Source: https://law.justia.com/cases/federal/appellate-courts/F2/670/642/118006/
Timestamp: 2019-12-07 18:35:17
Document Index: 400022614

Matched Legal Cases: ['§ 43', '§ 1125', '§ 43', '§ 43', '§ 27', '§ 43', '§ 43', '§ 43', '§ 27', '§ 43']

Frisch's Restaurants, Inc., Plaintiff-appellee, Cross-appellant, v. Elby's Big Boy of Steubenville, Inc.; the Boury Corporation;elby's Family Restaurants, Inc.; Elby's Commissionary, Inc.;george Boury, Ellis Boury and David Carr,defendants-appellants, Cross-appellees, 670 F.2d 642 (6th Cir. 1982) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Sixth Circuit › 1982 › Frisch's Restaurants, Inc., Plaintiff-appellee, Cross-appellant, v. Elby's Big Boy of Steubenville,...
Frisch's Restaurants, Inc., Plaintiff-appellee, Cross-appellant, v. Elby's Big Boy of Steubenville, Inc.; the Boury Corporation;elby's Family Restaurants, Inc.; Elby's Commissionary, Inc.;george Boury, Ellis Boury and David Carr,defendants-appellants, Cross-appellees, 670 F.2d 642 (6th Cir. 1982)
US Court of Appeals for the Sixth Circuit - 670 F.2d 642 (6th Cir. 1982) Argued Dec. 1, 1981. Decided Feb. 3, 1982
Frisch's moved for a preliminary injunction on October 21, 1980, requesting that Elby's be enjoined from using the Big Boy trademark in "any advertising medium that reaches a not insubstantial number of Ohioans" without disclosing Ohio Elby's disaffiliation with the Big Boy restaurant organization. On January 20, 1981, District Judge Robert M. Duncan, in an opinion reported at 514 F. Supp. 704 (S.D. Ohio 1981), issued a preliminary injunction enjoining Elby's from "using the 'Big Boy' trademark and service mark in their WTRF advertising without making a prominent disclosure that the Elby's Family Restaurants within the state of Ohio are not associated with the 'Big Boy' restaurant organization. Alternatively, defendants may wish to eliminate all reference to the 'Big Boy' mark on WTRF advertisements." Id. at 712. Judge Duncan based his holding solely on "the unfair competition provisions of (§ 43(a) of) the Lanham Act, 15 U.S.C. § 1125(a)," id., and expressed no view on Frisch's alternative theories of recovery. However, Judge Duncan refused to extend his preliminary injunction to Elby's newspaper and radio advertisements, noting that Frisch's failed to establish a "causal connection between the public's confusion (the confusion of eastern Ohio consumers over the availability of Big Boy products at Ohio Elby's restaurants) and defendants' advertising in such media." Id. at 711 (emphasis in original). Elby's has appealed the grant of the WTRF preliminary injunction, and Frisch's cross-appealed the district court's failure to enjoin Elby's newspaper advertisements.2
Although it is necessary to prove that the buying public was actually deceived in order to recover damages under § 43(a) of the Lanham Act, Skil Corp. v. Rockwell International Corp., 375 F. Supp. 777 (N.D. Ill. 1974), only a likelihood of confusion or deception need be shown in order to obtain equitable relief. Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., (604 F.2d 200 (2d Cir. 1979)) . Here, since equitable relief is sought, only the likelihood of confusion need be shown, and not proof of actual confusion as was required by the District Court.
Under § 43(a) of the Lanham Act it is not necessary to show that any false description or representation is wilful or intentional. Parkway Baking Co. v. Freihofer Baking Co., 255 F.2d 641, 648 (3d Cir. 1958). All that is required is that the representation or descriptions either be "false" or such as is "tending falsely to describe or represent the goods or services in question." Ames Publishing Co. v. Walker-Davis Publications, Inc., 372 F. Supp. 1, 11 (E.D. Pa. 1974). Thus, liability is not restricted solely to descriptions which are literally false, but extends to instances where the defendant creates a false impression. Id.
