Indianapolis Colts, Inc., National Football League Properties, Inc., and National Football League v. Metropolitan Baltimore Football Club Limited Partnership, James L. Speros, and Canadian Football League
Docket: 94-2578
Court: Court of Appeals for the Seventh Circuit; August 12, 1994; Federal Appellate Court
The Indianapolis Colts and the National Football League (NFL) filed a trademark infringement lawsuit against the Canadian Football League's (CFL) new Baltimore team, initially named "Baltimore Colts." The plaintiffs secured a preliminary injunction prohibiting the use of the name "Colts" or any variation in connection with professional football activities, arguing that consumers might mistakenly believe the CFL team is affiliated with the NFL's Indianapolis Colts, which were originally the Baltimore Colts. The defendants appealed the injunction, which was granted under the grounds of potential consumer confusion.
The dispute's context involves the historical move of the Colts franchise from Baltimore to Indianapolis in 1984, which left the city and its citizens aggrieved. After a failed attempt to reclaim the team through litigation, the CFL later awarded a franchise to Baltimore, prompting local support for the "Baltimore Colts" name. However, after the NFL's intervention and threat of legal action, the team was renamed "Baltimore CFL Colts" prior to its first games.
Defendants argue that the district judge erred in finding that the Baltimore team falls under Indiana's long-arm statute, as its only activity in the state involves nationwide broadcast of its games. The court concludes that this does not violate the Fourteenth Amendment's due process clause, noting that the alleged injury from trademark confusion primarily affects Indiana, where the Indianapolis Colts operate. By adopting a name potentially similar to the Colts', the defendants risk infringing valuable property rights in Indiana. The court references Calder v. Jones to support that tort jurisdiction is proper where the injury occurs. Furthermore, the defendants' broadcasts into Indiana provide sufficient grounds for jurisdiction, regardless of whether they have begun selling merchandise there. The court also finds venue proper in Indiana under 28 U.S.C. § 1391(b)(2) and indicates it will now consider the merits of the trademark dispute, stressing that its views are preliminary and not intended to bias the trial's outcome.
The Baltimore team seeks to use the name "Baltimore Colts," but has agreed to include "CFL" in its title to mitigate potential legal issues with the NFL. The inclusion of "CFL" is unlikely to deter consumers who are unaware of the Canadian Football League's lesser recognition in the U.S. The real concern is whether the new team can rightfully claim the name "Baltimore Colts." The defendants argue that the Indianapolis Colts abandoned the trademark when they relocated, thus allowing the new Baltimore team to appropriate it. However, abandonment of a trademark does not negate the need to avoid consumer confusion, especially since the Indianapolis Colts continue to operate under a similar name. The legal standard suggests that the new team's name could infringe on the Indianapolis Colts' trademark due to the historical connection and overlapping markets. The teams' shared history and geographical relevance reinforce that consumer confusion over sponsorship or league affiliation could arise, making the new team's claim to the name problematic.
Defendants reference *Major League Baseball Properties Inc. v. Sed Non Olet Denarius, Ltd.*, arguing that the departure of the Baltimore Colts from Baltimore to Indianapolis made the "Baltimore Colts" name available due to its status as a nontransportable cultural institution. The court finds this argument weak, noting that district court rulings lack authoritative weight in appellate courts and emphasizing that the comparison to the Brooklyn Dodgers case does not apply because there was no risk of confusion regarding the use of the name. The defendants had previously made a misappropriation claim, which was rejected by the district court and not renewed on appeal; now they solely claim consumers may confuse the new Baltimore team with the Indianapolis Colts.
The court elaborates on the nature of professional sports teams, likening them to a constantly changing river. It highlights that when the Colts moved to Indianapolis, the team maintained its integrity with the same players and coaching staff initially. Over time, changes occurred, but the continuity between the Baltimore Colts of 1984 and the Indianapolis Colts of 1994 was significant, akin to the changes seen between the Baltimore Colts of different decades. Johnny Unitas, a former player, asserts no connection exists between the two teams and has requested his name be removed from the Indianapolis record books due to his displeasure with the move. The court concludes that there is no contractual or other continuity between the Baltimore Colts and a Canadian Football League team seeking to use the name, stating that any suggestion of such continuity is misleading.
The text analyzes the potential trademark conflict arising from a new Canadian Football League (CFL) team wanting to use the name "Baltimore Colts." If there is a clear understanding that no connection exists between the new team and the original NFL Baltimore Colts, then the Lanham Act may not provide a basis for legal remedy against the new team's name usage. However, if confusion exists among consumers, it could lead to harm for the NFL, as fans might mistakenly support the CFL team over the NFL teams, affecting viewership and merchandise sales. The document emphasizes that while consumer confusion is possible, it is not necessarily likely, given the varying levels of consumer awareness. The Lanham Act's legal standard focuses on whether the new mark could cause significant consumer loss for the plaintiff, considering factors like mark similarity, consumer knowledge, and market overlap. The intent is to balance the interests of new product sellers in utilizing appealing names against the need for consumer clarity regarding product origins, minimizing the costs of consumer investigation.
Judges in trademark disputes often rely on consumer surveys conducted by marketing or statistical professionals to assess the issues at hand. However, the credibility of such surveys can be compromised, as experts may tailor their findings to align with the interests of the party hiring them. This concern is exacerbated by the limited ability of judges and juries to critically evaluate expert testimony due to their lack of expertise in these fields. A potential improvement to this process could involve appointing a neutral expert to conduct studies, as permitted under Federal Rule of Evidence 706, though this was not pursued in the present case.
