Serenity Springs v. The LaPorte County Convention and Visitors Bureau

FOR PUBLICATION
ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:
JONATHAN A. WATSON MICHAEL S. BERGERSON
Wandling & Associates Law Offices of Michael S. Bergerson
South Bend, Indiana Michigan City, Indiana
IN THE Apr 15 2013, 8:24 am
COURT OF APPEALS OF INDIANA
SERENITY SPRINGS, et al, )
)
Appellants, )
)
vs. ) No. 46A03-1205-MI-214
)
THE LAPORTE COUNTY CONVENTION AND )
VISITORS BUREAU, )
)
Appellee. )
APPEAL FROM THE LA PORTE SUPERIOR COURT
The Honorable William J. Boklund, Judge
Cause No. 46D04-1101-MI-1
April 15, 2013
OPINION - FOR PUBLICATION
FRIEDLANDER, Judge
Serenity Springs, Inc. and its principal owner, Laura Ostergren, (collectively, Serenity)
appeal from the trial court’s order permanently enjoining Serenity from using the designation
“Visit Michigan City LaPorte” 1 and ordering Serenity to transfer the domain name
registration for visitmichigancitylaporte.com to the LaPorte County Convention and Visitors
Bureau (the Bureau). Serenity raises three issues, which we consolidate and restate as
follows: Did the trial court err in concluding that Serenity committed trademark
infringement and cybersquatting? The Bureau cross-appeals and requests an award of
appellate attorney fees. Concluding that the Bureau did not establish that Serenity committed
trademark infringement or cybersquatting because it failed to establish that it held a valid and
protectable trademark in the designation “Visit Michigan City LaPorte,” we reverse the trial
court’s judgment and remand with instructions to consider the Bureau’s remaining claims.
Additionally, because Serenity has prevailed in this appeal, we deny the Bureau’s request for
appellate attorney fees.
The Bureau is a special-purpose governmental unit governed by Ind. Code Ann. § 6-9-
6 (West, Westlaw current through 2012 2nd Reg. Sess.). Its mission statement provides that it
is “the official destination marketing organization that represents the visitor industry and
communities to create economic growth from visitor expenditures.” Appellee’s Appendix at
6. The Bureau’s goal is to increase tourism in LaPorte County, and in doing so, the Bureau
1
Throughout the record, this designation is referred to with slight variations, including “Visit Michigan City
LaPorte,” “VISITMICHIGANCITYLAPORTE,” and “visitmichigancitylaporte.” For purposes of clarity, we
will refer to the designation as “Visit Michigan City LaPorte,” except when we refer specifically to a domain
name.
2
promotes a number of hotels and attractions in the area. Serenity operates a hotel resort in
LaPorte County, which is one of the businesses promoted by the Bureau.
In early 2009, the Bureau contracted with a private marketing firm to conduct a
branding study for the purposes of identifying new and better ways to promote tourism in the
area. On September 9, 2009, the Bureau held a public meeting at which the results of the
branding study were announced, and a representative of Serenity was in attendance. The
Bureau’s representatives announced that the phrase “Visit Michigan City LaPorte” had been
identified as the branding identifier for the area.
Immediately after the meeting, an employee of Serenity registered the domain name
“visitmichigancitylaporte.com” at Ostergren’s behest and set it up to redirect internet traffic
to Serenity’s website. Later that day, an employee of the Bureau attempted to register the
same domain name, but discovered that it had already been purchased and was being used to
direct internet traffic to Serenity’s website. The Bureau was able to register a number of
similar domain names, including visitmichigancitylaporte.org, visitmichigancitylaporte.net,
and michigancitylaporte.com.
Thereafter, the Bureau sent a cease-and-desist letter to Serenity claiming that Serenity
had infringed its trademark and committed cybersquatting by registering
visitmichigancitylaporte.com. Serenity responded that it had been unable to find any federal
or state trademark registrations for Visit Michigan City LaPorte and further claimed that (1)
Serenity had not committed trademark infringement because it registered and began using the
visitmichigancitylaporte.com domain name before the Bureau made any commercial use of
3
the designation Visit Michigan City LaPorte, and (2) that the designation was not protectable
as a trademark because it was merely descriptive and had not acquired distinctiveness.
Appellee’s Appendix at 53-54.
