Opposition Brief — Holiday Inns, Inc. v. 800 Reservation, Inc.

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Supreme Court. U.S.

F IL ED

LoL

YY DES 28 1996

No. 96-783

In The - cai

Supreme Court of the Gnited States

October Term, 1996

HOLIDAY INNS, INC.,

Petitioner,

800 RESERVATION, INC., et al.,

Respondents.

On Petition For A Writ of Certiorari

To The United States Court of Appeals

For The Sixth Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

ROBERT M. NEWBURY

Counsel of Record for Respondents

BRETT A. AUGUST

PATTISHALL, MCAULIFFE, NEWBURY,

HILLIARD & GERALDSON

311 South Wacker Drive

Suite 5000

Chicago, Illinois 60606

(312) 554-8000

DAVID T. BLACK

KIZER & BLACK

329 Cates Street

Maryville, Tennessee 37801

(615) 982-7650

Attorneys for CALL MANAGEMENT SYSTEMS,

INC. and 800 RESERVATION, INC.

QUESTIONS PRESENTED FOR REVIEW

1. Whether the court of appeals erred materially in

holding that no violation of the Lanham Act occurred because

Respondents did not use Petitioner’s mark or a "facsimile" of

Petitioner’s mark and did not create confusion.

2. Whether the court of appeals erred materially in

holding that Respondents did not violate the Lanham Act by

truthfully answering calls mistakenly placed to their 1-800-

405-4329 number because Respondents never promoted or

otherwise used in commerce Petitioner’s telephone number,

Petitioner’s vanity number or any other vanity number.

3. Whether the court of appeals committed reversible

error in this case by considering likelihood of confusion under

the Lanham Act to be a mixed question of fact and law.

LIST OF PARTIES

The parties are stated correctly in the Petition.

This Brief In Opposition is filed on behalf of two of

the Respondents, Call Management Systems, Inc., and 800

Reservation, Inc. Neither of these two parties has any parent

company or nonwholly-owned subsidiary.

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TABLE OF CONTENTS

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STATEMENT OF THE CASE.................. l

CORRECTIONS OF MISSTATEMENTS IN THE

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Petitioner Has Not Demonstrated That Either

The Supreme Or Any Court Of Appeals Has

Found Trademark Infringement Where The

Defendant Did Not Use A Trademark. ........ 8

There Is No Conflict Among The Circuits That

Use Of A Trademark Or Misrepresentation Is

A Prerequisite To Liability Under The Lanham

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The Long-Standing Divergence Among The

Circuits Regarding The Nature Of The Test

For Likelihood Of Confusion Is Not Ground

For Review And Is Irrelevant To This

Case.

TABLE OF AUTHORITIES

Cases

Beer Nuts, Inc. v. Clover Club Foods Co.,

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Dial-A-Mattress Franchise Corp. v. Page,

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Hancock v. American Steel & Wire Co.,

wen uae Fat as Ee ok ee a 10

Jellibeans, Inc. v. Skating Clubs of Ga., Inc.,

700 F.ae GS Citi Cir. 1968) nw hc ccc ccan. 9

Mobil Oil Corp. v. Pegasus Petroleum Corp.,

Bam F206 258 C8 Clr. 1967) . wk occ ccc iwc ween 10

Sun-Fun Prods. Inc. v. Suntan Research & Dev. Inc.,

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STATUTES

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Respondents 800 Reservation, Inc., and Call

Management Systems, Inc. (hereinafter collectively

"Respondents"), request that the Court deny the petition of

Holiday Inns, Inc., for a writ of certiorari seeking review of

an opinion of the United States Court of Appeals for the

Sixth Circuit.

STATEMENT OF THE CASE

Respondent Call Management Systems ("Call

Management") is a telephone service bureau that provides

various telecommunications services for clients that include

the State of Tennessee, the Gatlinburg Chamber of Commerce

and the Pigeon Forge Department of Tourism, as well as

Dollywood theme park and many other business. App. at

24a-25a. Call Management is the customer of record for the

telephone number 1-800-405-4329. App. at 24a. That

number differs by only one digit from Petitioner’s number |-

800-465-4329: it is one of the "complementary" numbers that

is frequently misdialed by callers who are attempting to dial

Petitioner’s number. App. at 2a.

