Raxton Corp. v. Anania Associates, Inc.
| Decision Date | 14 January 1982 |
| Docket Number | 81-1414,Nos. 81-1383,s. 81-1383 |
| Citation | 668 F.2d 622 |
| Parties | RAXTON CORPORATION, d/b/a Off the Rax, Plaintiff, Appellant, v. ANANIA ASSOCIATES, INC., d/b/a Off the Rack, Defendant, Appellee. RAXTON CORPORATION, d/b/a Off the Rax, Plaintiff, Appellee, v. ANANIA ASSOCIATES, INC., d/b/a Off the Rack, Defendant, Appellant. |
| Court | U.S. Court of Appeals — First Circuit |
Henry C. Nields, Concord, Mass., with whom Russell & Nields, Concord, Mass., was on briefs for Raxton Corporation, d/b/a Off the Rax.
Steven J. Henry, Boston, Mass., with whom John F. McKenna, and Cesari & McKenna, Boston, Mass., were on briefs for Anania Associates, Inc., d/b/a Off the Rack.
Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.
These cross-appeals constitute a second round in this litigation centering on competing trademark rights in Massachusetts. The factual background of this litigation is set forth at length in our prior opinion, Raxton Corp. v. Anania Assoc., Inc., 635 F.2d 924 (1st Cir. 1980).
Plaintiff ("Rax") sells women's clothing at a discount store called "Off the Rax" in the vicinity of Norwood, Massachusetts. Defendant ("Rack") sells men's clothing at a discount store called "Off the Rack" in Brockton, Massachusetts. Rax opened stores in New Jersey and Illinois in September, 1978, and in Massachusetts in August, 1979. Rack opened its Massachusetts store in April, 1979.
In July, 1979, Rax sued Rack, alleging false designation of origin, false description, and false representation in violation of 15 U.S.C. § 1125(a) (Section 43(a) of the Lanham Act), as well as trademark infringement and unfair competition under Massachusetts common law. Rack countersued on essentially the same grounds. The district court ruled that Rax's Massachusetts activities before August, 1979, were insufficient to establish trademark rights, but that Rax should nonetheless prevail under the doctrine of the "zone of natural business expansion". On appeal, we reversed. We held that the "natural expansion" doctrine is no more than a misnomer for a legitimate concern that subsequent trademark users not be allowed to trade on the preexisting good will of others. We further held that such concerns were irrelevant here, since Rack adopted its name in good faith and Rax had established no prior use of or reputation for the name in Massachusetts. We remanded the case to the district court for further consideration of Rack's counterclaim. The district court heard further arguments and issued an injunction in Rack's favor. Both sides appeal.
Rax argues two points on appeal. First, it contends that the initial district court proceeding did not rule on who had the prior use in Massachusetts, that we did not make such a ruling on appeal, and that the district court's finding on remand that Rack had the prior use is not supported by the evidence. Second, Rax contends that it is entitled to prevail because Massachusetts is part of its natural zone of "impansion". Without intending to demean conscientious professional effort we conclude that the first is ingenuous (or the reverse), the second ingenious, and neither has merit.
Rax's argument that the initial district court proceeding did not decide who had the prior use in Massachusetts is simply wrong. In its Memorandum of Decision dated January 21, 1980, the court stated as follows:
"Plaintiff (Rax) ... did not advertise its mark Off the Rax in Massachusetts until August 7, 1979, in preparation for opening the warehouse store to the public, nor did it sell to the general public in Massachusetts until that store opened.
....
"Defendant (Rack) made its first sale on March 15, 1979. Its store opened on April 2, 1979....
....
(Emphasis added.)
The italicized portions clearly express two conclusions of the district court: (1) Rack's sale and store opening in March and April were legally significant uses for purposes of establishing priority; (2) Rax's first legally significant use for such purposes was its public sale in August.
Rax is technically correct in stating that the court's conclusion regarding the zone of natural expansion kept its analysis of prior use from being a "necessary finding" as that term is used in determining the scope of collateral estoppel. See Block v. Commissioners, 99 U.S. 686, 693, 25 L.Ed. 491 (1878); Wright, Miller & Cooper, Federal Practice and Procedure § 4421 (1981). The court could have justified its conclusion without discussing the issue. But that fact is irrelevant here, where we are concerned not with estoppel in collateral proceedings but with waiver of an issue during the course of a single lawsuit. For such purposes, the question is not what the trial court had to find, but what it did find.
In its first decision, the trial court thought carefully about who had the prior use and presented its conclusions on the record. In so doing, it was by no means offering conclusions on irrelevant questions. The point was fully litigated, and if the court had been able to decide it in Rax's favor, it would have avoided the quagmire of "natural expansion" doctrine. Indeed, had it not presented any conclusion, we might have considered remanding the first appeal to request a finding, in order to ensure that our own entry into that morass was essential.
Nonetheless, in responding to the first appeal, Rax chose not to challenge the trial court's analysis of prior use. Instead it chose only to defend the court's analysis of natural expansion. Therefore, our earlier opinion accepted the district court's finding on prior use as a "given". 635 F.2d at 926. And in its petition for a rehearing, Rax did not challenge that acceptance.
Now, Rax blithely abandons its past silence and demands that we address the priority issue in this second appeal. First, it argues that, since the district court's initial ruling on prior use was technically unnecessary, our first opinion required that on remand the district court reexamine that ruling. Second, it argues in its reply brief that, whether or not the issue was still open on remand, we should consider it on this appeal because...
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