On April 29, 2010, the Bureau filed an application with the Secretary of State to
register “‘Visit Michigan City LaPorte’ and logo” as a trademark under the Indiana
Trademark Act. Appellant’s Appendix at 17. In its application, the Bureau indicated that the
mark was first used in commerce on September 9, 2009, and disclaimed any rights to the
words “Michigan City” or “LaPorte.” Id. The Bureau received a certificate dated May 13,
2010 indicating that “Visit Michigan City LaPorte” had been registered as a trademark with
the Secretary of State. Id. at 16. The certificate also indicated that the mark was first used on
September 9, 2009, and the words “Michigan City LaPorte” had been disclaimed. Id.On May 26, 2011, the Bureau sent another cease-and-desist letter to Serenity, again
asserting that Serenity was infringing its rights in the now-registered trademark. The Bureau
attached a copy of the certificate of trademark registration to the letter and informed Serenity
that the letter would be its final attempt to resolve the matter before taking legal action.
Serenity sent a response letter to the Bureau on June 1, 2010. In the letter, Serenity
again asserted that it was the first party to use the mark in commerce, and argued further that
the Bureau’s registration of the mark did not affect Serenity’s common-law rights to use the
mark or confer retroactive trademark rights. Serenity stated that it was willing to assign the
domain name to the Bureau if it could provide proof that it first used the mark in commerce
on or before September 9, 2009. Serenity argued that if the Bureau had not used the mark in
4
commerce by that date, it had fraudulently misrepresented the date of first use on the
application for trademark registration, which would result in cancellation of the registration.
On January 4, 2011, the Bureau filed a complaint against Serenity alleging trademark
infringement, cybersquatting, and unfair competition.2 The Bureau also sought and obtained
a preliminary injunction prohibiting Serenity from using the domain name. The matter
proceeded to a bench trial on March 8, 2012, and the trial court entered judgment in favor of
the Bureau on May 1, 2012. The trial court concluded that Serenity had violated Indiana law
by committing trademark infringement and “cybersquatting that approaches cyberpiracy[.]”
Appellant’s Appendix at 13. The trial court permanently enjoined Serenity from using the
Visit Michigan City LaPorte designation or the domain name visitmichigancitylaporte.com,
and further ordered Serenity to transfer the domain name registration to the Bureau. This
appeal ensued.
1.
Serenity appeals from a judgment entered following a bench trial. In reviewing claims
tried by the bench without a jury, our court shall not set aside the judgment “unless clearly
erroneous, and due regard shall be given to the opportunity of the trial court to judge the
credibility of the witnesses.” Ind. Trial Rule 52(A). “In determining whether a judgment is
clearly erroneous, we will not reweigh the evidence or determine the credibility of witnesses
but will consider only the evidence that supports the judgment and the reasonable inferences
2
The parties have not provided us with a copy of the Bureau’s complaint. We are able to discern the basis of
the complaint, however, from the copy of Serenity’s answer, which was included in the Appellee’s Appendix.
5
to be drawn from that evidence.” Bennett v. Broderick, 858 N.E.2d 1044 (Ind. Ct. App.
2006), trans. denied.
We define the clearly erroneous standard based upon whether the party is appealing a
negative or an adverse judgment. Garling v. Ind. Dep’t of Natural Res., 766 N.E.2d 409(Ind. Ct. App. 2002), trans denied. “A negative judgment is one entered against a party who
bears the burden of proof, while an adverse judgment is one entered against a party defending
on a given question.” Id. at 411. In the instant case, the trial court entered judgment in favor
of the Bureau, the party bearing the burden of proof at trial. Accordingly, Serenity is
appealing an adverse judgment. Under these circumstances, we hold the trial court’s findings
clearly erroneous if they are not supported by substantial evidence of probative value.
Garling v. Ind. Dep’t of Natural Res., 766 N.E.2d 409. Moreover, “[e]ven if the supporting
evidence is substantial, we will reverse the judgment if we are left with a definite and firm
conviction a mistake has been made.” Id. at 411.
Serenity argues that the trial court erred in concluding that it had committed trademark
infringement and cybersquatting because (1) the Visit Michigan City LaPorte designation is
geographically descriptive and not subject to trademark protection, and (2) alternatively, if
the designation is protectable, Serenity Springs acquired superior rights to the mark because
it was the first to use it in commerce. As an initial matter, we note that the trial court
concluded that the law of trademarks did not apply to the Bureau with the same force as a
private entity due to the transparency requirements imposed upon governmental units.
Specifically, the court concluded
6
34. That the construction of trademark law suggested by [Serenity] does not
take into account demands of transparency placed on governmental entities
concerning how they do business, and to construe the law so as to require
government to do business just as private concerns do business would violate
those laws that demand openness in government.
35. The demand for openness in government required [the Bureau] to reveal
matters that in private business would not have been revealed publicly, thereby
jeopardizing [the Bureau’s] ability to protect its mark and its investment in
money.
