North American Airlines v. Civil Aeronautics Board

• Citation: 228 F.2d 432,97 US App. DC 85
• Decision Date: 23 June 1955
• Docket Number: No. 12041.,12041.
• Parties: NORTH AMERICAN AIRLINES, Inc., Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent, American Airlines, Inc., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

97 US App. DC 85, 228 F.2d 432 (1955)

NORTH AMERICAN AIRLINES, Inc., Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent American Airlines, Inc., Intervenor.

No. 12041.

United States Court of Appeals District of Columbia Circuit.

Argued June 4, 1954.

Decided June 23, 1955.

Mr. Hardy K. Maclay, Washington, D. C., with whom Mr. Walter D. Hansen, Washington, D. C., was on the brief, for petitioner.

Mr. Gerald F. Krassa, Attorney, Civil Aeronautics Board, of the bar of the Court of Appeals of New York, pro hac vice, by special leave of Court, with whom Messrs. Emory T. Nunneley, Jr., General Counsel, Civil Aeronautics Board, John H. Wanner, Associate General Counsel, Civil Aeronautics Board, and James L. Highsaw, Jr., Chief, Litigation and Research Division, Civil Aeronautics Board, were on the brief, for respondent. Messrs. O. D. Ozment, Attorney, Civil Aeronautics Board, and Charles H. Weston, Attorney, Department of Justice, also entered appearances for respondent.

Mr. Howard C. Westwood, Washington, D. C., with whom Messrs. John W. Douglas, New York City, and Jerome Ackerman, Washington, D. C., were on the brief, for intervenor.

Before PRETTYMAN, FAHY and DANAHER, Circuit Judges.

DANAHER, Circuit Judge.

Petitioner asks review of a Board order which denied petitioner's application for authority to engage in air transportation under the name North American Airlines, Inc., and which further ordered the petitioner, "its successors, assignees, representatives, agents, officers and employees . . . to cease and desist from engaging in air transportation under the names North American Airlines, Inc., North American Airlines, North American, or any combination of the word `American.'"

Petitioner, holder of Letter of Registration No. 528 issued to Twentieth Century Airlines, Inc., July 22, 1947, is an irregular air carrier engaged in air transportation primarily between New York, Chicago, Kansas City and Los Angeles. About May 21, 1951, petitioner commenced operations under the trade names of North American Airlines and North American, and on March 3, 1952, petitioner changed its corporate name to North American Airlines, Inc. By letter dated March 11, 1952, petitioner advised the Board of its change of name and sought reissue of its Letter of Registration accordingly. Without then acting upon petitioner's application, the Board on August 19, 1952, amended its regulations to provide that on and after November 15, 1952, an irregular carrier might hold out to the public and perform air transportation services only in the name appearing in its Letter of Registration.

The Board's introductory comment to its new Economic Regulations, § 291.28 pointed out that where good will had been established in a name by use thereof, the Board would deny permission to continue such name only in cases where it believed that a violation of § 411 of the Act¹ might be involved and where such fact had been established after notice and opportunity for a hearing. On October 6, 1952, petitioner, pursuant to the new regulation, applied to the Board for authorization to conduct its operations under its corporate name rather than as Twentieth Century Airlines, Inc. In support of its application, petitioner set out that it had invested "substantial" sums of money in the name North American Airlines and had established "substantial" good will in that name at a time when there was no Board regulation of the names of air carriers.

American Airlines, Inc., was allowed to intervene in opposition to petitioner's application, representing, principally, that the name "North American" infringed upon the established name of American and constituted unfair competition within the meaning of § 411 of the Act, and further urging that North American had no vested right or established good will in the name "North American" which the Board was bound to recognize. Thereupon the Board ordered an investigation to determine whether petitioner's engaging in air transportation under the names North American Airlines, Inc., North American Airlines, or North American was in violation of § 411 and, if so, whether the Board should issue a cease and desist order accordingly, and this investigation was consolidated for hearing and decision with North American's application.

