Free Brief (Non Appeal) - District Court of Arizona - Arizona

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Donald A. Wall (Arizona Bar No. 007522) [email protected] David E. Rogers (Arizona Bar No. 019274) [email protected] Squire, Sanders & Dempsey L.L.P. Two Renaissance Square, Suite 2700 40 North Central Avenue Phoenix, Arizona 85004-4498 Tel: +1.602.528.4000 Fax: +1.602.253.8129 Attorneys for Defendant Century Surety Co.

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

CENTURY 21 REAL ESTATE LLC, Plaintiff, vs. CENTURY SURETY CO., Defendant.

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Case No. CIV 03-0053 PHX SMM

BRIEF ADDRESSING COUNTS IX AND X

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I.

Introduction.

The Court's March 16, 2006 Order ("Order") granted summary judgment for Century1 on Counts I-VIII, finding no infringement and no dilution of the "Century 21 Marks."2 The only remaining counts in this lawsuit are Count IX, which opposes the registration of "Century Surety Group," and Count X, which seeks to cancel the registration for "Century Insurance Group" (collectively, "Century's Registrations"). Counts IX and X should be addressed at this stage of the litigation and not bifurcated to allow for immediate appeal of Counts I-VIII because: (1) there are no unusual circumstances justifying piecemeal treatment of the case and other courts have not allowed special appeals under such circumstances, (2) the factual findings already made by this Court and which are the law of the case mandate summary judgment in favor of Century on Counts IX and X, and (3) the Court's ability to modify Century's Registrations and/or cancel or modify C21's registration for "insurance brokerage services"3 to conform with the factual findings already made (which Century believes is not necessary) would yield a direct correlation between the issues in Counts IX and X and the Court's factual findings, and mandate summary judgment for Century. Consequently, deciding Counts IX and X now would efficiently dispose of this case and avoid piecemeal litigation.
II.

There Are No Unusual Circumstances Requiring a Premature Appeal of Counts I-VIII.

Two procedures by which counts may be appealed before a final decision is rendered on all counts are (1) the procedure in Fed. R. Civ. P. 54(b), and (2) interlocutory appeal under 28 U.S.C. § 1292. An appeal regarding Counts I-VIII is unwarranted under either procedure. A. Rule 54(b). Judgments under Fed. R. Civ. P. 54(b) are reserved for the unusual case in which the costs and risks of multiplying the number of proceedings and of overcrowding the appellate

"Century" means Century Surety Co. and "C21" means Century 21 Real Estate LLC. This brief was not filed under seal since it contains no confidential information. 2 As defined in the Order, p. 1, ll. 21-22. Century has also dismissed its counterclaim with prejudice. 3 U.S. Registration No. 1,429,531 for "Century 21" for "insurance brokerage services." This registration is hereafter referred to as "C21's ISB Registration."
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docket are outbalanced by the pressing needs of the litigants for an early and separate judgment as to some claim or parties. Morrison-Knudsen Co. v. Archer, 655 F.2d 962, 965 (9th Cir. 1981). A similarity of legal or factual issues will weigh heavily against entry of judgment under the rule, and in such cases a Rule 54 (b) order is proper only if necessary to avoid a harsh and unjust result. Id. As explained herein, the legal and factual issues pertaining to claims IX and X are substantially the same as those for Counts I-VIII, other courts faced with similar situations have not bifurcated the issues, and certification under Rule 54(b) is unwarranted. See infra, Sections II C and III C-E. B. 28 U.S.C. § 1292(b). Under 28 U.S.C. § 1292(b) a district court's interlocutory order is subject to appeal if the court certifies that (1) it involves a controlling question of law, (2) there is a "a substantial ground for difference of opinion" regarding that question of law; and (3) "an immediate appeal from the order may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b); In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982), aff'd sub nom. Arizona v. Ash Grove Cement Co., 459 U.S. 1190 (1983). All three factors must be present for the court to grant interlocutory review, because interlocutory appeals are "to be applied `sparingly and only in exceptional cases' in furtherance of the long-standing federal policy against piecemeal appeals." Mont-Bell Co. v. Mountain Hardwear, 1997 U.S. Dist. LEXIS 22423, 3-6 (N.D. Cal. 1997). No exceptional circumstances requiring a departure from the policy of avoiding piecemeal litigation are present here. Even if C21 bases an appeal on the interpretation of 15 U.S.C. § 1055,4 that issue is not controlling because even if C21 were found to use the Century 21 Marks to sell insurance the Court's factual findings would still preclude a finding of infringement or dilution. See Sections III C-E, infra. Furthermore, there is no substantial ground for a difference of opinion as to the interpretation of 15 U.S.C. § 1055. C21 claims, contrary to (among other things) governmental licensing provisions, its franchise agreement and testimony, that it sells insurance under the Century 21 Marks. C21's theory changed throughout this litigation but C21 appears to have settled on one, namely, that referrals to
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See generally Order, p. 28, l. 8 - p. 31, l. 21.

