H-D Michigan, Inc. v. Top Quality Service, Inc., 06-3618.

• Citation: 496 F.3d 755
• Decision Date: 02 August 2007
• Docket Number: No. 06-3618.,06-3618.
• Parties: H-D MICHIGAN, INC. and Harley-Davidson Motor Company, Inc., Plaintiffs-Appellants, v. TOP QUALITY SERVICE, INC, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

496 F.3d 755 H-D MICHIGAN, INC. and Harley-Davidson Motor Company, Inc., Plaintiffs-Appellants,
v.
TOP QUALITY SERVICE, INC, Defendant-Appellee. No. 06-3618. United States Court of Appeals, Seventh Circuit. Argued March 29, 2007. Decided August 2, 2007.

[496 F.3d 757]

Jerre B. Swann (argued), Kilpatrick Stockton, Atlanta, GA, for Plaintiffs-Appellants.

John P. Fredrickson, Boyle Fredrickson Newholm Stein & Gratz, Milwaukee, WI, Thomas C. Elliott, Jr. (argued), Chicago, IL, for Defendant-Appellee.

Before FLAUM, EVANS, and WILLIAMS, Circuit Judges.

FLAUM, Circuit Judge.

H-D Michigan, Inc. and Harley Davidson Motor Co., Inc. (collectively, "Harley") sued Top Quality Service, Inc. ("Top Quality"), alleging trademark infringement, false designation of origin, and unfair competition claims under the Lanham Act, 15 U.S.C. § 1125(a), and state law. According to Harley's complaint, Top Quality's use of the name, "HOGS ON THE HIGH SEAS," which it uses to advertise ocean cruises for motorcycle enthusiasts, infringes on two Harley trademarks— "HOG" and "H.O.G."—that Harley uses for its motorcyclist travel club, the Harley Owners Group. The district court granted summary judgment in Top Quality's favor, concluding that a Second Circuit decision collaterally estopped Harley from bringing trademark claims premised on its use of the word "hog" to refer to motorcycle products or services. Harley appeals the district court's ruling granting Top Quality's motion for summary judgment. For the following reasons, we reverse and remand.

I. Background

Harley is universally recognized as a manufacturer of high quality motorcycles. In 1983, it established the Harley Owners Group, a 700,000 member social club for people who own Harley motorcycles. Buyers of Harley motorcycles receive a free, one-year membership in the Harley Owners Group, but they must pay annual dues or buy a lifetime membership to remain in the club. Since 1998, the club has offered travel services to members attending club-sponsored motorcycle rallies. The Federal Patent and Trademark Office has issued Harley the registered trademarks "HOG" and "H.O.G." to refer to its motorcyclist club.¹

Dean and Debbie Anderson are longtime Harley motorcycle owners and members of the Shenandoah Valley Chapter of the Harley Owners Group. In 2001, Dean Anderson came up with an idea to sell a

496 F.3d 758

cruise to motorcyclists. He was tired of attending traditional motorcycle rallies because the weather was unpredictable and because vendors charged inflated prices for food and lodging. He pitched the cruise idea to David Gray, Harley's east coast Harley Owners Group representative, but Gray said that Harley would not be interested in sponsoring a cruise. The Andersons continued to explore the possibility of offering the cruise on their own and eventually incorporated Top Quality as a means of selling their product. They decided to name the cruise "HOGS ON THE HIGH SEAS"—a catchy name that they believed captured the essence of their product.

In August 2002, the Andersons created the first advertisement for their cruise. It said, "1st Annual Harley Owners' Cruise Rally" in large print immediately above a circular logo that contained the words "HOGS ON THE HIGH SEAS" and a cartoon pig riding a large motorcycle on an ocean wave. Top Quality's website said, "Bring your Harley friends, HOG group members, riding buddies, there won't be a stranger on the ship." Top Quality advised potential vendors that the trip was an "all Harley Owners Cruise Ship Rally." Ninety-seven percent of the passengers on the first cruise owned Harley motorcycles.

Since November 2003, Top Quality has sponsored several cruises in the Carribean and Alaska. Passengers are not allowed to bring their motorcycles on the ship, but there are vendors who display motorcycles and motorcycle-related products and services. The cruises include entertainment, contests, and excursions that are designed to appeal to motorcycle enthusiasts.

