Ameritech, Inc. v. American Information Technologies Corp.

• Decision Date: 09 April 1987
• Docket Number: No. 85-3408,85-3408
• Citation: 1 USPQ2d 1861,811 F.2d 960
• Parties: AMERITECH, INC., an Ohio Corporation, Plaintiff-Appellant, v. AMERICAN INFORMATION TECHNOLOGIES CORPORATION, a Delaware Corporation, d/b/a Ameritech, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 960

811 F.2d 960

1 U.S.P.Q.2d 1861

AMERITECH, INC., an Ohio Corporation, Plaintiff-Appellant, v. AMERICAN INFORMATION TECHNOLOGIES CORPORATION, a Delaware Corporation, d/b/a Ameritech, Defendant-Appellee.

No. 85-3408.

United States Court of Appeals Sixth Circuit.

Argued Feb. 10, 1986.

Decided Feb. 12, 1987.

Rehearing Denied April 9, 1987.

Ray L. Weber, Lead Counsel (argued), Edwin W. (Ned) Oldham, Oldham, Oldham & Weber Co., L.P.A., Akron, Ohio, for plaintiff-appellant.

Stanley L. Ferguson, Helen E. Witt, Robert G. Krupka (argued), Alexander F. MacKinnon, Chicago, Ill., for defendant-appellee.

Before KEITH ^* and MARTIN, Circuit Judges, and SPIEGEL, ^** District Judge.

BOYCE F. MARTIN, Jr., Circuit Judge.

Ameritech, Inc. of Bedford Heights, Ohio, appeals a summary judgment in favor of American Information Technologies Corporation, in a trademark infringement action based on Ohio law. The district court held that the infringement claims of Ameritech, Inc. were barred by the defense of laches and that the claims failed under both "related" and "unrelated goods" analyses. The district court did not consider Ameritech's dilution of trademark and reverse confusion of sponsorship claims. We find the laches defense inapplicable. Also, because trademark dilution claims are cognizable under Ohio law and because we think an Ohio court, if presented with the issue, would recognize reverse confusion claims, we reverse and remand for consideration of those claims.

I. Facts

Ameritech, Inc., plaintiff below, is a small Ohio corporation that reclaims industrial oils. It collects used oil and lubricants, removes contaminants, replenishes and then returns the oil products to its customers. The company also develops and blends new industrial oils, provides laboratory analysis and consulting services, and sells or rents lubricant containers. Ameritech, Inc. has operated one plant since 1979 in Bedford Heights, Ohio. Total sales in the first five years approached two million dollars and the company turned its first profit in 1984. Plaintiff's 1981 long term plan called for patents, licensees, "going public," building plants outside Ohio, and national advertising. Today, while continuing with efforts to achieve these goals, it still makes 90% of its sales in Ohio.

In December 1979, plaintiff registered under Ohio law the trade name "Ameritech." It also adopted an unregistered trademark in a star configuration of the letters "A" and "T" with "Ameritech" printed next to the logo and its address under the name. Plaintiff has used this trade name and mark since 1979 but has not sought federal registration for either. During plaintiff's first five years, promotional expenses for oil reclamation services did not exceed $2,500. Plaintiff's president estimated the company spent a total of $100,000 during that period on advertising for laboratory and related oil services.

Defendant American Information Technologies is headquartered in Chicago and is a holding company for five Bell telephone companies which provide local telephone service in five midwestern states. Each of the local Bell companies owns a subsidiary that sells telephone equipment. Additionally, defendant owns a number of other subsidiaries whose functions vary from selling advertising to research in telecommunications. Defendant has $17 billion in assets and its annual profits exceed $1 billion.

Defendant has tried to create an image of state-of-the-art communications technology. It sought a name that would not limit the markets it might later choose to enter and which would establish it as more than just a telephone company. In June 1983, defendant announced its selection of the "Ameritech" trade name. Defendant asserts that it adopted the name as a contraction of its formal corporate name, American Information Technologies. The corresponding trademark consisted of "Ameritech" in angled block type with a star in the "A" and a streak through the remaining letters.

The day following the announcement of the new trade name, defendant advertised the new name in newspapers across the country, including The Cleveland Plain Dealer. In addition to carrying defendant's full page advertisement on June 17, 1983, The Plain Dealer also printed an article on defendant's debut under the trade name "Ameritech". Plaintiff's president first learned of defendant's adoption of "Ameritech" from the article and advertisement in the Cleveland newspaper. He contacted a Plain Dealer reporter that day to object to defendant's use of his company's trade name, complaining of customer confusion caused by the advertisement. He informed the reporter that plaintiff's attorneys would contact defendant the following Monday. The Plain Dealer published a story on the parties' overlapping use of "Ameritech" on June 18. The article mentioned the potential for customer confusion and recounted defendant's intention to apply for federal registration of "Ameritech" and for state registration in Illinois, Indiana and Wisconsin, but not in Ohio or Michigan. The article also mentioned plaintiff's declaration that it would contact defendant.

