Record and brief — Elby's Big Boy of Steubenville, Inc. v. Frisch's Restaurants, Inc.

2a - =

a

[“Nrrp |

81-2012 ee

No. ALEXANDER L. STEVAS.

ln the Supreme Court of the United States

October Term, 1981

ELBY’S BIG BOY OF STEUBENVILLE, INC., et al.,

Petitioners,

VS.

FRISCH’S RESTAURANTS, INC.,

Respondent.

PETITION FOR WRIT OF CERTIORARI

To the United States Court of Appeals

For the Sixth Circuit

THoMaAs J. COLLIN

(Counsel of Record)

THompson, HINE AND FLORY

1100 National City Bank Building

Cleveland, Ohio 44114

216/566-5500

Counsel for Petitioners

Ray A. Byrp

Scuraper, STAMP, Byrp, ByruM,

JOHNSON & COMPANION

816 Central Union Building

Wheeling, West Virginia 26003

304/233-3390

Krrrn A. SOMMER

SOMMER & ANTILL

409 Walnut Street

Post Office Box 279

Martins Ferry, Ohio 43935

614/633-5551

Of Counsel

"see

THE GATES LEGAL PUBLISHING CO., CLEVELAND, OHIO—TEL. (216) 621-5647

QUESTIONS PRESENTED FOR REVIEW

1. Whether a plaintiff can obtain injunctive relief

under Section 43(a) of the Lanham Act (15 U.S.C.

§1125[a]) without showing by specific evidence a likeli-

hood of diversion of sales or other damage to its com-

mercial position?

2. Whether Section 43(a) of the Lanham Act makes

actionable an omission of fact when the advertisement

from which the fact has been omitted is not facially false

and there is no evidence of consumer reaction to the ad-

vertisement?

3. Whether under Section 43(a) of the Lanham Act

likelihood of confusion is a legal question to be decided

de novo by a court of appeals without regard to the

“clearly erroneous” standard of Rule 52(a), Fed.R.Civ.P.?

4. Whether standing under Section 43(a) of the Lan-

ham Act is governed by the substantive trademark law

of the forum state?

5. Whether Section 43(a) of the Lanham Act applies

to federally registered marks?

PARTIES AND RULE 28.1 STATEMENT

The parties to this proceeding in the Sixth Circuit

were plaintiff, Frisch’s Restaurants, Inc. (“Frisch’s”), and

defendants The Boury Corporation (“Boury”), Elby’s

Family Restaurants, Inc., Elby’s Commissary, Inc., George

Boury, Ellis Boury and David Carr*. Defendant David

Carr is no longer employed by Elby’s Commissary, Inc., or

any other corporate defendant, but the district court’s pre-

liminary injunction order applies to him individually.

This petition is filed on behalf of three corporations,

Boury, Elby’s Family Restaurants, Inc., and Elby’s Com-

missary, Inc.

Boury has no parent company, no subsidiaries except

wholly-owned subsidiaries and no affiliates.

Elby’s Family Restaurants, Inc., is a wholly-owned sub-

sidiary of Boury. Other wholly-owned subsidiaries of

Boury are Elby’s of Steubenville, Inc., Elby’s of Pennsyl-

vania, Inc., Tri-Bro, Inc., Elby’s Big Boy of West Virginia,

Inc., Factory Glass Outlet, Inc., Boury Bros. Realty Corp.

and The Boury Company. Elby’s Family Restaurants, Inc.,

has no subsidiaries.

Elby’s Commissary, Inc., is a wholly-owned subsidiary

of The Park Corporation, which is a wholly-owned subsid-

iary of Boury. Other wholly-owned subsidiaries of The

Park Corporation are Elby’s Wheeling, Inc., Elby’s Weirton,

Inc., The Park Corporation No. 2, The Park Corporation

of Ohio and Tri-Ad Corporation. Elby’s Commissary, Inc.,

has no subsidiaries.

s s

Restaurant of Inc., Park Corporation , Elby’s

Martin’s

III

TABLE OF CONTENTS

Questions Presented for Review

Parties and Rule 28.1 Statement

Table of Contents

Table of Authorities

Opinions Below

Jurisdiction

Statute Involved

Statement of the Case

1. Facts

2. Decisions Belo

Reasons for Granting the Writ

The Decision of the Sixth Circuit Conflicts With

Decisions of Other Circuits

The Decision Conflicts With Applicable Decisions

of This Court

16

This Case Raises Important Questions of Federal

Law Which Have Not Been, But Should Be, Set-

tled by This Court

Appendix:

Opinion of the United States Court of Appeals for

the Sixth Circuit (February 3, 1982)

Memorandum and Order of the United States Dis-

trict Court for the Southern District of Ohio

(January 20, 1981)

Al

Judgment of the United States District Court for

the Southern District of Ohio (January 20,

1981)

Iv

Judgment Entry of the United States Court of Ap-

peals for the Sixth Circuit (February 3, 1982) .... A36

Order of the United States Court of Appeals for the

Sixth Circuit Staying Mandate (March 1, 1982) A37

Order of the United States Court of Appeals for the

Sixth Circuit Continuing Stay of Mandate (April

6, 1982) A38

Certificate of Registration of BIG BOY as a Trade-

mark by the United States Patent and Trade-

mark Office, No. 574,742 (May 19, 1953) (Plain-

tiff's Exhibit 34) A39

Newspaper Advertisements from Plaintiff's Ex-

hibit 42 A40

Section 32(1) of the Lanham Act (15 U.S.C. §1114

11 ä... A43

TABLE OF AUTHORITIES

Cases

Alfred Dunhill Ltd. v. Interstate Cigar Co., 499 F.2d

232 (2d Cir. 1974) 13, 14

Alpha Industries, Inc. v. Alpha Steel Tube & Shapes,

Inc., 616 F.2d 440 (9th Cir. 1980) 14, 15

American Brands, Inc. v. R. J. Reynolds Co., 413 F.

Supp. 1352 (S.D.N.Y. 1976) ; 13

American Home Products Corp. v. Johnson & Johnson,

577 F.2d 160 (2d Cir. 1978) 12-13

Beatrice Foods Co. v. Neosho Valley Cooperative Cream-

ery Ass’n, 297 F.2d 447 (10th Cir. 19617 15

Blue Bell, Inc. v. Jaymar-Ruby, Inc., 497 F.2d 433 (2d

Cir. 1974) Dai SSSR CANES 15

Vv

Boston Professional Hockey Ass’n v. Dallas Cap & Em-

blem Mfg., Inc., 510 F.2d 1004 (5th Cir.), cert. de-

nied, 423 U.S. 868 (1975) 21

Burger King of Florida, Inc. v. Hoots, 403 F.2d 904 (7th

—TTTVT—T—TCTT—T—T——— bpacestiaiasaandiie i9

Chevron Chemical Co. v. Voluntary Purchasing Groups,

Inc., 659 F.2d 695 (5th Cir. 1981), petition for cert.

filed, No. 81-1387 (U.S. Jan. 21, 1982 16

Colligan v. Activities Club of New York, 442 F.2d 686

(2d Cir.), cert. denied, 404 U.S. 1004 (19717 14

DCA Food Industries, Inc. v. Hawthorn Mellody, Inc.,

470 F. Supp. 574 (S.D.N.Y. 1979) | 21

Food Fair Stores, Inc. v. Square Deal Market Co.,

206 F.2d 482 (D.C. Cir. 1953), cert. denied, 346 U.S.

937 (1954) 19

FRA S.pA. v. Surg-O-Flex of America, Inc., 415 F.

Supp. 421 (S.D.N.Y. 1976) 21

Gold Seal Co. v. Weeks, 129 F. Supp. 928 (D.D.C. 1955),

aff'd per curiam sub nom. S.C. Johnson & Son, Inc.

v. Gold Seal Co., 230 F.2d 832 (D.C. Cir.), cert. de-

nied, 352 U.S. 829 (1956) 11-12

Hanover Star Milling Co. v. Metcalf, 240 U.S. 403 (1916)

11, 18

Jerome v. United States, 318 U.S. 101 (1943 16, 18

Johnson & Johnson v. Carter-Wallace, Inc., 631 F.2d

186 (2d Cir. 1980) ........... 10

Keebler Co. v. Rovira Biscuit Corp., 624 F.2d 366 (Ist

Cir. 1980) 11, 15, 16

L’Aiglon Apparel, Inc. v. Lana Lobell, Inc., 214 F.2d

649 (3d Cir. 1954) 16

MacGregor v. Westinghouse Electric & 6

e 16

VI

Maternally Yours, Inc. v. Your Maternity Shop, Inc.,

234 F.2d 538 (2d Cir. 1956)

NLRB v. Natural Gas Utility District, 402 US. 600

(1971)

Pignons S.A. v. Polaroid Corp., 657 F.2d 482 (Ist Cir.

1981)

Quabaug Rubber Co. v. Fabiano Shoe Co., 567 F.2d

154 (Ist Cir. 1977)

Socony-Vacuum Oil Co. v. Oil City Refiners, Inc., 136

F.2d 470 (6th Cir.), cert. denied, 320 U.S. 798 (1943)

Squirtco v. Seven-Up Co., 628 F.2d 1086 (8th Cir.

1980)

Standard Paint Co. v. Trinidad Asphalt Mfg. Co., 222

US. 446 (1910)

Sun Banks of Florida, Inc. v. Sun Federal Savings &

Loan Ass’n, 651 F.2d 311 (5th Cir. 19817

Sutton Cosmetics (P.R.) Inc. v. Lander Co., 455 F.2d

285 (2d Cir. 1972)

United Drug Co. v. Theodore Rectanus Co., 248 U.S.

90 (1918)

Universal City Studios, Inc. v. Sony Corp., 429 F. Supp.

407 (C.D. Cal. 1977)

John Wright, Inc. v. Casper Corp., 419 F. Supp. 292

(E.D. Pa. 1976), aff'd in part & rev'd in part sub

nom. Donsco, Inc. v. Casper Corp., 587 F.2d 262

3d Cir. 1978)

Younker v. Nationwide Mutual Insurance Co., 191 N.E.

RE Ree DOG) easitctsticeeritisterenptnerscccincntnininsi

Statutes and Rule

Lanham Act (15 U.S.C. §§1051 et seq.)

14

18

Section 32 (1) (15 U.S.C. §1114[1]) ............... I, 3, 20, 22

Section 43 (a) (15 U.S.C. §1125[a]) passim

VII

Securities Exchange Act of 1934 (15 U.S.C. §§78a et

seq.)

Section 10(b) (15 U.S.C. §78j[b]) 20

Federal Rules of Civil Procedure Rule 52(a) ....... 1, 9, 14, 15

Miscellaneous

H. R. Rep. No. 219, 79th Cong., Ist Sess. (1945) 17

2 J. McCartuy, TRADEMARKS AND UNFAIR COMPETITION

(1973) 18

Germain, Unfair Trade Practices Under Section 43(a)

of the Lanham Act: You’ve Come a Long Way,

Baby—Too Far, Maybe? 64 TrapeMarK Retr. 193

(1974) 21

Note, The Problem of Functional Features: Trade

Dress Infringement Under Section 43(a) of the Lan-

ham Act, 82 Cotum. L. Rev. 77 (1982) 17

*

No.

In the Supreme Court of the United States

October Term, 1981

ELBY’S BIG BOY OF STEUBENVILLE, INC., et al.,

Petitioners,

VS.

FRISCH’S RESTAURANTS, INC.,

Respondent.

PETITION FOR WRIT OF CERTIORARI

To the United States Court of Appeals

For the Sixth Circuit

The Boury Corporation (“Boury”’, Elby’s Family

Restaurants, Inc., Elby’s Commissary, Inc., George Boury,

Ellis Boury and David Carr (collectively referred to as

“defendants”) respectfully petition for a writ of certiorari

to review the judgment of the United States Court of

Appeals for the Sixth Circuit in this case.

OPINIONS BELOW

The opinion of the United States District Court for the

Southern District of Ohio, entered on January 20, 1981, is

reported at 514 F. Supp. 704 and is reprinted at A19 of

the appendix to this petition (“Appendix”). The opinion

of the United States Court of Appeals for the Sixth Circuit,

entered on February 3, 1982, is reported at 670 F.2d 642

and is reprinted at Al of the Appendix.

2

JURISDICTION

The judgment of the Sixth Circuit was entered on

February 3, 1982, a copy of which appears at A36 of the

Appendix. Defendants moved the Sixth Circuit for a stay

of mandate pending the filing of this petition, and the court

granted the motion by order dated March 1, 1982, a copy

of which appears at A37 of the Appendix. The stuy was

continued up to and including April 30, 1982, by order of

April 6, 1982, a copy of which appears at A38 of the Ap-

pendix. The jurisdiction of this Court is invoked under

Section 1254(1) of Title 28 of the United States Code (28

U.S.C. §1254[1]).

STATUTE INVOLVED

This case involves only Section 43(a) of the Lanham

Act (15 U.S.C. §1125[a]). Section 43 (a) provides as fol-

lows:

Any person who shell affix, apply, or annex, or use

in connection with any coods or services, or any con-

tainer or containers for goods, a false designation of

origin, or any false description or representation, in-

cluding words or other symbols tending falsely to de-

scribe or represent the same, and shall cause such

goods or services to enter into commerce, and any

person who shall with knowledge of the falsity of

such designation of origin or description or repre-

sentation cause or procure the same to be transported

or used in commerce or deliver the same to any carrier

to be transported or used, shall be liable to a civil

action by any person doing business in the locality

falsely indicated as that of origin or in the region in

which said locality is situated, or by any person who

believes that he is or is likely to be damaged by the

use of any such false description or representation.

STATEMENT OF THE CASE

This is a dispute over a federally registered trademark

for “hamburger sandwiches”, BIG BOY, Registration No.

574,742 (May 19, 1953) (the Mark“). A copy of the reg-

istration certificate appears at A39 of the Appendix.

Marriott Corporation (“Marriott”) is the owner of the

Mark by assignment. It did not join plaintiff in bringing

this action, and it is not a party.

Plaintiff, Frisch’s Restaurants, Inc. (Frisch's“), is an

Ohio corporation engaged in the family restaurant business.

Through a license agreement, Frisch’s has the exclusive

right to use the Mark in Ohio.

Defendant Boury is a West Virginia corporation en-

gaged in the family restaurant business. Through a li-

cense agreement, it has the exclusive right to use the

Mark in the panhandle of West Virginia, which includes

the Wheeling area.

Defendants other than Boury are wholly-owned sub-

sidiaries of Boury or officers or employees of Boury or its

subsidiaries.

The complaint in this action was filed in the Court of

Common Pleas for Belmont County, Ohio, on November

27, 1978, alleging, among other things, trademark infringe-

ment under Section 32(1) of the Lanham Act (15 U.S.C.

§1114[1]). The action was timely removed to the United

States District Court for the Southern District of Ohio on

December 19, 1978. Federal jurisdiction exists under Sec-

tions 1331(a) and 1337(a) of Title 28 of the United States

Code (28 U.S.C. §§1331[a], 1337[a]) and under Section

39 of the Lanham Act (15 U.S.C. §1121).

1. Facts.

This dispute centers upon defendants’ advertising of

the Mark on a Wheeling television station, WTRF-TV, and

in Wheeling newspapers. Defendants have an obligation

under the license agreement to promote the Mark.

Defendants operate in West Virginia, Ohio, Pennsyl-

vania and New York what are known as “Elby’s Family

Restaurants”. Defendants’ restaurants in West Virginia

use the Mark in their menus and display the Mark on the

restaurant premises. Defendants’ restaurants in Ohio do

not use the Mark in menus and do not display the Mark

on the restaurant premises.

Defendants use the Mark in their WTRF and Wheel-

ing newspaper advertising. The advertising does not

identify the location of defendants’ restaurants, and this

failure to list locations is the heart of the dispute in this

case. Frisch’s complains that the advertising is actionable

under Section 43(a) of the Lanham Act because residents

of nearby eastern Ohio who see the WTRF advertisements

and read the Wheeling newspaper advertisements might

conclude that defendants’ Ohio restaurants are associated

with the Mark.

Frisch’s has no restaurants in that part of eastern Ohio

reached by the WTRF signal or within the circulation range

of Wheeling newspapers. It does not advertise in this

geographic area. |

Frisch’s owns or franchises some eighty family res-

taurants in Cincinnati, Columbus and other cities in Ohio.

The restaurants are operated and advertised as “Frisch’s

Big Boy Restaurants”.

Defendants operate “Elby’s Family Restaurants” in

Columbus, but Frisch’s complains only of the effect of

WTRF and Wheeling newspaper advertising on defendants’

restaurants in six eastern Ohio cities, St. Clairsville, Bridge-

port, Steubenville, Marietta, Cambridge and Dover.

2. Decisions Below.

Frisch’s filed a motion (“Motion”) for preliminary in-

junction in the district court on October 21, 1980. Frisch's

requested in the Motion an order

preliminarily enjoining Defendants The Boury Corpo-

ration, Elby’s Family Restaurants, Inc., Elby’s Com-

missary, Inc., George Boury, Ellis Boury and David

Carr, pending final resolution of this case, from using

the “Big Boy” trademark in any advertising medium

that reaches a not insubstantial number of Ohioans

without making a prominent disclosure that the Hby's

Family Restaurants located within the State of Ohio

are not associated with the “Big Boy” restaurant orga-

nization.