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third-party businesses that are not C21 franchisees, are not licensed by C21 and do not use the Century 21 Marks somehow put C21 in the insurance business.5 C21 cited no case law in support of its position, and its position contradicts the plain language of the Lanham Act (which requires display of a mark plus providing the services). Order, p. 30, ll. 11-12; p. 26 n. 22. Even C21's own trademark registration for "Century 21 Connections" lists C21's services as promoting the goods and services of others. Century's SOF6 81. Accordingly, there is no substantial ground for a difference of opinion that C21 does not sell insurance. C. Other Courts Address Infringement and Cancellation Counts Together. Whether C21 relies on Fed. R. Civ. P. 54(b) or 28 U.S.C. § 1292(b), other courts deciding infringement and cancellation counts have not granted special appeals, but instead decided the counts together. We have not found any case in which counts were bifurcated for appeal under these circumstances.7 See Brookfield Communs., Inc. v. W. Coast Entm't Corp., 1999 U.S. Dist. LEXIS 23247 (C.D. Cal. Sept. 8, 1999) (cancellation and infringement claims appealed together); American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3 (5th Cir. 1974) (cancellation and infringement claims appealed together); Thane Int'l v. Trek Bicycle Corp., 305 F.3d 894, 900 (9th Cir. 2002); MWS Wire Ind. v. California Fine Wire Co., 797 F.2d 799, 801 (9th Cir. 1986) (district court found non-infringement and cancelled plaintiff's registrations and the counts were appealed together); Prudential Ins. Co. v. Gibraltor Financial Corp., 694 F.2d 1150, 1152 (9th Cir. 1982) (same); Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794 (9th Cir. 1970) (infringement and cancellation claims appealed together); Sportvision, Inc. v. Sportsmedia Tech. Corp., 2005 U.S. Dist. LEXIS 22889 (N.D. Cal.) (denying request to certify trademark claims under Rule 54 (b), instead deciding to resolve the remaining patent and tort claims).

See generally Order, p. 28, l. 8 - p. 31, l. 21. "Century's SOF" means Undisputed Statement of Facts In Support of Defendant's Motions for Summary Judgment on Counts, I, III, and V-VIII (No Likelihood of Confusion) and Counts II and IV (No Dilution). 7 There are cases involving preliminary injunctions in which the injunction was appealed while cancellation claims remained at the district court. Also, Star-Kist Foods, Inc. v Rhodes, 735 F.2d 346, 348 (9th Cir. 1984), involved an appeal under Rule 54 (b) for cancellation of a registration while the rest of the case proceeded to trial, but the appeal involved the narrow issue of whether plaintiff had standing to cancel the registration.
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III.

Century is Entitled to Summary Judgment on Counts IX and X. Law of the Case Applies Here.

A.

Law of the case applies where "the issue in question [was] decided explicitly or by necessary implication in the previous disposition." Lower Elwha Band of S'Klallams v. Lummi Indian Tribe, 235 F.3d 443, 452 (9th Cir. 2000) (quoting Liberty Mut. Ins. Co. v. EEOC, 691 F.2d 438, 441 (9th Cir. 1982)). In the Ninth Circuit, courts adhere to the doctrine of law of the case and give preclusive effect to prior decisions on legal issues in the same case unless: (1) substantially different evidence is subsequently presented, (2) there has been a change in controlling law applicable to the previously decided legal issues, or (3) the prior decision was clearly erroneous and would work a manifest injustice unless it is subsequently revisited. Merritt v. Mackey, 932 F.2d 1317, 1320 (9th Cir. 1991). A ruling by either a district court or appellate court can establish law of the case. Brookfield, 1999 U.S. Dist LEXIS 23247 at *15 (both district court and Court of Appeals' rulings as to similarity of marks and relatedness and similarity of products and services are binding as the law of the case); Federal Insurance Co. v. Scarsella Brothers, 931 F.2d 599, 601 (9th Cir. 1991) (in granting defendant's summary judgment motion, and denying plaintiff's motion, the district court established law of the case sufficient to decide every cause of action pleaded). Here, the Court's factual findings on the likelihood of confusion ("LOC") and dilution factors are law of the case. There is no substantially different evidence, no change in applicable controlling law, and the Court's decision was not clearly erroneous. Additionally, in a context such as this, where C21 chose to consolidate infringement, opposition and cancellation proceedings in this Court (rather than separating the issues and litigating infringement here and opposition/cancellation matters in the Trademark Office), collateral estoppel is not the proper legal standard and that line of cases is inapposite. Consequently, as explained in Sections III C-E, below, summary judgment should be granted for Century on Counts IX and X. B. The Difference between Trademark Litigation and Opposition/Cancellation Proceedings.

