Zapata Corp. v. Zapata Trading Intern., Inc.

• Decision Date: 15 October 1992
• Docket Number: No. C14-92-00147-CV,C14-92-00147-CV
• Citation: 841 S.W.2d 45
• Parties: ZAPATA CORPORATION, Appellant, v. ZAPATA TRADING INTERNATIONAL, INC., Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 45

841 S.W.2d 45

ZAPATA CORPORATION, Appellant, v. ZAPATA TRADING INTERNATIONAL, INC., Appellee.

No. C14-92-00147-CV.

Court of Appeals of Texas Houston (14th Dist.).

Oct. 15, 1992.

Chris Lorenzen, Jr., Kathleen Hopkins Alsina, Houston, for appellant.

Morley H. White, Houston, for appellee.

Before JUNELL and DRAUGHN, JJ., and ROBERT E. MORSE, Jr., Former Justice (sitting by designation).

OPINION

MORSE, Former Justice.

Appellant, Zapata Corporation appeals a directed verdict granted in favor of Appellee, Zapata Trading International, Inc. We reverse and remand.

Zapata Corporation (appellant) filed suit against Jose P. Montalvo d/b/a Zapata International for common law trademark and tradename infringement. Mr. Montalvo later incorporated his business under the name Zapata Trading International, Inc. (appellee). The appellant amended its petition and joined the appellee as a defendant. The appellant sought a temporary and a permanent injunction enjoining Jose Montalvo d/b/a Zapata International and Zapata Trading International, Inc. from operating businesses using those names in the State of Texas.

Before proceeding to trial, the parties agreed to a combined trial on the temporary and permanent injunction. Prior to the trial on the merits, the parties entered into a partial settlement agreement. Pursuant to this agreement, a judgment was entered ordering Jose Montalvo d/b/a Zapata International to desist and refrain from doing business using the name Zapata International.

After the announcement of the partial settlement, Zapata Corporation (appellant) and Zapata Trading International, Inc. (appellee) proceeded to trial. At the close of the appellant's evidence, appellee moved for a directed verdict, which the trial court granted.

In its first point of error, the appellant claims the trial court erred in granting a directed verdict in favor of the appellee because it had raised material fact issues as to each element of its case. The appellee made its motion for directed verdict on the grounds that the appellant had failed to carry its burden of proof as to its cause of action and on the affirmative defense of laches.

An instructed verdict is proper in three instances: (1) when a defect in the opponent's pleadings makes them insufficient to support a judgment, (2) when the evidence conclusively proves a fact that establishes a party's right to judgment as a matter of law, or (3) when the evidence offered on a cause of action is insufficient to raise an issue of fact. McCarley v. Hopkins, 687 S.W.2d 510, 512 (Tex.App.--Houston [1st Dist.] 1985, no writ) (citations omitted). When reviewing a directed verdict, this court must view the evidence in a light most favorable to the party against whom the verdict has been directed and disregard all contrary evidence and inferences. Qantel Business Systems, Inc. v. Custom Controls Co., 761 S.W.2d 302, 303 (Tex.1988). Our review is governed by the question of whether any evidence of probative force exists that raises fact issues on material questions presented. Henderson v. Travelers Ins. Co., 544 S.W.2d 649, 650 (Tex.1976).

Appellant sought a permanent injunction for trademark infringement. In order to succeed on this cause of action appellant had the burden to prove the following elements:

(1) the name it seeks to protect is eligible for protection;

(2) it is a senior user of the name;

(3) there is a likelihood of confusion between its mark and that of the other user;

(4) and because it seeks the equitable remedy of injunction, it must show the likelihood of confusion will cause irreparable injury for which there is no adequate legal remedy.

Union Nat. Bank, Laredo v. Union Nat. Bank, Austin, 909 F.2d 839, 844 (5th Cir.1990); accord, KIKK, Inc. v. Montgomery County Broadcasting, Inc., 516 S.W.2d 494, 495 (Tex.Civ.App.--Beaumont 1974, no writ); Cano v. Macarena, 606 S.W.2d 718, 722 (Tex.Civ.App.--Corpus Christi 1980, writ dism'd). A common law trademark infringement action under Texas law presents no difference in issues than those under federal trademark infringement actions. Waples-Platter Companies v. General Foods Corp., 439 F.Supp. 551, 583 (N.D.Tex.1977).

Appellant argues the evidence at trial was sufficient to raise a material fact question as to whether or not the name "Zapata" is eligible for protection. The classification of a mark is the first step in determining its eligibility for protection. Union Nat. Bank, Laredo, 909 F.2d at 844. In order for a name to be protected, it must be shown to be a suggestive term, an arbitrary or fanciful term, or a descriptive term that has acquired secondary meaning. ¹ Id. Appellant claims the evidence shows "Zapata," as used by the appellant, is an arbitrary mark. A mark is considered "arbitrary" if it refers to an ordinary word which does not suggest or describe the services involved. Id. at 845.

