Ale House Management, Inc. v. Raleigh Ale House, Inc. ( 2000 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ALE HOUSE MANAGEMENT,
INCORPORATED, a Florida corporation,
Plaintiff-Appellant,
v.
No. 99-1175
RALEIGH ALE HOUSE, INCORPORATED,
a North Carolina corporation; JOHN
A. DURANKO, a resident of Florida,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
James C. Fox, District Judge.
(CA-98-247-5-F)
Argued: January 24, 2000
Decided: March 1, 2000
Before NIEMEYER, Circuit Judge, Deborah K. CHASANOW,
United States District Judge for the District of Maryland,
sitting by designation, and Andre M. DAVIS,
United States District Judge for the District of Maryland,
sitting by designation.
_________________________________________________________________
Affirmed by published opinion. Judge Niemeyer wrote the opinion,
in which Judge Chasanow and Judge Davis joined.
_________________________________________________________________
COUNSEL
ARGUED: Michael J. Burley, MICHAEL J. BURLEY, P.A.,
Tequesta, Florida, for Appellant. David Ernest Bennett, COATS &
BENNETT, P.L.L.C., Cary, North Carolina, for Appellees. ON
BRIEF: Larry L. Coats, COATS & BENNETT, P.L.L.C., Cary,
North Carolina, for Appellees.
_________________________________________________________________
OPINION
NIEMEYER, Circuit Judge:
Ale House Management, Inc., an operator of a small chain of facili-
ties selling food and beer in Florida, seeks to enjoin Raleigh Ale
House, Inc. from opening a similar type of facility in Raleigh, North
Carolina. Ale House Management asserts a proprietary interest in (1)
the words "ale house," (2) both the exterior and interior appearances
of its facilities, and (3) the copyright of its floor plan drawings. The
district court rejected Ale House Management's claims and granted
Raleigh Ale House summary judgment. It also awarded Raleigh Ale
House attorneys fees. We affirm.
I
Ale House Management, Inc. ("AHM") established its first facility
for selling food and beer in 1988 and has successfully expanded by
opening other such facilities. By the time this action was commenced,
it had opened 21 facilities throughout Florida. Since the early to mid-
1990s, each facility has been named after its geographical location
plus the words "ale house" (e.g., Orlando Ale House).
The exterior appearances of AHM's facilities are somewhat simi-
lar. Each is a rectangular building with a simulated tower, or two, on
its roof and a sign on the side designating the facility's name in red
block letters. The buildings, however, do not share a common color
scheme, size, or shape. The roofs reflect different architectural styles
and are constructed of dissimilar materials. Awnings, window sizes,
and window shapes vary among the facilities. The exterior materials
used to build the facilities vary and include stucco, brick, and siding.
The interiors of AHM facilities appear to be more similar, conveying
the image of a wood-and-brass decorated pub or pub-style restaurant.
The general layout features a central rectangular bar, either as an
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island or a peninsula, and varying numbers of seats around the bar.
Booth seating is located generally on one side of the island or penin-
sula, and stool seating is located on the other. Numerous television
monitors and video games are present, as are pool tables. While the
interiors do present a similar general appearance, they are not identi-
cal, and virtually all vary in the amount, configuration, and placement
of seating, the number of pool tables, and the precise configuration of
the bar.
AHM facilities serve both food and alcohol; food accounts for 70%
of gross sales, and alcohol constitutes the remaining 30%. The menus
are extensive, and more than 20 types of beer are served on tap. Mar-
keting data indicate that customers dining with their families are
AHM's most frequent guests.
AHM has plans to expand its chain northward into the states of
Georgia, South Carolina, North Carolina, and Virginia, and it has
entered into an investment agreement to finance the development of
future AHM facilities. As part of its expansion plan, AHM's president
visited potential sites in Atlanta, Georgia, and solicited information
on possible locations in various cities in the Carolinas, including
Raleigh, Charlotte, Myrtle Beach, and Charleston.
Prior to committing to any specific expansion outside of Florida,
AHM learned that Raleigh Ale House, Inc. was preparing to open a
facility in Raleigh named the "Raleigh Ale House." Raleigh Ale
House's facility, which previously housed a Chinese restaurant, is a
rectangular building with gray-colored siding and a tower on which
"Raleigh Ale House" is painted in red block letters. To design the ren-
ovation of the restaurant, Raleigh Ale House hired an architect from
Florida, whose offices are located in a county where six AHM facili-
ties are located. The architect's plan for the Raleigh Ale House shows
a rectangular island bar, with booth seating on one side, stool seating
on the other, and tables and chairs at one end. The plans show five
television monitors, two pool tables, and a jukebox.
