Yellow Cab of Sacramento v. Yellow Cab of Elk Grove ( 2005 )


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  •                   FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    YELLOW CAB COMPANY OF                   
    SACRAMENTO, a California
    corporation,
    No. 03-16218
    Plaintiff-Appellant,
    v.                            D.C. No.
    CV-02-00704-FCD
    YELLOW CAB OF ELK GROVE, INC.,
    OPINION
    a California corporation; MICHAEL
    P. STEINER, an individual,
    Defendants-Appellees.
    
    Appeal from the United States District Court
    for the Eastern District of California
    Frank C. Damrell, District Judge, Presiding
    Argued and Submitted
    November 4, 2004—San Francisco, California
    Filed August 9, 2005
    Before: Betty B. Fletcher, Sidney R. Thomas, and
    Carlos T. Bea, Circuit Judges.
    Opinion by Judge Thomas
    10253
    10256            YELLOW CAB v. YELLOW CAB
    COUNSEL
    Andrea M. Miller, Benjamin D. Kinne, Nageley, Meredith &
    Miller, Inc., Sacramento, California, for the plaintiff-
    appellant.
    Jeffrey S. Kravitz, Kravitz Law Office, Sacramento, Califor-
    nia, for the defendants-appellees.
    OPINION
    THOMAS, Circuit Judge:
    In this Lanham Act case, plaintiff-appellant Yellow Cab of
    Sacramento appeals from the district court’s grant of sum-
    mary judgment in favor of defendant-appellee Yellow Cab of
    Elk Grove. We conclude that there are issues of material fact
    as to (1) whether the mark “Yellow Cab” has become generic
    through widespread use in the marketplace, and (2) if descrip-
    tive, whether the mark has acquired secondary meaning. We
    therefore reverse the judgment of the district court. We also
    determine that the burden of proof as to validity and protecta-
    bility of an unregistered mark lies with the party claiming
    trademark protection.
    I
    Perhaps the Yellow Cab Company of Sacramento didn’t
    know what it had until it was gone.1 It had operated in the
    1
    See JONI MITCHELL, BIG YELLOW TAXI (Siquomb Publishing Corp.
    1970).
    YELLOW CAB v. YELLOW CAB                 10257
    Sacramento area, including the suburb of Elk Grove, since
    1922. At the time this suit was filed, it operated approxi-
    mately 90 cabs, had approximately 700 business accounts,
    and was the only authorized taxicab provider to the Red Lion
    Hotel, Doubletree Hotel, Radisson Hotel, Holiday Inn Capital
    Plaza, Marriott Hotel Rancho Cordova, and the Amtrak Depot
    in the Sacramento area. In the fall of 2001, a cloud appeared
    over the Sacramento yellow cab empire when Michael Steiner
    started a one-cab taxi operation in Elk Grove and operated it
    under the name of “Yellow Cab of Elk Grove.” Determined
    to “catch that yellow cab,”2 Yellow Cab of Sacramento filed
    this action against Yellow Cab of Elk Grove, alleging trade-
    mark violation under the Lanham Act and related state law
    claims for unfair competition, false advertising, and inten-
    tional interference with prospective business advantage. The
    district court granted Yellow Cab of Elk Grove’s motion for
    summary judgment, holding that “yellow cab” is a generic
    term, and, alternatively, that even if “yellow cab” is a descrip-
    tive term, Yellow Cab of Sacramento failed to show second-
    ary meaning and is therefore not entitled to trademark
    protection. Yellow Cab of Sacramento timely appealed. We
    review a district court’s grant of summary judgment in a
    trademark infringement claim de novo, with all reasonable
    inferences drawn in favor of the non-moving party. Dream-
    werks Prod. Group, Inc. v. SKG Studio, 
    142 F.3d 1127
    , 1129
    (9th Cir. 1998).
    II
    There are five categories of trademarks: (1) generic; (2)
    descriptive; (3) suggestive; (4) arbitrary; and (5) fanciful. KP
    Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 
    408 F.3d 596
    , 602 (9th Cir. 2005). “The latter three categories are
    deemed inherently distinctive and are automatically entitled to
    protection because they naturally ‘serve[ ] to identify a partic-
    ular source of a product . . . .’ ” 
    Id.
     (quoting Two Pesos, Inc.
    2
    CHUCK BERRY, NADINE (Chess 1964).
    10258             YELLOW CAB v. YELLOW CAB
    v. Taco Cabana, Inc., 
    505 U.S. 763
    , 768 (1992)). Descriptive
    marks “define a particular characteristic of the product in a
    way that does not require any exercise of the imagination.”
