Fourth Circuit Affirms Lower Court Decision That OBX Creator Has No Trademark Rights To The Term

Pamela Chestek over at her blog Property, intangible discusses the Fourth Circuit’s recent decision in OBX-Stock, Inc. v. Bicast, Inc., No. 06-1769 (4th Cir. Feb. 27. 2009). The decision serves as a good reminder about the importance of using a trademark as a trademark.

Too many people not familiar with trademark law fail to appreciate that just because you come up with a unique word or slogan and affix that word or slogan to various goods (most often T-shirts or other souvenir items) does not mean that you are using the word or slogan as a trademark, especially in the case where the term is acknowledged to signify a specific geographic location. Trademarks are supposed to serve as source identifiers for a company’s goods and services – not as an identifier of something else for which you then use on goods and services.

As the court eloquentlystated in this case:

Trademark law, at a general level, protects the goodwill represented by particular marks, enabling consumers readily to recognize products and their source and to prevent consumer confusion between products and between sources of products. The marks enable consumers to make informed, independent decisions about quality and other product characteristics. But the law also protects the "linguistic commons" by denying mark holders an exclusive interest in words that do not identify goodwill attached to products or product sources but rather are used for their common meaning or meanings not indicative of products and product sources. See America Online, Inc. v. AT & T Corp., 243 F.3d 812, 821 (4th Cir. 2001); see generally 1 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 1:27 (4th ed. 2008).

In this case, the plaintiff (“OBX-Stock”) had coined the term “OBX” as a reference to the Outer Banks of North Carolina and made money selling products with OBX affixed thereon. The evidence showed that the public came to embrace OBX as a reference to the Outer Banks (thanks in part to OBX-Stock's sale of merchandise emblazoned with the OBX mark).

A company can obtain trademark rights over geographically descriptive marks with evidence of acquired distinctiveness. Of course, you must first use the mark as a source identifier – and not in its geographically descriptive sense. In this case, the court found that OBX-Stock affixed the letters OBX to stickers, souvenirs, and other sundries not to label an OBX brand product produced by OBX-Stock, but to indicate an association with the Outer Banks (i.e., OBX-Stock’s use of OBX on its souvenirs was always meant to be a reference the Outer Banks, and not to communicate that the souvenirs were produced by OBX-Stock).

In this case, the court found that the evidence indicated overwhelmingly that "OBX" is [ed. - OBX-Stock used OBX as] a geographically descriptive or generic term for the Outer Banks. Moreover, OBX-Stock had failed to show any evidence that any consumer associates OBX with its products or with OBX-Stock itself.

The court found that OBX-Stock had failed to show ownership of a valid trademark and therefore dismissed its trademark infringement lawsuit. [Interestingly, the entire lawsuit was brought because of the Defendant’s use of the mark “OB Xtreme” on some stickers. Given the outcome, one wonders if this particular suit against Bicast was the smartest decision.]

Curiously, even though the Court of Appeals affirmed the district court’s decision that "OBX" was either generic or a descriptive mark without secondary meaning, the court did not overrule the district court’s decision not to order cancellation of OBX-Stock’s trademark registrations. For OBX-Stock’s trademark registrations on the Principal Register based on Section 2(f), the court’s decision would appear to nullify the 2(f) basis for maintaining the registration.

The court noted that the district court had concluded that Bicast’s evidence did not conclusively establish that every one of OBX-Stock’s trademark registrations should be cancelled. The court also seems to fault Bicast for not having filed counterclaims seeking cancellation (and only arguing the point on summary judgment). The court justifies its decision by stating that “Bicast has received an adequate remedy through the district court’s summary judgment in its favor, and the court’s final adverse decision on trademark validity will preclude OBX-Stock’s marks from becoming incontestable.”

Of course, while this is good for Bicast, what about future parties who may be afraid of using the OBX mark (even in a geographically descriptive fashion) for fear of being sued by OBX-Stock.

Last year, the Third Circuit reversed a district court’s decision not to order the USPTO to enter a disclaimer of the term “Cocoa Butter Formula” (which was found to be generic) on the principal registration of the mark “Palmer's Cocoa Butter Formula.” See E.T. Browne Drug Co. v. Cococare Prods., Inc., Nos. 06-4543 & 06-4658, 2008 U.S. App. LEXIS 16585 (3rd Cir. August 5, 2008). While the lower court had declined to order relief under 35 U.S.C. § 1119 believing that it would not benefit the party requesting such relief, the Court of Appeals reversed stating “even if Cococare will not benefit from that disclaimer, we should not allow the absence of a disclaimer on the principal register to confuse a future business into believing that it may not use the term ‘Cocoa Butter Formula.’”

