Spire, Inc. v. Cellular South, Inc., 2017 WL 3995759, No.
17-00266 (S.D. Ala. Sept. 11, 2017)
Spire, a provider of natural gas fueling services, sought a
declaratory judgment against Cellular South, d/b/a C SPIRE, a wireless
telecommunications provider that also provides television and internet services,
for noninfringement/nondilution, and Cellular South sought a TRO/PI in
return.
Cellular South began doing business as C SPIRE in late 2011. In late 2012, the entity now known as Spire
chose the Spire mark and began using it for its natural gas stations, displayed
in a combination of gray, blue and white.
In 2013, LXE and Cellular South entered into a coexistence agreement;
LXE used “Spire” for antennas for infrastructure, not sold to ordinary
consumers. In 2014, now-Spire’s
rebranding as Spire spread, and Spire was registered for fueling stations and
used on a national website. In a 2015
trademark search, now-Spire identified C SPIRE as one of the results in 596
pages of results; now-Spire considered it irrelevant because it wasn’t in the
same business. There were over 150 active
registrations for Spire, including 15 in Alabama. In 2016, Spire began rebranding most of its
operations under the Spire brand name, including for promoting, offering and
rendering natural gas marketing/fueling in Alabama, Mississippi, Missouri, and South
Carolina. Cellular South then sent a
C&D and opposed Spire’s pending trademark registration. Spire’s rebranding continued; as of August
2017, employees were wearing Spire hats and ID badges but had yet to get new
uniforms, and vehicles were being updated.
Cellular south cited 2016 and 2017 market surveys for
Mississippi indicating C SPIRE has a “high brand preference” and the general
health of the brand is “very strong,” with 88% brand awareness in that state. The court found that the mark was at least
“well known” in Mississippi, but evidence didn’t support strength claims for
other states. Spire submitted
significant evidence of competing uses in many states, rendering the term “heavily
diluted nationwide.” “Cellular South has not established a substantial
likelihood of showing that its mark is arbitrary and thus entitled to the
highest protection.” [Yes, this conflates conceptual with marketplace strength,
but it doesn’t seem to make a difference.]
Mark similarity:
Cellular South’s witness testified that Cellular South’s logo will be
confused with Spire’s logo because “the average consumer driving down the road
at 55 miles per hour seeing a billboard will likely think Cellular South
altered its logo and changed its color to orange.” The court found that the
marks differed somewhat: Spire’s mark is orange, with block lettering in a
specific font, and has a symbol after the lettering (two staggered
semi-circles, representing a handshake). Cellular South’s mark is blue, with
rounded lettering in a different font, and has a symbol before the lettering (a
“c” with beams of varying lengths surrounding it). They were pronounced
differently: one versus two syllables, and one using “c” while the other didn’t.
Cellular South also made prior representations to the USPTO (in the Honeywell
agreement) that its use of the letter “c” in its logo sufficiently
distinguished it from another “spire” mark.
The context was distinguishable (businesses involved in infrastructure,
not common consumers) but that argument was still relevant. Overall, the colors differed, the fonts
differed slightly, the spacing differed slightly, and the art differed, making
the overall impression distinguishable. Similarity weighed slightly in Cellular
South’s favor.
Product/service similarity: Cellular South argued that local and long
distance transmission of telecommunications was similar to Spire’s “local and long distance transmission of gas”:
Cellular South has 7,000 miles of fiber cable underground and Spire supplies
natural gas through underground pipelines. Also, “someone may move into a new home or
office and need to set up phone, internet, television and gas. In that case, he
or she could call C Spire for the first three and Spire for the last.” Cellular South planned to expand into lighting
controls, thermostats, CO2 detectors, etc. for the household, and argued that
Cellular South was a utility like Spire.
The court disagreed.
“Spire’s natural gas energy services are distinct and unrelated to Cellular
South’s telecommunication goods and services.” They don’t compete, and, as
Cellular South told the USPTO, its buyers sign up for phone or computer
services not “by mistake” nor “without full knowledge as to the source of those
services.”
There was also no evidence of actual confusion. Jacob Jacoby did a survey and concluded that
“it is highly unlikely that any consumers seeking telecommunications services
would call a natural gas company for such services, or think that one is linked
with the other – noting only 2.7% of consumers may think the businesses could
be associated.” The lack of relation between the parties’ services made
confusion less likely. Most interesting
citation: General Motors Corp. v. Cadillac Marine & Boat Co., 226 F. Supp.
716 (W.D. Mich. 1964) (rejecting plaintiff’s theory that “public confusion
automatically follows the use of the trademark ‘Cadillac’ upon any other
product, no matter how unrelated it may be to Cadillac automobiles” and holding
“[w]hile Cadillac cars and defendant’s Cadillac boats are means for
transportation....they do not possess the same descriptive properties....This
differential makes them void of inherent confusing characteristics.”....).
Indeed, the court, continued, “[c]ase law also suggests that
direct or actual competition with the same or similar goods/services is
required for an infringement claim to survive.”
V. interesting! The court pointed
to dilution as the appropriate cause of action for unrelated
goods/services. In terms of Cellular South’s
claim to its “zone of natural expansion” in services, “the senior user of a
mark cannot monopolize markets that neither his trade nor his reputation has
reached.” Being utilities delivered
undergraound wasn’t sufficient similarity to weigh in Cellular South’s favor.
