Petition — Prudential Insurance Co. of America v. Gibraltar Financial Corp.

Office -Supre Sourt, U.S,

82 1789 FiL&ED :

”

No. 82—— MAY 2 1983

CLERK

IN THE

Suprenwe Court of the United States

OCTOBER TERM, 1982

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,

Petitioner,

Vv.

GIBRALTAR FINANCIAL CORPORATION OF CALIFORNIA,

AND GIBRALTAR SAVINGS & LOAN ASSOCIATION,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JOHN S. KINGDON

LESLEY A. MORADIAN

Doris E. LONG

Howrey & SIMON

1730 Pennsylvania Ave., N.W.

Washington, D.C. 20006

(202) 783-0800

Counsel for Petitioner

The Prudential Insurance

Company of America

May 2, 1983

eS amr

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON. D.C. 20001

QUESTIONS PRESENTED

1. Whether the Ninth Circuit, acting contrary to both

the Fifth and Seventh Circuits, erred in denying regis-

trant its statutorily granted right to the exclusive use

of its incontestable trademarks by permitting the asser-

tion of extra-statutory defenses to preclude all relief in

an action for trademark infringement.

2. Whether the Ninth Circuit erred in holding that in-

contestability does not preclude the assertion of equitable

defenses in addition to those expressly enumerated in

the statute against the enforcement of an incontestable

trademark registration under Section 1115(b).

PARTIES

All parties are named in the caption.’

1 In accordance with Rule 28.1 of the Rules of the Supreme Court,

the parent companies, subsidiaries and affiliates of petitioner are

set forth in Appendix A at la.

(i)

TABLE OF CONTENTS

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TABLE OF CONTENTS ...................... eine peaaatiacearan

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REASONS FOR GRANTING THE WRIT .......... vane

A. INCONTESTABILITY IS A FUNDAMENTAL

B.

C.

RIGHT UNDER TRADEMARK LAW WHICH

Ey ta yy | | cao ae

THE CONFLICT BETWEEN’ CIRCUITS

UNDERMINES THE PROTECTION OF IN-

CONTESTABLE MARKS UNDER SECTION

EE ARE (Ss Ce oO

THE NINTH CIRCUIT’S DECISION DE-

PRIVES OWNERS OF INCONTESTABLE

MARKS OF THEIR STATUTORILY GUAR-

ANTEED RIGHTS AND ADVERSELY AF-

ty Bg ts st ce

. WITHOUT REVIEW BY THIS COURT IM-

PORTANT TRADEMARK RIGHTS WILL

CONTINUE TO BE DENIED .............................

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10

iv

TABLE OF AUTHORITIES

CASES: Page

Exxon Corp. v. Humble Exploration Co., 524 F.

Supp. 450 (N.D. Tex. 1981), aff'd in part and

rev'd in part, 695 F.2d 96 (5th Cir. 1983) .......... 8

James Burrough, Ltd. v. Sign of the Beefeater, Inc.,

Bs & By. Gt A Seneenenmeemnenr 6

John Morrell & Co. v. Reliable Packing Co., 295

F.2d 314 (7th Cir. 1961), overruled, Union Car-

bide Corp. v. Ever-Ready, Inc., 531 F.2d 366

(7th Cir.), cert. denied, 429 U.S. 830 (1976) .... 9

John R. Thompson Co. v. Holloway, 366 F.2d 108

SU Gl IE ic eee 7

Koppers Co. v. Krupp-Koppers, GmbH, 517 F.

ee 8 A | ee ~

Miss Universe, Inc. v. Miss Teen U.S.A., Inc., 209

U.S.P.Q. 698 (N.D. Ga. 1980): ............2.--cce-cccceeee 8

National Blank Book Co. v. National Data Prod-

ucts, Inc., 213 U.S.P.Q. 79 (N.D. Ind. 1981)...... 8

Salton Inc. v. Cornwall Corp., 477 F. Supp. 975

‘jt 2 Ree SURE FE eee eee ~

Schwinn Bicycle Co. v. Murray Ohio Manufactur-

ing Co., 339 F. Supp. 973 (M.D. Tenn. 1971),

aff'd per curiam, 470 F.2d 975 (6th Cir. 1972}... 9

Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178 (5th

Cir. 1980), cert. denied, 450 U.S. 981 (1981)... 8

St. Regis Paper Co. v. St. Regis Builders Co., 213

ie ee Bs | eee s

Tillamook County Creamery Association v. Tilla-

mook Cheese & Dairy Association, 345 F.2d 158

(9th Cir.), cert. denied, 382 U.S. 903 (1965)... 9,12

Union Carbide Corp. v. Ever-Ready, Inc., 531 F.2d

366 (7th Cir.), cert. denied, 429 U.S. 830

PINE dcssciistcdiioseeusticamedaamadetertiet amet 6, 7, 8, 9. 12

United States Jaycees v. Chicago Junior Associa-

tion of Commerce & Industry, 505 F. Supp. 998

I i I ne labs e Apc 8,12

United States Jaycees v. Philadelphia Jaycees, 639

F.2d 134 (3d Cir. 1981) .. 8

v

TABLE OF AUTHORITIES—Continued

Page

Wrist-Rocket Manufacturing Co. v. Saunders Arch-

ery Ce., 516 F.2d 846 (8th Cir.), cert. denied,

ne cnslamndeneininh 9

Wrist-Rocket Manufacturing Co. v. Saunders Arch-

ery Co., 578 F.2d 727 (8th Cir. 1978) ................ 9

STATUTES:

Ris Tee S| | ene $e, SD 4

RS Se | IR eee: passim

Ns Me NT I ssc ocaeecuvecmnnctehsbctousegrice 12

- is Te». | les ES. eee cece 1

LEGISLATIVE MATERIALS:

S. Rep. No. 1333, 79th Cong., 2d Sess. (1946),

reprinted in 1946 U.S. Code Cong. Serv. 1274... 6,11

MISCELLANEOUS:

J. McCarthy, 1 Trademarks and Unfair Competi-

I Ra a 11

J. McCarthy, Important Trends in Trademark and

Unfair Competition Law During the Decade of

the 1970's, 71 Trademark Rep. 93 (1981) ........... 8, 10

Note, Incontestable Trademark Rights and Equita-

ble Defenses in Infringement Litigation, 66

ee et ee eee 8,12

IN THE

Supreme Court of the United States

OCTOBER TERM, 1982

No. 82-——

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,

. Petitioner,

GIBRALTAR FINANCIAL CORPORATION OF CALIFORNIA,

AND GIBRALTAR SAVINGS & LOAN ASSOCIATION,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioner prays that a writ of certiorari issue to re-

view a judgment of the United States Court of Appeals

for the Ninth Circuit entered December 16, 1982.

OPINIONS BELOW

The opinion of the United States Court of Appeals for

the Ninth Circuit (Circuit Judges Goodwin, Hug and

Boochever), reported at 694 F.2d 1150, is reprinted as

Appendix B at 5a-14a. The opinion of the United States

District Court for the Central District of California (Dis-

trict Judge Real) is reprinted as Appendix C at 15a-26a.

JURISDICTION

The decision of the Ninth Circuit Court of Appeals was

entered on December 16, 1982. A timely petition for re-

hearing was denied on January 31, 1983. See Appendix

D at 27a. The jurisdiction of this Court is invoked un-

der 28 U.S.C. § 1254(1) (1976).

2

STATUTE INVOLVED

The statute involved is 15 U.S.C. §1115(b) (1976)

which reads in pertinent part as follows:

If the right to use the registered mark has become

incontestable under section 1065 of this title, the

registration shall be conclusive evidence of the regis-

trant’s exclusive right to use the registered mark...

except when one of the following defenses or defects

is established:

(1)

(2)

(3)

(4)

(5)

(6)

That the registration or the incontestable right

to use the mark was obtained fraudulently; or

That the mark has been abandoned by the regis-

trant; or

That the registered mark is being used, by or

with the permission of the registrant or a per-

son in privity with the registrant, so as to mis-

represent the source of the goods or services in

connection with which the mark is used; or

That the use of the name, term, or device

charged to be an infringement is a use, other-

wise than as a trade or service mark, of the

party’s individual name in his own business, or

of the individual name of anyone in privity with

such party, or of a term or device which is

descriptive of and used fairly and in good faith

only to describe to users the goods or services

of such party, or their geographic origin; or

That the mark whose use by a party is charged

as an infringement was adopted without knowl-

edge of the registrant’s prior use and has been

continuously used by such party or those in

privity with him from a date prior to registra-

tion of the mark under this chapter or publica-

tion of the registered mark under subsection

(c) of section 12 of this Act ...; or

That the mark whose use is charged as an in-

fringement was registered and used prior to the

3

registration under this chapter or publication

under subsection (c) of section 1062 of this

title of the registered mark of the registrant,

and not abandoned .. .; or

(7) That the mark was been or is being used to

violate the antitrust laws of the United States.

(Amended Oct. 9, 1962, 76 Stat. 769). The full text of

Section 1115(b) is reprinted as Appendix E at 28a-29a.

