Forum Corp. of North America v. Forum, Ltd.

• Decision Date: 16 May 1990
• Docket Number: No. 89-1637,89-1637
• Citation: 903 F.2d 434
• Parties: The FORUM CORPORATION OF NORTH AMERICA, Plaintiff-Appellant, v. The FORUM, LTD., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 434

903 F.2d 434

14 U.S.P.Q.2d 1950

The FORUM CORPORATION OF NORTH AMERICA, Plaintiff-Appellant, v. The FORUM, LTD., Defendant-Appellee.

No. 89-1637.

United States Court of Appeals Seventh Circuit.

Argued Oct. 31, 1989.

Decided May 16, 1990.

Arthur Don, Nancy G. Abrahams, D'Ancona & Pflaum, Chicago, Ill., John T. Clark, Miller, Walsh & Maier, Milwaukee, Wis., Thomas V. Smurzynski, Lahive & Cockfield, and Donald P. Ricklefs, Ricklefs, Uehlein & Nason, Boston, Mass., for plaintiff-appellant.

Janet Koran, McDermott, Will & Emery, Chicago, Ill., and Robert L. Titley, Quarles & Brady, Milwaukee, Wis., for defendant-appellee.

Before BAUER, Chief Judge, and RIPPLE, Circuit Judge, and WILL, Senior District Judge. ^*

WILL, Senior District Judge.

This is an appeal from the dismissal of a complaint of trademark infringement and the entry of a declaratory judgment for the accused infringer. For the reasons set forth herein, we reverse and remand to the district court for further action consistent herewith.

I. Facts.

The parties are corporations that provide training seminars to business employees either in-house or in public settings. Both appellant and appellee give the employees they are training written materials and provide an instructor, or train an employee to act as an instructor. The seminars last from one to five days. The parties provide both generic or customized training programs, the latter being modified to fit the customer's particular desires for its employees. Despite these similarities, the parties appeal to different sectors of the corporate community. Appellant markets its teaching seminars to all types of corporations, while appellee restricts its market to manufacturers, especially those in the fabricating, machining and assembly of products areas.

Appellant, The Forum Corporation of North America, is the older of the two companies. It was founded in 1971 and is based in Boston, although it has operations in a number of cities, including Chicago. Appellant's generic training programs are designed for managers and salespeople. An example is the program "Influence," which "is designed to help people be more effective in getting things done through people who don't report to them." Trial transcript ("Tr.") 29. Appellant's annual sales totaled around $25 million for the 1987-88 fiscal year, a significant growth over its 1985 revenue of $20 million.

Appellee is a Milwaukee company founded in 1980, nine years after appellant's genesis. Its teaching seminars are designed for management-level employees of manufacturers. Appellee's current annual sales were estimated at the time of trial to be around $2.5 million as compared to about $1.5 million in 1985.

Appellant's business stationery, marketing and program material include the marks "The Forum Corporation," "The Forum," and/or "Forum." Appellant's Chief Executive Officer, testified that appellant has used the mark "The Forum Corporation" since 1971, the year when appellant created its "Exceptional Manager Program." The U.S. Patent and Trademark Office has issued a federal registration to appellant for the composite mark "The Forum Corporation: Helping People Do a Better Job." Appellant's application for registration of the mark "The Forum Corporation" was still pending at the time this appeal was filed.

Appellee commonly uses the mark "The Forum Ltd." in a composite with the slogan "Your Quality Circle for Management Education." However, some of appellee's materials do not include the composite mark. For instance, appellee markets to prospective clients by mailing out preview tapes for one of its programs which are marked only by the words "The Forum Ltd." Also, a catalog in which defendant advertises, the Deltak catalog, lists the appellee by the simple mark, "The Forum Ltd." Appellee's employees answer the phone, "The Forum Ltd.," and sometimes use that identifier in brochures after first giving appellee's composite mark.

Both parties market their products through personal contacts: appellant employs a direct sales force and appellee uses independent sales representatives. Both rely on direct mailings. Only appellee does advertising in publications, choosing those which are intended to reach manufacturing management. Both attend trade shows, but with the exception of one show, the parties have not attended the same ones. This lack of overlap is the result, in part, of appellee's choice to attend trade shows restricted primarily to manufacturing management.

Appellant produced evidence that its Fortune 1000 company clients do not usually follow a "highly planned, highly systematic process" in choosing a training program. Tr. 286. It also produced evidence that, for twenty to thirty percent of its customers, the amount a typical first-time buyer spends on appellant's services is "a drop in the bucket." Tr. 281. Finally, appellant provided testimony that most customers rely on word-of-mouth recommendations from other companies and do not spend much time deciding whether or not to purchase the service. Appellee, on the other hand, presented testimony that it takes an average of almost four months to conclude a sale after a potential client is first contacted.

