1 Specifically, Source alleges that SourceOne’s use of the word “source”

(continued...)

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

SOURCE, INC.,

Plaintiff,

VS.

SOURCEONE, INC.,

Defendant.

)

)

)

) CIVIL ACTION NO.

)

) 3:05-CV-1414-G

)

) ECF

)

MEMORANDUM OPINION AND ORDER

Before the court is the motion of the plaintiff, Source, Inc. (“Source”), for

partial summary judgment on its 15 U.S.C. § 1114(1)(a)-(b) trademark infringement

claims against the defendant, SourceOne, Inc., (“SourceOne”), and on SourceOne’s

third, fourth, seventh, eighth, and ninth affirmative defenses. For the reasons stated

below, Source’s motion is granted in part and denied in part.

I. BACKGROUND

Source filed its original complaint in this court on July 15, 2005, alleging that

SourceOne infringed, and continues to infringe, upon its trade and service mark.1

 

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1

(...continued)

violates 15 U.S.C. §§ 1114(1)(a)-(b), 1125(a)(1)(A), 1125(c)(1); TEX. BUS. &

COMM. CODE ANN. §§ 16.26(a)(1)-(2), 16.29; and Texas common law relating to

trademarks and unfair competition. Complaint ¶¶ 22-29. 

- 2 -

Plaintiff’s Original Complaint (“Complaint”). On September 6, 2005, SourceOne

filed an answer, in which it asserted nine affirmative defenses and six counterclaims. 

Defendant’s Answer, Affirmative Defenses, and Counterclaims (“Answer”). On

April 14, 2006, Source filed this motion for partial summary judgment on its section

1114(1) trademark infringement claims and on five of the nine affirmative defenses

asserted by SourceOne. Plaintiff’s Motion for Partial Summary Judgment and

Supporting Brief (“Motion for Summary Judgment”). 

Source is a telecommunications corporation that offers new and refurbished

communications equipment to customers on a nation-wide basis. Complaint ¶ 5. It

is the owner of the common law trademark and service mark “Source.” Id. ¶ 6. It has

continuously used the mark in connection with the sale of communications

equipment since March 1, 1972. Id. Source first registered its mark in 1989. 

Motion for Summary Judgment ¶ 2.

SourceOne is a “strategic technology vendor providing enterprise data and

voice solutions” to customers on a nation-wide scale. Defendant SourceOne, Inc.’s

Brief in Support of Response to Plaintiff Source, Inc.’s Motion for Partial Summary

Judgment, and Objections to Source’s Summary Judgment Evidence (“Response”)

 

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¶ 1. SourceOne first used the name “SourceOne” in 1995 and has never registered it. 

Motion for Summary Judgment ¶ 5. 

While Source and SourceOne do not provide identical services to an identical

customer base, there is some overlap in the voice and communications market. Id.

¶ 6; Response ¶ 2. Approximately 80% of SourceOne’s total business is unrelated to

the services provided by Source. Response ¶ 2. Only the remaining 20% of

SourceOne’s total business relates to voice and communications solutions. Id. Both

corporations are strategic business partners of Avaya, a third party manufacturer and

provider of communications equipment. Motion for Summary Judgment ¶ 6. Over

the past decade, employees of Avaya have confused the identities of the two

companies on numerous occasions. Affidavit of Karl Jackson, attached to Motion for

Summary Judgment at 6-7 (“Jackson Affidavit”). 

Prior to the commencement of this action, the only direct contact between the

two corporations involved a work order submitted by Source to SourceOne in August

2000. Response ¶ 4. Subsequent to that work order, Source sent SourceOne a cease

and desist letter indicating that Source considered SourceOne’s use of the word

“source” to be trademark infringement. Id. On February 16, 2001, SourceOne

responded to the cease and desist letter by mail and denied Source’s allegations of

trademark infringement. Id. Source apparently took no further action until it filed

this suit in July 2005. Id. 

 

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2 Source also filed a document styled “Plaintiff’s Amended Motion for

Partial Summary Judgment.” This document and the original motion for summary

judgment differ only in form. They are substantively identical. 

