Elvis Presley Enterprises, Inc. v. Capece

Plaintiff-appellant Elvis Presley Enterprises, Inc. appeals the district court's judgment that defendants-appellees' service mark, "The Velvet Elvis," does not infringe or dilute its federal and common-law trademarks and does not violate its right of publicity in Elvis Presley's name. See Elvis Presley Enters. v. Capece, 950 F.Supp. 783 (S.D.Tex.1996). Because the district court failed to consider the impact of defendants-appellees' advertising practices on their use of the service mark and misapplied the doctrine of parody in its determination that "The Velvet Elvis" mark did not infringe Elvis Presley Enterprises, Inc.'s marks, we reverse the district court's judgment on the trademark infringement claims and remand the case for entry of an injunction enjoining the use of the infringing mark.

Plaintiff-appellant Elvis Presley Enterprises, Inc. (EPE) is the assignee and registrant of all trademarks, copyrights, and publicity rights belonging to the Elvis Presley estate. EPE has at least seventeen federal trademark registrations, as well as common-law trademarks, for "Elvis Presley" or "Elvis" and other registrations for his likeness. However, none of these marks is registered for use in the restaurant and tavern business. Prior to trial, EPE announced plans to open a Memphis nightclub as part of a possible worldwide chain. The Memphis nightclub opened subsequent to trial. EPE licenses a wide variety of products and operates Graceland, Elvis's home, as a tourist attraction with adjacent retail stores and restaurants. Over 700,000 visitors per year come from all fifty states and from around the world to visit Graceland. Merchandise sales have brought in over $20 million in revenue over a five-year period and account for the largest portion of EPE's revenue.

In April 1991, defendant-appellee Barry Capece, operating through the limited partnership Beers 'R' Us, opened a nightclub on Kipling Street in Houston, Texas called "The Velvet Elvis." On August 28, 1991, Capece filed a federal service mark application for "The Velvet Elvis" for restaurant and tavern services with the United States Patent and Trademark Office (PTO). In December 1992, the service mark was published in the Official Gazette of the United States Patent and Trademark Office as required by 15 U.S.C. § 1062(a). EPE was aware of this publication, but did not file an opposition to the mark's registration within thirty days under 15 U.S.C. § 1063. Accordingly, the PTO issued a service mark registration to Capece for use of "The Velvet Elvis" mark on March 9, 1993. The Kipling Street nightclub closed in July 1993 for business reasons.

After the Kipling Street location's closing, Capece began soliciting investors to reopen the nightclub at a new location. The new nightclub, to be located on Richmond Avenue, would have the same name, "The Velvet Elvis," but it would be run by a new limited partnership, Velvet, Ltd. Audley, Inc. is the general partner of Velvet, Ltd., and Capece is the sole shareholder of Audley, Inc.1 Capece began renovating the new location in January 1994. In July 1994, EPE contacted Capece by letter, threatening him with legal action if the bar opened with "Elvis" in its name. The Richmond Avenue location opened in August 1994 under the name "The Velvet Elvis."

The Defendants' bar serves a wide variety of food and liquor, including premium scotches and bourbons. The menu items range from appetizers to full entrees. Live music is regularly featured at the bar, and the bar claims to be the first cigar bar in Houston. Its decor includes velvet paintings of celebrities and female nudes, including ones of Elvis and a bare-chested Mona Lisa. Other "eclectic" decorations include lava lamps, cheap ceramic sculptures, beaded curtains, and vinyl furniture. Playboy centerfolds cover the men's room walls.

In addition to the velvet painting of Elvis, the bar's menu and decor include other Elvis references. The menu includes "Love Me Blenders," a type of frozen drink; peanut butter and banana sandwiches, a favorite of Elvis's; and "Your Football Hound Dog," a hotdog. The menu bears the caption "The King of Dive Bars," and one menu publicized "Oscar at The Elvis," an Academy Awards charity benefit to be held at the bar. Numerous magazine photographs of Elvis, a statuette of Elvis playing the guitar, and a bust of Elvis were also among the decorations. By the time of trial, many of these decorations had been removed from the Defendants' bar and replaced with non-Elvis items.

