Liberty Mutual Insurance Co. v. Liberty Ins. Co. of Tex.

• Decision Date: 25 July 1960
• Docket Number: No. LR 2903.,LR 2903.
• Citation: 185 F. Supp. 895,127 USPQ 312
• Parties: LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff, v. LIBERTY INSURANCE COMPANY OF TEXAS, Defendant.
• Court: U.S. District Court — Eastern District of Arkansas

185 F. Supp. 895

127 USPQ 312

LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff, v. LIBERTY INSURANCE COMPANY OF TEXAS, Defendant.

No. LR 2903.

United States District Court E. D. Arkansas, W. D.

July 25, 1960.

COPYRIGHT MATERIAL OMITTED

Edward L. Wright, Little Rock, Ark., for plaintiff.

A. L. Barber, Little Rock, Ark., for defendant

HENLEY, Chief Judge.

The defendant, Liberty Insurance Company of Texas, is accused of service mark infringement in violation of the Lanham Trade-Mark Act of 1946, 15 U. S.C.A. § 1051 et seq., and of unfair competition. Plaintiff is a Massachusetts corporation authorized to do business in Arkansas. Defendant is a Texas corporation likewise authorized to do business in this State. Jurisdiction is based upon the Lanham Act, supra, and upon diversity of citizenship, the requisite jurisdictional amount being present. The cause has been tried to the Court and has been submitted upon the pleadings, certain stipulations of counsel, a transcript of the testimony taken before the Court, the deposition of S. Bruce Black, numerous exhibits, and written briefs. This memorandum incorporates the Court's findings of fact and conclusions of law as authorized by Rule 52(a), Federal Rules of Civil Procedure, 28 U.S.C.A.

Plaintiff was chartered in Massachusetts as a mutual insurance company in 1912 and adopted its present corporate name in 1917. It sells casualty insurance of various types and workmen's compensation insurance. An affiliate, Liberty Mutual Fire Insurance Company, sells fire insurance. Plaintiff's business is conducted in all of the States of the Union and amounts to interstate commerce. Cf. United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440; United States v. New Orleans Insurance Exchange, D.C.La., 148 F.Supp. 915, affirmed per curiam, 355 U.S. 22, 78 S.Ct. 96, 2 L.Ed.2d 66, rehearing denied 355 U.S. 908, 78 S.Ct. 329, 2 L.Ed.2d 262. Plaintiff was admitted to do business in Arkansas in 1923 and has done business here since that time.

Defendant also sells casualty and workmen's compensation insurance and is a competitor of plaintiff. Defendant was incorporated in Texas as a stock company in 1953 as the successor to an unincorporated Lloyd's insurance organization known as "Liberty Lloyd's," and was authorized to do business in Arkansas in September 1954. However, this action was commenced before defendant began actual operations in this State and, pending the outcome of this litigation, defendant has not undertaken to sell any insurance here. It is selling insurance in Texas, and perhaps, to a limited extent, in other States as well.

By virtue of fair dealing, progressive and farsighted business policies and practices, and extensive advertising, plaintiff has become one of the largest writers of casualty and workmen's compensation insurance in the United States. In 1958 plaintiff's total premiums for all lines of insurance amounted to approximately $300,000,000, and during the same year it paid out to or on behalf of its policyholders about $168,000,000. Plaintiff's premiums on insurance written in Arkansas in 1958 amounted to more than $1,000,000, and in that year it paid out to or on behalf of its Arkansas policyholders almost half a million dollars. For the period 1940 to 1958, inclusive, plaintiff's Arkansas premiums exceeded $10,000,000 and during the same period it paid out to or on behalf of its Arkansas policyholders over five and one-half million dollars.

From 1946 through 1958 plaintiff spent over $8,000,000 for advertising, of which sum more than half was spent for advertising in national publications circulating in Arkansas. In 1958 plaintiff's total advertising budget was $963,220, of which $659,895 was spent for advertising in publications circulating in this State.

The unincorporated Lloyd's group to which defendant is the successor was organized in 1938 by the insurance firm of Mitchell, Gartner & Thompson of Fort Worth, Texas. One of the members of that firm, J. Mac Thompson, is now the president and a principal stockholder of the defendant. Defendant's insurance sales in 1958 produced premiums amounting to about $3,600,000 of which more than 90 per cent came from Texas.

