Tuesday, April 8, 2008

Eleventh Circuit affirms lower court decision in favor of Georgia group on use of ANGEL FLIGHT mark

The Eleventh Circuit Court of Appeals last week reaffirmed a lower court’s decision upholding a Georgia organization’s senior rights to use the mark “Angel Flight” in Georgia, Alabama, South Carolina, Mississippi, North Carolina, and Tennessee. The court also upheld the lower court’s decision to cancel a trademark registration for the mark “Angel Flight” on the basis that it was acquired through fraud. See Angel Flight of Georgia, Inc. v. Angel Flight Southeast, Inc. et al, Case No. 07-11460 (11th Cir. April 4, 2008).

The case involves the group of organizations that operate under the name “Angel Flight” A man named Jack Welsh formed an organization called the American Medical Flight Support Team (“AMSFT”) in 1982 made up of volunteer pilots willing to provide free transportation for donated organs and medical patients. AMSFT chapters soon after began forming in other regions of the country.

In 1983, the Las Vegas chapter of AMSFT began using a mark with the words "The Angel Flight" with a winged caduceus. With permission from the Las Vegas chapter, the Los Angeles chapter of AMSFT (later known as Angel Flight West) also began using the same mark. After the Las Vegas chapter went defunct, Angel Flight West continued to use the mark, which it later modified slightly by altering the design of the wings and adding a stylized type to the words “Angel Flight” (picture above).

In 1983, an AMFST chapter was formed in Georgia (later known as Angel Flight of Georgia (“AFGA”)) and became the first organization to use the Angel Flight name in Georgia, Alabama, South Carolina, Mississippi, North Carolina, and Tennessee. In 1986, an AMFST chapter was formed in Florida (later known as Angel Flight Southeast (“AFSE”)) and operated primarily in Florida.

In 1987, Angel Flight West applied for registration of its modified “Angel Flight” mark (see ANGEL FLIGHT (and design) for transportation of human patients, tissue and organs, principally by air) after confirming that the Las Vegas organization was no longer in existence. The date of first use in commerce was claimed as November 21, 1983 (three years prior to the date Angel Flight West had created its modified “Angel Flight” mark). Angel Flight West, through its President at the time, signed the typical declaration (i.e., that Angel Flight West was the owner of the mark and, to the best of his knowledge and belief, no other person, firm, corporation, or association had the right to use the mark in commerce, either in an identical form or a near resemblance such as would be likely to cause confusion or mistake or deceive) – even though Angel Flight West certainly knew that other organizations were using the name Angel Flight in connection with similar air transportation services for medical patients and organs. The mark went on to be registered on June 7, 1988.

In 2000, many, but not all, of the regional Angel Flight organizations came together to form a national association known as Angel Flight America (“AFA”) which then divided the country into territorial zones and authorizing its members to operate in its designated geographical regions. Both AFSE and Angel Flight West joined AFA, but AFGA did not.

In May 2001, Angel Flight West agreed to assign its registered mark to AFA, which in turn licensed the mark to its affiliated member organizations.

Before joining AFA, AFSE originally served Florida patients and medical facilities, transporting patients and organs into and out of Florida; however, after joining AFA, AFSE began operating in Florida, Georgia, Mississippi, Alabama, and South Carolina. More significantly, AFSE began recruiting donors and promoting its services at trade shows and to medical facilities within those states. Sometime in 2001, AFGA became aware of AFSE's plans to open an office in Augusta, Georgia.

After becoming aware that donors and news media were confusing the two, AFGA on May 8, 2003, wrote to AFSE demanding that it cease and desist from promoting its services under the Angel Flight mark in Georgia, Alabama, South Carolina, Mississippi, North Carolina, and Tennessee. When AFSE refused, AFGA, on November 23, 2003, filed a lawsuit in the U.S. District Court for the Northern District of Georgia against AFSE alleging false designation of origin, false advertising, common law trademark infringement, common law unfair competition, and deceptive trade practices and other related state law claims. AFA later intervened in the lawsuit, and the AFA and AFSE filed similar counterclaims against AFGA

In July 2006, the district court ruled in favor of AFGA’s claims and against AFA/AFSE’s counterclaims. The district court issued a permanent injunction enjoining AFA and any of its members from using the Angel Flight mark in Georgia, Alabama, Mississippi, Tennessee, North Carolina, or South Carolina for the purpose of soliciting donations, advertising, promoting their services, or recruiting volunteers. In addition, the court ordered that AFA’s trademark registration be cancelled on the grounds that Angel Flight West had committed fraud in obtaining the registration by falsifying information in the application, specifically the incorrect date of first use as well as the failure to disclose the rights of others to use the mark.

