Opinion
Civ. No. 00-1026, SECTION "T"(1).
September 1, 2000.
This cause came for hearing on a previous date upon the Motion of the Plaintiff, Southeastern Louisiana Entertainment, L.L.E., d/b/a Hollywood ConxXxion ("Hollywood ConxXxion"), and upon the Motion of the Defendant, Hollywood Entertainment Corporation ("Hollywood Video"), for Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The parties have waived oral argument, and the Court, having studied the legal memoranda and exhibits submitted by the parties, the record, and the applicable law, is fully advised in the premises and ready to rule.
ORDER AND REASONS
I. Background
This case arose as an action for an injunction filed on March 15, 2000 by Hollywood ConxXxion in the Twenty-Fourth Judicial District Court for the Parish of Jefferson, State of Louisiana. Hollywood ConxXxion's petition alleges that Hollywood Video has capitalized on the good will of Hollywood ConxXxion in the Houma area, that it has caused confusion among video rental customers there, and that, therefore, Hollywood Video's use of its name has infringed Hollywood ConxXxion's service mark. Consequently, Hollywood ConxXxion requests that Hollywood Video be permanently enjoined from using the name "Hollywood" for its stores in Terrebone Parish. (Notice of Removal, Doc. 1, Exh. F).
Hollywood Video timely removed the case to this Court accurately claiming subject matter jurisdiction pursuant to 23 U.S.C. § 1331, 1332. (Notice of Removal, Doc. 1). Hollywood Video asserts that Hollywood ConxXxion began using its mark several years after Hollywood Video's registration of the mark with the U.S. Patent and Trademark Office ("PTO"), that use of both of the parties' marks has caused confusion in the Houma market, and therefore, that Hollywood ConxXxion is infringing on Hollywood Video's service mark. Both parties have stipulated to the relevant facts and request that this Court grant Summary Judgment and a permanent injunction plus reasonable attorney's fees and costs. (Hollywood ConxXxion's Motion for Summary Judgment, Doc. 11; Hollywood Video's Motion for Summary Judgment, Doc. 12).
Hollywood ConxXxion, in or around August 1997, opened a retail store selling and renting adult videos and selling adult novelties at 239 N. Hollywood Road in Houma, Louisiana. (Hollywood ConxXxion's Motion for Summary Judgment, Doc. 11, Stipulated Facts). Hollywood Video operates over 1700 stores in forty-four states including fourteen stores located in Louisiana; all of these stores offer a wide variety of movies, including family and children's titles but no adult videos or adult entertainment items. (Hollywood ConxXxion's Motion for Summary Judgment, Doc. 11, Stipulated Facts). Hollywood Video uses the registered marks: Hollywood Video Superstore; Hollywood Video; Hollywood Entertainment; and Want Entertainment? Go to Hollywood for its retail chain and for each of these owns valid and subsisting service mark registrations issued on the Principal Register of the United States Patent and Trademark Office on dates ranging from December 28, 1993 through March 18, 1997. (Hollywood ConxXxion's Motion for Summary Judgment, Doc. 11, Stipulated Facts, ¶ 4). The mark, Hollywood Video, was filed for registry on February 25, 1993 and was issued on August 9, 1994. (Hollywood ConxXxion's Motion for Summary Judgment, Doc. 11, Stipulated Facts, ¶ 4). Then, a Hollywood Video store opened at 1619 Martin Luther King Blvd., in Houma, Louisiana on June 24, 1998. (Hollywood ConxXxion's Motion for Summary Judgment, Doc. 11, Stipulated Facts, ¶ 6). Since this opening, both parties stipulate that "[t]here is a likelihood of confusion between Hollywood ConxXxion's use of the trade name and mark, Hollywood ConxXxion, and Hollywood Video's use of its marks, in Houma, Louisiana. In fact, there has been significant confusion in the Houma area as to which store is which." (Hollywood ConxXxion's Motion for Summary Judgment, Doc. 11, Stipulated Facts, ¶ 10).
II. Legal Analysis
A. Motion for Summary Judgment
The Federal Rules of Civil Procedure provide that summary judgment should be granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. Civ. P. 56(c). Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986). Thus, if there is no dispute between the parties as to the facts which are relevant to determining the outcome of the case, and there are only matters of law to be applied to those facts, then there is nothing for a trier of fact to decide, and summary judgment should be granted.
In this case, both Hollywood Video and Hollywood ConxXxion have offered the Court a statement of stipulated facts, and both parties have moved for summary judgment. (Hollywood Video's Motion for Summary Judgment, Doc. 12; Hollywood ConxXxion's Motion for Summary Judgment, Doc. 11). Therefore, no material issue of fact exists, there is nothing for the trier of fact to determine, and summary judgment must be GRANTED.
B. Lunham Act Service Mark Protection
Both parties have requested injunctions to prevent the other from using its mark. However, the Court need not address Hollywood ConxXxion's request individually because the Lanham Act clearly protects Hollywood Video's mark, as a validly registered service mark, from action brought under federal or state law. See 15 U.S.C. § 1125 (c)(3) (declaring that the ownership of a valid registration is a complete bar to any action brought against the owner under state law).