Similarly, in this case, future businesses should not be confused by OBX-Stock’s trademark registrations for the OBX mark into believing that they may not use the term OBX (particularly as a reference to the Outer Banks). In my opinion, the Third Circuit should have remanded the case back to the district court to order OBX-Stock’s trademark registrations (at least those on the Principal Register based on Section 2(f)) to be cancelled.

Hualapai Tribe opens a new front in its long running trademark battle over GRAND CANYON WEST

The "Skywalk"at the Hualpai Tribe's Grand Canyon West

(AP Photo from Flickr)

I previously wrote (link here) about the Trademark Trial and Appeal Board decision in the opposition filed by Grand Canyon West Ranch, LLC (“Ranch”) against the Hualapai Tribe over the Indian tribe’s attempt to register the mark GRAND CANYON WEST. See Grand Canyon West Ranch, LLC v. Hualapai Tribe, Opposition No. 91162008 (June 30, 2008).

By way of background, Ranch, which had its own pending applications for GRAND CANYON WEST RANCH (filed about a year after Hualapai Tribe’s application), opposed registration of the mark on the basis that it was geographically descriptive (and had not acquired distinctiveness) and because of fraud of the PTO. While the TTAB decision determined that the Hualapai Tribe had proven that the mark GRAND CANYON WEST had acquired distinctiveness, the Board nonetheless sustained the opposition based on fraud. Hualapai Tribe has filed an appeal to the Federal Circuit of the TTAB’s decision (Appeal No. 2009-1012). A copy of the Amicus Curiae brief filed by the AIPLA in support of the Hualapai Tribe is available here. Apparently, Ranch did not appeal the Board’s determination regarding acquired distinctiveness.

So while that appeal is pending, on February 12, 2009, Grand Canyon Resort Corporation (“GCR”), the Hualapai Tribe’s federally chartered corporation, filed a lawsuit in the U.S. District Court for the District of Arizona against Ranch. See Grand Canyon Resort Corporation v. Grand Canyon West Ranch, LLC, Case No. 09-cv-00289 (D. Ariz.). A copy of the complaint can be downloaded here. Not surprisingly, GCR is now attempting to stop Ranch from using the mark GRAND CANYON WEST RANCH in connection with its tourism business.

GCR claims that it has used the mark GRAND CANYON WEST in connection tourism related to the Hualapai Tribe’s land on the west rim of the Grand Canyon commonly referred to as “Grand Canyon West” since October 1998. [Note: In the TTAB decision, the Hualapai Tribe claimed use of “Grand Canyon West” back to 1986, but in that case, the party fighting the opposition was the Hualapai Tribe, whereas the plaintiff in this case did not exist until October 1998.] According to the complaint, GCR’s tourism revenue from GRAND CANYON WEST was $2.8 million. [Query– Is that from 1998 to 2000, for the year 2000 alone, or from the time they began operating “Grand Canyon West” including the time when it was operated by the Hualapai Tribe? The amount seems low regardless.]

For a period of time before 2000, GCR (or possibly its predecessor-in-interest) had an agreement with a company name Heli-USA, Inc. to provide helicopter tours at Grand Canyon West. The agreement was apparently terminated in 2000 after a dispute arose between GCR and a principal of Heli-USA, Nigel Turner.

According to the complaint, Turner, through Ranch (another company that he owned or managed) purchased some property that was located on the same road which leads to GCR’s “Grand Canyon West” sometime in 2000 or 2001. At that time, Ranch named the property “Grand Canyon West Ranch” and began operating it a tourist destination – presumably in competition with the tourism services offered by GCR.

GCR seeks a declaratory judgment that is consistent with the TTAB’s decision that GCR’s GRAND CANYON WEST mark has acquired distinctiveness. GCR’s other causes of action are for federal trademark infringement, federal trademark dilution, and common law trademark infringement.

Vegas™Esq. Comments:
The TTAB Opposition was filed back in September 8, 2004, so it’s fair to say that GCR knew about Ranch’s use of “Grand Canyon West Ranch” at least as far back as September 2004 (and more likely knew about it going all the way back to 2001). But instead of taking action back in 2004 to stop Ranch’s use of the mark GRAND CANYON WEST RANCH, GCR waited 4 years and 4 months to take such action. Laches, anyone?

Tenth Circuit affirms district court decision favoring 1-800-SKI-VAIL against Vail Ski Resort Owner

On February 7, 2008, a divided three judge panel of the Tenth Circuit Court of Appeals upheld a district court’s decision in favor of Vend-Tel-Co, Ltd. and Eric A. Hansen (together, “VTC”), the owner of the vanity phone number "1-800-SKI-VAIL," in a service mark infringement lawsuit brought by Vail Associates, Inc., owner of the Vail Ski Resort, and Vail Trademarks, Inc. (together, “VA”),. See Vail Associates, Inc. et al. v. Vend-Tel-Co., Ltd. et al., No. 05-1058 (10th Cir. February 7, 2008). A news article on the lower court’s 2005 decision can be found here.

