Kinark Corp. v. Camelot, Inc.

• Decision Date: 14 September 1982
• Docket Number: Civ. A. No. 81-1364.
• Citation: 548 F. Supp. 429
• Parties: KINARK CORPORATION, A Delaware Corporation, Camelot Inns of America Corporation, a Delaware Corporation, and Camelot Inn-Little Rock, Inc., an Arkansas Corporation, Plaintiffs, v. CAMELOT, INC., a New Jersey Corporation, d/b/a Camelot Hotel/Casino, Defendant.
• Court: U.S. District Court — District of New Jersey

548 F. Supp. 429

KINARK CORPORATION, A Delaware Corporation, Camelot Inns of America Corporation, a Delaware Corporation, and Camelot Inn-Little Rock, Inc., an Arkansas Corporation, Plaintiffs, v. CAMELOT, INC., a New Jersey Corporation, d/b/a Camelot Hotel/Casino, Defendant.

Civ. A. No. 81-1364.

United States District Court, D. New Jersey.

September 14, 1982.

COPYRIGHT MATERIAL OMITTED

Charles W. Heuisler, Archer, Greiner & Read, P. C., Haddonfield, N. J. and Herbert F. Kozlov, Richard J. Zakin, Skadden, Arps, Slate, Meagher & Flom, New York City, for plaintiffs.

Patrick T. McGahn, Jr., McGahn, Friss & Gindhart, Atlantic City, N. J. and Pasquale A. Razzano, Hugh C. Barrett, Maureen C. Meinert, Curtis, Morris & Safford, P. C., New York City, for defendant.

FINDINGS OF FACT and CONCLUSIONS OF LAW

BROTMAN, District Judge.

This is an action for service mark infringement and unfair competition. Claims for relief are pleaded under §§ 32(1) and 43(a) of the Lanham Act of 1946, as amended (hereinafter, "the Lanham Act"), 15 U.S.C. §§ 1114(1), 1125(a), as well as under the common law. Plaintiffs claim to be the owners of two federally registered service marks, CAMELOT INN and CAMELOT, which they have used in connection with hotels in Tulsa, Oklahoma, and Little Rock, Arkansas. Defendant Camelot, Inc., has undertaken steps to build and operate the Camelot Hotel/Casino in Atlantic City, New Jersey. Defendant denies infringement and unfair competition and asserts defenses and counterclaims for cancellation of the service marks on the basis of alleged fraud in the procurement and maintenance of the plaintiffs' service marks, laches and abandonment. Defendant also asserts that it was the user of the CAMELOT mark prior to plaintiffs' registrations, that there is no likelihood of confusion among consumers as to the sources of services marketed under the CAMELOT mark, and that plaintiffs' conduct amounts to malicious prosecution, unfair competition and false representation.

A five day trial was held without a jury. Upon consideration of the testimony and exhibits, stipulations, portions of deposition transcripts and answers to interrogatories relied on by the parties, as well as the proposed findings of fact and conclusions of law and the argument of counsel, the court is entering its findings of fact and conclusions of law below. Fed.R.Civ.P., Rule 52(a). Findings of fact which may also be considered conclusions of law are so deemed, and vice versa.

FINDINGS OF FACT

I. PARTIES.

1. Plaintiff Kinark Corporation (hereinafter, "Kinark") is organized under the laws of the State of Delaware and has its principal place of business in Tulsa, Oklahoma. Kinark is a publicly owned company with over 4.3 million shares issued and outstanding. Its stock is traded on the American Stock Exchange. Kinark owns the facility now called the "Camelot Hotel" in Tulsa, Oklahoma, formerly called the "Camelot Inn." (Final Pre-Trial Order, Stipulation). Kinark had sales of about $36 million in 1980. About half of these sales were attributable to Kinark's chemical formulating, packaging and distribution business, about a quarter to its industrial and commercial construction and manufacturing, and the remaining quarter to its hotel business. (Plaintiffs' Exhibit 36).

2. Plaintiff Camelot Inns of America Corporation (hereinafter, "CIAC") is a wholly-owned subsidiary of Kinark. It is a Delaware corporation with its principal place of business in Tulsa, Oklahoma. CIAC, through its subsidiary, Camelot Inn-Little Rock, Inc., owns the facility now called the "Camelot Hotel" in Little Rock, Arkansas, formerly called the "Camelot Inn." Camelot Inn-Little Rock, Inc., is an Arkansas corporation with its principal place of business in Little Rock. (Id.).

3. Defendant Camelot, Inc., a New Jersey corporation, has its principal place of business in Atlantic City, New Jersey. Camelot, Inc., is a controlled subsidiary of American Leisure Corp. (Defendant's Ex. 1). American Leisure's sole business is Camelot, Inc., and the two companies maintain common offices. (Vol. V, p. 13).

II. PLAINTIFFS' HOTELS AND MARKETING ACTIVITIES.

4. The Camelot Hotel in Tulsa is the third largest hotel in the Tulsa area, with about 350 rooms. (Dep. of Bajdek, pp. 64, et seq.). The hotel provides a comprehensive range of services to its guests, including room service, laundry and dry cleaning, shoe shines and delivery of newspapers to rooms, and arranges for the operation of restaurants and stores within its premises. (Vol. I, pp. 55-56, 63; Vol. II, p. 34; Plaintiffs' Ex. 9, 14). Eighty to eighty-five thousand rooms are occupied by guests each year. (Vol. I, p. 63).

