Exxon Corp. v. Exxene Corp., s. 81-2997

• Decision Date: 26 January 1983
• Docket Number: Nos. 81-2997,82-1704,s. 81-2997
• Citation: 217 USPQ 215,696 F.2d 544
• Parties: EXXON CORPORATION, Plaintiff-Appellant, v. EXXENE CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 544

696 F.2d 544

217 U.S.P.Q. 215

EXXON CORPORATION, Plaintiff-Appellant, v. EXXENE CORPORATION, Defendant-Appellee.

Nos. 81-2997, 82-1704.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 28, 1982.

Decided Dec. 30, 1982.

Rehearing Denied Jan. 26, 1983.

Robert Stern, Mayer, Brown & Platt, Chicago, Ill., for plaintiff-appellant.

Thomas R. Juettner, Gary, Juettner & Pyle, Chicago, Ill., for defendant-appellee.

Before BAUER and POSNER, Circuit Judges, and SWYGERT, Senior Circuit Judge.

POSNER, Circuit Judge.

This case began in 1976 when the appellant, Exxon Corporation, filed a three-count complaint against the appellee, Exxene Corporation. Count I charged that Exxene had deprived Exxon of its exclusive right to use the trademark "EXXON," thereby violating sections 33(a) and 35 of the Lanham Act, 15 U.S.C. Secs. 1115(a), 1117. Count II charged that Exxene had also violated section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a), which forbids the use of "a false designation of origin, or any false description or representation ...." Count III charged Exxene with having violated Ill.Rev.Stat.1981, ch. 140, Sec. 15, which forbids "subsequent use by another of the same or any similar mark, [or] trade name, ... if there exists a likelihood of ... dilution of the distinctive quality of the mark, [or] trade name, ... notwithstanding the absence of competition between the parties or of confusion as to the source of goods or services ...." Thus, Counts I and II charged trademark infringement and unfair competition in violation of federal law, and Count III, a pendent count, charged dilution in violation of state law.

Exxene counterclaimed under section 38 of the Lanham Act, 15 U.S.C. Sec. 1120, which forbids the fraudulent procurement of trademark registration. Although Exxon in its complaint had asked only for injunctive relief, the entire case was tried to a jury at Exxene's behest, because the counterclaim sought damages and the issues raised by the complaint and counterclaim overlapped. The jury returned a verdict for Exxene on both the complaint and the counterclaim, and awarded $250,000 in damages. Exxon appeals from both judgments, arguing that it is entitled (1) to a new trial on its trademark infringement and unfair competition claims (Counts I and II of the complaint), because the jury may have been confused by certain allegedly erroneous instructions relating to Exxene's counterclaim and because Exxene was permitted to conduct cross-examination and present evidence in violation of the pretrial order; (2) to judgment notwithstanding the verdict on both its dilution claim (Count III) and Exxene's counterclaim.

Twenty years ago Standard Oil Company (New Jersey) began to cast about for a new trade name. The history of this search (told in Oathout, Trademarks 136-37 (1981)) really begins, though, with the breakup of John D. Rockefeller's Standard Oil empire following the Supreme Court's affirmance in 1911 of the antitrust judgment dissolving Rockefeller's holding company, the Standard Oil Company of New Jersey. See Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619, 55 L.Ed. 834 (1911). Standard had owned, among its other properties, a number of oil companies organized along regional lines--Standard Oil of California, Standard Oil of New York (now Mobil), Standard Oil of Ohio, and others--and after the breakup the New Jersey company was just another regional company. The decree gave each regional company a monopoly within its territory of the Standard trademarks. The companies were free to compete in each other's territories but only under other trademarks. Standard Oil Company (New Jersey) had the exclusive use of the trademark "Esso," a Standard trademark, in its territory; it could use the trademark overseas, since the territories of the successor companies were domestic; but it could not use the trademark in the territories of the other successor companies--there it had to use other trademarks, "Enco" and "Humble." The situation was unsatisfactory; the company wanted to have a single trademark that it could use everywhere. After a long search it hit on the made-up word "Exxon," and in 1967 it began applying for trademark registrations for the word in connection with various products. In 1972 the company changed its name to Exxon Corporation and began advertising and promoting the new corporate name and the Exxon trademarks.

