Opinion ID: 446566
Heading Depth: 2
Heading Rank: 3

Heading: CPI's Motion for Injunctive Relief

Text: 19 CPI next argues that the jury's findings of laches and acquiescence properly barred its request for damages but should not have precluded it from securing an injunction preventing Conans from continuing to infringe its mark both locally and nationally. With respect to Conans' infringement of CPI's mark locally, in Austin, we must conclude that the district court correctly denied CPI's request for injunctive relief after considering the jury's findings of laches and acquiescence. We emphasize, however, that Austin is the only area in which CPI waived its right to protect its mark, CONAN THE BARBARIAN. Conans received CPI's cease and desist letter prior to opening the San Antonio restaurant. Conans therefore opened that restaurant at its own peril, without the defenses of laches and acquiescence. See, e.g., 2 J. McCarthy, supra, Sec. 26:3; James Burroughs Ltd. v. Sign of the Beefeater, Inc., 572 F.2d 574, 578 (7th Cir.1978); Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365, (10th Cir.1977) (even assuming defendant's first use of the infringing mark was in good faith, it could not execute a planned national advertising campaign using that mark after it had received the plaintiff's objection), cert. dismissed, 434 U.S. 1052, 98 S.Ct. 905, 54 L.Ed.2d 805 (1978). 20 A finding of laches alone ordinarily will not bar the plaintiff's request for injunctive relief, although it typically will foreclose a demand for an accounting or damages. Menendez v. Holt, 128 U.S. 514, 524, 9 S.Ct. 143, 145, 32 L.Ed. 526 (1888); McLean v. Fleming, 96 U.S. 245, 258, 24 L.Ed. 828 (1877); James Burrough Ltd. v. Sign of the Beefeater, Inc., 572 F.2d 574, 578 (7th Cir.1978); Grotrian, Helfferich, Schulz, Th. Steinwag Nachf v. Steinway & Sons, 523 F.2d 1331, 1344 (2d Cir.1975). This is because courts construe the plaintiff's unreasonable delay to imply consent to the defendant's conduct, which amounts to nothing more than a revocable license; the license is revoked once the plaintiff objects to the defendant's infringement. Menendez, 128 U.S. at 524, 9 S.Ct. at 145; University of Pittsburgh v. Champion Products, Inc., 686 F.2d 1040, 1045 (3d Cir.), cert. denied, 459 U.S. 1087, 103 S.Ct. 571, 74 L.Ed.2d 933 (1982). In cases where the defendant actually relies upon the plaintiff's affirmative act, however, the fiction of implied consent is inapplicable and an injunction may not issue. See, e.g., Saratoga Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1041 (2d Cir.1980) (the plaintiff's unreasonable delay and the defendant's actual reliance upon that delay precluded the issuance of an injunction). 21 In this case CPI unreasonably delayed in protecting its rights in Austin, and its dilatoriness prejudiced Conans. Moreover, through the affirmative acts of L. Sprague deCamp, one of its agents, CPI implicitly if not explicitly authorized Conans to continue using the CONAN THE BARBARIAN name and image in connection with restaurant services in Austin. Responding to the special interrogatories, the jury found that Conans had proven all of the elements of the defenses of laches and acquiescence. The jury's affirmative finding of acquiescence establishes the reliance necessary to preclude the issuance of an injunction, 3 and the record supports the jury's implicit conclusion that Conans relied upon deCamp's conduct. We therefore hold that the district court properly denied CPI's post-trial request for injunctive relief related to the Austin area. 22 A more difficult question is whether CPI's laches and acquiescence in one locale eternally forecloses it from asserting its rights if Conans expands beyond that area. CPI instituted this suit after it learned that Conans had applied with the USPTO for a service mark for Conans Pizza and was contemplating a national franchising scheme. In rejecting CPI's post-trial request for injunctive relief, the district court implicitly determined that laches in one locale resulted in laches everywhere. We conclude that CPI's laches and acquiescence in Austin did not constitute an eternal abandonment nationwide. We reverse, therefore, the judgment of the district court insofar as the judgment denied an injunction for any geographical area other than Austin. 