Opinion ID: 2211610
Heading Depth: 1
Heading Rank: 5

Heading: white's appeal

Text: The district court found that White's registration of the trade name Husker Authentics was improperly granted and ordered that it be canceled. The court reasoned that actual use and adoption of the trade name is required pursuant to Neb.Rev.Stat. §§ 87-208 to 87-220 (Reissue 1994) before a registration can be enforced and that White failed to meet this requirement because he admitted in his testimony that he never used the trade name at any time other than on his application for registration. Thus, the issue before us is one of statutory interpretation. On appeal, White contends that the district court misinterpreted the statute. He argues that the Nebraska statutes do not require actual use prior to registration and that his registration established a prima facie case of ownership of the trade name which the University could overcome only by demonstrating its prior use of the name. The University contends that White's registration was improperly granted because he never used Husker Authentics as a trade name or, alternatively, was invalid because the University had acquired a prior common-law right in the name through its use of the name Husker Authentics on products during 1996 and its decision in January 1997 to use the name Huskers Authentic for its retail outlet. At the time of the operative facts in this action, Nebraska law applicable to protection of trade names was codified at §§ 87-208 to 87-220. Section 87-208(4) defined trade name as every name under which any person does or transacts any business in this state other than the true name of such person. Section 87-210 set forth the requirements for an application for registration of a trade name, providing: [A]ny person who adopts a trade name for use in this state may file in the office of the Secretary of State on a form furnished by the Secretary of State an application, in duplicate, for registration of the trade name setting forth, but not limited to, the following information: (a) The name and street address of the applicant for registration; and, if a corporation, the state of incorporation; (b) The trade name sought to be registered; (c) The general nature of the business in fact conducted by the applicant; (d) The length of time during which the trade name has been used in this state; (e) The signature of the applicant, which must be acknowledged before a notary public; and (f) A filing fee of one hundred dollars. Section 87-211 provided procedures for renewing a registration, and specifically stated [a]ll applications for renewals ... shall include a statement that the trade name is still in use in this state. Section 87-216 provided that one who wrongfully used a registered trade name was civilly liable to the registrant. Section 87-217 provided that [a]ny registrant of a trade name may sue to enjoin its wrongful use by another and recover damages attributable to such use. Section 87-218 provided that Sections 87-208 to 87-219 shall not adversely affect rights in trade names, or the enforcement of rights in trade names, acquired at any time in good faith at common law. The district court reasoned that the requirement in § 87-210(1)(d) that the applicant for registration must state the length of time during which the trade name has been used in Nebraska supported its conclusion that there must be actual use of the trade name in connection with a business before it can be registered. Examined in isolation, this statutory language can reasonably be interpreted to require that actual use of the name must be made prior to registration. In addition, the language requiring that the business be in fact conducted at the time of registration also supports this interpretation, as does the renewal provision which requires continuing use of the name. §§ 87-210(1)(c) and 87-211. Such an interpretation is consistent with common law, which requires actual use before substantive rights in a designation can be obtained because it is only such use that creates goodwill and the possibility that subsequent use will lead to confusion as to the source of the goods. See Restatement (Third) of Unfair Competition § 18, comment a. (1995). However, whereas the Legislature provided in Neb.Rev.Stat. § 87-113 (Reissue 1999) that a trademark may be registered by any person who adopts and uses it, different language was used in § 87-210 with respect to registration of a trade name. There, the Legislature provided that registration may be accomplished by any person who adopts a trade name for use in this state (emphasis supplied) § 87-210, which could be interpreted as meaning that adoption and registration may occur before actual use of the trade name. According to the Restatement, registration under a state trade name registration act creates no substantive rights in the name. Id., § 12, comment c. Rights can be acquired in a designation only when the designation has been actually used as a trademark or trade name or when an applicable statutory provision recognizes a protectable interest in the designation prior to actual use. Id., § 18 at 184. However, the Restatement notes that trade name acts in several states specifically recognize a right in the registrant of a trade name to proceed under the statute against other users of the same or similar name. Id., § 12, comment c., and reporters' note, comment c., citing § 87-216. We have never addressed the specific issue of whether an enforceable right is created by the registration of a trade name which has never been used by the registrant, and we need not resolve it in this case. Assuming without deciding that actual use of a trade name is not a prerequisite to its valid registration under § 87-210, we conclude on de novo review that the University had prior common-law rights superior to those of White in the trade name Husker Authentics and that therefore the district court properly canceled White's registration. See § 87-214(4)(b) and (5). In Chadron Opera House Co. v. Loomer, 71 Neb. 785, 787, 99 N.W. 649, 650 (1904), we stated that in order to establish a legally protectable common law interest in a trade name, a party must make it appear, with at least reasonable certainty, that his adoption of the name was prior in time to that of his adversary; that he adopted and made use of it in such manner as would reasonably apprise the public that he intended it as a distinctive appellation for his trade, commodity, or place of business, and that it was not, at the time of his attempted appropriation of it, in common or general use in connection with like