"A `service mark' is a mark used in the sale or advertising of services to identify the services of one person and distinguish them from services of others." 15 U.S.C.A. § 1053 n. 4 (West 2000) (internal citation omitted). Registration of a service mark on the principal register of the PTO is prima facie evidence of the mark's validity and of the registrant's exclusive ownership. See 15 U.S.C. § 1115 (a). Moreover, "the filing of the application to register such mark shall constitute constructive use of the mark, conferring a right of priority." 15 U.S.C. § 1057 (c). This federal registration serves as constructive notice of the registrant's ownership of the mark throughout the country, even where the registrant is not currently operating. See 15 U.S.C. § 1072; All Video, Inc. v. Hollywood Entertainment Corporation, 929 F. Supp. 262 (E.D. Mich. 1996) (holding that this Defendant's registration of the mark, Hollywood Video Superstore, entitled it to protection from those using the mark, Hollywood Video). Therefore, once a service mark is registered, no one else anywhere in the nation may subsequently use a mark which infringes on that registered service mark.
The original purpose of regulation of marks under the Lanham Act was to offer consumer protection in a world of mass merchandising, and thus, "[i]nfringement turns on whether consumers are likely to be confused." Merges, Menell, Lemley, Intellectual Property in the New Technological Age Ch. 1, pp. 27-28 (2d. ed. 2000). In testing for the likelihood of confusion, several factors have been enunciated by the different circuits: strength of mark, similarity of marks, competitive proximity of parties' products, actual confusion, good faith, etc. See 15 U.S.C.A. § 1114 n. 88 (West 2000) (citations omitted). Nevertheless, once it is determined that a likelihood of confusion exists, the registered owner of the mark is entitled to relief for trademark infringement. See 15 U.S.C. § 1114 (1).
Whereas trademark infringement is meant to protect the consumer from confusion, trademark dilution protects the owners from having the potency of their famous marks reduced by unauthorized use. See Merges, Menell, Lemley, Intellectual Property in the New Technological Age Ch. 1, p. 693 (2d. ed. 2000). In order to establish dilution, the owner of a mark must establish that the mark is famous and became so before the infringement of the mark began, and that the infringing use of the mark causes dilution of the distinctive quality of the mark. See 15 U.S.C. § 1125 (c)(1). Proof of dilution entitles the owner of the mark to have the Court enjoin the infringing party from further use of its name. 15 U.S.C. § 1125 (c)(1).
First, to determine if a mark is famous, the federal statute lists several nonexclusive factors:
(A) the degree of inherent or acquired distinctiveness of the mark; (B) the duration and extent of use of the mark in connection with the goods or services with which the mark is used; (C) the duration and extent of advertising and publicity of the mark; (D) the geographical extent of the trading area in which the mark is used; (F) the channels of trade for the goods or services with which the mark is used; (F) the degree of recognition of the mark in the trading areas and channels of trade used by the marks' owner and the person against whom the injunction is sought; (G) the nature and extent of use of the same or similar marks by third parties; and (H) whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register.15 U.S.C. § 1125. Thus, a famous mark is one which has been developed extensively enough to have significant marketing value to the owner and to cause a recognizable association to the public.
The federal act defines "dilution" as the "lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of . . . competition between the owner of the famous mark and other parties, or . . . likelihood of confusion, mistake or deception." 15 U.S.C. § 1127. There are two recognized forms of dilution: blurring and tarnishment. See Westchester Media v. PRL USA Holdings, 214 F.3d 658, 670 (5th Cir. 2000). "Blurring involves the gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its use upon noncompeting goods." Id. "Tarnishment results when one party uses another's mark in a manner that tarnishes or appropriates the goodwill and reputation associated with the mark." Id.
In this case, Hollywood Video is the mark used by Hollywood Entertainment Corporation to identify its video rental and sales services. This mark was filed with the PTO by Hollywood Video on February 25, 1993, and it was registered there on August 9, 1994. (Hollywood ConxXxion's Motion for Summary Judgment. Doc. 11, Stipulated Facts, ¶ 4). This filing and registration had the effect of entitling Hollywood Video to protection from any infringement by any other service mark anywhere in the nation. Thus, Hollywood ConxXxion could not, subsequent to that PTO registration, initiate use of a mark or name that would infringe on Hollywood Video's name.
As the statute's purpose is to protect the video rental and adult novelty consumers of Houma from confusion over which store provides which service, the Court must determine whether a "likelihood of confusion" does exist. The parties, however, have both stipulated that there is actual confusion and that there is a likelihood of confusion among their customers. (Hollywood ConXXXion's Motion for Summary Judgment, Doc. 11, Stipulated Facts, ¶ 10). Therefore, no further inquiry or application of the test for infringement by this Court would be appropriate, the stipulated likelihood of confusion proves that Hollywood ConxXxion's mark infringes upon that of Hollywood Video, and thus, Hollywood Video is entitled to relief.
