Court Opinion

ID: 1015596
Source: CourtListenerOpinion
Date Created: 2013-07-04 21:35:33.845649+00
Date Added: 2024-06-11T11:50:18.289755
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                            No. 04-1405

ADVENTIS, INCORPORATED,

                                             Plaintiff - Appellee,

          versus

CONSOLIDATED PROPERTY HOLDINGS, INCORPORATED;
BIG LOTS STORES, Incorporated,

                                          Defendants - Appellants,

          and

BIG LOTS, INCORPORATED,

                                                        Defendant.

                            No. 04-1411

ADVENTIS, INCORPORATED,

                                            Plaintiff - Appellant,

          versus

CONSOLIDATED PROPERTY HOLDINGS, INCORPORATED;
BIG LOTS STORES, Incorporated,

                                           Defendants - Appellees,

          and
BIG LOTS, INCORPORATED,

                                                         Defendant.

Appeals from the United States District Court for the Western
District of Virginia, at Roanoke. James C. Turk, Senior District
Judge. (CA-02-611-7)

Argued:   December 2, 2004                 Decided:   March 2, 2005

Before LUTTIG, MOTZ, and DUNCAN, Circuit Judges.

Vacated and remanded by unpublished opinion. Judge Duncan wrote
the opinion, in which Judge Motz joined.     Judge Luttig wrote a
separate opinion concurring in the judgment.

ARGUED:   John Baylor Nalbandian, TAFT, STETTINIUS & HOLLISTER,
Cincinnati, Ohio, for Consolidated Property Holdings, Incorporated,
and Big Lots Stores, Incorporated.       Martin B. Pavane, COHEN,
PONTANI, LIEBERMAN & PAVANE, New York, New York, for Adventis,
Incorporated.   ON BRIEF: John M. Mueller, TAFT, STETTINIUS &
HOLLISTER, Cincinnati, Ohio; Arthur P. Strickland, STRICKLAND &
HARDEN, P.C., Roanoke, Virginia, for Consolidated Property
Holdings, Incorporated, and Big Lots Stores, Incorporated. Roland
E. Pieterman, ADVENTIS, INC., Midlothian, Virginia; Myron Cohen,
Jeremy M, Kaufman, COHEN, PONTANI, LIEBERMAN & PAVANE, New York,
New York, for Adventis, Incorporated.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

                              - 2 -
DUNCAN, Circuit Judge:

     In   these   cross-appeals,    the    parties    to   the   underlying

trademark action contest the district court’s denial of their

cross-motions for summary judgment on their competing claims of

trademark infringement.      Prior to filing their motions, both

parties admitted during discovery that there was a likelihood of

confusion between the Appellant’s use of its mark “The BIG Lot!”

and the Appellee’s use of its marks “BIG LOTS!” and “BIG ! LOTS.”

In finding that neither party could demonstrate infringement, the

district court concluded that the marks in question were not

confusingly   similar,   despite    the    parties’   admissions    to   the

contrary. Because the court impermissibly disregarded the parties’

discovery admissions, we vacate the district court’s order and

remand for further proceedings.

                                    I.

     The issues in this appeal arise from the following sequence of

events.   In 1997, Appellant/Cross-Appellee Consolidated Property

Holdings, Inc. (“CPHI”), the parent company of Big Lots Stores,

Inc., filed an application with the United States Patent and

Trademark Office (“PTO”) to register the word mark “BIG LOTS.”

CPHI has used this mark since 1985 to identify its nationwide chain

of Big Lots stores, which sell discount and close-out retail

                                   - 3 -
merchandise.1    The PTO granted CPHI’s application and registered

“BIG LOTS” as U.S. Trademark No. 2,087,643 (the 643 mark) on August

12, 1997.

       In 1998, Appellee/Cross-Appellant Adventis began an online

used       car    classifieds       service      on         the     website

. To market this service, Adventis began

using the mark “The BIG Lot!” in connection with its website.

Adventis filed U.S. Trademark Application No. 78/069,918 for “The

BIG Lot!” (the 918 mark) with the PTO on June 19, 2001, claiming a

first use in commerce on May 3, 2001.

       At about the same time Adventis began using the 918 mark, CPHI

introduced two new marks as part of an effort to “roll[] out [a]

new national image.”    J.A. 183.   These marks were “BIG LOTS!” and

“BIG ! LOTS.”    Shortly thereafter, CPHI became aware of Aventis’s

918 mark and sent a cease and desist letter dated August 7, 2001,

asserting that its 643 word mark, from which its two new marks was

derived, was senior to Adventis’s 918 mark and that the 918 mark

was confusingly similar.        Three weeks later, CPHI filed U.S.