After Raleigh Ale House had begun advertising for employees but
before it opened for business, AHM commenced this action against
Raleigh Ale House and its architect, seeking declaratory and injunc-
tive relief, as well as damages, costs, and attorneys fees, for false des-
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ignation of origin of trade name and trade dress under § 43(a) of the
Lanham Trademark Act (the "Lanham Act"), 15 U.S.C. § 1125(a);
trade-name infringement, trade-dress infringement, and unfair trade
competition under federal common law and North Carolina law; and
copyright infringement under the Copyright Act, 17 U.S.C. § 101 et
seq. The court granted Raleigh Ale House's motion for summary
judgment, adopting Raleigh Ale House's memorandum of law for its
opinion. The court thereafter denied AHM's motion for reconsidera-
tion based on newly discovered evidence and awarded Raleigh Ale
House attorneys fees under both the Lanham Act and the Copyright
Act. This appeal followed.
II
At oral argument, AHM focused its argument on its assertion that
Raleigh Ale House had appropriated its trade name and trade dress by
"deliberately copying" them. While there is no direct evidence of this
in the record and little indirect evidence, this pronouncement, even if
true, does not itself establish a violation of trademark law. Some pro-
prietary interest is necessary before trademark protection applies.
Indeed, even if a party does "copy" a design and "sells" an almost
identical product, "this it [may have] every right to do under the fed-
eral . . . laws." Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 231
(1964). This is so because even intentional copying can benefit the
public: "Sharing in the goodwill of an article unprotected by patent
or trade-mark is the exercise of a right possessed by all -- and in the
free exercise of which the consuming public is deeply interested."
Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 122 (1938).
Accordingly, before considering the significance of AHM's assertions
of intentional copying, we must address whether AHM had an exclu-
sive proprietary interest in either the words "ale house" or the trade
dress of its facilities.
A
Addressing first AHM's claim to exclusive use of the words "ale
house," we begin by noting that AHM has not registered "ale house."
Nevertheless, it may still seek protection under the Lanham Act,
which also protects unregistered marks. See 15 U.S.C. § 1125(a).
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To ascertain whether a mark is protected, we must determine
whether it is (1) generic, (2) descriptive, (3) suggestive, or (4) arbi-
trary or fanciful. See Perini Corp. v. Perini Construction, Inc., 915
F.2d 121, 124 (4th Cir. 1990) (adopting the analytic model advanced
by Judge Friendly in Abercrombie & Fitch Co. v. Hunting World,
Inc., 537 F.2d 4, 9 (2d Cir. 1976)). A generic mark "refers to the
genus or class of which a particular product is a member," and such
a mark "can never be protected." Ashley Furniture Indus., Inc. v.
Sangiacomo N.A. Ltd., 187 F.3d 363, 369 (4th Cir. 1999). In this case,
because Raleigh Ale House suggests that the term"ale house" is
generic and AHM has not registered it, AHM bears the burden of
establishing that it is not generic. See Mil-Mar Shoe Co. v. Shonac
Corp., 75 F.3d 1153, 1156 (7th Cir. 1996).
Acknowledging that "ale house" may be generic in some applica-
tions -- such as in reference to a neighborhood English pub -- AHM
argues that it is not generic in reference to a facility that serves both
food and beer, particularly when it has an extensive food menu. AHM
has failed, however, to present any evidence that"ale house" does not
refer to institutions that serve both food and beer. What it did provide
was evidence that AHM facilities are primarily large restaurants that
also serve beer and that food sales generate the majority of their reve-
nue.
On the other hand, Raleigh Ale House presented extensive evi-
dence, including citations to newspapers, dictionaries, books, and
other publications, that the term "ale house" is generic, referring to
several types of facilities. See Glover v. Ampak, Inc., 74 F.3d 57, 59
(4th Cir. 1996) (endorsing use of similar sources of evidence to estab-
lish that a term is generic). This evidence indicates that "ale house"
sometimes characterizes facilities that specialize in alcohol. For
example, one article refers to "ale houses and brew pubs where an
appreciation of beer is learned and passed on," and another restaurant
review calls an institution with "ale house" in its name an "un-
renovated saloon." Both a dictionary and a book chapter entitled "The
Emergence of the Alehouse" refer to an ale house as a place where
ale is sold and served. But Raleigh Ale House's evidence also indi-
cates that "ale house" can refer to facilities that serve both food and
alcohol. This evidence includes newspaper articles referring to a num-
ber of facilities with "ale house" in their names. Indeed, one Internet
5
search revealed well over 100 facilities denominated as "ale houses."
