Hassan v. Greater Houston Transportation Company, No. 01-05-00494-CV (Tex. App. 2/16/2007), 01-05-00494-CV.

Decision Date16 February 2007
Docket NumberNo. 01-05-00494-CV.,01-05-00494-CV.
CourtCourt of Appeals of Texas
PartiesYAHYA HASSAN, INDIVIDUALLY AND D/B/A SAFE CAB CO. A/K/A SAFE CAB COMPANY, AND KEMAL MOHAMMED, INDIVIDUALLY AND D/B/A SAFE CAB CO. A/K/A SAFE CAB COMPANY, Appellants, v. GREATER HOUSTON TRANSPORTATION COMPANY D/B/A YELLOW CAB, Appellee.

Panel consists of Justices NUCHIA, KEYES, and HANKS, Justice KEYES, dissenting.

OPINION

SAM NUCHIA, Justice.

Appellees, Greater Houston Transportation Company d/b/a Yellow Cab ("Yellow Cab"), brought a trade dress1 cause of action against appellants, Yahya Hassan, individually and d/b/a Safe Cab Co. a/k/a Safe Cab Company, and Kemal Mohammed, individually and d/b/a Safe Cab Co. a/k/a Safe Cab Company ("Safe Cab"), under United States Code title 15, section 1125(a),2 commonly known as the Lanham Act, and Texas common law. After a jury trial, the trial court rendered judgment granting a permanent injunction in favor of Yellow Cab and prohibiting Safe Cab from operating any taxicab with a color scheme that predominantly used the color yellow. On appeal, Safe Cab asserts that (1) the trial court lacked subject-matter jurisdiction over Yellow Cab's Lanham Act claim; (2) the trial court erred in rendering judgment for Yellow Cab because the jury did not find an element of its Texas common-law unfair competition claim; (3) the trial court erred by giving the jury an erroneous definition of "secondary meaning"; (4) the evidence was legally insufficient to support the jury's finding of secondary meaning; (5) the evidence was factually insufficient to support the jury's finding of secondary meaning; and (6) the evidence was factually insufficient to support the jury's finding that Safe Cab's use of the color yellow on its taxis caused a likelihood of confusion. We reverse the judgment and remand the case for further proceedings.

BACKGROUND

Since the 1940s, Yellow Cab has been operating yellow-colored taxicabs in the Houston metropolitan area. Today, on an average day, there are between 700 and 800 Yellow Cab taxis servicing greater Houston each day. While Yellow Cab is the dominant taxi company in Houston, there are about 120 other taxi companies. Thirty-six of these other taxicab companies use predominately yellow-colored taxis, but each has a different color scheme. As far back as 1993, there were more than 20 taxicab companies in Houston using a predominately yellow color scheme. As the name implies, Yellow Cab's taxis are painted yellow. They have black lettering and crossed-sword logos on the side.

In 2003, Safe Cab received a license to operate in the City of Houston. Its choice of a yellow paint scheme for its taxi3 was approved by the Transportation Section of the City of Houston. In that same year, Yellow Cab complained to the Transportation Section about the existence of other yellow-colored taxis, at which point the city placed a moratorium on any further yellow-colored taxis. However, there were still over 100 yellow-colored taxis on the streets of Houston that were not associated with Yellow Cab.

Yellow Cab sent "cease and desist" demand letters to taxi companies with yellow color schemes, demanding that they stop using yellow-colored taxis and offering to paint their taxis another color at Yellow Cab's expense. Two taxi companies, with a total of approximately 40 taxis, accepted Yellow Cab's offer. After Safe Cab refused to comply with Yellow Cab's demand, Yellow Cab filed suit under (1) the Lanham Act, the federal statutory scheme for trademark and trade dress infringement, and (2) a Texas common-law claim of unfair competition, contending that its yellow-colored taxis were protectable trade dress. Yellow Cab sought a permanent injunction enjoining Safe Cab from using yellow-colored taxis. The jury returned a verdict in favor of Yellow Cab, and the trial court rendered judgment permanently enjoining Safe Cab from using yellow-colored taxis. After the trial court denied Safe Cab's motion for new trial, Safe Cab filed this appeal.

Subject-Matter Jurisdiction

In its first point of error, Safe Cab contends that the trial court lacked subject-matter jurisdiction over Yellow Cab's Lanham Act claim because Yellow Cab did not prove that Safe Cab's services were used "in commerce." Yellow Cab responds that the "in commerce" requirement of the Lanham Act is not jurisdictional, but instead is simply an element of the cause of action, and therefore Safe Cab has waived this argument by failing to preserve the complaint.