36. The construction of trademark law suggested by [Serenity] would require
that [the Bureau] do business in a manner similar to a private entity, without
regard to the requirements placed on governmental units by Indiana law,
including the Open Door Law. Conducting business in such a manner makes it
impossible for a governmental entity to protect its investment of tax money in
projects such as this one.
Appellant’s Appendix at 11.
Serenity argues that “adopting the trial court’s reasoning would, in effect, create an
exception to a statutory rule of law that would apply in nearly every situation where a public
entity and private entity were in competition.” Appellant’s Brief at 17. We agree. This court
has long held that the exclusive right to use a mark is acquired through adoption and use of
the mark in commerce. See Johnson v. Glassley, 118 Ind. App. 704, 83 N.E.2d 488 (1949)
(“[t]he mere adoption of a particular name as a trade name, without actual use thereof in the
market, confers no right thereto, even though such adoption is publicly declared” ); Hartzler
v. Goshen Churn Ladder Co., 55 Ind. App. 455, 104 N.E. 34 (1914). We are unaware of any
authority suggesting that governmental units need not comply with the use requirement in
order to acquire exclusive rights to use a particular mark. To the extent the trial court
concluded that governmental entities competing with private entities are entitled to extra
protection or relieved of the burden of establishing the elements of trademark infringement
7
claims, such conclusion was error.
Before turning to the merits of Serenity’s argument concerning the validity of the
Bureau’s claimed trademark, a brief review of the law of trademarks is in order. Trademark
law is a subspecies of the law of unfair competition. 1 J. Thomas McCarthy, McCarthy on
Trademarks and Unfair Competition § 2.7 (“A basic aspect of the United States economy is
that of the market place policed by laws that set a minimum level of fair competition. The
law of trademarks is but a branch of this broader area called the law of ‘Unfair Competition
or ‘Unfair Trade Practices.’” (footnote omitted)); 20 Ind. Law Encyc. Monopolies and Unfair
Trade § 8 (noting that “trademark infringement is one type of unfair competition.” (footnote
omitted)).
The goal of trademark protection is to allow a firm to affix an identifying mark
to its product (or service) offering that will, because it is distinctive and no
competitor may use a confusingly similar designation, enable the consumer to
discover in the least possible amount of time and with the least possible
amount of head-scratching whether a particular brand is that firm’s brand or a
competitor’s brand.
Blau Plumbing, Inc. v. S.O.S. Fix-It, Inc., 781 F.2d 604 (7th Cir. 1986); see also Carroll v.
Lordy, 431 N.E.2d 118, 123 (Ind. Ct. App. 1982) (“[t]he purpose of a trademark is to identify
the source of the product, not the product itself”).
Trademark law is rooted in English common law, and was “largely codified” at the
federal level in the Trademark Act of 1946, commonly known as the Lanham Act. Moseley
v. V Secret Catalogue, Inc., 537 U.S. 418, 428 (2003). The Lanham Act defines a trademark,
in relevant part, as “any word, name, symbol, or device, or any combination thereof . . . used
by a person . . . to identify and distinguish his or her goods, including a unique product, from
8
those manufactured or sold by others and to indicate the source of the goods, even if that
source is unknown.” 15 U.S.C.A. § 1127 (West). A “service mark” is the same as a
trademark, except that it relates to services as opposed to goods or products. Id. The
Lanham Act provides the holder of a mark with a cause of action against infringers. 15
U.S.C.A. § 1125 (a) (West). The plaintiff must prove two elements in order prevail on a
claim of trademark infringement under the Lanham Act: (1) that he or she has a protectable
ownership interest in the mark, and (2) that the defendant’s use of the mark is likely to cause
consumer confusion. Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225 (5th Cir.
2010); see also Tana v. Dantanna’s, 611 F.3d 767 (11th Cir. 2010).
In 1999, Congress passed the Anti-Cybersquatting Consumer Protection Act (ACPA)
as an amendment to the Lanham Act for the purpose of prohibiting “cybersquatting.”
DaimlerChrysler v. The Net Inc., 388 F.3d 201, 204 (6th Cir. 2004).
‘[C]ybersquatting’ occurs when a person other than the trademark holder
registers the domain name of a well[-]known trademark and then attempts to
profit from this by either ransoming the domain name back to the trademark
holder or by using the domain name to divert business from the trademark
holder to the domain name holder. A trademark owner asserting a claim under
the ACPA must establish the following: (1) it has a valid trademark entitled to
protection; (2) its mark is distinctive or famous; (3) the defendant’s domain
name is identical or confusingly similar to, or in the case of famous marks,
dilutive of, the owner’s mark; and (4) the defendant used, registered, or
trafficked in the domain name (5) with a bad faith intent to profit.
