THORNBERRY, Circuit Judge:
Fundamentally, this appeal turns on the labels which the law of service marks and unfair competition ascribes to a single word. Unfortunately, the law is sometimes confusing, and consequently, the parties to this suit have been in legal combat for years in an attempt to convince the courts that the word means what each wants it to mean. Both parties have appealed from the decision of the district court because neither is entirely satisfied with the result reached there. The district court found that the word "Heritage," as used in the corporate names of these two parties, is generic or descriptive, rather than distinctive, of life insurance, that Heritage Life Insurance Company (HLIC) used the word in commerce before American Heritage Life Insurance Company (AHLIC) used the word before the public, that there is no secondary meaning in the word "Heritage" which the public associates with AHLIC or its insurance services, that HLIC is not barred by res judicata or collateral estoppel from defending in this action or counterclaiming for cancellation of AHLIC's registered service mark, that HLIC is guilty of neither service mark infringement nor unfair competition, and that HLIC is not entitled to a cancellation of AHLIC's service mark registration.
Undaunted, AHLIC renews its contentions below that HLIC is infringing upon its registered service mark in violation of 15 U.S.C. §§ 1114, 1116, that HLIC is infringing upon its common law trade name, and that prior proceedings before the Patent Office and the court bar both HLIC's defense and its counterclaim. While AHLIC seeks no damages, it does seek injunctive relief to prevent HLIC from doing business without using a prefix with the word "Heritage." Not wholly content with its victory below, HLIC challenges only that part of the district court's order denying cancellation of AHLIC's service mark registration.
The history of these two insurance companies is a litigious one. AHLIC was incorporated in accordance with the laws of the State of Florida on September 11, 1956, and has its principal offices in Jacksonville, Florida. HLIC was incorporated on July 26, 1957, in Arizona and has its executive offices in Los Angeles, California. The parties first became aware of each other's existence in March of 1959 when AHLIC's president visited HLIC's vice president. HLIC initially operated only as a reinsurer, but is presently involved in the direct sale of life insurance in twenty-two states. AHLIC has, since its inception, been dealing in the direct sale of life insurance, and is presently admitted to do business in forty-nine states.
In 1960, HLIC sued the Heritage Life Insurance Company of California for trade name infringement. The suit was settled when the latter agreed to change its name to Peoples Heritage Life Insurance Company. At the same time, HLIC filed an application to register "Heritage" as a service mark, alleging first use in interstate commerce in January of 1958. In 1961, HLIC's application was published by the Patent Office and AHLIC announced its opposition, claiming superior rights in the service mark "American Heritage."
HLIC appealed the denial of its request for registration to the United States District Court for the Southern District of Florida, and AHLIC counterclaimed for infringement. But HLIC's suit was dismissed with prejudice and without findings, for failure to state a claim upon which relief could be granted. The Florida district court also entered a voluntary dismissal without prejudice of AHLIC's counterclaim. Soon thereafter, on June 1, 1965, the Patent Office granted AHLIC's application for service mark registration. AHLIC filed this suit on June 20, 1966, and on August 30, 1972, after a full trial, the Texas district court denied the relief requested by AHLIC and denied HLIC's petition for cancellation of AHLIC's service mark registration.
We are thus faced with (1) a dismissal with prejudice by the Florida district court of HLIC's petition for registration, (2) a dismissal without prejudice by the Florida district court of AHLIC's counterclaim for infringement, (3) a Trademark Trial and Appeal Board decision sustaining AHLIC's opposition to HLIC's petition for registration, (4) an ex parte Patent Office proceeding permitting registration of AHLIC's mark, and (5) the Texas district court action below involving AHLIC's infringement claim and HLIC's counterclaim for cancellation. At the outset we must deal with AHLIC's contention that HLIC is barred by the res judicata and collateral estoppel effects of the prior proceedings before the Patent Office and the Florida district court from defending or counterclaiming in this action.
