Revised October 2, 1998
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 96-21102
_____________________
PEBBLE BEACH COMPANY; SEA PINES COMPANY INCORPORATED,
Plaintiffs-Appellees-Cross Appellants,
v.
TOUR 18 I LIMITED,
Defendant-Appellant-Cross Appellee.
--------------------------------------
RESORTS OF PINEHURST INCORPORATED,
Plaintiff-Appellee-Cross Appellant,
v.
GOLFORMS INCORPORATED; ET AL,
Defendants,
TOUR 18 I LIMITED,
Defendant-Appellant-Cross Appellee.
_________________________________________________________________
Appeals from the United States District Court
for the Southern District of Texas
_________________________________________________________________
September 14, 1998
Before REYNALDO G. GARZA, KING, and BENAVIDES, Circuit Judges.
KING, Circuit Judge:
Defendant Tour 18 I, Ltd. appeals the district court’s
judgment that it infringed and diluted the plaintiffs’ service
marks and one of the three golf-hole designs at issue, and it
challenges the district court’s injunction as vague, punitive,
and overly broad. See Pebble Beach Co. v. Tour 18 I, Ltd., 942
F. Supp. 1513 (S.D. Tex. 1996). Plaintiffs Pebble Beach Co.;
Resorts of Pinehurst, Inc.; and Sea Pines Co., Inc. cross-appeal,
arguing that (1) the district court erroneously held that two of
the three golf-hole designs at issue were not infringed or
diluted, (2) its injunction is inadequate to bar future
infringement, and (3) its denial of an accounting of profits and
an award of attorneys’ fees was erroneous. See id. We affirm
the district court’s judgment as modified below.
I. BACKGROUND1
Defendant-appellant-cross-appellee Tour 18 I, Ltd. (Tour 18)
owns and operates a public golf course in Humble, Texas named
“Tour 18.” Tour 18 began life as a limited partnership that
subsequently merged into Tour 18, Inc., which also owns and
operates a “Tour 18” public golf course in Flower Mound, Texas.
Tour 18 has created these two golf courses exclusively of golf
holes copied from famous golf courses across the country. The
Tour 18 course in Humble, Texas has three golf holes that are
1
For a more extensive recitation of the facts, see the
district court’s opinion. Pebble Beach Co. v. Tour 18 I, Ltd.,
942 F. Supp. 1513, 1526-36 (S.D. Tex. 1996).
2
copies of golf holes from golf courses owned and operated by
plaintiffs-appellees-cross-appellants Pebble Beach Co. (Pebble
Beach); Resorts of Pinehurst, Inc. (Pinehurst); and Sea Pines
Co., Inc. (Sea Pines) (collectively, the Plaintiffs).
A. The Plaintiffs
The Plaintiffs’ public courses are all part of expensive,
destination golf resorts, which advertise nationally and draw
customers from across the country, including Texas.2 All three
courses have hosted prestigious professional golf tournaments,
many of which are nationally televised, and have been written up
in numerous unsolicited articles, showering the courses with
praise. All three courses are consistently ranked among the top
golf courses in the United States.
Pebble Beach is located in Pebble Beach, California. Tour
18 copied the fourteenth hole from Pebble Beach Golf Links, one
of five courses that Pebble Beach operates in the area. The
course is located along the scenic shore of the Pacific Ocean and
has been in operation since 1919. Green fees to play the course
are $245 for the general public and $195 for guests staying at
the resort.
The district court described Pebble Beach’s par-five
fourteenth hole as a
2
Pebble Beach and Pinehurst presented evidence that
approximately five percent of their customers are Texas
residents.
3
dog-leg right that is ranked as Pebble Beach’s number
one handicap hole, identifying it as the most difficult
hole on the course. The 14th Hole is not adjacent to
the Pacific Ocean, but it provides golfers with a view
of the ocean from the tee box and while walking from
the tee box to the green. Its fairway is lined with
tall cypress and oak trees. One of the most notable
features of Hole 14 is the large sand bunker guarding
the left side of the green. In one of its brochures,
Tour 18 touts this bunker as “one of the most critical
bunkers in golf.”
Pebble Beach, 942 F. Supp. at 1528. While the golf course is
famous, the fourteenth hole is not famous among golfers. It is
not the course’s signature hole3 and is not emphasized in Pebble
Beach’s advertisements and promotional material. Pebble Beach
owns an incontestable federal service-mark registration4 in the
“Pebble Beach” mark for golfing services, but does not have a
3
“A golf course uses a ‘signature’ hole as a ‘trademark’
hole to advertise its course. Usually a signature hole has a
unique design or beauty that sets the hole apart from the rest of
the course and makes the hole memorable.” Pebble Beach, 942
F. Supp. at 1528 n.5.
4
Where the owner of a registered service mark uses the
mark in connection with the services specified for five
continuous years after the registration date, the mark is deemed
“incontestable.” See 15 U.S.C. § 1065. Once a mark is
incontestable, its registration constitutes conclusive evidence
of the registrant's right to exclusive use of the mark in
commerce for the services specified, subject only to the seven
defenses enumerated in 15 U.S.C. § 1115(b). See Soweco, Inc. v.
Shell Oil Co., 617 F.2d 1178, 1184 (5th Cir. 1980). In contrast,
where a registered service mark has not achieved
incontestability, its registration constitutes prima facie
evidence of the registrant's exclusive right to use the mark in
commerce for the services specified in the registration. See id.
A contestable registration is subject to “any legal or equitable
defense or defect, . . . which might have been asserted if such
mark had not been registered.” 15 U.S.C. § 1115(a); see also
Soweco, 617 F.2d at 1184.
4
federal trademark registration for, or a copyright or design or
utility patent on, the design of the fourteenth hole.
Pinehurst is located in Pinehurst, North Carolina. Tour 18
copied the third hole from the Pinehurst No. 2 course, one of
seven courses Pinehurst operates in the area. The Pinehurst
No. 2 course was designed by Donald Ross, who is considered one
of the greatest golf-course architects. The No. 2 course is
considered to be his masterpiece. The first nine holes of the
course began operation in 1903. Green fees are $145.
The Pinehurst No. 2 course’s third hole is a par four with
“a natural area of sand interspersed with clumps of wire grass,
which is indigenous to the local area, that extends between 200
and 300 yards along the right side of the fairway. Adjacent to
the natural area is a sand cart path.” Id. at 1529. While the
golf course is famous among golfers, the third hole is not. The
third hole is not the course’s signature hole, and Pinehurst does
not emphasize the hole in its advertisements or other promotional
material. Pinehurst owns a federal service-mark registration in
the “Pinehurst” mark for golf services, but does not have a
federal trademark registration for, or copyright or design or
utility patent on, the design of the third hole.
Sea Pines is located on Hilton Head Island, South Carolina.
Tour 18 copied the eighteenth hole from Harbour Town Golf Links,
the most famous of Sea Pines’s golf courses. The course was
designed by Pat Dye, a preeminent golf-course designer, and Jack
5
Nicklaus, who is considered to be one of the greatest golfers of
all time and is also an accomplished golf-course designer. The
course is distinguished by the presence of a lighthouse behind
the eighteenth green. The course has been in operation since
1969, and construction of the lighthouse was completed in 1970.
Green fees are $164.
The lighthouse that can be seen from Harbour Town’s par-
three eighteenth hole
is octagonal in shape with red and white striping.
While the lighthouse is visible from the tee box and
fairway of the 18th Hole, it is not physically on the
golf course. The lighthouse is actually situated 100
feet from the 18th green across a small inlet of water
leading to the Harbour Town marina. . . . [T]here was
testimony at trial that because of the location of the
lighthouse, many golfers use it as a target to line up
their tee shots. However, according to [the developer
of the course], his placement of the lighthouse in
relation to the 18th hole was not to create a target
for golfers, but to guarantee exposure for the
lighthouse on television during professional
tournaments.
Id. at 1530. Sea Pines’s predecessors built the lighthouse and
later sold the physical structure to another company in 1984,
which then sold it to Prudential Bache-Fogelman Properties
(Fogelman). Sea Pines entered into a licensing agreement with
Fogelman to allow Fogelman to use depictions of the lighthouse.
The eighteenth hole of Harbour Town Golf Links is one of the
most famous holes in golf and is the course’s signature hole.
Sea Pines emphasizes the hole in Harbour Town’s advertisements
and promotional materials. The lighthouse’s association with the
6
hole has led to the hole commonly being referred to as the
“Lighthouse Hole.” Sea Pines does not own a federal service-mark
registration for the “Harbour Town” mark. The design of the
lighthouse is not protected by a copyright or design or utility
patent. Sea Pines does not own a federal service-mark
registration for the lighthouse for golfing services. The design
of the eighteenth hole is not protected by a copyright or design
or utility patent; nor does Sea Pines own a federal trademark
registration for the design of the eighteenth hole.
B. The Defendant
In 1992, Tour 18 opened its golf course in Humble, Texas.
The course consists of a collection of replica golf holes from
sixteen famous golf courses. The first hole is a replica of the
eighteenth hole of Harbour Town Golf Links including a smaller
scale, nonfunctioning replica lighthouse. The third hole is a
replica of the third hole of the Pinehurst No. 2 course, and the
thirteenth hole is a replica of the fourteenth hole of Pebble
Beach Golf Links. The Flower Mound, Texas Tour 18 course has a
replica of the Harbour Town eighteenth hole including lighthouse
as its seventh hole. These replica golf holes were created using
topographic maps procured from third parties and videotapes of
the golf holes.
Tour 18 markets itself as “America’s Greatest 18 Holes.” It
places advertisements in regional and national publications. In
7
advertisements and promotional materials, Tour 18 identifies the
golf holes that it has copied by using the trademarks of the
original courses and refers to the golf holes by common nicknames
like the “Lighthouse Hole,” the “Blue Monster,” and “Amen
Corner.” It uses the Plaintiffs’ marks, “Pebble Beach,”
“Pinehurst,” “Harbour Town,” and depictions of the lighthouse,
extensively in its advertisements and promotional materials.
These materials regularly include pictures of Tour 18’s replica
lighthouse. The Tour 18 scorecard includes the Plaintiffs’ marks
to identify the replica golf holes. For example, “Pebble Beach
14” is printed next to the number 13. A picture of the replica
lighthouse appears on the back of the scorecard. Tour 18’s
yardage guide has a picture of its replica lighthouse on the
cover and contains descriptions of the golf holes and the history
of each copied golf hole. Signage at each hole indicates the
golf hole that has been copied and describes the original hole.
The sign at the Harbour Town replica refers to it as “The
Lighthouse Hole.” Additionally, Tour 18 uses the Plaintiffs’
marks on its menu at its restaurant, offering “The Harbour Town”
hamburger, “The Pinehurst” tuna salad, and “Pebble Beach” French
toast.
Tour 18 includes disclaimers on the course and in some
advertisements and promotional material. On its scorecard and in
its yardage guide, Tour 18 includes the following disclaimer:
“The design of this course was inspired by great holes from 16
8
different golf courses. None of the courses endorse, sponsor, or
are affiliated with Tour 18.” The same disclaimer is on a sign
at the first tee. Additional similar disclaimers are on signs at
each golf hole stating, for example, “The design of this hole was
inspired by the famous 14th Hole at Pebble Beach. Tour 18 is not
affiliated with, endorsed, or sponsored by Pebble Beach.” A
promotional brochure with pictures of the replica golf holes
contains the Plaintiffs’ marks on the pictures of each replica
golf hole and a notice below the last photo stating: “Actual
Photographs taken at TOUR 18-Houston.” However, several
advertisements and promotional materials do not contain any
disclaimers. For example, an issue of Metro Houston Golfer has a
picture of the replica lighthouse on its cover and a detailed
Tour 18 advertisement inside, but includes no disclaimer in the
magazine. Also, a Tour 18 mailer which includes a large drawing
of the replica lighthouse with the phrase “Harbour Town Golf
Links-the Lighthouse Hole” without any disclaimer.
Tour 18 charges green fees of $55 during the week and $75 on
weekends. While not as expensive as the green fees at the
Plaintiffs’ courses, these green fees are higher than the average
green fees at comparable daily-fee courses in the Houston area.
C. District Court Proceedings
The Plaintiffs filed suit against Tour 18 asserting federal
claims under the Lanham Act, 15 U.S.C. §§ 1051-1127, for service-
9
mark and trade-dress infringement, unfair competition, and false
advertising. See Pebble Beach, 942 F. Supp. at 1526. Under
Texas law, the Plaintiffs asserted claims for common-law unfair
competition, conversion, and civil conspiracy and for service-
mark and trade-dress dilution under the Texas anti-dilution
statute, see TEX. BUS. & COM. CODE ANN. § 16.29 (Vernon Supp. 1998).
