Viacom Inc. v. Ingram Enterprises, Inc.

• Decision Date: 29 May 1998
• Docket Number: Nos. 97-1950 and 97-2330,s. 97-1950 and 97-2330
• Citation: 141 F.3d 886
• Parties: VIACOM INCORPORATED; Blockbuster Entertainment, Inc., Plaintiffs-Appellees/ Cross Appellants, v. INGRAM ENTERPRISES, INC.; Blockbuster Fireworks, Inc.; Fireworks Supermarkets of America, Inc.; Blockbuster Fireworks of California, Inc., Defendants-Appellants/ Cross Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 886

141 F.3d 886

46 U.S.P.Q.2d 1473

VIACOM INCORPORATED; Blockbuster Entertainment, Inc. Plaintiffs-Appellees/ Cross Appellants, v. INGRAM ENTERPRISES, INC.; Blockbuster Fireworks, Inc. Fireworks Supermarkets of America, Inc. Blockbuster Fireworks of California Inc., Defendants-Appellants/ Cross Appellees.

Nos. 97-1950 and 97-2330

United States Court of Appeals, Eighth Circuit.

Submitted Dec. 8, 1997.

Decided April 14, 1998.

Rehearing Denied May 29, 1998. ^*

Thomas Y. Auner, Springfield, MO, argued, for Defendants-Appellants/Cross Appellees.

Marcia B. Paul, New York City, argued (Gregory J. Ikonen, New York City, Arthur Smith, St. Louis, MO, on the brief), for Plaintiffs-Appellees/Cross Appellants.

Before BOWMAN, LOKEN, and HANSEN, Circuit Judges.

LOKEN, Circuit Judge.

Viacom Inc. and Blockbuster Entertainment, Inc. ("Viacom"), own many federally registered trademarks centered around the marks BLOCKBUSTER and BLOCKBUSTER VIDEO. The first mark was registered in 1986, and some are now incontestable under 15 U.S.C. § 1065. Viacom owns or franchises 4,500 Blockbuster Video and 500 Blockbuster Music stores. The BLOCKBUSTER marks are heavily advertised and promoted and are used on a wide variety of consumer products and services. Ingram Enterprises, Inc., and three of its affiliates ("Ingram") own and operate fireworks stands in Missouri and California. Ingram owns a BLOCKBUSTER mark that was federally registered for fireworks sales in 1992, and a BLOCKBUSTER FIREWORKS mark for which a federal registration application is pending.

Viacom commenced this action in May 1994, asserting a variety of federal and state law claims for trademark infringement and dilution. After discovery, both sides moved for summary judgment. In a series of orders, the district court denied Viacom summary judgment on its claims of trademark infringement because the evidence of likelihood of confusion was not conclusive; granted Viacom summary judgment on its claim under Missouri's anti-dilution statute, Mo.Rev.Stat. § 417.061(1), and enjoined Ingram from further use of BLOCKBUSTER marks in Missouri; dismissed Viacom's claim under the Federal Trademark Dilution Act of 1995, 15 U.S.C. § 1125(c) ("FTDA"), because the relief sought would render the statute impermissibly retroactive; and denied all remaining claims for summary judgment. Ingram appealed the grant of summary judgment and an injunction under Missouri anti-dilution law. After the court entered final judgment dismissing the FTDA claim, see Fed.R.Civ.P. 54(b), Viacom cross-appealed that dismissal. Reviewing these summary judgment issues de novo, we conclude the district court erred in declining to apply the FTDA, an error which requires us to reverse both the grant of summary judgment on Viacom's state law anti-dilution claim, and the dismissal of Viacom's FTDA claim for prospective relief. Accordingly, we convert the district court's permanent injunction into a preliminary injunction, reverse in part, and remand.

I.

For reasons that will become apparent, it is essential to address first the FTDA's impact on a lawsuit commenced before enactment that seeks relief against on-going conduct. The FTDA protects a "famous" trademark from subsequent uses that tarnish or disparage or blur the distinctiveness of the mark, regardless of the likelihood of customer confusion. The Act creates a remedy against non-competing trademark uses such as "DuPont shoes, Buick aspirin, and Kodak pianos." 141 CONG. REC. H14317 (daily ed. Dec. 12, 1995) (statement of Rep. Moorhead). The FTDA entitles the owner of a famous mark to a nationwide injunction if another person's subsequent commercial use of a mark "causes dilution of the distinctive quality of the [famous] mark," 15 U.S.C. § 1125(c)(1), ¹ and to damages for willful dilution, 15 U.S.C. § 1125(c)(2). However, the FTDA also provides a complete defense to state law dilution claims to owners of valid, federally registered marks, 15 U.S.C. § 1125(c)(3). We must decide whether injunctive relief authorized by § 1125(c)(1) may be granted against on-going dilution that began before the FTDA's enactment in January 1996, and whether § 1125(c)(3) applies to Viacom's pre-enactment state law anti-dilution claim against Ingram's registered mark.

