Communications Satellite Corporation v. Comcet, Inc.
| Decision Date | 05 June 1969 |
| Docket Number | Civ. No. 20343. |
| Citation | 300 F. Supp. 559 |
| Parties | COMMUNICATIONS SATELLITE CORPORATION v. COMCET, INC. |
| Court | U.S. District Court — District of Maryland |
Leslie D. Taggart, Frank J. Colucci and Watson, Leavenworth, Kelton & Taggart, and George W. MacDonald, Jr., New York City, William H. Berman, Washington, D. C., and Russell R. Reno, Jr., and Venable, Baetjer & Howard, Baltimore, Md., for plaintiff.
Joe A. Sutherland and William L. Morrison, Chicago, Ill., and Michael P. Crocker, Baltimore, Md., for defendant.
This is a civil action for alleged infringement of plaintiff's trade name and registered service mark COMSAT and for unfair competition. Jurisdiction concededly exists. Plaintiff seeks injunctive relief,1 but concedes that it has not proved any damages.
1. Communications Satellite Corporation (plaintiff) is a District of Columbia corporation, incorporated on February 1, 1963, under the authority of the Communications Satellite Act of 1962 (the Act), 76 Stat. 419, 47 U.S.C.A. § 701 et seq. The Act declares that it is the policy of the United States to establish as expeditiously as practicable a "commercial communications satellite system", and provides for the creation of a private corporation, subject to appropriate governmental regulation by the Federal Communications Commission (FCC).
2. Plaintiff is a communications common carrier, which provides global communications service via space satellite for the transmission of telephone (voice), television, telegram, teletype and data traffic. It is the only entity in the United States authorized to provide such service, but it competes with companies which offer similar communications services via microwave facilities, high frequency radio or cable. Plaintiff is not authorized by the FCC to provide any communications services via satellite for use between points within the continental United States.
3. Plaintiff is primarily a common carrier's common carrier, since it is authorized by the FCC to sell its satellite communication services only to other communications common carriers and to the Federal Government.2 The Act does not prohibit the FCC from authorizing plaintiff to provide its communications services directly to others, but the FCC has not done so. Plaintiff sells its services to only six customers: five communications common carriers (A. T. & T., I. T. & T., W. U. Int'l, RCA Global Organizations and Hawaii Telephone Co.) and NASA. Plaintiff's customers, except NASA, are also stockholders.
4. Plaintiff does not manufacture or sell any products commercially, and is not authorized by the Act to do so.
5. Plaintiff has used COMSAT as its trade name since early 1964, and since October 1964 has used COMSAT as a service mark for its communications services via satellite. COMSAT is an acronym made up of the first syllable of two descriptive words: "Communications" and "satellite".
6. Plaintiff registered its service mark COMSAT in the United States Patent Office for communication services via satellite on May 2, 1967.3 On December 5, 1967, it made a similar registration4 of using a globe as a substitute for the letter "O".
7. Plaintiff has spent about a million dollars over the years in promoting its communications services via satellite and in recruiting personnel, using its trade name and mark in such promotion and recruiting. Plaintiff's sales of its services have amounted to many millions of dollars.
8. Plaintiff's stock has been traded on the New York Stock Exchange since September 8, 1964. It is listed in the reports of the New York Stock Exchange results as Comsat.
9. Plaintiff has been referred to as COMSAT or Comsat in national magazine articles and in articles which have appeared in the daily press throughout the country over the past five years.
10. Since plaintiff does not sell its services to the general public, it does little or no advertising. Nevertheless, as a result of plaintiff's promotional activities and the publicity it has received, COMSAT has become recognized throughout the United States as identifying and distinguishing plaintiff and its communications services.
11. Comcet, Inc. (defendant) was incorporated in Maryland on February 5, 1968. It is one of a family of companies related to Comress, Inc., which was incorporated in Maryland in 1962. All of the related companies — Comress, Inc., Computer Network Corporation (Comnet), Commed, Inc., Comcet, Inc., and Computer Microtechnology, Inc. — are engaged in various segments of the computer industry.5
12. Defendant is engaged in the business of developing, manufacturing and selling computers and related hardware and software. It has introduced and is now demonstrating and marketing the Comcet 60 Computer Communications System, which combines a computer, memory and interfacing units, monitoring equipment and software. It is designed to handle the communications requirements of a multiterminal system,6 and thus permit a large and relatively expensive data processing computer, such as an IBM 360 or a Univac 1108 (with both of which it is compatible) to realize more fully its data processing potential. Defendant markets its computers through its own sales staff to users of large data processing systems.