In the dispute, both parties submitted studies. The defendants' study by Michael Rappeport was deemed insufficient by the district judge, primarily due to its reliance on three leading questions asked in a single location. Rappeport's methodology has faced previous criticism. In contrast, the plaintiffs' study led by Jacob Jacoby was more comprehensive and was found credible by the district judge. This 28-page report involved surveys of several hundred consumers across 24 malls, who were questioned about their knowledge of merchandise and the team associated with it. The survey included various questions aimed at determining consumer confusion regarding the "Baltimore CFL Colts" merchandise and controlled for extraneous variables by comparing responses to a hypothetical team name, "Baltimore Horses." This design aimed to clarify whether confusion arose from the team's name or simply from the use of "Baltimore" in any context.
Rappeport's critique of Jacoby's survey highlights several key points regarding consumer confusion over the "Baltimore CFL Colts" merchandise. The argument that survey research is strictly a sociological endeavor is deemed irrelevant in the courtroom context. Jacoby's inquiry into consumer confusion between the "Baltimore CFL Colts" and the "Baltimore Colts" is justified, especially considering consumer perceptions could affect merchandise sales. Rappeport acknowledges flaws in Jacoby's survey, such as the biased comparison to "Horses" and some leading questions, but asserts that imperfections are common in trials.
Jacoby's survey revealed significant confusion among consumers; 64% of self-identified football fans mistakenly identified the "Baltimore CFL Colts" as either the original Baltimore Colts or the Indianapolis Colts. The confusion persisted even among more educated viewers of football. Additionally, a notable minority believed the new team was associated with the Indianapolis Colts or the NFL.
Rappeport critiques the survey methodology, noting that consumers may act differently when spending money versus answering survey questions. Nonetheless, the district judge's acceptance of Jacoby's major findings was upheld, indicating that the use of the name "Baltimore CFL Colts" was likely to confuse many consumers. This conclusion justified the issuance of a preliminary injunction, as the defendants failed to contest the potential irreparable harm from the injunction.
Defendants contend that the injunction against their use of "Colts" is overly broad and should permit its use only in conjunction with "Baltimore CFL." The court finds this argument perplexing, clarifying that the lawsuit restricts their use of "Colts" in contexts that could mislead consumers into believing it refers to the old Baltimore Colts or implies affiliation with the NFL. The court affirms the district court's preliminary injunction, emphasizing the urgency for the new Baltimore CFL team to clarify its name for licensing and merchandising purposes, as consumer confusion could lead to a loss of revenue for the NFL and its teams. The possibility of consumer confusion exists, but the court notes that it is not necessarily widespread or deliberate. The Lanham Act protects against marks that could lead to significant consumer loss, considering factors such as mark similarity, consumer knowledge, and market overlap. Balancing the interests of new and existing sellers and consumers is crucial, and expert surveys are often utilized in trademark disputes to assess public perception.
In *Olympia Equipment Leasing Co. v. Western Union Telegraph Co.*, the court highlighted the susceptibility of expert testimony to bias, particularly when experts are compensated by one of the parties involved. The efficacy of judicial oversight to mitigate biased testimony is limited due to the judges' and juries' lack of expertise in specialized fields. The court suggested the potential benefit of appointing a neutral expert under Federal Rule of Evidence 706, although this was not implemented in the case.
Two studies were presented: the defendants' study by Michael Rappeport, which was criticized for its methodology, particularly a survey with leading questions conducted in a single mall; and the plaintiffs' more robust study by Jacob Jacoby, which involved interviews with consumers across 24 malls regarding merchandise related to the Baltimore CFL Colts. The plaintiffs' study was deemed credible and methodologically sound, featuring questions designed to assess consumer confusion regarding the team name. Rappeport challenged Jacoby's study, although some of his criticisms were viewed as unfounded, reflecting academic disputes rather than substantive issues relevant to the case.
Jacoby’s inquiry into consumer confusion between the Baltimore CFL Colts and the Indianapolis Colts was deemed appropriate, despite the abandonment of the old Baltimore Colts by the Indianapolis team. Evidence showed significant consumer confusion, with 64% of self-identified football fans believing the Baltimore CFL Colts were either the old Baltimore Colts or the Indianapolis Colts. This confusion persisted even among more educated viewers of football, with 58% expressing uncertainty. A notable portion of respondents erroneously believed the Baltimore CFL Colts were sponsored by the Indianapolis Colts or the NFL.
Concerns were raised about the survey's methodology, including the choice of the comparison name "Baltimore Horses" and the general unpredictability of consumer behavior in survey contexts. Nonetheless, the district judge's acceptance of Jacoby's findings regarding the likelihood of consumer confusion was upheld as not constituting a clear error. The judge concluded that this confusion necessitated issuing a preliminary injunction against the defendants' use of the name.
The defendants contended that the injunction was overly broad, arguing they should be allowed to use "Colts" as long as it was in conjunction with "Baltimore CFL." The court found this argument unfounded, emphasizing that the objection was specifically to the use of "Colts" in a manner that could mislead consumers about the affiliation or status of the Baltimore CFL Colts in relation to the NFL and the Indianapolis Colts. Other arguments presented by the defendants were deemed insufficiently meritorious, leading to the affirmation of the district court's judgment granting the preliminary injunction. The decision was released expeditiously to provide clarity on the team name and merchandise licensing.