Raleigh Ale House presented articles in which "ale house" is used in
a general sense (e.g., "my neighborhood grill and ale house") and in
the name of facilities that serve food and drink (e.g., the Fish and Ale
House is a "freestanding restaurant," Charlie's Ale House is a "bar
and eating place," and the Copper Canyon Brewing & Alehouse
serves lunch and dinner entrees and provides "interesting beers" and
"good food"). Raleigh Ale House also presented Internet restaurant
reviews, referring to, for example, an ale house as an "eatery and bar"
and a "neighborhood alehouse" that serves food and drinks.
AHM has presented no evidence suggesting that "ale house" is not
a generic term that can refer to institutions serving both food and
alcohol. Indeed, it conceded at oral argument that other Florida food-
and-drink facilities incorporate "ale house" in their names. The fact
that the facilities referred to by Raleigh Ale House and the various
public data do not offer the same menu as AHM and that some focus
more extensively on beer and ale, does not refute the proposition that
"ale house" refers to a "genus or class" of facilities that serve both
food and drink.
AHM's response to Raleigh Ale House's unrebutted evidence is
that it constitutes inadmissible hearsay, an argument that AHM did
not assert below. But, to the extent that Raleigh Ale House relied on
the fact that "ale house" was used or "listed" in public advertising or
other media, the evidence was not presented for its truth but for the
fact that it was so listed. See Fed. R. Evid. 801(c) (defining hearsay
as "a statement, other than one made by a [testifying] declarant . . .
offered in evidence to prove the truth of the matter asserted" (empha-
sis added)).
In short, we conclude that AHM has no protectable interest in the
words "ale house." They are generic words for a facility that serves
beer and ale, with or without food, just as are other similar terms such
as "bar," "lounge," "pub," "saloon," or "tavern." All serve alcohol
alone or both food and alcohol.
B
Although AHM devotes less attention to its trade dress argument,
it nevertheless maintains that Raleigh Ale House violated AHM's
6
rights in its trade dress, both as to the exterior and interior appearance
of its facilities. At oral argument, however, when AHM was con-
fronted with the observation that the exterior appearances of its vari-
ous facilities differed significantly in shape, size, style, color, and
materials, AHM appeared to abandon its claim with respect to the
exterior and to press only its claim that it had a proprietary interest
in the appearance of the interior of its facilities, including its service.
See Ashley Furniture, 187 F.3d at 370 (recognizing that a restaurant's
design and decor may serve as the basis for a trade-dress suit);
Fuddruckers, Inc. v. Doc's B.R. Others, Inc., 826 F.2d 837, 841 (9th
Cir. 1987) (same).
As with generic trade names, the trademark laws do not protect a
generic trade dress. See Two Pesos, Inc. v. Taco Cabana, Inc., 505
U.S. 763, 768-70 (1992) (upholding as protectable trade dress the dis-
tinctive, nonfunctional appearance of a restaurant). Trade dress should
be considered generic if "well-known" or "common," "a mere refine-
ment of a commonly-adopted and well-known form of ornamenta-
tion," or a "common basic shape or design," even if it has "not before
been refined in precisely the same way." Ashley Furniture, 187 F.3d
at 371 (internal quotation marks omitted). On the other hand, trade
dress is not generic if it is "unique or unusual in the particular field
at issue." Id. (internal quotation marks omitted).
AHM produced photographs of both the interiors and exteriors of
several of its facilities and copies of its floor plans. It also submitted
a photograph of Raleigh Ale House's exterior and a copy of its floor
plans. It produced no evidence of Raleigh Ale House's decor, menu,
or style of service, presumably because Raleigh Ale House had not
yet adopted any. Once the issue of exterior appearance is set aside,
a scant record remains upon which to base a claim for a proprietary
interior trade dress or trade-dress infringement. There is no evidence
that AHM's centrally located rectangular bar with two types of seat-
ing on either side and television monitors, arcades, and pool tables,
decorated generally in wood and brass, is "unique or unusual." This
is particularly so when AHM's own configurations differ from facility
to facility, denying it a single model from which to distinguish the
numerous similar configurations used by other food-and-beer estab-
lishments.
