Opinion
CIVIL ACTION NO. 3:02-CV-2518-G
August 15, 2003
MEMORANDUM ORDER
Before the court are the following motions: (1) the motion of the plaintiff Half Price Books, Records, Magazines, Incorporated ("Half Price") for a preliminary injunction; and (2) the motion of Half Price to strike the first affirmative defense of the defendant Barnesandnoble.com, LLC ("BN.com"). For the reasons stated below, the motion for preliminary injunction is denied. Half Price's motion to strike is also denied.
As required by Rule 52(a), FED. R. CIV. P., the court's findings of fact and conclusions of law are set out in this memorandum order. The motion has been decided in accordance with the procedure authorized by Rules 43(e) and 78, FED. R. CIV. P., on the evidence and briefs submitted by the parties.
I. BACKGROUND
The motion for a preliminary injunction arises from a trademark infringement action brought under Section 1114 and Section 1125 of the Lanham Act, 15 U.S.C. § 1051-1127, as well as trademark and dilution claims under Texas law. See First Amended Complaint for Trademark Infringement and Demand for Jury ("Complaint") at 4-6. Half Price and BN.com both sell new and used books. Half Price Books' Proposed Findings of Fact and Conclusions of Law in Support of Its Motion for a Preliminary Injunction ("Half Price Findings and Conclusions") at 2; Response of Barnesandnoble.com to Plaintiff's Proposed Findings of Fact and Conclusions of Law ("BN.com Findings and Conclusions") at 1; Brief in Support of Plaintiff Half Price Books' Motion for Preliminary Injunction ("Motion") at 1; Memorandum of Law of Barnesandnoble.com LLC in Opposition to Motion for Preliminary Injunction ("Response") at 2. Half Price is a Texas corporation with its principal place of business in Dallas, Texas. In addition to an online store, it operates seventy-five retail stores in eleven states. Half Price Findings and Conclusions at 1-2. Half Price's annual sales exceed $110,000,000. Id. at 1-2. BN.com is a Delaware limited liability company with its principal place of business in New York, New York. Complaint at 2. It operates a website generating approximately $404,000,000 in annual sales nationwide. BN.com Findings and Conclusions at 1, 4. Although Half Price's registered trade name and trademark is "Half Price Books, Records, Magazines," it conducts business primarily under the abbreviated name "Half Price Books," and this informal unregistered trademark is the subject of this infringement action. Half Price Findings and Conclusions at 3, 5-6.In April of 2002, BN.com began designating certain discounted books on its website with the phrase "Half-Price Books Special Values" or "Half-Price Books." Half Price Findings and Conclusions at 7; BN.com Findings and Conclusions at 10-11; Response at 2 n. 1. On November 19, 2002, alleging that these designations violated federal and state trademark law, Half Price filed this trademark infringement suit, together with this motion for preliminary injunction, to prohibit BN.com from using the name "Half-Price Books" or similar derivations. See generally Complaint; Motion.
II. ANALYSIS A. Standards for a Preliminary Injunction
To obtain a preliminary injunction, it is well established that the movant must show: (1) a substantial likelihood that the movant will ultimately prevail on the merits; (2) a substantial threat that the movant will suffer irreparable injury if the injunction is not granted; (3) that the threatened injury to the movant outweighs whatever damage the proposed injunction may cause the opposing party; and (4) that granting the injunction is not adverse to the public interest. Vision Center v. Opticks, Inc., 596 F.2d 111, 114 (5th Cir. 1979) (citation omitted), cert. denied, 444 U.S. 1016 (1980); Mississippi Power Light Co. v. United Gas Pipe Line Co., 760 F.2d 618, 621 (5th Cir. 1985) (citing Canal Authority of State of Florida v. Callaway, 489 F.2d 567, 572 (5th Cir. 1974)).
The decision to grant or deny a preliminary injunction is left to the sound discretion of the district court. Mississippi Power Light, 760 F.2d at 621. A preliminary injunction is an extraordinary remedy which should only be granted if the movant has clearly carried its burden of persuasion on all of the four factors. Id.; Allied Marketing Group, Inc. v. CDL Marketing, Inc., 878 F.2d 806, 809 (5th Cir. 1989) (citations omitted). Here, the court's analysis need only reach the first factor because, as discussed below, Half Price has not clearly carried its burden of persuading the court that it will succeed on the merits of its trademark infringement claim.