Under the doctrine of res judicata, a judgment on the merits in one suit bars a subsequent suit involving the same parties or their privies based on the same cause of action. Under the doctrine of collateral estoppel, on the other hand, such a judgment precludes relitigation of issues actually litigated and determined in the prior suit, regardless of whether the second suit is based on the same cause of action as the first. Lawlor v. National Screen Service Corp., 1955, 349 U.S. 322, 326, 75 S.Ct. 865, 867, 99 L.Ed. 1122, 1126. In the words of Mr. Justice Field, in "a second action between the same parties . . . upon a different claim or demand, the judgment in the prior action operates as an estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered." Cromwell v. County of Sac, 1877, 94 U.S. 351, 353, 24 L.Ed. 195, 198. It forecloses inquiry only as to those issues which were necessarily determined. Exhibitors Poster Exchange, Inc. v. National Screen Service Corp., 5th Cir. 1970, 421 F.2d 1313, 1319.
In Lawlor, the Supreme Court held that a judgment dismissing a suit with prejudice constitutes an adjudication of the merits as fully and completely as if the order had been entered after trial and bars a later suit between the same parties on the same cause of action. But the Court noted that where the judgment is not accompanied by findings, the judgment does not bind the parties on any issue which might arise in connection with another cause of action. Lawlor v. National Screen Service Corp., supra, 75 S.Ct. at 868. Thus, such a judgment has only the most limited res judicata and collateral estoppel effect.
This does not end the matter, however, for we must still determine the effect of the decisions of the Patent Office on the present litigation. The Supreme Court has held that
United States v. Utah Construction and Mining Co., 1966, 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642, 660. That case, however, involved an appeal from a decision by the Advisory Board of Contract Appeals to whose findings the Wunderlich Act of 1954 gives "final and conclusive" effect. 41 U.S.C. § 321. And the Court had previously determined that with respect to this statutory provision, Congress did not intend a de novo determination of the facts by the courts. United States v. Carlo Bianchi & Co., 1963, 373 U.S. 709, 83 S.Ct. 1409, 10 L.Ed.2d 652.
By contrast, an appeal to a federal district court from a decision by the Trademark Trial and Appeal Board, pursuant to 15 U.S.C. § 1071(b), is in the nature of a trial de novo. Holiday Inns, Inc. v. Holiday Out in America, S. D.Fla.1972, 351 F.Supp. 537, 540, aff'd, 5th Cir. 1973, 481 F.2d 445; see also 15 U.S.C. § 1119. In our judgment, this indicates a congressional intent not to invoke the immunizing doctrines of res judicata or collateral estoppel in connection with Patent Office proceedings.
This does not mean that Patent Office determinations are not entitled to great weight. On the contrary, in the context of a direct appeal from a Patent Office decision on an application for registration, this court has held that findings as to confusing similarity of marks must be accepted as controlling unless the contrary is established by "evidence `which, in character and amount carries thorough conviction,'" notwithstanding that the case is heard de novo in the district court. Aloe Creme Laboratories, Inc. v. Texas Pharmacal Co., 5th Cir. 1964, 335 F.2d 72; see also Morgan v. Daniels, 1894, 153 U.S. 120, 14 S.Ct. 772, 38 L.Ed. 657. Even though this is an infringement and cancellation action rather than a direct appeal from a Patent Office registration proceeding, in our judgment the "thorough conviction" standard extends to all findings made by the Patent Office in quasi-judicial, adversarial proceedings between the same parties and emanating from the Office's expertise. In the opposition proceeding, the Trademark Trial and Appeal Board stated that "Heritage" was an "arbitrary" term which was being used in connection with identical services offered by both companies and that AHLIC was the prior user of the service mark. Those findings were sufficient, in the Board's judgment, to sustain AHLIC's opposition. The opposition proceeding conducted by the Board was quasi-judicial in character, and its findings on arbitrariness and priority of usage are grounded in the Patent Office's area of expertise. Consequently, while the findings do not merit application of the doctrine of collateral estoppel, they will be accepted by the federal court unless the contrary is established by evidence which carries thorough conviction.
