Court Opinion

ID: 9491308
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:10:19.147952+00
Date Added: 2024-06-11T17:54:39.296065
License: Public Domain

DIANE P. WOOD, Circuit Judge,
dissenting.
By the time Platinum Financial entered the Illinois home mortgage market, in January 1997, Platinum Mortgage had grown to be the third largest purveyor of government-backed home mortgages in the state, and had a thriving conventional mortgage practice as well. Armed not only with the eommonsense notion that consumers might be confused by a new entrant sharing the distinctive term in its name but also with detailed evidence of that confusion in action, Platinum Mortgage brought suit to enjoin Platinum Financial’s alleged infringement. I cannot agree with my colleagues’ conclusion that Platinum Mortgage had no more than a negligible chance of establishing rights to its mark. See Majority Op. at 730; Meridian Mut. Ins. Co. v. Meridian Ins. Group, Inc., 128 F.3d 1111, 1114 (7th Cir.1997). My disagreement stems from a different view of the protectibility of trade names under the law; this view in turn leads me to conclude that the district *731court abused its discretion in not issuing a preliminary injunction.
I agree with the majority that the term “Platinum” by itself could not be protected as suggestive; self-laudatory terms are a classic example of descriptive marks. E.g., In re Bush Bros. & Co., 884 F.2d 569, 571-72 (Fed.Cir.1989) (“Deluxe”); Murphy v. Provident Mut. Life Ins. Co., 923 F.2d 923, 927 (2d Cir.1990) (“Hot”); France Milling Co. v. Washburn-Crosby Co., 7 F.2d 304, 306 (2d Cir.1925) (“Gold Medal”); 1 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 11:17 (4th ed.1997) (hereinafter cited as “McCarthy”). While “Platinum” is not as obviously a description of the quality of a good (or here a company) as, say, “Deluxe,” Bush Bros., or “Plus,” Plus Products v. Plus Discount Foods, Inc., 722 F.2d 999, 1005 (2d Cir.1983), Judge Zagel quite rightly pointed out that what counts as merely an indication of quality can change over time, and the recent rash of credit cards designated “Platinum” underscores his finding.
As Judge Zagel held and the majority agrees, however, descriptive marks are pro-tectable upon a showing that the mark had, by the relevant time, acquired a secondary meaning in the eyes of the appropriate audience. Bush Bros., 884 F.2d at 570; France Milling, 7 F.2d at 306 (allowing protection of mark “Gold Medal” in pancake mix marketplace); Mil-Mar Shoe Co. v. Shonac Corp., 75 F.3d 1153, 1156 (7th Cir.1996). Underlying the majority’s belief that Platinum Mortgage failed to show more than a negligible likelihood of succeeding on the merits is its view that Platinum Mortgage had been in the mortgage business for too brief a time to permit its name to acquire secondary meaning. E.g., Majority Op. at 728 (referring to the “minimal length of time involved”). But generalized statements of the necessary length of time are merely predictions about the world, predictions which can be nothing more than the worst sort of legal fiction. See 2 McCarthy § 15:55 (rules of thumb as to time necessary for secondary meaning to devélop are “useless” and can be “dangerously misleading”). “With the advent of massive advertising campaigns on television and in national news magazines, a new trademark may achieve wide usage and ‘secondary meaning’ within a matter of days or weeks, compared to the many years required in the days of more leisurely advertising.” 2 McCarthy § 15:56. Secondary meaning is a question of fact, Meridian, 128 F.3d at 1114, and notably absent from the majority’s opinion are any facts which would support a finding that Platinum Mortgage could not possibly prove secondary meaning.
The record reflects that by the spring of 1997 Platinum Mortgage was the third largest offeror of government-backed mortgages in the state of Illinois and also a major issuer of conventional loans. It now has six offices, five in the Chicago metropolitan region. Since entering the business in 1994, Platinum Mortgage has closed more than 5900 mortgages totaling approximately $700,000,000. It focuses on mortgages for low- to moderate-income borrowers; one of its premier products is evidently the “Dream Loan,” a residential housing mortgage, under which the mortgagee need make no payments for a certain period of time after closing.
Between January 1994 and the commencement of this litigation, Platinum Mortgage incurred approximately $649,000 in promotional expenditures. Its main expense has been' the construction and maintenance of a large constantly illuminated billboard on a major highway west of Chicago. This billboard was erected in mid-1995, not, as the district court mistakenly thought, 1996. The billboard cost over $150,000 to construct, and it costs over $2,000 per month to maintain and operate. Platinum Mortgage also advertises throughout the Chicago region, has a web site, and appears at trade shows. It stresses that it never advertises specific mortgage rates, because it believes that doing so is problematic and potentially misleading to consumers given the volatility of the modern mortgage market.