Id. (citations omitted); see also Felsher v. Univ. of Evansville, 755 N.E.2d 589 (Ind. 2001)
(discussing Lanham Act claims against cybersquatters and cyber copycats). Thus, in order to
prevail on either a trademark infringement or cybersquatting claim under the Lanham Act,
9
the plaintiff must first prove that he or she has a valid and protectable mark. 3
To receive protection under the Lanham Act as a trademark or service mark, a
designation must be “distinctive.” 2 J. Thomas McCarthy, McCarthy on Trademarks and
Unfair Competition § 11.2 (“‘Distinctive’ has a special meaning in trademark law. . . .
Without achieving distinctiveness . . . a designation does not have the legal status of a
‘trademark’ or ‘service mark.’ No distinctiveness—no mark.” (footnote omitted)). As the
U.S. Supreme Court has explained, marks are classified into the following categories of
increasing distinctiveness: marks that are (1) generic; (2) descriptive; (3) suggestive; (4)
arbitrary; or (5) fanciful. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992) (citing
Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4 (2nd Cir. 1976)).
The latter three categories of marks—those that are suggestive, arbitrary, or fanciful—
are considered inherently distinctive and entitled to trademark protection “because their
intrinsic nature serves to identify a particular source of a product[.]” Id. at 768. “Fanciful
marks are, in essence, made-up words expressly coined for serving as a trademark. Some
examples of fanciful marks are Clorox®, Kodak®, Polaroid®, and Exxon®.” Sara Lee
Corp. v. Kayser-Roth Corp., 81 F.3d 455, 464 (4th Cir. 1996). Arbitrary marks consist of
3
In its order, the trial court concluded that Serenity had committed “cybersquatting that approaches
cyberpiracy, in violation of [Indiana] common law.” Appellant’s Appendix at 13. In support of this
conclusion, however, the court cited the ACPA and Felsher v. Univ. of Evansville, which discussed
cybersquatting as a potential violation of the Lanham Act. 755 N.E.2d 589 (Ind. 2001). In other words, the
authorities relied upon by the trial court support a cause of action for cybersquatting under federal statutory law
only. The parties have not directed our attention to, and we are unaware of, any authority suggesting the
existence of an Indiana statutory or common-law cause of action for cybersquatting per se. Of course, this
does not preclude the possibility that acts amounting to cybersquatting under the Lanham Act and ACPA might
also be actionable under the Indiana Trademark Act or common-law unfair competition principles.
10
words or symbols that are in common usage, but are arbitrarily applied to the goods or
services “because they do not suggest or describe any quality, ingredient, or characteristic of
the goods they serve . . . . Examples include Tea Rose® flour, Camel® cigarettes, and
Apple® computers.” Id. “Suggestive marks connote, without describing, some quality,
ingredient, or characteristic of the product. Coppertone®, Orange Crush®, and Playboy® are
good examples of suggestive marks because they conjure images of the associated products.”
Id.Descriptive marks and generic marks, on the other hand, are not inherently distinctive.
Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763. Generic designations refer merely “to
the genus of which the particular product is a species,” and are never protectable as
trademarks because they do not indicate the particular source of an item. Id. at 768; see also
Sally Beauty Co. v. Beautyco, Inc., 304 F.3d 964, 976 (10th Cir. 2002) (identifying the word
“cola” as an example of a generic designation). Descriptive marks describe “‘the ingredients,
qualities, or characteristics of an article of trade or a service[.]’’’ Platinum Home Mortg.
Corp. v. Platinum Fin. Group, Inc., 149 F.3d 722, 727 (7th Cir. 1998). As a general matter,
descriptive marks are not protectable as trademarks, “‘both because they are poor means of
distinguishing one source of services from another and because they are often necessary to
the description of all goods or services of a similar nature.’” Mil-Mar Shoe Co. v. Shonac
Corp., 75 F.3d 1153 (7th Cir. 1996) (quoting Liquid Controls Corp. v. Liquid Control Corp.,
802 F.2d 934, 936 (7th Cir. 1986)). Descriptive marks will become protectable, however,
“where the holder can establish that the mark has acquired ‘secondary meaning’ in the
11
collective consciousness of the relevant community.” Id. (quoting Gimix, Inc. v. JS & A
Group, Inc., 699 F.2d 901, 907 (7th Cir. 1983)). Secondary meaning exists when consumers
regard the designation not as a description, but as the name of the product or service itself.