Pictures and references to Elvis Presley appeared in advertising both for the Kipling Street location and for the Richmond Avenue location from the date it opened through early 1995, and some ads emphasized the "Elvis" portion of the name by "boldly display[ing] the 'Elvis' portion of 'The Velvet Elvis' insignia with an almost unnoticeable 'Velvet' appearing alongside in smaller script.'' Elvis Presley Enters. v. Capece, 950 F.Supp. 783, 789 (S.D.Tex.1996). The Defendants made direct references to Elvis and Graceland in advertisements with phrases such as "The King Lives," "Viva la Elvis," "Hunka-Hunka Happy Hour," and "Elvis has not left the building." Advertisements also included a crown logo above the "V" in "The Velvet Elvis" mark. Advertised promotional events at the Defendants' bar have included parties commemorating Elvis's birth and death and appearances by Elvis impersonators and Elvis Presley's drummer. Some advertisements publicizing the opening of the Richmond Avenue location included direct references to Elvis and used the tag-line "the legend continues" without using "The Velvet Elvis" mark.

In April 1995, EPE filed suit against the Defendants, alleging claims for federal and common-law unfair competition and trademark infringement, federal trademark dilution, and violation of its state-law rights of publicity in Elvis Presley's name and likeness. EPE sought injunctive relief, costs, attorneys' fees, and an order to the Commissioner of Patents and Trademarks to cancel Capece's registration for "The Velvet Elvis." The case was tried to the district court, which ruled in favor of EPE on its claims of trademark infringement and unfair competition relating to the Defendants' advertising practices, but not those claims relating to their use of "The Velvet Elvis" service mark. Id. at 796-97. In addition, the court ruled in favor of EPE on its right of publicity claim in relation to the use of Elvis's name and likeness, but again not in relation to the use of "The Velvet Elvis" service mark. Id. at 801-02. As to the claims upon which EPE succeeded, the district court granted injunctive relief barring the use, in connection with the promotion or advertising of the bar, of "the image or likeness of Elvis Presley, phrases that are inextricably linked to the identity of Elvis, or from displaying the 'Elvis' portion of their service mark in print larger than that used for its counterpart 'Velvet.' " Id. at 803. Upon all other claims, the district court ruled in favor of the Defendants and denied all other relief. Id. EPE now appeals.

EPE has appealed that portion of the district court's judgment denying relief on its trademark infringement claims, its federal dilution claim, and its right of publicity claim based only upon the Defendants' use of "The Velvet Elvis" mark and the district court's denial of an accounting of profits and attorneys' fees. Because it ruled in favor of the Defendants, the district court did not reach their defenses of laches or acquiescence. The Defendants reassert these defenses on appeal as alternative bases for affirming the district court's judgment.2 We consider each issue in turn.

The district court clearly stated EPE's claim:

[EPE] claims the inclusion of its "Elvis" trademark in the service mark "The Velvet Elvis" coupled with Defendants' use of the image and likeness of Elvis Presley in advertising, promoting, and rendering bar services creates confusion as to whether EPE licensed, approved, sponsored, endorsed or is otherwise affiliated with "The Velvet Elvis," constituting unfair competition and trademark infringement under the common law and Lanham Act.

Id. at 789. The district court also correctly stated the generally applicable law in this circuit to a trademark infringement claim. Id. at 789-91. First, we will summarize this applicable law and then examine the district court's decision.

For EPE to prevail on its trademark infringement claim, it must show that the Defendants' use of "The Velvet Elvis" mark and image, likeness, and other referents to Elvis Presley creates a likelihood of confusion in the minds of potential consumers as to the source, affiliation, or sponsorship of the Defendants' bar. See Society of Fin. Exam'rs v. National Ass'n of Certified Fraud Exam'rs, Inc., 41 F.3d 223, 227 (5th Cir.), cert. denied, 515 U.S. 1103, 115 S.Ct. 2247, 132 L.Ed.2d 255 (1995); Oreck Corp. v. U.S. Floor Sys., Inc., 803 F.2d 166, 170 (5th Cir.1986); see also 15 U.S.C. §§ 1114(1), 1125(a)(1)(A). Liability for trademark infringement hinges upon whether a likelihood of confusion exists between the marks at issue. See Society of Fin. Exam'rs, 41 F.3d at 227. Likelihood of confusion is synonymous with a probability of confusion, which is more than a mere possibility of confusion. See Blue Bell Bio-Med. v. Cin-Bad, Inc., 864 F.2d 1253, 1260 (5th Cir.1989); see also 3 J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 23:3 (4th ed.1997). A determination of a likelihood of confusion under federal law is the same as the determination of a likelihood of confusion under Texas law for a trademark infringement claim. See Zapata Corp. v. Zapata Trading Int'l, Inc., 841 S.W.2d 45, 47 (Tex.App.--Houston [14th Dist.] 1992, no writ) (applying Texas law to a trademark infringement claim); see also Blue Bell Bio-Med., 864 F.2d at 1261 (citing Chevron Chem. Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d 695, 706 (5th Cir. Unit A Oct.1981) (applying Texas law to an unfair trade practices claim)).3

