Team Tires Plus, Ltd. v. Tires Plus, Inc.

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JAN 6 2005
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

TEAM TIRES PLUS, LTD.,

Plaintiff-Appellant,
v. No. 03-2300
TIRES PLUS, INC.,

Defendant-Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
(D.C. NO. CIV 01-1124 JP/RLP)

Michael G. Sanderson (Juan L. Flores, Sheehan, Sheehan & Stelzner, P.A.,
Albuquerque, New Mexico; J. Todd Timmerman and Duane A. Daiker, Shumaker,
Loop & Kendrick, LLP, Tampa, Florida, with him on briefs), Shumaker, Loop &
Kendrick, LLP, for Plaintiff-Appellant.

Edward Ricco (Travis R. Collier, DeWitt M. Morgan, and Matthew S. Wermager
with him on the brief), Rodey, Dickason, Sloan, Akin & Robb, P.A.,
Albuquerque, New Mexico, for Defendant-Appellee.

Before McCONNELL , HOLLOWAY , and TYMKOVICH , Circuit Judges.

McCONNELL , Circuit Judge.
 This is a trademark infringement and unfair competition suit under the

Lanham Act, 15 U.S.C. §§ 1114 and 1125. The plaintiff, Team Tires Plus, Ltd.,

owns the federally registered “Tires Plus” trademark; the defendant, Tires Plus

Inc., operates a retail tire store of the same name in Albuquerque, New Mexico.

The district court dismissed the plaintiff’s claims on summary judgment, and we

REVERSE.

I.

The plaintiff began using the name Tires Plus in 1981 for its business of

franchising and operating retail tire stores and automobile maintenance centers.

In 1983, it registered the Tires Plus trademark for “rendering technical aid and

assistance in the establishment of automobile tire stores and automobile

maintenance centers.”

In 1986, the defendant opened its first retail tire store, also named Tires

Plus, in the city of Albuquerque, New Mexico. The plaintiff first objected to this

allegedly infringing use through letters to the defendant in May of 1994 and July

of 1995. The defendant declined to cease operations under the Tires Plus name,

and the plaintiff, which then operated primarily as a Midwestern business in the

Minneapolis-St. Paul metropolitan area, decided to refrain from further action

until it established operations in New Mexico or a neighboring state.

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 In 2000, the plaintiff was acquired by Morgan Tires & Auto, Inc. and began

a national expansion under the Tires Plus mark. It now operates in twenty-four

states, including Colorado and Oklahoma, and states that expansion into New

Mexico is imminent. After further demands on the defendant to discontinue use

of the Tires Plus name proved fruitless, the plaintiff filed this trademark

infringement and unfair competition suit in September 2001. The district court

dismissed the plaintiff’s claims on summary judgment, and the plaintiff now

appeals.

II.

We review the district court’s grant of summary judgment de novo. King of

the Mountain Sports, Inc. v. Chrysler Corp., 185 F.3d 1084, 1089 (10th Cir.

1999). Summary judgment is appropriate only when “there is no genuine issue as

to any material fact” and “the moving party is entitled to a judgment as a matter

of law.” Fed. R. Civ. P. 56(c). “[W]e examine the factual record and reasonable

inferences therefrom in the light most favorable to the party opposing summary

judgment.” King of the Mountain, 185 F.3d at 1089.

The key inquiry in a trademark infringement case is the likelihood of

confusion between two similar marks. The Lanham Act provides that one party

infringes another’s trademark when it uses a similar mark in commerce and “such

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use is likely to cause confusion.” 15 U.S.C. § 1114. This Court has identified six

factors that serve as a guide for evaluating the likelihood of confusion:

(a) the degree of similarity between the marks;

(b) the intent of the alleged infringer in adopting its mark;

(c) evidence of actual confusion;

(d) the relation in use and the manner of marketing between the

goods or services marketed by the competing parties;

(e) the degree of care likely to be exercised by purchasers; and

(f) the strength or weakness of the marks.

King of the Mountain, 185 F.3d at 1089-90. As with so many of our multi-factor

tests, we have emphasized that this list of factors is not exhaustive, that no single

factor is dispositive, and that all factors must be considered as an interrelated

whole. Heartsprings, Inc. v. Heartspring, Inc., 143 F.3d 550, 554 (10th Cir.

