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December 8, 1999


The opinion of the court was delivered by: Shapiro, District Judge.



Plaintiff Financial Systems has sold a variety of software products in the securities industry under the unregistered marks*fn2 FINANCIAL SYSTEMS SOFTWARE and FSS since 1988 (Stip. Part II ¶¶ 6-7), but Financial Systems did not use the FSS mark in advertising from 1991/1992 to 1994. The FSS mark of Financial Systems at first consisted of nothing more than the three letters together; the mark was later changed to include occasionally the three initials aligned diagonally on a grid, but Financial Systems also continued to use just the "FSS" initials.

Financial Systems products are used for financial risk management and trading. (Stip. Part I ¶¶ 23-26.) Until 1998, these products were on floppy disks or CD's, sold off-the-shelf and installed by the customer. (Stip. Part I ¶¶ 114-120.) Financial Systems is currently expanding its product line to include software identical to that sold by defendant Financial Software. (Pl. Supplement in Supp. of Mot. for Summ. J.) Plaintiff Financial Systems sells its products to banks, investment groups, and other financial institutions. (Pl.Br.Ex.46.)

In 1992, defendant Financial Software began using the unregistered FINANCIAL SOFTWARE SYSTEMS and FSS marks to sell risk management software in the securities industry. (Stip. Part II ¶¶ 2, 18.) Defendant's FSS mark consists of the initials "FSS" below a Bell curve, a symbol used in defendant's field. (Def. Br. at 11.) Defendant's products are used for trading, calculation of interest rates, and risk management. (Def. Br. at 9.) This software is sold to the same customers as those of Financial Systems, (Stip. Part II ¶ 25), and installed on-site. (Def. Br. at 9.) Shortly after Financial Software began using these marks, it received several telephone calls from customers who were attempting to call plaintiff Financial Systems. (Stip. Part II ¶¶ 26-29.)

In October, 1994, Financial Systems assigned its marks and goodwill to FNX Ltd., a company owned by Farid Naib, a former business partner of Financial Software's president, Gerald Thurston, Jr. (Stip. Part I. ¶¶ 22, 80-84.) In May, 1996, FNX Ltd. assigned the marks and their goodwill to Financial Systems, (Stip. Part I ¶ 102) and Financial Systems "stepped into the shoes" of FNX Ltd.*fn3

On November 18, 1996, Financial Systems, filing this action against Financial Software, alleged false representation under 15 U.S.C. § 1125(a), common law trade infringement, and violation of Ohio's trademark laws. Financial Software filed a counterclaim for violation of § 1125(a). After discovery, both parties have moved for summary judgment on Count I of the Complaint.*fn4


I. Standard of Review

Summary judgment may be granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A defendant moving for summary judgment bears the initial burden of demonstrating there are no facts supporting the plaintiff's claim; then the plaintiff must introduce specific, affirmative evidence there is a genuine issue for trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "When a motion for summary judgment is made and supported as provided in [Rule 56], an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in [Rule 56], must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e).

The court must draw all justifiable inferences in the non-movant's favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact exists only when "the evidence is such that a reasonable jury could return a verdict for the non-moving party." Id. at 248, 106 S.Ct. 2505. The non-movant must present sufficient evidence to establish each element of its case for which it will bear the burden at trial. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

The parties in this action, in filing cross-motions for summary judgment, concede there are no genuine issues of material fact, and the only issues are matters of law for the court to decide.

II. Trademark Infringement Law

The elements of trademark infringement are: (1) a valid and legally protectable mark; (2) ownership of the mark; and (3) likelihood of confusion concerning the origin of the goods or services when used by the other party. See Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 472 (3d Cir. 1994); Ford Motor Co. v. Summit Motor Products, Inc., 930 F.2d 277, 291 (3d Cir. 1991); Opticians Ass'n of America v. Independent Opticians of America, 920 F.2d 187, 192 (3d Cir. 1990).

A. Validity and Protectability of a Mark

A mark is only protected by the Lanham Act if it is "distinctive." See Specialty Measurements, Inc. v. Measurement Systems, Inc., 763 F. Supp. 91, 94 (D.N.J. 1991). A mark may fall into one of four categories: arbitrary or fanciful, suggestive, descriptive, and generic. A.J. Canfield v. Honickman, 808 F.2d 291, 296 (3d Cir. 1986). If the mark is arbitrary or suggestive, it is considered inherently distinctive and automatically protectable. Id. at 297; Specialty Measurements, 763 F. Supp. at 94. If the mark is descriptive, it is only protected if it has acquired secondary meaning. A.J. Canfield, 808 F.2d at 297. A generic mark is not protected. Id. Because the marks at issue are unregistered, the party seeking protection has the burden of proving that the mark is arbitrary, suggestive, or descriptive. See id.

A mark is considered arbitrary if it "bear[s] `no logical or suggestive relation to the actual characteristics of the goods.'" Id. at 296(quoting Keebler Co. v. Rovira Biscuit Corp., 624 F.2d 366, 374 n. 8 (1st Cir. 1980)); a suggestive mark "suggest[s] rather than describe[s] the characteristics of the goods." Id.

A descriptive mark "describe[s] a characteristic or ingredient of the article to which it refers." A.J. Canfield, 808 F.2d at 296. For a descriptive mark to be protected, the owner of the mark must demonstrate that the mark has gained secondary meaning; "[s]econdary meaning exists when the trademark is interpreted by the consuming public to be not only an identification of the product, but also a representation of the product's origin." Scott Paper Co. v. Scott's Liquid Gold, Inc., 589 F.2d 1225, 1228 (3d Cir. 1978).

A generic mark is not protected because the mark is "the common descriptive name of a product class." A.J. Canfield, 808 F.2d at 296. The purpose of trademark protection is to protect the public from confusion and "enabl[e] the buyer to distinguish the goods of one producer from the goods of others." Id. at 304. Generic marks are not protected because competitors must ...

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