909 F.2d 839 (5th Cir. 1990), 89-1885, Union Nat. Bank of Texas, Laredo, Tex. v. Union Nat. Bank of Texas, Austin, Tex.

Docket Nº:89-1885.
Citation:909 F.2d 839
Party Name:16 U.S.P.Q.2d 1129 UNION NATIONAL BANK OF TEXAS, LAREDO, TEXAS, Plaintiff-Appellant, v. UNION NATIONAL BANK OF TEXAS, AUSTIN, TEXAS, Defendant-Appellee.
Case Date:August 28, 1990
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

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909 F.2d 839 (5th Cir. 1990)

16 U.S.P.Q.2d 1129




No. 89-1885.

United States Court of Appeals, Fifth Circuit

August 28, 1990

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Horace C. Hall, III, Hall, Quintanilla, Palacios & Alarcon, Laredo, Tex., John R. Feather, Vaden, Eickenroht, Thompson & Boulware, Houston, Tex., for plaintiff-appellant.

Kenneth R. Wynne, Bracewell & Patterson, Houston, Tex., for defendant-appellee.

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


GOLDBERG, Circuit Judge:

What is in a name? Shakespeare wrote that a rose by any other name would smell as sweet, 1 but that sentiment is not shared

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by the parties to this dispute. Union National Bank of Texas, Laredo, Texas ("UNB-Laredo") seeks to prevent Union National Bank, Austin, Texas ("UNB-Austin") from using the names "Union National Bank" or "Union National Bank of Texas" and appeals the district court's denial of its request for a permanent injunction. The issue, as presented by the parties, is whether the combination of words "Union National Bank" or "Union National Bank of Texas" are entitled to trademark protection. 2

The district court ruled as a matter of law that the names "Union National Bank" and "Union National Bank of Texas" are descriptive and therefore not protected under trademark law absent proof of "secondary meaning." 3 We find the trial court applied the incorrect legal standard and therefore REVERSE and REMAND.


UNB-Laredo is a national banking association with its principal place of business in Laredo Texas and a branch office in San Antonio. It was originally named "United National Bank of Laredo," but in December, 1987 changed its name to "Union National Bank of Texas." The name change appears to have been motivated by a desire for a less regional name which would facilitate expansion, because in 1988 UNB-Laredo opened a branch in San Antonio.

UNB-Austin is also a national banking association. It is a subsidiary of Union of Arkansas Corporation. Union of Arkansas is a holding company which owns a number of banks in Arkansas and Oklahoma, all of which are called "Union National Bank of ______," with the appropriate geographical designation. It appears from the record that UNB-Austin has been using the "Union National Bank" name for many years prior to the establishment of UNB-Laredo--but not in Texas. UNB-Austin's presence in Texas came about as a result of its successful bid on the assets of a failed Texas institution in a sale organized by the Federal Deposit Insurance Corporation in August, 1988. 4 After UNB-Austin opened for business it received notice from UNB-Laredo that the Laredo institution laid claim to the name. UNB-Laredo subsequently filed suit to attempt to force UNB-Austin to change its name. In response, UNB-Austin changed its name from "Union National Bank of Texas, Austin, Texas" to "Union National Bank, Austin, Texas." UNB-Laredo is dissatisfied with this modification and seeks to enjoin UNB-Austin's use of either "Union National Bank" or "Union National Bank of Texas." UNB-Laredo claims that UNB-Austin's name is deceptively similar to UNB-Laredo's name and its use therefore violates Sec. 43 of the

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Lanham Act, 15 U.S.C. Sec. 1051 et seq., and the common law of unfair competition.

The case was heard without a jury in the United States Court for the Western District of Texas. After UNB-Laredo had presented its first witness, the district court, at the urging of counsel for UNB-Austin, called a halt to the presentation of evidence in order to hear legal arguments on the issue of whether or not the terms UNB-Laredo laid claim to were descriptive. After hearing arguments the court ruled that as a matter of law the name "Union National Bank" was descriptive and thus required proof of secondary meaning before it could be afforded trademark protection. Since UNB-Laredo had stipulated that it could not prove secondary meaning in the Austin market, the district court reasoned, there was nothing left to try because UNB-Laredo was not entitled to relief. 5 It therefore denied UNB-Laredo's request for a permanent injunction. UNB-Laredo appeals this ruling.


