Pizzeria Uno Corp. v. Temple

• Decision Date: 20 November 1984
• Docket Number: No. 83-1493,83-1493
• Citation: 747 F.2d 1522,224 USPQ 185
• Parties: PIZZERIA UNO CORPORATION, Appellant, v. James W. TEMPLE, Jr., d/b/a Taco Uno, Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1522

747 F.2d 1522

224 U.S.P.Q. 185

PIZZERIA UNO CORPORATION, Appellant, v. James W. TEMPLE, Jr., d/b/a Taco Uno, Appellee.

No. 83-1493.

United States Court of Appeals Fourth Circuit.

Argued April 2, 1984.

Decided Nov. 20, 1984.

Edward F. Perlman, Boston, Mass. (George L. Greenfield, Wolf, Greenfield & Sacks, P.C., Boston, Mass., on brief), for appellant.

Cort Flint, Jr., Greenville, S.C. (Dority & Flint, Greenville, S.C., on brief), for appellee.

Before WINTER, Chief Judge, RUSSELL, Circuit Judge, and WARRINER, United States District Judge for the Eastern District of Virginia, sitting by designation.

DONALD RUSSELL, Circuit Judge:

The plaintiff, the assignee of a registered trademark, asserts two causes of action for injunctive relief, one to restrain alleged infringement of its registered trademark by the defendant under 15 U.S.C. Secs. 1114(1), 1125(a), and the other under state common law to restrain the defendant's unfair competition in the alleged exploitation of plaintiff's trademark, with jurisdiction based on 15 U.S.C. Sec. 1121, and 28 U.S.C. Sec. 1338. After a trial before the court, the district judge found that there was no infringement redressable under Sec. 1114(1) and that, since the state common law action was basically the same as the federal infringement action, there was no common law violation. 566 F.Supp. 385. From the judgment entered thereon, the plaintiff has appealed. Though we conclude, unlike the district judge, that plaintiff's trademark rights have been infringed by the defendant, we agree with the district court that the absence of any actual competition between plaintiff and its possible franchisees on the one hand, and the defendant, on the other hand, in the geographical area where the defendant presently operates, compels the denial of injunctive relief in plaintiff's favor at this time. On that basis, we affirm the denial of relief to the plaintiff, without prejudice to plaintiff's right to renew its claims if it or one or more of its franchisees subsequently invades the same geographical area in which the defendant, using the challenged trademark, operates.

I

The use of plaintiff's tradename "Pizzeria Uno" began some forty years ago in Chicago, where Ike Sewell opened a restaurant using that tradename. This restaurant and its tradename acquired over the years a wide reputation, was favorably discussed by the food editors in national papers, and enjoyed a flattering exposure on national television programs. In 1978, Sewell in the name of the corporation Pizzeria Uno and Due International, Inc. (of which Sewell was the sole stockholder), applied to the Patent and Trademark Office for registration of the trademark "Pizzeria Uno" for "Restaurant Services, in class 42 (U.S. CL 100), with a disclaimer of any right to the exclusive use of the word 'Pizzeria' without detriment to any common law rights to the mark as a whole." On April 11, 1978, the Patent Office granted registration of the trademark, without requiring proof of secondary meaning. All title to the trademark, "including the registrations therefor, together with the goodwill of the business symbolized by said marks and the rights to recover for past infringement of said marks," "throughout the entire world, excluding only the State of Illinois," was thereafter transferred to the plaintiff. The purpose of the transfer was stated to be the promotion and exploitation of the trademark in providing restaurant and food services, particularly in the United States.

The plaintiff/appellant, in promoting the use of the trademark, as contemplated under its agreement, developed a standardized type of operation, with facilities and type of services of a unique quality. In this connection, it opened four wholly owned Pizzeria Uno restaurants and began to franchise others to operate such restaurants in various areas of the nation. Under the terms of the franchise, the operator was required to expend several hundreds of thousand dollars in furnishing the restaurants, to pay an annual license fee of five per cent of its gross, and to spend approximately two per cent of gross in advertising. As of the trial, the plaintiff had some eleven franchised operations, spread from Massachusetts in the East to California in the West and from Georgia in the South to Illinois and Michigan in the Midwest. In connection with its displays and advertisements for such franchised operations, the plaintiff and its franchisees emphasized "UNO" as the dominant word in the trademark. For this reason, the term "Pizzeria" in the trademark is about an eighth the size of the term "Uno" in all display materials and advertising signs used by either the plaintiff or its franchisees.

