Wells Fargo & Co. v. Stagecoach Properties, Inc.
| Decision Date | 24 August 1982 |
| Docket Number | No. 81-4175,81-4175 |
| Citation | 685 F.2d 302 |
| Parties | WELLS FARGO & COMPANY, Plaintiff-Appellant, v. STAGECOACH PROPERTIES, INC., Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Richard E. Backus, Flehr, Hohbach, Test, Albritton & Herbert, San Francisco, Cal., for plaintiff-appellant.
Theodore H. Lassagne, Huebner & Worrel, Los Angeles, Cal., for defendant-appellee.
Appeal from the United States District Court for the Northern District of California.
Before BROWNING, Chief Judge, WRIGHT and TRASK, Circuit Judges.
We decide that the district court's affirmance of the Trademark Trial and Appeal Board's denial of appellant's registration was proper.
In 1974, Wells Fargo & Company (hereinafter WF), sought registration of the following two symbols used to promote its employee restaurant services:
Stagecoach Properties, Inc. (hereinafter SP), opposed these applications, claiming prior use of the stagecoach symbol, from October 1960, for motel and restaurant services. The mark consisted of the words "Stagecoach Inn, Salado, Texas" and a picture of a Western style stagecoach pulled by a team of four horses. The words "Wells Fargo Lines" appeared in small print on the side of the stagecoach.
The Patent and Trademark Office granted SP a service mark registration for "STAGECOACH INN" in 1968.
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE
WF in response claimed first use of the stagecoach symbol in 1918 to promote its employee lunchrooms. 1
With an extensive recital of the history underlying both parties' claims to the mark, the Trademark Trial and Appeal Board (hereinafter Board) denied the registration. See Stagecoach Properties, Inc. v. Wells Fargo & Co., 199 U.S.P.Q. 341 (TTAB 1978)
Dissatisfied with this result, WF sued SP in district court. Count I of its complaint sought a declaratory judgment that SP's service mark registration of "STAGECOACH INN" for restaurant and motel services was invalid, Count II requested review of the Board's rulings on SP's opposition, and Count III sought, in the alternative, declaratory judgment that WF was entitled to concurrent registration of its marks.
The district court reviewed the Board's findings and specifically found that they had not been overcome at trial. Thus, in response to Count II and in its capacity to review the Board's decision, the district court affirmed. It remanded to the Board Counts I and III (invalidity of SP's registration and concurrent registration).
Section 2(d) of the Lanham Act, 15 U.S.C. § 1052(d), provides that a trademark will be refused registration if, when connected to the applicant's goods or services, it is likely to cause confusion with goods or services bearing (1) a mark already registered in the Patent and Trademark Office, or (2) a mark that previously has been used somewhere in the United States. 2
In an opposition proceeding, the opposer therefore contends that the applicant's mark so resembles his own registered mark or his prior common law mark that it will likely cause confusion. If, as an initial matter, the opposer fails to prove likelihood of confusion, and no other bar to registration appears, the Board's inquiry ends and registration may be granted. Once likelihood of confusion is established, the opposer still must prove his superior right to the mark, either by presenting proof of prior registration or of prior use in the United States. See generally 1 J. McCarthy, Trademarks and Unfair Competition §§ 20:4-20:8.
In the present proceeding, the Board and the district court held on alternative grounds that registration should be denied. These grounds were: (1) WF's marks are confusingly similar to SP's previously used, unregistered marks, and (2) they are confusingly similar to SP's registered "STAGECOACH INN" service mark. WF on appeal has argued against both holdings. Because we affirm on the first ground, which is sufficient to deny registration, we do not reach arguments relating to the second.
Section 21 of the Lanham Act, 15 U.S.C. § 1071, provides for two avenues of appeal from a Board decision. A dissatisfied party may appeal to the United States Court of Customs and Patent Appeals or may bring a civil action in district court. When the latter is pursued, the record of the Board is admitted by motion before the district court and has the same effect as if originally produced there. 3
The relation between the Patent Office and the district court concerning patent decisions was defined in Morgan v. Daniels, 153 U.S. 120, 14 S.Ct. 772, 38 L.Ed. 657 (1894). There the Supreme Court said that the Patent Office decision of priority of invention must be accepted as controlling by the district court unless the contrary is "established by testimony which in character and amount carries thorough conviction." Id. at 125, 14 S.Ct. at 773.
