WARNERVISION ENTERTAINMENT v. Empire of Carolina
| Decision Date | 26 March 1996 |
| Docket Number | 95 Civ. 9386 (HB). |
| Citation | 919 F. Supp. 717 |
| Parties | WARNERVISION ENTERTAINMENT INC., Plaintiff, v. EMPIRE OF CAROLINA INC., Empire Industries Inc. and Empire Manufacturing Inc. (formerly Buddy L Inc.) and Thomas Lowe Ventures, d/b/a Playing Mantis, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Robert C. Faber, Charles P. LaPolla, Ostrolenk, Faber, Gerb & Soffen, L.L.P., New York City, for plaintiff.
Charles A. Laff, Judith L. Grubner, Laff, Whitesel, Conte & Saret, Ltd., Chicago, IL, Alexandra D. Malatestinic, Darby & Darby P.C., New York City, for defendants.
Defendants Empire of Carolina, Inc., Empire Industries Inc., Empire Manufacturing Inc. and Thomas Lowe Ventures, Inc. (collectively "Empire") move for reconsideration of this Court's Opinion and Order dated February 12, 1996 granting plaintiff's motion for preliminary injunction and denying defendants' motion for preliminary injunction, or, in the alternative, for a stay of the preliminary injunction pending appeal. See 915 F.Supp. 639 (S.D.N.Y.1996). Plaintiff WarnerVision Entertainment Inc. ("WarnerVision") cross moves for modification of the injunction Order dated February 16, 1996 as modified by Order dated February 22, 1996. I have considered the parties' papers as well as the very helpful and articulate arguments by both sides made at a hearing on March 11, 1996. For the reasons that follow, these motions are DENIED.
As discussed more fully in the Opinion and Order dated February 12, 1996, this action involves a dispute over the use of the REAL WHEELS trademark and related trade dress. Empire raises several arguments that it claims justify reconsideration. Most of them, however, were raised originally and rejected. I have considered these points and conclude they do not warrant a different result now. The only argument that gives me pause is Empire's claim that it is entitled to rely on a pending intent-to-use trademark application in defending against WarnerVision's motion for a preliminary injunction. Although I find the argument fails as a matter of law, it is worthy of more extended consideration.
Empire has obtained by assignment the rights to an intent-to-use application for the REAL WHEELS mark filed on September 23, 1994 by defendant Thomas Lowe Ventures, Inc. ("TLV"). At the time I issued my initial opinion, it appeared from the record that the Patent and Trademark Office ("PTO") had objected to this application. In fact, unbeknownst to the Court, the PTO withdrew its objections on February 7, 1996, just days before I issued my opinion. In my February 12 Opinion and Order I held that "as TLV's application has been rejected and thus no registration has issued, Empire may not rely on it here." 915 F.Supp. at 645. Implicit in this result is a finding that Empire could not rely on the application offensively as part of its motion for a preliminary injunction or defensively in opposition to WarnerVision's motion. In essence, I found that the intent-to-use application was irrelevant. Despite the recent PTO action, I maintain that view.
Section 7(c) of the Lanham Act provides in pertinent part:
Contingent on the registration of a mark on the principal register provided by this Act, the filing of the application to register such mark shall constitute constructive use of the mark, conferring a right of priority, nationwide in effect, on or in connection with the goods or services specified in the registration....
15 U.S.C. § 1057(c). Empire argues in its motion for reconsideration that to allow WarnerVision, who made first actual use of the REAL WHEELS mark no later than January 18, 1995, and thus well after the TLV application date, to obtain an injunction would defeat the purpose of the intent-to-use provision.1
In interpreting the meaning of § 7(c), my analysis must begin with the statutory text. Where the language is unambiguous, that is generally the end of the matter. As the Supreme Court wrote in Connecticut National Bank v. Germain:
We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there. When the words of a statute are unambiguous, then, the first canon is also the last: "judicial inquiry is complete."
503 U.S. 249, 253-54, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992) (citations omitted). See also United States v. James, 478 U.S. 597, 606, 106 S.Ct. 3116, 3121, 92 L.Ed.2d 483 (1986); Wetzler v. FDIC, 38 F.3d 69, 73 (2d Cir.1994). Legislative history may be considered, but "in the absence of `clearly expressed legislative intention to the contrary,' the language of the statute itself `must ordinarily be regarded as conclusive.'" James, 478 U.S. at 606, 106 S.Ct. at 3121 (quoting Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980)); see also Roy v. Teachers Ins. and Annuity Assoc., 878 F.2d 47, 49 (2d Cir.1989).
