U.S. Jaycees v. Philadelphia Jaycees

• Decision Date: 04 March 1981
• Docket Number: No. 80-1201,80-1201
• Citation: 209 USPQ 457,639 F.2d 134
• Parties: UNITED STATES JAYCEES, a non-profit Missouri Corporation, and Pennsylvania Junior Chamber of Commerce, a non-profit Pennsylvania Corporation, Appellants, v. PHILADELPHIA JAYCEES, a non-profit Pennsylvania Corporation.
• Court: U.S. Court of Appeals — Third Circuit

Page 134

639 F.2d 134

209 U.S.P.Q. 457

UNITED STATES JAYCEES, a non-profit Missouri Corporation and Pennsylvania Junior Chamber of Commerce, a non-profit Pennsylvania Corporation, Appellants, v. PHILADELPHIA JAYCEES, a non-profit Pennsylvania Corporation.

No. 80-1201.

United States Court of Appeals Third Circuit.

Argued Oct. 17, 1980.

Decided Jan. 30, 1981.

Rehearing Denied March 4, 1981.

Robert B. Washburn, Rosemary M. Miano, Woodcock, Washburn, Kurtz, Mackiewicz & Norris, Patrick J. Broderick, Broderick & Karaszkiewicz, Philadelphia, Pa., Carl D. Hall (argued), Hall, Sublett, McCormick & Andrew, Paul H. Johnson, Head & Johnson, Tulsa, Okl., for appellants.

Bruce A. Cohen (argued), Dechert Price & Rhoads, Philadelphia, Pa., for appellee.

Before GIBBONS and ROSENN, Circuit Judges, and WEBER, ^* District Judge.

OPINION OF THE COURT

ROSENN, Circuit Judge.

This appeal raises the question of whether a subordinate chapter of a national organization may continue to use the national organization's trademark after the subordinate's disaffiliation without violating the Trademark Act of 1946 (Lanham Act), 15 U.S.C. §§ 1051-1127 (1976). The United States Jaycees (the National) instituted a trademark action in the United States District Court for the Eastern District of Pennsylvania against its former Philadelphia chapter to enjoin the infringement of its trademarks by the chapter's use of the name "Jaycee," and related trademarks. The district court found an infringement but granted only a narrow injunction that permitted the Philadelphia group to continue to use the name "Jaycee" albeit with the prefix "Philadelphia." 490 F.Supp. 688 (E.D.Pa.1979). We believe the limited order of the district court constituted error and we therefore vacate it and remand with directions to grant the relief requested.

I.

This case, like a number of others throughout the country, arose primarily because of an ideological split in the membership of the Jaycees. The Jaycees, organized on local, state, and national levels, is a civic group engaged in "organizing and holding meetings, competitions and other special events for young men interested in the affairs and improvement of their communities, with the purpose of fostering interest in the community betterment programs at the local, state and national levels, as well as offering leadership experience to the members." 490 F.Supp. at 691. Established in the halcyon days of the 1920s, the United States Jaycees limited membership to young men, as have the various state Jaycee organizations, including the Pennsylvania Junior Chamber of Commerce. Under the prescribed structure, only young men have been able to exercise full membership rights. Although women have been allowed to participate in some Jaycee activities, as non-members they cannot, however, vote, hold office or take part in Jaycee decision-making.

Approximately ten years ago, a number of local chapters, dissatisfied with these restrictions, admitted women to full membership. Two significant developments have since occurred. First, the national organization revoked the charters of many local chapters admitting women, including that of the defendant Philadelphia Jaycees. Second, a number of local chapters, having had their charters revoked or facing revocation if they admitted women, sued the national organization alleging that the prohibition against women members and its enforcement by revocation of charter violated the civil rights of members and, hence, were unconstitutional. These challenges have been uniformly unsuccessful because plaintiffs have failed to establish state action. See, e. g., New York City Jaycees, Inc. v. United States Jaycees, Inc., 512 F.2d 856 (2d Cir. 1975); Junior Chamber of Commerce of Kansas City v. Missouri State Junior Chamber of Commerce, 508 F.2d 1031 (8th Cir. 1975); Junior Chamber of Commerce of Rochester, Inc. v. United States Jaycees, 495 F.2d 883 (10th Cir.), cert. denied, 419 U.S. 1026, 95 S.Ct. 505, 42 L.Ed.2d 301 (1974). ¹

The conflict between the particular parties to this dispute began on August 11, 1972, when the Philadelphia Jaycees amended its bylaws to permit female members. This amendment violated the United States Jaycees bylaw prohibiting local amendments "inconsistent with any requirements for affiliation," and subjecting such local chapter violators to revocation of their charters. 490 F.Supp. at 691-92. One of the requirements for affiliation, throughout the 35 year period the Philadelphia Jaycees was chartered by the National, was that individual members be males under 36 years of age. Id. at 691. The Philadelphia Jaycees admitted its first female member in September 1972, admittedly in violation of the National's bylaws. Id. On June 26, 1973, the United States Jaycees revoked the charter of the Philadelphia Jaycees. Id. The sole reason for the disaffiliation was the disagreement over the admission of women. Id. at 693. Since that revocation, the parties have unsuccessfully attempted to reconcile their differences, each adhering to its stated position on the admission of women. Id. at 692.

