Court Opinion

ID: 9496222
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:20:46.341098+00
Date Added: 2024-06-11T17:57:25.991764
License: Public Domain

SMITH, Circuit Judge,
with whom HANSEN, Circuit Judge, joins, concurring.
I concur with the majority opinion, but I write separately to address an issue arising from the district court’s grant of judgment as a matter of law to HHF. Because we have vacated the district court’s decision and remanded for further proceedings, I write to clarify our precedents involving the type of evidence that can be used in a trademark case.
On appeal, the Bank raised two issues in addition to the discovery sanctions. The Bank appealed the district court’s judgment as a matter of law on the issues of 1) whether the Bank’s trademark was inherently distinctive or that the Bank made a submissible case of secondary meaning, and 2) whether the court erred in holding that evidence of actual confusion and survey evidence are necessary to create a submissible case on likelihood of confusion. Principally, the Bank challenges the district court’s application of the law concerning the type of evidence needed to establish secondary meaning and likelihood of confusion.
1. Secondary Meaning or Inherent Distinctiveness
The district court granted HHF’s oral motion for judgment as a matter of law after stating in relevant part:
I think there is no dispute between the parties as to the plaintiffs obligation to establish secondary meaning as an element of its claim. And in this regard, the plaintiff has to establish or prove that its mark has become associated in the mind of the public as identifying the source of goods or services. And that is basically the essence of establish secondary meaning. There are a number of ways that that can be proved; however, the plaintiff has not proved that the mark has become associated in the mind of the public with services provided by the bank or has associated it with Heartland Bank.
There’s been no evidence as to the effect that all of this advertising has had on customers or potential customers of the bank or potential consumers of the bank’s products. There has been no evidence that of any association that customers make between the mark and the bank. And on the issue of actual confusion, we’ve talked about that at some length already, the only evidence of any confusion at all comes from the testimony of the witnesses regarding Mrs. Mo-rak, who apparently, mistakenly believed that her son was employed by Heartland Bank when in fact he was employed by Heartland Home Finance.
Although the district court recognized that “there are a number of ways” that secondary meaning and likelihood of confusion can be proven, it concluded that the Bank’s failure to provide consumer studies alone to be fatal to its claim. The court’s analysis gave no consideration to evidence such as the extent of its advertising campaign, length of use in the market, and the money spent to promote the mark. The district court’s decision is thus out-of-line with relevant precedent and persuasive authorities.
On remand, if the district court determines that the trademark is not inherently distinctive, then the court must consider whether the name “Heartland Bank” has acquired secondary meaning. In order to establish secondary meaning, the user of a mark must show that by long and exclusive use in the sale of the goods or services, the mark has become so associated *819in the public mind with such goods or services that the mark serves to identify the source of the goods and to distinguish them from those of others. Aromatique, Inc. v. Gold Seal, Inc., 28 F.3d 863, 870 (8th Cir.1994); Co-Rect Products, Inc. v. Marvy! Advertising Photography, Inc., 780 F.2d 1324, 1330 (8th Cir.1985). In determining whether there is secondary meaning, “the chief inquiry is whether in the consumer’s mind the mark has become associated with a particular source.” Aromatique, Inc., 28 F.3d at 871; Co-Rect Products, Inc., 780 F.2d at 1332-33.
Generally, consumer surveys and testimony of consumers may be the only direct evidence of secondary meaning and should be considered in determining whether a mark has acquired such meaning. Co-Rect Products, Inc., 780 F.2d at 1333 n. 9 (emphasis added). However, if such direct evidence is absent, the court must consider whether secondary meaning can be inferred from the indirect evidence presented. Aromatique, Inc., 28 F.3d at 871.
Direct or indirect evidence can be used to establish secondary meaning, or “acquired distinctiveness.” 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, Sections 15:30, 15:61, 15:66 and 15:70 (4th ed.1999); see also, In re Ennco Display Systems Inc., 56 U.S.P.Q.2d 1279, 1283 (2000). Direct evidence includes testimony, declarations, or surveys of consumers as to their state of mind. Id. Circumstantial evidence is evidence from which consumer association might be inferred, such as years of use, extensive amount of sales and advertising, and any additional evidence showing wide exposure of the mark to consumers. Id.
