Ameritech, Inc. of Bedford Heights, Ohio, appeals a summary judgment in favor of American Information Technologies Corporation, in a trademark infringement action based on Ohio law. The district court held that the infringement claims of Ameritech, Inc. were barred by the defense of laches and that the claims failed under both “related” and “unrelated goods” analyses. The district court did not consider Ameriteсh’s dilution of trademark and reverse confusion of sponsorship claims. We find the laches defense inapplicable. Also, because trademark dilution claims are cognizable under Ohio law and because we think an Ohio court, if presented with the issue, would recognize reverse confusion claims, we reverse and remand for consideration of those claims.
I. Facts
Ameritech, Inc., plaintiff below, is а small Ohio corporation that reclaims industrial oils. It collects used oil and lubricants, removes contaminants, replenishes and then returns the oil products to its customers. The company also develops and blends new industrial oils, provides laboratory analysis and consulting services, and sells or rents lubricant containers. Ameritech, Inc. has operated one plant since 1979 in Bedford Heights, Ohio. Totаl sales in the first five years approached two million dollars and the company turned its first profit in 1984. Plaintiff’s 1981 long term plan called for patents, licensees, “going public,” building plants outside Ohio, and national advertising. Today, while continuing with efforts to achieve these goals, it still makes 90% of its sales in Ohio.
In December 1979, plaintiff registered under Ohio law the trade name “Ameritech.” It also adopted an unregistered *962 trаdemark in a star configuration of the letters “A” and “T” with “Ameriteeh” printed next to the logo and its address under the name. Plaintiff has used this trade name and mark since 1979 but has not sought federal registration for either. During plaintiffs first five years, promotional expenses for oil reclamation services did not exceed $2,500. Plaintiff’s president estimated the company spent a total of $100,000 during that period on advertising for laboratory and related oil services.
Defendant American Information Technologies is headquartered in Chicago and is a holding company for five Bell telephone companies which provide local telephone service in five midwestern states. Each of the local Bell companies owns a subsidiary that sells telephone equipment. Additionally, defendant owns a number of оther subsidiaries whose functions vary from selling advertising to research in telecommunications. Defendant has $17 billion in assets and its annual profits exceed $1 billion.
Defendant has tried to create an image of state-of-the-art communications technology. It sought a name that would not limit the markets it might later choose to enter and which would establish it as more than just a telephone company. In June 1983, dеfendant announced its selection of the “Ameriteeh” trade name. Defendant asserts that it adopted the name as a contraction of its formal corporate name, American Information Technologies. The corresponding trademark consisted of “Ameritech” in angled block type with a star in the “A” and a streak through the remaining letters.
The day following the announcement of the new trade name, defendant advertised the new name in newspapers across the country, including The Cleveland Plain Dealer. In addition to carrying defendant’s full page advertisement on June 17, 1983, The Plain Dealer also printed an article on defendant’s debut under the trade name “Ameriteeh”. Plaintiff’s president first learned of defendant’s adoption of “Ameriteeh” from the article and advertisement in the Cleveland newspaper. He contacted a Plain Dealer reporter that day to object to defendant’s use of his company’s trade name, complaining of customer confusion caused by the advertisement. He informed the reporter that plaintiff’s attorneys would contact defendant the following Monday. The Plain Dealer published a story on the parties’ overlapping use of “Ameriteeh” on June 18. The article mentioned the potential for customer confusion and recounted defendant’s intention to apply for federal registration of “Ameriteeh” and for state registration in Illinois, Indiana and Wisconsin, but not in Ohio or Michigan. The article also mentioned plaintiff’s declaration that it would contact defendant.
Plaintiff did not contact defendant before filing this action on December 14, 1983. Plaintiff’s president claims that he concluded from the June 18th article thаt defendant would neither seek Ohio registration nor use “Ameriteeh” in Ohio, and defendant did not contact plaintiff during the six months between the announcement of the trade name and the commencement of this suit. In September 1983, however, defendant launched a national advertising campaign. It also issued “Ameriteeh” stock certificates and placed its trademark on its business paraphernalia and equipment. At one point, defendant unsuccessfully attempted to register “Ameriteeh” in Ohio; the Ohio Registry rejected the application and instructed defendant to first seek plaintiff’s consent to use the trade name. Defendant did not do so.
