GTE Corp. v. Williams

• Decision Date: 30 June 1986
• Docket Number: Civ. No. C82-1237G.
• Citation: 649 F. Supp. 164
• Parties: GTE CORPORATION, Plaintiff, v. David R. WILLIAMS, individually and dba General Telephone, Defendant.
• Court: U.S. District Court — District of Utah

649 F. Supp. 164

GTE CORPORATION, Plaintiff, v. David R. WILLIAMS, individually and dba General Telephone, Defendant.

Civ. No. C82-1237G.

United States District Court, D. Utah C.D.

June 30, 1986.

COPYRIGHT MATERIAL OMITTED

Jeffrey A. Schwab, Mark Regan, Robert R. Mallinckrodt, Salt Lake City, Utah, for plaintiff.

Robert S. Campbell, Jr., Louise Knauer, Salt Lake City, Utah, for defendant.

MEMORANDUM DECISION

J. THOMAS GREENE, District Judge.

This matter came on regularly for non-jury trial on April 7, 1986 and concluded on April 17, 1986. Plaintiff GTE Corporation was represented by Jeffrey A. Schwab, Mark Regan and Robert R. Mallinckrodt and defendant Williams was represented by Robert S. Campbell, Jr. and Louise Knauer. After trial of the merits and counsels' able arguments to the Court, the Court took the matter under advisement. The Court, having adopted Findings of Fact and Conclusions of Law, hereby supplements the Findings and Conclusions with a Memorandum Decision which further addresses the factual and legal basis for its decision. The Court does not reiterate all its Findings of Fact but incorporates them by reference herein.

NATURE OF THE ACTION

Plaintiff GTE Corporation (hereinafter "plaintiff" or "GTE") alleges that defendant Williams dba General Telephone (hereinafter "defendant" or "Williams") infringed GTE's statutory rights in the tradename and trademark¹ "General Telephone" beginning in 1974 to the present. Plaintiff specifically alleges four statutory causes of action. First, plaintiff alleges trademark infringement pursuant to Section 32(1)(a) of the Lanham Act of 1946, 15 U.S.C. § 1114(1)(a). That statute makes it a violation for a person to use a registered trademark, without the consent of the registrant, "in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive." Id. Plaintiff's second cause of action alleges a violation of Section 32(1)(b) of the Lanham Act of 1946, 15 U.S.C. § 1114(1)(b). That Section proscribes a person's reproduction, counterfeit, copy, or colorable imitation of a registered trademark, without the consent of the registrant, where such use is applied to "labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive." Id. GTE's third claim alleges unfair competition in violation of Section 43(a) of the Lanham Act of 1946, 15 U.S.C. § 1125(a). That section applies to designations of origin, whether registered or not, and prohibits the use of words or symbols that tend falsely to describe or represent the source or origin of goods or services in commerce. Id. Plaintiff's final statutory claim is for damages pursuant to Section 35 of the Lanham Act of 1946, 15 U.S.C. § 1117. That statute allows a plaintiff to recover actual damages, damages in the form of defendant's profits, and attorney's fees,² for violation of a right of the registrant of a mark registered in the Patent and Trademark Office (hereinafter "PTO"). Plaintiff's claims are not in the alternative but allege separate violations.

Defendant asserts several affirmative defenses and makes several counterclaims. Generally, those defenses and counterclaims assert that Williams' adoption of the trademark "General Telephone" was in good faith, that Williams is the senior user in Utah and has acquired a common law trademark to the exclusion of GTE's use, that Williams' use in the Wasatch Front region constitutes a remote usage of the trademark which does not infringe on any rights GTE may have elsewhere in the trademark, that GTE abandoned the trademark and thus is the junior user, that GTE is estopped from asserting its claim because it acquiesced in Williams' use and because of laches, that GTE improperly and fraudulently obtained the federal registration, and that Williams is entitled to use the trademark exclusively in the Wasatch Front area of Utah while GTE has concurrent use of its elsewhere, pursuant to 15 U.S.C. § 1052.³ Defendant's affirmative defenses and counterclaims generally appear to be pleaded in the alternative but some of them overlap, so that one claim or defense may support a finding as to others.

