Gilbert/Robinson, Inc. v. Carrie Beverage-Missouri, Inc.

• Decision Date: 19 May 1993
• Docket Number: BEVERAGE-MISSOUR,91-2877,INC,Nos. 91-2869,s. 91-2869
• Citation: 26 USPQ2d 1378,989 F.2d 985
• Parties: , 26 U.S.P.Q.2d 1378 GILBERT/ROBINSON, INC., a corporation, Plaintiff-Appellee, v. CARRIE, a corporation, Defendant-Appellant, Carrie Beverage Incorporated, a corporation, Defendant. GILBERT/ROBINSON, INC., a corporation, Plaintiff-Appellant, v. CARRIE, a corporation, Defendant-Appellee, Carrie Beverage Incorporated, a corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 985

989 F.2d 985

61 USLW 2608, 26 U.S.P.Q.2d 1378

GILBERT/ROBINSON, INC., a corporation, Plaintiff-Appellee, v. CARRIE BEVERAGE-MISSOURI, INC., a corporation, Defendant-Appellant, Carrie Beverage Incorporated, a corporation, Defendant.

GILBERT/ROBINSON, INC., a corporation, Plaintiff-Appellant, v. CARRIE BEVERAGE-MISSOURI, INC., a corporation, Defendant-Appellee, Carrie Beverage Incorporated, a corporation, Defendant-Appellee.

Nos. 91-2869, 91-2877.

United States Court of Appeals,

Eighth Circuit.

Submitted Nov. 11, 1992.

Decided April 5, 1993.

Rehearing and Rehearing En Banc Denied May 19, 1993.

Thomas C. Walsh, Bryan Cave, St. Louis, MO, for plaintiff-appellant--cross-appellee, Gilbert/Robinson, Inc.

James Francis Malone, St. Louis, MO, for defendants-appellees--cross-appellants, Carrie Beverage-Missouri, Inc. and Carrie-Beverage, Inc.

Before LOKEN, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and ROSENBAUM, ^* District Judge.

LOKEN, Circuit Judge.

In this trademark infringement case, plaintiff Gilbert/Robinson, Inc. ("Gilbert"), the trademark owner, appeals a jury verdict awarding infringing defendants Carrie Beverage, Inc., and Carrie Beverage-Missouri, Inc. (collectively, "Carrie"), $3.1 million in compensatory and punitive damages because of Gilbert's fraud on the United States Patent and Trademark Office (the "PTO"). Carrie cross-appeals the district court's grant of a permanent injunction against continued infringement of Gilbert's trademark rights under state law. See Gilbert/Robinson, Inc. v. Carrie Beverage-Missouri, Inc., 758 F.Supp. 512, 520 (E.D.Mo.1991). We conclude that Carrie failed to prove actionable fraud on the PTO and reverse the judgment entered upon the jury's verdict. On the cross appeal, we affirm.

I.

In April 1972, Gilbert opened the first HOULIHAN'S OLD PLACE restaurant in Kansas City's Country Club Plaza shopping center. According to contemporary promotional material, Gilbert based the name on the site's previous tenant, Tom Houlihan's Men's Wear store. The restaurant was a success, and over the next four years HOULIHAN'S OLD PLACE restaurants opened in six other cities.

Gilbert took early steps to protect its new name. In June 1975, it applied for federal registration of the mark HOULIHAN'S OLD PLACE for restaurant services. In October 1975, it paid a San Diego company $9,500 to abandon the name HOOLIHAN'S 1880 BAR & GRILL; in May 1976, it paid a Houston restaurateur $10,000 to abandon the name HOULAHAN'S. On October 12, 1976, the PTO registered the mark HOULIHAN'S OLD PLACE. On February 5, 1980, the PTO granted Gilbert's 1978 application for registration of a second mark, HOULIHAN'S OLD PLACE AND LOGO. ¹

In 1982, Carrie opened MIKE HOULIHAN'S bar in a downtown Milwaukee shopping mall; the name was a combination of the names of Carrie's shareholders, Michael Heyer and John Houlihan. When Carrie opened a second MIKE HOULIHAN'S in Minneapolis in 1984, Gilbert wrote to "insist that the name be changed because of the [federal] registration we have in place." Carrie's Minneapolis bar closed with this issue unresolved.

In mid-1985, Carrie opened a MIKE HOULIHAN'S bar at the St. Louis Centre in downtown St. Louis. By this time, Gilbert had fifty-two HOULIHAN'S OLD PLACE restaurants in twenty-two states. Gilbert had operated a HOULIHAN'S OLD PLACE in suburban St. Louis since 1975 and planned to open another in December 1985 in Union Station, a few blocks from St. Louis Centre. The week MIKE HOULIHAN'S opened, Gilbert wrote Carrie to warn that, "[y]our use of Houlihan's in the name of your operation is already causing confusion.... In view of this situation, we hereby inform you that ... we will take all steps to protect our established and legally recognized rights in our Houlihan's name."