In its complaint, plaintiff alleged that defendant had violated its common law rights in the “Ameriteeh” trade name and trademark. Plaintiff submitted a number of affidavits attesting to thе confusing effect of defendant’s advertising campaign on plaintiff's business: plaintiff’s salesmen encountered increased difficulty in securing sales interviews because potential customers confused plaintiff with defendant and discarded plaintiff’s mail; plaintiff's officials incurred antagonism from established customers who believed plaintiff had *963 been sold to defendant; plaintiff’s president had to reassure smallеr customers and stockholders that plaintiff had not become a subdivision of defendant.
After extensive discovery defendant filed a motion for summary judgment arguing: (1) that the claims were barred by estoppel by laches; (2) that there was no likelihood of confusion because the parties’ businesses are totally unrelated; and (3) that there was no likelihood of confusion even under a “related goods” analysis. The district court granted defendant’s motion on each ground.
Ameritech, Inc. v. American Information Technologies Corporation,
II. Law & Analysis
This case is brought under diversity jurisdiction and, because Ameritech, Inc. did not file for federal trademark protection, is based on Ohio law. The substantial overlap of state and federal trademark law, however, often obscures the necessity of determining whether state or federal law аpplies.
International Order of Job’s Daughters v. Lindeburg and Co.,
A. Laches Defense
The district court held that the defense of laches applied because plaintiff’s six month delay between defendant’s announcement of its adoption of “Ameritech” and plaintiff’s filing of its trademark action, was unreasonable in light of defendant’s large advertising expenses. We disagree. Plaintiff is entitled “to some latitude to assess both the impact of another’s use of an allegedly infringing trademark as well as the wisdom of pursuing litigation on the issue.”
Tandy Corp. v. Malone & Hyde, Inc.,
Moreover, there are no unusual circumstances nor any affirmative estoppel conduct by plaintiff to overcome the strong presumption that laches do not bar an action before the running of the analogous statute of limitations. Prior to spending large sums of money to acquire the trade name “Ameritech,” defendant was well aware that the use of plaintiff’s trade name in Ohio would be problematic; it learned this from both the June 18, 1983,
Plain Dealer
article and from the Ohio Trademark Registry, which instructed defendant to seek plaintiff’s permission to use “Ameritech.” Laches will nоt bar injunctive relief where a defendant adopted the trade name with knowledge of a plaintiff’s rights and objections.
Induct-o-Matic Corp. v. Inductotherm Corp.,
B. Trademark Claims
Although trademark protection may have had its start in common law as an action in fraud, over the past one hundred fifty years it has come to focus also on protecting property interests in trademarks themselves. This shift is the result of the recognition of the purposes trademarks serve in the modern, imрersonal economy. They act as a means of identifying a product as coming from or being associated with a particular, although anonymous, source, and inducing subsequent purchases by consumers. As a commentator pointed out sixty years ago:
The fact that through his trademark the manufacturer or importer may “reach over the shoulder of the retailer” and across the latter’s counter straight to the consumer cannot be over-emphasized, for therein lies the key to any effective scheme of trademark protection____ [A trademark is] not merely the symbol of good will but often the most effective agent for the creation of good will, imprinting upon the public mind an anonymous and impersonal guaranty of satisfaction, creating a desire for further satisfactions. The mark aсtually sells the goods.
Schecter, The Rational Basis of Trademark Protection, 40 Harv.L.Rev. 812, 818-19 (1927) (emphasis original).
Thus, trademark law now pursues two related goals — the prevention of deception and consumer confusion, and, more fundamentally, the protection of property interests in trademarks. As a means of achieving these goals, the common law has developed a number of types of infringement actions. The first and most common is “palming off.” This occurs between directly competing goods and the confusion is over their source of origin. Similar marks on these goods can cause the consumer to mistakenly buy the infringing defendant’s product as the plaintiff’s; the defendant tries to “palm off” his goods as the plaintiff’s.
See, e.g., Seven-Up Co. v. Get Up Corp.,
A second kind of infringement is confusion of sponsorship, which occurs where the goods do not directly compete. In this situation, the goods are unrelated enough that no inferencе arises that they originated from the same source, but the similarity of the trademarks erroneously suggests a connection between the sources; the defendant seeks to capitalize on the plaintiff’s goodwill and established reputation.
See, e.g., Conan Properties, Inc. v. Conans Pizza, Inc.,
A third kind of infringement is revеrse confusion of sponsorship. A reverse confusion claim differs from the stereotypical confusion of source or sponsorship claim. Rather than seeking to profit from the goodwill captured in the senior user’s trademark, the junior user saturates the market with a similar trademark and overwhelms the senior user. The public comes to assume the senior user’s products are really the junior user’s оr that the former has become somehow connected to the latter. The result is that the senior user loses the value of the trademark — its product identity, corporate identity, control over its goodwill and reputation, and ability to move into new markets.
