Pebble Beach Co. v. Tour 18 I Ltd., No. 96-21102

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: Before REYNALDO G. GARZA, KING, and BENAVIDES; KING
• Citation: 48 USPQ2d 1065,155 F.3d 526
• Parties: PEBBLE BEACH COMPANY; Sea Pines Company Incorporated, Plaintiffs-Appellees-Cross Appellants, v. TOUR 18 I LIMITED, Defendant-Appellant-Cross Appellee. RESORTS OF PINEHURST INCORPORATED, Plaintiff-Appellee-Cross Appellant, v. GOLFORMS INCORPORATED; et al., Defendants, Tour 18 I Limited, Defendant-Appellant-Cross Appellee.
• Docket Number: No. 96-21102
• Decision Date: 14 September 1998

Page 526

155 F.3d 526 48 U.S.P.Q.2d 1065 PEBBLE BEACH COMPANY; Sea Pines Company Incorporated,
Plaintiffs-Appellees-Cross Appellants,
v.
TOUR 18 I LIMITED, Defendant-Appellant-Cross Appellee.
RESORTS OF PINEHURST INCORPORATED, Plaintiff-Appellee-Cross Appellant,
v.
GOLFORMS INCORPORATED; et al., Defendants,
Tour 18 I Limited, Defendant-Appellant-Cross Appellee. No. 96-21102. United States Court of Appeals,
Fifth Circuit. Sept. 14, 1998.
Rehearing Denied Oct. 26, 1998.

Page 532

James B. Gambrell, Akin, Gump, Strauss, Hauer & Feld, Austin, TX, William H. Knull, III, Mayer, Brown & Platt, Houston, TX, Lee Norman Abrams, Mayer, Brown & Platt, Chicago, IL, Lawrence Saul Robbins, Mayer, Brown & Platt, Stephen M. Trattner, Lewis & Trattner, Washington, DC, for Plaintiffs-Appellees-Cross-Appellants.

William D. Durkee, J. Mike Amerson, Arnold, White & Durkee, Houston, TX, William D. Raman, Arnold, White & Durkee, Austin, TX, for Defendant-Appellant-Cross-Appellee.

Appeals from the United States District Court for the Southern District of Texas.

Before REYNALDO G. GARZA, KING, and BENAVIDES, Circuit Judges.

KING, Circuit Judge:

Defendant Tour 18 I, Ltd. appeals the district court's judgment that it infringed and diluted the plaintiffs' service marks and one of the three golf-hole designs at issue, and it challenges the district court's injunction as vague, punitive, and overly broad. See Pebble Beach Co. v. Tour 18 I, Ltd., 942 F.Supp. 1513 (S.D.Tex.1996). Plaintiffs Pebble Beach Co.; Resorts of Pinehurst, Inc.; and Sea Pines Co., Inc. cross-appeal, arguing that (1) the district court erroneously held that two of the three golf-hole designs at issue were not infringed or diluted, (2) its injunction is inadequate to bar future infringement, and (3) its denial of an accounting of profits and an award of attorneys' fees was erroneous. See id. We affirm the district court's judgment as modified below.

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I. BACKGROUND ¹

Defendant-appellant-cross-appellee Tour 18 I, Ltd. (Tour 18) owns and operates a public golf course in Humble, Texas named "Tour 18." Tour 18 began life as a limited partnership that subsequently merged into Tour 18, Inc., which also owns and operates a "Tour 18" public golf course in Flower Mound, Texas. Tour 18 has created these two golf courses exclusively of golf holes copied from famous golf courses across the country. The Tour 18 course in Humble, Texas has three golf holes that are copies of golf holes from golf courses owned and operated by plaintiffs-appellees-cross-appellants Pebble Beach Co. (Pebble Beach); Resorts of Pinehurst, Inc. (Pinehurst); and Sea Pines Co., Inc. (Sea Pines) (collectively, the Plaintiffs).

A. The Plaintiffs

The Plaintiffs' public courses are all part of expensive, destination golf resorts, which advertise nationally and draw customers from across the country, including Texas. ² All three courses have hosted prestigious professional golf tournaments, many of which are nationally televised, and have been written up in numerous unsolicited articles, showering the courses with praise. All three courses are consistently ranked among the top golf courses in the United States.

Pebble Beach is located in Pebble Beach, California. Tour 18 copied the fourteenth hole from Pebble Beach Golf Links, one of five courses that Pebble Beach operates in the area. The course is located along the scenic shore of the Pacific Ocean and has been in operation since 1919. Green fees to play the course are $245 for the general public and $195 for guests staying at the resort.

The district court described Pebble Beach's par-five fourteenth hole as a

dog-leg right that is ranked as Pebble Beach's number one handicap hole, identifying it as the most difficult hole on the course. The 14th Hole is not adjacent to the Pacific Ocean, but it provides golfers with a view of the ocean from the tee box and while walking from the tee box to the green. Its fairway is lined with tall cypress and oak trees. One of the most notable features of Hole 14 is the large sand bunker guarding the left side of the green. In one of its brochures, Tour 18 touts this bunker as "one of the most critical bunkers in golf."