In determining whether a likelihood of confusion exists, this court considers the following nonexhaustive list of factors: (1) the type of trademark allegedly infringed, (2) the similarity between the two marks, (3) the similarity of the products or services, (4) the identity of the retail outlets and purchasers, (5) the identity of the advertising media used, (6) the defendant's intent, and (7) any evidence of actual confusion. See Conan Properties, Inc. v. Conans Pizza, Inc., 752 F.2d 145, 149 (5th Cir.1985). No one factor is dispositive, and a finding of a likelihood of confusion does not even require a positive finding on a majority of these "digits of confusion." Id. at 150; see also Society of Fin. Exam'rs, 41 F.3d at 228 & n. 15. In addition to the listed factors, a court is free to consider other relevant factors in determining whether a likelihood of confusion exists. See Armco, Inc. v. Armco Burglar Alarm Co., 693 F.2d 1155, 1160-61 (5th Cir.1982). Parody is one such other relevant factor that a court may consider in a likelihood-of-confusion analysis. See Dr. Seuss Enters. v. Penguin Books USA, Inc., 109 F.3d 1394, 1405 (9th Cir.), cert. dismissed, --- U.S. ----, 118 S.Ct. 27, 138 L.Ed.2d 1057 (1997); Nike, Inc. v. "Just Did It" Enter., 6 F.3d 1225, 1231 (7th Cir.1993) (holding that parody is not an affirmative defense to trademark infringement but that it can be an additional factor in a likelihood-of-confusion analysis); Jordache Enters. v. Hogg Wyld, Ltd., 828 F.2d 1482, 1486 (10th Cir.1987) (considering parody as a factor in determining whether a likelihood of confusion exists).

Neither the trademark and service mark registrations of EPE or the service mark registration of Capece disposes of EPE's trademark infringement claim. Proof of registration of a service mark or trademark is only prima facie evidence of the registrant's exclusive right to use the mark in commerce for the services specified in the registration. 15 U.S.C. § 1115(a). However, such proof does "not preclude another person from proving any legal or equitable defense or defect ... which might have been asserted if such mark had not been registered." Id. A registration only becomes conclusive evidence of a registrant's exclusive right to use a mark after five consecutive years of continuous use in commerce, subject to a few enumerated defenses. Id. §§ 1065, 1115(b). "The Velvet Elvis" mark has not become incontestable, but Capece's registration of the mark constitutes prima facie evidence of the mark's validity and that there is no likelihood of confusion with previously registered marks. See id. § 1115(a). EPE's registration of the Elvis and Elvis Presley marks establishes that it is entitled to protection from infringement by junior users, thereby meeting the threshold requirement that the plaintiff must possess a protectible mark, which must be satisfied before infringement can be actionable. Id. §§ 1052(d), 1057, 1115(a); see also Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1184 (5th Cir.1980).

After correctly summarizing the applicable law, the district court then proceeded to consider EPE's trademark infringement and unfair competition claims. In doing so, the court explicitly isolated its consideration of "The Velvet Elvis" mark and the bar's decor from any consideration of the Defendants' advertising and promotional practices. Elvis Presley Enters., 950 F.Supp. at 791, 797.

a. Service mark and the bar's decor

Beginning with the bar's decor and "The Velvet Elvis" mark, the district court considered each of the digits of confusion in turn. First, on the type of mark, the district court found that EPE has strong marks, but that the "Defendants' use of the service mark 'The Velvet Elvis' when combined with the bar's gaudy decor form[s] an integral part of Defendants' parody of the faddish, eclectic bars of the sixties." Id. at 792. The district court found that the mark "symbolizes tacky, 'cheesy,' velvet art, including, but not limited to velvet Elvis paintings" and that "the image of Elvis, conjured up by way of velvet paintings, has transcended into an iconoclastic form of art that has a specific meaning in our culture, which surpasses the identity of the man represented in the painting." Id. Despite EPE's strong marks which would normally be accorded broad protection, the bar's parody of "faddish, eclectic bars of the sixties" led the district court to find that the name and decor of the bar would not mislead consumers and that this digit weighed against a likelihood of confusion. Id. at 793.

