Court: Court of Appeals for the Ninth Circuit; October 7, 1993; Federal Appellate Court
Official Airline Guides (OAG) appeals a district court judgment from a bench trial that determined Mindy Goss, Ashby-web Ltd., and other defendants did not infringe OAG's trademark "OAG TRAVEL PLANNER" by using the phrases “THE TRAVEL PLANNER USA” and “USA TRAVEL PLANNER.” Conversely, Ashby-web cross-appeals the finding that it did infringe OAG's mark by using “THE TRAVEL PLANNER” alone. This judgment followed a remand for reconsideration of OAG's trademark protection eligibility, and the court has jurisdiction under 28 U.S.C. 1291.
OAG has published travel directories for over sixty years, including three editions: European, Pacific Asian, and North American. The North American Edition, known as “OAG TRAVEL PLANNER,” focuses on travel services in the U.S. and is primarily distributed to travel agents and corporate coordinators. OAG's revenue largely comes from advertisers, contributing 65%, with the rest from approximately 70,000 subscribers. OAG registered the "OAG TRAVEL PLANNER" trademark in 1966, initially needing to disclaim the descriptive "Travel Planner" term. A subsequent trademark in 1987 did not require such a disclaimer, supported by an affidavit claiming the term had become distinctive through exclusive use.
Since 1983, Ashbyweb has operated a similar travel directory under the names “THE TRAVEL PLANNER USA,” “USA TRAVEL PLANNER,” and “THE TRAVEL PLANNER,” mainly distributing in Europe and the Middle East, and has been aware of OAG's directory for over two decades. Ashbyweb’s directory did not reach the U.S. market and initially had Trans World Airlines as a corporate sponsor, which appeared on the cover of its first edition.
Ashbyweb obtained listings and solicited advertisements independently from TWA, utilizing forms titled “THE TRAVEL PLANNER” that did not reference TWA or its predecessor, Churchfield publications. Targeting a broader range of travel-related businesses compared to OAG, Ashbyweb focused on international travelers to the U.S., organizing listings by state and including direct dial phone numbers, travel document information, and lodging options. Ashbyweb sold its directory in bulk, while TWA and Pan American distributed copies to European travel agents to promote bookings.
In 1987, OAG received erroneous mailings of Ashbyweb’s forms and subsequently requested Ashbyweb to stop using “USA TRAVEL PLANNER.” When Ashbyweb did not comply, OAG filed a lawsuit alleging federal trademark infringement, false description, common law trademark infringement, and disseminating false representations. Ashbyweb counterclaimed, accusing OAG of fraudulently obtaining a trademark and interfering with its business. It also raised defenses of laches and unclean hands.
The district court granted a temporary restraining order against Ashbyweb's use of certain phrases but denied OAG’s preliminary injunction. OAG appealed, and the Ninth Circuit affirmed the district court’s decision, remanding for a determination on the common law protection of the term “Travel Planner.” After OAG registered “OAG TRAVEL PLANNER,” the district court deemed it unnecessary to assess the common law status of “Travel Planner.”
On September 14, 1990, the court bifurcated OAG’s trademark infringement claim from Ashbyweb's counterclaim. The infringement claims were tried first, resulting in a ruling that Ashbyweb's use of “THE TRAVEL PLANNER” infringed OAG’s trademark, leading to a permanent injunction against Ashbyweb using that phrase in its materials.
Ashbyweb is allowed to continue using the phrases “THE TRAVEL PLANNER USA” and “USA TRAVEL PLANNER,” as these do not infringe upon OAG's trademarks, according to the district court. A jury ruled in favor of OAG regarding Ashbyweb's counterclaim for intentional interference with business relations, while Ashbyweb's counterclaim for fraudulent procurement of trademark was dismissed as time barred. Both parties are appealing the decisions.
Under the Lanham Act, a trademark is defined as a combination of words or symbols that identify and distinguish goods in commerce. Registered marks serve as "prima facie evidence" of validity and exclusive use rights. The protection level against infringement relies on the mark's distinctiveness; inherently distinctive marks, such as fanciful, arbitrary, and suggestive marks, receive the greatest protection. Descriptive marks, while not inherently distinctive, may be protected if they acquire secondary meaning through consumer association.
