Investacorp, Inc. v. Arabian Inv. Banking Corp. (Investcorp) E.C.

• Decision Date: 29 May 1991
• Docket Number: No. 89-6060,89-6060
• Citation: 931 F.2d 1519
• Parties: INVESTACORP, INC., Plaintiff-Appellant, v. ARABIAN INVESTMENT BANKING CORPORATION (INVESTCORP) E.C. d/b/a Investcorp and Investcorp International, Inc., a Delaware Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1519

931 F.2d 1519

19 U.S.P.Q.2d 1056

INVESTACORP, INC., Plaintiff-Appellant, v. ARABIAN INVESTMENT BANKING CORPORATION (INVESTCORP) E.C. d/b/a Investcorp and Investcorp International Inc., a Delaware Corporation Defendants-Appellees.

No. 89-6060.

United States Court of Appeals Eleventh Circuit.

May 29, 1991.

Richard Ross, Richard S. Ross, P.A., Miami, Fla., for plaintiff-appellant.

John Millian, Washington, D.C., Rudolph F. Aragon, Coffey, Aragon, Martin & Bulington, P.A., Miami, Fla., and Wesley Howell, Jr., Gibson, Dunn & Crutcher, Washington, D.C., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before JOHNSON and HATCHETT, Circuit Judges, and SMITH ^*, Senior Circuit Judge.

EDWARD S. SMITH, Senior Circuit Judge:

Plaintiff, Investacorp, Inc. (Investacorp), appeals the grant of summary judgment entered in favor of defendants, Arabian Investment Banking Corporation (Investcorp E.C.) and Investcorp, International, Inc. (Investcorp International) on the claims of service mark infringement and unfair competition. 722 F.Supp. 719. Because the undisputed facts show appellant does not have a protectable interest in its claimed service mark, we affirm the judgment of the United States District Court for the Southern District of Florida.

Facts

Appellant, Investacorp, is a Florida corporation whose primary business is providing financial services as a broker/dealer and as a financial intermediary between individuals, corporations and institutions seeking investment opportunities. There are two appellees in this case: Investcorp E.C., the parent corporation, and its wholly owned subsidiary, Investcorp International. Investcorp E.C. is an investment bank headquartered in Bahrain which began doing business in the United States under that name in 1983. Investcorp International was created by Investcorp E.C. in November of 1986 to continue conducting the business of its parent in the United States. Hereinafter, the two co-appellees will be referred to as "Investcorp".

Investcorp filed for federal service mark registration in June of 1987. The Patent and Trademark Office (PTO) allowed the Investcorp service mark to pass for potential opposition to registration. Four months later, in October 1987, Investacorp filed for federal service mark registration. In February, 1988, Investacorp filed a Notice of Opposition with the Trademark Trial and Appeal Board of the PTO, opposing registration of the Investcorp service mark.

Later in 1988, Investacorp sued Investcorp on several counts of service mark infringement and unfair competition. The district court granted summary judgment in favor of defendant on all counts of the complaint, because it determined that plaintiff does not have a proprietary interest in the mark "Investacorp". Plaintiff appeals to this Court asserting that genuine issues of material fact are involved in the trial court's summary resolution of the claims.

Issue

We must determine whether the district court's finding involved the resolution of an issue of material fact. As an appellate court, we must also determine the applicable law, independent of that interpretation rendered by the district court. If no issue of material fact was presented and the independently determined applicable law supports the grant of summary judgment ordered by the district court, then we must affirm. ¹

Opinion

Plaintiff, Investacorp, alleges that defendants, Investcorp, unfairly competed by infringing on plaintiff's unregistered service mark. Appellant asserts that the district court should have found genuine issues of material fact presented in the following counts: Federal service mark infringement, ² Florida common law service mark infringement, Florida common law unfair competition, and violation of the Florida anti-dilution law. ³ As the parties do in their briefs, we evaluate the federal service mark infringement claim as a measuring stick for the whole host of claims that appellant asserts. If the federal service mark claim fails in this case for the reason cited by the district court, that plaintiff had no proprietary interest in the "Investacorp" mark, then all of appellant's claims will fail.

Prima Facie Service Mark Infringement

To prove service mark infringement in this case, plaintiff must prove (1) that defendant used a term in commerce (2) in connection with their services (3) which is likely to be confused with the term (4) in which plaintiff possesses the right to use to designate their services. ⁴ Appellee concedes that elements (1) and (2) are present. The district court, however, found that plaintiff did not own the right to designate its services with the term "Investacorp" and hence had no protectable interest that could be infringed. Consequently, summary judgment was entered for defendant.

