West Des Moines State Bank v. Hawkeye Bancorporation

• Decision Date: 09 December 1983
• Docket Number: Nos. 82-2111,82-2166,s. 82-2111
• Citation: 722 F.2d 411
• Parties: WEST DES MOINES STATE BANK, Appellee-Cross Appellant, v. HAWKEYE BANCORPORATION; First Federal State Bank, d/b/a Hawkeye-West Bank & Trust, Hawkeye-West Bank & Trust, Appellants-Cross Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 411

722 F.2d 411

221 U.S.P.Q. 307

WEST DES MOINES STATE BANK, Appellee-Cross Appellant, v. HAWKEYE BANCORPORATION; First Federal State Bank, d/b/a

Hawkeye-West Bank & Trust, Hawkeye-West Bank &

Trust, Appellants-Cross Appellees.

Nos. 82-2111, 82-2166.

United States Court of Appeals,

Eighth Circuit.

Submitted May 17, 1983.

Decided Dec. 9, 1983.

Donald U. Austin, West Des Moines, Iowa and William E. Shull, Kearney, Mo., for appellee-cross appellant.

Robert E. Dreher and Dick L. Jensen, Des Moines, Iowa, for Hawkeye.

Before ROSS and ARNOLD, Circuit Judges, and SCHATZ, District Judge. ^*

ROSS, Circuit Judge.

Hawkeye Bancorporation is a bank holding corporation and Hawkeye-West Bank and Trust is one of its wholly owned companies. West Des Moines State Bank known as "West Bank" is located on the western side of Des Moines, Iowa, as is "Hawkeye-West." West Des Moines State Bank adopted the advertising name of "West Bank" in 1969, although it was not until March 1982 that the name ripened into a statutory right under IOWA CODE ANN. Secs. 548.1-548.4 (West 1981). Hawkeye-West, prior to April 1, 1982, was named First Federal State Bank. Seventy-five thousand five hundred and five dollars was expended by Hawkeye-West on advertising, signs, and forms, to accommodate its change of name.

On March 29, 1982, West Des Moines State Bank sued Hawkeye-West Bank and Trust in federal court ¹ for service mark infringement under 15 U.S.C. Sec. 1125(a) (1976). A similar claim based upon Iowa's common law and statutes was also presented to the trial court. IOWA CODE ANN. Sec. 548.1-.11 (West 1981). West Des Moines State Bank requested an injunction prohibiting further infringements, cancellation of the registered mark "Hawkeye-West Bank & Trust," actual and punitive damages, attorney fees, and an award of profits.

Upon stipulation by the parties, the hearing for a preliminary injunction became the final hearing on the merits. At the hearing the district court found that the use of the service name "Hawkeye-West Bank & Trust" violated West Des Moines State Bank's rights under the federal statute, 15 U.S.C. Sec. 1125(a), the Iowa statutes, IOWA CODE ANN. Sec. 548.9-.11 (West 1981), and the Iowa common law. This determination was not appealed and is not now in issue. The district court ordered the following relief: destruction of all documents and devices bearing the term "West Bank" or any similar name that were then under the control of Hawkeye-West Bank & Trust, an injunction prohibiting further use of the infringing mark, cancellation of the Iowa Service Mark registration of Hawkeye-West Bank & Trust, and an award of $18,876.43 in compensation for actual damages. The trial court refused to award punitive damages or attorney fees.

Hawkeye-West Bank & Trust appeals from the trial court's award of actual damages. West Des Moines State Bank cross appeals from the denial of attorney fees and punitive damages. We affirm in part and reverse in part.

