Opinion
Page 1014w
928 F.Supp. 1014w (C.D.Cal. 1996) STERLING BANK, a California corporation, Plaintiff, v. STERLING BANK AND TRUST, FSB, a Federal Savings Bank; and Does 1-50, inclusive, Defendants. No. CV-94-8378-KMW (MCx). United States District Court, C.D. California. May 14, 1996Order Vacating 1996 WL 500946.
Editorial Note:
This opinion is published in the advance sheet at this citation, Sterling Bank v. Sterling Bank and Trust FSB 928 F.Supp. 1014-1022, was withdrawn from the bound volume because it was ordered vacated pursuant to settlement July 5, 1996. [Copyrighted Material Omitted] Jill Pietrini, Mark Lee, Manatt, Phelps & Phillips, Los Angeles, CA, for Sterling Bank.
George E. Schulman, Danning, Gill, Diamond, Kollitz, LLP, Los Angeles, CA, Dale B. Goldfarb, Edward W. Lukas, Jr., Harrington, Foxx, Dubrow & Canter, Los Angeles, CA, for Sterling Bank and Trust.
ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING DEFENDANT'S FIFTH AND SIXTH AFFIRMATIVE DEFENSES
WARDLAW, District Judge.
The Court has considered Plaintiff's Motion for Partial Summary Judgment Regarding Defendant's Fifth and Sixth Affirmative Defenses, and has read and reviewed all the material filed by the parties in connection with the Motion. Based upon all briefs, exhibits, declarations, and other evidence submitted by the parties, the oral argument of counsel, as well as all files and records in this case, the Court hereby grants Plaintiff's motion in its entirety.
I. BACKGROUND
This is an action for common law service mark infringement, false designation of origin, and unfair competition. Plaintiff Sterling Bank ("Plaintiff") is a bank operating under a state charter issued by the State of California. Plaintiff's business is located exclusively in the Los Angeles County area with offices in Los Angeles, Encino, Burbank, Glendale, and Beverly Hills. Since 1980, Plaintiff has used the service mark "Sterling Bank" in connection with its provision of a broad range of banking services in California. Complaint pp 3, 9, 10. Plaintiff does not allege that it registered its mark with any federal or state agency.
Defendant Sterling Bank & Trust, FSB ("Defendant") is a federal savings and loan association which also offers a broad range of banking and financial services. Defendant's principal place of business is Michigan. Complaint ¶ 4. Defendant currently has 19 branches, two of which are located in California--one in Newport Beach and the other in San Francisco. Defendant opened its Newport Beach branch in July 1993 and opened its San Francisco branch in early 1994. Memorandum at 4.
In July 1984, Defendant began its operation in Michigan under the name of Sterling Savings & Loan Association. At that time, Defendant began using a service mark which consisted of the words "Sterling savings & loan," with a stylized eagle between the word "Sterling" and the words "savings & loan." Memorandum at 3; Opposition at 3.
In 1988, Defendant changed its name from Sterling Savings & Loan Association to Sterling Savings Bank. Defendant continued to use as its service mark the word "Sterling" in combination with the eagle design. In place of the words "& loan," Defendant placed the word "Bank." On May 31, 1988, Defendant filed a federal trademark registration application to register its "Sterling savings bank" mark with the United States Patent and Trademark Office ("PTO"), disclaiming the words appearing below the eagle design. On March 14, 1989, the PTO granted Defendant's application and issued Registration No. 1,530,060 for the "Sterling savings bank" mark ("the registered mark"). Opposition at 3-4.
In September of 1992, Defendant began offering trust services and changed its name to Sterling Bank and Trust. In September 1993, Defendant converted to a federally chartered savings bank under the name Sterling Bank and Trust, FSB. Defendant continues to offer banking services, including trust services, and now uses a service mark which includes the word "Sterling" and the eagle design, under which appears the words "bank & trust." Opposition at 4. Plaintiff claims that Defendant no longer uses the registered mark. Memorandum at 4. Defendant, however, asserts that it continues to use both the "savings bank" term and the "bank & trust" term with its Sterling/eagle & design. Opposition at 4-5.