McCarthy further discusses the type of evidence that can establish a claim of secondary meaning, stating:
Some courts have given broad hints that when plaintiff has a less than clear case, a survey is necessary to prove secondary meaning. However, survey data is not a requirement and secondary meaning can be, and most often is, proven by circumstantial evidence. The other traditional manner of proving secondary meaning is by circumstantial evidence of the seller’s efforts in advertising the mark throughout a wide group of prospective buyers. Such circumstantial evidence can consist of evidence of the size of the seller, the number of actual sales made, large amounts spent in promotion and advertising, the scope of publicity given the mark, and any similar evidence showing wide exposure of the buyer class to the mark in question.
McCarthy, § 15.30. In addition, McCarthy notes that courts usually consider the following factors in determining whether a term has acquired secondary meaning:
Direct Evidence:
1. Direct consumer testimony
2. Consumer survey
Circumstantial Evidence:
1. Exclusivity, length and manner of use
2. Amount and manner of advertising
3. Amount of sales and number of customers
4. Established place in the market
5. Proof of intentional copying
Id. Accord, L.D. Kichler Co. v. Davoil, Inc., 192 F.3d 1349, 1352 (Fed.Cir.1999) (noting that 15 U.S.C.A. § 1052(f) indicates that it is prima facie evidence of distinctiveness if trademark used exclusively and continuously for five years); Stuart Hall Company, Inc. v. Ampad Corp., 51 F.3d 780, 789 (8th Cir.1995); American Scientific Chemical, Inc. v. American Hospital Supply Corp., 690 F.2d 791, 793 (9th Cir.1982).
*820In any case, circumstantial evidence can be sufficient to meet a party’s burden of proof to establish a claim. In fact, in a trademark case, circumstantial evidence may be all that is available to establish secondary meaning. “Direct proof of secondary meaning is difficult to obtain.” Burke-Parsons-Bowlby Corporation v. Appalachian Log Homes, Inc., 871 F.2d 590, 596 (6th Cir.1989). Various circuits and authorities recognize that in the absence of direct proof, the court must draw reasonable inferences from the evidence of money spent in advertising to establish that the mark is from a particular source, of the type of advertising used, of long-term usage of the mark, and of sales volume. Id,.; President & Trustees of Colby College v. Colby College-New Hampshire, 508 F.2d 804 (1st Cir.1975) (normal consequences of' substantial publicity may be inferred); Reader’s Digest Association v. Conservative Digest, 821 F.2d 800 (D.C.Cir.1987) (“... to say that proof of extensive advertising and substantial sales may not be probative of secondary meaning is to defy both logic and common sense.”), abrogated on a ground not relevant to this case, Fogerty v. Fantasy, Inc., 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994); Yamaha International Corp. v. Hoshino Gakki Co., 840 F.2d 1572 (Fed.Cir.1988) (no obligation to introduce survey evidence to establish secondary meaning); Echo Travel, Inc. v. Travel Associates, Inc., 870 F.2d 1264 (7th Cir.1989) (court evaluated “McCarthy" circumstantial evidence factors to evaluate existence of secondary meaning in absence of consumer survey evidence or evidence of intentional copying).
In Co-Rect Products, Inc., we recognized that various forms of evidence could establish secondary meaning so long as the evidence showed that the mark “through long an exclusive use and advertising” had “become so associated in the public mind” with a particular source. 780 F.2d at 1332. We acknowledged that the effect of, and not the extent of, advertising is the controlling inquiry, and to be effective, the advertising must cause the public to equate the mark with the product’s source. Id. Although the court did not find secondary meaning based on the particular advertising efforts in that case, the court did not preclude a finding of secondary meaning without consumer survey evidence. Rather, the court noted that consumer surveys, if available, would be considered as an additional factor, rather than the only or main factor, in determining whether a mark has acquired secondary meaning. Id. at 1333 n. 9; see also, Truck Equipment Service Company v. Fruehauf Corporation, 536 F.2d 1210 (8th Cir.1976) (district court properly relied on both direct consumer testimony and circumstantial evidence of design copying to find trademark infringement); Anheuser-Busch Inc. v. Stroh Brewery Company, 750 F.2d 631 (8th Cir.1984) (survey evidence helpful in gauging public reaction).
The district court acknowledged that the Bank presented circumstantial evidence that it had continuously used the name “Heartland Bank” since 1987; that it had expended considerable amounts of money and personnel to publish and advertise the name “Heartland Bank” and to generate good will in the community through various charitable activities; that it had spent approximately five-million dollars or more for several years on advertising and marketing to promote the Bank’s name and product; that it has grown and expanded since 1987 throughout the St. Louis metropolitan area; and that it had “promoted itself as .an entity that provides individualized service and personal service to customers” since the 19th Century. However, the district court discounted this evidence by determining that the Bank did *821not connect this circumstantial evidence to an impact it may have had on consumers and failed to provide any direct consumer testimony of that impact. As such, the district court failed to consider the circumstantial evidence on its own merits, and instead determined that the circumstantial evidence had to be tied to “impact” evidence of the type noted as “direct evidence” for the Bank to establish a case of secondary meaning. Clearly, this is not required. To require that level of proof would eliminate the use of circumstantial evidence to establish a case through reasonable inferences in this one area of law.