Pebble Beach also asserted a claim for copyright infringement
based upon maps used by Tour 18. See Pebble Beach, 942 F. Supp.
at 1526. Tour 18 counterclaimed under Texas common law for
unfair competition, interference with existing and prospective
business relations, and civil conspiracy. See id.
After a bench trial, the district court issued an
excellent opinion and entered judgment for the Plaintiffs on
their infringement, dilution, and unfair competition claims in
relation to Tour 18’s use of their names and the image of the
lighthouse, and the court entered judgment for Sea Pines in
relation to Tour 18’s copying of its golf-hole design. See id.
at 1554, 1561, 1567. The district court entered judgment for
Tour 18 on the remainder of the Plaintiffs’ claims and entered
judgment for the Plaintiffs on all of Tour 18’s counterclaims.
See id. at 1561-63, 1567-71. The district court denied the
Plaintiffs’ requests for damages, an accounting of profits, and
attorneys’ fees, but it entered an injunction against Tour 18
requiring it to (1) cease using Pebble Beach and Pinehurst’s
marks, except to inform the public of the golf holes it copied;
10
(2) cease using Sea Pines’s marks and images of the lighthouse,
without any exceptions; (3) remove the replicas of Sea Pines’s
lighthouse from both of its courses; (4) include a conspicuous
disclaimer in all advertisements, promotional material, and
informational guides; (5) maintain the disclaimers on the course;
and (6) make no claims of use of original blueprints, maps, or
other data in the construction of the course without a
disclaimer. See id. at 1571-78. The district court has
partially stayed the injunction pending appeal in relation to the
requirement of removing the replica lighthouses. Tour 18 and the
Plaintiffs now appeal.
II. DISCUSSION
Tour 18 appeals the district court’s judgment that it
infringed and diluted the Plaintiffs’ service marks and Sea
Pines’s trade dress and that it competed unfairly. Tour 18 also
appeals the district court’s injunction, claiming that it is
overly broad, punitive, and vague. The Plaintiffs cross-appeal
the district court’s judgment that Tour 18 did not infringe or
dilute Pebble Beach and Pinehurst’s trade dress, its injunction
as providing inadequate relief, and its denial of an accounting
of profits and an award of attorneys’ fees. We consider each
issue in turn.
A. Infringement
For the Plaintiffs to prevail on their service-mark and
11
trade-dress infringement claims, they must show (1) that the mark
or trade dress, as the case may be, qualifies for protection and
(2) that Tour 18’s use of the mark or trade dress creates a
likelihood of confusion in the minds of potential consumers. See
Taco Cabana Int’l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1117-
18 (5th Cir. 1991), aff’d, 505 U.S. 763 (1992); Security Ctr.,
Ltd. v. First Nat’l Sec. Ctrs., 750 F.2d 1295, 1298 (5th Cir.
1985). A trademark or service mark is “any word, name, symbol,
or device or combination thereof” used by a person to “identify
and distinguish his or her goods [or services], including a
unique product [or service],” from the goods or services of
another and “to indicate the source of the goods [or services],
even if that source is unknown.” 15 U.S.C. § 1127. “‘Trade
dress’ refers to the total image and overall appearance of a
product” and “may include features such as the size, shape,
color, color combinations, textures, graphics, and even sales
techniques that characterize a particular product.” Sunbeam
Prods., Inc. v. West Bend Co., 123 F.3d 246, 251 & n.3 (5th Cir.
1997), cert. denied, 118 S. Ct. 1795 (1998). With trade dress,
the question is whether the “combination of features creates a
distinctive visual impression, identifying the source of the
product.” Id. at 251 n.3.
The same tests apply to both trademarks and trade dress to
determine whether they are protectible and whether they have been
infringed, regardless of whether they are registered or
12
unregistered. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S.
763, 768-70, 773-74 (1992); see also Sunbeam Prods., 123 F.3d at
251 n.4. Both are protectible if they are inherently distinctive
or have achieved secondary meaning in the public’s mind--i.e., if
the trade dress or mark “‘has come through use to be uniquely
associated with a specific source.’” Sunbeam Prods., 123 F.3d at
253 (quoting Two Pesos, 505 U.S. at 766 n.4); see also Sicilia Di
R. Biebow & Co. v. Cox, 732 F.2d 417, 425 n.4 (5th Cir. 1984).5
However, trade dress is not protectible and cannot be distinctive
if it is functional--i.e., if the design “is one of a limited
number of equally efficient options available to competitors and
free competition would be unduly hindered by according the design
trademark protection.” Two Pesos, 505 U.S. at 775; see also
Sicilia Di R. Biebow, 732 F.2d at 428-29. Once a plaintiff’s
mark or trade dress is found to be protectible, liability for
trademark and trade-dress infringement hinges upon whether a
likelihood of confusion exists in the minds of potential
consumers as to the source, affiliation, or sponsorship of the
defendant’s product or service due to the use of the allegedly
infringing marks or trade dress. See Society of Fin. Exam’rs v.
National Ass’n of Certified Fraud Exam’rs, Inc., 41 F.3d 223, 227
(5th Cir. 1995); Oreck Corp. v. U.S. Floor Sys., Inc., 803 F.2d
166, 170 (5th Cir. 1986).
5
See footnote 4, supra, for the procedural effect of
registration upon a mark’s protectibility.
13
1. Standard of review
We review the district court’s conclusions of law de novo
and its findings of fact for clear error. See Joslyn Mfg. Co. v.
Koppers Co., 40 F.3d 750, 753 (5th Cir. 1994). Under the clear
error standard, we will reverse the district court only if we
have a “definite and firm conviction that a mistake has been
committed.” B.H. Bunn Co. v. AAA Replacement Parts Co., 451 F.2d
1254, 1260 (5th Cir. 1971) (internal quotation marks omitted).
However, “the ‘clearly erroneous’ standard of review does not
insulate factual findings premised upon an erroneous view of
controlling legal principles.” Johnson v. Hospital Corp. of Am.,
95 F.3d 383, 395 (5th Cir. 1996) (citing Johnson v. Uncle Ben’s,
Inc., 628 F.2d 419, 422 (5th Cir. 1980), vacated on other
grounds, 451 U.S. 902 (1981)). The functionality,
distinctiveness, or secondary meaning of a mark or trade dress
and the existence of a likelihood of confusion are questions of
fact. See Elvis Presley Enters. v. Capece, 141 F.3d 188, 196
(5th Cir. 1998) (likelihood of confusion); Epic Metals Corp. v.
Souliere, 99 F.3d 1034, 1037 (11th Cir. 1996) (functionality);
Security Ctr., 750 F.2d at 1297-98 (distinctiveness); American
Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 13
(5th Cir. 1974) (secondary meaning); see also 1 J. THOMAS MCCARTHY,
MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 7:71 (4th ed. 1998)
[hereinafter MCCARTHY ON TRADEMARKS] (functionality).
14
2. Protectible marks and trade dress
The district court considered the Plaintiffs’ marks, “Pebble
Beach,” “Pinehurst,” and “Harbour Town,” and the image of the
lighthouse and found them to be protectible. See Pebble Beach,
942 F. Supp. at 1537-41. In the case of the design of the three
golf holes, the district court determined that the configuration
of a golf hole is nonfunctional, but it found that only Sea
Pines’s golf-hole design was protectible. See id. at 1555-61.
Tour 18 challenges only the district court’s findings that the
Sea Pines’s golf-hole design is protectible and that Sea Pines
has protectible rights in the lighthouse. Tour 18 does not
challenge the district court’s finding that the Plaintiffs’ other
marks are protectible. The Plaintiffs challenge the district
court’s finding that Pebble Beach and Pinehurst’s golf-hole
designs are not protectible. We consider the golf-hole designs
and the lighthouse in turn.
a. golf-hole designs
Turning first to the district court’s traditional trade-
dress analysis of Tour 18's challenge to the protectibility of
the designs of the Plaintiffs’ golf holes, Tour 18 attacks the
district court’s findings that a golf-hole design is
nonfunctional and that Sea Pines’s golf-hole design is
protectible in that it is inherently distinctive or alternatively
has acquired secondary meaning. The Plaintiffs challenge the
15
district court’s findings that Pebble Beach and Pinehurst’s golf
holes are not inherently distinctive and are therefore
unprotectible, but they do not challenge its finding that neither
golf-hole design has acquired secondary meaning.
i. functionality
The Lanham Act protects only nonfunctional distinctive trade
dress; this limitation “serves to assure that competition will
not be stifled by the exhaustion of a limited number of trade
dresses.” Two Pesos, 505 U.S. at 775. “[A] design is legally
functional, and thus unprotectible, if it is one of a limited
number of equally efficient options available to competitors and
free competition would be unduly hindered by according the design
trademark protection.” Id. (citing Sicilia Di R. Biebow, 732
F.2d at 426); see also Sunbeam Prods., 123 F.3d at 251 n.6. “The
ultimate inquiry . . . is whether characterizing a feature or
configuration as protected will hinder competition or impinge
upon the rights of others to compete effectively in the sale of
goods.” Id. at 255 (internal quotation marks omitted) (quoting
Sicilia Di R. Biebow, 732 F.2d at 429). Thus, functionality
“secures for the marketplace a latitude of competitive
alternatives,” Taco Cabana, 932 F.2d at 1119, and “balanc[es]
the interest in facilitating innovation against the interest in
fostering competition in the free market,” Sunbeam Prods., 123
F.3d at 255.
A collection of functional features in a product design does
16
not necessarily make the combination of those features functional
and therefore unprotectible. See Sunbeam Prods., 123 F.3d at
256; Taco Cabana, 932 F.2d at 1119. Where the trade dress of a
product consists of a particular configuration of features, the
functionality of the design turns on “whether its design as a
whole is superior to other designs, not on whether its component
features viewed individually each have a function.” Vaughan Mfg.
Co. v. Brikam Int’l, Inc., 814 F.2d 346, 350 (7th Cir. 1987)
(emphasis added). In determining whether competition would be
stifled, we have considered whether the feature or combination of
features is “superior or optimal in terms of engineering, economy
of manufacture, accommodation of utilitarian function or
performance.” Sicilia Di R. Biebow, 732 F.2d at 429; see also
Sunbeam Prods., 123 F.3d at 255. The Supreme Court has stated
the question more generally as whether the trade dress is
“‘essential to the use or purpose of the article or if it affects
the cost or quality of the article,’ that is, if exclusive use of
the feature would put competitors at a significant non-
reputation-related disadvantage.” Qualitex Co. v. Jacobson
Prods. Co., 514 U.S. 159, 165 (1995) (quoting Inwood Lab., Inc.
v. Ives Lab., Inc., 456 U.S. 844, 850 n.10 (1982)).
The district court determined that the golf-hole designs at
issue here are nonfunctional, noting that there is an “unlimited
number of alternative designs” to the Plaintiffs’ golf-hole
designs and that no evidence indicated that the Plaintiffs’
17
designs are superior to the many available alternatives. See
Pebble Beach, 942 F. Supp. at 1556. In finding that competition
would not be hindered by protecting the Plaintiffs’ golf-hole
designs, the district court noted that one of Tour 18’s experts
testified that protecting the design of the golf holes from
copying would not unduly injure competition and that Tour 18’s
director of marketing testified that a golf course need not copy
golf-hole designs in order to be competitive in the Houston
market. See id.
Tour 18 first attacks the district court’s finding that golf
holes are nonfunctional by defining its product as a golf course
that provides replicas of famous golf holes. It claims that such
a product requires that it be able to copy famous golf holes in
order to have any commercial success in delivering its product: a
course copying famous golf holes. While Tour 18’s product may be
a golf course the commercial success of which has been based upon
copying golf holes, it nevertheless is still just a collection of
golf holes. Features that contribute to the commercial success
of a product are not thereby necessarily classed as functional.
In Sicilia Di R. Biebow, this court rejected the argument that
functionality should be defined in terms of commercial success or
marketing effectiveness because such a definition would allow a
second comer to copy the protectible trade dress of a product
whenever the product became successful and preferred by
consumers. See 732 F.2d at 428. Tour 18 argues that in Qualitex
18
the Supreme Court overruled this holding with its citation of
Justice White’s concurrence in Inwood Laboratories, which stated
that “[a] functional characteristic is an important ingredient in
the commercial success of the product.” See Qualitex, 514 U.S.
at 165 (internal quotation marks omitted) (quoting Inwood Lab.,
456 U.S. at 863 (White, J., concurring in the result)). However,
these two statements are not inconsistent. Justice White’s
statement is merely an acknowledgment that a functional feature
is by definition important to the commercial success of a product
because without the functional feature a viable, competitive
product could not be produced and because competition would be
injured if such a feature were protectible by trademark law. The
converse, however, is not true. To define functionality based
upon commercial success would allow the second comer to trade on
the first comer’s goodwill, purely because it would be easier to
market his product and not because he could not produce a viable,
competitive product. Such a rule does not promote innovation,
nor does it promote competition, leaving no reason to narrow
trademark protection. The logical extension of this argument
would practically obliterate trademark protection for product
design because a defendant could always argue that its innovative
product is a widget that provides a replica of the most popular
or most prestigious widget on the market, thus requiring that the
defendant be allowed without further analysis to copy the
plaintiff’s widget.
