Holiday Inns, Inc. v. Holiday Inn v. Strand Development Corporation ( 1981 )

ALBERT V. BRYAN, Senior Circuit Judge:

This appeal is from the Federal District Court of South Carolina’s denial of the motion by defendant Holiday Inn (the Local), a motel-restaurant in Myrtle Beach, South Carolina, for relaxation of an injunction the Court had granted in 1973 to Holiday Inns, Inc. (the Chain), a national and international operation in the same business with its name duly registered under 15 U.S.C. § 1111.¹ The injunction prohibited the Local from indicating that its name HOLIDAY INN was registered by the U. S. Patent Office.² Specifically it proscribed the Local’s usage of the symbol ® in connection with its insignia. The order on appeal reaffirmed the injunction and declared that the subsequent acquisition by the Local of a limited registration from the Court of Customs and Patent Appeals in 1976, did not warrant the modification. Maintaining the continued efficacy of the injunction, we refuse to overrule the trial judge’s order denying the motion.³

For decision upon the District Court’s refusal to relax its injunction, our course is charted by Mr. Justice Cardozo’s cautions in United States v. Swift & Co., 286 U.S. 106, 52 S.Ct. 460, 76 L.Ed. 999 (1933):

There is need to keep in mind steadily the limits of inquiry proper to the case before us. We are not framing a decree. We are asking ourselves whether anything has happened that will justify us now in changing a decree. The injunction, whether right or wrong, is not subject to impeachment in its application to the conditions that existed at its making. ... The inquiry for us is whether the changes are so important that dangers, once substantial, have become attenuated to a shadow. No doubt the defendants will be better off if the injunction is relaxed, but they are not suffering hardship so extreme and unexpected as to justify us in saying that they are the victims of oppression.

Id. at 119, 52 S.Ct. at 464 (accents added).

The words are an immediate reminder that we are not to question the right or wrong of the issuance of the injunction decreeing that:

Defendant [Holiday Inn], its officers agents, servants, employees and attorneys and all those persons in active concert or participation therewith, who receive actual notice hereof, are hereby perpetually enjoined and restrained from:

(e) Using directly or indirectly any indication that the defendant’s name is registered in the United States Patent Office.⁴ 364 F.Supp. at 786.

To begin with, incontrovertibly the injunction was violated whenever the Local used the symbol ® in connection with its name in advertisements, publications or elsewhere. Of course, this litigation is not confined to the use of the ® just in itself but, rather, embraces also the significance accorded the symbol by statute, i. e., it is the equivalent of the words “Registered in U.S. Patent and Trademark Office” or “Reg. U.S. Pat. & Tm. Off.,” 15 U.S.C. § 1111, supra note 1 (text quoted). Nor is there any question of the power of this court to continue the exclusivity preserved by the District Court. The single inquiry is whether the change now sought is warranted by the evidence. There is no basis for assuming that the Court of Customs and Patent Appeals’ award of concurrent registration of the Local’s trademark lends any force of law tempering or modulating the injunction; that award does not ex proprio vigore override in any degree the District Court’s injunction.

Returning to the question of this court’s abatement or modification of the injunction, our first ground for refutation of appellant’s motion rests on the premise of Justice Cardozo: the decree is “not subject to impeachment in its application to the conditions that existed at its making ...” 286 U.S. at 119, 52 S.Ct. at 464 (accent added). Justification for the injunction was laid, in the appeal of it to this court, “upon the District Court’s findings of fact.” 498 F.2d 1397 (1974) (unpublished opinion). No longer open to “impeachment” or to vacation when, as here, they are not assertedly erroneous, Rule 52, Fed.R.Civ.P., the following findings accurately reflect the “conditions” before, and as of, March 14, 1973 when the injunction issued.

1. Holiday Inns, Inc. (the Chain) was founded in 1952 in Memphis, Tennessee and since that time has become the largest factor in the restaurant and lodging business in the United States. Permanent displays were developed and placed on each facility, including the one at Myrtle Beach. One was the “great sign,” having a green background with HOLIDAY INN in distinctive script lettering, a large star at the top, and an orange arrow running from the top to the bottom pointing to the location of the restaurant. In addition, the name is printed in large lettering in script on the side or face of the building. Its slogan was “your host from coast to coast.”

2. The United States Patent Office registered the Chain’s service marks beginning in 1954. They have been well known to the American traveling public. Numerous advertisements, appearing in magazines and newspapers as well as on radio, television and billboards, embody the symbol ® or the words, “Reg. U.S. Pat. Office.”

3. The Local was'incorporated in 1960, having prior thereto operated as a partnership or proprietorship. In 1948 it began business under the name of Ocean Front Lodge, consisting of eight frame structures. In August 1955, a new sign was erected bearing the words HOLIDAY INN. The lettering was in script and materially identical to that of the Chain’s, which had been adopted in 1952 and, as mentioned, registered in 1954. In recent years the Local has placed stars near the words HOLIDAY INN. It has also distributed towels, parking lot identification stickers and notices to guests bearing the insignia “HOLIDAY INN ®.”

