Lucent Information Management, Inc. v. Lucent Technologies, Inc.

accomplish the proper distribution of the

assets of the partnership and to determine relative and obligations of the

partners.” Id.

This case not fall does within any

categories of exceptional cases which an

action at law is permitted under Pennsyl-

vania law. The partnership was not for a

single transaction, but for the continuous

operation of a hotel business. Nor is the

accounting that will be required a simple parties

one. The were in partnership for a

significant period prior to B.F. General’s

exclusion and the history of their dealings

in that capacity will have to be analyzed to

determine the parties’ current rights and

obligations. And, the business of BFHA

has not been up. Indeed, wound the pur-

pose of the chapter filing is to permit

that business to continue on firmer finan-

cial footing. I therefore conclude that

B.F. General has no right alternative

recover profits lost that, at law and as a

consequence, its equitable asserted right

to such an accounting has not been dis-

charged in bankruptcy.

LUCENT INFORMATION

MANAGEMENT, INC.,

Appellant,

LUCENT TECHNOLOGIES, INC.

No. 98-7203.

United States Court of Appeals,

Third Circuit.

Argued May

Filed: Aug. Siegelb- Friedman Taylor,

Lindsey H. (ar- Roseland, NJ, I. Samuel aum, Richard Samuel, New Cobrin, & Gittes gued), York, York, Appellant. for New Nichols, Morris, Parsons, Jr., F. Donald DE, Robert Tunnell, Wilmington, & Arsht Par- V.B. Mark Newbury (argued), M. Pattishall, McAu- Cohn, L. Bradley tridge, Geraldson, Chi- liffe, Hilliard & Newbury, IL, Appellee. for cago, ALITO, GREENBERG Before: ACKERMAN,* Judges, Circuit Judge District COURT OF THE OPINION GREENBERG, Judge. Circuit

I. INTRODUCTION ques- involves case This “use” sufficient what constitutes tion of rights. law common establish Inc. Management, Information Lucent common (“LIM”) it had argues prior mark “LUCENT” rights (“LTI”), based Technologies, Inc. Lucent LTI filed before usage of that mark (“ITU”) application to use an intent and Trademark Patent United States (“PTO”), indicating its intention Office in commerce. mark LUCENT use not act LTI did alleges that further using the adopting faith good use of limited that LIM’s findWe mark. use mark did constitute to establish sufficient commerce result, LTI’s that, * by designation. sitting Jersey, Ackerman, of New Judge District Senior A. Honorable Harold Court States District United adoption of the mark did not paid advertising, relying instead on word constitute trademark infringement, and of mouth and its solicitations business was in good faith as a matter of law. acquaintances of its principals. 1995, November LIM made presen- sales

II. AND FACTUAL PROCEDURAL to acquaintances tations at NBC in New HISTORY York, Aramark in Pennsylvania, and Nixon Adoption LIM’s A. Use and the Name Uniform Delaware, but these presenta- and Mark LUCENT tions did not result sales. From De- 1, 1995, We cember accept 5, 1996, true the to February facts set forth LIM court, the district made which drew all about 12 presentations reason- and contin- able inferences favor of LIM. In 1995 ued promote to the new business with Feinstein, Norman Samuel Weinberg, Ed- people principals met socially and in Eisen, ward and Cliff Armstrong formed business. The date 5,1996, of February LIM, a Pennsylvania corporation, pro- to significant because on that the & AT date vide document imaging and management T announced the creation of LTI to the services, acting as a consultant on and re- public through a huge media campaign. seller of software and hardware. LIM 16, 1996, On February LIM made another selected the name during LUCENT sale, entering into a support agreement summer of 1995 after finding it in a dictio- with local bank. Finally, 29, on April nary. formation, Since its LIM oper- has 1996, LIM filed application an with the ated out of the Bala Cynwyd, Pennsylva- register PTO to LUCENT for computer nia, office of business, Feinstein’s other and office-related services.2 Corporate Consultants, Inc., an employee company. benefits principals four are B. LTI’s Adoption and Use the Name employees LIM’s only and Feinstein’s em- Mark and LUCENT ployees Corporate perform Consultants LIM’s clerical and bookkeeping work. In LTI is the telecommunication and tech- 1995, the fall of LIM using began contacts nology spun-off business from AT & T in and referrals to inform individuals and 1996. A consultant suggested LUCENT companies of its services. On September potential as a name the new for business. 5,1995, Feinstein sent a one-page on letter Politano, Frank L. a trademark attorney, Corporate Consultants’ letterhead to about coordinated the trademark clearance. 50 people to announce the services LIM 1995, November AT T & obtained a trade- would offer. On October Arm- mark name search and two trademark strong installed a modem the Israel search reports, all of which compa- located Bonds Office in Philadelphia. While Arm- using nies the mark LUCENT or variants strong, LIM, payment received the of it. One of the three search results installation, for the purchaser’s $323.50 included reference to LIM. invoice address, shows LIM’s name and and favorably LIM, viewed this transac- 30, 1995, On November LTI through its tion was its first sale.1 predecessor in interest filed an intent to