19
Tour 18 then argues that every feature of a golf hole and
how it is configured affects how the hole plays, making any golf-
hole design functional. Without citing any authority, Tour 18
urges a rule that a feature or configuration of features is
functional unless “a specific design can be made another way
without affecting use, purpose, cost, quality or commercial
desirability.” This rule is much broader than any applied in
this circuit or by the Supreme Court and could conceivably render
any design functional because any change would undoubtedly
somehow affect cost, use, or commercial desirability.
Additionally, the Supreme Court limited its statement that trade
dress is functional if the trade dress is essential to the use or
purpose of the product or affects the cost or quality of the
product with the following language: “that is, if exclusive use
of the features [or combination of features] would put
competitors at a significant non-reputation-related
disadvantage.” Qualitex, 514 U.S. at 165. This language makes
it clear that any effect must be great enough to significantly
disadvantage competitors in ways other than consumer preference
for a particular source.
Next, Tour 18 contends that Qualitex imposes as a threshold
inquiry in the functionality analysis the question of whether the
trade dress serves “any other significant function.” See 514
U.S. at 166. It argues that this question must be considered
before concerns of competition and available alternative designs
20
can be addressed. This is a misreading of Qualitex, which held
that, in certain circumstances, color can be a registerable
trademark. See id.. Where the Supreme Court uses the language
“without serving any other significant function,” it is stating
that color alone may sometimes meet the basic legal requirements
for use as a trademark. See id. at 166 (citing PATENT AND TRADEMARK
OFFICE, U.S. DEP’T OF COMMERCE, TRADEMARK MANUAL OF EXAMINING PROCEDURE
§ 1202.04(e), at 1202-13 (2d ed. May 1993) (approving
registration of a color that indicates source, provided that
“there is [no] competitive need for colors to remain available in
the industry” and the color is not “functional”), and 1 J.
MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION §§ 3.01[1], 7.26,
at 3-2, 7-113 (3d ed. 1994) (noting that the requirements for
protecting a word or symbol as a trademark are that it be (1) a
symbol (2) used as a mark (3) to identify and distinguish one’s
goods, but that it not be functional)). This language in
Qualitex, as supported by its accompanying citations, is just
another way of stating that functionality, with its consideration
of the needs of competition, bars Lanham Act protection to
functional features and configurations, which by definition serve
a significant function other than source-identification. As
noted earlier, functionality takes into account whether
protecting a particular feature or combination of features would
“hinder competition or impinge upon the rights of others to
compete effectively.” See Sunbeam Prods., 123 F.3d at 255
21
(internal quotation marks omitted). Therefore, Qualitex does not
create a threshold inquiry in the functionality analysis.
Additionally, we have held that nonfunctional trade dress may
still have some utility--i.e., serve a function other than
source-identification--and still be legally nonfunctional. See
Sicilia Di R. Biebow, 732 F.2d at 429.
Having rejected Tour 18’s challenges to the district court’s
analysis, and after reviewing the evidence, we find that the
district court did not clearly err in finding that the
Plaintiffs’ golf-hole designs are nonfunctional.6
ii. distinctiveness
Trademarks and trade dress are distinctive and protectible
if they serve as indicators of source. See Taco Cabana, 932 F.2d
at 1119-20. Trademarks and trade dress are classified into the
following categories: (1) generic, (2) descriptive, (3)
6
Tour 18 also argues that the district court failed to
consider the aesthetic functionality of a golf hole. This
circuit has rejected the doctrine of aesthetic functionality.
See Sno-Wizard Mfg., Inc. v. Eisemann Prods. Co., 791 F.2d 423,
426 n.3 (5th Cir. 1986); Sicilia Di R. Biebow, 732 F.2d at 428-
29. Tour 18 argues that the Supreme Court acknowledged aesthetic
functionality in Qualitex with its reference to aesthetic
functionality and the Restatement (Third) of Unfair Competition.
See Qualitex, 514 U.S. at 170 (citing RESTATEMENT (THIRD) OF UNFAIR
COMPETITION § 17 cmt. c., at 175-76 (1995)). However, the ultimate
inquiry in aesthetic functionality is the same as utilitarian
functionality: “‘whether the recognition of trademark rights
would significantly hinder competition.’” Id. (quoting
RESTATEMENT, supra, § 17 cmt. c.). Without deciding the viability
of aesthetic functionality in this circuit, we note that, based
upon the testimony of Tour 18’s witnesses that protecting the
golf-hole designs would not burden competition, the golf-hole
designs at issue are not aesthetically functional.
22
suggestive, (4) arbitrary, or (5) fanciful. See Two Pesos, 505
U.S. at 768 (citing Abercrombie & Fitch Co. v. Hunting World,
Inc., 537 F.2d 4, 9 (2d Cir. 1976)); Sunbeam Prods., 123 F.3d at
252. The last three categories--suggestive, arbitrary, and
fanciful--are inherently distinctive, requiring no additional
showing to be protectible, “‘because their intrinsic nature
serves to identify a particular source of a product.’” Sunbeam
Prods., 123 F.3d at 252 (quoting Two Pesos, 505 U.S. at 768). A
mark or trade dress is descriptive if it “identifies a
characteristic or quality of an article or service, such as its
color, odor, function, dimensions, or ingredients.” Zatarains,
Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 790 (5th Cir.
1983) (citations and internal quotation marks omitted). A
descriptive mark or trade dress is protectible only when it has
“acquir[ed] a secondary meaning in the minds of the consuming
public.” Id. A generic mark or trade dress is never protectible
because it connotes “a particular genus or class of which an
individual [product] or service is but a member . . . , rather
than the more individualized characteristics of a particular
product.” Id. (citations and internal quotation marks omitted).
The district court found that Pebble Beach and Pinehurst’s
golf-hole designs were not inherently distinctive because they
were variations on commonplace themes in the design of golf
holes. See Pebble Beach, 942 F. Supp. at 1557-58. Sea Pines’s
golf-hole design, however, is inherently distinctive according to
23
the district court because the incorporation of the lighthouse
adds an “arbitrary source-identifying feature[].” Id. at 1558.
Additionally, the district court determined that Sea Pines’s
golf-hole design had acquired secondary meaning in the public’s
mind. See id. at 1561. As to Pebble Beach and Pinehurst’s golf-
hole designs, the district court found no evidence to support a
conclusion that either design had acquired secondary meaning.
See id. at 1560-61.
The Plaintiffs argue that the district court should have
found Pebble Beach and Pinehurst’s golf holes to be inherently
distinctive. However, Pebble Beach and Pinehurst’s golf-hole
designs do not fall into any of the three inherently distinctive
classifications. Arbitrary and fanciful marks or trade dress
“bear no relationship to the products or services to which they
are applied.” Zatarains, 698 F.2d at 791. The trade dress of
Pebble Beach and Pinehurst’s golf holes is a configuration of
commonplace features of a golf hole and therefore does bear a
relationship to the product, a golf hole. A suggestive mark or
trade dress “suggests, rather than describes, some particular
characteristic of the goods or services to which it applies and
requires the consumer to exercise the imagination in order to
draw a conclusion as to the nature of the goods and services.”
Id. The configurations of the features in Pebble Beach and
Pinehurst’s golf-hole designs create golf holes and nothing more.
They require no exercise of one’s imagination to realize that one
24
is viewing a golf hole. Therefore, the district court did not
clearly err in finding that Pebble Beach and Pinehurst’s golf-
hole designs were not inherently distinctive.7
Tour 18 argues that Sea Pines’s golf-hole design is not
protectible because a golf hole’s trade dress is generic and
because, even if it is descriptive, the Plaintiffs failed to
present evidence that demonstrates that Sea Pines’s trade dress
has acquired secondary meaning. In general, a golf hole’s trade
dress may be generic, but Sea Pines’s inclusion of the
distinctive lighthouse in the design of the golf hole takes it
out of the generic classification because it emphasizes the
“individualized characteristics” of this particular golf-hole
7
The Plaintiffs argue that their golf-hole designs are
unique and therefore inherently distinctive, urging us to equate
uniqueness with inherent distinctiveness. However, something
that is inherently distinctive is unique, but the converse is not
necessarily true. A product may be unique and yet fail to be
sufficiently distinctive to indicate source. See 1 MCCARTHY ON
TRADEMARKS, supra, § 8:13, at 8-35 to 8-36 (“A product or package
feature is not inherently distinctive merely because there is no
other product on the market that looks exactly the same.”). If
uniqueness were the test, then
[p]resumably, it could be said about the trade dress of
any new product that no competitive product combines
precisely the same elements in its trade dress. . . .
[Such a test] essentially would require a finding of
inherent distinctiveness whenever a new product enters
the market.
Turtle Wax, Inc. v. First Brands Corp., 781 F. Supp. 1314, 1321
(N.D. Ill. 1991) (citing Blue Coral, Inc. v. Turtle Wax, Inc.,
664 F. Supp. 1153, 1163 (N.D. Ill. 1987)); see also Duraco
Prods., Inc. v. Joy Plastic Enters., 40 F.3d 1431, 1447-48 (3d
Cir. 1994). Thus, uniqueness alone cannot be the test for
inherent distinctiveness.
25
design rather than connoting golf holes in general. See
Zatarains, 698 F.2d at 790. Therefore, the district court did
not clearly err in finding that Sea Pines’s golf-hole design was
not generic.
As Sea Pines’s golf-hole design is not generic, it is
protectible if it has acquired secondary meaning.8 That a
particular mark or trade dress has acquired secondary meaning can
be proven by a consideration of the following evidence: (1)
length and manner of use of the mark or trade dress, (2) volume
of sales, (3) amount and manner of advertising, (4) nature of use
of the mark or trade dress in newspapers and magazines, (5)
consumer-survey evidence, (6) direct consumer testimony, and (7)
the defendant’s intent in copying the trade dress. See
RESTATEMENT, supra, § 13 cmt. e; see also Duraco Prods., 40 F.3d at
1452; Zatarains, 698 F.2d at 795; 2 MCCARTHY ON TRADEMARKS, supra,
§ 15:30. While each of these types of evidence alone may not
prove secondary meaning, in combination they may indicate that
consumers consider the mark or trade dress to be an indicator of
source. See Zatarains, 698 F.2d at 795. In considering this
evidence, the focus is on how it demonstrates that the meaning of
8
The district court found that the inclusion of the
lighthouse made such a significant difference that Sea Pines’s
golf-hole design is inherently distinctive and thus by definition
not generic. See Pebble Beach, 942 F. Supp. at 1558-59. We need
not consider whether Sea Pines’s golf-hole design is inherently
distinctive because we affirm infra the district court’s finding
that the golf-hole design has acquired secondary meaning. See
Sunbeam Prods., 123 F.3d at 252-53.
26
the mark or trade dress has been altered in the minds of
consumers. See id. For example, in the case of advertising,
spending substantial amounts of money does not of itself cause a
mark or trade dress to acquire secondary meaning, but
advertisements may emphasize “the source significance of the
designation through prominent use of the [mark or trade dress]”
and are therefore likely to alter the meaning of the mark or
trade dress in the minds of consumers. See RESTATEMENT, supra,
§ 13 cmt. c, at 110.
The district court based its finding of secondary meaning
upon Sea Pines’s extensive advertising; unsolicited publicity of
the trade dress of Sea Pines’s golf hole, including the
lighthouse, in golf publications; and Tour 18’s intent to copy
and use the trade dress prominently in its advertising. See
Pebble Beach, 942 F. Supp. at 1559-61. Tour 18 argues that the
district court erred in relying upon the advertising and
publicity because they touted the design of the golf hole for its
playing qualities and not as a designation of source. While some
of Sea Pines’s advertising and publicity does promote the
playability of the golf hole, the trade dress of Sea Pines’s golf
hole, including the lighthouse, is prominently used in the
advertising and the publicity of the Harbour Town Golf Links in a
manner other than simply to promote the playing qualities of the
golf hole. See id. at 1559-60. Therefore, the district court
did not clearly err in finding that Sea Pines’s trade dress had
27
acquired secondary meaning.9
b. the lighthouse
Tour 18 does not challenge the protectibility of depictions
of the lighthouse; rather, it challenges Sea Pines’s rights in
the lighthouse. Tour 18 argues that Sea Pines no longer has any
9
Tour 18 also argues that it presented survey evidence
indicating that the Plaintiffs’ golf-hole designs had not
acquired secondary meaning in the minds of consumers. Through
the testimony of an expert, Tour 18 presented a survey of the
public’s reactions to pictures of the Plaintiffs’ golf holes.