Pebble Beach, 942 F.Supp. at 1528. While the golf course is famous, the fourteenth hole is not famous among golfers. It is not the course's signature hole ³ and is not emphasized in Pebble Beach's advertisements and promotional material. Pebble Beach owns an incontestable federal service-mark registration ⁴ in the "Pebble Beach" mark for golfing services, but does not have a federal trademark registration for, or a copyright or design or utility patent on, the design of the fourteenth hole.

Pinehurst is located in Pinehurst, North Carolina. Tour 18 copied the third hole from

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the Pinehurst No. 2 course, one of seven courses Pinehurst operates in the area. The Pinehurst No. 2 course was designed by Donald Ross, who is considered one of the greatest golf-course architects. The No. 2 course is considered to be his masterpiece. The first nine holes of the course began operation in 1903. Green fees are $145.

The Pinehurst No. 2 course's third hole is a par four with "a natural area of sand interspersed with clumps of wire grass, which is indigenous to the local area, that extends between 200 and 300 yards along the right side of the fairway. Adjacent to the natural area is a sand cart path." Id. at 1529. While the golf course is famous among golfers, the third hole is not. The third hole is not the course's signature hole, and Pinehurst does not emphasize the hole in its advertisements or other promotional material. Pinehurst owns a federal service-mark registration in the "Pinehurst" mark for golf services, but does not have a federal trademark registration for, or copyright or design or utility patent on, the design of the third hole.

Sea Pines is located on Hilton Head Island, South Carolina. Tour 18 copied the eighteenth hole from Harbour Town Golf Links, the most famous of Sea Pines's golf courses. The course was designed by Pat Dye, a preeminent golf-course designer, and Jack Nicklaus, who is considered to be one of the greatest golfers of all time and is also an accomplished golf-course designer. The course is distinguished by the presence of a lighthouse behind the eighteenth green. The course has been in operation since 1969, and construction of the lighthouse was completed in 1970. Green fees are $164.

The lighthouse that can be seen from Harbour Town's par-three eighteenth hole

is octagonal in shape with red and white striping. While the lighthouse is visible from the tee box and fairway of the 18th Hole, it is not physically on the golf course. The lighthouse is actually situated 100 feet from the 18th green across a small inlet of water leading to the Harbour Town marina.... [T]here was testimony at trial that because of the location of the lighthouse, many golfers use it as a target to line up their tee shots. However, according to [the developer of the course], his placement of the lighthouse in relation to the 18th hole was not to create a target for golfers, but to guarantee exposure for the lighthouse on television during professional tournaments.

Id. at 1530. Sea Pines's predecessors built the lighthouse and later sold the physical structure to another company in 1984, which then sold it to Prudential Bache-Fogelman Properties (Fogelman). Sea Pines entered into a licensing agreement with Fogelman to allow Fogelman to use depictions of the lighthouse.

The eighteenth hole of Harbour Town Golf Links is one of the most famous holes in golf and is the course's signature hole. Sea Pines emphasizes the hole in Harbour Town's advertisements and promotional materials. The lighthouse's association with the hole has led to the hole commonly being referred to as the "Lighthouse Hole." Sea Pines does not own a federal service-mark registration for the "Harbour Town" mark. The design of the lighthouse is not protected by a copyright or design or utility patent. Sea Pines does not own a federal service-mark registration for the lighthouse for golfing services. The design of the eighteenth hole is not protected by a copyright or design or utility patent; nor does Sea Pines own a federal trademark registration for the design of the eighteenth hole.

B. The Defendant

In 1992, Tour 18 opened its golf course in Humble, Texas. The course consists of a collection of replica golf holes from sixteen famous golf courses. The first hole is a replica of the eighteenth hole of Harbour Town Golf Links including a smaller scale, nonfunctioning replica lighthouse. The third hole is a replica of the third hole of the Pinehurst No. 2 course, and the thirteenth hole is a replica of the fourteenth hole of Pebble Beach Golf Links. The Flower Mound, Texas Tour 18 course has a replica of the Harbour Town eighteenth hole including lighthouse as its seventh hole. These replica golf holes were created using topographic

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maps procured from third parties and videotapes of the golf holes.

Tour 18 markets itself as "America's Greatest 18 Holes." It places advertisements in regional and national publications. In advertisements and promotional materials, Tour 18 identifies the golf holes that it has copied by using the trademarks of the original courses and refers to the golf holes by common nicknames like the "Lighthouse Hole," the "Blue Monster," and "Amen Corner." It uses the Plaintiffs' marks, "Pebble Beach," "Pinehurst," "Harbour Town," and depictions of the lighthouse, extensively in its advertisements and promotional materials. These materials regularly include pictures of Tour 18's replica lighthouse. The Tour 18 scorecard includes the Plaintiffs' marks to identify the replica golf holes. For example, "Pebble Beach 14" is printed next to the number 13. A picture of the replica lighthouse appears on the back of the scorecard. Tour 18's yardage guide has a picture of its replica...