STATEMENT

The opinion of the Ninth Circuit in this case has

created a fundamental, irreconcilable conflict between that

circuit and precedent in the Fifth and Seventh Circuits

over the defenses available in an infringement action

against litigants who own incontestable trademark regis-

trations. The Fifth and Seventh Circuits recognize that

incontestability precludes the assertion of any defense not

expressly enumerated in Section 1115(b) of the Lanham

Act. The Ninth Circuit, despite the clear meaning of the

statute and forceful precedent to the contrary, maintains

that extra-statutory defenses, such as laches, may be ju-

dicially engrafted onto Section 1115(b) to deny a regis-

trant its statutory rights to the exclusive use of its trade-

mark.

The Proceedings Below

On July 18, 1980, petitioner, The Prudential Insur-

ance Company of America (“Prudential’’) filed suit in

the United States District Court for the Central District

of California against respondents Gibraltar Financial

Corporation of California and Gibraltar Savings & Loan

Association (“Gibraltar”) charging, inter alia, infringe-

ment of Prudential’s weli known, federally registered

service marks depicting the left profile of the Rock of

Gibraltar. Prudential sought injunctive relief from

Gibraltar’s infringement of its marks.

4

Since 1896, Prudential has utilized a service mark de-

picting the left profile of the Rock of Gibraltar. Pruden-

tial currently owns six federal registrations for six ver-

sions of its Rock of Gibraltar service mark.* Five of

these marks have achieved the status of incontestable

marks under Section 1065 of the Lanham Act.*

Gibraltar Savings and Loan Association was formed in

1952. Two years later it began using a Rock of Gibral-

tar logo as its service mark. Gibraltar Financial Corpo-

ration, formed as the holding company for Gibraltar Sav-

ings and Loan Association in 1959, utilized a globe as its

corporate mark until 1968. None of Gibraltar’s marks

has been registered pursuant to the Lanham Act.

After a trial to the court, Judge Real determined Gi-

braltar’s use of a Rock of Gibraltar logo did not infringe

Prudential’s well-known Rock of Gibraltar service mark

and that Prudential’s claim for injunctive relief was

barred by laches. Prudential appealed contending Gibral-

tar’s use of a Rock of Gibraltar logo created a likelihood

of confusion between the two marks as a matter of law

and ‘act and that the incontestable nature of Pruden-

tial’s service marks precluded the assertion of laches as

a matter of law.

The Ninth Circuit held that laches barred Prudential’s

claim for relief. The issue of infringement was not

reached. The appeals panel rejected Prudential’s argu-

ment that the incontestable nature of Prudential’s marks

2 The marks in question bear the following registration numbers:

501,706; 615,490; 792,738; 961,764; 961,765 and 1,121,163.

* Section 1065 of the Lanham Act provides that a federally reg-

istered trademark shall become “incontestable” if, after five years

of continuous use subsequent to the date of registration, the party

files the appropriate affidavit attesting to such continuous use and

to current use of the mark in commerce.

Those marks at issue which have become incontestable bear the

following registration numbers: 501,706; 615,490; 792,738; 961,764

and 961,765.

5

precluded the assertion of laches as a matter of law un-

der Section 1115(b) of the Lanham Act. Instead, the

court held that incontestability could only be used in a

defensive posture to protect a mark from cancellation.

REASONS FOR GRANTING THE WRIT

A. INCONTESTABILITY IS A FUNDAMENTAL

RIGHT UNDER FEDERAL TRADEMARK LAW

WHICH MUST BE PROTECTED

Incontestability is one of the most important rights

granted to trademark registrants under the Lanham Act.

Under Section 1115(b), the Lanham Act provides that

once a registered mark has become “incontestable,” “the

registration shall be conclusive evidence of the regis-

trant’s exclusive right to use the registered mark... .”

15 U.S.C. § 1115(b) (1976) (emphasis added). The ex-

clusivity of the registrant’s right to use the mark is,

however, subject to seven specifically enumerated defenses

in Section 1115(b) which may be interposed against an

incontestable mark.*

The exclusive right to use a trademark is a potent

commercial asset. Federal trademark law encourages a

trademark owner to invest time and money developing

4 Laches is not one of the defenses listed. The seven defenses

established by Congress in Section 1115(b) of the Lanham Act are:

(1) fraudulent registration;

(2) abandonment;

(3) use by or with the permission of the registrant “so as to

misrepresent the source of the goods or services in con-

nection with which the mark is used”’;

(4) use “otherwise than as a trade or service mark”;

(5) prior innocent adoption and use;

(6) prior registration and use;

(7) prior or current use to violate the antitrust laws of the

United States.

15 U.S.C. § 1115(b) (1976).

6

the goodwill of its mark with the assurance that the mark

cannot be appropriated by outsiders without legal remedy.

One of the primary purposes for the enactment of the

Lanham Act was to “secur[e] to the owner [of a trade-

mark] the good will of his business. .. .” S. Rep. No.

1333. 79th Cong., 2d Sess. (1946), reprinted in 1946 U.S.

Code Cong. Serv. 1274.

Incontestability, as defined by Section 1115(b), rein-

forces this important property right. The statute, on its

face, strictly limits the defenses that may be asserted

against a trademark owner who has complied with the

registration and incontestability provisions of the Lan-

ham Act. As limited, the statute fortifies the right of an

owner of an incontestable mark to sue others for infringe-

ment. See Union Carbide Corp. v. Ever-Ready, Inc., 531

F.2d 366 (7th Cir.), cert. denied, 429 U.S. 830 (1976).

Moreover, the concept of incontestability itself broadens

the protection afforded by the Lanham Act to owners

of registered trademarks. Instead of bearing the burden

of establishing both its exclusive right to use a given

mark and the likelihood of confusion between its mark

and defendant’s mark, the owner of a trademark that

has achieved incontestable status need only demonstrate

likelihood of confusion to obtain relief. See, e.g., Union

Carbide Corp. v. Ever-Ready, Inc., 581 F.2d at 377.

Incontestability also reinforces a second fundamental

purpose underlying the enactment of the Lanham Act—

protection of the public from fraud and deceit. Congress

recognized that the public has the right to “be confident

that, in purchasing a product bearing a particular trade-

mark which it favorably knows, it will get the product

which it asks for and wants to get.” S. Rep. No. 1333,

79th Cong. at 1274. As the Seventh Circuit stated in

James Burrough, Ltd. v. Sign of the Beefeater, 540 F.2d

266, 274 (7th Cir. 1976): “A ‘trademark’ is not that

which is infringed. What is infringed is the right

of the public to be free from confusion ....” By grant-

7

ing the exclusive right to use a given mark to the regis-

trant of that mark, incontestability prohibits the use of

any confusing mark, thereby assuring the public that the

mark it values and relies upon is, in fact, the mark iden-

tifying the product it is purchasing. The Ninth Circuit’s

decision, eroding the concept of incontestability, ad-

versely affects the validity and enforceability of federally

registered trademarks as well as consumer protection

under the Lanham Act.

B. THE CONFLICT BETWEEN CIRCUITS UNDER-

MINES THE PROTECTION OF INCONTESTABLE

MARKS UNDER SECTION 1115(b)

The conflict between the Fifth and Seventh Circuits and

the Ninth Circuit regarding the effect of incontestability

under Section 1115(b) on a trademark infringement ac-

tion severely diminishes the Congressional protection af-

forded incontestable marks under the Lanham Act. The

Seventh Circuit, in its landmark decision in Union Car-

bide Corp. v. Ever-Ready, Inc., 531 F.2d 366 (7th Cir.),

cert. denied, 429 U.S. 830 (1976), held that Section

1115(b)’s list of defenses is exhaustive, not merely illus-

trative. Under the reasoning of the Seventh Circuit,

extra-statutory defenses may not be interposed to cut off

or otherwise impair a registrant’s incontestable trade-

mark rights. The Seventh Circuit expressly rejected the

argument that Section 1115(b) was solely a defensive

provision to protect the registration from attack. That

court held that Section 1115(b) could also be used by

a plaintiff affirmatively in an infringement suit as con-

clusive evidence of its exclusive right to use the mark,

stating:

[O]nce incontestability is established, registrant’s

mark is immune from challenge on any grounds not

enumerated in §1115(b). There is no defensive/

offensive distinction in the statute, and we do not

believe one should be judicially engrafted on to it.

531 F.2d at 377. See also John R. Thompson Co. v.

Holloway, 366 F.2d 108 (5th Cir. 1966) (incontestability

8

may be used by the registrant in an infringement action) ;

Soweco, Ine. v. Shell Oil Co., 617 F.2d 1178 (5th Cir.

1980), cert. denied, 450 U.S. 981 (1981) (defenses listed

in Section 1115(b) are exhaustive). The reasoning in

Union Carbide has been adopted uniformly by other

courts that have considered the issue and has been praised

by an eminent scholar for its clarity. See, e.g., United

States Jaycees v. Philadelphia Jaycees, 639 F.2d 134 (3d

Cir. 1981) ; Exxon Corp. v. Humble Exploration Co., 524

F. Supp. 450 (N.D. Tex. 1981), aff'd in part and rev'd

in part, 695 F.2d 96 (5th Cir. 1983); Koppers Co. v.

Krupp-Koppers, GmbH, 517 F. Supp. 836 (W.D. Pa.

1981) ; United States Jaycees v. Chicago Junior Associa-

tion of Commerce & Industry, 505 F. Supp. 998 (N.D. Il.

