Blinded Veterans Association v. Blinded American Veterans Foundation

Opinion for the Court filed by Circuit Judge RUTH BADER GINSBURG.

The Blinded Veterans Association (BVA or the Association) sought to enjoin the Blinded American Veterans Foundation (BAVF or the Foundation) from using the words “blinded” and “veterans” in its name and from using the initials “BAV” as an acronym. BVA contended that BAVF’s name was confusingly similar to BVA’s and would deceive the public into thinking BAVF was BVA. The district court agreed, concluding that BAVF had infringed BVA’s trademark. That court therefore enjoined BAVF from using the name “Blinded American Veterans Foundation,” the initials “BAV” or “BAVF,” and “any name in which the words ‘veterans,’ and ‘blind’ or ‘blinded,’ are employed as noun and modifying adjective.” Blinded Veterans Ass’n v. Blinded Am. Veterans Found., 680 F.Supp. 442, 446 (D.D.C.1988). We hold that BVA's name is not a protectable trademark because the term “blinded veterans” is generic. BVA, however, may be entitled to protection against BAVF’s passing itself off as BVA. We therefore vacate the judgment of the district court and remand for consideration of BVA’s “passing off” claim.

I.

Appellee Blinded Veterans Association is a nonprofit organization founded in 1945 by a group of blinded World War II veterans. BVA was incorporated in New York in 1947 and was chartered by an act of Congress in 1958. Id. at 443. The Association has used the initials “BVA” as its logo since 1945. Id. at 445. BVA provides services for veterans who originally could see but have lost their sight, even if their blindness is not service-connected. Id. at 443. The Association’s services and activities for its constituency include arranging for rehabilitation and job training and placement, advising on claims for government benefits, testifying before Congress, joining litigation likely to benefit blinded veterans, sponsoring events to publicize the plight of blinded veterans, and publishing a newsletter, the “BVA Bulletin,” containing information of interest to blinded veterans. Id. at 444.

BVA has approximately 6,500 members; it employs sixteen persons on its head *67 quarters staff in Washington, D.C. and eight field representatives outside the nation’s capital. Id. The Association’s annual operating budget is just under $1.5 million. Seventy percent of BVA’s income represents contributions derived from direct mail solicitations; to gain these contributions, BVA mails more than four million solicitations per year. Id. The remainder of BVA’s income comes from membership dues and contracts with the Department of Labor and the Veterans Administration to provide rehabilitation and employment services for blinded veterans. Id. at 443-44.

Appellant BAVF is a nonprofit District of Columbia corporation founded in September 1985 by three former officials of BVA. 1 Aside from the three founders, who also serve as BAVF’s officers and directors (and who are employed full-time elsewhere), BAVF has no “members” or paid employees. Id. at 444. The Foundation maintains no office of its own; it operates from “free ‘desk space’ in a local consulting firm’s office.” Id. At the time of trial, the Foundation had a balance of approximately $10,000 in a bank, “the name of which [BAVF’s] president could not then remember.” Id.

BAVF’s charter defines the Foundation’s purpose broadly as assisting veterans with “sensory disabilities such as visual impairment, hearing impairment, speech impediments, etc.” Id. at 443. Nevertheless, the Foundation has so far directed its efforts exclusively toward sightless former servicemembers. Id. at 444. BAVF has held Flag Day celebrations; it has presented awards to journalists and members of Congress for demonstrating an interest in handicapped veterans’ issues; and it commissioned a recorded reading of the Constitution, which it mailed postage free to 17,-500 blinded veterans nationwide. Id. In addition to these principal activities, BAVF found employment for three blinded veterans, and donated some “trial lenses” to the Veterans Administration. Id. BAVF plans to develop an inexpensive “folding cane” and to set up an outreach program for veterans blind in one eye and suffering from diabetes. Id. BAVF also “aspires someday to build a rehabilitation center.” Id.