In order for defendant to infringe on plaintiff's mark, plaintiff must have a protectable property interest in the mark "Investacorp". ⁵ Ordinarily, such an interest is derived when a business uses a mark to represent its services. ⁶ Each time a business uses a mark, it enhances the customer recognition of the mark and its association with the service, thereby inuring to the business greater rights in the mark. ⁷ However, a business does not automatically obtain rights in a mark by using it. A business will obtain rights in a mark upon first use only if the mark is "inherently distinctive." ⁸ If the mark is not inherently distinctive, a business may obtain rights in the mark when it attains a secondary meaning. ⁹ Therefore, to determine if and when plaintiff obtained rights in the mark "Investacorp," we must determine if the mark "Investacorp" is inherently distinctive.

The Categories of Distinctiveness

There are four categories of distinctiveness in which a service mark may be classified. ¹⁰ In ascending order they are: (1) Generic; (2) descriptive; (3) suggestive; and (4) arbitrary or fanciful. ¹¹ The demarcation between each category is more blurred than it is definite. ¹² A term which suggests the basic nature of the service is generic. ¹³ The term "Milk Delivery" is an example of a generic service mark for a hypothetical milk delivery service. ¹⁴ A generic term is typically incapable of achieving service mark protection because it has no distinctiveness. ¹⁵ A descriptive term merely identifies a characteristic or quality of a service. ¹⁶ An example of a descriptive service mark might be "BarnMilk." Because a descriptive service mark is not inherently distinctive, it may be protected only if it acquires a secondary meaning. ¹⁷ The personal name component of a service mark such as "Barney's" to denote a milk delivery service is also considered not inherently distinctive and hence merely descriptive. ¹⁸ However, if the personal name mark acquires secondary meaning, it is afforded the strength of an inherently distinctive mark. ¹⁹ Marks which are descriptive of geographic location of the source of the service are treated in the same manner as personal name marks. ²⁰ A suggestive term suggests the characteristics of the service "and requires an effort of the imagination by the consumer in order to be understood as descriptive" of the service. ²¹ "Barn-Barn" is an example of a suggestive term. Because a suggestive service mark is inherently distinctive, no proof of secondary meaning is required for it to be protectable. ²² "An arbitrary or fanciful [term] bears no relationship to the service." ²³ Arbitrary and fanciful terms are also inherently distinctive, so they are protectable without proof of secondary meaning. "Barnbarnfish" is an example of an arbitrary or fanciful service mark.

Distinctiveness Inquiry

The district court determined that the term "Investacorp" was descriptive. Because the distinctiveness categorization given a term is a question of fact, ²⁴ we must determine whether the district court's finding involved a genuine issue of material fact. ²⁵

Investacorp is a corporation in the business of advising their customers in corporate investment opportunities. Pursuant to a customer's desires, Investacorp sells stocks, bonds and other securities which are often initially issued by corporations. The two key formatives in the term "Investacorp" are "invest" and "corp". "Invest" is the verb "to commit (money) in order to earn a financial return," ²⁶ and "corp" is the widespread abbreviation for a corporation. It is beyond doubt that the term "Investacorp" bears a relationship to the type of services being offered by plaintiff. Hence, it cannot be an arbitrary or fanciful term. ²⁷ The only two categories remaining that are eligible for service mark protection are the descriptive and suggestive categories. Thus, we must determine whether the mark is descriptive or suggestive.

To determine whether a term is descriptive, third party usage by competitors is probative. ²⁸ We reject appellant's argument that third party usage is not relevant to the distinctiveness inquiry because there is a plethora of authority embracing the relevancy of third party usage. ²⁹

The likelihood of prospective use by competitors is high. Both of the two formatives "invest" and "corp" pervade the lexicon of business terminology. Because the two formatives are indispensable to the investment services industry, we agree that it is very likely that competitors will need to use these terms.

Moreover, the popularity of actual use of the two key formatives also indicates that the mark is descriptive. ³⁰ Over eighty competing broker-dealers use the word "invest" in their mark, and there are a handful of businesses who use some combination of the formatives "invest" and "corp" in their mark. We find the popularity of use by competitors is extreme.

Also probative of the descriptiveness of a mark is the idea that is conveyed to the observer by the plain dictionary definition of the formatives comprising the mark. ³¹ In this case, the two formatives combined...