1981) ; Miss Universe, Inc. v. Miss Teen U.S.A., Inc., 209

U.S.P.Q. 698 (N.D. Ga. 1980); Salton Inc. v. Cornwall

Corp., 477 F. Supp. 975 (D.N.J. 1979); National Blank

Book Co. v. National Data Products, Inc., 213 U.S.P.Q. 70

(N.D. Ind. 1981) ; St. Regis Paper Co. v. St. Regis Build-

ers Co., 213 U.S.P.Q. 412 (D. Or. 1981); J. McCarthy,

Important Trends in Trademark and Unfair Competi-

tion Law During The Decade of the 1970's, 71 Trade-

mark Rep. 93, 101-06 (1981).

Union Carbide established the propriety of utilizing

incontestability in an offensive posture, i.e., by the owner

of the incontestable mark who is either a plaintiff or a

counterclaimant. The Seventh Circuit’s recognition of

the all inclusive nature of the defenses listed in Section

1115(b), when coupled with this offensive posture,

eliminates the applicability of any defense not listed

therein, including laches. See United States Jaycees v.

Chicago Junior Association of Commerce & Industry,

505 F. Supp. 998 (N.D. Ill. 1981). See also Note, Incon-

testable Trademark Rights and Equitable Defenses in

Infringement Litigation, 66 Minn. L. Rev. 1067 (1982).

9

In marked contrast, the Ninth Circuit herein altered

the words of Section 1115(b) to include a “defensive use

only” provision and judicially engrafted onto Section

1115(b) an eighth statutory defense—laches.® The es-

sence of the Ninth Circuit’s error is its statement:

“(I |ncontestability [is] a defensive provision only. It

helps protect the registrant’s mark from cancellation

but is of no offe isive use. Incontestability does not pre-

clude a defense of laches.” 694 F.2d at 1153. In reach-

ing this decision, the Ninth Circuit completely disre-

garded Union Carbide and its progeny and, instead,

relied on an earlier Ninth Circuit case, Tillamook

County Creamery Association v. Tillamook Cheese &

Dairy Association, 345 F.2d 158 (9th Cir.), cert. de-

nied, 382 U.S. 903 (1965). The Ninth Circuit totally dis-

regarded the fact that the Seventh Circuit in Union Car-

bide had expressly overruled the case upon which the

Ninth Circuit in Tillamook had relied * in establishing its

defensive/offensive dichotomy. Therefore, the Ninth Cir-

5The Eighth Circuit in Wrist-Rocket Mfg. Co. v. Saunders

Archery Co., 516 F.2d 846, 851 (8th Cir.), cert. denied, 423 U.S.

870 (1975), citing, inter aiia, Tillamook and John Morrell & Co. v.

Reliable Packing Co., 295 F.2d 314 (7th Cir. 1961), overruled, Union

Carbide Corp. v. Ever-Ready, Inc., 531 F.2d at 377, has also held

that incontestability is a defensive provision that “protects the

registrant from cancellation of his trademark by a prior user claim-

ing superior rights.” In a subsequent decision (post-Union Car-

bide) the Eighth Circuit indicated that the vitality of Wrist-Rocket

might have been undermined by the Seventh Circuit’s opinion in

Union Carbide. Wrist-Rocket Mfg. Co. v. Saunders Archery Co.,

578 F.2d 727, 731 n.4 (8th Cir. 1978). The Sixth Circuit in

Schwinn Bicycle Co. v. Murray Ohio Mfg. Co., 339 F. Supp. 973,

982 (M.D. Tenn. 1971), aff'd per curiam, 470 F.2d 975 (6th Cir.

1972), held that incontestability is a defensive provision. That cir-

cuit has not reconsidered the issue after the Union Carbide decision.

6 John Morrell & Co. v. Reliable Packing Co., 295 F.2d 314 (7th

Cir. 1961), overruled, Union Carbide Corp. v. Ever-Ready, Inc., 531

F.2d at 377.

10

cuit, ignoring precedent, stands as the sole Circuit, post-

Union Carbide, to construct an artificial distinction

between the use of incontestability in an offensive or a

defensive mode. All other courts have applied the concept

of incontestability according to the clear words of the

statute.

C. THE NINTH CIRCUIT’S DECISION DEPRIVES

OWNERS OF INCONTESTABLE MARKS OF

THEIR STATUTORILY GUARANTEED RIGHTS

AND ADVERSELY AFFECTS COMPETITION

The judicial standard which forms the basis for the

Ninth Circuit’s decision herein, if allowed to stand,

would deny to registrants in the Ninth Circuit their

statutorily granted rights to the exclusive use of incon-

testable trademarks in derogation of the clear meaning of

Section 1115(b) and Congressional intent in enacting the

Lanham Act.

The Ninth Circuit’s imposition of extra-statutory de-

fenses and new limitations to a registrant’s incontesta-

ble rights enables an infringer to invade the reg-

istrant’s exclusive right to use its mark. One of the

main purposes of the Lanham Act was “the creation of

certain conclusive and predictable rights in mature

registrations of marks.” J. McCarthy, “Important

Trends in Trademark and Unfair Competition Law Dur-

ing the Decade of the 1970s” 71 Trademark Rep. 93,

101 (1981).

One of these “conclusive and predictable rights” is

the right to the exclusive use of an incontestable mark

pursuant to Section 1115(b). The plain meaning of Sec-

tion 1115(b) is unequivocal: “the registration shall be

conclusive evidence . . . except when one of the following

defenses or defects is established.” 15 U.S.C. § 1115(b)

(1976) (emphasis added). The interposition of addi-

tional defenses by the Ninth Circuit denies a registrant

its “conclusive and predictable right” to the exclusive

11

use of its mark, consequently precluding relief on

grounds never sanctioned by Congress. Thus, in the

Seventh and Fifth Circuits, an owner of an incontestable

trademark can rely upon the exclusive right to use its

mark, while in the Ninth Circuit, its mark is imper-

missibly at peril. Federal trademark rights should not

be subject to such uneven treatment.

The decision by the Ninth Circuit injects a new ele-

ment of uncertainty into the area of trade competition.

As Congress recognized in enacting the Lanham Act:

“'T]|rade-marks ... are the essence of competition ... .”

S. Rep. No. 1333, 79th Cong., 2d Sess. (1946), re-

printed in 1946 U.S. Code Cong. Serv. 1274, 1275.

They secure to the business community the advantages

of reputation and goodwill while providing a non-

conforming basis upon which consumers can select freely

the goods and services they wish to utilize. See, e.g.,

J. McCarthy, 1 Trademarks and Unfair Competition

§ 2.7 (1973). By diluting the rights of incontestability

under Section 1115(b), the Ninth Circuit has under-

mined the source identification role of trademarks and

impermissibly altered the balance between competition

and public protection which the Lanham Act represents.

If the Ninth Circuit decision is not reversed, an owner

who has invested time, money and energy in developing

a recognizable trademark may lose its investment in the

mark even though the defendant’s mark is likely to

cause public confusion with the registrant’s mark.

The seven defenses specifically enumeratec. in Section

1115(b) were established by Congress after careful con-

sideration of three (sometimes competing) policies:

(1) protection of a valid owner’s trademark against

appropriation or dilution; (2) protection of the public

against confusion; and (3) fostering a competitive mar-

ketplace. See S. Rep. No. 1333, supra at 1274-75. These

defenses consequently represent Congress’s judgment re-

garding the appropriate balance to be struck among

12

these policies in the area of trade competition. The

Ninth Circuit’s application of additional defenses alters

this balance without Congressional] sanction.’

Finally, the Ninth Cireuit’s decision diminishes the

importance and integrity of federal registration of trade-

marks under the Lanham Act. The federal registration

program is strengthened by the Union Carbide decision,

which augments the benefits of registration by recog-

nizing the strong incentives contained in Section 1115

(b). By contrast, the Ninth Circuit’s decision subverts

the strength of incontestable trademarks in infringe-

ment suits. The statutory protection of federal registra-

tion is diminished with the resulting loss to the public

of the benefits of the registration system—protection of

investment in goodwill, protection from public confusion

and deception, and protection of free compztition. There

is no concomitant gain.

D. WITHOUT REVIEW BY THIS COURT IMPOR-

TANT TRADEMARK RIGHTS WILL CONTINUE

TO BE DENIED

Only this Court can reconcile the conflict that exists

among the circuits regarding the effect and scope of the

concept of incontestability in trademark infringement

suits. Although this case afforded the Ninth Cireuit the

opportunity to modify its prior decision in Tillamook

to be in accord with established precedent arising after

Union Carbide, it failed to do so and instead adopted a

7 Section 1116 which provides that “[t]he several courts ...

shall have power to grant injunctions, according to the principles

of equity ... to prevent the violation of any right of the registrant”

does not provide Congressional authorization for addition of extra-

statutory defenses to Section 1115(b). 15 U.S.C. $1116 (1976).

The provision is directed to the fashioning of a remedy, not to the

determination of liability. See, e.g., United States Jaycees v.

Chicago Junior Ass’n of Commerce & Indus., 505 F. Supp. 998

(N.D. Ill. 1981) ; Note, Incontestable Trademark Rights and Equita-

ble Defenses in Infringement Litigation, 66 Minn. L. Rev. 1067

(1982).

13

position uniformly rejected by other courts who have

considered the issue.