Petitioner promotes its "800 number" as the mnemonic

vanity number "1-800-HOLIDAY" and claims trademark

rights in 1-800-HOLIDAY. App. at 2a. Petitioner does not

promote "1-800-465-4329" and does not claim trademark

rights in that number. See Pet. at 2-3. Although the

phenomenon of misdialed vanity numbers is so well known

that other hotel chains, like Marriott and Red Roof Inns,

subscribe to common misdials of their vanity numbers,

Petitioner did not attempt to subscribe to any misdials of its

vanity number. App. at 4a. If a complementary number is

not assigned, callers who dial it receive either a busy signal

or a recorded message that the number is out of service.

App. at 24a.

Respondents never used "1-800-HOLIDAY" or any of

Petitioner’s marks; and the district court agreed that they

"never advertised or publicized anything to do with Holiday

Inns or its telephone number." App. at 12a. Nor did

Petitioners use any other vanity number. App. at 14a.

Respondents simply answered their telephone. Callers who

dialed Respondents’ number first reached a recording that

explained the situation:

Hello. You have misdialed and have not

reached Holiday Inns or any of its affiliates.

You have called 800 Reservations, America’s

fastest growing independent computerized

hotel reservations service. One of our highly

trained hotel reservations specialists will be

with you momentarily to provide the Holiday

Inns number or to assist you in finding the

lowest rate at over 19,000 properties world-

wide, including such hotel chains as Holiday

Inns, Guest Quarters, Hampton Inn, Sheraton,

Comfort Inn, and many more. If you are a

member of a hotel’s frequent guest program,

have that number ready. Please stay on the

line, assistance is just a moment away.

App. at Sa-6a. This message was played as part of an

automated answering system for every call. The district

found testimony to the effect that it was "technologically

impossible" for a caller to receive a live telephone operator

without first hearing this record’ng to be credible. App. at

59a-60a.

Respondents admittedly answered calls from people

who had mistakenly dialed Petitioner’s telephone number, but

they did nothing to cause that misdial; in fact, Respondents

lessened the impact of the caller’s mistake with their

recording because callers would otherwise have received a

busy signal or a recorded message that the number was not in

service. App. at 16a, 4a. The district court found that

answering those calls and booking reservations for those

callers served both the public and Petitioner, in addition to

Respondents, because it would “aid the hotel chain in

capturing otherwise lost customers." App. at 27a. Because

Respondents booked reservations at Petitioner’s properties

when available, the district court found this was "extremely

profitable” for Petitioner, resulting in approximately $275,000

worth of reservations at Petitioner’s properties for which

Respondents earned only a standard travel agents’ fee of

$8,888.71. App. at 29a. This caused the district court to

question how damages could be owing:

[I]t would appear that defendants have actually

assisted plaintiff in making profits it otherwise

would have lost by redirecting "lost" customers

to their doors. Furthermore, to the extent that

defendants may have rerouted some of these

consumers to competitors, the court is hard

pressed to comprehend how plaintiff can prove

that those customers may not have contacted

plaintiff's competing hotels in any event.

App. at 47a, n.4.

Because Respondents never used Petitioner’s vanity

telephone mnemonic, the "Holiday" trademark or any

facsimile of Petitioner’s marks, even the district court - which

enjoined Respondents from answering misdialed calls to their

telephone number - found Respondents did not violate the

letter of the Lanham Act. App. at 16a, 37a. On the contrary,

the district court stated unequivocally:

The

court agrees with defendants that, in a

traditional sense, they have made no use of a

Heliday inns’ registered mark or of any similar

name or logo. That is, they are not holding

themselves out as an entity under the Holiday

Inns’ umbrella. Moreover, defendants are not

advertising a similar word or name to induce

public

confusion and cause consumers to reach

the wrong party.