Plaintiff did not contact defendant before filing this action on December 14, 1983. Plaintiff's president claims that he concluded from the June 18th article that defendant would neither seek Ohio registration nor use "Ameritech" in Ohio, and defendant did not contact plaintiff during the six months between the announcement of the trade name and the commencement of this suit. In September 1983, however, defendant launched a national advertising campaign. It also issued "Ameritech" stock certificates and placed its trademark on its business paraphernalia and equipment. At one point, defendant unsuccessfully attempted to register "Ameritech" in Ohio; the Ohio Registry rejected the application and instructed defendant to first seek plaintiff's consent to use the trade name. Defendant did not do so.

In its complaint, plaintiff alleged that defendant had violated its common law rights in the "Ameritech" trade name and trademark. Plaintiff submitted a number of affidavits attesting to the confusing effect of defendant's advertising campaign on plaintiff's business: plaintiff's salesmen encountered increased difficulty in securing sales interviews because potential customers confused plaintiff with defendant and discarded plaintiff's mail; plaintiff's officials incurred antagonism from established customers who believed plaintiff had been sold to defendant; plaintiff's president had to reassure smaller customers and stockholders that plaintiff had not become a subdivision of defendant.

After extensive discovery defendant filed a motion for summary judgment arguing: (1) that the claims were barred by estoppel by laches; (2) that there was no likelihood of confusion because the parties' businesses are totally unrelated; and (3) that there was no likelihood of confusion even under a "related goods" analysis. The district court granted defendant's motion on each ground. Ameritech, Inc. v. American Information Technologies Corporation, 609 F.Supp. 611 (N.D.Ohio 1985). The district court held that plaintiff's action was barred by estoppel by laches because it unreasonably delayed filing a complaint for six months, which resulted in prejudicial reliance by defendant. It also concluded that there was no likelihood of consumer confusion between the source of plaintiff's oil reclamation services and the source of defendant's telecommunications products and services. It held that there could be no confusion and therefore no infringement where the parties' goods are unrelated and noncompetitive. The court then determined that plaintiff had also failed to show a likelihood of confusion for related but non-competing goods. The district court did not address the reverse confusion or dilution arguments.

II. Law & Analysis

This case is brought under diversity jurisdiction and, because Ameritech, Inc. did not file for federal trademark protection, is based on Ohio law. The substantial overlap of state and federal trademark law, however, often obscures the necessity of determining whether state or federal law applies. International Order of Job's Daughters v. Lindeburg and Co., 633 F.2d 912, 916 (9th Cir.1980), cert. denied, 452 U.S. 941, 101 S.Ct. 3086, 69 L.Ed.2d 956 (1981). More particularly, because Ohio courts use federal as well as state trademark law, this Court may also do so. Jewel Companies, Inc. v. Westhall Co., 413 F.Supp. 994, 999 (N.D.Ohio 1976), aff'd, 575 F.2d 1176 (6th Cir.1978). In analyzing the issues presented by this case, we deal first with the laches ruling and then turn to the trademark infringement claims.

A. Laches Defense

The district court held that the defense of laches applied because plaintiff's six month delay between defendant's announcement of its adoption of "Ameritech" and plaintiff's filing of its trademark action, was unreasonable in light of defendant's large advertising expenses. We disagree. Plaintiff is entitled "to some latitude to assess both the impact of another's use of an allegedly infringing trademark as well as the wisdom of pursuing litigation on the issue." Tandy Corp. v. Malone & Hyde, Inc., 769 F.2d 362, 366, reh'g denied, 777 F.2d 1130 (6th Cir.1985), cert. denied, --- U.S. ----, 106 S.Ct. 2277, 90 L.Ed.2d 719 (1986). As we said in Tandy, "there is a strong presumption that plaintiff's delay ... is reasonable", so long as the analogous statute of limitations has not elapsed. Id. at 366. In this case, the analogous Ohio law is the two-year statute of limitations for injury to persons and personal property, Ohio Rev.Code Sec. 2305.10, and plaintiff's six month delay falls well within its bounds.

Moreover, there are no unusual circumstances nor any affirmative estoppel conduct by plaintiff to overcome the strong presumption that laches do not bar an action before the running of the analogous statute of limitations. Prior to...