While the plaintiff presently has no franchisees in South Carolina, it has surveyed the market and is seeking to interest a franchisee or franchisees in operating one of its restaurants in such State.

II.

The defendant had worked in the food distribution industry for about 14 years. During a part of that time, he had responsibility for the supervision of food establishments in the Chicago area, where the initial Pizzeria Uno was located. In July, 1981, he opened two restaurant establishments, one in Sumter, South Carolina, and the other, some fifty miles away, in Columbia, South Carolina, using in the operation of both the mark "Taco Uno." In the latter part of August, 1981, he applied to the Patent and Trademark Office for trademark registration of the mark "Taco Uno" to be used for "restaurant services." He certified in the application that the first use of the mark was July 14, 1981 and stated that the "mark is used in connection with the services by being displayed on signs adjacent [to] the building." By amendment, the defendant disclaimed "the word TACO apart from the mark as shown." By letter dated March 16, 1982, the Patent and Trademark Office refused registration of defendant's mark "on the basis of Registration No. 1,089,458 for the mark Pizzeria Uno." The defendant petitioned for reconsideration of this refusal in July, 1982. On the basis of such petition, the defendant's mark was ordered published in the Official Gazette of the Patent and Trademark Office for the purpose of providing an opportunity for anyone believing he would be damaged by registration of the mark as requested by the defendant to file an opposition to the registration. The plaintiff, within due time, filed its statement of opposition with the Patent and Trademark Office. In that posture, the Patent and Trademark Office ordered the matter for hearing but deferred the actual hearing itself, awaiting the judgment in this proceeding which had been filed in the interim.

III.

After trial of this action, in which live and documentary evidence was adduced, the district court found that there was no infringement by the defendant. In reaching this conclusion, it began by finding that the term "UNO," which it recognized to be the dominant word in the plaintiff's trademark and defendant's proposed registered mark, was both in itself and in conjunction with "Pizzeria" a descriptive or weak term similar to the term "KING" in "Burger King." As a descriptive term, the mark, it accordingly found, was not entitled to "exclusive protection," absent the establishment by appropriate proof of a secondary meaning, and it found further that there was no proof of a secondary meaning. This finding that the term "UNO" was weak and merely descriptive was supported, according to the district court's reasoning, by the decision of the "Trademark Office examiners who are experts in applying the test of likelihood of confusion between two marks," a conclusion which the district court found to be "entitled to great weight." The district court, also, found that the operation of the two restaurants was not similar, though the two do conduct their business "on the same retail level." It held that, while there was "similarity in the advertising media used by both parties," the nearest restaurant of the plaintiff to the South Carolina market, where defendant's operations were centered, was Atlanta, Georgia. Finally, it found no proof of intentional infringement on defendant's part or of any actual confusion. On the basis of these findings and conclusions, the district court dismissed plaintiff's infringement claim. The plaintiff by this appeal, challenges these findings and conclusions of the district court.

IV.

A threshold issue is the standard for appellate review to be applied in reviewing the district court's findings. While some courts have established in trademark cases different standards for review of "foundation" or "subsidiary" findings of fact and of findings of "ultimate facts," see Frisch's Restaurants, Inc. v. Elby's Big Boy, 670 F.2d 642, 651 (6th Cir.1982), cert. denied, 459 U.S. 916, 103 S.Ct. 231, 74 L.Ed.2d 182; Golden Door, Inc. v. Odisho, 646 F.2d 347, 350 (9th Cir.1980), we agree with Lyddan v. United States, 721 F.2d 873, 875 (2nd Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 2656, 81 L.Ed.2d 363, that the Supreme Court in Pullman-Standard v. Swint, 456 U.S. 273, 286-87, 102 S.Ct. 1781, 1788-89, 72 L.Ed.2d 66 (1982) made obsolete any distinction between "subsidiary" and "ultimate" findings in the application of the clearly erroneous rule and established the principle that all findings, "regardless of whether these findings are ultimate or subsidiary findings" were to be reviewed under the clearly erroneous rule. We, therefore, find that to be the applicable standard for appellate review herein. But under this rule, a finding is clearly erroneous when there is no evidence in the record supportive of it and also, when, even though there is some evidence to support the finding, the reviewing court, on review of the record, is left with a definite and firm conviction that a mistake has been made in the finding. United States v. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (194...