The ex parte AHLIC registration proceeding is viewed through yet another prism. For under the Lanham Act, registration by itself does not enlarge a registrant's substantive rights in a mark. It does, however, confer procedural advantages which affect the burden of proof. Turner v. HMH Publishing Co., 5th Cir. 1967, 380 F.2d 224, 228, cert. denied, 389 U.S. 1006, 88 S.Ct. 566, 19 L.Ed.2d 601. Under the Act, registration is prima facie evidence of the registrant's ownership of the mark and of the registrant's exclusive right to use the mark in commerce in connection with the services specified in the registration certificate. 15 U.S.C. §§ 1057(b), 1115(a). Thus registration is sufficient to establish prima facie (1) the required prior use (2) of a registrable mark (3) which is likely to be confused with another's use of the same or a similar mark.
We review the district court's findings and analyze the parties' contentions with these standards as our guides.
In an action for infringement of a registered service mark, the threshold question is whether the word or symbol is registrable or protectable. World Carpets, Inc. v. Dick Littrell's
Noting that the word "heritage" means "something that descends to an heir; something transmitted by or acquired from a predecessor; a legacy," the district court concluded that all life insurance companies are, in a very real sense, "in the business of providing `heritages,' usually for the benefit of the family of the insured."
At the same time, we are equally mindful of the Socratic admonition that words are more plastic than wax.
The test of secondary meaning is the effectiveness of the effort to create it, and the chief inquiry is directed toward the consumer's attitude about the mark in question: does it denote to him or her "a single thing coming from a single source?" Carter-Wallace, Inc. v. Procter & Gamble Co., 9th Cir. 1970, 434 F.2d 794, 802; Aloe Creme Laboratories, Inc. v. Milsan, Inc., supra, 423 F. 2d at 849. Has the word, in the mind of the public, come to stand as a name or identification for this firm? Continental Motors Corp. v. Continental Aviation Corp., 5th Cir. 1967, 375 F.2d 857, 861. Since the word is generic with respect to life insurance, "the plaintiff must show more than a subordinate meaning which applies to it. It must show that the primary significance of the term in the minds of the consuming public is not the product but the producer."
AHLIC began selling life insurance in January of 1957 in several southeastern states. The district court found that "although AHLIC regularly advertised its insurance services, from that time until the present, [AHLIC] has never referred to itself by use of the word `Heritage' not preceded by `American' in any magazine advertisement, newspaper advertisement, or radio or television advertisement." The district court further found, and it is not disputed, that the word "Heritage" is not featured in a different script, style, or color from the word "American" in any of its advertising material.
The record also shows that none of AHLIC's insurance policies uses the word "Heritage" alone or without "American" as an antecedent. Indeed, there was no evidence presented of a single instance where AHLIC promoted before the public the shortened name "Heritage" or "Heritage Life." Even in its annual reports, prospectuses offering stock, stock transfer data, and other corporate material, AHLIC has not referred to itself as "Heritage" or "Heritage Life," but as "American Heritage," "American Heritage Life," or by its full corporate name.
In contrast to AHLIC's evidentiary showing, HLIC introduced testimony from the officers of eleven insurance companies which have the word "Heritage" in their corporate names and which do business all over the country, including AHLIC's home state of Florida. HLIC also offered proof of thirteen insurance agencies having "Heritage" in their names, including a Florida agency and two Texas agencies. This lack of exclusivity in the use of the word in the insurance industry is a factor militating against a finding of secondary meaning in AHLIC's use of the word. Carter-Wallace, Inc. v. Procter & Gamble Co., supra, 434 F.2d at 802.
Particularly relevant to the issue of secondary meaning is an opinion poll conducted by AHLIC in its home town of Jacksonville to determine whether the public recognized that "American Heritage" was synonymous with AHLIC. See Holiday Inns, Inc. v. Holiday Out in America, 5th Cir. 1973, 481 F.2d 445, 447. In the words of a top AHLIC officer, the company "was not elated at the results," despite the fact that the poll was taken with respect to "American Heritage," a name which AHLIC promotes much more strongly.
From this evidence, the district court concluded that the word "Heritage" has not become associated in the minds of the insurance buying public exclusively with either AHLIC or with any of its services. A claim of secondary meaning presents a question of fact, and the district court's finding on the issue, therefore, will not be disturbed unless clearly erroneous. Volkswagenwerk Aktiengesellschaft v. Rickard, 5th Cir. 1974, 492 F.2d 474; F.R.Civ.P. 52(a). From the evidence submitted, the district court could hardly have found otherwise. Consequently, AHLIC cannot be said to own any exclusive rights to the word "Heritage" which warrant a finding of service mark infringement.
