950 F.Supp. 783 (S.D.Tex. 1996), C. A. H-95-1197, Elvis Presley Enterprises, Inc. v. Capece

Docket Nº:C. A. H-95-1197
Citation:950 F.Supp. 783
Party Name:Elvis Presley Enterprises, Inc. v. Capece
Case Date:December 30, 1996
Court:United States District Courts, 5th Circuit, Southern District of Texas
 
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Page 783

950 F.Supp. 783 (S.D.Tex. 1996)

ELVIS PRESLEY ENTERPRISES, INC., Plaintiff,

v.

Barry CAPECE; Velvet, Ltd., a Texas Limited Partnership; and Audley, Inc., a Texas Corporation, Defendants.

Civil Action No. H-95-1197.

United States District Court, S.D. Texas, Houston Division.

Dec. 30, 1996

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W. Mack Webner, Cynthia Clarke Weber, Sughrue Mion Zinn MacPeak and Seas, Washington, DC, for Elvis Presley Enterprises, Inc.

Wayne D. Davidson, Wayne D. Davidson & Associates, Houston, TX, Terry Fitzgerald, Fitzgerald Gartner & Follis, Houston, TX, William Dean Raman, Arnold White & Durkee, Austin, TX, John Paul Venzke, Houston, TX, for Barry Capece, Velvet Ltd., Audley, Inc.

ORDER

GILMORE, District Judge.

On the 25th day of November, 1996, the above-styled and numbered case came on for trial. Both sides appeared and announced ready for trial, and the case was tried to the Court from November 25 to November 26, 1996. At the conclusion of Plaintiff's case in chief, Defendants moved for judgment as a matter of law as to Plaintiff's claims. Defendants' motion was denied. The Court enters the following findings of fact and conclusions of law on the evidence presented.

I. BACKGROUND

Elvis Presley Enterprises ("EPE") is a Tennessee corporation formed in 1981 under the terms of a testamentary trust created by Elvis Presley ("Presley"). EPE is the assignee and registrant of all trademarks, copyrights, and publicity rights belonging to the Presley estate, including over a dozen United States federal trademark registrations and common law trademarks of Presley's name and likeness. None of these marks, however, are registered service marks for use in the restaurant and tavern

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business. EPE's exclusive rights are marketed through a licensing program which grants licensees the right to manufacture and sell Elvis Presley merchandise worldwide. Products range from t-shirts to juke boxes. Merchandise sales have generated over $20 million dollars in revenue in the last five years and account for the largest percentage of EPE's annual earnings. In addition, EPE operates a mail order business and several retail stores at Graceland, the Elvis Presley home in Memphis, Tennessee, including two restaurants and an ice cream parlor. EPE recently announced plans to open an Elvis Presley night club in 1997 on Beale Street in Memphis and is also currently exploring the possibility of opening similar establishments throughout the world.

In April of 1991, Barry Capece ("Capece"), operating through the now dormant limited partnership, Beers 'R' Us, opened a nightclub on Kipling Street in Houston, Texas named "The Velvet Elvis." The name, "The Velvet Elvis," referring to one of the more coveted velvet paintings, was selected for the powerful association it immediately invokes with a time when lava lamps, velvet paintings, and bell bottoms were popular. Capece intended the bar to parody an era remembered for its sensationalism and transient desire for flashiness. By taking bad, albeit once widely popular, art and accentuating it with gallery lights and by showcasing decor which mocks society's idolization of less than scrupulous celebrities, Capece ridiculed a culture's obsession with the fleeting and unimportant. His biting criticism provides his patrons with a constant reminder not to take themselves nor the world they live in too seriously.

In order to register the new bar's name, Capece filed a federal service mark application with the United States Patent and Trademark Office (PTO) on August 28, 1991. In December of 1992, pursuant to § 12(a) of the Trademark Act of 1946, the service mark was published in the Official Gazette of the Patent Office for the purpose of providing notice of the mark's pending registration and an opportunity for parties to object to the application's approval. Although aware of the service mark's publication in the Official Gazette, EPE did not file an opposition to the mark within the proscribed thirty day period. On March 9, 1993, registration for the service mark, "The Velvet Elvis," was issued to Capece for use in the restaurant and tavern business. For business reasons, however, the Kipling Street nightclub was closed in July of 1993.

