American Intern. Group, Inc. v. American Intern. Bank

• Decision Date: 14 February 1991
• Docket Number: No. 88-5558,88-5558
• Citation: 926 F.2d 829
• Parties: AMERICAN INTERNATIONAL GROUP, INC., Plaintiff-Appellant, v. AMERICAN INTERNATIONAL BANK, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 829

926 F.2d 829

17 U.S.P.Q.2d 1907

AMERICAN INTERNATIONAL GROUP, INC., Plaintiff-Appellant, v. AMERICAN INTERNATIONAL BANK, Defendant-Appellee.

No. 88-5558.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Dec. 7, 1988.

Decided Feb. 14, 1991.

Stephen B. Judlowe, Hopgood, Calimafde, Kalil, Blaustein & Judlowe, New York City, for plaintiff-appellant.

Joel Mark, Baker & McKenzie, Los Angeles, Cal., for defendant-appellee.

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

Before WALLACE, Chief Judge, POOLE and KOZINSKI, Circuit Judges.

POOLE, Circuit Judge:

I. Overview

Appellant, American International Group, Inc. ("the Group"), sued American International Bank ("the Bank") under the Lanham Trade Mark Act for federal trademark infringement, 15 U.S.C. Sec. 1114(1) (1963), and false designation of origin, 15 U.S.C. Sec. 1125(a) (1982), and, under California state law for trademark dilution, trademark infringement and unfair competition. California Business and Professional Code Secs. 14330, 14400 and 17200. Appellant sought to recover damages and injunctive relief. The district court granted summary judgment in favor of the Bank on the grounds that appellant's claims were barred by laches. We reverse and remand. The Group has adduced evidence sufficient to raise factual disputes which were not amenable to summary judgment.

II. Factual and Procedural Background

The Group, a Delaware corporation with its principal place of business in New York, serves as a holding company for its more than 150 subsidiary corporations throughout the United States and in over 130 foreign nations. The Group is one of the largest underwriters of commercial and industrial insurance in the United States, with assets currently exceeding $21 billion and annual revenues of more than $8 billion.

The Group began using the service mark "American International" in 1926. ¹ Approximately eighty of the Group's subsidiaries bear names containing the words "American International"; still others utilize the abbreviations "AI" or "AIG." The Group registered the service marks "American International" and "AIG" with the U.S. Patent and Trademark Office in October, 1975 and February, 1978, respectively. Subsequently, in 1981 and 1982, the Group reregistered those service marks to extend their use from strictly insurance underwriting purposes to also encompass a variety of additional financial services (most of which are insurance-related, such as actuarial, pension-fund, and installment loan services, and others relating to real estate).

The Group opened its first California office in San Francisco in the 1960's. The Group's presence in Los Angeles, the center of appellee's banking operations, began in 1972.

In June, 1983, Wayland Mead, in-house counsel for the Group, learned of the Bank's use of the words "American International" while browsing through a Los Angeles telephone directory. Some six months later, Mead contacted the Group's outside counsel, Roy Hopgood, requesting that he investigate the Bank. Although steps were taken to look into the matter, the Group did not warn the Bank of its alleged infringement of the "American International" service mark until January, 1986, a full two and one-half years after Mead's discovery. ² The Group offers no excuse for this delay.

Appellee, the Bank, is a California corporation which provides commercial banking services in the Los Angeles area. Prior to initiating operations in 1978, the Bank did not conduct a search of federal trademark records to ascertain whether its name had been preempted. Nor did it attempt to register the "American International" mark with the U.S. Patent and Trademark Office.

Beginning in July 1982, the Bank sought and later obtained insurance from National Union Fire Insurance Company of Pittsburgh Pennsylvania ("National Union") which, as it turns out, was actually a wholly owned subsidiary of the Group. The Bank's financial condition was at that time extremely precarious, prompting National Union and the Group's Banking Division in New York to monitor closely the appellee's financial progress. Because of the Bank's poor performance, National Union refused to renew the Bank's policy in early 1985.

By the end of 1985, however, the Bank had extricated itself from its dire financial straits and had begun to reflect a profit. ³ At about the same time, in January 1986, the Bank received a letter from Hopgood written on behalf of appellant notifying appellee of its possible infringement of the Group's service mark and requesting that the Bank change its name. In February 1986, the Bank opened a second branch office as scheduled in Alhambra, California. Appellee is currently seeking approval to open a third office in Glendale, California.

