Scientific Applications, Inc. v. Energy Conservation Corp.

• Decision Date: 26 August 1977
• Docket Number: Civ. A. No. 77-1281A.
• Citation: 436 F. Supp. 354
• Parties: SCIENTIFIC APPLICATIONS, INC. and Atlanta Homefoamers, Inc. v. ENERGY CONSERVATION CORPORATION OF AMERICA, d/b/a the Homefoamers of Georgia.
• Court: U.S. District Court — Northern District of Georgia

436 F. Supp. 354

SCIENTIFIC APPLICATIONS, INC. and Atlanta Homefoamers, Inc. v. ENERGY CONSERVATION CORPORATION OF AMERICA, d/b/a the Homefoamers of Georgia.

Civ. A. No. 77-1281A.

United States District Court, N. D. Georgia, Atlanta Division.

August 26, 1977.

Steven J. Strelzik, Johnston & McCarter, George M. Hopkins, Newton, Hopkins, & Orsby, Atlanta, Ga., for plaintiffs.

Mark Weber, Resnick & Lawson, Lawrence D. Kupferman, Julius Alembik, Alembik & Kupferman, Atlanta, Ga., for defendant.

ORDER

RICHARD C. FREEMAN, District Judge.

This is an action for trademark infringement¹ under the Lanham Act, 15 U.S.C. § 1051, et seq., brought by Scientific Applications, Inc. hereinafter "SAI", an Iowa corporation and by its licensee, Atlanta Homefoamers, a Georgia corporation against The Homefoamers of Georgia, a Georgia corporation. All parties provide a service of installing building insulation of urea formaldehyde foam. The plaintiffs seek declaratory and injunctive relief and damages. The jurisdiction of the court is invoked pursuant to 15 U.S.C. § 1121 and 28 U.S.C. § 1338. The action is presently before the court on plaintiffs' motion for a temporary restraining order² or a preliminary injunction to prevent defendant: (1) from using SAI's service mark or a confusingly similar equivalent; (2) from listing defendant's service in the White and Yellow Pages and with directory assistance of the Southern Bell Telephone and Telegraph Company under such mark; (3) from selling its service of building insulation under such mark; and (4) from otherwise infringing upon plaintiffs' mark or otherwise unfairly competing with plaintiffs. Before proceeding to the merits of the plaintiffs' motion, a brief review of the facts and party allegations is warranted.

Plaintiff SAI has been engaged in the service of installing building insulation since December, 1972, and has provided that service under the service mark or name The Homefoamers since December 8, 1974. On February 3, 1976, the United States Patent and Trademark Office issued to plaintiff SAI Service Mark Registration No. 1,032,531 on the principal register for The Homefoamers and design.³ SAI alleges continued ownership of said registration and maintains that the registration is in full force and effect. SAI is also the holder of a state registration for The Homefoamers and Design, certified by the Secretary of the State of Georgia on August 19, 1977.

SAI has licensed 400-500 dealers across the country to use SAI's mark. Eight of these dealers are located in the Southeast: three in Georgia, three in Florida, and two in Alabama. Plaintiff Atlanta Homefoamers was incorporated as an SAI dealer on April 25, 1977, under the laws of the State of Georgia. Plaintiff SAI represents that its gross sales of urea formaldehyde foam and related services approximate $9,385,487.00 and that the gross income of its licensed dealers approximates $38,000,000.00.

SAI supports an advertising campaign which includes commercials on national television broadcasts, e. g., the NBC Today and Tonight programs, and advertisements in national periodicals, e. g., Business Week, Better Homes and Gardens, Mechanic Illustrated, and RSI (a trade publication). Plaintiff asserts that a total of $613,113.00 was spent on advertising during the last fiscal year and that over $1,000,000.00 is projected for this year. SAI contends that its national advertising has reached the Atlanta market.

The defendant began its operations in Georgia in March, 1977, and was incorporated under the laws of the State of Georgia on June 13, 1977. Defendant holds a certificate from the Secretary of the State of Georgia, granted June 7, 1977, for the use of the name Homefoamers of Georgia, Inc.

The defendant reports that its name was selected after viewing promotional materials of Isoschaum Foam Products, a supplier of insulating foam. Defendant asked Isoschaum for permission to use the term "Homefoamers" in its name and Isoschaum responded that it knew of no reason why defendant could not use the term. On July 20, 1977, the president of SAI notified and ordered Isoschaum upon the termination of their business relationship that authorization for Isoschaum's use of SAI's registered mark was revoked as of that date. Isoschaum was requested to forward to SAI the names of any other users of the mark which Isoschaum had authorized in order to prevent any further unauthorized use of SAI's registered mark. Plaintiff represents that Isoschaum acquiesced to its order of July 20, 1977.

A total of nearly $40,000.00 has been expended by the defendant for advertising and in setting up its service in Atlanta. Defendant's advertising has focused on the Atlanta market only and has included local television commercials, newspaper ads, and telephone directory listings.

