Modular Cinemas of America, Inc. v. Mini Cinemas Corp.

• Decision Date: 19 September 1972
• Docket Number: Civ. A. No. 69 3115.
• Citation: 348 F. Supp. 578
• Parties: MODULAR CINEMAS OF AMERICA, INC., a corporation, Plaintiff, v. MINI CINEMAS CORPORATION, a corporation, Defendant.
• Court: U.S. District Court — Southern District of New York

348 F. Supp. 578

MODULAR CINEMAS OF AMERICA, INC., a corporation, Plaintiff, v. MINI CINEMAS CORPORATION, a corporation, Defendant.

Civ. A. No. 69 3115.

United States District Court, S. D. New York.

September 19, 1972.

Francis D. Thomas, Jr., of Bacon & Thomas, Washington, D. C., for plaintiff.

Arthur L. Goldstein, New York City, for defendant.

EDELSTEIN, Chief Judge.

OPINION

This is a civil action for infringement of a trademark registered in the United States Patent Office, brought pursuant to Section 32 of the Lanham Act, 15 U. S.C. § 1114. This court has jurisdiction over the subject matter under 15 U.S.C. § 1121 and 28 U.S.C. § 1338(a).

Plaintiff Modular Cinemas of America is a corporation organized and existing under the laws of the State of Georgia and having its principal place of business in Atlanta, Georgia. It is engaged in the business of operating motion picture theaters under the name "mini cinema," some of which it owns and others which are under franchise to it.

Defendant, Mini Cinema Corporation is a corporation organized and existing under the laws of the State of New York and has its principal place of business in New York, New York. Defendant operates one motion picture theater in the Times Square area of New York City.

Briefly stated, it is plaintiff's contention that notwithstanding its alleged superior common law and statutory rights in the service mark mini cinema, the defendant with constructive and actual notice has adopted and continues to use the identical name to identify its own theater which has resulted in the infringement of plaintiff's mark.

Therefore, plaintiff requests that defendant be permanently enjoined from the use of the name mini cinema; that monetary damages, including profits, be awarded; that defendant be required to destroy any materials bearing the designation; and that costs, including reasonable attorney fees, be awarded.

The defendant has denied all of the material allegations contained in the complaint except to admit that it has used and continues to use the term mini cinema. It contends that such use is proper. More particularly, defendant asserts:

(1) that its concurrent use does not constitute an infringement in that there is no likelihood of confusion in the relevant market;

(2) that it uses the term in a descriptive sense and only for the purpose of describing the nature of its product, namely, and extremely small motion picture theater;

(3) that the term mini cinema as used by plaintiff is descriptive and therefore incapable of exclusive appropriation by anyone;

(4) that plaintiff is not entitled to injunctive relief absent an operation in New York; and

(5) that under the Lanham Act, 15 U.S.C. § 1115(b)(5), defendant has a valid defense in that it adopted the mark without actual knowledge of plaintiff's prior use but before plaintiff's registration—this defense being limited under the statute to the area of prior use.

Thus, defendant prays that the complaint be dismissed.

In addition, defendant has asserted a counterclaim requesting that plaintiff's registration and service mark be cancelled and revoked on the ground that the term mini cinema is purely descriptive. Plaintiff contests this assertion and requests that the court adjudicate that its mark is valid and that the counterclaim be dismissed.

On May 22, 1970, plaintiff moved for a preliminary injunction to preclude defendant's use of the name mini cinema. After hearing argument on June 23, 1970, the court reserved decision and ordered the trial of this action, which commenced on July 27, 1970, and was concluded July 28, 1970. On November 18, 1970, plaintiff moved to reopen the trial record for the limited purpose of proffering certain subsequently acquired evidence. After argument on December 17, 1970, the court granted the motion.

At the time of trial plaintiff operated six theaters located in Georgia and Tennessee and pursuant to its policy of promotion and expansion it was involved in various stages of developing additional theaters. Plaintiff's theaters exhibit films which are predominantly geared toward what is known in the trade and by the public as "family" audiences. All of its operating theater sites are in shopping centers, situated in suburban or semi-suburban metropolitan locations. None of plaintiff's theaters is called mini cinema only; rather, the name of the shopping center in which it is located is always employed, together with its mark. Two examples are Ainsley Mini Cinema, and Peach Tree Mini Cinema. The mark as registered and used is comprised of a circular geometric figure underneath which appears the words "mini cinema" (small case) also underneath one another.