Trademark Application No. 76/305,489 for the mark “BIG LOTS!” (the

489 mark) and Application No. 76/305,490 for the mark “BIG ! LOTS”

(the 490 mark), claiming a first use of these marks in May 2001.2

       1
      CPHI also operates     an   internet    site    but   does   not   sell
merchandise through it.
       2
      The PTO preliminarily denied CPHI’s applications, asserting
a likelihood of confusion with Adventis’s 918 mark.

                                  - 4 -
     Unable to resolve its differences with CPHI, Adventis filed

this action on April 25, 2002.         In its amended complaint, Adventis

charged CPHI with federal trademark infringement under the Lanham

Act, see 15 U.S.C. § 1125(a)(1)(A), and common law trademark

infringement.     In its counterclaim, CPHI presented five claims:

trademark infringement under the Lanham Act, unfair competition and

false    designation   of    origin,    trademark     dilution,    common    law

trademark infringement, and common law unfair competition.                During

discovery, each party requested that the other admit pursuant to

Federal Rule of Civil Procedure 36 that the marks in question were

confusingly    similar.      Adventis    denied   that   its    918   mark   was

confusingly similar to CPHI’s 643 mark but admitted that there was

a likelihood of confusion between its mark and CPHI’s more recent

489 and 490 marks.     For its part, CPHI admitted that there existed

a likelihood of confusion between all of its marks and Adventis’s

918 mark.     Drawing on these admissions, the parties filed cross-

motions for summary judgement.

     The district court denied the parties’ motions as to their

claims   of   infringement    under    the   Lanham    Act,    however,    based

principally on its determination that (contrary to the parties’

admissions) none of the marks in question were confusingly similar.

The court reasoned that the differences in presentation between the

various marks and the different modes of commerce in which the

parties operated sufficed to distinguish the marks.               As a result,

                                   - 5 -
the court found no infringement by either party.            Although the

court’s order did not address the parties’ common law claims or

CPHI’s federal dilution claim, the court certified its summary

judgment order for interlocutory appeal pursuant to 28 U.S.C.

§ 1292, and this court accepted the appeal.

                                  II.

      We review de novo the grant or denial of summary judgment on

infringement claims under the Lanham Act.        See AT&T Wireless PCS,

Inc. v. Winston-Salem Zoning Bd. of Adjustment, 172 F.3d 307, 312

(4th Cir. 1999).     Summary judgment is never appropriate unless

there is no genuine issue of material fact and the moving party is

entitled to judgment as a matter of law.      Celotex Corp. v. Catrett,

477 U.S. 317, 322 (1986).     In making this assessment, we apply the

same tests and standards used by the district court and consider

the facts (and reasonable inferences drawn therefrom) in the light

most favorable to the non-movant.         See Blair v. Defender Servs.,

Inc., 386 F.3d 623, 625 (4th Cir. 2004).       However, while we review

the   district   court’s   infringement    determination   de   novo,   the

necessary underlying factual determinations, including whether

there exists a likelihood of confusion between the marks, are

reviewed for clear error.      See Int’l Bancorp, LLC v. Societe des

                                 - 6 -
Bains de Mer et du Cercle des Etrangers a Monaco, 329 F.3d 359,

362-63 (4th Cir. 2003), cert. denied, 124 S. Ct. 1052 (2004).3

     In their briefs and at oral argument, both parties asserted

that the district court erred in disregarding their admissions

regarding likelihood of confusion and that they were entitled to a

finding   that   the   other   party      had   infringed   on   their   marks.

However, we address only the former issue in this appeal.                Because

we conclude that the district court could not reach a result that

conflicted with the parties’ admissions under Rule 36, we vacate

the district court’s order and remand for further proceedings.

                                         A.