- 4 -

II. ANALYSIS

A. Procedural Deficiencies in Source’s Motion

 for Partial Summary Judgment

In its response, SourceOne objects, pursuant to Local Rule 56.3, to the form of

Source’s motion for summary judgment. Response ¶ 13. Specifically, SourceOne

objects on the grounds that Source’s motion “(1) fails to contain a summary, (2) does

not contain legal and/or factual grounds on which the moving party relies, (3) does

not cite to an appendix, and (4) erroneously contains argument and authorities.” Id. 

In an effort to correct these procedural deficiencies, Source has moved the court for

leave to file an amended motion.2

 Plaintiff’s Motion for Leave to File Plaintiff’s

Amended Motion for Partial Summary Judgment. (“Motion for Leave”). 

Notwithstanding the local civil rules, the court can direct the parties to proceed

in any manner that it deems just and expeditious. Local Rule 83.1. As the instant

defects are non-prejudicial and purely procedural in nature, the twin goals of justice

and expediency are better served by allowing the defective motion to stand as

opposed to forcing Source to re-file. This is especially true in light of the fact that the

proposed amended motion is substantively identical to the original motion. For these

reasons, the court will waive the procedural deficiencies and consider the original

motion as though it had been properly filed.

 

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3 SourceOne asserts nine “affirmative” defenses; however, SourceOne’s

first defense (that Source fails to state a claim), second defense (that there is no

likelihood of confusion), fifth defense (that there has been no dilution), and sixth

(continued...)

- 5 -

B. Objections to Summary Judgment Evidence

Both Source and SourceOne raise objections to particular affidavits pertaining

to the motion for summary judgment and the response thereto. Source objects to the

Smith affidavit on the grounds that it is hearsay and does not reflect Smith’s personal

knowledge of the subject matter. SourceOne objects to the Jackson affidavit in its

entirety on the grounds that it is not verified as true and correct. Response ¶ 15. 

Alternatively, SourceOne objects to particular phrases in the affidavit that are

“hearsay, opinion, conclusory allegations, speculation, unsubstantiated assertions and

legal arguments.” Response ¶ 17.

Supporting and opposing affidavits must (1) state admissible facts, (2) be

based on personal knowledge, and (3) demonstrate that the affiant is competent to

testify. FED. R. CIV. P. 56(e). In reaching its decision, the court has only considered

summary judgment evidence that meets this standard. Evidence that does not meet

this standard was disregarded by the court. Accordingly, the parties’ respective

objections are overruled as moot.

C. Source’s Motion for Summary Judgment

Source has moved for summary judgment on its 15 U.S.C. § 1114(1)

trademark infringement claims and on five of the nine “affirmative defenses”3

 raised

 

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3

(...continued)

defense (that Source’s mark is not famous) are not affirmative defenses. The first is

essentially a statement of Rule 12(b)(6) and, in the absence of a 12(b)(6) motion, it

is essentially meaningless. The remainder of the defenses attempt to negate an

element of one of Source’s claims; thus, they are not affirmative in nature.

4 The disposition of a case through summary judgment “reinforces the

purpose of the Rules, to achieve the just, speedy, and inexpensive determination of

actions, and, when appropriate, affords a merciful end to litigation that would

otherwise be lengthy and expensive.” Fontenot v. Upjohn Company, 780 F.2d 1190,

1197 (5th Cir. 1986).

- 6 -

by SourceOne in its answer. The affirmative defenses moved upon are SourceOne’s

third affirmative defense (that the mark “Source” is descriptive), fourth affirmative

defense (abandonment), seventh affirmative defense (laches, waiver, and estoppel),

eighth affirmative defense (acquiescence), and ninth affirmative defense (that

SourceOne’s use constitutes fair and/or nominative use of the mark).

1. Evidentiary Burdens on Summary Judgment

Summary judgment is proper when the pleadings and evidence before the court

show that no genuine issue exists as to any material fact and that the moving parties

are entitled to judgment as a matter of law. FED. R. CIV. P. 56(c).4

 The movant

makes such a showing by informing the court of the basis of its motion and by

identifying the portions of the record which reveal there are no genuine material fact

issues. Celotex Corporation v. Catrett, 477 U.S. 317, 323 (1986). “[T]he substantive

law will identify which facts are material.” Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 248 (1986). A genuine issue of material fact exists “if the evidence is such that

 

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a reasonable jury could return a verdict for the nonmoving party.” Id. The pleadings,

depositions, admissions, and affidavits, if any, must demonstrate that no genuine

issue of material fact exists. FED. R. CIV. P. 56(c).