The district court conducted a hearing on the Motion

on November 24, 1980. Frisch’s introduced as evidence at

the hearing WTRF advertisements and newspaper ad-

vertisements of defendants. It also introduced the results

of a survey conducted by Lee Becker (the “Becker sur-

vey”). The Becker survey, conducted by telephone, sam-

pled some 300 residents of St. Clairsville, Steubenville and

Cambridge, Ohio.

The Becker survey comprised 19 questions, many of

which were intended to elicit background information

1. Wheeling stands on the eastern bank of the Ohio River,

the border between Ohio and West Virginia. A east-west

interstate highway, Interstate 70, runs through

St.

R on Interstate

70. Steubenville is 18 miles north of as the

crow flies. Cambridge is tely 45 miles to the wes.

of Wheeling, also on Interstate 70.

about the interviewee and others of which were calculated

to mask the purpose of the survey, i.e., the collection of

information about the public’s perception of defendants’

restaurants in eastern Ohio. Becker concluded from the

survey that “there is considerable confusion in the Ohio

communities studied over the availability of the Big Boy

product. A sizeable number of people think that Elby’s

Family Restaurants in Ohio carry that product.“

Frisch’s premised the Motion on this confusion—

public perception that defendants’ restaurants in eastern

Ohio are associated with the Mark. It urged that defen-

dants were responsible for this confusion and that the con-

fusion was actionable under Section 43 (a).

The Becker survey did not establish what was the

cause of confusion. Rather, as the district court noted,

the confusion was “associated” with four factors:

(a) proximity of the particular Ohio community to

West Virginia where consumers can purchase a

Big Boy at Elby’s;

(b) length of residence in the respective community;

1. e., residents for a period greater than eight years

are more likely to be confused;

(c) frequent travel to West Virginia; and

(d) viewing of Elby’s advertisements on WTRF.

514 F. Supp. at 708; App. A24*

The district court found that the first three of these

four factors “are not attributable to defendants” but are

instead “a result of the fairly unique geography of this

2. Plaintiff's Exhibit 2 at 6; Joint Appendix at 434.

3. Parallel citations to court opinions in the Appendix to

this petition will appear as App ‘

7

tri-state area.” Id. at 708; App. A24). Because, pursuant

to a reciprocal advertising arrangement between defendants

and WTR", defendants by use of billboards and other ad-

vertising at their Ohio restaurants urged customers to

watch Elby’s ads on WTRF, the district court concluded,

however, that the fourth factor was attributable to de-

fendants. I+ therefore preliminarily enjoined, under Sec-

tion 43(a) of the Lanham Act, any WTRF advertising that

did not disclose that defendants’ eastern Ohio restaurants

are not associated with the Mark. Alternatively, it ordered

defendants to delete all references to the Mark from the

WTRF advertising.

The Becker survey elicited no information about the

readership of any of the Wheeling newspapers in which

defendants placed advertising using the Mark. Frisch’s

introduced at the hearing on the Motion no evidence on

public reaction to the newspaper advertising. Neither did

it introduce any evidence that the advertisements were

facially false. Evidence on the content and effect of the

advertisements was confined to the advertisements them-

selves.‘ The district court concluded that Frisch’s proof

with respect to newspaper advertising was “not sufficient

to establish a causal connection between the public’s con-

fusion and defendants’ advertising in such media.” Id. at

711; App. A30 (emphasis in original).

Defendants perfected an interlocutory appeal from the

district court’s entry of a preliminary injunction with re-

spect to the WTRF advertising. Frisch’s cross-appealed

from the district court’s denial of preliminary injunctive

relief with respect to newspaper advertising. The Sixth

Circuit in its February 3, 1982, opinion affirmed the dis-

4. Copies of a sample of the Wheeling newspaper adver-

tisements introduced by Frisch's at the hearing on the Motion

appear at A40-A42 of the Appendix.

trict court’s entry of preliminary injunctive relief with

respect to WTRF advertising and reversed its denial of

preliminary injunctive relief with respect to newspaper

advertising.

The Sixth Circuit held that defendants’ television and

newspaper advertising constituted acticnable conduct under

Section 43(a) of the Lanham Act because it amounted to

“passing off” defendants’ Ohio restaurants as restaurants

associated with the Mark. 670 F.2d at 646-47; App. A7-A8.

While acknowledging that defendants’ WTRF and Wheel-

ings newspaper advertising was undertaken pursuant to

Boury’s obligations as a licensee and that defendants’

advertising originating in Ohio or used in connection with

specific Ohio store locations did not use the Mark, id. at

644-46; App. A2, A6, the Sixth Circuit nonetheless held that

defendants’ West Virginia-originating WTRF and news-

paper advertising was enjoinable under Section 43 (a).

And even though Frisch’s was not engaged in operat-

ing restaurants or advertising restaurants in the area

reached by the WTRF and newspaper advertising, the

Sixth Circuit held that Frisch’s had shown a likelihood of

irreparable injury sufficient to maintain an action for

injunctive relief under Section 43(a) because its right to

use of the Mark, regardless of the actual area of use, ex-

tended through the entire State of Ohio. Id. at 649; App.

Al2-Al3.

Without reviewing or disturbing any of the factual

findings of the district court with respect to newspaper

advertising, the Sixth Circuit held that the district court’s

finding of no likelihood of confusion with respect to the

newspaper advertising was erroneous. Id. at 651; App.

Al6. It reasoned that likelihood of confusion is a legal

determination which could be made by it, the reviewing

court, regardless of the district court’s factual finding on

the issue of confusion. Id.; App. Als.

REASONS FOR GRANTING THE WRIT

This case raises fundamental questions about the

proper construction and application of an increasingly im-

portant federal statute, Section 43(a) of the Lanham Act.

The Court bas never previously reviewed Section 43 (a),

and this is an appropriate case for review. The Sixth

Circuit’s construction of the section conflicts in several

crucial respects with decisions of the Second and other

Circuits, conflicts with applicable decisions of this Court

and with the clear intent of Congress in passing the Lan-

ham Act and improperly substitutes Section 43(a) as a

remedy for alleged wrongs affecting federally registered

trademarks.

The Decision of the Sixth Circuit Conflicts With

Decisions of Other Circuits.

The Sixth Circuit’s decision conflicts with decisions of

the Second, First and District of Columbia Circuits which

require that a Section 43(a) plaintiff demonstrate with

specific evidence a likelihood of diversion of sales and

damage to its commercial position from the false designa-

tion or advertising complained of. It conflicts with a de-

cision of the Second Circuit which requires that the effect

of advertising which is not facially false must be shown

by actual evidence of consumer reaction. It conflicts with

a decision of the Second Circuit which holds that Section

43(a) dees not make a failure to disclose actionable. And

it conflicts with decisions of the First, Fifth, Eighth and

Tenth Circuits which hold that a district court’s conclusion

as to likelihood of confusion can be disturbed only if it is

clearly erroneous under Rule 52(a), Fed. R. Civ. P.

1. By granting preliminary injunctive relief against

defendants’ advertising, the Sixth Circuit approved a con-

10

struction of Section 43 (a) that eliminates the need for a

plaintiff to demonstrate any causal link between the ad-

vertising which is the subject of his complaint and threat-

ened injury to his business.

The Court of Appeals for the Second Circuit held in

Johnson & Johnson v. Carter-Wallace, Inc., 631 F.2d 186

(1980) (“Johnson & Johnson”), that a plaintiff seeking

an injunction umder Section 43 (a) must demonstrate that

he is “likely to be damaged as a result of the false adver-

tising in question. Id. at 190. A plaintiff must show “a

logical causal connection between the alleged .alse ad-

vertising and its own sales position”. Id. The Second Cir-

cuit referred to this as a “[llikelihood of competitive in-

jury sufficient to warrant a §43(a) injunction.” Id. at 191

(emphasis added).

The plaintiff in Johnson & Johnson demonstrated “with

specific evidence” that the false advertising in question was

likely to have an adverse and direct impact on its sales

position. Id. at 190. It did so by introducing three types

of evidence. First, it showed that defendant’s share of

the market there in question (the hair removal market)

had increased since the defendant’s allegedly false baby

oil advertising began. Second, plaintiff elicited testimony

from a consumer witness that she had switched from use

of baby oil to NAIR because it was advertised as containing

baby oil, and, third, plaintiff introduced survey evidence

showing that some people thought after viewing the al-

legedly false ads that they would not have to use baby oil

if they used NAIR. Id. at 190-91.

Here, in contrast, Frisch’s demonstrated absolutely

no connection between defendants’ challenged television

and newspaper advertising and threatened injury to its

sales position. It introduced no evidence on threatened

injury. The Sixth Circuit reasoned that this type of evi-

11

dence was not necessary, however, because, it held, trade-

mark rights extend statewide. 670 F.2d at 649.

The Sixth Circuit’s reliance on the commercially arbi-

trary assumption of statewide trademark use was neces-

sary if it was to affirm the district court’s preliminary in-

junction, because Frisch’s had put no evidence before the

district court to support even an inference that what the

Sixth Circuit viewed as the wrong in this case, passing off,

had occurred or was likely to occur.“ Frisch’s failure to

adduce any such evidence was not surprising, however,

because, as the record did clearly establish, Frisch’s was

not engaged in business in that part of Ohio reached by

the advertising it was challenging, and it did not itself

advertise in that area. There could not possibly have

been any showing of likelihood of diversion of sales or other

damage to its commercial position.

The Second Circuit is not the only Circuit requiring

that a Section 43(a) plaintiff come forward with specific

evidence of likelihood of diversion of sales and damage to

its commercial position. This evidentiary requirement has

also been approved in the First and District of Columbia

Circuits. Pignons S.A. v. Polaroid Corp., 657 F.2d 482, 493

(Ist Cir. 1981); Gold Seal Co. v. Weeks, 129 F. Supp. 928,

5. As this Court has repeatedly held, the essence of a claim

of unfair competition or trademark infringement is “the sale of

the goods of one manufacturer or vendor for those of another”.

Hanover Star Milling Co. v. Metcalf, 2 412-13 (1916);

r 8 4a) tn no dtarent Co., Tag Beg *

462 (1910). pee ee

7

product it to be that of the There is a total

and complete of such in this record. In-

stead, the proof at most, that confusion

12

940 (D.D.C. 1955), aff d per curiam sub nom. S.C. Johnson

& Son, Inc. v. Gold Seal Co., 230 F.2d 832 (D.C. Cir.), cert.

denied, 352 U.S. 829 (1956). By holding as it has in this

case, the Sixth Circuit has dispensed with any such proof

and instead imposed liability on the strength of a com-

mercial fiction, statewide trademark use.

2. The Sixth Circuit not only eliminated any need

for plaintiff to show a connection between the advertising

in question and adverse impact on its commercial posi-

tion, but, additionally, it imposed liability under Section

43(a) in the total absence of any demonstration that de-

fendants’ newspaper advertising, which was not facially

false, caused or was likely to cause confusion or deception

when viewed by the consuming public. In total disregard

of the district court’s specific finding that there was no

causal link between the Wheeling newspaper advertising

and the customer confusion complained of by Frisch’s, the

Sixth Circuit nonetheless held that the newspaper ad-

vertising was actionable under Section 43 (a).

The Sixth Circuit arrived at this result, first, by hold-

ing that likelihood of confusion is a question of law for

the court of appeals to decide and, second, by reasoning

that causation is not determinative of likelihood of con-

fusion. As shown at pages 14-15 below, the Sixth Cir-

cuit’s first step is contrary to the law in at least four of

the other Circuits. The second step stands on the premise,

for which there is no authority in the statute, general

unfair competition law or even basic principles of tort law,

that advertising can be enjoined under Section 43(a) even

when the district court has specifically held that there is

no causal connection between that advertising and the

customer confusion complained of—in short, a total failure

of proof of proximate cause.

It was to guard against precisely this type of result

that the Second Circuit held in American Home Products

13

Corp. v. Johnson & Johnson, 577 F.2d 160, 165-66 (1978),

that unless advertising is actually, facially, false, relief

cannot be granted under Section 43(a) “without refer-

ence to the reaction of the buyer or consumer of the

product”. Id. at 165, quoting American Brands, Inc. v.

R. J. Reynolds Co., 413 F. Supp. 1352, 1356 (S.D.N.Y. 1976).

By holding, as it has here, that defendants’ newspaper

advertising is actionable even though it was found not to

be a cause of customer confusion, the Sixth Circuit has

interpreted Section 43(a) in a manner directly in conflict

with the Second Circuit and rewritten the statute to im-

pose liability not only without fault but also without

causation.

3. By helding that the newspaper advertising was

actionable under Section 43(a) because it did not advise

the public of the location of restaurants associated with

the Mark, the Sixth Circuit has turned Section 43(a) into

a remedy for omissions of fact. It is no longer con-

fined to its terms, which make actionable “a false designa-

tion of origin, or any false description or representation”.

Now it also reaches a failure to make a designation, de-

scription, representation or statement.

This view of Section 43(a) was explicitly rejected by

the Second Circuit in Alfred Dunhill Limited v. Interstate

Cigar Company, 499 F.2d 232 (1974). There, plaintiff, the

manufacturer of Dunhill brand tobacco, sought to enjoin

a buyer of salvage tobacco from selling it to the public

without labelling it to disclose that it was in fact salvage

tobacco and had possibly been water-damaged. The dis-

trict court granted the injunction requested, 364 F. Supp.

366 (S.D.N.Y. 1973), but the Second Circuit reversed.

After noting that the Lanham Act’s purpose, as defined

in Section 45 (15 U.S.C. §1127), is “exclusively to protect

the interests of a purely commercial class against un-

14

scrupulous commercial conduct,” 499 F.2d at 236, quoting

Colligan v. Activities Club of New York, 442 F.2d 686, 692

(2d Cir.), cert. denied, 404 U.S. 1004 (1971), the court of

appeals held that Section 43(a) “does not have boundless

application as a remedy for unfair trade practices but is

limited to false advertising as that term ir generally

understood.” 499 F.2d at 237.

The Second Circuit concluded that Section 43(a) does

not impose a duty of disclosure; it does not make omissions

actionable. There, as here, there was no showing that the

advertising or labelling in question bore any false de-

scription or representation. District courts in the Ninth

and Third Circuits have similarly concluded that Section

43(a) does not make a failure to disclose actionable.

Universal City Studios, Inc. v. Sony Corp., 429 F. Supp.

407, 410 (C.D. Cal. 1977); John Wright, Inc. v. Casper

Corp., 419 F. Supp. 292, 326 (E.D. Pa. 1976), aff’d in part

& rev’d in part on other grounds sub nom. Donsco, Inc.

v. Casper Corp., 587 F.2d 262 (3d Cir. 1978). The Sixth

Circuit’s holding squarely conflicts with these decisions

and Dunhill and vastly enlarges the scope of Section 43(a)

in contradiction of the text of the statute itself.

4. Finally, in ignoring the district court’s finding that

the newspaper advertisements did not create any likelihood

of confusion, the Sixth Circuit substituted its own judg-

ment for that of the district court. It did so by following

the Ninth Circuit’s holding in Alpha Industries, Inc. v.

Alpha Steel Tube & Shapes, Inc., 616 F.2d 440, 443-44

(1980), that likelihood of confusion is a legal conclusion

not subject to review under the clearly erroneous standard

of Rule 52(a) of the Federal Rules of Civil Procedure.

The Circuits are divided on whether likelihood of con-

fusion is subject to review under the clearly erroneous

15

test or is a legal question. The First, Fifth, Eighth and

Tenth Circuits have held that likelihood of confusion is a

factual determination of the district court reviewable under

the clearly erroneous standard of Rule 52(a). Keebler

Company v. Rovira Biscuit Corp., 624 F.2d 366, 377 (ist

Cir. 1980); Sun Banks of Florida, Inc. v. Sun Federal

Savings & Loan Ass’n, 651 F.2d 311, 314-15 (5th Cir.

1981); Squirtco v. Seven-Up Company, 628 F.2d 1086,

1091 (8th Cir. 1980); Beatrice Foods Co. v. Neosho Valley

Cooperative Creamery Ass’n, 297 F.2d 447, 449 (10th Cir.

1961). The Sixth Circuit has now joined the Ninth and

Second Circuits in holding that likelihood of confusion is

a legal question which a court of appeals can decide on

its own. Alpha Industries, Inc. v. Alpha Steel Tube &

Shapes, Inc., 616 F.2d 440, 443-44 (9th Cir. 1980); Blue

Bell, Inc. v. Jaymar-Ruby, Inc., 497 F.2d 433, 435 n.2

(2d Cir. 1974).

