Cellular Sales, Inc. v. Mackay, 90-2473

• Decision Date: 13 August 1991
• Docket Number: No. 90-2473,90-2473
• Citation: 942 F.2d 483
• Parties: CELLULAR SALES, INC. and John Webb, Appellees, v. Rick MACKAY, d/b/a Cellular Sales North, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 483

942 F.2d 483

19 U.S.P.Q.2d 1712

CELLULAR SALES, INC. and John Webb, Appellees, v. Rick MACKAY, d/b/a Cellular Sales North, Appellant.

No. 90-2473.

United States Court of Appeals Eighth Circuit.

Submitted April 11, 1991.

Decided Aug. 13, 1991.

Steve Leben, argued (Thomas McGraw, III, on brief), Overland Park, Kan., for appellant.

Gary Long, Kansas City, Kan., for appellees.

Before WOLLMAN, Circuit Judge, and ROSS and HENLEY, Senior Circuit Judges.

ROSS, Senior Circuit Judge.

Plaintiffs Cellular Sales, Inc. and John Webb filed this action charging that defendant Rick Mackay, by doing business as Cellular Sales North, is misappropriating plaintiffs' trade name. The district court agreed and issued a preliminary injunction enjoining Mackay from using the name "Cellular Sales" in the future. Because we conclude that the name "Cellular Sales" is generic in nature and therefore not entitled to trade name protection, we reverse the decision of the district court.

I.

In October 1986, plaintiff John Webb became an agent for a company named Cellular One, a regional cellular telephone company that is licensed by the Federal Communications Commission to provide cellular telephone services. In May 1987, Mackay agreed to work with Webb as a salesman and installer of cellular phones. Both Webb and Mackay had salesmen working for them and each earned commissions on sales. Mackay alleges that the two operated in a joint venture, while Webb alleges that he operated as a sole proprietorship until February 1989 when he formed the corporation Cellular Sales, Inc., in which he was the only shareholder and officer. Webb assigned right to the name "Cellular Sales" to the corporation.

On July 23, 1987, Webb filed a "Registration of Fictitious Name" with the Missouri Secretary of State for the name, "Cellular Sales." Missouri law requires the registration of any fictitious name under which someone is doing business in Missouri, but the law does not provide for any trade name protection as a result of such filings. Mo.Rev.Stat. §§ 417.200-417.230.

In mid-1989, Mackay decided that there was a potential for development of cellular phone sales in North Kansas City, but Webb was not interested in opening a north office. In August 1989, Mackay eventually leased a north office location on his own. He obtained a phone for that location and immediately began using the name, "Cellular Sales North." On October 10, 1990, an advertisement was placed in the Kansas City Times under the name "Cellular Sales," listing telephone numbers for both the north office and the original office.

In November 1989, Mackay began making arrangements to obtain his own agent's contract with Cellular One, the regional cellular air carrier. Mackay eventually obtained his own agents's contract with Cellular One effective December 1, 1989. On December 2, 1989, Webb and Mackay agreed to end their business relationship. Thereafter, Webb filed suit against Mackay alleging trade name infringement.

The district court found that the name, "Cellular Sales," has a unique significance and that the use of the name "Cellular Sales North" would likely mislead some members of the public into believing that Mackay was operating a branch or franchised office affiliated with Webb. The district court found that Mackay had not proven his joint venture theory and concluded that "defendant has a likelihood of success of no more than 40% or 45% in establishing equal rights to the name 'Cellular Sales.' " The court also found that there was a threat of irreparable harm because confusion of the name could cause lost business which would be extraordinarily difficult to ascertain and evaluate. The lower court entered a preliminary injunction against any future use by Mackay of the business name "Cellular Sales" and Mackay was instructed to begin use of a clarifying name, such as "Cellular North," in response to incoming calls.

II.

Whether a preliminary injunction should issue involves consideration of (1) the threat of irreparable harm to the movant; (2) whether the threatened injury outweighs damage to the opposing party; (3) the probability that the movant will succeed on the merits; and (4) the public interest. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 113 (8th Cir.1981) (en banc).

In determining whether a trade name is entitled to protection, it must first be classified into one of four categories: (1) generic, (2) descriptive, (3) suggestive, or (4) arbitrary or fanciful. Vision Center v. Opticks, Inc., 596 F.2d 111, 115 (5th Cir.1979), cert. denied, 444 U.S. 1016, 100 S.Ct. 668, 62 L.Ed.2d 646 (1980). A generic term is the name of a particular type, kind, genus or class of goods in which an individual article or service is but a member. Id. It is well established that generic terms are not entitled to trademark protection because such words are in "the public domain and available for all to use," Hallmark Cards, Inc. v. Hallmark Dodge, Inc., 634 F.Supp. 990, 997 (W.D.Mo.1986), and because such terms "describ[e] not only a particular product or service but also a type or kind of product or service." First Fed. Sav. & Loan Ass'n of Council Bluffs v. First Fed. Sav. & Loan Ass'n of Lincoln, 929 F.2d 382, 383 (8th Cir.1991).

The standard of proof that must be met by the plaintiff in seeking injunctive relief varies depending upon the type of mark at issue. If the mark is the strongest possible mark--an arbitrary or fanciful mark--it is "entitled to maximum legal protection and do[es] not require proof of secondary meaning." Hallmark Cards, supra, 634 F.Supp. at 998. If the mark is the weakest protectable mark--a descriptive trademark or trade name--the plaintiff must prove that the mark has an accepted "secondary meaning."

Secondary meaning refers to a mark that "has become distinctive of the applicant's goods in commerce, i.e., to a mark that consumers associate with a producer or distributor rather than with the product itself." Best Buy...