Centaur Communications, Limited v. A/s/m Communications, Inc.

This appeal, from a finding of trademark infringement, necessarily implicates the legal concepts of secondary meaning and likelihood of confusion, for which our precedents establish a long list of factors that must be considered before a determination may be reached. Unfortunately, there is no shortcut. To reach a principled conclusion in a trademark case, it is just as essential to recite the right formulas as it was for Ali Baba to say "Open Sesame" in order to open the door to the treasure cave of the Forty Thieves.

In a judgment of the United States District Court for the Southern District of New York (Pollack, J.) entered on January 20, 1987, the district court judge found that the plaintiff-appellee Centaur Communications, Ltd. (Centaur or appellee) had established that the phrase, "Marketing Week," the title of a Centaur publication, was a protectible trademark under both federal and state law. The trial judge also ruled that the defendant-appellant A/S/M Communications, Inc. (A/S/M or appellant) had infringed upon the mark because the title of its publication, "ADWEEK's Marketing Week," would be likely to create confusion among consumers as to the source or origin of A/S/M's magazine. Based on these findings, it granted injunctive relief. We subsequently stayed a portion of the injunction pending appeal. We now affirm.

This appeal involves two weekly publications with similar titles, both of which focus on marketing news. For purposes of clarity, we will refer to Centaur's publication as Marketing Week and A/S/M's as ADWEEK's Marketing Week.1 Although both magazines are concerned with marketing, the emphasis of each is different. Marketing Week concentrates on the British market, though it does have a page devoted to marketing news in the United States, and ADWEEK's Marketing Week is geared towards the American market.

The orbits of these two magazines recently converged. Marketing Week has been distributed in the United States for about ten years, garnering only a slim circulation of 110 current subscribers. In contrast, its subscriber-base in the United Kingdom numbers 36,000. The genesis of ADWEEK's Marketing Week is somewhat complicated. A/S/M was formed in 1978. At that time it acquired three regional publications dealing with advertising, and changed their names to ADWEEK. Over the next several years, A/S/M acquired other publishing companies in different regions that also published advertising magazines. By 1986 it was publishing six regional editions of ADWEEK, all aimed towards advertising agency executives. In mid-1985, A/S/M began publishing a national marketing edition of ADWEEK. The national publication differed from the regional editions in that it emphasized attracting marketing executives in so-called "client" companies. The national marketing edition of ADWEEK had a subscription base of 10,000. The title of this new publication was ADWEEK National Marketing Edition. Beginning with the September 6, 1986 edition, A/S/M changed the title to ADWEEK's Marketing Week. This new publication came to Centaur's attention shortly thereafter, and the present litigation ensued.

This case commenced when Centaur sued A/S/M for declaratory and injunctive relief on December 15, 1986. The complaint alleged, inter alia, infringement of Centaur's unregistered trademark and a violation of New York's unfair competition law. After a December 23, 1986 hearing before the district court, the request for preliminary injunctive relief was denied. Centaur Communications, Ltd. v. A/S/M Communications, Inc., 649 F.Supp. 74 (S.D.N.Y.1986).

Waiving damages, Centaur then sought permanent injunctive relief. After a bench trial on the merits, the district court found both a Lanham Act and an unfair competition violation. Centaur Communications, Ltd. v. A/S/M Communications, Inc., 652 F.Supp. 1105 (S.D.N.Y.1987). As a consequence, it restrained A/S/M from displaying on its cover or in any promotional material, the mark "Marketing Week" either alone or with the word "ADWEEK's" "occupying a significantly and materially lesser percentage of the entire logo." Id. at 1125. It further enjoined A/S/M from using the title "Marketing Week" without a license from Centaur. Id. at 1124. Appellant was also required to publish a prominent notice in its next three issues explaining why it had stopped using the title Marketing Week" and stating that its publication was not connected to Centaur's. Id. at 1126. Finally, the district court awarded appellee attorneys' fees. Id.