On appeal to the Eleventh Circuit Court of Appeals, AFA and AFSE tried to argue that the district court erred by relying on hearsay testimony to support a finding of actual confusion, refusing to apply the doctrine of laches or acquiescence against AFGA, crafting an overly broad injunction, and canceling AFA’s registered trademark.

Hearsay Evidence of Actual Confusion
The district court found that AFGA was the senior user of the Angel Flight mark in the geographic region at issue. Much of the court’s conclusion of infringement was based on the similar manner in which AFSE was using the mark and AFGA’s evidence of actual confusion.

The evidence of actual confusion consisted of two AFGA employees who testified regarding conversations they had with donors and medical personnel. The district court allowed the evidence under Fed. R. Evid. 803(3), the hearsay exception permitting receipt of out of court statements for the purpose of showing the declarant's "confused" state of mind; however, in its order, the district court recounted such stories as fact (i.e. used the out-of-court statements for the truth of the matters asserted, which is hearsay).

The court noted, however, that evidence of actual confusion was just one part of the court’s overall determination that a likelihood of confusion existed. Even if such evidence were excluded, the court found sufficient evidence to support the district court's finding that confusion was likely (identical mark, identical services, targeting the same consumers, identical advertising methods, and AFSE intent to exploit AFGA’s goodwill with its opening of an office in Georgia and contacting established AFGA donors). Thus, the court found no error in the district court’s determination of a likelihood of confusion with respect to AFGA’s common law trademark rights..

Laches and Acquiescence
With respect to AFA’s argument that the district court erred in finding that AFA and AFSE had not proven the affirmative defenses of laches and acquiescence, the court found no abuse of discretion by the district court, which ruled that AFGA did not unreasonably delay before bringing its lawsuit. Specifically, before 2001, AFSE’s use of the mark in AFGA’s territory was limited to flying patients and organs in and out of the area before; however, after 2001, AFSE opened a branch office in the territory and began soliciting donations and promoting its services.

The court stated:

Under the doctrine of progressive encroachment, "delay is to be measured from the time at which the plaintiff knows or should know she has a provable claim for infringement." Kason Indus., Inc. v. Component Hardware Group, Inc., 120 F.3d 1199, 1206 (11th Cir. 1997); see also 6 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 31.19 (4th ed. 1997) ("The senior user has no obligation to sue until the likelihood of confusion looms large. . . ."). The district court found AFSE's change of tack in 2001 justified the timing of AFGA's lawsuit. That finding was supported by the evidence and was not an abuse of discretion.

Slip op. at 14.

The court noted further than even if AFA and AFSE had proven their affirmative defenses, it would not have precluded the court from issuing a permanent injunction in order to prevent a likelihood of confusion. See 6 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 31.10 (4th ed. 1997); see also SunAmerica Corp. v. Sun Life Assur. Co. of Canada, 77 F.3d 1325, 1337 (11th Cir. 1996); Coach House Rest., Inc. v. Coach & Six Rests., Inc., 934 F.2d 1551, 1564 (11th Cir. 1991). As such, the district court did not err in rejecting AFA/AFSE affirmative defenses of laches and acquiescence as grounds for barring AFGA’s injunctive relief

Permanent Injunction
AFA/AFSE, in trying to argue that the district court erred in granting a permanent injunction, argued that the district court was wrong in deciding that an injunction would serve the public interest. AFA/AFSE argued that the public interest at stake was the “interest in accessing free medical transportation,” which could be harmed by the court’s injunction.

In response to the argument that avoiding confusion is a legitimate public interest for granting an injunction, AFA/AFSE tried to argue that confusion “cannot be the only public interest considered by the court when deciding whether to issue an injunction . . . because no litigant can win a trademark infringement lawsuit without proving it likely that the public will be confused by similarities between the original and infringing marks, the ‘public interest’ in an injunction must be more than a mere interest in avoiding confusion. Were that not the case, an injunction would issue in every trademark action where infringement has been shown.” Id. at *19-20. The court, however, notes that indeed in most trademark infringement actions, complete injunctions are imposed against the infringing party for the simple reason that “the public deserves not to be led astray by the use of inevitably confusing marks-even in cases in which more than one entity has a legal right to use the mark.” Id. at *20.

