695 N.E.2d 1197 | Ohio Ct. App. | 1997
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *599 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *600 The United States Playing Card Company ("USPC"), headquartered in Norwood, Ohio, has made "Bicycle" brand playing cards for over a century. USPC has one of the oldest registered trademarks in the United States — the Bicycle name.
The Bicycle Club ("the Club") is a card casino, established in 1984, located in Bell Gardens, California. The Club registered its name on the principal register in the United States Patent and Trademark Office on February 17, 1987. The Club is permitted under California law to play certain types of card games involving skill. The casino does not take the usual "house" position, but instead provides facilities for a time-based or per-hand fee, and the players compete among themselves for the "pot." With over one hundred and twenty tables at the time it opened, the Club billed itself as the largest card club casino in the world.
Before the opening of the Club in November 1984, either USPC President Lee Racey or Whitney Miller, in charge of retail sales at USPC, sent sales representative Herbert Craig to this new card casino. Craig visited George Hardie, then a partner and general manager of the Club, to attempt to sell cards to the Club. Hardie asked Craig if there would be a problem with the name of the Club. When Craig brought the issue up with USPC President Racey, Racey told Craig that the Club's name was an excellent way to promote the Bicycle name. Prior to the filing of this lawsuit in 1987, USPC never complained about the use of the Club's name. Further, Hardie testified, as Craig did, that he was told by a USPC representative that USPC's lawyers said the word "bicycle" was generic, and thus that USPC had no problem with the Club's name. USPC denies that its lawyers would label the Bicycle name generic, and claims that it tacitly gave the Club an "implied license" to use its name. In spite of this alleged sub silentio grant of an "implied license," at that time the Club bought its cards from a different supplier.
The Club spent $200,000 on a large sign bearing its name, $250,000 on its first order of poker chips, embossed with its name, and placed its name on various gift shop items, such as T-shirts, hats, coffee mugs, and the like. The Club advertised its casino services in numerous magazines and newspapers. Findings *601 from a study commissioned by the Club, in preparation for this litigation, showed that thirty-eight percent of Los Angeles area residents recognized the Bicycle Club name and which services it provided. Though evidence was presented of possible confusion on the part of some survey participants because of the Bombay Bicycle Club and the Bicycle Cafe, both restaurants in Los Angeles (and presumably not sued by USPC), undoubtedly the casino was recognized by a great number of people in the Los Angeles area.
In 1986, the Club decided to try USPC's cards, and the parties negotiated a contract, under which USPC would provide special decks of "pan" cards, used in panguinne, similar to gin rummy, and super pan nine, a popular Asian card game. These cards bore the logo "Bicycle Club." After receiving only about one-third of the cards, the Club complained of defective cards and card shortages, seemingly related to a labor strike then occurring at USPC. On July 29, 1987, Hardie wrote a letter to USPC repudiating the remainder of the contract because of problems with card quality. On October 7, 1987, USPC brought this suit claiming breach of contract, and violation of its statutory and common-law rights in the Bicycle trademark.
In 1990, the federal government took a majority interest in the general partner of the limited partnership comprising the Club, a joint venture, in a forfeiture proceeding after several principals in the partnership were convicted of violations of the Racketeer Influenced and Corrupt Organizations ("RICO") statute. USPC wished to introduce, under a trademark-dilution theory, evidence of adverse publicity about the Club during this time, including articles and letters in The Wall Street Journal and The Los Angeles Times, and stories on the Dallas Morning News, CBS Evening News, and NBC Sunrise, as proof of tarnishment of the Bicycle trademark. Prior to trial, the trial court, without written explanation, granted the Club's motions to exclude the evidence regarding its reported unlawful activities. During trial, the trial court denied USPC's motion for reconsideration concerning the admissibility of this evidence, finding its prejudicial effect outweighed its probative value under Evid.R. 403.
After over eight years of delay, the case was heard on January 16, 1996. Apparently by sheer coincidence, the first day of trial was the day that the Federal Trademark Dilution Act of 1995 ("FTDA") went into effect. However, neither side mentioned this statute at trial. On appeal, the Club contends that this statute is a bar to USPC's claim of trademark dilution.
