Black Hills Jewelry Mfg. Co. v. Gold Rush, Inc.

• Decision Date: 13 November 1980
• Docket Number: No. 80-1426,80-1426
• Citation: 633 F.2d 746,208 U.S.P.Q. 631
• Parties: , 7 Fed. R. Evid. Serv. 252 BLACK HILLS JEWELRY MANUFACTURING CO., a South Dakota Corporation, F. L. Thorpe Company, a South Dakota Corporation and Stamper Jewelry Manufacturing, a South Dakota Corporation, Appellees, v. GOLD RUSH, INC., a North Dakota Corporation a/k/a "Black Hills Gold Jewelry by Gold Rush", Appellant, and Kirk Enterprises, Inc., a New Mexico Corporation, a/k/a "Black Hills Gold Jewelry by Kirk", LaBelle's, a Corporation, Appellant, Herberger's Department Store, a Corporation, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 746

633 F.2d 746

208 U.S.P.Q. 631, 7 Fed. R. Evid. Serv. 252

BLACK HILLS JEWELRY MANUFACTURING CO., a South Dakota

Corporation, F. L. Thorpe Company, a South Dakota

Corporation and Stamper Jewelry

Manufacturing, a South Dakota

Corporation, Appellees, v. GOLD RUSH, INC., a North Dakota Corporation a/k/a "Black

Hills Gold Jewelry by Gold Rush", Appellant,

and

Kirk Enterprises, Inc., a New Mexico Corporation, a/k/a

"Black Hills Gold Jewelry by Kirk",

LaBelle's, a Corporation, Appellant,

Herberger's Department Store, a Corporation, Appellant.

No. 80-1426.

United States Court of Appeals,

Eighth Circuit.

Submitted Sept. 8, 1980.

Decided Nov. 13, 1980.

Ronald L. Haskvitz, Minneapolis, Minn., for appellants.

Geo. A. Bangs and James P. Hurley, Rapid City, S.D., for appellees.

Before BRIGHT, ROSS and STEPHENSON, Circuit Judges.

STEPHENSON, Circuit Judge.

Plaintiffs-appellees are three South Dakota corporations located in the Black Hills area of South Dakota. They are in the business of manufacturing a certain design of gold jewelry which they market under the name "Black Hills Gold Jewelry." Appellees brought this action under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), seeking injunctive relief against the use by defendants-appellants of the words "Black Hills Gold Jewelry" to describe jewelry of a style similar to that of appellees, but not manufactured in the Black Hills of South Dakota.

The district court, ¹ relying on 15 U.S.C. §§ 1125(a) and 1127, held that although appellees were not entitled to the exclusive use of the phrase "Black Hills Gold Jewelry," an injunction would issue prohibiting appellants from using the phrases "Black Hills Gold" or "Black Hills Gold Jewelry" to describe jewelry not made in the Black Hills of South Dakota. Appellants' major contentions on appeal are that: (1) The district court incorrectly held appellants could be afforded relief based on the existence of a common law unregistered certification mark; (2) the district court was clearly erroneous in several factual findings especially in finding that the phrase "Black Hills Gold Jewelry" was merely geographically descriptive and not a generic term for the design of the gold jewelry; (3) several evidentiary rulings by the district court were improper; and (4) the issuing of the injunction was improper. We affirm.

I. BACKGROUND

Appellees are three separate, distinct, and independent companies that manufacture basically only one product, three-color gold jewelry in a grape and leaf design. All three appellees market their product as "Black Hills Gold Jewelry," sometimes preceded by their corporate name and the word "original" or "genuine." See Findings of Fact 2-11, Black Hills Jewelry Manufacturing Co. v. LaBelle's, 489 F.Supp. 754, 760 (D.S.D.1980). All three companies can trace their beginnings back to one of the earliest manufacturers of "Black Hills Gold Jewelry," Mr. F. L. Thorpe.

Until recently, appellees were the only manufacturers of this design of jewelry who marketed it as "Black Hills Gold Jewelry," and their only place of manufacture was and is the Black Hills of South Dakota. Beginning sometime in 1977, other manufacturers and retailers began to market jewelry of this or a similar design as "Black Hills Gold Jewelry," although none of the jewelry was manufactured in the Black Hills. ²

In 1978, appellant Gold Rush, Inc. began manufacturing three-color gold grape and leaf design jewelry in Bismarck, North Dakota and selling it as "Black Hills Gold Jewelry by Gold Rush." The other two appellants are retailers of "Black Hills Gold Jewelry." Appellant Herberger's purchased jewelry which was sold as "Black Hills Gold" from Gold Rush, Inc., and appellant LaBelle's purchased jewelry which was sold as "Black Hills Gold" from both Gold Rush, Inc. and Felco Jewel Industries, a manufacturer of jewelry located in Rio Rancho, New Mexico. Appellees brought suit in August 1979, against Gold Rush and later against the retailers. These suits were consolidated for trial.