Appellant brought instances of actual confusion between the parties to the attention of the trial judge. A common carrier misdelivered a package in 1982 in a hotel in Long Beach, California in which both parties were giving public seminars. At a 1983 trade show, people came to appellee's booth looking for representatives of appellant. John Connellan, president of a company which trains executives to communicate, testified that he believed that the listing in the Deltak catalog related to appellant, rather than appellee. Appellee's Chief Executive Officer Schultz testified that, based on his experience with his customers, there was no confusion between the parties' products.

In 1986 Elaine Fuerst, an employee of Motorola, was told by her boss to "call Forum and get their 'Influence.' They have a program called 'Influence.' " Fuerst looked through her files, which she had not yet organized since taking them over from her predecessor, called appellant's number in Florida which was disconnected and then called appellee in Milwaukee. She told appellee's representative that she was looking for "Influence," but the representative told her she should consider their "Business Requirements Planning" program. Fuerst agreed to review the "Business Requirements" program, but also expected to receive "Influence."

Fuerst reviewed appellee's program which she also showed to upper-level managers and then sent the materials to another training manager who was in charge of manufacturing and materials. She later received a copy of appellant's annual report, which described the "Influence" program, and figured out that there were two separate companies with the word "forum" in their names. She spoke to her boss, a training manager, and to the training manager for the manufacturing and materials area and to other training personnel and found that none knew there were two separate companies.

II. Standard of Review.

We review findings of fact under the clearly erroneous standard and findings of law de novo. Fed.R.Civ.P. 52(a); Pullman-Standard v. Swint, 456 U.S. 273, 287, 102 S.Ct. 1781, 1789, 72 L.Ed.2d 66 (1982). We have stated a number of times that the trial court's ultimate conclusion on the likelihood of confusion is a finding of fact. G. Heileman Brewing Co. v. Anheuser-Busch, Inc., 873 F.2d 985 (7th Cir.1989); Int'l Kennel Club v. Mighty Star, Inc., 846 F.2d 1079, 1087 (7th Cir.1988); Scandia Down Corp. v. Euroquilt, Inc., 772 F.2d 1423 (7th Cir.1985), cert. denied, 475 U.S. 1147, 106 S.Ct. 1801, 90 L.Ed.2d 346 (1986) (White, J., dissenting because of need to resolve conflict in circuits). Other circuits have treated the final resolution of the confusion issue as legal. See, e.g., Charles of the Ritz Group, Ltd. v. Quality King Distrib., 832 F.2d 1317, 1321-23 (2d Cir.1987) (citing Plus Products v. Plus Discount Foods, Inc., 722 F.2d 999, 1004-05 (2d Cir.1983)) (applying the Plus Products two-level standard: fact findings in applying the test are reviewed under the clearly erroneous standard, while the ultimate conclusion is legal and reviewable de novo); Alpha Indus., Inc. v. Alpha Steel Tube & Shapes, Inc., 616 F.2d 440 (9th Cir.1980) (two-level approach). ¹

We have considered the arguments in favor of treating the ultimate finding of confusion or no confusion as legal and rejected them. Scandia Down, 772 F.2d at 1428-29. However, we review the district court's statement of the law de novo for legal error and its conclusions for signs that the court's application of the law was infected with legal error, i.e., an erroneous general principle about the way the test should be applied. See Schwinn Bicycle Co. v. Ross Bicycles, Inc., 870 F.2d 1176, 1187-88 (7th Cir.1989) (district court's statement that there is a presumption of likelihood of confusion when a trademark has secondary meaning was an error of law and its mechanical application of the test, without considering the totality of the circumstances, was an error of law which prevented the court from exerting its sound discretion). See also James Burrough, Ltd. v. Sign of Beefeater, Inc., 572 F.2d 574, 577 (7th Cir.1978) (reversal because district court placed excessive importance on certain factors of test); Chevron Chem. Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d 695, 696 (5th Cir.1981), cert. denied, 457 U.S. 1126, 102 S.Ct. 2947, 73 L.Ed.2d 1342 (1982) ("district court applied an erroneous legal standard in finding no likelihood of confusion, thereby stripping that determination of the protection normally accorded fact findings").

The standard of review of a district court's classification of a term along the spectrum of trademark protection--that is, as generic, descriptive, suggestive or arbitrary--is also clearly...