Walker-Davis Publications, Inc. v. Penton/IPC, Inc., 509 F. Supp. 430, 435 (E.D. Pa. 1981).4
The district court determined that there was actual confusion among eastern Ohio consumers about the availability of Big Boy products at Ohio Elby's restaurants. 514 F. Supp. at 708-09. This finding was supported by evidence from Frisch's expert witness, who testified about a survey he conducted which indicated that Elby's television advertisements contributed to confusion over the connection of the Big Boy organization with the Ohio Elby's restaurants. The Fifth Circuit deduced that while "evidence of actual confusion is not necessary to a finding of likelihood of confusion, it is nevertheless the best evidence of likelihood of confusion." Amstar Corp. v. Domino's Pizza, Inc., 615 F.2d 252, 263 (5th Cir.), cert. denied, 449 U.S. 899, 101 S. Ct. 268, 66 L. Ed. 2d 129 (1980).5
Chevron Chemical Co., supra at 703-04. The district court found that "the defendants intentionally associate Ohio Elby's restaurants with the 'Big Boy' mark," since "the Ohio Elby's restaurants are in fact direct participants in the reciprocal advertising agreement with WTRF," they "actively encourage Ohio consumers to 'watch for Elby's specials on WTRF' ... where the television advertisement frequently identifies the Elby's Family Restaurant with the 'Big Boy' mark" and "(a) variety of in-store promotional material including matchbooks and sacks also directs the Ohio consumer to WTRF." 514 F. Supp. at 710. The district court correctly inferred that Elby's improperly intended to "derive benefit" from the Big Boy trademark for their Ohio operations through coupling the entire chain to the trademark.
Elby's first argues that Frisch's does not have standing to bring this suit because Frisch's does not operate any restaurants in the eastern Ohio area where the confusion about Big Boy products is prevalent. However, it is evident that Frisch's suffers a cognizable injury in this instance because it would have to combat consumer misperceptions about the availability of Big Boy products if it were to expand into the area itself or license restaurants in that area to operate under the Big Boy trademark. The Ohio Supreme Court has recognized that a trademark is entitled to protection throughout the entire state even though its owner is currently operating only in one part of the state. Younker v. Nationwide Mutual Ins. Co., 175 Ohio St. 1, 191 N.E.2d 145 (1963). More to the point, this court in Socony-Vacuum Oil Co. v. Oil City Refiners, Inc., 136 F.2d 470 (6th Cir.), cert. denied, 320 U.S. 798, 64 S. Ct. 369, 88 L. Ed. 482 (1943), determined that the user of a trademark "was entitled to the exclusive use of the name within the entire state as territory which may reasonably be anticipated to be within normal business expansion ...." Id. at 475. Accord, Grocers Baking Co. v. Sigler, 132 F.2d 498, 502 (6th Cir. 1942).
On the one hand, despite the use of the word "believes," something more than a plaintiff's mere subjective belief that he is injured or likely to be damaged is required before he will be entitled even to injunctive relief. See, Chromium Industries v. Mirror Polishing & Plating, 448 F. Supp. 544, 554 (N.D. Ill. 1978); D. M. Antique Import Corp. v. Royal Saxe Corp., 311 F. Supp. 1261, 1269 n. 6 (S.D.N.Y. 1970). On the other hand, as the district court in this case recognized, a plaintiff seeking an injunction, as opposed to money damages, need not quantify the losses actually borne.
The statute demands only proof providing a reasonable basis for the belief that the plaintiff is likely to be damaged as a result of the false advertising. The correct standard is whether it is likely that Carter's advertising has caused or will cause a loss of Johnson sales, not whether Johnson has come forward with specific evidence that Carter's ads actually resulted in some definite loss of sales. Parkway Baking Co. v. Freihofer Baking Co., 255 F.2d 641, 649 (3d Cir. 1958); Ames Publishing Co. v. Walker- Davis Publications, Inc., 372 F. Supp. 1, 13 (E.D. Pa. 1974); 2 J.T. McCarthy, Trademarks and Unfair Competition § 27:5 at 249-50 (1973). Contrary to Johnson's argument, however, the likelihood of injury and causation will not be presumed, but must be demonstrated. If such a showing is made, the plaintiff will have established a reasonable belief that he is likely to be damaged within the meaning of § 43(a) and will be entitled to injunctive relief, as distinguished from damages, which would require more proof.
514 F. Supp. at 710. When Elby's advertisements reached the Ohio consumers, they affirmatively misrepresented an affiliation of the local Elby's restaurants in Ohio with the Big Boy trademark. Since Elby's was directly responsible for the false impressions generated about the Ohio Elby's restaurants' connection with Big Boy products, it was properly within the district court's discretion to require Elby's to disclose information that would correct those false impressions. See, e.g., CBS Inc. v. Springboard International Records, 429 F. Supp. 563 (S.D.N.Y. 1976), CBS, Inc. v. Gusto Records, Inc., 403 F. Supp. 447 (M.D. Tenn. 1974) (district courts ordered disclosures about release of collection of old Charlie Rich songs).
