Opposition Brief — American Bankers Insurance v. Paymaster Corp.

x Ad

AUG 2 1990

No. 90-43

JOSEPH F. SPANIOL, J

% CLERK

In the Supreme Court

OF THE

United States

OCTOBER TERM 1990

AMERICAN BANKERS INSURANCE

COMPANY OF FLORIDA,

Petitioner,

VS.

THE PAYMASTER CORPORATION,

Respondent.

_ On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

----—

—

RESPONDENT'S BRIEF IN OPPOSITION

DENNIS M. PERLUSS*

THOMAS H. EDWARDS

Nancy C. BROWN |

HUFSTEDLER, Kaus & BEARDSLEY

355 South Grand Avenue

Forty-Fifth Floor

Los Angeles, CA 90071

(213) 617-7070

*Counsel of Record for

Respondent

August 2, 1990

Bowne of Los Angeles, Inc.. Law Printers. (213) 627-2200.

BEST AVAILABLE COPY!

i

QUESTIONS PRESENTED

The Ninth Circuit decided that Section 43(a) of the

Lanham Act, 15 U.S.C. $1125(a) (1982), does not re-

quire the infringement of a “protected interest’ in the

nature of a trademark.

1. Is the unpublished opinion of the Ninth Circuit in

conflict with the decisions of other circuits?

2. Does the unpublished opinion of the Ninth Cireuit

construing the former Section 43(a) of the Lanham Act,

15 U.S.C. 1125(a) (1982), raise significant questions of

law where that Section was substantially revised by Con-

gress in 1988?

LIST OF PARTIES

Respondent concurs with the list of parties presented

by Petitioner. The Paymaster Corporation is a corporate

respondent but has no affiliated corporations.

ll

TABLE OF CONTENTS

, Page(s)

QUEBBTIONS PRION TMD okie vse sew ecses i

Ee ROME 2 io ke sas eden cnese@an ee eee i

ope gp A, 5 |: re men Per 1

STATEMENT OF THE CASE .................. =

; oe: 2 PPE e rrr ee er yy 3

a PP re ee 3

DR Fe re 0 + + ks 6 ck ee ee eee eee 4

D. ‘Fee SAO 6 vk ee eee 3)

REASONS FOR DENYING THE WRIT......... 7

I

THERE IS NO CONFLICT OF OPINIONS BE-

ye fiom, | Be! by ee ee ee |

A. The Ninth Cireuit’s Finding That Section

43(a) of the Lanham Act Does Not Require

the Infringement of a “Protected Interest” in

the Nature of a Trademark is Consistent with

Decisions in Other Cireuits................ 7

B. The Ninth Cireuit’s Unpublished M-_moran-

dum Disposition Is Not Precedent and Cre-

ates No Conflict In Any Event............. 12

C. The Ninth Cireuit’s Memorandum Disposition

Is Not a Holding That Could Create a Conflict

aah Te Se oko eso on a os he ee 13

THE ISSUES RAISED BY PETITIONER ARE

NOT SUFFICIENT TO WARRANT REVIEW BY

Wee GONE 6k bo ch xc ahapadaencenn een eeeenre 14

ill

TABLE OF CONTENTS

Page(s)

Section 43(a) of the Lanham Act Was Amended in

1988 During the Pendency of the Appeal and the

Issues Raised in the Writ Petition Are Moot.... 14

III

THE PETITION IMPROPERLY SEEKS RE-

VIEW OF SUFFICIENCY OF EVIDENCE AND

ES gs) 17

EE ee 19

iv

TABLE OF AUTHORITIES

Cases

Bangor Punta Operations v. Universal Marine Co.,

610 F.Supp. 612 (S.D.N.Y. 1985) ..............

Black Hills Jewelry Mfg. Co. v. Gold Rush, Inc., 633

ig §. 2 8) Se Breer eye cre eee

Bologna v. NMU Pension Trust of NMU Pension &

Welfare Plan, 654 F.Supp. 637 (S.D.N.Y. 1987) ..

Chevron Chem. Co. v. Voluntary Purchasing Groups,

659 F.2d 695 (5th Cir. 1981)..............025.

Mesquite v. Aladdin’s Castle, Inc., 455 U.S.

283 n. 9, 71 L.Ed.2d 152, 102 S.Ct. 1070 (1982)...

Commissioner v. McCoy, 484 U.S. 3, L.Ed.2d 495,

ge Be St errr

CPG Prods. Corp. v. Pegasus Luggage, Inc., 776

Pe 2GGT TOC. Cie. TGGR) . ccc neces ececcnces

Diffenderfer v. Central Baptist Church Inc., 404

U.S. 412, 30 L.Ed.2d 567, 92 S.Ct. 574 (1972) ..