On November 4, 1994, Defendant filed a declaration with the PTO attesting to the fact that its registered mark had been in use in interstate commerce for five consecutive years from the date of registration and enclosed a sample of its registered mark. Upon filing the Declaration, the registration was given incontestable status by the PTO. Opposition at 5.
On December 14, 1994, Plaintiff filed a Complaint alleging causes of action against Defendant for 1) violation of the Lanham Act; 2) common law trademark infringement; 3) unfair competition; and 4) declaratory relief. Plaintiff asserts that Defendants' use of the name "Sterling Bank & Trust" constitutes trademark infringement, and so resembles Plaintiff's mark as to cause confusion or mistake, or to deceive members of the public with respect to the source of Defendant's services or with respect to Plaintiff's affiliation therewith. Complaint ¶ 19-21.
On January 3, 1995, Plaintiff filed a Motion for Preliminary Injunction. This motion was denied on February 6, 1995.
On February 2, 1995, Defendant filed its Answer to Plaintiff's Complaint wherein Defendant admitted and denied certain allegations set forth in the Complaint and asserted several affirmative defenses. Defendant's fifth affirmative defense alleges as follows:
[Defendant] has an incontestable federal service mark, registration number 1,530,060, in the name "Sterling." [Defendant]'s incontestable service mark gives it the superior right to use its service mark in the provision of financial services pursuant to the Lanham Act, 15 U.S.C. § 11 1051 (sic), et seq. Answer ¶ 51. Defendant's sixth affirmative defense alleges as follows:
[Defendant] has the right to use its incontestable federal service mark throughout the United States, including California, except to the extent, if any, that Plaintiff can establish that it is entitled to exercise the limited geographic use exception set forth in 15 U.S.C. §§ 1065 and 1125.
Answer ¶ 52.
On April 8, 1996, Plaintiff filed a motion for partial summary judgment regarding Defendant's fifth and sixth affirmative defenses. This motion is now before the Court.
II. ANALYSIS
A. Summary Judgment Standard.
It is the burden of the party who moves for summary judgment to establish that there is "no genuine issue of material fact, and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); British Airways Bd. v. Boeing Co., 585 F.2d 946, 951 (9th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1790, 60 L.Ed.2d 241 (1979). If the moving party has the burden of proof at trial (the plaintiff on a claim for relief, or the defendant on an affirmative defense), the moving party must make a showing sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party. Calderone v. United States, 799 F.2d 254, 259 (6th Cir.1986) (quoting W. Schwarzer, Summary Judgment Under the Federal Rules: Defining Genuine Issues of Material Fact, 99 F.R.D. 465, 487-88 (1984)). This means that, if the moving party has the burden of proof at trial, that party must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in that party's favor. Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir.1986). Furthermore, the court must view the evidence presented to establish these elements "through the prism of the substantive evidentiary burden." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986).
If the opponent has the burden of proof at trial, then the moving party has no burden to negate the opponent's claim. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). In other words, the moving party does not have the burden to produce any evidence showing the absence of a genuine issue of material fact. Id. at 325, 106 S.Ct. at 2554. "Instead, ... the burden on the moving party may be discharged by 'showing'--that is, pointing out to the district court--that there is an absence of evidence to support the nonmoving party's case." Id.
Once the moving party satisfies this initial burden, "an adverse party may not rest upon the mere allegations or denials of the adverse party's pleadings ... [T]he adverse party's response ... must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e) (emphasis added). A "genuine issue" of material fact exists only when the nonmoving party makes a sufficient showing to establish an essential element to that party's case, and on which that party would bear the burden of proof at trial. Celotex, 477 U.S. at 322-23, 106 S.Ct. at 2552-53. "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which a reasonable jury could reasonably find for plaintiff." Anderson, 477 U.S. at 252, 106 S.Ct. at 2512. The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor. Id. at 248, 106 S.Ct. at 2510; Griffeth v. Utah Power & Light Co., 226 F.2d 661, 669 (9th Cir.1955).
