Westchester Media v. PRL USA Holdings Inc

• Decision Date: 27 June 2000
• Docket Number: No. 99-20754,99-20754
• Citation: 214 F.3d 658
• Parties: (5th Cir. 2000) WESTCHESTER MEDIA; NAVASOTA HOLDING CO., L.L.C. Plaintiffs/Counter-Defendants/Appellants, v. PRL USA HOLDINGS, INC.; POLO RALPH LAUREN CORPORATION d/b/a Delaware Polo Ralph Lauren Corporation Defendants/Counter-Claimants/Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

Page 658

214 F.3d 658 (5th Cir. 2000)

WESTCHESTER MEDIA; NAVASOTA HOLDING CO., L.L.C. Plaintiffs/Counter-Defendants/Appellants, v. PRL USA HOLDINGS, INC.; POLO RALPH LAUREN CORPORATION d/b/a Delaware Polo Ralph Lauren Corporation Defendants/Counter-Claimants/Appellees.

No. 99-20754

UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

June 27, 2000

[Copyrighted Material Omitted]

Appeal from the United States District Court for the Southern District of Texas, Houston Division

Before JONES, DeMOSS, and DENNIS, Circuit Judges.

EDITH H. JONES, Circuit Judge:

Appellants Westchester Media and Navasota Holding Co. ("Westchester") appeal the judgment finding that their use of the mark "POLO" to title a magazine infringed marks for products sold by Polo Ralph Lauren entities ("PRL"). Two features distinguish this case from run of the mill trademark infringement claims. PRL is attempting to prevent Westchester from titling a magazine even though PRL itself sells no literary products. And Westchester acquired its "POLO" mark from and, at least in part for the continuation of, the official publication of the U.S. Polo Association. This Court agrees with the magistrate judge's finding of trademark infringement but concludes that the court may have erred in permanently enjoining Appellants from using the mark "Polo" for their lifestyle magazine. We remand for further consideration of remedy, in particular for reconsideration of disclaimer relief.

I. FACTUAL & PROCEDURAL HISTORY

PRL is a fashion and design business founded in 1967 by Ralph Lauren. Lauren has built PRL into a multi-billion dollar company that sells wearing apparel, accessories, home furnishings, and fragrances. In the last four years alone, PRL sold approximately four billion dollars wholesale value of products bearing various "Polo" trademarks. PRL advertises extensively in newspapers, trade publications, and magazines. Articles about PRL's products and Ralph Lauren himself have appeared in magazines as diverse as Time, Financial World, Town & Country, and Vanity Fair.

PRL has registered a number of trademarks with the Patent and Trademark Office ("PTO") that include the word POLO. We will refer to these trademarks collectively as the "Polo Trademarks." PRL does not possess a POLO trademark for use on a publication. All the Polo Trademarks remain in effect, and several have become incontestable under the Lanham Act. 15 U.S.C. § 1065. PRL contends that as a result of its thirty years of continuous and extensive use of the Polo Trademarks, these marks have become famous, and the word POLO has come to be closely identified with both Ralph Lauren and PRL.

Westchester Media Company publishes magazines and, until the summer of 1997, produced only specialty magazines such as "Cowboys & Indians." Westchester's general partner is Navasota, whose sole shareholder is John B. Goodman. An avid polo player, Goodman is captain of a top-ranked polo team that has represented the United States in the international Westchester Cup tournament. He has been a member of the United States Polo Association ("USPA") since 1989 and serves on the boards of two USPA committees. He is also on the board of directors of the Houston Polo Club, of which he was president in 1994 and 1995.

In May 1997, Westchester Media and Navasota Holding Company purchased the assets of POLO magazine, including its trademarks, from Fleet Street Publishing Company and its owner, Ami Shinitzky. Those trademark registrations were granted to Shinitzky and Fleet Street in 1992 and read as follows:

(1) Registration No. 1,691,432 for "POLO", a "magazine on the subject of equestrian sports and lifestyles";

(2) Registration No. 1,677,088 for a "horse and rider design" for "magazine publication services", and the design which appears on the masthead of POLO magazine; and

(3) Registration No. 1,710,894 for "POLO Life", a "magazine dealing with equestrian sports and lifestyles."

The history of Ami Shinitzky's POLO Magazine is critical to this dispute. Shinitzky, a polo enthusiast and USPA member, founded POLO Magazine (the "Old POLO Magazine") in 1975. Until it was sold in 1997, the Old POLO Magazine was a special interest magazine that provided, in its own words, "an insider's view of the sport of polo and the international society and . . . traditions that surround it." In an August 1997 article on the history of the Old POLO Magazine, Shinitzky wrote that the magazine "hit its stride with a formulaic mixture of game coverage, personality and club profiles, rules, opinions, history and how-to and horsemanship articles." The magazine's advertising base was equally equine-focused, consisting primarily of horse medicines, equestrian products, and polo equipment. The USPA endorsed the Old POLO Magazine as its "official publication," and most of the magazine's 7,000 subscribers were members of the USPA who received the magazine as a benefit of membership.