Because a preliminary injunction should be granted only if the movant has clearly carried the burden of persuasion on all four factors, Mississippi Power Light Co., 760 F.2d at 621, it is unnecessary for the court to consider the remaining factors when the movant fails to carry its burden on any one of the factors. Medlin v. Palmer, 874 F.2d 1085, 1091 (5th Cir. 1989) ("The failure of a movant to establish one of the above four elements will result in the denial of a motion for a temporary injunction."); Anderson v. Douglas Lomason Co., 835 F.2d 128, 133 (5th Cir. 1988) ("if the movant does not succeed in carrying its burden of persuasion on any one of the four prerequisites, a preliminary injunction may not issue. . . .").
B. Likelihood of Success On Trademark Infringement Claim
The court looks to the standards of the substantive law to determine the likelihood of success on the merits. Roho, Incorporated v. Marquis, 902 F.2d 356, 358 (5th Cir. 1990). The Fifth Circuit has distilled the trademark infringement inquiry down to a two step determination. Security Center, Ltd. v. First National Security Centers, 750 F.2d 1295, 1298 (5th Cir. 1985). The first step requires the court to determine whether the plaintiff has a protectable right in its mark. Id. A mark is protectable if it "either (1) is inherently distinctive or (2) has acquired distinctiveness through secondary meaning." Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992) (emphasis in original); see also Security Center, 750 F.2d at 1298; Chevron Chemical Company v. Voluntary Purchasing Groups, Inc., 659 F.2d 695, 702 (5th Cir. 1981), cert. denied, 457 U.S. 1126 (1982). If the plaintiff has a protectable right in the mark, the second step instructs the court to determine whether there is infringement as judged by the likelihood of confusion between the protectable mark and the challenged mark. Security Center, 750 F.2d at 1298. In light of this two step inquiry, the court must first determine if Half Price has a protectable right in the mark "Half Price Books."1. Classification of Marks
A trademark serves as a label "that identifies and distinguishes a particular product." Sport Supply Group, Inc. v. Columbia Casualty Company, 335 F.3d 453, 461 (5th Cir. 2003). Trademark law classifies marks into five types: (1) generic; (2) descriptive; (3) suggestive; (4) arbitrary; or (5) fanciful. Two Pesos, 505 U.S. at 768; see also Sport Supply, 335 F.3d at 460 n. 7; see generally Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 790-92 (5th Cir. 1983) ("These categories, like the tones in a spectrum, tend to blur at the edges and merge together."). Each classification reflects the strength and distinctiveness of a given mark and determines "the scope of protection [the mark] should be accorded." Amstar Corporation v. Domino's Pizza, Inc., 615 F.2d 252, 259 (5th Cir.), cert. denied, 449 U.S. 899 (1980); Lawfinders Associates, Inc. v. Legal Research Center, Inc., 65 F. Supp.2d 414, 425 (N.D. Tex. 1998), aff'd, 193 F.3d 517 (5th Cir. 1999) (table).Generic and descriptive marks are not inherently distinctive. Two Pesos, 505 U.S. at 768; Zatarains, 698 F.2d at 790-91. A generic mark identifies an entire class of products or services but does not distinguish a certain product or service within that class and therefore receives no protection under trademark law. Two Pesos, 505 U.S. at 768; Union National Bank of Texas, Laredo, Texas v. Union National Bank of Texas, Austin, Texas, 909 F.2d 839, 845 (5th Cir. 1990). The word "airplane" is an example of a generic mark. Sport Supply, 335 F.3d at 460 n. 7. A descriptive mark describes a product, such as "barbecue beans," and generally does not "inherently identify a particular source, and hence cannot be protected." Two Pesos, 505 U.S. at 769; see also Union National Bank, 909 F.2d at 845. When, however, the public almost exclusively associates a descriptive mark with a given product, such as the term "all bran" with the product "All Bran," the mark is deemed to have acquired distinctiveness or secondary meaning and is accorded protection under trademark law. Id.; Sport Supply, 335 F.3d at 460 n. 7; Security Center, 750 F.2d at 1300-01.
