Holiday Inns, Inc. v. Alberding

• Decision Date: 26 August 1982
• Docket Number: No. 81-1539,81-1539
• Citation: 216 USPQ 568,683 F.2d 931
• Parties: HOLIDAY INNS, INC., Plaintiff-Appellee, Cross-Appellant, v. C. H. ALBERDING, Defendant, Airport Holiday Corporation, et al., Defendants-Appellants, Cross-Appellees. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 931

683 F.2d 931

216 U.S.P.Q. 568

HOLIDAY INNS, INC., Plaintiff-Appellee, Cross-Appellant, v. C. H. ALBERDING, Defendant, Airport Holiday Corporation, et al., Defendants-Appellants,

Cross-Appellees.

No. 81-1539

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

Aug. 26, 1982.

Blankenship, Potts, Aikman, Hagin & Stewart, Howard Jensen, Dallas, Tex., Whitten, Haag, Cobb & Hacker, C. Terry Hagin, Abilene, Tex., for defendants-appellants, cross-appellees.

James L. Kurtz, Washington, D. C., E. Eldridge Goins, Jr., Dallas, Tex., for plaintiff-appellee cross-appellant.

Appeals from the United States District Court for the Northern District of Texas.

Before BROWN, POLITZ and WILLIAMS, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge:

Appellee and cross-appellant Holiday Inns, Inc. supervises a chain of over 1700 hotels. Many of these hotels operate under a franchise agreement by which the owner is entitled to display the familiar "Holiday Inn" sign (referred to as the "Great Sign") and other distinctive emblems of the chain. In 1956, Holiday Inn signed a license agreement with Tex-Mex Inn Operating Co. (Tex-Mex) that permitted Tex-Mex to operate a 200-room hotel located at 7800 Lemmon Avenue in Dallas, Texas, as a Holiday Inn. The agreement provided for termination of the license, however, if Tex-Mex did not meet Holiday Inns' standards. On February 28, 1975, Holiday Inns wrote Tex-Mex a letter terminating the agreement and requesting that Tex-Mex remove all Holiday Inn service marks from the property. Despite this and subsequent demands for removal of the trademarks, the hotel continued to display the Great Sign ¹ and a small sign bearing the mark "Holiday Inn" in distinctive script.

Holiday Inns brought this action in May, 1976, alleging trademark infringement under state and federal law ² and seeking a permanent injunction, treble damages, and attorneys' fees. Although the original complaint named C. H. Alberding as owner and operator of the hotel, which by that time was operating as the "Holiday Hotel", Alberding's answer revealed that Tex-Mex was the actual operator of the facility and that appellant/cross-appellee Airport Holiday Corp. (Airport) was the owner. An amended complaint joined Tex-Mex and Airport as defendants; Alberding, who served as president and director of both defendant corporations, eventually was dismissed from the suit.

Holiday Inns moved for partial summary judgment on liability in July, 1977. Two affidavits, photographs of the offending signs, and a memorandum of law accompanied the motion. Tex-Mex and Airport, after filing separate counterclaims for harassment, responded in August of 1978 with a joint memorandum and affidavit in opposition to the motion for summary judgment. The district court heard argument on the motion on December 4, 1978. On December 19, the court granted partial summary judgment against Tex-Mex and Airport on the issue of liability. It found that the defendants had presented no issue of material fact and that

(t)he "Great Sign" being used by defendants at the time of the hearing is essentially identical to the registered marks of the Plaintiff. This sign is likely to cause confusion, mistake or deception with Plaintiff's registered service marks. The minor changes made by the Defendants are cosmetic in nature and inconsequential. Surely such inconsequential changes will not avoid a finding of infringement and unfair competition.

The judgment enjoined Tex-Mex and Airport from any further use of the Great Sign or other Holiday Inn service marks.

The parties proceeded to a bench trial on damages in October, 1979. In a judgment entered on October 19, 1981, the court found Tex-Mex and Airport jointly and severally liable for $96,795.00, plus interest, in profits and damages, and $35,000.00 in attorney's fees.

Airport has appealed from this judgment on the issues of liability and damages; Holiday Inns has cross-appealed, submitting that the damage award is insufficient. We affirm.

I. Airport's Appeal

Airport presents two questions on appeal. First, it argues that the district court erred in granting summary judgment against Airport on liability because the record contains no evidence that Airport-as opposed to Tex-Mex-ever "used" the trademarks in violation of the Lanham Act, 15 U.S.C. § 1114(1). ³ As stated by Airport, "the legal issue is whether mere ownership of real estate upon which an infringement of a trademark takes place is sufficient to assess liability on the owner."

The district court must render summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The defendants' joint response to Holiday Inns' motion for partial summary judgment raised no genuine issue as to any material fact. As Airport admits, the question presented on appeal is purely a legal one. However, we decline to consider even this issue of law because we conclude that Airport did not properly present it in the court below. We realize that our rule against considering issues raised for the first time on appeal can give way when a pure question of law is involved and the refusal to consider it will result in a miscarriage of justice. See Martinez v. Matthews, 544 F.2d 1233, 1237 (5th Cir. 1976). However we perceive no possibility of such a miscarriage here.

The only legal argument pressed by Airport individually in the joint responsive motion of defendants below was that Airport had purchased the Great Sign "with the knowledge of and acquiescence of Plaintiff and without any restriction being placed thereon by Plaintiff against Airport Holiday Corporation, and the Plaintiff has waived or is estopped to claim any trademark violation against Airport Holiday Corporation." This brief "waiver and estoppel" argument, apparently predicated upon a theory that Holiday Inns had a duty expressly to forbid Airport from using its trademarks, did not deter the district court from holding Airport liable, as undisputed owner of the Great Sign and the rest of the Holiday Hotel property, for the infringement.

Airport now seeks to obtain a reversal of the court's judgment by suggesting that a mere owner of real estate is not chargeable with trademark infringements or other torts committed by another party "operating" on the owner's property. As sole support for this allegation of error, Airport cites Kinnear-Weed Corp. v. Humble Oil & Refining Co., 324 F.Supp. 1371, 1381 (S.D.Tex.1969), aff'd, 441 F.2d 631 (5th Cir. 1971), cert. denied, 404 U.S. 941, 92 S.Ct. 285, 30 L.Ed.2d 255 (1971), in which the court held that "a 'non-operator,' as simply the owner of an interest in realty (the leasehold estate)" in a drilling venture was not responsible for the drilling contractor's infringement of the patent on a drilling bit.

Apart from obvious dissimilarities between the facts of Kinnear-Weed and those of the case before us, ⁴ our rejection of this appeal stands upon Airport's failure to present this authority or any legal argument derived from it to the court below. Although the defendants took over a year to reply to the motion for summary judgment, neither in that response nor at any other time did Airport attempt to forestall an adverse decision by providing the district judge with authority or argument in the vein now sought to be explored. Our discretion to entertain a legal argument presented for the first time on appeal "is a...