Opinion
No. 3-99-CV-0212-P.
March 15, 2000.
MEMORANDUM OPINION AND ORDER
Defendant Petco Animal Supplies, Inc. has filed a motion for summary judgment in this trademark infringement case. For the reasons stated herein, the motion is granted.
All parties have consented to allow the magistrate judge to make final rulings on dispositive motions in accordance with 28 U.S.C. § 636 (c). (Jt. Status Rep. ¶ 8).
I.
Plaintiff P.A.W. Safety Charities is a non-profit organization that conducts and promotes health and safety programs for children and their pets. (Plf. Complaint ¶ 3). One such program is the "Pet Pals Club." ( Id.). Children who enroll in "Pet Pals" receive quarterly newsletters with information about the health, safety, and care of their pets, a first-aid booklet, window decals, a glow-in-the-dark PAW collar tag, greeting cards, coupons, and other promotional items. ( Id., Exh. A). Plaintiff also developed a series of ten anthropomorphic cartoon characters known as "Pet Rangers" who are featured in most of its programs. ( Id., Exh. B).In 1997, plaintiff entered into negotiations with defendant for the development of a joint marketing plan modeled after the "Pet Pals Club." ( Id. ¶ 4). Plaintiff agreed to allow defendant to promote its pet supply stores using a club-like program with animal cartoon characters as product "spokespets." ( Id. ¶¶ 4 5). In return, defendant would make charitable contributions to plaintiff's organization and help expand its operations. ( Id. ¶ 4). Plaintiff alleges that it disclosed trade secrets and confidential information to defendant based on assurances that the marketing plan would be accepted, implemented, and funded. ( Id. ¶ 5; Plf. App. at 15-18). However, defendant failed to take any action on the proposal. In October 1997, plaintiff learned that defendant had launched its own frequent buyer program under the name "Petco P.A.L.S." (Plf. Complaint ¶ 6). Defendant promotes this program through a series of pet care brochures containing illustrations of animal characters. Plaintiff maintains that this concept was derived from, and is substantially similar to, its "Pet Pals" program. ( Id.).
"Petco P.A.L.S." is registered by the U.S. Patent and Trademark Office under Trademark No. 2,172,931. (Plf. Complaint ¶ 30).
Plaintiff now sues defendant for trademark infringement under federal and state law, misappropriation of trade secrets, breach of contract, unjust enrichment, and breach of confidential relationship. Defendant moves for summary judgment as to all claims and causes of action. The issues have been briefed by the parties and this matter is ripe for determination.
II.
Summary judgment is proper when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). A dispute is "genuine" if the issue could be resolved in favor of either party. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Thurman v. Sears, Roebuck Co., 952 F.2d 128, 131 (5th Cir.), cert. denied, 113 S.Ct. 136 (1992). A fact is "material" if it might reasonably affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Matter of Gleasman, 933 F.2d 1277, 1281 (5th Cir. 1991).
A movant who does not have the burden of proof at trial must point to the absence of a genuine fact issue. Duffy v. Leading Edge Products, Inc., 44 F.3d 308, 312 (5th Cir. 1995); Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995). The burden then shifts to the nonmovant to show that summary judgment is not proper. Duckett v. City of Cedar Park, 950 F.2d 272, 276 (5th Cir. 1992). The nonmovant may satisfy this burden by tendering depositions, affidavits, and other competent evidence. Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir), cert. denied, 113 S.Ct. 82 (1992). All the evidence must be viewed in the light most favorable to the party opposing the motion. Rosado v. Deters, 5 F.3d 119, 122 (5th Cir. 1993); Reid v. State Farm Mutual Automobile Insurance Co., 784 F.2d 577, 578 (5th Cir. 1986). However, conclusory statements and testimony based merely on conjecture or subjective belief are not competent summary judgment evidence. Topalian, 954 F.2d at 1131.
III.
"Pet Pals" is not a federally registered trademark. Therefore, plaintiff's trademark infringement claim must be analyzed under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125 (a). This statute provides, in relevant part:
Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which —
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.15 U.S.C. § 1125 (a)(1). The general principles used to determine whether a registered trademark has been infringed are also applicable in determining whether an unregistered mark is protected. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768, 112 S.Ct. 2753, 2757, 120 L.Ed.2d 615 (1992); Boston Beer Company Limited Partnership v. Slesar Bros. Brewing Co., 9 F.3d 175, 180 (1st Cir. 1993). In order to prove infringement, plaintiff must show that: (1) its mark qualifies for trademark protection; and (2) defendant's use of the mark is likely to cause confusion as to the source of plaintiff's services. Sicilia Di R. Biebow Co. v. Cox, 732 F.2d 417, 425 (5th Cir. 1984).