5. The decor, stationery and the promotional materials in the hotel are designed to call forth associations with the thousand year old Arthurian legends of knightly splendor, courtly valor, chivalry and romance. For example, rooms in the hotel are named after Robin Hood, Friar Tuck, Lancelot, Galahad, William Tell and Ivanhoe. The plaintiff uses Gothic lettering to set forth the CAMELOT mark on nearly all of its materials in order to strengthen the association with medieval England. The architecture of the hotel is designed toward the same end, for the entrance to the hotel is at the end of a drawbridge spanning a moat; the exterior walls of the building are capped with machicolations, crenelations, corbels, battlements and turrets. Banners and heraldic shields appear throughout. The swimming pool is in the shape of a shield, and the Excalibur sword embedded in stone appears in the lobby. (E.g., Plaintiffs' Ex. 4).

6. The Camelot Hotel in Little Rock contains features with similar medieval associations, although the architecture is not so richly laden. (Plaintiffs' Ex. 5, 6). With 303 rooms, it is the largest hotel in Little Rock, with many of the same amenities as are in the Tulsa hotel. (Vol. I, pp. 58-61; Plaintiffs' Ex. 10). Seventy thousand rooms are sold each year. (Vol. I, p. 63).

7. Both of plaintiffs' Camelot Hotels have facilities which make them suitable for conventions and meetings. (Vol. I, pp. 114-15). Such conventions have been held at both hotels (Id., pp. 115-16), and, indeed, they account for forty to forty-five percent of the plaintiffs' hotel business. (Vol. I, pp. 114-18; Dep. of Chastain, pp. 165-67). Promotional efforts to book conventions and meetings may be made solely by the plaintiffs' hotels, or by local Chambers of Commerce and like organizations. (Dep. of Bajdek, pp. 36-37). The Little Rock hotel is located next to that city's convention center, and is connected to the center by a covered walkway. (Dep. of Chastain, p. 86; Vol. I, p. 65).

8. Aside from convention and meeting business, the plaintiffs' hotels rely primarily on business travellers for income from room accommodations. The restaurants may draw from a more local clientele, but it is fair to say that both hotels draw a substantial amount of their room guests from all parts of the United States and from outside of the country. Few of the guests at either hotel stay there only as pleasure travellers. (Vol. I, p. 12; Vol. II, pp. 30-32; Deposition of Bajdek, pp. 80-86). The hotels generally have been profitable businesses in recent years (Vol. III, pp. 10-14, 35-38, 40-41), and are for sale by Kinark, which has decided to continue in industries which do not have such heavy investment in real estate. Kinark has indicated an asking price for the hotels of $26 to $32 million dollars. (Vol. II, pp. 24-27). Plaintiffs maintain that they have intended to expand their small hotel chain to other cities, but have done little to demonstrate this intention except for an ill-fated effort which will be discussed below. (Vol. I, p. 120; Finding of Fact, ¶ 32). The likelihood that future owners of the Camelot Hotels might attempt to expand the chain is impossible to ascertain.

9. The marketing expenses of plaintiffs for their two hotels from 1974 to 1981 were $3,787,000.00. The figure is based on an extremely broad definition of marketing expenses, and much of these expenses are aimed at attracting local business for the restaurants located in the hotels, or are otherwise not calculated to reach people who are outside of the Tulsa and Little Rock regions. (Vol. I, pp. 79-87; Vol. II, pp. 12-13, 35-40; Plaintiffs' Ex. 278, 279, 279A). Nevertheless, the two hotels are the subject of a significant amount of national advertising. The Little Rock Hotel was the beneficiary of advertisements placed by the American Express Co. in Business Week and U. S. News & World Report in 1981. (Vol. I, pp. 87-91; Plaintiffs' Ex. 17, 18, 18A). Ads for the hotels are placed in airline magazines and in publications used by people connected with the travel industry. (Vol. I, pp. 85-106). The plaintiffs' predecessors placed advertisements in the Wall Street Journal, but probably not between 1965 and 1981. (Vol. I, pp. 91-94; Plaintiffs' Ex. 20; Dep. of Bajdek, p. 29; see also Dep. of Chastain, pp. 97-101, 138-41, 149).

III. DEFENDANT'S HOTEL AND MARKETING ACTIVITIES.

10. Defendant's Camelot Hotel/Casino is planned for an 8.2 acre site in the marina area of Atlantic City. (Final Pre-Trial Order, Stipulation). If the plans of the defendant come to fruition, the complex will be considerably larger than either of the plaintiffs' hotels, consisting of 990 hotel rooms and suites, a casino of sixty thousand square feet, several meeting rooms, a theatre, seven restaurants, tennis and racquet ball courts, two movie theatres, swimming pools and other entertainment, commercial and exhibition facilities. (Defendant's Ex. 1). There will be a good deal more space and facilities than in the Tulsa or Little Rock Camelots. (E.g., Vol. V, pp. 13-19). Like the plaintiffs, defendant has adopted the use of many symbols of the English Middle Ages, as well as the Gothic lettering which the plaintiffs have used, and the imagery of Dark Ages military activities. (E.g., Vol. I, ...