Although its best known consumer products are gasoline and motor oil, Exxon makes and sells a wide variety of other products. At the time of trial it owned 71 trademark registrations either for the simple word "EXXON" or for an emblem in which the word appears in red with crossed x's against a blue and white background. These registrations covered a wide variety of products manufactured by Exxon, not just gasoline and motor oil but asphalt, plastic laminated sheets, fertilizer, insecticide, and many others--even hosiery and yarn.

Exxene, a small family business incorporated in 1974, manufactures coatings and precoated plastic sheets. The coatings are applied to motorcycle and snowmobile windshields, ski goggles, other goggles, and scuba diving masks to make them scratch resistant and to prevent fogging. The precoated plastic sheets are the windshields, etc., already coated with Exxene's anti-fogging and scratch-resistant coatings. Most of Exxene's customers are other business firms. They either incorporate Exxene's coatings and sheets into their own finished products or resell the coatings and sheets to the consumer under the firms' own trade names. Only a small fraction of Exxene's output is sold to the consumer under Exxene's trade names and they are unlike its corporate name; the closest is "Xene." However, the corporate name and address usually appear somewhere on the package.

The double x appears in other trade names and trademarks besides those of the parties. "XX," "EXXELLO," and "OXXFORD" are all registered trademarks not owned by either Exxon or Exxene. And the parties do not make any of the same products. Exxon does not make optical coatings or precoated plastic sheets. Exxene does not make any products that Exxon does. The closest connection between the two businesses is that a motorcyclist, snowmobilist, or motorcycle or snowmobile dealer might purchase gasoline or oil from Exxon and windshield coatings from Exxene.

Exxon alleged in its complaint that it owned 66 federal registrations for the trademark "EXXON," and the pretrial order listed as one of the contested issues of fact and law the validity of "any of plaintiff's federal registrations." But Exxon listed only eight registrations as proposed trial exhibits, and Exxene listed no Exxon registrations among its proposed trial exhibits. During the presentation of Exxon's case in chief its counsel asked several witnesses to describe the areas of Exxon's business they were familiar with. In response the witnesses listed a variety of products, many not covered by any of the eight trademark registrations on which Exxon was relying to prove its case. On cross-examination Exxene's counsel asked these witnesses about the trademark registrations covering the products they had named. He was trying to show that Exxon had abandoned them. In addition, he placed in evidence 13 trademark registrations for the word "EXXON"--for such products as laminated plastic sheets, printers' ink, and hosiery--which he contended had been abandoned.

The validity of three of the eight registrations on which Exxon relied was not challenged, but in its special verdict the jury found that each of the five others, and all 13 that Exxene had placed in evidence, had been abandoned, including the use of "EXXON" in connection with motor oil. Although the last finding probably is wrong, it is not quite so fantastic as it seems. The trademark under which most of Exxon's service-station products are sold is the familiar red, white, and blue emblem with the x's in "Exxon" crossed. That trademark is not in issue. Exxon does not rely on it because Exxene has never crossed its x's or otherwise imitated the Exxon emblem; Exxene does not contend that any of the emblem trademark registrations have been abandoned. The trademark in issue in this case is the word "EXXON" in simple capital letters; it is registrations of this trademark that Exxene contends have been abandoned.

Exxon argues that the cross-examination and evidence concerning the 13 trademark registrations not listed in the pretrial order violated that order, were irrelevant and prejudicial, and caught Exxon by surprise. But there was no violation of the actual terms of the pretrial order, and in any event the violation of a pretrial order would not warrant an appellate court's ordering a new trial unless the violation so surprised the party complaining of it that it denied that party a fair hearing. It did not here. Exxon had time to prepare an effective rebuttal dealing with the validity of its own trademarks, a matter on which it is well informed.

So the only question is whether the 13 registrations were relevant; and considering the scope of the direct examination, we think probably they were. It is hard to imagine why Exxon's counsel would have been interested in extracting from its witnesses a description of the great variety of products made by Exxon except to counter the fact, which weakened Exxon's claims under Counts I and II, that Exxon and Exxene do not compete in the marketplace. If firms do not compete directly, it is harder to show that consumers are likely to be confused by similar terms; and confusion is relevant to both trademark infringement and unfair competition. It was in Exxon's interest therefore to impress on the jury the breadth of its product line, so that the jury would think the entire line--a line so long that it seemingly must intersect Exxene's product line somewhere--covered by valid trademark...