Through (“ITU”) the end of use LIM application continued with the PTO for to seek clients from existing contacts and the mark LUCENT for various telecom- referrals. LIM did not any public do or munications and computer-related goods 16, 1995, 1. On October met Corpo- LIM with application That listed the first of LU- use rate vices, products Consultants to select 6, 1996; ser- CENT as March LIM amended then rendered services to it application after suit filed claim through November. The district court did September 1995 sale to the Israel not credit this as a sale because it involved Bonds Office as the date of first use. provided services to Feinstein himself. As confusingly similar. are not products announced T AT & When and services.3 an above, thereafter filed LIM 1996, major noted we February spin-off LUCENT. register the the event. covered application media newspapers responded counsel LUCENT then-trademark LIM’s included articles Many proposed 1.2 mil- over letter with out mailed April LTI headline customers. refrain potential would party each agreement lion announcements America, about learned registra- parties’ Like most the other opposing March On February 1996. trade LTI would tion of counsel, John 1996, LIM’s trademark a man- marketing in dress, advertising and to objecting Caldwell, a letter LTI sent confu- of avoid likelihood that would ner LUCENT, stating name the of use however, LTI’s enter did not parties, The sion. LUCENT and used adopted had thereafter, that LIM Shortly agreement. that into cease-and- This basis. a “nationwide” on litigation.5 began this LIM part: in letter stated desist 1995, [LIM] September, and August History Procedural C. Lucent the under corresponding began 12, September on this suit filed LIM ef- nationwide was a This name.... alleged LIM 1996, district court. in the letter sent the copy A of ... fort. viola- its trademark infringed LTI that redacted, time, addresses the with that 1125(a), alleged § and tion of U.S.C. a brochure I also enclose enclosed. is infringement trade name mark and service I time.... at that from [LIM] available trade deceptive and competition unfair and you with hearing from look forward I-V). (counts Delaware law practices under bewill a name that new your assurance relief, of recovery injunctive sought LIM ... company your for found LTI damages. treble and profits, LTI’s copy a enclosed Caldwell App. 289-90. 1996, in- 3, denying on October answered a letter brochure and promotional a affirmative raising several fringement dated LIM letterhead clients solicit on admitting use defenses, generally but 5,1995.4 September name.6 T’s AT Ryan, R.A. & April On sum- 3, 1997, moved for July LTI On counsel, responded trademark I-V of the as to counts judgment mary letter, that she did stating March had LTI that ground on complaint, name use of LTI’s agree not that LU- and mark the name rights to a likelihood created Technologies” “Lucent LTI’s granted court district The CENT. confusion, companies’ markets that I- as to motion counts summary judgment that their services overlap, and did not Significantly, the en- letterhead. sultants' Act of Law Revision 3. Trademark Sep- exist did not in fact a allowing registration of brochure closed for provisions added a it later. applicant has LIM created as showing that tember on a a trademark ... to use fide intention "bona 1051(b). Filing § U.S.C. commerce.” proceedings opposition five 5. LIM has filed application estab- an "intent-to-use” such to file application arising of LTI’s out (except filing the date priority lishes as States United LUCENT mark), but already using the against those have Office which Trademark Patent filed within be use must a of actual statement of this pending the outcome suspended been months, to 24 extended be which appeal. 1051(d). At the same § 15 U.S.C. months. provide law was revised time the supplemental filed May On 6. " the bona fide means in commerce' 'use alleging claims complaint, five additional trade, and ordinary course of mark in the interference, infringement, tortious copyright right in a merely to reserve made violations, libel, fraud Act Lanham trade § U.S.C. 1127. mark.” VI-X). determined (counts The district issues involved distinct those claims the letter Subsequently, LIM admitted I-V. counts Corporate Con- out been sent had fact opinion V in an and accompanying order We consider events before November 30, 1995, dated November 1997. Lucent registration because federal of a Info. Management v. Lucent Technologies, prima facie evidence of the (D.Del.1997). 986 F.Supp. 253 While there mark’s validity, the registrant’s ownership were further proceedings in the of the district and its right exclusive to use court, appeal and thus opinion mark in commerce. 15 U.S.C. 1115(a). § concerns only those counts.7 Nevertheless, After the fur- there are limita- proceedings ther LIM filed a timely appeal 7(c) tions on the right as section 17,1998. on April Lanham Act states that “the filing of an application register [a shall ... mark] III. STANDARD OF REVIEW a right confer[ ] of priority, nationwide effect, ... against any person other except We review the district court’s order person who, for a ... prior to such filing, granting, summary judgment novo, de has used 1057(c). the mark.” § 15 U.S.C. apply we the same test the district court Consequently, parties agree that LIM applied in the first instance. See Petruz must establish in the name and zi’s IGA Supermarkets, Inc. v. Darling- “ mark by LUCENT prior its ‘use [of the Co., 1224, (3d Delaware 998 F.2d 1230 mark] commerce’—‘use’ being defined Cir.1993). Consequently, must we deter as ‘the bona fide use of a mark in the record, mine whether the when viewed in ordinary course of trade....’” 15 U.S.C. light LIM, most favorable to shows § 1127. that “there genuine no is any issue as to material fact” and that LTI is “entitled to It is a well-settled principle plain that a a judgment as a matter of law.” Fed. tiff must establish that it had prior rights 56(c). R.Civ.P. We confine our discussion or “priority” in the mark. See Paper Scott to the infringement count as Co. Gold, v. Scott’s Liquid Inc., 589 F.2d LIM has not briefed (3d the case Cir.1978) (“relief under state only is law. available if plaintiff priori establishes

ty”). Because LTI filed its ITU on No IV. DISCUSSION 30, 1995, vember LTI priority has over anyone using the mark after that date A. Infringement Trademark person unless the earlier used the mark. Trademark protects owners 1051(b), 1057(c). §§ 15 U.S.C. According in the exclusive use of their marks when ly, inasmuch as LIM does not prior assert by use is likely another to cause confusion. registration, see L’Oreal, Zazu Designs v. See A H Sportswear & Inc. v. Victoria’s S.A., (7th 979 F.2d Cir.1992), it Stores, Inc., (3d Secret 166 F.3d prevail can if only it prior shows use of the Cir.1999) (en banc). Thus, to obtain relief mark “in way a sufficiently public to identi plaintiff a in an infringement case must fy or distinguish the marked goods in an demonstrate its ownership mark. appropriate segment public mind as In considering who owns the mark LU- adopter those of the mark.” Blue CENT, the question before isus whether a Bell, Co., Inc., Inc. v. Mfg. Farah 508 F.2d reasonable trier of fact could find that (5th 1260, 1266 Cir.1975). LIM’s activities to November ITU, when LTI filed its established LIM points out that this is “re prior rights in the mark through use in case, verse confusion” and contends that commerce. Horticulture, Indus., Fisons Vigoro Inc. 7. LTI also judgment moved for summary argued has only briefed and the dismiss- VI-X, counts granted and summary judg- claims, original al of its infringement and not ment on March 1998. See Lucent claims, supplemental dismissal of its Info. we Management, Inc., Inc. v. Technologies, Lucent only address the former. (D.Del.1998). F.Supp.2d Inasmuch as likelihood-of-confusion undertake (3rd Cir.1994), controls F.3d analysis. Sportswear, H also A & See

