Vail Associates, Inc. v. Vend-Tel-Co., Ltd.

• Decision Date: 07 February 2008
• Docket Number: No. 05-1058.,05-1058.
• Citation: 516 F.3d 853
• Parties: VAIL ASSOCIATES, INC., and Vail Trademarks, Inc., Plaintiffs-Appellants, v. VEND-TEL-CO., LTD., and Eric A. Hanson, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

516 F.3d 853

VAIL ASSOCIATES, INC., and Vail Trademarks, Inc., Plaintiffs-Appellants, v. VEND-TEL-CO., LTD., and Eric A. Hanson, Defendants-Appellees.

No. 05-1058.

United States Court of Appeals, Tenth Circuit.

February 7, 2008.

Appeal from United States District Court for the District Colorado, Richard P. Matsch, J Glenn K. Beaton (Stephen C. McKenna with him on the briefs), Gibson, Dunn & Crutcher, L.L.P., Denver, Colorado, for Plaintiffs-Appellants.

Luke Santangelo, Santangelo Law Offices, P.C. (Kay L. Collins, Santangelo Law Offices, P.C., and Thomas R. French, Thomas R. French, P.C., with him on the brief), Fort Collins, Colorado, for Defendants-Appellees.

Before BRISCOE, BALDOCK, and TYMKOVICH, Circuit Judges.

BALDOCK, Circuit Judge.

This service mark infringement case is about the use of a purely descriptive term "Ski," in conjunction with a geographically descriptive term, "Vail," or more precisely, "Ski Vail." Plaintiff Vail Associates (VA), owner of the Vail Ski Resort, has a registered incontestable service mark in the latter, but not the former term.¹ VA's service mark registration describes "Vail" as encompassing the gamut of commercial recreational activities and accompanying amenities available in and around the Town of Vail, Colorado, save maybe golf. According to the registration, VA's mark encompasses "downhill skiing facilities, ice skating facilities, cross-country ski trails and expeditions, hiking and back-packing trails, and horseback riding, . . . resort hotel and restaurant services, and retail store services in the field of recreational equipment." United States Patent and Trademark Office (PTO), Reg. No. 1,521,276 (Jan. 17, 1989).² Defendant Vend-Tel-Co (VTC) meanwhile has a registered service mark on the vanity or alphanumeric telephone number "1-800-SKI-VAIL," which offers "marketing services related to the ski industry, namely providing an automated phone switching system to offer services available in or near Vail, Colorado and nearby resort locations." PTO, Reg. No. 2,458,894 (June 12, 2001).

VA's essential claim is that VTC's use of the geographically descriptive term "Vail" in combination with the descriptive term "Ski" infringes its "Vail" mark, making VTC's use of 1-800-SKI-VAIL violative of the Lanham Act. Specifically, VA claims direct confusion, that is to say VTC's use of the vanity number is likely to cause consumers to believe that VA or its ski resort is the source of VTC's phone service. See Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1238 (10th Cir.2006) (distinguishing direct from indirect confusion). Consumers, so goes VA's theory of the case, are more likely to dial the number because they perceive it as associated with VA's services. This, in turn, allows VTC to divert business from VA by referring consumers elsewhere.

I.

Of course, VA's claim of service mark infringement under 15 U.S.C. § 1114(1)(a), based on the likelihood of confusion between the two marks, is a factual inquiry upon which VA bore the burden of proof at trial. See Universal Money Ctrs., Inc. v. AT & T, 22 F.3d 1527, 1530 (10th Cir.1994).³ Following a bench trial, the district court concluded VA failed to meet its burden. Specifically, the district court found VA failed to prove VTC's use of its 1-800 service mark posed a likelihood of consumer confusion between the services offered by VA and VTC. Viewing the evidence in a light most favorable to the district court's finding, our careful review of the trial record reveals ample support for the court's judgment.⁴ See Sanpete Water Conserv. Dist. v. Carbon Water Conserv. Dist., 226 F.3d 1170, 1178 (10th Cir.2000) (explaining that on appeal from a bench trial, "we view the evidence in the light most favorable to the district court's ruling and must uphold any district court finding that is permissible in light of the evidence").

On an appeal from a bench trial, we may not set aside the factual findings of the district court "unless clearly erroneous." Fed.R.Civ.P. 52(a). A court bound by the clearly erroneous standard cannot simply reject findings with which it does not agree:

A finding is clearly erroneous when although there is, evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. This standard plainly does not entitle a reviewing court to reverse the finding of the trier of fact simply because it is convinced that it would have decided the case differently. In applying the clearly erroneous standard[,] appellate courts must consistently have in mind that their function is not to decide factual issues de novo.