Appellate review of the question of likelihood of con-

fusion as a purely legal issue has led in this case to an ab-

surd result, underscoring the soundness of the clearly er-

roneous standard. Here, despite any finding by the district

court that the newspaper advertising was false or deceptive

and despite any evidence that the advertising caused or

was likely to cause any consumer confusion or deception,

the Sixth Circuit reached, in the total absence of any sup-

porting evidence, exactly the opposite conclusion—that the

newspaper advertising did create a likelihood of con-

fusion. Section 43(a) could not possibly have been in-

tended by Congress to produce such an irrational result,

and if the Sixth Circuit had concluded it were bound by

Rule 52(a) there would have been no such result.

16

The Decision Conflicts With Applicable Decisions

of This Court.

The decision of the Sixth Circuit conflicts with this

Court’s holdings that federal statutes do not depend upon

state law for their content and application and that trade-

mark rights are protectible only when associated with a

plaintiff’s actual business activities.

1. There is broad agreement among the courts of

appeals that Section 43(a) is a sui generis federal statutory

tort. E.g., Chevron Chemical Company v. Voluntary Pur-

chasing Groups, Inc., 659 F.2d 695, 702 (5th Cir. 1981),

petition for cert. filed, No. 81-1387 (U.S. Jan. 21, 1982);

Keebler Company v. Rovira Biscuit Corp., supra, 624 F.2d

at 372-73; L’Aiglon Apparel, Inc. v. Lana Lobell, Inc., 214

F.2d 649, 651 (3d Cir. 1954). As this Court has repeatedly

held, the content and application of a federal statute do

not depend upon the law of the state in which the district

court sits. When Congress enacts a statute, it is “not

making the application of the federal act dependent on

state law” unless there is a clear and explici* indication

to the contrary. Jerome v. United States, 318 U.S. 101, 104

(1943) .°

This principle of statutory construction finds express

.

itself:

The theory once prevailed that protection of trade-

marks was entirely a State matter and that the right

to a mark was a common-law right. This theory was

the basis of previous national trade-mark statutes.

Many years ago the Supreme Court held and has

Accord, e.g., NLRB peg Gas Utility District, 402

US. % 603 (1971); M 8, Westinghouse Electric &

Manufacturing Co., 329 U.S. 402, (1947).

17

recently repeated that there is no Federal common

law. It is obvious that the States can change the

common law with respect to trade-marks and many

of them have, with the possible result that there may

be as many different varieties of common law as

there are States. A man’s rights in his trade-mark

in one State may differ widely from the rights which

he enjoys in another.

However, trade is no longer local, but is national.

Marks used in interstate commerce are properly the

subject of Federal regulation. It would seem as if

national legislation along national lines securing to

the owners of trade-marks in interstate commerce

definite rights should be enacted and should be

enacted now.

There can be no doubt under the recent decisions

of the Supreme Court of the constitutionality of a

national act giving substantive as distinguished from

merely procedural rights in trade-marks in commerce

over which Congress has plenary power, and when

it is considered that the protection of trade-marks is

merely protection to goodwill, to prevent diversion of

trade through misrepresentation, and the protection

of the public against deception, a sound public policy

requires that trade-marks should receive nationally

the greatest protection that can be given them.

H. R. Rep. No. 219, 79th Cong., Ist Sess. 4 (1945) (em-

phasis added). Congress’ objective in passing the Lan-

ham Act, of which Section 43(a) is a part, was to eliminate

state differences in trademark protection and to put in their

place “national legislation along national lines” for a uni-

form federal law. See generally Note, The Problem of

Functional Features: Trade Dress Infringement Under

18

Section 43(a) of the Lanham Act, 82 Corum. L. Rev. 77,

86-90 (1982).

The Sixth Circuit has, however, construed Section

43(a) in a way that will make its application and content

vary from state to state and Circuit to Circuit, depending

upon state law. In holding, as it has, that Frisch’s has

shown a likelihood of injury sufficient to support an in-

junction under Section 43(a) because under Ohio law, as

announced in Younker v. Nationwide Mutual Insurance

Company, 191 N.E.2d 145 (Ohio 1963), and under a pre-

Lanham Act Sixth Circuit case, Socony-Vacuum Oil Co.

v. Oil City Refiners, Inc., 136 F.2d 470 (6th Cir.), cert.

denied, 320 U.S. 798 (1943), trademark rights in Ohio are

entitled to statewide protection regardless of the area of

actual use of a mark, the Sixth Circuit has not only in-

terpreted Section 43(a) in precisely the manner sought

to be avoided by Congress when it passed the Lanham Act

but has also done so in conflict with applicable decisions

of this Court holding that rights under federal statutes

are not controlled by vagaries of state law.

By so holding, the Sixth Circuit has made standing

under Section 43(a) a function of whether a plaintiff

resides in a state which recognizes the commercially arbi-

trary rule that trademark rights extend statewide,’ a rule

which, as Professor McCarthy has observed, is “grossly

unrealistic” and has been specifically rejected by many

courts. 2 J. McCartuy, TRADEMARKs aND Uxram Compe-

TITION §26: 12 at 223-24 (1973).

Not only does this holding conflict with Jerome v.

United States and other comparable decisions of this Court,

but it also directly conflicts with the Seventh Circuit's

7. This rule of statewide rights has in the past drawn much

of its vitality from dicta in Justice Holmes’ concurring in

Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 426 (1916).

19

holding in Burger King of Florida, Inc. v. Hoots, 403 F.2d

904, 907-08 (1968), that state law on entitlement to state-

wide trademark protection must yield before the Lanham

Act. See also Sutton Cosmetics (P.R.), Inc. v. Lander Co.,

455 F.2d 285, 289 (2d Cir. 1972) (Section 43[a} injunction

limited to Dade County, Florida, metropolitan New York

City and Puerto Rico). Cf. Food Fair Stores, Inc. v. Square

Deal Market Co., 206 F.2d 482, 484-85 (D.C. Cir. 1953)

(statewide protection test rejected in diversity case).

2. The Sixth Circuit’s recognition, and importation

into Section 43(a), of the statewide use presumption also

squarely conflicts with the elernentary trademark prin-

ciple applied by this Court in United Drug Company v.

Theodore Rectanus Company, 248 U.S. 90 (1918), that

trademark rights do not exist “in gross or at large”, id. at

97, but instead, xist only as “a right appurtenant to an

established business or trade in connection with which

the mark is employed”, id. The Court there, in reversing

a decision by the Circuit Court of Appeals for the Sixth

Circuit, specifically rejected plaintiff's request that its

right to use of a mark be extended into an area beyond

that in which it actually engaged in business:

To hold otherwise—to require Rectanus to retire from

the field upon the entry of Mrs. Regis’ successor—

would be to establish the right of the latter as a right

in gross, and to extend it to territory wholly remote

from the furthest reach of the trade to which it was

Id. at 101. Yet this is precisely what the Sixth Circuit

has approved in this case (and what the Second Circuit

declined to do in Sutton Cosmetics (P.R.), Inc. v. Lander

Co., supra, 455 F.2d at 289)—the granting of injunctive re-

lief to regulate trade in a geographic area where Frisch’s

does not advertise or engage in business.

*

This Case Raises Important Questions of Federal Law

Which Have Not Been, but Should Be, Settled

by This Court.

The Sixth Circuit’s holding raises fundamental and

far-reaching questions about Section 43(a), a federal stat-

utory tort of enormous, and increasing, significance.* The

section has moved to the center stage of federal unfair

competition and trademark law and occupies a position

there not unlike that occupied by Section 10(b) of the

Securities Exchange Act (15 U.S.C. §78j[b]) in the field

q securities law, but this Court has never considered or

construed it.

Guidance from this Court is needed not only to resolve

the significant conflicts between the Sixth Circuit’s de-

cision and the decisions of this Court and of other courts

of appeals detailed above, but also to address an issue of

fundamental importance underlying this entire case:

whether Section 43(a) has application to a dispute over

the use of a federally registered mark.

Frisch’s alleges in its amended complaint that the

same conduct which is the subject of its Section 43(a)

claim constitutes trademark infringement under Section

32(1) of the Lanham Act (15 U.S.C. §32[1]). Congress

specifically defined in Section 32(1) of the Lanham Act

the protection available for federally registered marks.“

8. A review of the trend of decisions by the courts of ap-

Jes or applying Section 43(a) shows Lat Judge

a were 34 such in

(six in 1979, 15 in 1980 and 13 in 1981).

8. Section 32(1) is reproduced at A43 of the Appendix.

21

Section 43(a), on the other hand, does not refer at all to

either marks or registered marks.

With the exception of Section 43 and Section 44 (un-

fair competition in international trade), the provisions of

the Lanham Act relate exclusively to federal registration

of marks and remedies for infringement of those registered

marks. To assume that Congress intended Section 43(a)

to apply to registered marks after having so carefully and

meticulously, section-by-section, defined in the balance of

the Lanham Act the rights and remedies incident to federal

registration makes the rest of the Act mere surplus.

Rather, as Professor Germain has concluded, Section 43 (a)

should not apply to “cases of mere passing-off or infringe-

ment of registered or unregistered traderaarks”. Germain,

Unfair Trade Practices Under Section 43(a) of the Lanham

Act: You’ve Come a Long Way, Baby—Too Far, Maybe?

64 TRADEMARK Ryrn. 193, 221 (1974).

Yet, Section 43(a) has here been applied by the Sixth

Circuit to resolve what is essentially a dispute between

licensees of a federally registered trademark owner, Mar-

riott, over the circumstances under which they can use

the trademark. This dispute, which can more properly be

characterized as one arising out of contract (but which

the lower courts have refused to view as a contract dis-

10. While the lower courts have held that federal

Boston Prof

Dallas Cap & Emblem ‘i g., Inc., 510 F.2d 1004, 1010 (5th Cir.),

cert. 423 US. (1975); DCA Food Industries, Inc. v.

Hawthorn Mellody, Inc., 470 F. . 574, 578-79 S.D.N.Y.

1979), and have occasionally in Section 43(a) W —

subject federally

cle: Torry; FRA SpA. v. Surg-0-Flex of 567 F.2d 154 (ist

„„ v a), tear America, Inc., 415

Section 43(a).

pute), centers on rights inhering in a federally registered

trademark, BIG BOx, and it directly implicates Section

32 (1) of the Lanham Act, not Section 43 (a). To reach

this dispute through Section 43 (a) elevates the section

over the balance of the Act and makes superfluous Section

32 (1) and the other provisions of the Act defining the

rights and duties of owners of federally registered marks.

If the Sixth Circuit’s application of Section 43(a) is fol-

lowed by other courts, the section will quickly and in-

evitably swallow up the balance of the Act, a result Con-

gress could not possibly have intended.

CONCLUSION

For all of the foregoing reasons, the Court should

grant the petition and issue a writ of certiorari to the

Court of Appeals for the Sixth Circuit.

Respectfully submitted,

Tuomas J. COLLIN

(Counsel of Record)

THompson, HIN AND FLORY

1100 National City Bank Building

Cleveland, Ohio 44114

216/566-5500

Counsel for Petitioners

Ray A. Byrp

Scuraver, STAMP, Brno, ByruM,

JOHNSON & COMPANION

816 Central Union Building

Wheeling, West Virginia 26003

304/233-3390

Kerru A. SOMMER

SoMMER & ANTILL

409 Walnut Street

Post Office Box 279

Martins Ferry, Ohio 43935

614/633-5551

Of Counsel

Dated: April 28, 1982

pu

Al

APPENDIX

OPINION OF THE COURT OF APPEALS

FOR THE SIXTH CIRCUIT

(Filed February 3, 1982)

Nos. 81-3095, 81-3098

UNITED STATES COURT OF APPEALS

For THe Stern Circuit

FRISCH’S RESTAURANTS, INC.,

Plaintiff-Appellee, Cross-Appellant,

V.

ELBY’S BIG BOY OF STEUBENVILLE, INC.; THE

BOURY CORPORATION; ELBY’S FAMILY RES-

TAURANTS, INC.; ELBY’S COMMISSARY, INC.;

GEORGE BOURY, ELLIS BOURY and DAVID CARR,

Defendants-Appellants, Cross-Appellees.

On Appeal From the United States District Court for the

Southern District of Ohio, Eastern Division.

Before: Wick“ and Brown, Circuit Judges; Pratt,

District Judge.**

Battey Brown, J. Marriott Corporation is the owner

of the “Big Boy” trademark and service mark, which is

»On December 31, 1981 J Weick retired from regular

active service under 28 U.S.C. § 371(b) and became a Senior Cir-

cuit Judge.

**The Honorable Philip Pratt, United States District Judge

for the Eastern District of Michigan, sitting by designation.

A2

used by a network of family restaurants around the coun-

try. The plaintiff, Frisch’s Restaurants, Inc. (Frisch’s),

has the exclusive license from Marriott to use these marks

in Ohio and currently operates eighty restaurants in Ohio

under the Big Boy trademark. One of the defendants, The

Boury Corporation, operates the network of “Elby’s Fam-

ily Restaurants” in western Pennsylvania (five restau-

rants), northern West Virginia, referred to in the record as

“the panhandle,” (seven restaurants), and eastern Ohio

(eight restaurants in six different cities). The Boury Cor-

poration holds the exclusive right to use the Big Boy

trademark in the panhandle of West Virginia and in most

of western Pennsylvania. Prior to 1971, the Elby’s Res-

taurants in eastern Ohio were authorized under a fran-

chise agreement with Frisch’s to use the Big Boy trade-

mark, but that agreement was terminated at Elby’s re-

quest in late 1971.

When the Ohio Elby’s restaurants continued to use the

Big Boy trademark after the franchise agreement was

terminated, Frisch’s sought and obtained a preliminary in-

junction from the West Virginia Supreme Court of Appeals

in 1973, enjoining the Ohio Elby’s organization from using

the Big Boy trademark “in any manner whatsoever in

connection with [Elby’s] business operations within the

State of Ohio.” The Ohio Elby’s restaurants have avoided

using the Big Boy trademark in their restaurants and in

Ohio advertising media since that time. However, the

present action by Frisch’s challenges the spillover effects

of Elby’s West Virginia advertising utilizing the Big Boy

trademark. This advertising reaches eastern Ohio con-

sumers and allegedly creates the false impression that Big

Boy products are available at the Ohio Elby’s restaurants

as well as Elby’s West Virginia operations.

A3

The Ohio and the West Virginia Elby’s restaurants

conduct joint advertising and promotional campaigns un-

der the direction of the parent corporation. A major ave-

nue of media advertisement is the Wheeling, West Virginia

television station WTRF. Most of Elby’s commercials on

WTRF which advertise for the entire chain contain a pic-

torial representation of the Big Boy figure,’ advertise “Big

Boy” food items, or contain jingles which strongly identify

all Elby’s Family Restaurants with the Big Boy trademark.

However, whenever a specific Ohio Elby’s restaurant is

advertised on WTRF or another West Virginia medium,

no reference to the Big Boy trademark is made.

The WTRF signal is broadcast from Bridgeport, Ohio,

across the Ohio River from Wheeling, West Virginia, and is

widely received by television viewers in certain counties in

the eastern portion of Ohio. Under their reciprocal adver-

tising agreements with WTRF, the Ohio Elby’s restaurants

have erected billboards on their restaurant properties di-

recting the attention of their Ohio customers to Elby’s ad-

vertisements on station WTRF. These Ohio Elby’s restau-

rants also utilize various in-store promotional devices, in-

cluding matchbooks and sugar packets, advertising station

WTRF.

‘sue Elby’s chain also places newspaper advertisements

in newspapers published in Wheeling, West Virginia which

have considerable circulation in the counties of eastern Ohio

where the Elby’s restaurants are located. These advertise-

ments publicize food items and specials available at all

Elby’s Family Restaurants with the aid of the Big Boy

trademark.

Frisch’s filed a complaint against the Elby’s organi-

zation and related corporations in an Ohio state court on

1. This boy is rather chubby and somewhat cherubic in ap-

pearance.

Al

November 27, 1978, alleging federal trademark infringe-

ment, breach of its prior franchise agreement with the Ohio

Elby’s restaurants, and a violation of Ohio’s “Deceptive

Trade Practices Act.” Elby’s removed the action to the

United States District Court for the Southern District of

Ohio. Frisch’s amended its complaint on February 21,

1980, adding state law trademark infringement and com-

mon law unfair competition as well as § 43(a) of the Lan-

ham Act (15 U.S.C. f 1125(a) (1976) ) claims to its previous

allegations. Frisch’s had previously demanded a permanent

injunction against Elby’s advertisements; its amended com-

plaint sought for the first time a preliminary injunction.

