Opinion ID: 521895
Heading Depth: 2
Heading Rank: 3

Heading: Passing Off17

Text: 31 Even if blinded veterans is generic, BVA asserts, BAVF may be enjoined from passing itself off as BVA. Case law in this area is not perspicuous; there is, however, support for BVA's contention. For the reasons stated herein, we conclude that BVA may, dependent upon further proceedings in the district court, succeed in obtaining limited relief to prevent BAVF from passing off. 32 If the name of one manufacturer's product is generic, a competitor's use of that name, without more, does not give rise to an unfair competition claim under section 43(a) of the Lanham Act. See Liquid Controls Corp. v. Liquid Control Corp., 802 F.2d 934, 939 (7th Cir.1986). Nevertheless, such a claim might be supportable if consumer confusion or a likelihood of consumer confusion arose from the failure of the defendant to adequately identify itself as the source of the product. Id. (citing Miller Brewing Co. v. Jos. Schlitz Brewing Co., 605 F.2d 990, 997 (7th Cir.1979), cert. denied, 444 U.S. 1102, 100 S.Ct. 1067, 62 L.Ed.2d 787 (1980)); see also Technical Publishing Co. v. Lebhar-Friedman, Inc., 729 F.2d 1136, 1142 (7th Cir.1984); London v. Carson Pirie Scott & Co., 4 U.S.P.Q.2d 1148, 1151 n. 1, 1987 WL 11382 (N.D.Ill.1987). 18 Analogously, if an organization's own name is generic, a competitor's subsequent use of that name may give rise to an unfair competition claim if the competitor's failure adequately to identify itself as distinct from the first organization causes confusion or a likelihood of confusion. See Liquid Controls, 802 F.2d at 939-40 (suggesting that Liquid Controls Corp. could have valid claim against Liquid Control Corp. if there were more evidence of confusion than merely misdirected mail). 33 In either situation, the subsequent competitor cannot be prevented from using the generic term to denote itself or its product, but it may be enjoined from passing itself or its product off as the first organization or its product. Thus, a court may require the competitor to take whatever steps are necessary to distinguish itself or its product from the first organization or its product. In the paradigm case, Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 59 S.Ct. 109, 83 L.Ed. 73 (1938), for example, the Supreme Court held that the term shredded wheat is generic; the National Biscuit Company therefore was not entitled to exclusive use of the term. Id. at 116, 59 S.Ct. at 112. Because National Biscuit had been the only manufacturer of shredded wheat for many years, however, the public had come to associate the product and the term shredded wheat with that company. The Court therefore stated that the Kellogg Company, which also produced a shredded wheat cereal, could be required to use reasonable care to inform the public of the source of its product. Id. at 119, 59 S.Ct. at 113-14; 19 see also, e.g., Singer Mfg. Co. v. June Mfg. Co., 163 U.S. 169, 204, 16 S.Ct. 1002, 1015, 41 L.Ed. 118 (1896) (holding that Singer had become generic denotation of type of sewing machine, but requiring that defendant not use the word on its product or in advertisements without clearly and unmistakably stating ... that the machines are made by the defendant, as distinguished from the sewing machines made by the Singer Manufacturing Company); Metric & Multistandard Components Corp. v. Metric's, Inc., 635 F.2d 710, 714 (8th Cir.1980) (finding metric generic designation of metric industrial supplies, but nevertheless concluding that section 43(a) of Lanham Act had been violated because mark had become so associated with plaintiff that defendant's use of it created likelihood of confusion); King-Seeley Thermos Co. v. Aladdin Indus., Inc., 321 F.2d 577, 581 (2d Cir.1963) (finding thermos generic denotation of vacuum-insulated container, but affirming requirement that defendant distinguish its product from plaintiff's by preceding thermos with Aladdin's, by using only the lower case t, and by never using the words original or genuine in describing its product); DuPont Cellophane Co. v. Waxed Prods. Co., 85 F.2d 75, 80, 82 (2d Cir.) (finding cellophane generic denotation of cellulose transparent wrappings, but requiring defendant to identify itself as source of product in certain instances to avoid confusion with plaintiff's product), cert. denied, 299 U.S. 601, 57 S.Ct. 194, 81 L.Ed. 443 (1936) and 304 U.S. 575, 58 S.Ct. 1047, 82 L.Ed. 1539 (1938); 20 O. & W. Thum Co. v. Dickinson, 245 F. 609, 627-28 (6th Cir.1917) (requiring defendant to qualify and explain its use of the term sticky fly paper to differentiate its product from plaintiff's product of the same name); G. & C. Merriam Co. v. Saalfield, 198 F. 369, 373-76 (6th Cir.1912) (requiring defendant to accompany generic term Webster's Dictionary with sufficient explanation to avoid giving false impression that his book was plaintiff's); Reddaway v. Banham, 1896 App.Cas. 199, 221-22 (recognizing defendants' right to use generic term camel hair belting but requiring them to clearly distinguish[ ] such belting from the belting of the plaintiffs); cf. Miller Brewing Co. v. Jos. Schlitz Brewing Co., 605 F.2d 990, 997 (7th Cir.1979) (rejecting claim of passing off because defendant had adequately identified itself as source of product by preceding generic name of product, Light Beer, with producer's name, Schlitz, and had not engaged in potentially confusion-generating practices such as using a similar label or misleading advertisements), cert. denied, 444 U.S. 1102, 100 S.Ct. 1067, 62 L.Ed.2d 787 (1980). 