Vertex Distributing, Inc. v. Falcon Foam Plastics, Inc.

• Decision Date: 07 October 1982
• Docket Number: No. 81-5652,81-5652
• Citation: 689 F.2d 885
• Parties: VERTEX DISTRIBUTING, INC., Plaintiff-Appellant, v. FALCON FOAM PLASTICS, INC., Falcon Manufacturing of California, Inc., James Allen, and Michael Allen, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 885

689 F.2d 885

217 U.S.P.Q. 763

VERTEX DISTRIBUTING, INC., Plaintiff-Appellant, v. FALCON FOAM PLASTICS, INC., Falcon Manufacturing of California, Inc., James Allen, and Michael Allen Defendants-Appellees.

No. 81-5652.

United States Court of Appeals Ninth Circuit.

Argued and Submitted July 9, 1982.

Decided Oct. 7, 1982.

Michael D. Harris, Poms, Smith, Lande & Rose, Los Angeles, Cal., for plaintiff-appellant.

Margot A. Metzner, Hufstedler, Miller, Carlson & Beardsley, Los Angeles, Cal., for defendants-appellees.

Appeal from the United States District Court for the Central District of California.

Before GOODWIN and NELSON, Circuit Judges, and SMITH, ^* District Judge.

NELSON, Circuit Judge:

Vertex Distributing, Inc. ("Vertex"), filed applications in the district court, asking that defendants Falcon Foam Plastics, Inc., Falcon Manufacturing of California, Inc., James Allen, and Michael Allen ("defendants") be held in civil contempt for violating the terms of a consent judgment. Vertex now appeals the district court's denial of those applications and the district court's clarification of the original consent judgment. We conclude that the district court did not abuse its discretion in denying the applications for civil contempt and that it correctly interpreted the consent judgment. We therefore affirm.

FACTS AND PROCEEDINGS BELOW

Vertex owns the federally-registered trademark "Falcon-Foam." In February, 1978, Vertex filed a trademark infringement claim against defendants over their use of "Falcon;" in October 1978, a consent judgment was entered, that:

(1) enjoined defendants from using "Falcon-Foam or Falcon Foam," or colorable imitations of those terms;

(2) permitted defendants to use "Falcon Foam Plastics, Inc." as their corporate name "for legal reasons only," and prohibited the use of that name for commercial or publicity purposes;

(3) permitted defendants to do business with a trade name that includes the word "Falcon," so long as a falcon bird perched on the "F" of Falcon was included "wherever possible and practical." ¹

In April, 1981, Vertex filed an application for an order holding defendants in civil contempt for violations of the consent judgment. Vertex requested discovery regarding the extent of the violations, an accounting for damages, and other relief.

As evidence of alleged violations, Vertex submitted three small ads from three 1980 Yellow Pages Telephone Directories. These ads contained the single word "Falcon," prominently displayed in graphic block letters, and did not include a bird perched on the "F." Vertex also submitted a one-line name-address-telephone number listing that did not display a falcon bird.

In response, defendants submitted evidence of their redesigned logo, which contained the perched bird. This logo appeared on letterheads, envelopes, signs, and delivery vehicles. The defendants submitted further evidence that all large Yellow Pages ads did contain a picture of a perched bird; they argued that this picture was omitted only from small ads and one-line listings, where it had not been "possible or practical" to include the bird.

While the district court's decision on the first application for contempt was still pending, Vertex filed a second application, submitting as evidence two one-line listings for "Falcon Foam Plastics, Inc." from the 1980 Canoga Park-Reseda-Agoura Yellow Pages Directory. Defendants then demonstrated that the two listings in question had been changed before the application for contempt was filed and that current telephone directories contained listings only for "Falcon."

In June 1981, the district court determined that Vertex had not met its burden of providing by "clear and convincing evidence" that the consent judgment of 1978 was violated. Both applications for orders of contempt were denied. ² Vertex then filed a timely appeal.

ISSUES

This appeal raises the following issues:

I. Did the district court abuse its discretion in determining that Vertex failed to show by clear and convincing evidence that defendants had violated the consent judgment?

A. Did the district court abuse its discretion in refusing to hold defendants in contempt for their use of the one-word name "Falcon"?

B. Did the district court abuse its discretion by not holding defendants in contempt for their use of the name "Falcon," without an accompanying picture of a bird perched on the "F," in small Yellow Pages advertisements and listings?

C. Did the district court abuse its discretion by refusing to hold defendants in contempt for their failure to prevent telephone directory listings from appearing under the name "Falcon Foam Plastics, Inc."?

II. Did the district court err in not holding defendants in contempt once it held that they were required to change their advertisements to comply with the consent judgment?