1998). At all times, however, “the key inquiry is whether the consumer is ‘likely

to be deceived or confused by the similarity of the marks.’” Id. at 554 (quoting

Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 780 (1992)).

A.

The district court erred in two important respects, which we will address in

turn. First, the district court never analyzed the likelihood of confusion caused by

the defendant’s use of the Tires Plus name. Instead, it concluded that no jury

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could find trademark infringement because the defendant was not engaged in a

“competing use” of the plaintiff’s mark. Dist. Ct. Op. 5-6. According to the

district court, when parties use identical marks on different products there can be

no infringement because use of a mark on a different product is not a “competing

use.” Id. Thus, for example, a defendant who uses a plaintiff’s milk trademark

on its own competing brand of milk could infringe the plaintiff’s mark, but a

defendant who uses the same mark on its ice cream could not.

Applying this analysis to the present case, the district court easily found no

trademark infringement. The defendant uses the mark for retail tire sales; the

plaintiff’s mark, as interpreted by the district court, covers only business

consulting services. These are not competing uses of the mark, and therefore,

according to the district court, there can be no infringement.

The problem with this analysis, however, is that its basic premise—that a

trademark provides protection only when the defendant uses the mark on directly

competing goods—is no longer good law. Although this notion survived into the

early 1900s, 1 it has long since been superceded. Even the 1905 Federal

Trademark Act provided protection against the use of marks on non-competing

1
See, e.g., Borden Ice Cream Co v. Borden’s Condensed Milk Co., 201 F.
510, 514 (7th Cir. 1912) (finding no infringement of Borden milk by Borden ice
cream because the “secondary meaning of a name . . . has no legal significance,
unless the two persons make or deal in the same kind of goods”).

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goods of the “same descriptive class” as the goods covered by the mark. Act of

Feb. 20, 1905, 33 Stat. 724, repealed by Trademark (Lanham) Act of 1946 §

46(a), 60 Stat. 427, 444. And, as the plaintiff points out, federal courts have long

since expanded trademark rights to protect against the use of a mark on non-

competing but “related” goods—that is, “any [good] related in the minds of

consumers.” Appellant’s Br. at 16 (citing Brookfield Communications, Inc. v.

West Coast Entm’t Corp., 174 F.3d 1036, 1056 (9th Cir. 1999)); see also, e.g.,

Aunt Jemima Mills Co. v. Rigney & Co., 247 F. 407, 409-10 (2d Cir. 1917)

(finding infringement of Aunt Jemima’s trademark on pancake batter by Aunt

Jemima syrup on the ground that “goods, though different, may be so related as to

fall within” the protections of trademark law); Yale Elec. Corp. v. Robertson, 26

F.2d 972, 974 (2d. Cir. 1928) (finding infringement of Yale’s trademark on locks

by Yale flashlights under the sweeping proposition that “unless the borrower’s

use is so foreign to the owner’s as to insure against any identification of the two,

it is unlawful”). Thus, while “the relation in use . . . between the goods” is a

relevant factor in the likelihood-of-confusion analysis, King of the Mountain, 185

F.3d at 1089—reflecting the fact that use of a mark on a directly competitive

good is more likely to create confusion than use of the same mark on a distantly

related good—the district court was wrong to treat this factor as dispositive

simply because the defendant did not use the mark on competing goods.

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 B.

The district court’s second error concerns its interpretation of the scope of

the plaintiff’s trademark. The court found that the plaintiff’s mark—for

“rendering technical aid and assistance in the establishment of automobile tire

stores and automobile maintenance centers”—“cannot reasonably be considered to

cover franchising.” Dist. Ct. Op. 6. According to the district court, the services

specified in the registration “are more reasonably interpreted as being in the

nature of business consultation; something wholly distinct from franchising.” Id.

This interpretation of the plaintiff’s mark, in turn, bolstered the district court’s

conclusion that the defendant was not infringing the plaintiff’s mark.

One look at the USPTO’s standard definition of franchising, however,

demonstrates that the plaintiff’s mark must cover franchising. The USPTO

defines franchising as “offering technical assistance in the establishment and/or

operation of [indicate specific area of business, e.g., restaurants, shoe stores, car

washes].” 2 The services specified in the plaintiff’s registration are virtually

identical: “rendering technical aid and assistance in the establishment of [specific

area of business].” Also illuminating, though not necessary to the outcome, is the

2
This is the definition of franchising first adopted by the USPTO in 1991
and used until July 2004, when it was revised to read: “consultation and
assistance in business management, organization and promotion.” See U.S. Dept.
of Commerce, Patent and Trademark Office, Acceptable Identification of Goods
and Services Manual S-17, at http://www.uspto.gov/main/trademarks.htm.