23 The respective definitions of laches and acquiescence offer the most compelling reason for concluding that CPI did not forfeit its rights nationally. Laches is commonly defined as an inexcusable delay that results in prejudice to the defendant. Matter of Bohart, 743 F.2d 313, 325 (5th Cir.1984); Armco, 693 F.2d at 1161; Environmental Defense Fund, Inc. v. Alexander, 614 F.2d 474, 478 (5th Cir.), cert. denied, 449 U.S. 919, 101 S.Ct. 316, 66 L.Ed.2d 146 (1980). Similarly, acquiescence involves the plaintiff's implicit or explicit assurances to the defendant which induces reliance by the defendant. Dwinell-Wright Co. v. White House Milk Co., 132 F.2d 822, 825 (2d Cir.1943); Golden West Brewing Co. v. Milionas & Sons, Inc., 104 F.2d 880, 882 (9th Cir.1939); Procter & Gamble Co. v. J.L. Prescott Co., 102 F.2d 773, 780 (3d Cir.), cert. denied, 308 U.S. 557, 60 S.Ct. 80, 84 L.Ed. 468 (1939). As affirmative defenses, the defendant must prove how it will be prejudiced by the plaintiff's unreasonable delay and implicit or explicit assurances. Bohart, 743 F.2d at 326 n. 13; Environmental Defense Fund, 614 F.2d at 479. An injunction against future infringement in a particular locale when laches and acquiescence have been found, as in this case, is properly denied if the plaintiff's delay or other conduct either induced reliance on the defendant's part or will result in substantial prejudice to the defendant if the plaintiff is permitted to enforce its rights in the trademark. Whether phrased as reliance or prejudice, the effect is the same--the defendant has done something it otherwise would not have done absent the plaintiff's conduct. 24 The result is different, however, when the asserted future infringement would occur in a geographical area other than the one in which the plaintiff waived its right to protect its mark. In the new geographical area where the defendant has not yet expanded its business, the defendant is hard pressed to demonstrate how it could have relied to its detriment upon the plaintiff's inactivity or other conduct. Stated simply, the defendant at best can show only that the plaintiff acquiesced or unreasonably delayed in protecting its mark in the local area. Since a showing of mere delay will not support a finding of laches or acquiescence, Bohart, 743 F.2d at 326, the defenses are invalid. In this case we conclude that Conans has made sufficient showings of reliance and prejudice in the Austin area to justify denying an injunction, but has failed to offer any evidence, let alone carry its burden of demonstrating that it would be prejudiced if barred from infringing CPI's mark in any area other than Austin. 25 Three other practical considerations guide our determination that CPI's laches and acquiescence should not have barred its post-trial request for injunctive relief outside Austin. First, allowing Conans, which has been found to have infringed CPI's mark and violated Texas unfair competition laws, to expand its trademark violation and unfair competition would be inequitable and unworthy of judicial protection. Second, permitting Conans to expand its infringement into geographical areas it has never penetrated would grant Conans an unjustified windfall. Finally, creating a risk that CPI may be barred from asserting its rights nationwide because of its failure to challenge what it may have considered a de minimis, local infringement may spur litigation where litigation otherwise would not be necessary, since CPI would be forced to bring infringement suits in local de minimis situations. 4 26 Having concluded that CPI is entitled to an injunction prohibiting Conans from infringing its mark in CONAN THE BARBARIAN in areas outside Austin, Texas, we now turn to the scope of the injunction. As previously stated, the conduct in which Conans currently engages that CPI alleges constitutes an infringement of its mark includes (1) using the service mark CONANS PIZZA as its restaurants' name, (2) describing one of the featured pizzas as The Savage, and (3) decorating the restaurants with Frank Frazetta's artwork which is commonly associated with CONAN THE BARBARIAN books and the CONAN THE BARBARIAN character. In 1981, Conans discontinued using all other indicia of CPI's trademark, including its use of the barbarian man on T-shirts, advertising material, and signs. 27 When fashioning an injunction in a suit such as this, the court must give careful consideration to the possibility that a defendant found to have either infringed the plaintiff's mark or unfairly competed with the plaintiff will modify his behavior ever so slightly and attempt to skirt the line of permissible conduct. Courts have responded to this problem by issuing broad injunctions that prohibit conduct that clearly infringes the plaintiff's mark as well as conduct that ordinarily would not justify any relief. For example, in Chevron Chemical Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d 695 (5th Cir.1980), cert. denied, 457 U.S. 1126, 102 S.Ct. 2947, 73 L.Ed.2d 1342 (1982), we stated that: 28 [A] competitive business, once convicted of unfair competition in a given particular, should thereafter be required to keep a safe distance away from the margin line--even if that requirement involves a handicap as compared with those who have not disqualified themselves. 