According to BAVF’s president, it never occurred to the three BAVF founders that the name “Blinded American Veterans Foundation” resembles the name of the founders’ former employer, “Blinded Veterans Association.” See Joint Appendix (J.A.) at 389. 2 There can be no doubt, however, that the names are similar. BAVF’s original logo — “BAV” in large type, followed by “foundation” in small type below — also bore a marked resemblance to the Association’s “BVA.” See 680 F.Supp. at 445 n. 1 (noting, inter alia, that BAVF has “since abandoned” “BAV” in large type as its logo).

In 1986, BAVF applied to 552 local campaign organizations involved in the Combined Federal Campaign (CFC). Those organizations listed BAVF, alphabetically ahead of BVA, as a prospective recipient of CFC funds. Id. at 444. Despite its lack of significant accomplishments at that point, BAVF did rather well in its initial fundraising foray: the Foundation’s 1986 income totalled between $35,000 and $40,000, half from CFC pledges and half from corporate contributions. Id.

On June 5, 1986, BVA filed an action in the district court under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1982), 3 *68 seeking to enjoin the Foundation “from using the words ‘Blinded’ and ‘Veterans’ in its name, and from using the initials ‘BAV’ to describe itself.” Complaint for Injunction, Blinded Veterans Ass’n v. Blinded Am. Veterans’ [sic] Found., C.A. No. 86-1563 at 8 (D.D.C. June 5, 1986). The complaint sought no damages. BVA alleged that BAVF’s “deliberate choice of a too-similar name ... constitutes unfair competition, false representation and description, false advertising, palming off, and deception of the public, and injures the good will of [BVA].” Id. at 1.

On March 8, 1988, the district court decided that BAVF had infringed BVA’s trademark. The court therefore enjoined BAVF from using the name “Blinded American Veterans Foundation,” the initials “BAV” or “BAVF,” and any name in which “veterans” and “blind” or “blinded” appear as noun and modifying adjective. 680 F.Supp. at 446.

The district court ruled first that the term “blinded veterans” is not a “generic term ... incapable of acquiring trademark significance.” Rather, the term is “at the least, a ‘descriptive term’ in trademark parlance, which is entitled to protection against infringement if it has, over time, acquired in the mind of the relevant public a ‘secondary meaning.’ ” Id. at 445. The court next concluded that “Blinded Veterans Association” has acquired a secondary meaning. As evidence, the court relied on the effort and expense that have gone into BVA’s continuous promotion of itself “as the preeminent private voluntary proponent of the interests of blinded former U.S. service personnel” and of its services for blinded veterans. Id. The court added that its conclusion concerning secondary meaning was “reinforced ... by both BAVF’s startling success in its maiden fundraising venture with no history of significant accomplishment, and by the tenacity with which it seeks to preserve its right to use the name it has chosen for itself.” Id.

Finally, the district court found it likely that potential contributors would confuse BVA and BAVF. BVA’s name is “easily misapprehended by intending benefactors even when no alleged imposter is on the scene,” the court observed, citing mistaken variations of BVA’s name on contributions and bequests clearly intended for the Association. Id. at 446 & n. 3. “When [BAVF’s] name is offered as an alternative,” the court reasoned, “the potential for confusion approaches totality.” Id. at 446. The court also credited the results of a survey conducted by a University of Maryland professor of English and linguistics. That survey presented three lists of organizational names, one with only BVA’s and BAVF’s names and two with other names as well, to groups of between thirty and fifty-eight college students. The results of these tests “demonstrated that a substantial majority of the subjects either did not perceive a distinction between BVA and BAVF, or so garbled their names as to create a genuine doubt as to which they had in mind.” Id. The court acknowledged that the tests were not a “market survey.” Id. It doubted whether such a survey would be “practicable” in this case, however; and it concluded that, in any event, a market survey “would add little to the commonsense [sic] inference (which the test results confirm) that ordinary contributors believe one organization soliciting for sightless veterans is as good as another, because the ultimate beneficiaries are ostensibly the same.” Id.