App. at 35a. Nor is this a case where Respondents acted with

bad intent.

As the district court said of Mr. Montreuil,

president of Call Management:

Mr. Montreuil’s intent is clear. He intends to

create

a profitable business for himself and his

employees; he intends to increase profits for

Holiday Inns ... and he intends to provide a

unique service to the public.

App., at 30a.

In fact, the district court questioned in its

opinion on summary judgment why Petitioner would even

bring this case instead of welcoming the added business

Respondents produced for them:

Again, the court is somewhat perplexed by

Holiday Inn’s refusal to allow defendants to

answer the complementary number and play

their proposed disclaimer and to salvage some

of the

lost business opportunity for plaintiff.

App. at 46a, n. 3.

CORRECTIONS OF MISSTATEMENTS IN THE

PETITION

A Petitioner wrongly but repeatedly equates

Respondents’ answering their 1-800-405-4329 telephone

number with infringing use of "1-800-H[zeroJLIDAY,"” a

variation of Petitioner’s trademark 1-800-HOLIDAY. See,

for example, the Petition at 11: "It is undisputed that

respondents “used the phone number, 1-800-405-4329 [1-800-

H[O]JLIDAY]’ (App., infra, 12a) to intercept calls..." See,

also, the Petition at 12-13, n. 8: "... the court did not dispute

that fact that respondents purposely selected the 1-800-

H[O]LIDAY number (not merely its numeric equivalent."

These statements create the false impression that the courts

below accepted Petitioner’s argument that Respondents used

a trademark susceptible of causing confusion with Petitioner’s

mark, when in fact both courts rejected that argument. As

stated by the court of appeals:

The district court agreed with the defendants’

argument and found that Call Management

never used "1-800-HOLIDAY" or any of

Holiday Inns’s marks, and "never advertised or

publicized anything to do with Holiday Inns or

its telephone number."

App., 12a (note omitted). The court of appeals accepted this

finding and ruled that Respondents "never used Holiday

Inns’s trademark nor any facsimile of Holiday Inns’s marks."

App., 16a. Seemingly contrary statements in the Petition are

not supported by the record.

y 2 In support of the contention that some callers

to Respondents’ 800 number were misled and possibly did not

receive the recording quoted above, the Petition states that

one customer "booked a room at a Holiday Inn in the belief

that he was dealing directly with a Holiday Inns

representative, only to learn later that the room had in fact

been booked by [one of the respondents]." Pet., at 5. The

testimony of that customer, Thomas Lee Miller, shows that he

did not personally place the telephone call and does not know

whether the remote operator who placed the call for him

heard the recorded message before passing the call on to him.

R.24, page 16 line 13 - page 18 line 13, page 31 line 10 -

page 32 line 18. As for the other purported instance of caller

confusion, the district court declined to rely on it in light of

(a) the flatly contradictory testimony of Call Management’s

president that it was "technologically impossible" for a caller

to receive a live telephone operator without first hearing a

recording advising the caller that he had not reached Holiday

Inns, and (b) other testimony that directly conflicted with the

purported confusion story. App. at 59a-60a.

3. Petitioner relies on statements of an employee, Ann

Fant, for the proposition that the Holiday Inn room rates

available to callers to Respondents’ telephone number were

higher than the rate the caller would have paid by calling

Petitioner because of differences between Petitioner’s own

reservations systems and the one used by travel agents. Pet.

at 5; App. at 6a-7a (n. 1), 28a. As stated in the Petition: "a

customer who mistakenly dialed [Respondents’ number] could

be given incorrect information about room availability and/or

rates at Holiday Inns.... Moreover, customers were more

likely to obtain lower room rates by contacting Holiday Inns

directly than by contacting [Respondents] through the

misdialed complementary number." Pet. at 5. There is, in

fact, no credible evidence to support those allegations. Ms.

Fant herself, in later sworn deposition testimony, directly

denied their truth:

Q. Now you said something interesting.

Up in Knoxville, you said it cost

Holiday Inns or costs a guest who

wanted to stay over night more if they

booked through a travel agent than if

they booked through the Holiday

Express System? Do you recall that

testimony?