The text of § 7(c) is unambiguous. It states clearly that the priority rights of constructive use are "contingent on the registration of the mark." Here, Empire does not claim that it has obtained a registration. Rather, it contends that it should be allowed to bring the product to market so that it can make actual use of the mark in commerce and obtain a registration. However, this claimed right to use the intent-to-use application defensively as a shield to avoid an otherwise appropriate preliminary injunction has no basis in the statutory language.
Furthermore, an examination of the legislative history confirms my view that all rights of the intent-to-use applicant, both offensive and defensive, are conditioned on registration. For example, the United States Trademark Association Trademark Review Commission Report stated that: USTA Trademark Review Commission Report and Recommendations on the United States Trademark System and the Lanham Act (1987), 77 Trademark Rep. 375, 398, reprinted in USTA, The Trademark Law Revision Act of 1988, at 15, 38 (1989).2
Empire argues that the policies behind the intent-to-use provisions will be undermined by this reading of § 7(c). Empire claims that the Lanham Act was amended to encourage applicants to file as early as possible and thereby disclose their marks publicly. In addition, the constructive use date provided by the application promotes certainty in the trademark system. To allow a subsequent user to obtain an injunction and prevent actual registration will subvert these policies and encourage pirates to make subsequent use of a proposed mark in order to extort licensing fees. The legislative history supports this view. As the Trademark Review Commission Report stated:
Constructive use is essential for an intent-to-use application. Without it, the application would be an easy target for pirates, vulnerable also to priority claims of anyone else whose use began after an applicant's filing date but before applicant's use. This would strongly discourage filing intent-to-use applications and also defeat our objective of reducing uncertainty.
77 Trademark Rep. at 397, reprinted in The Trademark Law Revision Act of 1988, supra, at 37; see also S.Rep. No. 100-515, 100th Cong.2d Sess. 29-30 (1988), U.S.Code Cong. & Admin.News 5577, 5591-5593, reprinted in The Trademark Law Revision Act of 1988, supra, at 153, 181-82; USTA Testimony before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice of the House Judiciary Committee (Sept. 8, 1988) (statement of Ronald S. Kareken), reprinted in The Trademark Law Revision Act of 1988, supra, at 227, 233.
Although my interpretation of § 7(c) may not advance fully all of these policies, Congress apparently adopted the constructive use system with full knowledge of its possible imperfections. Under the Senate bill, intent-to-use applicants were permitted to sue for an injunction, but federal courts were prohibited from entering a final judgment until the mark was registered. See S. 1883, 100th Cong., 2d Sess. § 31(1)(B) (1988) ( § 34(a)) ("However, no final judgment shall be entered in favor of an applicant under section 1(b) prior to the mark being registered, if such applicant cannot prevail without establishing constructive use pursuant to section 7(c)."), reprinted in The Trademark Law Revision Act of 1988, supra, at 143, 148; see also S.Rep. No. 100-515, supra, at 30, U.S.Code Cong. & Admin.News 5577, 5592, reprinted in The Trademark Law Revision Act of 1988, supra, at 182. The House Subcommittee on Courts, Civil Liberties and the Administration of Justice of the House Committee on the Judiciary rejected this proposal based on two concerns. See H.R.Rep. No. 100-1028, 100th Cong., 2d Sess. 4 (1988), U.S.Code Cong. & Admin.News 5577, 5580, reprinted in The Trademark Law Revision Act of 1988, supra, at 280. First, as a practical matter, the Subcommittee did not want to force district courts to maintain unresolved cases in their files for up to four years pending the disposition of an application. Id. Second, the Subcommittee expressed constitutional reservations about the Senate bill. Since use in commerce is the constitutional basis for the Lanham Act, the Subcommittee was concerned that federal courts would not have jurisdiction over claims by intent-to-use applicants. In the absence of actual use, there may not be a case or controversy ripe for judicial resolution. Id.
The House Committee endorsed the Subcommittee's conclusions, noting ...
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WarnerVision Entertainment Inc. v. Empire of Carolina, Inc.
...Entertainment Inc.'s trademark "REAL WHEELS," and denying Empire's cross-motion for injunctive relief. See 915 F.Supp. 639 and 919 F.Supp. 717. The appeal was argued on an emergency basis on May 31, 1996, and on June 12, 1996, we issued an order vacating the preliminary injunction with an o......