Tally-Ho, Inc. v. Coast Community College Dist.

• Decision Date: 06 December 1989
• Docket Number: No. 88-5594,TALLY-H,INC,88-5594
• Citation: 889 F.2d 1018
• Parties: , 13 U.S.P.Q.2d 1133 , A Florida Corporation, Plaintiff-Counter-Defendant-Appellant, v. COAST COMMUNITY COLLEGE DISTRICT, Defendant-Counter-Plaintiff-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1018

889 F.2d 1018

58 USLW 2392, 13 U.S.P.Q.2d 1133

TALLY-HO, INC., A Florida Corporation, Plaintiff-Counter-Defendant-Appellant, v. COAST COMMUNITY COLLEGE DISTRICT,

Defendant-Counter-Plaintiff-Appellee.

No. 88-5594.

United States Court of Appeals, Eleventh Circuit.

Dec. 6, 1989.

As Amended Jan. 19, 1990.

Bret Shawn Clark, Miami Shores, Fla., for plaintiff-counter-defendant-appellant.

Richard B. Adams, Adams, Hunter, Angones, Adams, Adams & McClure, Miami, Fla., Harold L. Novick, Larson & Taylor, Douglas E. Jackson, S. Arlington, Va., for defendant-counter-plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before CLARK and COX, Circuit Judges, and HENDERSON, Senior Circuit Judge.

PER CURIAM:

Appellant Tally-Ho, Inc. appeals an order denying it preliminary injunctive relief on its complaint of trademark infringement and unfair competition against Coast Community College District under the Lanham Act, 15 U.S.C.A. Sec. 1051 et seq. (1976), and FLA.STAT.ANN. Sec. 495.011 et seq. (West 1988). Because the district court misapplied the law when it denied Tally-Ho's motion for a preliminary injunction we exercise our broad powers of review, see E. Remy Martin & Co. v. Shaw-Ross Int'l Imports, Inc., 756 F.2d 1525, 1529 (11th Cir.1985), and reverse and remand.

I. BACKGROUND

A. Facts

Tally-Ho, Inc. (Tally-Ho) produces and distributes a program entitled "You and the Law" that has been broadcast in South Florida since 1984 on a public television station, WLRN, and on a cable television system. The program is hosted by a moderator who discusses with guests topics of current interest in the law. Tally-Ho registered its "You and the Law" trademark with the State of Florida on December 20, 1985, and its certificate indicates the mark was first used in January, 1984.

Coast Community College District (Coast) is one of the nation's largest producers and distributors of educational telecourses. It distributes "You and the Law," a series of twenty-six videotaped lectures and discussions concerning various legal issues and concepts. Coast produced and copyrighted ¹ this series in 1980 and 1981. Coast, however, has not registered the "You and the Law" trademark under state or federal trademark statutes. Following negotiations, in February 1984, the State of Florida and Coast entered a licensing contract which gave the state the right to use, broadcast and distribute Coast's video lecture series. The license also permitted the state to duplicate and distribute the series by any means. The state included the series in a list of video courses available to community colleges. The video series was first shown during the first week of January 1984. Use of the telecourse was very limited. The video series was shown only at Daytona Beach Community College, Valencia Community College and Florida Keys Community College. None of these uses were in the same viewer market in which Tally-Ho's programming was shown.

Tally-Ho became aware of Coast's video series when a local community access cable channel, MDTV, advertised that it was going to present the Coast "You and the Law" series in upcoming broadcasts. MDTV acquired the Coast series from the state after learning about it from WLRN. Coast had not previously broadcast its courses over any television systems anywhere in Florida.

B. District Court Proceedings

In March 1988, Tally-Ho filed a two-count complaint for declaratory and permanent injunctive relief and for damages under federal and state trademark and unfair competition laws. ² On June 1, 1988, Coast answered and filed a four-count counterclaim. Coast also sought declaratory and permanent injunctive relief and damages for Tally-Ho's alleged violation of federal and state unfair competition laws. ³ In June 1988, Tally-Ho filed a motion seeking preliminary injunctive relief to prevent Coast from broadcasting its course to the general public.

