Keaton and Keaton v. Keaton

• Decision Date: 22 February 2006
• Docket Number: No. 02S03-0602-CV-67.,02S03-0602-CV-67.
• Citation: 842 N.E.2d 816
• Parties: KEATON AND KEATON, an Indiana Professional Corporation, Appellant (Plaintiff below), v. R. Mark KEATON, Paul A. Keaton, d/b/a Keaton and Keaton, Appellees (Defendants below).
• Court: Indiana Supreme Court

Page 816

842 N.E.2d 816

KEATON AND KEATON, an Indiana Professional Corporation, Appellant (Plaintiff below), v. R. Mark KEATON, Paul A. Keaton, d/b/a Keaton and Keaton, Appellees (Defendants below).

No. 02S03-0602-CV-67.

Supreme Court of Indiana.

February 22, 2006.

COPYRIGHT MATERIAL OMITTED

William B. Keaton, Rushville, for Appellant.

R. Mark Keaton, Ft. Wayne, for Appellees.

BOEHM, Justice.

Unfair competition includes both the tort of "passing off" and trade name infringement. We hold that "passing off" requires intentional misrepresentation or deception but trade name infringement does not.

Facts and Procedural History

In 1971 Walter and William Keaton, a father and son, established a partnership for the practice of law in Rushville, Indiana, under the name "Keaton and Keaton." In 1978, the firm incorporated under the name "Keaton and Keaton, P.C." (the "Rushville P.C."). Walter died in 1980 and William continued as the sole shareholder of the P.C., retaining the name "Keaton and Keaton, P.C." In 2002, two brothers, Mark and Paul Keaton, formed a general partnership under the name "Keaton & Keaton" for the practice of law in Fort Wayne, Indiana. The brothers are unrelated to the Rushville Keatons.

The Rushville P.C. filed a complaint for an injunction and damages against Paul and Mark, d/b/a Keaton & Keaton (the "Fort Wayne firm"). The Rushville P.C.'s complaint alleged the above facts and that: 1) the similarity of names had created confusion in the marketplace, 2) the "natural and probable effect" of the Fort Wayne firm's use of its surname was "to deceive the public and pass off" the Fort Wayne firm's services as those of the Rushville P.C., and 3) these facts deprived the Rushville P.C. of the good will it had built up since 1971. Both sides filed motions for summary judgment. In support of its motion, the Rushville P.C. designated three instances of alleged confusion arising out of the Fort Wayne firm's name: 1) on one occasion the Rushville P.C. received medical records that had been requested by the Fort Wayne firm; 2) on one occasion the Rushville Circuit Court sent an order to the Rushville P.C. in a case in which the Fort Wayne firm was counsel; and 3) on one occasion the Rush County Clerk asked one of the Fort Wayne brothers if he was related to William Keaton, and the Fort Wayne brother responded that they were not related.

The trial court granted summary judgment to the Fort Wayne firm, in effect allowing both firms to continue to use their current names. The Court of Appeals affirmed. Keaton & Keaton v. Keaton, 824 N.E.2d 1261, 1264 (Ind.Ct.App.2005). It concluded that the Rushville P.C. failed to designate evidence establishing a likelihood of public confusion. Id. at 1263. It also held that in order to maintain a cause of action for unfair competition a plaintiff must show that the defendant had a subjective intent to deceive. Id. at 1264.

I. Standard of Review

On review of a trial court's decision to grant or deny summary judgment, we apply the same standard as the trial court: we must decide whether there is a genuine issue of material fact that precludes summary judgment and whether the moving party is entitled to judgment as a matter of law. Carie v. PSI Energy, Inc., 715 N.E.2d 853, 855 (Ind.1999). When the parties have filed cross-motions for summary judgment we consider each motion separately to determine whether the moving party is entitled to judgment as a matter of law. Ind. Farmers Mut. Ins. Group v. Blaskie, 727 N.E.2d 13, 15 (Ind.Ct.App.2000).

II. Unfair Competition

The complaint does not seek to characterize its theory of recovery other than as described above. There are several related doctrines of unfair competition that the complaint suggests. We agree with the Court of Appeals that the trial court properly granted summary judgment to the Fort Wayne firm, but disagree as to some of the reasons why this is so.

