Resource Developers, Inc. v. Statue of Liberty-Ellis Island Foundation, Inc.

Decision Date11 February 1991
Docket NumberNo. 590,LIBERTY-ELLIS,D,590
Citation926 F.2d 134
Parties, 17 U.S.P.Q.2d 1842 RESOURCE DEVELOPERS, INC., Plaintiff-Appellant, v. The STATUE OFISLAND FOUNDATION, INC., Hamilton Projects, Inc., Dettra Flag Company, Inc. and Harbor Festival Foundation, Defendants-Appellees. ocket 90-7585.
CourtU.S. Court of Appeals — Second Circuit

Harry E. Youtt (I. Michael Bak-Boychuk, Long Beach, Cal., of counsel), for plaintiff-appellant.

Francis D. Landrey (Alexander H. Schmidt, Proskauer Rose Goetz & Mendelsohn, New York City, of counsel), for defendants-appellees.

Before FEINBERG, TIMBERS and MINER, Circuit Judges.

MINER, Circuit Judge:

Appellant Resource Developers, Inc. ("Resource") appeals from a summary We reject the arguments advanced by Resource and affirm the summary judgment entered in favor of Dettra.

judgment entered in the United States District Court for the Southern District of New York (Haight, J.), dismissing its claims against Dettra Flag Company ("Dettra"), asserted under section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) (1988), for unfair competition and dismissing its pendent state law claim against Dettra for inducing the breach of a licensing agreement between the Statue of Liberty-Ellis Island Foundation ("Foundation") and Resource. On appeal, Resource contends that the district court misapplied the law because it applied legal principles pertaining to product infringement claims instead of the legal standards for false advertising. Resource also argues that summary judgment was inappropriate because the evidence supported a finding that Dettra intentionally sought to convey the false impression that its flags were officially endorsed by the Foundation. Finally, Resource maintains that the district court erred in requiring it to prove actual consumer confusion in order to succeed in an action for money damages. Resource argues that it presented evidence of intent to deceive and therefore a showing of actual consumer confusion was unnecessary.

BACKGROUND

Resource sells to retail stores items such as flags, banners and pennants. Dettra has been manufacturing and distributing flags and similar items since 1901. The Statue of Liberty-Ellis Island Foundation was organized for the sole purpose of raising funds from the public for the restoration of the Statue of Liberty. To that end, the Foundation designed a logo, a highly stylized portrayal of the neck, head and crown of the Statue of Liberty, which was registered under the federal trademark and copyright laws. Additionally, the Foundation entered into licensing agreements with various licensees who, for consideration or royalty payments, obtained the right to publicly represent the Foundation and to use its symbols and marks on goods covered by the licensing agreement. The licensing program was coordinated by Hamilton Products, Inc. ("Hamilton") as agent for the Foundation. In the spring of 1984, Resource entered into negotiations with the Foundation culminating in the signing of a licensing agreement. As an official licensee, Resource was entitled to use exclusively the official logo of the 1986 Statue of Liberty commemoration for the retail marketing of flags, pennants and banners.

On August 17, 1984 representatives of Resource, including John Boyko, general counsel of Resource, met with William Spangler, president of Dettra, to discuss the possibility of retaining Dettra as fabricator of Resource's commemorative flags, banners and pennants. During that meeting, Boyko showed Dettra representatives various flag, banner and pennant designs that it was contemplating producing. Spangler and Dettra's vice president, Joe McIntyre, advised Resource that flags were more marketable than the other two items. Apparently recognizing the country of origin of the Statue of Liberty, McIntyre suggested a flag design with a tri-color background resembling the French flag. The parties agreed that Dettra would produce sample flags to be presented to Foundation officials for approval.

There was a second meeting on September 6, 1984 during which Boyko examined the sample flags. Boyko informed the Dettra representatives that he would contact them after receiving authorization from the Foundation to begin production of the proposed flag. Because no further communication was received from Resource, Dettra sent a letter to Resource on October 15, 1984 explaining that it could not manufacture the flags until it received authorization. In November, Dettra learned that Resource had obtained its flags from another manufacturer.