A. Viacom's Claim for Injunctive Relief under § 1125(c)(1). In Landgraf v. USI Film Products, 511 U.S. 244, 278, 114 S.Ct. 1483, 1503-04, 128 L.Ed.2d 229 (1994), the Supreme Court revived the "traditional presumption against applying statutes affecting substantive rights, liabilities, or duties to conduct arising before their enactment," absent an express statutory command to the contrary. However, the Court also noted that

application of new statutes passed after the events in suit is unquestionably proper in many situations. [For example, w]hen the intervening statute authorizes or affects the propriety of prospective relief, application of the new provision is not retroactive.

511 U.S. at 273, 114 S.Ct. at 1501. The FTDA contains no express language addressing retroactivity. Therefore, Ingram argues that Viacom's claims for FTDA relief are barred by the traditional presumption against retroactivity. Viacom responds that it is entitled to prospective FTDA relief against continuing dilution of its BLOCKBUSTER marks. ²

In dismissing Viacom's claim for prospective FTDA relief, the district court relied on Circuit City Stores, Inc. v. OfficeMax, Inc., 949 F.Supp. 409 (E.D.Va.1996). The court in Circuit City described the above-quoted language in Landgraf as dicta and held that prospective FTDA relief would have an impermissible retroactive effect. Because the diluter's conduct did not violate federal law when initiated, it would be "manifestly inequitable" to compel the diluter to surrender good will associated with its competing mark. 949 F.Supp. at 419. ³ We disagree.

In the first place, we will not brush aside as dicta the Supreme Court's pronouncement that an intervening statute may "authorize[ ] ... prospective relief" without running afoul of the traditional presumption against retroactivity. That pronouncement was expanded upon in Justice Scalia's concurring opinion for three Justices. See 511 U.S. at 293 & n. 3, 114 S.Ct. at 1525-26 & n. 3. As we read Landgraf, the pronouncement is not "dicta." It is part of a carefully crafted holding on retroactivity that is binding on this court.

Second, the court in Circuit City analyzed cases cited in Landgraf and concluded that the prospective relief pronouncement only applies when the conduct to be enjoined was illegal prior to the new statute's enactment. However, other Supreme Court cases make it clear that the pronouncement has a broader sweep. For example, in upholding a Sherman Act injunction, the Court many years ago stated:

It is said that to grant the injunction prayed for in this case is to give the statute a retroactive effect; that the contract, at the time it was entered into, was not prohibited or declared illegal by the statute, as it had not then been passed, and to now enjoin the doing of an act which was legal at the time it was done would be improper. We give to the law no retroactive effect. The agreement in question is a continuing one.... Assuming such action to have been legal at the time the agreement was first entered into, the continuation of the agreement, after it has been declared to be illegal, becomes a violation of the act.

United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290, 342, 17 S.Ct. 540, 559, 41 L.Ed. 1007 (1897); to the same effect, see Waters-Pierce Oil Co. v. State of Texas, 212 U.S. 86, 107-08, 29 S.Ct. 220, 225-26, 53 L.Ed. 417 (1909); Chicago & Alton R.R. v. Tranbarger, 238 U.S. 67, 73, 35 S.Ct. 678, 680, 59 L.Ed. 1204 (1915). ⁴ Here, the conduct sought to be enjoined under the FTDA is Ingram's continuing use of its BLOCKBUSTER marks, not its pre-enactment conduct.

Third, Ingram argues that applying the FTDA would unfairly deprive it of the investment in its BLOCKBUSTER marks. We agree that fairness is important in considering retroactivity issues. There is also a difference between applying a new trademark infringement statute to enjoin conduct causing public confusion, and applying a new anti-dilution statute to enhance Viacom's private property rights at the expense of Ingram's pre-existing property rights. ⁵ However, the answer to this very real issue is not to abandon the general rule that new statutes may be enforced prospectively. Section § 1125(c)(1) expressly provides that its injunctive relief is "subject to the discretion of the court and the principles of equity." If Ingram's non-competing, non-confusing use of its BLOCKBUSTER mark prior to the FTDA's enactment was lawful and resulted in Ingram acquiring a valuable and legitimate property interest of its own, Viacom will presumably not be entitled to an anti-dilution injunction granting it a nationwide monopoly in the use of this rather common word. ⁶

For the foregoing reasons, we conclude that the district court erred in dismissing the part of Count VIII that seeks prospective relief under § 1125(c)(1).

B. Ingram's Defense Based upon § 1125(c)(3). Section 1125(c)(3) provides that ownership of a "valid federal registration ... shall be a complete bar to an action against that person, with respect to that mark, that is brought by another person under the common law or a statute of a State and that seeks to prevent dilution of the distinctiveness of a mark." We must separately consider the retroactive effect of this provision. See Maitland v. University of Minnesota, 43 F.3d 357, 361 (8th Cir.1994).

Viacom seeks (and has been granted) an injunction under the Missouri antidilution statute, Mo.Rev.Stat. § 417.061(1). Because "relief by injunction operates in futuro " and gives Viacom "no 'vested right' in the decree entered by the trial court," there is no retroactivity bar to applying a new, more restrictive statute on appeal. Landgr...