The testimony at trial showed the appellant's use of the name "Zapata" does not describe or suggest the services involved. Kent Stephenson, Vice President, General Counsel and Secretary for appellant testified that the business of appellant was highly diversified and included an offshore servicing company, a fishing operation, and an oil and gas exploration company among its many holdings. He also testified appellant has neither conducted business in Zapata County nor has it had customers, suppliers or offices in Zapata County in over twenty years. The evidence showed appellant is headquartered in Houston and conducts its business worldwide. Appellant points to this evidence as proof that its use of "Zapata" is not connected to the county of Zapata nor to the goods or services it provides and is therefore, an arbitrary use. If it is an arbitrary use, then appellant does not have to show proof of secondary meaning. Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 791 (5th Cir.1983).

Appellant argues in the alternative that its use of "Zapata" is protectable as a descriptive term that has acquired secondary meaning. A geographic term is descriptive if it describes where the product or services are offered or manufactured. Union Nat. Bank, Laredo, 909 F.2d at 845. Descriptive marks are protectable only if there is proof they have acquired secondary meaning for the consuming public. Zatarains, Inc., 698 F.2d at 793-94.

The party seeking protection of a name has the burden of proving the name has acquired secondary meaning. This is a substantial burden and it must be shown the name or mark denotes to the consumer a single thing coming from a single source. Both direct and circumstantial evidence may be used to establish secondary meaning. Evidence such as amount and manner of advertising, volume of sales, and length and manner of use may constitute circumstantial evidence relevant to the issue of secondary meaning. These factors combined may prove secondary meaning; together they can establish the necessary link in the minds of consumers between product and source. Id., at 794-95.

At trial, appellant produced evidence that went to several of these factors. The testimony of Mr. Stephenson showed appellant had used the name "Zapata" continuously since 1954. Evidence showing long and extensive use has been held sufficient to prove a trade name has acquired secondary meaning. Douglas v. Walker, 707 S.W.2d 733, 734 (Tex.App.--Beaumont 1986, no writ).

Appellant was shown to conduct business on a worldwide basis and had thousands of employees and customers throughout the world. There was also testimony that consumers in the industry refer to the company as "Zapata." Mr. Stephenson testified that appellant's gross revenues for 1990 were about $90,000,000.

The evidence showed appellant uses its name on stationary, business cards, drilling rigs, boats, and buildings. Appellant also uses its name on promotional items such as t-shirts, windbreakers, umbrellas, and pens. Mr. Stephenson's testimony showed these promotional items were given to customers and suppliers. Use of names on business property and in promotional items have been used successfully to prove secondary meaning. J.C. Penney Co. v. Walker, 395 S.W.2d 76, 78 (Tex.Civ.App.--Waco 1965, writ ref'd n.r.e.).

Appellee contends appellant cannot protect a merely geographical name. Appellee argues because "Zapata" is a county and city in Texas, appellant cannot protect it for its exclusive use. Geographical names can be used in such a manner and for such a length of time that they do acquire secondary meaning in the minds of the consuming public and may become protectable. Harrelson v. Wright, 339 S.W.2d 712, 714 (Tex.Civ.App.--Eastland 1960, writ ref'd); see also Burge v. Dallas Retail Merchants Ass'n, 257 S.W.2d 733, 735 (Tex.Civ.App.--Dallas 1953, no writ); In Re Nantucket, Inc., 677 F.2d 95, 99-101 (C.C.P.A.1982).

Looking at the above evidence in a light most favorable to the appellant, we find that appellant introduced some probative evidence on the issue of whether or not appellant has a name that is eligible for protection. Whether or not a tradename or trademark has been established is generally a question for the jury. Cano, 606 S.W.2d at 722.

We also find the evidence clearly establishes the appellant's status as senior user of the name. Mr. Stephenson testified appellant had used the name "Zapata" since 1954. Mr. Montalvo testified the appellee had used "Zapata" in its present form only since 1989 and used it for the first time in 1986.

Appellant then had to produce probative evidence that showed a likelihood of confusion between its name and the name used by appellee. Proof of actual confusion is not required. Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1186 (5th Cir.1980), cert. denied, 450 U.S. 981, 101 S.Ct. 1516, 67 L.Ed.2d 816 (1981). However, proof of actual confusion is strong proof that the likelihood of confusion exists. Id. Once actual confusion has been proved, it would require an almost overwhelming amount of proof to...