Sears, Roebuck and Co. v. Allstate Driving School, Inc.
| Decision Date | 05 June 1969 |
| Docket Number | No. 64-C-1105.,64-C-1105. |
| Citation | 301 F. Supp. 4 |
| Parties | SEARS, ROEBUCK AND CO., and Allstate Insurance Company, Plaintiffs, v. ALLSTATE DRIVING SCHOOL, INC., Defendant. |
| Court | U.S. District Court — Eastern District of New York |
COPYRIGHT MATERIAL OMITTED
Sprague, Dwyer, Aspland & Tobin, Mineola, N. Y., for plaintiffs, John E. Regan, Burton T. Ryan, New York City, of counsel.
Nicholas A. Clemente, Brooklyn, N. Y., for defendant.
Plaintiffs seek an order "permanently enjoining the defendant from using the name `Allstate' or any imitation thereof, in connection with its business." The first cause of action is brought by both plaintiffs. Relief is requested under the Lanham Act, 15 U.S.C. § 1114(1),1 for infringement of plaintiffs' marks and for common law unfair competition. The court has jurisdiction to hear these claims by virtue of 28 U.S.C. § 1338(a), (b).2 The second cause of action is brought solely by plaintiff Allstate Insurance Company (Allstate Insurance). Injunctive relief is sought under section 368-d of the New York General Business Law, McKinney's Consol.Laws, c. 20.3 Jurisdiction to hear this claim is based on diversity of citizenship between the parties, 28 U.S.C. § 1332.
Plaintiff Sears, Roebuck and Co. (Sears) adopted the name "Allstate" for use in connection with the sale of automobile tires in 1926 following a contest in which participants proposed names for Sears' new tire. It has since extended the name to numerous other automobile accessories (approximately 4000), and has limited the name to automotive related products. Beginning in 1927, Sears registered the name "Allstate" with the United States Patent Office. In the margin is a list of the "Allstate" trademark registrations owned by Sears as of November 7, 1963.4
Plaintiff Allstate Insurance is a wholly owned subsidiary of Sears. Since its incorporation in 1931 it has used the name "Allstate" in its corporate name and in connection with the sale of automotive and other lines of insurance. It has registered with the United States Patent Office the name "Allstate" and several slogans incorporating that name as indicated in the margin.5 In addition, it has registered the name "Allstate" and various pictures with the Secretary of State of New York as indicated in the margin.6
Sears sells its products through a chain of retail stores and its nationally prominent catalog. In its Eastern Territory (Maine to Pittsburgh and south to Virginia), Sears has 235 retail stores, including 12 within the four counties of Long Island (Kings, Queens, Nassau and Suffolk). National sales for tires marketed with the name "Allstate" presently yield approximately $200,000,000, and for batteries, $65,000,000. The sales volume in this territory is $60,000,000 for tires and $15-18,000,000 for batteries, representing 60% and 14% respectively of the total sales volume of products marketed under the trade name "Allstate" in the Eastern Territory. Sears does approximately $10,000,000 volume in automotive products, so trademarked, in the Long Island area alone.
Sears spends large sums advertising its Allstate line of products, mostly in newspapers and through distribution of the Sears catalog. In 1966 and 1967 Sears spent $4,000,000 and $4,500,000 respectively for newspaper advertising in its Eastern Territory. The cost of such advertising has been substantially the same since 1960. The Sears catalog presently enjoys a circulation of over 28,000,000. In 1960 the circulation was more than 9,000,000. In that year, 67 pages of the catalog were devoted to automotive products marketed under the appellation "Allstate." The 1960 catalog, as it related to automotive advertising, was typical of the ten year period prior to 1960. For the past six years the catalog averaged 97.5 pages dealing with Allstate automotive products.