Packman v. Chicago Tribune Co., 267 F.3d 628 (7th Cir. 2001). Geographically descriptive
designations generally fall within the descriptive category; thus, to be protected, they must
have acquired secondary meaning. 2 McCarthy §§ 14:1 (“’[i]f a geographic term is used
merely to indicate the location or origin of the goods and services, it is purely descriptive”).
A mark’s proper placement on the spectrum of distinctiveness is a question of fact. Welding
Servs., Inc. v. Forman, 509 F.3d 1351 (11th Cir. 2007).
Under the Lanham Act, the holder of a mark may request the United States Patent and
Trademark Office (USPTO) to register the mark on the principal register. 15 U.S.C.A. §
1051, et seq. Marks that are “primarily descriptive” and “primarily geographically
descriptive” of the goods or services with which they are associated are not eligible for
registration on the principal register unless they have “become distinctive of the applicant’s
goods in commerce.” 15 U.S.C.A. § 1052(e), (f) (West). Thus, registration of a descriptive
mark on the principal register requires a showing of secondary meaning. Kohler Co. v. Moen
Inc., 12 F.3d 632 (7th Cir. 1993). Although the Lanham Act protects both registered and
unregistered marks, registration is desirable because it constitutes prima facie evidence of the
mark’s validity. See 15 U.S.C.A. §§ 1057(b), 1115(a). Thus, federal registration of a mark
“‘entitles the plaintiff to a presumption that its registered trademark is not merely descriptive
or generic, or, if merely descriptive, is accorded secondary meaning.’” Thomas & Betts
12
Corp. v. Panduit Corp., 138 F.3d 277, 301 (7th Cir. 1998) (quoting Liquid Controls Corp. v.
Liquid Control Corp., 802 F.2d at 936). The plaintiff bears the burden of establishing that an
unregistered mark is entitled to protection. Platinum Home Mortg. Corp. v. Platinum Fin.
Group, Inc., 149 F.3d 722.
The Indiana Trademark Act is similar, and in some respects identical, to the Lanham
Act. Although Indiana’s body of trademark law is relatively undeveloped, the General
Assembly has specified that the Indiana Trademark Act “is intended to provide a system of
state trademark registration and protection that is consistent with the federal system of
trademark registration and protection under the Trademark Act of 1946.” Ind. Code Ann. §
24-2-1-0.5 (West, Westlaw current through 2012 2nd Reg. Sess.). Moreover, “[a] judicial or
an administrative interpretation of a provision of the federal Trademark Act may be
considered as persuasive authority in construing a provision of” the Indiana Trademark Act.
Id.The Indiana Trademark Act’s definitions of “trademark” and “service mark” track the
Lanham Act’s definitions of those terms nearly verbatim. See I.C. § 24-2-1-2(8), (9) (West,
Westlaw current through 2012 2nd Reg. Sess.). Like the Lanham Act, the Indiana Trademark
Act does not adversely affect common-law trademark rights. See I.C. § 24-2-1-15 (West,
Westlaw current though 2012 2nd Reg. Sess.). Registration of a trademark or service mark
with the office of the Secretary of State provides a registrant with a remedy for the
infringement thereof under the Indiana Trademark Act. I.C. § 24-2-1-14(a) (West, Westlaw
current though 2012 2nd Reg. Sess.); Felsher v. Univ. of Evansville, 755 N.E.2d 589. Like
13
the Lanham Act, the Indiana Trademark Act prohibits the registration of marks that are
“primarily geographically descriptive or deceptively geographically misdescriptive of the
goods or services[.]” I.C. § 24-2-1-3 (West, Westlaw current through 2012 2nd Reg. Sess.).
This provision does not, however, “prevent the registration of a mark that is used in Indiana
by the applicant and has become distinctive of the applicant’s goods or services.” Id. In
other words, a geographically descriptive mark may be registered under the Indiana
Trademark Act if it has acquired secondary meaning. 4 See Restatement (Third) of Unfair
Competition § 14 (1995) (providing that a designation that is likely to be perceived by
purchasers as merely descriptive of the geographical origin or location of the goods or
services with which it is associated is not distinctive and protectable unless it has acquired
secondary meaning); cf. Keaton and Keaton v. Keaton, 842 N.E.2d 816, 821 (Ind. 2006)
(“Personal names, including surnames, are not ‘inherently distinctive’ and are only
protectable as trademarks or trade names upon proof of secondary meaning.”).
Serenity argues that the designation at issue in this case, Visit Michigan City LaPorte,
is primarily geographically descriptive and not subject to protection as a trademark. 5 The
trial court did not specify in its findings where the designation fell on the spectrum of
4
Proof of continuous use of the mark in Indiana for the five years preceding the date the claim of
distinctiveness is made may constitute sufficient proof that a geographically descriptive mark has attained
secondary meaning. I.C. § 24-2-1-3. The mark at issue in this case clearly has not satisfied this threshold.
