Advantage Rent-A-Car v. Enterprise Rent-A-Car

• Decision Date: 22 January 2001
• Docket Number: INC,No. 99-51145,CO,RENT-A-CA,99-51145
• Citation: 238 F.3d 378,57 USPQ2d 1561
• Parties: (5th Cir. 2001) ADVANTAGE, Plaintiff-Counter Defendant-Appellee, v. ENTERPRISE, Defendant-Counter Plaintiff-Appellant
• Court: U.S. Court of Appeals — Fifth Circuit

Page 378

238 F.3d 378 (5th Cir. 2001)

ADVANTAGE RENT-A-CAR, INC., Plaintiff-Counter Defendant-Appellee, v. ENTERPRISE RENT-A-CAR, CO., Defendant-Counter Plaintiff-Appellant.

No. 99-51145

UNITED STATES COURT OF APPEALS, Fifth Circuit

January 22, 2001

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

Before: GOODWIN¹, GARWOOD and JONES, Circuit Judges.

GOODWIN, Circuit Judge:

Enterprise Rent-A-Car Company (Enterprise) appeals the judgment and order denying Enterprise's post-judgment motion, which disposed of all claims between Enterprise and Advantage Rent-A-Car, Inc. (Advantage) under the Federal Trademark Dilution Act (FTDA) and the Texas, Louisiana, Arkansas, and New Mexico anti-dilution statutes over use of the slogan "We'll Pick You Up."

FACTUAL & PROCEDURAL BACKGROUND

Both Enterprise and Advantage are rental car companies. The rental car market is divided into two segments: one that caters primarily to business and leisure travelers and one that provides replacement cars to drivers whose cars are in the shop for repair. Both companies are active in both segments.

In 1990, Advantage produced a television commercial that depicted an actor holding a steering wheel. A voice-over discussed the various reasons the actor might need a rental car. At the end of the commercial, a taller actor entered and lifted the first actor off the ground and into his arms, while the voice-over stated: "We'll even pick you up." The commercial aired on the Spurs Network at least 24 times in 1992, at least 12 times in 1993, at least 17 times in 1994, and at least 49 times by the end of the professional basketball season in May 1995. From August 1997 to April 1998, the commercial aired 289 times on Fox Sport Southwest. The commercial is the only advertising piece in which Advantage employed the phrase "We'll Even Pick You Up." Although Advantage has received several federal registrations for various slogans, it did not file an application to register the phrase "We'll Even Pick You Up" until May 3, 1999.

Meanwhile, Enterprise began using the phrases "Pick the Company that Picks You Up" and "Pick Enterprise, We'll Pick You Up" from 1994-1995. It first used the slogan "We'll Pick You Up" in 1994 and obtained federal service mark registrations for "Pick Enterprise. We'll Pick You Up" on January 16, 1996 and "We'll Pick You Up"on August 5, 1997. Enterprise estimates that it has spent more than $130 million on advertising containing the slogan, "We'll Pick You Up." It has used the slogan in all of the media forms in which it advertises, including print ads, yellow pages, radio ads, and commercials shown on prime time national television on major broadcast networks and cable stations. Approximately 75 percent of Enterprise's advertising includes the phrase "We'll Pick You Up." Enterprise has won marketing awards for its advertising campaign involving the "We'll Pick You Up" slogan.

Both Enterprise and Advantage became aware that variations of the slogan "We'll Pick You Up" were appearing in advertisements, and after some correspondence back and forth, Advantage filed suit against Enterprise. Enterprise answered that it did not infringe on Advantage's right in the phrase, and counterclaimed against Advantage. Enterprise asserted that Advantage had infringed Enterprise's federally registered "We'll Pick You Up" slogan and was diluting Enterprise's rights in the slogan.

Advantage moved for summary judgment against Enterprise's FTDA dilution claim on the ground that the FTDA expressly provides relief only if the accused use "begins after the mark has become famous," 15 U.S.C. §1125(c)(1), and that the FTDA could not be applied retroactively against Advantage's use of its slogan. Whether or not Enterprise had attained fame with its slogan became the principal issue in the case.

After months of discovery, the parties narrowed the issues by entering into a partial consent judgement on May 24, 1999. They agreed that due, at least in part, to the presence of their respective company names in conjunction with the phrases, consumers were not confused by the competing advertisements that used the slogans. As a result of the partial consent judgment, Advantage's claims against Enterprise dropped out of the case, and only Enterprises claims for dilution under the FTDA and under the four state dilution statutes remained.

After trial, the district court entered a judgment that denied Enterprise relief on any of its dilution claims. Having found that Enterprise did not demonstrate that its mark was sufficiently famous or distinctive, the district court did not reach the questions whether: (1) Enterprise's claim under the FTDA must fail because of Advantage's prior use of its slogan; (2) Enterprise's claim under the FTDA must fail because the FTDA does not apply retroactively; (3) Enterprise met its burden of proof on dilution and/or likelihood of dilution; or (4) Enterprise met its burden of proof by clear and convincing evidence that Advantage abandoned its rights in its slogan. The district court dismissed Advantage's pending motions for summary judgment as moot.

Enterprise then filed a motion under FRCP 52 and 59, in which it requested that the district court: (1) amend its conclusions of law and reach new conclusions by applying the statutory factors on fame under the FTDA and (2) enter judgment in favor of Enterprise on the "fame requirements of the FTDA and the Arkansas and New Mexico anti-dilution statutes, and on the less stringent "distinctiveness" standard of the Texas and Louisiana anti-dilution statutes.

The district court denied Enterprise's post-judgment motion, and Enterprise appealed.

DISCUSSION

To prevail on its federal dilution claim, Enterprise must prove that its slogan is "famous and distinctive;" that Advantage adopted its mark after Enterprise's had become "famous and distinctive;" and that Advantage caused dilution of Enterprise's mark. Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658, 670 (5th Cir. 2000). Enterprise must prove actual economic harm. See id. The New Mexico and Arkansas anti-dilution statutes also require that the mark be famous. See AR ST §4-71-213 and NM ST §57-3B-15.

The district court disposed of the federal dilution claim on the ground that Enterprise's slogan was insufficiently famous for the states' or the FTDA's anti-dilution protections to attach. It conducted an impressive review of dilution law and noted that the FTDA provides a nonexclusive list of factors that courts may consider in deciding whether a mark is distinctive and famous for dilution purposes.²

To the extent that the district court's opinion can be read to suggest that Enterprise needed to prove fame beyond its market, we disagree. Rather, we agree with the Seventh Circuit, which has rejected this reading of the statute. See Syndicate Sales Inv. v. Hampshire Paper Corp., 192 F.3d 633, 640 (7th Cir. 1999). See also Restatement (Third) Of Unfair Competition §25 cmt. e (1995) (stating that "[a] mark that is highly distinctive only to a select class or group of purchasers may be protected from diluting uses directed at that particular class or group"). Enterprise needed only to show that its "We'll Pick You Up" mark is famous within the car rental industry, not in a broader market.

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