    Surfvivor Media, Inc. v. Survivor Productions, 
    406 F.3d 625
    ,
    632 (9th Cir. 2005). A descriptive mark can receive trademark
    protection if it has acquired distinctiveness by establishing
    “secondary meaning” in the marketplace. Filipino Yellow
    Pages, Inc. v. Asian Journal Publ’ns, Inc., 
    198 F.3d 1143
    ,
    1147 (9th Cir. 1999). “Generic marks give the general name
    of the product; they embrace an entire class of products.”
    Kendall-Jackson Winery, Ltd. v. E. & J. Gallo Winery, 
    150 F.3d 1042
    , 1047 n.8 (9th Cir. 1998). “Generic marks are not
    capable of receiving protection because they identify the
    product, rather than the product’s source.” KP Permanent
    Make-Up, 
    408 F.3d at 602
    .
    In the present case, Yellow Cab of Sacramento seeks trade-
    mark protection for the term “yellow cab,” which is not a fed-
    erally registered trademark, and Yellow Cab of Elk Grove
    asserts that the term “yellow cab” is either generic or descrip-
    tive without acquired secondary meaning, and therefore not
    entitled to trademark protection.
    A
    [1] Under the circumstances presented by this case, the dis-
    trict court correctly allocated the burden of proof to Yellow
    Cab of Sacramento to establish that the mark was not generic.
    When a plaintiff pursues a trademark action involving a prop-
    erly registered mark, that mark is presumed valid, and the bur-
    den of proving that the mark is generic rests upon the
    defendant. Filipino Yellow Pages, 
    198 F.3d at 1146
    . How-
    ever, if the disputed term has not been federally registered,
    and the defendant asserts genericness as a defense, the burden
    shifts to the plaintiff to show that the mark is nongeneric. 
    Id.
    Yellow Cab of Sacramento argues that the district court
    misallocated the burden of proof, claiming that a trademark
    YELLOW CAB v. YELLOW CAB                 10259
    challenger must establish that the term was generic prior to
    the proponent’s use before the burden of proof can be shifted
    to the mark’s proponent. We have not recognized such a rule,
    and it is not supported by trademark theory.
    The plaintiff bears the ultimate burden of proof in a trade-
    mark infringement action. Tie Tech, Inc. v. Kinedyne Corp.,
    
    296 F.3d 778
    , 783 (9th Cir. 2002). “A necessary concomitant
    to proving infringement is, of course, having a valid trade-
    mark; there can be no infringement of an invalid mark.” 
    Id.
    (citing Yarmuth-Dion, Inc. v. D’ion Furs, Inc., 
    835 F.2d 990
    ,
    992 (2nd Cir. 1987)). The validity of the trademark is “a
    threshold issue” on which the plaintiff bears the burden of
    proof. 
    Id.
     Federal registration of a mark constitutes prima
    facie evidence of the validity of the mark. 
    15 U.S.C. § 1057
    (b). For this reason, a plaintiff alleging infringement of
    a federally-registered mark is entitled to a presumption that
    the mark is not generic. Anti-Monopoly, Inc. v. General Mills
    Fun Group, Inc., 
    684 F.2d 1316
    , 1319 (9th Cir. 1982). “In
    essence, the registration discharges the plaintiff’s original
    common law burden of proving validity in an infringement
    action.” Tie Tech, Inc., 
    296 F.3d at
    783 (citing Vuitton et Fils
    S.A. v. J. Young Enters., Inc., 
    644 F.2d 769
    , 775 (9th Cir.
    1981)). The defendant may, of course, overcome the pre-
    sumption “by a showing by a preponderance of the evidence
    that the term was or has become generic.” Anti-Monopoly,
    
    684 F.2d at 1319
    .
    [2] However, when a mark is not registered, the presump-
    tion of validity does not apply; therefore, the plaintiff is left
    with the task of satisfying its burden of proof of establishing
    a valid mark absent application of the presumption. Generic
    marks lack any distinctive quality, and therefore are not enti-
    tled to trademark protection. Interstellar Starship Servs., Ltd.
    v. Epix, Inc., 
    304 F.3d 936
    , 943 n.6 (9th Cir. 2002) (citing
    TCPIP Holding Co. v. Haar Communications, Inc., 
    244 F.3d 88
    , 93 (2d Cir. 2001)). Therefore, when a defendant raises the
    defense of genericness in an infringement case involving an
    10260            YELLOW CAB v. YELLOW CAB
    unregistered mark, the plaintiff has the burden of proof to
    show that the mark is valid and not generic. Filipino Yellow
    Pages, 
    198 F.3d at 1146
    . Even a registered mark may become
    generic and subject to cancellation. “Generic terms are not
    registrable, and a registered mark may be canceled at any time
    on the grounds that it has become generic.” Park ‘N Fly, Inc.
    v. Dollar Park and Fly, Inc., 
    469 U.S. 189
    , 194 (1985). Com-
    petitors may use a term that was once distinctive if it has
    become generic over time. Nora Beverages, Inc. v. Perrier
    Group of Am., Inc., 
    164 F.3d 736
    , 744 (2d Cir. 1998) (citing
    Park ‘N Fly, 782 F.2d at 1509). The crucial date for the deter-
    mination of genericness is the date on which the alleged
    infringer entered the market with the disputed mark or term.
