Sports Authority, Inc. v. Prime Hospitality Corp.

• Decision Date: 23 July 1996
• Docket Number: D,No. 145,145
• Parties: The SPORTS AUTHORITY, INC., Plaintiff-Appellant, v. PRIME HOSPITALITY CORP., Defendant-Appellee. ocket 95-7161.
• Court: U.S. Court of Appeals — Second Circuit

Page 955

89 F.3d 955

39 U.S.P.Q.2d 1511

The SPORTS AUTHORITY, INC., Plaintiff-Appellant, v. PRIME HOSPITALITY CORP., Defendant-Appellee.

No. 145, Docket 95-7161.

United States Court of Appeals, Second Circuit.

Argued Oct. 19, 1995.

Decided July 23, 1996.

Ralph T. Rader, Bloomfield Hills, MI (Dykema Gossett, PLLC, Bloomfield Hills, MI, Jonathan I. Blackman, Cleary, Gottlieb, Steen & Hamilton, New York City, on the brief), for Plaintiff-Appellant.

Lawrence O. Kamin, New York City (Gregory L. Harris, Esther Berkowitz-Caballero, Wilkie Farr & Gallagher, New York City, on the brief), for Defendant-Appellee.

Before MESKILL, MAHONEY, and WALKER, Circuit Judges.

WALKER, Circuit Judge:

Plaintiff The Sports Authority, Inc. ("TSA") brought this action for violations of the Lanham Act, 15 U.S.C. § 1051 et seq., and New York's anti-dilution statute, N.Y. Gen. Bus. Law § 368-d, against defendant Prime Hospitality Corp. ("Prime") in the United States District Court for the Southern District of New York. TSA alleged that Prime's use of the words "sports authority" in the name of its sports-oriented restaurants and in its advertising and signs both constituted an infringement of and diluted the value of TSA's registered trademarks. Finding that there were no genuine issues of material fact remaining for a trier of fact to decide, the district court (John S. Martin, Jr., District Judge ) granted summary judgment to Prime and dismissed the action. See Sports Auth., Inc. v. Prime Hospitality Corp., 877 F.Supp. 124 (S.D.N.Y.1995). Because we believe that genuine issues of material fact exist, we vacate the district court's order and remand for further proceedings.

BACKGROUND

TSA is a sporting goods and apparel retailer with extensive operations in various parts of the United States, including the greater New York area, and is the owner of three federally registered trademarks: No. 1,527,526, a service mark for the words "The Sports Authority"; No. 1,529,035, a service mark for TSA's logo; and No. 1,821,430, a trademark for the words "The Sports Authority." TSA undertakes substantial advertising to reach potential customers, including television and radio commercials, advertisements in various publications, roadside billboards, and signs in various sports arenas. The result of this advertising, accordingly to TSA, has been considerable exposure throughout the greater New York area.

Prime owns and operates hotels throughout the United States. As part of this business, Prime runs eight sports-related restaurants at its hotels under the name "Sports Authority Food, Spirits & Sports," mainly in the greater New York area. The first of these opened in April 1991 at Prime's Ramada Inn located in Fairfield, New Jersey. Prime advertises these restaurants through a number of mediums, including newspaper, radio, and signs.

In September 1991, TSA informed Prime that TSA recently had become aware of Prime's use of the name "Sports Authority" for Prime's restaurants and TSA asked that Prime cease and desist from using this name. Three days later, Prime responded that, in light of the use of similar marks by other parties, it did not believe that its use infringed on TSA's marks.

Soon thereafter, Prime conducted a trademark search for the mark "Sports Authority" and confirmed that TSA had registered both mark no. 1,527,526 and mark no. 1,529,035. In March 1992, Prime filed an application for a trademark for its logo with the United States Patent and Trademark Office ("PTO"). The PTO initially refused registration, but after Prime clarified that it "uses a design and includes 'Food, Spirits & Sports' in its mark," the PTO published the mark in the Official Gazette of the PTO. Thereafter, TSA filed an opposition to the mark.

In July 1993, TSA filed this action in the district court alleging violations of both the Lanham Act and New York state law. In November 1993, the PTO suspended the opposition proceedings in light of this action. In July and August 1994, following discovery, the parties cross-moved for summary judgment. The district court, applying the balancing

                test of  Polaroid Corp. v. Polarad Elecs.  Corp., 287 F.2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961), concluded that "the balance [of the factors] does not support TSA's claim of trademark infringement" and dismissed the Lanham Act claims.  Sports Auth., 877 F.Supp. at 130.   The court also dismissed the state law dilution claims because its findings were "inconsistent with such a showing."  Id. at 131.   TSA now appeals
                

DISCUSSION

It is well-settled that in ruling on a motion for summary judgment, a

judge must ask himself not whether he thinks the evidence unmistakably favors one side or the other but whether a fair-minded [trier of fact] could return a verdict for the [non-movant] on the evidence presented. The mere existence of a scintilla of evidence in support of the [non-movant's] position will be insufficient; there must be evidence on which the [trier of fact] could reasonably find for the [non-movant].