Frisch’s moved for a preliminary injunction on October

21, 1980, requesting that Elby’s be enjoined from using the

Big Boy trademark in “any advertising medium that reaches

a not insubstantial number of Ohioans” without disclosing

Ohio Elby’s disaffiliation with the Big Boy restaurant

organization. On January 20, 1981, District Judge Robert

M. Duncan, in an opinion reported at 514 F.Supp. 704

(S.D. Ohio 1981), issued a preliminary injunction enjoining

Elby’s from “using he ‘Big Boy’ trademark and service

mark in their WTRF advertising without making a prom-

inent disclosure that the Elby’s Family Restaurants within

the state of Ohio are not associated with the Big Boy’

restaurant organization. Alternatively, defendants may

wish to eliminate all reference to the ‘Big Boy’ mark on

WTRF advertisements.” Id. at 712. Judge Duncan based

his holding solely on “the unfair competition provisions of

Is 43(a) of] the Lanham Act, 15 U.S.C. § 1125 (a),“ id.,

and expressed no view on Frisch’s alternative theories of

recovery. However, Judge Duncan refused to extend his

preliminary injunction to Elby’s newspaper and radio ad-

vertisements, noting that Frisch’s failed to establish a

“causal connection between the public’s confusion [the con-

A5

fusion of eastern Ohio consumers over the availability of

Big Boy products at Ohio Elby’s restaurants] and defen-

dants’ advertising in such media.” Id. at 711 (emphasis

in original). Elby’s has appealed the grant of the WTRF

preliminary injunction, and Frisch’s cross-appealed the

district court’s failure to enjoin Elby’s newspaper advertise-

ments.“

Section 43 (a) of the Lanham Act, 15 U.S.C. § 1125 (a)

(1976), provides:

Any person who shall. . use in connection with

any goods or services a false designation of origin,

or any false description or representation, including

words or other symbols tending falsely to describe or

represent the same, and shall cause such goods or ser-

vices to enter into commerce . . shall be liable to a civil

action by any person doing business in the locality

falsely indicated as that of origin or in the region in

which said locality is situated, or by any person who

believes that he is or is likely to be damaged by the

use of any such f lse description or representation.

The intent of the Lanham Act is set forth in § 45 there-

of, 15 U.S.C. § 1127 (1976):

The intent of this chapter is to regulate commerce

within the control of Congress by making actionable

the deceptive and misleading use of marks in such com-

merce .. land] to protect persons engaged in such

Mas?

A6

It has been suggested that § 43 (a) of the Lanham Act

“created a sui generis federal statutory cause of action for

‘false representation,“ Chevron Chemical Co. v. Voluntary

Purchasing Groups, Inc., 659 F.2d 695, 702 (5th Cir. 1981).

The Fifth Circuit also concluded that Ҥ 43(a) proscribes

not only what had been considered ‘false advertising’ but

also what had been differentiated as unfair competition.“

Id. In addition, the Chevron Chemical court described the

distinctions between these two concepts:

In sum, the essential misrepresentation in “false

advertising,” which we have noted forms the basis of

the “false representation” leg of § 43(a), is funda-

mentally different from the essential misrepresentation

in “unfair competition”: in the former case, the de-

fendant makes no secret of the origin of the goods in

himself, but merely misrepresents certain qualities or

characteristics that his goods may or may not have;

in the latter case, the defendant misrepresents his

goods to be those of another.

Id. at 701 (fo note omitted).

It is undisputed that Elby’s has a right to use the Big

Boy trademark in connection with its West Virginia op-

erations; indeed, it has an obligation to promote the Big

Boy trademark in the panhandle of West Virginia under

its licensing agreement with Marriott. It is also undis-

puted that the Ohio Elby’s restaurants have no right to

use the Big Boy trademark. Frisch’s contends that the

Ohio Elby’s restaurants. through their participation in

Elby’s West Virginia advertisements which have sub-

stantial exposure in eastern Ohio, are improperly using

the Big Boy trademark to promote their products, thereby

creating a “false designation of origin” or a “false descrip-

tion or representation” of their goods as being sponsored

A7

by the Big Boy organization in the minds of Ohio con-

sumers in violation of § 43 (a).

We conclude that Frisch’s contentions are properly

within the scope of § 43(a) of the Lanham Act. Frisch’s

primary concern is that Ohio consumers will assume that

all Elby’s restaurants, including the Ohio Elby’s, sell food

which is sponsored by or originates from the “Big Boy”

chain of restaurants. This court previously concluded that

false representations about the “origin of source or manu-

facture” of goods are prohibited by the “false designation

of origin” clause of § 43(a). Federal-Mogul-Bower Bear-

ings, Inc. v. Azoff, 313 F.2d 405, 408 (6th Cir. 1963).

“(False representations of the source of a product con-

stitute the common-law tort of ‘unfair competition,’ or as

it is otherwise known, ‘passing off.’” Chevron Chemical

Co., supra, at 701.“ Passing off involves “defendant’s use

of plaintiff's well-known product name, symbol, or fa-

A8

previously determined, attempts at passing off are pro-

hibited by § 43 (a); indeed, the Lanham Act provi‘es:

a right of action to persons engaged in interstate and

foreign commerce, against . deceptive and misleading

use of words, names, symbols, or devices, or any com-

bination thereof, which have been adopted by a manu-

facturer or merchant to identify his goods and dis-

tinguish them from those manufactured by others,

where such misleading use is carried on, in the channels

of interstate and foreign commerce, which is subject

to regulation by Congress.

Federal-Mogul-Bower Bearings, supra at 409.

The district court properly held that the standard of

proof needed to prevail in a § 43(a) action for injunctive

relief was a showing of “likelihood of confusion.”

Although it is necessary to prove that the buying

public was actually deceived in order to recover dam-

ages under § 43(a) of the Lanham Act, Skil Corp. v.

Rockwell International Corp., 375 F.Supp. 777 (ND.

III. 1974), only a likelihood of confusion or deception

need be shown in order to obtain equitable relief.

Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema,

Ltd., (604 F.2d 200 (2d Cir. 1979)]. Here, since

equitable relief is sought, only the likelihood of con-

fusion need be shown, and not proof of actual con-

fusion as was required by the District Court.

Warner Bros., Inc., supra at 79. This likelihood of confusion

need not arise from intentional conduct; furthermore, a

mere showing that advertisements tend to create a false

impression is sufficient to warrant injunctive relief.

Under § 43(a) of the Lanham Act it is not neces-

sary to show that any false description or representa-

A9

tion is wilful or intentional. Parkway Baking Co. v.

Freihofer Baking Co., 255 F.2d 641, 648 (3d Cir. 1958).

All that is required is that the representation or de-

scriptions either be “false” or such as is “tending

falsely to describe or represent the goods or services

in question.” Ames Publishing Co. v. Walker-Davis

Publications, Inc., 372 F. Supp. 1, 11 (E. D. Pa. 1974).

Thus, liability is not restricted solely to descriptions

which are literally false, but extends to instances where

the defendant creates a false impression. Id.

Walker- Davis Publications, Inc. v. Penton/ IPC, Inc., 509 F.

Supp. 430, 435 (E. D. Pa. 1981).

In Toho Company, Ltd. v. Sears, Roebuck & Co., 645

F.2d 788 (9th Cir. 1981), the Ninth Circuit delineated eight

factors which are helpful in demonstrating that there

is a likelihood of confusion among consumers:

In AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348

(9t Cir. 1979), we set forth eight factors that are

relevant to the likelihood of confusion:

1. strength of the plaintiff’s mark;

gee

111

is.

5

i

1

a

|

|

9 2

111

:

8

F

:

:

E

ie

fi

2

:

8

255

f

b

Alo

evidence of actual confusion;

marketing channels used;

likely degree of purchaser care;

defendant’s intent in selecting the mark;

8. likelihood of expansion of the product lines.

Id. at 790.

In considering these factors, the unique factual setting

with which we are concerned militates strongly towards

likelihood of confusion. Although the strength of the Big

Boy mark was not addressed by the district court, we pre-

sume that it is a distinctive and desirable mark from Elby’s

attempts to implant in the public mind the idea that all of

its restaurants are affiliated with the Big Boy mark. The

parties are competing restaurant chains using the identical

trademark to promote related if not identical goods; addi-

tionally, it is likely that the marketing methods used to

promote the fast-food products served by both chains are

substantially similar. All these factors contribute to the

likelihood of confusion about the Ohio Elby’s restaurants’

association with the Big Boy trademark.

The district court determined that there was actual

confusion among eastern Ohio consumers about the avail-

ability of Big Boy products at Ohio Elby’s restaurants.

514 F. Supp. at 708-09. This finding was supported by

evidence from Frisch’s expert witness, who testified about

a survey he conducted which indicated that Elby’s tele-

vision advertisements contributed to confusion over the

connection of the Big Boy organization with the Ohio

Elby’s restaurants. The Fifth Circuit deduced that while

“evidence of actual confusion is not necessary to a finding

of likelihood of confusion, it is nevertheless the best evi-

dence of likelihood of confusion.” Amstar Corp. v.

a 2 7 „

All

Domino’s Pizza, Inc., 615 F.2d 252, 263 (5th Cir.), cert.

denied, 449 U.S. 899 (1980).°

The casual “degree of purchaser care” in selecting

fast-food restaurants also supports a conclusion of likeli-

hood of confusion. The “fast-food” products promoted by

Elby’s are not likely to be the object of intensive consumer

research, but rather subject to “impulse buying;” there-

fore, it is highly unlikely that Ohio consumers will discover

their mistake about the availability of Big Boy products in

Ohio Elby’s restaurants before patronizing Elby’s.

The Fifth Circuit’s comments on the intent factor are

equally supportive of likelihood of confusion:

Intent: we stated in Amstar that the “intent of

defendants in adopting [their mark] is a critical factor,

since if the mark was adopted with the intent of

deriving benefit from the reputation of [the plaintiff, ]

that fact alone may be sufficient to justify the infer-

ence that there is confusing similarity.” Amstar Corp.,

supra, 615 F.2d at 263 (emphasis added).

Chevron Chemical Co., supra at 703-04. The district court

found that “the defendants intentionally associate Ohio

Elby’s restaurants with the ‘Big Boy’ mark,” since “the

Ohio Elby’s restaurants are in fact direct participants in

the reciprocal advertising agreement with WTRF,” they

“actively encourage Ohio consumers to ‘watch for Elby’s

specials on WTRF’ .. . where the television advertisement

frequently identifies the Elby’s Family Restaurant with

the ‘Big Boy’ mark” and “[a] variety of in-store promo-

tional material including matchbooks and sacks also di-

5. it is difficult to conceive of a situation where a

of actual confusion

such as were involved in Amstar Corp., supra at 263.

Al2

rects the Ohio consumer to WTRF.” 514 F. Supp. at

710. The district court correctly inferred that Elby’s im-

properly intended to “derive benefit” from the Big Boy

trademark for their Ohio operations through coupling the

entire chain to the trademark.

Finally, the past association of the Ohio Elby’s res-

taurants with the Big Boy trademark through their expired

licensing agreement with Frisch’s increases the likelihood

that consumers would be confused about whether the Ohio

Elby’s restaurants continued to be linked with the Big

Boy organization. It is evident from their actions that the

Ohio Elby’s restaurants hoped to reinforce the residual

effects of Ohio consumer memories of their past affiliation

with the Big Boy trademark by tying in with the legitimate

West Virginia Big Boy advertisements thereby obscuring

their disaffiliation with the Big Boy trademark.

The preceding factors led the district court to con-

clude that a likelihood of confusion existed with regard

to Elby’s television advertisements. However, Elby’s con-

tends that the district court erred in even applying § 43(a)

to the facts of this case, and broadly attacks the district

court’s ruling.

Elby’s first argues that Frisch’s does not have standing

to bring this suit because Frisch’s does not operate any

restaurants in the eastern Ohio area where the confusion

about Big Boy products is prevalent. However, it is evi-

dent that Frisch’s fers a cognizable injury in this in-

stance because it w have to combat consumer misper-

ceptions about the availability of Big Boy products if it

were to expand into the area itself or license restaurants

in that area to operate under the Big Boy trademark. The

Ohio Supreme Court has recognized that a trademark is

entitled to protection throughout the entire state even

though its owner is currently operating only in one part

Al3

of the state. Younker v. Nationwide Mutual Ins. Co., 175

Ohio St. 1, 191 N.E.2d 145 (1963). More to the point,

this court in Socony-Vacuum Oil Co. v. Oil City Refiners,

Inc., 136 F.2d 470 (6th Cir.), cert. denied, 320 U.S. 798

(1943), determined that the user of a trademark “was

entitled to the exclusive use of the name within the entire

state as territory which may reasonably be anticipated

to be within normal business expansion. Id. at 475.

Accord, Grocers Baking Co. v. Sigler, 132 F.2d 498, 502

(6th Cir. 1942).

The issue of standing to sue under § 43(a) is closely

related to the statute’s declaration that a § 43(a) plaintiff

includes one “who believes that he is or is likely to be

damaged by the use of any such false description or rep-

resentation.” 15 U.S.C. 1125 (a) (1976). The Second

Circuit explained the burden of proof such a plaintiff

must meet to be entitled to injunctive relief:

On the one hand, despite the use of the word

“believes,” something more than a plaintiff's mere

subjective belief that he is injured or likely to be

damaged is required before he will be entitled even

to injunctive relief. See, Chromium Industries v.

Mirror Polishing & Plating, 448 F.Supp. 544, 554 (N.D.

III. 1978); D.M. Antique Import Corp. v. Royal Saxe

Corp., 311 F.Supp. 1261, 1269 n. 6 (S.D.N.Y.1970).

On the other hand, as the district court in this case

recognized, a plaintiff seeking an injunction, as op-

posed to money damages, need not quantify the losses

actually borne.

Johnson & Johnson v. Carter-Wallace, Inc., 631 F.2d 186,

189 (2d Cir. 1980).

The Second Circuit further elaborated on these re-

quirements:

Al4

The statute demands only proof proviidng a reasonable

basis for the belief that the plaintiff is likely to be dem-

aged as a result of the false advertising. The correct

standard is whether it is likely that Carter’s advertis-

ing has caused or will cause a loss of Johnson sales, not

whether Johnson has come forward with specific evi-

dence that Carter’s ads actually resulted in some def-

inite loss of sales. Parkway Baking Co. v. Freihofer

Baking Co., 255 F.2d 641, 649 (3rd Cir. 1958); Ames

Publishing Co. v. Walker-Davis Publications, Inc., 372

F.Supp. 1, 13 (E.D.Pa.1974); 2 J.T. McCarthy, Trade-

marks and Unfair Competition § 27:5 at 249-50 (1973).

Contrary to Johnson’s argument, however, the likeli-

hood of injury and causation will not be presumed, but

must be demonstrated. If such a showing is made,

the plaintiff will have established a reasonable belief

that he is likely to be damaged within the meaning of

§ 43(a) and will be entitled to injunctive relief, as

distinguished from damages, which would require more

proof.

Id. at 190. In this instance, where Frisch's has demon-

strated that it has a cognizable interest in protecting its

Ohio trademark rights, and a showing of a likelihood of

confusion about the origin and sponsorship of the products

of Ohio Elby’s restaurants has been made, Frisch’s has

demonstrated the “likelihood of injury and causation” for

injunctive relief without the need for showing an actual loss

of business to Frisch’s restaurants.

Elby’s also protests the imposition of an injunction

requiring disclosures under § 43(a), claiming that § 43(a)

does not cover its failure to disclose that its Ohio restau-

rants are not connected with the Big Boy trademark. How-

ever, the district court found that

the Ohio Elby’s affirmative participation in the WTRF

reciprocal advertising campaign involves far more than

Al5

simple nondisclosures and is accordingly within the

purview of Section 43(a) . . . Standing alone, neither

the Ohio Elby’s WTRF billboards nor the advertise-

ments on WTRF-TV say that Ohio Elby’s are Big Boy”

restaurants. Functioning together, however, the bill-

boards and TV advertisements create the likely impres-

sion in the consumer that “Big Boy” products are avail-

able at Ohio Elby’s.

514 F.Supp. at 710. When Elby’s advertisements reached

the Ohio consumers, they affirmatively misrepresented an

affiliation of the local Elby’s restaurants in Ohio with the

Big Boy trademark. Since Elby’s was directly responsible

for the false impressions generated about the Ohio Elby’s

restaurants’ connection with Big Boy products, it was prop-

erly within the district court’s discretion to require Elby’s

to disclose information that would correct those false im-

pressions. See, e.g., CBS Inc. v. Springboard International

Records, 429 F.Supp. 563 (S.D.N.Y. 1976), CBS, Inc. v.

Gusto Records, Inc., 403 F.Supp. 447 (M.D. Tenn. 1974)

(district courts ordered disclosures about release of collec-

tion of old Charlie Rich songs).

The district court was accordingly justified in deter-

mining that a “likelihood of confusion” existed, warranting

injunctive relief against Elby’s television advertisements.

The district court, however, failed to properly utilize

the “likelihood of confusion” standard with respect to

Elby’s newspaper and radio advertisements: “Plaintiff's

proof relative to defendants’ advertising in newspapers and

on radio is not sufficient to establish a causal connection

between the public’s confusion and defendants’ advertis-

ing in such media. No proof comparable to the Becker

Study has been presented for other media.” 514 F.Supp.

at 711. Because Frisch’s did not prove through its consumer

survey that Ohio consumers were actually confused by

Elby’s newspaper advertisements, the district court con-

Als

cluded that “likelihood of confusion” was not present. As

before pointed out, however, the existence of actual con-

fusion is only one factor in determining whether likelihood

of confusion is present.