Finkbohner v. U.S., 788 F.2d 723 (5th Cir. 1986) ..

Fox Chemical Co. v. Amsoil Inc., 445 F.Supp. 1355

en Ls oa iw bee h 66 Ge «pbs a ee ells

Fusari v. Steinberg, 419 U.S. 379, 42 L.Ed.2d 521,

a eS a ee

Gilliam v. American Broadcasting Cos., Inc., 538

oe 8B: kh | Re a ae

Hall v. Beals, 396 U.S. 45, 24 L.Ed.2d 214, 90 S.Ct.

4 re er era ee ee

Harris v. U.S., 769 F.2d 178 (11th Cir. 1985) .....

Hyar v. Burrus, 474 U.S. 1016, 88 L.Ed.2d 548,

ee es ED SED ws no bv ease xaucesesaccweas

£

10

10

12

=

TABLE OF AUTHORITIES

CASES

Holiday Inns v. Trump, 617 F.Supp. 1443 (1985) ..

In re Leimer, 724 F.2d 744 (8th Cir. 1984)........

Invicta Plastics (USA) Ltd. v. Mego Corp., 523

eo me OB a ee ee rere ee

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

SOE Ce SE 6 kb wikded cei cae

Kremens v. Bartley, 431 U.S. 119, 52 L.Ed.2d 184,

OT a ee LOO ES 6 na cscdaesctcivne eee

Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352

CR CO ED 5 a5 6 AA Caw ew eae eaeen ee

Liquid Controls Corp. v. Liquid Control Corp., 802

ek Re. Bt es ee ere

Marathon Mfg. Co. v. Enerlite Prods. Corp., 767

FiO Bee Ce Se ED ion os hii ee eceen een

Metric & Multistandard Components Corp. v.

Metric’s Inc., 635 F.2d 710 (8th Cir. 1980)......

Olsomte Corp. v. Bemis Mfg. Co., 610 F.Supp. 1011

Fie Se sc k.k shaw eae ce ee Oke i

Runge v. Lee, 441 F.2d 579 (9th Cir. 1971) .......

Smith v. Montoro, 648 F.2d 602 (9th Cir. 1981) ....

Taylor v. Diznoff, 633 F.Supp. 640 (W.D. Pa. 1986)

Tiverton Bd. of License Comm’rs v. Pastore, 469 U.S.

238, 83 L.Ed.2d 618, 105 S.Ct. 685 (1985) ......

Transamerican Freight Lines, Inc. v. Brada Miller

Freight Sysiems, Inc., 423 U.S. 28, 46 L.Ed.2d

SG, Wer es, I CT oka kb bs ee ce aeueeea us

9

vi

TABLE OF AUTHORITIES

CASES

Page

U-Haul Int’l., Inc. v. Jartran, Inc., 793 F.2d 1034

oS Le Wee een yeh ee awe 10

WSM Ince. v. Hilton, 724 F.2d 1320 (1984) ......... » §

Statutes and Legislative Materials

The Federal Trademark Act of 1946, 15 U.S.C.

re errr er passim

The Trademark Law Revision Act of 1988 (Pub. L.

No. 100-667, 102 Stat. 3946, effective November

16, 1989), 15 U.S.C. 1125(a) (1988)...... 2, 14, 15, 16

S. Rep. No. 515, 100th Cong., 2d Sess. 7, reprinted

in 1988 U.S. Code Cong. & Admin. News, 5577... = 16

U.S. Ct. of App. 9th Cir. Rule 36-3, 28 USCA......6, 12

U.S. Ct. of App. 9th Cir. Rule 36-4, 28 USCA ..... 13

Other Authorities

2 J. McCarthy, Trademarks and Unfair Competition

§ 27:2, p. 344 (2d ed. 1984) . 0... ccc cee cc eeee 8

No. 90-43

In the Supreme Court

OF THE

United States

OCTOBER TERM 1990

AMERICAN BANKERS INSURANCE

COMPANY OF FLORIDA,

Petitioner,

vs.

THE PAYMASTER CORPORATION,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

RESPONDENT'S BRIEF IN OPPOSITION

STATUTES INVOLVED

Petitioner has correctly identified Section 43 of the

Federal Trademark Act of 1946, as amended (the “Lan-

ham Act’), 15 U.S.C. § 1125(a) (1982) as the relevant act

of Congress involved in the Ninth Cireuit’s decision be-

low. The statute is set forth in full in the Petition, p. 2.

However, Section 43 of the Lanham Act was substan-

tially revised in 1988 by The Trademark Law Revision Act

of 1988 (Pub. L. No. 100-667, 102 Stat. 3946).'