Partial summary judgment can be used by the Court to dispose of affirmative defenses. Vernon v. Heckler, 811 F.2d 1274, 1278 (9th Cir.1987); Koch Industries, Inc. v. United Gas Pipe Line Company, 700 F.Supp. 865, 867 (M.D.La.1988). The effect of a grant of partial summary judgment in this situation is that the affirmative defenses are stricken. Koch Industries, 700 F.Supp. at 867.
B. Plaintiff Is Entitled To Partial Summary Judgment As To Defendant's Fifth and Sixth Affirmative Defenses.
In its fifth and sixth affirmative defenses, Defendant attempts to defeat Plaintiff's claims based upon its registered mark, which consists of a stylized eagle between the word "Sterling" and the words "savings bank."
Plaintiff seeks partial summary judgment as to Defendant's fifth and sixth affirmative defenses. According to Plaintiff, Defendant cannot tack on its prior use and registration of "Sterling savings bank" to "Sterling bank & trust" because the marks are not legally equivalent. Plaintiff further argues that Defendant has abandoned its "Sterling savings bank" mark and therefore cannot rely upon its registration of that mark as a defense in this action.
In the Court's opinion, Plaintiff has established that, as a matter of law, Defendant has abandoned its use of the registered mark. Moreover, Plaintiff has demonstrated that, as a matter of law, Defendant's registered mark and its "Sterling bank & trust" mark are not legally equivalent. Therefore, Defendant may not avoid the legal consequences of abandonment in this case by tacking its prior use of the registered mark onto its current use of the "Sterling bank & trust" mark. Nor can Defendant rely on its "Sterling bank & trust" mark in connection with its fifth and sixth affirmative defenses. Accordingly, Defendant may not rely on its registered mark as a defense in this action, and Plaintiff is entitled to partial summary judgment as to Defendant's fifth and sixth affirmative defenses.
a. Defendant Has Abandoned Its Registered "Sterling savings bank" Mark As A Matter Of Law.
Under the Lanham Act, 15 U.S.C. § 1127, a mark is deemed to be "abandoned" when "its use has been discontinued with intent not to resume such use." 15 U.S.C. § 1127. Because a trademark owner's certificate of registration is prima facie evidence of the validity of the registration and continued use of the registered mark, the burden of proof is placed upon those who seek cancellation. Cerveceria Centroamericana, S.A., v. Cerveceria India, Inc., 892 F.2d 1021 (Fed.Cir.1989). However, non-use of a mark for three consecutive years is prima facie evidence of abandonment. 15 U.S.C. § 1127. Even an incontestable mark may be challenged as abandoned. 15 U.S.C. § 1115(b)(2).
Use of a mark means "bona fide use of such mark made in the ordinary course of trade, and not merely to reserve a right in a mark." 15 U.S.C. § 1127. To prove bona fide trademark usage, the trademark owner must demonstrate that its use of the mark has been deliberate and continuous, not sporadic, casual or transitory. Major League Baseball Properties Inc. v. Sed Non Olet Denarius Ltd., 817 F.Supp. 1103, 1129 (D.C.N.Y.1993), vacated pursuant to settlement, 859 F.Supp. 80 (S.D.N.Y.1994); see also L.A. Gear, Inc. v. E.S. Originals, Inc., 859 F.Supp. 1294, 1299 (C.D.Cal.1994) (trademarks must be used continuously in order to remain valid and enforceable). Minor activities regarding a trademark, such as non-commercial uses, are not sufficient to forestall abandonment. Silverman v. C.B.S. Inc., 870 F.2d 40, 47-48 (2d Cir.1989), cert. denied 492 U.S. 907, 109 S.Ct. 3219, 106 L.Ed.2d 569 (1989). "Such uses do not sufficiently rekindle the public's identification of the mark with the proprietor, which is the essential condition for trademark protection, nor do they establish an intent to resume commercial use." Id. at 48.