Because the district court found a likelihood of confusion, the court found that the district court did not err in issuing an injunction to stop AFA/AFSE from using the Angel Flight mark in a way that would cause confusion in violation of AFGA’s senior rights. To that end, the court noted that the district court carefully crafted the injunction to allow AFA/AFSE to continue to use the mark in a way that it had before opening the Atlanta office. The district court’s injunction only prohibited AFA and its members (including AFSE) from using the Angel Flight mark in Georgia, Alabama, Mississippi, Tennessee, North Carolina, and South Carolina for the purpose of soliciting donations, advertising or promoting their services, or recruiting volunteers – the injunction does not prevent AFA and its members from using the mark to identify its planes flying into and out of these states and does not prevent them from promoting their services or recruiting volunteers in other states. The court found no error on the district court’s part with respect to issuing the injunction or its scope.

Cancellation of Trademark Registration on basis of Fraud
Finally, the court upheld the district court’s cancellation of AFA’s trademark registration.

The court noted:

In any action involving a registered mark, a court may order the cancellation of the registration, in whole or in part, when such action is warranted. See 15 U.S.C. § 1119. One ground on which a party may petition to cancel a registered service mark is that the registration was obtained fraudulently. 15 U.S.C. § 064(3) [sic]. Fraud occurs when an applicant knowingly makes false, material representations of fact in connection with an application for a registered mark. Metro Traffic Control, Inc. v. Shadow Network Inc., 104 F.3d 336, 340 Fed. Cir. 1997).

Slip op. at 19.

The district court found that Angel Flight West, the original applicant, committed two acts of fraud in obtaining its registration: intentionally providing an incorrect first date of use for the registered mark and intentionally failing to disclose known use of the mark by others

Regarding the first act of fraud, the court noted that “A misstatement of the date of first use in the application is not fatal to the securing of a valid registration as long as there has been valid use of the mark prior to the filing date.” Id. at 20 (quoting Car Subx Serv. Sys., Inc. v. Exxon Corp., 215 U.S.P.Q. 345, 351 (P.T.O. T.T.A.B. 1982) and citing Pony Exp. Courier Corp. of America v. Pony Exp. Delivery Serv., 872 F.2d 317, 319 (9th Cir. 1989)). In this case, because Angel Flight West did not modify the earlier version of the mark created by the Las Vegas AMFST chapter until 1986, it could not have used such mark in 1983; nonetheless, the court found that Angel Flight West was using the modified mark before it filed for federal registration, and therefore, “the improper first use date contained in the application cannot be a basis for invalidating the registration.” Id. at 21.

However, with respect to the Angel Flight West’s failure to disclose in its application the fact that other organizations were using the term “Angel Flight” despite knowledge of other organizations rightfully using the name, the court noted that “[p]urposely failing to disclose other users' rights to use the same or similar marks may qualify as a material omission justifying cancellation of a trademark. See L.D. Kichler Co. v. Davoil, Inc., 192 F.3d 1349, 1352 (Fed. Cir. 1999) (suggesting proof of noninfringing, consequential use by others may invalidate applicant's claim when combined with proof of intent to deceive).” Id.

Given the evidence that Angel Flight West was aware of other organizations using the “Angel Flight” name for similar transportation services at the time the application was filed and yet failed to disclose such material information to the PTO, the district court’s ruling that Angel Flight West had committed fraud was not clearly erroneous, and thus the district court did not err in canceling the registration on the basis of fraud.

AFA also has a second registration for the word mark ANGEL FLIGHT for “Transportation of human patients, tissue and organs by air.” The first date of use in commerce is cited as November 21, 1983 (the same date as the registration cancelled above). In addition, the registration suffers the same flaw as the above application – it was filed in January 28, 2003, and yet includes the same kind of declaration by AFA that no other person, firm, corporation, or association has the right to use said mark in commerce, either in the identical form thereof or in such near resemblance thereto as may be likely, when used on or in connection with the goods/services of such other person, to cause confusion, or cause mistake, or to deceive. AFGA filed extensions of time to file an opposition back when the mark was published for opposition, but did not follow through. AFGA would appear to have the necessary ammunition should it desire to cancel this registered mark as well.

No comments: