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FIRST KEYSTONE FED. SAV. BANK v. FIRST KEYSTONE MO

August 16, 1995

FIRST KEYSTONE FEDERAL SAVINGS BANK
v.
FIRST KEYSTONE MORTGAGE, INC.



The opinion of the court was delivered by: J. CURTIS JOYNER

 JOYNER, J.

 Before this Court are cross-motions for summary judgment. Plaintiff is First Keystone Federal Savings Bank and Defendant is First Keystone Mortgage, Inc. The first two counts of Plaintiff's Complaint state federal trademark infringement and false designation of origin claims under the Lanham Trademark Act of 1946, as amended, 15 U.S.C. §§ 1051-1127 (1963, 1982 & Supp. 1995). The other three counts state claims for unfair competition, trademark misappropriation and common law trademark infringement.

 STANDARD OF REVIEW

 In considering a motion for summary judgment, a court must consider whether the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show there is no genuine issue of material fact, and whether the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The court must determine whether the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).

 In making this determination, all of the facts must be viewed in the light most favorable to the non-moving party and all reasonable inferences must be drawn in favor of the non-moving party. Id. at 256. Once the moving party has met the initial burden of demonstrating the absence of a genuine issue of material fact, the non-moving party must establish the existence of each element of its case. J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531 (3d Cir. 1990), cert. denied, 499 U.S. 921, 111 S. Ct. 1313, 113 L. Ed. 2d 246 (1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)).

 FACTUAL BACKGROUND

 According to the Complaint, in March, 1985, Plaintiff registered the name and mark "First Keystone Federal" with the Principal Register of the United States Patent and Trademark Office. This registration alleged a date of first use of January, 1982 for banking services. Since registration, Plaintiff's mark has been in continuous use and has become incontestable.

 It is uncontested that Defendant incorporated under the name First Keystone Mortgage, Inc in 1985 and began business in 1987. In 1988, one of Plaintiff's employees became aware of Defendant's similar name and contacted Defendant's President to discuss the similarity. Defendant's President did not wish to discuss the matter with a junior manager of Plaintiff, and the matter was dropped until 1993 when Plaintiff mailed Defendant a cease-and-desist letter. This litigation soon followed.

 The main issues the parties have raised to this Court are: (a) whether Plaintiff's interest in its mark can be protected and (b) if so, whether Defendant infringed that mark.

 A. Protection of Plaintiff's Mark

 Under judicial interpretations of the Lanham Act, a party can establish trademark infringement by showing that (1) its mark is valid and legally entitled to protection; (2) it is owned by plaintiff; and (3) defendant's use of the mark is likely to confuse consumers. Ford Motor Co. v. Summit Motor Prods., 930 F.2d 277, 291 (3d Cir.), cert. denied, 502 U.S. 939, 112 S. Ct. 373, 116 L. Ed. 2d 324 (1991) (quoting Opticians Ass'n v. Independent Opticians, 920 F.2d 187, 192 (3d Cir. 1990)). When a plaintiff's mark has been registered and has become "incontestable" under 15 U.S.C. § 1065, the elements of validity, ownership and entitlement to protection are conclusively proved. Id. If a mark is not incontestable, a plaintiff must show that its mark is valid in that it has a secondary meaning. Id.

 In this case, both parties appear to concur that Plaintiff's mark is incontestable under 15 U.S.C. § 1065. Incontestability is not as envious a status as the name implies, however. The Lanham Act provides for eight defenses against an incontestable mark. 15 U.S.C. § 1115(b). If a defendant can prove one of these defenses, which include laches, estoppel and acquiescence, then the plaintiff loses the presumptions of validity, ownership and right to protection. Ford Motor Co., 930 F.2d at 291.

 Defendant argues that Plaintiff's mark is contestable due to the doctrines of laches and acquiescence and because the mark has no secondary meaning.

 1. LACHES

 Laches is an equitable doctrine that prevents recovery when a defendant can show (1) inexcusable delay in instituting suit and (2) prejudice to the defendant resulting from such delay. University of Pittsburgh v. Champion Prods., Inc., 686 F.2d 1040, 1044 (3d Cir.), cert. denied, 459 U.S. 1087, 103 S. Ct. 571, 74 L. Ed. 2d 933 (1982) (citing Gruca v. United States Steel Corp., 495 F.2d 1252, 1258 (3d Cir. 1974); Sobosle v. United States Steel Corp., 359 F.2d 7, 12-13 (3d Cir. 1976)).

 Defendant argues that Plaintiff inexcusably delayed instituting suit because it is uncontested that Plaintiff was aware of Defendant at least by 1988 when Plaintiff's employee called Defendant's President about their similar names. Defendant argues further that it has been prejudiced by the delay between 1988 and now in that it expended resources on advertising and expanding its business. Defendant offers its President's deposition to support this allegation of prejudice.

 In return, Plaintiff argues that Defendant has not demonstrated laches. First, it offers evidence that Defendant's competing activities dramatically increased in 1992 and 1993. Pl.'s Br. at Exs. D & E. The Third Circuit has held that when an alleged infringement changes magnitude, a plaintiff is not guilty of laches if it acts promptly after the nature of the infringement changes. University of Pittsburgh, 686 F.2d at 1046. Second, Plaintiff asserts that Defendant was not prejudiced by the delay. Plaintiff proffers an excerpt of ...


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