BAVF appealed, arguing that “blinded veterans” is a generic term incapable of acquiring trademark protection even if the term has acquired secondary meaning. Alternately, if secondary meaning is relevant, the Foundation faults the district court for not requiring survey evidence and for focusing on the duration of BVA’s use of its *69 name and logo and the efforts and expense that have gone into the Association’s self-promotion rather than on the effects of those factors on the public’s perceptions.

BVA offers three separate grounds for affirming the district court’s decision: trademark infringement, violation of BVA’s congressional charter, and “passing off.” We hold that the term “blinded veterans” is generic and therefore not entitled to trademark protection. We further conclude that BVA’s charter does not prohibit other organizations’ use of that term in their names or their use of the initials “BAV” or “BAVF.” BVA’s passing off claim, however, remains viable. We therefore vacate the district court’s judgment and remand for that court’s determination whether BAVF is passing itself off as BVA.

II.

A. Trademark Infringement

The existence and extent of trademark protection for a particular term depends on that term’s inherent distinctiveness. Courts have identified four general categories of terms: (1) generic, (2) descriptive, (3) suggestive, and (4) arbitrary or fanciful. These groupings are not airtight, however. As the Fifth Circuit cautioned:

These categories, like the tones in a spectrum, tend to blur at the edges and merge together. The labels are more advisory than definitional, more like guidelines than pigeonholes. Not surprisingly, they are somewhat difficult to articulate and to apply.

Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 790 (5th Cir.1983). The rough contours of the categories, however, can be drawn from the array of trademark controversies in which courts have endeavored to characterize or classify terms.

The first category consists of “generic” terms. 4 A generic term is one commonly used to denote a product or other item or entity, one that indicates the thing itself, rather than any particular feature or exemplification of it. See Liquid Controls Corp. v. Liquid Control Corp., 802 F.2d 934, 936 (7th Cir.1986); accord Abercrombie & Fitch v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir.1976). 5 A generic term does not merely identify a particular characteristic or quality of some thing; it “connotes the ‘basic nature’ ” of that thing. Zatarains, 698 F.2d at 790 (citation omitted). Because a generic term denotes the thing itself, it cannot be appropriated by one party from the public domain; it therefore is not afforded trademark protection even if it becomes associated with only one source. See, e.g., National Conf. of Bar Examiners v. Multistate Legal Studies, 692 F.2d 478, 487 (7th Cir.1982), cert. denied, 464 U.S. 814, 104 S.Ct. 69, 78 L.Ed.2d 83 (1983); Abercrombie & Fitch, 537 F.2d at 9. 6

Descriptive terms, which compose the second category, directly describe a partic *70 ular quality, function, or characteristic of a product or service. 7 Because descriptive terms are thus not inherently distinctive, they acquire trademark protection only upon proof of secondary meaning — ie., upon proof that the public recognizes only one source of the product or service. See Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 118, 59 S.Ct. 109, 113, 83 L.Ed. 73 (1938) (stating that a term has acquired secondary meaning when “the primary significance of the term in the minds of the consuming public is not the product but the producer”); see generally J. McCarthy, Trademarks and Unfair Competition § 15:2 at 661-65 (2d ed.1984) [hereafter McCarthy] (defining secondary meaning).

The third category consists of “suggestive” terms. These are terms that do not directly describe a product or service, but suggest some quality of the article. 8 As one court usefully stated:

A term is suggestive if it requires imagination, thought and perception to reach a conclusion as to the nature of goods. A term is descriptive if it forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the goods.

Stix Prods. Inc. v. United Merchants & Mfrs., Inc., 295 F.Supp. 479, 488 (S.D.N.Y. 1968); see also General Shoe Corp. v. Rosen, 111 F.2d 95, 98 (4th Cir.) (suggestive terms “shed some light upon the characteristics of the good” only “through an effort of the imagination on the part of the observer”), reh’g denied, 112 F.2d 561 (1940) (per curiam). Because suggestive terms only indirectly convey an impression of the products or services, they are considered inherently distinctive; suggestive terms therefore are protectable without proof of secondary meaning. See McCarthy § 11:20 at 488.