Although plaintiff and defendant are competitors, their methods of operation are different. All of defendant's sales are made through local insurance agencies or brokers. Defendant makes no direct solicitations of or direct sales to members of the public desiring insurance and has no advertising program directed at the insurance buying public. It does advertise in trade publications which circulate among insurance agents and brokers and it publishes its annual financial statement in the Fort Worth newspapers. Plaintiff, on the other hand, places no insurance through independent agencies. All of its sales are made by its own employees directly to the public, and plaintiff handles directly all claims arising out of its policies and makes no use of independent adjustment companies. In all of plaintiff's sales promotion and advertising the personal relationship between the policyholders and the company is emphasized.

In addition to selling insurance, investigating claims, defending lawsuits, and paying losses, plaintiff has caused to be carried out extensive research in the field of accident prevention and industrial safety, the results of which are available to its policyholders. Further, plaintiff stands ready to sponsor programs of industrial safety, employee health, and accident prevention in the establishments of holders of its policies of workmen's compensation insurance; and it maintains two vocational rehabilitation centers, the facilities of which are available to injured employees of businesses which carry their workmen's compensation insurance with plaintiff.

In its advertising and otherwise, down through the years, plaintiff has always used an abbreviation of its full corporate name. The original abbreviation used, and which is still extensively employed, is "Liberty Mutual." In recent years plaintiff has begun to refer to itself not only as "Liberty Mutual," but also as "Liberty" or "The Liberty." However, a careful examination of the record before the Court, including plaintiff's exhibits, indicates that plaintiff did not adopt the abbreviation "Liberty" or "The Liberty" until 1955 which was after the commencement of this action.

Since 1921 plaintiff has employed a distinctive service mark in its advertising and on its letterheads, policies and other materials. That mark may be described as a depiction of the upper portion of the Statue of Liberty imposed upon an oblong medallion crossed with narrow horizontal lines. The flame of the torch held by Liberty extends beyond the outer border of the medallion, which border consists of two smooth lines with a narrow space between them.

When the Lanham Act became effective in 1947, plaintiff applied for registration of its mark, and its application was granted in 1949. While the application was pending, it was carefully scrutinized by the Patent Office, and plaintiff was required to make certain changes in the application, which will be noted hereinafter. It seems that the Patent Office refers to plaintiff's mark as the "Torch of Liberty" design, but plaintiff's officers and employees call the mark the "Liberty Lady."

In addition to its service mark, plaintiff employs a distinctive print-type and arrangement of words in setting out its corporate title on the materials upon which such title appears. The words "Liberty Mutual" appear side by side in large type, separated by the service mark which extends above the lettering. Immediately below "Liberty Mutual" appear the words "Insurance Company," printed in much smaller type. Below those words, in still smaller type, appear the words "Home Office: Boston."

As to the defendant, the evidence disclosed that the original name "Liberty Lloyd's" was chosen out of consideration of alliteration and euphony. When the defendant corporation was organized it was decided to retain the word "Liberty" in the title and to call the corporation simply "Liberty Insurance Company." On advice of counsel, however, the words "Of Texas" were added to the proposed name before the articles of incorporation were presented to the Insurance Department of the State of Texas. The purpose of the change was to avoid confusion between the new company and other insurance companies having "Liberty" as a part of their corporate names.

Mr. J. Mac Thompson, heretofore mentioned, testified that at the time defendant corporation was formed, he and his associates were familiar with the plaintiff company, but that they did not copy plaintiff's name, and he insisted that defendant's selection of its name was made in good faith. The Court is not able to find that defendant deliberately copied plaintiff's name, but it is clear that defendant's incorporators were made to realize that the name originally selected by them might cause confusion and, as experienced insurance men, they must have been aware that the plaintiff was at least the principal company with respect to which confusion might be expected.¹

Not only is defendant's name somewhat similar to that of plaintiff, but the defendant uses also a service mark, print-type, and word arrangement quite similar to those used by plaintiff. The words "Liberty Insurance" are printed side by side on one line and in very large type, and below them are the words "Company of Texas" in smaller type. Between "Liberty" and "Insurance" appears a depiction of the upper portion of the Statue of Liberty, including upraised arm and burning torch. While defendant's figure is not enclosed by a solid oblong medallion, as is that of plaintiff, the head and arm of defendant's figure are under an arc of seven five-pointed stars, with the torch extending beyond the arc. Two other stars are shown in parallel position on opposite sides of Liberty and somewhat...