The plaintiff SAI notified the Homefoamers of Georgia by letter dated June 30, 1977, and demanded that the defendant cease and desist using plaintiffs' registered service mark in any manner whatsoever. The defendant continued its advertising and sales of the home insulating service under the name of The Homefoamers of Georgia. On August 4, 1977, the plaintiffs filed the instant action. Defendant responded and has entered a five count counterclaim.⁴ The instant motion for a preliminary injunction was prompted by a letter dated August 12, 1977, to plaintiffs' counsel from an attorney for the Southern Bell Telephone and Telegraph Company explaining that because entries for the Atlanta Yellow Pages listings would be closed on August 26, 1977, and because the controversy persisted between the plaintiffs and the defendant over the right to use the term Homefoamers, Southern Bell had decided to list both parties, and not one to the exclusion of the other, in an attempt to avoid incurring any possible liability.

The traditional prerequisites of a preliminary injunction provide that the burden is on the plaintiffs to demonstrate: (1) a substantial likelihood of plaintiffs' success at a trial on the merits; (2) an immediate and real threat of irreparable injury to plaintiffs; (3) that the imminent harm to plaintiffs is greater than the harm to defendant if an injunction is imposed; and (4) that granting the injunction is in the public interest. Morgan v. Fletcher, 518 F.2d 236, 239 (5th Cir. 1975); Carling Brewing Co. v. Philip Morris, Inc., 277 F.Supp. 326, 334 (N.D.Ga.1967). These prerequisites will be reviewed seriatim by the court.

LIKELIHOOD OF SUCCESS ON THE MERITS

SAI has held Registered Service Mark No. 1,032,531 for The Homefoamers and Design since February 3, 1976. The Lanham Act provides:

A certificate of registration of a mark upon the principal register . . . shall be prima facie evidence of the validity of the registration, registrant's ownership of the mark, and of registrant's exclusive rights to use the mark in commerce in connection with the goods or services specified in the certificate, subject to any conditions and limitations stated therein.

15 U.S.C. § 1057(b). Plaintiffs' mark is entered on the principal register and bears no conditions or limitations.

To prove infringement the plaintiffs must show the likelihood of confusion of some accused mark with their registered mark, 15 U.S.C. § 1114(1)(a). Actual confusion is the most persuasive evidence of likelihood of present and future consumer confusion. World Carpets, Inc. v. Dick Littrell's New World Carpets, 438 F.2d 482, 489 (5th Cir. 1971); Professional Golfers Association v. Bankers Life & Casualty Co., 514 F.2d 665, 670 (5th Cir. 1975). The affidavit of plaintiff Atlanta Homefoamers' president, David Decker, reports the confusion of certain customers, including Mrs. Tidwell and Ms. Williams, who sought the defendant's service but telephoned plaintiffs' company by mistake. The defendant has asserted the lack of similarity between its name and plaintiffs' registered mark and design. However, the Fifth Circuit Court of Appeals instructs:

that while very little proof of actual confusion would be necessary to prove the likelihood of confusion, an almost overwhelming amount of proof would be necessary to refute such proof.

World Carpets, Inc., supra at 489.

The defendant thereupon contends that it is entitled to the rights and benefits of the term The Homefoamers because: (1) the defendant exercised prior use of the mark in the Atlanta area; (2) the defendant was unaware of plaintiffs' mark at the time of defendant's choice of a name; and (3) the plaintiffs' mark is not registrable.

Defendant's first contention of priority of use in the trading area emphasizes the specificity of defendant's service and advertising in the Atlanta metropolitan area as contrasted with plaintiffs' scattered dealerships and national advertising. Defendant contends that plaintiffs' advertising "only, at most, peripherally touched upon the Atlanta market. . . ." and that defendant was contracting for foam insulation installation one month before the plaintiff Atlanta Homefoamers was incorporated in Georgia. Defendant asserts that this priority of local use entitles it to use the mark within its established "reputation zone", the Atlanta trading area, and relies on J. A. Dougherty's Sons v. Kasko Distillers Products Corp., 35 F.Supp. 561 (E.D.Pa.1940) and the District Court opinion in Wiener King, Inc. v. Wiener King Corp., 407 F.Supp. 1274 (D.N.J.), reversed and remanded, 546 F.2d 421 (3d Cir. 1976), cert. denied, 430 U.S. 916, 97 S.Ct. 1328, 51 L.Ed.2d 594 (1977).

Defendant's claim of entitlement does not state the present law of trademark rights in this circuit and its reliance on the District Court decisions is misplaced.⁵ The decision in J. A. Dougherty's Sons, supra, antedates the Lanham Act of 1946. The language and legislative history⁶ of the Act reflect a congressional intent "to provide nationwide protection for expanding businesses." John R. Thompson Co. v. Holloway, 366 F.2d 108, 115 (5th Cir. 1966).

The Lanham...