The harm inflicted by the present conflict between the

circuits will only be exacerbated over time. The concept

of incontestability is fundamental to trademark regis-

trants seeking to protect their federally granted rights

in trademark infringement suits. Consequently, the

issues presented in this case regarding the scope of

protection afforded incontestable marks under the Lan-

ham Act arise repeatedly in trademark infringement

suits. Uncertainty and confusion over the extent of pro-

tection afforded an incontestable trademark is injurious

to the entire federal trademark registration system.

Resolution of this issue by the Court at this time will

alleviate the existing conflict.

CONCLUSION

For all the foregoing reasons, the petition for certi-

orari should be granted.

Respectfully submitted,

JOHN S. KINGDON

LESLEY A. MORADIAN

Donis E. LONG

Howrey & SIMON

1730 Pennsylvania Ave., N.W.

Washington, D.C. 20006

(202) 783-0800

Counsel for Petitioner

The Prudential Insurance

Company of America

May 2, 1983

TABLE OF CONTENTS

Page

LISTING OF PARENT COMPANIES, SUBSIDI-

ARIES AND AFFILIATES OF THE PARTIES.. la

OPINION OF THE NINTH CIRCUIT COURT

Be Pe I Sak cassrrotictnrncn erencsecensteoneorinrpettaoniobiniareieine 5a

OPINION OF THE CENTRAL DISTRICT

COURT GF CALIPURNIA...... 0. ccnn. 15a

ORDER OF THE NINTH CIRCUIT COURT OF

APPEALS DENYING PETITION FOR RE-

IIE cic scuserctcesulecdececetsuttatarinisiabsainestpseaweepnaeeatics 27a

SECTION 1115 OF THE LANHAM ACT ............ 28a

la

APPENDIX A®

THE VRUDENTIAL INSURANCE COMPANY OF

AMERICA

Subsidiaries:

PRUCO, Ine.

745 Broad St.

Newark, NJ 07102

Subsidiaries:

Bache Group, Inc.

100 Gold St.

New York, NY 10038

Flor-Ag Corporation

Ste. 172, 6220 S. Orange Blossom Trail

Orlando, FL 32809

Newark Rehabilitation, Inc.

10 Bank St. Suite 606

Newark, NJ 07102

PG Realty, Ine.

1500 Woodmen Tower

Omaha, NE 68102

PIC Realty Corp.

P.O. Box 1539

Newark, NJ 07101

Pruco Life Insurance Co. of Texas

P.O. Box 2075

Houston, TX 77001

~ Pruco Securities Corp.

P.O. Box 1200

Newark, NJ 07101

8 Information obtained from Directory of Corporate Affiliations

“Who Owns Whom” (National Register Publishing Co., Inc. 1983).

2a

Pruco Services, Inc.

P.O. Box 1488

Newark, NJ 07101

Prudential Funding Corp.

Prudential Plaza

Newark, NJ 07101

Prudential Health Care Plan, Inc.

P.O. Box 2884

Houston, TX 77001

Prudential Health Care Plan of Oklahoma,

Inc.

Northwest Medical Center, Ste 400, 3330

N.W. 56th St.

Oklahoma City, OK 73112

Prudential Property & Casualty Ins. Co.

P.O. Box 419

Holmdel, NJ 07733

Prudential Trust Co.

P.O. Box 388

Fert Washington, PA 19034

Subsidiaries:

Prudential Commercial! Insurance Co.

23 Main St.

Hoimdel, NJ 07733

Prudential General Insurance Co.

23 Main St.

Holmdel, NJ 07733

PruCapital, Ine.

840 Memorial] Dr.

Cambridge, MA 02138

Subsidiary:

PruLease, Inc.

840 Memorial Dr.

Cambridge, MA 02138

3a

Subsidiaries:

PruFunding, Inc.

840 Memorial Dr.

Cambridge, MA 02138

PruCapital Management, Inc.

840 Memorial Dr.

Cambridge, MA 02138

PruSupply, Inc.

840 Memorial Dr.

Cambridge, MA 02138

Prudential Reinsurance Co.

P.O. Box 908

Newark, NJ 07101

Subsidiaries:

Dryden & Co., Inc.

P.O. Box 999

Chatham, NJ 07928

Essex Syndicate, Inc.

59 John St.

New York, NY 16038

Gibraltar Casualty Co.

213 Washington St.

Newark, NJ 07102

John Street Syndicate, Inc.

59 John St.

New York, NY 10038

Pruco Managers, Inc.

59 John St., Ste 900

New York, NY 10038

Pruco Syndicate, Inc.

59 John St.

New York, NY 10038

4a

Pruco Life Insurance Co.

Prudential Plaza

Newark, NJ 07101

745 Property Investments

c/o Boston RE10

Boston, MA 02199

5a

APPENDIX B

UNITED STATES COURT OF APPEALS

NINTH CIRCUIT

No. 81-5874

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,

Plaintiff-A ppellant,

Vv.

GIBRALTAR FINANCIAL CORPORATION OF CALIFORNIA, and

GIBRALTAR SAVINGS & LOAN ASSOCIATION,

Defendants-A ppellees.

Argued and Submitted Nov. 1, 1982

Decided Dec. 16, 1982

As Amended Dec. 22, 1982

John S. Kingdon, Howrey & Simon, Washington, D.C.,

for plaintiff-appellant.

Marvin Jubas, Los Angeles, Cal., for defendant-

appellee.

Appeal from the United States District Court for the

Central District of California.

Before GOODWIN, HUG and BOOCHEVER, Circuit

Judges.

GOODWIN, Circuit Judge.

This dispute is about the likeness of a rock. Pruden-

tial Insurance Company of America alleges that Gibral-

tar Financial Corporation of California and Gibraltar

Savings & Loan Association (collectively, Gibraltar)

have misappropriated its corporate symbol, a picture

6a

of the Rock of Gibraltar. Prudential sued for injunctive

relief alleging (1) infringement of a registered service

mark under the Lanham Act, 15 U.S.C. $§ 1051-1127,

(2) dilution of a registered service mark in violation

of Cal. Bus. and Prof.Code §§ 14320-14330, and (3)

unfair competition. Gibraltar counterclaimed, alleging

that Prudential has abandoned four older versions of

Prudential’s logo. The district court held for Gibraltar

on all issues and ordered cancellation of four of Pruden-

tial’s trademark registrations. This appeal followed.

In 1896, Prudential adopted a likeness of the Rock

of Gibraltar as its service mark. Prudential registered

different versions of its mark in 1948, 1955, 1965, 1973

and 1979. The first four registrations had achieved in-

contestability status at the time of this action.

Gibraltar Savings and Loan Association was formed

in 1952 and first used a rock logo in 1954. Gibraltar

Financial Corporation was formed in 1959 and from

that date until 1968, used a globe as its corporate mark.

Gibraltar Savings and Loan expanded from 1 branch in

1960 to 77 branches in 1980.

In 1979, Prudential first complained to Gibraltar about

Gibraltar’s use of a rock logo. Prudential sued after

Gibraltar had used the rock logo for twenty-eight years.

Prudential is barred by laches.

Prudential contends that laches may preclude dam-

ages, but cannot bar injunctive relief. Prudential relies

on Menendez v. Holt, 128 U.S. 514, 523-524, 9 S.Ct. 143,

145, 32 L.Ed. 526 (1888); McLean v. Fleming, 96 U.S.

245, 24 L.Ed. 828 (1877); and Stork Restaurant, Ine.

v. Sahati, 166 F.2d 348, 363 (9th Cir. 1948). These

cases do not support the proposition. The Supreme

Court explicitly made laches available as an equitable

defense barring injunctive relief in United Drug Co. v.

Rectanus Co., 248 U.S. 90, 102-103, 39 S.Ct. 48, 52-53,

63 L.Ed. 141 (1918); and French Republic v. Saratoga

Ta

Vichy Spring Co., 191 U.S. 427, 436-437, 24 S.Ct. 145,

146-147, 48 L.Ed. 247 (1903). These cases limited the

Menendez and McLean rationale to situations involving

fraudulent imitation or conscious infringement. United

Drug, 248 U.S. at 102, 39 S.Ct. at 52. The Stork court

found no laches based on the facts, Sterk Restaurant v.

Sahati, 166 F.2d 348, 362-363 (9th Cir. 1948), and

stated in dicta that laches could not bar injunctive re-

lief. In light of United Drug and Saratoga Vichy, Stork

Restaurant should be read for the limited proposition

that the defense of laches was not made out in that case.

See National Van Lines v. Dean, 237 F.2d 688, 693-694

(9th Cir. 1956) (defense of laches not made on facts).

Four of Prudential’s rock marks have incontestable

status under 15 U.S.C. § 1065. Prudential alleges that

only the defenses enumerated in 15 U.S.C. § 1115(b) can

apply against incontestable marks; laches is not one of

these. Gibraltar responds that 15 U.S.C. § 1116 calls on

the courts “to grant injunctions, according to the prin-

ciples of equity. . . .” in protecting trademark regis-

trants’ rights and, therefore, laches can apply.2 This

1 There is a wealth of authority in other circuits that laches can

bar injunctive relief. See, e.g., Skippy, Inc. v. CPC International,

Inc., 674 F.2d 209, 212 (4th Cir. 1982) (30-year delay constitutes

laches) ; Saratoga Vichy Spring Co. v. Lehman, 625 F.2d 1087, 1040-

1042 (2nd Cir. 1980) (proposition that laches cannot bar injunctive

relief has long been rejected); Safeway Stores, Inc. v. Safeway

Quality Foods, Inc., 433 F.2d 99, 102-108 (7th Cir. 1970) (16-year

delay constitutes laches) ; Chandon Champagne Corp. v. San Marino

Wine Corp., 335 F.2d 531, 5385 (2nd Cir. 1964) (18-year delay con-

stitutes laches) ; Anheuser-Busch v. Du Bois Brewing Co., 175 F.2d

370, 376-377 (3rd Cir.), cert. denied, 339 U.S. 934, 70 S.Ct. 664, 94

L.Ed. 1358 (1950) (30-year delay constitutes laches) ; Standard Oil

Co. v. Standard Oil Co., 252 F.2d 65, 76-77 (10th Cir. 1958) (de-

fense available but denied on facts).

