GOLDBERG, Circuit Judge:
What is in a name? Shakespeare wrote that a rose by any other name would smell as sweet,
The district court ruled as a matter of law that the names "Union National Bank" and "Union National Bank of Texas" are descriptive and therefore not protected under trademark law absent proof of "secondary meaning."
FACTS AND PROCEEDINGS BELOW
UNB-Laredo is a national banking association with its principal place of business in Laredo Texas and a branch office in San Antonio. It was originally named "United National Bank of Laredo," but in December, 1987 changed its name to "Union National Bank of Texas." The name change appears to have been motivated by a desire for a less regional name which would facilitate expansion, because in 1988 UNB-Laredo opened a branch in San Antonio.
UNB-Austin is also a national banking association. It is a subsidiary of Union of Arkansas Corporation. Union of Arkansas is a holding company which owns a number of banks in Arkansas and Oklahoma, all of which are called "Union National Bank of _____," with the appropriate geographical designation. It appears from the record that UNB-Austin has been using the "Union National Bank" name for many years prior to the establishment of UNB-Laredo — but not in Texas. UNB-Austin's presence in Texas came about as a result of its successful bid on the assets of a failed Texas institution in a sale organized by the Federal Deposit Insurance Corporation in August, 1988.
The case was heard without a jury in the United States Court for the Western District of Texas. After UNB-Laredo had presented its first witness, the district court, at the urging of counsel for UNB-Austin, called a halt to the presentation of evidence in order to hear legal arguments on the issue of whether or not the terms UNB-Laredo laid claim to were descriptive. After hearing arguments the court ruled that as a matter of law the name "Union National Bank" was descriptive and thus required proof of secondary meaning before it could be afforded trademark protection. Since UNB-Laredo had stipulated that it could not prove secondary meaning in the Austin market, the district court reasoned, there was nothing left to try because UNB-Laredo was not entitled to relief.
DISCUSSION
The threshold question in this case is whether the names "Union National Bank" and "Union National Bank of Texas" are eligible for protection under either the Lanham Act or the common law of unfair competition.
I. Trademarks
A. Background
Ownership of trademarks is established by use, not by registration.
B. Purpose of trademark protection
These limitations are manifestations of the two principal concerns of trademark law, both of which are seen as promoting competition:
Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 413, 36 S.Ct. 357, 360, 60 L.Ed. 713 (1915) (emphasis added).
Thus, "the gravamen for any action of trademark infringement or common law unfair competition is whether the challenged mark is likely to cause confusion." Marathon Mfg. Co. v. Enerlite Prod. Co., 767 F.2d 214, 217 (5th Cir.1985). The idea is that trademarks are "distinguishing" features which lower consumer search costs and encourage higher quality production by discouraging free-riders.
From these policies and concerns stem the various doctrines which control trademark law. The doctrines represent imperfect attempts to grasp that which is inherently slippery — what is in a name? Their purpose is to provide a basis for analyzing trademarks with a view towards achieving the ends visualized by the laws.
II. Mechanics
A. In General
A party seeking an injunction for trademark infringement must clear several hurdles in order to prevail. First, he must prove that the name he seeks to protect is eligible for protection. He must then prove he is the senior user. Having proven these elements he must then show a likelihood of confusion between his mark and that of the defendant. Finally, because he is asking for the equitable remedy of an injunction, he must show that the likelihood of confusion will actually cause him irreparable injury for which there is no adequate legal remedy. It is the first of these requirements which concerns us now.
B. Classification of Marks
"The threshold issue in any action for trademark infringement is whether the word or phrase is initially registerable or protectable." Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 790 (5th Cir.1983). See also Bank of Texas v. Commerce Southwest, Inc., 741 F.2d 785, 786 (5th Cir.1984); Vision Center v. Opticks, Inc., 596 F.2d 111, 115 (5th Cir.1980). To determine whether a word or phrase is protectable, it must first be determined into which category, (1) generic, (2) descriptive, (3) suggestive, or (4) arbitrary or fanciful, the word or phrase belongs. Abercrombie & Fitch, Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir.1976); Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1183 (5th Cir.1980); Zatarains, supra, at 790; Vision Center, supra, at 115.
The significance of assigning a word or phrase to one of these categories is that the assignment determines whether or not, or in what circumstances, the word or phrase is eligible for trademark protection. Generic terms are never eligible for trademark protection. Descriptive terms may only be protected after proof of secondary meaning, and suggestive, arbitrary or fanciful terms are all protectable without proof of secondary meaning. See e.g., Zatarains,
C. Definitions
A generic term is one which identifies a genus or class of things or services, of which the particular item in question is merely a member. Zatarains, supra, at 790. An example of a generic word is "fish." "Fish" is a generic term which applies with equal force to sole, haddock, perch, salmon, bass and carp.