VA holds a service mark registration for the mark VAIL (for recreational services, namely downhill skiing facilities, ice skating facilities, cross-country ski trails and expeditions, hiking and back-packing trails, and horseback riding and educational services, namely skiing classes and for resort hotel and restaurant services, and retail store services in the field of recreational equipment) registered January 17, 1989. VTC holds a service mark registration for the vanity telephone number 1-800-SKI-VAIL (for marketing services related to the ski industry, namely providing an automated phone switching system to offer services available in or near Vail, Colorado and nearby resort locations) registered June 12, 2001 .

VA claimed that VTC's use of the term SKI and VAIL in its vanity telephone number infringed its registered VAIL service mark in violation of 15 U.S.C. §1114(1)(a) as likely to cause consumers to believe that VA and its Vail Ski Resort was the source of or affiliated with VTC’s phone service. VA also alleged false designation of origin under 15 U.S.C. §1125(a) and sought to cancel VTC’s registered mark under 15 U.S.C. §1064 for alleged fraud in the prosecution.

After a bench trial, the district court concluded VA failed to meet its burden of proof regarding likelihood of confusion between the two marks and that VA failed to establish by clear and convincing evidence that two alleged misstatements of fact were material to the PTO's issuance of the registration.

The majority of the three judge panel of the court of appeals, noting that it does not set aside a district court’s factual findings unless clearly erroneous (Fed. R. Civ. P. 52(a)) (i.e., only if the reviewing court is left with the definite and firm conviction that a mistake has been committed), decided that a review of the trial record, in the light most favorable to the district court’s ultimate findings, showed ample support for the court's judgment.

After a detailed review of the witnesses and testimony set forth by the parties at the district court level, the court stated:

Taken in a light most favorable to the district court's ruling, the only thing the preceding recitation of the evidence confirms is the district court's finding of no likelihood of confusion was not clearly erroneous. Based on our review of the trial record, we are satisfied the district court did not clearly err in finding that VA failed to prove the ordinary consumer, looking for winter recreation in and around the Town of Vail, Colorado, associates the word "Vail" exclusively, if at all, with VA or its ski resort. Rather, the ordinary consumer sees Vail as a place to ski, i.e., as a ski destination, without associating it with any particular entity or service provider. Simply put, the district court took a permissible view of the evidence to hold VA failed to prove a likelihood of confusion between 1-800-SKI-VAIL and VA's ski resort.

Slip op. at 15-16 (emphasis in original).

The court proceeds to discuss the evidence of record as applied to each of the six factors used in the Tenth Circuit to determine a likelihood of confusion (the Sally Beauty factors): (1) evidence of actual confusion between the marks, (2) the strength of the contesting mark, (3) the intent of the alleged infringer in adopting the contested mark, (4) the degree of similarity between the marks, (5) the similarity of the parties' services and manner in which they market them, and (6) the degree of care consumers are likely to exercise in purchasing those services. See Team Tires Plus, Ltd. v. Tires Plus, Inc., 394 F.3d 831, 833 (10th Cir. 2005); Sally Beauty Co. v. Beautyco, Inc., 304 F.3d 964, 972 (10th Cir. 2002).

The dissent, in concluding that the district court’s decision was clearly erroneous, undertakes its own analysis of the six factors, which results in some back and forth arguments (and footnotes) with the majority.

Actual Confusion
The court found that VA offered little evidence of actual confusion, initial interest confusion or otherwise, on the part of consumers phoning 1-800-SKI-VAIL. One piece of evidence relied upon by VA was the testimony and affidavit of a travel agent (Joyce Newton, owner of Vacation Coordination) who at one time served callers of the 1-800-SKI-VAIL number. The court recounted events surrounding the procurement of Newton’s affidavit by VA – she marked up an initial version of the affidavit in a way that worked against VA’s argument of actual confusion by callers of 1-800-SKI-VAIL. Newton signed a modified version of VA's original affidavit and agreed to testify on behalf of VA only after VA cut off her travel agency's ability to book reservations with VA, which, in turn, deprived her travel agency of the ability to earn commissions. Newton later testified that she felt coerced into signing the modified affidavit. Under such circumstances, the court found that the district court understandably discounted such evidence of actual confusion, and that the district court’s action in discounting such evidence was not clearly erroneous. The court also noted that the district court did not abuse its discretion in excluding VA’s survey evidence after concluding in a Daubert hearing that VA’s survey evidence contained methodology flaws and thus was unreliable.