On January 27, 1987, A/S/M moved in this Court for an order expediting the appeal and for a stay pending appeal. We expedited the appeal and stayed that portion of the decree which required that "Adweek" appear in comparable size lettering to and in conjunction with "Marketing Week" on its cover. Subject to certain conditions, A/S/M was permitted to utilize advertising and promotional materials without the word "Adweek" appearing in comparable size to and in connection with "Marketing Week." We also stayed the requirement that appellant give notice to its subscribers. Finally, the sum of $10,000 was set as liquidated damages should the finding of infringement be affirmed on appeal.

The main issue raised is the correctness of the district court's determination that by its use of the term "Marketing Week" A/S/M violated Sec. 43(a) of the Lanham Act.

Section 43(a) of the Lanham Act proscribes "false designation of origin" in relation to goods or services. 15 U.S.C. Sec. 1125(a) (1982). This section is the only provision in the Lanham Act that protects an unregistered mark like Centaur's. Its purpose is to prevent consumer confusion regarding a product's source, see Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 871 (2d Cir.1986), and to enable those that fashion a product to differentiate it from others on the market. International Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912, 918 (9th Cir.1980), cert. denied, 452 U.S. 941, 101 S.Ct. 3086, 69 L.Ed.2d 956 (1981). In that way producers create goodwill with consumers. The device used to protect both groups is a trademark.

Not all trademarks are entitled to the same degree of legal protection. See, e.g., Lois Sportswear, 799 F.2d at 871; 20th Century Wear, Inc. v. Sanmark-Stardust Inc., 747 F.2d 81, 87 (2d Cir.1984), cert. denied, 470 U.S. 1052, 105 S.Ct. 1755, 84 L.Ed.2d 818 (1985) (20th Century I). As Judge Friendly's opinion in Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4 (2d Cir.1976), observes, there are four shifting levels of trademark protection which, beginning with the least protected, are (1) generic, (2) descriptive, (3) suggestive, and (4) fanciful or arbitrary. Id. at 9.

The two categories implicated on this appeal are generic and descriptive marks. A generic mark "refers, or has come to be understood as referring, to the genus of which the particular product is a species." Id. at 9. For example, "aspirin" is a generic term. A descriptive mark "describes the qualities or characteristics of a good or service." Park 'N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 194, 105 S.Ct. 658, 662, 83 L.Ed.2d 582 (1985). A term can be descriptive in two ways: "[i]t can literally describe the product, or it can describe the purpose or utility of the product." 20th Century I, 747 F.2d at 88. The district court ruled without objection that the mark, "Marketing Week," was descriptive. 652 F.Supp. at 1108.

Appellant now suggests that "Marketing Week" is a generic mark. Since this argument was not raised in the trial court, we decline to consider it. See Air et Chaleur, S.A. v. Janeway, 757 F.2d 489, 493 (2d Cir.1985); Schmidt v. Polish People's Republic, 742 F.2d 67, 70 (2d Cir.1984). Moreover, neither party has addressed the issue of whether "marketing" is the name of a trade or industry, which were that the case, would cause the mark to be generic. Cf. Reese Publishing Co. v. Hampton Int'l Communications, 620 F.2d 7, 10 (2d Cir.1980) (the title, "Consumer Electronics Monthly" was a generic trademark because "consumer electronics" was the name of a trade). We consider therefore what protection, if any, should be accorded appellee's descriptive mark.

Because the title, "Marketing Week," is not registered, Centaur may only succeed in this infringement suit if it proves that (1) the mark has acquired secondary meaning and (2) there is a likelihood of confusion as to the source of the publication. See Thompson Medical Co. v. Pfizer Inc., 753 F.2d 208, 213, 216 (2d Cir.1985); 20th Century I, 747 F.2d at 90. This two-step analysis reflects two different questions. The inquiry into the existence of secondary meaning examines whether the proponent of the mark has acquired a protectible interest in it. See American Television & Communications Corp. v. American Communications & Television, Inc., 810 F.2d 1546, 1548 (11th Cir.1987); Security Center, Ltd. v. First Nat'l Sec. Centers, 750 F.2d 1295, 1298 (5th Cir.1985). An examination into the likelihood of confusion considers whether that interest has been infringed. See Lois Sportswear, 799 F.2d at 871. We discuss each of these questions.

