Country Floors, Inc. v. Partnership Composed of Gepner and Ford
| Decision Date | 16 April 1991 |
| Docket Number | No. 90-1439,90-1439 |
| Parties | , 18 U.S.P.Q.2d 1577 COUNTRY FLOORS, INC., Appellant, v. A PARTNERSHIP COMPOSED OF Charley GEPNER AND Gary FORD, d/b/a Country Tiles, Appellee. |
| Court | U.S. Court of Appeals — Third Circuit |
Arthur H. Seidel (argued), Nancy Rubner-Frandsen, Stephen J. Meyers, Seidel, Gonda, Lavorgna & Monaco, P.C., Philadelphia, Pa., for appellant.
John T. Synnestvedt (argued), Alexis Barron, Bryna S. Silver, Synnestvedt & Lechner, Philadelphia, Pa., for appellee.
Present STAPLETON, HUTCHINSON and ROSENN, Circuit Judges.
Appellant Country Floors, Inc. (Country Floors or the Corporation), a manufacturer and seller of upscale ceramic tile and accessories, appeals a final order of the United States District Court for the Eastern District of Pennsylvania. That order granted summary judgment to appellees, a Partnership composed of Charley Gepner (Gepner) and Gary Ford (Ford) (collectively the Partnership). The Partnership also sells ceramic tile and accessories under the name "Country Tiles" from several of its own stores. Country Floors, the older concern, instituted this action by a complaint asserting that the Partnership's use of the name "Country Tiles" and its advertising of that name infringed upon the Corporation's two federally registered trademarks, its service mark, and constituted unfair competition under the Lanham Act, 15 U.S.C.A. Secs. 1051-1128 (West 1963, 1976, 1982 & Supp.1990), and at common law.
The Corporation claimed that the Partnership's use of its common law trademark and tradename "Country Tiles" was likely to result in confusion with the Corporation's name, its service mark and its federally registered trademarks "Country Floors" and "Country Tile." The Partnership denied that confusion existed, claimed prior use of the name "Country Tiles" and filed a counterclaim seeking to cancel the Corporation's registration of the "Country Tile" mark because it infringed upon the Partnership's use of "Country Tiles." Early in the case, the district court denied the Corporation's motion for a preliminary injunction, holding that the Corporation had not made a showing sufficient to present a likelihood of confusion between the "Country Floors" and "Country Tiles" names or marks and permitted the Partnership's "Country Tiles" store in Philadelphia to continue to operate.
Later, the Partnership filed a motion for summary judgment. The district court granted that motion, relying in part on credibility determinations it had made in connection with the Corporation's earlier motion for preliminary injunction. The court's final order granting the Partnership's motion for summary judgment included an injunction against the Corporation's further use of the trademark "Country Tile" and also canceled the Corporation's registration number for that mark. The Corporation appealed.
We hold that the district court erred when it used the findings and credibility determinations that it made in the preliminary injunction hearing to decide the Partnership's motion for summary judgment. Rejecting as immaterial the additional evidence produced by the Corporation after discovery, 1 the court made credibility determinations from the evidence already presented instead of determining whether any genuine issues of material fact were left to be resolved. The record on this appeal demonstrates that a number of key factual questions remain, not least among them the likelihood of confusion. Also remaining are fact issues relating to the Partnership's asserted prior use of its common law mark and name "Country Tiles." Additionally, even if the Partnership has some right of prior use with respect to the mark "Country Tiles," there are unresolved issues concerning the market in which the Partnership had prior use, as well as genuine issues of material fact concerning the Corporation's diligence in protecting its rights. Accordingly, we will reverse the district court's order granting summary judgment to the Partnership, vacate its order canceling the Corporation's federal registration number for "Country Tiles" as well as its injunction against the Corporation's continued use of that mark and remand for further proceedings consistent with this opinion.
The Corporation owns and uses the tradename and service mark "Country Floors." It also holds an incontestable federal registration for the trademark "Country Floors." This trademark has been used since the 1960's and was registered on the Principal Register in the United States Patent and Trademark Office in 1976. A representation of the trademark is reproduced in the Appendix. In 1986, the Corporation also entered a mark on the Principal Register incorporating the name "Country Tile."