the outcome. exists confusion Reverse at 207. by four-factor “use” measure We mar- its size user uses junior when a Hart, Ltd. v. Natural Footwear test senior, to overwhelm ket Marx, 1398-99 & Schaffner is the smaller, user” The “senior user. but Cir.1985). represented case That anywhere mark and use adopt first commonly re- to the clearly applicable is sec- is the “junior user” country. The use of concurrent curring pattern fact adopts whether user, regardless ond trade- common-law similar confusingly re- geographically in a a mark uses Here, we do regions. in different marks McCar- Thomas 4 J. See mote location. with a competition, geographic not have Trademarks McCarthy on thy, Unfair established being allegedly user senior ed.1996). (4th Re- § 26.01[1] Competition in on moving area, junior user and a an the sen- protects doctrine confusion verse the same trying to territory or good- and the itsof mark ior user’s control outset region. From in another junior from a by the mark created will na- operate and able willing LTI was pro- employment user’s mar- tionwide, undisputed national and has into being deceived public tects ket penetration.8 product user’s the senior believing that to, spon- from, or is connected emanates from the classic vary facts before us junior user. sored However, cases. of use extent geographic the basic issue—market we assess the reverse fit in this case facts the of upon prior use start-up based penetration little LIM the model: confusion Footwear the Natural applying built goodwill, and identity that its alleging mark — cir- mark, in other which, been tests test, have like similar of a alleged use upon of a senior swamping cuits, the market the extent LTI’s measures threatened the expansion. use of same zone later of allegedly the actual use user’s out, LIM must Corp. But, points See, as LTI Entertainment mark. e.g., Peaches Fisons, Inc., that Assocs., in show, user 62 the senior Repertoire as did Entertainment Fisons, Cir.1995) (6th (examining fact senior user. it is in F.3d of owner the uncontested was senior user had established the defendant whether so there dispute, in registered penetration market or presence market for it establish no need to regis- of locality as of the date any specific Fisons, prior use. through that noting mark and plaintiffs tration proceed able to Thus, we case were that the time of frozen at area is the market But analysis. user).9 ato likelihood-of-confusion by the senior registration versus user the senior apply cannot we asserting trademark party A unless and analysis Fisons junior user must show trading in a area ownership two there that are we determine until its protection to entitle[ment]” “clear Because same mark. “users” of the See particular market. do trademark finding, we that support cannot record plaintiff's Pennsylvania Delaware from penetration sales show national 8. LIM cannot Jersey). New appears usage in southern but area recognition of its or expan- zone of is a argue that there natural it nation —for entire services—the sion for its has used district court note that a 9. We nationwide eventually could reach customers pen market test to assess Footwear Natural reach the need not hoped to do so. We involving overlapping ain situation etration expansion as calculating its zone issue of regions. See geographic sales distinct but not been has not use of LUCENT its commercial Stores, Inc., F.Supp. Dep’t v. Ames Smith See, e.g., area. in a even small established (D.N.J.1997), aff'd, F.3d 860 837-39 Inc., Personnel, AccuStaff, Inc. v. ACCU Cir.1998) (table). (D.Del.1994) (refusing F.Supp. 1208-09 parts of expansion in natural to find zone Footwear, Natural F.2d at 1397. In Because only LIM made a single sale in words, party other must period introduce before LTI ITU, filed its we evidence to show its trademark “has cannot find trends,” and review “growth achieved market ‘signif- that is the second factor the Natural Footwear n icant enough pose the real likelihood of test. LIM' argued has it had the confusion among the consumers in that potential and intention to offer services to ” area.’ Id. Sunline, (quoting Sweetarts v. market, a nationwide but even considering (8th Cir.1967)). 380 F.2d the volume of potential clients in the Phila- Natural adopted FooUvear area, four-factor delphia we must conclude that test “to determine whether the market ratio of existing customers potential penetration of a trademark in an area is customers is minute. (1) sufficient to warrant protection: As for the factor, fourth and final adver- volume of sales of the prod- trademarked tising and promotion, LIM stresses (2) uct; (both the growth trends positive efforts were reach the general pub- area; (3) and negative) in the the number first, lic at but rather to cultivate its clien- persons actually purchasing product tele from existing contacts. LIM does not in relation to the potential number of cus- assert that its advertising promotion tomers; (4) the amount of product public were any extensive in region, advertising in the area.” Natural Foot- let alone nationwide. mayWe take into wear, (internal ci- 1398-99 account in this respect and more generally omitted).

tations the nature of the market LIM has entered and the services offers. LIM contends test, Applying this we reach the that as a start-up company with a limited same result did the district court in budget, offering relatively ser- granting ^expensive motion summary LTI’s judg vices which are not “sampled” easily by ment. LIM’s “volume of sales” customers, it would be expected to take consisted of Armstrong’s single sale for time for it to win over clients. According- $323.50. This court has held that sales it ly, is understandable that it try would to volume must be more than de minimis. establish the through business a small cir- “When sales activity does not exceed even cle of existing personal business and con- a minimum level, threshold may a court tacts. LIM correctly notes that sales or properly conclude that market presentations made to acquaintances or ... simply has not been demonstrated.” friends be bona fide commercial uses. Id. at 1400 (finding de clothing minimis But see v. Simon & Schuster $5,000 sales of Jaffe less than and total of over WL U.S.P.Q.2d 50 customers in at least two of the three (S.D.N.Y.1987) (“A user’s ear- [trademark] years available). for which sales data were ly sales to friends and relatives do not LIM Bell, asks us to consider Blue ‘actually put product the on the market F.2d at in which the Ap Court of ....’”) (citation omitted). peals for the Fifth Circuit held that “even a single use in trade may sustain trade But the fact remains that LIM existed mark rights if by followed continuous com only for about three months before LTI Here, mercial utilization.” though, ITU, if we filed its had made but one sale in look for “continuous commercial utiliza period, that not had invested any monies tion” beyond sale, the first required public advertising expanded or beyond its Bell, under Blue we do not find that the initial set-up, and had made a relatively continuous use—the promotional further small presentations. number sales LIM “sufficiently public identify or offers evidence of confusion generated by efforts— distinguish marked goods