2 Commentators are uncertain about the effect of incontestability.

See Developments in the Law—Trademarks and Unfair Competition,

68 Harv.L.Rev. 814, 829-830 (1955). Some circuits consider incon-

testability to be a defensive provision only; that is, useful only when

8a

court considers incontestability to be a defensive provi-

sion only. It helps protect the registrant’s mark from

cancellation but is of no offensive use. Incontestability

does not preclude a defense of laches. Tillamook County

Creamery Ass’n v. Tillamook Cheese and Dairy Ass’n,

345 F.2d 158, 163 (9th Cir.), cert. denied, 382 U.S. 903,

86 S.Ct. 239, 15 L.Ed.2d 157 (1965).

Prudential invites this court to overrule Tillamook.

We decline for two reasons: First, precedent should be

followed unless good reason counsels change. No such

reason exists. The effect of 15 U.S.C. §1115(b) is un-

clear; and both positions regarding the offensive/

defensive distinction are reasonable readings of the

statute.’ Second, the availability of a laches defense

narrows the protection afforded trademarks. For policy

reasons, this circuit has expressed a preference to read

the Lanham Act narrowly. International Order of Job’s

Daughters v. Lindeburg & Co., 633 F.2d 912, 918 (9th

Cir.), cert. denied, 452 U.S. 941, 101 S.Ct. 3086, 69

L.Ed.2d 956 (1981). The Act protects against fraud

cancellation proceedings are initiated against a mark. Tillamook

County Creamery Ass’n v. Tillamook Cheese and Dairy Ass'n, 345

F.2d 158 (9th Cir.), cert. denied, 382 U.S. 903, 86 S.Ct. 239, 15

L.Ed.2d 157 (1965). Other circuits make no offensive-defensive

distinction, allowing incontestability to be used against an alleged

infringer, Union Carbide Corp. v. EverReady, Inc., 531 F.2d 366,

871-377 (7th Cir.), cert. denied, 429 U.S. 830, 97 S.Ct. 91, 50

L.Ed.2d 94 (1976).

3 Commentators are either uncertain, see Developments in the

Law—Trademarks and Unfair Competition, 68 Harv.L.Rev. 814, 830

(1955), or split on the issue. Compare, Callmann, Unfair Competi-

tion and Trade-Marks, 2dEd., Vol. 4, §938.3(c) (1), p. 2075-2076

(incontestability is defensive only) with J. Thomas McCarthy, Jm-

portant Trends in Trademark and Unfair Competition Law During

the Decade of the 1970's, 71 Trade-Mark Rep. 83, 101-106 (1981)

(praising Union Carbide decision), and Note Incontestable Trade-

mark Rights and Equitable Defenses in Infringement Litigation,

66 Minn.L.Rev. 1067 (1982) (argues incontestability should pre-

clude equitable defenses).

9a

and consumer confusion. See James Burrough Ltd. v.

Sign of Beefeater, Inc., 540 F.2d 266, 276 (7th Cir.

1976) (trademark laws exist not to protect trademarks,

but to protect consuming public from confusion, con-

comitantly protecting trademark owner’s right to non-

confused public). To read the Act more broadly invites

anticompetitive and irrational market behavior. Smith

v. Chanel, Inc., 402 F.2d 562, 566 (9th Cir. 1968). See

Brown, Advertising and the Public Interest, 57 Yale

L.J. 1165, 1185-1206 (1948) (distinguishes ‘“informa-

tive” from “persuasive” functions of trademarks and

argues only former should be legally protected).

Prudential makes three factual allegations in an at-

tempt to avoid the application of laches: (1) Gibraltar

did not use the Rock logo continuously; (2) Gibraltar

changed its rock to look more like Prudential’s rock over

the years; and (3) Gibraltar grew prodigiously from 1

office in the early 1960’s to 77 offices in 1980.

The first allegation is unsupported. Gibraltar Finan-

cial Corporation and Gibraltar Financial, Insurance Di-

vision, used marks other than variations of the rock

between 1959 and 1968. However, it is uncontroverted

that Gibraltar Savings and Loan used the rock logo

from 1954 until today. The rock logo also represented

all of the Gibraltar family of organizations from 1954

to 1959, and from 1968 until today.

Prudential alleges Gibraltar more closely imitated its

rock over the years. Prudential relies on inferences

drawn from comparison of the respective changes made

in the design of the rock logo by the companies over

the years. Inspection of the marks provided in Pruden-

tial’s brief fails to show increasing similarity between

Prudential and Gibraltar logos. The marks of the two

companies looked as similar twenty-eight years ago as

they look today, probably because they represent the

same rock, albeit with decreasing fidelity to the real

thing.

10a

Prudential’s third allegation is that because Gibraltar

has progressively encroached upon Prudential’s mark

over time, laches cannot bar injunctive relief. The ar-

gument appears to be two-pronged: (1) Gibraltar’s

business has expanded over time; and (2) Gibraltar’s

use of the symbol has expanded and progressively en-

croached on Prudential’s symbol.

Prudential bases its theory of symbolic encroachment

on two allegations: (1) that Gibraitar modified its mark

over the years to approximate Prudential’s mark more

closely; and (2) that Gibraltar recently entered the tele-

vision advertising arena. The first allegation has al-

ready been discussed. The record shows that Gibraltar

has engaged in TV advertising for nearly twenty years.

The volume of Gibraltar’s television advertising has in-

creased, and the use of the rock logo has become more

frequent. However, these facts are not adequate to sup-

port the theory of gradual encroachment.

Prudential also alleges that Gibraltar’s expansion in

type and amount of business constitutes progressive en-

croachment and thus laches is no bar to relief. Pruden-

tial relies on California Packing Corp. v. Sun-Maid

Raisin Growers, 81 F.2d 674 (9th Cir.), cert. denied,

298 U.S. 668, 56 S.Ct. 833, 80 L.Ed. 1391 (1936). Sun-

Maid is inapposite because it is a contract case in which

plaintiff and defendant agreed to defendant’s use of the

Sun-Maid label on raisins only. When defendant ex-

panded its product line to other fruits, plaintiff im-

mediately protested. The court held that use of the Sun-

Maid label as allowed by contract did not raise a laches

defense to use of “Sun-Maid” on other fruits in viola-

tion of the contract. Jd. at 676, 679-680.

Prudential also relies on a number of other progres-

sive encroachment cases, principally Chandon Cham-

pagne Corp. v. San Marino Wine Corp., 335 F.2d 531,

585 (2nd Cir. 1964); Miss Universe, Inc. v. Patricelli,

271 F. Supp. 104, 110 (D. Conn. 1967), affirmed, 386

lla

F.2d 997 (2nd Cir. 1967) ; Standard Oil Co. v. Standard

Oil Co., 252 F.2d 65 (10th Cir. 1958) ; Independent Nail

& Packing Co. v. Strenghold Screw Products, Inc., 205

F.2d 921, 927 (7th Cir.), cert. denied, 346 U.S. 886, 74

S.Ct. 188, 98 L.Ed. 391 (1953). These cases all rely on

the principle that if the junior user of a mark moves

into direct competition with the senior user, selling the

same “product” through the same channels and causing

actual market confusion, laches is no defense. Gibraltar

has not moved into direct competition with Prudential

as contemplated in these cases. Gibraltar and Pruden-

tial do not offer the same services to any substantial

extent and there is no evidence that actual confusion of

their services has occurred.

As for expansion in amount of business, it is true

that Gibraltar has grown tremendously, but growth

alone does not infringement make. See, e.g., Polaroid

Corp. v. Polarad Electronics Corp., 287 F.2d 492, 498

(2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7

L.Ed.2d 25 (1961) (laches barred plaintiff because of

failure to act while defendant was small). In Dwinell-

Wright Co. v. White House Milk Co., 132 F.2d 822 (2d

Cir. 1943) the court held that laches barred injunctive

relief because “[f]rom the first moment when it learned

of . . . [defendant’s] use of the mark . . .—sixteen

years—the plaintiff did nothing to stop that use; it

merely stood aside and watched the business grow at

great cost to colossal proportions.” Jd. at 825. We find

no error in the district court’s factual basis for finding

laches.

Prudential’s allegations of dilution and unfair com-

petition under California law are also barred by laches.

In addition, the unfair competition claim fails for lack

of evidence of confusion by purchasers as to source as

required by California law. Walt Disney Prod. v. Air

Pirates, 581 F.2d 751, 760 (9th Cir.), cert. denied, 439

U.S. 1132, 99 S.Ct. 1054, 59 L.Ed.2d 94 (1979).