“Arbitrary” and “fanciful” terms compose the fourth category. An arbitrary term is one which is commonly used in the language, but has no intrinsic connection to the product. 9 A fanciful term is one coined for the purpose of serving as a trademark. 10 Because arbitrary and fanciful terms are inherently distinctive, they are protectable without proof of secondary meaning. See McCarthy § 11:2 at 435.

The threshold issue for this court is whether “blinded veterans” is generic, and therefore unprotectable as a trademark, 11 or descriptive, and thus protectable upon *71 proof of secondary meaning. 12 The district court’s rationale for finding the term descriptive is not apparent. The court stated first that “blinded” and “veterans” might be generic when used separately, as in “the blinded persons association” or “the veterans association,” but then immediately concluded that together the words are descriptive. Blinded Veterans Ass’n, 680 F.Supp. at 445. In accord with the district court, we accept the general proposition that “[w]ords which could not individually become a trademark may become one when taken together.” Union Carbide Corp. v. Ever-Ready Inc., 531 F.2d 366, 379 (7th Cir.), cert. denied, 429 U.S. 830, 97 S.Ct. 91, 50 L.Ed.2d 94 (1976); see also McCarthy § 11:10 at 458 (“The validity of a mark must be determined by looking at the mark as a whole. A composite mark should not be fragmented into its various pieces.”). But see National Conf. of Bar Examiners, 692 F.2d at 488 (stating that “if the components of a trade name are common descriptive terms, a combination of such terms retains that quality”). Nevertheless, we are convinced, for the reasons next set out, that the combination of “blinded” and “veterans” in this case remains generic.

Because “blinded veterans” is not a registered trademark, the burden was on BVA to prove that the term is not generic. See id.; Reese Publishing Co. v. Hampton Int’l Communications, Inc., 620 F.2d 7, 11 (2d Cir.1980); McCarthy § 12:2 at 528. BVA failed to shoulder that load. Indeed, BVA’s own witnesses and exhibits effectively demonstrated the genericness of “blinded veterans,” for they employed the term repeatedly to denote formerly sighted former warriors. E.g., J.A. at 75-76, 189-90, 337-38; see Reese Publishing, 620 F.2d at 11-12 (such usage is probative of genericness); McCarthy § 12:2 at 529 & n. 12 (same). The district court itself, we note, used the term generically. E.g., 680 F.Supp. at 444 (observing the BAVF’s founders “are themselves blinded veterans” and reporting that BAVF mailed recorded readings of the Constitution to “17,-500 blinded veterans”).

A term need not be the sole designation of an article in order to be generic, see McCarthy § 12:2 at 525-26; the test for genericness is whether the public perceives the term primarily as the designation of the article, see id. § 12:2 at 522-23. “Blinded veterans” appears to fit that test. It is difficult to imagine another term of reasonable conciseness and clarity by which the public refers to former members of the armed forces who have lost their vision. 13 Courts have found generic other terms that seem less distinctly apt denotations of their respective articles. See, e.g., National Conf. of Bar Examiners, 692 F.2d at 488 (“Multistate Bar Examination” as denoting “test prepared for determining the competency of applicants to the bars of several states”); Abercrombie & Fitch, 537 F.2d at 11-12 (“Safari” as denoting particular types of khaki-colored apparel); Dresser Indus., Inc. v. Heraeus Engelhard Vacuum, Inc., 395 F.2d 457, 462-63 (3d Cir.) (“Roots” as denoting rotary positive displacement lobe-type vacuum pumps), cert. denied, 393 U.S. 934, 89 S.Ct. 293, 21 L.Ed. 2d 270 (1968).

Just as “blinded” would be generic when used with “the blinded persons association,” or “veterans” with “the veterans association,” 680 F.Supp. at 445, so “blinded veterans” is generic when used to refer to once-sighted persons who served in the armed forces. Separately or together, the terms denote particular types of individuals; “blinded veterans” simply designates the twice-circumscribed category of people who are both blinded and veterans. We conclude, then, that the district court *72 lacked justification for declaring “blinded veterans” descriptive rather than generic. 14 We therefore do not address under a trademark rubric whether BVA proved that the term has acquired secondary meaning. But cf. infra 1046 & nn. 22, 24.