Once the movant makes this showing, the nonmovant must then direct the

court’s attention to evidence in the record sufficient to establish that there is a

genuine issue of material fact for trial. Celotex, 477 U.S. at 323-24. To carry this

burden, the “opponent must do more than simply show . . . some metaphysical doubt

as to the material facts.” Matsushita Electric Industrial Co., Ltd. v. Zenith Radio

Corporation, 475 U.S. 574, 586 (1986). Instead, the nonmovant must show that the

evidence is sufficient to support a resolution of the factual issue in its favor. Anderson,

477 U.S. at 249. 

While all of the evidence must be viewed in a light most favorable to the

nonmovant, id. at 255 (citing Adickes v. S.H. Kress & Company, 398 U.S. 144, 158-59

(1970)), neither conclusory allegations nor unsubstantiated assertions will satisfy the

nonmovant’s summary judgment burden. Calbillo v. Cavender Oldsmobile, Inc., 288

F.3d 721, 725 (5th Cir. 2002) (citing Little v. Liquid Air Corporation, 37 F.3d 1069,

1075 (5th Cir. 1994) (en banc)). Summary judgment in favor of the movant is

proper if, after adequate time for discovery, the motion’s opponent fails to establish

the existence of an element essential to its case and as to which it will bear the burden

of proof at trial. Celotex, 477 U.S. at 322-23.

 

 Case 3:05-cv-01414-G Document 33 Filed 08/16/06 Page 7 of 21 PageID 537
5 Under 15 U.S.C. § 1065, a mark becomes incontestable if the owner has

used it continuously in connection with the goods or services specified in the

registration for five years after the date of registration provided that (1) there has

been no final adverse decision to the registrant’s claim; (2) there is no current

proceeding involving the mark; (3) an affidavit stating that the mark has been in

continuous use for five years is filed within one year of the expiration of the five year

period; and (4) the mark is not the generic name for the goods or services for which it

is registered. 

Source has established that its mark is incontestable. 15 U.S.C.

§ 1115(b) provides that a mark’s incontestability is “conclusive evidence of the

validity of the registered mark.” That section goes on to say, however, that such

conclusive evidence extends only to the goods and services specified in the affidavit.

- 8 -

2. The Trademark Infringement Claims

To demonstrate trademark infringement under 15 U.S.C. § 1114(1), a plaintiff

must prove (1) that it is the owner of a valid and protectable mark and (2) that the

defendant’s use of the mark creates a likelihood of confusion. 15 U.S.C. § 1114(1);

Fuji Photo Film Company v. Shinohara Shoji Kabushiki Kaisha, 754 F.2d 591, 594 (5th

Cir. 1985) (“Likelihood of confusion is thus the central issue in any suit for

trademark infringement”) (internal quotations omitted). 

a. A Valid and Protectable Mark

By producing the Jackson affidavit and the exhibits attached thereto, Source

has established that it owns a valid and incontestable mark.5 Jackson Affidavit ¶ 3. 

SourceOne, however, argues that Source’s mark is not incontestable in this situation

because the mark does not embrace the goods and services in question. Response

¶ 26. Source’s registered service mark covers: 

 

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- 9 -

Business management consultation services in the purchase

and rental of telephone equipment and systems . . .

installation, repair, reconditioning, refurbishment and

maintenance of telephone parts, equipment, and systems

. . . telecommunication services and rental services in the

field of telephone parts, equipment and systems.

Service Mark Principal Register, attached to Jackson Affidavit as Exhibit 1. Source’s

registered trademark covers “new and reconditioned telecommunications equipment,

[including] telephone sets and parts thereof, switching apparatus and private branch

exchanges.” Trademark Principal Register, attached to Jackson Affidavit as Exhibit 1. 

SourceOne argues that Source’s mark, which embraces only traditional

communications systems, cannot possibly cover “design and implementation of

Internet Protocol telephone [systems] allowing voice, video and data collaboration”

because that technology simply did not exist at the time of registration. Response

¶ 26. It is primarily in this non-traditional communications market that the

potentiality for competition exists between the two companies; thus, SourceOne

argues, a genuine issue of fact exists as to whether the mark is applicable in this

situation. Id.