One point of contention between the majority and the dissent is the extent to which source confusion existed despite consumers calling 1-800-SKI-VAIL not having knowledge of the particular company behind skiing in Vail because most people calling the phone line think of Vail as a place to ski, and not as a specific company offering ski services. While the majority recognized that consumers need not have knowledge of the particular company behind a service source before confusion may occur, the court stated that consumers nonetheless must associate the company's mark with its services. The court found nothing in Newton’s testimony suggesting that consumers phoning 1-800-SKI-VAIL thought they were calling the service provider behind the VAIL registered mark.

While some consumers calling 1-800-SKI-VAIL asked about ski passes, directions to Vail, weather, grooming, and ski rental, the court states that VA did not offer any evidence suggesting that consumers are more likely to call the VAIL ski resort than the chamber of commerce, a travel agency, or some other information source to inquire about such matters. In addition, other callers asked about things not related to a ski resort, which allowed the district court to conclude that callers recognized they were calling a general information number rather than the resort itself. Such consumer inquiries show that consumers knew they could ski in Vail; it does not say anything about whether those consumers identified the name VAIL with the ski resort or rather with Vail as a geographic designation.

The court also disregarded Newton’s testimony about redirecting calls from 1-800-SKI-VAIL to VA since such testimony did not offer any evidence into the subjective belief or knowledge of consumers calling the number.

The dissent, however, saw the evidence as showing that of the 10-20 calls per week that Newton received, most of the calls asked questions directed to VA's ski resort (i.e., directed to the one place in Vail to ski). Consumers contacting VTC about lodging were not necessarily directed to VA's accomodations, which puts VTC at competition with VA in this respect. By ignoring evidence that consumers calling 1-800-SKI-VAIL attempting to contact VA's ski resort who were then direct to competiting hotel accomodations, the dissent maintains that the district court committed clear error.

Strength of the Mark
The court also found that the district court did not clearly err in finding the VAIL mark to be weak. While recognizing that VAIL has acquired a secondary meaning with respect to VA’s ski services, the “presence of secondary meaning, however, does not provide the mark holder with an exclusive right to use the mark in its original descriptive sense. Secondary meaning provides the mark holder ‘an exclusive right not in the original, descriptive sense, but only in the secondary one associated with the mark holder's goods.’ KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 122, 125 S. Ct. 542, 160 L. Ed. 2d 440 (2004).” Slip op. at 21 (emphasis in original).

In response to VA and the dissent, both of whom argue that VAIL is a strong mark that has acquired secondary meaning associated with “world-class ski resort services,” the majoritymaintains that the very fact that VA does not have evidence of confusion suggests that the VAIL mark does not have a strong secondary meaning.

Furthermore, VA did not set forth any evidence that consumers actually confuse 1-800-SKI-VAIL with VA and its ski resort facilities. VA relied primarily on the registration and incontestability of the VAIL mark as evidence of secondary meaning, which the court, citing McCarthy, supra § 11:82, at 11-166, notes does not dictate the conclusion that a mark is strong with no further analysis.

VA also did not address how much it spent marketing the word VAIL apart from its stylized logo nor did VA provide any evidence that consumers associated the mark VAIL with VA’s ski resort services.

The court also noted that the geographically descriptive nature of the mark coupled with its extensive use by third parties substantially undermines the strength of the mark:

We find little in the record to support the view that consumers routinely associate the word "Vail" with VA's ski resort services. More importantly, we find no support in the record for the conclusion that the district court's contrary finding was clearly erroneous. The lack of actual confusion evidence, the geographically descriptive nature of the word Vail, and its documented use among numerous businesses in the Vail area, all support the district court's finding that the Vail mark is not particularly strong.

Slip op. at 24-25.

The dissent, however, found the district court's conclusion that VA's mark was weak clearly erroneous. The dissent argued that VA had established secondary meaning for its mark with respect to ski services and that VTC's own use of the term "ski" in conjunction with the word "Vail" proved such strength.

While the majority notes that the dissent relies on VA’s testimony that Ski Magazine ranked Vail as the #1 ski resort for many years, the majority notes that “VA presented no evidence as to the circulation of Ski Magazine, the regard in which likely consumers of VA's services hold the magazine, or the percentage of those consumers that read the magazine.” Slip op. at 22, n.12. In short, the court found that “the district court as the trier of fact properly found the Vail mark was not particularly strong because VA's evidence of secondary meaning was not particularly strong.” Slip op. at 22-23.

VTC’s Intent in Adopting Mark
The court found that the evidence amply supported the district court’s finding that there was nothing in the record to suggest VTC intended to trade on VA's service mark or deceive the public into believing that the operator of the Vail ski facilities provided VTC's marketing service.

