Coach House Restaurant, Inc. v. Coach and Six Restaurants, Inc.

Citation934 F.2d 1551,19 USPQ2d 1401
Decision Date11 July 1991
Docket NumberNo. 89-8815,89-8815
PartiesCOACH HOUSE RESTAURANT, INC., Plaintiff-Appellant, v. COACH AND SIX RESTAURANTS, INC., Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Nicholas L. Coch, New York City, for plaintiff-appellant.

Virginia S. Taylor, Miles J. Alexander, Kilpatrick & Cody, Atlanta, Ga., Donald A. Kaul, Brownstein, Zeidman & Schomer, Washington, D.C., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before JOHNSON and HATCHETT, Circuit Judges, and EDWARD S. SMITH *, Senior Circuit Judge.

EDWARD S. SMITH, Senior Circuit Judge:

Petitioner, The Coach House Restaurant, Inc. (Coach House) seeks to cancel the federal registration of the servicemark owned by the registrant, The Coach and Six Restaurants, Inc. (Coach and Six). The Trademark Trial and Appeals Board (TTAB) estopped the petition because it found that petitioner had acquiesced in registrant's use of the mark. Petitioner appealed the decision to the United States District Court for the Northern District of Georgia and added new claims of servicemark infringement and unfair competition. Relying on the findings and conclusions of the TTAB, the district court granted summary judgment in favor of the registrant. Petitioner appeals to this Court for review. We reverse the grant of summary judgment and remand the case to the district court for trial.

Facts

In 1953, Coach House began using the "coach and six horses" logo as a service mark for The Coach House Restaurant in New York, New York. In 1962, registrant opened The Coach and Six Restaurant in Atlanta, Georgia. The corporate president of Coach House is Leon Lianides. Lianides was also instrumental in formation of Coach and Six, although Harold Soloff was the majority owner of the Coach and Six corporation at its inception. Moreover, Lianides served on Coach and Six's board of directors until 1963 and was a shareholder of the registrant until 1968.

Because registrant could not afford to have a new logo created for the restaurant, Lianides suggested that the "coach and six horses" logo be used. Registrant has been continuously using the logo since that time. At one point during registrant's use of the "coach and six horses" logo, Lianides suggested that Soloff discontinue the affiliation between the two restaurants. Lianides was apparently concerned that the quality of registrant's restaurant had diminished and registrant's affiliation with petitioner could injure the public reputation of petitioner's restaurant. Subsequently, the quality of registrant's restaurant improved, and Lianides never again objected to the affiliation. Even after Lianides sold his stock in registrant in 1968, he continued to render advice until he terminated all relations with the registrant after Soloff died in 1974.

Thereafter, and unbeknownst to petitioner, Coach and Six applied for and received a federal registration of its servicemark on December 29, 1981. The registered mark comprises two components as shown below: (1) the "coach and six horses" logo underlain by (2) the words "The Coach and Six Restaurant."

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

The registered mark appropriates the identical "coach and six horses" logo that petitioner uses as its logo.

Petitioner discovered the registration which appropriated its logo and objected to it by February 23, 1983. Coach House petitioned the TTAB to cancel the registration of the service mark because Coach House has the prior trade identity rights in the mark. In the initial proceeding, the TTAB determined that petitioner had acquiesced in registrant's use of the mark. 1 Therefore, the TTAB determined that the cancellation petition was estopped, unless petitioner could show that confusion between the two marks is inevitable. 2 At trial before the TTAB, petitioner asserted that its logo, unaccompanied by the name, is sufficiently similar to the registered mark to cause inevitable confusion. The TTAB compared only petitioner's logo against the registered mark which comprises both the registrant's name and the logo and found that there was no inevitability of confusion. Therefore, the TTAB concluded that the petition to cancel was estopped by acquiescence. The TTAB also denied petitioner's claim that the registrant procured the registration by making false statements to the PTO.

