Gear, Inc. v. LA Gear California, Inc.

Decision Date29 July 1987
Docket NumberNo. 85 Civ. 5754 (CSH).,85 Civ. 5754 (CSH).
Citation670 F. Supp. 508,4 USPQ 2d 1192
PartiesGEAR, INC., Plaintiff, v. L.A. GEAR CALIFORNIA, INC.; L.A. Gear Licensing Corp.; L.A. Gear, Ltd.; and Robert Y. Greenberg, Defendants, Bettye Martin Musham and William Musham, Additional Counterclaim Defendants.
CourtU.S. District Court — Southern District of New York

COPYRIGHT MATERIAL OMITTED

Pennie & Edmonds, New York City, Walter G. Marple, Jr., Judith D. Cohen, of counsel, for plaintiff.

Kelley Drye & Warren, New York City, Robert A. Horowitz, of counsel, Arant Kleinberg & Lerner, Los Angeles, Cal., for defendants.

MEMORANDUM OPINION AND ORDER

HAIGHT, District Judge:

This dispute between these young, highly successful business enterprises focuses this Court's attention on the commercial value of the simple English word "gear."

Plaintiff Gear, Inc. sues to enjoin defendants from using the mark "L.A. Gear" on its goods or in its corporate names, for cancellation of defendants' trademark registration, and for an accounting. It brings causes of action under sections 32(1) and 43(a) of the Lanham Act, 15 U.S.C. §§ 1114(1), 1125(a) ("section 32(1)" and "section 43(a)" respectively), and under New York State law of unfair competition and dilution, N.Y.Gen.Bus.Law § 368-d. Defendants counterclaim for cancellation of plaintiff's registered trademarks, 15 U.S.C. § 1119, and for tortious interference with its business, and seek attorney's fees under 15 U.S.C. § 1117.

The parties cross-move for summary judgment. Defendant L.A. Gear, Ltd. renews its motion to dismiss for lack of in personam jurisdiction. Additional counterclaim defendants Bettye Martin Musham and William Musham also move to dismiss the counterclaims as to them only.

Much of the factual background is set forth in this Court's previous Memorandum Opinion and Order dated March 26, 1986, reported at 637 F.Supp. 1323 (S.D.N.Y. 1986), denying plaintiff's motion for a preliminary injunction. Familiarity with that opinion is assumed.

I. The Marks and Goods in Suit

It is useful at the outset to be precise about what marks are at issue and the goods to which they pertain.1

Plaintiff has registered the mark GEAR for luggage, garment bags, tote bags, and gym bags;2 for textile fabrics;3 and for bath accessories — shower curtains and towels.4 NEW COUNTRY GEAR was registered for sheets, towels, and textile fabrics of natural and synthetic fibers5 and for paper goods, dinnerware and cookware, and bed and bath accessories of cloth and vinyl.6 For textile and vinyl-coated paper wallcovers, AMERICAN COUNTRY GEAR was registered.7 Plaintiff's first registration for clothing — men's and misses ready-to-wear dresses, pants, skirts, blazers, belts, hats, ties, scarves, shoes and boots — was for GEARWEAR.8 Most recently, plaintiff obtained registration for GEAR heart symbol KIDS for wool and acrylic fabrics, throws and blankets, household linens, and children's clothing and footwear.9

Plaintiff has also used the mark GEAR on children's clothing. Supplemental Decl. of Charles Gilman ¶ 2; May 5, 1987 Letter of Robert A. Horowitz at 1. To date it has failed to persuade the Patent and Trademark Office to register GEAR for this use. See Def.Ex. 100-6 (final rejection by examiner of plaintiff's registration application). It is pursuing administrative appeals from the denial of registration. Gear has not relied on its common law rights in this unregistered mark in its papers filed in support of this motion; indeed, it was mentioned only in the defendants' papers.

All examples in the record of plaintiff's marks are printed in a type style called "Avant Garde Bold," modified to give a stenciled look. See Saemann Decl. ¶ 20; Def.Ex. 17, 18; Ex. B to Verified Amended Complaint. This sample, a reduction of Defendants' Exhibit 17, is representative:

Defendants' only mark is "L.A. Gear." Their primary product line is "athleisure" and casual footwear, but they also licence the mark for use on clothing. A licensing agreement was also concluded for fabric bags and totes, but defendants' licensee terminated that agreement after it was joined as a defendant in this lawsuit. See 637 F.Supp. at 1332.

For their line of shoes and clothing, defendants have obtained registration for their mark, "L.A. Gear."10 The mark frequently appears in a stylized script:

Def.Ex. 54. A block letter version using a modified "Tera" type style is also often used:

Def.Ex. 9. See Saemann Aff. ¶ 19; Def.'s Rule 3(g) Statement ¶ 1.

