Coca-Cola Co. v. Overland, Inc.
| Citation | 692 F.2d 1250,216 U.S.P.Q. 579 |
| Decision Date | 18 November 1982 |
| Docket Number | COCA-COLA,No. 80-4376,80-4376 |
| Parties | , 1982-83 Trade Cases 65,051, 11 Fed. R. Evid. Serv. 1746 TheCOMPANY, a corporation, Plaintiff-Appellee, v. OVERLAND, INC., doing business as Topaz Lodge and Casino, and R.H. Hobson, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Glade L. Hall, Ltd., Reno, Nev., for defendants-appellants.
Elmer Wm. Hanak, III, Atlanta, Ga., argued for plaintiff-appellee; Albert F. Pagni, Vargas & Bartlett, Reno, Nev., John N. Hauser, San Francisco, Cal., on brief.
Appeal from the United States District Court for the District of Nevada.
Before CHOY and WALLACE, Circuit Judges, and EAST, * District Judge.
The Coca-Cola Company sued for injunctive relief charging Overland, Inc. with trademark infringement and unfair competition in violation of the Lanham Trade-Mark Act (Lanham Act), 15 U.S.C. Sec. 1051 et seq. 1 Overland denied liability and counterclaimed charging Coca-Cola with using trademark-infringement suits as a means of attempting to monopolize the soft-drink syrup market in violation of Sec. 2 of the Sherman Act, 15 U.S.C. Sec. 2. The district court granted summary judgment against Overland on both Coca-Cola's complaint and Overland's antitrust counterclaim. The court permanently enjoined Overland and its agents, servants, and employees, from substituting in response to orders for "Coca-Cola" or "Coke" any beverage other than that sold by the Coca-Cola Company unless they first give the customer oral notice of the substitution and obtain the customer's approval. It also dismissed Overland's antitrust counterclaim with prejudice. Because we find that there are no genuine issues of material fact with respect to either Overland's liability or Coca-Cola's non-liability, and because we also find that Coca-Cola is entitled to judgment as a matter of law, we affirm.
Overland operates a restaurant and bar known as the Topaz Lodge and Casino. The only cola soft drink sold at the Topaz Lodge and Casino is Pepsi-Cola. Coca-Cola's suit for trademark infringement and unfair competition is based on the Topaz Lodge and Casino's alleged practice of serving Pepsi-Cola in response to specific orders for "Coca-Cola" or "Coke" 2 without orally notifying customers that a substitution has been made. 3 In support of its motion for summary judgment, Coca-Cola submitted affidavits of its Trade Research employees assigned to investigate the Topaz Lodge and Casino. These affidavits document that on 23 of 29 separate occasions over a three-year period, employees at the Topaz Lodge and Casino substituted, without comment, Pepsi-Cola in response to specific orders for "Coca-Cola" or "Coke." 4
Overland does not seriously dispute that its employees have on occasion substituted Pepsi-Cola, without comment, in response to orders for "Coca-Cola" or "Coke." Taken alone, such conduct by Overland's employees appears to present a clear-cut case of trademark infringement and unfair competition. Coca-Cola Co. v. Dorris, 311 F.Supp 287, 289 (E.D.Ark.1970), cited with approval in HMH Publishing Co. v. Lambert, 482 F.2d 595, 598 n. 5 (9th Cir.1973); see Heaton Distributing Co. v. Union Tank Car Co., 387 F.2d 477, 484 (8th Cir.1967). Overland, nevertheless, appeals the district court's grant of summary judgment and injunctive relief, claiming that it has certain defenses that raise genuine issues of material fact. Specifically, Overland contends that there are genuine issues of material fact as to whether (1) certain signs indicating that only Pepsi-Cola would be served provided customers with adequate notice of the substitutions; (2) "Coke" has become a generic term not eligible for protection under the Lanham Act; (3) the permanent injunction issued by the district court requiring oral notice of the substitutions is impossible to perform; and (4) Coca-Cola is using trademark-infringement suits as a device to achieve a monopoly in the soft-drink syrup market and thus is guilty of unclean hands. Overland further contends that the validity of its antitrust counterclaim raises genuine issues of material fact.
Summary judgment is proper if the pleadings and evidence submitted in support of the motion show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party has the burden of demonstrating the absence of a genuine issue of material fact. Blair Foods, Inc. v. Ranchers Cotton Oil, 610 F.2d 665, 668 (9th Cir.1980). In reviewing the grant of summary judgment, we must view all evidence in the light most favorable to the party opposing the motion. Id.