Second, on the similarity of the marks, the district court found that "The Velvet Elvis" has a meaning independent from Elvis Presley. Specifically, the district court concluded that "The Velvet Elvis" "is symbolic of a faddish art style" that "has no specific connection with the singer other than the coincidence of its use to portray him." Id. The district court noted that " '[t]he proper test is whether the average consumer, upon encountering the allegedly infringing mark in the isolated circumstances of the marketplace ... would be likely to confuse or associate the defendant or his services with the plaintiff.' " Id. (quoting American Auto. Ass'n v. AAA Ins. Agency, 618 F.Supp. 787, 792 (W.D.Tex.1985)). Because of the dissimilarity in the meanings of the Defendants' and EPE's marks, the district court found that this digit of confusion weighed against a likelihood of confusion. Id.

Third, on the similarity of the products and services, the district court noted that, at the time of trial, there was some overlap between the parties' services, but that the services were not directly competitive because they served different clienteles and had different purposes. Id. at 794. While noting that EPE's plan to open a chain of Elvis Presley nightclubs might weigh in favor of a likelihood of confusion, the district court found that "the relative clarity of 'The Velvet Elvis' ' parodic purpose" made it dissimilar from any business that EPE currently operates or has plans to operate. The district court thus concluded that this digit weighed against a likelihood of confusion. Id.

Fourth, on the identity of the retail outlets and purchasers, the district court found that the majority of EPE's customers are "middle-aged white women" and that the Defendants' customers are generally "young professionals, ranging in age from early twenties to late thirties." Id. at 794. In the district court's analysis, this disparity between the customers weighed against a likelihood of confusion. Id. (relying upon Amstar Corp. v. Domino's Pizza, Inc., 615 F.2d 252, 262 (5th Cir.1980)).

Fifth, on the identity of the advertising media, the district court found that this digit of confusion was irrelevant to the determination of a likelihood of confusion because the parties operate in different geographic markets and because EPE admits that it rarely advertises because of the strength of its marks and Elvis's image. Id. at 795.

Sixth, on the Defendants' intent, the district court found that the Defendants intended to parody "a time or concept from the sixties--the Las Vegas lounge scene, the velvet painting craze and perhaps indirectly, the country's fascination with Elvis." Id. The district court noted that the references to Elvis are indirect, but that the "use of his name is an essential part of the parody because the term, 'velvet Elvis,' has become a synonym for garish, passe black velvet art." Id. The district court found that the Defendants' intent weighed against a likelihood of confusion because the "clarity" of the Defendants' parody showed that they did not intend to confuse the public.

Seventh, on actual confusion, the district court found that EPE failed to show any actual confusion because "each witness acknowledged that once inside 'The Velvet Elvis' and given an opportunity to look around, each had no doubt that the bar was not associated or in any way affiliated with EPE." Id. at 796. Additionally, the district court considered the fact that the Defendants' bar had been in operation at the Richmond Avenue location without any complaints or inquiries about the affiliation of the bar with EPE. Id. Relying upon this evidence, the district found that this digit of confusion weighed against a likelihood of confusion.

Having found none of the digits of confusion weighing in favor of a likelihood of confusion, the district court found no likelihood of confusion in relation to the bar's decor or "The Velvet Elvis" mark, and therefore found that the use of the Defendants' mark caused no infringement.

b. The Defendants' advertising practices

The district court next turned to the Defendants' advertising practices and found that their advertising scheme would leave the ordinary customer with

the distinct impression that the bar's purpose was to pay tribute to Elvis Presley or to promote the sale of EPE related products and services. Consequently, use of this [advertising scheme] can only indicate a marketing scheme based on the tremendous drawing power of the Presley name and its ability to attract consumer interest and attention.

Id. at 797. Further, the district court noted that the advertising, without the backdrop of the parody, "will cause confusion, leading customers to wonder if they might find [Elvis] memorabilia" in the bar and that the Defendants' emphasis of the "Elvis" portion of the mark over the "Velvet" portion focusses attention on Elvis and "creat[es] a definite risk that consumers will identify the bar with Presley or EPE." Id. Additionally, the district court found that the Defendants' advertising caused actual confusion. Based upon the above findings the district court found that the Defendants' advertising practices, including the actual configuration of the mark emphasizing "Elvis," constituted trademark infringement and unfair competition. Id.