7
Accordingly, we hold that AHM has not advanced sufficient evi-
dence to support its claim to a proprietary interest in the appearance
and service it employs in the interior of its facilities. While we would
reach the same conclusion with respect to its exterior appearance,
AHM apparently is no longer pursuing that claim.
III
AHM also contends that Raleigh Ale House violated AHM's copy-
right in its floor plans.
At the outset, the parties dispute whether AHM had"registered its
copyright before filing an action for copyright infringement," as
required. Trandes Corp. v. Guy F. Atkinson Co. , 996 F.2d 655, 658
(4th Cir. 1993). While the effective date of registration for AHM's
floor plans was March 13, 1998, the registration certificate had not
been issued before March 26, 1998, when AHM filed its complaint.
We need not, however, resolve whether AHM had effective registra-
tion because we conclude that AHM has not advanced facts sufficient
to withstand summary judgment, even assuming the timing of regis-
tration provided no defense.
A copyright is an author's right to prohibit others from copying the
author's intellectual invention. The originality of the author's expres-
sion is the essence of the proprietary interest. See Superior Form
Builders, Inc. v. Dan Chase Taxidermy Supply Co., 74 F.3d 488, 492
(4th Cir. 1996). Copyright protection does not extend to ideas. See 17
U.S.C. § 102(b); Wickham v. Knoxville Int'l Energy Exposition, Inc.,
739 F.2d 1094, 1097 (6th Cir. 1984) (in rejecting claim of infringe-
ment of architectural plans, the court noted that"[t]he `idea' of a
tower structure certainly is not copyrightable. . . . Ideas are not pro-
tected by copyright, only expressions of ideas" (citation omitted)).
Thus, when an infringer copies an original work, he appropriates that
author's proprietary interest in the author's individual expression. See
Superior Form Builders, 74 F.3d at 492. To prove copyright infringe-
ment, the plaintiff must establish that it owned copyrighted material
and that the infringer copied protected elements of it. See Feist Publi-
cations, Inc. v. Rural Telephone Serv. Co., 499 U.S. 340, 361 (1991).
A presumption of copying is created by showing that the infringing
material is substantially similar to the protected material and that the
8
infringer had access to the protected material. See Towler v. Sayles,
76 F.3d 579, 581-82 (4th Cir. 1996). Access may be shown by dem-
onstrating that the infringer had an opportunity to view or to copy the
protected material. But this showing must establish more than a "mere
possibility that such an opportunity could have arisen"; it must be
"reasonably possible that the paths of the infringer and the infringed
work crossed." Id. at 582.
A casual comparison between AHM's various architectural floor
plans and Raleigh Ale House's floor plans shows, at most, the imita-
tion of an idea or a concept, but not a copying of the plans them-
selves. Raleigh Ale House's floor plans are not in the same
dimensions or proportions as any of those presented by AHM.
On some of AHM's drawings, the central bar is a peninsula extend-
ing from the kitchen area and transecting the rectangular facility
across the short dimension. On other drawings, it is an island. On yet
others, the central bar runs with the long dimension of the rectangular
facility. On each of AHM's drawings, there are variations in the loca-
tion of the various seating areas and the pool tables. AHM appears to
be claiming, not that Raleigh Ale House infringed on a particular
plan, but that it copied the concept of using an island- or peninsula-
shaped bar to bisect a seating area which has booths on one side and
stool seating on the other. But at this level of generality, the AHM
design is nothing more than a concept, as distinct from an original
form of expression, and is not copyrightable. See Howard v. Sterchi,
974 F.2d 1272, 1276 (11th Cir. 1992) (defendant failed to show copy-
right infringement because "although the floor plans are visually simi-
lar and the layout is generally the same, the dissimilarities are
significant, particularly the roof lines, the bay window and the dimen-
sions. . . . [T]he variety of ways a . . . rectangle can be divided . . .
is finite. In architectural plans of this type, modest dissimilarities are
more significant than they may be in other types of art works" (cita-
tions omitted)); Wickham v. Knoxville Int'l Energy Exposition, Inc.,
739 F.2d 1094, 1097 (6th Cir. 1984) (rejecting claim of infringement
of architectural plans because "substantial design differences" exist
and "[o]nly by significantly altering the plaintiff's designs could any
similarity be shown"); Nucor Corp. v. Tennessee Forging Steel Ser-
vice, Inc., 476 F.2d 386, 390 (8th Cir. 1973) ("While the concept of
a T-shaped building is not entitled to copyright protection, detailed
9
plans and drawings of a specific building are"); Imperial Homes
Corp. v. Lamont, 458 F.2d 895, 899 (5th Cir. 1972) (defendants are
not "in anywise restricted by the existence of[plaintiff's] copyright
from reproducing a substantially identical residential dwelling . . .