Trademark protection is not limited to the goods and services specified in the

registration but extends to any goods or services which are likely to cause confusion in

the market. Hindu Incense v. Meadows, 692 F.2d 1048, 1050 (6th Cir. 1982); see

Maier Brewing Company v. Fleischmann Distilling Corporation, 390 F.2d 117 (9th Cir.)

 

 Case 3:05-cv-01414-G Document 33 Filed 08/16/06 Page 9 of 21 PageID 539
6 The sections of the United States Code upon which Source makes its

motion are codifications of the “Lanham Act,” which is named for its principal

proponent. 

7 Both categories of goods and services represent methods of

communication. It is not as though Source is attempting to exert the mark’s

protection over an entirely unrelated industry.

- 10 -

(noting that the Lanham Act’s6

 focus is on the creation of a likelihood of confusion as

opposed to the previous trademark act’s focus on the type of goods infringed), cert.

denied, 391 U.S. 966 (1968). The high-tech voice and data collaboration goods and

services now provided by Source are sufficiently similar to the traditional

telecommunication goods and services specified in the registration to come within the

scope of the trademark’s protection.7 Therefore, as SourceOne has failed to direct the

court to any evidence that could create a genuine issue of material fact on this issue,

Source’s showing that it is the owner of a valid trademark is sufficient to satisfy the

first prong of the test.

b. Likelihood of Confusion

The second prong of the test requires the plaintiff to prove that the

defendant’s use of the mark in question creates a likelihood of confusion. A

likelihood of confusion is something more than a mere possibility of confusion; a

probability of confusion is a better approximation of the degree of likelihood

necessary to satisfy the test. See Blue Bell Bio-Medical v. Cin-Bad, Inc., 864 F.2d 1253,

1260 (5th Cir. 1989). The 5th Circuit has enumerated a non-exhaustive list of

 

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- 11 -

factors that a court should consider when making this determination: “(1) the type

of mark allegedly infringed, (2) the similarity between the two marks, (3) the

similarity of the products or services, (4) the identity of the retail outlets and

purchasers, (5) the identity of the advertising media used, (6) the defendant’s intent,

and (7) any evidence of actual confusion.” Westchester Media v. PRL USA Holdings,

Inc., 214 F.3d 658, 664 (5th Cir. 2000). No one factor is controlling, Conan

Properties, Inc. v. Conans Pizza, Inc., 752 F.2d 145, 150 (5th Cir. 1985), and the court

is free to consider other factors in reaching its decision. Armco, Inc. v. Armco Burglar

Alarm Co., Inc., 693 F.2d 1155, 1160 (5th Cir. 1982). 

i. Type of Mark Infringed

The first enumerated factor refers to the relative “strength” of the trademark. 

Elvis Presley Enterprises v. Capece, 141 F.3d 188, 201 (5th Cir. 1998). Marks can be

classified into one of five increasingly protective categories: (1) generic;

(2) descriptive; (3) suggestive; (4) arbitrary; or (5) fanciful. Two Pesos, Inc. v. Taco

Cabana, Inc., 505 U.S. 763, 768 (1992). Marks that fall into one of the latter three

categories are considered strong and are entitled to greater protection. Id. “Source” is

properly classified as an arbitrary mark because it does not suggest anything about the

nature of the goods and services offered by telecommunications company. See Union

National Bank of Texas, Laredo v. Union National Bank of Texas, Austin, 909 F.2d 839,

845 (5th Cir. 1990) (discussing the definitions of the different categorical terms).

 

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- 12 -

SourceOne, in an attempt to combat the strength of the mark, argues that the

mere multitude of communications companies that incorporate the word “source”

into their names indicates the relative weakness of the mark. Response ¶¶ 32-33. 