    Id. Thus, Yellow Cab of Sacramento’s argument that the
    plaintiff should not have to assume the burden of proof until
    the defendant proves that the term in question was generic
    prior to the plaintiff’s use runs counter to trademark theory,
    and we must reject it.
    [3] The Second Circuit has created an exception to the gen-
    eral rule, upon which Yellow Cab of Sacramento also relies,
    that “where the public is said to have expropriated a term
    established by a product developer, the burden is on the
    defendant to prove genericness.” Murphy Door Bed Co. v.
    Interior Sleep Systems, Inc., 
    874 F.2d 95
    , 101 (2nd Cir. 1989).
    However, even if we were to recognize that exception in our
    Circuit, it would not afford plaintiff relief. The Murphy Door
    Bed Co. exception applies to protect a product innovator —
    in that case, the originator of the Murphy bed. The term “yel-
    low cab” was not originally coined by Yellow Cab of Sacra-
    mento, nor was the concept of the taxi cab. John Hertz
    developed the “Yellow Cab” name in Chicago in 1915, a
    decade before the term was associated with a taxicab com-
    pany in Sacramento. Using an analysis prepared by the Uni-
    versity of Chicago, Hertz decided that yellow was the most
    distinctive color for a fleet of taxicabs. He continued use of
    the color in his subsequent business, Hertz Rent-A-Car. In
    contrast, the Yellow Cab of Sacramento’s use was derivative.
    YELLOW CAB v. YELLOW CAB                10261
    The narrow Second Circuit exception for product developers
    does not apply.
    [4] For these reasons, we agree with the district court that
    the plaintiff bore the burden of proof of establishing that the
    name was not generic, subject to the usual rules pertaining to
    the grant of summary judgments.
    B
    [5] Although the district court properly allocated the burden
    of proof, it erred in determining that there were no genuine
    issues of material fact concerning genericness. “Whether a
    mark is generic is a question of fact.” Stuhlbarg Int’l Sales
    Co., Inc. v. John D. Brush & Co., Inc., 
    240 F.3d 832
    , 840 (9th
    Cir. 2001). “To determine whether a term has become
    generic, we look to whether consumers understand the word
    to refer only to a particular producer’s goods or whether the
    consumer understands the word to refer to the goods them-
    selves.” KP Permanent Make-Up, Inc., 
    408 F.3d at 604
    . If
    buyers understand the term as being identified with “a partic-
    ular producer’s goods or services, it is not generic.” Surgi-
    centers of Am., Inc. v. Medical Dental Surgeries Co., 
    601 F.2d 1011
    , 1016 (9th Cir. 1979). “But if the word is identified
    with all such goods or services, regardless of their suppliers,
    it is generic.” 
    Id.
     (citing King Seeley Thermos Co. v. Aladdin
    Indus., Inc., 
    321 F.2d 527
    , 579 (2d Cir. 1963)).
    [6] We have often determined whether a mark is generic
    using the “who-are-you/what-are-you” test: “A mark answers
    the buyer’s questions ‘Who are you?’ ‘Where do you come
    from?’ ‘Who vouches for you?’ But the generic name of the
    product answers the question ‘What are you?’ ” Filipino Yel-
    low Pages, 
    198 F.3d at 1147
     (quoting Official Airline Guides,
    Inc. v. Goss, 
    6 F.3d 1385
    , 1391 (9th Cir. 1993) (quoting 1 J.
    Thomas McCarthy, Trademarks and Unfair Competition,
    § 12.01 (3d ed. 1992))) (alterations omitted).
    10262             YELLOW CAB v. YELLOW CAB
    Analyzing the undisputed evidence, we conducted the
    “who-are-you/what-are-you” test and held that “Filipino yel-
    low pages” answered the “what are you?” question, and was
    thus a generic term. Id. at 1151. We noted in Filipino Yellow
    Pages that if asked, “What are you?” the three competing
    companies could all answer “a Filipino yellow pages.” Id.
    [7] In the present case, there is a genuine issue of material
    fact as to the genericness of the term “yellow cab.” If one asks
    “What are you?” to companies called, for example, Checker
    Cab Co. or City Cab Co., one would expect the response “a
    taxicab company” or “a cab company.” Posing the question:
    “Could you refer me to a yellow cab company?”, one would
    expect these same companies to point not to themselves, but
    to a business operating under the name “Yellow Cab.” “Yel-
    low cab” thus appears to answer the “who are you?” rather
    than the “what are you?” question, demonstrating its non-
    genericness. Because Yellow Cab of Sacramento came for-
    ward with evidence demonstrating the existence of a genuine
    issue of material fact about whether the term “yellow cab”
    was generic, summary judgment was inappropriate on this
    issue.