See, e.g., Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co.,
A fourth kind of infringement is dilution. Under this theory, an infringement can occur even where the products are non-competing and no confusion is possible. Rather than focusing on consumer confusion, the dilution theory seeks to protect the senior user’s interests in the trademark. Dilution occurs when the senior user possesses a distinctive mark, the junior use of which might not, in the short run, result in loss of sales or loss of control over reputation, but might cause a gradual diminution in the mark’s distinctiveness, effectiveness and, hence, value. This kind of infringement corrodes the senior user’s interest in the trademark by blurring its product identification or by damaging positive associations that have attached to it.
See
3A R. Callmann,
Unfair Competition, Trademarks & Monopolies
§ 21.11, at 33-34 (4th ed. 1981); 2 J. McCarthy,
Trademarks and Unfair Competition
§ 24.13, at 215 (2d ed. 1984).
See, e.g., Vogue Co. v. Thompson-Hudson Co.,
The district court in the case at hand asserted that there could be no infringement where the goods are unrelated and non-competing and as a result did not evaluate plaintiff’s reverse confusion and dilution claims. Dilution claims, however, are cognizable under Ohio’s common law.
See, e.g., National City Bank of Cleveland v. National City Window Cleaning Co.,
[T]he use of the same or very similar names in entirely unrelated businesses may in and of itself prove injurious to the originator of the name. Such practice operates to whittle away and disperse in the mind of the public the identity of the name in relation tо the one who invented it. The more distinctive the name the deeper its impression on the public consciousness and the greater the need to protect it against indiscriminate invasion.
See also Hugo Stein Cloak Co. v. S.B. Stein & Son, Inc.,
Plaintiff in this case contends its “Ameritech” trade name and mark have been diluted by defendant’s use and complains that it has lost effective business use of that name and mark, its formerly untarnished reputation, and exclusive association with its name. As the quotation from the Ohio Supreme Court suggests, to succeed with its dilution claim, plaintiff must have a distinctive mark. Plaintiff’s trademark need not be nationally famous, however, for a mark that is strong in a particular geographical or product area also deserves protection.
See, e.g., Dreyfus Fund Inc. v. Royal Bank of Canada,
As for reverse confusion claims, Ohio has yet to consider them. Without an Ohio statute or ruling directly on point, we must
*966
examine the policies of Ohio law to ascertain what an Ohio court would do if presented with such a claim. Ohio statutory law and trademark decisions manifest a concern to prevent confusion and to protect property interests of seniоr users in their trademarks, regardless of whether the parties compete.
See Younker v. Nationwide Mutual Ins. Co.,
Not only is Ohio generous in protecting trademarks, but recognizing a reverse confusion claim is not a big step. Ohio has long protected trademark owners from confusion of source (i.e., “palming off”) and confusion of sponsorship. The same interests — protecting property interests in trademarks and preventing consumer confusion — are аt stake in a reverse confusion case; the senior user’s interests in the trademark can be suffocated by the junior user who takes the trademark as his own; and consumers can be confused that the senior user’s products come from the junior user or that the senior has become associated with the junior. To borrow the words of Justice Holmes, “the principle that condemns one condemns the оther.”
International News Service,
In the case before us, plaintiff asserts that its name and mark have obtained secondary meaning in its field. In this era of corporate diversification, and on this record which shows defendant intends to expand into other high-technology markets, we cannot say the ordinarily prudent consumer would not assume defendant bought plaintiff as a subsidiary and is sponsoring plaintiff’s products. Plaintiff is therefore entitled to a consideration of its reverse confusion of sponsorship claim.
Although the district court did not evaluate the reverse confusion and dilution claims, it did make some findings that could have a bearing on these claims. Using a series of factors listed in
Frisch’s Restaurant, Inc. v. Elby’s Big Boy, Inc.,
The district court accurately observed that the stronger a trademark, the greater the protection afforded, but then concluded that plaintiff’s mark was not strong. The court reasoned that “Ameritech” does nоt identify plaintiff's goods or services, that it is not well known, and that
*967
many other businesses use the same name.
Ameritech, Inc.,
The district court also concluded that the parties’ trademarks are dissimilar because they use different typeset and design.
Ameritech, Inc.,
Judgment reversed.