This does not, however, preclude its registration if there is evidence that the mark has actually achieved
secondary meaning within a shorter timeframe.
5
Serenity also argues that to the extent the designation is protectable as a trademark, it has superior rights to
the mark because it was the first to use the mark in commerce. See Johnny Blastoff, Inc. v. Los Angeles Rams
Football Co., 188 F.3d 427 (7th Cir. 1999) (“The party who first appropriates the mark through use . . .
acquires superior rights to it.”). Because we resolve this matter based on the threshold issue of whether the
mark is subject to trademark protection in the first instance, we need not address this argument.
14
trademark distinctiveness; rather, the court found that the Bureau’s “trademarks were
distinctive at the time [Serenity] began using the mark and acquired the registration for the
domain name VISITMICHIGANCITYLAPORTE.COM.” Appellant’s Appendix at 11. The
court also concluded that “[t]he mark was properly certified for trademark.” Id.We first note that the designation in question is a geographic composite mark, that is,
“one composed of geographic matter coupled with additional matter (e.g. wording and/or a
design element).” U.S. Patent and Trademark Office, Trademark Manual of Examining
Procedure § 1210.02(c) (hereinafter TMEP), available at
http://www.uspto.gov/trademarks/resources/TMEP_archives.jsp. Such marks are classified
based on their primary significance. Id.; see also I.C. § 24-2-1-3 (providing that marks that
are “primarily geographically descriptive” are not registerable unless they have acquired
distinctiveness (emphasis supplied)). The mark here consists of two geographic descriptors,
“Michigan City” and “LaPorte,” preceded by the word “Visit,” which, in the context of the
tourism industry, is at best descriptive. We have little difficulty accepting Serenity’s
argument that the designation is primarily geographically descriptive of the goods and
services with which it has been associated. See TMEP § 1210(c)(ii) (“[g]enerally, the
addition of a highly descriptive or generic term to the name of a geographic place does not
alter its primarily geographic significance”). Indeed, the purpose of the Bureau’s branding
efforts is to promote tourism in LaPorte County, and the only unifying characteristic shared
by all of the accommodations and attractions promoted by the Bureau is their geographic
location. It is difficult to conceive of a mark that falls more squarely within the category of
15
geographically descriptive marks. Because we can conclude as a matter of law that
prospective purchasers are likely to understand the designation as describing the geographic
location of the goods and services the Bureau promotes, we conclude that the mark is
geographically descriptive. Accordingly, the mark must have acquired secondary meaning in
order to be protectable. 6
The Bureau seems to suggest that its registration of the mark with the Secretary of
State is sufficient proof of distinctiveness and/or secondary meaning. We cannot agree that
registration is a substitute for evidence of the mark’s validity. The Indiana Trademark Act
provides that the Secretary of State shall cancel a trademark registration for a variety of
reasons, including when “a court of competent jurisdiction finds that . . . the registration was
granted improperly[.]” I.C. § 24-2-1-10 (West, Westlaw current through 2012 2nd Reg.
Sess.). Thus, the Act specifically contemplates that a court may review and overturn the
Secretary of State’s determination that a particular mark is registerable. Moreover, I.C. § 24-
2-1-5 provides that a certificate of registration issued by the Secretary of State “is admissible
in evidence as competent and sufficient proof of the registration of the mark in an action or
judicial proceeding in a court of Indiana.” (emphasis supplied). Thus, a certificate of
registration is proof of registration only, which is a necessary prerequisite to a suit for
infringement under the Indiana Trademark Act. I.C. § 24-2-1-14(a); Felsher v. Univ. of
6
The Bureau suggests that its disclaimer of the terms “Michigan City” and “LaPorte” removes the composite
designation Visit Michigan City LaPorte from the category of geographically descriptive marks. We disagree.
The fact that the Bureau has disclaimed any exclusive right to use these geographic descriptors outside the
composite mark at issue in this appeal does nothing to alter our conclusion that the composite mark is itself
primarily geographically descriptive.
16
Evansville, 755 N.E.2d 589. The Indiana Trademark Act contains no provisions
corresponding to 15 U.S.C.A. §§ 1057(b) and 1115(a), which provide that federal registration
of a mark constitutes prima facie evidence of its validity.
