Ale House Management v. Raleigh Ale House

• Decision Date: 24 January 2000
• Docket Number: No. 99-1175,CA-98-247-5-F,99-1175
• Parties: (4th Cir. 2000) ALE HOUSE MANAGEMENT, INCORPORATED, a Florida corporation, Plaintiff-Appellant, v. RALEIGH ALE HOUSE, INCORPORATED, a North Carolina corporation; JOHN A. DURANKO, a resident of Florida, Defendants-Appellees. (). . Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 137

205 F.3d 137 (4th Cir. 2000)

ALE HOUSE MANAGEMENT, INCORPORATED, a Florida corporation, Plaintiff-Appellant, v. RALEIGH ALE HOUSE, INCORPORATED, a North Carolina corporation; JOHN A. DURANKO, a resident of Florida, Defendants-Appellees.

No. 99-1175 (CA-98-247-5-F).

UNITED STATES COURT OF APPEALS, FOR THE FOURTH CIRCUIT.

Argued: January 24, 2000.

Decided: March 1, 2000.

Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh.

James C. Fox, District Judge.

COUNSEL ARGUED: Michael J. Burley, MICHAEL J. BURLEY, P.A., Tequesta, Florida, for Appellant. David Ernest Bennett, COATS & BENNETT, P.L.L.C., Cary, North Carolina, for Appellees. ON BRIEF: Larry L. Coats, COATS & BENNETT, P.L.L.C., Cary, North Carolina, for Appellees.

Before NIEMEYER, Circuit Judge, Deborah K. CHASANOW, United States District Judge for the District of Maryland, sitting by designation, and Andre M. DAVIS, United States District Judge for the District of Maryland, sitting by designation.

Affirmed by published opinion. Judge Niemeyer wrote the opinion, in which Judge Chasanow and Judge Davis joined.

OPINION

NIEMEYER, Circuit Judge:

Ale House Management, Inc., an operator of a small chain of facilities selling food and beer in Florida, seeks to enjoin Raleigh Ale House, Inc. from opening a similar type of facility in Raleigh, North Carolina. Ale House Management asserts a proprietary interest in (1) the words "ale house," (2) both the exterior and interior appearances of its facilities, and (3) the copyright of its floor plan drawings. The district court rejected Ale House Management's claims and granted Raleigh Ale House summary judgment. It also awarded Raleigh Ale House attorneys fees. We affirm.

I

Ale House Management, Inc. ("AHM") established its first facility for selling food and beer in 1988 and has successfully expanded by opening other such facilities. By the time this action was commenced, it had opened 21 facilities throughout Florida. Since the early to mid1990s, each facility has been named after its geographical location plus the words "ale house" (e.g., Orlando Ale House).

The exterior appearances of AHM's facilities are somewhat similar. Each is a rectangular building with a simulated tower, or two, on its roof and a sign on the side designating the facility's name in red block letters. The buildings, however, do not share a common color scheme, size, or shape. The roofs reflect different architectural styles and are constructed of dissimilar materials. Awnings, window sizes, and window shapes vary among the facilities. The exterior materials used to build the facilities vary and include stucco, brick, and siding. The interiors of AHM facilities appear to be more similar, conveying the image of a wood-and-brass decorated pub or pub-style restaurant. The general layout features a central rectangular bar, either as an island or a peninsula, and varying numbers of seats around the bar.

Booth seating is located generally on one side of the island or peninsula, and stool seating is located on the other. Numerous television monitors and video games are present, as are pool tables. While the interiors do present a similar general appearance, they are not identical, and virtually all vary in the amount, configuration, and placement of seating, the number of pool tables, and the precise configuration of the bar.

AHM facilities serve both food and alcohol; food accounts for 70% of gross sales, and alcohol constitutes the remaining 30%. The menus are extensive, and more than 20 types of beer are served on tap. Marketing data indicate that customers dining with their families are AHM's most frequent guests.

AHM has plans to expand its chain northward into the states of Georgia, South Carolina, North Carolina, and Virginia, and it has entered into an investment agreement to finance the development of future AHM facilities. As part of its expansion plan, AHM's president visited potential sites in Atlanta, Georgia, and solicited information on possible locations in various cities in the Carolinas, including Raleigh, Charlotte, Myrtle Beach, and Charleston.