A. No, I do not.

Q. Well, do you know that to be true or

untrue? I am talking about a charge to

a guest, that the cost to a guest would

be more if they booked through a

travel agent than if they booked

through Holiday Express?

A. The room rate is the room rate.

* * *

Q. You didn’t tell the Court it was

cheaper to book through Holiday Inns

than through a travel agent?

A. No sir, I didn’t.

Fant Dep. at 35-36, 38, cited at R.63, pp. 8-9. Ms. Fant’s

testimony about room availability was also later contradicted

by the sworn testimony of Byron Hill, the manager of

Petitioner’s property in Gatlinburg, Tennessee. He testified

that availability of rooms as shown on both Petitioner’s

computer reservations system and the system used by

Respondents and other travel agents reflect actual availability

unless the manager of the hotel property in question blocks

rooms from either of the two integrated reservation systems.

Hill Dep. at 13-15, 23-24, 26, cited at R.63, pp. 11-12.

REASONS FOR DENYING THE WRIT

The decision of the court of appeals is correct and

does not conflict with any decision of this Court or of any

court of appeals. The questions presented in the Petition do

not accuracy reflect the ratio decidendi of the court of

appeals. No further review is warranted.

A. Petitioner Has Not Demonstrated That |

Either The Supreme Or Any Court Of |

Appeals Has Found Trademark

Infringement Where The Defendant Did Not

Use A Trademark.

Both prongs of Petitioner’s first argument for granting

its writ rest on the fallacy (see Misstatement No. 1) that

Respondents used petitioners HOLIDAY trademark or

another trademark in connection with its telephone number.

The record to the contrary is unequivocal: Respondents did

not use any trademark in answering calls to their telepho «

number; Respondents merely answered their telephone. App.

at 12a, 16a-18a. As the court of appeals stated, "both the

district court and Holiday Inns acknowledge that the

defendants never used a mark or a deceptively similar copy

of a mark owned by Holiday Inns....". App. at 16a (emphasis

added). Petitioner nevertheless argues, first, that it was error

for the court of appeals not to proceed with a "likelihood of

confusion" analysis. But the applicable statute, 15 U.S.C. :

§ 1125(a)(1), imposes liability for trademark infringement

only where a defendant:

i aaa

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....

Here, in the absence of any such use, liability cannot exist

under the statute. That explains why Petitioner fails to cite

even one case in support of this argument where the

defendant did not use a trademark. Indeed, Petitioner

prefaces its discussion of case law with the assertion: "the

sole and dispositive question is whether there is a likelihood

of confusion between the plaintiff's mark and the mark or

symbol used by the defendant." Pet. at 13-14. True to this

assertion, Petitioner fails to cite even one case in conflict with

the court of appeal’s ruling.

In the second prong of its first argument, Petitioner

asserts that a defendant may be liable for trademark

infringement even if its trademark is not a "facsimile" or

“copy” of the plaintiffs mark. Pet. at 17. Neither this

argument nor any of the cases cited thereunder by Petitioner

addresses the situation where the defendant does not use any

mark at all. Instead, these cases all compare sets of marks,

albeit ones that are rt always visually or orally similar, such

as:

-- JELLIBEANS and LOLLIPOPS, for skating rinks;

-- BEER NUTS and BREW NUTS, for snack foods;?

' Jellibeans, Inc. v. Skating Clubs of Ga., Inc., 716

F.2d 833, 839 (11th Cir. 1983).

2 Beer Nuts, Inc. v. Clover Club Foods Co., 805 F.2d

920 (10th Cir. 1986).

-- NATIVE TAN and BEACH BUFF (both with |

sunburst symbols), for sun screens;°

-- PEGASUS and pictorial symbol of a flying horse,

for oil companies;* and

-- TORNADO and CYCLONE, for fencing.”

Since none of these cases involves a defendant that did not

use a trademark, not a single one is in conflict with the ruling

for which writ is sought.