Although the Indiana Trademark Act was intended to provide a system of state
trademark protection consistent with the Lanham Act, where, as here, the language of the
state legislation departs significantly from its federal counterpart, it is apparent that the
General Assembly intended a different result. We therefore conclude that the Bureau’s
registration of the mark with the Secretary of State under the Indiana Trademark Act is not
sufficient to establish its validity under the Indiana Trademark Act.7 Accordingly, to support
its infringement claims, the Bureau was required to present evidence to establish the validity
of the mark, including the existence of secondary meaning. See Keaton and Keaton v.
Keaton, 842 N.E.2d at 821 (“[i]n order to state a cognizable claim for trade name
infringement, a plaintiff must make a threshold showing of a protectable trade name”). 8
7
To the extent the Bureau asserts a federal trademark claim, we note that there is no evidence that the mark
was registered on the USPTO’s principal register. Accordingly, the Bureau is not entitled to a presumption of
validity under the Lanham Act.
8
The Bureau seems to suggest that in order to present the argument that the mark is not subject to protection as
a trademark, Serenity was required to file as a counterclaim an action to cancel the mark’s registration pursuant
to I.C. § 24-2-1-14.5 (West, Westlaw current through 2012 2nd Reg. Sess.). Although I.C. § 24-2-1-14.5
provides for a cause of action to cancel a mark registered under the Indiana Trademark Act, we can see no
basis for the conclusion that Serenity was required to do so in this case. Serenity has not sought cancellation of
the Bureau’s trademark. Rather, it has sought to defend against the Bureau’s claims of infringement by
arguing that the Bureau has not established an essential element of its claims, i.e., the existence of a protectable
trademark.
17
Having concluded that the mark is geographically descriptive and not entitled to a
presumption of validity, we turn our attention to whether the mark was nevertheless
protectable, i.e., whether it had acquired secondary meaning. “The existence of secondary
meaning is a question of fact, with the burden of proof on the person claiming rights in the
name.” Id.; see also 2 McCarthy § 15:29. The rule applied by the majority of courts, and
which we adopt here, is that “the senior user must prove the existence of secondary meaning
in its mark just prior to the time and place that the junior user first began use of the mark.” 2
McCarthy §§ 15:4, 16:34.
The trial court found that subsequent to the Bureau’s registration of the mark with the
Office of Secretary of State, “the trademark VISITMICHIGANCITYLAPORTE has come to
identify [the Bureau’s] goods and services and to distinguish them from the goods and
services of others.” Appellant’s Appendix at 10. Thus, to the extent the trial court concluded
that the mark had acquired secondary meaning, it is apparent that the trial court considered
the time period subsequent to Serenity’s first use. As described above, the proper question is
whether the mark acquired secondary meaning prior to Serenity’s first use.
In the present case, the Bureau presented no evidence that the mark at issue acquired
secondary meaning before Serenity began using it. It is undisputed that Serenity purchased
the domain name visitmichigancitylaporte.com on September 9, 2009 and immediately began
using it to direct internet traffic to its main website on that date. The Bureau also claimed
September 9, 2009 as the date of its first use of the mark in its application for trademark
registration, and trial court found that the Bureau first used the mark in commerce on that
18
date. Assuming arguendo that the trial court’s finding in this regard is supported by the
evidence, 9 the Bureau’s and Serenity’s first uses of the mark were virtually simultaneous.
Secondary meaning is acquired through actual use of a mark, and there is simply no evidence
in the record supporting a conclusion that the mark became associated with the Bureau in the
minds of consumers on September 9, 2009 in the hours prior to Serenity’s registration of the
domain name. Indeed, Jack Arnett, the Bureau’s executive director, testified that the Bureau
intended to begin using the mark following the September 9 announcement, and that securing
the domain names would have been the first step in that effort. Because Serenity had already
registered and begun using the visitmichigancitylaporte.com domain name by the time the
Bureau sought to do the same, it would appear that Serenity began using the mark first, and it
would therefore follow that the mark could not possibly have acquired a secondary
association with the Bureau prior to Serenity’s first use.
In arguing that it is nevertheless entitled to trademark protection, the Bureau argues
that it made an investment in undertaking the branding study, registering the mark, and
attempting to defend the mark by issuing cease-and-desist letters. The Bureau argues that
trademark protection exists to protect such investments, and that Serenity made no
comparable investment in or attempt to protect the mark, and has even denied ownership
thereof.
9
Serenity argues that the Bureau did not actually use the mark in commerce until well after September 9, 2009.
According to Serenity, the Bureau merely announced an intention to use the mark on that date. We agree that
merely announcing an intention to use a trademark is insufficient to confer trademark rights. 2 McCarthy §
16:11. Rather, trademark priority is granted to the party who first uses the mark in commerce. Id.
