Freedom Sav. and Loan Ass'n v. Way

• Decision Date: 15 April 1985
• Docket Number: No. 84-3315,84-3315
• Parties: , 17 Fed. R. Evid. Serv. 1290 FREEDOM SAVINGS AND LOAN ASSOCIATION, Plaintiff, Counterclaim/Defendant, Appellant, v. Vernon WAY, Jr., d/b/a Freedom Realty, Defendant, Counterclaim/Plaintiff, Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1176

757 F.2d 1176

226 U.S.P.Q. 123, 17 Fed. R. Evid. Serv. 1290

FREEDOM SAVINGS AND LOAN ASSOCIATION, Plaintiff, Counterclaim/Defendant, Appellant, v. Vernon WAY, Jr., d/b/a Freedom Realty, Defendant, Counterclaim/Plaintiff, Appellee.

No. 84-3315.

United States Court of Appeals, Eleventh Circuit.

April 15, 1985.

John S. Hale, McLean, Va., for plaintiff, counterclaim/defendant, appellant.

Stevan T. Northcutt, Tampa, Fla., for defendant, counterclaim/plaintiff, appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before FAY and JOHNSON, Circuit Judges, and DYER, Senior Circuit Judge.

JOHNSON, Circuit Judge:

Freedom Savings and Loan Association brought this action against Vernon Way, sole proprietor of Freedom Realty Company, alleging that Way had infringed its servicemark under the Lanham Act, 15 U.S.C.A. Sec. 1114 (1963), and had committed unfair labor practices under 15 U.S.C.A. Sec. 1125 (1982) and "dilution" under FLA.STAT. Sec. 495.151 (1972) by using the Freedom Realty name. Way counterclaimed for injunctive relief preventing Freedom Savings from infringing on his common law rights in the name Freedom Realty.

Freedom Savings first adopted its name in 1974 when it was a federally-chartered savings and loan association offering services throughout Florida and in other states. The company chose the name Freedom after reviewing names suggested by the public that were descriptive of the company's image and function; Freedom was chosen in consideration of the public's apparent appreciation of God and country. The name was placed on a red and white banner logo, similar to a flag. By the fall of 1976, Freedom Savings had registered several other servicemarks and trademarks, including "Freedom Federal" and "Freedom Account." Later, in 1979, FSL registered the single word "Freedom" when used in connection with savings and loan association services.

In November of 1976, Way opened his real estate office in the Tampa area and named it Freedom Realty Company. Although Way knew of Freedom Savings, he testified that he never thought the two entities would be confused and that he had chosen the name because of the bicentennial celebration. Freedom Savings knew of the existence of Freedom Realty and encouraged Way to refer potential mortgage borrowers to Freedom Savings.

Late in 1978, Way applied to the Patent and Trademark Office for registration of the name Freedom Realty Company and Freedom Savings filed its opposition to that registration. The Trademark Trial and Appeal Board (TTAB) decided the dispute in favor of Freedom Savings in 1981; Way did not appeal that decision. In the meantime, Freedom Savings had become a state-chartered institution which meant that it could, for the first time, offer real estate brokerage services to the public. Before that time it had purchased and sold property, but only as a proprietor rather than as a broker. Freedom Savings purchased Sun Bay Realty, which operated in the same market as Way's Freedom Realty, and the two companies cooperated on at least one sale.

After the TTAB decision, Way began to advertise his company as "Vernon Way's Freedom Realty, Independently Owned and Operated." Nevertheless, Freedom Savings sent him a letter in December of 1981 demanding that he cease using the Freedom Realty name. After unsuccessful attempts to settle the dispute, Freedom Savings filed this suit seeking monetary damages and declaratory and injunctive relief. Freedom Savings moved for summary judgment, alleging that the earlier proceeding before the TTAB had conclusively resolved the servicemark infringement claim in this suit; the court denied the motion. The case then proceeded to trial before a jury. The court granted Way's motion in limine at the beginning of the case, forbidding any reference to the earlier TTAB proceedings. At the close of the plaintiff's case, the jury was dismissed because Freedom Savings had not presented any evidence to allow a calculation of damages by the jury. The court served as trier of fact on the equitable claims that remained in the case and ruled in favor of Way on all of Freedom Savings' claims. The court also granted Way's counterclaim and enjoined Freedom Savings from using the name "Freedom Realty" in Hillsborough County, 583 F.Supp. 544.

I. Infringement

The central inquiry in a servicemark infringement case is whether there is a "likelihood of confusion" on the part of consumers between the names and symbols used by the two parties. ¹ The district court ruled that there was no likelihood of confusion in this case. The validity of that ruling will depend on the court's treatment of the prior decision by the TTAB and its assessment of the factors that courts in this Circuit most commonly rely upon to resolve the question of likelihood of confusion.