B. There Is No Conflict Among The Circuits

That Use Of A Trademark Or Misrepresen-

tation Is A Prerequisite To Liability Under

The Lanham Act.

Petitioner’s second argument is contrary to the explicit |

language of the Lanham Act provisions under which

Petitioner seeks relief. Both 15 U.S.C. sections 1114 and

1125 impose liability only where a defendant’s accused |

conduct includes "use" of a trademark or misrepresentation

that leads to confusion, mistake or deception. The court of |

appeals expressly recognized this statutory underpinning and |

refused to find liability here since "defendants in this case

never used Holiday Inns’ trademark nor any facsimile of

Holiday Inns’ marks. Moreover, the defendants did not create |

any confusion." App. at 16a. The Petition seizes upon one |

> Sun-Fun Prods. Inc. v. Suntan Research & Dev. Inc.,

656 F.2d 186 (Sth Cir. 1981).

* Mobil Oil Corp. v. Pegasus Petroleum Corp., 818

F.2d 254 (2d Cir. 1987).

> Hancock v. American Steel & Wire Co., 203 F.2d

737 (C.C.P.A. 1953).

a Rn ne en gee

aspect of this lack of use - lack of "promotion" - by which

the court of appeals distinguished this case from the fact

pattern in Dial-A-Mattress Franchise Corp. v. Page, 880 F.2d

675 (2d Cir. 1989), and misportrays the court of appeals’

decision as (1) conflicting with the earlier decision of the

Court of Appeals for the Second Circuit, and (2) establishing

a néw "promotion" requirement. Pet. at 23. First, the court

of appeals’ rationale is consistent with Dial-A-Mattress: the

court concluded that Petitioner has trademark rights in its

vanity number 1-800-HOLIDAY but accepted the district

court’s finding that Respondents never used that mark or any

other mark or misleading representation. App. at 17a.

Second, the court of appeals did not, as Petitioner argues,

impose a “promotional use" requirement on Lanham Act

cases; it noted, rather, that the instant case does not involve

any use of a mark, and in particular not any promotional use

of the sort found in Dial-A-Mattress. It is telling that

Petitioner has not cited even one case where liability was

imposed in the absence of such use, and it prefaces its list of

"supporting" cases with the admission that some "minimal

use" of a mark is needed to give rise to a likelihood of

confusion. As the court of appeals observed in this regard:

Holiday Inns does not offer, and our own

research has not produced, a case in which the

defendant neither used the offending mark nor

created the confusion and yet was deemed to

have committed a trademark infringement.

We believe that stretching the plain language

of the Lanham Act to cover the present dispute

is unjustified.

App. at 18a.

ot The Long-Standing Divergence Among The

Circuits Regarding The Nature Of The Test

For Likelihood Of Confusion Is Not Ground

For Review And Is Irrelevant To This Case.

Petitioner’s last argument in support of it request for

a writ is that the Court should accept this case as the vehicle

for resolving the "long-standing" divergence among the

circuits regarding the nature of the test for likelihood of

confusion under the Lanham Act. Pet. at 29. As the Petition

acknowledges, the Supreme Court has many times refused to

treat this as ground for review. Pet. at 27. Even if the Court

were disposed to address this issue one day, this is not the

case in which to do it because here it is not outcome

determinative. This case is on appeal from a grant of

summary judgment, not findings made after a trial. The court

of appeals reversed the district court’s finding of liability

because of the lower court’s misapplication of law -

specifically the failure to recognize that "use in commerce” is

a prerequisite to liability under the Lanham Act - not because

of a disagreement as to whether the individual findings under

the multi-factor test for likelihood of confusion collectively

supported the conclusion that confusion was likely. Because

the threshold "use" of a trademark had not been established,

the court of appeals did not even address the issue of

likelihood of confusion. App. at 17a-18a. Thus the standard

under which it would have reviewed a ruling on likelihood of

confusion is not at issue here.

CONCLUSION

For the foregoing reasons, Respondents request that

the petition for writ of certiorari be denied.

Respectfully submitted,