Prior to committing to any specific expansion outside of Florida, AHM learned that Raleigh Ale House, Inc. was preparing to open a facility in Raleigh named the "Raleigh Ale House." Raleigh Ale House's facility, which previously housed a Chinese restaurant, is a rectangular building with gray-colored siding and a tower on which "Raleigh Ale House" is painted in red block letters. To design the renovation of the restaurant, Raleigh Ale House hired an architect from Florida, whose offices are located in a county where six AHM facilities are located. The architect's plan for the Raleigh Ale House shows a rectangular island bar, with booth seating on one side, stool seating on the other, and tables and chairs at one end. The plans show five television monitors, two pool tables, and a jukebox.

After Raleigh Ale House had begun advertising for employees but before it opened for business, AHM commenced this action against Raleigh Ale House and its architect, seeking declaratory and injunctive relief, as well as damages, costs, and attorneys fees, for false designation of origin of trade name and trade dress under § 43(a) of the Lanham Trademark Act (the "Lanham Act"), 15 U.S.C. § 1125(a); trade-name infringement, trade-dress infringement, and unfair trade competition under federal common law and North Carolina law; and copyright infringement under the Copyright Act, 17 U.S.C. § 101 et seq. The court granted Raleigh Ale House's motion for summary judgment, adopting Raleigh Ale House's memorandum of law for its opinion. The court thereafter denied AHM's motion for reconsideration based on newly discovered evidence and awarded Raleigh Ale House attorneys fees under both the Lanham Act and the Copyright Act. This appeal followed.

II

At oral argument, AHM focused its argument on its assertion that Raleigh Ale House had appropriated its trade name and trade dress by "deliberately copying" them. While there is no direct evidence of this in the record and little indirect evidence, this pronouncement, even if true, does not itself establish a violation of trademark law. Some proprietary interest is necessary before trademark protection applies. Indeed, even if a party does "copy" a design and "sells" an almost identical product, "this it [may have] every right to do under the federal . . . laws." Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 231 (1964). This is so because even intentional copying can benefit the public: "Sharing in the goodwill of an article unprotected by patent or trade-mark is the exercise of a right possessed by all -and in the free exercise of which the consuming public is deeply interested." Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 122 (1938). Accordingly, before considering the significance of AHM's assertions of intentional copying, we must address whether AHM had an exclusive proprietary interest in either the words "ale house" or the trade dress of its facilities.

A

Addressing first AHM's claim to exclusive use of the words "ale house," we begin by noting that AHM has not registered "ale house." Nevertheless, it may still seek protection under the Lanham Act, which also protects unregistered marks. See 15 U.S.C. § 1125(a).

To ascertain whether a mark is protected, we must determine whether it is (1) generic, (2) descriptive, (3) suggestive, or (4) arbitrary or fanciful. See Perini Corp. v. Perini Construction, Inc., 915 F.2d 121, 124 (4th Cir. 1990) (adopting the analytic model advanced by Judge Friendly in Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976)). A generic mark "refers to the genus or class of which a particular product is a member," and such a mark "can never be protected." Ashley Furniture Indus., Inc. v. Sangiacomo N.A. Ltd., 187 F.3d 363, 369 (4th Cir. 1999). In this case, because Raleigh Ale House suggests that the term"ale house" is generic and AHM has not registered it, AHM bears the burden of establishing that it is not generic. See Mil-Mar Shoe Co. v. Shonac Corp., 75 F.3d 1153, 1156 (7th Cir. 1996).

Acknowledging that "ale house" may be generic in some applications -such as in reference to a neighborhood English pub -AHM argues that it is not generic in reference to a facility that serves both food and beer, particularly when it has an extensive food menu. AHM has failed, however, to present any evidence that"ale house" does not refer to institutions that serve both food and beer. What it did provide was evidence that AHM facilities are primarily large restaurants that also serve beer and that food sales generate the majority of their revenue.

On the other hand, Raleigh Ale House presented extensive evidence, including citations to newspapers, dictionaries, books, and other publications, that the term "ale house" is generic, referring to several types of facilities. See Glover v. Ampak, Inc., 74 F.3d 57, 59 (4th Cir. 1996) (endorsing use of similar sources of evidence to establish that a term is generic). This evidence indicates that "ale house" sometimes characterizes facilities that specialize in alcohol. For example, one article refers to "ale houses and brew pubs where an appreciation of beer is learned and passed on," and another restaurant review calls an institution with "ale house" in its name an "unrenovated saloon." Both a dictionary and a book chapter entitled "The Emergence of the Alehouse" refer to an ale house as a place where ale is sold and served. But Raleigh Ale House's evidence also indicates that "ale house" can refer to facilities that serve both food and alcohol. This evidence includes newspaper articles referring to a number of facilities with "ale house" in their names. Indeed, one Internet search revealed well over 100 facilities denominated as "ale houses." Raleigh Ale House presented articles in which "ale house"...