The survey was entitled “An Investigation of the ‘Inherent
Distinctiveness’ of Selected Golf Holes.” During its expert’s
testimony about the survey, Tour 18’s counsel asked if the expert
had an opinion as to whether Pebble Beach or Pinehurst’s golf-
hole designs had acquired secondary meaning. Tour 18’s counsel
did not ask the same question about Sea Pines’s golf-hole design.
This omission implies either that the survey was not
probative in relation to whether Sea Pines’s golf-hole design had
acquired secondary meaning or that the survey would have
supported a finding of secondary meaning, an inference not in
Tour 18’s interests. Tour 18 chose not to present the survey as
probative of whether Sea Pines’s trade dress had acquired
secondary meaning as evidenced by the omitted question and by its
failure to argue no secondary meaning for the Sea Pines’s golf-
hole design in its closing argument, and we therefore do not find
error in the district court’s failure to factor in the survey as
to this issue. Additionally, the survey showed that nine percent
of active golfers surveyed identified Sea Pines’s golf hole in a
way indicating source--e.g., “legendary light house hole,” “a
golf course in Hilton Head, S.C.,” and “18th hole harbor [sic]
town.” While this may not be enough to establish secondary
meaning on its own, see, e.g., Roselux Chem. Co. v. Parsons
Ammonia Co., 299 F.2d 855, 862 (C.C.P.A. 1962) (finding 10% to be
insufficient to establish secondary meaning); Zippo Mfg. Co. v.
Rogers Imports, Inc., 216 F. Supp. 670, 689-90 (S.D.N.Y. 1963)
(finding 25% to be insufficient); see also 2 MCCARTHY ON TRADEMARKS,
supra, § 15:45 n.9 (cautioning against using 25% as a benchmark),
it does not negate the showing made by the Plaintiffs,
establishing that Sea Pines’s trade dress has acquired secondary
meaning through evidence of Sea Pines’s advertising, unsolicited
publicity, and Tour 18’s intent.
28
rights in the lighthouse because (1) it does not own the
lighthouse and (2) by its course of conduct, it has abandoned the
lighthouse as a mark. In response to the first argument, we
adopt the reasoning of the district court:
The Lanham Act does not require a party to “own” a
word, symbol, or other identifying mark before it may
be granted protection from infringement. Rather, all
that is required is that a party “use” the mark in
commerce to identify its services and distinguish them
from the services of others. 15 U.S.C. § 1127; see
[Boston Prof’l Hockey Ass’n v. Dallas Cap & Emblem
Mfg., Inc., 510 F.2d 1004, 1014 (5th Cir. 1975)]
(noting that under trademark law, a party acquires
rights to a symbol in the public domain through use of
the mark and the public’s association of the mark with
the user).
Id. at 1541 (footnote omitted); see also 1 MCCARTHY ON TRADEMARKS,
supra, § 7:100-:101. Tour 18 styles its argument as attacking
Sea Pines’s interest in the structure of the lighthouse itself
and not in the image of the lighthouse, arguing that the only
connection between the golf course and the lighthouse is that the
lighthouse can be seen from the course. However, Harbour Town
Golf Links was built by the same entity that constructed the
lighthouse and the evidence demonstrates that the placement and
design of the course and the lighthouse were specifically
designed to create the relationship between the course and the
lighthouse. This is not a case where the only connection is the
coincidence of proximity or location. The connection between the
course and the lighthouse is much greater and dates back to the
conception of both. Sea Pines has used depictions of the
29
lighthouse in relation to golfing services since 1969, and the
district court did not clearly err in finding that the lighthouse
has achieved secondary meaning in relation to golfing services in
the minds of consumers. The sale of the lighthouse to Fogelman’s
predecessor, while reserving trademark rights in depictions of
the lighthouse, does not alter this finding.
In relation to abandonment, Tour 18 argues that Sea Pines’s
failure to police third-party uses of the lighthouse as a mark
has caused the mark “to lose its significance as a mark,” thus
constituting abandonment under 15 U.S.C. § 1127. As Tour 18
argues, this form of abandonment does not require any intent to
abandon on the part of Sea Pines. See id.; RESTATEMENT, supra,
§ 30 cmt. c; 2 MCCARTHY ON TRADEMARKS, supra, § 17:8. However, the
evidence shows, as the district court discussed, that Sea Pines
has not failed to police third-party uses of depictions of the
lighthouse; rather, it has aggressively policed third-party uses.
See Pebble Beach, 942 F. Supp. at 1541. Additionally, the
district court’s finding of secondary meaning in the lighthouse
mark for golfing services shows that the lighthouse has not lost
its significance as a mark for golfing services, despite the
third-party uses in relation to other products and services.
Those third-party uses are only relevant to the strength of the
mark in this case and do not evidence abandonment. See
Sweetheart Plastics, Inc. v. Detroit Forming, Inc., 743 F.2d
1039, 1048 (4th Cir. 1984) (citing 1 J.T. MCCARTHY, TRADEMARKS AND
30
UNFAIR COMPETITION § 17:5, at 779-80 (2d ed. 1984)); RESTATEMENT,
supra, § 30 cmt. c; see also Amstar Corp. v. Domino’s Pizza,
Inc., 615 F.2d 252, 259 (5th Cir. 1980); 2 MCCARTHY ON TRADEMARKS,
supra, § 17:17, at 17-27.
3. Likelihood of confusion
Next we turn to whether Tour 18’s use of the Plaintiffs’
marks and trade dress infringed the Plaintiffs’ rights. The
touchstone of infringement is whether the use creates a
likelihood of confusion as to the “source, affiliation, or
sponsorship” of Tour 18’s golf course. See Society of Fin.
Exam’rs, 41 F.3d at 227; Oreck, 803 F.2d at 170; see also 15
U.S.C. § 1114(1); id. § 1125(a)(1)(A) (imposing liability for
uses “likely to cause confusion . . . as to the affiliation,
connection, or association of [the defendant] with another
person, or as to the origin, sponsorship, or approval of [the
defendant’s] goods, services, or commercial activities by another
person”). Likelihood of confusion is synonymous with a
probability of confusion, which is more than a mere possibility
of confusion. See Elvis Presley Enters., 141 F.3d at 193. In
determining whether a likelihood of confusion exists, this court
considers the following nonexhaustive list of factors: (1) the
type of mark allegedly infringed, (2) the similarity between the
two marks, (3) the similarity of the products or services, (4)
the identity of the retail outlets and purchasers, (5) the
31
identity of the advertising media used, (6) the defendant’s
intent, and (7) any evidence of actual confusion. See Taco
Cabana, 932 F.2d at 1122 n.9; Conan Properties, Inc. v. Conans
Pizza, Inc., 752 F.2d 145, 149 (5th Cir. 1985). No single factor
is dispositive, and a finding of a likelihood of confusion does
not require a positive finding on a majority of these “digits of
confusion.” See id. at 150; see also Elvis Presley Enters., 141
F.3d at 194.
While noting that no golfer will stand on the tee at Tour 18
and believe that he or she is playing at Pebble Beach, Pinehurst,
or Harbour Town, in considering Tour 18’s use of the Plaintiffs’
marks and depictions of the lighthouse, the district court found
that all seven digits of confusion weighed in favor of a
likelihood of confusion as to whether the courses are otherwise
affiliated. See Pebble Beach, 942 F. Supp. at 1541-50, 1552. In
reaching this determination, the district court considered Tour
18’s use of disclaimers and found them to be inadequate where
present and to be absent from the majority of advertisements and
promotional material. See id. at 1550-52. In relation to Sea
Pines’s trade dress, the district court also found that the
digits of confusion weighed in favor of a likelihood of
confusion, partially relying upon its analysis of the likelihood
of confusion in relation to the marks and upon the same actual
confusion evidence as used in relation to the marks. See id. at
32
1561.
Tour 18 attacks the district court’s finding of a likelihood
of confusion based upon its consideration of evidence of actual
confusion that consumers believed that Tour 18 had obtained
“permission” to use the Plaintiffs’ marks and to copy their golf
holes. Tour 18 argues that “permission” does not include a
connotation of control and therefore does not express a
relationship that is relevant to confusion as to source,
affiliation, sponsorship, or approval. We disagree.
Permission is synonymous with approval and suggests some
connection between the parties. The idea that one party has
given permission to another implies a form of approval of the
other’s activities. See WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY
1683 (Philip Babcock Gove ed., 1963) (defining “permission” as
“the act of permitting : formal consent : AUTHORIZATION” and
“permit” as “to consent to expressly or formally”); WILLIAM C.
BURTON, LEGAL THESAURUS 30, 383 (2d ed. 1992) (including “consent
to” among synonyms of “approve,” “permit” among synonyms of
“approval,” and “approval” among synonyms of “permission”); see
also ROGET’S DESK THESAURUS 30, 397 (Joyce O’Connor ed., 1995)
(same). For a party to suggest to the public, through its use of
another’s mark or a similar mark, that it has received permission
to use the mark on its goods or services suggests approval, and
even endorsement, of the party’s product or service and is a kind
of confusion the Lanham Act prohibits. See Indianapolis Colts,
33
Inc. v. Metropolitan Baltimore Football Club Ltd. Partnership, 34
F.3d 410, 415-16 (7th Cir. 1994) (finding confusion as to
“permission” relevant); Anheuser-Busch, Inc. v. Balducci
Publications, 28 F.3d 769, 772, 775 (8th Cir. 1994) (same);
University of Ga. Athletic Ass’n v. Laite, 756 F.2d 1535, 1546
(11th Cir. 1985) (same); Dream Team Collectibles, Inc. v. NBA
Properties, Inc., 958 F. Supp. 1401, 1416 (E.D. Mo. 1997) (same).
But see Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 786
F. Supp. 182, 202 (E.D.N.Y.) (expressing concern that confusion
as to permission may actually only be a measure of the popularity
of an established product), vacated on other grounds, 973 F.2d
1033 (2d Cir. 1992). Therefore, confusion as to permission is
relevant confusion under the Lanham Act.
The Plaintiffs’ survey was conducted among golfers who had
played a round of golf at Tour 18. Tour 18 argues that the
survey was flawed because, by relying upon “permission,” it
created the possibility that those surveyed believed that
permission was required, thereby skewing the result. But the
survey asked whether Tour 18 “did get” or “did not get”
permission to use the Plaintiffs’ marks or to copy the
Plaintiffs’ golf holes. This question asks what message Tour
18’s use of the Plaintiffs’ marks and trade dress conveyed,
rather than whether Tour 18 needed to get permission, which would
focus on what those surveyed believed to be required. Although,
this latter form is more problematic because it allows for the
34
consumer’s misunderstanding of the law, rather than the
defendant’s use of the marks, to be the basis for his belief, it
has been accepted by other courts as probative as to confusion.
See, e.g., Indianapolis Colts, 34 F.3d at 415 (accepting a survey
that asked if a party needed to get another’s permission to use
the mark at issue); Anheuser-Busch, 28 F.3d at 772, 775
(accepting a survey asking if a party “did have to get permission
to use” the mark). But see Major League Baseball Properties,
Inc. v. Sed Non Olet Denarius, Ltd., 817 F. Supp. 1103, 1122-23
(S.D.N.Y. 1993) (rejecting a survey for asking a leading
question: “Do you believe that [the defendant] had to get
authorization, that is, permission to use the name . . . ?”),
vacated pursuant to settlement, 859 F. Supp. 80 (S.D.N.Y. 1994).