Shinitzky's direction of Old POLO Magazine was marked by a peaceful coexistence with PRL. Soon after the magazine's founding, Shinitzky interviewed Ralph Lauren for the magazine. In the following years, PRL frequently advertised in the magazine, as did several other luxury goods manufacturers. At no point during Old POLO Magazine's existence did PRL complain about the magazine's use of the "Polo" mark.

Beginning in 1989, Shinitzky started publishing issues of the Old POLO Magazine with expanded "lifestyle" content under the title POLO Life. According to Westchester, issues with expanded lifestyle content were published in 1989, 1990, 1992, 1993, 1994, 1995, and early 1997. Describing one of these issues in 1989, the trade journal Ad Week wrote, "[Shinitzky's magazine bears] a striking resemblance to one of Lauren's ads. It's loaded with pictures of upscale people having a good time at country clubs. Shinitzky hopes to attract advertisers that want to reach just that crowd." PRL was aware of the Ad Week article but continued to advertise in the Old POLO Magazine.

Ad Week was not the only entity to find similarity between the Old Polo Magazine and PRL. According to Westchester, potential advertisers in Old POLO Magazine frequently asked whether there was some connection between Old POLO Magazine and PRL.

In 1992, Shinitzky obtained federal registration for POLO covering a "magazine on the subject of equestrian sports and lifestyles." In support of its application to the PTO, Fleet Street submitted two 1989 issues of the Old POLO magazine, one of which included a PRL advertisement. PRL filed no opposition to the title or description of the magazine. Shinitzky offered to sell the magazine and its registration to PRL in 1994 but received no response. In April 1998, the federal registration received by Shinitzky became incontestable.

In May 1997, Westchester purchased all assets of POLO Magazine from Fleet Street for approximately $400,000. Despite the Old POLO Magazine's lackluster financial performance -- it lost $1,400 in 1996 -- Westchester explained the purchase price by pointing to the goodwill and history behind Fleet Street's POLO mark and to the access the magazine provided to personalities in the world of polo. Westchester repeatedly testified that it bought the magazine intending to "re-launch" it in an effort to expand readership and broaden polo's appeal. Despite Shinitzky's attempt during the purchase negotiations to link the magazine with "Ralph Lauren's spectacular achievement with the name Polo," Westchester denied at trial any intent to infringe PRL's trademarks or to trade on PRL's reputation and goodwill.

After purchasing the Old POLO Magazine, Westchester "re-launched" the magazine in October 1997 under the name of POLO (the "New POLO Magazine"), while at the same time publishing a separate magazine called "Polo Players Edition." In contrast to Shinitzky's magazine, the new POLO Magazine carried the tagline "Adventure Elegance Sport." The re-launched magazine also changed its target audience and distribution methods. Westchester purchased the customer list from Neiman Marcus, one of PRL's largest retailers, and arranged for promotional materials for the New POLO Magazine to be mailed to these customers. Westchester then sent a free copy of the New POLO Magazine to almost one million Neiman Marcus customers. In promotional materials sent to prospective advertisers, Westchester wrote that the New POLO Magazine was "not about the sport, but rather about an adventurous approach to living life." The promotional materials also explained that the new magazine would be distributed not only to USPA members but also "on newstands, at hotels, resorts, and clubs." Westchester also chose fashion model Claudia Schiffer to appear on the cover of its inaugural issue. The previous year, Ms. Schiffer had been PRL's featured model in an extensive advertising campaign.

While re-making the image of POLO magazine, Westchester tried to maintain the old magazine's links with PRL. Shortly after purchasing POLO magazine, Westchester contacted PRL and secured a meeting with Elizabeth Morris, a PRL advertising executive. On June 23, 1997, Westchester's Reid Slaughter met with Morris and made an advertising sales pitch. This pitch included two "mock-up" covers of the New POLO Magazine, neither of which was ever used for the New POLO Magazine. One cover depicted a horse, but Westchester did not put a horse on its cover until more than a year after the re-launch. Slaughter testified that Morris reacted positively to his presentation. PRL, however, asserts that Morris made a clear objection to the magazine's title.

After this meeting, Westchester continued to lobby PRL for advertising. In September 1997, PRL's advertising agency invited Westchester to "Magazine Week," an event that allowed select magazine "finalists" to pitch advertising deals to PRL. This invitation was rescinded two days after it issued, and on September 23, 1997, PRL formally objected to the...