     Before   proceeding,      it   is    useful   to   review   the   relevant

elements of a claim for trademark infringement under the Lanham

     3
      This court has consistently held that the likelihood of
confusion issue in an infringement claim is an inherently factual
determination. See, e.g., Anheuser-Busch, Inc. v. L. & L. Wings,
Inc., 962 F.2d 316, 318 (4th Cir. 1992). We recognize, however,
that a minority of other circuits regard the issue as a mixed
question of fact and law, see, e.g., In re Majestic Distilling Co.,
Inc., 315 F.3d 1311, 1314 (Fed. Cir. 2004) (describing likelihood
of confusion “as a question of law based on findings of relevant
underlying facts”); Jet, Inc. v. Sewage Aeration Sys., 165 F.3d
419, 422 (6th Cir. 1999) (“[W]e review a trial court’s underlying
factual findings for clear error but review de novo whether these
facts indicate a likelihood of confusion.”); see also, 3 J. Thomas
McCarthy, McCarthy on Trademarks and Unfair Competition § 23:73
(4th ed. 2001), and that the split over this issue continues, see,
e.g., McMonagle v. Northeast Women’s Center, Inc., 493 U.S. 901,
904 (1989) (WHITE, J., dissenting from denial of certiorari);
Heartsprings, Inc. v. Heartspring, Inc., 143 F.3d 550, 553 (10th
Cir. 1998).

                                    - 7 -
Act. In order to establish trademark infringement under the Lanham

Act,   the   complainant   must   show    that:   a)   “it   has    a   valid,

protectible trademark”; and b) “the defendant’s use of a colorable

imitation of the trademark is likely to cause confusion among

consumers.”     Lone Star Steakhouse & Saloon, Inc. v. Alpha of

Virginia, Inc., 43 F.3d 922, 930 (4th Cir. 1995).            The owner of a

trademark registered under § 2 of the Lanham Act is entitled to a

presumption of validity, and if that mark has been in continuous

use for more than five years, the validity of the mark ordinarily

becomes incontestable.      Wal-Mart Stores, Inc. v. Samara Bros.,

Inc., 529 U.S. 205, 209 (2000). The parties’ reciprocal admissions

that their marks were confusingly similar effectively reduced their

dispute to a litigation addressing a) whether either party had a

valid, protectible trademark and b) which had priority of use.

Because the district court’s denial of the parties competing

infringement claims turned on a finding that their marks were not

confusingly similar, in contravention of their admissions, both

parties request that we vacate the court’s summary judgment order

and remand for further proceedings.

                                   B.

       For the following reasons, we agree with the parties that the

court erred in disregarding their Rule 36 admissions.              Under Rule

36, the parties to litigation may request from their adversaries

                                  - 8 -
admissions regarding purely factual matters or the application of

law to facts, but not matters of law.        See, e.g., In re Carney, 258

F.3d 415, 418 (5th Cir. 2001)."        8A Charles Alan Wright, Arthur R.

Miller, & Mary Kay Kane, Federal Practice & Procedure, § 2255 & n.8

(3d ed. 1999); see also Fed. R. Civ. P. 36(a).           The purpose of such

admissions is to narrow the array of issues before the court, and

thus expedite both the discovery process and the resolution of the

litigation.    See Carney, 258 F.3d at 419 (noting the breadth of

what may be admitted under Rule 36 “allows litigants to winnow down

issues prior to trial and thus focus their energy and resources on

disputed matters”).

     The mere fact that parties have attempted to narrow the issues

in dispute through their admissions is not necessarily controlling,

however.   A district court is not bound by a party’s admission that

addresses a purely legal matter.            Cf. Carney, 258 F.3d at 418

(collecting    cases   for   the   proposition    that    “Rule   36   allows

litigants to request admissions as to a broad range of matters,

including ultimate facts, as well as applications of law to fact,”

but not conclusions of law).           Additionally, because “[i]ssues

change as a case develops, and the relevance of discovery responses

is   related   to   their    context   in   the   litigation,”    according

conclusive effect to an admission “may not be appropriate where

requests for admissions or the responses to them are subject to

more than one interpretation.”         Rolscreen Co. v. Pella Prods. of

                                   - 9 -
St. Louis, Inc., 64 F.3d 1202, 1210 (8th Cir. 1995).         As a result,

district courts are generally afforded discretion as to what scope

and effect is to be accorded party admissions under Rule 36.             See

Johnson v. DeSoto County Bd. of Comm’rs, 204 F.3d 1335, 1341 (11th

Cir. 2000).

     Nevertheless,   a   court’s    discretion   in   this   area   is   not

unfettered.   Rule 36 plainly states that “[a]ny matter admitted

. . . is conclusively established unless the court on motion

permits withdrawal” of the admission. Rule 36(b) (emphasis added).

Once made, an admission may be withdrawn only if: a) the withdrawal

would promote the presentation of the merits of the action, and b)

allowing the withdrawal would not prejudice the party that obtained

the admission.   See Rule 36(b); Am. Auto. Ass’n (Inc.) v. AAA Legal

Clinic of Jefferson Crooke, P.C., 930 F.2d 1117, 1119 (5th Cir.