Therefore, the district court did not improperly rely upon the
Plaintiffs’ survey.10
In addition to the survey evidence, the district court
relied upon the testimony of the witnesses that, before actually
10
We have held in the text that the district court did not
err in relying upon the Plaintiffs’ survey asking whether
permission was obtained. However, we note that “approval” is a
word with an easily understood everyday meaning that could have
been used just as easily in the survey or in questions asked of
the witnesses. We do not hold here that the unfettered use of
“permission,” rather than “approval” or other less ambiguous
language, is always acceptable, and we caution litigants to
consider the language of the survey and questions so that the
consumer’s belief that permission is required does not skew the
results of the survey, thus decreasing its probative value. See
Exxon Corp. v. Texas Motor Exch. of Houston, Inc., 628 F.2d 500,
506-07 (5th Cir. 1980); Holiday Inns, Inc. v. Holiday Out In Am.,
481 F.2d 445, 447-48 (5th Cir. 1973).
35
playing the course, they thought Tour 18 had obtained permission
to use the Plaintiffs’ marks and trade dress; most notably, two
witnesses testified that Tour 18’s advertising in particular
caused their confusion. See Pebble Beach, 942 F. Supp. at 1547-
48 & nn.31-32. This confusion was relevant even if it was
obviated by playing the course and viewing the holes and
disclaimers on the golf course signs. See Elvis Presley Enters.,
141 F.3d at 204. Moreover, those disclaimers and signs did not
necessarily obviate the confusion as evidenced by the findings of
the Plaintiffs’ survey of golfers who had played Tour 18 and had
been exposed to all of Tour 18’s disclaimers on the course. See
Pebble Beach, 942 F. Supp. at 1548-50. Additionally, “[e]vidence
of actual confusion is not necessary to a finding of a likelihood
of confusion.” Elvis Presley Enters., 141 F.3d at 203-04 (citing
Amstar, 615 F.2d at 263). After reviewing the record, we cannot
say that the district court committed clear error in finding
actual confusion and in finding a likelihood of confusion based
partially upon that actual confusion, resulting from Tour 18’s
use of the Plaintiffs’ marks and trade dress.11 Cf. Champions
11
In its reply brief, Tour 18 challenges other aspects of
the district court’s findings, including its consideration of the
intent factor in the likelihood-of-confusion analysis and its
partial reliance upon the likelihood-of-confusion analysis of the
use of the Plaintiffs’ marks in its analysis of the use of Sea
Pines’s trade dress. Because Tour 18 failed to raise these
arguments in its initial brief on appeal, we will not consider
them. See Cinel v. Connick, 15 F.3d 1338, 1345 (5th Cir. 1994)
(“An appellant abandons all issues not raised and argued in its
initial brief on appeal.”). However, we note that neither of the
36
Golf Club, Inc. v. The Champions Golf Club, Inc., 78 F.3d 1111
(6th Cir. 1996) (finding that a likelihood of confusion as to
affiliation could exist between two golf courses located in
Nicholasville, Kentucky and Houston, Texas).
4. Nominative use
Tour 18 asserts that it has used the Plaintiffs’ marks only
to identify the Plaintiffs’ golf holes that it copied and that
such use, as a matter of law, does not create a likelihood of
confusion. The district court treated this argument by Tour 18
as a species of the fair-use defense and considered it after
finding a likelihood of confusion. See Pebble Beach, 942
F. Supp. at 1552-54. While a claim that the use was to identify
the markholder’s goods or services is analogous to the statutory
fair-use defense, it is in actuality a claim that the use is
noninfringing and thus creates no likelihood of confusion.12
above arguments would likely prevail. See Elvis Presley Enters.,
141 F.3d at 203 (noting that lack of intent does not weigh
against a likelihood of confusion and fails to swing the balance
away from infringement); cf. id. at 197-98 (noting that a
trademark must be considered in context as used with other
marks).
12
The fair-use defense allows a party to use its own name
or a descriptive term or device in the name or term’s descriptive
sense to describe its own goods or services. See 15 U.S.C.
§ 1115(b)(4). Use of the term or name as a mark defeats the
defense. See id.; RESTATEMENT, supra, § 28 cmt. a. The fair-use
defense is limited “to use of the original descriptive or
personal name significance of a term.” See id. § 28 & cmt. a;
see also 15 U.S.C. § 1115(b)(4); Soweco, 617 F.2d at 1185. It
does not apply to the use of a term as a mark to identify the
markholder’s goods or services. See id. §§ 20 cmt. b, 28 cmt. a.
Unlike the use to identify the markholder’s goods or services, a
37
Courts have long recognized that one who has lawfully copied
another’s product can tell the public what he has copied. See
Saxlehner v. Wagner, 216 U.S. 375, 380 (1910); see also, e.g.,
Hypertherm, Inc. v. Precision Prods., Inc., 832 F.2d 697, 700-01
(1st Cir. 1987) (stating that a copyist may use the originator’s
mark to identify the product that it has copied); Calvin Klein
Cosmetics Corp. v. Lenox Lab., Inc., 815 F.2d 500, 503 (8th Cir.
1987) (same); G.D. Searle & Co. v. Hudson Pharm. Corp., 715 F.2d
837, 842-43 (3d Cir. 1983) (same); Smith v. Chanel, Inc., 402
F.2d 562, 563 (9th Cir. 1968) (same); Societe Comptoir de
l’Industrie Cotonniere Etablissements Boussac v. Alexander’s
Dep’t Stores, Inc., 299 F.2d 33, 35-37 (2d Cir. 1962) (same);
RESTATEMENT, supra, § 20 cmt. b, at 209-10. Likewise, one can use
another’s mark truthfully to identify another’s goods or services
in order to describe or compare its product to the markholder’s
product. See, e.g., August Storck K.G. v. Nabisco, Inc., 59 F.3d
616, 617-18 (7th Cir. 1995); New Kids on the Block v. News Am.
Publ’g, Inc., 971 F.2d 302, 306-09 (9th Cir. 1992); see also
RESTATEMENT, supra, § 20 cmt. b, at 209-10; 3 MCCARTHY ON TRADEMARKS,
supra, § 25:51-:52. This right to use a mark to identify the
markholder’s products--a nominative use--however, is limited in
fair use of a term may be protected even if a likelihood of
confusion exists. See id. § 28 cmt. b. Otherwise, a markholder
could “appropriate a descriptive term for his exclusive use and
so prevent others from accurately describing a characteristic of
their goods.” Soweco, 617 F.2d at 1185.
38
that the use cannot be one that creates a likelihood of confusion
as to source, sponsorship, affiliation, or approval. See, e.g.,
August Storck, 59 F.3d at 618; New Kids on the Block, 971 F.2d at
308; Hypertherm, 832 F.2d at 700-01; Calvin Klein, 815 F.2d at
503; G.D. Searle, 715 F.2d at 842; see also RESTATEMENT, supra,
§ 20 cmt. b, at 209-10; 3 MCCARTHY ON TRADEMARKS, supra, § 25:51-
:52.
As the Ninth Circuit has recognized, where a nominative use
of a mark occurs without any implication of affiliation,
sponsorship, or endorsement--i.e., a likelihood of confusion--the
use “lies outside the strictures of trademark law.” New Kids on
the Block, 971 F.2d at 308. In order to avail itself of the
shield of nominative use, the defendant (1) may only use so much
of the mark as necessary to identify the product or service and
(2) may not do anything that suggests affiliation, sponsorship,
or endorsement by the markholder. See id. at 30813; cf. B.H.
Bunn, 451 F.2d at 1263-64 (holding that references to a
competitor’s numbering system and prices are allowable only if
solely used for comparison). By definition, the defendant cannot
use the mark to identify its goods because this would not be a
13
New Kids on the Block also held that “the product or
service in question must be one not readily identifiable without
use of the trademark.” 971 F.2d at 308. We decline to impose
this requirement because, in the circumstance before us of direct
comparative advertising used to identify what was copied, it
will always be satisfied. We express no opinion as to whether
this requirement should or should not be imposed in other
circumstances of claimed nominative use.
39
nominative use, and it would also suggest affiliation,
sponsorship, or endorsement.
The district court found that Tour 18 used the Plaintiffs’
marks as service marks to name its own products and to
distinguish them from those offered by other golf courses. See
Pebble Beach, 942 F. Supp. at 1553. Based upon the prominent use
of the Plaintiffs’ marks in its advertising and promotional
material, use of the marks on its menu, and use of the marks on
signs directing players to each tee, Tour 18 has used the marks
in ways suggesting affiliation, sponsorship, or approval. See
Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 953-54
(7th Cir. 1992) (holding that use of a mark as an “attention-
getting symbol” in advertising was not a fair use); Lindy Pen Co.
v. Bic Pen Corp., 725 F.2d 1240, 1248 (9th Cir. 1984) (holding
that prominent placement of a mark on product was a trademark
use); Beer Nuts, Inc. v. Clover Club Foods Co., 711 F.2d 934,
937-38 (10th Cir. 1983) (same); cf. RESTATEMENT, supra, § 13
cmt. c, at 110 (noting that prominent use of a term in
advertising is a way to indicate source--i.e., a trademark use).
Therefore, the district court did not clearly err in finding that
Tour 18 had used the Plaintiffs’ marks in a service-mark context
on its own products and services and did not err in denying Tour
18 the shield of nominative use.
In addition, Tour 18 argues that, because the allowable use
of a mark in comparative advertising (a nominative use) will
40
normally result in a positive finding among a majority of the
digits of confusion, the traditional likelihood-of-confusion
analysis cannot be applied. However, implicit in this argument
is a misunderstanding of the likelihood-of-confusion analysis.
The digits of confusion “are not an end in themselves, and all
are not of equal significance. The [digits] serve only as guides
on the analytical route to the ultimate determination of whether
confusion is likely to result.” Champions Golf Club, 78 F.3d at
1122; see also Falcon Rice Mill, Inc. v. Community Rice Mill,
Inc., 725 F.2d 336, 345 n.9 (5th Cir. 1984) (“[I]t is clear that
some factors are more important than others and that they may
have different weight in different cases.”). Additionally, a
court is not limited to considering only the standard digits of
confusion and should consider other relevant factors in its
analysis. See Elvis Presley Enters., 141 F.3d at 194.
Furthermore, as noted earlier, a positive finding on a majority
of the digits of confusion does not require a court to find a
likelihood of confusion. See id. at 199. Therefore, the
traditional likelihood-of-confusion analysis is applicable in a
comparative-advertising situation, but the court should usually
consider the nominative-use claim in conjunction with its
likelihood-of-confusion analysis to avoid lowering the standard
of confusion.14 Because Tour 18 used the Plaintiffs’ marks in
14
We do not prescribe any particular method for this
consideration because this case does not present a situation in
41
more than a merely nominative sense, a different approach would
not have altered the result.15
which nominative use is a significant factor in the liability
determination.
15
Because we affirm the district court’s finding of
infringement, we likewise affirm its state-law unfair-competition
claim. See Elvis Presley Enters., 141 F.3d at 193 (noting that
the likelihood-of-confusion determination under Texas law for
unfair competition based upon infringement is the same as under
federal law).
Additionally, Tour 18 and the Plaintiffs’ challenges to the
district court’s findings on dilution have no merit. Dilution
can be shown by way of two different theories: blurring and
tarnishment. See 3 MCCARTHY ON TRADEMARKS, supra, § 24:67-:69; see
also RESTATEMENT, supra, § 25 (referring to the theories
respectively as “dilution” and “tarnishment”). The district
court found that Tour 18 had diluted the Plaintiffs’ marks under
a theory of blurring, but that it had not diluted their marks
under a theory of tarnishment. See Pebble Beach, 942 F. Supp. at
1566-67. Tour 18’s challenge to the district court’s finding of
dilution by blurring was based only upon the protectibility of
the marks, which we affirmed above. Moreover, Tour 18 did not
challenge whether the Plaintiffs’ marks and trade dress were
sufficiently famous to support a dilution claim. See RESTATEMENT,
supra, § 25(1)(a) & cmt. e.
The Plaintiffs’ challenge to the district court’s finding of
no dilution by tarnishment rests upon the argument that Tour 18’s
replicas are not as difficult or as beautiful as the original
golf holes and that Tour 18’s claim that its golf holes are
replicas tarnishes their images. The Plaintiffs’ brief argument,
buried in their challenge to the injunction, is that this type of
association supports a finding of tarnishment. The district
court recognized that this association may support a claim of
dilution by tarnishment but found that such dilution does not
exist in this case because any shortcomings would be attributed
to Tour 18 and not to the Plaintiffs. See Pebble Beach, 942
F. Supp. at 1566-67; cf. Smith, 402 F.2d at 569 (noting that,
because the defendants make it clear that the product is their
own, “[i]f [the product] proves to be inferior, they, not [the
plaintiffs], will bear the burden of consumer disapproval”).
Therefore, the district court committed no legal error which
would allow us to review its finding on dilution by tarnishment
under a less deferential standard of review than clear error, and
42
5. Effect of Sears-Compco
In addition to its attack on the district court’s
traditional trade-dress analysis, Tour 18 contends that it has
the unfettered right to copy the Plaintiffs’ golf-hole designs
and lighthouse under the Intellectual Property Clause of the
Constitution. See U.S. CONST. art. I, § 8, cl. 8. Tour 18 points
to Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225 (1964), and
Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234 (1964), to
demonstrate that unfair-competition law cannot protect product
designs or configurations to which no current, valid patent
applies. We disagree.
First, Sears and Compco, both decided the same day,
concerned the preemption of state trade-dress protection by
federal patent law and barred the use of state unfair-competition
laws to prohibit the copying of products that are not protected
by federal patents. See Sears, 376 U.S. at 231-32 (copying of a
lamp); Compco, 376 U.S. at 237-38 (copying of a reflector for a
fluorescent light fixture). This bar to state prohibitions on
copying includes nonfunctional designs and designs that have
achieved secondary meaning. See Compco, 376 U.S. at 238.
However, the Supreme Court noted that “other federal statutory
the Plaintiffs have failed to demonstrate that the district court
clearly erred in its factual findings on dilution by tarnishment.
