Yellow Cab Company of Sacramento, a California Corporation v. Yellow Cab of Elk Grove, Inc., a California Corporation Michael P. Steiner, an Individual

Citations: 419 F.3d 925; 75 U.S.P.Q. 2d (BNA) 1758; 2005 U.S. App. LEXIS 16598Docket: 03-16218

Court: Court of Appeals for the Ninth Circuit; August 9, 2005; Federal Appellate Court

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In the case of Yellow Cab Company of Sacramento v. Yellow Cab of Elk Grove, the Ninth Circuit Court of Appeals reviewed a district court's summary judgment favoring Yellow Cab of Elk Grove in a trademark infringement dispute under the Lanham Act. The appellate court identified two critical issues: whether the term "Yellow Cab" had become generic due to extensive market use, and if it was descriptive, whether it had acquired secondary meaning to warrant trademark protection. The court reversed the district court's judgment, stating that the burden of proof for the validity and protectability of an unregistered trademark lies with the party asserting its protection.

Historically, Yellow Cab of Sacramento had been operating in the Sacramento area since 1922, managing around 90 cabs and holding significant business accounts, including contracts with major hotels. The conflict arose when Michael Steiner established a competing taxi service in Elk Grove under the name "Yellow Cab of Elk Grove." Yellow Cab of Sacramento alleged trademark violations among other claims, but the district court concluded that "yellow cab" was a generic term and, alternatively, that Sacramento failed to prove secondary meaning.

The appellate review emphasized the classification of trademarks into five categories: generic, descriptive, suggestive, arbitrary, and fanciful, with only the latter three being inherently distinctive and automatically entitled to protection. Descriptive marks can gain protection if they establish secondary meaning, while generic marks cannot be protected as they refer to a general class of products rather than a specific source.

Yellow Cab of Sacramento seeks trademark protection for the term "yellow cab," which is not federally registered. Yellow Cab of Elk Grove contends that "yellow cab" is generic or descriptive without acquired secondary meaning, thus ineligible for trademark protection. The district court appropriately placed the burden of proof on Yellow Cab of Sacramento to demonstrate that the term is not generic. Generally, if a mark is federally registered, it is presumed valid, and the defendant bears the burden of proving its genericness. However, for unregistered marks, the plaintiff must prove the mark is non-generic when the defendant asserts it is generic. Yellow Cab of Sacramento's assertion that the burden should shift only after the defendant proves the term's genericness prior to the plaintiff's use is unsupported by trademark law. The plaintiff holds the ultimate burden of proof in trademark infringement actions, which entails proving the mark's validity since there can be no infringement of an invalid mark. Federal registration provides a presumption of validity, relieving the plaintiff of the initial burden of proof in infringement cases. Nonetheless, this presumption does not apply to unregistered marks, leaving the plaintiff responsible for establishing the mark's validity. Generic terms lack distinctiveness and are not eligible for trademark protection. A registered mark can also become generic over time, leading to potential cancellation. The determination of genericness focuses on the date the alleged infringer entered the market with the term. Therefore, Yellow Cab of Sacramento's view on burden allocation contradicts established trademark theory and is rejected.

The Second Circuit has established an exception regarding the burden of proof in cases of genericness, which Yellow Cab of Sacramento references. Specifically, it is typically the defendant's responsibility to prove that a term has become generic. However, this exception is applicable only to protect original product developers, as demonstrated in Murphy Door Bed Co. v. Interior Sleep Systems, Inc., where the term "Murphy bed" was defended by its originator. In the case of "yellow cab," the term was coined by John Hertz in Chicago in 1915, prior to its usage in Sacramento, indicating that Yellow Cab of Sacramento's claim is derivative and does not qualify for the exception.

The district court correctly assigned the burden of proof to the plaintiff but mistakenly concluded that no genuine material facts existed regarding the term's genericness. Whether a term is generic is fundamentally a factual question, evaluated through consumer perception—specifically if consumers associate the term with a specific producer's goods or the goods themselves. 

The "who-are-you/what-are-you" test is employed to distinguish between a mark and a generic term. For instance, in a previous case, "Filipino yellow pages" was found to be generic because multiple companies could answer "What are you?" with the same response. Conversely, in this instance, the term "yellow cab" seems to respond to "who are you?" rather than "what are you?" because companies like Checker Cab Co. or City Cab Co. would not identify themselves as "yellow cab" but rather as taxicab companies. This evidence suggests that "yellow cab" is not generic, thus creating a genuine issue of material fact that precludes summary judgment on this matter.

The district court alternatively concluded that if "yellow cab" is not a generic term, Yellow Cab of Sacramento failed to demonstrate secondary meaning. However, Yellow Cab of Sacramento provided evidence that raises a genuine issue of material fact regarding this claim. The determination of secondary meaning is factual and involves assessing whether actual buyers associate the trademark with the producer, the extent and nature of advertising, the duration and manner of use, and whether the trademark use has been exclusive. Yellow Cab of Sacramento submitted various declarations concerning its history, customer confusion, and advertising efforts, which, when viewed favorably, suggest that the descriptive mark may have acquired secondary meaning. Comparatively, the evidence presented by Yellow Cab of Elk Grove was weaker. Consequently, summary judgment on this matter was deemed inappropriate. The district court correctly allocated the burden of proof, but due to the genuine issues of material fact raised by the plaintiff, the summary judgment was reversed, and each party will bear its own costs on appeal. The case is reversed and remanded for further proceedings.

A genuine issue of material fact exists regarding the case, making it unnecessary to address the appellant's claim about the district court's focus on national market evidence rather than local market evidence. On remand, the district court must consider the territorial scope of common law trademark rights to determine relevant evidence. However, the defendant's assertion that the term "yellow cab" in the New York City metropolitan area conclusively impacts the distinctiveness of a mark used by a small business in Sacramento, California, is rejected. New York City's regulation, which mandates that licensed medallion cabs be painted yellow to differentiate them from "for hire vehicles" and "gypsy" cabs, is deemed irrelevant to the trademark issues at hand, particularly concerning the significance of the voluntary use of marks in different geographic locations.