Beacon Mut. Ins. Co. v. Onebeacon Ins. Corp.

• Decision Date: 15 July 2005
• Docket Number: No. C.A.01-354S.,C.A.01-354S.
• Citation: 376 F.Supp.2d 251
• Parties: The BEACON MUTUAL INSURANCE COMPANY, Plaintiff, v. ONEBEACON INSURANCE CORP., Defendant.
• Court: U.S. District Court — District of Rhode Island

Page 251

376 F.Supp.2d 251

The BEACON MUTUAL INSURANCE COMPANY, Plaintiff, v. ONEBEACON INSURANCE CORP., Defendant.

No. C.A.01-354S.

United States District Court, D. Rhode Island.

July 15, 2005.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Michael A. Gamboli, Robert K. Taylor, Steven E. Snow, Partridge Snow & Hahn LLP, Providence, RI, for Plaintiff.

Brian J. Lamoureux, William M. Dolan, III, Brown Rudnick Berlack Israels LLP, Providence, RI, Dalila Argaez Wendlandt, Martha J. Collins, Steven A. Kaufman, Ropes & Gray, Boston, MA, for Defendant.

DECISION AND ORDER

SMITH, District Judge.

I. Introduction

The Beacon Mutual Insurance Company ("Plaintiff" or "Beacon") is the largest writer of workers' compensation insurance in the state of Rhode Island. It has used the name "The Beacon Mutual Insurance Company" (along with a lighthouse logo) since 1992. Meanwhile, OneBeacon Insurance Group ("Defendant" or "OneBeacon"), formerly known as CGU Insurance, adopted its current name, and began using a lighthouse logo as well, in June 2001. Following this name change, Beacon brought this lawsuit claiming that Defendant's adoption of the name "OneBeacon" and a lighthouse logo violated federal and state unfair competition law. Beacon also asserted claims for service mark infringement and trademark dilution under state law.

OneBeacon responded to Beacon's suit with a Motion for Summary Judgment, which this Court granted. Beacon Mut. Ins. Co. v. OneBeacon Ins. Group, 290 F.Supp.2d 241 (D.R.I.2003) ("Beacon I"), rev'd 376 F.3d 8 (1st Cir.2004). In granting summary judgment, this Court relied primarily on the First Circuit's opinion in Astra Pharm. Prods., Inc. v. Beckman Instruments, Inc., 718 F.2d 1201 (1st Cir.1983), which held that in order to find a likelihood of confusion between parties' marks sufficient to support a claim of unfair competition, that confusion "must be based on the confusion of some relevant person; i.e., a customer or purchaser," id. at 1206 (emphasis added). Because "Plaintiff ha[d] not established that the [allegedly confused] entities and persons ... are [] consumers of the product," Beacon I, 290 F.Supp.2d at 246, this Court concluded that Plaintiff failed "to demonstrate that the confusion it identifies is connected in any way to its commercial interests," id. at 252, as required to maintain an unfair competition claim.

On appeal, the First Circuit reversed. Beacon Mut. Ins. Co. v. OneBeacon Ins. Group, 376 F.3d 8 (1st Cir.2004)("Beacon II"). Without addressing its earlier holding in Astra that the relevant confusion must be shown to exist in customers or purchasers, the First Circuit implicitly abdicated the Astra standard by concluding that evidence of actionable commercial injury in a case such as this was "not restricted to the loss of sales to actual and prospective buyers of the product in question." Id. at 10. Instead, the First Circuit enunciated a new standard for what constitutes actionable confusion: "Confusion is relevant when it exists in the minds of persons in a position to influence the purchasing decision or persons whose confusion presents a significant risk to the sales, goodwill, or reputation of the trademark owner." Id. (emphasis added). Further, "relevant commercial injury includes not only loss of sales but also harm to the trademark holder's goodwill and reputation." Id.

As a result of the First Circuit's decision, the case returned to this Court and a bench trial was held from February 28, 2005, to March 4, 2005, with final arguments on March 9, 2005. What follows are the Court's findings of fact and conclusions of law.

II. Findings of Fact and Conclusions of Law

The marks that Plaintiff seeks to protect are not registered. "Therefore the present claim is based upon § 43(a) of the Lanham Act which covers unregistered trademarks." Boston Beer Co. v. Slesar Bros. Brewing Co., 9 F.3d 175, 180 (1st Cir.1993). Section 43(a) of the Lanham Act forbids persons from using,

in connection with any goods or services ... any word, term, name, symbol, or device, or any combination thereof ... which —

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.

15 U.S.C. § 1125(a)(1)(A).

To make out a claim under § 43(a), the owner of an unregistered mark must establish that its mark is (1) either inherently distinctive or has acquired secondary meaning, and (2) is likely to be confused with the defendant's mark. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769-70, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992).

