Mutual of Omaha Ins. Co. v. Novak, CV 84-0-581.

• Decision Date: 26 November 1986
• Docket Number: No. CV 84-0-581.,CV 84-0-581.
• Parties: MUTUAL OF OMAHA INSURANCE COMPANY, a Nebraska Corporation, Plaintiff, v. Franklyn NOVAK, an Individual, Defendant.
• Court: U.S. District Court — District of Nebraska

648 F. Supp. 905

MUTUAL OF OMAHA INSURANCE COMPANY, a Nebraska Corporation, Plaintiff, v. Franklyn NOVAK, an Individual, Defendant.

No. CV 84-0-581.

United States District Court, D. Nebraska.

November 26, 1986.

Dennis L. Thomte, Omaha, Neb., for plaintiff.

Peter J. Hoagland, Warren C. Schrempp, Omaha, Neb., for defendant.

BEAM, Chief Judge.

This matter is before the Court for decision on the merits following trial to the Court. Plaintiff Mutual of Omaha Insurance Company ("Mutual") filed this suit against Franklyn Novak alleging trademark infringement under 15 U.S.C. §§ 1114(1) and 1125(a) (the Lanham Act), violations of Neb.Rev.Stat. § 87-302 (Reissue 1981) (the Nebraska Uniform Deceptive Trade Practices Act), common-law trademark infringement, and trademark disparagement. On November 30, 1984, this Court issued a preliminary injunction (filing 19) prohibiting the defendant from marketing T-shirts, coffee mugs and other products featuring the words "Mutant of Omaha" or "Mutant Kingdom" and bearing a logo resembling the Indianhead logo used by Mutual. Issuance of the preliminary injunction was subsequently affirmed by the United States Court of Appeals for the Eighth Circuit. Mutual of Omaha Ins. Co. v. Novak, 775 F.2d 247 (8th Cir.1985). Having now considered the evidence, the arguments and authorities advanced by the parties, and the record, the Court finds in favor of the plaintiff and against the defendant on all plaintiff's claims except trademark disparagement. This memorandum shall constitute the Court's findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52.

FACTS

Plaintiff is a Nebraska corporation engaged since 1944 in the business of insurance sales. Its premium income in 1983 amounted to over 1½ billion dollars. Beginning in 1952, plaintiff acquired various trademark registrations for marks used in connection with its insurance services and a wildlife television program which it sponsors. Principal variations of these marks are pictured below.

In April of 1983, defendant Novak produced a design using the words "Mutant of Omaha" and an accompanying logo depicting a side view of a war-bonneted and emaciated human face. The design was initially placed on T-shirts in conjunction with the phrase "Nuclear Holocast Insurance" or "Sponsored by Mutant of Omaha Nuclear Holocaust Insurance Co." The reverse side of the shirts read "When the world's in ashes we'll have you covered." Novak marketed approximately 4000 of these T-shirts in various styles. He has also utilized the design on a more limited number of sweatshirts, caps, buttons and coffee mugs. In the spring of 1984, Novak produced another design, this time using the words "Mutant Kingdom" or "Mutant of Omaha's Mutant Kingdom" with an accompanying logo depicting a cyclops-type, one-eyed tiger. The design has been affixed to similar types of merchandise, although sold in lesser quantities. The principal variations of Novak's designs are set out below.

Novak actively marketed these items to the public at retail shops, exhibitions and fairs through an unincorporated company called "Mutants of Omaha". He has advertised on television, in newspapers and in magazines.

While Mutual's business endeavors are devoted principally to the sale of insurance, Mutual does use its trademarks and logos on T-shirts, sweatshirts, caps, mugs and patches. These items are offered for sale to agents and company representatives who use them as gifts or incentives to prospective or actual customers. Mutual does not market these items to the general public.

In this lawsuit, Mutual claims that Novak's use of his various designs operates to infringe and disparage Mutual's registered trademarks. In response, Novak argues that there exists no likelihood of confusion in the minds of the consuming public as to the origin or sponsorship of the T-shirts and other items. Novak also claims that his activities amount to political comment on an issue of national concern protected by the first amendment and that the products are good faith parody and satire which are not actionable under the trademark laws.

LAW

A. Trademark Infringement

In addition to common law trademark infringement, Mutual alleges that Novak has violated several different statutes. Under the Lanham Act, Mutual's first claim falls under 15 U.S.C. § 1114(1), which provides that it is trademark infringement to:

(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

(b) reproduce, counterfeit, copy or colorably imitate a registered mark and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.