businesses, commodities, buildings, or localities. This is consistent with Restatement (Third) of Unfair Competition § 18 at 184 (1995), which provides that [a] designation is `used' as a trademark, trade name, collective trademark, or certification mark when the designation is displayed or otherwise made known to prospective purchasers in the ordinary course of business in a manner that associates the designation with the goods, services, or business of the user.... The Restatement further provides: One who has used a designation as a trademark, trade name, collective mark, or certification mark under the rule stated in § 18 has priority in the use of the designation over another user: (a) in any geographic area in which the actor has used the designation in good faith or in which the designation has become associated with the actor as a result of good faith use before the designation is used in good faith by, or becomes associated with, the other; and (b) in any additional geographic area in which the actor has priority over the other under an applicable statutory provision. Id., § 19 at 194-95. We adopt the common-law definition for use of a trade name or other designation set forth in § 18 of the Restatement and the rule with respect to priority of use set forth in § 19. At common law, the use of a trade name may be established by its appearance on signs, documents employed in conducting business, mail solicitations, or advertising. Id., § 18, comment d. The record reveals that Husker Authentics was used by the Department on both mail solicitations and advertising. Specifically, the record reveals that the Department engaged in test marketing pursuant to agreements with both Eastbay and Awards Unlimited. Bahl testified that both mailings were sent to season ticket holders, boosters, and 50,000 alumni of the University of Nebraska-Lincoln, and that Eastbay catalogs were distributed at one home football game at Memorial Stadium. In addition, Bahl testified that hard goods were marketed in the magazine, Huskers Illustrated, and in a Lincoln newspaper. The test marketing was conducted as part of a series of steps taken to prepare for the opening of the Department's store and was specifically conducted to develop purchasing statistics. Although the name was admittedly not used in marketing directed at the general public, the name Husker Authentics was used in the ordinary course of business by the Department. The question thus becomes whether it was used in a manner that would associate it with the products and business of the Department. The Eastbay catalog clearly used the logo Husker Authentics and contained a quote from Osborne stating that Husker Authentics was the provider of Nebraska apparel. The Department's agreement with Eastbay provided that it would receive 4 percent of the gross sales of the products in the catalog. This evidence establishes that the Department did conduct mail-order business under the name Husker Authentics, which was a name other than its true name and could reasonably apprise the public of its business. Similarly, the Awards Unlimited test marketing also involved the Department conducting mail-order business as Husker Authentics. The Department engaged Awards Unlimited to be its fulfillment house, and the order form distributed by the Department listed the name of the business as Husker Authentics, although it was actually the Department engaged in the business of selling the products. This evidence further demonstrates the Department's prior use of Husker Authentics as a trade name. Based upon our de novo review of the record, we disagree with the district court's determination that the University used Husker Authentics only in association with products and not with its conduct of business. The district court reasoned that the University utilized the name Husker Authentics as a trademark rather than as a trade name. However, the evidence summarized above demonstrates that the Department engaged in the business of selling such products using the name Husker Authentics, which was not its true name, and thus used the name as a trade name. Persons ordering merchandise from either catalog could reasonably assume that they were purchasing products from a business named Husker Authentics. In addition, we note that the Eastbay catalog clearly reveals that the Department used a logo with a large block N with Husker written over it in script and the capitalized block letters Authentics underneath. At common law, [r]ights in a trade name can also be infringed by its unauthorized use as a trademark, just as a trademark can be infringed by unauthorized adoption as a trade name. Restatement (Third) of Unfair Competition § 12, comment b. at 98 (1995). We therefore disagree with the district court's focus on the distinction between use of Husker Authentics as a trademark versus use as a trade name. See Dynamet Technology, Inc. v. Dynamet Inc., 201 U.S.P.Q. 129, 593 F.2d 1007 (C.C.P.A.1979) (holding trade name use may be tacked on to trademark use for purpose of establishing priority). As noted above, § 87-218 specifically provides that the statutes pertaining to registration of trade names shall not adversely affect rights in trade names, or the enforcement of rights in trade names, acquired at any time in good faith at common law. In Ransdell v. Sixth St. Food Store, 174 Neb. 875, 120 N.W.2d 290 (1963), and Personal Finance Co. v. Personal Loan Service, 133 Neb. 373, 275 N.W. 324 (1937), we held that common-law trade name rights were enforceable notwithstanding the fact that other persons had subsequently registered the trade name with the Secretary of State. Accordingly, we hold that where one has acquired a common-law right in a trade name by its use, the subsequent registration of the trade name by the Secretary of State upon the application of another is invalid and subject to cancellation pursuant to § 87-214. In summary, we conclude on the basis of our de novo review that the University had a common-law right in the trade name Husker Authentics prior to White's registration of that name, and the registration was therefore invalid and must be cancelled. Where the record demonstrates that the decision of the trial court is correct, although such correctness is based on a different ground from that assigned by the trial court, the appellate court will affirm. Hornig v. Martel Lift Systems, 258 Neb. 764, 606 N.W.2d 764 (2000); Gordon v. Community First State Bank, 255 Neb. 637, 587 N.W.2d 343 (1998). We therefore affirm the judgment of the district court canceling White's trade name registration and dismissing his petition.