Platinum Financial commenced operations in January 1997. It aims primarily at a different clientele than Platinum Mortgage— middle- to upper-middle income clients. According to its president, it provides only “conventional first mortgage services to its clients,” and does not originate government-*732backed loans. Platinum Financial does advertise specific rates, among other places in the Chicago Tribune; the record does not include its total advertising budget, but it spends in excess of $5,000 per month on advertising. By August 1997, Platinum Financial had closed 29 loans totaling just under $6,000,000,19 of which were for previous clients of Platinum Financial’s president or personal referrals. Platinum Financial learned of Platinum Mortgage’s existence in December 1996, before it (that is, Platinum Financial) commenced operations, and acknowledges it never consulted a lawyer to discern whether it had the right to use the term “Platinum” in its name.
It is Platinum Financial’s advertisements which most directly show that the similarity between the names of Platinum Mortgage and Platinum Financial caused confusion. By the time Judge Zagel held the preliminary injunction hearing in this case, 25 different people had called Platinum Mortgage, inquiring about the rates advertised by Platinum Financial, despite the fact that those advertisements included Platinum Financial’s telephone number. But that is not the only evidence of confusion in the record. Platinum Financial acknowledged receiving at least five telephone calls derived from people seeing Platinum Mortgage’s large billboard. Finally, real estate professionals have also confused the two companies, on at least three occasions either sending checks and bills to or telephoning the wrong firm.
Factors we commonly look to in order to show that a term has acquired secondary meaning “include the amount and manner of advertising, volume of sales, the length and manner of use, direct consumer testimony, and consumer surveys.” International Kennel Club v. Mighty Star, Inc., 846 F.2d 1079, 1085 (7th Cir.1988). With the exception of direct consumer testimony, these are all indirect routes towards the real question— whether, in the mind of the relevant customer base (which here may be the public, real estate professionals, or both, cf. Centaur Communications, Ltd. v. A/S/M Communications, Inc., 830 F.2d 1217, 1221-22 (2d Cir.1987); Lon Tai Shing Co. v. Koch + Lowy, 19 U.S.P.Q.2d 1081, 1087 (S.D.N.Y. 1990)), the word “Platinum” has come to be associated, in the mortgage industry, with Platinum Mortgage. See International Kennel Club, 846 F.2d at 1085-86.
No one disputes that secondary meaning in the trade name context is governed by the same legal standards as in the trademark arena. E.g., 1 McCarthy § 9:2; Accuride Int’l, Inc. v. Accuride Corp., 871 F.2d 1531, 1534 (9th Cir.1989) (primary distinction between trade names and trademarks is that trademarks are registrable); Country Floors Inc. v. Partnership Composed of Gepner and Ford, 930 F.2d 1056, 1064 n. 2 (3d Cir.1991). The standard must be framed slightly differently in the trade name context, however. Descriptive trademarks are commonly said to have developed secondary meaning when an association has developed “in the mind of the consumer between the trade dress or name of a product and a particular producer.” International Kennel Club, 846 F.2d at 1085; Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 163, 115 S.Ct. 1300, 131 L.Ed.2d 248 (1995) (“ ‘[Sjecondary meaning’ is acquired when ‘in the minds of the public, the primary significance of a product feature ... is to identify the source of the product rather than the product itself.’ ”), quoting Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 851 n. 11, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982) (omission in Qualitex). Absent hypothetical situations involving the interrelation of linked corporations, when a trade name develops secondary meaning, it is not identifying the corporation with a particular product or entity. Rather, when one says a descriptive trade name has acquired secondary meaning one means that the relevant consumer pool knows of that corporation and has come to understand that, for example, “Pizza Hut,” is not the name of just any pizza restaurant but rather a specific purveyor of pizza. (Pizza Hut may not be a trade name given its corporate ownership, but works well as an example nonetheless.) See Self-Realization Fellowship Church v. Ananda Church of Self-Realization, 59 F.3d 902 (9th Cir.1995) (“A trademark represents the mark holder on ‘the vendible commodity to which it is affixed,’ while a trade name symbolizes ‘a business and its goodwill.’”), quoting American Steel Foundries v. Robert*733son, 269 U.S. 372, 380, 46 S.Ct. 160, 70 L.Ed. 317 (1926). “In the case of a trade name, secondary meaning is ‘the power of a name ... to symbolize a particular business.’ ” Perini Corp. v. Perini Construction, Inc., 915 F.2d 121, 125 (4th Cir.1990), quoting Ideal Toy Corp. v. Kenner Products Div’n of General Mills Fun Group, Inc., 443 F.Supp. 291, 305 n. 14 (S.D.N.Y.1977). The existence of other entities using a similar name in unrelated industries is only marginally relevant to the determination of whether a trade name has developed secondary meaning, although it may affect the strength of the mark, likelihood of confusion, or scope of relief. Cf. National Cable Television Ass’n v. American Cinema Editors, Inc., 937 F.2d 1572, 1579 (Fed.Cir.1991); France Milling, 7 F.2d at 306 (“[O]ne who takes a phrase which is the commonplace of self-praise like ‘Blue Ribbon’ or ‘Gold Medal’ must be content with that special field which he labels with so undistinetive a name.”) (allowing protection of “Gold Medal” pancake mix, but limiting protection to the pancake mix industry); 2 McCarthy § 15:27.