Gilbert commenced this action in October 1985, alleging that it has the exclusive right to use the federally registered HOULIHAN'S OLD PLACE marks, and that Carrie's infringing use of the name MIKE HOULIHAN'S violates federal and state trademark law and constitutes unfair competition under Missouri common law. Gilbert sought an injunction, compensatory and punitive damages, and attorney's fees.

During discovery, Carrie learned that, when Gilbert submitted its first registration application to the PTO in 1976, the PTO examiner responded with the following inquiry:

The name ... on the drawing should be identified. If it is the name ... of a particular living individual, a written consent from said individual to the use and registration of the name ... must be filed. Section 2(c) of the trademark act; TMEP section 1204. ²

Although Kansas City clothier Tom Houlihan was alive at this time (he died on December 4, 1976), Gilbert responded through its patent counsel that, "The name in the mark is fictitious and is not a reference to any living individual." Armed with these facts, Carrie now asserted a counterclaim, alleging that Gilbert had procured its 1976 and 1980 registrations by fraudulent declarations to the PTO, and seeking to recover damages under Section 38 of the Lanham Act, 15 U.S.C. § 1120.

The district court bifurcated the parties' claims and tried Carrie's counterclaim first to a jury. At trial, Carrie presented evidence tending to prove that Gilbert's response to the PTO examiner's inquiry was an intentional nondisclosure. Carrie's experts further opined that Gilbert's 1976 registration would not have issued without Tom Houlihan's consent had the facts been disclosed to the PTO, and that Gilbert's 1980 registration was tainted by the fraud because it was dependent upon Gilbert's ownership of the 1976 registration. For damages, Carrie presented evidence that Gilbert's infringement suit scuttled plans for a nationwide expansion of MIKE HOULIHAN'S restaurants backed by $750,000 of venture capital.

The jury found that Gilbert's 1976 and 1980 registrations were procured by fraud and awarded the two Carrie corporations a total of $1.1 million in compensatory damages for Carrie's lost business opportunity and litigation expenses, plus $2 million in punitive damages. ³ Based upon the jury verdict, the district court dismissed Gilbert's Lanham Act infringement claims and then conducted a two-day bench trial on Gilbert's state law claims. The court concluded that, independent of any federal registration, Gilbert "has acquired trademark rights in [the HOULIHAN'S] name," which is "a fictitious, arbitrary or fanciful mark ... entitled to the widest ambit of protection." 758 F.Supp. at 525. The district court entered judgment in favor of Gilbert on its state statutory and common law claims and permanently enjoined Carrie from using the MIKE HOULIHAN'S name in Missouri. Both sides timely appealed.

II.

Section 2(c) of the Lanham Act, 15 U.S.C. § 1052(c), provides that a trademark is not registrable if it "Consists of or comprises a name, portrait, or signature identifying a particular living individual except by his written consent...." This section is intended to protect rights of privacy and proprietorship, not of all persons who bear a particular name, but of those who "will be associated with the mark as used on the goods, either because that person is so well known that the public would reasonably assume the connection or because the individual is publicly connected with the business in which the mark is used." Martin v. Carter Hawley Hale Stores, Inc., 206 U.S.P.Q. 931, 933 (T.T.A.B.1979).

At the time of Gilbert's 1976 application, the TMEP provided the following guidance to trademark applicants and examining attorneys concerning compliance with § 1052(c):

§ 1204.01. If a mark appears to be matter which identifies a particular individual ... and no explanation or consent is of record, the Examining Attorney must inquire whether or not the matter identifies a particular individual.... In the event the matter does not identify a particular living individual, it is satisfactory if in response it is stated that the matter does not identify any particular living individual, or that it is fanciful, or the like, but it is desirable that in addition any special circumstances which exist be explained....

§ 1204.03. If the mark or a part of it gives the appearance of identifying a particular individual, but it was devised by the applicant as fanciful, or applicant believes it to be fanciful, a statement to that effect must be put in the record.

If it should nevertheless develop that the matter is the name of some particular living individual, requirement for consent depends upon determination of whether the mark would be recognized and understood by the public as identifying the person. If the person is not generally known, nor well known in the field relating to the goods concerned, it may be that the mark would not constitute the identification of a particular person under this section, and in such event consent would not be required.

Carrie's claim of fraud is based upon Gilbert's failure to disclose Tom Houlihan in responding to the examiner's § 1052(c) inquiry.

The Lanham Act has numerous remedial provisions that may apply when a registration is improperly obtained. First, a person "damaged by the registration" may petition to have the registration cancelled "at any time if the registered mark ... was obtained fraudulently or contrary to the provisions of" § 1052(c). 15 U.S.C. § 1064(c). Second, in an infringement suit fraudulent procurement of the mark or a violation of § 1052(c) is a defense to the "incontestability" of a registered mark. See 15 U.S.C. §§ 1065, 1115(b)(1). Third is the remedy invoked by Carrie--a damage action under 15 U.S.C. § 1120, which provides that:

Any person who shall procure registration ... by a false or fraudulent declaration ... shall be liable in a civil action by any person injured thereby for any damages sustained in consequence thereof.

For purposes of this appeal, we accept the jury's finding that Gilbert intentionally withheld...