A mark acquires secondary meaning when "it [is] shown that the primary significance of the term in the minds of the consuming public is not the product but the producer." 20th Century Wear, Inc. v. Sanmark-Stardust Inc., 815 F.2d 8, 10 (2d Cir.1987) (20th Century II) (quoting Ralston Purina Co. v. Thomas J. Lipton, Inc., 341 F.Supp. 129, 133 (S.D.N.Y.1972) (emphasis in original)). Thus, the crux of the doctrine of secondary meaning "is that the mark comes to identify not only the goods but the source of those goods," even though the relevant consuming public might not know the name of the producer. Id. ("[C]onsumers often buy goods without knowing the personal identity or actual name of the [producer]."). Nonetheless, someone seeking to establish secondary meaning must show that the purchasing public associates goods designated by a particular mark with but a single--although anonymous--source. Id.; cf. 3 R. Callmann, The Law of Unfair Competition Trademarks and Monopolies Sec. 19.25, at 81-82 n. 7 (L. Altman 4th ed. 1983) (Trademarks ) ("It suffices if consumers accept the trademark as an indication of origin.").

The focus of secondary meaning therefore is the consuming public. Hence, so must be the inquiry into whether the mark owner has a protectible interest. Although the mark owner strives to create a secondary meaning for its product, it is the consuming public which, in effect, determines whether that effort has succeeded. See Co-Rect Prods., Inc. v. Marvy! Advertising Photography, Inc., 780 F.2d 1324, 1330 (8th Cir.1985); Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1015 (9th Cir.1985), cert. denied, 474 U.S. 1059, 106 S.Ct. 802, 88 L.Ed.2d 778 (1986); Scott Paper Co. v. Scott's Liquid Gold, Inc., 589 F.2d 1225, 1228 (3d Cir.1978). See also Madrigal Audio Laboratories, Inc. v. Cello, Ltd., 799 F.2d 814, 822 (2d Cir.1986) (same but involving trade name).

Again, it is not always the general public's understanding but--depending upon the product--often only a segment of consumers that need be examined. See Playboy Enters. v. Chuckleberry Publishing, Inc., 687 F.2d 563, 567 (2d Cir.1982) (the litigants' magazines appealed to the same consumer group--heterosexual adult males); President & Trustees of Colby College v. Colby College-N.H., 508 F.2d 804, 808 (1st Cir.1975) (college could establish secondary meaning by showing "the congruence of its name and its institution in the minds of an appreciable number of individuals broadly associated with other institutions of higher education in a given geographic area."); Inc. Publishing Corp. v. Manhattan Magazine, Inc., 616 F.Supp. 370, 386 (S.D.N.Y.1985), aff'd mem., 788 F.2d 3 (2d Cir.1986) (relevant consumer group in trademark case involving magazine titles comprised of advertisers, subscribers, and newsstand purchasers). Such is the case at hand.

Moreover, it is only necessary to show that a substantial segment of the relevant group of consumers made the requisite association between the product and the producer. See Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1358 (9th Cir.1985) (en banc); Union Carbide Corp. v. Ever-Ready Inc., 531 F.2d 366, 381 (7th Cir.), cert. denied, 429 U.S. 830, 97 S.Ct. 91, 50 L.Ed.2d 94 (1976); 3 R. Callmann, Trademarks, supra, Sec. 19.26, at 86. The district court here found that the relevant consuming public (i.e., market) of the magazines was "executives in the international marketing and advertising community in the United States." 652 F.Supp. at 1110. Because neither party challenges this definition of the group, it is the starting point for analysis.