12a

Prudential argues the lower court erred in finding

that Prudential and Gibraltar do not compete, contend-

ing that: (1) Gibraltar also sells insurance; (2) Gibral-

tar and Prudential are both financial institutions which

take surplus funds from the public and invest the funds

for a profit; and, (3) even if the two companies do not

compete extensively now, deregulation will make them

competitors.

The district court found that Gibraltar sells a small

amount of insurance, mostly in conjunction with home

mortgage and building loans. The record shows that in-

surance sales comprise less than 0.3 percent of Gibral-

tar’s business and that this insurance is sold primarily

to depositors and borrowers. Savings and loan associa-

tions routinely insure mortgage payment. Such insur-

ance, not sold to the public at large, does not make

Gibraltar a competitor of Prudential. A different case

would be presented if Gibraltar attempted to enter the

general insurance market on a broad scale.

Prudential next argues that both companies are in

the business of acquiring surplus funds for investment

at a profit. Though analytically attractive, the claim is

flawed for two reasons. First, it is too broad. Almost

every purchase can be said to be made with “surplus

funds,” and every corporation which thus acquires funds

is free to invest those funds for long or short-term

profit. These two corporations are competitors only in

the sense that at any given time, the investment pie is

divided into finite pieces.

Second, the argument ignores the function of a trade-

mark: .dentification of a product or service to the con-

sumer. Though term insurance and a savings account

may have some similarity in an economic sense, most

consumers would perceive insurance as a hedge against

risk and not as capital accumulation. A savings account

is the reverse. Use of similar symbols to identify differ-

ent products presents less of a problem of confusion than

if both parties supplied the same service.

13a

Prudential also contends that given the rapid change

in financial institutions, the two companies will soon

compete in a wide variety of services. This argument

is speculative. No one knows the future contours of

banking, savings and loan, and insurance regulation.

Even if the regulatory framework were amended to al-

low unfettered expansion, whether such growth and

service competition will occur is a matter entrusted to

private decision-makers as business needs and opportu-

nities dictate. The mere possibility of future competition

is too tenuous a basis upon which to reverse the district

court. On the record developed in the trial court in this

case, the growth of the companies and the changes in

their services do not create a basis for relief. Nothing

in this opinion will preclude new litigation if new facts

develop. A remedy will be available when the necessary

facts arise.

The district court excluded from evidence Prudential’s

survey showing that 14 percent to 31 percent of the

public identify Gibraltar’s logo with Prudential’s logo.

Prudential alleges the court improperly excluded the

survey as unreliable and as hearsay evidence. The dis-

trict court stated the evidence “did not meet the relia-

bility requirements necessary to overcome its hearsay

character.” This composite conclusion was incorrect.

Reliability and hearsay are linked conceptually for cer-

tain purposes, but not in the way the trial court linked

these concepts in this case. Neither premise is a basis

for rejecting survey evidence.

Technical unreliability goes to the weight accorded a

survey, not its admissibility. C.A. May Marine Supply

Co. v. Brunswick Corp., 649 F.2d 1049, 1055 and n.10

(5th Cir. 1981). Surveys are admissible, if relevant, ei-

ther as nonhearsay or through a hearsay exception. Zippo

Manufacturing Co. v. Rogers Imports, Inc., 216 F.Supp.

670, 682-684 (S.D.N.Y. 1963). Surveys conducted accord-

ing to accepted principles are routinely admitted. See,

e.g., Anti-Monopoly, Inc. v. General Mills Fun Group, Inc.,

684 F.2d 1316 (9th Cir. 1982). A few cases do support

14a

the position taken by the district court. See, e.g., Ameri-

can Foot Wear Corp. v. General Footwear Co., 609 F.2d

655, n.4 (2d Cir.), cert. denied, 445 U.S. 951, 100 S.Ct.

1601, 63 L.Ed.2d 787 (1980) (trial court properly ex-

cluded survey which contained self-serving questions and

which failed to duplicate actual marketing conditions).

The majority view, however, to admit the survey and dis-

count its probative value, seems the better course.

Nonetheless, exclusion failed to prejudice Prudential be-

cause the survey showed only that the Prudential rock

and the Gibraltar rock are linked in the public eye. It

failed to show any confusion between Gibraltar’s services

and Prudential’s services and that failure, together with

the fact that twenty-eight years of coexistence had pro-

duced no examples of actual confusion, make the fear of

confusion in the future problematic.

Gibraltar presented evidence from Prudential’s Graphic

Standards Manual that Prudential intended to abandon

its marks registered in 1948, 1955, 1965, and 1973.

Gibraltar did not show that actual use of the old marks

had ceased. The evidence showed that not only did Pru-

dential continue to use old stationery and related items,

but that the company continued to commission advertise-

ments using the old logos.

Title 15 U.S.C. § 1127 states, in relevant part, “A mark

shall be deemed to be ‘abandoned’—(a) When its use has

been discontinued with intent not to resume.” The section

requires two elements, nonuse and intent not to resume

use. Saratoga Vichy Spring Co. v. Lehman, 625 F.2d

1037 (2d Cir. 1980). Abandonment of a trademark,

being in the nature of a forfeiture, must be strictly

proved. United States Jaycees v. Philadelphia Jaycees,

639 F.2d 134, 139 (8rd Cir. 1981). The district court

clearly erred in ignoring evidence of Prudential’s contin-

ued use of its older marks. The order of the district court

to cancel four of Prudential’s service marks is vacated.

In all other respects, the judgment is affirmed.

Affirmed in part, vacated in part.

15a

APPENDIX C

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CV 80-3162-R

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,

Plaintiff,

Vv.

GIBRALTAR FINANCIAL CORPORATION OF CALIFORNIA,

and GIBRALTAR SAVINGS & LOAN ASSOC.,

Defendants.

OPINION

This action brings plaintiff, The Prudential Insurance

Company of America, a New Jersey Corporation (PRU-

DENTIAL) and Gibraltar Financial Corporation of

California, a Delaware Corporation and Gibraltar Sav-

ings and Loan Association, a California Corporation

(jointly hereafter GIBRALTAR) into conflict over the

use of a likeness of the Rock of Gibraltar as a service

mark. PRUDENTIAL also adds claims of unfair com-

petition and dilution of the service mark under Cali-

fornia law.

PRUDENTIAL began selling insurance to the public

late in the 19th century. In 1896 PRUDENTIAL

adopted as a service mark a depiction of the left face

of the British owned fortress at the Atlantic entry to

the Mediterranean Sea known as the Rock of Gibraltar.

Since 1896 the service mark has been used in connection

with PRUDENTIAL’s sale of life insurance and its

later involvement in real estate mortgage loans. The

real estate mortgage loan business is one largely limited

to financing large developments usually in excess of one

million dollars. This real estate mortgage business is

16a

accomplished exclusively through independent brokers

or dealing directly with large land developers and

builders.

In the mid 1970s PRUDENTIAL first entered on an

effort to sell casualty insurance with a concentrated

television campaign featuring a slogan to “get” or “own

a piece of the rock.” This multimillion piece of the rock

campaign prominently featured PRUDENTIAL’s rock

service mark. Before its entry into the casualty insur-

ance market PRUDENTIAL’s advertising and _ public

relations budget was almost exclusively dedicated to the

sale of life insurance to the general public.

PRUDENTIAL first registered in the United States

Patent and Trademark Office the depiction of the left

face of the Rock of Gibraltar as a design mark in 1948

(1948 mark). Since 1948 PRUDENTIAL has made

separate registrations in 1955 (1955 mark), 1965 (1965

mark), 1973 (1973 mark) and 1979 (1979 mark). The

1979 Mark, now being used exclusively by PRUDEN-

TiAL as its service mark, is a stylized depiction of the

Rock of Gibraltar.

GIBRALTAR is a savings and loan association char-

tered by and operating under the regulatory laws of the

State of California. GIBRALTAR began its Gibraltar

existence in Los Angeles in 1952 when it was chartered

by the State of California. It has through acquisitions,

affiliations and newly issued charters now expanded its

operations to 75 locations all within the State of Cali-

fornia. Since its formation GIBRALTAR has engaged

in the business of attracting savings deposits from and

making real estate loans to individuals of the general

public. If GIBRALTAR’s business can be characterized

in any fashion it is in single family residential loans.

As part of its loan business GIBRALTAR acts as

insurance agent or brokers to provide casualty insur-

17a

ance service for its depositors and/or borrowers. These

insurance services have been provided by GIBRALTAR

continuously since 1952. GIBRALTAR also provides a

type of life insurance sold in conjunction with its real

estate loans to protect the borrower’s equity in the en-

cumbered property during the period of the loan. This

insurance is offered by most, if not all, institutions that

make residential loans to individual borrowers.

In 1980 the law of California was amended to permit

savings and lIsan associations to offer to the public a

new service—the checking account. GIBRALTAR, now

competing with full-service banking institutions began

an advertising campaign to sell its checking account

service. In keeping with the fertility of the advertising

mind GIBRALTAR adopted “Rock-Solid” as the iden-

tification of its new service. It appears that this is the

only identifiable reason that this action was commenced

by PRUDENTIAL.

GIBRALTAR came to its name in 1952 at the sug-

gestion of Mrs. Rose Barlow, the wife of the founder.