The district court, however, failed to properly utilize the "likelihood of confusion" standard with respect to Elby's newspaper and radio advertisements: "Plaintiff's proof relative to defendants' advertising in newspapers and on radio is not sufficient to establish a causal connection between the public's confusion and defendants' advertising in such media. No proof comparable to the Becker Study has been presented for other media." 514 F. Supp. at 711. Because Frisch's did not prove through its consumer survey that Ohio consumers were actually confused by Elby's newspaper advertisements, the district court concluded that "likelihood of confusion" was not present. As before pointed out, however, the existence of actual confusion is only one factor in determining whether likelihood of confusion is present.
This failure by the district court properly to apply the likelihood of confusion standard to the newspaper advertising was an error of law and therefore, to this extent, an abuse of discretion. United States v. Colahan, 635 F.2d 564 (6th Cir. 1980), cert. denied, --- U.S. ----, 102 S. Ct. 127, 70 L. Ed. 2d 108 (1981). The question remains, however, whether a reversal and remand for a further factual determination is required or whether this court can determine on this record that Frisch's is entitled to injunctive relief as to the newspaper advertising.
In assessing whether there is likelihood of confusion, a court first considers numerous factors and then, based thereon, determines whether there exists a likelihood of confusion. With the analysis so structured, the J. B. Williams (Co., Inc. v. Le ContEe Cosmetics, Inc.; 523 F.2d 187 (9th Cir.)), and AMF, Inc. courts held that the determination of what is the state of affairs regarding each factor (a "foundational fact") is a finding of fact reviewed on the clearly erroneous standard, but the further determination of likelihood of confusion based on those factors is a legal conclusion. See J. B. Williams, 523 F.2d at 191-92; AMF, Inc., 599 F.2d at 348-54 (applying two-level test as described here).
Applying this test, with which we agree, to the facts that are not in dispute and as found by the district court, we conclude that Frisch's is entitled to injunctive relief as to the newspaper advertising. Even without evidence of actual consumer confusion, examination of the other factors which are not in dispute, i.e., intent, likely degree of purchaser care, and the unavoidable confusion resulting from the use of identical trademarks in similar marketing channels, inexorably leads to the "legal conclusion" that confusion is just as likely to result from Elby's newspaper advertisements as from their television advertisements. See, e.g., Chevron Chemical Co., supra at 705 ("the lack of evidence of actual confusion did not militate strongly against a finding of likelihood of confusion" when the other factors were also taken into account). Furthermore, the district court did find as a foundational fact that there was actual confusion among Ohio consumers about the availability of Big Boy products in Ohio Elby's restaurants; the only dispute concerned the causes of that confusion. In determining the proper scope of relief, we should recall that " § 43(a) of the Lanham Act is remedial in nature, and should be interpreted and applied broadly so as to effectuate its remedial purpose." Warner Bros., supra at 79. Because the ultimate determination of "likelihood of confusion" is a legal conclusion reviewable de novo by this court, J. B. Williams Co. v. Le Conte Cosmetics, Inc., 523 F.2d 187, 190 (9th Cir. 1975), cert. denied, 424 U.S. 913, 96 S. Ct. 1110, 47 L. Ed. 2d 317 (1976), it is unnecessary to remand this case to the district court for further consideration.
Accord, CBS, Inc. v. Springboard International Records, 429 F. Supp. 563 (S.D.N.Y. 1976); CBS, Inc. v. Gusto Records, Inc., 403 F. Supp. 447 (M.D. Tenn. 1974); Rich v. RCA Corp., 390 F. Supp. 530 (S.D.N.Y. 1975) (release of collection of old Charlie Rich recordings done in his old style with a current photograph of Charlie Rich on the cover created false impression that record was done in Rich's contemporary style; violation of § 43(a) found by three separate district courts); J. McCarthy, Trademarks & Unfair Competition, § 27:7 at 255 (1973) ("(Section) 43(a) does not require literal falsity for liability"); Germain, Unfair Trade Practices Under Section 43(a) of the Lanham Act: You've Come a Long Way, Baby-Too Far, Maybe?, 49 Ind.L.J. 84, 96 (1973) (" 'literal' truth is probably not a defense (to a § 43(a) claim). A false impression may be found to violate the section ...."