Nevertheless, we need not sort out this particular dispute because we reach the same conclusion even if we
accept the trial court’s finding that the Bureau first used the mark on September 9, 2009.
19
As an initial matter, we note that Serenity’s alleged denial of ownership of the mark
would be entirely consistent with its argument that the mark is not protectable as a trademark.
Additionally, we agree that trademarks exist, at least in part, to protect businesses’
investments in marks as a means to inform consumers about the source of the goods or
services they offer. See Kohler Co. v. Moen, Inc., 12 F.3d 632; see also 1 McCarthy, § 2:2.
This goal must be balanced, however, against competing concerns about depriving
competitors of the ability to effectively market similar goods and services by removing
descriptive terms from the public domain. See Blau Plumbing v. S.O.S. Fix-It, Inc., 781 F.2d
at 609 (“it is no purpose of trademark protection to allow a firm to prevent its competitors
from informing consumers about the attributes of the competitors’ brands”). The
distinctiveness requirement is designed to strike a balance between these concerns by
granting protection only when a mark is truly used to identify the source of goods or services,
rather than to describe the goods or services themselves (or their geographical location). The
Bureau’s initial investment in and subsequent efforts to defend the mark are simply not
relevant to whether the mark had acquired distinctiveness at the time of Serenity’s first use.10
For all of these reasons, we conclude that the trial court’s findings that the designation
Visit Michigan City LaPorte was distinctive and properly registered as a trademark were
clearly erroneous. Because the Bureau failed to establish that the designation was protectable
as a trademark against Serenity, its claims of trademark infringement and cybersquatting
10
These facts may be relevant, however, to the Bureau’s remaining claim of common-law unfair competition,
which is discussed further below. We also note that the trial court found that Serenity had made a number of
misrepresentations to the trial court concerning its ownership of the domain name at a pretrial. Serenity’s
initial denial that it owned the domain name might also be relevant to the Bureau’s remaining claims.
20
must necessarily fail. 11 Accordingly, we reverse and remand with instructions to the trial
court to vacate its judgment and enter judgment in Serenity’s favor on these claims.
None of this is to say, however, that Serenity’s actions are necessarily beyond the
reach of the law. Although the trial court ruled only on the Bureau’s trademark infringement
and cybersquatting claims, the Bureau asserted additional claims, including a claim of
common-law unfair competition, which does not necessarily turn on the existence of a valid
and protectable trademark. See also Keaton and Keaton v. Keaton, 842 N.E.2d at 820
(noting that the law of unfair competition is very broad and not limited to passing off one’s
goods and services as those of another); Felsher v. Univ. of Evansville, 755 N.E.2d at 598
(noting that unfair competition does not refer to a tort with a specific number of elements, but
“‘instead describes a general category into which a number of new torts may be placed when
recognized by the courts. The category is open-ended, and nameless forms of unfair
competition may be recognized at any time for the protection of commercial values’”
(quoting W. Page Keeton, Prosser and Keeton on the Law of Torts, 105 (5th ed. 1984)).
Because these claims were not addressed by the trial court, we do not pass on their merits.
Instead, we remand with instructions to the trial court to consider the Bureau’s remaining
claims. Because this matter has already proceeded to a trial on the merits, however, the trial
court may not receive new evidence and must limit its consideration to the evidence and
claims already presented by the Bureau.
11
Of course, this does not preclude the possibility that the mark could, in the future, become distinctive by
acquiring secondary meaning. In that event, the Bureau would be entitled to protection against unauthorized
use by others, provided their use began subsequent to the mark’s acquisition of secondary meaning.
21
2.
On cross-appeal, the Bureau requests an award of appellate attorney fees. Under Ind.
App. Rule 66(E), “[t]he Court may assess damages if an appeal . . . is frivolous or in bad
faith. Damages shall be in the Court’s discretion and may include attorneys’ fees.” 12 Our
discretion to award attorney fees under App. R. 66(E) is limited to “instances when an appeal
is permeated with meritlessness, bad faith, frivolity, harassment, vexatiousness, or purpose of
delay.” Thacker v. Wentzel, 797 N.E.2d 342, 346 (Ind. Ct. App. 2003). Because Serenity has
prevailed on the merits of this appeal, an award of appellate attorney fees to the Bureau
would be inappropriate.
Judgment reversed and remanded with instructions.
NAJAM, J., and BRADFORD, J., concur.
12
In support of its request for appellate attorney fees, the Bureau cites the former Ind. Appellate Rule 15(G),
which is no longer a part of the appellate rules. Requests for appellate attorney fees are now governed by App.
R. 66(E).
22