[but] if copyrighted architectural drawings of the originator of such
plans are imitated or transcribed in whole or in part, infringement
occurs").
Even when comparing specific plans, Raleigh Ale House's floor
plan is not similar enough to any AHM plan to support a presumption
that Raleigh Ale House copied any AHM drawing in violation of the
Copyright Act. The closest comparison to Raleigh Ale House's draw-
ing is an AHM floor plan in which the bar island runs with the long
dimension of the facility. But in comparing those two plans, the size
and proportion of the seating areas are dissimilar, as is the placement
of the pool tables. Moreover, the bars in the two drawings have differ-
ent dimensions and proportions.
In addition, AHM has not presented evidence from which one
could infer more than a mere possibility that Raleigh Ale House could
have seen AHM's drawings. AHM alleges that Raleigh Ale House's
architect had access to its plans because AHM was required to submit
copies of them to various building departments in the same county in
which Raleigh Ale House's architect conducted his business. But
AHM presents no other evidence of access. Against this "mere possi-
bility," Raleigh Ale House's architect has affirmatively denied having
ever seen AHM's drawings.
We therefore agree with the district court that AHM has failed to
establish a prima facie case of copyright infringement.
IV
AHM argues that the district court abused its discretion in award-
ing Raleigh Ale House its attorneys fees under § 35(a) of the Lanham
Act, 15 U.S.C. § 1117(a), and under § 505 of the Copyright Act, 17
U.S.C. § 505.
In awarding attorneys fees, the district court observed that AHM
(1) alleged erroneous facts due to reliance on a form complaint; (2)
10
failed to tailor its factual allegations to fit this case; (3) withdrew a
federal anti-dilution claim after Raleigh Ale House pointed out its
inapplicability; and (4) is a successful company that used its resources
to hinder Raleigh Ale House's business venture. Awards of attorneys
fees under both the Lanham Act and the Copyright Act are not to be
made as a matter of course, but rather as a matter of the court's con-
sidered discretion, and we are satisfied that the court did not abuse its
discretion in applying the attorneys-fees provisions of either Act to
the facts in this case.
Under the Lanham Act, a prevailing defendant may recover attor-
neys fees in an "exceptional" case, necessitating a showing of "some-
thing less than bad faith." Scotch Whisky Ass'n v. Majestic Distilling
Co., 958 F.2d 594, 599 (4th Cir. 1992) (quoting Noxell Corp. v. Fire-
house No. 1 Bar-B-Que Restaurant, 771 F.2d 521, 526 (D.C. Cir.
1985)). Relevant factors include "economic coercion," "groundless
argument[s]," and failure to cite controlling law. Noxell, 771 F.2d at
526-27.
We have instructed district courts, when exercising their discretion
under the Copyright Act, to consider: "(1) the motivation of the par-
ties; (2) the objective reasonableness of the legal and factual positions
advanced; (3) the need in particular circumstances to advance consid-
erations of compensation and deterrence; and (4) any other relevant
factor presented." Superior Form Builders, Inc. v. Dan Chase Taxi-
dermy Supply Co., 74 F.3d 488, 498 (4th Cir. 1996) (citing
Rosciszewski v. Arete Assocs., Inc., 1 F.3d 225, 234 (4th Cir. 1993)).
The rationale given by the district court for its award of attorneys
fees supports its exercise of discretion under both the Lanham Act
and the Copyright Act. Providing additional support for the court's
action under the Copyright Act, AHM initially asserted a claim for
copyright infringement occurring in 1988, which it had to withdraw
because the statute authorizing the claim was not passed until 1990.
Accordingly, we conclude the district court did not abuse its discre-
tion in awarding Raleigh Ale House its attorneys fees.
V
Finally, AHM argues that the district court abused its discretion by
denying AHM's motion for reconsideration of its summary judgment
11
based on newly discovered evidence. This evidence included five affi-
davits, which AHM characterized as evidence of "actual consumer
confusion." The court concluded that all of the affidavits either were
not competent as evidence or did not support the proposition for
which they were offered. More importantly, however, the affidavits
do not bear upon the question of whether AHM's trademark and trade
dress are generic.
For the reasons given, the judgment of the district court is
AFFIRMED.
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