With this picture before us, we are equally convinced that the district court erred in refusing to order the cancellation of AHLIC's service mark registration. Section 37 of the Lanham Act provides that "in any action involving a registered mark," the court may
AHLIC has raised an alternative charge against HLIC based on the law of unfair competition generally and trade name infringement specifically. The law of unfair competition is the umbrella for all statutory and nonstatutory causes of action arising out of business conduct which is contrary to honest practice in industrial or commercial matters. 3 R. Callman, The Law of Unfair Competition, supra, § 4.1, at 120. In its complaint, AHLIC alleged both a statutory and a common law cause of action for unfair competition.
The complaint charged that HLIC's use of its corporate name in connection with the advertising and sale of insurance constitutes "a false designation of origin" and "A false representation" that its services rendered in connection with its advertising and selling originate with AHLIC, in violation of section 43(a) of the Lanham Act. 15 U.S.C. § 1125(a).
But AHLIC offered no evidence to show that HLIC made false representations with respect to its advertising and sales of insurance or to show that HLIC was engaged in any advertising or selling activities that were likely to undermine AHLIC's reputation or business. Furthermore, the district court found no evidence which suggested that HLIC had engaged in any wrongful conduct with respect to AHLIC. In the face of that meager showing, we can only conclude that AHLIC has failed to prove a violation of the statute.
Under its common law unfair competition claim, AHLIC contends that it is known by nicknames such as "Heritage" and "Heritage Life," nicknames which the insurance buying public associates with the company. AHLIC also contends that the word "Heritage" is the dominant part of its name so that by doing business under the corporate name Heritage Life Insurance Company without a distinguishing prefix, HLIC has infringed upon AHLIC's trade name and created a likelihood of consumer confusion.
As a preliminary matter, a word should be said about the law applicable to common law unfair competition claims. The federal court's jurisdiction over the common law claim was asserted upon the basis of diversity of citizenship, 28 U.S.C. § 1332, and upon the ground that the claim was joined with a substantial and related claim under the trademark laws, 28 U.S.C. § 1338(b). In those circumstances, the common law claim would appear to require the application
But neither the district court nor the parties have raised any question about whether federal or state law should be applied, and neither has asserted that the law of one state as against that of another is controlling or would make any difference.
We have already noted that the evidence does not support AHLIC's contention that the word "Heritage" is identified with AHLIC by the insurance buying public. Without a demonstration of distinctiveness, AHLIC cannot sustain its claim of trade name infringement, unless there is evidence either of actual passing off on the part of HLIC or of an intent to do so. American Gold Star Mothers v. National Gold Star Mothers, 1951, 89 U.S.App.D.C. 269, 191 F.2d 488, 490. But as the district court found, the record is devoid of any such evidence. The lack of distinctiveness is also fatal to a claim of dilution, for it is clear that a nondistinctive mark cannot be diluted. Holiday Inns, Inc. v. Holiday Out in America, supra, 481 F.2d at 450. The district court concluded that there was insufficient evidence of a lack of commercial fairness in HLIC's actions to support a finding of unfair competition. Whether or not there has been unfair competition is a mixed question of law and fact, which can only be decided after a review of all the evidence. B. H. Bunn Co. v. AAA Replacement Parts Co., 5th Cir. 1971, 451 F.2d 1254, 1259, 1262. Our review convinces us that the district court's conclusion is correct. Creamette Co. v. Conlin, 5th Cir. 1951, 191 F.2d 108.
Because of the very nature of our enterprise, what we have said today may have little eternal significance. Although the word "Heritage" is generic of life insurance, and today neither party can claim the required distinctiveness, tomorrow the word may grow in individuality. Such is the character of human language and, we might add, sophisticated marketing technique. See Continental Motors Corp. v. Continental Aviation Corp., supra, 375 F.2d at 862. Nevertheless, for the life insurance company
Affirmed in part; reversed in part.