The trial court used an advisory jury for the contract claim and, after rejecting the jury's initial verdict, accepted its second, which awarded $8,218 to USPC. The advisory jury's first verdict in favor of USPC was for $15,643.92 in damages, but it also ordered USPC to give the Club its inventory of finished pan cards. Rather than force USPC to perform, the trial court correctly had the jury further deliberate and convert its original verdict into a purely monetary award. However, *602 the trial court refused to award prejudgment interest on the breach-of-contract award. Further, the trial court ruled against USPC on "all issues involving common law and statutory trademark infringement, dilution and unfair competition," and declined to enjoin the Club's use of its name.
USPC brings two assignments of error, challenging (1) the trial court's refusal to admit reputation evidence bearing on trademark dilution, and (2) the trial court's denial of prejudgment interest on the breach-of-contract award.
Although the United States allegedly acquired its interest in 1990, no immunity claim was made in the trial court. No United States Attorney has appeared, and we are not certain that the United States Government even claims immunity. Be that as it may, we do not believe that governmental immunity applies in this case.
To determine whether the government is entitled to sovereign immunity, the threshold question is whether the suit is one against the United States as sovereign. Florida Dept. ofBusiness Regulation v. United States Dept. of Interior (C.A.11, 1985),
USPC's cause of action is brought under a theory of trademark dilution, grounded in Ohio common law. Trademark dilution is "the `gradual whittling away' of a trademark's distinctiveness through use by third parties on nonconfusing, noncompeting products." Schechter, The Rational Basis of Trademark Protection (1927), 40 Harv.L.Rev. 813, 825.4 Trademark dilution protects a trademark owner against the diminution of a trademark's "commercial magnetism" or selling power by a junior user's unauthorized use of the same or substantially similar mark. See Pattishall, Dawning Acceptance of the Dilution Rationale for Trademark-Trade Identity Protection (1984), 74 Trademark Rep. 289, 290.5
The equitable doctrine of laches requires "(1) unreasonable delay or lapse of time in asserting a right, (2) absence of an excuse for such delay, (3) knowledge, actual or constructive, of the injury or wrong, and (4) prejudice to the other party."State ex rel. Meyers v. Columbus (1995),
In Kaufman, the court held that laches applied where a lawsuit for trademark infringement was not brought for four years, even though the plaintiff complained through a series of letters to the infringer concerning the trademark.7 Here, USPC did not bring suit for nearly three years after the opening of the Club, on November 30, 1984, and knew about the casino even before it opened. USPC never even complained to the Club about its name until the filing of the lawsuit on October 7, 1987. USPC's inaction, well longer than the analogous statute of limitations, constitutes an unreasonable delay.
Prejudice, however, will not be inferred from a mere lapse of time. State ex rel. Meyers v. Columbus,
But where the remedy desired is prospective relief, a finding of laches alone is not sufficient. See Kaufman v. Limobusters,Inc.,
Estoppel arises when one by his acts, representations, or admissions, or by his silence when he ought to speak out, intentionally or through culpable negligence induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts.State ex rel. Madden v. Windham Exempted Village School Dist.Bd. of Edn. (1989),
In a trademark context, "[t]here is much semantic confusion in the case opinions over the distinction, if any, between `laches,' `estoppel by laches' and `acquiescence.' * * * To preserve some semantic sanity in the law, it is appropriate to reserve the word `acquiescence' for use only in those cases where the trademark owner, by affirmative word or deed, conveys its implied consent to another. That is, laches denotes a merely passive consent, while acquiescence implies active consent. In this set of definitions, we would have `estoppel by laches' as distinct from `estoppel by acquiescence.'" Guardian Life Ins.Co. of Am. v. Am. Guardian Life Assurance Co.,
Hardie testified that Racey and Craig told him there was no problem with the Club's name. This testimony is supported by the uncontroverted fact that USPC did not complain about the Club's use of the name until it filed suit. Even if Hardie's testimony were disbelieved, if USPC objected to the Club's name, it had a duty to speak out — or it was at least guilty of intentionally misleading the Club through its silence. See Emra Corp. v.Superclips Ltd. (E.D.Mich. 1983),
The Fourth Circuit refused to grant an injunction against use of the name "Ambrosia" because of "laches and acquiescence" by the plaintiff. Ambrosia Chocolate Co. v. Ambrosia Cake Bakery,Inc. (C.A.4, 1947),
Similarly, USPC knew of the Club's name choice before the Club opened in 1984. USPC sent Craig to solicit sales from the Club. USPC even considered investing in the Club. In 1986, the Club bought cards from USPC, which USPC produced inscribed with the Club's name. Apparently, newly hired USPC president Ron Rule became concerned with the Club's name in 1987, especially after the contract dispute between the parties could not be resolved, whereas Racey did not find the name objectionable during his tenure as president of USPC.