The Partnership uses the name "Country Tiles" in its retail stores and its advertising. In September 1988, the Partnership registered the name "Country Tiles" as a fictitious name with the Commonwealth of Pennsylvania's Department of State in Harrisburg. In January, 1989, the Partnership also obtained a Pennsylvania trademark registration number and a Pennsylvania Service Mark registration for its mark "Country Tiles." A representation of this trademark is also reproduced in the Appendix.
The Corporation sought both legal and equitable relief, claiming that the Partnership's use of the common law trademark "Country Tiles" directly infringed upon the Corporation's federally registered trademarks "Country Floors" and "Country Tile." Its complaint included allegations of trademark infringement pursuant to 15 U.S.C.A. Secs. 1051-1128 and common law, false designation of origin pursuant to 15 U.S.C.A. Sec. 1125(a), and common law unfair competition and unjust enrichment. The Partnership raised several affirmative defenses including laches and counterclaimed seeking legal and equitable relief for various violations of the Pennsylvania Trademark Act, 54 Pa.Cons.Stat.Ann. Secs. 1101-1126 (Purdon Supp.1990), including alleged injury to business reputation and trademark, service mark and tradename dilution, common law trademark and service mark infringement, and unfair competition.
At a preliminary injunction hearing, the Corporation presented evidence that the Partnership's use of the name "Country Tiles" led customers to confuse the Partnership's Manayunk store with the previously established "Country Floors" Philadelphia sales outlet and showroom. The district court denied the Corporation's motion for a preliminary injunction, in part because of its view that there was no likelihood of confusion between the "Country Floors" and the "Country Tiles" names and logos. Thereafter, the parties engaged in discovery and the Partnership filed a motion for summary judgment in January, 1990.
The district court granted the Partnership's motion for summary judgment and entered final judgment in favor of the Partnership on May 18, 1990. It also enjoined the Corporation from using the trademark "Country Tile" and canceled the Corporation's registration number for that mark pursuant to 15 U.S.C.A. Sec. 1119. This timely appeal followed.
The Corporation, Country Floors, began in 1964 as a small retail business in the basement of its President and Chief Executive Officer, Norman Karlson (Karlson). Its first store was located on 26th Street in New York City. There it sold hand decorated and imported tiles from various European countries. The Corporation's gross sales for the first year totaled about $95,000.00. Today, its sales are about $14,000,000.00 per year.
Country Floors now maintains either showrooms or warehouses, directly or through licensees, in New York City, Miami, Philadelphia, Los Angeles and Melbourne and Sydney, Australia. The Florida showroom opened in 1972, the Philadelphia showroom in 1976 and the Los Angeles showroom in 1982. Although not the largest retail tile company in the United States, Country Floors is among the leaders in the high-end tile market. It not only imports tiles from different manufacturers around the world but designs new tiles as well. Its merchandise is sold both through its showrooms and through a system of sales representatives.
The name "Country Floors" has been used by the Corporation on its packages since it began business in 1964. On July 6, 1976, a logo incorporating the name was registered as a trademark in the United States Patent and Trademark Office, Registration No. 1,042,904. The logo depicts the tradename "Country Floors" in Augustea type font, centered on a representation of a ceramic tile.
Over the course of its operations, the Corporation has received mail and checks from customers addressed or payable to the names of "Country Tiles," "Country Tile" and "Country Tiles, Inc." In 1985, it began marketing a line of Italian tile under the name "Country Tile." On February 18, 1986, the Corporation filed for and received federal registration number 1,383,398 for a mark incorporating the name "Country Tile."
The "Country Tiles" stores the Partnership now operates are, in a sense, foster children of a single tile store that first opened in Westport, Connecticut (the Westport store) in 1972. The Westport store began as a joint venture between Country Floors and the Basque Corporation (Basque).
Fifty percent of the stock of this venture was owned by Country Floors. The other fifty percent belonged to Basque. Country Floors gave Basque a license to use the tradename "Country Floors." Tom and Kita Melahn (the Melahns) were the principals in Basque
In 1979, a dispute arose between Basque and Country Floors. Country Floors sued Basque in a New York state court. A settlement was reached that terminated the relationship between Basque and Country Floors. Under the settlement the licensing agreement was canceled, Basque and the Melahns were restricted from further use of the name "Country Floors," and Country...
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