This proposition has some merit. See Armco, 693 F.2d at 1159-1160 (noting that an

absence of third-party use contributes to the strength of a mark); see also Amstar

Corporation v. Domino’s Pizza, Inc., 615 F.2d 252, 260 (5th Cir.) (noting that extensive

third-party use should be considered in determining strength of mark), cert. denied,

449 U.S. 899 (1980). In light of the arbitrariness of the mark and its relative

prominence in the market, the mark is neither patently strong nor inherently weak.

ii. Similarity of the Marks

The similarity of the mark and the purported infringing use is determined by

comparing their appearance, sound, and meaning. Elvis Presley Enterprises, 141 F.3d at

201. The relevant inquiry is whether the mark and the alleged infringing use are so

similar that the average consumer is likely to be confused. Id. In making this

determination, the court can take notice of logos, labels, and the context of usage. Id.

The summary judgment evidence suggests that the only similarity between the

marks in this case is the incorporation of the word “source” into SourceOne’s name. 

The companies’ logos and labels are similar only insofar as SourceOne’s logo includes

the word “source.” Compare SourceOne logo, attached to Answer as Exhibit 1

(“SourceOne Logo”), with Source Logo, attached to Answer as Exhibit 2 (“Source

 

 Case 3:05-cv-01414-G Document 33 Filed 08/16/06 Page 12 of 21 PageID 542
- 13 -

Logo”). Source’s logo is red, is in a special font, and is capitalized. See Source Logo. 

SourceOne’s Logo, on the other hand, is blue (or black) and yellow, in a different

font, and not capitalized. See SourceOne Logo. Any likelihood of confusion would

therefore most likely arise out of the auditory similarity of the marks and not out of

their physical appearance.

iii. Similarity of Products and Services

The likelihood of confusion is greater where the products or services provided

by the owner of a mark and the alleged infringer are similar. Exxon Corporation v. Texas

Motor Exchange of Houston, Inc., 628 F.2d 500, 505 (5th Cir. 1980). The summary

judgment evidence establishes that Source and SourceOne are both dealers for Avaya

and Cisco communications equipment. Jackson Affidavit ¶¶ 7-8. The court notes,

however, that the sale of such equipment accounts for only a small percentage of

SourceOne’s total business. Response ¶ 36.

iv. Identity of Retail Outlets and Purchasers

Dissimilarities between the retail outlets for and the predominate consumers of

the parties’ goods and services lessens the likelihood of confusion. Amstar, 615 F.2d

at 262. While Source asserts that both companies “sell communications systems and

services to businesses large and small across the country,” Motion for Summary

Judgment at 10, it fails to direct the court to any summary judgment evidence

demonstrating that Source and SourceOne are direct competitors. SourceOne, on the

 

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8 Sells avers that the name SourceOne was intended to indicate to

(continued...)

- 14 -

other hand, proffers the Sells affidavit, which suggests that the companies are not

direct competitors, have never lost business to each other, and that SourceOne does

not even consider Source to be a competitor in its market. Affidavit of Steven Sells,

attached to Response as Exhibit 1 at A1-A4 (“Sells Affidavit”).

v. Advertising Medium Used

There is a greater likelihood of confusion when the advertising methods

implemented by the parties are similar in nature. Exxon Corporation, 628 F.2d at 506. 

The summary judgment evidence reveals only that both parties advertise on their

respective websites. Accordingly, they use the exact same medium to advertise.

vi. SourceOne’s Intent

Proof of intent to deceive is not a condition precedent to a finding of a

likelihood of confusion; however, proof of intent to deceive, standing alone, may be

sufficient to justify such a finding. Elvis Presley Enterprises, 141 F.3d at 203. Where a

defendant acted in good faith, this “digit of confusion” becomes a non-factor in the

analysis. Id. It weighs neither in favor of a likelihood of confusion nor against it. Id.

In the instant case, Source admits that there is no summary judgment evidence

specifically demonstrating that SourceOne acted in bad faith. Motion for Summary

Judgment at 11-12. SourceOne, however, has offered evidence demonstrating that

the origin of its name was not intended to inject confusion into the market place.8

 

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8

(...continued)

SourceOne’s customers that they needed only “one source for their data server,

storage and voice needs.” Sells Affidavit at A3.