A descriptive term is one that "identifies a characteristic or quality of the article or service." Vision Center, 596 F.2d at 115. Thus, in many cases, a descriptive term will be an adjective such as "speedy," "friendly," "green," "menthol," or "reliable." But see Convenient Food Mart v. 6-Twelve Convenient Mart, 690 F.Supp. 1457, 1462-64 (D.Md.1988) (Noun/adjective test not helpful; "convenient," in context of convenience stores, is generic describing class of which plaintiff was merely a member). Geographical terms such as "Texas," "Midwest," "Madison Avenue," or "Philadelphia" are also considered descriptive terms when they describe where the products or services are offered or manufactured. Bank of Texas, 741 F.2d at 787.
A suggestive term is one which "suggests rather than describes, some particular characteristic of the goods or services to which it applies and requires the consumer to exercise the imagination in order to draw a conclusion as to the nature of goods and services." Zatarains, 698 F.2d at 791. An oft-cited example of a suggestive term is "Penguin" as applied to refrigerators. See e.g., Soweco, 617 at 1184; Sun Banks of Fla. v. Sun Fed. Sav. & Loan, 651 F.2d 311, 315 (5th Cir.1981) (citing Soweco, supra). See also opinion of district court, Record Excerpts p. 14, citing Sun Banks, supra.
Finally, arbitrary and fanciful terms or phrases are those which are either coined words or words which are not suggestive of the product or service. Here we have a sub-set of classifications within the categories. Fanciful terms are most often coined words such as "Xerox" or "Kodak." See, Zatarains, 698 F.2d at 791, citing Eastman Kodak Co. v. Weil, 137 Misc. 506, 243 N.Y.S. 319 (1930).
III. Application
A. Standard of review
"The correct categorization of a given term is a factual issue...." Zatarains, at 793. See also Soweco, at 1183 n. 12. Nevertheless, it has many attributes of a question of law and courts, as the district court in this case, often list it among their findings of law. See e.g., King-Size, Inc. v. Frank's King Size Clothes, Inc., 547 F.Supp. 1138, 1155-56 (S.D.Tex.1982); Dominion Bankshares Corp. v. Devon Holding Co., 690 F.Supp. 338 (E.D.Pa.1988). As we noted in Security Centers, "The question of law is so constantly mixed up with the various questions of fact ... that it is sometimes difficult when examining former decisions to disentangle what is decided as fact and what is laid down as a principle of law." 750 F.2d at 1297-98 n. 3, (quoting Reddaway v. Banham, 1896 A.C. 199, 204 (H.L.)). In spite of this very understandable confusion, the categorization of a term is properly considered a matter of fact because the appropriate categorization is not self-evident.
B. Application of the Categories to a Particular Trademark
"Although meant as pigeon-holes, these useful labels are instead central tones in a spectrum; they tend to merge at their edges and are frequently difficult to apply." Soweco, 617 F.2d at 1183. Words are often ambiguous. As our colleague Judge Thornberry wrote in American Heritage, supra, "[W]e are ... mindful of the Socratic admonition that words are more plastic than wax." American Heritage, 494 F.2d at 11. The English language, more than most, is in a constant state of flux. A word which is today fanciful may tomorrow become descriptive or generic. See Security Center, Ltd. v. First Nat'l Sec. Centers, 750 F.2d 1295, 1298 n. 4 (5th Cir.1985). See also Convenient Food Mart, 690 F.Supp. at 1462-63 (noun-adjectives are "recent linguistic corruptions" but firmly established in the language); Continental Motors Corp. v. Continental Aviation, 375 F.2d 857, 862 (5th Cir.1967) (no longer may say with finality that geographic terms cannot acquire protected status). Thus, the trier of fact must be aware of, or informed of, common, up-to-date usage of the word or phrase.
Furthermore, even were usage not constantly changing, the context in which a word or phrase appears is relevant to determining the proper category for purposes of trademark protection eligibility. The word or phrase must be compared to the product or service to which it is applied. "[W]ords are chameleons which reflect the color of their environment." American Heritage, 494 F.2d at 11 (paraphrasing Judge Learned Hand in C.I.R. v. National Carbide Corp., 167 F.2d 304, 306 (2d Cir.1948)). For example, the word "fish," previously discussed, was said to be generic as it describes a category of aquatic life. Yet "fish" as used in "fish market" turns "fish" into a descriptive term if it describes a type of "market."
The context in which a particular word or phrase is used is examined, not just with respect to how it is used with other words or the products or services to which it is applied, but also to the audience to which the relevant product or service is directed. To paraphrase Judge Learned Hand, the question is, "What do the buyers understand by the word for whose use the parties are contending?" Bayer Co. v. United Drug Co., 272 F. 505, 509 (2nd Cir.1921). Thus, while for the general public the word "roots" may only call to mind tuberous plant growths which extend below the surface of the earth, for some consumers it is apparently a generic term for vacuum pumps. See Dresser Indus., Inc. v. Heraeus Engelhard Vacuum, Inc., 267 F.Supp. 963, 969-70 (W.D.Pa.1967), aff'd, 395 F.2d 457 (3rd Cir.), cert. denied, 393 U.S. 934, 89 S.Ct. 293, 21 L.Ed.2d 270 (1968).