Shortly thereafter, Capece began soliciting investors and quickly obtained the financial backing to reopen "The Velvet Elvis" at a different location. Another limited partnership, Velvet Ltd., comprised of general partner, Audley, Inc. and three limited partners, was formed to replace Beers 'R' Us as "The Velvet Elvis' " new owner. With the necessary funds in hand, Capece leased a vacant sports bar on Richmond Avenue and began renovation in January of 1994. In July of that same year, EPE sent a cease and desist letter to Capece, threatening legal action if the bar opened with EPE's trademark, "Elvis," in its name. Capece was "All Shook Up." Despite the warning letter, however, the Richmond Street "Velvet Elvis" opened for business in August of 1994.

The bar currently serves a wide selection of liquors, including premium scotches, bourbons and tequilas. Food is available and menu items range from appetizers to complete entrees. "The Velvet Elvis" also claims to be the first cigar bar in Houston, specializing in high quality cigars. "The Velvet Elvis's" decor, consistent with its theme, features velvet paintings along with a widely divergent assortment of eclectic art. In addition to the velvet Elvis painting in the back lounge, velvet portraits of Stevie Wonder, Chuck Berry, Bruce Lee, and a collection of velvet nudes are hung throughout the bar. Also a part of the bar's decor are lava lamps, cheap ceramic sculptures, beaded curtains, and vinyl furniture. A painting of the Mona Lisa exposing her breasts hangs prominently in the front room. Centerfolds from Playboy magazines dating back to the sixties completely cover the walls of the men's room. Reminders of Elvis Presley, including numerous magazine photographs and a statute of Elvis playing the guitar, were at one time amongst the bar's decorations, but have since been replaced with art work unrelated to

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Elvis or his music but equally as reminiscent of the forgotten era the bar attempts to mimic.

Pictures and references to Elvis Presley were also used in advertisements promoting the establishment until 1995. A number of ads contained actual pictures of Elvis Presley. Some ads made direct references to the deceased singer or Graceland using phrases such as "The King Lives," "Viva la Elvis," or "Elvis has not left the building." Others, while avoiding explicit references to Elvis or his persona, boldly displayed the "Elvis" portion of "The Velvet Elvis" insignia with an almost unnoticeable "Velvet" appearing alongside in smaller script. The bar's menu bears a caption, "The King of Dive Bars." A frozen drink, "Love Me Blenders," is served in the bar and the menu features items such as peanut butter and banana sandwiches, and "Your Football Hound Dog."

Plaintiff claims that the focal point of the bar's name, decor, and advertisements is Elvis Presley. To protect its exclusive right to license the commercial use of Elvis Presley's name, image, and likeness, Plaintiff filed suit against the Velvet, Ltd., Audley, Inc., and Capece, as owner of "The Velvet Elvis" service mark, on April 21, 1995. Plaintiff sued Defendants for unfair competition, trademark infringement, and dilution, under both the common law and the Lanham Act, 15 U.S.C. § 1051 et seq. (1994), and for infringement of its common law and corresponding statutory right of publicity. Plaintiff seeks injunctive relief, an accounting for profits, attorneys fees, costs, and an Order to the Commissioner of Trademarks to cancel Capece's registration for "The Velvet Elvis."1

Defendants, on the other hand, maintain that Plaintiff is merely a victim of "Suspicious Minds." Defendants contend that its valid, registered service mark presumptively entitles it to the exclusive right to use the mark in its business. Further, because the bar is meant and viewed as a parody, Defendants also argue that use of its service mark has not yet nor will in the future cause confusion as to the identity of the bar's owners, sponsors, or affiliates. Defendants claim that all possibility of confusion or dilution of Plaintiff's trademarks is negated with the customer's immediate appreciation of the bar's parodic message. Defendants also assert that their parody is protectable expression under the First Amendment, further warranting the Court's dismissal of all Plaintiff's claims. Alternatively, Defendants argue that to allow Plaintiff to succeed in this suit after its inexcusable delay in asserting opposition to Defendants' use of "The Velvet Elvis" as a service mark would result in extreme prejudice to Defendants and, consequently, that this action is subject to the equitable defenses of laches and acquiescence.

II. UNFAIR COMPETITION AND TRADEMARK INFRINGEMENT

Liability in this case will depend on whether Defendants have improperly utilized the Elvis moniker or Elvis's image and likeness in the promotion and operation of its tavern. Stated simply, the Court must determine whether Defendants stepped on Plaintiff's blue suede shoes. Plaintiff claims the inclusion of its "Elvis" trademark in the service mark "The Velvet Elvis" coupled with Defendants' use of the image and likeness of Elvis Presley in advertising, promoting, and rendering bar services creates confusion as to whether EPE licensed, approved, sponsored, endorsed or is otherwise affiliated with "The Velvet Elvis," constituting unfair competition and trademark infringement under the common law and Lanham Act.

To prevail on its trademark infringement and unfair competition claims under the Lanham Act, Plaintiff needs to...

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