In Thompson Medical we collected the various precedents that discussed the question of secondary meaning, 753 F.2d at 217, and drew from them the elements utilized in determining whether secondary meaning had been created, noting that "no 'single factor [was] determinative,' and [that] every element need not be proved." Id. (quoting American Footwear Corp. v. General Footwear Co., 609 F.2d 655, 663 (2d Cir.1979)). The elements are (1) advertising expenditures, (2) consumer studies linking the mark to a source, (3) unsolicited media coverage of the product, (4) sales success, (5) attempts to plagiarize the mark, and, (6) length and exclusivity of the mark's use. Id. After applying these criteria to its definition of the relevant market the district court found that the mark "Marketing Week" had acquired a secondary meaning. Our first task is to analyze these factors in order to decide whether its findings were clearly erroneous. See McGregor-Doniger Inc. v. Drizzle Inc., 599 F.2d 1126, 1133 n. 4 (2d Cir.1979); see also American Television, 810 F.2d at 1549; Blue Bell, Inc., 778 F.2d at 1355; 3 R. Callmann, Trademarks, supra, Sec. 19.27, at 91.

(1) Advertising Expenditures

The characteristics of the relevant market are important in considering advertising expenditures. Compared to other advertising campaigns, Centaur's efforts were relatively modest. Cf. Aloe Creme Laboratories, Inc. v. Milsan, Inc., 423 F.2d 845, 850 (5th Cir.), cert. denied, 398 U.S. 928, 90 S.Ct. 1818, 26 L.Ed.2d 90 (1970) (expenditure of 3 million dollars for nationwide magazine and newspaper advertisements). It expended $10,000 in a direct mail solicitation campaign targeted at 26,000 subscribers of Advertising Age.

Nonetheless, the record discloses that Centaur publicized Marketing Week by other means. For the past three years it has mailed brochures to the top 100 American advertising agencies. Its senior director has traveled to the United States twice a year for the last eight years to make sales presentations to advertising agencies and the media. Concededly, these trips were undertaken for the purpose of selling advertising space, but they were in effect advertising expenditures because they served to put Marketing Week before the relevant group of consumers. Similarly, Marketing Week's appearance in a source guide to European marketing and advertising, entitled Marketing Europe 1985, is also the functional equivalent of advertising because this guide was distributed to people involved in advertising and marketing. Moreover, Centaur produces a video guide to advertising agencies in England, many of which are overseas offices of American agencies. Centaur has also sponsored various conferences featuring speakers from American advertising agencies and companies under the "Marketing Week" title. And, it has generated in recent years up to $250,000 in revenues from U.S. advertisers buying space in Marketing Week.

Thus, these activities support the conclusion that Centaur's efforts were effective in causing the relevant group of consumers to associate Marketing Week with it. See, e.g., First Brands Corp. v. Fred Meyer, Inc., 809 F.2d 1378, 1383 (9th Cir.1987) (test of secondary meaning is not the size of the expenditure used to create it but its effectiveness).

(2) Consumer Studies Linking Mark to Source

The most vigorously disputed aspect of this case is the evidence of consumer associations linking the mark to appellee. The dispute encompasses the district court's reliance on "anecdotal" testimony by Centaur's witnesses and its treatment of A/S/M's survey. The trial court credited testimony of the head of another trade magazine, Advertising Age, Mr. Rance Crain, and of the chief executive officer of a large advertising agency, Mr. Edward Ney, that Marketing Week had substantial recognition and acceptance in the relevant market.

Appellant mounts several challenges to the use of this evidence. First, it attacks reliance on anecdotal testimony by consumers instead of use of a consumer survey. This attack is misplaced. We have never rejected use of direct testimony by consumers. Cf. 20th Century II, 815 F.2d at 10 (in passing on the question of secondary meaning, the court noted the absence of testimony from consumers or a consumer survey). And, though surveys have become the usual way of demonstrating secondary meaning, see Mattel, Inc. v. Azrak-Hamway Int'l, Inc., 724 F.2d 357, 361 (2d Cir.1983) (per curiam), they are not the only way. A/S/M also attacks the credibility of Mr. Crain, arguing that he is biased because his magazine competes with ADWEEK's Marketing Week. The trial court was in a better position to determine credibility, particularly in light of appellant's thorough investigation of the alleged bias. Hence, the testimony cannot be discounted on this basis. Cf. Playboy Enterprises, 687 F.2d at 569 (appellate court, lacking trial court's opportunity to observe the witness, credited trial court's characterization of witness's testimony).