While at times the appropriate categorization may seem self-evident, and therefore unnecessary of clarification through the presentation of evidence, a review of the cases should dispel that notion.
Another source of evidence is a consumer survey, although one must be careful to properly structure the survey.
Another line of inquiry is whether others in the same business would generally need the word to adequately describe their product or service.
The district court, after hearing arguments on the issue, found as a matter of law that the phrases "Union National Bank" and "Union National Bank of Texas" were descriptive only, thus requiring proof of secondary meaning. However, legal arguments and comparison to the decisions in other cases is not helpful without reference to evidence of the context in which the word or phrase is used. The court did not include in its findings of fact any facts which support or explain its conclusion. Although in Security Centers we suggested that treating the evidence as matters of fact and the ultimate conclusion as a matter of law might be a "more workable paradigm," in this case, that analysis
The district court and the parties were operating under an erroneous view of the law. As the Supreme Court has noted, "[I]f a district court's findings rest on an erroneous view of the law, they may be set aside on that basis." Pullman-Standard v. Swint, 456 U.S. 273, 102 S.Ct. 1781, 1789, 72 L.Ed.2d 66 (1982). UNB-Laredo argues that it had additional evidence to present. A review of its list of exhibits reveals that some of them may be relevant to this issue. Appellee successfully argued to the trial court that this was an issue of law.
CONCLUSION
Concluding that the district court applied an erroneous view of the law, we REVERSE and REMAND to allow the Appellant an opportunity to present evidence regarding the appropriate categorization of its mark.
FootNotes
This difference does not apply in the instant case. UNB-Laredo has not registered its mark, and while UNB-Austin has, that registration is still subject to geographical limitations under the case law. See Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358 (2d Cir.1959) (owner of federally registered mark only entitled to injunctive relief in the market it actually serves plus its "natural zone of expansion"). For a discussion of the view that this is an appropriate, but perhaps erroneous, judicial interpretation of Congressional intent in the passage of the Lanham Act see Carter, The Trouble with Trademark, 99 Yale L.J. 759, 790-795 (1990) [hereinafter Carter]. "[N]othing in the Lanham Act carves out such an exception from the nationwide right to use the mark." Id. at 791.
Abercrombie & Fitch, 537 F.2d at 11 n. 12 (emphasis added).
In its brief and at oral argument, UNB-Austin conflates the categories of fanciful and arbitrary. (Appellee's Brief, p. 13). Since UNB-Laredo argues that "Union" is arbitrary, citations to fanciful terms such as "Kodak" to refute this proposition are inapposite.
The rationale for denying protection to generic words or limiting it in the case of descriptive words, is that to give the holder of a generic or highly descriptive mark would bestow on it an effective monopoly on the use of a term common to all in the industry and that this would represent unfair competition. On the other hand, this rationale seems to create an incentive for choosing an arbitrary or fanciful mark, since they are more likely to be eligible for protection. However, an incentive to choose an arbitrary or fanciful mark cuts against the law's concern for accurate communication to the consumer, since by definition arbitrary or fanciful terms by themselves carry no information about the product or service. In fact, the assumption that generic or descriptive marks are "better" is not always valid. Sometimes marks are desireable merely because they are "catchy." See American Can Co. v. Dixie Wax Paper Co., 407 F.2d 420 (C.C.P.A.1969) (descriptive term "Health Cup" for disposable paper cups was a "flop"; same product, marketed under the tradename "Dixie Cup," chosen because it was "catchy," phenomenal success). For a discussion of the problem with the assumption of the "irrelevant mark," see Carter, supra at note 6, passim.
We do not believe that the court in American Heritage meant to imply that the owners of facially arbitrary or fanciful marks would not be able to argue for protection of their names in a particular market merely because some component of the name was popular within the industry. Appellant is not seeking to protect the word "Union" alone, (thus denying its use to others, in other arrangements), but rather the whole name, in this precise arrangement, "Union National Bank" or "Union National Bank of Texas." See Estate of P.D. Beckwith v. Commissioner of Patents, 252 U.S. 538, 40 S.Ct. 414, 417, 64 L.Ed. 705 (1919) ("The commercial impression of trade-mark is derived from it as a whole, not from its elements separated and considered in detail. For this reason it should be considered in its entirety....") (citations omitted) (emphasis added). Unless widespread industry use can be demonstrated by the evidence to result from the understanding in the industry that the term is generic or descriptive, not merely attractive or popular, we believe that this inquiry more properly goes to the likelihood of confusion issue. See supra, note 24.
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