‘The Petitioner fails to set forth the revised statute in full,

although it does reference the fact of the amendment in a footnote.

Petitioner erroneously concludes that “although the Ninth Circuit's

ee

The Act of Congress now in effect is Section 43(a) of

the Lanham Act, 15 U.S.C. § 1125(a), as amended (1988):

(a) Any person who, on or in connection with any

goods or services, or any container for goods, uses in

commerce any word, term, name, symbol, or device,

or any combination thereof, or any false designation

of origin, false or misleading description of fact, ‘or

false or misleading representation of fact, which -

(1) is likely to cause confusion, or to cause

mistake, or to deceive as to the affiliation, connec-

tion, or association of such person with another

person, or as to the origin, sponsorship, or ap-

proval of his or her goods, services, or commercial

activities by another person, or

(2) in commercial advertising or promotion,

misrepresents the nature, characteristics, quali-

ties, or geographic crigin of his or her or another

person’s goods, services, or commercial activities,

shall be liable in a civil action by any person who

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

such act. (As amended Nov. 16, 1988, Pub. L. 100-

667, Title I, § 132, 102 Stat. 3946.)

STATEMENT OF THE CASE”

Respondent The Paymaster Corporation (“‘Paymas-

ter’) opposes the Petition for Writ of Certiorari filed by

holding construed the 1982 version of the statute, that holding is

equally applicable to the present version of the statute.” Pet. Br., p.

2, n.l. Petitioner cites no authority for this proposition.

*Respondent presents this brief statement of the case to address

certain inadequacies of Petitioner's Statement of the Case. (Pet. Br.,

pp. 3-6).

3

American Bankers Insurance Company of Florida

(“ABIC”). The United States Court of Appeal for the

Ninth Circuit, in an unpublished memorandum, deter-

mined that Paymaster had adequately proved its claims

against ABIC for false advertising and false designation

of origin proscribed by Section 43(a) of the Lanham Act,

15 U.S.C. §1125(a) (1982). Specifically, the Ninth Cir-

cuit held that ““Paymaster was not required to establish

the infringement of a ‘protected interest’ in the nature of

a trademark in order to support its Section 43(a) claim,”

and the district court properly denied ABIC’s motion for

a judgment notwithstanding the verdict and alternative

motion for new trial. Petitioner challenges this decision in

its Writ Petition.’ |

A. The Parties

1. Paymaster

For more than 50 years, Paymaster has manufactured

‘“checkwriter” machines that imprint checks to make for-

gery and alteration difficult. Since 1957 Paymaster has

provided a warranty to its purchasers with a mechanical

guaranty and an indemnification provision. The guaranty

covers mechanical defects for two years, and the indemni-

fication provision provides for reimbursement of losses

from forgery or alteration of checks printed on the

buyer’s machine for the same period. After the initial

‘Petitioner presents Question No. 2 in its petition, but states in a

footnote that it “does not include Question No. 2 among the reasons

for the grant of certiorari.” Paymaster objects to Question No. 2 and

refers to the District Court and Ninth Circuit's findings that Paymas-

ter presented to the jury and the jury rendered its verdict on the

basis of substantial evidence, in support of the verdict. Pet. Br. App.,

pp. 3-4, 15-16.

Tee ge ee ee

4

period, the warranty is renewable for additional two-year

periods.

2. ABIC/UCIS

Petitioner ABIC and its agent United Commercial

Insurance Services (UCIS)* marketed and sold insurance

policies that iasured against losses resulting from forged

or altered checks. UCIS also offered a maintenance ser-

vice agreement for mechanical eheckwriter machines. To-

gether the ABIC insurance policy and UCIS maintenance

agreement offered by UCIS mimicked the two parts of

Paymaster’s warranty.

In April 1979 ABIC commenced an agency relationship

with UCIS for the sale of check forgery and alteration

insurance. At the same time, UCIS began marketing the

ABIC forgery insurance and mechanical service contract

by direct mail solicitation. The solicitation was designed

to have the appearance of an invoice rather than an

application for insurance. As a result, many UCIS cus-

tomers purchased the ABIC insurance and mechanical

service contract in the mistaken belief that the solicita-

tion form they received from UCIS was in fact a bill from

Paymaster.

Additionally, advertising materia] in the solicitation

purported to compare, but in fact misstated, the differ-

ences between the UCIS/ABIC products and those pro-

vided by “Plan P,” a thinly veiled reference to Paymaster.

Shortly after the mail solicitation campaign started,

ABIC began receiving complaints from customers who

‘UCIS was a defendant in the underlying action and settled while

the appeal was pending before the Ninth Circuit. The facts pertaining

to UCIS-ABIC relationships are important to complete the factual

contexv.