Despite the facts that the Defendants had discontinued the activity that the district court found to be infringing and that Capece stated that they would not resume the activity, the district court believed that "there [was] a definite possibility that ads including the image or likeness of Elvis Presley, references to Elvis, or his name disproportionately displayed may be used in connection with 'The Velvet Elvis' again." Id. at 803. Even after acknowledging that the cessation of activity might make an injunction unavailable, the court issued an injunction barring the use in the Defendants' advertising of "the image and likeness of Elvis Presley, phrases that are inextricably linked to the identity of Elvis, or from displaying the 'Elvis' portion of their service mark in print larger than that used for its counterpart 'Velvet.' " Id.

We review questions of law de novo and questions of fact for clear error. Joslyn Mfg. Co. v. Koppers Co., 40 F.3d 750, 753 (5th Cir.1994). Likelihood of confusion is a question of fact reviewed for clear error. Society of Fin. Exam'rs, 41 F.3d at 225; Blue Bell Bio-Med., 864 F.2d at 1260. However, "the 'clearly erroneous' standard of review does not insulate factual findings premised upon an erroneous view of controlling legal principles." Johnson v. Hospital Corp. of Am., 95 F.3d 383, 395 (5th Cir.1996) (citing Johnson v. Uncle Ben's, Inc., 628 F.2d 419, 422 (5th Cir.1980), vacated on other grounds, 451 U.S. 902, 101 S.Ct. 1967, 68 L.Ed.2d 290 (1981)); see also In re Auclair, 961 F.2d 65, 69 n. 7 (5th Cir.1992) ("Factual findings made under an erroneous view of the law are not binding on the appellate court." (citing 1 STEVEN ALAN CHILDRESS & MARTHA S. DAVIS, FEDERAL STANDARDS OF REVIEW § 2.16, at 2-116 (2d ed.1992))). When a likelihood-of-confusion factual finding is "inextricably bound up" in, or infected by, a district court's erroneous view of the law, we may conduct a de novo review of the fully-developed record before us. See Anheuser-Busch, Inc. v. Balducci Publications, 28 F.3d 769, 773 (8th Cir.1994) (applying de novo review where the district court misapplied the First Amendment in relation to parody in its likelihood-of-confusion determination); see also Roto-Rooter Corp. v. O'Neal, 513 F.2d 44, 46-47 (5th Cir.1975) (reviewing the district court's fact-finding on a likelihood of confusion de novo where it applied the incorrect legal standard).

EPE argues that the district court erroneously applied parody to its likelihood-of-confusion analysis and that this error permeated its entire analysis, infecting nearly all of its findings of fact. Within EPE's discussion of the digits of confusion, it also argues that the district court erred in isolating its consideration of the Defendants' advertising from its consideration of whether "The Velvet Elvis" mark infringes EPE's marks. If the district court erred as EPE argues, then we would review the likelihood-of-confusion finding de novo, rather than for clear error. We will consider the district court's isolation of the advertising evidence from its analysis first.

a. Isolated consideration of advertising

The use of a mark in advertising is highly probative of whether the mark creates a likelihood of confusion in relation to another mark. "Evidence of the context in which a mark is used on labels, packages, or in advertising material directed to the goods is probative of the reaction of prospective purchasers to the mark." In re Abcor Dev. Corp., 588 F.2d 811, 814 (C.C.P.A.1978). Courts consider marks in the context that a customer perceives them in the marketplace, which includes their presentation in advertisements. See The Sports Auth., Inc. v. Prime Hospitality Corp., 89 F.3d 955, 962 (2d Cir.1996) (considering the appearance of the mark in advertising in determining similarity of marks); Nikon Inc. v. Ikon Corp., 987 F.2d 91, 94-95 (2d Cir.1993) (same); Oreck Corp., 803 F.2d at 171 (considering the presentation of the marks in advertising in determining the similarity of the marks and the defendant's intent); Sun Banks of Fla., Inc. v. Sun Fed. Sav. & Loan Ass'n, 651 F.2d 311, 318 (5th Cir.1981) (considering the presentation of the marks in advertising in determining the similarity of the marks); National Ass'n of Blue Shield Plans v. United Bankers Life Ins. Co., 362 F.2d 374, 378 (5th Cir.1966) (comparing marks as used in advertising in newspapers and on television where the black and white format did not allow for color distinctions); see also Sun-Maid Raisin Growers v. Sunaid Food Prods., Inc., 356 F.2d 467, 469 (5th Cir.1966) ("[I]t is the labels that the prospective purchaser sees. The trademarks cannot be isolated from the labels on which they appear.").