APPLICABLE LEGAL PRINCIPLES

A. Federal Registration

Rights to use of federally registered trademarks in Utah, as in other states, are determined, in large measure, by the common law and state statutes. See, e.g., Wrist-Rocket Mfg. Co. v. Saunders Archery Co., 578 F.2d 727, 730 (8th Cir.1978) (state common law circumscribes the rights accompanying registration with the PTO). The rights accompanying a federal trademark registration are, to a great extent, coextensive with the rights acquired at common law.⁴ Value House v. Phillips Mercantile Co., 523 F.2d 424, 428 (10th Cir.1975) (the Lanham Act "does not go beyond protection under common law principles which afford rights growing out of use") (citing United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 39 S.Ct. 48, 63 L.Ed. 141 (1918)). Wrist-Rocket Mfg. Co. v. Saunders Archery Co., 516 F.2d 846, 850 (8th Cir.) ("registration does not confer upon the registrant rights not possessed at common law. It is not a sword. To prevail in the infringement action plaintiff must establish his exclusive right to use the trademark independent of the registration"), cert. denied, 423 U.S. 870, 96 S.Ct. 134, 46 L.Ed.2d 100 (1975); Caesars World, Inc. v. Caesar's Palace, 490 F.Supp. 818, 822 (D.N.J.1980) (common law rights in service or trademarks exist independently of statutory provisions for registration and are not affected by the fact that the trademarks were registered after another began its use of the marks). Therefore, although plaintiff has not pleaded a cause of action for infringement of a common law trademark, GTE's common law rights of usage of the trademark, if any, in the Wasatch Front region must be determined according to Utah's standard for common law trademark acquisition and infringement.⁵ Accordingly, plaintiff will succeed on its first, second and fourth claims only if it has shown that it obtained a validly registered trademark with the PTO on October 22, 1982, which defendant has infringed as measured by common law and statutory law applicable in Utah.

B. Remote Area Exception to Federal Registration

Moreover, defendant's common law right of usage, if any, of "General Telephone" in the relevant area is significant to a resolution of the issues herein. Where two parties acquire common law rights to a trademark in different areas, "a registered owner's rights can become incontestable⁶ but the other common-law owner retains exclusive rights to the mark in areas where his rights antedated registration." Wrist-Rocket Mfg. Co. v. Saunders Archery Co., 578 F.2d 727, 730 (8th Cir.1978) (registration will not deprive another good faith user in a separate market of the protections acquired at common law). On this point, the Tenth Circuit affirmed a case in which the lower court stated:

It has long been the law that the prior appropriation of a trademark in one geographical market does not entitle the first user to prevent a second user from using the same trademark in a separate and geographically remote area if the second user selected its mark in good faith.

Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber, 408 F.Supp. 1219, 1239 (D.Colo. 1976), (citing Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713 (1916); United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 39 S.Ct. 48, 63 L.Ed. 141 (1918); and Value House v. Phillips Mercantile Co., 523 F.2d 424 (10th Cir.1975)), aff'd, 561 F.2d 1365 (10th Cir.1977), cert. dismissed, 434 U.S. 1052, 98 S.Ct. 905, 54 L.Ed.2d 805 (1978). Good faith is not vitiated by a user's knowledge of the existence of a prior user. Id.; see also Proctor and Gamble Co. v. Johnson and Johnson, Inc., 485 F.Supp. 1185, 1201 (S.D.N.Y.1979) ("good faith can be found even when the junior user has both actual and constructive notice of the senior user's mark"), aff'd, 636 F.2d 1203 (2d Cir.1980). Good faith depends on whether adoption of the mark was intended to palm off or take advantage of the goodwill and reputation of the prior user.

C. Common Law Principles Applicable in Utah

Utah law provides a cause of action for common law trademark infringement. See Utah Code Ann. § 70-3-15.⁷ In order for a party alleging infringement of a trademark not registered under Utah or federal statutes to prevail the party must show the existence of several factors. Where the trademark is composed of words that are commonly used in everyday speech and belong in the public domain or are descriptive of the product or service, the user of the mark must have developed a reputation and goodwill for its business and its products or services, and the words must have acquired a "secondary meaning";⁸ that is, — the trademark must have come to mean, in the minds of the general public, the party's particular business and products, as opposed to the general or dictionary meaning of the words. George v. Peterson, 671 P.2d 208, 210-11 (Utah 1983) (citing Budget System, Inc. v. Budget Loan & Finance Plan, 12 Utah 2d 18, 24, 361 P.2d 512, 516 (1961)); Beer Nuts, Inc. v. Clover Club Foods Co., 711 F.2d 934, 939 (10th Cir.1983). Factors that bear on secondary meaning include length of use, continuity of use, extent of advertising and success of the enterprise. Once secondary meaning is established, the holder of the trademark must show that the alleged violator's trademark is sufficiently similar to produce confusion among the public.

Under Utah law applicable to the facts herein, acquisition of a common law...