5

told ABIC that they had been deceived by the appearance

of the UCIS solicitation. ABIC also received inquiries and

complaints from state regulatory agencies about the de-

ceptive invoice-like format. Although attorneys for ABIC

recommended that UCIS modify its solicitation to protect

against further consumer confusion, including a state-

ment that “this is not an invoice,” UCIS’ chairman re-

fused to follow the recommendations.

B. The Litigation

In August 1980 UCIS commenced an action for alleged

antitrust violations against Paymaster in the United

States District Court for the Central District of Califor-

nia. Paymaster denied all liability in its answer and

counterclaimed against UCIS, its principals and ABIC.,

The counterclaim alleged that UCIS and ABIC violated

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

(1982), and California common law prohibitions against

unfair competition by falsely representing that their prod-

uct came from Paymaster and by engaging in false com-

parative advertising. At trial, Paymaster presented

evidence that UCIS’ method of marketing — sending a

solicitation that appeared to be an invoice to Paymaster

customers — was intentionally designed to confuse the

recipient. Testimony of UCIS/ABIC eustomers estab-

lished actual customer confusion by the solicitation. as

customers believed they had received an invoice from

Paymaster. The evidence also established that Paymaster

suffered damage as a direct result of UCIS and ABIC’s

misconduct.

On June 2, 1986 the jury returned a general verdict in

favor of Paymaster and awarded $5,500,000 in compensa-

tory damages jointly against UCIS, its principals and

ABIC, $3,000,000 punitive damages against UCIS and

6

$2,361,000 punitive damages against ABIC. The District

Court filed its Memorandum of Decision and Order or

August 12, 1986 denying ABIC’s and UCIS’ Motions for

Judgment Notwithstanding the Verdict and Alternatively

for a New Trial.

On January 8, 1990 the Ninth Cireuit Courts of Appeals

affirmed the judgment of the District Court denying the

Motion for Judgment Notwithstanding the Verdict and

Alternative Motion for New Trial. The decision was ren-

dered in an unpublished memorandum disposition “Not

For Publication” pursuant to Ninth Circuit Rule 36-3. On

May 2, 1990, the Ninth Circuit denied the Petition for

Rehearing Filed by ABIC. This Writ of Certiorari was

received by respondent on July 2, 1990.

7

REASONS FOR DENYING THE WRIT

I.

THERE IS NO CONFLICT OF OPINIONS BETWEEN

THE CIRCUITS

A. The Ninth Circuit’s Finding That Section 43 (a)

of the Lanham Act Does Not Require the In-

fringement of a “Protected Interest” in the Na-

ture of a Trademark is Consistent with Decisions

in Other Circuits.

The Ninth Circuit, in upholding the district court's

denial of ABIC’s Motion for Judgment Notwithstanding

the Verdict and alternative Motion for New Trial, found

that “{t]here was substantial evidence to support the

Lanham Act claim that the direct mail solicitations con-

tained false representations concerning the origin of the

services offered.” Pet. Br. App., p. 5. The court stated

that a jury could reasonably find that “the invoice-de-

signed document established a false impression that it

originated from Paymaster” and that “Paymaster was not

required to establish the infringement of a ‘protected

interest’ in the nature of a trademark” in order to recover

for false advertising under Section 43(a). Pet. Br. App.,

p. 6. The Ninth Circuit concluded that the district court

properly denied ABIC’s motions under the expansive

interpretation of Section 43(a) reflected in prevailing

case law.

False advertising concerning the origin of goods or

services is prohibited by Section 43(a). Smith v. Montoro,

648 F.2d 602, 603 (9th Cir. 1981). Two of the forms of

unfair competition disallowed by Section 43(a) are (i)

false advertising, including false representations concern-

ing the origin of goods or services; and (ii) infringement

of registered and unregistered marks, names and trade

8

dress. 2 J. McCarthy, Trademarks and Unfair Competition

§ 27:2, p. 344 (2d ed. 1984).

Since the passage of The Trademark Act of 1946, the

federal law of unfair competition has evolved through

statutory and judicial interpretation.

§43(a) has gradually developed through judicial

construction into the foremost federal vehicle for the

assertion of two major and distinct types of “unfair

competition”: (1) “false advertising” and (2) in-

fringement of even unregistered marks, names and

trade dress. These two “prongs” of §43(a) have

developed somewhat separately and have achieved

their own sub-set of substantive rules. Both prongs

arise out of the same words of § 43(a) in that both rest

on the prohibitions against “false designation of or-

gin” and “false description of origin” and “false

description or representation”. The point is that these

words do double duty in covering both classic false

advertising as to the qualities of defendant’s goods or

services as well as use of a mark which infringes a

senior user’s mark, name or trade dress.

Id. (emphasis added).