In the case of a service mark, advertising is of even greater relevance because the mark cannot be actually affixed to the service, as a trademark is to the goods. Many prospective purchasers first encounter the mark in advertising, rather than on the product; therefore, the service mark cannot be isolated from the advertising in which it appears. See RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 21(a)(i) (1995) (stating that "the overall impression created by the [marks] as they are used in marketing the respective goods and services" is relevant to how similar two marks are (emphasis added)). The Lanham Act itself makes advertising relevant to a service mark infringement claim. In order to infringe another's mark, the infringing mark must be used in commerce. 15 U.S.C. § 1114. By definition, a service mark is used in commerce "when it is used or displayed in the sale or advertising of services." Id. § 1127 (emphasis added). In summary, advertisements used by the alleged infringer, which incorporate the allegedly infringing mark, are relevant in determining whether a mark has been infringed. Advertisements are therefore relevant to the likelihood-of-confusion analysis.

In addition, the context of the presentation of a mark, including advertising, is relevant to the meaning that the mark conveys. McGregor-Doniger Inc. v. Drizzle Inc., 599 F.2d 1126, 1133 (2d Cir.1979) (" '[T]he setting in which a designation is used affects its appearance and colors the impression conveyed by it.' " (brackets in original) (quoting RESTATEMENT OF TORTS § 729 cmt. b, at 593 (1938))). The Supreme Court has said that "[t]he protection of trade-marks is the law's recognition of the psychological function of symbols." Mishawaka Rubber & Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 205, 62 S.Ct. 1022, 1024, 86 L.Ed. 1381 (1942). To understand a symbol's psychological function, one must consider it in the context in which it is used and not in a vacuum. See American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 11 & n. 7 (5th Cir.1974) ("[W]ords are chameleons, which reflect the color of their environment."); 2 JEROME GILSON, TRADEMARK PROTECTION AND PRACTICE § 5.09, at 5-137 n. 1 (Jeffrey M. Samuels ed., 1997) (noting that advertising is used by the holders of marks to "establish[ ] a sufficient aura of desirability to induce the public to purchase" their products and services). Courts have recognized this fact in determining whether a mark has developed a secondary meaning as an indicator of source independent from its everyday meaning, entitling the mark to protection under the Lanham Act. See, e.g., G. Heileman Brewing Co. v. Anheuser-Busch, Inc., 873 F.2d 985, 994-95 (7th Cir.1989); American Heritage Life Ins. Co., 494 F.2d at 12; Volkswagenwerk Aktiengesellschaft v. Rickard, 492 F.2d 474, 478 (5th Cir.1974). In an extreme example of a word taking on meaning from the context of its use, the Court of Customs and Patent Appeals found that the word "stain" connoted a "a state of relative cleanliness"--a meaning contrary to its normal meaning--when used in connection with a cleaning product, making marks that included "stain" and "clean" similar despite the aural and optical dissimilarity of the marks. See Procter & Gamble Co. v. Conway, 57 C.C.P.A. 865, 419 F.2d 1332, 1335-36 (C.C.P.A.1970) (finding that "Mister Stain" infringed "Mr. Clean").

In this case, we are dealing with a service mark, "The Velvet Elvis," which the Defendants have used at their business location and extensively in advertising. To consider only the Defendants' use of the mark at their business location would ignore highly probative evidence of the meaning of the mark as the public encounters it in commerce and of the Defendants' intent in using the mark. By placing the mark in an Elvis context and in configuring the mark to highlight the "Elvis" portion of the mark, the Defendants have placed the mark in a context that does not alone connote tacky, cheesy art as the district court found. This contrary context of the mark has the ability to alter the psychological impact of the mark and must be considered in determining whether the Defendants' mark creates a likelihood of confusion in relation to EPE's marks. In failing to consider the Defendants' presentation of "The Velvet Elvis" mark to the public in advertising in determining whether the Defendants' use of their mark created a likelihood of confusion, the district court failed to consider the mark as perceived by the public. In addition, by isolating the advertising, the district court failed to consider how the Defendants configured the mark in emphasizing the "Elvis" portion of the name, which is highly probative of the impression they intended to convey.

The fact that the Defendants ceased many of the problematic advertising practices after receiving the cease and desist letter and shortly before EPE filed suit does not make the advertising any less relevant to the question of whether the Defendants' use of the "The Velvet Elvis" mark infringes EPE's marks. The cessation of infringing acti