Yet the testimony of the two witnesses is not entitled to much weight. For example, we have previously considered as probative testimony from a witness that a product had "a small and declining share of the market and that 'on a consumer level the brand was ... virtually unknown to the vast majority of people.' " Abraham Zion Corp. v. Lebow, 761 F.2d 93, 105 (2d Cir.1985). The justification for little weight is because the basis for Mr. Crain's statement that Marketing Week was well known in "top marketing circles and advertising circles and in top international circles in the country" is not disclosed. Although the witness testified that he had questioned various people about Marketing Week, it is unclear whether they were representative of the relevant market. Again, the witness estimated that there are approximately 5,000 to 10,000 individuals in that market, but does not reveal whether he spoke to 5 or 50 of them. Similarly, the record does not indicate how representative Mr. Ney's experience at his particular advertising agency was compared to other agencies. Cf. In re Northland Aluminum Prods., Inc., 777 F.2d 1556, 1560 (Fed.Cir.1985) (discounting testimony of individuals concerning secondary meaning of term because the record did not establish that they were representative of the relevant group of consumers). Thus, though the testimony of these witnesses is relevant, its significance is limited.

A/S/M conducted two surveys designed to test consumer association of the mark "Marketing Week" to Centaur. No consumer in either survey made the association. These surveys were admitted into evidence, but their significance was discounted by the district court, which stated that they were "of dubious value in the totality of the evidence." 652 F.Supp. at 1110. Judge Pollack treated the survey evidence properly. A survey must use the right frame of reference, that is, the group whose associations or attitudes are at issue. See Universal City Studios, Inc. v. Nintendo Co., 746 F.2d 112, 118 (2d Cir.1984); see also Manhattan Magazine, 616 F.Supp. at 392-93. Although the above cases concerned flaws in a survey designed to test consumer confusion, there is no reason not to apply the basic principle in the context of secondary meaning.

The surveys here, according to the testimony of Dr. Hans Zeisel, were designed to test the reactions of "people in executive positions in marketing in American business enterprises and institutions." These people did not correspond to the relevant group--"executives in the international marketing and advertising community in the United States"--defined by the district court. Thus, the value of the surveys was correctly discounted, leaving direct evidence of consumer association of "Marketing Week" with Centaur as inconclusive.

(3) Sales Success

As previously mentioned, American subscriptions to Marketing Week are limited. In another context, such a small base might be fatal. But the paucity of subscribers in the instant case must be considered in light of two factors. First, some of the subscriptions are held by large advertising agencies and companies where the magazine is read by more than one person. Second, Centaur sold advertising to Business Week, the New York Times, Hilton International, and McGraw Hill. Because these advertising decisions typically involve advertising agencies and client companies, they suggest a recognition among the relevant group of consumers. In sum, the limited success of Centaur in attracting subscribers tends to undercut a finding of secondary meaning, but in light of the discussed considerations, it is not dispositive.

(4) Unsolicited Media Coverage

With respect to unsolicited media coverage, Marketing Week has been cited in such publications as Business Week and the Associated Press. Not much significance may be ascribed to such citations because it is not clear what they indicate about the relevant group of consumers. Cf. Harlequin Enters. v. Gulf & W. Corp., 644 F.2d 946, 950 (2d Cir.1981) (unsolicited media coverage reported on the "enthusiasm and loyalty" of the product's customers).

(5) Attempts to Plagiarize

The most persuasive Thompson Medical factor is the finding that A/S/M had intentionally copied Centaur's mark. See 20th Century II, 815 F.2d at 10 (finding of intentional copying was persuasive, if not conclusive, evidence of consumer recognition and goodwill). Appellant was aware of appellee's publication. Its executive vice-president and principal stockholder had copies of Marketing Week in his office. Additionally, the parties previously had discussed a joint video venture, as well as Centaur's possible acquisition of some shares in A/S/M.

