Pacific Telesis Group v. International Telesis Communications

• Decision Date: 18 May 1993
• Docket Number: No. 91-55866,91-55866
• Citation: 994 F.2d 1364
• Parties: PACIFIC TELESIS GROUP, a Nevada corporation, Plaintiff-Appellee, v. INTERNATIONAL TELESIS COMMUNICATIONS, a California corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1364

994 F.2d 1364

26 U.S.P.Q.2d 1786

PACIFIC TELESIS GROUP, a Nevada corporation, Plaintiff-Appellee, v. INTERNATIONAL TELESIS COMMUNICATIONS, a California corporation, Defendant-Appellant.

No. 91-55866.

United States Court of Appeals Ninth Circuit.

Argued and Submitted April 5, 1993.

Decided May 18, 1993.

William J. Robinson, Graham & James, Los Angeles, CA, for defendant-appellant International Telesis Communications.

Andrew J. Belansky and David A. Dillard, Christie, Parker & Hale, Pasadena, CA, for plaintiff-appellee Pacific Telesis Group.

Appeal from the United States District Court for the Central District of California.

Before: NOONAN and LEAVY, Circuit Judges, and TANNER, ^* District Judge.

NOONAN, Circuit Judge:

In 1988, Pacific Telesis Group (PTG) brought an action against International Telesis Communications (ITC) for infringement of its service mark in violation of the Lanham Act, 15 U.S.C. § 1114 and Cal.Bus. and Prof.Code § 14400; for false designation of origin contrary to the Lanham Act, 15 U.S.C. § 1125(a); and for unfair competition contrary to Cal.Bus. and Prof.Code § 17200. The district court found these violations to have occurred, 795 F.Supp. 979. We affirm.

FACTS

PTG was formed in 1983 in anticipation of the court-mandated break-up of American Telephone and Telegraph Company. It was to take over the businesses of AT & T's regional subsidiary, Pacific Telephone and Telegraph Company, and Pacific Telephone's subsidiary, Bell Telephone Company of Nevada. It was incorporated on October 26, 1983 and became the holding company for the operating companies in California and Nevada. Its subsidiaries were Pacific Bell, Nevada Bell, Pac Tel Publishing, Pac Tel Communications Services and Pac Tel Mobile Access.

Prior to the incorporation of PTG, the executives of Pacific Telephone had selected Pacific Telesis Group as the name for the new holding company. On August 5, 1983, Pacific Telephone distributed to customers in California, and Nevada Bell distributed to customers in Nevada, an advertisement for "Telesis" telephone services such as call-forwarding, call-waiting, and 3-way calling. On August 8, 1983 Pacific Telephone filed an application for federal registration of TELESIS as a service mark, and on September 11, 1983, the United States Patent and Trademark Office issued the registration for communications services, "namely telephone services." In the fall of 1983 the mark was similarly registered as a California service mark. At the beginning of 1984 these marks were assigned by Pacific Telephone with its business to PTG.

Simultaneous press conferences in San Francisco and Reno on August 8, 1983 announced the selection of "Pacific Telesis Group" as the name of the new holding company. An advertisement in the San Francisco Chronicle on August 7, 1983 announced:

Pacific Telephone gives birth to a new family of companies: Introducing Pacific Telesis Group

PTG was then described and the full name repeated six times. The dictionary definition of "telesis" was given: "progress intelligently planned and directed."

Thereafter, from September 1983 through January 1984, advertisements were run in the Wall Street Journal, Barrons, Business Week, Forbes, Fortune, Newsweek and Time, using the full name of PTG and describing its goals. The ads typically put "Pacific Telesis" in larger type than "Group." "Pacific" and "Telesis" were equally emphasized. The advertising was addressed both to potential investors and potential customers. Its cost was approximately $2.5 million.

