Tenth Circuit: District court’s internally inconsistent findings lead to remandSeptember 12, 2008

In a decision last week, the Tenth Circuit reversed a district court's ruling of no trademark infringement. The district court, applying the Tenth Circuit's six likelihood of confusion factors, initially stated that three factors favored the plaintiffs, two were neutral, and one favored the defendants, but in its conclusion, stated that only one factor favored the plaintiff, with the remainder of the factors neutral or favoring the defendants. The district court also noted it was "reluctant" to find infringement where the allegedly infringing mark incorporated one defendant's middle name.The Tenth Circuit reversed, noting the inconsistency in the district court's findings and that such inconsistencies constitute clear error. The court further noted that while courts are "generally reluctant to enjoin an individual from using their own name," this reluctance does not extend to situations where there was "an attempt to deceive the public." Here, the district court specifically found the defendants chose their mark to advantage of the plaintiff's goodwill, and thus any reluctance to find infringement was inappropriate. More on The John Allan Co. v. The Craig Allen Co. after the jump.In 1988, John Allan Meing opened a men's salon in New York City, which focused on creating a plush environment for men. Since the first salon opening in 1988, John Allan's has grown to a total of four, all located in New York City. In addition to the salons John Allan also sold grooming and hair products throughout the nation. In 1996, they obtained the registered mark "John Allan's & JA Circle Design" for "men's and women's haircutting services, namely haircutting, manicures, facials, and massage services, retail counter in the field of hair and skin products." After visiting a John Allan store, Craig Allen Tatro and Erik Leschuk opened a similar salon in Wichita, Kansas and conveniently selected the name "Craig Allen's." Craig Allen's developed a logo significantly similar to that of John Allan's. The two logos are shown below: The services and amenities were also nearly identical (cigar rooms, pool tables, leather chairs, black smoking jackets, bar, etc.)In 2005, The John Allan Company sent a letter alleging trademark infringement to The Craig Allen Company. Pursuant to the letter, The Craig Allen Company changed its logo, however, they did not change the name or any of the interior furnishings. The revised logo is shown below:

Unsatisfied, The John Allan Company sued, seeking injunctive relief for infringement of their logo and the use of a similar name. The district court ruled that Craig Allen's original logo did infringe John Allan's, but since Craig Allen's had spent more than $20,000 in changing it, it was not necessary to enjoin them. Regarding the use of the Craig Allen's name, the court ruled that it did not infringe John Allan's. The court applied a six factor test to determine likelihood of confusion:

1. the degree of similarity between the marks
2. the intent of the alleged infringer in adopting the mark
3. evidence of actual confusion
4. similarity of products and manner of marketing
5. the degree of care likely to be exercised by purchasers
6. the strength or weakness of the marks

In its decision, the district court noted three of the factors were in John Allan's favor (similarity of the marks, intent to copy, and strength of the mark), two factors were neutral (the similarity of products and degree of care exercised by consumers, and one was in Craig Allen's favor (no evidence of actual confusion). However, in its summary, the district court stated that only one factor favored the plaintiff, and held there was no likely confusion. The court also noted its reluctance to enjoin use of one defendant's middle name (Allen), particularly given how common it was. John Allan's appealed to the Tenth Circuit, claiming that the district court had been erroneously came to the wrong conclusion regarding the evidence of confusion factor and had not given proper weight to the finding that Craig Allen had intentionally used the mark to benefit from the reputation of John Allan's. The Tenth Circuit reversed. The court stated the district court placed too much weight on the fact that Craig Allen, was the defendant's actual name. While ordinarily courts are "reluctant" to enjoin use of a party's actual name, this reluctance does not apply in cases where there was an attempt to confuse customers. Here, the district court held the defendants intended to trade on John Allan's goodwill in adopting its Craig Allen mark. Accordingly, the court remanded the case back to the district court and stated that the court "must properly weigh the use of Tatro's first and middle name, with its finding that The Craig Allen Company's adoption of the name 'Allen' 'seems too coincidental given defendants' purposeful copying of plaintiff's registered marks and other features of plaintiff's salons.'" The court then moved on to the claim misapplication of the actual confusion factor. John Allan's presented the testimony of two witnesses that noted at least some confusion between the companies. Even if this evidence was discounted, the court observed it is not necessary to show actual confusion to show likelihood of confusion. The problem with the district court's analysis was that the court failed to "consider the potential for confusion created by an appearance that the two salons had a common sponsorship or affiliation." The Tenth Circuit remanded back to the district court, and for the court to properly apply this factor, which may or may not be sufficient to show likelihood of confusion. Finally, the court looked at the district court's decision to not enjoin Craig Allen's for infringing John Allan's registered mark. Specifically, John Allan's sought application of the "safe distance rule," which is designed to prevent defendants from continued benefits of using something still similar to the plaintiff's mark. The test for applying the "safe distance rule" is a similar likelihood of confusion test. The court said that there is no legal requirement forcing the district court to apply this rule. However, the issue was remanded so that if the district court determined that there was a likelihood of confusion, the court can "revisit the issue of whether injunctive relief is necessary."As a result, the court reversed the district court's finding on likelihood of confusion and remanded. All in all, it was largely the district court's internal inconsistency that led to this reversal.To read the full opinion in The John Allan Co. v. The Craig Allen Co., click here.