It seems fairly clear that A/S/M deliberately copied Centaur's mark. The most telling evidence of this is the obvious similarity of the titles and the fact that A/S/M failed to provide a credible explanation for the change that appeared in its September 6, 1986 edition that did not involve copying. A/S/M's previous title for its magazine was ADWEEK's National Marketing Edition. But, as the A/S/M official stated at trial, the name "Adweek" was the most prominent feature in the title while the phrase "National Marketing Week" appeared "in a bar under the title." (emphasis supplied). This testimony suggests that ADWEEK's Marketing Week evolved from ADWEEK alone. In fact, the evolution from "Adweek" to "Adweek's Marketing Week" is not so evident. A/S/M claimed in an affidavit submitted in opposition to the preliminary injunction that "Marketing" evolved from the phrase "National Marketing Edition." Yet this claim is belied by its officer's statement and by the continued presence--as of April 20, 1987 issue--of the phrase "National Marketing Edition" on the cover of appellant's publication. Moreover, the trial court was better able than we are to observe the demeanor of appellant's witnesses testifying to the genesis of the title and therefore to assess their credibility. See Schmitz v. St. Regis Paper Co., 811 F.2d 131, 132 (2d Cir.1987) (per curiam); Financial Information Inc. v. Moody's Investors Serv., Inc., 808 F.2d 204, 208 (2d Cir.1986).

(6) Length and Exclusivity

Another Thompson Medical factor that supports the finding of secondary meaning is the length and exclusivity of Centaur's use of the mark. From 1978 Centaur had continuously and exclusively used "Marketing Week" as its mark until A/S/M changed the title of ADWEEK's National Marketing Edition in September 1986. Of course, no absolute time span can be posited as a yardstick in cases involving secondary meaning. Cf. Ralston Purina Co. v. Thomas J. Lipton, Inc., 341 F.Supp. 129, 133-34 (S.D.N.Y.1972) (comparing cases involving different durations in the use of a mark); 3 R. Callmann, Trademarks, supra, Sec. 19.27, at 89. Instead, the length and exclusivity of a mark's use is evaluated in light of the product and its consumers. See 3 R. Callmann, Trademarks, supra, Sec. 19.27, at 91. Thus, the relatively small size of the defined market, as well as the interconnections developing between American and British advertising and marketing communities resulting from acquisitions of advertising agencies and the establishment of branch offices, indicate that Centaur's use of the mark is more significant in this context than it otherwise would have been.

To summarize: given the findings of intentional copying of the mark, its duration and exclusive use, and the relative significance of advertising expenditures, considered in the context of the relevant consumer group, we are unable to say that the district court was clearly erroneous in concluding that "Marketing Week" had achieved secondary meaning. Accordingly, we turn to the second part of the Lanham Act analysis to explore whether the use of "Marketing Week" by A/S/M was likely to confuse consumers as to the source of the product.

Having determined that Centaur has a protectible property interest in its mark, we take up the question of whether A/S/M has infringed upon that right. In order to succeed on this sort of Lanham Act claim, a plaintiff must show a "likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question." Mushroom Makers, Inc. v. R.G. Barry Corp., 580 F.2d 44, 47 (2d Cir.1978) (per curiam), cert. denied, 439 U.S. 1116, 99 S.Ct. 1022, 59 L.Ed.2d 75 (1979). In reviewing the finding that A/S/M's use of the "Marketing Week" mark presented a likelihood of confusion, it is well to remember that this issue is like a tangle of underbrush. Fortunately, a path has been hewn through this thicket.

In Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961), Judge Friendly set out a multifactor balancing test. The factors are: (1) the strength of the mark, (2) the degree of similarity between the two marks, (3) the proximity of the products, (4) the likelihood that the senior user of the mark will bridge the gap, (5) evidence of actual confusion, (6) the junior user's bad faith vel non in adopting the mark, (7) the quality of the junior user's product, and, finally, (8) the sophistication of the relevant consumer group. Id. at 495. At the outset, we note that the district court's finding on each individual Polaroid factor is subject to the clearly erroneous standard, see Lois Sportswear,