the in an appro launch, LTI’s phone such as calls intended priate segment of the public mind as those for LTI coming to its or people office of the adopter of the mark.” Id. at 1266. wondering whether it stole mark from faith bad to attribute mark is sufficient it Nevertheless, when LTI correct LTI. mark, reason we see no adoption of protect wants LIM that stresses A. See J. occasion. so on this a success- do goodwill to create Canfield

intention Honickman, n. 7 F.2d and busi- v.Co. business, goodwill and not ful (“[tjhose Cir.1986) raise inter claims any new business Certainly ness itself. decision). necessary for issues” not but ground, esting get off need time will effort award- aid that cannot the courts V. CONCLUSION unregistered an rights in

ing hopes or antici- the business that mark reasons, af- will we foregoing For used. not been but has used will be pates order of November court’s the district firm district Thus, with the agree we sum- motion for 5, 1997, LTI’s granting because in LUCENT prior LTI has origi- I-V in on counts mary judgment on November its ITU it filed LIM’s trademark dismissing complaint, nal use. shown LIM has not claims. and related infringement Adoption Use Faith B. LTI’s Good ACKERMAN, Court District Senior LUCENT the Mark dissenting. Judge, liable for bad that LTI is argues LIM opinion from the respectfully I dissent LIM’s exis- aware of it was faith because I agree colleagues. my learned proceed- but tence and/or issue correctly identified majority has is moot The issue anyway.10 adopt toed i.e., “use” case, constitutes what in this user was not senior LIM because law trade- a common to establish sufficient Designs, 979 Zazu See reasons. above however, Because, I there believe mark. at 504-05. p fact which material are issues genuine summary judgment entry of preclude case, LIM only evidence any In summary record, I reverse the would this bad there was as to whether raised has I write court. of the district judgment during privilege assertion faith is LTI’s district by which clarify the process also to LTI any, if steps, discovery as to what trade- common resolve courts should generating upon took disputes. the reference included which search summary judgment of moved for context, an LTI will draw we LIM. September LIM’s through I V of raising privi Counts from the inference adverse counts, In those Complaint. reliance on have found lege, as courts 43(a) of section violations alleges a conducting of counsel after the advice law trademark and common an Act Lanham to defeat is sufficient trademark search a of com- claim To establish infringement. faith. Astra Pharma bad inference of See one infringement, law trademark Products, mon Instru Inc. Beckman v. ceutical (1) in the the owner is 51933, U.S.P.Q. prove must it Inc., ments, 1983 WL distinctive a mark that is area of Thus, relevant we (D.Mass.1983). while 609, 612 (2) the defen- that junior protectable, a user’s whether have not decided of confu- a likelihood actions dant’s cause use of user’s senior knowledge when Fisons, through investigation with con- followed we would Applying the test in 10. companies. Did such there were it found in search- was 'careless” LTI sider whether confusion Fisons, likelihood of consider the [LTI] 30 F.3d ing mark. for uses products companies’ marks and other substituting with suggested, we In Fisons considering that case, (as the likelihood opposed to "[t]he that those in parties for here mark)? Did it its new would contest someone consider district should questions the using a companies similar attempt to contact ade- an conducted are whether [LTI] here mark, careless Was [LTI] as[LIM]? such companies mar- quate search other name of confusion?” likelihood in- its evaluation trademarks goods keting under similar name[LUCENT], Id. and whether cluding the e.g., sion. See Ford Motor Co. v. long Summit as the initial appropriation and use Products, Inc., Motor 930 F.2d accompanied are by an intention to contin- (3d Cir.1991). The elements of a section ue exploiting the mark commercially.” Id. 43(a) violation are See Padding similar. It is that if axiomatic there is “no trade— Corp. ton v. Attiki Importers & Distribu no trademark.” Id. at 1274.

