Circuit City Stores, Inc. v. Officemax, Inc.

• Decision Date: 20 December 1996
• Docket Number: Civil Action No. 3:96cv401.
• Citation: 949 F.Supp. 409
• Parties: CIRCUIT CITY STORES, INC., Circuit City Stores West Coast, Inc. and Acme Commercial Corporation d/b/a Carmax the Auto Superstore, Plaintiffs, v. OFFICEMAX, INC., Defendant.
• Court: U.S. District Court — Eastern District of Virginia

949 F.Supp. 409

CIRCUIT CITY STORES, INC., Circuit City Stores West Coast, Inc. and Acme Commercial Corporation d/b/a Carmax the Auto Superstore, Plaintiffs, v. OFFICEMAX, INC., Defendant.

Civil Action No. 3:96cv401.

United States District Court, E.D. Virginia, Richmond Division.

December 20, 1996.

Gilbert E. Schill, Brian C. Riopelle, McGuire, Woods, Battle & Boothe, Richmond, VA, for Plaintiffs.

Henry N. Ware, Jr., Cook, Ware & Tuck, Glen Allen, VA, R. Terrance Rader, Rader, Fishman & Grauer, P.L.L.C., Bloomfield Hills, MI, for Defendant.

MEMORANDUM OPINION

PAYNE, District Judge.

The plaintiffs (collectively "CarMax") instituted this action against OfficeMax, Inc. ("OfficeMax") by filing a Complaint pursuant to 28 U.S.C. § 2201, seeking a declaratory judgment that the use and/or registration of the CarMax trademarks is not a violation of any rights OfficeMax has pursuant to 15 U.S.C. §§ 1114, 1125(a). CarMax also asserts rights under the common law of unfair competition or infringement.¹ By its Counterclaim, OfficeMax asserts: trademark infringement under 15 U.S.C. § 114 (Count 1); unfair competition pursuant to 15 U.S.C. § 1125(a) (Count 2); federal trademark dilution under 15 U.S.C. § 1125 (Count 3); and unjust enrichment (Count 4).

Following discovery, CarMax moved for summary judgment on all of OfficeMax's counterclaims, asserting that each claim is barred by the doctrine of laches.² CarMax also seeks summary judgment on Count 3 of the Counterclaim, wherein OfficeMax seeks monetary damages and injunctive relief pursuant to the recently enacted Federal Trademark Dilution Act of 1995 (the "Dilution Act"), 15 U.S.C. § 1125(c), contending that the retroactive enforcement of the Dilution Act in this case would violate the rule established in Landgraf v. USI Film Products, Inc., 511 U.S. 244, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994). Because there are genuine disputes over material facts, the Court denied the Motion For Summary Judgment with respect to the defense of bar pursuant to the equitable doctrine of laches. For the reasons which follow, the Court finds that the Dilution Act may not be applied and enforced retroactively in this action and therefore grants the motion for summary judgment on Count III.

BACKGROUND

OfficeMax began promoting the "OfficeMax" service mark in 1988. Over the past eight years, OfficeMax has grown from a fledgling business operated from the basement of its founder to a corporation with annual sales exceeding $3 billion. OfficeMax currently owns and operates so-called "superstores" offering lines of office products in approximately 550 locations throughout the country. The OfficeMax stores are in each of the four cities in which CarMax operates currently. OfficeMax owns 15 federal trademark registrations for marks formed by or incorporating "Max" as a suffix or a prefix. These include "OfficeMax," "CopiMax," and "QuickMax." OfficeMax claims to have spent more than $100 million to promote its marks.