A.
The first inquiry is whether plaintiff's mark qualifies for trademark protection at all. This requires the Court to locate the mark along a spectrum of "distinctiveness." Trademarks can be classified, in increasing order of distinctiveness, as generic, descriptive, suggestive, arbitrary, or fanciful. Two Pesos, 112 S.Ct. at 2757; Union National Bank of Laredo, Texas v. Union National Bank, Austin, Texas, 909 F.2d 839, 844 (5th Cir. 1990). Generic words or phrases may never serve as trademarks. Landscape Forms, Inc. v. Columbia Cascade Co., 113 F.3d 373, 377 (2d Cir. 1997); Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1183 (5th Cir. 1980), cert. denied, 101 S.Ct. 1516 (1981). Descriptive marks, while not inherently distinctive, may be protected upon a showing of secondary meaning. Union National Bank of Laredo, 909 F.2d at 844. Suggestive, arbitrary, and fanciful marks are considered inherently distinctive even without proof of secondary meaning. Two Pesos, 112 S.Ct. at 2757; Sicilia Di R. Biebow, 732 F.2d at 425 n. 3.
"Distinctiveness" is the term used to indicate that a mark serves as a symbol of its origin. Sicilia Di R. Biebow, 732 F.2d at 425 n. 3.
A mark has "secondary meaning" if it connotes "a mental association in buyers' minds between the alleged mark and a single source of the product." Sicilia Di R. Biebow, 732 F.2d at 425 n. 4, quoting 1 J. McCARTHY, TRADEMARKS AND UNFAIR COMPETITION § 15:2 at 516 (2d ed. 1984) (emphasis in original).
The debate in this case focuses on the thin and sometimes unclear line between marks that are suggestive and those that are merely descriptive. A descriptive mark is one that "conveys an immediate idea of the qualities, characteristics, effect, purpose, or ingredients of a product or service." Zatarain's, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 792 (5th Cir. 1983). Thus, a mark can be descriptive either by literally describing the product or service or by describing the purpose or utility of the product or service. Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1040 (2d Cir. 1992), citing 20th Century Wear v. Sanmark-Stardust, 747 F.2d 81, 88 (2d Cir. 1984), cert. denied, 105 S.Ct. 1755 (1985). By contrast, "[a] term is suggestive if it requires imagination, thought and perception to reach a conclusion as to the nature of the goods." Abercrombie Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 11 (2d Cir. 1976), citing Stix Products, Inc. v. United Merchants Manufacturer's, Inc., 295 F. Supp. 479, 488 (S.D.N.Y. 1968). The Court must consider the mark in its entirety in making this assessment. Equine Technologies, Inc. v. Equitechnology, Inc., 68 F.3d 542, 544 (1st Cir. 1995).
Plaintiff maintains that "Pet Pals" is properly characterized as suggestive because "[i]t takes imagination and thought to connect a term meaning `pet friends' to a pet health and safety program based on an enrollment principle." (Plf. Brief at 7). The Court disagrees. The concept of descriptiveness is broadly construed. Zatarain's, 698 F.2d at 792. A mark need not convey every relevant piece of information about the nature of a product to be characterized as descriptive. Rather, it must only "immediately convey an important attribute of plaintiffs' products." Bristol-Myers Squibb, 973 F.2d at 1041; see also Sizes Unlimited, Inc. v. Sizes to Fit, Inc., 871 F. Supp. 1558, 1562 (E.D.N.Y. 1994). The noun "pet" commonly refers to "a domesticated animal kept for pleasure rather than utility." MERRIAM WEBSTER'S COLLEGIATE DICTIONARY at 868 (10th ed. 1993); see also Zatarain's, 698 F.2d at 192 (suggesting that dictionary definition of terms is appropriate gauge of whether mark is descriptive or suggestive). The dictionary defines "pal" as "a close friend." MERRIAM WEBSTER'S COLLEGIATE DICTIONARY at 835. Thus, the literal interpretation of "pet pal" is one who is a friend to his or her pet. It is a common and distinctive quality of friendship to care for and seek the well-being of one's friend. Thus, it takes no imagination or perception to conclude that a program called "Pet Pals" is one that promotes the well-being of pets. The mark describes the essence of plaintiff's program, even though it does not specifically spell out all the associated services. See Bristol-Myers Squibb, 973 F.2d at 1041; Bernard v. Commerce Drug Co., 964 F.2d 1338, 1341 (2d Cir. 1992); Security Center, Ltd. v. First National Security Centers, 750 F.2d 1295, 1299 (5th Cir. 1985). The Court therefore concludes that the mark is descriptive.