tors, Inc., (2d Cir.1993). 996 F.2d The Lanham Act provides that “use” is primary appeal issue “the bona is fide use aof mark in the ordi whether nary trade, LIM has used the course “LUCENT” and not merely made mark in a manner sufficient to confer reserve own a mark ... mark shall be ership rights. In granting summary deemed to judg be in use in commerce ... on case, ment to LTI in this the district court services when it is used displayed or in the determined that no trier of fact sale or advertising could find of services and the had “used” the services “LUCENT” are rendered in commerce.” 15 degree to a § sufficient to obtain com U.S.C. 1127. Although this standard of mon law trademark rights. applies use addressing the amount of use required issue, the district court first looked achieve statutory than, the standard of traditionally “use” be lower applied the “use” needed to to common law obtain trademarks a common trademark, then see Zazu looked L’Oreal, to the Designs standards set v. S.A., forth Natu 979 F.2d (7th Hart, ral Footwear Ltd. v. Cir.1992), 503-04 & that standard is in Schaffner Marx, 760 F.2d structive 1398-99 Cir. with respect to common law 1985). See, While I agree trademarks. Designs, former Zazu 979 F.2d I do approach, agree J., at 509 (Cudahy, with the latter. Cir. dissenting); So Thus, I disagree also with the ciete de majority’s Developments Et D'Innovations exclusive rebanee Agricoles test set in des Marches forth et Alimentaires Natural Foohvear to determine -Sodima-Union Cooperatives de Agricoles threshold issue of Co., sufficient use to obtain a International Yogurt (D.Or.1987) common law F.Supp. trademark. (noting that “use commerce required for obtaining a A. Standard “Use” under Common registration federal generally congruous Law Trademark Law with the required use of a mark for obtain ing ownership law.”). under the common It is a principle well-established of trade- mark law that right exclusive to a Traditionally, ownership of distinctive mark belongs to the party accrues goods bearing when the mark are which first uses the “sold, mark in connection displayed for sale pub or otherwise particular with its line of business. Mc- licly distributed.” Blue Bell v. Farah (6 Otto) v. Fleming, Lean 96 U.S. Co., Inc., 24 Manufacturing (1877); L.Ed. (5th Co., Cir.1975). Ford Motor Indeed, to estabbsh F.2d at 292. This first actual com- prior use for a common law distribu merce, however, must be and “deliberate tion of mark need not be wide-spread, continuous, sporadic, not casual or transi- but it public must be of a and nature more tory.” La Societe Anonyme des than de minimis. Enterprises, Allard Inc. Parfums Patou, le Inc., Galion v. Jean 495 F.2d Resources, v. Programming Advanced (2d Cir.1974) J.). Inc., (Friendly, (6th Cir. Cir.1998); Ka Indeed, the right to use a exclusively mark threiner’s Mit Fabriken Bes Malzkaffee a monopoly akin to’ which derives from Haftung v. chraenkter Pastor Kneipp appropriation “its subsequent Co., (7th and in Cir.1897) use F. Medicine (common the marketplace. The user who ap- first law by foreign obtained propriates the mark obtains an enforceable company which had five test ship sent right it, to exclude using others from as ments companies to and individuals in the Bell, at omitted); 508 F.2d see Blue States). tions are not nec sales Actual

United 1265. and extensive prior use establish essary to cases be may in some alone advertising based Appeals of Ultimately the Court trade a common to establish

sufficient defendants had that conclusion its Entertain right. (a) See WarnerVision mark defen- sufficiently on the mark “used” Inc., 915 Carolina Empire Inc. ment complete genuine com- attempt to dants’ (S.D.N.Y.), part in (b) F.Supp. transactions, the commercial mercial aff'd F.3d 259 Cir. part, rev’d in not and which need attempts their nature 1996). public recognition” have “achieved wide (c) and contin- mark and the consistent in recent decision Circuit’s Sixth uous, high-volume, use though not Pro v. Advanced Inc. Enterprises, Allard upon specifically court relied mark. The Resources, F.3d 350 gramming had used the that the defendants the fact Cir.1998) (6th applica on the is instructive fax, at least one on one “on at least mark “use.” law standard of the common tion of solicita- resume, [oral] in numerous and using the Allard, began the defendants Allard, at 359. The tions.” with in connection mark in 1989 contested although de- further determined Defen business. placement employee its advertisement word-of-mouth fendant’s had no very not successful were dants “it is not might preferred not be campaign date, March relevant prior to the revenue could person no reasonable atypical so ” howevef, in Beginning 1994. Id. at 358. The view as ‘commercial.’ at in individualized engaged defendants for a find- the case Circuit remanded Sixth large compa employees place tempts the defendants ing of the area which large companies several and contacted nies prior mark continuously used their had In 1993 its business. inform them of registration. plaintiffs place tried to the defendants standard of the aforementioned Given large companies with employees several law trade- to a common applicable “use” regard, In this defen little success. with Allard, are there exemplified in as two resumes to a fax sent dants material issues of genuine record on this Defendants also Bryant. company Lane entry judgment preclude fact which to 100 mailing potential promotional sent Here, of fact LTI. trier favor of 30, 1994. March customers on LIM used “LU- had conclude sufficiently to obtain com- CENT” affirmed dis- Appeals, The Court rights. Specifically, mon law that defendants’ court’s conclusion trict lain dormant Novem- LIM had not though March prior to conduct Rather, August Sep- ber sufficiently profitable, or extensive inception, after its soon tember common law trademark to warrant public marketing efforts. At that began “[a]s held that The Sixth Circuit rights. time, designer LIM hired a graphic of mark genuine long as there is letterhead, logo, business cards develop a commerce, ..., be es- ownership may such assorted documents other uses are not if the first tablished even labels and message pads, bro- messages, market deep result and do not extensive in- marketing materials LIM’s chures. widespread recognition.” or documents from holding a folder cluded added). Relying (emphasis Id. at 358 producers manufacturers software Bell, Blue opinion in Fifth Circuit’s LIM as which identified containing labels need that “such use went on to hold products. the source recognition, public gained have wide not Feinstein, 1995, 5, Mr. September On sustain single use trade even a letter on wrote a principals, LIM’s one of by if continuous followed companies, his (internal of another cita- letterhead Id. utilization.” commercial Consultants, Corporate which introduced its Intent to Use the “LUCENT” mark. name, LIM, by and the it provid- services The present records establish that on No- ed. The letter was sent to ap- between 3, vember 1995 LIM presentation made a proximately people: 25-50 clients of Cor- in Philadelphia, ARAMARK on Novem- porate Consultants and other contacts Mr. 17, ber 1995 LIM made a presentation to potential Feinstein viewed as customers. York, NBC in New 21, on November That letter referred to the services LIM LIM made its first of presentations several was providing specifically associated to Nixon Uniform in Delaware. Although services; the “LUCENT” mark with those LIM’s initial contact with Nixon Uniform “The name Lucent was selected after ex- through friend, was a personal the solicita- study tensive and with various database tion letter and presentation LIM’s was searches. It is a derivation of translucent made to another Nixon employee Uniform and well describes our mission of providing with whom prior LIM had no connection. light, clarity, guidance in a new and Although LIM used various marketing 5,1995 Letter). exciting (Sept. field.” techniques, only it made two sales Beginning in October LIM entered December 1995. Specifically, on Octo- into several distributorship agreements ber 1995 for LIM $323.50 installed a with hardware and software companies modem for the Israel Bonds Office in Phil- which authorized it to resell compa- those adelphia provided related training. products. nies’ For example, October LIM’s contact at the Israel Bonds Office 1995 LIM entered into a contract permit- was a friend of one of LIM’s principals. software, ting LIM to resell File Magic provided LIM the Israel Bonds Office with well as a contract with Tech Data. LIM’s an invoice on a pre-printed LIM form principals also an exposition attended though payment was directed to Mr. Arm- 1995, sponsored October by Imaging strong, one of LIM’s principals. addi- Magazine, World at which LIM regis- was tion to LIM’s sale the Israel Bonds tered its name and attending Office, on October 1995 LIM took an principals wore badges that bore the com- Consultants, order from Corporate Mr. pany name. company Feinstein’s with whom LIM In November LIM received its space. shared office The services ren- business cards and letterhead from the Corporate dered to Consultants included: printers and principals began LIM’s dis- servers, software, network network fax tributing extensively cards, their business cards, scanners, SCSI and other peripher- bearing the “LUCENT” a as means als as well as consultation services on the of advertisement. In the Fall of design of their document imaging system LIM also directed marketing its efforts 12,1995.1 beginning on November prospects through personal solicitations via mail, phone LIM, personal meetings. summary At the judgment stage, a court however, did not engaged any public or may weigh the evidence or make credi- paid advertising employees but dis- bility determinations —these tasks are left cussed business with virtually everyone to the fact-finder. Petruzzi’s v. Dar- IGA they came in contact with. ling-Delaware, Cir.1993).