Eric Hanson, a former shareholder and president of VTC who obtained the rights to the 1-800-SKI-VAIL mark during the pendency of the lawsuit, testified that neither he nor VTC intended to derive any benefit from VA's reputation or goodwill and VTC’s expert testified that he found no evidence that VTC intended to utilize VA's reputation in employing the 1-800-SKI-VAIL mark – noting that none of VTC's advertising materials, printed or electronic, referred to VA or its ski resort. The same expert also noted that the 1-800-SKI-VAIL mark was part of a portfolio of 1-800 ski numbers containing the word “ski” and a geographical designation (e.g., 1-800-SKI-ASPEN, 1-800-SKI-STEAMBOAT, 1-800-SKI-SUMMIT, 1-800-SKI-ASPEN, and 1-800-SKI-TAHOE).

The dissent notes that VTC admitted that it intended to procure 1-800 numbers with the names of major ski resorts -- and by incorporating the name of VA's ski resort, VTC hoped to capitalize on VA's reputation and goodwill. From the dissent's perspective, VTC stepped over the line of using "Vail" as a geographic descriptor when it added the word "ski" to its vanity phone number because by adding such word, VTC was informing consumers (consumers that are likely knowledgable about skiing in Vail) that its services were not just about the geograophic area of Vail, but rather skiing in Vail, which could only have intended to evoke the image of VA's ski resort. By ignoring the evidence of VTC capitalizing on VA's reputation, the dissent argues that the district court commiteed error.

In response to the dissent’s argument that VTC’s expert opinion ignores the fact that when one skis in Vail, it will be a VA’s resort, the majority noted that such point should have been addressed on cross-examination or during closing arguments – not at the appellate stage.

In response to the dissent’s argument that the district court clearly erred in refusing to infer a wrongful intent, the court notes that intent is a question of fact which lies within the purview of the fact finder:

And the district court, taking a permissible view of the evidence, found VTC, by incorporating the name Vail into a toll-free telephone number, hoped to capitalize, not on Vail Resort's reputation, but rather on Vail, Colorado's reputation as an attractive ski destination. See Baum v. Great Western Cities, Inc., 703 F.2d 1197, 1210-11 (10th Cir. 1977) ("Questions of intent which involve intangible factors, including witness credibility, are matters for consideration of [the] fact finder after a full trial."). In fact, the record reveals VA offered little direct evidence of VTC's wrongful intent. As the foregoing recitation of the evidence well illustrates, the record clearly supports the district court's view that 1-800-SKI-VAIL trades on Vail as a geographic ski destination, rather than on Vail as a mark identifying VA and/or
its ski resort.

Slip op. at 27-28.

Degree of Similarity Between the Marks
VA argued (and the dissent agrees) that VTC’s 1-800-SKI-VAIL is similar to VA’s VAIL mark because it merely adds the generic 1-800 prefix and the generic word SKI brings to mind VA’s skiing facilities. However, as the court notes, VA’s argument presupposes that (1) consumers calling 1-800-SKI-VAIL know that only one ski resort exists in Vail, and (2) those same consumers know the word Vail means that ski resort – neither fact of which VA established with any evidence:

A consumer unaware of those particular facts would not likely be confused when phoning 1-800-SKI-VAIL because that consumer could not be confused about facts of which he or she is unaware. In other words, consumers cannot dial an alphanumeric phone number believing it to be associated with VA and/or its ski resort facilities if they have no knowledge of VA's mark in any particularized sense.

Slip op. at 29. The majority criticizes the dissent for effectively relieving VA of its burden of proof by assuming that consumers possess such knowledge about VA’s ski facilities.

The dissent argues that in the specific market context at issue (skiing), the hypothetical consumers are sufficiently interested in skiing to be even considering a ski vacation. Thus, this type of typical consumer calling 1-800-SKI-VAIL would be calling the number becasue they are interested in skiing at VA's ski resort.

The majority also notes that VA and the dissent rely upon the word “ski” to support the argument that the marks are similar. The court reiterates that VA’s service mark is only for the word VAIL, and not “Ski Vail,” and notes that VA fails to cite any authority for truncating 1-800-SKI-VAIL to simply VAIL and then comparing the two marks. The court also found the marks to be visually dissimilar – VAIL is a single word whereas 1-800-Ski-Vail is four components, with the word “Vail” being only one component.

In total, the court found that the evidence did not establish that the marks were similar in sound, sight, or meaning.