ABIC identifies the two prongs of Section 43(a) as

(1) false designation of origin and (2) false advertising,

rather than the two prongs identified by Professor

McCarthy as (1) false advertising and (2) infringement

in the nature of a trademark. Section 43(a) does not

contain the limitation that “false designation of origin”

only gives rise to a claim for infringement. The conclusion

that false designation of origin only supports a claim in

the nature of trademark infringement and not false adver-

tising is the error in petitioner’s analysis. By analyzing

Paymaster’s claims as trademark infring?ment claims

> leet

9

under Section 43(a), petitioner concludes that Paymaster

did not prove an infringement of a “protected interest” in

the nature of a trademark in its false advertising claim.

Pet. Br., pp. 7-9.

Section 43(a) proscribes not only acts that would

technically qualify as trademark infringement but also

unfair competitive practices involving actual or potential

deception. Holiday Inns v. Trump, 617 F.Supp. 1443

(D.N.J. 1985). See also Metric & Multistandard Compo-

nents Corp. v. Metric’s Inc., 635 F.2d 710 (8th Cir. 1980)

(provision of Section 43(a) dealing with false designation

of origin was designed to create a new federal remedy for

the particular kind of unfair competition which results

from false designation of origin or other false represenia-

tions used in connection with the sale of a product)

(emphasis added); and WSM Inc. v. Hilton, 724 F.2d 1320

(8th Cir. 1984) (same).

The limitation of Section 43(a) claims to require proof

of a “protected interest” in the nature of trademark is not

supported by statute or case law. In Johnson & Johnson v.

Carter-Wallace, Inc., 631 F.2d 186 (2d Cir. 1980), the

court held that the statutory tort under Section 43(a)

allows suit to be brought by any person who believes he or

she is likely to be damaged by use of false description or

representation. Jd. at 189. Section 43(a) does not require

proof of intent to deceive, and entitles a broad range of

commercial parties to relief, thus differing from a com-

mon law action for trade disparagement. Id.

A claim of false advertising under Section 43(a) does

not require that plaintiff show that defendant infringed

upon a “protected interest.” The plaintiff must show that

“the defendant has made false or deceptive statements of

fact concerning its product, consisting of actual misstate-

ments, partially correct statements, or a failure to dis-

10

close.” Olsonite Corp. v. Bemis Mfg. Co., 610 F.Supp. 1011,

1025 (D.Wis. 1985); see U-Haul Int’l., Inc. v. Jartran, Inc.,

793 F.2d 1034, 1040-41 (9th Cir. 1986); Black Hills

Jewelry Mfg. Co. v. Gold Rush, Inc., 633 F.2d 746, 750-51

(8th Cir. 1980) (false designation of origin violates Sec-

tion 43(a) even if no protected interest involved); Liquid

Controls Corp. v. Liquid Control Corp., 802 F.2d 934, 939-

40 (7th Cir. 1986) (same); Gilliam v. American Broad-

casting Cos., Inc., 538 F.2d 14, 24 (2d Cir. 1976) (“[i]t is

sufficient to violate the Act that a representation of a

product, although technically true, creates a false impres-

sion of the product’s origin’’); see also Chevron Chem. Co.

v. Voluntary Purchasing Groups, 659 F.2d 695, 702 (5th

Cir. 1981), cert. denied, 457 U.S. 1126 (1982); Bangor

Punta Operations v. Universal Marine Co., 610 F.Supp.

612, 625-27 (S.D.N.Y. 1985); and Foz Chemical Co. v.

Amsoil, Inc., 445 F.Supp. 1355, 1360 (D. Minn. 1978)

(“[T]he majority of courts and the Eighth Circuit hold

that allegations of false advertising and resulting injury

are sufficient to state a claim under the Lanham Act.”).

The Ninth Cireuit is not in conflict with other circuits in

determining that a Section 43(a) false advertising claim

does not require proof of a ‘protected interest.”

In contrast, a plaintiff alleging a claim of infringement

under Section 43(a) must show that the defendant in-

fringed upon the plaintiff's “protected interest” in a

mark. Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352

(9th Cir. 1985). A “protected interest” in a mark can be a

registered mark, “inherently distinctive” mark, or a mark

that has acquired “secondary meaning.” Jd. at 1354.

Petitioner claims that all circuits except the Ninth

Cireuit require that a piaintiff prove that the purportedly

infringed interest “has risen to the level of a trademark

right by acquiring a ‘secondary meaning’ ’’ before it can

es

11

prevail in a Section 43(a) claim for “false designation of

origin encompassing the infringement of trade identity.”

Pet. Br., p. 7, 9. This position is erroneous.