    C
    The district court held, in the alternative, that if the term
    “yellow cab” was not generic, then Yellow Cab of Sacra-
    mento had failed to meet its burden to establish secondary
    meaning. Yellow Cab of Sacramento has put forth evidence
    raising a genuine issue of material fact on this issue as well.
    [8] “[T]he question of secondary meaning is one of fact.”
    Levi Strauss & Co. v. Blue Bell, Inc., 
    778 F.2d 1352
    , 1355
    (9th Cir. 1985) (en banc). To determine whether a descriptive
    mark has secondary meaning, a finder of fact considers: “(1)
    whether actual purchasers of the product bearing the claimed
    YELLOW CAB v. YELLOW CAB                        10263
    trademark associate the trademark with the producer, (2) the
    degree and manner of advertising under the claimed trade-
    mark, (3) the length and manner of use of the claimed trade-
    mark, and (4) whether use of the claimed trademark has been
    exclusive.” Levi Strauss, 
    778 F.2d at 1358
     (quoting Transgo,
    Inc. v. AJAC Transmission Parts Corp., 
    768 F.2d 1001
    , 1015
    (9th Cir. 1985)) (alteration omitted).
    [9] Here, Yellow Cab of Sacramento presented to the dis-
    trict court various declarations detailing the history of the
    Yellow Cab of Sacramento, customer confusion concerning
    the companies, advertising data and other evidence addressing
    the Levi Strauss factors. This evidence, when viewed in the
    light most favorable to Yellow Cab of Sacramento, creates a
    genuine issue of material fact concerning whether the descrip-
    tive mark in this case had acquired secondary meaning. Yel-
    low Cab of Elk Grove relies heavily on Filipino Yellow
    Pages, but the record in this case is far different and far
    stronger than the record in that case.3 Therefore, the entry of
    summary judgment on this question was inappropriate.
    3
    Japan Telecom, Inc. v. Japan Telecom Am., Inc., 
    287 F.3d 866
     (9th
    Cir. 2002), is also distinguishable. There, the plaintiff brought a trademark
    infringement action against the defendant; the district court granted sum-
    mary judgment for the defendant. 
    Id. at 870
    . We affirmed, holding that
    although plaintiff’s name was descriptive, the plaintiff failed to establish
    a genuine issue of material fact regarding secondary meaning because the
    plaintiff presented only a few misdirected mailings which were ambiguous
    as to secondary meaning, and an affidavit from the plaintiff’s president
    which the district court correctly found lacked foundation. 
    Id. at 873-74
    .
    As noted above, however, Yellow Cab of Sacramento presented direct evi-
    dence (e.g., evidence of customer confusion and advertising data relevant
    to the Levi Strauss factors) sufficient to present a genuine issue of material
    fact for trial.
    10264                YELLOW CAB v. YELLOW CAB
    III
    The district court correctly allocated the burden of proof to
    the plaintiff. However, because the plaintiff tendered evidence
    creating genuine issues of material fact, the district court’s
    grant of summary judgment is reversed.4 Each party shall bear
    its own costs on appeal.
    REVERSED AND REMANDED.
    4
    Because we determine that a genuine issue of material fact exists as to
    both issues, we need not address appellant’s argument that the district
    court erred in considering evidence pertaining to a national market rather
    than a local one. On remand, the district court should take into consider-
    ation the territorial scope of common law trademark rights in deciding
    what evidence is relevant to the determination. See 4 J. THOMAS
    MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION 26:25-
    30. However, we must reject the specific argument tendered by the defen-
    dant that the use of the term “yellow cab” in the New York City metropol-
    itan area is dispositive in determining the distinctiveness of a mark used
    by a small business claiming territorial rights in Sacramento, California.
    Since the 1960’s, New York City has required its licensed medallion cabs
    to be painted yellow. 34 R.C.N.Y. § 4-01(b) (defining “taxi” as “a motor
    vehicle used for the carriage of passengers for compensation, equipped
    with a taxi meter, painted yellow, and displaying a current medallion
    issued by the New York City Taxi and Limousine Commission”). This is
    to distinguish taxis, which can be hailed from the street, from “for hire
    vehicles,” which must be hired “by prearrangement only.” Id. It also dis-
    tinguishes licensed medallion cabs from so-called “gypsy” cabs, which do
    not operate with government authorization. In short, the unique New York
    City government regulation of taxicabs is irrelevant to the trademark
    issues presented by this case, and in particular, deciding the significance
    of the voluntary use of marks in commerce in different geographic areas.