On review, the district court 3 determined that because petitioner offered no new evidence indicating that the TTAB was wrong on the cancellation issue, Freedom Savings & Loan Association v. Way requires the court to defer to TTAB's judgment that the relief was estopped by acquiescence. 4 Petitioner also instituted a new additional claim of service mark infringement and unfair competition before the district court. The district court deferred to the TTAB's finding of no inevitability of confusion, and concluded there could be no likelihood of confusion, an essential element of service mark infringement. In addition to concluding that the infringement claim failed, the court alternatively concluded that laches estopped petitioner from proceeding on the new infringement and unfair competition claims. Consequently, the district court granted summary judgment to registrant on all claims pending before the court.

Petitioner appeals to this Court citing three issues: that the TTAB and the district court erred in finding that petitioner was barred by acquiescence from cancelling the registration, the district court erred in finding both no likelihood of confusion and that registrant committed no fraud on the PTO. Registrant asserts that the TTAB and the district court were correct and that petitioner has filed a frivolous appeal.

Standard of Review

A district court may not reverse findings of the TTAB, "unless the contrary is established by testimony which in character and amount carries thorough conviction." 5 The district court can reverse if it concludes that the law applied by the TTAB was incorrect. 6 Moreover, any equitable rulings rendered by the TTAB may be reversed if the TTAB abused its discretion. 7

The district court granted summary judgment to registrant on the cancellation claim because petitioner failed to present new evidence that would impugn the TTAB's ruling that petitioner was estopped by acquiescence. Consequently, the grant of summary judgment on the cancellation petition indicates that the district court, relying on the TTAB's factual findings, concluded that there was no abuse of discretion in the TTAB's decision. Although the unfair competition and infringement claims were initially brought before the district court, the court relied on the findings of the TTAB and granted summary judgment on the new claims also in favor of the registrant.

Accordingly, we review the district court grant of summary judgment to determine if genuine issues of material fact are involved and whether the registrant was entitled to judgment as a matter of law and equity. 8 The facts found by the TTAB presented in the record to the district court will be deemed established, hence, not at issue, unless we are impressed with a thorough conviction that the findings are erroneous. 9 We view all the evidence presented before the district court pertaining to unestablished facts in a light most favorable to petitioner. 10

Petition to Cancel

In order to prosecute successfully a petition for cancellation, petitioner must prove: (1) That it has standing to petition for cancellation because it is likely to be damaged, and (2) that there are valid grounds for discontinuing registration. 11 The first element is ostensibly satisfied because petitioner claims to have prior identity rights in the mark, and a registration of the same mark could give the registrant an incontestable right to own and exclusively use the mark anywhere in the United States. 12 Hence, petitioner must prove a valid reason for discontinuing registration.

Because the mark at issue has been on the federal Principal Register in registrant's name for less than five years, the mark may be cancelled if petitioner can prove that the registration should have been barred in the first instance under Lanham Act Sec. 2. 13 Petitioner asserts that Lanham Act Sec. 2(d) 14 barred registration of the mark because petitioner was the prior user of the mark which is confusingly similar to the registrant's mark.

1. Acquiescence in Registration Defense

The district court adopted the TTAB equitable decision to estop the petition to cancel the registration because petitioner had acquiesced in the registrant's use for such a long time. Because acquiescence is an equitable defense, it will be reviewed for an abuse of discretion. 15

Acquiescence is a doctrine which is very similar to laches. Both are equitable defenses that are recognized in inter partes proceedings before the TTAB 16 and are capable of estopping a petitioner from asserting dormant rights against a defendant. The difference between acquiescence and laches is that laches denotes passive consent and acquiescence denotes active consent. 17

The defense of acquiescence requires proof of three elements: (1) That petitioner actively represented that it would not assert a right or a claim; (2) that the delay between the active representation and assertion of the right or claim was not excusable; and (3) that the delay caused the registrant undue prejudice. 18 The TTAB found that petitioner supplied the logo to registrant and permitted registrant to use it for a continued period of twenty years, ending when petitioner instituted this proceeding. The TTAB concluded that acquiescence was applicable and estopped plaintiff from petitioning for a cancellation. We conclude that the TTAB abused its discretion by failing to observe the distinction in this case between acquiescence as to use and acquiescence as to registration.

Although petitioner...

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