The error arises from the confusion of the “false adver-

tising”’ and “infringement” prongs of Section 43(a) and

its prohibition against false designation of origin. The

principal question in analyzing a claim under Section

43(a) of the Lanham Act is “whether the public is likely

to be confused, rather than whether a first-comer’s trade

dress has acquired secondary meaning.” CPG Prods.

Corp. v. Pegasus Luggage, Inc., 776 F.2d 1007 (D.C. Cir.

1985) (Section 43(a) “[provides] civil action for a false

designation of origin and false descriptions or representa-

tions of goods or services.”’) Federal courts have consist-

ently focused on the likelihood of confusion of an

ordinary purchaser as to the source of goods as the “test”

of a violation of Section 43(a), Invicta Plastics ( USA)

Ltd. v. Mego Corp., 523 F.Supp. 619 (S.D.N.Y. 1981), or

the “ultimate inquiry or gravamen” of claims under Sec-

tion 43(a), Marathon Mfg. Co. v. Enerlite Prods. Corp., 767

F.2d 214 (5th Cir. 1985).

There is no requirement that plaintiff must prove in-

fringement of a protected interest in order to establish a

claim for false advertising under Section 43(a). Paymas-

ter’s right to proceed against ABIC for violation of the

false advertising provisions of Section 43(a) is well estab-

lished within the circuits. The Ninth Circuit’s decision

does not conflict with other circuits, and the writ should

be denied.

12

B. An Unpublished Memorandum Disposition by

the Ninth Circuit Is Not Precedent and Creates

No Conflict In Any Event.

As an unpublished memorandum disposition, rather

than a published opinion, the Ninth Cireuit’s decision

cannot be regarded as precedent. Petitioner argues that

the Ninth Cireuit’s holding “is in conflict with virtually

every decision to reach the issue of whether a claim for

‘false designation of origin’ pursuant to Section 43(a) of

the Lanham Act requires proof of infringement of a

protected interest.” Pet. Br., p. 6.

“Any disposition that is not an opinion or an order

designated for publication ... shall not be regarded

as precedent and shall not be cited to or by this court

or any district court of the Ninth Cireuit, either in

briefs, oral argument, opinions, memoranda, or or-

ders, except when relevant under the doctrines of law

of the case, res judicata, or collateral estoppel.” U.S.

Ct. of App. 9th Cir. Rule 36-3, 28 USCA.

Pursuant to Rule 36-3, no federal court in the Ninth

Circuit can use the unpublished memorandum disposition

as precedent. The Ninth Circuit decision is not and

cannot be in conflict with opinions of other circuits be-

eause of its lack of precedential value. Compare In re

Leimer, 724 F.2d 744 (8th Cir. 1984), on remand 54 B.R.

587 (pursuant to Eighth Cireuit Rule 8(1), unpublished

opinions are not intended to create binding precedent);

and Bologna v. NMU Pension Trust of NMU Pension &

Welfare Plan, 654 F.Supp. 637 (S.D.N.Y. 1987); with

Finkbohner v. U.S., 788 F.2d 723 (5th Cir. 1986) (Fifth

Cireuit Local Rule 47.5 allows unpublished opinions to be

cited as precedent) and Harris v. U.S., 769 F.2d 178 (11th

Cir. 1985) (unpublished opinions are binding precedent

in Eleventh Cireuit.)

13

Ninth Circuit Rule 36-4 provides that an unpublished

disposition can be redesignated as an opinion: ‘“Publica-

tion of any unpublished disposition may be requested by

letter addressed to the Clerk, stating concisely the rea-

sons for publication.” However, “[{s]uch a request will not

be entertained unless received within 60 days of the

issuance of this Court’s disposition.” U.S. Ct. of App. 9th

Cir. Rule 36-4, 28 USCA. More than 60 days have passed

since the memorandum disposition was filed on January

8, 1990 and ABIC’s Petition for Rehearing with sugges-

tion for En Bane Reconsideration was denied on May 2,

1990. Thus, the Ninth Cireuit’s unpublished memorandum

has no precedential effect now, and will not be published

by the Court. No conflict exists between the Circuits.

C. The Ninth Circuit’s Memorandum Disposition Is

Not a Holding That Could Create a Conflict in

the Circuits.

