Opinion
Civil Action No. 3:02-CV-2249-BF.
March 4, 2005
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This case came on for a trial before the United States Magistrate Judge. After considering the stipulations of the parties, the testimony and credibility of the witnesses, the exhibits, and the arguments of counsel, the Court makes the following findings of fact and conclusions of law.
STIPULATED FACTS
In open court, the parties stipulated to the following facts:
1. Tiddies, Inc., ("Plaintiff") is a Texas corporation with its principal place of business and registered agent in Houston, Texas.
2. Kevin B. Brown ("Defendant") is an individual residing in Harris County, Texas and does business under the assumed name "Tiddies."
3. On December 7, 1976, the U.S. Patent and Trademark Office ("PTO") granted U.S. Trademark Registration No. 1,053,971 for the term TIDDIES in International Class 25 (for sandals) and International Class 28 (for belly boards for aquatic flotation) to Tiddies Company, a partnership formed by Defendant and his brother, Dwight C. Brown.
4. In July 1977, Defendant, Dwight C. Brown, Margo Hoague (formerly Margo Brown), and Jo Ellen Brown incorporated Tiddies, Inc., the Plaintiff in this case.
5. In 1980, the Defendant sold his interest in the Plaintiff to his partners.
6. On November 23, 1982, the Defendant and Dwight C. Brown assigned, nunc pro tunc, effective July 1, 1977, their entire right, title, and interest in the TIDDIES trademark no. 1,053,971 to the Plaintiff together with the goodwill of the business symbolized by the TIDDIES trademark and the trademark registration thereof. The assignment was recorded with the PTO at reel/frame 0429/052.
7. Plaintiff was granted U.S. Trademark Registration No. 1,355,417 on August 20, 1985 for the TIDDIES trademark in International Class 21 (insulating sleeves for beverage containers) and International Class 25 (sandals, T-shirts and visors).
8. Pursuant to 35 U.S.C. §§ 8, 15, a combined affidavit of use and incontestability of the TIDDIES trademark was timely filed with the PTO. The affidavit was accepted and acknowledged by the PTO on May 15, 1992.
9. In 1987, Defendant began manufacturing and selling sandals under the trademarks UMAN and PLANOS.
10. Plaintiff's corporate charter was forfeited by the Texas Secretary of State on February 13, 1996 pursuant to section 171.309, Texas Tax Code Annotated, for failure to file a corporate franchise tax return and/or pay state franchise taxes.
11. Plaintiff's corporate charter was reinstated by the Texas Secretary of State on March 30, 2001.
12. As early as October 1996, or as late as 1998, Defendant attempted to license the use of the TIDDIES trademark from Plaintiff and/or her sister.
13. At least as early as August 1999 Defendant began using the trademark TIDDIES in interstate and interstate commerce in connection with the sale of sandals, soft foam can coolers, imprinted apparel, pressure sensitive vinyl stickers reflecting logo, T-shirts, visors, and replacement straps for sandals.
14. In September 1999 Defendant initiated a cancellation proceeding (Cancellation No. 29,451) before the Trademark Trial and Appeal Board ("Board") of the PTO to cancel Plaintiff's TIDDIES trademark registration alleging that Plaintiff had abandoned the use of its TIDDIES trademark with the intent not to resume use of the trademark.
15. On March 28, 2002, the Board granted Plaintiff's motion for summary judgment and dismissed with prejudice Defendant's petition to cancel Plaintiff's TIDDIES trademark registration.
16. Defendant did not appeal the decision of the Board dismissing with prejudice his petition to cancel Plaintiff's TIDDIES trademark registration.
17. The TIDDIES trademark is a strong, arbitrary mark in relation to insulating sleeves for beverage containers, sandals, T-shirts, and visors, and related goods.
18. The spelling of Defendant's TIDDIES trademark is identical to the spelling of Plaintiff's TIDDIES trademark.
19. Defendant knew of Plaintiff's prior use of the TIDDIES trademark and federal trademark registration thereof at the time he adopted and began using the TIDDIES trademark.
20. Defendant's gross sales of products under the TIDDIES trademark for the period September 1999 through September 4, 2004 total at least $1,024,224.40.
21. The visual representation of Defendant's TIDDIES trademark is identical or substantially similar to Plaintiff's TIDDIES trademark.
FINDINGS OF FACT
The Court finds the following facts after considering the evidence:
22. Plaintiff did not discontinue use of the TIDDIES trademark for a period of three (3) consecutive years with no intent to resume use of the TIDDIES trademark.
23. Plaintiff's TIDDIES trademark registration is in full force and effect.
24. Plaintiff is the senior user of the TIDDIES trademark.
25. Defendant's products sold under the TIDDIES trademark are identical or substantially similar to Plaintiff's products sold under its federally registered TIDDIES trademark.
26. Defendant promotes and sells products under the TIDDIES trademark to the same or similar class or type of purchasers as Plaintiff.
27. Defendant is aware of actual instances of confusion between his use of the TIDDIES trademark and Plaintiff's federally registered TIDDIES trademark.
28. Defendant was under the mistaken belief that Plaintiff's TIDDIES trademark had been abandoned until November 16, 1999, when he received a letter from Plaintiff's attorney putting him on notice the trademark was still valid.
29. After Defendant received the notice, he continued to use his TIDDIES trademark on the products he manufactured, sold, and marketed. This use resulted in actual confusion, as well as the likelihood of confusion and mistake. Defendant infringed Plaintiff's federally registered trademark no. 1,053,977.
CONCLUSIONS OF LAW
1. This Court has jurisdiction under 15 U.S.C. § 1121 and 28 U.S.C. §§ 1331, 1338, 2201, 2202.
2. Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b).