Ultimately, LIM presenta- made sales I am also mindful that sum- companies prior tions to three mary judgment to Novem- motions this area of the 30, 1995, ber the date on which LTI filed law should analyzed carefully be because 1. The district court point, did not credit LIM for this on this and I resolve all reasonable Corporate LIM, sale, sale to Consultants because the inferences in favor of I credit this time, record, court considered this to be an internal trans- at this to LIM. On a fuller action which did not bear on the determina- trier of fact can determine whether this sale tion of whether LIM priority. sufficiently public weigh had established in favor of fully developed Since the record has not ownership rights. been LIM's injunction an as mark as well “Time Out” disputes are trademark of disposition

the Bell, any had not obtained Blue driven, against Co. v. Scott’s Paper factually Scott ship first through its Gold, Inc., F.2d market Liquid Rather, Cir.1978) to the granted that first “right and ment to customers. a mo trademark is registered of a which Farah’s upon owner shipment unless not be extended nopoly rested, merely “point should the first was thereto,” S.C. clearly entitled the owner is had a chance to associ public at which Johnson, Son, Inc. Johnson & of particular a line ate Time Out denied, (6th Cir.), 361 U.S. cert. By relying too Id. at 1267. sportswear.” (1959). 4 L.Ed.2d 80 S.Ct. Bell, Blue heavily passage on that pen market more expected court summary district Here, grant of the court’s to become the monopoly LTI a than is needed grants etration to LTI judgment Historically, proof without as mark a trademark. the “LUCENT” owner of to use above, it. LIM’s clearly required entitled to it is the use that discussed pro- to November prior conduct need not be extensive law mark common fact which a trier of upon a basis pen vides market deep “result in not need had LIM may determine that “used” recognition.” Al widespread etration or necessary degree to the “LUCENT” 146 F.3d at 358. Enterprises, lard ownership. priority of use to show dis- prematurely court also The district credibility de- making Only a trier of fact Israel Bonds LIM’s sale to as counted ulti- a fuller record upon can terminations Here, or relative. being a sale to a friend inten- whether LIM’s mately determine LIM’s contact Israel although strategy, marketing and continuous tional principals, its was a friend of Bonds office in a participation presentations, sales three may still find that this was a trier of fact show, distributorship contracts trade upon a fuller rec- public based sufficiently to establish common were sufficient sales sale, of the the nature regarding ord are right. Though there law trademark training agreed LIM servicing future which detract from in the record facts other facts for Israel Bonds and provide uses, LIM’s statement early such as LIM’s to the sale. district relevant application that its first in its significance minimized the unduly also weighing such evidence sale was introducing promotional LIM’s letters A fact time. trier of at this inappropriate as well as its potential clients LIM to ultimately wfeigh against campaign. Although sales word-of-mouth not sales were and conclude that promotional initial efforts were law LIM’s achieve a enough to common public promotions and on word-of-mouth is not for the court based This trademark. associates, this to business summary judgment. mailings direct decide on necessarily signifi- their diminish does not summary conclusion The district court’s case, recipients In this cance. were presentations “the letters and that were 1995 letter not September LIM’s satisfy the stan- enough to not extensive any did not have merely social friends who public in the ‘popularization dard ” Rather, appears from presence. market mind,’ heavily on often- relied too people 25-50 record that those present “use” Blue Bell excerpt from quoted existing corporate cus- were chosen identify or “sufficiently public to be must a list represented tomer lists which appro- goods an distinguish marked The Allard court customers. potential mind those segment public of the priate of word-of- held reliance Bell, properly the mark.” adopter Blue or business contacts campaign mouth of that reading A closer F.2d at 1266. in bona fide sales was Farah, which could result case, however, which reveals person that no reasonable atypical “so ultimately ownership awarded