As part of the embryonic stirrings GIBRALTAR adopted

a crude but recognizable left face depiction of the Rock

of Gibraltar as a logo in its publication of “The Gibral-

tar Quarterly” started in July 1953 to advertise its

policy of 314% interest dividends on accounts paid

quarterly. The 1950s generation was bombarded by the

voice of Harold Perry—the Great Gildersleeve of radio

fame—announcing “Get that good solid feeling at .. .”

As GIBRALTAR’s growth mirrored California’s home

building explosion of the 1950s GIBRALTAR built its

headquarters in Beverly Hills, California at Gibraltar

Square in 1959. This building prominently displayed a

depiction of the Rock of Gibraltar at its entrance on

Wilshire Boulevard approximately two miles from the

Western Home Office of PRUDENTIAL. Significantly,

PRUDENTIAL/’s offices were identified simply with the

word PRUDENTIAL on its sides. No use was made of

18a

the Rock of Gibraltar service mark anywhere upon the

PRUDENTIAL property known as Prudential Plaza.

In spite of GIBRALTAR’s notorious use of a depic-

tion of the Rock of Gibraltar on its buildings, in its ad-

vertising and on its stationery, PRUDENTIAL did not,

until December 1979—some 28 years after GIBRAL-

TAR’s first use—complain of GIBRALTAR’s use.

Protection in the use of a registered trade or service

mark under federal law is provided by the Lanham Act

codified as Title 15 USC $ 1051 et seq. PRUDENTIAL,

has for purposes of protection of its latest depiction of

the Rock of Gibraltar as a trade mark, met all the

requirements of the Lanham Act. The so-called highly

stylized mark was registered June 26, 1979

For: PROVIDING ALL FORMS OF INSURANCE

PROTECTION AND SERVICES INCIDENTAL

THERETO, INCLUDING LIFE, HEALTH AN-

NUITIES AND PENSION AND PROFIT SHAR-

ING FUNDS, PROPERTY AND CASUALTY

AND REINSURANCE; ALSO INDEPENDENT

ADMINISTRATIVE SERVICES OF THE TYPE

PERFORMED IN THE NORMAL CONDUCT OF

ITS INSURANCE OR ANNUITY OPERATIONS

INCLUDING CONSULTATIVE, ACTUARIAL,

DATA PROCESSING, ACCOUNTING AND

CLAIMS SERVICES; CORPORATION FINANC-

ING AND MORTGAGE LENDING SERVICES;

AND INVESTMENT SERVICES INCLUDING

THE PURCHASE AND SALE OF REAL ESTATE

AND SECURITIES IN CONNECTION WITH

FUND MANAGEMENT; ALL OF WHICH ARE

ENGAGED IN BY THE APPLICANT DIRECTLY

OR THROUGH SUBSIDIARIES IN CLASS 36

(U.S. CL 102).

With that registration came protection from infringe-

ment as provided in 15 USC § 1114 which in pertinent

part says:

19a

§ 1114. Remedies; infringement; innocent infringe-

ment by printers and publishers.

(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,

distribution, or advertising of any goods or services

on or in connection with which such use is likely to

cause confusion, or to cause mistake, or to deceive;

or

- * * *

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

PRUDENTIAL lays claim to the depiction of the

Rock of Gibraltar on what appears to be an exclusive

right to use. What should be remembered is that PRU-

DENTIAL does not own the Rock of Gibraltar. It is the

property of Great Britain. No person or entity has

exclusive use to the reproduction of what generations of

geography and history students have recognized as the

southern most tip of the Iberian Peninsula and the gate-

way to the Mediterranean Sea. The fame and recog-

nizability of the Rock of Gibraltar (cartoonists notwith-

standing) does not come from some stylized version of

its left face used by either PRUDENTIAL or GIBRAL-

TAR but rather from the impregnable nature of the

fortress that has endured as a small speck of the British

Empire through centuries to the present day. The in-

nocent adoption of this symbol of strength, particularly

by a financial institution bearing the name “Gibraltar”

does not therefore seem as incredulous as counsel for

PRUDENTIAL may want to believe. Reliance on Bevins

Manchester Corporation v. Soft Brush Car Wash Sys-

tems, Inc. 207 USPQ 757 (E.D. Vir. 1980), Fotomat.

Corp. v. Cochran 437 F. Supp 123 (D. Kan. 1977)

Fleischmann Distilling Corp. v. Maier Brewing Co., 314

F.2d 149 (9th Cir. 1963) and HMH Publishing Co. Inc.,

20a

v. Brincat, 504 F.2d 713 (9th Cir 1974) misses the

point.

PRUDENTIAL claims that this action was filed “sim-

ply attempting to avoid confusion, so that significant

portions of the public will not believe that either of

defendants is in any way sponsored, affiliated, or con-

nected with plaintiff.” (Plaintiff’s Post Trial Reply

Brief pp. 4-5). The protections of 28 [sic] USC § 1114

would offer little more whether infringement is ap-

proached from “confusion of source” or “confusion of

sponsorship.” To treat “source” and “sponsorship” as

different concepts is pure semantic sophistry. It is diffi-

cult to conceive that the source of a product or service

identified by a trademark would not claim sponsorship.

The evidence of the likelihood of confusion in this

case takes on two aspects. First the fact that in 28

years of the use by GIBRALTAR of various depictions

of the Rock of Gibraltar as its logo no more than one

or two instances of momentary confusion have been

uncovered.

PRUDENTIAL would have this Court disregard that

evidence in slavish adherence to a concept of “likelihood

of confusion” as though prescience is somehow more ac-

curate than historical fact in determining whether in

the everyday use of similar marks the public has been

or will be confused as to the source or sponsorship of

the product under consideration. The cases cited by

plaintiff for the proposition that a “likelihood of con-

fusion” is the sole consideration of courts in trademark

infringement cases are distinguishable. Those cases all

involved claimed infringement of rather recent origin

where a court is left only with whatever prescience it

can bring to bear on future preceptions [sic] of consum-

ers in the purchase of products. The concern of § 1114 is

to distinguish a mark that is “likely to cause confusion,

or to cause mistake, or to deceive.” That the public

has not been confused, mistaken or deceived by GIBRAL-

2la

TAR’s logo in use for 28 years must be considered if a

court is to determine actionable infringement under

§ 1114. There can be no more persuasive evidence that

a “likelihood of confusion” is just not a fact of life in

this litigation. The reality of yesterday is more than

just a prelude to the prescience of tomorrow.

PRUDENTIAL offered testimony of an expert in

trademark law on the question of likelihood of confu-

sion. The Federal Rules of Evidence Rule 702 provides

in part:

Rule 702 Testimony by Experts

If scientific technical, or other specialized knowl-

edge will assist the trier of fact to understand the

evidence or to determine a fact in issue, a witness

qualified as an expert . . . may testify thereto in

the form of an opinion or otherwise.

Certainly Rule 702 has broadened the common law

scope of expert testimony. One need only look to the

elimination in Rule 704 of the common law prohibition

of testimony on an ultimate issue to recognize the lib-

eralization of evidentiary consideration of expert testi-

mony. The Federal Rules of Evidence are explicit, how-

ever, in their reach into the decision making reserved

to judges. The expertise of a witness is a judicial deci-

sion. So too, the judge is left discretion with the deci-

sion as to whether or not expert evidence “will assist

the trier of fact to understand the evidence or to deter-

mine a fact in issue.” It is with this latter consideration

that the great bulk of the proffered testimony of PRU-

DENTIAL’s expert runs afoul.

The law is not the subject of expert testimony and

Rule 702 makes no changes in the common law approach

to expert testimony on domestic law.

Given the expertise of PRUDENTIAL’s witness he cer-

tainly fell into attempted lectures on the law particularly

22a

in the area of likelihood of confusion. From the pedagogi-

cal exposition on trademark law the expert offered his

personal opinion on what the public would perceive in ob-

serving Gibraltar’s use of the Rock of Gibraltar logo.

Aside from its help—if admissible—to the trier of fact

that opinion came simply without knowing GIBRALTER’s

use of its logo nor testing the perceptions of the public in

obtaining offered services from either PRUDENTIAL or

GIBRALTAR. Any legal expertise of the witness was far

outweighed by the abysmal absence of knowledge of the

facts of this case.

PRUDENTIAL also commissioned a marketing analy-

sis and survey to determine a likelihood of confusion by

“polling the public” on, what the pollster communicated

to his supervisors, as, “a study to be conducted on the

identification of company names and symbols.”

Public opinion and perceptions have often been meas-

ured by persons who have become expert in the methodol-

ogy of sampling and polling parts of the affected public

and statistically extrapolating that information to the

opinion of what the members of the public generally per-

ceive or know about a subject. These polls and surveys

have been admitted by Courts in trademark infringement

cases to satisfy the evidentiary requirements or show likeli-

hood of confusion of source and/or sponsorship. Whether

admissible because they are not hearsay i.e. offered not

to prove the truth of the statements made, or as an ex-

ception to the hearsay rule i.e. offered to prove state of

mind, attitude or belief, polls and surveys must be relia-

ble. Reliable both in the sense that it has some guaranty

of trustworthiness and that it is designed to measure the

reach of the inquiry under consideration. PRUDEN-

TIAL’S offer failed on both prongs of the reliability test.

PRUDENTIAL offered testimony of the designer of

t). poll and the supervisors who supervised the inter-

viewers. But neither the designer nor the supervisors

could tell the Court that the instructions given the inter-

23a

viewers were in fact carried out. This foundational evi-

dence cannot be offered through hearsay statements of

the interviewers or beliefs that the instructions in fact

were carried out. It must come from the persons charged

with the responsibility of asking questions of the public.