This failure by the district court properly to apply the

likelihood of confusion standard to the newspaper adver-

tising was an error of law and therefore, to this extent, an

abuse of discretion. United States v. Colahan, 635 F.2d 564

(6th Cir. 1980), cert. denied, 50 U.S.L.W. 3246 (Oct. 5,

1981). The question remains, however, whether a reversal

and remand for a further factual determination is required

or whether this court can determine on this record that

Frisch’s is entitled to injunctive relief as to the newspaper

advertising.

The Ninth Circuit has developed a two-level test for

reviewing lower court findings of likelihood of confusion.

In assessing whether there is likelihood of con-

fusion, a court first considers numerous factors and

then, based thereon, determines whether there exists

a likelihood of confusion. With the analysis so struc-

tured, the J. B. Williams and AMF, Inc. courts held that

the determination of what is the state of affairs re-

garding each factor (a “foundational fact”) is a find-

ing of fact reviewed on the clearly erroneous standard,

but the further determination of likelihood of con-

fusion based on those factors is a legal conclusion.

See J. B. Williams, 523 F.2d at 191-92; AMF, Inc.,

599 F.2d at 348-54 (applying two-level test as described

here).

Alpha Industries, Inc. v. Alpha Stee’ de & Shapes, Inc.,

616 F.2d 440, 443-44 (9th Cir. 1980).

Applying this test, with which we agree, to the facts

that are not in dispute and as found by the district court,

we conclude that Frisch’s is entitled to injunctive relief

Al7

as to the newspaper advertising. Even without evidence

of actual consumer confusion, examination of the other

factors which are not in dispute, i.e., intent, likely degree

of purchaser care, and the unavoidable confusion resulting

from the use of identical trademarks in similar marketing

channels, inexorably leads to the “legal conclusion” that

confusion is just as likely to result from Elby’s newspaper

advertisements as from their television advertisements.

See, e.g., Chevron Chemical Co., supra at 705 (“the lack of

evidence of actual confusion did not militate strongly

against a finding of likelihood of confusion” when the

other factors were also taken into account). Furthermore,

the district court did find as a foundational fact that there

was actual confusion among Ohio consumers about the

availability of Big Boy products in Ohio Elby’s restaurants;

the only dispute concerned the causes of that confusion.

In determining the proper scope of relief, we should re-

call that Ҥ 43 (a) of the Lanham Act is remedial in nature,

and should be interpreted and applied broadly so as to

effectuate its remedial purpose.” Warner Bros., supra at

79. Because the ultimate determination of “likelihood of

confusion” is a legal conclusion reviewable de novo by

this court, J. B. Williams Co. v. Lee Conte Cosmetics, Inc.,

523 F.2d 187, 190 (9th Cir. 1975), cert. denied, 424 U.S. 913

(1976), it is unnecessary to remand this case to the district

court for further consideration.

A final issue raised by Elby’s is whether the particular

requirements for a preliminary injunction are met here.

The legal standard governing the grant of a preliminary in-

junction under § 43 (a) is clear.

There must be a showing of (A) irreparable harm and

(B) either (1) likelihood of success on the merits or

(2) sufficiently serious questions going to the merits

to make them a fair ground for litigation and a balance

of hardships tipping decidedly toward the party re-

questing the preliminary relief.

Als

Warner Bros., supra at 78. It is obvious to this court that

Frisch’s has shown a likelihood that it will succeed on the

merits of this case. We are also convinced that Frisch's

has demonstrated irreparable harm, since it has a “substan-

tial financial interest at stake” in its exclusive use in Ohio

of the Big Boy trademark, it has “incurred great expense”

in promoting that trademark in Ohio, and “its licensing pro-

gram will lose much of the confidence reposed in it by

[its] licensees” if they view Frisch’s as unwilling to protect

the exclusivity of its licenses. Id. at 79. Although it is

true that [a] preliminary injunction imports a degree of

urgency [and] . . . should not be available to the plaintiff

who slumbered on his rights,” 4 R. Catuman, Law or Un-

ram COMPETITON, TRADEMARKS & Monopo.ies § 88.3 (b) at

206 (3d ed. 1970), it appears to us that Frisch’s properly

asserted its legal rights from the beginning through its

litigation in the West Virginia state courts, and it undoubt-

edly hoped to defend its interest in that forum without

the need of proceeding in another forum. We recognize

Frisch’s delay in moving for a preliminary injunction after

the present action was originally filed; however, it so moved

a few months after it filed its amended complaint.* We do

not believe the district court abused its discretion in grant-

ing the preliminary injunction in spite of this delay.

The district court’s order granting a preliminary in-

junction as to Elby’s television advertisements is there-

fore affirmed, while we reverse on the issue of newspaper

advertisements and remand for entry of such preliminary

injunction.

6. Evidently Frisch’s sought a preliminary injunction when

it became t that docket constraints in the district court

would preclude a plenary for an extended period of time.

of slumbering on its ts, Frisch’s sought to draw the

court’s attention to its dilemma as soon as practicable by applying

for a preliminary injunction.

Al9

MEMORANDUM AND ORDER OF THE

UNITED STATES DISTRICT COURT

(Filed January 20, 1981)

Case No. C-2-78-1316

IN THE UNITED STATES DISTRICT COURT

For THE SOUTHERN District or OHIO

EASTERN DIVISION

FRISCH’S RESTAURANTS, INC.,

Plaintiff,

V.

ELBY’S BIG BOY OF STEUBENVILLE, INC., et al.,

Defendants.

MEMORANDUM AND ORDER

This matter is before the Court on plaintiff's motion

for preliminary injunction pursuant to Fed. R. Civ. P. 65.

This is a trademark infringement action brought under

Section 43(a) of the Lanham Act, 15 US.C. §1125(a),

common law principles of unfair competition, and Ohio’s

Deceptive Trade Practices Act. For the reasons stated

below, the plaintiff's request for preliminary injunctive

relief is granted in part. In accordance with the require-

ments of Rule 65(d), the Court makes the following find-

ings.

I. Findings of Fact

1. Plaintiff, Frisch’s Restauranis, Inc. (Frisch’s), is

an Ohio corporation engaged in the business of preparing

and processing food products in Ohio and other states.

A20

Plaintiff owns and franchises family restaurants in the

state of Ohio, many of which engage in business under the

“Big Boy” trademark and service mark.

2. Defendant The Boury Corporation, Inc. is the

parent corporation for all of the company-owned Elby’s

Family Restaurants located in Ohio and West Virginia.

Defendant Elby’s, Inc. is a wholly-owned subsidiary of

The Boury Corporation, Inc. Defendant George Boury is

the president of The Boury Corporation, Inc. Defendant

Ellis Boury is an officer, director, and shareholder of The

Boury Corporation, Inc., and is responsible for supervision

of the advertising and promotional campaigns of the Elby’s

Family Restaurants located in Ohio and West Virginia.

Defendant David Carr is an employee of Elby’s Inc., and

is the person primarily responsible for the creation and

placement of advertisements on behalf of Elby’s Family

Restaurants in Ohio and West Virginia.

3. Marriott Corporation is the holder of the registra-

tion for the federally-registered trademark “Big Boy”

bearing Registration No. 574,742 on the Principal Register

of the United States Patent Office. This registration is in

full force and effect.

4. On October 25, 1953, plaintiff was granted by the

predecessor in interest of Marriott Corporation a license to

use in Ohio the “Big Boy” trademark in connection with

a doubledecker hamburger and the restaurant where the

hamburger is sold.

5. Defendant The Boury Corporation holds the ex-

clusive right to use the Big Boy trademark in the pan-

handle of West Virginia, including the Wheeling area, and

in Pennsylvania except in the Philadelphia and Pittsburgh

areas. Defendants have an obligation under these various

license agreements to promote and advertise the “Big Boy”

mark.

A21

6. The Marriott Corporation is currently the common

licensor of plaintiff and defendants. Plaintiff now operates

approximately 80 restaurants in Ohio under the “Big Boy”

mark. Defendants now operate 7 restaurants in northern

West Virginia and 5 restaurants in western Pennsylvania

under the “Big Boy” mark.

7. Prior to 1971, Elby’s Family Restaurant of Steu-

benville, Inc. was authorized, pursuant to a franchise agree-

ment with plaintiff, to use the “Big Boy” mark in con-

nection with the Elby’s Family Restaurants in eastern Ohio.

In late 1971, Elby’s and a related corporation terminated

the agreements pursuant to which the “Big Boy” mark was

used in eastern Ohio.

8. Shortly thereafter, in early 1972, plaintiffs initiated

an action in West Virginia state court alleging, among

other things, that Elby’s Family Restaurants of Steuben-

ville, Inc. and the related corporation were violating pro-

visions of the prior franchise agreements relating to cessa-

tion of trademark and tradename use after termination

of the agreements. In response to a request from plaintiff

in connection with the pending state court litigation, the

West Virginia Supreme Court of Appeals, in July 1973,

entered a preliminary injunction, which continues in effect,

enjoining defendants Park Corporation of Ohio and Elby’s

Family Restaurant of Steubenville, Inc. from using the

“Big Boy” trademark in connection with their restaurants

in Ohio.

9. Defendants currently operate restaurants under

the name “Elby’s Family Restaurants” in the Ohio cities of

Steubenville, Marietta, Dover, Cambridge, and St. Clairs-

ville (hereafter Ohio Elby’s). As noted earlier, the Ohio

Elby’s authority to use the “Big Boy” mark was terminated

in 1971.

A22

10. Defendant Elby’s Commissary, Inc. was and is the

corporation responsible for the creation and placement of

television, radio and newspaper advertisements on behalf

of Elby’s Family Restaurants located in West Virginia and

Ohio. Defendant Ellis Boury is an officer, director and

shareholder of The Boury Corporation, Inc. and is di-

rectly responsible for the supervision of the advertising

and promotional campaigns on behalf of Elby’s Family

Restaurants located in West Virginia and Ohio.

11. The Elby’s Family Restaurants located in the

cities of Steubenville, St. Clairsville, Bridgeport, Marietta,

Cambridge and Dover, Ohio, have erected billboards on

their restaurant properties directing the general public

to watch for Elby’s advertisements on Wheeling, West

Virginia, television station WTRF whose signal is broad-

cast from Bridgeport, Ohio, and is widely received by

television sets throughout the easte:n portion of the state

of Ohio.

12. In addition to these billboards, the above-named

Elby’s Family Restaurants have placed in their respective

restaurants in-store promotional pieces, including match-

books and sugar packets, which advertise WTRF.

13. Defendant Elby’s Coommissary, Inc. creates and

places on behalf of Elby’s Family Restaurants, a large

number of television advertisements on WTRF, most of

which either contain a pictorial representation of the “Big

Boy” figure, advertise “Big Boy” food items and/or con-

tain jingles which strongly identify “Elby’s Family Res-

taurants” with the “Big Boy” trademark and service mark.

14. Defendant Elby’s Commissary, Inc. creates and

places advertisements in newspapers published in West

Virginia and having circulation in both West Virginia and

eastern Ohio. These advertisements advertise food items

A23

available at Elby’s Family Restaurants with the aid of the

“Big Boy” trademark and service mark.

15. None of the television or newspaper advertise-

ments placed on behalf of Elby’s Family Restaurants and

received by persons living in the eastern portion of the

state of Ohio advises the public that the Elby’s Family

Restaurants located in Ohio are not affiliated with the

“Big Boy” trademark and service mark and that “Big Boy”

food items are unavailable at those restaurants.

16. In addition to the advertising described above,

the Ohio Elby’s also employ a variety of advertising media

which originate in Ohio. None of these Ohio advertise-

ments use the “Big Boy” mark. Moreover, when defen-

dants have advertised a specific Ohio Elby’s location in a

West Virginia medium, no reference to the “Big Boy”

mark has been included. Tr. 115-16.

17. The advertisements placed on WTRF on behalf

of Elby’s Family Restaurants coupled with the WTRF

promotional material located in Ohio Elby’s are likely to

confuse and indeed have confused persons residing in the

eastern portion of Ohio, near the West Virginia panhandle,

into believing that the Elby’s Family Restaurants located

in Ohio are affiliated with the “Big Boy” trademark and

service mark and that “Big Boy” food items are available

at such restaurants.

18. Plaintiff's claim of likelihood of confusion was

supported by the testimony of Dr. Lee B. Becker, a quali-

fied expert in the field of scientific survey analysis. Becker

supervised a survey carried out in July of 1979 which was

designed to measure whether residents of eastern Ohio

are confused concerning the availability of Big Boy pro-

ducts in Ohio. The Court finds the survey and testimony

of Dr. Becker to be worthy of significant weight.

A24

19. The Court finds that residents of eastern Ohio

are in fact confused about the availability of the Big Boy

products in Ohio. As Dr. Becker wrote: “Many think

this product can be purchased at Elby’s Family Restaurants

operated in Ohio.” Plaintiff's Ex. 2, p. 1.

20. Dr. Becker found that the confusion concerning

the Big Boy products was “associated with” the following

factors:

(a) proximity of the particular Ohio community

to West Virginia where consumers can purchase a

Big Boy at Elby’s;

(b) length of residence in the respective com-

munity; i.e., residents for a period greater than eight

years are more likely to be confused;

(c) frequent travel to West Virginia; and

(d) viewing of Elby’s advertisements on WTRF.

21. The first three factors causing confusion are not

attributable to defendants; but are instead a result of the

fairly unique geography of this tri-state area. The con-

fusion associated with WTRF advertising is, however, at-

tributal to defendants.

22. Although the Court claims no expertise in the

field of consumer survey research, the Court’s own viewing

of the WTRF advertisements confirms the view that the

confusion in eastern Ohio communities is in part attribut-

able to the WTRF-TV advertising which reaches the homes

of 96.3% of the sample surveyed by Dr. Becker.

23. Plaintiff currently has no restaurants in the cov-

erage area of defendant’s WTRF-TV advertising. How-

ever, plaintiff has previously sub-licensed the “Big Boy”

trademark in this area and may well attempt to do so in

the future.

A25

24. The crucial facts in this matter can be sum-

marized as follows. Ohio Elby’s restaurants previously

paid plaintiff under a franchise agreement for the right

to use the “Big Boy” mark in association with its Elby’s

restaurants in Ohio. Although the authority to use the

trademark was terminated in 1971, the continued use

of the mark resulted in a West Virginia court’s issuance

of a preliminary injunction prohibiting such further use.

Thereafter, defendants continued to involve the Ohio Elby’s

restaurants in an advertising campaign on WTRF-TV as-

sociating all Elby’s restaurants with the “Big Boy” trade-

mark. Although defendants have avoided use of the mark

in Ohio, promotional material and billboards on Elby’s

property directed Ohio consumers to look for WTRF-TV

weekly Elby’s specials. These WTRF weekly specials, in

turn, prominently associated all Elby’s restaurants with

the “Big Boy” trademark. The public’s confusion concern-

ing the availability of “Big Boy” products at Ohio Elby’s

is due in part to this advertising campaign.

Discussion and Conclusions of Law

1. This action arises under trademark laws of the

United States and Ohio’s Deceptive Trade Practices Act

and principles of common law unfair competition. Ju-

risdiction is based on 28 U.S.C. §1338(a) and 15 U.S.C.

$1051 et seq. and 28 U.S.C. §1338(b).

2. Plaintiff's request for preliminary injunctive re-

lief requires this Court to apply the familiar factors identi-

fied by the United States Court of Appeals for the Sixth

Circuit in Mason County Medical Association v. Knebel,

563 F.2d 256 (6th Cir. 1977):

(a) Whether the plaintiff has shown a strong or sub-

stantial likelihood of success on the merits.

A26

(b) Whether the plaintiff has shown irreparable in-

jury.

(c) Whether the issuance of a preliminary injunction

would cause substantial harm to others.

(d) Whether the public interest would be served by

issuing a preliminary injunction.

563 F. ad at 261. The Court will now turn to an examination

of these criteria.

Substantial Likelihood of Success on the Merits

3. The threshold inquiry in this action for unfair

competition is likelihood of confusion. 15 U.S.C. §1125(a).

New West Corp. v. Nym Co. of California, Inc., 595 F.2d

1194, 1201 (9th Cir. 1979); Quabaug Rubber Co. v. Fabiano

Shoe Co., Inc., 567 F.2d 154, 160 (1st Cir. 1977). The First

Circuit in Quabaug suggested that the required showing

under §1125(a) is closely analagous, if not identical with,

the likelihood of confusion standard applied in federal

trademark infringement actions. “In determining whether

likelihood of confusion exists, courts consider such factors

as the type of trademark in issue, the similarity of the de-

sign, similarity of products, identity of retail outlets and

purchasers, identity of advertising media utilized, defen-

dant’s intent, and actual confusion.” Union Carbide Corp.

v. Ever-Ready, Inc., 531 F.2d 366, 381 (7th Cir. 1976), cert.

denied, 429 U.S. 830; see also Restatement of Torts §729.

4. As common licensees of the Marriott Corporation,

for the use of the “Big Boy” mark it is not surprising to

find that the mark advertised by defendants is identical

to the mark advertised by the plaintiff. The similarities of

products, retail outlets, usual purchasers, and general forms

of advertising media are also apparent. This conclusion, in

the somewhat unusual factual context presented by this

A27

case, is neither surprising nor particularly helpful. Neigh-

boring licensees under a common mark will generally share

such characteristics. Many of these characteristics will also

be shared by family restaurant competitors even though

not operating under a common trademark as is the case

with Frisch’s Big Boy and Elby’s Family in Ohio.