The dissent argues that similarity between two marks is judged by the total impression created by the mark. While 1-800-SKI-VAIL may have dissimilar individual features, the total effect of the mark is an association with skiing in Vail, which can only be an association with VA's ski resort. VTC's use of the marks "ski" and "Vail" bring to mind an association between VTC's services and VA's ski resort -- the alphanumeric number indiates a means of contacting the only company in Vail that offers ski services.

Similarity of Products and Manner of Marketing
The court agreed that the nature of the parties' services and the manner in which they market them did not support the position that they compete with one another. The district court found that 1-800-SKI-VAIL serves as a conduit, much like a travel agency, to bring consumers wanting to visit Vail and the surrounding area together with service providers in the region. VTC does not offer ski resort services – and the services it does provide are at least one step removed from the services VA provide (and even benefit VA’s resort by helping bring consumers to the Vail area and directing them to VA’s resort).

In addition, the court agreed that the manner in which the parties market their services is not particularly similar – VTC never sought to pass off its services as the same type of high end ski services offered by VA, but rather promoted itself as a place to call for general travel information about Vail. “VTC's marketing of 1-800-SKI-VAIL portrayed the number as precisely what it was: an easy-to-use number that connected callers to a variety of services.” Slip op. at 32-33. VA, on the other hand, marketed its resort services world-wide in a sophisticated manner with a multi-million dollar marketing budget.

The court found that the district court was entitled to find the aforementioned differences outweighed the similarities in judging the similarity of the parties' services and the manner in which they market them in finding a likelihood of confusion.

The dissent maintains that the district court ignored evidence of the overlapping (and somewhat competitve) nature of their business and the similarity of consumers -- specficially, evidence of callers being diverted to competing hotels providing similar hotel accomodations as VA -- an area in which VTC's own expert acknoweldged VTC competes with VA:

Because VTC markets an overlapping product to the same pol of consumers as Vail Asccoiates, VTC's use of a mark virtually identical to Vail Associates' can only suggest to the typical consumer that 1-800-SKI-VAIL is affiliated with Vail Associates' ski resort business.

Slip op. at 55 (Tymkovich, J. dissenting).

Degree of Consumer Care
With respect to the degree of care the consuming public uses in selecting the various services at issue, the court noted that VA provides first class ski resort accommodations at first class prices. Because ski vacations to VA’s ski resort are not cheap, consumers will exercise a degree of care at the time of purchase.

The dissent focuses on initial interest confusion – “Initial interest confusion is a 'bait and switch' tactic that permits a competitor to lure consumers away from a service provider by passing off services as those of the provider, notwithstanding that the confusion is dispelled by the time of sale. See Syndicate Sales, Inc. v. Hampshire Paper Corp., 192 F.3d 633, 638 (7th Cir. 1999).” Slip op at 34.

However, the majority notes that such initial interest confusion cannot be assumed, and must be still proven – and that VA simply failed to prove any initial interest confusion.

The court adds that while consumers exploring ski vacation options by dialing a toll-free number are not likely to exercise extraordinary care, those same consumers are unlikely to associate the word VAIL with VA's ski resort services, thus negating the possibility of any confusion. As for more sophisticated consumers, they are more likely to contact VA directly and would not likely phone 1-800-SKI-VAIL. And even if they were to phone 1-800-SKI-VAIL, any initial confusion is unlikely to result in sophisticated consumers booking services elsewhere.

Conclusion
In conclusion, the court found that the record showed a) little credible evidence of actual consumer confusion between the number 1-800-SKI-VAIL and the mark VAIL; b) that the evidence has not shown that VA’s VAIL mark is strong; c) that VTC did not intent to trade on VA's reputation; d) that the sight, sound, and meaning of the two marks are not irrefutably similar; e) that VA's and VTC's respective services and the manner in which they market them differ in important respects; and f) that consumers exercise a high degree of care when planning ski vacations, mitigating confusion that might initially exist between the marks.

The court found none of the six likelihood of confusion factors to favor VA to any significant degree, and thus, the district court's finding that VA failed to prove likelihood of confusion in this case was not clearly erroneous.

The court added that it was not willing to deprive VTC of the use of the descriptive word “Vail”:

We decline to extend unwarranted service mark protection to VA on what the record tells us is first and foremost a geographical term describing a ski destination in the Colorado Rockies. Such extension would imperil the countless number of retailers, merchants, and innkeepers in and around Vail who use the town's name to promote their wares and services.

Slip op. at 36. The court added that any minor confusion was a risk that VA accepted when it decided to identify its services with a single word that is primarily descriptive of a geographic location: “The law's tolerance of a certain degree of confusion on the part of consumers flows from ‘the undesirability of allowing anyone to obtain a complete monopoly on use of a descriptive term simply by grabbing it first.’” KP Permanent Make-Up, 543 U.S. at 122.

