Chance v. Pec-Tel Teletrac

• Decision Date: 20 March 2001
• Docket Number: PAC-TEL,No. 98-55160,98-55160
• Parties: (9th Cir. 2001) ALLEN CHANCE, an individual d/b/a/ T.A.B. SYSTEMS, Plaintiff-Appellant, v.TELETRAC INC., a Calif. Corp.; TELETRAC INC., a Calif. Corp.; KENNETH WEISNER, an individual;TELETRAC, a joint venture; INTERNATIONAL TELETRAC SYSTEMS INC., a Corp.; AIR TOUCH TELETRAC, a Delaware Corp.; AIR TOUCH COMMUNICATIONS INC., a Delaware Corp., Defendants-Appellees
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1151

242 F.3d 1151 (9th Cir. 2001)

ALLEN CHANCE, an individual d/b/a/ T.A.B. SYSTEMS, Plaintiff-Appellant, v. PAC-TEL TELETRAC INC., a Calif. Corp.; TELETRAC INC., a Calif. Corp.; KENNETH WEISNER, an individual; PAC-TEL TELETRAC, a joint venture; INTERNATIONAL TELETRAC SYSTEMS INC., a Corp.; AIR TOUCH TELETRAC, a Delaware Corp.; AIR TOUCH COMMUNICATIONS INC., a Delaware Corp., Defendants-Appellees.

No. 98-55160

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted April 10, 2000

Filed March 20, 2001

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] R. Joseph Trojan, Esq., Eric J. Aagaard, Esq., Shelly Sanchez Maurer, Esq., Keyvan Davoudian, Esq., Trojan Law Offices, Beverly Hills, California, for plaintiff-appellant Allen Chance, an individual d/b/a/ T.A.B. Systems.

David Romanski, Esq., Karren M. Shorofsky, Steinhart & Falconer, San Francisco, California, for defendants-appellees Pac-Tel Teletrac Inc., a California Corporation; Kenneth Weisner, an individual; Pac-Tel Teletrac, a joint venture; International Teletrac Systems Inc., a Corporation; Airtouch Teletrac, a Delaware Corporation; and Airtouch Commications Inc., a Delaware Corporation.

David S. Elkind, Esq., Reboul, MacMurray, Hewitt, Maynard & Kristol, New York, New York, for Teletrac Inc., a California Corporation.

Appeal from the United States District Court for the Central District of California Mariana R. Pfaelzer, District Judge Presiding. D.C. No.CV-96-04817-MRP

Before: Ferdinand F. Fernandez, and Kim McLane Wardlaw, Circuit Judges, and Charles R. Weiner, ¹ Senior District Judge.

I.

WEINER, Senior District Judge:

In this appeal, we must determine when a service mark is first used in commerce under the Lanham Act, 15 U.S.C. S 1127. Allen Chance, d/b/a/ T.A.B. Systems ("T.A.B."), claims first use of the service mark "TeleTrak " in connection with T.A.B.'s lost and found tag service. Pac-Tel Teletrac, Inc. and related entities (collectively "Pac-Tel") claim priority of use in connection with their radio frequency based system for tracking fleet vehicles and recovering lost or stolen vehicles. The district court entered summary judgment in favor of Pac-Tel, finding that Pac-Tel's free services to the Los Angeles County Office of Education ("LACOE") in April 1990 constituted first use. We conclude that Pac-Tel's first use of the mark was even earlier than that found by the district court, and clearly pre-dated T.A.B.'s first use. Accordingly, we affirm the entry of summary judgment.

II.

As early as 1984, Pac-Tel's predecessor in interest, North American Teletrac ("NAT") began developing a radio-frequency based system for tracking fleet vehicles and recovering lost or stolen vehicles. In 1985, NAT acquired the necessary frequency licenses from the Federal Communications Commission. In October 1988, Pac-Tel began field testing its system on school buses operated by LACOE. In June 1989, one of NAT's subsidiaries, DMI Systems, Inc., changed its name to International Teletrac Systems. Also in June 1989, DMI entered into a joint venture arrangement with Pacific Telesis and adopted the name Pac-Tel Teletrac. In July 1989, Pac-Tel began a comprehensive public relations campaign to market its new service, including distributing press releases and giving interviews to print and electronic media. It also made presentations to prospective customers. The district court found that in April 1990, Pac-Tel began making its service available on a commercial basis, and began making its service available to non-fleet customers in the last quarter of 1990. April 1990 was the first time LACOE began using the system on a non-test basis, although it did not begin paying for the service until December 1990, when the system was publicly launched. The record before the district court also included information that, from mid-1990 onward, Pac-Tel was developing customers among various vehicle fleet operating enterprises and had agreements with at least twenty four of them.

Meanwhile, in mid-1989, Allen Chance came up with the idea for a lost and found service using attachable tags with unique serial numbers. Finders of lost tagged items would use a toll free telephone number to report their discovery. In June 1989, Chance worked with his partner Bill Gray to design and manufacture the tags. The two brought in another friend, Tom Nettles, to work with them, coining the name "TeleTrak" for their service. "T.A.B." is an abbreviation for Tom Allen Bill.