CarMax, a wholly-owned subsidiary of Circuit City, Inc., began operations in 1993. Currently, CarMax owns and operates five retail stores which sell and service used cars and trucks. The CarMax stores are located in Richmond, Virginia (opened in September 1993); Raleigh, North Carolina (opened in November 1994); Atlanta, Georgia (two stores opened in early 1995); and in Charlotte, North Carolina (opened in March 1996). CarMax currently owns a series of federal trademark registrations including "CarMax," and other marks incorporating "CarMax" or "Max." Since 1993, when it began using the CarMax name, CarMax has spent $12 million on advertising and promotion under the name CarMax and its other related "Max" marks. CarMax has recorded $370 million in gross sales since 1993, the amount increasing significantly in each year of operation.

In early 1996, CarMax announced its plans to start a "national roll-out" of approximately 90 stores located throughout the country. In September, 1996, Circuit City announced that it will "spin-off" up to twenty percent of CarMax to raise capital for the forthcoming expansion. On April 26, 1996, OfficeMax, which has been aware of CarMax since it began operations in 1993, became concerned about the announced expansion plans and sent CarMax a letter, claiming that CarMax was infringing its mark by employing "CarMax" and other "Max" marks in a retail superstore format. This action followed immediately.

STANDARD FOR SUMMARY JUDGMENT

Summary judgment is to be rendered "if the pleadings, depositions, answers to interrogatories, and admissions, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The rules further provide:

When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.

Fed.R.Civ.P. 56(e).

The party seeking summary judgment "bears the initial responsibility of informing the district court of the basis for its motion," and of establishing, based on relevant portions of the record, that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Pocahontas Supreme Coal Co. v. Bethlehem Steel Corp., 828 F.2d 211, 216 (4th Cir.1987); see also Catawba Indian Tribe v. South Carolina, 978 F.2d 1334, 1338-39 (4th Cir.1992). "[W]here the non-moving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the `pleadings, depositions, answers to interrogatories and admissions on file.'" Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. The moving party may also use affidavits to support its motion.

Once this initial showing under Rule 56(c) is made, the burden of production, but not persuasion, shifts to the nonmoving party. The non-moving party must go beyond the pleadings and, by citing its own affidavits or by citing "`depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Id. Opposition to a properly documented summary judgment motion may not be based solely on the pleadings. Id.

When "the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citations omitted). The "mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (emphasis added). The non-moving party, however, "need only present evidence from which a jury might return a verdict in his favor. If he does so, there is a genuine issue of fact that requires a trial." Anderson, 477 U.S. at 257, 106 S.Ct. at 2514. It is the function of the district court not to weigh the evidence, but to determine whether there is a genuine issue for trial, and "there is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 249, 106 S.Ct. at 2511 (citations omitted). Hence, summary judgment is appropriate if the evidence is "merely colorable" or "not significantly probative." Id. at pp. 249-50, 106 S.Ct. at 2511 (citations omitted). The district court must also "view the evidence presented through the prism of the substantive evidentiary burden." Id. at 254, 106 S.Ct. at 2513.

Furthermore, "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255, 106 S.Ct. at 2513. Summary judgment is appropriate only if, upon consideration of the record as a whole, a reasonable trier of fact could not find for the non-movant. Allstate Financial Corp. v. Financorp, Inc., 934 F.2d 55, 58 (4th Cir.1991). But, where a faithful examination of the record establishes the absence of a genuine issue of material fact, it is "the affirmative obligation of the trial judge to prevent `factually unsupported claims and defenses' from proceeding to trial." Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir.1987); see also Guinness PLC v. Ward, 955 F.2d 875, 883 (4th Cir.1992). With these principles in mind, the Court will consider CarMax's Motion for Summary Judgment with respect to Count III of the Counterclaim.

DISCUSSION

In Count III, OfficeMax asserts a claim under the Dilution Act which became effective January 16, 1996 as an amendment to the Lanham Act³ and which created for the first time a federal claim for trademark dilution, as opposed to classic trademark infringement. The Dilution Act provides, in pertinent part:

(c) Remedies for dilution of famous marks:

(1) The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection.

15 U.S.C. § 1125(c).

The new federal claim for trademark dilution differs from traditional...