29 Id. at 705 (quotation omitted). Similarly, in Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368 (5th Cir.1977), a case in which the defendant had engaged in an elaborate and calculated scheme of unfair competition, we declined to modify the scope of a permanent injunction that prohibited the defendant from using certain marks that the plaintiff had alleged were likely to cause confusion with its trademarks. In upholding the broad injunction, we assumed without deciding that absent its other conduct the defendant would have been entitled to use the allegedly confusing marks but that its history of improper behavior justified a broad injunction. We reasoned that [a]n injunction can be therapeutic as well as protective. In fashioning relief against a party who has transgressed the governing legal standards, a court of equity is free to proscribe activities that, standing alone, would have been unassailable. Id. at 390. 30 These standards justify the issuance of an injunction in this case prohibiting Conans from ever using any semblance of the CONAN THE BARBARIAN theme in its current and future restaurants outside Austin. This includes using the barbarian name or theme on menus, specialty items, signs, etc. Specifically, Conans must not be permitted to use The Savage or any similar phrase to describe its food items. Further, the printing of the name Conans must be in a form which does not resemble in any way the manner in which CPI prints the name CONAN. The writing of the name Conans in script form as Conans is now doing is a reasonable and proper presentation of the name. Finally, Conans must not display either the familiar Frazetta prints or any other artwork that even remotely suggests a connection between it and CONAN THE BARBARIAN. Because Conans opened the San Antonio restaurant after it had notice of CPI's objection to its use of CPI's mark, this injunction must apply with equal force to that restaurant. 31 We perceive no need to invoke the full breadth of the court's powers to prohibit Conans from using its name, Conans Pizza, or the word Conan in the San Antonio restaurant or in any future restaurant outside Austin. This case is unlike the Chevron Chemical and Kentucky Fried Chicken cases, where the defendants' conduct was egregious, and this Court was concerned that any relief other than broad injunctions would permit the defendants to retain part of the goodwill they had originally misappropriated from the plaintiffs. In view of CPI's laches and acquiescence, we view Conans' conduct as significantly different from the defendants' conduct in Chevron Chemical and Kentucky Fried Chicken. In addition, we see no likelihood that Conans will retain any goodwill which may have been misappropriated from CPI by merely using the names Conans Pizza or Conans without any indicia of CONAN THE BARBARIAN. 32 Another reason compels our conclusion that Conans should not be enjoined from using these names if it expands beyond Austin. CPI's argument reduced to its core is that it has exclusive rights in the name Conan in any form and in connection with any product or service. We reject this argument. Although we conclude that CPI has protectable rights in the CONAN THE BARBARIAN name and character, we hold that CPI lacks similar rights in merely the name Conan. Conan is a surname 5 and can be regarded as a descriptive term rather than an inherently distinctive mark. Amstar Corp. v. Domino's Pizza, Inc., 615 F.2d 252, 260 (5th Cir.) (the name Domino is a surname and warrants less protection than an arbitrary mark) cert. denied, 449 U.S. 899, 101 S.Ct. 268, 66 L.Ed.2d 129 (1980). Descriptive terms may acquire trademark protection only with a showing that through usage the name has acquired distinctiveness (the so-called secondary meaning requirement) in the minds of ordinary consumers. L.E. Waterman Co. v. Modern Pen Co., 235 U.S. 88, 94, 35 S.Ct. 91, 92, 59 L.Ed. 142 (1914); Herring-Hall-Marvin Safe Co. v. Hall's Safe Co., 208 U.S. 554, 559, 28 S.Ct. 350, 351, 52 L.Ed. 616 (1908); Amstar, 615 F.2d at 260; John R. Thompson Co. v. Holloway, 366 F.2d 108, 113 (5th Cir.1966); Hanover Mfg. Co. v. Ed Hanover Trailers, Inc., 434 S.W.2d 109, 111 (Tex.1968); In re Glen Raven Knitting Mills, Inc., 153 U.S.P.Q. 134 (T.T.A.B.1967); Dunfey Hotels Corp. v. Meridien Hotels Investments Group, Inc., 504 F.Supp. 371, 378, 380 (S.D.N.Y.1980) (plaintiff established that the name Parker House is a well-known service mark for hotel services but failed to establish that merely the name Parker triggered the same public recognition). One noted commentator has stated that this test requires the plaintiff to show that the public has come to recognize the personal name as a symbol which identifies and distinguishes the goods or services of only one seller. 1 J. McCarthy, supra, Sec. 13:2 at 446 (footnote omitted). 33 At trial CPI failed to introduce any evidence, testimonial, statistical, or otherwise, demonstrating that its use of merely the name Conan established the requisite distinctiveness in the minds of ordinary consumers. CPI's failure to introduce any evidence establishing secondary meaning in the name Conan mandates denying the extraordinarily broad injunction it seeks. We conclude, therefore, that Conans' use of its trade name on existing and future restaurants outside Austin poses no legally significant threat to CPI's mark. 6 34