4. In 1968 the Local erected a sign in its parking lot across the street from its facility. The manager of the Local requested the sign maker to provide a sign which would resemble, but not exactly duplicate, the plaintiff’s “great sign.” He was given one of the Chain’s brochures to copy. The production so resembled the “great sign” of the Chain that the manager in his testimony could not describe any differences between the Local’s sign and the Chain’s without first seeing photographs of them.

When comparing the two photographs the Court can distinguish one from the other, but the signs are so similar that the traveling public would be easily confused and upon seeing defendant’s sign would conclude that it was a franchise of plaintiff or affiliated with it. The colors of the two signs are almost identical. The use of stars, the big arrow, the attraction panel and the script of Holiday Inn are so similar that the Court can only conclude that defendant erected this sign with the intent and purpose of infringing the rights of the plaintiff and unfairly competing with it.

* * * * * *

In the past confusion has been deliberately and systematically nurtured by the defendant [the Local] in an effort to profit from the national recognition and good wili of the plaintiff [the Chain].

j|c * ^ * # *

[Again,] [in] the present case, the [Chain’s] wrong, if any, is delay, while the [Local’s] wrong is intentional deception and use of the [Chain’s] marks to the detriment of the [Chain] and the confusion of the public.

364 F.Supp. at 779-80, 784 (accents added).

The foregoing numbered sections are the unassailable findings of the District Court (repeated in direct quotation or, for brevity, in substance) upon which it issued the injunction. The findings are essential to the pending issue for they foretell why the injunction should not be modified.

The Local’s behavior in the past predicts what its conduct may, with reason, be expected in the future if the Chain’s trademarks are stripped of their potency by the duplication. Clearly, it will allow the Local to “identify with and trade upon the [Chain’s] good will,” to quote the language of the trial judge. Id. at 783.

To repeat, appellant’s motion does not meet Justice Cardozo’s measure of justification for “changing” the injunction. 286 U.S. at 119, 52 S.Ct. at 464. Truth is the Local’s misconduct evinces no hint of cessation or dilution. On the contrary, it has never lessened in its constancy. Amazing, indeed, is the failure of the Local to give evidence of any diminution in its imitating of the Chain’s presentations.

In his findings precedent to refusal of the modification, the District Judge squarely refutes the contention that the injunction, unmodified, deprived the Local of economic benefits to the point of “oppression” as enunciated by Justice Cardozo. Id. at 119, 52 S.Ct. at 464. The pertinent parts of the trial court’s findings are these:

After careful review of defendant’s memorandum and supplemental memorandum in support of its present motion, the Court can see little, if any practical benefit to be derived by the defendant by use of (r) in the restricted area of Myrtle Beach, South Carolina. In the original Order this Court found that most of the confusion in Myrtle Beach was caused by efforts of the defendant Holiday Inn (a South Carolina corporation with one motel at Myrtle Beach) to identify itself with the plaintiff Holiday Inns, Inc. (the national chain). In that Order it was found that the defendant’s summer season is always full and it enjoys approximately 80% repeat business, which had not suffered because of the construction and operation of motels in the Myrtle Beach area affiliated with the plaintiff.

Holiday Inns, Inc. v. Holiday Inn, No. 70-811 (D.S.C., Oct. 24, 1979) (order denying motion, to modify injunction).

The closely reasoned conclusions of the District Court will be

Affirmed.

1 . 15 U.S.C. § 1111:

[A] registrant of a mark registered in the Patent Office, may give notice that his mark is registered by displaying with the mark as used the words “Registered in U.S. Patent Office” or “Reg. U.S. Pat. Off.” or the letter R enclosed with a circle, thus ®; and in any suit for infringement under this chapter by such a registrant failing to give such notice of registration, no profits and no damages shall be recovered under the provisions of this chapter unless the defendant had actual notice of the registration....

2 . Holiday Inn v. Holiday Inns, Inc., 534 F.2d 312 (C.C.P.A.1976).

3 . The issuance of the injunction originally by the District Court was reported as Holiday Inns, Inc. v. Holiday Inn, 364 F.Supp. 775 (D.S. C.1973). It was affirmed by this court, 498 F.2d 1397 (1974) (unpublished opinion), on the findings of the District Court. The present appeal is solely upon the denial of modification by the District Court for the reasons stated in its order, Holiday Inns, Inc. v. Holiday Inn, No. 70-811 (D.S.C. Oct. 24, 1979).

4 . The right of the Local to continue in the use of the name Holiday Inn within the town of Myrtle Beach was not questioned.