Therefore, we affirm the district court’s finding of no dilution
by tarnishment because we have no definite or firm conviction
that a mistake has been made.
43
protection,” in addition to the patent laws, may bar copying of a
product. See id. at 238. In Bonito Boats, Inc. v. Thunder Craft
Boats, Inc., 489 U.S. 141 (1989), the Supreme Court reaffirmed
its Sears-Compco holdings that limit state protection of product
designs and noted that the application of Sears-Compco to
nonfunctional product design must take into account competing
federal policies as evidenced by the Lanham Act. See id. at 166.
Thus, federal trademark protection is not limited by the
preemption holdings in Sears-Compco. See Thomas & Betts Corp. v.
Panduit Corp., 138 F.3d 277, 286 (7th Cir. 1998) (noting that the
Sears-Compco and Bonito Boats holdings have no effect on the
scope of federal trademark or unfair-competition law), petition
for cert. filed, 67 U.S.L.W. 3152 (U.S. July 28, 1998) (No. 98-
179).
Second, the federal trademark laws are “other federal
statutory protection,” and their protection of product designs
and configurations does not conflict with the federal patent laws
or the Intellectual Property Clause. The patent laws and the
trademark laws have two entirely different and consistent
purposes, addressing entirely different concerns. See generally
Thomas & Betts, 138 F.3d at 283-89 (discussing the origins and
competing policies of the patent and trademark laws). The patent
laws serve (1) “to foster and reward invention,” (2) “to
promote[] disclosure of inventions to stimulate further
innovation and to permit the public to practice the invention
44
once the patent expires,” and (3) “to assure that ideas in the
public domain remain there for the free use of the public.”
Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262 (1979); see
also Duraco Prods., 40 F.3d at 1446 (noting that the policy of
encouraging innovative designs is the province of the patent and
copyright laws). The principal purposes of the trademark laws
are to avoid consumer confusion and to protect the goodwill of
the trademark owner’s business. See Park ’N Fly, Inc. v. Dollar
Park & Fly, Inc., 469 U.S. 189, 198 (1985); Duraco Prods., 40
F.3d at 1446 n.10.
While the federal trademark laws provide a trademark or
trade-dress owner indefinite protection unlike the limited-
duration protection provided by the patent laws, traditional
trade-dress analysis limits the scope of product designs or
configurations that can be protected to avoid conflict between
the two areas of law. See Kohler Co. v. Moen Inc., 12 F.3d 632,
642 (7th Cir. 1993) (“[A]ny conflicts between the patent laws and
the Lanham Act should be resolved by a careful application of
traditional bases for determining the propriety of trademark
protection such as likelihood of confusion, functionality, and
distinctiveness.”); see also Qualitex, 514 U.S. at 164-65 (noting
that the functionality doctrine prevents trademark law from
inhibiting legitimate competition by protecting useful product
features, which is the province of patent law); Duraco Prods., 40
F.3d at 1451; W.T. Rogers Co. v. Keene, 778 F.2d 334, 337 (7th
45
Cir. 1985) (noting that the defense of functionality prevents any
conflict between the federal patent and trademark laws,
especially with a trade-dress infringement suit requiring
secondary meaning (i.e., distinctiveness) and a likelihood of
confusion).
Third, in the more than thirty years since Sears-Compco,
Congress and the courts have recognized that federal unfair-
competition law provides protection to product designs and
configurations consistent with the patent laws. See Bonito
Boats, 489 U.S. at 166. Courts have developed federal unfair-
competition law and have protected product designs and
configurations. See, e.g., American Greetings Corp. v. Dan-Dee
Imports, Inc., 807 F.2d 1136 (3d Cir. 1986) (teddy bears);
LeSportsac, Inc. v. K Mart Corp., 754 F.2d 71 (2d Cir. 1985)
(luggage); Ideal Toy Corp. v. Plawner Toy Mfg. Corp., 685 F.2d 78
(3d Cir. 1982) (Rubik’s Cube); Truck Equip. Serv. Co. v. Freuhauf
Corp., 536 F.2d 1210 (8th Cir. 1976) (semi-truck trailer); see
also 1 MCCARTHY ON TRADEMARKS, supra, §§ 7:54, 8:4-:5; cf. id.
§§ 7:94-:95 (noting that, since Sears-Compco, product designs and
configurations have been allowed registration on both the
principal and supplemental registers). In the face of this
developing protection for product designs and configurations,
Congress reenacted in 1988 the definition of trademark to include
“any word, name, symbol, or device, or any combination thereof,”
15 U.S.C. § 1127. See Qualitex, 514 U.S. at 172-73. The Supreme
46
Court found in Qualitex that the reenactment of this language--
along with its legislative history explicitly referring to the
Trademark Commission’s recommendation that the terms “symbol, or
device” be left unchanged to allow registrations of color, shape,
smell, sound, or configuration that function as a mark--undercut
restrictive trademark precedent. See id. Thus, Congress and the
Court have embraced a broad reading of the Lanham Act and its
protections, which can encompass product designs and
configurations.
For the above reasons, the Intellectual Property Clause, the
federal patent laws, and the Sears-Compco-line of cases do not
preclude federal trademark protection for product designs and
configurations. Accord, e.g., Kohler, 12 F.3d at 639-41; Ferrari
S.P.A. Esercizio Fabriche Automobili E Corse v. Roberts, 944 F.2d
1235, 1240-41 (6th Cir. 1991); Keene Corp. v. Paraflex Indus.,
Inc., 653 F.2d 822, 823 n.1 (3d Cir. 1981); see also Kohler, 12
F.3d at 640 n.10 (noting that the Lanham Act differs in many
respects from the state unfair-competition law at issue in Sears-
Compco); 1 MCCARTHY ON TRADEMARKS, supra, § 7:61. But see Kohler, 12
F.3d at 644-51 (Cudahy, J., dissenting); Ferrari, 944 F.2d at
1252-53 (Kennedy, J., dissenting); cf. Vornado Air Circulation
Sys., Inc. v. Duracraft Corp., 58 F.3d 1498, 1510 (10th Cir.
1995) (finding that a nonfunctional feature that is part of a
claim in a utility patent cannot be protected by federal
47
trademark law),16 cert. denied, 516 U.S. 1067 (1996).17
Finally, if the acid test of any theory is how it works in
16
In Vornado, the court found that a feature was both
patentable and nonfunctional. See 58 F.3d at 1506. The decision
has been criticized for its narrow definition of functionality
which does not take into account the utilitarian definition used
by this court. See 1 MCCARTHY ON TRADEMARKS, supra, § 7:68, at 7-
134 to 7-136. Therefore, if Vornado had applied this court’s
traditional trade-dress analysis, any conflict between the patent
and trademark laws would have likely been avoided.
17
Tour 18 contends that this court’s decision in North
Shore Laboratories Corp. v. Cohen, 721 F.2d 514 (5th Cir. 1983),
controls our resolution of the effect of Sears-Compco. In North
Shore Laboratories, the plaintiff and the defendant both made a
brown tire-patch material, and the plaintiff argued that, based
upon a consent judgment, the defendant should be prohibited from
making a tire-patch material the same color as its own. See id.
at 516-18. Solely by interpreting the judgment, the court
determined that the defendant had not violated the consent
judgment through the manufacture and sale of his product. See
id. at 518-21. After resolving the question before it, the court
alternatively considered whether it could have enforced the
consent judgment if the judgment had prohibited the defendant’s
conduct. See id. at 521-24. The court looked to Sears-Compco
for the public policy that the copying of unpatented products is
permitted and promotes free competition. See id. at 522. It
found that an injunction which barred the defendant’s manufacture
and sale of a brown tire-patch product would conflict with this
public policy.
North Shore Laboratories’s alternative holding that a
product’s color cannot be protected by federal trademark law has
been overruled by subsequent Supreme Court authority. See
Qualitex, 514 U.S. at 174. As discussed in the text, subsequent
authority and Congress’s reenactment of the broad language in the
definition of a trademark demonstrate that the alternative
rationale of North Shore Laboratories is inconsistent with the
subsequent development of federal trademark law. We note,
however, that the result of the North Shore Laboratories
decision’s alternative holding would hold true today, without its
discussion of Sears-Compco, because the court also found that the
color of the tire-patch material lacked the necessary secondary
meaning and was functional. See North Shore Lab., 721 F.2d at
522-23. Each of these findings would independently bar Lanham
Act protection to the color of the tire-patch product.
48
practice, we note that the application of traditional trade-dress
analysis under the Lanham Act to the product configurations at
issue here, the design of the Plaintiffs’ golf holes, has
effectively left intact Tour 18’s right to copy the Plaintiffs’
golf holes, barring only its copying of the lighthouse.
B. Remedies
On appeal, Tour 18 and the Plaintiffs challenge the district
court’s injunction as being too broad and too narrow,
respectively. The Plaintiffs also claim error in the district
court’s denial of an accounting of profits and an award of
attorneys’ fees. We address each of these issues in turn.
1. Injunctive relief
Under the Lanham Act, the district court has the discretion
to enter an injunction to prevent continued infringement or
unfair competition. See 15 U.S.C. § 1116(a). The Texas anti-
dilution statute also provides for injunctive relief to remedy
any dilution. See TEX. BUS. & COM. CODE ANN. § 16.29 (Vernon Supp.
1998). We review the district court’s decision whether to grant
or deny an injunction and the scope and form of the injunction
for an abuse of discretion.18 See Frostie Co. v. Dr. Pepper Co.,
361 F.2d 124, 126-27 (5th Cir. 1966). In reviewing the
18
Whether an injunction is mandatory under the Texas anti-
dilution statute is not before us because an injunction has been
entered which, as discussed infra, does not permit diluting
conduct.
49
injunction, it is important to note that, “‘[i]n fashioning
relief against a party who has transgressed the governing legal
standards, a court of equity is free to proscribe activities
that, standing alone, would have been unassailable.’” Taco
Cabana, 932 F.2d at 1126 (quoting Kentucky Fried Chicken Corp. v.
Diversified Packaging Corp., 549 F.2d 368, 390 (5th Cir. 1977)).
The district court entered an injunction against Tour 18
limiting its use of the Plaintiffs’ marks, depictions of the
lighthouse, Sea Pines’s trade dress, and claims that original
blueprints or maps were used and requiring it to remove the
replica lighthouses from both of its courses.19 The district
19
The complete text of the district court’s amended
injunctive order follows:
(1) Defendant and all persons in active concert or
participation with defendant are permanently enjoined
from using in connection with the promotion,
advertising, or sale of golfing services, the service
marks “HARBOUR TOWN,” “HARBOUR TOWN GOLF LINKS,” or any
depiction or photo of the Harbour Town lighthouse.
(2) Defendant and all persons in active concert or
participation with defendant are permanently enjoined
from offering in connection with defendant’s golf
course services a replica, copy, or imitation of the
Harbour Town lighthouse. Tour 18 is ordered to remove
its replicas of the Harbour Town lighthouse from all
Tour 18 golf courses. However, Tour 18 is not required
to alter the playable surface of the golf holes in
question.
(3) Defendant and all persons in active concert or
participation with defendant are permanently enjoined
from using in connection with the promotion,
advertising, or sale of golfing services, the service
marks “PEBBLE BEACH,” “PEBBLE BEACH GOLF LINKS,”
“PINEHURST,” or “PINEHURST No. 2,” except that
50
defendant may use these marks only to the limited
extent necessary to inform the public which golf holes
it copied. To comply with this section of the
injunction, Tour 18 may use plaintiffs’ marks on its
scorecard, yardage guide, and tee box signs.
Additionally, Tour 18 may place these service marks in
other printed materials only within a simple legend of
the course’s replicated golf holes. This legend shall
include only the Tour 18 hole number, name of
replicated hole, par, and yardage, similar to the
legend contained within Tour 18’s current promotional
brochure, specifically plaintiff's exhibit 103. Tour
18 must remove all other superfluous uses of the marks
listed in this section from its written materials,
including but not limited to, the Tour 18 promotional
brochures, mailers, advertisements in independent
publications, and restaurant menu.
(4) Defendant shall place a disclaimer prominently
and in bold lettering on the front of all
advertisements, promotional brochures, scorecards,
yardage guides, or other written materials provided to
the public as a means of marketing Tour 18. The
disclaimer shall disclaim any association, affiliation,
sponsorship, or permission from the owners of the golf
holes Tour 18 copied. Tour 18 shall maintain use of
the disclaimers that currently appear on its tee box
signs.
(5) Defendant is enjoined from using any
advertisement or promotional statement claiming it used
“original” blueprints, maps, or other data to construct
its replica golf holes, except that defendant may use
such a statement if it also includes a disclaimer
clearly stating that it neither received the blueprints
or maps from the owners of the original golf holes or
that the owners of the original golf holes authorized
Tour 18’s use of such blueprints or maps.