21 34 Under the approach set forth in these cases, a court will not act to remedy or prevent confusion generated by a mere similarity of names. Liquid Controls, 802 F.2d at 940; see also Standard Paint Co. v. Trinidad Asphalt Mfg. Co., 220 U.S. 446, 461, 31 S.Ct. 456, 460, 55 L.Ed. 536 (1911) (rejecting passing off claim because any confusion resulted solely from likeness of generic terms rubbero and ruberoid and not from any acts of defendant that might cause confusion). If a consumer confuses two manufacturers' shredded wheat cereal, for example, because both products share the same name and the consumer has a general appetite for crunchy, pillow-shaped wheat biscuits, there is no cause for judicial action. Such confusion results merely from the manufacturers' concurrent use of a generic term to designate their products, and the late entrant into the shredded wheat field cannot be said to have engaged in unfair competition. If, however, the consumer associates shredded wheat with a particular manufacturer, perhaps because that manufacturer enjoyed a de facto (or de jure) monopoly for many years, there is a risk that the consumer may erroneously assume that any product entitled shredded wheat comes from that manufacturer. 22 A second manufacturer may increase the risk of confusion by, for example, using a similar label, similar packaging, misleading advertisements, or simply by failing to state the product's source. Only when there is a likelihood that the newcomer might thus pass its product off as the original manufacturer's may a court require the newcomer to distinguish its product or to notify consumers explicitly that its product does not come from the original manufacturer. 35 In speaking of passing off, we do not mean to insinuate that the complaining party must prove intent on the part of the passer off. Because passing off developed as an offshoot of the common law of fraud and deceit, some courts in the past required proof that the defendant intended to deceive consumers. See, e.g., O. & W. Thum Co., 245 F. at 621 (The essence of unfair competition consists in palming off, either directly or indirectly, one person's goods as the goods of another, and this, of course, involves an intent to deceive.); see generally MCCARTHY Sec. 25:1 at 232-33; R. CALLMAN, UNFAIR COMPETITION, TRADEMARKS & MONOPOLIES Sec. 21.40 at 159 (4th ed.1983) [hereafter CALLMAN]; cf. Liquid Controls, 802 F.2d at 940 (Passing off is a type of fraud. We have defined it as trying to get sales from a competitor by making consumers think that they are dealing with that competitor when actually they are buying from the passer off.). Today, however, the predominant view is that, [w]hen used in connection with passing off, the term 'fraud' is understood to mean the result of the defendant's act, i.e., deception of the public, rather than his intent. CALLMAN Sec. 2.02 at 6; see also id. Sec. 21.40 at 158-60; MCCARTHY Sec. 25:1 at 234; id. Sec. 23:30 at 139-40; cf. FTC v. Algoma Lumber Co., 291 U.S. 67, 81, 54 S.Ct. 315, 321, 78 L.Ed. 655 (1934) (Indeed there is a kind of fraud, as courts of equity have long perceived, in clinging to a benefit which is the product of misrepresentation, however innocently made.). 23 Intent to deceive, nevertheless, retains potency; when present, it is probative evidence of a likelihood of confusion. See, e.g., B.H. Bunn Co. v. AAA Replacement Parts Co., 451 F.2d 1254, 1264 (5th Cir.1971); CALLMAN Sec. 20.49 at 385; MCCARTHY Sec. 23:30 at 140. 36 Although the district court did not credit the testimony advanced by BAVF concerning the Foundation's conception, that court reported no conclusion, drawn from the evidence, that BAVF passed itself off as BVA. The court stated only that it disbelieved BAVF's president's testimony that it never occurred to him that BAVF's name was similar to BVA's and that BAVF did not plan to compete with BVA: 37 The Court ... finds that BAVF was deliberately named, and presently refuses to change its name, to enable it to capitalize upon the association in the mind of the charitable public between the words blinded and veterans (and the understandable sympathy they engender), and, thus, to compete with [BVA] for the funds of those inclined to give to such a cause. 38 680 F.Supp. at 444-45. The Lanham Act, of course, does not proscribe competition per se. Nor is the competition described by the district court unfair merely because BAVF intended to capitalize upon the public's sympathetic association of the words blinded and veterans. Only if BAVF was capitalizing on the public's association of blinded and veterans with BVA, and therefore reaping the benefits of BVA's goodwill, would the Foundation's actions constitute unfair competition. 