We have ruled that the Morgan rule is applicable to the likelihood of confusion issue in trademark cases. Safeway Stores, Inc. v. Dunnell, 172 F.2d 649 (9th Cir.), cert. denied, 337 U.S. 907, 69 S.Ct. 1049, 93 L.Ed. 1719 (1949). We have also ruled that the civil action permitted by 15 U.S.C. § 1071 is to be a trial de novo, but that the decision of the Board must be accepted as controlling on fact issues unless overcome under the Morgan standard. Redken Laboratories, Inc. v. Clairol, Inc., 501 F.2d 1403, 1404 (9th Cir. 1974). The trial is de novo to the extent that the parties are permitted to introduce additional evidence relevant to the issues raised before the Board. Id.
Appellate review of the district court's factual conclusions has traditionally been under the clearly erroneous standard. 4 Fed.R.Civ.P. 52(a); Sarah Coventry, Inc. v. T. Sardelli & Sons, Inc., 526 F.2d 20 (1st Cir. 1975), cert. denied, 426 U.S. 920, 96 S.Ct. 2626, 49 L.Ed.2d 374 (1976); Aloe Creme Laboratories, Inc. v. Texas Pharmacal Co., 335 F.2d 72 (5th Cir. 1964); Teter, Inc. v. Rheem Manufacturing Co., 334 F.2d 784 (7th Cir. 1964); 2 J. McCarthy, supra § 21:6 at 13-14 (1973).
Constrained by this analysis, we look to the district court's record (including the Board's record introduced by joint motion, and the new evidence presented at trial) to determine whether its findings are clearly erroneous. Generally, the district court found that the Board's conclusions were not overcome at trial by evidence carrying thorough conviction.
The test of likelihood of confusion is the same as that applied in infringement actions. But the Board considers only the use shown in the application, not actual use, because opposition proceedings do not determine the common law rights of the applicant. They determine only whether the applicant has the exclusive right to use of the mark and so qualifies for registration. 2 J. McCarthy, supra § 20:4 at 765.
WF presented no persuasive evidence at trial to overcome the Board's finding of likelihood of confusion between its symbols and SP's unregistered stagecoach symbols. 5
WF has instead focussed on the district court's affirmance of the Board's application of the so called "word picture equivalency rule." We do not reach this issue for the reason stated above.
WF first argues in support of its priority of use. It argues that the Board's and the district court's findings that it failed to establish use of the stagecoach symbol in connection with employee restaurant facilities were based upon the incorrect assumption that in-house use is not sufficient to establish trademark rights.
Such an assumption would be contrary to American International Reinsurance Co. v. Airco, Inc., 570 F.2d 941 (CCPA), cert. denied, 439 U.S. 866, 99 S.Ct. 190, 58 L.Ed.2d 175 (1978), which held that use of a mark to identify services exclusively available to employees of the user does not preclude the mark from being a protectible trademark. Id. at 944.
WF's argument, however, is based upon a misreading of the Board's and the district court's decisions. The Board rested its decision on this issue on the lack of evidence of actual use of the mark to promote restaurant services, not on the lunchrooms' limited patronage. 6
At trial, WF presented testimony of present use of a stagecoach symbol on frames used for posting employee cafeteria menus and a bronze sculpture of a stagecoach in the executive dining room. Yet no evidence showed that these symbols were used to promote these facilities prior to SP's use. E.R. 6. The district court could conclude that the Board's finding (that WF failed to show promotion with the symbol) was correct.
WF then attacks SP's priority in its unregistered marks by arguing that SP copied WF's banking marks. To make this argument it asserts: (1) that SP adopted a stagecoach design that included "Wells Fargo Lines" in small lettering, (2) that Dion Van Bibber (SP's predecessor) was generally aware of Wells Fargo history, and (3) that Exhibits J and 356 are similar.
It is not clear what argument WF now makes with these facts. Before the Board, it argued that the use of "Wells Fargo Lines" was evidence of unclean hands. Before us it argues that these facts demonstrate copying by SP and that its use cannot therefore be prior to WF's.
We reject the copying/no priority argument because it assumes that the WF's use of the stagecoach symbol for banking services establishes priority for this proceeding. The issue is not whether WF enjoys priority for the mark as used to promote banking services, it is whether it enjoys priority for its use to promote restaurant services.
The unclean hands argument is more difficult. If SP has deliberately attempted to exploit the commercial good will of WF's banking marks, it cannot enjoy enforcement of rights...
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