Mutual also alleges that Novak has engaged in unfair competition in violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). That section prohibits as unfair competition the use in interstate commerce of any "false designation of origin, or any false description or representation, including words or symbols tending falsely to describe or represent the same...." Id.

Finally, Mutual alleges violations of the Nebraska Uniform Deceptive Trade Practices Act, Neb.Rev.Stat. § 87-301 et seq. (Reissue 1981). The Act prohibits a broad panoply of deceptive trade practices, including confusing customers as to the origin of goods or services. Id. at § 87-302. See Midway Manufacturing Co. v. Dirkschneider, 571 F.Supp. 282 (D.Neb.1983).

For the purposes of this case, the elements of all of these various infringement claims are the same. See Bi-rite Enterprises Inc. v. Button Master, 555 F.Supp. 1188, 1192 (S.D.N.Y.1983). Mutual must show that it owns a protectible trademark and that Novak has used, in commerce, a similar mark that is likely to cause confusion as to the source of Novak's goods or the involvement or association of Mutual in Novak's business. Here, the fact that Mutual owns federally registered trademarks which have been used in interstate commerce has not been contested. Thus, as in most trademark infringement cases, plaintiff's showing of a "likelihood of confusion" is the gravamen of its claim. See WSM, Inc. v. Hilton, 724 F.2d 1320 (8th Cir.1984); Vitek Systems, Inc. v. Abbott Laboratories, 675 F.2d 190 (8th Cir. 1982); Squirtco v. Seven Up Co., 628 F.2d 1086 (8th Cir.1980).

Several factors have been identified by the Eighth Circuit which are to be considered in determining whether there exists a likelihood of confusion. The essential inquiry is whether the defendant's design so resembles the registered mark that its use is likely to cause confusion as to product source, sponsorship or affiliation. W.S.M. Co. v. Hilton, 724 F.2d at 1329. The Court must examine:

1) The strength of plaintiff's trademarks;

2) The similarity between plaintiff's marks and defendant's designs;

3) The competitive proximity of the products on which the marks and designs are used;

4) Defendant's intent to pass off its goods as plaintiff's product;

5) Incidents of actual confusion; and

6) The type of product, its costs and the conditions of purchase.

Squirtco v. Seven Up Co., 628 F.2d at 1090-91. See Polariod Corp. v. Polorad Electronics, 287 F.2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961). A review of each of these factors reveals that a likelihood of confusion does exist between Novak's design and Mutual's registered trademarks.

The strength of Mutual's trademarks is not disputed by Novak. Mutual has spent in excess of $150 million over the past ten years in the advertisement and promotion of its services. Its trademarks are widely exposed to the public on a frequent basis. A strong and distinctive mark such as Mutual's is entitled to greater protection. Squirtco v. Seven Up Co., 628 F.2d at 1091.

Analysis of the second factor, the similarity of the two marks, is based on an examination of the marks and designs as a whole, including visual impression. Id. at 1091. The degree of similarity is judged by comparing the marks, not side-by-side, but as they appear in the marketplace. See Vitek Systems, Inc. v. Abbott Laboratories, 675 F.2d 190, 192 (8th Cir.1982). It is not necessary for this court to find that the names and logos are exactly the same. Similarities weigh more heavily than differences. Id. There may be infringement where the substantial and distinctive part of the trademark is copied or imitated. David Sherman Corp. v. Heublin, Inc., 340 F.2d 377, 380 (8th Cir.1965).

A comparison of Mutual's trademarks with Novak's designs leaves little doubt that they are very similar. The lettering styles are identical, the Indian head logo depicts the same side view of a war-bonneted head, and the substitution of "Mutant" for "Mutual" is confusing and suggestive especially upon a brief glance. Novak, in fact, testified that he used Mutual's marks as a guide in creating his designs. While there are differences that can be pointed out in a side-by-side comparison, on the whole the name and logo create a substantially similar concept, image and feel which the Court finds is likely to create confusion as to source, affiliation or sponsorship on the part of consumers. Cf. Jordache Enterprises, Inc. v. Hogg Wyld, Ltd., 625 F.Supp. 48, 56 (D.N.M.1985).

The next factor is the competitive proximity of the products. It is clear that Mutual uses its marks primarily in connection with insurance and entertainment services. While Mutual also places its marks on a variety of items such as T-shirts,...