I

The Board found (1) that American Airlines and North American Airlines are in competition in air transportation; (2) that American Airlines was incorporated, eo nomine, and that the term "American" had acquired a secondary meaning before North American adopted the trade name of, and changed its corporate name to, North American Airlines; (3) that the substantial public confusion found herein was likely to continue; (4) that use of the name "North American Airlines, Inc.," "North American Airlines," "North American" or any combination of the word "American" constitutes an unfair or deceptive practice and an unfair method of competition within the meaning of § 411 of the Act; (5) that the public interest required denial of the application for authority to engage in air transportation under the name North American Airlines, Inc.; and (6) that petitioner and its successors, assignees, representatives, agents, officers and employees should be ordered to cease and desist from engaging in air transportation under the names listed in (4), above.

Thereupon, the Board, one member dissenting, entered its order, drastic, as it knew,² and unprecedented, so far as we have been shown. It purported to predicate public interest upon the "confusion,"³ attributable to North American's "knowing" use of a "confusingly similar name" to that of American. Its brief tells us that there were "six groups of confused members of the public, namely: (1) ticket holding passengers, (2) persons meeting passengers, (3) persons making inquiry regarding transportation, (4) persons having business with petitioner North American, (5) the Post Office, and (6) the public press." Our examination of the record and the exhibits discloses, (1) some North American passengers with North American tickets in their hands presented themselves at American ticket counters; (2) some people intending to meet North American passengers called American Airlines "information" or ticket counters to ask about the arrival of North American flights; (3) some people who heard North American radio advertising of deferred payment flight plans called American Airlines for particulars as to how North American's "fly now — pay later" program operated; American offered no such plan; (4) "persons having business" were (a) a painter's union official who telephoned to American to protest that a sign was being painted by non-union painters but was assured this was a North American sign; (b) a hotel in Kansas City where North American had "hotelled" its passengers sent its bill to American; (c) a radio repair service telephoned to American about a North American bill for $13; (d) a tailor who addressed a North American tailoring charge for $18 to American although the street number was that of North American; (5) the Post Office misdelivered to American (a) one correctly addressed envelope intended for North American; (b) the tailor bill mentioned in (4) (d) above; (c) in Burbank where both lines had ticket counters at the terminal, a witness said some 6 to 12 envelopes came to the American counter but were intended for the North American counter; (6) a robbery of a North American ticket office was described in the newspapers as having occurred at American's office.

The Board offered no evidence whatever. We have already noted the nature and the gist of such evidence as was offered which was supplied by employees of the intervenor, American, and upon such the Board rested its finding of "confusion." Board Member Adams in his dissent commented:

"Since American Airlines, Inc., carries approximately 5½ million passengers each year over its system, I am not impressed with the fact that witnesses in this case (principally those employed by American Airlines itself) have testified that some confusion has existed. . . . On the contrary, I would be greatly surprised, (in view of the several million phone calls and other communications which American Airlines receives every year over and above those received from passengers which it actually carries) if there were not some demonstrable public confusion . . .."

The Board also concluded that the word "American," as used by the intervenor, had acquired a secondary meaning, that intervenor had long engaged in extensive advertising of its services under that name, and that this "practice has helped to instill in the minds of the public the notion that the word `American' when used in connection with domestic air transportation denotes American Airlines." In this particular it did not "overlook" "the recent use of the word American in the name of the sectional local service carrier All American Airways," the "recent use of the word American in the name of the irregular carrier Air America," and the international "use of American in the name Pan American World Airways." In this connection it should be noted that American Airlines, Inc., since 1934, and its predecessor American Airways, Inc., since 1930, had continuously been engaged in air transportation. In 1949 American Airlines, Inc., registered in the Patent Office as a service mark the two words in combination, "American Airlines."⁴

No ticket agents were parties to the proceeding, nor was there evidence as to their engaging in proscribed practices within the meaning of the Act, but they as a class, throughout the nation, have been brought within the sweep of the Board's order.

The Board rejected, and decided it "need not comment" upon, its Examiner's finding:

"There is no evidence of record that North American adopted its name with intent to deceive the public or trade upon the good-will and business reputation of American, or that American has been injured by

...