The Group brought its complaint against the Bank on June 26, 1986. The Bank counterclaimed for damages, injunctive relief and declaratory relief. Later, the Bank moved for summary judgment based on the affirmative defense of laches. The district court granted the Bank's motion and, pursuant to the parties' stipulation to dismiss the Bank's counterclaim without prejudice, entered a final judgment on December 4, 1987. The Group timely appealed.

III. Standard of Review

We review de novo the district court's grant of summary judgment. Pope v. Savings Bank of Puget Sound, 850 F.2d 1345, 1356-57 (9th Cir.1988). Summary judgment is proper if, when viewing the evidence in the light most favorable to the party opposing the motion, the court determines that there remains no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Lundy v. Union Carbide Corp., 695 F.2d 394, 396 (9th Cir.1982).

IV. Discussion

The Group argues that material factual issues exist which should have precluded the grant of summary judgment with respect to the laches defense asserted by the Bank. Appellant contends, in the alternative, that even if the finding that laches barred the recovery of money damages was proper, the court committed error by concluding as a matter of law that appellant's claim for prospective injunctive relief was also necessarily foreclosed.

The district court may properly grant summary judgment on the basis of laches. See Boone v. Mechanical Specialties, 609 F.2d 956, 960 (9th Cir.1979) (upholding summary judgment of a Title VII claim on grounds of laches). "Issues concerning the correct test to be used in evaluating trademark infringement are reviewed de novo." Clamp Manufacturing Co. v. Enco Manufacturing Co., 870 F.2d 512, 514 (9th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 202, 107 L.Ed.2d 155 (1989). We agree with the district court that the proper standard for evaluating this case is that enumerated in E-Systems, Inc. v. Monitek, Inc, 720 F.2d 604 (9th Cir.1983). In E-Systems we established a balancing test to be applied in examining the issue of laches which requires the district court to consider a variety of factors, including (1) the strength and value of the trademark rights asserted; (2) the senior user's diligence in enforcing the mark; (3) the harm to the senior user if relief is denied; (4) whether the junior user acted in good faith ignorance of the senior's rights; (5) the degree of competition between senior and junior users; and (6) the extent of harm suffered by the junior user because of the senior user's delay in asserting his rights. Id. at 607.

A. Existence of Contested Material Facts

The district court issued an express statement of uncontroverted facts and conclusions of law on the Bank's laches defense. The court resolved each of the E-Systems factors in the Bank's favor, concluding that (1) the Group's mark is not strong since the term "American International" has commonly been employed by many companies; (2) the Group has failed to diligently police infringement of its mark since it "did nothing--intentionally or unintentionally--while [the Bank] struggled to establish itself as a viable entity, even though [the Group] probably knew of the struggle and surely knew of the existence of defendant ... at least as early as 1983, and yet it took no step to enforce its alleged rights until 1986"; (3) any prejudice accruing to the Group in the event the Bank is permitted to continue using the name "American International" is likely to be de minimis; (4) the Bank was acting in good faith ignorance of the Group's rights since even had appellee performed a trademark search before selecting its name it would only have discovered a registration restricted to insurance underwriting services, not commercial banking; (5) there is minimum competition between the two parties making it extremely improbable that consumers will confuse their services; and (6) as "a struggling entity that only recently turned the corner into profitability in the highly competitive Southern California banking world," detriment to the Bank would be extreme should the Group prevail in this litigation.

Despite the district court's extensive findings on these factors, we conclude that the entry of summary judgment on the grounds that laches was established as a matter of law was improper. First, with regard to the strength and value of the "American International" mark and appellant's diligence in protecting it, the Group presented uncontroverted evidence showing that it had utilized the "American International" name since 1926; that over 80 of its subsidiaries also use the name; that it had operated successfully under this name, amassing assets in the billions of dollars; that it has conducted extensive advertising; and that it has on many occasions attempted through litigation and otherwise to protect its service mark from infringement by companies representing a variety of financial fields, not simply infringers in the insurance industry. Although a suggestive or descriptive mark such as "American International" is inherently a weak mark, it "may...