Hollywood Video is unquestionably the owner of the mark at issue, and is, therefore, entitled to protection. If the Hollywood Video mark became famous before Hollywood ConxXxion began using its name, and if Hollywood ConxXxion's use of its name causes dilution of the distinctive quality of the Hollywood Video mark, then Hollywood Video is entitled to move this Court to enjoin Hollywood ConxXxion from further use of that infringing name.
Hollywood ConxXxion challenges in its memorandum whether Hollywood Video's registration is valid and entitled to federal protection, asserting that "Hollywood Video" is a generic term and therefore not entitled to Lanham Act protection. While this Court seriously doubts that the combination of "Hollywood" and "Video" is generic, the question is moot because Hollywood ConxXxion has stipulated that the mark is "valid and subsisting." (Hollywood ConXXXion's Motion for Summary Judgment, Doc. 11, Stipulated Facts, ¶ 4).
Hollywood Video is the second largest video rental retail chain in the U.S. It has brought in over three billion dollars in total revenue since 1992, it has expended over one hundred twenty-four million dollars in advertising, thirty-five million of which were expended in or before 1997, it currently operates over 1750 Hollywood Video stores located in forty-eight states and as of August 1997 operated 729 stores in forty-two states. (Hollywood Video's Motion for Summary Judgment, Doc. 12, Exh. 1). Additionally, Hollywood Video offers numerous examples of news, investing, and entertainment publicity which were published during and before 1997. (Hollywood Video's Motion for Summary Judgment, Doc. 12, Exh. 2(A)). Moreover, Hollywood Video has held its registered marks for years and invested countless dollars in marketing to create a distinctive consumer association between video rental and "Hollywood Video." (Hollywood Video's Motion for Summary Judgment, Doc. 12, Exh. 1-3). Therefore, it is the determination of this Court that the Hollywood Video mark was famous and distinctive before August 1997 when Hollywood ConxXxion opened its doors.
As for dilution, the stipulated likelihood of confusion and subsequent potential for mistake by consumers combined with the fact that both stores deal to some degree in videos, creates a lessening of the capacity of Hollywood Video's mark to distinctly identify its video services. Blurring of the identity of the Hollywood Video name will occur in the Houma area if customers mistakenly believe that the two stores are related. Moreover, Hollywood Video's reputation for family and children's videos could be tarnished by Hollywood ConxXxion's reputation for adult videos. Therefore, this Court believes that dilution of Hollywood Video's famous mark has and will continue to occur, and Hollywood Video's request for an injunction ordering Hollywood ConxXxion to cease use of its name must be GRANTED.
C. Request for an Award of Attorney's Fees and Costs
In an action brought for dilution of a mark, the owner of the famous mark shall be entitled only to injunctive relief unless the person against whom the injunction is sought willfully intended to trade on the owner's reputation or to cause dilution of the famous mark. See 15 U.S.C. § 1125. If wilful intent is proven, the owner of the famous mark shall also be entitled to certain remedies which may include attorney's fees in exceptional cases. See 15 U.S.C. § 1125; 15 U.S.C. § 1117. The case is exceptional if the infringement is "malicious, fraudulent, deliberate, or wilful and . . . it has been interpreted by courts to require a showing of a high degree of culpability." See Seatrax, Inc. v. Sonbeck Intern., Inc., 200 F.3d 358, 373 (5th Cir. 2000).
Here, there is insufficient evidence to persuade this Court that Hollywood ConxXxion intentionally or wilfully infringed upon Hollywood Video's mark. In fact, the "ConxXxion" store is located on N. Hollywood Road in Houma, LA. The most likely scenario is that its owner took the "Hollywood" name from the store's location. Moreover, Hollywood ConxXxion was opened in the Houma area prior to the Hollywood Video store opening nearby, and Hollywood ConxXxion was the one who originally filed the petition for an injunction against Hollywood Video. Therefore, it appears that Hollywood ConxXxion was at all times acting in good faith, and this is not an exceptional case as defined by the Lanham Act. Consequently, Hollywood Video's request for attorney's fees and costs must be DENIED.
III. Conclusion
This Court is of the opinion that there is a service mark infringement by Hollywood ConxXxion on the registered mark of Hollywood Video. This infringement will cause dilution and/or tarnishment of Hollywood Video's services, and thus the use of the name "Hollywood ConxXxion" must be enjoined in order to prevent any further confusion. However, this Court is not convinced that exceptional circumstances are present in this case to entitle Hollywood Video to an award of attorney's fees and costs.
Accordingly,
IT IS ORDERED that Hollywood ConxXxion's Motion for Summary Judgment (Doc. 11) be, and the same hereby is DENIED, and that Hollywood Video's Motion for Summary Judgment (Doc.12) be, and the same hereby is GRANTED in part, and DENIED in part.
IT IS FURTHER ORDERED that Southeastern Louisiana Entertainment, L.L.C. cease and desist any and all use of the name "Hollywood ConxXxion" within 15 days from the execution of this order.
New Orleans, Louisiana, this 1st day of September, 2000.
G. Thomas Porteous, Jr., United States District Judge.