Similarity of customers and sales outlets between the
entities: Cellular South argued that it used all types of advertising you can
think of and sold to the general public, leading to inevitable overlap. Spire responded that it didn’t use retail
stores (consumers have to call Spire or use its website to sign up) and that
the public couldn’t select from a long list of competing natural gas providers
as it can for telecom providers. “Cellular
South’s advertising and sales argument is based on a faulty premise -- that
Cellular South and Spire are using the same available channels of advertising
to compete against one another…. Further, apart from stating its customers are
homeowners and businesses, Cellular South has not shown how a cell phone or
internet customer is similar to a natural gas customer.” [Well, they probably often are the same
person, but they could be thinking about different things for different
purchases.]
Similarity of advertising methods: the court found this
factor neutral, given Spire’s arguments that the content of its ads were very different, despite the similar
media. “[W]hile both companies may use
the same or similar advertising methods and styles, because the companies are
not competitors in the telecom industry, they are necessarily communicating
distinct and different advertising messages to different audiences.”
Intent: Cellular South didn’t show that Spire had a
conscious intent to capitalize on its reputation/goodwill, was intentionally
blind, or otherwise manifested improper intent in adopting its mark.
Actual confusion: Cellular South’s confusion arguments were
linked to its future plans to “own the home” – it recently applied to register
its marks for home automation and security services (alarm services – alarm
systems, CO2 detectors, thermostats, garage door openers, lights, AC, door
locks, lighting controls, etc). But Spire has no plans to go into the telecom
and internet business. And Cellular
South couldn’t show actual confusion; there were no instances of both companies
advertising in Alabama and Mississippi.
Its survey found that, after viewing the company’s logos, “just shy of
37%” of consumers were confused, thinking Spire was affiliated with Cellular
South. Spire criticized showing only the
bare logos to participants, which the surveyor justified by arguing that Spire
wasn’t yet in the marketplace and that isolated logos are common (e.g., on a
headset or jumbotron). The surveyor also testified that there might be
confusion and inconvenience with customer call centers, and that a Spire
catastrophe could affect the image of Cellular South. Jacoby responded that Cellular South’s expert
used the wrong universe (testing Spire’s customer base, not Cellular South’s),
wrong stimuli (logos without context), and wrong protocols (no control group!).
The court found no evidence of actual confusion, just conjecture
and speculation by Cellular South. “At most, the evidence, per Dr. Jacoby,
indicates that 15.3% of consumers thought a telecommunications business and a
natural gas business could be associated. Association, however, is not de facto
confusion.” On balance, there was no likely success on the merits.
Alabama and Mississippi Trademark dilution: 15 U.S.C. §
1125(c)(6) states that “[t]he ownership by a person of a valid registration ...
on the principal register under this chapter shall be a complete bar to” a
state law dilution claim. But Cellular
South is challenging the Spire registration.
While that was pending, the court wouldn’t dismiss the state-law
dilution claims as preempted.
Both states protect marks that are “famous and
distinctive.” Fame meaans “widely
recognized by the general consuming public of this state or a significant[ ] geographic
area in this state as a designation of source of the goods or services or the
business[ ] of the mark’s owner.” For
Alabama, there was no evidence that the C SPIRE was “famous” in Alabama before
Spire’s first use of the “spire” mark in December 2013. For Mississippi, the
evidence of fame was from 2016, years after Spire’s first use of a version of
the “spire” mark in December 2013. However, since Spire used other versions of
the mark in 2016, there was “some” evidence of C SPIRE’s fame at that time. “[E]ven assuming arguendo that the C SPIRE
mark was famous in Mississippi as of March 2016, Cellular South still has to
submit evidence showing that the public associates (or will likely associate)
the same mark with both Cellular South and Spire, and that such association
infringes on Cellular’ South’s rights ‘by preventing the mark to serve as a
unique identifier of the senior user alone.’” While it was a close case, the
court found that Cellular South hadn’t shown a substantial likelihood of
success on the merits. (Could it be
a close case overall if the Spire registration might be valid?)
Irreparable harm: eBay
applied to trademark cases. Cellular South argued that the threat of lost
control over its reputation was irreparable harm. But “Cellular South and Spire do not
produce/sell (or associate with) the same goods/services such that one would
logically (or necessarily) ‘be at the mercy’ of the nature and quality of the
goods/services of the other.” Cellular
South’s evidence was speculative: e.g., “risk of a gas leak,” theoretical
“negative customer experiences,” “negative social posts” incorrectly linked to,
or associated with, Cellular South. But Cellular South also emphasized the
hundreds of millions of dollars and thousands of hours it has invested to to
create trust in its brand. Here’s a good quote for defendants in non-competing
goods cases: “The Court finds it incongruous for Cellular South to argue how
famous and well known its name is and how vested it is with its customers and
communities as a trusted brand, yet to simultaneously ask the Court to conclude
that Spire’s use of a mark – in a different industry, with a different
business, selling/providing different goods/services – is on the verge of
causing the imminent loss or destruction of all of those dollars and work hours
unless an immediate injunction issues.”
Plus, Cellular South’s delay in seeking injunctive relief
argued against irreparable injury; it knew of Spire’s rebranding plans at the
latest in March 2016, when it sent a C&D.
Then Spire sued for declaratory relief in June 2017. Cellular South only moved for injunctive
relief in August 2017. The potential for
a slow rollout of Spire’s rebranding didn’t justify disregarding the March 2016
letter, which “indicates that Cellular South thought the harm or injury was
actual or imminent at that time, not prospective, potential or possible, yet
failed to seek injunctive relief.” And in February 2017, Spire notified
Cellular South that it was already rebranding and that the process would finish
by the end of 2017. Whether Cellular
South’s delay was a few months or 18 months, it undercut any urgency.
The balance of harms weighed in favor of Spire, given that
it had already started operating under that mark and it had invested substantially
in rebranding since 2016. Nor, of course, did the public interest favor an
injunction.
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