On May 1, 1980, the district court issued its Findings of Facts, Conclusions of Law, and Memorandum Opinion. See Black Hills Jewelry Manufacturing Co. v. LaBelle's, 489 F.Supp. 754 (D.S.D.1980). In addition to the facts summarized above and detailed infra as discussion requires, the district court made the following findings of fact which are relevant to this appeal:

20. In connection with its store located in Sioux Falls, South Dakota, Defendant Herberger's advertised in the Sioux Falls Argus Leader a sale of "Black Hills Gold Jewelry by Gold Rush" and included in said advertisement a picture of Mount Rushmore National Monument, which is located in the Black Hills of South Dakota.

21. Defendant LaBelle's has also run advertisements promoting the sale of so-called Black Hills Gold Jewelry in newspapers in Sioux Falls, South Dakota, Grand Forks, North Dakota and Rapid City, South Dakota. These advertisements have included pictures of Mount Rushmore National Monument, even though the jewelry advertised was manufactured in either Bismarck, North Dakota or Rio Rancho, New Mexico.

26. The consuming public generally considers the terms Black Hills Gold or Black Hills Gold Jewelry to refer to jewelry products manufactured in the Black Hills of South Dakota.

27. The actions of the Defendants in promoting and selling jewelry not manufactured in the Black Hills as Black Hills Gold or Black Hills Gold Jewelry has created the likelihood of consumer confusion as to the origin of products labelled as Black Hills Gold or Black Hills Gold Jewelry.

28. The first time any of the Plaintiffs became aware of the use of the name Black Hills Gold Jewelry by a manufacturer of three-color gold, grape and leaf design jewelry located outside the Black Hills of South Dakota occurred approximately three years prior to the filing of this litigation. Upon Plaintiffs' demand, the Rhode Island firm producing such jewelry stopped using the term Black Hills Gold to identify its products.

29. The Defendants' first use of the name Black Hills Gold or Black Hills Gold Jewelry on any of their jewelry products occurred approximately eighteen months prior to the commencement of this litigation. Plaintiffs filed this action soon after the Defendants openly advertised their products in local newspapers as Black Hills Gold Jewelry.

30. Plaintiffs have been reasonably diligent in taking action to protect the name Black Hills Gold Jewelry from use by manufacturers of similar products located outside the Black Hills of South Dakota.

31. Plaintiffs have not been guilty of unclean hands surrounding their attempts to protect their use of the terms Black Hills Gold and Black Hills Gold Jewelry.

32. Use of the terms Black Hills Gold or Black Hills Gold Jewelry will cause consumers to purchase products of the Defendants when they in fact wished to purchase a product manufactured in the Black Hills of South Dakota. This will enable the Defendants to wrongfully trade upon and profit from Plaintiff's reputation and good will and will result in business losses to Plaintiffs.

Id. at 761-62. The district court granted appellees injunctive relief on what we view as two alternative holdings. The court first stated:

The statute (section 43(a) of the Lanham Act, 11 U.S.C. § 1125(a)) under which plaintiffs brought this action appears to continue this tradition of providing protection against outsiders for those using a geographical name. The statute prohibits a "false designation of origin," which would appear to prohibit a producer from labelling his product so as to make consumers believe it came from somewhere it did not.

Id. at 759. The court also held that:

Another section of the Lanham Act (15 U.S.C. § 1127) deals with what is known as a certification mark. This section also appears to provide protection for a group of producers using a geographical name to designate their product.

Id.

II. COMMON LAW CERTIFICATION MARK

Neither party questions the district court's conclusion that appellees are not entitled to exclusive use of the phrase "Black Hills Gold Jewelry" as a trademark. The district court so concluded because appellees were unable to establish secondary meaning. See Conclusions of Law 6, Black Hills Jewelry Manufacturing Co. v. LaBelle's, supra, 489 F.Supp. at 762.

Appellants object to what they contend to be the sole holding of the district court-that appellees were entitled to prohibit appellants from using the phrase "Black Hills Gold Jewelry" by virtue of appellees having a common law unregistered certification mark. We agree with appellants that appellees are not entitled to the benefit of a certification mark.

15 U.S.C. § 1127 defines certification mark as "a mark used upon or in connection with the products or services of one or more persons other than the owner of the mark to certify regional or other origin * * *." (Emphasis added.) Here the products are those of appellees, who are not "one or more persons other than the owner of the mark." It is clear that the language of the statute prohibits the producers of the goods from being the owner of a certification mark. ³

III. SECTION 43(a) OF THE LANHAM ACT

We disagree with appellants' argument that the district court relied solely on the existence of a common law unregistered certification mark to afford relief. The district court's Memorandum Opinion discusses in detail unfair competition under section 43(a) of the Lanham Act, 11 U.S.C. § 1125(a). See Black Hills Jewelry Manufacturing Co. v. LaBelle's, supra, 489 F.Supp. at 756-59. It concluded that pre-Lanham Act cases established it was possible for a group of manufacturers to assert the right to a geographical designation without establishing secondary meaning and a single source. Id. at 757. The court also concluded that section 43(a) continued this tradition of providing protection against outsiders who use the same geographical designation. Id. at 759.

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