II. Cancellation of Plaintiff's Registrations

Section 37 of the Lanham Act, 15 U.S.C. § 1119, empowers the court to order the cancellation of registrations in any civil action in which the validity of the mark is placed in issue. Dymo Industries v. Tapeprinter, Inc., 326 F.2d 141, 143 (9th Cir. 1964) (per curiam). Thus, in an infringement action by a holder of a registered mark, the defendant may counterclaim for cancellation. See Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 7, 13-14 (2d Cir.1976) (Friendly, J.); 2 J.T. McCarthy, Trademarks and Unfair Competition § 30:32 (2d ed. 1984). Defendants contend plaintiff's registrations should be cancelled because the registration applications contained fraudulent misstatements.11 Because the fact of registration has evidentiary consequences, see pages 515, 518-19 infra, I begin with this counterclaim.

Trademark registrations obtained by fraud are subject to cancellation. Edison Brothers Stores, Inc. v. Cosmair, Inc., 651 F.Supp. 1547, 1563 (S.D.N.Y.1987). However, misstatements in registrations applications will cause cancellation only if they were made with knowledge of their falsity and if they were material to the decision to grant the registration application. Ibid. Fraud must be proven by clear and convincing evidence. The Money Store v. Harriscorp Finance, Inc., 689 F.2d 666, 670 (7th Cir.1982); 2 McCarthy, supra, ¶ 31:21.

Defendants point to a number of alleged falsehoods in several of Gear's registration applications. First, they note that Bettye Martin Musham, plaintiff's president, founder and chief executive officer, testified at her deposition that the mark GEAR was designed in 1978,12 even though plaintiff's registration application '360 placed the first use date in October, 1977. Later in her testimony, however, Musham recanted and swore 1977 was correct. Assuming arguendo the materiality of the discrepancy, this credibility issue is for the trier of fact to resolve, not for summary judgment. Knight v. U.S. Fire Insurance Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, ___ U.S. ___, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987).13

Next, defendants note that plaintiff falsely identified footwear as goods covered by its GEARWEAR mark, registration number '409. Def.Ex. 51. Plaintiff's amended application to register "GEAR" for children's clothing also included footwear. Def.Ex. 100. In fact, plaintiff has never used any of its marks on footwear. Plaintiff's Response to Request for Admissions 3 and 4, Def.Ex. 99. However, defendant has not even attempted to argue that this conceded falsehood was material.14 And the application to register GEAR for use on children's apparel has been denied, so there is no registration to cancel.

Finally, defendants assert that Musham swore falsely that certain substitute specimens submitted to the Patent and Trademark Office of the use of "GEARWEAR" had been used in commerce prior to the filing date of March 31, 1980. In fact, the substitute specimens were prepared after May 12, 1982, the date the examiner requested the substitute specimens.

I agree with plaintiff, however, that it substantially complied with the examiner's request if it provided specimens representative of use before March 31, 1980. A successful business would not ordinarily be expected to have on hand a inventory of two-year old goods. Even if the defendants' reading comports with the examiner's intent, I cannot assume the plaintiff knew that was the examiner's intent when it filed the substitute specimens.

The question, then, is whether the substitute specimens were truly representative of the use of the mark before the filing date. Put this question at her deposition, Musham's memory failed her. See Plaintiff's Reply Mem. at 4. Defendants have provided no other proof of fraud. Despite Musham's startling lapse, I hold defendants have failed to show the absence of a genuine issue of fact on this material issue.15

Accordingly, defendants' motion for summary judgment on the issue of cancellation is denied. F.R.Civ.P. 56(c).

III. Plaintiff's Lanham Act Claims16
A. "L.A. Gear" as a Trademark on Clothing and Shoes
1. Eligibility of "Gear" for Protection

Trademark law recognizes the commercial drawing power of congenial symbols — particularly, words and their presentation. Mishawaka Manufacturing Co. v. S.S. Kresge Co., 316 U.S. 203, 205, 62 S.Ct. 1022, 1024, 86 L.Ed. 1381 (1942). However, the eligibility of a word or phrase for trademark protection and the scope of any such protection vary. Four familiar categories of terms have been identified. In ascending order of protection, they are: generic, descriptive, suggestive, and arbitrary or fanciful. Abercrombie & Fitch, supra, 537 F.2d at 9.

A term is generic if it "refers, or has come to be understood as referring, to the genus of which the particular product is a species." Ibid. A generic term "implies reference to every member of a genus and the exclusion of individuating characteristics." Eastern Air Lines, Inc. v. New York Air Lines, Inc., 559 F.Supp. 1270, 1274 (S.D.N.Y.1983). The question is whether the principal significance of the word to the consuming public is as an indication of the nature or class of the article rather than as an indication that it emanated from a particular (possibly anonymous) source. Feathercombs, Inc. v. Solo Products Corp., 306 F.2d 251, 256 (2d Cir.), cert. denied, 371 U.S. 910, 83 S.Ct. 253, 9 L.Ed.2d 170 (1962); see McGregor-Doniger Inc. v. Drizzle,...

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