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fact that the USPTO specifically recommended the language adopted by the

plaintiff. The plaintiff’s initial application for registration described the services

covered by the mark as “the establishment and/or operation of retail automobile

tire stores and automobile maintenance services.” The plaintiff also included as a

specimen of use its Uniform Franchise Offering Circular for its retail tire store

franchise system, thus indicating to the USPTO that its business included

franchising. Nevertheless, the USPTO rejected plaintiff’s initial application,

stating that the recitation of services was too “indefinite” and recommending that,

if accurate, the plaintiff should use the formulation it ultimately did: “rendering

technical aid and assistance in the establishment of automobile tire stores and

automobile maintenance centers.” This exchange confirms that the USPTO,

which was aware that the plaintiff was engaged in franchising, understood the

recommended formulation to cover those operations.

C.

Based on these two errors of law—that trademarks protect only against

directly competing uses of the mark and that the plaintiff’s mark does not cover

franchising—we reverse the district court’s grant of summary judgment for the

defendant. The appropriate question on remand is whether, considering the

guiding factors listed above, the defendant’s use of the name Tires Plus is likely

to cause confusion. Although the parties have briefed this issue on appeal, this

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Court “favor[s] remand to the district court for determination of [likelihood of

confusion] as a question of fact.” Beer Nuts, Inc. v. Clover Club Foods Co., 805

F.2d 920, 923 n. 2 (10th Cir. 1986). By way of guidance, however, we observe

that the relevant confusion under trademark law is not limited to confusion of

consumers as to the source of the goods, but also includes confusion as to

sponsorship or affiliation, such as a consumer’s mistaken belief that a retailer is

part of a larger franchising operation. See Amoco Oil Co. v. Rainbow Snow, 748

F.2d 556, 558 (10th Cir. 1984); King of the Mountain, 185 F.3d at 1090

(distinguishing between source and sponsorship confusion).

III.

The plaintiff raises one more argument on appeal, the substance of which

need not long detain us because it is procedurally barred. The plaintiff owns two

other trademarks we have not yet discussed. Both cover retail tire sales, and

therefore the district court could not dismiss the infringement claims on the faulty

ground that the defendant was not engaged in a competing use of the mark.

Instead, the district court dismissed the claims on the ground that the defendant

had established a prior-use defense under 15 U.S.C. § 1115(b). (The plaintiff had

registered the two marks at issue after the defendant opened its retail tire store in

1986.) The problem with this ruling, according to the plaintiff, is that the district

court failed to take into account an important fact: the defendant owns two retail

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tire stores, and only one of the stores had been opened before the plaintiff

registered its retail mark. The prior-use defense applies “only for the area in

which . . . continuous prior use is proved,” id., and the defendant never proved

that its second retail tire store was part of the same area as the first. Thus, it was

possible that the second retail tire store infringed the plaintiff’s mark, even if the

first was protected by the prior-use defense.

All of this is beside the point, however, because the plaintiff failed to raise

this argument in the district court. Although it claims that the district court called

for supplemental briefing on the issue after it granted the defendant’s motion for

summary judgment, this assertion is deceptive. The district court actually

requested supplemental briefing on the defendant’s counterclaim, namely, that the

plaintiff’s future use of the Tires Plus mark in New Mexico would infringe the

defendant’s common-law proprietary right in the Tires Plus mark. Accordingly,

the district court asked the defendant for a memorandum of law setting forth the

geographical scope of protection to which it claimed it was entitled. The plaintiff

used this as an opportunity to assert the present argument, which it had failed to

raise in the summary judgment motions on which the district court had already

ruled. Not surprisingly, when the defendant dropped its counterclaims, the

district court declined to address the plaintiff’s new arguments. “Since [this]

claim was not considered or ruled upon by the district court, we will not address it

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on appeal.” Burnette v. Dresser Industries, Inc., 849 F.2d 1277, 1285 (10th Cir.

1988).

IV.

For the foregoing reasons, we REVERSE the district court’s grant of

summary judgment and REMAND for further proceedings consistent with this

opinion.

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