Following an evidentiary hearing, the district court issued an order denying Tally-Ho's motion for a preliminary injunction. The court held that Coast was the first to "use" ⁴ the mark in Florida based on an October 4, 1983, internal Florida Department of Education memorandum indicating approval for a proposed contract with Coast. The district court rejected Tally-Ho's argument that Coast relinquished its right by granting to the Department of Education a "naked license" to use the mark. The court also rejected Tally-Ho's arguments that Coast's prior use was in a substantially different geographic market than the market occupied by Tally-Ho, and that Coast could not support its claim of superior right because it could not show that its "You and the Law" telecourse was in direct competition with Tally-Ho's program. The court specifically held that Coast's "prior" educational use of the mark gives it the right to use the mark in the "related" broadcast market and that Tally-Ho was not entitled to a preliminary injunction because "the court does not find [Tally-Ho] to have a substantial likelihood of success on the merits." ⁵

Tally-Ho filed a notice of appeal and moved for a preliminary injunction pending appeal. The district court granted the motion in part and enjoined Coast's broadcast of its program for twenty days. After this court denied Tally-Ho's motion to extend the injunction, Coast and the Dade County Attorney informed Tally-Ho that the broadcast of the telecourse would begin on July 25, 1988. Tally-Ho filed a motion for reconsideration to this court for an injunction pending appeal, which was denied.

II. DISCUSSION

The sole issue on appeal is whether the district court erred in denying Tally-Ho's motion for a preliminary injunction. To prevail on its motion for a preliminary injunction, Tally-Ho has the burden of proving: (1) a substantial likelihood of success on the merits; (2) a substantial threat of irreparable injury; (3) its own injury outweighs the injury to Coast; and (4) the injunction would not disserve the public interest. Canal Authority of the State of Florida v. Callaway, 489 F.2d 567, 572 (5th Cir.1974). The district court held that Tally-Ho failed to meet its burden on each of these elements.

We review the district court's denial of a preliminary injunction to determine whether that court abused its discretion. Remy Martin, 756 F.2d at 1529. However, if the trial court has misapplied the law, we must review and correct the error without deference to that court's determination of the legal issue. Id. Factual findings will be reversed only if clearly erroneous. Id. Our review of the district court opinion reveals two errors of law. First, the district court erred when it determined that Coast was not required to show actual competition with Tally-Ho in order to successfully assert a prior use defense. Second, the district court ignored the geographic component of trademark protection that gives Coast priority only in limited geographic and product markets in which it did not compete with Tally-Ho.

At the outset, it is important to note that neither Tally-Ho nor Coast has registered the "You and the Law" trademark under the federal registration system. Tally-Ho has registered its mark under the Florida statute while Coast has not filed on any registry. Thus, neither party can claim nationwide protection under the federal statute. Instead, Coast has only common law trademark protection while Tally-Ho has common law trademark protections in addition to those provided under the Florida statute. As discussed below, because the Florida statute provides little additional protection beyond that provided at common law, this action is almost exclusively governed by common law trademark principles.

A. Common Law Trademark Principles

Because of the importance of common law trademark principles under Florida's statutory system, we first identify the basic concepts necessary to determine the extent of Coast's common law trademark rights. Under the common law, trademark rights are appropriated only through actual prior use in commerce. United States v. Steffens, 100 U.S. 82, 25 L.Ed. 550 (1879); J. McCarthy, Trademarks and Unfair Competition Sec. 16:1, at 720 (2d Ed.1984). Trademark ownership is always appurtenant to commercial activity. Thus, actual and continuous use ⁶ is required to acquire and retain a protectible interest in a mark.

Ownership of a distinctive mark is further limited by priority of use. The first to use a mark on a product or service in a particular geographic market, the senior user, acquires rights in the mark in that market. Junior Food Stores of W. Fla. v. Junior Food Stores, Inc., 226 So.2d 393, 396 (Fla.1969). Junior users, who subsequently use the same or similar mark on similar products or services, may also establish common law rights to perhaps even the same mark provided there is no competitive overlap with the senior user. Id. at 398. The senior user, however, may enjoin such uses that infringe upon its prior rights. The extent of the senior user's rights in the mark are also governed by a few additional principles.

The senior user's rights may extend into uses in "related" product or service markets (termed the "related goods" doctrine). J. McCarthy, supra, Sec. 24-1 to -12. Thus, an owner of a common law trademark may use its mark on related products or services and may enjoin a junior user's use of the mark on such related uses. The doctrine "gives the trademark owner protection against the use of its mark on any product or service which would reasonably be thought by the buying public to come from the same source, or thought to be affiliated with, connected with, or sponsored by, the trademark owner." Id. at 166. In this case, the district court concluded that Coast's use of its telecourse in the cable broadcast market is "related" to use in the community college educational telecourse market.

A senior user's rights also are geographically limited to only those...