The threshold question in this case is whether the names "Union National Bank" and "Union National Bank of Texas" are eligible for protection under either the Lanham Act or the common law of unfair competition. 6 Trademark law, as the trial court observed, often presents issues that are "more gray than black and white." 7 The question of when a trade name is eligible for protection leads courts into the surgical parsing of phrases, and questions of grammar and semantics that defy easy categorization, as the subject matter is that most dynamic of creations--language. Complicating an already complicated inquiry in this case is the distinction between an issue of fact and an issue of law. The district court made its ruling on the appropriate categorization of the name "Union National Bank" as a matter of law. This was an error. However, to understand why we must examine some of the basic principles of trademark law.

I. Trademarks

A. Background

Ownership of trademarks is established by use, not by registration. 8 The first one to use a mark is generally held to be the "senior" user and is entitled to enjoin other "junior" users from using the

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mark, or one that is deceptively similar to it, subject to limits imposed by the senior user's market and natural area of expansion. 9 While trademarks have some aspects of property, i.e. the right to exclude others, they are not viewed solely as property. Thus, the right to exclude others is limited in various ways. A senior user lude others in areas where he does not currently do business nor is likely to do business in the future. Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358, 364-65 (2d Cir.1959) (owner of viable mark not able to enjoin its use by others in area where owner not likely to expand). He may not enjoin others from using the mark if he has ceased to use it. Exxon Corp. v. Humble Oil Exploration Co., 695 F.2d 96, 101 (5th Cir.1983) (Lanham Act does not allow protection of a mark solely to prevent others from using it; mark must be used in commerce). He may not enjoin others from using the mark if the likelihood of confusion between his product and the infringer's is minimal or non-existent, such as where the parties to the action use the mark in totally different markets, or for different products. See Amstar Corp. v. Domino's Pizza, 615 F.2d 252 (5th Cir.1980) (no likelihood of confusion between pizza delivery service's use of the mark "Domino" and that of a company selling sugar principally in grocery stores). See also Sun Banks of Fla. v. Sun Fed. Sav. & Loan, 651 F.2d 311 (5th Cir.1981) (no likelihood of confusion between parties' use of the word "sun" in their names where logos dissimilar, where there was evidence of extensive third-party use of word "sun," and little evidence of actual confusion).

B. Purpose of trademark protection

These limitations are manifestations of the two principal concerns of trademark law, both of which are seen as promoting competition: 10 (1) to protect consumers against confusion and monopoly, and (2) to protect the investment 11 of producers in

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their trade names to which goodwill may have accrued and which goodwill free-riders may attempt to appropriate by using the first producer's mark, or one that is deceptively similar.

"Common-law trademarks, and the right to their exclusive use, are, of course, to be classed among property rights, but only in the sense that a man's right to the continued enjoyment of his trade reputation and the goodwill that flows from it, free from the unwarranted interference by others, is a property right, for the protection of which a trademark is an instrumentality."

Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 413, 36 S.Ct. 357, 360, 60 L.Ed. 713 (1915) (emphasis added).

Thus, "the gravamen for any action of trademark infringement or common law unfair competition is whether the challenged mark is likely to cause confusion." Marathon Mfg. Co. v. Enerlite Prod. Co., 767 F.2d 214, 217 (5th Cir.1985). The idea is that trademarks are "distinguishing" features which lower consumer search costs and encourage higher quality production by discouraging free-riders. 12

From these policies and concerns stem the various doctrines which control trademark law. The doctrines represent imperfect attempts to grasp that which is inherently slippery--what is in a name? Their purpose is to provide a basis for analyzing trademarks with a view towards achieving the ends visualized by the laws.

II. Mechanics

A. In General

A party seeking an injunction for trademark infringement must clear several hurdles in order to prevail. First, he must prove that the name he seeks to protect is eligible for protection. He must then prove he is the senior user. Having proven these elements he must then show a likelihood of confusion between his mark and that of the defendant. Finally, because he is asking for the equitable remedy of an injunction, he must show that the likelihood of confusion will actually cause him irreparable injury for which there is no adequate legal remedy. It is the first of these requirements which concerns us now.

B. Classification of Marks

"The threshold issue in any action for trademark infringement is whether the word or phrase is initially registerable or protectable." Zatarains, Inc. v. Oak Grove Smokehouse...

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