Prima facie abandonment "may be rebutted by showing valid reasons for nonuse or by proving lack of intent to abandon." Star-Kist Foods, Inc. v. P.J. Rhodes & Co., 769 F.2d 1393, 1396 (9th Cir.1985). A proprietor who temporarily suspends use of a mark can rebut the presumption of abandonment by showing reasonable grounds for the suspension and plans to resume use in the reasonably foreseeable future when the conditions requiring suspension abate. Silverman, 870 F.2d at 47. But a proprietor may not protect a mark if he discontinues using it for an extended period and has no plans to use or permit its use in the reasonably foreseeable future. Id.
In the Court's opinion, Plaintiff has established that as a matter of law Defendant has discontinued use off its registered mark and that Defendant has no intention of resuming such use in the future. Preliminarily, the Court notes that Plaintiff is not entitled to a presumption of abandonment. The undisputed evidence indicates that Defendant continued to use its registered mark within three years of the filing of this action. Nonetheless, Plaintiff has carried its burden under the Lanham Act, 15 U.S.C. § 1127, and is entitled to partial summary judgment on Defendant's fifth and sixth affirmative defenses.
(1). Undisputed Evidence That Defendant Discontinued Its Use Of The Registered Mark.
Plaintiff contends that the undisputed evidence establishes that Defendant has not made commercial use of its registered "Sterling savings bank" mark since 1992. According to Plaintiff, Defendant does not use its registered mark on any of its exterior signs, advertisements, brochures, credit card applications, or letterhead. Memorandum at 13. Plaintiff admits that Defendant has some "lingering materials" bearing the registered mark, but asserts that such "residual use" is insufficient to prevent a finding of abandonment. Memorandum at 14.
Defendant counters that it has continued to use the registered "Sterling savings bank" mark in the ordinary course of its business. Defendant asserts that the mark appears on at least one branch office exterior sign, on brochures, and on ATM cards currently issued to bank customers. Opposition at 9-10. Moreover, Defendant claims that its filing of a Declaration for Federal Registration with the PTO less than a year and a half ago in order to obtain incontestable status for its mark is itself sufficient to defeat Plaintiff's abandonment claim. Opposition at 10.
Examination of the undisputed evidence reveals that Defendant's only continuing uses of the registered "Sterling savings bank" are as follows: 1) The registered mark appears on the foyer door of one of Defendant's Michigan branches; 2) The registered mark appears on one rate board located at the same Michigan branch; 3) The registered mark appears on a customer parking sign at the same Michigan branch; 4) The registered mark was mistakenly placed on certain of Defendant's ATM cards; and 5) The registered mark appears on discharge papers used by the County Recorder's Office to release liens held in the name of Sterling Savings Bank. Pietrini Decl.Exhs. 2, 4; Lukas Decl.Exhs. 5, 12, 13; Stewart Decl.Exh. A.
In the Court's opinion, Defendant's uses of the registered mark are not "bona fide uses in the ordinary course of trade." Defendant's uses are neither deliberate nor continuous. Defendant does not use its registered mark in any of its advertisements, does not use its registered mark in connection with its daily operations, and, in fact, no longer holds itself out to the public as Sterling Savings Bank. Furthermore, Defendant's filing of a declaration with the PTO is not a use, and may show no more than "an impermissible attempt to preserve the mark for an unknown future use." Shelby v. Ford Motor Co., 27 U.S.P.Q.2d 1452, 1454, 1993 WL 379581 (C.D.Cal.1993), amended at 28 U.S.P.Q.2d 1471, 1993 WL 528389 (C.D.Cal.1993). At most, the evidence indicates that Defendant has not yet removed the registered mark from all of its offices and materials. Defendant's continuing use of the registered mark is de minimis, does not constitute a bona fide use in the ordinary course of trade, and does not prevent a finding of abandonment. See Oshman's Sporting Goods Inc. v. Highland Import Corp., 16 U.S.P.Q.2d 1395, 1397 (T.T.A.B.1990).
(2). Undisputed Evidence That Defendant Does Not Intend To Use Its Registered Mark In The Future.