2. Likelihood of Confusion
The Bank also argues that the court erred in refusing to submit to the jury the issue of likelihood of confusion by holding that evidence of actual confusion and survey evidence were necessary in the case. The district court stated:
And there’s no evidence of any likelihood of confusion. There has been no evidence that the plaintiff partook or undertook any studies or consumer surveys to determine whether the public has any confusion or is likely to be confused by the similarity of the names of the two companies.
My recollection from our discussion on one of the motions in limine yesterday was that there was no evidence that the plaintiff could produce on that point; that is, the plaintiff did not do any consumer studies. And there were no reports of any such studies that were conducted.
So all we have is evidence of two companies that both are involved in the financial industry — the mortgage industry — and both of whom use the name the word, “Heartland,” in their names. And they both do business in a similar geographical area, but that evidence alone is not enough to establish a trademark infringement or service mark infringement under state or federal law.
Likelihood of confusion, like secondary meaning, can be established through either direct or circumstantial evidence. In Collect Prods., Inc., we established that the following six factors are to be considered in determining whether a likelihood of confusion exists: (1) the strength of the owner’s mark; (2) the similarity between the owner’s mark and the alleged infringer’s mark; (3) the degree to which the products compete with each other; (4) the alleged infringer’s intent to “pass off’ its goods as those of the owner; (5) incidents of actual confusion; and (6) the type of product, its costs, and conditions of purchase. See also Insty *Bit, Inc. v. Poly-Tech Industries, Inc., 95 F.3d 663, 667 (8th Cir.1996); Duluth News-Tribune v. Mesabi Publishing Co., 84 F.3d 1093, 1096 (8th Cir.1996); Anheuser-Busch, Inc. v. Balducci Publications, 28 F.3d 769, 774 (8th Cir.1994). These factors, however, do not operate in a mathematically precise formula; instead, the relative weight of the factors depends on the facts of the individual case. First National Bank in Sioux Falls v. First National Bank, South Dakota, 153 F.3d 885, 888 (8th Cir.1998).
McCarthy notes that there are at least three evidentiary routes to prove a likelihood of confusion-survey evidence, evidence of actual confusion, and/or argument based on an inference arising from a judicial comparison of the conflicting marks themselves and the context of their use in the marketplace. McCarthy, § 23:63.
Under the third route, it would not be necessary for any witness to testify as to instances of actual confusion, for evidence of actual confusion is not necessary to prove a likelihood or probability of confusion. Thus, the decision-maker can decide the issue by inspection of the *822conflicting marks and their manner of use. As previously discussed, this is not a subjective judgment as to whether the judge, jury or Trademark Examiner would personally be confused, but rather, whether the ordinary, prudent customer in the marketplace would likely be confused. As Professor Perlman points out, in trademark litigation the persons whose states of mind are in issue are not parties to the case: Trademark infringement turns on proof of the likely state of mind of a class of persons — consumers—in a particular context — when they are considering the purchase of goods or services. None of the relevant class is a party to the lawsuit. Consequently, there is no specific event or action to be proved by direct evidence; the likelihood that purchasers will be confused must ultimately rest on the inference to be drawn from circumstantial evidence.

Id.

Despite the presence of these forms of evidence, the district court relied only on the lack of direct evidence such as consumer surveys and did not focus on the mark itself. The court’s exclusive use of direct evidence was improper considering the test used by this and other circuits to determine whether likelihood of confusion exists based on the evidence presented. Such evidence as that discounted by the district court — i.e., use of the same name, operating in same geographical area, etc. — may be sufficient when analyzed under the test factors noted, for example, in Insty *Bit, Inc., Duluth News-Tribune, Anheuser-Busch, Inc., and First National Bank, Sioux Falls. Here, however, the district court did not analyze the evidence under these factors. As such, on remand it will be necessary for the district court to evaluate both the direct and circumstantial evidence offered by the Bank with the understanding that circumstantial evidence alone can be sufficient to establish the elements of secondary meaning and likelihood of confusion in a claim for trademark infringement.