5. Far more important to the unusual factual posture

of this case are the conclusions to be drawn from the testi-

mony of Dr. Becker relative to the issue of confusion. As

the Court noted in its findings of fact, supra, eastern Ohio

consumers are in fact confused concerning the availability

of “Big Boy” products at Ohio Elby’s restaurants. Of the

four factors associated with the confusion, however, three

are not attributable to any arguable wrongdoing on the

part of the defendants. Instead. the confusion associated

with travel, proximity to defendants’ restaurants legit-

imately using the mark, and length of residence are attribu-

table to either unique geography or, in the case of residence,

the fact that residents for a period in excess of eight

years may not have “forgotten” the prior legitimate asso-

ciation of the mark with Ohio Hby's restaurants. The

Court can discern no basis for imposing liability on the

defendants for the confusion associated with these first

three factors.

6. The WTRF advertising presents another matter.

It is important to note at the outset that the Ohio Elby’s

restaurants are in fact direct participants in the reciprocal

advertising agreement with WTRF. Deposition of Frank

Curtis at 17. Thus, this is not a case of mere accidental

benefit te the Ohio Elby’s from the association of Elby’s

with the “Big Boy” mark. Moreover, the Ohio Elby’s res-

taurants, pursuant to the terms of the reciprocal advertising

agreement, actively encourage Ohio consumers to “watch

for Elby’s specials on WTRF,” (Plaintiff's Ex. 26, 15, 5),

A28

where the television advertisement frequently identifies

the Elby’s Family Restaurant with the “Big Boy” mark. A

variety of in-store promotional material including match-

books and sacks also directs the Ohio consumer to WTRF.

The Court concludes from these facts that the defendants

intentionally’ associate Ohio Elby’s restaurants with the

“Big Boy” mark.

While the Court would be reluctant to draw such an

inference of intentional unauthorized association from a

case of simple advertising “spill-over,” the facts here do

not present such a case. Because the preliminary injunc-

tion by a West Virginia state court has been in effect, the

defendants have been well aware of a problem concerning

unauthorized use of the “Big Boy” mark in Ohio. Never-

theless, the evidence establishes a continuing effort on the

part of the defendants to foster the improper association

with the “Big Boy” mark by the bill-board and promotional

devices discussed above.

The Court concludes that plaintiff has established a

likelihood of confusion resulting from the WTRF advertis-

ing and therefore a substantial likelihood of success on the

merits.

7. The defendants argue, however, that plaintiff has

shown no likelihood of confusion between the defendants’

products and plaintiff's products; that is, between the

products of Ohio Elby’s and the products of the plaintiff's

restaurants. The argument, however, misses the mark.

Plaintiff sues for protection of the “Big Boy” trademark in

Ohio, not the Frisch’s name. Cf. Union Carbide Corp. v.

Ever-Ready, Inc., 531 F.2d 366, 387 (7th Cir. 1976) (“The

test . . is whether they associate the products either with

Carbide or with the single, though anonymous, source which

manufacturers EVERREADY products.“)

A29

8. Defendants also argue that Section 43(a) of the

Lanham Act does not reach omissions and nondisclosures.

Universal City Studios, Inc. v. Sony Corp., 429 F. Supp.

407 (1977). Defendants’ argument appears to confuse the

relief sought by plaintiff with the acts forming the basis

for liability. The Court finds that the Ohio Elby’s affirma-

tive participation in the WTRF reciprocal advertising cam-

paign involves far more than simple nondisclosures and

is accordingly within the purview of Section 43(a) of the

Act. “The question is what is the likely ultimate impres-

sion, upon customers and potential customers of the rele-

vant services and products which will be created by what

is said and what is reasonably implied.” Dallas Cowboys

Cheerleaders v. Pussycat Cinema, 467 F. Supp. 366, 374

(S.D. N.Y. 1979), aff'd, 604 F.2d 200 (2d Cir. 1979). Stand-

ing alone, neither the Ohio Elby’s WTRF billboards nor the

advertisements on WTRF-TV say that Ohio Elby’s are

“Big Boy” restaurants. Functioning together, however,

the billboards and TV advertisements create the likely im-

pression in the consumer that “Big Boy” products are avail-

able at Ohio Elby’s.

9. Defendant also argues that plaintiff has shown no

causal connection between defendants’ conduct and dam-

age to the plaintiff. In this argument, defendant mis-

takenly equates harm with proof of lost sales or actual

competition. Under Section 43(a) of the Lanham Act,

however, proof of actual competition is not required. Tisch

Hotels, Inc. v. Americana Inn, Inc., 350 F.2d 609, 613 (7th

Cir. 1965). Moreover, the Sixth Circuit has held that the

legal protection to be afforded the owner of a trademark

extends throughout the entire state. Socony-Vacuum Oil

Co. v. Oil City Refiners, 136 F.2d 470 (6th Cir. 1943), cert.

denied, 320 U.S. 798; Sheila’s Shine Products, Inc. v. Sheila

Shine, Inc., 486 F.2d 114, 127 (5th Cir. 1973); see also

A30

Younker v. Nationwide Mutual Ins. Co., 175 Ohio St. 1, 191

N.E.2d 145 (Ohio 1963). Application of that rule where,

as here, plaintiff has previously expanded its operations

into eastern Ohio is particularly appropriate. See Finding

of Fact #7, supra.

10. Plaintiff has also requested preliminary relief

with respect to defendants’ advertisements on radio and

in newspapers. As noted earlier, these advertisements

originate in West Virginia media and are either heard or

read by some Ohio consumers. The Court concludes that

the plaintiff has not established a sufficient likelihood of

success on the merits to warrant preliminary relief with

respect to the newspaper and radio advertisements. Plain-

tiff's proof relative to defendants’ advertising in news-

papers and on radio is not sufficient to establish a causal

connection between the public’s confusion and defendants’

advertising in such media. No proof comparable to the

Becker study has been presented for other media.

There is also some question whether Section 43(a) of

the Lanham Act reaches omissions and nondisclosures.

Universal City Studios, Inc. v. Sony Corp., 429 F. Supp.

407 (1977). As noted above, plaintiff's proof with respect

to WTRF-TV advertisements established more than omis-

sions and nondisclosures. Plaintiff established purposeful?

fostering of confusion by defendants’ affirmative acts in

directing Ohio consumers to watch or weekly specials on

WTRF-TV.* No comparable proof has been presented

with respect to radio and newspaper advertisements. For

that reason, the Court finds a substantial likelihood of suc-

cess on the merits only with respect to defendants’ WTRF-

TV advertisements. The Court will next consider the re-

maining factors identified in Mason County, supra.

A31

Irreparable Injury

11. The law is well-settled that likelihood of confusion

will generally constitute irreparable harm. Dallas Cowboys

Cheerleaders, supra, 604 F.2d at 207; Hills Bros. Coffee, Inc.

v. Hills Supermarkets, Inc., 428 F.2d 379, 381 (2d Cir. 1970);

Ideal Industries, Inc. v. Gardner Bender, Inc., 612 F.2d

1018, 1025-26 (7th Cir. 1979), cert. denied, 100 S. Ct. 3016.

The defendant, however, argues that plaintiff's own laches

in seeking injunctive relief conclusively establishes that

defendants’ advertisements have not caused irreparable

harm to the plaintiff.

The record does suggest considerable periods of delay

in plaintiff's pursuit of the defendants’ allegedly illegal acts.

However, “[mJere delay is insufficient; it must result in

prejudice to the party asserting laches.” Standard Oil of

Colorado v. Standard Oil Co., 72 F.2d 524, 527 (10th Cir.

1934). See also Ideal Industries, Inc. v. Gardner Bender,

Inc., 612 F. 2c 1018, 1025 (7th Cir. 1979). Under these

cases the Court must determine whether “the defendant

ha[s] been lulled into a false sense of security or has acted

in reliance on plaintiff's delay.” 612 F. ad at 1025. In view

of the fact that several of the defendants have been subject

to a preliminary injunction prohibiting the use of the

“Big Boy” trademark in connection with the Ohio Elby’s

restaurants, the Court is unable to conclude that defen-

dants have been lulled into a false sense of security. See

also Plaintiff's Ex. 48. Moreover, the defendants have not

offered evidence to establish the date upon which plaintiff

first learned of the existence and terms of defendants’ re-

ciprocal advertising agreement with WTRF and the content

of the WTRF advertisements. In the absence of such proof,

the Court is unwilling to hold that defendants have met

their burden of proof relative to the defense of laches.

Cuban Cigar Brands N.V. v. Upmann International, Inc.,

A32

457 F. Supp. 1090, 1096 (S.D. N.Y. 1978). The Court there-

fore concludes that plaintiff's proof of likelihood of con-

fusion is sufficient to satisfy the test of irreparable harm.

Harm to Others and the Public Interest

12. The final two factors identified in Mason County,

supra, also weigh in favor of the issuance of a preliminary

injunction. Plaintiff seeks an order requiring defendants

to prominently disclose that Ohio Elby’s are not associated

with the “Big Boy” mark. While the Court does not

believe that the disclosure in the advertisements on WTRF-

TV will totally reverse the public’s confusion concerning

the availability of “Big Boy” products in Ohio Elby’s res-

taurants, the Court is satisfied that accurate advertising will

be a step in the right direction. One of the fundamental

policies implicit in Section 43(a) of the Lanham Act is

accurate advertisement. The public interest will be well

served by taking this small step to reverse the consumer

confusion caused in part by defendants’ false advertising.

Finally, although the Court recognizes that including

the limitation will “clutter-up” defendants’ advertising on

WTRF-TV, the Court believes that this minor incon-

venience is outweighed by the greater harm that would

result to plaintiff if defendants were allowed to continue

to falsely associate the Ohio Elby’s restourant with the

“Big Boy” mark. For all of the above reasons, the Court

will grant preliminary injunctive relief pursuant to 15

U.S. C. §1125(a).

13. Having determined that injunctive relief is ap-

propriate under the unfair competition provisions of the

Lanham Act, 15 U.S.C. 51125 (a), the Court expresses no

view concerning the plaintiff's alternative theories of re-

covery under 15 U.S.C. §1114, Ohio statutes, and common

law.

A33

ORDER

14. Accordingly, defendants are preliminarily enjoined

from using the “Big Boy” trademark and service mark in

their WTRF advertising without making a prominent dis-

closure that the Elby’s Family Restaurants within the state

of Ohio are not associated with the “Big Boy” restaurant

organization. Alternatively, defendants may wish to elimi-

nate all reference to the “Big Boy” mark on WTRF ad-

vertisements. (Tr. 158-59.) Defendants are further

ORDERED to file with the Court and serve upon the

plaintiff a report in writing under oath setting forth in

detail the manner and form in which the defendants have

complied with the injunction. Said report is due thirty

(30) days after the issuance of this injunction. Pursuant

to Rule 65(c) of the Federal Rules of Civil Procedure,

plaintiff is required to post security. The amount of this

security shall be Five Thousand Dollars ($5,000.00). The

injunction shall take effect upon posting of the security.

/s/ Rosert M. Duncan

Judge

United States District Court

Although intent to deceive is not a necessary element

„ why ogg ed Br y BB er <M ee

of a conclusion of likelihood of confusion. Combe, Inc. v. Scholl,

Inc., 453 F. Supp. 961 (S.D. N.Y. 1978).

2. The Court recognizes that actual intent to deceive is not

required to establish a claim under Section 43(a); affirmative

acts, however, may be required.

3. See conclusion #6, supra.

A34

JUDGMENT OF THE UNITED STATES

DISTRICT COURT

(Filed January 20, 1981)

Case Number C-2-78-1316

UNITED STATES DISTRICT COURT

For SouTHERN District or Omo

EASTERN DIVISION

FRISCH’S RESTAURANTS INC.,

V.

ELBY’S BIG BOY OF STEUBENVILLE, INC., et al.,

JUDGMENT

This action came on for consideration before the Court,

The Honorable Robert M. Duncan United States District

Judge, presiding. The issues having been duly considered

and a decision having been duly rendered,

IT IS ORDERED AND ADJUDGED THAT: defen-

dants are preliminarily enjoined from using the “Big Boy”

trademark and service mark in their WTRF advertising

without making a prominent disclosure that the Elby’s

Family Restaurants within the state of Ohio are not as-

sociated with the “Big Boy” restaurant organization. Al-

ternatively, defendants may wish to eliminate all reference

to the “Big Boy” mark on WTRF advertisements. (Tr.

158-59). Defendants are further ORDERED to file with

the Court and serve upon the plaintiff a report in writing

A35

under oath setting forth in detail the manner and form

in which the defendants have complied with the injunction.

Said report is due thirty (30) days after the issuance of

this injunction. Pursuant to Rule 65(c) of the Federal

Rules of Civil Procedure, plaintiff is required to post

security. The amount of this security shall be Five Thou-

sand Dollars ($5,000.00). The injunction shall take effect

upon posting of the security.

JOHN D. LYTER, CLERK

By: /s/ [Ilegible)

Deputy Clerk

A36

JUDGMENT ENTRY OF THE UNITED STATES

COURT OF APPEALS FOR THE SIXTH CIRCUIT

(Filed February 3, 1982)

Nos. 81-3095/81-3098

UNITED STATES COURT OF APPEALS

For THE Stern Cmcurr

FRISCH’S RESTAURANTS, INC.,

Plaintiff-Appellee, Cross-Appellant,

vs.

ELBY’S BIG BOY OF STEUBENVILLE, INC.; THE

BOURY CORPORATION; ELBY’S FAMILY RESTAU-

RANTS, INC.; ELBY’S COMMISSARY, INC.; GEORGE

BOURY, ELLIS BOURY and DAVID CARR,

Defendants-Appellants, Cross-Appellees.

Before: Wick and Brown, Circuit Judges; Pratt, District

Judge.

JUDGMENT

APPEAL from the United States District Court for the

Southern District of Ohio.

THIS CAUSE came on to be heard on the record from

the United States District Court for the Southern District of

Ohio and was argued by counsel.

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the judgment of

the said District Court granting a preliminary injunction

as to Elby’s television advertisements is affirmed and re-

versed as to the issue of newspaper advertisements, and

remanded for entry of such preliminary injunction.

Each party to bear its own costs on this appeal.

ENTERED BY ORDER OF THE COURT

/s/ Jom P. HEHMAN

Clerk

A37

ORDER OF THE UNITED STATES COURT OF

APPEALS FOR THE SIXTH CIRCUIT STAYING

MANDATE

(Filed March 1, 1982)

No. 81-3095 & 81-3098

UNITED STATES COURT OF APPEALS

For THe Stern Cmcurr

FRISCH’S RESTAURANTS, INC.,

Plaintiff-Appellee, Cross-Appellant,

vs.

ELBY’S BIG BOY OF STEUBENVILLE, INC.; THE

BOURY CORPORATION; ELBY’S FAMILY RESTAU-

RANTS, INC.; ELBY’S COMMISSARY, INC.; GEORGE

BOURY, ELLIS BOURY AND DAVID CARR,

Defendants-Appellants, Cross-Appellees.

ORDER STAYING MANDATE

ORDERED, That motion to stay mandate herein pend-

ing application to the Supreme Court for writ of certiorari

is hereby granted and the mandate is stayed for thirty days

from this date; provided that, if within such thirty days,

the applicant shall file with the Clerk of this Court the

certificate of the Clerk of the Supreme Court that the cer-

tiorari petition, record, and brief have been filed, the stay

shall continue until the final disposition of the case by

the Supreme Court. Unless this condition is complied with

within such thirty days or any extension thereof made by

the Court or any judge thereof, or if the condition is com-

plied with, then upon the filing of copy of an order deny-

ing the writ applied for, the mandate shall issue.

ENTERED BY ORDER OF THE COURT

Jom P. Henman, Clerk

/s/ Joun P. HEHMAN

A38

ORDER OF THE UNITED STATES COURT OF

APPEALS FOR THE SIXTH CIRCUIT CONTIN-

UING STAY OF MANDATE

(Filed April 6, 1982)

Nos. 81-3095 and 81-3098

UNITED STATES COURT OF APPEALS

For THe Stern Circuit

FRISCH’S RESTAURANTS, INC.,

Plaintiff-Appellee, Cross-Appellant,

vs.

ELBY’S BIG BOY OF STUEBENVILLE, INC.; THE

BOURY CORPORATION; ELBY’S FAMILY RES-

TAURANTS, INC.; ELBY’S COMMISSARY, INC.;

GEORGE BOURY, ELLIS BOURY AND

DAVID CARR,

Defendants-Appellants, Cross-Appellees.

ORDER

Upon consideration of the defendant-appellant, cross-

appellee’s motion to stay mandate to April 30, 1982 pending

filing petition for certiorari in the Supreme Court of the

United States;

IT IS ORDERED that the motion be, and it hereby is,

granted.