323 ” it could view as ‘commercial.’ Id. at 358. specific trademark in a area. That test “(1) is the case here.2 measures Such volume of sales of the (2) trademarked product; growth Thus, I because find that there is a (both trends positive negative) in the genuine issue of material fact as to wheth- (3) area; persons number of actually “use,” er LIM’s conduct establishes I purchasing product in relation to the would remand for further proceedings.3 potential customers; (4) number of product amount of advertising in the area.” B. The Natural Footwear Test Ltd., Natural Footwear respect With to the district court’s sec- (3d Cir.1985) (internal citations omit- ondary reliance on the four-factor test an- ted). purpose of this test is to ensure nounced in Natural Footwear to determine that a common law trademark holder’s “use” and the majority’s exclusive reliance rights precede do not it into a market it test, on that I also Although dissent. yet has not penetrated but which a subse- Natural Footwear test is useful at quent user penetrated. has remedy stage of a proceeding to determine There is no indication in the history or injunction the territorial limits of an subsequent application of that four-factor delineate trademark between two test it was intended to be used to remote confusingly users of a similar discern the of a prior status user as an mark, inapplicable test is to the Rather, initial matter. the history and question threshold of ownership. While I later reliance on the Natural FooUvear am mindful of the precedential value of test supports the conclusion that this test Footwear, Natural I am also mindful that equity tool of designed to determine Natural Footwear does stand alone as appropriate remedy in a geographical governing principle law, of trademark dispute good between two faith users of a case, and in this apart stands from the fact, mark. one must remember that requisite inquiry threshold for a common the Natural FooUvear test is an exception law trademark. to the well-established rule of law that a I will not recount here the facts of Natu- senior user is deemed the exclusive owner Footwear, ral say suffice of the trademark. Drug United Co. v. presented with a dispute arising Co., 90, 101, Theodore Rectanus 248 U.S. out of the territorial limits of a senior (1918); 39 S.Ct. 63 L.Ed. 141 Hanover junior user’s mark when user had culti- Milling Metcalf, Star Co. v. 240 U.S. vated the same mark in a geographically 415-16, 357, 361, 36 S.Ct. 60 L.Ed. 713 (1916). remote market. Presented with the need This exception grew out of the to formulate a test which would address need to equities balance the between two scope of a common law trademark good faith remote users of the same mark. right, Id.; this court a four-part Personnel, Inc., announced test ACCU F.Supp. (D.Del.1994) for determining the market of 1213 (noting exception to rule Surely 2. the district court did company merely preclude not intend to reserves a mark to company's conclude targeting existing use, that a competition or for later see La Societe corporate high places” clients or "friends in Galion, Anonyme des le 495 F.2d at Parfums promotions for its and initial sales cannot company where a makes a token sale to form the basis for a common law trademark lay down a claim to the see Talk To Me right. holding tragic Such a would have con- Products, Corp., Inc. v. F.Supp. Larami sequences companies, particularly large to all internal, (S.D.N.Y. 1992), or made secret companies, which have cultivated substantial sales, Hydro-Dynamics, George Inc. v. Putnam potential business and social contacts with Co., (Fed.Cir.1987), & or fact, clients. In this is how business has been merely personal made sales to friends who done for millennia. players, were not market Schuster, see v. Simon & Jaffe U.S.P.Q.2d (S.D.N.Y. Although summary judgment appro- is not 1987). here, priate appropriate it is still where a dispute. in a territorial user v. trademark analysis The Sweetarts priority). of Co., Inc. (8th Manufacturing Cir.1967), Wristr-Rocket Sunline, Inc., See F.2d 923 380 Co., 727, 732 578 F.2d Archery the Natu- v. Saunders which upon of the decisions one Cir.1978) (8th only (relying on Sweetarts relied, illustrates ral Footwear law of common geographical zone Sweetarts, for Eighth the Cir- after point. analysis); Electronic and not “use” rights a valid had plaintiff the cuit found Communications, Inc. v. Electronic Com the defen- which law trademark common Co., F.2d 487 Industry 443 ponents to the the court turned infringed, had dant for (on use, Cir.1971) (8th the question of extent “geographical question of in com to actual use Eighth Circuit looked relief.” Id. at entitled to plaintiff is which but did not invoke Sweetarts King, v. The merce 928; Inc. also Weiner see (CCPA Webb Inter inquiry); of Graham standard 615 F.2d 512 King Corp., Wiener Inc., 17 Helene Curtis 1980) (territorial after v. only made national inquiry (D.Minn.1998) (issue pri- of established). F.Supp.2d 919 rights each user’s of plaintiffs initial sale or use between circuit, only re within this was Even promotion compared to defendant’s goods Department Ames cently in v. Smith with tradi al and test efforts addressed (D.N.J.1997), Stores, Inc., 827 F.Supp. 988 and no refer principles law tional common (3d Cir.1998), which is 172 F.3d 860 aff'd, Sweetarts). ence to authority, and the instant not precedential of cases plain It from a review these case, test was is Natural Footwear that the an ex- Footwear test that the Natural is inquiry the threshold exclusively to applied cases, grew out of the need ception which Prior to those recent of use. two remote equities between only to balance applied test was Footwear Natural remedy mark where the of same of an users of the territorial limits question injunction. This imposed permanent is a two remote users. See injunction between (dis Co., of the dispositive meant to be 277 test e.g., Ford Motor a mark between two concur- ownership a common law of acquisition cussing rent users and stands stark contrast Natural without reference to trademark Personnel, Inc., by Judge Friend- Footwear); upon relied standard ACCU (Natural Anonyme des le ly in La ap test Societe F.Supp. 1191 Footwear Parfums Inc., Patou, 495 F.2d law v. Jean extent of common Galion plied to determine goods a trade in the secured in that must be rights already “there trademark active under the mark or at least an In sold Jersey); New Trans Southern Pacific public attempt to establish such Insurance v. surance Co. Trans-Pacific Clairol, (E.D.Pa.1990) Inc. Co., (quoting trade.” at (pre Id. F.Supp. Products, Hall “senior com v. Holland liminary injunction denied to (TTAB 1970)). U.S.P.Q. mark user” under the Natural mon law mar proof absent of actual Footwear test question of By to the threshold applying City v. Beas penetration); ket Newark law mark the same use for common (D.N.J.1995) (stating F.Supp. ley, 883 perma- required “use” standard of as to the is no set formula that “there relief, injunctive respectfully sug- I nent mark required of use establish quantity errs. The gest majority that the distribu- rights. general rule is that is rights tion of distinct or de by sporadic not created rights are This question appropriate remedy. use.”). minimis disputes in trademark especially true Moreover, latitude “tailor great in which where courts have Eighth in the Circuit likeli- law, remedies to decrease the ap- that test is not Sweetarts is the unnecessarily without use but is hood confusion plied inquiry to the threshold & Ev- inhibiting competition.” Merchant scope applied considering when ans, Building Products Inc. Roosevelt remedy given to a senior common Co., Inc., 639-40 Cir. means that trademark users which have 1992). is, injunction permanent engaged A continuous use of their mark course, only equitable not the form of re albeit over a longer diffuse area will no Kane, Sieg any lief in a court’s arsenal. See have trademark rights. By refusing run, A Practioner’s all common Trademark Law: law trademark to a (3d Ed.1997) Guide, 16-7; 15 long-standing, non-concentrated and mod- 16-1 — 1116(a) (courts erately § have power company U.S.C. “shall successful under test, injunctions, according prin to the grant junior Natural Footwear a can user upon enjoin such terms as the ciples equity company using a mark reasonable.”) may deem a altogether. Given Such result runs counter to range infringed of remedies available to an trademark law. no party, equat there is sound reason for In global economy this where goods are