Meanwhile, prior to the filing of this suit, the Club registered its name on the principal register in 1987. USPC did not challenge this registration. The Club spent hundreds of thousands of dollars on signs, poker chips, and gift shop items bearing its name. The Club advertised in many magazines and newspapers for its casino services. The card club was the largest in the world, and undoubtedly built up recognition in the Los Angeles area, especially among its clientele — gamblers.
USPC cannot revoke an "implied license" after it allowed the Club to garner customer loyalty and recognition. The Club relied on USPC's consent to use the Bicycle Club name. Moreover, the Club would be damaged financially if it had to rename itself and change the name on its signs, poker chips, and gift shop items. USPC actively consented to the Club's name choice. After the Club relied on this consent, USPC should not be heard to object.
USPC claims that although it "tacitly" gave the Club an "implied license" to use its name, it had the right to revoke this license after the Club received negative publicity, which USPC claims adversely affected the Bicycle name. USPC cites cases for the proposition that such a change in circumstances warrants ignoring laches and estoppel. We are unpersuaded.
In Parrot Jungle, Inc. v. Parrot Jungle, Inc. (S.D.N.Y. 1981),
In contrast, the Club opened as the largest card casino in the world. The principal change in circumstances alleged by USPC does not concern its size, but its reputation. USPC does allege that the Club's $9-million expansion in 1988-1989 is a change of circumstances barring the doctrine of laches. But USPC does not explain how such an expansion at the same location, where the Club was already a huge card casino, would have materially changed the situation concerning the name. Further, USPC cites no case as authority that a change in an infringer's reputation is cause to deny it the right to assert laches or estoppel. Although courts have denied a defense of laches where an infringer's conduct was egregious, the egregious conduct was directed at the plaintiff. The Sixth Circuit held that the defendant's misconduct in plagiarizing the plaintiff's patent was cause to reject its assertion of laches — an equitable defense only available in the interest of fairness. TWM Mfg. Co.v. Dura Corp. (C.A.6, 1979),
USPC, by sleeping on its rights and courting the Club's business — even supplying it with playing cards bearing the name to which it now objects — has forfeited any right to complain. Allowing USPC to complain and enjoin the Club's name any time the Club's reputation becomes soiled would place it in a *608 position of overseer — ready to sue on its name any time the Club did something to which USPC objected. USPC should have considered that the Club might one day provide inferior services or develop an unsavory reputation. But after USPC's acquiescence, the Club need not answer to USPC for the blemishes that it has received. We hold that the Club is shielded by estoppel by laches and estoppel by acquiescence barring USPC's trademark-dilution action.10
In holding USPC's dilution action barred by estoppel, we need not determine whether the FTDA operates retroactively. Nor do we need to consider whether trademark dilution is even part of Ohio's common law.11
The advisory jury awarded USPC $8,218 on the breach of contract. The trial court accepted this verdict and granted postjudgment interest from the date of the filing of the entry, but denied prejudgment interest.
Prejudgment interest compensates a claimant for the period of time between the accrual of the claim and the judgment, regardless of whether the judgment is based on a liquidated or unliquidated claim. Royal Elec. Constr. Corp. v. Ohio StateUniv. (1995),
The contract for the sale of cards was breached when, on July 29, 1987, Hardie wrote to USPC terminating the contract. At that point, the Club had only taken about one-third of the cards that it had ordered under the contract. This was a definite date that the contract was breached. That until that point neither party had enforced its rights under the contract is of no moment. USPC can be made whole by awarding prejudgment interest from the date of the breach until the date of the entry of judgment. The second assignment is sustained.
Judgment affirmed.
HILDEBRANDT and MARIANNA BROWN BETTMAN, JJ., concur.