The latter three types of marks — suggestive, arbitrary and fanciful — link a given product or service with a particular source and therefore are distinctive and entitled to protection. Two Pesos, 505 U.S. at 768. A suggestive mark "suggests rather than describes, some particular characteristic of the goods or services to which [the mark] applies and requires the consumer to exercise the imagination in order to draw a conclusion as to the nature of goods and services." Union National, 909 F.2d at 845 (quoting Zatarains, 698 F.2d at 791 (internal quotations omitted)). Examples of suggestive marks include "Penguin" for refrigerators or "Business Week" for a business periodical. See Union National Bank, 909 F.2d at 845; Sport Supply, 335 F.3d at 460 n. 7. An arbitrary mark employs common words in an uncommon way, such as "Apple Computer," while a fanciful mark uses invented or coined words to identity a product, such as "Kodak" or "Exxon." Id.
2. Classification of the Mark "Half Price Books"
Having outlined the five classifications of marks that could potentially apply to "Half Price Books," the court can quickly dismiss the suggestive, arbitrary and fanciful classifications from further consideration. The public needs no imagination to conclude from the mark "Half Price Books" that Half Price sells discounted books. See Union National Bank, 909 F.2d at 845. Nor does the mark "Half Price Books" employ common words in an uncommon way or use invented words. See id. Indeed, in its brief, Half Price does not even address these classifications and instead focuses solely on persuading the court that "Half Price Books" is a descriptive mark that has acquired a secondary meaning. Motion at 8-12. Therefore, the threshold issue appears to be whether the mark "Half Price Books" is generic or descriptive.Distinguishing between generic and descriptive marks necessarily "involve[s] line drawing in areas that are inherently `fuzzy.'" Soweco, Inc. v. Shell Oil Company, 617 F.2d 1178, 1182 (5th Cir. 1980), cert. denied, 450 U.S. 981 (1981). However, in the instant case, this problem poses few concerns because, generally, both generic and descriptive marks are not inherently distinctive and thus receive no protection under trademark law. Two Pesos, 505 U.S. at 768-69; Zatarains, 698 F.2d at 790-91. A narrow exception to this general rule applies when a descriptive mark "has acquired distinctiveness through secondary meaning." Two Pesos, 505 U.S. at 769; see also Security Center, 750 F.2d at 1300-02; Zatarains, 698 F.2d at 793-96; Soweco, 617 F.2d at 1183 n. 16. Thus, absent a showing that the mark "Half Price Books" has acquired a secondary meaning, it is immaterial whether the mark "Half Price Books" is categorized as generic or descriptive. The court may assume, for the sake of argument, that the mark is descriptive. A determination of whether it is protectable, therefore, turns on whether it has acquired a secondary meaning.
3. Distinctiveness Through Secondary Meaning?
To establish secondary meaning, Half Price "must show that the primary significance of [its mark] in the mind of the consuming public is not the product but the producer." Bank of Texas v. Commerce Southwest, Inc., 741 F.2d 785, 787 (5th Cir. 1984). To ascertain whether the public exclusively associates the mark "Half Price Books" with Half Price, the court looks to five types of evidence: (1) the length and manner of the mark's use; (2) the nature and extent of advertising and promotion; (3) the volume of sales; (4) instances of actual confusion; and (5) survey evidence. Id. (citing cases); Security Center, 750 F.2d at 1301. Although no one factor alone establishes secondary meaning, the Fifth Circuit assigns considerable weight to survey evidence as "the most direct and persuasive way of establishing secondary meaning." Zatarains, 698 F.2d at 795; see Security Center, 750 F.2d at 1301; Aloe Creme Laboratories, Inc. v. Milsan, Inc., 423 F.2d 845, 849-50 (5th Cir.), cert. denied, 398 U.S. 928 (1970).
