AuSable River Trading Post, LLC v. Dovetail Solutions, Inc., 082918 FED6, 18-1368

Docket Nº:18-1368
Opinion Judge:SUTTON, CIRCUIT JUDGE.
Party Name:AuSable River Trading Post, LLC, Plaintiff-Appellant, v. Dovetail Solutions, Inc.; Tawas Area Chamber of Commerce, Defendants-Appellees.
Attorney:Ronald R. Tyler, TYLER & TYLER, P.C., East Tawas, Michigan, for Appellant. Robert G. Kamenec, TAWAS AREA CHAMBER OF COMMERCE, Bloomfield Hills, Michigan, for Appellee Tawas Area Chamber of Commerce.
Judge Panel:Before: SUTTON, DONALD, and THAPAR, Circuit Judges.
Case Date:August 29, 2018
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

AuSable River Trading Post, LLC, Plaintiff-Appellant,

v.

Dovetail Solutions, Inc.; Tawas Area Chamber of Commerce, Defendants-Appellees.

No. 18-1368

United States Court of Appeals, Sixth Circuit

August 29, 2018

Appeal from the United States District Court for the Eastern District of Michigan at Bay City. No. 1:16-cv-11207-Thomas L. Ludington, District Judge.

ON BRIEF:

Ronald R. Tyler, TYLER & TYLER, P.C., East Tawas, Michigan, for Appellant.

Robert G. Kamenec, TAWAS AREA CHAMBER OF COMMERCE, Bloomfield Hills, Michigan, for Appellee Tawas Area Chamber of Commerce.

Before: SUTTON, DONALD, and THAPAR, Circuit Judges.

OPINION

SUTTON, CIRCUIT JUDGE.

Every winter for the last sixty years or so, Tawas, Michigan has become the home of the "Perchville" festival, replete with a polar bear swim and a fishing contest. The Tawas Area Chamber of Commerce organizes the annual February event and has registered the name Perchville as a trademark. A local company-the AuSable River Trading Post-wants to make Perchville-branded tee-shirts, and sued the Chamber to invalidate its mark. The district court declined. Because "Perchville" is a distinctive term eligible for protection under the Lanham Act, we affirm.

I.

Tawas rests on the shores of Lake Huron, about an hour south (by car) from Alpena. Like many towns, it has a chamber of commerce. The Tawas Area Chamber of Commerce has organized the Perchville festival for many decades. In 2002, the organization decided to register "Perchville" as a trademark for apparel and other goods. It has kept the registration ever since, with one exception. The registration accidentally expired in 2013, after which the Chamber reapplied and obtained a new registration in February 2015. While dues-paying members of the Chamber of Commerce may use the Perchville mark, non-members must pay a licensing fee to use it.

The Trading Post operates a two-part business. It prints words or images onto goods that it sells wholesale to retailers, and it sells some merchandise in its own retail store. In October 2015, the Trading Post's owner asked about using the Perchville mark. After learning that the Trading Post would have to pay a $750 fee to use the mark, the owner decided to produce Perchville-branded tee-shirts without the Chamber's permission.

When the Chamber learned what was going on, it obtained a state court injunction against one of the Trading Post's employees. The Trading Post in response filed this separate action in state court against the Chamber and its third-party management company, Dovetail Solutions, seeking a declaratory judgment invalidating the Perchville mark under federal law. The Chamber removed the action to federal court.

The district court granted the Chamber's motion for summary judgment and concluded that the prior state court injunction against the Trading Post employee prevented his employer from relitigating the dispute. On appeal, this court reversed, holding that the injunction against the employee did not apply to the Trading Post. See AuSable River Trading Post, LLC v. Dovetail Sols., Inc., 874 F.3d 271 (6th Cir. 2017).

On remand, the district court granted summary judgment to the Chamber of Commerce, holding that "Perchville" is an inherently distinctive mark suitable for trademark protection. The court declined to exercise supplemental jurisdiction over the Trading Post's remaining state law claims and remanded them to state court. The Trading Post appealed.

II.

The Lanham Act protects trademarks, defined as "any word, name, symbol, or device, or any combination thereof" that a person uses "to identify and distinguish his or her goods" in the marketplace. 15 U.S.C. § 1127.

Case law refines all of this in several ways. On the unprotected side of things, a generic term, such as "light beer," or a purely descriptive word, such as "tasty," does not receive trademark protection. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768-69 (1992); 2 McCarthy on Trademarks and Unfair Competition §§ 11:18, 12:18 (5th ed. 2018). On the protected side of things, two types of distinctive marks receive protection: (1) inherently distinctive marks; and (2) descriptive marks that become distinctive when they become associated with a particular good over time. See Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 210-11 (2000); Two Pesos, 505 U.S. at 768-69.

Refining things further, case law divides inherently distinctive marks into three types: (1) arbitrary, (2) fanciful, and (3) suggestive. Arbitrary marks consist of real words that possess a meaning unrelated to the product. Think Camel cigarettes or Apple computers. Champions Golf Club, Inc. v. The Champions Golf Club, Inc., 78 F.3d 1111, 1117 (6th Cir. 1996). Fanciful marks are made-up words. Think Kodak film. Id. Suggestive marks are words or phrases that require "imagination and perception to determine the nature of the goods." Innovation Ventures, LLC v. N.V.E., Inc., 694 F.3d 723, 730 (6th Cir. 2012) (quotation omitted). Think "Old Spice" products, which require a consumer to imagine how "old spices" smell. All three types of marks share this attribute: "[T]heir intrinsic nature serves to identify a particular source of a product." Two Pesos, 505 U.S. at 768.

We can illustrate these concepts by reference to trademarks with respect to places and events-the context of today's case. As a general rule, the Lanham Act makes it difficult to trademark a geographic name, such as Manhattan, New York or Tawas, Michigan. The Act also makes it difficult to trademark purely...

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