Petitioner identifies the Ninth Cireuit’s memorandum

disposition as an “opinion” or “holding” of the Ninth

Circuit. Pet. Br., p. 1 and see, e.g., “Opinions Below.” The

use of the term “holding” as applied to an unpublished

disposition by the Court of Appeals is misleading. Taylor

v. Diznoff, 633 F.Supp. 640 (W.D. Pa. 1986) (reference to

language of district court opinion affirmed by Court of

Appeals without opinion as a “Third Cireuit holding”

misleading. )

Because there is no “holding” by the Ninth Circuit

creating a conflict between circuits, review of the unpub-

lished memorandum is unwarranted whatever its out-

come. Of course, the Court can elect to review an

unpublished order of a court of appeals, for example,

where the unpublished memorandum rests upon acts in

excess of jurisdiction, or resolves conflicts between ex-

14

isting precedent affirmed by unpublished memorandum

and precedential cases in other circuits. ° However, in this

ease, petitioner argues only that the Ninth Circuit has

misapplied a rule of law in its unpublished memorandum,

not that the Ninth Circuit relied on prior Ninth Circuit

precedent, or that a jurisdictional issue exists that war-

rants this Court’s review by writ. The writ should be

denied.

Il.

THE ISSUES RAISED BY PETITIONER ARE NOT

SUFFICIENT TO WARRANT REVIEW BY THIS

COURT

Section 43(a) of the Lanham Act Was Amended in

1988 During the Pendency of the Appeal and the

Issues Raised in the Writ Petition Are Moot.

Section 43(a) of the Federal Trademark Act of 1946,

15 USC §1125(a), “The Lanham Act”, as amended

(1982), is identified by petitioner as the relevant Act of

Congress to be reviewed by this Court. Pet. Br., p. 2.

Petitioner acknowledges in a footnote that “[t]he Trade-

mark Law Revision Act of 1988, Pub. L. No. 100-667, 102

5See Commissioner v. McCoy, 4£ * U.S. 3, L.Ed.2d 495, 108 S.Ct. 496

(1987) (Sixth Cireuit exceeded jurisdiction in review of Tax Court's

proceedings; fact that order was unpublished of no weight Court's

decision to review case, as Circuit Court exceeded jumsdiction “re-

gardiess of nonpublication and regardless of assumed lack of prece-

dential effect of unpublished ruling”). See also Transamencan Freight

Lines, Inc. v. Brada Miller Freight Systems, Inc., 423 U.S. 28, 34, 46

L.Ed.2d 169, 96 S.Ct. 229 (1975) (unpublished district court opinion

following established Seventh Circuit precedent affirmed by Court of

Appeal in unpublished opinion; certioram granted per conflict in

precedential case with other circuits).

——————————

15

Stat. 3946 (1988) (effective November 16, 1989)...

amended Section 43(a)" of the Lanham Act.® Pet. Br..

p. 2, n. 1.

Ii is well established that an issue can be mooted by the

enactment of subsequent legislation, Hall v. Beals, 396

U.S. 45, 48, 24 L.Ed.2d 214, 90 S.Ct. 200 (1969), or where

the statute that is the basis for the action is repealed or

challenged conduct is modified. Diffenderfer v. Central

Baptist Church, Inc., 404 U.S. 412, 414-15, 30 L.Ed.2d 567,

92 S.Ct. 574 (1972). In this instance, the plain language

of the 1988 amendment of Section 43(a) supports the

conclusion that there is no need for this Court to review

the Ninth Circuit decision, and the writ should be denied.

Petitioner concluded that because the 1988 amendment

of Section 43(a) retains a claim for false designation of

origin, the Ninth Circuit's decision “is equally applicable

to the present version of the statute.” Pet. Br., p. 2, n.1.

“The revised Section 43(a), 15 U.S.C. §1125(a) states:

(a) Any person who, on or in connection with any goods or

services, or any container for goods, uses in commerce any word,

term, name, symbol or device, or any combination thereof, or any

false designation of origin, false or misleading description of fact,

or false or misleading representation of fact, which —

(1) is likely to cause confusion, or to cause mistake, or to

deceive as to the affiliation, connection or association of such

person with another person, or as to the origin, sponsorship, or

approval of his or her goods, services, or commercial activities by

another person, or

(2) in commercial advertising or promotion, misrepresents

the nature, characteristics, qualities, or geographic ongin of his

or her or another person's goods services or commercial activi-

ties, shall be liable in a civil action by any person who believes

that he or she is likely to be damaged by such act. (As amended

Nov. 16, 1988, Pub. L. 100-667, Title I, § 132, 102 Stat. 3946.)

16

Petitioner cites no authority for its conclusion. There is

no reason for this Court to construe the 1982 version of

Section 43(a) after Congress in 1988 substantially re-

vised and clarified the same provision.”

The fact that a mooting event occurred after the deci-

sion below “does not save the... claims from mootness.