Plaintiff's use in commerce of the designation mini cinema as a service mark was initiated at least as early as April 5, 1968, and has continued without interruption to the present. (R. 12).¹ Plaintiff formally registered the mark with the U. S. Patent Office on the Principal Register on March 11, 1969, (Registration No. 866,662; Class 107 for operating motion picture theaters). (Ex. 17).² The word "cinema" is disclaimed apart from the mark as shown.

As stated, defendant is a corporation operating a single theater located in the Time Square area of Manhattan, New York. On April 23, 1968, it filed a certificate of corporation in New York State under the name "Mini Cinema Corporation." (Ex. C. & D; R. 104). Thereafter it became the lessee of what it thought to be the smallest motion picture theater in New York City. Between June 1968 and April 1969, in preparation for commencing business operations, it advertised its then impending opening in various New York City newspapers (Ex. L, M, O; R. 115, 123), erected a theater marquee which included the words mini (all caps) cinema (no caps, stylized letters) (R. 156,162), booked films for future presentation (R. 118) and contracted with theater service agencies (such as a concessionaire).

On April 30, 1969, defendant opened its doors to the public. As characterized by defendant, its features are consistently and exclusively for "adults only" and its entertainment includes "live dance performances" between film exhibitions. (Defendant's post-trial memorandum at page 2; R. 123).

With these findings in mind we will now consider the first issue in this case —plaintiff's claim to ownership of the mark in question and defendant's closely associated claim of "innocent user."

It is an axiomatic principle of trademark law that priority in adoption and actual use of a name or designation, as a trademark, is the essential criterion upon which ownership is based. Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713 (1916). It is this priority in time of trademark use, in commerce, which confers the quintessential right of exclusiveness and hence "ownership" upon the user. Registration confers certain procedural advantages upon a successful applicant; particularly, it is prima facie evidence of the validity of the registration, of the registrant's ownership of the mark, and its exclusive right to the use of it in commerce. 15 U.S.C. § 1057(b). Applying these principles to the case at bar, it is indisputable that plaintiff is the prior user and hence the exclusive owner even if the court accepts defendant's asserted earliest date of use—its date of incorporation—as applicable.

To avoid this fatal conclusion defendant has invoked the doctrine of innocent user as embodied in section 1115(b)(5) of Title 15, U.S.Code, which provides a defense against infringement to a defendant who (1) adopts a mark without actual knowledge of a registrant's prior use, (2) if defendant has continuously "used" the mark from a date prior to plaintiff's registration. Such a defense, however, applies only "for the area in which such continuous prior use is proved." The theory upon which this statutory exception rests is that registration provides constructive notice to the world of a registrant's claim of ownership. Therefore, one who adopts and uses a mark after another does so, without knowledge, but prior to the latter's registration, is entitled to limited superior rights.

As stated, plaintiff's registration was issued on March 11, 1969; the parties have stipulated that actual notice did not occur before March 21, 1969.³ Thus, the jugular issue becomes whether defendant "adopted" and "used" the name mini cinema prior to the date of registration. Defendant argues that its use began on April 23, 1968, by its act of incorporation (see defendant's proposed finding of fact No. 5), whereas plaintiff claims that use within the meaning of § 1115(b)(5) did not occur until defendant's theater opened for business on April 30, 1969.

The plaintiff's position as to the statutory meaning of use is supported both in theory and by case law. It is a hornbook rule of law that a trademark must be appurtenant to some existing enterprise to which it is related; it can not exist in gross. No rights are acquired through mere invention or creation of a name or symbol, or through mere adoption or the intention to use it. The gist of trademark rights is its actual use in trade. As one commentator has stated:

"There is no such thing as property in a trademark except a right pertaining to an established business with which the mark is employed." Seidel, Trademark Law and Practice, § 3.01 at page 39. (emphasis added).

This is not to say that any particular time period of use is a prerequisite to assert trademark rights, nor that there be an instance of the actual sale of a product or service, so long as an established business exists and the mark is used to identify the source of trade. Maternally Yours, Inc. v. Your Maternity Shop, Inc., 234 F.2d 538, 542 (2d Cir. 1956). "It is axiomatic, however, that use and not priority of incorporation is decisive." 3 Callman § 76.1 at page 275.

Further, the mere advertisement of a product does not constitute trademark use, Victor Tool &...