A. The Spectrum of Distinctiveness

In analyzing whether a mark is distinctive, marks are divided into four categories: (1) generic, (2) descriptive, (3) suggestive, and (4) arbitrary or fanciful. Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir.1976). Suggestive, arbitrary and fanciful marks are considered inherently distinctive, while descriptive marks are deemed distinctive only upon a showing that they have acquired secondary meaning. I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27, 39 (1st Cir.1998). Generic marks are generally not protected. Id. Whether a mark is inherently distinctive is a question of fact. Boston Beer, 9 F.3d at 180.

To be classified as "fanciful," terms will usually have to have been "invented solely for their use as trademarks." Abercrombie, 537 F.2d at 11 n. 12. Arbitrary marks are "common word[s]... applied in an unfamiliar way." Id. Suggestive marks "require imagination, thought and perception to reach a conclusion as to the nature of goods." 537 F.2d at 11 (quoting Stix Prods., Inc. v. United Merch. & Mfrs., Inc., 295 F.Supp. 479, 488 (S.D.N.Y.1968)). Finally, "[a] term is descriptive if it forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the goods." Id. (quoting Stix Prods., Inc., 295 F.Supp. at 488).

Beacon's mark is most appropriately deemed descriptive. The word "beacon" in the mark is meant to suggest that Beacon will serve as a good guide to consumers. See Miriam-Webster's Collegiate Dictionary 98 (10th ed.2002) (defining "beacon" as a "signal for guidance" and "a source of light or inspiration"); see also Platinum Home Mortgage Corp. v. Platinum Fin. Group, Inc., 149 F.3d 722, 728 (7th Cir.1998) ("In this instance, `platinum' describes the quality of plaintiff's mortgage services and suggests that it provides a superior service...."); American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 11 (5th Cir.1974) (upholding a district court's conclusion "that the word `heritage' is generic or descriptive of life insurance"); Hiram Walker & Sons, Inc. v. Penn-Maryland Corp., 79 F.2d 836, 838 (2d Cir.1935) (holding that "imperial" was descriptive of quality of whiskey). The descriptive nature of the mark is confirmed by the widespread use of the term "beacon" with a lighthouse logo by many other companies around the country.¹ See American Heritage Life Ins., 494 F.2d at 11 ("The industry itself evidently recognizes the truth of the district court's finding because the word `heritage' is used in the corporate names of insurance companies all over the country."). Finally, Beacon itself has capitalized upon the descriptive significance of its mark by putting out a newsletter in the past entitled "Guiding Light." (Tr. of 2/28/05 at 85 (testimony of Michael Lynch, Vice President of Legal Services at Beacon).)

B. Proving Secondary Meaning

Because Beacon's mark is descriptive, and therefore not inherently distinctive, Beacon must show secondary meaning to avail itself of the protection of the Lanham Act. A mark that is not inherently distinctive is protected under the Lanham Act only upon a showing by the mark owner, by a fair preponderance of the evidence, that the mark has acquired secondary meaning. See 2 J. Thomas McCarthy, McCarthy On Trademarks And Unfair Competition § 15:33 (4th ed.2005) (hereinafter, "McCarthy"). A mark has acquired secondary meaning only if its primary significance in the minds of the public is to identify the source of the product or service. See I.P. Lund, 163 F.3d at 41. Market surveys have "become a well-recognized means of establishing secondary meaning." Boston Beer Co., 9 F.3d at 182. Other factors a court may look to "in determining whether a term has acquired secondary meaning are: (1) the length and manner of its use, (2) the nature and extent of advertising and promotion of the mark and (3) the efforts made in the direction of promoting a conscious connection ... between the name ... and a particular product...." Id. (citation omitted).

Beacon retained the services of Dr. Jacob Jacoby as an expert witness on secondary meaning. Dr. Jacoby produced a written report which concludes that the phrase "The Beacon," has acquired a substantial degree of secondary meaning among individuals in Rhode Island responsible for selecting their company's workers' compensation insurance and/or commercial or industrial insurance. (Pl.'s Ex. 406.) This conclusion is based upon the results of three surveys conducted in Rhode Island in the Fall of 2001. In these surveys, a total of 237 targeted respondents (persons who choose, or help to choose, the provider of workers' compensation or commercial/industrial insurance for their company) were asked what they thought of when they heard or saw the term "The Beacon." According to Jacoby, 69% of the respondents who heard and 79% of the respondents who saw the term "The Beacon" said that it signified a workers' compensation insurance company.

Dr. Jacob Jacoby's survey supports the conclusion that Beacon's marks have acquired secondary meaning.² Dr. Jacoby's survey demonstrates that individuals in Rhode Island responsible for, or influential in, selecting their company's workers'...