The Lanham Act provides in pertinent part:

(1) Any person who, on or in connection with any goods and services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, which—

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, . . .

. . . .

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C.S. § 1125(a)(1) (LexisNexis 2006) (emphasis added).

Several federal circuit courts of appeals have held that the "in commerce" language is a jurisdictional prerequisite. See Starter Corp. v. Converse, Inc., 84 F.3d 592, 595 (2d Cir. 1996) (holding that use of marks was sufficiently "in commerce" to sustain federal-question jurisdiction under Lanham Act); Ocean Garden, Inc. v. Marktrade Co., 953 F.2d 500, 505 (9th Cir. 1991) (stating that act in commerce triggers subject-matter jurisdiction); Rickard v. Auto Publisher, Inc., 735 F.2d 450, 453 n.1 (11th Cir. 1984) ("In actions involving unregistered trademarks, the jurisdiction of the federal courts extends only to cases in which a false designation of origin has been 'transported or used in commerce.'"). However, at least one circuit court has treated the requirement as a nonjurisdictional element of the cause of action. See World Carpets, Inc. v. Dick Littrell's New World Carpets, 438 F.2d 482, 488-89 (5th Cir. 1971).

Decisions of the federal courts of appeals do not bind Texas courts, although they are received with respectful consideration. Hayes v. Pin Oak Petroleum, Inc., 798 S.W.2d 668, 672 n.5 (Tex. App.-Austin 1990, writ denied). Texas state courts "are free to interpret federal law independently, though in the first instance we typically seek guidance from among the decisions of the lower federal courts." Kiefer v. Continental Airlines, Inc., 882 S.W.2d 496, 502 (Tex. App.-Houston [1st Dist.] 1994), aff'd, 920 S.W.2d 274 (Tex. 1996). Unless a federal statute provides for exclusive federal jurisdiction, state courts have the authority to render binding decisions based on their interpretation of federal law. ASARCO v. Kadish, 490 U.S. 605, 617, 109 S. Ct. 2037, 2045 (1989).

Unlike federal courts, in which the authority to adjudicate must be established for each case, Texas district courts are courts of general jurisdiction, and subject-matter jurisdiction over a cause of action is presumed unless a contrary showing is made. Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71, 75 (Tex. 2000). In Kazi, our supreme court held that the statutory requirement in that case was not jurisdictional.4 Id. at 73. The court concluded that a plaintiff's failure to establish a statutory prerequisite does not deprive the trial court of subject-matter jurisdiction over the plaintiff's claim if the statutory prerequisite is merely a condition on which the plaintiff's right to relief depends. Id. at 76-77. Thus, a statutory requirement may be mandatory without being jurisdictional. Id. at 76. Compliance with nonjurisdictional, mandatory requirements can be waived if not timely asserted. Univ. of Tex. Sw. Med. Ctr. v. Loutzenhiser, 140 S.W.3d 351, 359 (Tex. 2004). However, subject-matter jurisdiction may not be waived by the parties and may be raised for the first time on appeal. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445 (Tex. 1993).

Appellant has made no showing that the "in commerce" requirement is jurisdictional, and we do not so interpret the language of the Lanham Act. Rather, here, as in Kazi, the right to maintain a suit for trade dress infringement goes to the right of the plaintiff to obtain relief, not to the right of the court to entertain the suit. See Kazi, 12 S.W.3d at 75, 76-77. Safe Cab did not object in the trial court that the alleged infringement of the Lanham Act did not occur "in commerce." Therefore, Safe Cab waived its right to require Yellow Cab to prove that the alleged infringement affected interstate commerce.

Accordingly, we overrule Safe Cab's first point of error.

Jury Charge5

In its third point of error, Safe Cab asserts that the trial court erred in submitting an erroneous definition of "secondary meaning" in the jury charge. Yellow Cab first contends that Safe Cab waived this point of error because it did not properly object.

The Texas Supreme Court has adopted the following test for preservation of charge error: Did the trial court know of and overrule the substance of the complaint at a time when the court could have, but did not, correct the problem in the charge? See State Dep't of Highways & Pub. Transp. v. Payne, 838 S.W.2d 235, 241 (Tex. 1992) (holding that there "should be but one test for determining if a party has preserved error in the jury charge, and that is whether the party made the trial court aware of the complaint, timely and plainly, and obtained a ruling."). Therefore, an objection to a defective instruction is sufficient to preserve error, and a request using substantially correct language is not required....

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