Plaintiff further asserts that the undisputed evidence indicates that Defendant does not intend to resume its use of the registered "Sterling savings bank" mark in the future. Plaintiff cites the testimony of Defendant's corporate officers wherein they admit that Defendant has ceased using the registered mark in favor of the "Sterling bank and trust" and that Defendant does not plan to revert to its old mark at any future date. Memorandum at 15, Pietrini Decl., Exhs. 1, 2, 4.
Defendant, however, explains that the deposition excerpts cited by Plaintiff merely indicate that Defendant was no longer generally using the name Sterling Savings Bank, but do not address their intentions with respect to the registered "Sterling savings bank" mark. Opposition at 9. Defendant also maintains that it has no intention of completely removing the registered mark from its premises and products.
Defendant's arguments fail. During his deposition, Defendant's Chairman of the Board, Richard Zamojski, testified that as far as he was aware, "there's no intent to return to the use of the mark Sterling Savings Bank." Pietrini Decl.Exh. 1, p. 71. Similarly, Defendant's President, Anthony Albanese testified that it was "fair to say that Sterling Bank and Trust has no intention to resume the use of the Sterling Savings Bank name." Pietrini Decl. Exh. 2, p. 55. Defendant's Director of Marketing, Anne Marie Redoutey, similarly stated that, as far as she knew, "there's no intent to resume the use of the name Sterling Savings Bank." Pietrini Decl.; Exh. 4, p. 23. In light of this evidence, Defendant's unsupported denial of intent not to resume is insufficient. Nor does Defendant's assertion that it does not intend to completely remove the mark from its operations suffice. See AmBrit Inc. v. Kraft, Inc., 805 F.2d 974, 994 (11th Cir.1986, cert. denied 481 U.S. 1041, 107 S.Ct. 1983, 95 L.Ed.2d 822) (1987) (proper inquiry is whether registrant intends to resume commercial use of the mark, not whether he intended to abandon the mark).
In sum, the undisputed evidence reveals that Defendant is no longer using its registered mark and has no intention of resuming use of the mark in the reasonably foreseeable future. Thus, Plaintiff has established that Defendant abandoned the registered mark as a matter of law.
b. Defendant's Registered "Sterling savings bank" Mark And Its "Sterling bank and trust" Mark Are Not Legally Equivalent.
A trademark owner who changes the form of his mark may retain the benefit of his use and registration of the earlier form, without abandonment, if the new and old forms create the same, continuing commercial impression. Ilco Corporation v. Ideal Security Hardware Corp., 527 F.2d 1221, 1224 (C.C.P.A.1976). The previously used mark must be the legal equivalent of the mark in question or indistinguishable therefrom, and the consumer should consider both as the same mark. Van Dyne-Crotty Inc. v. Wear-Guard Corp., 926 F.2d 1156, 1159 (Fed.Cir.1990); Pro-Cuts v. Schilz Enterprises, Inc., 27 U.S.P.Q.2d 1224, 1226-27 (T.T.A.B.1993). For purposes of tacking, even if the two marks are confusingly similar, they still may not be legal equivalents. Van Dyne-Crotty, 926 F.2d at 1159. Tacking in general should be condoned only in rare circumstances, and it would be clearly contrary to well-established principles of trademark law to sanction the tacking of a mark with a narrow commercial impression onto one with a broader commercial impression. Id. at 1160. The question of whether two marks are legal equivalents is one of law. Id. at 1159.
Plaintiff argues that Defendant's registered "Sterling savings bank" mark and its "Sterling bank & trust" mark do not create the same commercial impression and are not legal equivalents. Defendant, however, insists that the registered mark and the newer "Sterling bank & trust" mark are legally indistinguishable because both contain the dominant word "Sterling" in combination with a distinctive eagle design, with disclaimed non-trademark terms in smaller type style below. Opposition at 7.
Applying well established principles of trademark law to the marks at issue, the Court concludes that Defendant's registered mark and its "Sterling bank & trust" mark are not legally equivalent. Defendant's "Sterling bank & trust" mark imparts more information to the consumer than the registered mark. As stated in its opposition, Defendant began using its new mark after it acquired a trust department and began offering trust services. Opposition at 4. The new mark was clearly intended to inform consumers of this change.