3. A corporation whose charter is forfeited for failure to file a corporate franchise tax return and/or pay state franchise taxes is entitled to have its corporate charter and corporate privileges revived upon payment of the tax, penalty and interest. Tex. Tax Code Ann. § 171.312 (Vernon 2002).
4. Forfeiture of a corporate charter does not result in the dissolution of a business. Hinkle v. Adams, 74 S.W.3d 189, 193-94 (Tex.App.-Texarkana 2002, no pet.).
5. Neither the forfeiture of corporate privileges by the comptroller nor the forfeiture of a corporation's charter by the secretary of state extinguishes the corporation as an entity. Lighthouse Church of Cloverleaf v. Tex. Bank, 889 S.W.2d 595, 601 (Tex.App.-Houston [14th Dist.] 1994, writ denied).
6. When a corporation files its delinquent reports and pays its delinquent franchise taxes, its corporate privileges and charter are retroactively reinstated. Mello v. A.M.F. Inc., 7 S.W.3d 329, 331 (Tex.App.-Beaumont 1999, pet denied).
7. Reinstatement of a corporate charter that was forfeited for failure to file a corporate franchise tax return or for failure to pay state franchise taxes restores the corporations's status, making it as though the forfeiture had never existed. Hinkle, 74 S.W.3d at 193-94 (citing Mello, 7 S.W.3d at 331.) The corporate charter of Tiddies, Inc., was reinstated, making the corporation's status the same as it would have been if the forfeiture had never existed.
8. The Lanham Act provides that a mark is abandoned when "its use has been discontinued with intent not to resume use. Non-use for three consecutive years shall be prima facie evidence of abandonment." 15 U.S.C. § 1127.
9. To prevail on a claim for cancellation of a trademark registration on the ground of abandonment, a party must allege and prove abandonment of the trademark as the result of nonuse with intent not to resume use. The burden of proof is on the party claiming abandonment. 15 U.S.C. § 1127; Vais Arms, Inc. v. Vais, 383 F.3d 287, 293 (5th Cir. 2004). In this case, Defendant failed to prove by a preponderance of the evidence that Plaintiff abandoned federally registered trademark no. 1,355,417.
10. Infringement of a registered trademark requires a finding that use of the same or a similar mark by another party is likely to cause confusion, or to cause mistake, or to deceive. 15 U.S.C. § 1114(1).
11. The factors to be determined to establish trademark infringement include (a) the type of trademark at issue; (b) similarity of the marks; (c) similarity of product; (d) identity of retail outlets and purchasers; (e) identity of advertising media utilized; (f) defendant's intent; and (g) actual confusion. Elvis Presley Enterprises, Inc. v. Capece, 141 F.3d 188, 194 (5th Cir. 1998). The Court has considered these factors and finds that Plaintiff has established that Defendant deliberately infringed Plaintiff's federally registered trademark no. 1,053,971 from November 1999 through September 2004.
12. Any person who shall, without the consent of the registrant (a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive . . . shall be liable in a civil action by the registrant for the remedies hereinafter provided. 15 U.S.C. § 1114(1)(a).
13. Any court vested with jurisdiction of civil actions arising under this Act shall have power to grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable, to prevent the violation of any right of the registrant of a mark registered in the PTO or to prevent a violation under subsections (a), (c), or (d) of section 43. 15 U.S.C. § 1116.
14. If a plaintiff succeeds in proving deliberate infringement under 15 U.S.C. § 1114(a), the Court may award, subject to the principles of equity, damages that consist of "(1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. . . ." 15 U.S.C. § 1117(a). In assessing profits the plaintiff shall be required to prove defendant's sale only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. "If the court shall find that the amount of the recovery based on profits is either inadequate or excessive, the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case. Such sum in either of the above circumstances shall constitute compensation and not a penalty. The court in exceptional cases may award reasonable attorney fees to the prevailing party." 15 U.S.C. § 1117(a); Rolex v. Meece, 158 F.3d 816, 823 (5th Cir. 1998).
15. Factors which may be considered in determining whether an award of profits under 15 U.S.C. § 1117(a) is appropriate include: "(1) whether the defendant had the intent to confuse or deceive, (2) whether sales have been diverted, (3) the adequacy of other remedies, (4) any unreasonable delay by the plaintiff in asserting his rights, (5) the public interest in making the misconduct unprofitable, and (6) whether it is a case of palming off." Rolex, 158 F.3d at 823.
16. Subject to the principles of equity, an award of profits under 15 U.S.C. § 1117(a) is appropriate in this case, and the Court hereby awards Plaintiff the sum of $118, 715, together with its costs of action. The Court further finds that no other damages have been proven by a preponderance of the evidence.
17. The terms of 15 U.S.C. § 1117(a) expressly permit an award of attorney's fees only in "exceptional cases." "[T]he exceptional case is one in which the defendant's trademark infringement can be characterized as malicious, fraudulent, deliberate, or willful, and . . . it has been interpreted by courts to require a showing of a high degree of culpability." Rolex, 158 F.3d at 824 (quoting Martin's Herend Imps., Inc. v. Diamond Gem Trading USA, Co., 112 F.3d 1296, 1305 (5th Cir. 1997) (internal quotation marks and citation omitted). After due consideration, the Court finds that this is not an exceptional case that warrants an award of attorney's fees.
18. The Court hereby enjoins and prohibits Defendant, individually and doing business as Tiddies, his heirs, assigns, representatives and any others acting in concert with him or for him, from using the words of the trademark "Tiddies" in commerce to refer to any product or service in Categories 21 and 25 that are covered by Plaintiff's registration no. 1,355,417.
19. The Court finds that Defendant shall take nothing by way of the counterclaim, and Plaintiff shall take nothing by way of its causes of action, other than deliberate infringement under 15 U.S.C. § 114(a).
SO ORDERED.