Plaintiff points to several cases from other jurisdictions where marks similar in structure to "Pet Pals" were found to be suggestive rather than descriptive. See Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999) ("MovieBuff"); Equine Technologies, Inc. v. Equitechnology, Incorporated, 68 F.3d 542 (1st Cir. 1995) ("Equine Technologies"); Physicians Formula Cosmetics, Inc. v. West Cabot Cosmetics, Inc., 857 F.2d 80 (2d Cir. 1988) ("Physicians Formula"). This argument ignores the well-settled principle that marks must be judged in context rather than in the abstract. Bristol-Myers Squibb, 973 F.2d at 1041. The structure of these other marks simply has no relevance to this case.
This conclusion is bolstered by the fact that others have used the words "pal" or "pals" in connection with a variety of pet-related goods and services. See Zatarain's, 698 F.2d at 793; Security Center, 750 F.2d at 1299. The summary judgment evidence shows that there are 75 such marks currently in use. (Def. App. at 50-124). A mark will be classified as descriptive if it uses terms that either singly or in combination might unfairly monopolize common speech. See Bernard, 964 F.2d at 1342; Sizes Unlimited, 871 F. Supp. at 1562. Such is the case here.
The Court finds that the "Pet Pals" mark is descriptive. Plaintiff must therefore show that the mark has secondary meaning in order to sue for infringement under Section 43(a) of the Lanham Act. Since no such evidence has been presented, defendant is entitled to summary judgment as to this claim.
B.
The elements of trademark infringement under Texas common law are identical to those under federal trademark law. Waples-Platter Cos. v. General Foods Corp., 439 F. Supp. 551, 583 (N.D.Tex. 1977); All American Builders, Inc. v. All American Siding of Dallas, Inc., 991 S.W.2d 484, 488 (Tex.App. — Fort Worth 1999, no pet.). In particular, plaintiff must establish that its mark is eligible for trademark protection. See All American Builders, 991 S.W.2d at 488-89; Zapata Corp. v. Zapata Trading International, Inc., 841 S.W.2d 45, 47 (Tex.App.-Houston [14th Dist.] 1992, no writ). As plaintiff has failed to meet this burden, summary judgment is proper as to this claim as well.
C.
Finally, plaintiff seeks cancellation of defendant's registered "Petco P.A.L.S." trademark under Section 37 of the Lanham Act. This statute provides:
In any action involving a registered mark the court may determine the right to registration, order the cancellation of registration, in whole or in part, restore canceled registrations, and otherwise rectify the register with respect to the registrations of any party to the action. Decrees and orders shall be certified by the court to the Commissioner, who shall make appropriate entry upon the records of the Patent and Trademark Office, and shall be controlled thereby.15 U.S.C. § 1119. However, this section of the Lanham Act does not by itself confer federal jurisdiction. See 5 J. McCARTHY, TRADEMARKS AND UNFAIR COMPETITION § 30:110 (4th ed. 1997). Cancellation may only be ordered when the action is one "involving a registered mark." 15 U.S.C. § 1119. Thus, "a controversy as to the validity of or interference with a registered mark must exist before a district court has jurisdiction to grant the cancellation remedy." Ditri v. Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869, 873 (3d Cir. 1992); see also Windsurfing International, Inc. v. AMF Incorporated, 828 F.2d 755, 758-59 (Fed. Cir. 1987) (the term "involving" means more than the mere presence of a registered trademark).
No such controversy exists here. The Court has already determined that plaintiff's "Pet Pals" mark does not qualify for federal trademark protection. Therefore, this case no longer "involves" a federal trademark. Plaintiff's claim for cancellation must be dismissed for lack of subject matter jurisdiction.
Plaintiff may still seek cancellation of defendant's registered trademark from the U.S. Patent and Trademark Office. See 5 J. McCARTHY, TRADEMARKS AND UNFAIR COMPETITION § 30:110.
IV.
Defendant also moves for summary judgment on plaintiff's state law claims for misappropriation of trade secrets, breach of contract, unjust enrichment, and breach of confidential relationship. The Court will address each claim in turn.A.
Plaintiff accuses defendant of misappropriating trade secrets and confidential information "obtained through the disclosure of plaintiff under the confidentiality of meetings and written submissions of the first half of 1997." (Plf. Complaint ¶ 10). These "trade secrets" allegedly consist of: (1) a club-like program modeled after the "Pet Pals" program; (2) cartoon animal characters serving as "spokespets" for specific categories of merchandise in pet care brochures; (3) plush toy tie-ins with retail chains; and (4) a newsletter featuring celebrities such as Jack Hannah. (Def. App. at 382-83).