- 15 -

Sells Affidavit at A3. Therefore, this factor weighs neither one way nor the other in

the analysis.

vii. Actual Confusion

While evidence of actual confusion is not necessary to a finding of a likelihood

of confusion, “it is nevertheless the best evidence of a likelihood of confusion.” Elvis

Presley Enterprises, 141 F.3d 203-204 (quoting Amstar Corp., 615 F.2d at 263); World

Carpets, Inc. v. Dick Littrell’s New World Carpets, 438 F.2d 482, 489 (5th Cir. 1971)

(“[W]hile very little proof of actual confusion would be necessary to prove the

likelihood of confusion, an almost overwhelming amount of proof would be necessary

to refute such proof.”). While trademarks seek to protect the ultimate consumer

from confusion, the identity of the person confused is essentially a non-factor in the

likelihood of confusion analysis. See Fuji Photo Film Company, 754 F.2d at 597

(noting that the 5th Circuit has never totally disregarded evidence of actual

confusion, regardless of the identity of the person confused). 

Source has presented substantial evidence demonstrating that employees of

Avaya have confused the identities of the two companies on numerous occasions. 

Jackson Affidavit ¶¶ 12-17. SourceOne does not refute that evidence; instead, it

argues that “the relevant inquiry is whether the use of the mark produces confusion in

 

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- 16 -

potential customers.” Response ¶ 34 (emphasis in original). Despite the evidence of

actual confusion, SourceOne’s argument is appealing in light of the aforementioned

evidence suggesting that the two companies have not ever competed directly for the

same business. After careful consideration of this argument, however, and the

authorities on which it relies (the majority of which are not Fifth Circuit cases), the

court is ultimately unpersuaded by it.

viii. Weighing the Factors

Source bears the burden of proof on the trademark infringement claims; thus,

it is its responsibility to demonstrate that no reasonable jury, upon consideration of

the summary judgment evidence, could return a verdict in favor of SourceOne. 

Anderson, 477 U.S. at 248. Source’s presentation of evidence demonstrating actual

confusion weighs heavily in its favor; however, SourceOne’s presentation of evidence

demonstrating that the two companies have never competed for business and are

unlikely to compete directly in the future weighs perhaps as heavily in its favor. 

Careful consideration of the digits of confusion, in light of the summary judgment

evidence proffered by both parties, reveals that Source has failed to meet its

evidentiary burden on the motion for summary judgment. Source has not established

that no reasonable jury could return a verdict in favor of SourceOne.

 

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- 17 -

3. The Affirmative Defenses

Source’s mark is incontestable under 15 U.S.C. § 1065. See FN 5 supra. An

incontestable mark is subject only to the defenses enumerated in 15 U.S.C.

§ 1115(b), including abandonment, laches, estoppel, acquiescence, and fair use.

a. Third Affirmative Defense -- That the Mark is Descriptive

SourceOne argues that Source’s mark is invalid because it is descriptive and

lacks secondary meaning. Answer at 5. This defense is not listed among the available

defenses to an incontestable mark under 15 U.S.C. § 1115(b). Moreover, in Park ‘N

Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 191, 205 (1985), the United States

Supreme Court held that an incontestable mark may not be defended against on the

grounds that it is merely descriptive. Therefore, Source is entitled to summary

judgment on this defense. 

b. Fourth Affirmative Defense -- Abandonment

15 U.S.C. § 1115(b)(2) expressly preserves the defense of abandonment. 

Under the Lanham Act, a mark shall be deemed abandoned “[w]hen its use has been

discontinued with intent not to resume such use.” 15 U.S.C. § 1127. The party

asserting abandonment must present evidence demonstrating that the owner of the

mark both (1) discontinued use of the mark and (2) intended not to resume its use. 

Vais Arms, Inc. v. Vais, 383 F.3d 287, 293 (5th Cir. 2004).

 

 Case 3:05-cv-01414-G Document 33 Filed 08/16/06 Page 17 of 21 PageID 547
9 Waiver is essentially abandonment. See Tristar Financial Insurance

Agency, Inc. v. Equicredit Corporation, 97 Fed. Appx. 462, 464 (5th Cir. 2004); see also

AT&T Communications v. Bell South Telecommunications Inc., 238 F.3d 636, 656 (5th

Cir. 2001).