There is evidence that some of Top Quality's potential customers have been confused about whether the cruise is sponsored by the Harley Owners Group. Shortly after it was launched, Top Quality's website posted a list of Frequently Asked Questions that included, "Do I have to be a HOG Member" and "Can I get on this Rally Cruise if I don't own a Harley Davidson Brand Bike." In surveys completed after the cruise, a number of passengers used the word "hog" to refer to Top Quality's passengers and cruise-related events. Additionally, prospective customers have referred to the cruise in their communication with Top Quality as "hd cruise," "Harley cruise," and "HOG cruise." A consumer survey conducted by Harley's expert suggests that twenty-seven percent of motorcycle riders who view Top Quality's promotional materials believe that Harley promotes or approves of Top Quality's cruises. The same survey suggests that much of this confusion stems from Top Quality's use of the word "hog" and the word's association with the Harley Owners Group.

There is also evidence that Top Quality has attempted to limit any such confusion. Its website currently disclaims association with Harley and the Harley Owners Group, and it has printed similar statements on literature that it distributes at motorcycle rallies. Top Quality's brochures also state that Dean and Debbie Anderson are the owners of HOGS ON THE HIGH SEAS and that they are "independent cruise consultants."

On January 31, 2003, Top Quality applied to register the HOGS ON THE HIGH SEAS mark in connection with "travel arrangements in the nature of cruises for motorcycle owners and enthusiasts." On January 23, 2004, Harley filed an opposition proceeding against the application, and on June 4, 2004, Harley filed the complaint in this case. It alleged trademark infringement, false designation of origin, and unfair competition claims under the Lanham Act and state law. The parties filed cross-motions for summary

496 F.3d 759

judgment, and the district court granted Top Quality's and denied Harley's motion. It concluded that a Second Circuit decision, Harley Davidson, Inc. v. Grottanelli, 164 F.3d 806 (2d Cir.1999), which held Harley's "H.O.G." mark generic, collaterally estopped Harley from arguing that its "H.O.G." mark was protectable.

The district court said that Grottanelli "pertains to any use of the word `hog,' including the acronym `H.O.G.' when `hog' is used in relation to `motorcycle products or services.'" H-D Michigan, Inc. v. Top Quality Service, Inc., No. 04-C-0533, 2006 WL 2547083, *3 (E.D.Wis. Aug. 31, 2006) (emphasis in original). The district court further observed as follows:

In holding that `hog' is generic, the court did not single out the `H.O.G.' mark as non-generic because it refers to people rather than motorcycles. To the contrary, it mentioned the `H.O.G.' mark as part of Harley's illegitimate efforts to exclude the term `hog' from the generic pool.... Thus, the Grottanelli court was aware of (1) the `H.O.G.' mark; and (2) that the acronym denoted members of Harley Owner' [sic] Group rather than motorcycles. Nevertheless, the court made no distinction between Harley's application of the term `hog' to large motorcycles and to H.O.G. members.

Id. (internal citations omitted). With regard to Harley's unfair competition claim, the district court recognized that a plaintiff using a generic name can succeed on such a claim if the defendant has not adequately identified itself as the source of its product. The court concluded, however, that Top Quality had identified itself as the source of its product by disclaiming any association with Harley. Id. at *4-5. Harley appeals the district court's ruling on Top Quality's motion for summary judgment.

II. Analysis

The Court reviews the district court's grant of summary judgment de novo. "Summary judgment is appropriate where the evidence in the record shows no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Steen v. Myers, 486 F.3d 1017, 1021 (7th Cir.2007). We take the facts in the light most favorable to the non-moving party and draw all reasonable inferences in its favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

"[T]o prove a claim pursuant to 15 U.S.C. § 1125(a), a plaintiff must show (1) that its trademark may be protected and (2) that the relevant group of buyers is likely to confuse the alleged infringer's products or services with those of plaintiff." Forum Corp. of N. Am. v. Forum, Ltd., 903 F.2d 434, 439 (7th Cir.1990). Marks are either fanciful, arbitrary, suggestive, descriptive, or generic. See Bliss Salon Day Spa v. Bliss World LLC, 268 F.3d 494, 496 (7th Cir.2001). "A generic term is one that is commonly used as the name of a kind of goods." Liquid Controls Corp. v. Liquid Control Corp., 802 F.2d 934, 936 (7th Cir.1986). A descriptive term, by contrast, is one that names a characteristic of a particular product or service. See J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 11:16 (4th ed.2007).² Generic and descriptive marks ordinarily cannot function as trademarks, but a descriptive mark may warrant protection if it has acquired secondary meaning. See Custom

496 F.3d 760

Vehicles, Inc. v. Forest River, Inc., 476 F.3d 481, 483 (7th Cir.2007); Liquid Controls Corp., 802 F.2d at 935. A descriptive mark acquires...