournament in 1989; a local U.S. Open qualifying round and the National Women's Western Amateur in 1990; the Women's SEC Tournament, the Kentucky Intercollegiate Tournament, and the Kentucky Open in 1991; and the Men's NCAA Tournament in 1993. Like Houston, the majority of Nicholasville's members are local, but it does have members from 16 states and Japan. In fact, both clubs have members from the states of California, Colorado, Florida, Georgia, Illinois, Missouri, New Jersey, New York, Ohio, Pennsylvania, South Carolina, Tennessee, and West Virginia, and at least one Kentuckian is a member of Houston's club.

In the late 1980s, Houston learned that other clubs, including Nicholasville, had begun using the CHAMPIONS mark, and Houston therefore applied for federal registration in order to protect its mark. On May 15, 1989, Houston sent a "cease-and-desist" letter to Nicholasville, and on March 6, 1990, the CHAMPIONS mark was accepted on the principal register of the U.S. Patent & Trademark Office as Houston's service mark for "providing golfing and country club services." Nicholasville continued its use of the mark, and so the plaintiff brought suit requesting injunctive relief and damages, and alleging claims of service mark infringement and unfair competition under the Lanham Act, as well as common-law unfair competition and service mark infringement claims under the laws of Kentucky and Texas.

Following a bench trial, the district court concluded, for reasons discussed in more detail below, that Houston failed to show a likelihood of confusion in the parties' dual use of the CHAMPIONS mark. The court disposed of Houston's unfair competition claim by noting that, since unfair competition requires the same proofs as an infringement claim, its unfair competition claim, too, failed. Houston then appealed.

II.

A.

The Houston club brought its claim for mark infringement under the section of the Lanham Act that provides, in pertinent part, that

[a]ny person who shall, without the consent of the registrant--

(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive[,]

....

shall be liable in a civil action by the registrant[.]

15 U.S.C. § 1114(1). The central inquiry here, then, is whether Nicholasville's use of the CHAMPIONS mark is "likely to cause confusion." This court has held that whether there is a likelihood of confusion depends on consideration of eight factors:

1. the strength of the plaintiff's mark;

2. the relatedness of the services;

3. the similarity of the marks;

4. the evidence of actual confusion;

5. the marketing channels used;

6. the likely degree of purchaser care;

7. the defendant's intent in selecting the mark; and

8. the likelihood of expansion of the product lines.

Wynn Oil Co. v. Thomas, 839 F.2d 1183, 1186 (6th Cir.1988) (Wynn I ) (citing Frisch's Restaurants, Inc. v. Elby's Big Boy of Steubenville, Inc., 670 F.2d 642 (6th Cir.) (Frisch's I ), cert. denied, 459 U.S. 916, 103 S.Ct. 231, 74 L.Ed.2d 182 (1982)). The Wynn I court explained the proper approach to these factors as follows:

These factors are simply a guide to help determine whether confusion would be likely to result from simultaneous use of the two contested marks. They imply no mathematical precision, and a plaintiff need not show that all, or even most, of the factors listed are present in any particular case to be successful.... "[T]he general concept underlying likelihood of confusion is that the public believe that 'the mark's owner sponsored or otherwise approved of the use of the trademark.' "

Id. (citation omitted). To frame it another way, the "ultimate question [is] whether relevant consumers are likely to believe that the products or services offered by the parties are affiliated in some way." Homeowners Group, Inc. v. Home Mktg. Specialists, Inc., 931 F.2d 1100, 1107 (6th Cir.1991).

Whether there is a likelihood of confusion is a mixed question of fact and law. Wynn I, 839 F.2d at 1186. We apply a clearly erroneous standard to the district court's findings of fact supporting the likelihood of confusion factors, but review de novo the legal question of whether those foundational facts constitute a "likelihood of confusion." Id. (citing Frisch's Restaurant, Inc. v. Shoney's, Inc., 759 F.2d 1261, 1264 (6th Cir.1985) (Frisch's II )). This standard of review applies both to a mark infringement claim and an unfair competition claim. Wynn Oil Co. v. American Way Service Corp., 943 F.2d 595, 604 (6th Cir.1991) (Wynn II ).

1. Strength of Mark

" 'A term for which trademark protection is claimed will fit somewhere in [a] spectrum which ranges through (1) generic or common descriptive and (2) merely descriptive to (3) suggestive and (4) arbitrary or fanciful.' " Induct-O-Matic Corp. v. Inductotherm Corp., 747 F.2d 358, 362 (6th Cir.1984) (citation omitted). "[W]hether a mark is regarded as 'strong' or 'weak,' 'original, arbitrary, fanciful' or 'generic, descriptive, geographic' is but one of the elements to be considered in determining whether confusion is likely to result." Id. at 364 (internal quotation marks and citation omitted). The stronger the mark, the more likely it is that encroachment on it will produce confusion. Little Caesar Enterprises, Inc. v. Pizza Caesar, Inc., 834 F.2d 568, 571 (6th Cir.1987). "Accordingly, the strong mark enjoys greater protection while the weak mark is afforded little support." Hindu Incense v. Meadows, 692 F.2d 1048, 1050 (6th Cir.1982). The district court concluded that "since Houston's mark is arbitrary, it is strong as a matter of...