This action, filed October 1, 1978, does not directly challenge the National's membership policy or its revocation of the charter of the Philadelphia group. ² Rather, in this case, the national and Pennsylvania state organizations sought an injunction under the Lanham Act barring the disaffiliated Philadelphia group from using the name "Jaycees" and a variety of related trademarks. The United States Jaycees owns the mark "Jaycees." That mark, alone and in combination with designs and other words, is registered with the United States Patent and Trademark Office. 490 F.Supp. at 691. As the district court stated, the federal registration created a presumption of the validity of those marks and of the United States Jaycees' exclusive right of ownership. Further, at least some of those marks have become incontestable under 15 U.S.C. § 1115(b) (1976). 490 F.Supp. at 694. The Philadelphia Jaycees argued, however, that despite the National's ownership of incontestable exclusive rights to those marks, the Philadelphia group should be permitted to continue to use the name "Jaycees."

The Philadelphia Jaycees offered two arguments to the district court in favor of its position. First, it argued that an order allowing such use was within the equitable discretion of the court, particularly in light of (1) the goodwill the chapter had built in the name "Philadelphia Jaycees"; (2) the slight likelihood of confusion from the continued use as compared with the great likelihood of confusion if it had to change its name; and (3) the underlying cause of the disaffiliation that led to the trademark action, the National Jaycees' discriminatory membership policy. Second, the Philadelphia group contended that an injunction barring use of the name "Jaycee" would aid the United States Jaycees in enforcing its discriminatory membership policy and that such aid would be unconstitutional under the doctrine announced in Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161 (1948).

The district court, although accepting the National's contention that it has incontestable rights in the trademarks in dispute, declined to enjoin the Philadelphia group's use of the name "Jaycees." The court adopted both arguments advanced by the Philadelphia Jaycees, and, although it found infringement, issued only a limited injunction. The court ordered only that the local group (1) always use "Philadelphia" with "Jaycees" and (2) make clear in printed material that it disseminates that it is not affiliated with the National.

The United States Jaycees and the Pennsylvania Junior Chamber of Commerce appealed, arguing that under the Lanham Act the narrow injunction is an abuse of equitable discretion and that Shelley v. Kraemer, supra, does not require such a limited order.

II.

The Lanham Act makes any persons using registered trademarks without the consent of the registrant liable in a civil action. 15 U.S.C. § 1114(1) (1976). The district court found that the United States Jaycees is the registrant of a number of valid trademarks and that several of these marks have become incontestable under 15 U.S.C. § 1065. 490 F.Supp. at 694. The Philadelphia Jaycees have not appealed from that finding. Once a mark has become incontestable, "the registration shall be conclusive evidence of registrant's exclusive right to use the registered mark in commerce ...." 15 U.S.C. § 1115(b) (emphasis added). ³ The infringement of such a mark, according to the Act, is subject to only seven enumerated defenses. Id. Only one of these defenses, abandonment, id. § 1115(b)(2), was urged by the defendant at any time during these proceedings. ⁴ We shall first consider the claim of abandonment.

III.

The National revoked the charter of its Philadelphia chapter on June 26, 1973, 490 F.Supp. at 691, but did not file this trademark action until more than five years later, on October 1, 1978. Admittedly, during part of this period the National was attempting by negotiations, albeit unsuccessfully, to reconcile the differences between the two organizations. Id. at 692. Nonetheless, the Philadelphia Jaycees are technically correct that the National did not promptly enforce its trademark rights. Further, despite the revocation, the United States Jaycees continued to correspond with the "Philadelphia Jaycees," addressing the local organization as such, and to supply the Philadelphia group with organizational accoutrements. Id. at 693. Also, on one occasion, the National requested the aid of the Philadelphia group in promoting a National-sponsored television program. Id. Furthermore, the United States Jaycees have been tolerant of other chapters admitting women. There was evidence that the National had allowed some of its major chapters to remain affiliated or at least to use the name "Jaycee," despite their admission of women. Id. Based on these actions...