OAG's trademark “OAG TRAVEL PLANNER” is deemed an arbitrary composite trademark, thus protectable without needing to prove secondary meaning, despite "travel planner" being descriptive. The court must determine if Ashbyweb's usage of “THE TRAVEL PLANNER,” “USA TRAVEL PLANNER,” and “TRAVEL PLANNER USA” constitutes infringement of OAG’s trademark.
The core element of trademark infringement is the likelihood of confusion among consumers regarding the source of products, as established in E. J. Gallo Winery v. Gallo Cattle Co. The Ninth Circuit has outlined various tests for this determination, emphasizing that they are nonexclusive factors rather than strict requirements. The district court utilized the eight-factor test from AMF Inc. v. Sleekcraft Boats, which includes: 1) strength of the mark, 2) proximity of the goods, 3) similarity of the marks, 4) evidence of actual confusion, 5) marketing channels, 6) type of goods and purchaser care, 7) defendant's intent, and 8) likelihood of product line expansion.
In this case, the court found that Ashbyweb's publications are distributed solely outside the U.S., while OAG's guide targets the U.S. market. Furthermore, their advertisements are tailored for different markets, and the customer bases do not overlap significantly. The court concluded that the publications are related but not in direct competition and properly applied the eight-factor test.
Regarding the strength of the mark, arbitrary marks receive more protection than descriptive ones. The court had previously ruled that "OAG TRAVEL PLANNER" is an arbitrary composite mark protectable without needing to prove secondary meaning, despite "travel planner" being descriptive. However, the district court incorrectly analyzed the strength of the mark by dissecting it into parts, labeling "Travel Planner" as weak. Under the anti-dissection rule, the mark should be assessed in its entirety as it appears to consumers. Despite this error, the court found sufficient likelihood of confusion based on the other seven factors to justify enjoining Ashbyweb from using "THE TRAVEL PLANNER." Ashbyweb's claim that "Travel Planner" is generic was negated by a prior ruling that it is descriptive.
Related goods are more likely to confuse consumers regarding their producers, leading to a reduced standard of similarity when comparing trademarks. However, in this case, the district court determined that the goods of OAG and Ashbyweb are not closely related enough to apply this diminished standard. Both companies provide directories for travel-related services, but OAG primarily distributes within the United States, while Ashbyweb targets the European market. OAG charges significantly higher advertisement rates than Ashbyweb.
The district court assessed the similarity of the marks based on sight, sound, and meaning, concluding that Ashbyweb's marks, “THE TRAVEL PLANNER USA” and “USA TRAVEL PLANNER,” are substantially different from OAG’s “OAG TRAVEL PLANNER.” The court noted that OAG’s mark appears within a larger title and is styled differently than Ashbyweb’s. Furthermore, Ashbyweb's marketing materials do not visually resemble OAG’s, and there is no confusing similarity in sound or meaning between their respective marks.
Ashbyweb's use of “THE TRAVEL PLANNER” alone does present some similarity to OAG’s mark, particularly in sight, sound, and meaning, which could potentially confuse advertisers and subscribers. However, evidence of actual confusion was minimal, with OAG receiving only seven listing forms from Ashbyweb out of 80,000 sent, which the court deemed de minimis. Additionally, there was no evidence of lost sales or confusion among travel agents and advertisers. The court ultimately found no persuasive evidence of actual confusion between the two companies’ directories.
Convergent marketing channels can increase confusion. The court determined that while OAG and Ashbyweb's distribution channels do not converge, their methods to attract advertisers are similar, both utilizing direct mail. Ashbyweb's promotional materials exclusively use “THE TRAVEL PLANNER” without identifying the publisher, although their cover letters clarify the target audience. Both companies produce travel guides for travel agents and frequent flyers, with the court noting that consumers typically exercise more care when purchasing expensive items. OAG’s ad costs range from $2,400 to $16,000 annually, indicating a high standard of accuracy in advertising, which minimizes confusion among advertisers. However, travel establishments, which often incur nominal or no costs for listings, exercise less care, leading to inaccuracies that may support a finding of infringement, despite the court’s view that the number of misdirected listings is minimal evidence of confusion.
Regarding Ashbyweb's intent, courts generally presume intent to deceive when a similar mark is used knowingly. The district court found insufficient evidence to prove that Ashbyweb knowingly adopted a similar name. OAG argued the burden of proof was incorrectly placed on them regarding Ashbyweb's intent. However, the court clarified that intent to deceive is not a necessary element for proving trademark infringement. A plaintiff can succeed without proving intent, but if intent is shown, it may imply a higher likelihood of public deception.