- 18 -

The summary judgment evidence indicates that Source has continuously used

its trade mark since 1972. Jackson Affidavit ¶ 4. As SourceOne has failed to direct

the court to any evidence suggesting that Source actually abandoned its mark with an

intent to not resume its use, summary judgment denying this defense is granted.

c. Seventh Affirmative Defense -- Laches, Waiver,9 and Estoppel

The essence of SourceOne’s seventh affirmative defense is laches and not

estoppel. Equitable estoppel requires the defendant to prove intentional deception

through concealment or inaction or gross negligence amounting to constructive fraud.

Matter of Henderson, 577 F.2d 997, 1001 (5th Cir. 1978). SourceOne proffers no

such evidence in this case. Laches, on the other hand, is commonly defined as an

inexcusable delay that results in prejudice to the defendant. Conan Properties, 752

F.2d at 153. To successfully assert the defense of laches, the defendant must prove

three elements: (1) delay in asserting one’s trademark rights; (2) lack of excuse for

the delay; and (3) undue prejudice to the alleged infringer by the delay. Environmental

Defense Fund, Inc. v. Alexander, 614 F.2d 474, 478 (5th Cir.), cert. denied, 449 U.S. 919

(1980). 

SourceOne asserts two different periods of time out of which the equitable

defense of laches could emerge: (1) the time between the August 2000 work order

 

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- 19 -

and the February 2001 cease and desist letter; and (2) the time between SourceOne’s

February 2001 denial of infringement and the instigation of this action. Response

¶ 45. With regard to the interim period between the work order and the cease and

desist letter, a five month delay does not amount to an inexcusable delay. Elvis Presley

Enterprises, 141 F.3d at 205 (“We do not find that eight months was an inexcusable

delay”). SourceOne does not offer any evidence suggesting that the delay was

otherwise inexcusable.

The Fifth Circuit has held: “[a]ny acts after receiving a cease and desist letter

are at the defendant’s own risk because it is on notice of the plaintiff’s objection to

such acts.” Elvis Presley Enterprises, 141 F.3d at 205. In the case at bar, Source, by

way of the cease and desist letter, clearly notified SourceOne of its objection to 

SourceOne’s use of the word “source” in its name. As a result of this letter, any

prejudice suffered by SourceOne during the interim between the letter and the filing

of this suit is not attributable to the delay. Therefore, SourceOne is precluded from

establishing the third element of its defense (i.e. undue prejudice). Accordingly,

Source is entitled to summary judgment on this defense. 

d. Eighth Affirmative Defense -- Acquiescence

The 5th Circuit commonly refers to acquiescence as involving implicit or

explicit assurances provided to the defendant by the plaintiff upon which the

defendant relies. Conan Properties, 752 F.2d at 153; Elvis Presley Enterprises, 141 F.3d

 

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- 20 -

at 206. The same two time periods contended to prove laches are proffered by

SourceOne as possible interims out of which the defense of acquiescence could

plausibly arise. Response ¶ 46. Acquiescence can only arise prior to the cease and

desist letter. Elvis Presley Enterprises, 141 F.3d at 206 (“The period of silence relevant

to acquiescence would not include any time after the cease and desist letter was

sent.”). In the absence of any explicit acquiescence, SourceOne would have to

demonstrate that some action of Source constituted implicit acquiescence. The five

month period between the work order and the cease and desist letter is simply not

long enough to justify an inference of acquiescence. Id. Thus, summary judgment on

this defense is granted.

e. Ninth Affirmative Defense -- Fair Use

15 U.S.C. § 1115(b)(4) provides for an affirmative defense to an incontestable

mark where the mark is being used as “a term or device which is descriptive of and

used fairly and in good faith only to describe the goods or services” of the defendant. 

SourceOne contends that its name describes the goods and services it provides in that

“SourceOne” “refers to the fact that SourceOne is the one and only source needed for

its customers [sic] needs.” Response ¶ 48. This argument is unavailing. SourceOne

markets and sells communications equipment. The term “SourceOne” in no way

indicates to potential customers that SourceOne is a telecommunications company. 

Accordingly, Source is entitled to summary judgment on this defense.

 

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III. CONCLUSION

For the reasons stated above, Source’s motion for partial summary judgment is

DENIED as to its underlying trademark infringement claims and GRANTED as to

the affirmative defenses upon which it moved. Source’s motion for leave to file an

amended motion is DENIED as moot.

SO ORDERED.

August 16, 2006.

 

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