A. "Passing Off"

The Rushville P.C. alleges that "The natural and probable tendency and effect of the defendants using the plaintiff's name is to deceive the public so as to pass off the defendants' services for that of the plaintiff." The tort of "passing off" (also called "palming off") is a species of unfair competition that emerged in the nineteenth century as a type of fraud. 1 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 5:2 (West 4th ed.2005). Under this doctrine, liability is imposed for the intentional misrepresentation of goods or services as those of another. Restatement (Third) of Unfair Competition § 9 cmt. d (1995). To the extent the above quoted language from the complaint seeks to state a claim for the tort of "passing off," we agree that the trial court properly granted summary judgment to the Fort Wayne firm. "Passing off" is nothing more than a subspecies of fraud. See, e.g., Internat'l News Serv. v. Associated Press, 248 U.S. 215, 258, 39 S.Ct. 68, 63 L.Ed. 211 (1918) (Brandeis, J., dissenting) ("In the `passing off' cases (the typical and most common case of unfair competition), the wrong consists in fraudulently representing by word or act that defendant's goods are those of plaintiff."); Gulf Coast Bank v. Gulf Coast Bank & Trust Co., 652 So.2d 1306, 1315 (La.1995) ("The law of trademark infringement originally was based on deceit and fraud and evolved into a distinct tort of `passing off'...."); see also McCarthy, supra, at § 5:2. Accordingly, like common law fraud, it requires a showing of intentional deception by the defendant. The Rushville P.C. conceded at a hearing on the cross motions for summary judgment that the Fort Wayne firm and its partners never intentionally misrepresented themselves or their partnership as being the same as or associated with the Rushville P.C. and that they never passed off their services as those of the Rushville P.C. Accordingly, since the Rushville P.C. failed to designate any evidence of intentional misrepresentation or deception by the Fort Wayne firm or anyone associated with it, the trial court properly granted summary judgment to the Fort Wayne firm on the passing off claim.

B. Trade Name Infringement

The Rushville P.C.'s complaint also alleges that "The defendants' use of the plaintiff's name ... has created confusion in the marketplace" as to the source of the defendants' legal services. The Court of Appeals treated this as a claim for unfair competition and cited Hammons Mobile Homes, Inc. v. Laser Mobile Home Transport, Inc., 501 N.E.2d 458, 461 (Ind. Ct.App.1986), trans. denied, for the proposition that actionable unfair competition consists of passing off and requires a showing that the defendant intended to deceive. We do not agree that unfair competition is limited to passing off. Nor does every ground of unfair competition require intentional wrongdoing. In Bartholomew County Beverage Co. v. Barco Beverage Corp., 524 N.E.2d 353, 358 (Ind.Ct.App. 1988) the Court of Appeals correctly observed that "Although the law of unfair competition has been defined as the palming off of ones goods or services as that of some one else, and the attempt thereof, the tort of unfair competition is much broader and also includes actions for the interference with a contract or business relationship, as well as for predatory price cutting." (internal citations omitted). See also Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 428, 123 S.Ct. 1115, 155 L.Ed.2d 1 (2003) ("Traditional trademark infringement law is part of a broader law of unfair competition that has its sources in English common law, and was largely codified in the Trademark Act of 1946 (Lanham Act)") (internal citations omitted).

Use of confusingly similar corporate, business and professional names has been labeled unfair competition by courts. See Moseley, 537 U.S. at 428, 123 S.Ct. 1115; McCarthy, supra, at § 1:10. It is more precisely described as trade name infringement, which like passing off, is a subspecies of unfair competition. We take the Rushville P.C.'s allegation of "confusion in the marketplace" as asserting a claim for trade name infringement. A trade name is "a word, name, symbol, device, or other designation, or a combination of such designations, that is distinctive of a person's business or other enterprise and that is used in a manner that identifies that business or enterprise and distinguishes it from the businesses or enterprises of others." Restatement (Third) of Unfair Competition § 12. Both the Rushville P.C. and the Fort Wayne firm are using a variant of the common surname of their principals as a trade name. At common law, trade name infringement exists when a defendant's use of a name is likely to cause confusion as to the source of goods or products, irrespective of whether the defendant has a subjective intent to deceive or confuse. Blue Ribbon Feed Co. v. Farmers Union Cent. Exch., Inc., 731 F.2d 415, 418 (7th Cir.1984); Hulburt Oil & Grease Co. v. Hulburt Oil & Grease Co., 371 F.2d 251, 256 (7th Cir.1966); Metro. Life Ins. Co. v. Metro....