Communications Satellite Corp. v. Comcet, Inc.

• Decision Date: 14 July 1970
• Docket Number: No. 13822.,13822.
• Citation: 429 F.2d 1245
• Parties: COMMUNICATIONS SATELLITE CORP., Appellant, v. COMCET, INC., Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

429 F.2d 1245 (1970)

COMMUNICATIONS SATELLITE CORP., Appellant, v. COMCET, INC., Appellee.

No. 13822.

United States Court of Appeals, Fourth Circuit.

Argued April 7, 1970.

Decided July 14, 1970.

COPYRIGHT MATERIAL OMITTED

Francis C. Browne, Washington, D.C. (Richard G. Kline, Washington, D.C., Russell R. Reno, Jr., and Venable, Baetjer & Howard, Baltimore, Md., David C. Acheson, William H. Berman, Washington, D.C., J. Frank Osha, and Browne, Beveridge & Degrandi, Washington, D.C. on brief), for appellant.

Joe A. Sutherland, Chicago, Ill. (James G. Reynolds, Baltimore, Md., William L. Morrison, Chicago, Ill., Michael P. Crocker and Piper & Marbury, Baltimore, Md., and Gardner, Carton, Douglas, Chilgren & Waud, Chicago, Ill., on brief), for appellee.

Before BRYAN, CRAVEN, and BUTZNER, Circuit Judges.

BUTZNER, Circuit Judge:

Communications Satellite Corporation (Comsat), claiming trade name infringement, trademark infringement, and deceptive trade practices, brought this action against Comcet, Inc., to enjoin it from using Comcet as a trade name and trademark.¹ The district judge found that Comsat's services and Comcet's products are dissimilar and noncompetitive; that expansion leading to future competition is improbable; that the parties' customers are highly sophisticated and knowledgeable; and that "there is virtually no likelihood of confusion in the minds of investors." Primarily because of these factors, he concluded that Comcet's goods, services, or business are not likely to be confused with Comsat's. He also held that the evidence was insufficient to show damage to Comsat's image or good will and that Comcet was not guilty of unfair competition. Characterizing Comsat and Comcet as weak marks because they are acronyms derived from words in common use, he ruled that Comcet does not infringe Comsat's trade name or mark.² We reverse and remand the case for the entry of a decree enjoining Comcet, Inc., from using Comcet as either a trade name or a trademark.

I. Comsat

Communications Satellite Corporation, established by the Communications Satellite Act of 1962 47 U.S.C. § 701 et seq., began using Comsat as its trade name shortly after its incorporation early in 1963 and as its service mark in October 1964. Since then, Comsat has become renowned for its world-wide satellite communications system. Although other United States companies provide intercontinental communications service by radio and cable, Comsat alone is authorized to use satellites for this purpose. It furnishes services for all types of communications traffic, including voice, record, data, and television. By its own efforts, or through contracts with others, it conducts extensive research and development, and recently in association with IBM, it tested high speed transmission of data by computers via satellite. NASA now uses its services for the transmission of data from computer to computer.

Comsat is authorized by the Federal Communications Commission to sell global communications service only to other communications common carriers and to the federal government. Presently, it serves NASA and five communications common carriers — AT&T, IT&T, RCA Communications, Western Union International, and Hawaiian Telephone. It seeks to expand the market for its services by inducing many businesses to utilize its satellites through connections with the common carriers it serves. Comsat presently is limited to providing intercontinental communications services, but recently the FCC requested proposals from Comsat and other common carriers for a domestic satellite system. FCC Docket 16495 (1970).

II. Comsat's Name and Mark

Comsat is a coined word that is not found in any dictionary. No one else is using it as a trade name, trademark, service mark, or for any other purpose. Comsat has only one function. It uniquely identifies the plaintiff's business and services. Contrary to the position taken by Comcet and the conclusion reached by the district judge, we believe Comsat's derivation from communications and satellite does not make it a weak mark. In Durox Co. v. Duron Paint Mfg. Co., 320 F.2d 882, 884 (4th Cir. 1963), upon which the defendant relies, we observed that Durox and Duron were weak marks because Dur is suggestive. Connoting durability, it rendered the marks descriptive, and it had been used to describe this quality in other marks for protective and decorative coatings.³ In contrast, while Com is the first syllable of many other marks, it is not uniquely descriptive of communications. Indeed, Comcet uses Com as an abbreviation for computers, and it enjoys wide popularity as a prefix in other marks for abbreviating such words as community, compatible, comprehensive, and commercial. Descriptive words, we recognize, are to be accorded only narrow protection as trade names or trademarks, but Comsat, we hold, is not such a word. It is unique and distinctive.