III. Did the district court err in not permitting Vertex to conduct further discovery?

IV. Did the district court err in interpreting the consent judgment as permitting use of the single word "Falcon" as defendants' trade name?

DISCUSSION

I. Did the district court abuse its discretion in

determining that Vertex failed to show by clear

and convincing evidence that defendants

had violated the consent judgment?

We apply well-settled law. In a civil contempt proceeding, the contempt must be proved by clear and convincing evidence. Battaglia v. United States, 653 F.2d 419, 422 (9th Cir. 1981); United States v. Powers, 629 F.2d 619, 626 n.6 (9th Cir. 1980). This requires more than does the preponderance of the evidence standard applicable to most civil cases. Battaglia, 653 F.2d at 422; Powers, 629 F.2d at 626 n.6.

Where the language of a consent judgment is too vague, it cannot be enforced; to do so would be an invalid exercise of judicial authority. International Longshoremen's Association, Local 1291 v. Philadelphia Marine Trade Association, 389 U.S. 64, 76, 88 S.Ct. 201, 208, 19 L.Ed.2d 236, 245 (1967) (reversing a civil contempt judgment founded upon a decree too vague to be understood); see United States v. Joyce, 498 F.2d 592, 596 (7th Cir. 1974) (reversing a criminal contempt judgment because terms of a court order should be clear and specific and leave no doubt or uncertainty in the minds of those to whom it is addressed). Thus, if a defendant's action "appears to be based on a good faith and reasonable interpretation of (the court's order)," he should not be held in contempt. Rinehart v. Brewer, 483 F.Supp. 165, 171 (S.D.Iowa 1980).

We review the district court's decision declining to hold defendants in contempt under the abuse of discretion standard. Washington-Baltimore Newspaper Guild Local 35 v. Washington Post Co., 626 F.2d 1029, 1031 (D.C.Cir.1980). See Powers, 629 F.2d at 624 (district court decision in setting punishment for contempt reviewed for abuse of discretion).

We do not here determine whether a trademark infringement occurred, but rather whether the district court abused its discretion in determining that defendants had not violated the consent judgment. Furthermore, our function here is not that of the patent office when it decides problems of confusing similarity in connection with applications for trademark registration. Thus cases such as King-Kup Candies, Inc. v. King Candy Co., 288 F.2d 944 (Cust. & Pat.App.1961) and Bon Ami Co. v. McKesson & Robbins, Inc., 93 F.2d 915 (Cust. & Pat.App.1938) are inapposite.

A. Did the district court abuse its discretion in refusing

to hold defendants in contempt for their use of

the one-word name "Falcon" ?

The original consent judgment enjoined defendants from using "the terms FALCON-FOAM or FALCON FOAM, or any colorable imitations thereof in connection with the ... advertising of any foamed products." Final Judgment, supra note 1, P 3. As an exception to this general prohibition, however, the consent judgment stated that "defendants may do business using a trade name which includes the word FALCON providing, however, that when defendants use a trade name incorporating FALCON therein, defendants shall include a falcon bird perched on the 'F' of FALCON wherever possible and practical." Id. P 4(b).

Vertex argues that the portion of paragraph 4(b) reading "defendants may do business using a trade name which includes the word FALCON providing, however, that when defendants use a trade name incorporating FALCON therein," exposes defendants to contempt because "the only fair reading of this requirement is that 'Falcon' be used with other terms and not alone." This argument led the parties to engage in a semantic battle over the meaning of "includes" and "incorporating." They traded definitions from dictionaries and other authorities with inconclusive results. Because Vertex failed to show by clear and convincing evidence that defendants' interpretation of "includes" and "incorporating" as allowing use of the single word "Falcon" was unreasonable, this was an insufficient ground for the district court to hold defendants in contempt. Rinehart v. Brewer, 483 F.Supp. at 171.

Relying on the portions of paragraphs 3 and 4 quoted above, Vertex also argues that the exception of paragraph 4(b) should not be read in a manner that swallows the general prohibition of paragraph 3. Vertex argues that the purpose of paragraph 3, and the central purpose of the consent judgment as a whole, is "to protect Vertex's 'Falcon-Foam' trademark from confusion." In Vertex's view, "almost any advertisement that uses Falcon violates the Final Judgment because it causes confusion." Vertex therefore concludes that paragraph 4(b) must be read as not permitting the use of the word "Falcon" standing alone.

The difficulty with this argument is that paragraph 4(b) is an express exception to the general prohibition of paragraph 3. Because exceptions operate to limit the scope of a general rule, we think that the district court did not err in concluding that Vertex failed to meet its burden of showing by...