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). Furthermore, a district judge must view the evidence in the light most favorable to the non-moving party and must draw all inferences in favor of that party. See Hanson v. McCaw Cellular Communications, Inc., 77 F.3d 663, 667 (2d Cir.1996). When reviewing the grant of a summary judgment motion, we must determine whether "there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson, 477 U.S. at 250, 106 S.Ct. at 2511.

I. Lanham Act Claims.

To succeed on its Lanham Act claims, TSA must show that it has a valid mark that is entitled to protection under the Lanham Act and that Prime's actions are likely to cause confusion with TSA's mark. Gruner + Jahr USA Publishing v. Meredith Corp., 991 F.2d 1072, 1075 (2d Cir.1993); see 15 U.S.C. §§ 1114(1) & 1125(a)(1)(A). In order to succeed a plaintiff does not have to show necessarily that consumers would believe that the defendant's goods or services are from the same source as those of the plaintiff. A defendant may also be liable under the Lanham Act where the defendant's actions are "likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association" of the defendant's goods or services with those of the plaintiff. 15 U.S.C. § 1125(a)(1)(A).

TSA has valid registrations for all of its marks, so the issue for determination is whether TSA has demonstrated a likelihood of confusion, and we are guided in this inquiry by the Polaroid balancing test. There we set forth eight nonexclusive factors to be considered in deciding whether a likelihood of confusion exists: 1) the strength of the plaintiff's mark, 2) the degree of similarity between the plaintiff's and the defendant's marks, 3) the proximity of the products, 4) the likelihood that the plaintiff will "bridge the gap" between the two products, 5) actual confusion between the two marks, 6) the defendant's good faith in adopting its mark, 7) the quality of the defendant's product(s), and 8) the sophistication of buyers of the plaintiff's and defendant's goods or services. Polaroid, 287 F.2d at 495; see Gruner + Jahr, 991 F.2d at 1077. Summary judgment is appropriate where "the undisputed evidence would lead only to one conclusion" under the Polaroid test. Cadbury Beverages, Inc. v. Cott Corp., 73 F.3d 474, 478 (2d Cir.1996). Our task in this appeal from a grant of summary judgment to the defendant "is to determine whether any reasonable trier of fact could conclude that confusion is likely." Id. We therefore examine each of the Polaroid factors in turn and determine "whether the parties' factual presentations raise a genuine issue of fact." Id. at 479.

1. Strength of the Mark.

Although TSA has alleged in its submissions that it is the owner of three marks, it is the registration of the words "The Sports Authority" (No. 1,527,526) that is most pertinent to this action. In determining the strength of this mark, we look at "its tendency to identify the goods [or services] sold under the mark as emanating We have set forth four categories to gauge the extent to which a mark indicates a source of goods or services: 1) generic, 2) descriptive, 3) suggestive, and 4) arbitrary or fanciful. W.W.W. Pharmaceutical Co. v. Gillette Co., 984 F.2d 567, 572 (2d Cir.1993). Generic marks are not entitled to protection under the Lanham Act, while arbitrary marks will almost always be seen as strong marks. Id.; Cadbury Beverages, 73 F.3d at 479. When determining whether either a suggestive or descriptive mark is a strong one for purposes of the Polaroid inquiry, we look to the secondary meaning that the mark has acquired, because the ultimate issue to be decided is the mark's " 'origin-indicating quality,' in the eyes of the purchasing public." Lang v. Retirement Living Publishing Co., 949 F.2d 576, 581 (2d Cir.1991) (quoting McGregor-Doniger, 599 F.2d at 1131).

from a particular, although possibly anonymous, source." McGregor-Doniger Inc. v. Drizzle Inc., 599 F.2d 1126, 1131 (2d Cir.1979). ¹

The district court found that TSA's mark was descriptive and therefore required secondary meaning to be protected. Sports Auth., 877 F.Supp. at 128. The district court found that such secondary meaning had been acquired through the mark's uncontested use for five years. Id. We agree with the district court that TSA's mark is strong for the purposes of the Polaroid inquiry on Prime's summary judgment motion. Gruner + Jahr, 991 F.2d at 1078 (stating that "we think it now established that the strength of a descriptive mark made incontestabl[e] ... by registration for more than five years is a matter also properly considered by a trial court on the issue of likelihood of confusion").

Prime argues that we must look...