In late summer 1989, T.A.B. obtained a toll free number under the name "TeleTrak Lost and Found Hotline. " It also obtained a mail drop and drew up a business plan. In October 1989, an unrelated company, Locksmith Ledger, included T.A.B.'s postcard in its own bulk mailing to 35,000 locksmiths. This post card announced the TeleTrak World Wide Toll Free Lost and Found Hotline. T.A.B. received 128 responses from the mailing, but made no sales as a result.

In January 1991, Chance saw advertisements for Pac-Tel's Teletrac service. He conducted a trademark search and discovered no pending application on file with the United States Patent and Trademark Office (PTO). T.A.B. filed a service mark application for "Teletrak Lost and Found Hotline" and a trademark application for "TeleTrak" claiming first use of the mark on December 28, 1990. It later claimed first use in October 1989, the time of the postcard mailer.

In February 1990, Chance purportedly sold a TeleTrak tag to Brian Voorheis, a long time friend. Chance produced a one page typewritten registration form he prepared for Voorheis'tag, number 11229, dated February 23, 1990. Chance could not state, however, how much Voorheis paid for the tag, how he paid for the tag, nor does T.A.B. have any record reflecting payment. Voorheis could not recall when he received it, when he paid for it, or how much he paid for it. He also could not recall signing up for the service or ever renewing it. The tag Voorheis produced at his deposition was one number different from the number recorded on the registration form. In addition, Kirk Rudy, another friend of Chance, testified that Chance gave him two tags in the summer of 1990. He could not recall if they were a gift or he bartered for them. T.A.B. produced no record of a sale to Rudy.

In 1992, Pac-Tel challenged the registrations filed by T.A.B. In a decision dated August 29, 1994, the Trademark Trial and Appeal Board (TTAB) sustained Pac-Tel's challenge, granting summary judgment on the ground that PacTel's promotional activities prior to October 1989 were sufficient to establish that Pac-Tel used the designation in a manner analogous to service mark use prior to T.A.B.'s earliest claimed priority date. Pac-Tel Teletrac v. T.A.B. Systems, 32 U.S.P.Q. 2d 1668 (TTAB 1994). Because it found Pac-Tel's use pre-dated T.A.B.'s earliest claimed date, it made no finding whether the postcard mailer constituted a valid first use in commerce for T.A.B.

The entry of summary judgment was overturned on appeal by the Federal Circuit. T.A.B. Sys. v. Pac-Tel Teletrac, 77 F.3d 1372 (Fed. Cir. 1996). The court found that Pac-Tel's evidence of analogous use was legally insufficient to support the TTAB's conclusion that Pac-Tel was entitled to a June 1989 priority date, since the evidence of Pac-Tel's press releases did not demonstrate a substantial impact on the purchasing public. Id. It remanded the case to the Board for further proceedings on whether the postcard mailer constituted a valid use in commerce. Id. at 1378. However, following remand, T.A.B. moved to suspend the TTAB proceeding and filed this action to pursue its claims for money damages.

III.

The district court's grant of summary judgment is reviewed de novo. Robi v. Reed, 173 F.3d 736, 739 (9th Cir. 1999). Our review is governed by the same standard used by the district court under Fed. R. Civ. P. 56(c). Adcock v. Chrysler Corp., 166 F.3d 1290, 1292 (9th Cir. 1999). We must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Berry v. Valence Tech., Inc., 175 F.3d 699, 703 (9th Cir. 1999).

IV.

Like the Court of Appeals for the Federal Circuit in the prior appeal of the registration case, the primary issue we deal with here is one of priority of use. To have prevented entry of summary judgment in the district court, Chance would have had to come forward with some evidence beyond the mere pleadings to demonstrate a disputed issue of fact that T.A.B.'s use of the TeleTrak service mark predated Pac-Tel's first use. This question is dependent upon several subordinate questions: (1) was T.A.B.'s national post card advertising mailer in 1989 a bona fide first use; (2) if not, were T.A.B.'s "sales" of tags to Voorheis and Rudy, in February and the summer of 1990 respectively, sufficient to establish first use; and (3) was the district court correct in holding that Pac-Tel's first use occurred in April 1990 when LACOE began using Pac-Tel's system on a non-test basis?

a. The definitions of "service mark" and "use in commerce"

Under the Lanham Act, a service mark can be any "word, name, symbol, device or any combination thereof -(1) used by a person, or (2) which a person has a bona fide intention to use in commerce and applies to register. . . to identify and distinguish the services of one person, including a unique service, from the services of others and to indicate the source of the services, even if that source is unknown." 15 U.S.C. S 1127. This definition is virtually identical to the definition of "trademark," contained in the preceding paragraph of S 1127, the only difference between a trademark and a service mark is that a trademark identifies goods while a service mark identifies services. West & Co., Inc. v. Arica Inst., Inc., 557 F.2d 338, 340 n.1 (2d Cir. 1977); Caesars...