Estate of Trentadue v. United States, 397 F.3d 840,859-60 (10th Cir.2005) (emphasis added) (internal quotations, citations, and ellipses omitted). For reasons to become readily apparent, that standard of review sounds the death knell of VA's Lanham Act claim.

II.

We begin with a comprehensive appraisal of the trial evidence, viewed through the proper evidentiary prism. That is to say, we review' the record evidence in a light most favorable to both the district court's subsidiary and ultimate findings. At the close of VA's case-in-chief, the district court cautiously deferred ruling on VTC's motion for judgment as a matter of law on VA's Lanham Act claim. See Fed.R.Civ.P. 52(c). Yet the court in doing so accurately described VA's claim as "very weak." Appellants' App. at 748 (hereinafter App.).

A.

VA's first witness was Chris Jarnot, Vice-President of Marketing and Sales for VA. After describing VA's corporate structure, Jarnot testified about his "impression" of 1-800-SKI-VAIL: "[T]o me [it] would be confusing to a customer who saw the number. They would perceive it to be our company that were [sic] answering the number." App. at 471-72. On cross examination, Jarnot testified he was not "aware of any instance where consumers were actually confused by the use of 1-800-Ski-Vail." App. at 485. Jarnot further acknowledged "the hundreds of uses of the letters V-A-I-L in the names of businesses in the Vail Valley." App. at 486-87.

VA's next witness was Eric Hanson, a named Defendant along with VTC, and former shareholder and president of VTC. Hanson testified as to the ownership history of 1-800-SKI-VAIL. In 1992, a company known as 1-800-Ski-Numbers, with which Hanson was affiliated, held rights to the number. Hanson stated VTC acquired rights to the number in 1997 and later had the number registered as a mark. VTC transferred ownership of the number to him along with rights to the mark during the pendency of this lawsuit. Throughout the vanity number's history, calls had been routed to various businesses, including at least three travel agencies. At various times, the number was promoted through print directories, print ads, electronic media, and email solicitations. After VA expressed concern about VTC's use of the number in the summer of 1995, callers, at least sporadically, heard a disclaimer stating the number was not affiliated with VA.

On cross examination, Hanson explained 1-800-Ski-Numbers had held the rights to twenty-three vanity numbers all incorporating the word "Ski." The purpose of the company was to use 1-800 numbers as a conduit for pointing consumers to ski-related services in Colorado, among other places. The business plan was to sell advertising as part of print directories and to earn commissions on reservations made through the conduit. Hanson stated that in August 1995, 1-800-Ski-Numbers received a cease and desist letter from VA. The letter stated: "You will not use the expression Ski, or any similar expression together with the word Vail as part of your 800 number advertising or merchandising." App. at 585.

The third, and by far the most telling, witness that VA called to the stand was Joyce Newton. Newton is a resident of the Vail region and the owner of a local travel agency known as Vacation Coordination. In August 2001, Newton's agency agreed to answer calls placed to 1-800-SKI-VAIL. Vacation Coordination began taking calls in September 2001. Newton testified that her agency received "anywhere from ten to twenty calls" per week. App. at 618. The typical caller asked questions "with regard to general ski related products, [or] location questions." App. at 620. Newton stated the caller "would ask perhaps the price of a season pass, [or] directions to get to the Vail destination. There were inquiries about the weather, grooming, just some general location related things. Sometimes it would be about a restaurant or ski rental, or something like that." App. at 621. On cross-examination, Newton responded "yes" when asked whether "it would be fair to say . . that you get questions all the time in your capacity as a travel agent about grooming and ski passes regardless of whether it was a call from 1-800-Ski-Vail?" App. at 631.

Because Vacation Coordination booked a substantial number of reservations with VA and earned a substantial amount of commissions from those bookings, Newton inevitably became caught in the cross-fire. Mark Manley, VA's Associate General Counsel, delivered to Newton, for her signature, an affidavit to be used in this litigation. The relevant portions of that proposed affidavit read:

9. . . . . When Vacation Coordination originally began answering calls to the 1-800-SKI-VAIL telephone number many callers indicated that they thought they were calling the entity that operates the Vail Resort. Individuals would inquire regarding the purchase of ski season passes, ski lift tickets, ski instruction, or in numerous cases, the person asked if they had reached Vail Resorts.

10. Since December of 2001, several callers have still indicated that they were attempting to reach Vail Resorts or were confused that they had not reached Vail Resorts.

Appellees' Supp. App. at 4, 74 (hereinafter Supp. App.).

Newton testified that upon receipt of the affidavit, she made certain additions and...