B. BVA’s Congressional Charter

BVA argues that, regardless of whether “blinded veterans” is protectable as a trademark, this court can affirm the district court’s injunction on the basis of BVA’s congressional charter. That charter provides:

[BVA] and its duly authorized regional groups and other local subdivisions shall have the sole and exclusive right to have and use in carrying out its purposes the name Blinded Veterans Association and such seals, emblems, and badges as the corporation may lawfully adopt.

36 U.S.C. § 867 (1982). The Association asserts that this charter grants BVA not only the exclusive use “of the precise name ‘Blinded Veterans Association’ (and the letters ‘BVA’), but also the right to prevent anyone else from using a confusingly similar name or logo.” Brief for Appellee at 14. For support, BVA relies on San Francisco Arts and Athletics, Inc. v. United States Olympic Committee, 483 U.S. 522, 107 S.Ct. 2971, 97 L.Ed.2d 427 (1987) (SFAA). That case involved a congressional charter granting the United States Olympic Committee (USOC) the exclusive use of the word “Olympic.” See 36 U.S.C. § 380(c) (1982). Based on the congressional act, the Supreme Court upheld an injunction preventing San Francisco Arts and Athletics from using the word “Olympic” in conjunction with the “Gay Olympic Games.”

A comparison of BVA’s and USOC’s charters readily reveals a crucial distinction between SFAA and this case. USOC’s charter grants it the exclusive use not only of its name per se, but also of the word “Olympic.” See id. 15 BVA’s charter, however, gives the Association exclusive use only of the name “Blinded Veterans Association” and the specific symbols BVA adopts. See 36 U.S.C. § 867. BVA’s charter does not extend to the words “blinded veterans” any more than it does to the individual words “blinded,” “veterans,” or “association.” Given the clarity of the confined statutory language, unclouded by the sparse legislative history, see, e.g., H.Rep. No. 2323, 85th Cong., 2d Sess. 1-2 (1958), we find no basis for believing that Congress intended the scope of the charter to extend beyond its literal terms. 16 We therefore hold that BAVF has not violated BVA’s charter.

C. Passing Off 17

Even if “blinded veterans” is generic, BVA asserts,' BAVF may be enjoined from passing itself off as BVA. Case law in this area is not perspicuous; there is;o however, support for BVA’s contention. For the reasons stated herein, we conclude that BVA *73 may, dependent upon further proceedings in the district court, succeed in obtaining limited relief to prevent BAVF from passing off.

If the name of one manufacturer’s product is generic, a competitor’s use of that name, without more, does not give rise to an unfair competition claim under section 43(a) of the Lanham Act. See Liquid Controls Corp. v. Liquid Control Corp., 802 F.2d 934, 939 (7th Cir.1986). Nevertheless, such a claim “might be supportable if consumer confusion or a likelihood of consumer confusion arose from the failure of the defendant to adequately identify itself as the source of the product.” Id. (citing Miller Brewing Co. v. Jos. Schlitz Brewing Co., 605 F.2d 990, 997 (7th Cir.1979), cert. denied, 444 U.S. 1102, 100 S.Ct. 1067, 62 L.Ed.2d 787 (1980)); see also Technical Publishing Co. v. Lebhar-Friedman, Inc., 729 F.2d 1136, 1142 (7th Cir.1984); London v. Carson Pirie Scott & Co., 4 U.S.P.Q.2d 1148, 1151 n. 1, 1987 WL 11382 (N.D.Ill. 1987). 18 Analogously, if an organization’s own name is generic, a competitor’s subsequent use of that name may give rise to an unfair competition claim if the competitor’s failure adequately to identify itself as distinct from the first organization causes confusion or a likelihood of confusion. See Liquid Controls, 802 F.2d at 939-40 (suggesting that “Liquid Controls Corp.” could have valid claim against “Liquid Control Corp.” if there were more evidence of confusion than merely misdirected mail).