13. The Comcet 60 System is priced at about $200,000. A decision to purchase one or more of defendant's computers will be made by executives and top technical personnel after extensive contact and work with defendant's personnel.
14. Defendant's president, Lee Johnson, is widely known in the computer field; he and other members of defendant's management and technical personnel have had many years of experience with computers.
15. In January or February 1968, Johnson and Donald Herman, defendant's chairman, chose Comcet, Inc., as defendant's corporate name, intending to use Comcet or COMCET as its trademark. Comcet is an acronym for computer communications engineering technology. The syllable "Com" was chosen to suggest defendant's products (computers) and its relationship to the Comress family of companies. The letter "c" in the second syllable was chosen because the word "communications" describes the type of computers to be manufactured; the "e" and "t" and the words they represent were chosen to round out a euphonious name, which would aid defendant in establishing a lead in its particular and narrow market in competition with its potential competitors, such as IBM, Control Data, Sperry Rand, General Electric and Honeywell. Some of those companies now make devices which perform somewhat the same function as the Comcet 60, and some or all of those companies may be expected in the near future to produce competitive computers. Defendant did not obtain a trademark search report of similar names. The evidence shows, however, that many two-syllable words having "com" as the first syllable have been registered. When defendant's chairman and president decided to adopt Comcet as defendant's name and trademark, they knew that plaintiff's trade name and service mark was COMSAT, but they did not believe that they would ever be in competition with COMSAT and did not adopt Comcet or COMCET with any intention of using or obtaining the benefit of whatever good will plaintiff has established for its name and service mark COMSAT.
16. Defendant issued a prospectus on October 15, 1968, in which a certain amount of its common stock was offered to the public at a stated price.7 Before the prospectus was issued, the Securities and Exchange Commission suggested to defendant by letter dated September 13, 1968, that: "A parenthetical phrase disclosing that the registrant is not related to `Comsat', Communications Satellite Corporation, should be inserted immediately following the registrant's name on the cover page of the prospectus." Defendant decided to follow rather than contest the SEC suggestion, and inserted at the head of its prospectus immediately after its corporate name: "Not related to `Comsat', Communications Satellite Corporation".
17. Defendant's stock is traded over-the-counter and is generally referred to as Comcet.
18. Promptly after the prospectus was issued, plaintiff complained to defendant of its use of the name Comcet.
19. The 90-day period following the issuance of defendant's prospectus expired one day before this lawsuit was filed. Defendant, therefore, had not advertised any of its products prior to the commencement of the suit, but had prepared "prototype hardware", to which it had attached the mark COMCET 60, and had prepared elaborate advertisements for Comcet 60 systems, which were published in "Datamation", a magazine of the computer industry, in its April 1969 issue. Copies of this advertisement have also been circulated among prospective customers during the year 1969.
20. Defendant has received one firm order for six computers from Comnet, one of its related companies. Two independent companies have agreed orally to purchase computers from defendant but have not yet signed formal orders.
21. Plaintiff and defendant are in different but sometimes interrelated industries.8
22. In 1967 plaintiff, in association with IBM, made tests of high speed transmission of data by computers via communication satellite. These tests have demonstrated the potential of plaintiff's satellite system for high speed transmission of data from computer to computer. Plaintiff's communications services are presently utilized by NASA for the transmission of data from computer to computer, and these operations are now being expanded.
23. In December 1968, pursuant to the rules of the FCC, plaintiff established its tariff for wide band (48 KHz channels) communication services via satellite suitable for the high speed transmission of data, and plaintiff is presently marketing such services.
24. Plaintiff used computers (a) to develop information which...
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Communications Satellite Corp. v. Comcet, Inc.
...corporation and Comcet is a Maryland corporation — and on the Lanham Act, 15 U.S.C. § 1051 et seq. 2 Communications Satellite Corp. v. Comcet, Inc., 300 F.Supp. 559 (D.Md.1969). 3 But see In re Dobeckmun Co., 286 F.2d 187, 48 C.C.P.A. 810 (1960), which rejects an argument based on the descr......
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