The Court initially questions whether these marketing ideas even qualify as trade secrets. "A trade secret is any formula pattern, device or compilation of information which is used in one's business and presents an opportunity to obtain an advantage over competitors who do not know or use it." Seatrax, Inc. v. Sonbeck International, Inc., 200 F.3d 358, 365 (5th Cir. 2000) (emphasis added); see also Computer Associates International, Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1996), conformed to, 61 F.3d 35 [ 61 F.3d 6] (2d Cir. 1995). Plaintiff previously acknowledged that it is not in competition with defendant. (Def. App. at 425). This concession, standing alone, is fatal to plaintiff's misappropriation claim.
Moreover, the summary judgment evidence establishes that defendant developed the concept for its "Petco P.A.L.S." program long before the parties met on June 24, 1997. It was at this meeting that plaintiff allegedly disclosed its trade secrets and extracted verbal assurances of confidentiality from defendant. (Plf. App. at 15-18). However, the evidence shows that the "Petco P.A.L.S." customer loyalty program was first presented to defendant by the Harte-Hanks advertising agency on November 8, 1995. (Def. App. at 144 ¶ 4, 150 ¶ 7, 169). The initial presentation suggested an enrollment program to build customer loyalty by offering discounts and other perquisites for frequent shoppers. A newsletter was part of the original proposal. ( Id. at 169-86). The acronym P.A.L.S., standing for "Petco Animal Lovers Save," was suggested by a Harte-Hanks representative. ( Id. at 144 ¶ 3). Graphics depicting cartoon animals were designed by Prop Art and first displayed in retail stores in the summer of 1996. ( Id. at 144 ¶ 8). Brochures of "pet tips" featuring the graphics were in the final proofing stages as of May 1997. ( Id. at 151 ¶ 11, 164-67). Defendant's program was officially being referred to as "Petco P.A.L.S." by at least May 5, 1997. ( Id. at 209).
Thus, all the elements of the "Petco P.A.L.S." program were firmly in place before plaintiff allegedly disclosed its promotional concepts to defendant in June 1997. There is absolutely no evidence that any of plaintiff's marketing ideas were ever passed from defendant to Harte-Hanks or Prop Art. Although plaintiff surmises that confidential information "could easily have been passed from one entity to the other then or on countless other occasions," this suspicion is not supported by the record and does not constitute competent summary judgment evidence. Topalian, 954 F.2d at 1131. Plaintiff has failed to establish a genuine issue of material fact with respect to its misappropriation claim.
Plaintiff also suggests that it might have revealed confidential information to defendant in preliminary correspondence prior to the June meeting. (Plf. Brief at 14). However, there is no evidence that any of this information was disclosed to defendant with a reasonable expectation of confidentiality. See Lawfinders Associates, Inc. v. Legal Research Center, Inc., 65 F. Supp.2d 414, 419 (N.D.Tex. 1998), aff'd, 193 F.3d 517 (5th Cir. 1999) (Table) ("If an individual discloses his trade secret to others who are under no obligation to protect the confidentiality of the information . . . his property right is extinguished.").
B.
Nor can plaintiff maintain a cause of action for breach of contract, unjust enrichment, or breach of confidential relationship. There is no evidence that defendant breached any agreement with plaintiff or unjustly enriched itself at plaintiff's expense. See Wright v. Christian Smith, 950 S.W.2d 411, 412 (Tex.App.-Houston [1st Dist.) 1997, no writ) (absence of agreement is fatal to breach of contract claim); Vortt Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990) (claim for unjust enrichment requires proof that defendant "used and enjoyed" plaintiff's services). Although the Texas Supreme Court has recognized that certain informal relationships may give rise to a fiduciary duty, "[t]he fact that one businessman trusts another, and relies upon his promise to perform a contract, does not rise to a confidential relationship." Crim Truck Tractor Co. v. Navistar International Transportation Corp., 823 S.W.2d 591, 594 (Tex. 1992). Nothing in the record suggests that the relationship between plaintiff and defendant went beyond this normal level of business trust or was otherwise fiduciary in nature. See id. at 595-96.
CONCLUSION
There are no genuine issues of material fact and defendant is entitled to judgment as a matter of law. Accordingly, defendant's motion for summary judgment is granted in its entirety.
SO ORDERED.
DATED: March 15, 2000.
JEFF KAPLAN UNITED STATES MAGISTRATE JUDGE