Prior to learning that Resource had retained another flag manufacturer, Dettra had mailed on October 9, 1984 a "Dettragram," a bi-annual advertising circular, to about 4,500 of its regular customers. On the top left corner of one page of the Dettragram was a picture of the Statue of As a manufacturer of U.S. flags and other symbols of freedom, Dettra Flag Company is specially [sic] proud to have made a contribution to this noble cause. Join us in this effort to help "KEEP THE TORCH OF LIBERTY LIT", please send your contribution today.

                Liberty superimposed on the American flag.  To the right of the Statue was the message, "The Famous Lady in the Harbor Needs Our Help."    Just below the message was a printed contribution form addressed to the Foundation.  The following paragraph appeared to the left of the contribution form
                

In late February of 1985, Dettra sent a letter to between 50 and 100 of its customers, announcing the creation of its own liberty flag. The letter, and the attached price list, provided that Dettra would contribute to the Foundation ten percent of the net proceeds received from sales of its liberty flag. An amended price list, dated March 1, 1985, provided that although Dettra's

LIBERTY FLAGS [were] not officially endorsed by the Statue of Liberty-Ellis Island Foundation, [it would] contribute 10% of the NET PRICE of all LIBERTY FLAG sales to the Foundation.

Dettra's liberty flag contained a realistic representation of the upraised arm and torch, crown and upper body of the Statue of Liberty against a tri-color background.

Upon learning of Dettra's campaign on behalf of the Foundation and its restoration efforts, the Foundation wrote to Dettra, complaining that Dettra "falsely implie[d] an affiliation between [the two] organizations" and ordering Dettra to cease the unauthorized activity. Spangler wrote the Foundation, explaining that its efforts were "genuine and well intentioned" and assuring the Foundation that it would make "no further reference to the 'Foundation' " in any forthcoming literature. Dettra mailed to the Foundation a check, dated April 12, 1985, in the amount of $750, representing the ten percent of the proceeds from sales of its liberty flags promised in its February 1985 letter. The check was deposited by the Foundation through an affiliated organization and was followed up by a letter thanking Dettra for its contribution.

Resource brought this action in the Southern District of New York against several defendants, including the Foundation, Hamilton and Dettra. Resource alleged that Dettra made false representations with knowledge of the deceptive character of the representations and intent to deceive its customers. Resource also alleged that Dettra manufactured flags substantially like those produced by Resource. In its prayer for relief in the action against Dettra, Resource sought money damages for the loss of sales occasioned by Dettra's infringing flags and by Dettra's false advertising scheme. Dettra moved for summary judgment.

In its memorandum opinion and order dated May 16, 1990, the district court concluded that summary judgment for Dettra was warranted on the infringement claim because the only meaningful resemblance between the two logos was that both "evoke" the Statue of Liberty. After noting that the Statue is a generic mark and that Dettra thus is entitled to use it, the court found that Dettra's depiction of the Statue was not substantially similar to the Foundation's logo and that no likelihood of confusion resulted from it. Secondly, after noting that, in a section 43(a) action for money damages, the plaintiff bears the burden of proving actual consumer confusion, the court concluded that the record was devoid of any evidence of actual confusion and therefore summary judgment was appropriate on that issue. Finding no reason for delay, pursuant to Fed.R.Civ.P. 54(b), the court directed the entry of judgment on all claims pleaded against Dettra. Resource appeals from the judgment so entered. On consent of the parties, the action against the other defendants was stayed pending disposition on appeal.

DISCUSSION

On appeal from a summary judgment, in determining whether there are genuine issues of material fact, we review the record de novo. Twin Laboratories v. Weider Resource initially argues that it is entitled to a reversal because the district court applied incorrect legal standards. Coca Cola Co. v. Tropicana Prods., Inc., 690 F.2d 312, 316 (2d Cir.1982). Resource asserts that the district court incorrectly viewed the case as presenting a product infringement claim when it principally presents a false advertising claim. This argument is somewhat disingenuous, since Resource alleged in its complaint that "Dettra began offering to the public flags and pennants substantially like those licensed by [Resource]." It may be true that Resource intended its principal claim to be the alleged false advertising by Dettra, but it cannot be said that Resource made no claim of product infringement in its complaint. Resource argues the product infringement issue on this appeal, in any event. The district court properly viewed the complaint, on a fair reading, as presenting both product infringement claims and false advertising claims; moreover, the court analyzed each claim under the appropriate legal standard.

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