As a basis for secondary meaning, Half Price first cites its continued use of the mark "Half Price Books" since 1972. Motion at 9; Appendix to Plaintiff's Brief in Support of Its Motion for Preliminary Injunction ("Half Price Appendix") at 1. Although a mark may acquire a secondary meaning during a period of continuous use, a period of continuous use alone does not establish a secondary meaning. Bank of Texas, 741 F.2d at 788; Second, Half Price points to annual sales exceeding $110,000,000 at seventy-five retail stores in eleven states. Motion at 9; Half Price Appendix at 3. This unadorned statement, absent supporting evidence demonstrating how Half Price's annual sales impart secondary meaning to the mark "Half Price Books," cannot serve as a basis for secondary meaning. See Bank of Texas, 741 F.2d at 788. Half Price also points to the considerable sums expended in promoting its product and the newspaper and magazine articles highlighting Half Price's business. Motion at 9; Half Price Appendix at 103-196. Although this evidence certainly illustrates Half Price's promotional efforts, the focus of the court's inquiry with regard to advertising and promotional evidence "is not the extent of the promotional efforts, but their effectiveness in altering the meaning of ['Half Price Books'] to the consuming public." Aloe Creme, 423 F.2d at 850 (emphasis in original). Half Price provides no evidence demonstrating how its promotional endeavors have altered public perception to the degree that the mark "Half Price Books" is associated with Half Price. See Security Center, 750 F.2d at 1301; Bank of Texas, 741 F.2d at 787.
Finally, Half Price offers "more than ten instances" of alleged actual confusion by the public as a basis for secondary meaning. Motion at 10, 15-17; Appendix at 456-467. Although these instances of confusion show that at least ten members of the public mistakenly concluded that Half Price and BN.com were affiliated because the mark "Half Price Books" was used on BN.com's website, the court cannot infer from those ten instances that the mark "Half Price Books" has acquired secondary-meaning with the consuming public. Stated simply, ten instances of consumer confusion for seventy-five retail stores in eleven states with annual sales exceeding $110,000,000 are more accurately characterized as statistically insignificant rather than evidence of secondary meaning. This conclusion is further buttressed by the fact that Half Price presented "no evidence involving an objective survey of the public's perception of its name." Vision Center, 596 F.2d at 119. As noted above, the Fifth Circuit places considerable weight on survey evidence because "[t]he chief inquiry is the attitude of the consumer toward the mark; does it denote to him a, `single thing coming from a single source'? Short of a survey, this is difficult of direct proof." Aloe Creme, 423 F.2d at 849 (quoting Coca-Cola v. Koke Company of America, 254 U.S. 143, 146 (1920), superseded by statute as stated in 514 U.S. 159 (1995)). This omission, coupled with the ultimately unpersuasive evidence discussed above, is fatal to Half Price's attempt to demonstrate that its mark "Half Price Books" has acquired secondary meaning. Accordingly, because Half Price has not demonstrated that the mark "Half Price Books" is protectable, it necessarily follows that Half Price has failed to show a substantial likelihood of success on the merits.
C. Texas Anti-Dilution Act
Half Price also seeks relief under the Texas Anti-Dilution Act, which in pertinent part states:
A person may bring an action to enjoin an act likely to injure a business reputation or to dilute the distinctive quality of a mark registered under this chapter or Title 15, U.S.C. or a mark or trade name valid at common law. . . .
TEXAS BUSINESS COMMERCE CODE § 16.29 (Vernon 2002) (emphasis added).
To establish a dilution claim, Half Price "must first show that its . . . mark ["Half Price Books"] is distinctive." Lawfinders Associates, 65 F. Supp.2d at 428; see also E. J. Gallo Winery v. Spider Webs Ltd., 129 F. Supp.2d 1033, 1037-38 (S.D. Tex. 2001), aff'd, 286 F.3d 270 (5th Cir. 2002); Sefton v. few, 201 F. Supp.2d 730, 750 (W.D. Tex. 2001). The court's analysis need go no further. As discussed above, the court concludes that the mark "Half Price Books" is not distinctive and therefore Half Price has not shown a substantial likelihood of success on its anti-dilution cause of action. See Lawfinders Associates, 65 F. Supp.2d at 428-29.