ENTERED BY ORDER OF THE COURT

Joun P. Henman, Clerk

/s/ Joun P. HeEHMAN

A39

PLAINTIFF EXHIBIT 34

Registered May 19, 1953 Registration No. 574,742

PRINCIPAL REGISTER

Trade-Mark

N igs N May 19, 1973

UNITED STATES PATENT OFFICE

Revert ( .

het of 1

Application August 11, 1952, Serial Ne 633,766

s

STATEMENT

Enterprises, Inc. a corperstion or». Ce ————— —

laws of the State Cf neee,

Last Colorade Boule~ ‘Time ede mart wes fret ised om ine poode

doing busines: ef = sperified im 1938 and was frst used om said goods

and s usm be 8 ® commerce among Ube ervera! Baie: which mar

oes oa lawfully be rruleied by Congres = Osoember

ingredients af foods and presents Apeticant © Ube owner af Registration Ma

ve (3) specimens showing the trade- lee.

applied le paper ROBERT C. WLAN ENTERPRISES, IC.

un. ROBERT c.

11 * ay Wax,

Grandparents

* SPECIAL |

28

—

4

* 2509

a — %

+> ‘

— - 5

—

FAMILY RESTAURANTS

SEAFOOD « STEAKS o CHICKEN ¢ SPAGHETTI

¥ AB tere Rens Avedstie Foe Carre Oe

Fide, Segtenber . lad o

SPECIAL:

this week..

.

A42

‘SPECIAL’

this week... 2

o THRU WEDNESDAY

Ham Steak

Dinner

with grilled pineapple ring

Feed Se Good. And Ok WheiA Valuet

Selbys 8

* .

o CHICEEN teaser

; mee teens oo

Onno Bet — —

—

tell; erct/

W Seotemler Tb. 1980

A43

Section 32(1) of the Lanham Act

(15 U.S.C. §1114[1])

Any person who shall, without the consent of the

registrant—

(a) use in commerce any reproduction, counter-

feit, copy, or colorable imitation of a registered mark

in connection with the sale, offering for sale, distri-

bution, 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; or

(b) reproduce, counterfeit, copy, or colorably imi-

tate a registered mark and apply such reproduction,

counterfeit, copy, or colorable imitation to labels, signs,

prints, packages, wrappers, receptacles or advertise-

ments intended to be used in commerce upon or in

connection with the sale, offering for sale, distribu-

tion, or advertising of goods or services on or in con-

nection with which such use is likely to cause con-

fusion, or to cause mistake, or to deceive,

shall be liable in a civil action by the registrant for the

remedies hereinafter provided. Under subsection (b) of

this section, the registrant shall not be entitled to recover

profits or damages unless the acts have been committed

with knowledge that such imitation is intended to be used

to cause confusion, or to cause mistake, or to deceive.

~

mvs BIG BOY OF STEUBENVILLE, INC., et al,

| Petitioners,

ee vs.

FRISCH’S RESTAURANTS, INC.,

Respondent.

2 Ow Pxrrrrom ron 4 Warr or CERTIORARI TO THE

* Untrep States Courr or APPEALS

Statement of Facts 1

Statement of the Case

Reasons for Denying the Writ 4

The Petition fails to state any grounds warranting

interlocutory review ... +

The Sixth Circuit’s decision does not conflict with

decisions of other circuits 6

The Sixth Circuit’s decision does not conflict with

applicable decisions of this Court 8

The Petition raises questions which were never pre-

sented to the Sixth Circuit and were not ad-

dressed by that Court 12

TABLE OF AUTHORITIES

Cases

American Construction Co. v. Jacksonville, T. & K.W.R.

Co., 148 U.S. 372 8 * . 4,5

California v. Taylor, 353 U.S. 553 n.22 12

Estelle v. Gamble, 429 U.S. 99 5

Food Fair Stores, Inc. v. Lakeland Grocery Corp., 301

. 10, 11

Goldstein v. California, 412 U.S. 546, 37 L. Ed. 2d 163,

. Rape PSS Se a

Johnson & Johnson v. Carter-Wallace, Inc., 631 F.2d

186 (2d Cir. 1980) 6

II

Keebler v. Rovira Biscuit Corp., 624 F.2d 336 n.3 (Ist

Cir. 1980) 8

Kewanee Oil Company v. Bicron Corporation, 416 U.S.

470, 40 L. Ed. 2d 315 1 S. Ct. 1879 (19749 9

Labor Board v. Sears, Roebuck & Co., 421 U.S. 132 12

Tisch Hotels, Inc. v. Americana Inn, Inc., 350 F.2d 609,

146 U.S.P.Q. 566 (7th Cir. 1965) 7

Tyrrel v. District of Columbia, 243 US. 1 12

United States v. Singer Manufacturing Co., 374 US.

174, 194 n.9 (1963) 8

Younker v. Nationwide Mutual Insurance Company,

191 N.E.2d 145 (S. Ct. Ohio, 1963) 2 4

Statutes and Rules

Lanham Act:

Section 32(1) (15 U.S.C. § 1114[1]) .......................... 2,5

Section 43 (a) (15 U.S.C. § 1125[a]) .............. 2, 4, 5, 9, 12

nene Ae 7

No. 81-2012

In the Supreme Court of the United States

October Term, 1981

ELBY’S BIG BOY OF STEUBENVILLE, INC., et al.,

Petitioners,

VS.

FRISCH’S RESTAURANTS, INC.,

Respondent.

Own PETITION FOR A Writ OF CERTIORARI TO THE

Unttep States Court or APPEALS

For THE SrxTu Cmcurr

BRIEF FOR RESPONDENTS IN OPPOSITION

STATEMENT OF FACTS

The “Big Boy” family of restaurants is composed of

approximately one thousand restaurants in the United

States that promote their restaurant operations with the

aid of the federally registered “Big Boy” trademark. As

noted by the Sixth Circuit, the Big Boy is “rather chubby

and somewhat cherubic in appearance.” (A-3). The federal

trademark is owned by the Marriott Corporation, which,

in turn, has licensed various entities to use the mark in

different regions of the country. Plaintiff, Frisch’s Res-

taurants, Inc., has the exclusive right to use the “Big Boy”

mark in a four state region that includes Ohio and is the

owner of an Ohio state trademark for the “Big Boy” mark.

Plaintiff operates company-owned “Big Boy” restaurants

and also licenses others to use the “Big Boy” mark within

its exclusive territory. Plaintiff entered into license agree-

ments with several of the Defendants which granted them

the right to operate “Big Boy” restaurants in cities located

in the eastern portion of the State of Ohio. These Defen-

dants repudiated the license agreements but continued to

advertise and promote their restaurants with the aid of the

“Big Boy” trademark. Corporations related to the former

licensees then commenced operation of similar restaurants

in the eastern Ohio area which joined in the ongoing acts

of trademark infringement and unfair competition.

STATEMENT OF THE CASE

Plaintiff brought this action seeking injunctive and

monetary relief arising out of Defendants’ deliberate acts

of trademark infringement and unfair competition. At

the time of the hearing on Plaintiff's Motion for a Pre-

liminary Injunction, Plaintiff’s Amended Complaint alleged

causes of action under Sections 32(1) and 43(a) of the

Lanham Act (15 U.S.C. Sections 1114[1] and 1125[a]) as

well as under the statutory and common law of the State

of Ohio. At the preliminary injunction hearing, among

the items Plaintiff introduced into evidence were Defen-

dants’ television and newspaper advertisements as well as

the testimony of an expert who conducted a survey among

the people in the eastern Ohio area. According to the

survey’s results, 70 per cent of the people incorrectly be-

lieved that it was possible to purchase a “Big Boy” ham-

burger at Defendants’ Ohio restaurants and approximately

40 per cent of the people surveyed stated that they had

actually purchased a “Big Boy” hamburger at Defendants’

Ohio restaurants. The district court viewed the television

advertisements and, based on its own viewing and the

survey results, concluded that the public confusion was

“in part attributable” to Defendants’ television advertise-

ments (A-24). The district court concluded not only that

there was widespread public confusion, but also found that

the Defendants’ acts of unfair competition were intentional

(A-28). Based on these findings, the court granted Plain-

tiff’s Motion for a Preliminary Injunction against De-

fendants’ television advertisements but denied relief

against the newspaper advertisements citing lack of sur-

vey proof to establish a causal connection between the

public confusion and the newspaper advertisements.

Defendants perfected an interlocutory appeal from

the district court’s entry of a preliminary injunction with

respect to the television advertisements. Frisch’s cross-

appealed from the district court’s denial of preliminary

injunctive relief with respect to the newspaper advertis-

ing. The Sixth Circuit affirmed the district court’s entry

of preliminary injunctive relief with respect to the tele-

vision advertisements and reversed its denial of preliminary

injunctive relief with respect to newspaper advertising.

The Sixth Circuit held that the district court has used

the wrong legal standard in determining the existence of

“likelihood of confusion” with respect to Defendants’ news-

paper advertisements. The Sixth Circuit then applied the

proper legal test to the facts as found by the district court

and concluded that Frisch’s was entitled to injunctive

relief against Defendants’ newspaper advertisements (A-

16-17).

REASONS FOR DENYING THE WRIT

Petitioners seek interlocutory review of a judgment

granting a preliminary injunction. The petition fails to

state any reason why this Court should deviate from its

normal practice of denying interlocutory review. Although

the petition alleges that this case raises important ques-

tions of federal law concerning the applicability of Section

43(a) of the Lanham Act to an action involving a federally

registered mark, this issue was never raised by Petitioners

in the courts below nor addressed by the Sixth Circuit

in its opinion. The decision of the Sixth Circuit is not in

conflict with decisions of this Court or of other Circuits.

Finally, given the procedural posture of this case, its highly

unusual facts and the decision’s support on both federal

and state law grounds, this case is not appropriate for

review by this Court.

The Petition Fails to State Any Grounds

Warranting Interlocutory Review.

Petitioners seek interlocutory review of a judgment by

the Sixth Circuit which granted Plaintiff's Motion for a

Preliminary Injunction. Petitioners have been unsuc-

cessful in litigating the merits of this action but have

succeeded in delaying the day of reckoning for their

deliberate acts of trademark infringement. This petition

is their latest effort to slow the wheels of justice. In

American Construction Co. v. Jacksonville, T. & K.W.R.

Co., 148 U.S. 372, 384, this Court stated that:

Whether an interlocutory order may be separately

reviewed by the appellate court in the progress of the

suit, or only after and together with the final decree,

is matter of procedure rather than of substantial right;

and many orders made in the progress of a suit be-

come quite unimportant by reason of the final result,

or intervening matters. Clearly, therefore, this court

should not issue a writ of certiorari to review a decree

of the circuit court of appeals or appeal from an in-

terlocutory order, unless it is necessary to prevent

extraordinary inconvenience and embarrassment in the

conduct of the cause.

Review of interlocutory decisions ill serves the inter-

est of judicial economy Esteile v. Gamble, 429 U.S. 97, 114

(Stevens, dissenting) and, in the absence of extraordinary

circumstances, has not been granted. The petition in this

case fails to state any extraordinary circumstance that

would justify the piecemeal review of an action that

the Sixth Circuit has remanded to the District Court for

further proceedings. The petition seeks review of “funda-

menta! questions” about the proper construction and ap-

plication of Section 43(a) of the Lanham Act. Yet, Plain-

tiffs Amended Complaint is not only based on Section

43(a) but also on Section 32 (1), 15 U.S.C. Section 1114[1],

as well as on the statutory and common law of Ohio. The

district court has already ruled that Plaintiff has stand-

ing, as an assignee of the federally registered “Big Boy”

mark, to bring an action pursuant to Section 32(1). Con-

sequently, it is quite possible, if not probable, that the

final relief in this action will be premised on Section

32 (1) and that any questions regarding the scope and ap-

plicability of Section 43(a) will be “quite unimportant by

reason of the final result.” American Construction Co.

v. Jacksonville, T. & K.W.R. Co., supra.

The Sixth Circuit’s Decision Does Not Conflict

With Decisions of Other Circuits.

1. The Plaintiff in this action is a franchisor who

both operates Big Boy” restaurants and licenses others

to operate “Big Boy” restaurants within its exclusive ter-

ritory. The essence of Plaintiff's Complaint against the

Defendants is that they are operating and advertising their

restaurants in the eastern portion of the State of Ohio

in a manner that has led 70 per cent of the public to im-

properly associate the Defendants’ restaurants with Plain-

tiffs Big Boy” trademark. Defendants’ actions of trade-

mark infringement and unfair competition, if unchecked,

would gobble up a sizable portion of Plaintiff's Big Boy”

territory, destroy the value of the license to use the “Big

Boy” mark in that area and jeopardize the integrity of

Plaintiff's licenses with its authorized licensees who make

royalty payments for the right to use the “Big Boy” mark.

Defendants, at trial, on appeal, and now in their petition

for writ of certiorari, have countered Plaintiff’s attempts to

secure judicial relief by arguing that diversion of sales is

the sine qua non of unfair competition. Of course there

are unfair competition cases in which the only injury is

the diversion of sales and no claim of misappropriation

of rights in a trademark is made. For example, in Johnson

& Johnson v. Carter-Wallace, Inc., 631 F.2d 186 (2d Cir.

1980), Johnson & Johnson, a manufacturer of baby oil

complained that Carter-Wallace, Inc.’s advertisements for

its depilatory “NAIR” falsely suggested that NAIR con-

tained a baby oil which softened the skin thereby eliminat-

ing the need to purchase other baby oil products. The

Second Circuit correctly held that, under those circum-

stances, a plaintiff seeking injunctive relief must show

“a logical causal connection between the alleged false

advertising and its own sales position.” 631 F.2d at 190.

7

Diversion of sales, however, is not the only injury for

which the laws of trademark infringement and unfair

competition offer relief. The federal courts have routinely

granted injunctive relief against persons who misappro-

priate the trademark rights of others, even in the absence

of diversion of sales. In Tisch Hotels, Inc. v. Americana

Inn, Inc., 350 F.2d 609, 146 U.S.P.Q. 566 (7th Cir. 1965),

the court stated that:

Federal court cases, whether based on trademark in-

fringement, unfair competition, or state anti-dilution

statutes, and involving hotels, motels or restaurants

with the same or similar names have been practically

unanimous in awarding injunctive relief to the prior

user of the name who has established a national or

widespread reputation for the name, even though the

establishments are separated geographically and not

in competition.

In the case at Bar, Frisch’s licensed several of the De-

fendants to use the “Big Boy” mark in eastern Ohio. These

Defendants repudiated the license agreements, and along

with related corporations continued and expanded their

restaurant operations by promoting these restaurants as

“Big Boy” restaurants. Defendants, by their actions, have

misappropriated the rights to the “Big Boy” mark in east-

ern Ohio. The decision of the Sixth Circuit is not in

conflict with the decisions of other Circuits, but rather,

relies on principles of unfair competition law that have

been widely recognized and applied.

2. The Sixth Circuit did not violate the provisions

of Rule 52(a) in holding that the District Court erred

in failing to enjvin Defendants’ deceptive newspaper ad-

vertisements. The Sixth Circuit did not set aside any

of the District Court’s factual findings or give greater

weight to any of the District Court’s findings—rather,

the court held that the District Court used the wrong

legal standard in determining “likelihood of confusion.”

The court then applied the proper standard to the facts

as found by the District Court and held that Plaintiff

was entitled to injunctive relief. If a trial court bases

its findings upon a mistaken impression of applicable

legal principles, the reviewing court is not bound by the

clearly erroneous standard. United States v. Singer Manu-

facturing Co., 374 U.S. 174, 194n.9 (1963).

The Sixth Circuit’s Decision Does Not Conflict

With Applicable Decisions of This Court.

Defendants, in their petition, imply that federal law

has preempted the field of trademark regulation and any

efforts by the States to grant greater rights to owners

of trademarks must be swept aside in the interest of uni-

formity. In Keebler v. Rovira Biscuit Corp., 624 F.2d

336, 372 footnote 3 (Ist Cir. 1980) the court stated that:

The Lanham Act does not preempt the states’ ability

to recognize and protect trademark rights. The pur-

pose of the Act was to protect the public from confus-

ing and deceptive trademarks and to provide security

against misappropriation for trademark owners who

have invested resources in presenting their products

to the public and exploiting whatever goodwill the

merits of their products warrant. See Mariniello v.

Shell Oil Co., 511 F.2d 853, 858 (3d Cir. 1975). The

Supremacy Clause bars only state statutes or doctrine

that would permit the sort of confusing or deceptive

practices the draftsmen of the Lanham Act sought

to prevent.

Defendants advance no reasons why federal courts

should not look to principles developed by the common

law in applying the law of unfair competition under Sec-

9

tion 43(a). After all, it is the common law that estab-

lishes rights in trademarks, federal registration only con-

fers certain additional rights. State and federal regulation

of trademarks have coexisted for many years. Several

states have enacted anti-dilution statutes which confer up-

on owners of trademarks even greater rights than those

available through federal registration. In Kewanee Oil

Company v. Bicron Corporation, 416 U.S. 470, 40 L. Ed.

2d 315, 94S. Ct. 1879 (1974) this Court stated that:

Trade secret law and patent law have co-existed in

this country for over one hundred years. Each has

its particular role to play, and the operation of one

does not take away from the need for the other.