1991).   Thus, once a matter that is properly subject of an

admission under Rule 36(b) has been admitted during discovery, the

district court is not free to disregard that admission. See Langer

v. Monarch Life Ins. Co., 966 F.2d 786, 803 (3d Cir. 1992) (“Rule

36 admissions are conclusive for purposes of the litigation and are

sufficient to support summary judgment.” (emphasis added)).4

     4
      We are not confronted here with a situation where the parties
have, for reasons known only to themselves, stipulated to an
admission that obviously misrepresents a material factual issue in
the litigation, and therefore do not address whether a district
court would abuse its discretion in declining to accord conclusive
effect to such an admission, or whether such a suit would
constitute an actual case or controversy.

                                   - 10 -
                                  C.

     Applied here, these principles indicate that the district

court was bound by the parties’ admissions that Adventis’s 918 mark

and CPHI’s 489 and 490 marks are confusingly similar.                   As a

threshold   matter,   the   likelihood   of    confusion   issue   is    “an

inherently factual issue that depends on the unique facts and

circumstances of each case,” Anheuser-Busch, Inc. v. L. & L. Wings,

Inc., 962 F.2d 316, 318 (4th Cir. 1992) (internal quotations

omitted), and thus presents a matter that may properly be the

subject of a request for admission under Rule 36(b).         Indeed, the

Fifth Circuit reached an identical result in American Automobile

Association v. AAA Legal Clinic, in which the court held that

because the parties to an infringement action had identified the

likelihood of confusion issue as an “‘undisputed issue[] of fact,’”

the district court erred in sua sponte deeming the admissions of

the defendant in that infringement action to be withdrawn, and

therefore without conclusive effect.          See 930 F.2d at 1119.       As

noted by the Fifth Circuit, the conclusive effect of admissions

applies “even if the matters admitted relate to material facts that

defeat a party’s claim,” including the likelihood of confusion

between similar marks that are the subject of an infringement

action   Id. at 1120.

                                - 11 -
                                    D.

      Because we must vacate and remand the district court’s order

for further proceedings, we do not reach the             parties’ assertions

that the facts and law are clear enough to permit this court to

remand the case with instructions to enter judgment in favor of one

party or the other.    As noted above, the parties have in large part

reduced   their   competing   Lanham     Act   claims    to    a   dispute   over

priority of use.    Cf. United Drug Co. v. Theodore Rectanus Co., 248

U.S. 90, 100 (1918) (“[T]he general rule is that, as between

conflicting claimants to the right to use the same mark, priority

of appropriation determines the question.”).                  Because there is

inadequate evidence in the current record on which to resolve the

parties’ various arguments regarding priority, we do not reach the

remaining issues, including, inter alia, whether Adventis’s 918

mark is a colorable imitation of CPHI’s 643 mark, whether CPHI may

refer back to its 643 mark under the doctrine of tacking for

purposes of establishing priority of use, see Van Dyne-Crotty, Inc.

v.   Wear-Guard    Corp.,   926   F.2d   1156,    1159    (Fed.     Cir.     1991)

(discussing tacking); see also Homeowners Group, Inc. v. Home Mktg.

Specs., Inc., 931 F.2d 1100, 1106 (6th Cir. 1991) (“Homeowners

cannot make out an infringement case against Specialists by showing

ownership of one mark (the initials HMS alone) and a likelihood of

confusion based on a comparison between a different mark (the

HMS-roof design mark) and Specialists’ marks.”), and whether an

                                  - 12 -
application of the tacking doctrine results in abandonment of the

earlier mark, see, e.g., Iowa Health System v. Trinity Health

Corp., 177 F. Supp. 2d 897, 917-23 (N.D. Iowa 2001).     These matters

must be left to the district court in the first instance.

                                    III.

     For the foregoing reasons, we vacate the district court’s

order denying the parties’ cross-motions for summary judgment as to

their claims of infringement under the Lanham Act and remand to the

district   court   for   further   proceedings   consistent   with   this

opinion.

                                                  VACATED AND REMANDED

                                   - 13 -
LUTTIG, Circuit Judge, concurring in the judgment:

     I am sufficiently unclear as to the reasons for the majority’s

holding, and therefore the implications of the court’s decision,

that I simply concur in the judgment reached by the court.

                              - 14 -