A. The TTAB decision

In many infringement cases the parties have had no occasion to pursue their claims before the TTAB. In cases involving trademark disputes ruled upon by the TTAB, however, the courts must give proper deference to the decision reached by the Board. Freedom Savings alleges that the court's failure to give adequate consideration to the TTAB decision infected its rulings on the motion for summary judgment, the admissibility of certain evidence and the burden of proof.

Summary judgment

In United States v. Utah Construction and Mining Co., 384 U.S. 394, 86 S.Ct. 1545, 16 L.Ed.2d 642 (1966), the court held that the factual findings of an administrative agency acting in a judicial capacity will in some circumstances be given res judicata or collateral estoppel effect in subsequent related lawsuits. Freedom Savings claimed in its motion for summary judgment that the TTAB decision in this case deserves such treatment. Since the TTAB found in favor of Freedom Savings on the likelihood of confusion issue, collateral estoppel would entitle Freedom Savings to summary judgment as a matter of law.

The Utah Construction court reached the result just described because Congress intended that a determination of facts by the Board of Contract Appeals acting in a judicial capacity would be final and conclusive for the parties. 384 U.S. at 419, 86 S.Ct. at 1558. Thus, while the preclusive effect of an administrative decision will depend in part on the adjudicative quality of the agency action and on traditional principles of collateral estoppel such as finality, International Union of Operating Engineers, Local No. 714 v. Sullivan Transfer, Inc., 650 F.2d 669, 672-76 (5th Cir. Unit A 1981), Congress can also limit the preclusive effect of an agency decision for the sake of some other public policy. Cf. Alexander v. Gardner-Denver Co., 415 U.S. 36, 48-51 & n. 10, 94 S.Ct. 1011, 1019-1021 & n. 10, 39 L.Ed.2d 147 (1974).

This Circuit has decided that Congress limited the res judicata or collateral estoppel effect to be given the decisions of the TTAB because the Lanham Act provides for extensive judicial involvement in the registration and protection of trademarks. Section 1071(b) of Title 15 U.S.C.A. (1982) empowers courts to hear appeals from the TTAB de novo. According to American Heritage Life Insurance Co. v. Heritage Life Insurance Co., 494 F.2d 3 (5th Cir.1974), the ability of courts to hear appeals on a de novo basis reflects a Congressional intent not to invoke the immunizing doctrines of res judicata or collateral estoppel with regard to TTAB proceedings. In this Circuit, a court hearing an infringement claim is not legally and conclusively bound by a prior decision of the TTAB regarding the same trademark dispute. ² The trial court correctly denied the motion for summary judgment.

Admissibility of evidence

The second alleged source of error arose from the district court's exclusion of all references to the TTAB proceedings "in the presence of the jury." Freedom Savings contends that the decision was reversible error because it removed from consideration some of the most important evidence in the case without any substantial justification. We do not address the propriety of that ruling, however, because the district court rescinded its earlier ruling once the jury had been dismissed at the end of the plaintiff's case. Explaining that the exclusion of the TTAB proceedings had been for the benefit of the jury, the court stated that re-argument of the issue would not be necessary and that the material could come in.

Freedom Savings claims that despite this ruling, the court did not consider all the pertinent material. While acknowledging that the district court reviewed the findings of the TTAB before making its ruling, Freedom Savings maintains that its witnesses had limited their testimony to exclude all references to the TTAB proceedings, thereby weakening their testimony. ³ Freedom Savings contends, therefore, that the damage had already been done by the time the court made its second ruling.

Freedom Savings, however, never explains why it presented no evidence of the TTAB proceedings either during cross-examination or during rebuttal. Freedom Savings presented no rebuttal evidence at all, yet it could have presented considerable evidence at that stage, including supplemental testimony of previous witnesses, in order to compensate for the earlier exclusion. This complete failure to proffer evidence indicates that any error by the trial court in excluding evidence was harmless; the choices of counsel rather than the rulings of the court were responsible for the exclusion. Cf. Mills v. Levy, 537 F.2d 1331 (5th Cir.1976).

Burden of proof

The TTAB proceedings, while not dispositive of this case, were relevant evidence for the court to consider. In deciding whether to register Way's servicemark, the TTAB, like the district court in this infringement case, was faced with the question of whether the servicemarks of the two parties were likely to cause confusion among consumers. 15 U.S.C.A. Sec. 1052(d) (1976); 15 U.S.C.A. Sec. 1114(1) (1...