I. Actual Damages

The district court awarded actual damages to compensate West Des Moines State Bank for the confusion created in the public mind by the advertising of the name "Hawkeye-West." The district court's opinion includes an extensive recitation of the evidence of customer confusion and misidentification caused by the advertising campaign conducted by Hawkeye-West Bank & Trust. The court arrived at the figure of $18,876.73 by applying the formula adopted by the Tenth Circuit Court of Appeals in Big O Tire Dealers, Inc. v. Goodyear Tire and Rubber Co., 561 F.2d 1365 (10th Cir.1977), cert. dismissed, 434 U.S. 1052, 98 S.Ct. 905, 54 L.Ed.2d 805 (1978). The Big O formula begins with the total amount of money spent to advertise the infringing name in the area in which the plaintiff conducted business. This figure is then reduced by 75% and the remaining sum is awarded as damages for corrective advertising. Id. at 1375-76.

Hawkeye-West does not argue on appeal that such confusion did not exist or that it was not caused by the name change and attendant advertising. It instead argues that a damage award for corrective advertising is not permitted under the applicable federal or state statutes. Simply put, the law does not have a remedy for a business whose trade name has been diluted, absent evidence of actual dollar loss to the plaintiff or actual dollar gain to the defendant. We do not agree.

Hawkeye-West bases the argument that the federal statutes will not permit this type of an award on the case of Metric & Multistandard Components v. Metric's, Inc., 635 F.2d 710 (8th Cir.1980). In Metric the court stated that 15 U.S.C. Sec. 1117 (1976) (Section 35 of the Lanham Act) was the exclusive remedy for all violations of the Lanham Act. A series of cases are then cited for the proposition that an award of damages is improper under this section unless an actual dollar amount is established. See, e.g., Foxtrap, Inc. v. Foxtrap, Inc., 671 F.2d 636, 642 (D.C.Cir.1982). The remedies available to a plaintiff under the Iowa statutes are also argued to be limited to those listed in section 548.11 of the Iowa Code. As damages for corrective advertising are not included in section 548.11, the following rule of construction is argued to be controlling:

When a cause of action has been created by a statute which expressly provides the remedies for vindication of the cause, other remedies should not readily be implied.

Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 720, 87 S.Ct. 1404, 1408, 18 L.Ed.2d 475 (1967).

Today we need not decide whether an award of damages for corrective advertising is permitted under either the federal or state statutes, as in our view such an award is authorized under Iowa common law.

At the outset we note that section 548.13(1) of the Iowa Code states: "This Act does not affect: 1. Rights, or the enforcement of rights, in marks or trade names acquired in good faith at any time at common law." (Emphasis added.) The common law action for trademark infringement is a species of the action for unfair competition. Boston Pro Hockey Ass'n, Inc. v. Dallas Cap & Emblem Mfg., Inc., 510 F.2d 1004, 1010 (5th Cir.), cert. denied, 423 U.S. 868, 96 S.Ct. 132, 46 L.Ed.2d 98 (1975). Trade names (business names) are under modern law accorded the same protection as trademarks. First Wisconsin National Bank v. Wichman, 85 Wis.2d 54, 270 N.W.2d 168, 172-73 (1978).

The Iowa Supreme Court in the case of Basic Chemicals, Inc. v. Benson, 251 N.W.2d 220 (Iowa 1977) addressed the question of whether in an action for unfair competition an actual dollar amount must be established before damages could be recovered. The court stated:

As a result of our study we conclude there was proof of a reasonable basis from which the amount of damages can be inferred or approximated. We are not disposed to interfere with the amount of the award.

Id. at 233.

The court in Basic Chemicals, Inc. cited as authority the following:

Courts have recognized a distinction between proof of the fact that damages have been sustained and proof of the amount of those damages. If it is speculative and uncertain whether damages have been sustained, recovery is denied. If the uncertainty lies only in the amount of damages, recovery may be had if there is proof of a reasonable basis from which the amount can be inferred or approximated.

Patterson v. Patterson, 189 N.W.2d 601, 605 (Iowa 1971) (emphasis added).

As was noted earlier, the basis from which the district court awarded damages was drawn from the case of Big O Tire Dealers, Inc., supra, 561 F.2d 1365. In that case the court cited precedent supporting an award of damages for corrective advertising but limited this remedy to 25% of the amount spent advertising the infringing mark "in accordance with the FTC rule, since we agree with that agency's determination that a...