(6) Defendant shall have thirty days from the
entry of final judgment to comply with the provisions
of this injunction.
(7) All additional relief requested by plaintiffs
and defendant not specifically granted herein is
denied.
51
court allowed Tour 18 continued use of Pebble Beach and
Pinehurst’s marks to inform the public of which golf holes it has
copied, but the district court did not allow the same exception
in relation to Sea Pines’s marks.
Tour 18 argues that the district court’s injunction is an
abuse of discretion because (1) it limits legal activity that
does not infringe or dilute the Plaintiffs’ marks and (2) it is
vague in its requirements. Specifically, Tour 18 argues that
a. paragraph (1) impermissibly bars its use of Sea Pines’s
marks, “Harbour Town” and “Harbour Town Golf Links,”
without allowing for Tour 18’s right to use the marks
in truthful comparative advertising;
b. paragraph (2) is vague as to what “remove its replicas
of the Harbour Town lighthouse from all Tour 18 golf
courses” means, in that it is unclear whether this
means “remove the entire lighthouse structure including
its foundation; alter the lighthouse to look like a
water tower, a different lighthouse or something other
than a lighthouse; or just paint the red stripes
black”;
c. paragraph (3) is overly broad in that it only allows
Tour 18 to use Pebble Beach and Pinehurst’s marks to
identify the golf holes it has copied and not in any
other comparative advertising sense, such as to claim
that its course is more fun than Pinehurst or Pebble
Beach;20 and
d. paragraph (5) is overly broad in limiting Tour 18’s use
of claims of having used “maps or other data” in
Pebble Beach, 942 F. Supp. at 1577-78.
20
Tour 18 also argues that the term “superfluous” in
paragraph (3) is vague, but by our reading of the paragraph and
“superfluous” in context, we find a clear meaning. The district
court’s requirement that all superfluous uses of the Plaintiffs’
marks must be removed means that uses not expressly allowed are
enjoined.
52
recreating its golf holes in that this limitation
precludes Tour 18 from making claims based upon maps
and blueprints created by its own efforts.
Tour 18’s challenges to paragraphs (1) and (3) will be considered
in relation to the Plaintiffs’ related challenges to the
injunction. Tour 18’s challenges to paragraphs (2) and (5) can
be resolved by a cursory reading of the district court’s opinion
and of the injunction.
In relation to paragraph (2), “remove” means “to change or
shift the location, position, station, or residence of,” which
does not include any connotation of alteration. See WEBSTER’S
THIRD NEW INTERNATIONAL DICTIONARY, supra, at 1921. The district
court’s amended injunction requires the complete removal of the
structure from the golf course. This meaning is clear from the
fact that the district court, in its original injunction, allowed
for the parties to work out a solution that could include
altering the structure, and when this failed, it ordered that the
structure be removed. See Pebble Beach, 942 F. Supp. at 1573,
1576-77. The district court’s decision to order the removal of
the replica lighthouses when a satisfactory alteration could not
be agreed upon was not an abuse of discretion.
In relation to paragraph (5), the plain language of the
injunction does not bar all mention of any blueprints, maps, or
other data. The injunction by its own language only limits
references to “original” blueprints, maps, or other data, which
does not include such items created by Tour 18. Tour 18 also
53
argues that its blueprint and map claims did not contribute to
confusion, but the district court found that “[l]ikely consumer
confusion is reinforced by Tour 18’s advertisements and
promotional materials which claim original blueprints and maps
were used to copy plaintiffs’ holes.” Id. at 1545 (emphasis
added). This finding is not clearly erroneous and supports this
paragraph of the injunction. Paragraph (5) of the injunction
allows Tour 18 to refer to blueprints and maps it created, but it
must not do so in a way that suggests that they are original
documents or data obtained from the Plaintiffs or that the
Plaintiffs authorized them to use such data.
The Plaintiffs challenge the district court’s injunction
because it allows Tour 18 to continue activities that contributed
to the infringement and because the injunction fails to provide
relief for their successful dilution claims. Specifically, the
Plaintiffs argue (1) that, as the district court itself found,
using disclaimers to alleviate any problems is ineffective;
(2) that the injunction allows infringing conduct and dilution to
continue by permitting Tour 18’s continued use of Pebble Beach
and Pinehurst’s marks; and (3) that all uses of the Plaintiffs’
marks must be enjoined because Tour 18 was attempting to “cash
in” on the Plaintiffs’ reputations.
First, as to disclaimers, the district court found that
disclaimers were ineffective due to their absence or
inconspicuousness on advertisements and promotional materials and
54
due to Tour 18’s “prominent use” of the Plaintiffs’ marks. See
id. at 1551. In contrast, conspicuous disclaimers that disclaim
affiliation may reduce or eliminate confusion. See, e.g., Soltex
Polymer Corp. v. Fortex Indus., Inc., 832 F.2d 1325, 1330 (2d
Cir. 1987), cited in Roho, Inc. v. Marquis, 902 F.2d 356, 361
(5th Cir. 1990); cf. Better Bus. Bureau of Metro. Houston, Inc.
v. Medical Dirs., Inc., 681 F.2d 397, 405 (5th Cir. 1982)
(requiring a disclaimer to obviate any confusion). Therefore,
the district court appropriately used disclaimers as part of its
injunction.
Second, as to the permitted continued use of the Plaintiffs’
marks, the district court is allowing Tour 18 to use the
Plaintiffs’ marks only to identify the golf holes it copied. As
noted in Part II.A.4, supra, this nominative use is outside the
strictures of trademark law where it is done without any
implication of affiliation, sponsorship, or approval. In
addition, a clear nominative use does not create any likelihood
of confusion. Further, it does not create any possibility of
dilution by blurring because the use is one that links the mark
to the markholder’s goods or services. Such a use strengthens
rather than blurs the identification of a mark with the
markholder’s goods. Cf. Smith, 402 F.2d at 569 (holding that the
defendants’ use of the plaintiffs’ mark to identify the
plaintiffs’ product will not endanger the distinctiveness of the
mark). Therefore, the Plaintiffs’ success on its infringement
55
and dilution claims does not compel enjoining the nominative use
allowed by the district court.
Similarly, Tour 18’s challenge to the district court’s
complete prohibition of the use of Sea Pines’s marks in paragraph
(1) of the injunction has merit. For the same reasons that
support Tour 18’s nominative use of Pebble Beach and Pinehurst’s
marks, Tour 18 should be free to use Sea Pines’s marks, other
than the lighthouse, in a nominative manner to identify the golf
hole it has copied. Additionally, the removal of the lighthouse
should not bar Tour 18 from identifying the golf hole as one
copied from Harbour Town Golf Links. The lighthouse is part of
Sea Pines’s trade dress, and despite being used by some golfers
as a target, it is not part of the playing aspect of the golf
hole any more than a tree, a mountain, a cloud, power lines, or
other features in the distance are part of the playing aspect of
a golf hole. To find otherwise would be inconsistent with our
holding that Tour 18 can identify its golf holes as copies of
Pebble Beach and Pinehurst’s golf holes despite differences in
the surroundings. The district court was concerned “that the
lighthouse is so intertwined with Harbour Town Hole 18 in
golfer’s [sic] minds that they constitute a single overall trade
dress,” Pebble Beach, 942 F. Supp. at 1577, but copying a product
does not necessarily entail copying all aspects of its trade
dress. The essential parts of Sea Pines’s golf hole are copied,
and Tour 18 should be allowed to tell the public that it has
56
copied the golf hole in a manner that does not cause fraud or
deception. Cf. Saxlehner, 216 U.S. at 380-81; Smith, 402 F.2d at
567-68. Therefore, the injunction must be modified to allow Tour
18 to use Sea Pines’s marks (other than the lighthouse), but Tour
18’s use of Sea Pines’s marks shall be limited in the same manner
as its use of Pebble Beach and Pinehurst’s marks is limited.
Additionally, Tour 18 contends that the district court
fashioned the limitation on its use of the Plaintiffs’ marks too
narrowly by enjoining other proper nominative uses of the marks.
Tour 18 opines that it should be allowed to advertise, “You can
have more fun at TOUR 18 than at Pebble Beach,” relying upon
Better Business Bureau, 681 F.2d 397, and Trail Chevrolet, Inc.
v. General Motors Corp., 381 F.2d 353, 354 (5th Cir. 1967). In
Trail Chevrolet, the defendants sold used Chevrolets and repaired
Chevrolets, and they could not describe their business without
being able to state those facts. See 381 F.2d at 354. Trail
Chevrolet does not compel a broadening of the injunction in this
case, in which the injunction allows Tour 18 the necessary use of
the Plaintiffs’ marks to describe its business and product as a
collection of copies of the Plaintiffs and others’ golf holes.
In Better Business Bureau, the district court completely
enjoined any use of the plaintiffs’ marks, which was considerably
broader than the scope of conduct that the district court had
adjudicated as misleading. See 681 F.2d at 399, 404. This court
determined that this restriction was not “‘reasonably necessary
57
to prevent the deception’” at issue and that the remedy should be
to require disclaimers rather than completely prohibit use of the
plaintiffs’ marks. See id. at 405-06 (quoting In re R.M.J., 455
U.S. 191, 203 (1982)). In the instant case, Tour 18 has made
generous use of the Plaintiffs’ marks in the past--including
prominent use in its advertising and promotional material and on
its restaurant menus--which has been found to create a likelihood
of confusion by suggesting approval. Furthermore, even when
consumers were exposed to Tour 18’s disclaimers, the confusion
continued to persist. See Pebble Beach, 942 F. Supp. at 1549.
Unlike in Better Business Bureau, the district court’s injunction
limits advertising and promotional activity by Tour 18 that has
been adjudicated as misleading, and the use of disclaimers alone
by Tour 18 has been found to be ineffective in preventing a
likelihood of confusion.
Otherwise unassailable activities may be proscribed where a
party has transgressed the governing legal standard. See Taco
Cabana, 932 F.2d at 1126; Chevron Chem. Co. v. Voluntary
Purchasing Groups, Inc., 659 F.2d 695, 705 (5th Cir. Unit A Oct.
1981); Kentucky Fried Chicken, 549 F.2d at 390; 5 MCCARTHY ON
TRADEMARKS, supra, § 30:4. The district court’s injunction
permits extensive use of the Plaintiffs’ marks by permitting Tour
18 to use the marks to identify the holes it has copied, and the
limitation on uses like the example urged by Tour 18 is
58
minimal.21 In light of the minimal nature of the limitation on
Tour 18’s use of Plaintiffs’ marks and the fact that disclaimers
alone are ineffective, the limitation imposed by the district
court is reasonably necessary to prevent deception based upon the
specific facts of this case. The district court therefore did
not abuse its discretion by limiting Tour 18’s use of the
Plaintiffs’ marks as described in the injunction.
Third, the Plaintiffs’ argument that an injunction must
issue because Tour 18 was trying to “cash in” on the Plaintiffs’
fame and reputation has no merit. In both cases upon which the
Plaintiffs rely, this court enjoined use of trademarks which were
used to identify the defendants’ services and were chosen and
designed specifically to appropriate the plaintiffs’ reputations.
See National Ass’n of Blue Shield Plans v. United Bankers Life
Ins. Co., 362 F.2d 374 (5th Cir. 1966) (enjoining use of logos
similar to the plaintiff’s even in a different color because in
black and white advertising the color would not distinguish the
logo); Aetna Cas. & Sur. Co. v. Aetna Auto Fin. Inc., 123 F.2d
582 (5th Cir. 1941). In this case, the district court’s
injunction, when modified as required above, will allow only uses
21
Our belief that the limitation is minimal is supported
by the fact that Tour 18 challenged only the complete prohibition
of its use of Sea Pines’s marks and not the limitation on its use
of Pebble Beach or Pinehurst’s marks in its motion to the
district court to alter or amend the final judgment.
Additionally, its argument to this court that the injunction is
too broad is brief and cursory.
59
which identify which holes were copied, thereby permitting Tour
18 to try to appropriate the reputation of the goods but not of
the mark or markholder. See Saxlehner, 216 U.S. at 380-81
(holding that it is proper to attempt to appropriate the goodwill
of the goods, but not the name); see also Ferrari, 944 F.2d at
1243 (“‘Where the copying by one party of another’s product is
not done to deceive purchasers and thus derive a benefit from
another’s name and reputation, but rather to avail oneself of a
design which is attractive and desirable, a case of unfair
competition is not made out.’” (quoting West Point Mfg. Co. v.
Detroit Stamping Co., 222 F.2d 581, 586 (6th Cir. 1955))); Smith,
402 F.2d at 568-69 (noting that the opportunistic copyist’s “free
ride” serves an important public interest of offering comparable
goods at lower prices and that the markholder is not entitled to
monopolize the public’s desire for the unpatented product).