Moreover, Defendant's emphasis on the dominant features of both marks and its attempt to downplay the significance of the disclaimed words are improper. When determining whether or not two marks create the same commercial impression or are the legal equivalent of one another, the marks must be viewed and compared in their entireties. Van Dyne-Crotty, 926 F.2d at 1159. The filing of a disclaimer with the PTO does not remove the disclaimed matter from the purview of determination of likelihood of confusion. In re Shell Oil Co., 992 F.2d 1204, 1206 (Fed.Cir.1993); In re MCI Communications Corp., 21 U.S.P.Q.2d 1534, 1537 (T.T.A.B.1991). Rather, "the purpose of a disclaimer is to show that the applicant is not making claim to the exclusive appropriation of such matter except in the precise relation and association in which it appears in the drawing and description." MCI at 1537. Reviewing Defendant's marks in their entirety, as this Court must do, Van Dyne-Crotty at 1160, their differences are readily apparent. Defendant's new mark projects a broader commercial impression than the registered mark, and the Court believes that Defendant's customers would distinguish between the two.
Finally, the Court notes that the fact that Defendant's two marks incorporate the same eagle design does not mean they are legally equivalent. Although the Court recognizes that Defendant's marks are visually similar, they are distinguishable when spoken. More importantly, Defendant's new mark is more informative and hence legally different from the registered mark. See American Paging, Inc. v. American Mobilphone, Inc., 13 U.S.P.Q.2d 2036, 2039 (T.T.A.B.1989), aff'd without opinion 17 U.S.P.Q.2d 1726 (Fed.Cir.1990) (the mark "American Mobilphone Paging" and design is more informative than and hence legally different from "American Mobilphone" and design). Defendant's marks are therefore distinct and tacking is prohibited. Moreover, because the registered mark and the new mark are not equivalent, Defendant may not rely on the new mark in connection with the fifth and sixth affirmative defenses. Of course, to the extent it may be relevant to other issues in this case, Defendant may rely on its unregistered mark purposes unrelated the the fifth and sixth affirmative defenses.
During oral argument, counsel for Defendant insisted that Defendant had not abandoned its registered mark because it has continuously used the word "Sterling" in combination with the eagle design. This argument is without merit. The proper inquiry relates to Defendant's use of the registered mark, not portions thereof. As discussed, Defendant abandoned its mark as registered in favor of a new mark which creates a different commercial impression. The fact that the new mark retains certain aspects of the registered mark is insufficient to forestall abandonment.
III. CONCLUSION
For the reasons discussed above, the Court finds that Plaintiff has established that, as a matter of law, Defendant has abandoned its use of the registered mark. The Court further concludes that Plaintiff has demonstrated that Defendant's registered mark and its "Sterling bank & trust" mark are not legally equivalent. Therefore, Defendant may not avoid abandonment by tacking its prior use of the registered mark onto its current use of the "Sterling bank & trust" mark. Accordingly, Defendant may not rely on its registered mark as a defense in this action.
Because Defendant has abandoned its registered mark, the fifth and sixth affirmative defenses fail as a matter of law. The Court's finding of abandonment relates solely to the continuing vitality of Defendant's registered mark, consisting of the words "Sterling savings bank" and eagle design. This ruling does not in any way limit Defendant's ability to rely on its unregistered mark containing the words "Sterling bank and trust" and utilizing the eagle design in this action or any other.
Accordingly, Plaintiff's motion for partial summary judgment regarding Defendant's fifth and sixth affirmative defenses must be granted.
In its opposition, Defendant raises certain arguments which are irrelevant to the instant motion. Specifically, Defendant argues that a finding that the its two marks are legally distinct precludes a finding of trademark infringement and that Plaintiff has failed to proffer evidence of actual confusion in this case. Defendant's first argument is without legal merit. See Van Dyne-Crotty, 926 F.2d at 1159. The second argument is unrelated to any issue presently before the Court.
IT IS SO ORDERED.