Congress, by its silence over these many years, has

seen the wisdom of allowing the States to enforce

trade secret protection. Until Congress takes affirma-

tive action to the contrary, States should be free to

grant protection to trade secrets.

416 U.S. at 493. Similarly, in the field of copyrights,

this Court in Goldstein v. California, 412 U.S. 546, 37

L. Ed. 2d 163, 93 S. Ct. 2303 (1973), failed to find an

“unyielding national interest” that required “an inference

that state power to grant copyrights has been relinquished

to exclusive federal control.” 412 U.S. at 558.

Under Ohio law, Frisch’s is clearly entitled to injunc-

tive relief. The Ohio Supreme Court in Younker v. Na-

tionwide Mutual Insurance Company, 191 N.E.2d 145 (Ohio

1963) held that trademark rights in Ohio are entitled to

statewide protection regardless of the area of actual use

of the mark. Yet, even if Ohio law were to be held

irrelevant to an action under Section 43(a), the federal

law of unfair competition recognizes that a trademark’s

protection does not end at the restaurant’s parking lot

10

but rather extends to all areas to which its trade may

reasonably be expected to expand. In Food Fair Stores,

Inc. v. Lakeland Grocery Corp., 301 F.2d 156 (4th Cir.

1962) the court stated:

It has been generally recognized since the decision

of the Supreme Court in Hanover Star Milling Co.

v. Metcalf, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713,

and United Drug Co. v. Theodore Rectanus Co., 248

U.S. 90, 39 S.Ct. 48, 63 L.Ed. 141, that an established

trade name is entitled to protection not only in the

area in which it already renders service or sells goods

but also in areas to which its trade may reasonably

be expected to expand. In the cited cases the issues

were confined to the priority of use of a trademark

in a given area and the question of expansion did

not arise; but the court was careful to reserve it, say-

ing in the Hanover case, 240 U.S. at 420, 36 S.Ct.

at 363:

We are not dealing with a case where the junior

appropriator of a trade-mark is occupying territory

that would probably be reached by the prior user

in the natural expansion of his trade, and we need

pass no judgment upon such a case.

Moreover, the court noted at page 415, 36 S. Ct. at

page 361:

‘. . But where two parties independently are

employing the same mark upon goods of the same

class, but in separate markets whe’. semote the

one from the other, the question of prior appropria-

tion is legally insignificant, unless at least it appear

that the second adopter has selected the mark with

some design inimical to the interests of the first

user, such as to take the benefit of the reputation

11

of his goods, to forestall the extension of his trade

or the like.’

301 F.2d at 161, 162.

The Fourth Circuit went on to state that:

Following the intimation in the opinion of the

Supreme Court in the Hanover case quoted above that

a competitor may not deliberately appropriate the

trademark of another with a design to forestall the

expansion of the latter’s trade, it has been generally

held that the owner of a trade name may enjoin in-

fringement in territory to which his business has not

The existence or non-existence of good faith on

the part of the second user of the trade name is a

powerful factor in determining whether the name is

entitled to protection in an area to which the business

it identifies has not actually extended.

301 F.2d at 162, 163.

Although the District Court and the Sixth Circuit

spoke in terms of a presumption of statewide use of the

trademark, their opinions and rationales clearly fit within

the established federal law of granting protection to a

trademark in its zone of reasonable expansion. The Dis-

trict Court noted that several courts had adopted the rule

of granting statewide protection to trademarks and noted

that:

Application of that rule where, as here, plaintiff has

previously expanded its operations into eastern Ohio

is particularly appropriate.

Conclusion of Law #10 (A-30).

12

Defendants’ actions have not resulted in mere hypo-

thetical injury but rather, have struck at the heart of

Frisch’s ability to expand its operations into a portion of

its exclusive territory where it formerly conducted busi-

ness. Consequently, the Sixth Circuit’s decision is not

in conflict with the decisions of this Court or of other

Circuits and is in harmony with the federal and state

policies of affording protection to owners of trademarks

against deliberate infringers.

The Petition Raises Questions Which Were Never Pre-

sented to the Sixth Circuit and Were Not Addressed

by That Court.

Defendants, in their petition, raise for the first time

what they term “fundamental and far-reaching questions

about Section 43(a).” (Petition, p. 20). Defendants con-

tend that Section 43(a) should not be applicable to acts of

unfair competition involving federally registered trade-

marks. This argument is an after-thought added to spice

up an otherwise run of the mill meritless petition for cer-

tiorari. Perhaps if Defendants had shared their “funda-

mental and far-reaching questions” with the Sixth Circuit,

this Court would be in a position to give consideration to

their arguments. Defendants’ failure to raise these ques-

tions before the Sixth Circuit should preclude this Court’s

review. Tyrrel v. District of Columbia, 243 U.S. 1; Cali-

fornia v. Taylor, 353 U.S. 553, 557, n.2; Labor Board v.

Sears, Roebuck & Co., 421 U.S. 132, 163-164.

13

CONCLUSION

This Court should not exercise its discretionary power

to review the decision of the Sixth Circuit. There are

no exceptional circumstances warranting interlocutory re-

view; the facts of this case—a territorial dispute among

licensees authorized to use the same mark—are highly un-

usual and do not lend themselves to setting precedent for

a broad range of cases; the decision of the Sixth Circuit

is consistent with decisions of this Court and decisions of

other Circuits and is in harmony with both federal and

state policies favoring protection of trademarks against

deliberate infringers. For all of the foregoing reasons,

Plaintiff respectfully requests that this Court deny the

petition for a writ of certiorari.

Respectfully submitted,

CarL GENBERG

(Counsel of Record)

575 South Third Street

Columbus, Ohio 43215.

614/464-0519

Counsel for Respondent

Dated: July 6, 1982

aug Ace

8 leon

October Term, 1981

ELBY’S BIG BOY OF STEUBENVILLE, INC., et al.,

Petitioners,

VS.

FRISCH’S RESTAURANTS, INC.,

Respondent.

REPLY BRIEF OF PETITIONERS

Tuomas J. CoLLIn

(Counsel of Record)

THompson, Hive ann FLonr

1100 National City Bank Building

Cleveland, Ohio 44114

216/566-5500

Counsel for Petitioners

Ray A. Brno

Scuraper, STAMP, Bynd, Brum,

Jounson & COMPANION

816 Central Union Building

Wheeling, West Virginia 26003 °

304/233-3390

Kerrn A. SOMMER

Sommer & ANTILL

409 Walnut Street

Post Office Box 279

Martins Ferry, Ohio 43935

614/633-5551

Of Counsel

TABLE OF CONTENTS

TABLE OF AUTHORITIES

A. Review of Preliminary Injunctions ...............

B. Conflict With Decisions of Other Courts of

C. Conflict With This Court’s Decisions

D. Issue Not Raised Below

Il. THE PULLMAN-STANDARD CASE ....................

III. CONCLUSION .. FRONT SS EE ?

TABLE OF AUTHORITIES

Cases

Alfred Dunhill Limited v. Interstate Cigar Company,

499 F. 2d 232 (2d Cir. 1974) ..

American Home Products 8 v. Johnson & *

r

Andrus v. Charlestone Stone Products Co., 436 U.S.

604 (1978)

Community Communications Company v. City of Boul-

der, 50 U.S.L.W. 4144 (U.S. 1982)

Inwood Laboratories, Inc. v. Ives Laboratories, Inc.,

50 U.S. L. W. 4592 (U.S. 1982)

Jacksonville Bulk Terminals, Inc. v. International Long -

shoremen’s Ass’n, 50 U.S. L. W. 4789 (U.S. 1982)

Johnson & Johnson v. Carter - Wallace, Inc., 631 F. 2d

186 (2d Cir. 1980)

Liberty Mutual Insurance Co. v. Wetzel, 424 U.S. 737

(1976) . 5

Pullman-Standard v. Swint, 50 US.L.W. 4425 (US.

1982) 1, 5, 6

SEC v. Capitol Gains Research Bureau, Inc., 375 U.S.

180 (1963) 2

Statute and Rule

Lanham Act (15 U.S.C. §§1051 et seq.)

Section 43(a) (15 U.S.C. 6112812) — passim

Fed. R. Civ. P. Rule 32(2) 5,6

1

No. 81-2012

In the Suxreme Court of the United States

October Term, 1981

ELBY’S BIG BOY OF STEUBENVILLE, INC., et al.,

: Petitioners,

vs.

FRISCH’S RESTAURANTS, INC.,

Respondent.

REPLY BRIEF OF PETITIONERS

Respondent’s arguments opposing the Petition under-

score the need for review of the Sixth Circuit’s decision.

Review is further warranted because the Sixth Circuit’s

decision conflicts with this Court’s April 27, 1982, decision

in Pullman-Standard v. Swint, 50 US.L.W. 4425, filed

after the Petition had been printed.

I. RESPONDENT'S BRIEF

A. Review of Preliminary Injunctions

Respondent, Frisch’s Restaurants, Inc. (“Frisch’s”),

urges at pages 4 and 5 of its brief (“Brief”) that it is some-

how inappropriate for this Court to review a preliminary

injunction order. It refers, without citation of authority,

to the “normal practice of denying interlocutory review”.

(Brief at 4).

seated

2

The cases reflect no such “normal practice”. Just as

there is no bar to interlocutory review of preliminary in-

junction orders in the courts of appeals, so there is no bar

in 28 U.S.C. §1254(1), which authorizes this Court to re-

view by writ of certiorari “[c]ases in the courts of ap-

peals”. This Court routinely reviews preliminary injunc-

tion decisions by the courts of appeals. See, e.g., Jackson-

ville Bulk Terminals, Inc. v. International Longshoremen’s

Ass’n, 50 U.S.L.W. 4789, 4790-91 (U.S. 1982); Community

Communications Company v. City of Boulder, 50 U.S.L.W.

4144, 4145 (U.S. 1982); SEC v. Capitol Gains Research

Bureau, Inc., 375 U.S. 180, 184-85 (1963).

B. Conflict With Decisions of Other Courts of Appeals

Petitioners identified four distinct areas in which the

decision of the Sixth Circuit conflicts with decisions of

other circuits. Frisch’s apparently concurs on all four of

these.

Frisch’s does not take issue with petitioner’s demon-

stration that the Sixth Circuit’s holding imposes liability

under Section 43(a) without proof o? causation, in direct

conflict with the Second Circuit’s decision in American

Home Products Corp. v. Johnson & Johnson, 577 F.2d 160

(1978). (Petition at 12-13).

Nor does Frisch’s dispute that the Sixth Circuit has

construed Section 43(a) to make actionable a failure to

disclose, in conflict with the Second Circuit’s decision in

Alfred Dunhill Limited v. Interstate Cigar Company, 499

F.2d 232 (1974). (Petition at 13-14).

Nor does Frisch’s dispute that the Sixth Circuit's

treatment of “likelihood of confusion” as a question of law

conflicts with its treatment in the First, Fifth, Eighth and

Tenth Circuits. (Petition at 14-15).

3

Frisch’s challenges only the contention that the Sixth

Circuit’s decision conflicts with the Second Circuit’s in

Johnson & Johnson v. Carter-Wallace, Inc., 631 F.2d 186,

(1980) (“Johnson & Johnson”), on the quality and type

of evidence an applicant for a preliminary injunction under

Section 43(a) must produce. As the Petition showed,

Frisch’s failed to come forward with any evidence of like-

lihood of diversion of saies and damage to its commercial

position, and the Sixth Circuit, contrary to the Second in

Johnson & Johnson, found this failure of proof immaterial.

(Petition at 10-11). Frisch’s responds to this showing of

circuit conflict by ignoring it. It argues only that it should

not have to come forward with any of the evidence specified

in Johnson & Johnson, not that the Sixth Circuit’s opinion

does not conflict with Johnson & Johnson. (Brief at 6-7).

C. Conflict With This Court’s Decisions

Frisch’s argument that the Sixth Circuit’s decision

does not conflict with this Court’s standards on the con-

struction of federal statutes is pervaded by precisely the

same confusion of Ohio law with federal law that creates

the very conflict Frisch’s asserts does not exist.

Without disputing the congressional intent behind

Section 43(a)—to eliminate state differences in trademark

protection and to establish in their place “national legis-

lation along national lines” (Petition at 17)—and without

disputing that congressional enactments do not depend for

their content upon the forum’s state law, Frisch’s argues

that it was entirely appropriate for the Sixth Circuit to

superimpose Ohio’s common law of trademark and unfair

competition on Section 43(a).

Frisch’s begins by urging that state common law is the

appropriate source for the content of Section 43(a) be-

cause

4

it is the common law that establishes rights in trade-

marks, federal registration only confers certain ad-

ditional rights. State and federal registration of

trademarks have coexisted for many years.

(Brief at 9). Frisch's conveniently overlooks the fact

that Section 43(a) has nothing whatsoever to do with fed-

eral or state registration of trademarks. It is, rather, a

sui generis federal statutory tort. Contrary to Frisch’s be-

lief, Section 43 (a), not the common law, “establishes

rights” affecting the matters within its scope.

Frisch’s goes on to argue that “under Ohio law,

Frisch’s is clearly entitled to injunctive relief”. (Brief at

9). This reliance on Ohio law is, of course, a fundamental

failing of the Sixth Circuit’s decision. If Section 43(a) is

to have any uniform application, its content cannot vary

from state to state, depending upon idiosyncrasies of state

law. The law of the forum state should not determine the

result in a Section 43(a) case.

D. Issue Not Raised Below

Finally, Frisch’s contends that the fifth question pre-

sented for review in the Petition, whether Section 43(a)

applies to federally registered marks, was not raised below

and cannot be raised in this Court. (Brief at 12). It is

mistaken. Defendants argued both in the district court

and the court of appeals that this dispute between licensees

of Marriott Corporation over a federally registered trade-

mark owned by Marriott is not reached by Section 43(a),

because it is, fundamentally, a contract dispute over the

use of a federally registered mark. It is implicit in this

argument that Section 43(a) should not be invoked when

the subject of a dispute is a federally registered mark.

Even if it were assumed, however, that the question

had not been raised below, the question goes to subject

matter jurisdiction over the claims upon which the pre-

liminary injunction stands. The preliminary injunction

- pests exclusively upon Section 43 (a). The Sixth Circuit

had. subject matter jurisdiction to review the claims only

if they fall within Section 43(a). If they do not, because

Section 43 (a) does not extend to federally registered

marks, then the court of appeals had no power to consider

them. Subject matter jurisdiction can be raised in this

Court regardless of whether it has been raised below.

E.g., Andrus v. Charlestone Stone Products Co., 436 US.

604, 607 n.6 (1978); Liberty Mutual Insurance Co. v. Wet-

zel, 424 U.S. 737, 740 (1976).

II. THE PULLMAN-STANDARD CASE

This Court reviewed in Pullman-Standard, decided

April 27, 1982, whether it was consistent with Rule 52 for

a court of appeals to make an independent determination

of the ultimate fact in a Title VII case, whether the de-

fendant had “discriminatory purpose”. The Court ob-

served that Rule 52 does not

divide facts into categories; in particular, it does not

divide findings of fact into those that deal with “ulti-

mate” and those that deal with “subsidiary” facts.

50 U.S.L.W. at 4429. It held that the Fifth Circuit ig-

nored Rule 52 in making an independent determination of

“discriminatory purpose”.

In treating the question of “likelihood of confusion”

as a legal issue, the Sixth Circuit has similarly attempted

to remove a question of fact from the requirements of Rule

52. Yet it is no more a legal issue than “discriminatory

purpose” is a legal issue in Title VII cases. At the most,

it is the “ultimate” fact, subject, in common with all

other fact-findings of the district court, to review under

the standards of Rule 52. The Sixth Circuit’s treatment

of “likelihood of confusion” as a legal issue outside Rule

52 directly conflicts with Pullman- Standard. See also

Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 50

U.S. LW. 4592, 4595-96 (U.S. 1982).

Even if it were assumed, as Frisch’s contends, that

the district court applied the incorrect legal standard in

determining “likelihood of confusion” (Brief at 7-8), not

that the Sixth Circuit made an independent determination

of fact, Pullman-Standard emphasizes that a court of

appeals must remand such a case for further proceedings.

50 U.S.L.W. at 4430. The Sixth Circuit, of course, did

exactly the opposite, rewriting the district court’s opinion

instead of remanding.

III. CONCLUSION

The Sixth Circuit’s decision raises far-reaching issues

on the content and application of Section 43(a), and the

Court should grant the Petition.

Respectfully submitted,

Tuomas J. CoLLiIn

(Counsel of Record)

THompson, Hive AND FLory

1100 National City Bank Building

Cleveland, Ohio 44114

216/566-5500

Counsel for Petitioners

Ray A. Byrp

Scraper, Stamp, Byrp, Byrum,

Jounson & CoMPANION

816 Central Union Building

Wheeling, West Virginia 26003

304/233-3390

Kerrn A. SoMMER

Sommer & ANTILL

409 Walnut Street

Post Office Box 279

Martins Ferry, Ohio 43935

614/633-5551

Of Counsel