39 True, the district court's opinion is somewhat ambiguous on this score. In a footnote, for example, the district court adverted to the evident similarity of BAVF's original logo-- 'BAV' in large type, followed by the word 'foundation' in small-type subscript--to BVA's logo. Id. at 445 n. 1. The court also noted that, while the Foundation professes to be concerned with veterans' 'sensory disabilities' generally, its founders selected a name which adverts only to blindness. Id. Although these findings, along with the fact that BAVF's founders all had worked for BVA, suggest that BAVF's founders purposely sought to create confusion, the court did not expressly find so. 40 Moreover, even if BAVF's founders had intended to pass BAVF off as BVA, such an intent, although probative, would not conclusively establish unfair competition. Cf. Schwinn Bicycle Co. v. Ross Bicycles, Inc., 870 F.2d 1176, 1184 (7th Cir.1989) (holding that district court erred in presuming consumer confusion on basis of defendant's intent to copy plaintiff's trade dress because intent is but one of the factors 'bearing on the likelihood of confusion issue' ) (citation omitted). Ultimately, to succeed on its passing off claim, BVA must prove that the likely effect of BAVF's actions is to induce the public to think that BAVF is BVA. The evidence now in the record appears insufficient to establish this type of confusion. The district court noted that local CFC authorities had confused BAVF and BVA in processing their applications to be listed as beneficiary organizations in 1986, that BVA's name is often misstated by intending contributors even without the compounding presence of BAVF, and that college students in three experiments were unable to distinguish between the parties' names. 680 F.Supp. at 446 & n. 3. To prevail in this action, however, it is not enough for BVA to show confusion that is the natural consequence of the two organizations' use of generic names. See Liquid Controls, 802 F.2d at 940 (proof falls short if it does not show confusion results or is likely to result from anything other than the similarity of names). What is essential, we underscore, is evidence that people associate blinded veterans with BVA per se 24 and that, because of specific actions by BAVF that increase the risk of confusion, people are likely to think BAVF is BVA. 41 Taking into account the opacity of some of the decisional law in this area, and the district court's understandable but incorrect assumption that trademark protection was available, we think it proper to permit the parties to submit additional evidence trained on the question whether people are likely to think that BAVF is actually BVA. See Community for Creative Non-Violence v. Reid, 846 F.2d 1485, 1496 n. 14 (D.C.Cir.1988) (because decision on appeal altered legal framework for the case, court permitted introduction of additional evidence and argument on remand), aff'd --- U.S. ----, 109 S.Ct. 2166, 104 L.Ed.2d 1 (1989). It would fill out and sharpen the record to prove (or disprove), for instance, that people who have contributed to BVA in the past have contributed, or are likely to contribute, to BAVF thinking it was BVA, or that people familiar with BVA's long service on behalf of blinded veterans are likely to think any group with a name containing blinded veterans or with the letters B A and V in its logo is the same as, or is associated with, BVA. BVA need not show actual confusion, we emphasize, but actual confusion is probative evidence that consumers are likely to confuse the two entities. See MCCARTHY Sec. 23:2 at 51-54. 42 If the district court, on remand, finds from the evidence that BAVF is passing itself off as BVA, the court may order that BAVF distinguish itself from BVA to avoid confusion. This case obviously differs from Kellogg and other cases cited above because it involves the name of an organization rather than the name of a particular product. This difference precludes such a ready remedy as attaching the manufacturer's name to the generic name of the product. The district court could, however, require BAVF to attach a prominent disclaimer to its name alerting the public that it is not the same organization as, and is not associated with, the Blinded Veterans Association. 25 See N. Hess' Sons, Inc. v. Hess Apparel, Inc., 223 U.S.P.Q. 1006, 1007-08, 738 F.2d 1412, 1413-14 (4th Cir.1984) (approving injunction allowing defendant apparel shop to sell shoes provided it state prominently in all of its advertising for one year, and display a sign in its show area indefinitely, alerting customers that it was not affiliated with plaintiff shoe store); Warner Bros. Pictures v. Majestic Pictures Corp., 70 F.2d 310, 312-13 (2d Cir.1934) (requiring defendant to accompany title of motion picture, which included generic term Gold Diggers, with producer's name and disclaimer stating that the picture was not based on the play or plaintiff's motion picture entitled The Gold Diggers); Barton v. Rex-Oil Co., 2 F.2d 402, 406-07 (3d Cir.1924) (allowing defendant to use term Dye and Shine in competition with plaintiff's Dyanshine provided defendant add affirmative, prominent disclaimer stating that his product was not that of plaintiff); see generally CALLMAN Sec. 20.35 at 294-96. Alternatively, the court could order that BAVF adopt another name containing the term blinded veterans that is less likely to confuse. 26 Either remedy would assist BVA to retain, and reap the benefits of, the goodwill it has built up over the years, while allowing BAVF to appeal, fairly, to the public's general desire to aid blinded veterans. Cf. King-Seeley Thermos, 321 F.2d at 581 (noting that requiring producer's name to accompany generic name of product would strike proper balance between defendant's interest in using generic term and plaintiff's and public's interest in avoiding confusion). 27