A strong likelihood of business expansion between competing parties generally supports a finding of trademark infringement. However, the court determined there was no such likelihood of expansion in this case, noting OAG's minimal distribution in Europe and Ashbyweb's lack of current or planned marketing in the U.S. OAG argued against the district court's finding, citing its London office and international editions, but the focus remained on whether the parties would compete with similar products in the same market. The court concluded that OAG did not demonstrate a strong likelihood of competing in either scenario presented.
In evaluating the likelihood of confusion based on the eight Sleekcraft factors, the district court found five factors favored Ashbyweb, including the strength of the mark and proximity of markets, while only one factor favored OAG. The court recognized confusion between OAG’s mark “OAG TRAVEL PLANNER” and Ashbyweb’s standalone use of “THE TRAVEL PLANNER,” but not with “THE TRAVEL PLANNER USA” or “USA TRAVEL PLANNER.” Consequently, the court enjoined Ashbyweb from using “THE TRAVEL PLANNER” alone due to infringement.
While the district court's application of the Sleekcraft factors raised questions, the standard of review emphasized deference to the court's factual findings unless a clear error was evident. The overall factual findings supported the conclusion of a likelihood of confusion. Additionally, Ashbyweb contested the admission of unauthenticated and hearsay evidence regarding consumer association with “OAG Travel Planner.” This evidence was deemed relevant for assessing whether the term “Travel Planner” had acquired secondary meaning. Ashbyweb conceded that any error in admitting this evidence was harmless if OAG was not required to prove secondary meaning for the term.
The district court, upon remand, was directed to evaluate consumer perceptions regarding the term “Travel Planner” for trademark protection, but this was relevant only because OAG initially disclaimed the term outside of its composite mark, “OAG TRAVEL PLANNER.” OAG has since retracted this disclaimer, and the composite mark is deemed an arbitrary mark eligible for trademark protection without needing to establish secondary meaning. The alleged error regarding this issue was considered harmless.
Regarding the dismissal of Ashbyweb's counterclaim under 15 U.S.C. § 1120, Ashbyweb contends that the district court wrongly dismissed its claim as time-barred, which accused OAG of obtaining trademark registration for “OAG TRAVEL PLANNER” through fraud by not disclosing the generic use of “travel planner” in the industry. The Lanham Act holds individuals civilly liable for false trademark registration claims. The statute of limitations, taken from Oregon law, is two years. OAG registered the trademark on September 1, 1987, and subsequently filed a motion to amend its complaint on November 23, 1987, which was delayed until February 7, 1990, when it was granted. Ashbyweb's counterclaim was filed on February 16, 1990.
Ashbyweb argued that its claim arose only when it was compelled to defend against OAG's infringement allegations, suggesting that the statute of limitations did not start until the court's amendment ruling. However, this argument was rejected; any party with a legitimate interest in contesting fraudulent trademark registrations can file a claim. Ashbyweb could have initiated an action when OAG registered the mark in 1987, but instead, it waited over two years, leading to the proper dismissal of its counterclaim as time-barred by the district court.
Ashbyweb contends that the jury's verdict in favor of OAG regarding Ashbyweb's counterclaim for intentional interference with business relations should be overturned due to improper statements made by OAG’s counsel during closing arguments. OAG’s counsel claimed Ashbyweb knowingly used the term “Travel Planner” without permission, and despite Ashbyweb's objections, maintained his assertion inappropriately. The court intervened, emphasizing that counsel's statements are not evidence and instructing the jury to focus on the facts and law presented. Although the argument was deemed improper, the court's immediate corrective instruction mitigated any prejudice, thus no reversal is warranted.
Additionally, Ashbyweb challenges a $5,804.78 sanction imposed by the district court for failing to comply with an order regarding a settlement conference, which required attendance by a party with settlement authority. Ashbyweb's attorney attended alone without authority, violating the order. The district court's decision to impose sanctions is supported by relevant case law and was not an abuse of discretion. Ashbyweb further argued that OAG’s Vice President was not required to attend the conference and that attorney fees for responding to Ashbyweb's motion for reconsideration should not have been awarded. Both arguments were rejected, as the Vice President's attendance was prudent and the incurred costs were a direct result of Ashbyweb's noncompliance, justifying the sanctions under the court's broad discretion. The ruling is affirmed.