There must be a live case or controversy” before the

Court. Kremens v. Bartley, 431 U.S. 119, 128, 52 L.Ed.2d

184, 97 S.Ct. 1709 (1977). If it becomes apparent that a

ease has become moot while an appeal is pending, the

judgment below normally is vacated with directions to

dismiss the complaint. Mesquite v. Aladdin’s Castle, Inc.,

455 U.S. 283, 288 n. 9, 71 L.Ed.2d 152, 102 8.Ct. 1070

(1982) on remand 701 F.2d 524, withdrawn, on reh 9 713

F.2d 137, reh’g denied 718 F.2d 1097 (1983)."

The revised Section 43(a) of the Lanham Act does not

eontain the limitation that a claim under Section 43(a)

for false designation of origin requires proof of the

infringement of a protected interest that rises to the level

of a trademark right. Moreover, the Ninth Circuit did not

construe the revised act; it properly construed the 1982

"The legislative history of The Trademark Law Revision Act,

Section 35 of Pub. L. 100-667 indicates that Section 43(a) of the

Lanham Act was revised “to codify the interpretation it has been

given by the courts.” S. Rep. No. 515, 100th Cong., 2d Sess. 7,

reprinted in 1988 U.S. Code Cong. & Admin. News 5577, 5604.

Congress identified only four areas where it expects the courts to

continue to interpret the law on a case-by-case basis: (1) tarnish-

ment; (2) disparagement; (3) standing under Section 43(a); and (4)

misrepresentations resulting from omissions of material information.

Id. None of these areas applies to this case.

*Even if this Court first heard of the mooting events after certioram

was granted, it would be appropmate to vacate and remand with

directions to dismiss as moot. Hijar v. Burrus, 474 U.S. 1016, 88

L.Ed.2d 548, 106 S.Ct. 562 (1985).

17

statute as the statute in effect at the time it rendered its

decision.” The substantial revisions to Section 43(a)

render the issues in the petition moot.’®

Il.

THE PETITION IMPROPERLY SEEKS REVIEW OF

SUFFICIENCY OF EVIDENCE AND FACTUAL

FINDINGS

While purportedly seeking review of the remedies avail-

able to plaintiffs under prior Section 43(a) of the Lanham

Act, 15 U.S.C. § 1125(a) (1982), in Question No. 2 Peti-

tioner actually seeks review of the sufficiency of the

evidence presented to the jury in the trial court. Pet. Br..

p. (i). Question No, 2 involves questions of evidence and

factual findings and the writ should be denied on that

basis.

The District Court addressed these issues when it

found that Paymaster established “actual confusion” of

customers as a result of the ABIC/UCIS solicitation. The

*Without an appropriate disclosure of a statute's amendment, the

Court cannot assess the issues on appeal because it must review the

district court's judgment with reference to existing law, not the law

in effect when judgment was rendered. Fusari v. Steinberg, 419 U.S.

379, 387-88, 42 L.Ed 2d 521, 528, 95 S.Ct. 533, reh’g denied, 420 U.S.

955, 43 L.Ed.2d 433, 95 S.Ct. 1340 (1975).

The effect of the amendment of Section 43(a) on the petition

rendering the issues in the writ moot was not disclosed in the

Petition. Counsel must fully and candidly disclose all legal develop-

ments that may alter the issues before the court. Tiverton Bad. of

License Comm'rs v. Pastore, 469 U.S. 238, 83 L.Ed.2d 618, 105 S.Ct.

685 (1985) (it is the duty of counsel to call facts that give rise to

problems of mootness to the Court's attention “in order that [the

Court] may not unknowingly exercise its authority in cases in which

it no longer has jurisdiction”).

18

District Court concluded that ‘‘[s]ubstantial evidence

exists to support the verdict and it is not the function of

this Court to reweigh the evidence.” Pet. Br. App., pp. 15-

16.

The Ninth Circuit similarly determined that there was

“substantial evidence in the record that the mailings

caused the losses,” citing Runge v. Lee, 441 F.2d 579, 583-

84 (9th Cir. 1971), cert. denied, 404 U.S. 887 (1971).

“ABIC’s arguments on appeal are unavailable to the

extent they go to the weight of the evidence and credibil-

ity of the witnesses.” Pet. Br. App., pp. 3-4.

Two courts have reviewed the evidence and found it to

be sufficient. No review of the sufficiency of the evidence

by this Court is warranted.

et a a LE re PR a TN ot IO AT i A A ITN LORE EG Ra 8 Ee

19

IV

CONCLUSION

Respondent, The Paymaster Corporation, requests that

this Court deny the Petition for Writ of Certiorari for the

reasons set forth above.

Respectfully submitted,

DENNIS M. PERLUSS*

THOMAS H. EpwaRpbs

Nancy C. BROWN

HUFSTEDLER, Kaus & BEARDSLEY

355 South Grand Avenue

Forty-Fifth Floor

Los Angeles, CA 90071

(213) 617-7070

* Counsel of Record for

Respondent