Advertising of PTG's full name continued in the same national publications into 1986 with the aim of increasing recognition of the name. Through 1984 and 1985 PTG also sponsored the "Nightly Business Report" on 260 Public Broadcasting Stations. The program was regularly seen by approximately two million people. The full name of the sponsor was given. From September 1985 into 1989, PTG ran a series of commercials on television in the major metropolitan centers The break-up of AT & T and the development of telecommunications technology in the 1980s led to the development of the business of consulting on telecommunications, a business conducted by PTG subsidiaries and by consultants independent of the telephone companies. Pacific Bell presents its account teams as advisors, problem solvers, and strategic planners. They will design voice and data networks. Pac Tel Connection, a division of Pac Tel Communications Systems, offers the design of voice and data networks. Pac Tel Cellular and Pac Tel Paging, the successors of Pac Tell Access, not only provide cellular phones and paging but advise on their design and use in a system. In 1984 PTG also formed Pacific Telesis International. For the first three years of its existence this company offered telecommunications consulting services overseas. From 1987 onwards it has continued to do consulting work but has also developed overseas telecommunications projects in which it might acquire ownership. It, too, is known as "A Pacific Telesis Company."

                of California.   The combined print and television advertising of PTG's name from 1984 through 1989 cost close to $50 million.   In the same period the subsidiaries of PTG spent about $290 million.   In this advertising in print, on the radio, and on television, each subsidiary was identified by its own name and as "A Pacific Telesis Company."
                

ITC, the defendant, was incorporated in California in October 1985. Its founder, David Zweiban, testified that in 1983 and 1984 he had used the name "International Telesis Group" to describe and promote his telecommunications consulting business in England and the United States. He also testified that he was unaware of PTG's service mark before he used "Telesis" in combination with "International" and that he did not hear of the name "Pacific Telesis" until late 1985 or early 1986. Nonetheless, he admitted that in April 1985 he attended a trade show sponsored by Pacific Telesis, which in announcing its presentation of the show described itself as "A Pacific Telesis Company."

On November 24, 1986 Zweiban applied for federal registration of the service mark "International Telesis Group." In this application he declared "the service mark was first used in connection with the services" on November 30, 1985 and was first used in interstate commerce on November 17, 1986. On December 4, 1986 Zweiban registered with the state of California "International Telesis Group" as a service mark. In his application he stated the date the mark had been first used in California or anywhere was October 30, 1985. The first advertisement in which the term "Telesis" appeared for ITC was the December 1985 issue of Mercury, a publication of the Los Angeles Athletic Club.

The services provided by ITC, according to an advertisement in the record, are, generally, "Voice and Data Communication Consulting Services." More particularly, they are:

"Telecommunications Planning for New Facilities

Building Cabling and Riser System Design

PABX Selection and Implementation

Integrated Voice, Data, Cabling Systems

Private Satellite, Microwave, and Fiber-Optic Network

Electronic Mail and Document Delivery Systems"

ITC offers its services to a broad spectrum of potential customers, including airlines, banks, law firms, utilities and universities, and addresses its sales pitch not only to telecommunications managers, but to auditors, bankers, lawyers and sales directors.

PROCEEDINGS

PTG brought this action on March 25, 1988. A bench trial, lasting 12 days, began on April 9, 1990. On July 16, 1991 the district court entered findings of fact and conclusions of law and held that ITC's "use of the mark TELESIS constitutes a federal and state of California service mark infringement, federal false designation of origin and state of California trademark infringement and unfair competition." The district court accordingly enjoined ITC from "using in any way the service mark 'TELESIS' or any other name or mark confusing or similar to TELESIS, alone or in combination with other words or designs, in connection with the Salient findings of facts by the court were as follows:

advertising, offering, or performing of voice and telecommunications consulting services, or other business activities relating to telecommunication."

14. David Zweiban, now president of defendant corporation, made several previous declarations, in writing, under penalty of perjury that the first use of the name International Telesis Group in connection with telecommunications consulting services in the United States was in 1985.

15. Mr. Zweiban was fully aware of plaintiff's adoption of TELESIS prior to any use by him of TELESIS in any combination with International.

. . . . .

17. The services offered by plaintiff's subsidiaries substantially overlap the areas of communication technology in which defendant offers its consulting services.

. . . . .

20. ...

TELESIS is the dominant component of plaintiff's service marks and trade name. TELESIS does not describe any characteristics, functions, uses or qualities of telecommunications services. As applied to such services, it is arbitrary.

b. Proximity [of] the services. The areas of telecommunication technology offered by plaintiff's subsidiaries overlap the telecommunications services as to which defendant offers consulting services.

c. Similarity of marks/names. Defendant uses the identical dominant component "telesis" in its name(s).

d. Evidence of actual confusion. There was no evidence of actual confusion presented at trial.

e. Marketing channels used. There is virtually a complete overlap of existing or potential customers in that defendant has offered its telecommunications services to small, medium and multi-branch large concerns, most of which are in California.

f. Likely degree of purchaser care. There is a wide range in the level of sophistication among those concerns selecting telecommunications...