However, the court’s true feelings about the case are revealed in the majority opinion’s final paragraph:

In the end, VA's lack of evidence suggesting a likelihood of confusion could lead one to suspect VA's concern is really about "disconnecting" an alphanumeric phone line which provides easy access to VA's actual service competitors. The record evidence simply belies any notion that VA's Lanham Act claim is about the likelihood of confusion. Rather VA's claim appears more about limiting access to its competition by squelching a conduit which provides easy, free, and readily available access to that competition through use of a vanity or alphanumeric phone number. Because the factual record, viewed in a light most favorable to the district court's judgment, supports the court's finding that VA failed to prove a likelihood of confusion, the district court's judgment is AFFIRMED.

Slip op. at 36-37.

And to the extent that the court’s opinion of VA’s evidence was not clear, the court added one last snipe at VA’s evidentiary record when it states in a footnote that VA’s counsel at oral argument “no more wanted to talk about the record evidence than a hog wants to talk about bacon. . . .” Slip op at 36, n.14.

Geographically Descriptive Marks – LAS VEGAS BURGER loses its $325 trademark gamble

When I saw that a Section 1(b) trademark application for LAS VEGAS BURGER (word mark) for restaurants went abandoned last Friday, September 14, 2007, I could not resist using it as an illustration of the Section 2(e)(2) geographically descriptive rejection, especially since it has the words LAS VEGAS in it (and I’m all about Vegas).

In its non-final action, the PTO refused registration under Section 2(e)(2) of the Trademark Act, 15 U.S.C. §1052(e)(2), on the grounds that the mark was primarily geographically descriptive of the origin of applicant’s goods and/or services. The office action set forth the three-part test for determining whether a mark is primarily geographically descriptive of the goods and/or services within the meaning of Section 2(e)(2):
(1) the primary significance of the mark must be geographic (i.e., the mark names a particular geographic place or location);
(2) purchasers would be likely to make a goods-place or services-place association (i.e., purchasers are likely to believe the goods or services originate in the geographic location identified in the mark); and
(3) the goods and/or services originate in the place identified in the mark.
See TMEP §1210.01(a); see also In re MCO Properties, Inc., 38 USPQ2d 1154 (TTAB 1995); In re California Pizza Kitchen, 10 USPQ2d 1704 (TTAB 1989).

The examining attorney attached evidence from Wikipedia showing that the primary significance of the term “Las Vegas” is the name of a geographic location. Furthermore, consumers are likely to believe the goods will originate in Las Vegas because the applicant is located in Las Vegas. When the geographic significance of a term is its primary significance and the geographic place is neither obscure nor remote, then for purposes of §2(e)(2) the PTO can presume a services-place association from the fact that the applicant's services originate in the place named in the mark – a presumption which is rebuttable. See TMEP §1210.04; see also In re JT Tobacconists, 59 USPQ2d 1080 (TTAB 2001) (MINNESOTA CIGAR COMPANY primarily geographically descriptive of cigars); In re California Pizza Kitchen Inc., 10 USPQ2d 1704 (TTAB 1988) (CALIFORNIA PIZZA KITCHEN held primarily geographically descriptive of restaurant services that originate in California); In re Handler Fenton Westerns, Inc., 214 USPQ 848, 849-50 (TTAB 1982) (DENVER WESTERNS held primarily geographically descriptive of western-style shirts originating in Denver). Furthermore, the addition of another generic or merely descriptive term (e.g., BURGER) to a geographic term does not overcome a refusal based on geographic descriptiveness. See In re JT Tobacconists, 59 USPQ2d 1080 (TTAB 2001); In re Carolina Apparel, 48 USPQ2d 1542 (TTAB 1998); TMEP §1210.02(c)(ii).

In response to the non-final action, applicant made the following argument:

The examining attorney has refused registration because the mark is allegedly primarily geographically descriptive of the goods and/or services. Las Vegas is indeed a city in Nevada, but it is also reference that invokes far-reaching implications regarding gambling, recreation, vacationing, images of slot machines, a glittery style, a campy style, etc. In fact, the Applicant's first restaurant is not in Las Vegas, but instead is located in Primm, Nevada, near the California border. The Applicant's restuarants [sic] are Las Vegas-themed, and include a single hamburger called the "Ace," a double burger called a "Pair," a triple burger called "Three of a Kind," etc. "Las Vegas" in this context indicates the gambling theme, design, look and feel of a restaurant that is not located in Las Vegas. Inasmuch as the goods and services provided by a restaurant originate at the restaurant (in the presence of the customers) where they are sold and rendered, the good and services in this case do not originate in the place identified in the mark, and therefore the mark is not primarily geographically descriptive.