ing the standard of use to obtain a trade often sold over a wide area rather in than mark with the standard needed to obtain store, neighborhood a majority’s rule injunction against an a remote user. penalizes companies of use small which this standard practice, higher, advantage of use take of the national It market. in deprive start-up would local concerns is ironic that the majority sets forth such a obtaining high day this circuit from common law standard of age this rights upon based their deliber when there is a technological revolution Indeed, underway ate and continuous use of a mark. permits which the internet might “impossible, such a test make it small trademark goods users sell their a respect geographic to valuable desirable article and services to broad areas. manufacture, designated by or The product majority’s places a standard of use a manner, particular particular legal or in a straightjacket companies brand on those trade,” ever to Kathreiner’s them deprives establish of all common law end, rights. Fabriken Mit Beschraenkter In the will Malzkaffee Haftung, F. at Simply, compa 82 exclude a whole class of trademark users ny’s attempts to establish a from obtaining rights through business with “use” rather by the aid of a trademark could be stifled than and will tilt registration the level competitor before that company’s playing always sales field which has been an penetration” indispensable ingredient and “market ever reach the in deciding trade- standard set forth in Nahiral Footwear. I mark rights. do not believe this is what was intended analysis, I respectfully sug- The sounder

under trademark law or under the Lan- gest, a com- determine first whether Indeed, majority’s ham Act. formulaic pany engaged has sufficient use of a proceeds adherence to Natural Footwear mark under common law trademark law theory pene on the that a trademark must and, finding infringement by if there is a particular geographic trate a area in its company, another court should consid- inception recognizing rather than that a company’s er that first market ownership senior user is entitled to indicia of equities and other involved development larger of a mark into a injunctive the case to fashion appropriate provided concern its initial use is Inc., Enterprises, relief. Allard See enough grant ownership rights. (diffuse F.3d 350 use created common law

Putting impact aside for a moment the but case remanded for a determina- majority’s may pen- rule of use have for tion of what area the had defendants start-up companies granting injunction); which are slow to etrated before an Industries, easily Polymer v. Fortex penetration, Corp. achieve market one can Soltex (2d Cir.1987) (where Inc., pres- foresee how this new rule 832 F.2d 1325 also moderate, problems long-established compa- ent confusion was disclaimer Sons, N. Inc. adopted by majority appropriate remedy); nies. rule Hess’ (4th Inc., Apparel, v. Hess EM-

Cir.1984) (disclaimer Man & PROFESSIONAL granted); relief OFFICE Industries, INTERNATIONAL Inc. v. Sweater Bee PLOYEES hattan Cir.1980) UNION, Ltd., NO. 471 F.2d 628 LOCAL Banff, (where close, permanent no equities were v. Sportswear H A & injunction granted); Inc., Stores, Co., Victoria’s Secret GENERAL Inc. v. BROWNSVILLE (disclaimer (E.D.Pa.1997) HOSPITAL, Appellant F.Supp. grounds, other remanded on granted); 98-3331. No. (1999); Inc. Commons WAWA (E.D.Pa. 1989 WL at WAWA Appeals, States Court of United 1989) (disclaimer per granted instead Third Circuit. of con injunction where likelihood manent Argued: Feb. minimal); Rentt-A-Car Thrifty fusion was Cars, Inc., 639 System, Inc. v. Thrift 3, 1999 Aug. Filed: (D.Mass.1986) (recognizing F.Supp. 750 Aug. As Amended defining mar senior user but common law Taunton, ket East Massachusetts injunctive narrow

fashioning appropriately

relief). reasons, I dissent foregoing

For today decision to raise majority’s

from the for a common requirement

the “use” right to the same level needed injunction between permanent

to obtain a

two remote users. Adoption and LTI’s Faith

C. Good Mark the “LUCENT"

Use of majority, the court

As stated in this case whether

need not determine of a senior user’s mark is dis-

knowledge faith in junior of a user’s bad

positive Here, the dis-

adopting that mark. since that LIM had no

trict court determined rights, logically, district fully address the issue

court did not its assertion of the

LTI’s bad faith or during discovery.

attorney privilege client above, I with the dis- disagree

As stated summary judgment grant

trict court’s I for further

and would remand this case

proceedings including a determination attorney

whether LTI assert privilege

client in this case.

Case Details

Case Name: Lucent Information Management, Inc. v. Lucent Technologies, Inc.

Court Name: Court of Appeals for the Third Circuit

Date Published: Aug 3, 1999

Citation: 186 F.3d 311

Docket Number: 98-7203

Court Abbreviation: 3rd Cir.