Overland has posted signs in the restaurant and bar, and placed disclosures in its menus advising customers that Pepsi-Cola is the only cola beverage served. 5 Overland contends that its signs and disclosures provided adequate notice of the beverage substitutions and thus supply a complete defense to the charges of trademark infringement and unfair competition. It maintains that the adequacy of its signs and disclosures at least raises a genuine issue of material fact.
Neither the Supreme Court nor the circuit courts of appeals have apparently ruled on what constitutes adequate notice in beverage-substitution cases. The district courts, however, have uniformly held that signs do not provide adequate notice. E.g., Coca-Cola Co. v. Dorris, 311 F.Supp. at 290; Coca-Cola Co. v. Foods, Inc., 220 F.Supp. 101, 106 (D.S.D.1963). The district courts require that for notice to be adequate, the customer must be informed orally that the beverage ordered is not available and be given the opportunity to accept or reject the substituted product. Coca-Cola Co. v. Dorris, 311 F.Supp. at 290.
Although we decline to rule that signs can never provide adequate notice, we adopt the general rule set forth by the district courts that oral explanations, and not signs, are normally required to notify customers adequately in beverage-substitution cases. 6 Because we find Overland's signs and disclosures were not sufficiently conspicuous 7 to justify a departure from this general rule, we reject as a matter of law Overland's defense that its signs and disclosures provided adequate notice. 8 It thus follows that the adequacy of Overland's signs and disclosures does not raise a genuine issue of material fact.
Overland argues that the trademark "Coke" 9 has become generic to all cola beverages and thus is no longer entitled to protection under the Lanham Act. 10 It maintains that whether the trademark "Coke" has become generic raises a genuine issue of material fact which precludes the grant of summary judgment. We disagree.
In its answer to Coca-Cola's complaint, Overland admits that "Coke" is a validly-registered and subsisting trademark under federal law. Federal registration of a trademark endows it with a strong presumption of validity. Miss Universe, Inc. v. Patricelli, 408 F.2d 506, 509 (2d Cir.1969); see the Lanham Act, 15 U.S.C. Secs. 1057 and 1115. The general presumption of validity resulting from federal registration includes the specific presumption that the trademark is not generic. See Reese Publishing Co. v. Hampton International Communications, Inc., 620 F.2d 7, 11 (2d Cir.1980); Miss Universe, Inc. v. Patricelli, 408 F.2d at 509.
A party moving for summary judgment is entitled to the benefit of any relevant presumptions that support the motion. United States v. General Motors Corp., 518 F.2d 420, 441-42 (D.C.Cir.1975); see 6 J. Moore, W. Taggart & J. Wicker, Moore's Federal Practice p 56.15 (2d ed. 1982). By virtue of the presumption that the trademark "Coke" is not generic, Coca-Cola has met its burden of demonstrating that the genericness of the trademark "Coke" does not raise a genuine issue of material fact. 11
Once the moving party has sufficiently supported his or her motion for summary judgment, the opposing party "may not rest upon the mere allegations or denials in his pleadings," but must by affidavits or other evidence "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Overland attempts to rebut the presumption that "Coke" is not generic and to establish the existence of a genuine issue of material fact by submitting affidavits taken from employees at the Topaz Lodge and Casino. These affidavits state that the employees believe that customers ordering "Coke" are using the term in a generic sense.
These affidavits are clearly insufficient to rebut the presumption that the trademark "Coke" is not generic and thus do not establish the existence of a genuine issue of material fact. Before affidavits opposing a motion for summary judgment can be given any weight, Rule 56(e) requires that they be made on personal knowledge, set forth such facts as would be admissible in evidence, and show affirmatively that the affiant is competent to testify on the matters stated therein. Id. Overland's employees are not qualified to testify as to what their customers are thinking when using the term "Coke." See Fed.R.Evid. 701. The affidavit statements of the employees that they believe customers use "Coke" in the generic sense are thus inadmissible and must be disregarded as failing to meet the requirements of Rule 56(e). Moreover, even if the employees' affidavits are considered, they are too speculative and insubstantial to establish the existence of a genuine issue of material fact with respect to the genericness of the trademark "Coke." See British Airways Board v. Boeing Co., 585 F.2d 946, 951-52 (9th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1790, 60 L.Ed.2d 241 (1979).
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Opinion
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