Regardless of its origin, Comsat has established a secondary meaning that qualifies it for protection. Cf. Armstrong Paint & Varnish Works v. Nu-Enamel Corp., 305 U.S. 315, 335, 59 S.Ct. 191, 83 L.Ed. 195 (1938). Comsat has spent about a million dollars using its name in promoting services and recruiting personnel. Its sales have amounted to many millions of dollars. Its stock, listed as Comsat, has been traded on the New York Stock Exchange since 1964. National magazines and newspapers frequently refer to the plaintiff by its trade name, Comsat. Indeed, as the district judge observed, "COMSAT has become recognized throughout the United States as identifying and distinguishing plaintiff and its communications services." These facts, coupled with Comsat's uniqueness as a coined word, establish it as a strong mark and a famous name. Cf. Polaroid Corp. v. Polaraid, Inc., 319 F.2d 830, 831 (7th Cir. 1963); Telechron, Inc. v. Telicon Corp., 198 F.2d 903, 908 (3rd Cir. 1952). As such, it is entitled to broad protection, for counterfeits more successfully prey on strong marks than on weak. See Arrow Distilleries, Inc. v. Globe Brewing Co., 117 F.2d 347, 349 (4th Cir. 1941); Schechter, The Rational Basis of Trademark Protection, 40 Harv.L.Rev. 813, 825 (1927).

III. Comcet

Comcet, Inc., organized in 1968, is one of a family of computer companies related to Comress, Inc.⁴ It is not, however, a wholly owned subsidiary, and its stock is traded over the counter. Comcet develops, manufactures, and sells communications computers which receive data over telephone and teletype lines, edit and verify the information, and relay it to data processing computers at appropriate times.

Before this suit was instituted, Comcet had only prepared advertisements and a prototype computer that it called Comcet 60. The advertisements were circulated after suit was filed. Comcet's computers sell for about $200,000. It has received a firm order for six computers from one of its related companies, and tentative orders for two from independent companies.

IV. Comcet's Name and Mark

The name Comcet was selected in a one-hour meeting of two of the corporation's organizers. Com was chosen to suggest computers and the corporation's relationship to Comress; c stands for communications; e and t were selected to round out the name with a euphonious ending. Comcet, its organizers testified, is an acronym for computer communications engineering technology. The district court found that the men who selected Comcet knew of Comsat; that they did not believe Comcet would ever compete with Comsat; and that they did not adopt Comcet with any intention of capitalizing on Comsat's good will.

The Securities and Exchange Commission required Comcet to state in its prospectus: "Not related to `Comsat', Communications Satellite Corporation." Moreover, Comsat promptly complained to Comcet of the similarity of names. Comcet, however, declined to change its name and mark.

V. Comparison of the Names and Marks

There can be no doubt about the resemblance of Comcet to Comsat. They sound almost identical, and visual differences are slight. Whether the test be common law or statute, the likeness is so striking that it is apparent that Comcet — though requested not to do so — is using a colorable imitation of Comsat's name and mark. 15 U.S.C. § 1127; cf. Telechron, Inc. v. Telicon Corp., 198 F. 2d 903, 908 (3rd Cir. 1952); Little Tavern Shops, Inc. v. Davis, 116 F.2d 903, 906 (4th Cir. 1941); see 3 Callmann, Unfair Competition, Trademarks and Monopolies § 82.1(a) (3d ed. 1969). It is, moreover, no defense to this action that the defendant's organizers adopted the name, Comcet, without intention to trade on Comsat's image and good will. While evil intent may evidence unfair competition and deception, lack of guile is immaterial. Best & Co. v. Miller, 167 F.2d 374, 377 (2d Cir.), cert. denied, 335 U.S. 818, 69 S.Ct. 39, 93 L.Ed. 373 (1948); Edmondson Village Theatre, Inc. v. Einbinder, 208 Md. 38, 116 A.2d 377, 381 (1955).

VI. Trade Name Infringement

Quite apart from its claim for trademark protection, Comsat has a distinct and separate cause of action to restrain infringement of its trade name. Telechron, Inc. v. Telicon Corp., 97 F. Supp. 131, 141 (D. Del. 1951), aff'd, 198 F.2d 903 (3rd Cir. 1952). Trade name protection finds its genesis in the common law, which in Maryland has been succinctly summarized in Drive It Yourself Co. v. North, 148 Md. 609, 130 A. 57, 59 (1925), as follows:

"The right of a corporation to the exclusive use of its own name . . . exists at common law, and it includes the further right to prohibit another from using a name so similar to the corporate name as to be calculated to deceive the public."⁵

Following Nims, Unfair Competition and Trademarks §§ 10 and 11 (4th ed. 1947), the Maryland Court of Appeals classifies cases dealing with trade name protection into three general categories — (1) cases protecting a name consisting of distinctive, unique or fanciful words; (2) cases where actual fraud and deceit...