The opinion of the court was delivered by: Dalzell, District Judge.
A bail bond company has sued a rival for, inter alia, trademark
infringement, and has filed a motion for a preliminary injunction to stop
it. The rival has moved to dismiss.
This memorandum will constitute our findings of fact and conlusions of
law under Fed.R.Civ.P. 52(a) as to the preliminary injunction motion. For
the reasons that follow, we will deny both motions.
Plaintiff Capital Bonding Corp. ("Capital") is a Reading-based company
that sells bail bonds in much of the country. Until 1997, the firm
operated as a sole proprietorship under the name "Vincent J. Smith Bail
Bonds". Smith two years ago elected to incorporate his business, to which
he was introduced and learned from boyhood at the knee of his
grandmother. Together with his wife, Smith owns all of the common stock
of Capital.
ABC Bail Bonds, Inc. ("ABC") is a relatively new firm, having been
formed by its principal, and current president, Ronald Jacob Yellin, as
the sequel to a number of pawn shops and check cashing agencies that
Yellin had operated for many years. Yellin began the bail bond business
in 1995 and, like Capital, it has to date proved to be a successful and
fast-growing enterprise.
Although Capital operates directly and indirectly in at least thirty
states, it is undisputed that It competes with ABC in the counties of
Eastern Pennsylvania and throughout New Jersey, where ABC is based in the
state capital. Both firms serve the same market, which ranges from
lawyers to non-literate, non-English-speaking defendants and their
families and friends. Both provide the financial guarantees most people
associate with such firms, but both also provide the less commonly
thought-of service of, as Yellin put it, "fugitive recovery".*fn1
Capital on August 31, 1999 filed this action for trademark infringement
and unfair competition under the Lanham Act, 15 U.S.C. § 1051 et
seq., and Pennsylvania law.*fn2 Capital alleges that the Yellow Pages
ads of ABC infringe its "distinctive" logo, which it has registered with
the Patent and Trademark Office. Capital's logo consists of a muscular,
serious-looking man dressed in tattered prison garb bending apart the
bars of a prison cell (the "Capital image").*fn3 ABC's image features a
cartoon prisoner dressed in an old-fashioned prison uniform, gleefully
stepping through a hole in a brick wall (the "ABC image").*fn4
After affording the parties a brief time for expedited discovery, we
held a hearing on the preliminary injunction motion on September 27-28,
1999.
II. Capital's Motion for a Preliminary Injunction
When ruling on a motion for a preliminary injunction, we must consider
four factors: (1) the likelihood that plaintiff will prevail on the
merits at final hearing; (2) the extent to which plaintiff is being
irreparably harmed by the conduct complained of; (3) the extent to which
defendant will suffer irreparable harm if the preliminary injunction is
issued; and (4) the public interest. See, e.g., Pappan Enters. v.
Hardee's Food Sys., Inc., 143 F.3d 800, 803 (3d Cir. 1998). Because we
find that the likelihood that Capital will prevail on its trademark
infringement claim is very slim, we need not reach the last two
inquiries.
A. Capital's Likelihood of Success on the Merits
To succeed on a claim for trademark infringement,*fn6 a plaintiff must
establish three elements:
1. The mark is valid and legally protectable;
2. The mark is owned by the plaintiff; and
3. The defendant's use of the mark to identify goods
or services is likely to create confusion
concerning the origin of the goods or services.
See, e.g., Fisons Horticulture, Inc. v. Vigoro Indus., 30 F.3d 466, 472
(3d Cir. 1994); Opticians Ass'n of Am. v. Independent Opticians of Am.,
920 F.2d 187, 192 (3d Cir. 1990).
1. Validity and Legal Protectability of the Mark
The first element of a trademark infringement claim — the
validity and legal protectability of the mark — is proven where a
mark is federally registered and has become "incontestable" under the
Lanham Act, 15 U.S.C. § 1065.*fn7 Because Capital cannot establish
that its mark is incontestable (because it has not been in continuous use
for five consecutive years), the Capital image is valid and legally
protectable only if it has acquired "secondary meaning" or is "inherently
distinctive.". See, e.g., Ford Motor Co. v. Summit Motor Prods., Inc.,
930 F.2d 277, 291 (3d Cir. 1991).
Capital has a certificate of registration for its mark, see Compl.
exh. B, which is "prima facie evidence of the validity of the registered
mark and of the registration of the mark, of the registrant's ownership
of the mark, and of the registrant's exclusive right to use the
registered mark in commerce on or in connection with the goods or
services specified in the certificate," 15 U.S.C. § 1057(b). At the
preliminary injunction hearing, however, Capital proffered no actual
evidence that would suggest that Capital's image has acquired either
secondary meaning or is inherently distinctive.
Secondary meaning is demonstrated where, "in the minds of the public,
the primary significance of a product feature or term is to identify the
source of the product itself." Ford, 930 F.2d at 292 (quoting Freixenet,
S.A. v. Admiral Wine & Liquor Co., 731 F.2d 148, 152 (3d Cir. 1984)). It
is generally established "through extensive advertising which suggests
that the products originate from a single source." Scott Paper Co. v.
Scott's Liquid Gold, Inc., 589 F.2d 1225, 1228 (3d Cir. 1978). A
non-exhaustive list of factors that may be relevant to the issue of
whetheramark has acquired secondary meaning in the market includes the
extent of sales and advertising leading to buyer assoiation, the length
and "exclusivity of use, the fact of copying, customer surveys and
testimony, the use of the mark in trade journals, the size of the
company, the number of sales, the number of customers, and actual
confusion. See Ford, 930 F.2d at 292.
Capital has produced nothing that would suggest that its image has
acquired secondary meaning in the marketplace. To the contrary, the
parties have stipulated that Capital has only been in existence since
January of 1997 and only began using its image in July of 1997, just
slightly more than two years ago.*fn8 Capital has offered nothing to
show that its image has achieved secondary meaning in that brief period
of time; to the contrary, its president testified at the, hearing that
Capital actually stopped using the logo in the Yellow Pages, although it
is undisputed that such advertising is an important source "of business
in the bail bond industry. Cf. Guardian Life Ins. Co. v. American
Guardian Life Assurance Co., 943 F. Supp. 509, 525 (E.D.Pa. 1996) ...