In either situation, the subsequent competitor cannot be prevented from using the generic term to denote itself or its product, but it may be enjoined from passing itself or its product off as the first organization or its product. Thus, a court may require the competitor to take whatever steps are necessary to distinguish itself or its product from the first organization or its product. In the paradigm case, Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 59 S.Ct. 109, 83 L.Ed. 73 (1938), for example, the Supreme Court held that the term “shredded wheat” is generic; the National Biscuit Company therefore was not entitled to exclusive use of the term. Id. at 116, 59 S.Ct. at 112. Because National Biscuit had been the only manufacturer of shredded wheat for many years, however, the public had come to associate the product and the term “shredded wheat” with that company. The Court therefore stated that the Kellogg Company, which also produced a shredded wheat cereal, could be required to “use reasonable care to inform the public of the source of its product.” Id. at 119, 59 S.Ct. at 113-14; 19 see also, e.g., Singer Mfg. Co. v. June Mfg. Co., 163 U.S. 169, 204, 16 S.Ct. 1002, 1015, 41 L.Ed. 118 (1896) (holding that “Singer” had become generic denotation of type of sewing machine, but requiring that defendant not use the word on its product or in advertisements “without clearly and unmistakably stating ... that the machines are made by the defendant, as distinguished from the sewing machines made by the Singer Manufacturing Company”); Metric & Multistandard Components Corp. v. Metric’s, Inc., 635 F.2d 710, 714 (8th Cir.1980) (finding “metric” generic designation of metric industrial supplies, but nevertheless concluding that *74 section 43(a) of Lanham Act had been violated because mark had become so associated with plaintiff that defendant's use of it created likelihood of confusion); King-Seeley Thermos Co. v. Aladdin Indus., Inc., 321 F.2d 577, 581 (2d Cir.1963) (finding “thermos” generic denotation of vacuum-insulated container, but affirming requirement that defendant distinguish its product from plaintiffs by preceding “thermos” with “Aladdin’s,” by using only the lower case “t”, and by never using the words “original” or “genuine” in describing its product); DuPont Cellophane Co. v. Waxed Prods. Co., 85 F.2d 75, 80, 82 (2d Cir.) (finding “cellophane” generic denotation of cellulose transparent wrappings, but requiring defendant to identify itself as source of product in certain instances to avoid confusion with plaintiff’s product), cert. denied, 299 U.S. 601, 57 S.Ct. 194, 81 L.Ed. 443 (1936) and 304 U.S. 575, 58 S.Ct. 1047, 82 L.Ed. 1539 (1938); 20 O. & W. Thum Co. v. Dickinson, 245 F. 609, 627-28 (6th Cir.1917) (requiring defendant to qualify and explain its use of the term “sticky fly paper” to differentiate its product from plaintiff’s product of the same name); G. & C. Merriam Co. v. Saalfield, 198 F. 369, 373-76 (6th Cir.1912) (requiring defendant to accompany generic term “Webster’s Dictionary” with sufficient explanation to avoid giving false impression that his book was plaintiff’s); Reddaway v. Banham, 1896 App.Cas. 199, 221-22 (recognizing defendants’ right to use generic term “camel hair belting” but requiring them to “clearly distinguish ] such belting from the belting of the plaintiffs”); cf. Miller Brewing Co. v. Jos. Schlitz Brewing Co., 605 F.2d 990, 997 (7th Cir.1979) (rejecting claim of passing off because defendant had adequately identified itself as source of product by preceding generic name of product, “Light Beer,” with producer’s name, “Schlitz,” and had not engaged in potentially confusion-generating practices such as using a similar label or misleading advertisements), cert. denied, 444 U.S. 1102, 100 S.Ct. 1067, 62 L.Ed.2d 787 (1980). 21

*75 Under the approach set forth in these cases, a court will not act to remedy or prevent “confusion generated by a mere similarity of names.” Liquid Controls, 802 F.2d at 940; see also Standard Paint Co. v. Trinidad Asphalt Mfg. Co.,