In the PTO’s final office action, the examining attorney, however, found applicant’s argument unpersuasive. The examining attorney cited to the applicants business address (Food Courts of Nevada, LLC; 300 S. 4th Street, 11th Floor, Las Vegas, NEVADA 89101 ) and stated that “[s]ince applicant’s services appear to be located in Vegas, a geographic place and location that is not remote or obscure, nor has any other significant non-geographic meaning, a public association of the services with the place is presumed. . . .”

In both actions, the examining attorney reminded applicant about the possibility of registering the mark on the Supplemental Register once it is actually being used (and either an amendment to allege use or statement of use is filed). I’ve mentioned before the benefits of registration on the Supplemental Register (here).

Two things I found strange about this application’s prosecution. First, how come the application was not filed under Section 1(a)? Applicant’s response to the non-final action stated that “In fact, the Applicant's first restaurant is not in Las Vegas, but instead is located in Primm, Nevada, near the California border.” This would seem to suggest that the applicant was already using the mark in commerce. In addition, the applicant filed state trademark registrations in Nevada (see here and here) in March 2005, which suggests the marks were being used at that time. More significantly, if this was the case, why didn’t the applicant submit evidence that the restaurant was located in Primm, Nevada, and not in Las Vegas? The PTO cited to the company’s corporate records filings to support the notion that the services originate in Las Vegas. Evidence of the applicant’s Primm restaurant under this name could have helped rebut the PTO’s services-place association presumption.

Second, the same applicant has an application for VEGAS BURGER for restaurants, but in that case, an amendment to allege use was filed and the applicant filed an amendment to have the mark registered on the Supplemental Register. So why would the applicant choose to “expressly” abandon this application, rather than go for registration on the supplemental register. At least they could put the ® symbol next to the mark and prevent anyone else from registering, at the federal level, a confusingly similar mark. After all, they already paid the $325 filing fee – a supplemental trademark registration is better than nothing. Perhaps they decided to go with VEGAS BURGER instead of LAS VEGAS BURGER for the name of its chain. They also have two applications pending for design versions of the same marks, here and here.

I personally think the applicants may have gotten an unfair refusal simply because they have their corporate address in Las Vegas. The address cited by the PTO – 300 S. 4th Street, 11th Floor – is not the future home of any burger restaurant, but instead more likely rented office space or mail drop that Nevada corporations and LLCs sublease from Brownstein Hyatt Farber Schreck, P.C., 300 S. 4th Street, Suite 1200 – the applicant’s Nevada resident agent.

If this restaurant had opened up in any other part of the country, the outcome may have been different. But for the fact that the applicant had a Las Vegas address, the PTO would have likely have had to base its refusal of the mark on either §2(e)(3) (primarily geographically deceptively misdescriptive) or §2(a) (geographically deceptive). However, under these grounds for refusal, the services-place association that the PTO easily presumed for §2(e)(2) purposes requires some additional reason for the consumer to associate the services with the geographic location invoked by the mark. See In re Municipal Capital Markets, Corp., 51 USPQ2d 1369, 1370-71 (TTAB 1999) ("Examining Attorney must present evidence that does something more than merely establish that services as ubiquitous as restaurant services are offered in the pertinent geographic location."). A services-place association in a case dealing with restaurant services requires a showing that the patrons of the restaurant are likely to believe the restaurant services have their origin in the location indicated by the mark – a much greater burden due to the presence of restaurants everywhere. See In re Les Halles De Paris J.V., 334 F.3d 1371 (Fed. Cir. 2003); In re Consolidated Specialty Restaurants, Inc., 71 USPQ2d 1921 (TTAB 2004).

So while I do not think that consumers would necessarily think that that LAS VEGAS BURGER’s services originate from Las Vegas, the PTO has the rebuttable presumption in its favor – a presumption that applicant did not sufficiently rebut. The PTO also has the California Pizza Kitchen precedent -- a TTAB decision with which I do not necessarily agree -- to rely upon, which has held that when the goods or services may be said to originate both in the geographic place named in the mark and outside that place, registration is normally refused based on primarily geographically descriptive under §2(e)(2). See In re California Pizza Kitchen Inc., 10 USPQ2d 1704, 1706 n.2 (TTAB 1988) (CALIFORNIA PIZZA KITCHEN for restaurant services held primarily geographically descriptive, where the services were rendered both in California and elsewhere

Instead, it looks like Las Vegas Burger will have to just use the mark in commerce, and later come back and file a Section 2(f) application for principal registration arguing secondary meaning – which is exactly what California Pizza Kitchen did for “restaurant services” (see here).

All this thought about burgers is making me hungry. I can’t wait to check out the menu and try the “ROYAL FLUSH” (currently under suspension pending the outcome of ROYAL FLUSH for energy drinks).