The Coca-Cola Company sued for injunctive relief charging Overland, Inc. with trademark infringement and unfair competition in violation of the Lanham Trade-Mark Act (Lanham Act), 15 U.S.C. § 1051 et seq.
Overland operates a restaurant and bar known as the Topaz Lodge and Casino. The only cola soft drink sold at the Topaz Lodge and Casino is Pepsi-Cola. Coca-Cola's suit for trademark infringement and unfair competition is based on the Topaz Lodge and Casino's alleged practice of serving Pepsi-Cola in response to specific orders for "Coca-Cola" or "Coke"
Overland does not seriously dispute that its employees have on occasion substituted Pepsi-Cola, without comment, in response to orders for "Coca-Cola" or "Coke." Taken alone, such conduct by Overland's employees appears to present a clear-cut case of trademark infringement and unfair competition. Coca-Cola Co. v. Dorris, 311 F.Supp. 287,
II. Standard of Review
Summary judgment is proper if the pleadings and evidence submitted in support of the motion show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party has the burden of demonstrating the absence of a genuine issue of material fact. Blair Foods, Inc. v. Ranchers Cotton Oil, 610 F.2d 665, 668 (9th Cir.1980). In reviewing the grant of summary judgment, we must view all evidence in the light most favorable to the party opposing the motion. Id.
A. Signs as Adequate Notice
Overland has posted signs in the restaurant and bar, and placed disclosures in its menus advising customers that Pepsi-Cola is the only cola beverage served.
Neither the Supreme Court nor the circuit courts of appeals have apparently ruled on what constitutes adequate notice in beverage-substitution cases. The district courts, however, have uniformly held that signs do not provide adequate notice. E.g., Coca-Cola Co. v. Dorris, 311 F.Supp. at 290; Coca-Cola Co. v. Foods, Inc., 220 F.Supp. 101, 106 (D.S.D.1963). The district courts require that for notice to be adequate, the customer must be informed orally that the beverage ordered is not available and be given the opportunity to accept or reject the substituted product. Coca-Cola Co. v. Dorris, 311 F.Supp. at 290.
Although we decline to rule that signs can never provide adequate notice, we adopt the general rule set forth by the district courts that oral explanations, and not signs, are normally required to notify customers adequately in beverage-substitution cases.
B. "Coke" as a Generic Term
Overland argues that the trademark "Coke"
In its answer to Coca-Cola's complaint, Overland admits that "Coke" is a validly-registered and subsisting trademark under federal law. Federal registration of a trademark endows it with a strong presumption of validity. Miss Universe, Inc. v. Patricelli, 408 F.2d 506, 509 (2d Cir.1969); see the Lanham Act, 15 U.S.C. §§ 1057 and 1115. The general presumption of validity resulting from federal registration includes the specific presumption that the trademark is not generic. See Reese Publishing Co. v. Hampton International Communications, Inc., 620 F.2d 7, 11 (2d Cir.1980); Miss Universe, Inc. v. Patricelli, 408 F.2d at 509.
A party moving for summary judgment is entitled to the benefit of any relevant presumptions that support the motion. United States v. General Motors Corp., 518 F.2d 420, 441-42 (D.C.Cir.1975); see 6 J. Moore, W. Taggart & J. Wicker, Moore's Federal Practice ¶ 56.15 (2d ed. 1982). By virtue of the presumption that the trademark "Coke" is not generic, Coca-Cola has met its burden of demonstrating that the genericness of the trademark "Coke" does not raise a genuine issue of material fact.
Once the moving party has sufficiently supported his or her motion for summary judgment, the opposing party "may not rest upon the mere allegations or denials in his pleadings," but must by affidavits or other evidence "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Overland attempts to rebut the presumption that "Coke" is not generic and to establish the existence of a genuine issue of material fact by submitting affidavits taken from employees at the Topaz Lodge and Casino. These affidavits state that the employees believe that customers ordering "Coke" are using the term in a generic sense.
These affidavits are clearly insufficient to rebut the presumption that the
C. Performing the Injunction
The district court permanently enjoined Overland and its agents, servants, and employees from substituting any beverage in response to specific orders for "Coca-Cola" or "Coke" unless they first give the customer oral notice of the substitution and obtain the customer's approval. Overland argues that the injunction is impossible to perform because it cannot guarantee that its employees will give the required oral notice on each and every occasion that "Coca-Cola" or "Coke" is ordered.
We find Overland's claim of impossibility unconvincing and hold that it is too insubstantial to raise a genuine issue of material fact.
D. Antitrust Counterclaim and Unclean-Hands Defense
Overland raises the affirmative defense that Coca-Cola is guilty of unclean hands because it is bringing trademark-infringement suits as part of a scheme to obtain a monopoly in the soft-drink syrup market. In combination with this unclean-hands defense, Overland filed a counterclaim charging Coca-Cola with attempting to monopolize the soft-drink syrup market in violation of § 2 of the Sherman Act. 15 U.S.C. § 2. Overland describes the alleged scheme employed by Coca-Cola in its attempt to monopolize the soft-drink syrup market as follows:
Coca-Cola dispatches employees to uncover retailers substituting, without oral notice, another cola beverage in response to orders for "Coca-Cola" or "Coke." Coca-Cola then brings trademark-infringement suits against these retailers seeking permanent injunctions prohibiting such substitutions unless the customer is given oral notice of, and assents to, the substitution. Because the term "Coke" is used generically by customers, and because of the human failings of employees, Coca-Cola is aware that it is virtually impossible for retailers to comply with the requested injunctions. Coca-Cola nevertheless harasses retailers by bringing trademark-infringement suits seeking such injunctions, and when the injunctions are granted, continues to harass retailers by threatening and actually instituting contempt proceedings for mere technical violations of the injunctions.