In finding that Platinum Mortgage had no more than a negligible chance of showing that the term “Platinum” had developed a secondary meaning — that is, that consumers had come to understand that the name “Platinum” referred to “Platinum Home Mortgage Corporation” within at least the local mortgage industry — the district court acknowledged that the lack of consumer surveys or testimony was not fatal, and acknowledged evidence of Platinum Mortgage’s advertising and sales volume (though it understated both because of its mistaken belief that Platinum Mortgage’s billboard was erected in 1996 and its impression that Platinum Mortgage had earned only “several hundred million dollars” in closings, as opposed to the $700,000,000 the record showed). It found fatal to Platinum Mortgage’s claim the fact that its trade name was too new, and refused to consider Platinum Mortgage’s evidence of actual confusion, believing this irrelevant to the existence of a protectable trademark.
Actual confusion logically must be an indication of at least some amount of secondary meaning. See Adray v. Adray-Mart, Inc., 76 F.3d 984, 987 (9th Cir.1995); 2 McCarthy § 15:11; Perini, 915 F.2d at 125. “[I]f buyers are confused, then this also means that they must have recognized plaintiffs word as a trademark and associated it only with the plaintiff.” 2 McCarthy § 15:11. The majority’s statement that “consumer confusion does not exist within the scope of an infringement claim when the mark is not entitled to trademark protection,” Majority Op. at 729, is circular. While it is true that if no secondary meaning exists (and thus there is no “mark entitled to trademark protection”) consumer confusion cannot follow, Sno-Wizard Mfg., Inc. v. Eisemann Products Co., 791 F.2d 423, 427 n. 5 (5th Cir.1986) (quoting McCarthy), the converse is not true: consumer confusion is direct evidence of the existence of a pro-tectable mark. Adray, 76 F.3d at 987, citing American Scientific Chem. v. American Hosp. Supply, 690 F.2d 791, 793 (9th Cir.1982).
In the trade name and trademark context we consistently have held that a plaintiff has a “reasonable likelihood for success on the merits,” for purposes of a motion for preliminary injunctive relief if she has a “‘better than negligible’ chance of succeeding on the merits.” Meridian, 128 F.3d at 1114, quoting International Kennel Club, 846 F.2d at 1084. I believe the district court clearly erred in finding that Platinum Mortgage had no better than a negligible chance of success on the merits. Given the ignored evidence of actual confusion, the excessive weight placed on the length of time Platinum Mortgage has been in business, and the understatements regarding advertising expenditures and sales, I am left with a “definite and firm conviction that a mistake has been committed.” Anderson v. City of Bessemer, 470 U.S. 564, 565, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985), quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948).
The majority correctly holds that given the district court’s decision on likelihood of success its succinct discussion of the remaining factors to consider for injunctive relief was not inherently an abuse of discretion. Majority Op. at 730, citing Ping v. National Educ. Ass’n, 870 F.2d 1369, 1371 (7th Cir.*7341989). Given my disagreement on the plaintiffs likelihood of demonstrating that it has a valid mark, I note that, while Platinum Mortgage articulated to this court reasons why the remaining considerations relevant to in-junctive relief favored the granting of its requested injunction, Platinum Financial did not address these factors and thus it has waived at this stage any argument that those other factors support the district judge even if he erred on the likelihood of success. Thomas & Betts Corp. v. Panduit Corp., 138 F.3d 277, 300 n. 9 (7th Cir.1998). In my view, it is likely that Platinum Mortgage’s name has been infringed given the similarity in name and business and the evidence of actual customer confusion, see Meridian, 128 F.3d at 1115 (listing factors relevant to infringement). The district court itself stated that it believed Platinum Mortgage lacked an adequate remedy at law and that the balance of harms favored it.
The district court thought that the public interest favored the defendant here because denying protection to Platinum Mortgage’s trade name would somehow “preserve competition.” But this reveals a fundamental misunderstanding of the way intellectual property rights like trademarks and trade names help the competitive process. There is nothing inherently anticompetitive about intellectual property rights, as courts and commentators alike have come to recognize. E.g., Qualitex, 514 U.S. at 163-64, 115 S.Ct. 1300; William M. Landes & Richard A. Posner, Trademark Law: An Economic Perspective, 30 J.L. & Econ. 265 (1987); United States Dept, of Justice & Federal Trade Commission, Antitrust Guidelines for the Licensing of Intellectual Property (Apr. 6, 1995). Companies need a way to capture their investments in good will and reputation, and one important way they do so is to develop a trade name. Free riding by a newcomer on the first company’s name, and hence investment, does not help competition any more than competition is helped when free riders disrupt a manufacturer’s distribution strategy. Finally, as we have recognized in the past, “in trademark infringement cases ... the relevant consideration in determining whether the public interest will be disserved by the grant of an injunction is the consumer’s interest in not being deceived about the products they purchased.” International Kennel Club, 846 F.2d at 1092 n. 8.
For these reasons, I believe that the district court’s refusal to grant Platinum Mortgage its preliminary injunction was an abuse of discretion. I therefore respectfully dissent.