They must be available to be tested in the crucible of

reliability—cross examination.

Secondly the poll was designed, according to PRUDEN-

TIAL’s expert, to identify company names and symbols.

This is not the measure of the confusion or mistake re-

quired for actionable infringement under § 1114 consid-

ered by Courts under the rubrics of likelihood of confu-

sion of source and/or sponsorship.

Likelihood of confusion must be determined in the con-

text of the use of a trademark by its owner and the use

by the alleged infringer. Here, the use by GIBRALTAR

of the Rock of Gibraltar logo is with its corporate name

“GIBRALTAR.” It has universally been used as a “com-

posite mark.” PRUDENTIAL/’s poll has some important

failings in this respect. The identification of a Rock of

Gibraltar logo with PRUDENTIAL needs no poll to es-

tablish. The test however is not identification but rather

whether a person dealing with CIBRALTAR will likely

be confused, mistaken or deceived into believing that

PRUDENTIAL is providing the service or somehow spon-

sors GIBRALTAR services. Simple identification is par-

ticularly easy in recent years when the American public

has been under constant bombardment of PRUDEN-

TIAL’s “piece of the Rock” commercials on television.

More importantly the poll requires the questioner to ask

“What company, if any do you believe is connected with

this company?” To the person viewing a GIBRALTAR

advertisement as a pollee, he or she is immediately put

on notice that the questioner is looking for another name

to the exclusion of an answer involving GIBRALTAR. In

fact none of the survey was approached with the thought

in mind that PRUDENTIAL’s use of its Rock of Gibral-

24a

tar logo has been used almost exclusively in connection of

the sale of life insurance while GIBRALTAR’s compos-

ite mark incorporating the Rock of Gibraltar logo is used

in its primary business of attracting savings accounts and

making single family real estate mortgage loans. The

poll therefore did not meet the reliability requirements

necessary to overcome its hearsay character. Neither was

there sufficient foundation to show that even if reliable,

the poll was conducted as designed.

There is a significant difference in the common use of

the Rock of Gibraltar logo by these parties than in those

cases in which the use of colorably si-iilar logos have been

held to be infringing one of [sic] the other. PRUDEN-

TIAL and GIBRALTAR meet competitively in an area

of concurrent sale, only in the sale of casualty insurance.

Even this concurrence of sales is somewhat attenuated

because GIBRALTAR’s market for casualty insurance

has been limited since its first furnishing a casualty in-

surance service in 1954 to its own customers in the State

of California. PRUDENTIAL on the other hand under-

took an intensive “piece of the rock” television campaign

upon its first entry into the casualty insurance busi-

ness in 1975. The argument of PRUDENTIAL seems

somehow to press on the Court by its argument of in-

creased harm that PRUDENTIAL can by its own action

of entry into the casualty insurance field buy its position

of competition as one of the strengths of its equitable

position in this case. To bridge a twenty year gap—

1954 for GIBRALTAR—1975 for PRUDENTIAL— into

a competitive relationship by the simple expenditure of

great sums of money is an intolerable imposition upon

the principles of equitable remedies.

PRUDENTIAL’s mark and GIBRALTAR’s mark, as

used, fail in similarity. GIBRALTAR’s mark, as used,

does not infringe PRUDENTIAL’s mark because of its

composite character and for lack of any likelihood of con-

fusion.

25a

There is a further reason for denying PRUDENTIAL’s

claim for injunctive relief. GIBRALTAR’s open and

notorious use of its various depictions of the left face of

the geographic “Rock of Gibraltar” landmark has contin-

ued over 28 years with the full knowledge and acquies-

ence of PRUDENTIAL. PRUDENTIAL argues to the

Court the complete lack of a laches or estoppel defense.

None of plaintiff’s cited cases have been decided on the

absence of a laches or estoppel defense but rather on the

basis that a consideration of the facts did not lead to a

finding of laches or estoppel. It seems curious that a per-

son can lose all rights in real property by adverse posses-

sion (a specie of laches or estoppel) but cannot be estopped

to claim injunctive relief in a trademark case. When

the facts in any other context are so compelling it would

be intolerable that a party who has for 28 years relied

on the unfettered ability to use an adopted lcgo should

now find itself in a position to be unable to use the com-

posite mark it has established in a successful savings and

loan business. It is even more intolerable when that very

success is attempted to be turned against GIBRALTAR

as the orly reason for the need of injunctive relief.

GIBRALTAR’s success has neither been at the expense

of PRUDENTIAL nor in the public’s confusion that GIB-

RALTAR either was an alter ego of PRUDENTIAL or

was sponsored in its business practices by PRUDEN-

TIAL. To grant injunctive relief under such circum-

stances would torture equity beyond recognition.

The failure of PRUDENTIAL’s claim under the Lan-

han Act similarly defeats its unfair competition and dilu-

tion claims under California law.

GIBRALTAR’s counterclaims ask for cancellation of

PRUDENTIAL’s registered mark.

Upon receipt of its registration No. 1121163 PRU-

DENTIAL invoked the requirements of its Graphic

Standards Manual which provide:

26a

“The Rock and Slogan

The new engraved version of the Rock is now the

only Rock of Gibraltar symbol that may be used here-

afte: ©. new designed material. The outdated Pru-

dential Rocks, shown below, must no longer be used.”

(emphasis is original) Graphic Standards Manual,

p. D-2.

The instruction is clear that all previous registrations

would no longer be used in connection with trademark

identification of PRUDENTIAL’s services. The evidence

showed that PRUDENTIAL’s practice of trademark use

was consistent with the admonition of the Graphic Stand-

ards Manual. PRUDENTIAL except for uses of histori-

cal interest has abandoned the marks under Registrations

501706, 615490, 792730, 916764 and 961765. Those reg-

istrations must be cancelled.

This opinion shall be deemed to be the Findings of Fact

and Conclusions of Law necessary to the judgments or-

dered herewith.

Judgment shall be entered for the defendant and

against the plaintiff on the trademark infringement, dilu-

tion and unfair competition claims.

Judgement shall be entered for counterclaimant for

cancellation of Registrations 501706, 615490, 792730,

916764 and 961765.

Defendant and counterclaimant is awarded its costs of

suit.

DATED: June 26, 1981.

/s/ Manuel L. Real

MANUEL L. REAL

United States District Judge

27a

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 81-5874

DC No. CV 80-1362 R

(Central District California)

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,

Appellant,

Vv. -

GIBRALTAR FINANCIAL CORPORATION OF CALIFORNIA, and

GIBRALTAR SAVINGS & LOAN ASSOCIATION,

Appellees.

ORDER

Before: GOODWIN, HUG and BOOCHEVER, Circuit

Judges.

Appellant’s petition for rehearing is denied.

28a

APPENDIX E

$1115. Registration on principal register as evidence

of exclusive right to use mark; defenses

(a) Any registration issued under the Act of March 3,

1881, or the Act of February 20, 1905, or of a mark

registered on the principal register provided by this

chapter and owned by a party to an action shall be ad-

missible in evidence and shall be prima facie evidence

of registrant’s exclusive right to use the registered mark

in commerce on the foods or services specified in the

registration subject to any conditions or limitations

stated therein, but shall not preclude an opposing party

from proving any legal or equitable defense or defect

which might have been asserted if such mark had not

been registered.

(b) If the right to use the registered mark has become

incontestable under section 1065 of this title, the regis-

tration shall be conclusive evidence of the registrant’s

exclusive right to use the registered mark in commerce

on or in connection with the goods or services specified

in the affidavit filed under the provisions of said section

1065 subject to any conditions or limitations stated

therein except when one of the following defenses or

defects is established :

(1) That the registration or the incontestable

right to use the mark was obtained fraudulently;

or

(2) That the mark has been abandoned by the

registrant; or

(3) That the registered mark is being used, by

or with the permission of the registrant or a person

in privity with the registrant, so as to misrepresent

the source of the goods or services in connection

with which the mark is used; or

29a

(4) That the use of the name, term, or device

charged to be an infringement is a use, otherwise

than as a trade or service mark, of the party’s indi-

vidual name in his own business, or of the individ-

ual name of anyone in privity with such party, or

of a term or device which is descriptive of and used

fairly and in good faith only to describe to users the

goods or services of such party, or their geographic

origin; or

(5) That the mark whose use by a party is

charged as an infringement was adopted without

knowledge of the registrant’s prior use and has been

continuously used by such party or those in privity

with him from a date prior to registration of the

mark under this chapter or publication of the regis-

tered mark under subsection (c) of section 1062 of

this title: Provided, however, That this defense or

defect shall apply only for the area in which such

continuous prior use is proved; or

(6) That the mark whose use is charged as an

infringement was registered and used prior to the

registration under this chapter or publication under

subsection (c) of section 1062 of this title of the

registered mark of the registrant, and not aban-

doned: Provided, however, That this defense or

defect shall apply only for the area in which the

mark was used prior to such registration or such

publication of the registrant’s mark; or

(7) That the mark has been or is being used to

violate the antitrust laws of the United States.

(July 5, 1946, c. 540, Title VI, § 33, 60 Stat. 438; Oct.

9, 1962, Pub. L. 87-772, § 18, 76 Stat. 774).