For the reasons discussed above, we reject nearly all of the
Plaintiffs and Tour 18’s challenges to the district court’s
injunction. In relation to Tour 18’s use of Sea Pines’s service
marks, we modify paragraphs (1) and (3) of the injunction to read
as follows:
(1) Defendant and all persons in active concert or
participation with defendant are permanently enjoined
from using in connection with the promotion,
advertising, or sale of golfing services, any depiction
or photo of the Harbour Town lighthouse.
(3) Defendant and all persons in active concert or
participation with defendant are permanently enjoined
from using in connection with the promotion,
60
advertising, or sale of golfing services, the service
marks “PEBBLE BEACH,” “PEBBLE BEACH GOLF LINKS,”
“PINEHURST,” “PINEHURST No. 2,” “HARBOUR TOWN,” or
“HARBOUR TOWN GOLF LINKS,” except that defendant may
use these marks only to the limited extent necessary to
inform the public which golf holes it copied. To
comply with this section of the injunction, Tour 18 may
use plaintiffs’ marks on its scorecard, yardage guide,
and tee box signs. Additionally, Tour 18 may place
these service marks in other printed materials only
within a simple legend of the course’s replicated golf
holes. This legend shall include only the Tour 18 hole
number, name of replicated hole, par, and yardage,
similar to the legend contained within Tour 18’s
current promotional brochure, specifically plaintiff's
exhibit 103. Tour 18 must remove all other superfluous
uses of the marks listed in this section from its
written materials, including but not limited to, the
Tour 18 promotional brochures, mailers, advertisements
in independent publications, and restaurant menu.
2. Profits and attorneys’ fees
The district court denied the Plaintiffs’ request for an
accounting of profits and reasonable attorneys’ fees. See Pebble
Beach, 942 F. Supp. at 1571-72. The Plaintiffs argue that the
district court abused its discretion in not awarding them profits
and attorneys’ fees, pursuant to 15 U.S.C. § 1117.22
22
The Plaintiffs also argue that Pebble Beach and
Pinehurst must be granted an award of treble profits and
attorneys’ fees, pursuant to 15 U.S.C. § 1117(b). However,
§ 1117(b), which provides penalties for the intentional use of
counterfeit marks, does not apply to this case because (1) this
simply is not a counterfeiting case and (2) despite the fact that
Tour 18 intentionally copied the Plaintiffs’ marks and trade
dress, it did not intentionally infringe the Plaintiffs’ marks by
the use of counterfeit marks in attempting to use them to
identify the golf holes it copied. The case upon which the
Plaintiffs rely does not stand for the proposition that any
§ 1114(1)(a) violation triggers the remedies in § 1117(b). That
case is a clear case of intentional counterfeiting. See Dunkin’
Donuts Inc. v. Mercantile Ventures, No. 93-8270, slip op. at 6
(5th Cir. Mar. 7, 1994) (unpublished), on remand, 32 U.S.P.Q.2d
61
a. accounting of profits
Section 1117(a) of the Lanham Act entitles a markholder to
recover the defendant’s profits, subject to the principles of
equity. See 15 U.S.C. § 1117(a); Maltina Corp. v. Cawy Bottling
Co., 613 F.2d 582, 584 (5th Cir. 1980). An award of the
defendant’s profits is not automatic, see Champion Spark Plug Co.
v. Sanders, 331 U.S. 125, 131 (1947); Bandag, Inc. v. Al Bolser’s
Tire Stores, Inc., 750 F.2d 903, 919 (Fed. Cir. 1984), and is
committed to the discretion of the district court, whose decision
we review for an abuse of discretion, see id. at 917, 919. While
this court has not required a particular factor to be present,
relevant factors to the court’s determination of whether an award
of profits is appropriate include, but are not limited to,
(1) whether the defendant had the intent to confuse or deceive,
(2) whether sales have been diverted, (3) the adequacy of other
remedies, (4) any unreasonable delay by the plaintiff in
asserting his rights, (5) the public interest in making the
misconduct unprofitable, and (6) whether it is a case of palming
off. See Texas Pig Stands, Inc. v. Hard Rock Cafe Int’l, Inc.,
951 F.2d 684, 695 (5th Cir.) (citing Champion Spark Plug, 331
U.S. at 130; Bandag, 750 F.2d at 919; and Maltina, 613 F.2d at
585), reh’g denied, 966 F.2d 956 (5th Cir. 1992); RESTATEMENT,
supra, § 37. Once an award is found to be appropriate, a
1460 (W.D. Tex. 1994).
62
markholder is only entitled to those profits attributable to the
unlawful use of its mark. See Texas Pig Stands, 951 F.2d at 696,
reh’g denied, 966 F.2d at 957-58 (citing Mishawaka Rubber &
Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 206 (1942), and
Meier Brewing Co. v. Fleischmann Distilling Corp., 390 F.2d 117,
124 (9th Cir. 1968)).
The district court determined that an accounting of profits
was inappropriate based upon (1) the lack of any evidence of lost
or diverted sales, (2) the fact that the Plaintiffs only
partially prevailed, and (3) the adequacy of injunctive relief.
See Pebble Beach, 942 F. Supp. at 1571. The Plaintiffs argue
that the district court erred in considering the fact that they
only partially prevailed and in its finding that there was no
loss of goodwill.
The district court did err in placing weight on the fact
that the Plaintiffs partially prevailed in denying an accounting
of profits. The Supreme Court has held that the burden is upon
the defendant to show that he made no profit from the infringing
use of the mark. See Mishawaka, 316 U.S. at 206; see also
5 MCCARTHY ON TRADEMARKS, supra, § 30:65. The Court acknowledged
that the plaintiff may receive a windfall, but stated that,
“where it is impossible to isolate the profits” from the
infringing conduct, the windfall should go to the plaintiff
rather than the wrongdoer. See Mishawaka, 316 U.S. at 206-07.
Therefore, the fact that the Plaintiffs only partially prevailed
63
does not weigh against an accounting of profits.
Nevertheless, the other relevant factors here still support
the district court’s denial of an accounting of profits. There
were no diverted sales nor palming off in this case, which are
both significant factors. See Texas Pig Stands, 951 F.2d at 695;
see also Champion Spark Plug, 331 U.S. at 131 (affirming a denial
of profits where no fraud or palming off was evident). The
district court also implicitly found that Tour 18’s infringement
was not willful. See Pebble Beach, 942 F. Supp. at 1571-72
(noting that a case of willful infringement is normally an
appropriate case for an award of profits and not finding such
infringement and indicating, in its discussion of attorneys’
fees, that Tour 18 did not intend to divert sales and had a good-
faith belief that it could copy the golf holes and use the marks
to identify what it copied). Considering the lack of actual
damages and the lack of an intent to confuse or deceive,
injunctive relief satisfies the equities in this case. See
Champion Spark Plug, 331 U.S. at 131; Bandag, 750 F.2d at 917;
see also Highway Cruisers of Cal., Inc. v. Security Indus., Inc.,
374 F.2d 875, 876 (9th Cir. 1967) (“One may get just enough
relief to stop the evil where it is apparent no great damage was
done to the complainant.”). Therefore, we do not find that the
district court abused its discretion in denying the Plaintiffs an
accounting of Tour 18’s profits. The Plaintiffs’ attack on the
district court’s apparent reliance upon no loss of goodwill does
64
not change this outcome, especially considering that it does not
appear that the district court gave that fact much weight as it
was only mentioned in the summary of its discussion of an
accounting of profits and not in the discussion itself. See
Pebble Beach, 942 F. Supp. at 1571.
b. attorneys’ fees
Under the Lanham Act, a court may award reasonable
attorneys’ fees to the prevailing party in “exceptional cases.”
15 U.S.C. § 1117(a). “An exceptional case is one where the
violative acts can be characterized as malicious, fraudulent,
deliberate, or willful.” Seven-Up Co. v. Coca-Cola Co., 86 F.3d
1379, 1390 (5th Cir. 1996) (internal quotation marks omitted)
(citing Moore Bus. Forms, Inc. v. Ryu, 960 F.2d 486, 491 (5th
Cir. 1992)). A district court should consider all the facts and
circumstances in determining whether a case is exceptional. See
CJC Holdings Inc. v. Wright & Lato, Inc., 979 F.2d 60, 65 & n.2
(5th Cir. 1992) (looking to patent case law for guidance on what
constitutes an exceptional case). The prevailing party must
demonstrate the exceptional nature of a case by clear and
convincing evidence. See CJC Holdings, 979 F.2d at 65 (citing
Machinery Corp. of Am. v. Gullfiber AB, 774 F.2d 467, 471 (Fed.
Cir. 1985)). Once this showing has been made, the district court
may award attorneys’ fees at its discretion. See id. (citing
Texas Pig Stands, 951 F.2d at 684). We review the district
65
court’s findings as to whether a case is exceptional for clear
error and its decision on whether to award attorneys’ fees for an
abuse of discretion. See id.
An award of attorneys’ fees under § 1117(a) generally
“require[s] a showing of a high degree of culpability on the part
of the infringer, for example, bad faith or fraud.” Texas Pig
Stands, 951 F.2d at 697. Deliberate copying does not make a case
per se exceptional. See CJC Holdings, 979 F.2d at 65-66 (noting
that an unpatented and uncopyrighted product can normally be
copied). A good-faith effort to create elements of dissimilarity
may render a case unexceptional, see Taco Cabana, 932 F.2d at
1128 (citing with approval Roulo v. Russ Berrie & Co., 886 F.2d
931, 942 (7th Cir. 1989)), and “[a] district court normally
should not find a case exceptional where the party presents what
it in good faith believes may be a legitimate defense,” CJC
Holdings, 979 F.2d at 66 (citing Gustafson, Inc. v. Intersystems
Indus. Prods., 897 F.2d 508, 511 (Fed. Cir. 1990)).
Additionally, lack of damages is an important factor in
determining whether a case is exceptional. See Texas Pig Stands,
951 F.2d at 697 n.23.
Relying upon (1) Tour 18’s lack of intent to divert sales,
(2) the lack of evidence of actual damages, (3) Tour 18’s good-
faith belief that it could copy the Plaintiffs’ golf holes and
use their marks to identify the golf holes it copied without
causing confusion, and (4) the closeness of the case and the
66
mixed results achieved by both sides, the district court found
that this case was not an exceptional case allowing for an award
of attorneys’ fees. See Pebble Beach, 942 F. Supp. at 1571-72.
The Plaintiffs argue that Tour 18 acted in bad faith with the
requisite level of culpability, intentionally trading on the
Plaintiffs’ fame and reputations and that the district court
erred in relying upon a lack of intent to divert sales and upon
the mixed results of the case in determining that the case was
not exceptional.
While a prevailing party’s mixed results can be handled by
apportioning the attorneys’ fees among the claims, see 5 MCCARTHY
ON TRADEMARKS, supra, § 30:103, the district court considered the
mixed results as a makeweight indicating (1) that Tour 18’s
conduct was not so egregious that it had no defense and (2) that
it had not taken an unreasonable position. See Pebble Beach, 942
F. Supp. at 1572. The fact that the outcome was mixed is
relevant to whether a case is exceptional, but it should not be
accorded great weight in the court’s analysis. As a makeweight,
the district court did not weigh this fact too heavily in its
determination of whether the case was exceptional.
As to the other circumstances of the case, the district
court did not clearly err in finding a lack of the requisite
level of culpability because there was no intent on Tour 18’s
part to divert sales, there were no actual damages proven, there
67
was no lack of good faith (as evidenced by Tour 18’s use of
disclaimers, though inadequate), and there were available
legitimate uses of the Plaintiffs’ marks to identify the
Plaintiffs’ products. See Roulo, 886 F.2d at 942-43 (affirming a
denial of attorneys’ fees where the defendant attempted to create
a similar product and made conscious efforts to create
dissimilarities, which in the end were inadequate); cf. Texas Pig
Stands, 951 F.2d at 697 n.23 (noting the significance of a lack
of actual damages); Taco Cabana, 932 F.2d at 1127-28 (affirming
an award of attorneys’ fees where the defendant acted with the
intent to reduce the plaintiff’s sales); Springs Mills, Inc. v.
Ultracashmere House, Ltd., 724 F.2d 352, 356 (2d Cir. 1983)
(holding attorneys’ fees appropriate where the defendant “adopted
[the plaintiff’s] mark and trade dress for no other purpose than
to obtain a free ride” on the plaintiff’s reputation (emphasis
added)). This case is unexceptional, and the district court
therefore did not abuse its discretion in denying an award of
attorneys’ fees to the Plaintiffs.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s
judgment as modified. Each party shall bear its own costs on
appeal.
68
Pebble Beach Co. v. Tour 18 I Ltd.
Court: Court of Appeals for the Fifth Circuit
Date filed: 1998-10-02
Citations: 155 F.3d 526, 1998 WL 611126
Copy CitationsCombined Opinion