Allstate Insurance is now a multiline carrier writing all forms of property insurance. It has been actively engaged in writing automobile insurance in New York State since May 1, 1936 and in 1952 added other lines. However, most of its total premium volume is on automobile insurance (90% until 1958, 83.2% in 1966). It was ranked second, nationally, in premium volume for automobile insurance for the year ending 1966, and first in New York State for that year. Its Eastern Zone (comprising the New England states and the states of New York, New Jersey, Pennsylvania and Delaware) presently accounts for $277,000,000 in insurance premiums. 70% of which is for automobile insurance covering 1,500,000 automobiles. At the trial, it estimated its annual advertising expenses (for advertising on local and network television, radio, newspapers and magazines) for the years 1963-1966 based upon the percentage of the population of the "New York City area" residing in the Long Island area. It estimated the population of the Long Island area at 60.2% of that of the "New York City area" and allocated to the Long Island area 60.2% of its total cost of $2,323,473 for advertising in the "New York City area" during that period.
The plaintiffs rely heavily on the sampling survey (hereinafter referred to) and the activities of Allstate Insurance in the field of driver education, in their attempt to support their contention that the business of the defendant is likely to cause confusion in the minds of those who avail themselves of the services of the defendant.7
Since 1952 Allstate Insurance has been giving discounts on automobile insurance premiums to youngsters who successfully complete a driver education course at their local high schools. The only requirement appears to be that the course be approved by the appropriate state agency. The record indicates that other insurance companies likewise offer such discounts. There is nothing before the court which indicates the amount of publicity given this program by Allstate Insurance.
In 1952 Allstate Insurance chartered a nonprofit organization, The Allstate Foundation, in order to channel funds into various safety-related activities. All funds received by the Foundation emanate from Allstate Insurance. So far, the Foundation has contributed over $1,000,000 to various colleges which use the funds to provide scholarship grants for college-level courses in driver education given to high school driver education instructors. The hope is that, after such a course, these high school instructors will be better qualified to give a driver education course to their students. A total of forty colleges and universities have received grants under this program and, since 1955, an average of thirty seven colleges and universities have participated each year. Approximately 12,700 high school teachers have received scholarship grants originating from this Foundation and they, in turn, have taught over 2,000,000 students.
Apparently there is no extensive publicity program connected with the scholarship grants. Annual news releases are prepared by Allstate Insurance for national distribution which list the participating colleges for a particular year. In addition, some of the colleges submit their own news releases to local newspapers. While some high schools publicize that their teachers were trained by college courses paid for by this program, it is not a common practice for them to do so. The form of application for a grant by a high school teacher to take the course states that the scholarship funds have been provided by the Allstate Foundation. Allstate Insurance is not identified as the source from which the Foundation receives its funds. Apparently there is some concern that such publicity might adversely affect the tax-exempt status enjoyed by the Foundation.
A slightly more publicized driver education activity, sponsored by Allstate Insurance and identified with it rather than the Allstate Foundation, is the Good Driver Trainer Program. Allstate Insurance derives no profit from the production or sale of a series of eleven films designed to aid in the driving instruction of high school students. The films are used by many high schools in conjunction with the Link Driver Simulator, a machine designed to reproduce in the classroom (when coordinated with the films) simulated driving situations. These trainers are not designed, manufactured or furnished by either plaintiff. The films credit their production to the Training Division of Allstate Insurance Company. Two hundred and twenty seven schools use the Link Simulator and the Allstate Insurance films. Thirteen schools use them in New York State, including five in the Long Island area. Eight to ten thousand brochures which identify Allstate Insurance with this program, are distributed annually upon request and at trade shows, explaining the nature of the films to prospective users. The interest which Allstate Insurance has in driver education is publicized by advertisements in national magazines and trade publications which urge communities to develop high school programs using the Link Simulator and the Allstate Insurance films.
Numerous pamphlets dealing with safety in driving are distributed to high schools each year for use by high school students in driver education courses. These pamphlets have been cleared by the National Education Association for use in schools as free from commercial propaganda. However, the pamphlets are clearly identified as having been published by Allstate Insurance.
Allstate Insurance frequently sends representatives to meet with governmental agencies concerned with improving driver education programs in their respective states and with various civic groups, in order to alert them to the importance of community action in the field of driver education. In addition, it maintains a limited program whereby it undertakes to train drivers who are working for companies whose...
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