Overland contends that this conduct demonstrates that the real motive behind Coca-Cola's trademark-infringement suits is not trademark protection, but to use the suits as a device to coerce retailers into switching to the sale of Coca-Cola's product. Overland further claims that Coca-Cola has successfully employed trademark-infringement suits to coerce many retailers into switching to its product and that Coca-Cola's present suit was brought for the purpose of achieving the same result. On the basis of these allegations, Overland asserts that the validity of its antitrust counterclaim and unclean-hands defense raises genuine issues of material fact.
Overland does not contend that the trademark-infringement suits brought by Coca-Cola lack merit. In fact, Overland acknowledges Coca-Cola's overwhelming success
We need not decide whether the bringing of meritorious trademark-infringement suits can ever constitute sham suits violative of the antitrust laws.
Summary judgment is not favored in antitrust cases particularly where motive and intent are at issue. Poller v. Columbia Broadcasting System, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). Such relief, however, is not precluded in antitrust cases and when properly used, is a valuable means of preserving scarce judicial time and resources. Mutual Fund Investors, Inc. v. Putnam Management Co., 553 F.2d 620, 622 (9th Cir.1977); see Ron Tonkin Gran Turismo, Inc. v. Fiat Distributors, 637 F.2d 1376, 1381 (9th Cir.), cert. denied, 454 U.S. 831, 102 S.Ct. 128, 70 L.Ed.2d 109 (1981).
Coca-Cola as the moving party has the burden of establishing the absence of any genuine issue of material fact with respect to Overland's antitrust counterclaim and unclean-hands defense. This burden is satisfied once Coca-Cola rebuts Overland's allegations of attempted monopolization by introducing probative evidence supporting an alternative interpretation of its conduct. Blair Foods, Inc. v. Rancher's Cotton Oil, 610 F.2d at 671. If Overland then fails to come forward with specific factual support for its allegations of attempted monopolization, summary judgment is appropriate. Id.
Coca-Cola rebutted Overland's allegations and satisfied its burden by producing evidence that its present and past trademark-infringement suits were legitimate actions necessary to protect against infringement of its trademarks. The record not only shows that Coca-Cola has been eminently successful in its past trademark-infringement suits, but that its present suit, on the basis of the evidence compiled, was fully warranted. Coca-Cola thus produced probative evidence that its trademark-infringement suits are justifiably interpreted as the legitimate exercise of its right to protect its trademarks, and not as devices used to coerce retailers to switch to its product.
Overland failed to respond to Coca-Cola's showing by coming forward with specific factual support for its allegations of attempted monopolization. Overland produced no evidence that Coca-Cola had attempted to persuade it to switch to Coca-Cola's product. Nor has Overland identified a single retailer that had been coerced to switch as the result of Coca-Cola's institution of a trademark-infringement suit.
Even viewing the evidence in the light most favorable to Overland, it is still difficult to escape the conclusion that Overland's antitrust counterclaim and unclean-hands defense were not carefully considered claims, but merely makeweight arguments introduced in a futile attempt to forestall summary judgment. To allow Overland to get to trial on the basis of its unsupported allegations in the hope that some favorable evidence could be developed at trial would be improper. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289-90, 88 S.Ct. 1575, 1592-1593, 20 L.Ed.2d 569 (1968).
The district court's grant of summary judgment against Overland on both Coca-Cola's complaint and Overland's antitrust counterclaim is AFFIRMED.
An employee of Coca-Cola's Trade Research Department first visited the Topaz Lodge and Casino in December 1975. After discovering that another beverage was being served, without comment, in response to specific orders for "Coca-Cola" or "Coke," the Coca-Cola Company appealed to Overland to stop its deceptive practice. When subsequent investigations revealed that the deceptive practice was continuing, Coca-Cola again communicated its protest to Overland. Only when further investigations showed that the deceptive practice had not ceased did Coca-Cola bring suit for trademark infringement and unfair competition.
Coca-Cola also relies on a trademark-recognition survey discussed in a case not involving Coca-Cola. In that survey, "Coke" was the second-highest-ranking trademark with 76% of the public sampled recognizing "Coke" as a trademark rather than a generic term. E.I. Dupont de Nemours and Co. v. Yoshida International, Inc., 393 F.Supp. 502, 526 n. 54 (E.D.N.Y.1975).
If Overland is claiming that its good faith provides a defense to the charge of trademark infringement and unfair competition and thus raises a genuine issue of material fact, it is mistaken. Good faith or lack of wrongful intent does not provide a valid defense to a charge of trademark infringement. Coca-Cola Co. v. Dorris, 311 F.Supp. at 290; see Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 157-58 (9th Cir.), cert. denied, 374 U.S. 830, 83 S.Ct. 1870, 10 L.Ed.2d 1053 (1963); Safeway Stores, Inc. v. Rudner, 246 F.2d 826, 829 (9th Cir.1957). The basic policy behind the Lanham Act is to protect customers against likelihood of confusion. International Order of Job's Daughters v. Lindeberg & Co., 633 F.2d 912, 917 (9th Cir.1980), cert. denied, 452 U.S. 941, 101 S.Ct. 3086, 69 L.Ed.2d 956 (1981); Monsanto Chemical Co. v. Perfect Fit Products Manufacturing Co., 349 F.2d 389, 395 (2d Cir.1965), cert. denied, 383 U.S. 942, 86 S.Ct. 1195, 16 L.Ed.2d 206 (1966). Given this policy, the determination of liability focuses on the objective fact of likely customer confusion and not on the subjective mental state of the infringer. Because good faith is not a defense, the question of Overland's intent in allowing the substitution of Pepsi-Cola in response to orders for "Coca-Cola" or "Coke" does not raise a genuine issue of fact.