LOC in an infringement context (such as for Counts I, III and V-VIII) considers how the parties' respective marks, services and channels of trade are actually presented in the

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marketplace. AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979). In contrast, LOC8 in an opposition or cancellation proceeding is "decided on the basis of the mark as shown in the application/registration, the identification of goods set forth in the application/registration regardless of what the record may reveal as to the particular nature of an applicant's goods, the particular channels of trade or the class of purchasers to which sales of the goods are directed." Octocom Systems Inc. v. Houston Computers Services Inc., 918 F.2d 937, 942 (Fed. Cir. 1990); Jim Beam Brands Co. v. Beamish & Crawford, Ltd., 937 F.2d 729, 734-735 (2d Cir. 1991) ("likelihood of confusion is determined only as to the registrability of the applicant's mark exactly as shown in the application and only as to the goods listed, regardless of actual usage."). The marketing channels are presumed to be all channels customary for the services listed in the registration(s) and/or application(s). CBS, Inc. v. Morrow, 708 F.2d 1579, 1581 (Fed. Cir. 1983). Therefore, the Court's factual findings are directly applicable to Counts IX and X except that the findings related to the parties' respective services and trade channels are utilized in a different manner.9 For Counts IX and X Century's services are determined by simply reading those listed in Century's Registrations (which are located at Century's Ex. 10, tabs 20-21) and comparing those to (1) for C21's common-law rights, the services actually provided by C21, and (2) for C21's three registrations10 at issue in this case (which can be found at Century's Ex. 10, tabs 16, 18-19), the services listed in those registrations. As explained below, utilizing this simple comparison in view of the Court's factual findings leads to the conclusion that summary judgment should be granted for Century. In addition, if any issue remains, the Court can and should amend the services description in Century's Registrations and/or C21's ISB Registration, or cancel C21's ISB Registration, in conformance with the factual findings. In that case there would be essentially a one-to-one
As discussed in Section III D, infra, any differences in the dilution standards would not preclude summary judgment in favor of Century. 9 In an opposition/cancellation proceeding, the marks are also examined by reference solely to the application/registration at issue, but the Court has already held as a matter of law that "Century 21" is dissimilar to the marks in Century's Registrations. See generally Order, p. 20, l. 12-p. 22, l. 14. 10 U.S. Registration No. 1,063,488 for "Century 21" for "real estate brokerage services, U.S. Registration No. 1,085,040 for "Century 21" (with design) for "real estate brokerage services" and U.S. Registration No. 1,429,531 for "Century 21" for "insurance brokerage services."
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correlation between the issues in Counts IX and X and the Court's findings, which would mandate summary judgment for Century. See Section III E, infra. C. There is No Likelihood of Confusion. The Court has already found that: (1) "Century 21" is dissimilar to Century's Marks (including the marks in Century's Registrations), (2) C21 does not provide insurance services, (3) even if C21 did provide insurance services those would be retail brokerage services and not the commercial underwriting services provided by Century, (4) commercial insurance underwriting and real estate brokerage are unrelated, (5) the parties' services move through different trade channels, (6) the parties have coexisted since at least 1991 with no actual confusion (even by C21's franchisees), (7) Century's selection of its marks had nothing to do with C21, (8) there is no likelihood that Century will expand into C21's business or vice versa, (9) Century's insurance is expensive and the purchasers of Century's insurance are business persons,11 and (10) C21 has never heard of the trade associations to which Century belongs or the publications in which Century advertises.12 In Counts IX and X, C21 is asserting common-law rights and rights in three "Century 21" registrations against each of Century's Registrations (which recite insurance underwriting services). C21's common-law rights and two of its registrations (each for "real estate brokerage services") are easily disposed of by the Court's findings. C21 has been found to provide no insurance services (and hence has no common-law rights for insurance services) and real estate brokerage and insurance underwriting have been found to be dissimilar. Order, p. 32, l. 10 - p. 33, l. 6. Coupled with the other findings in Century's favor, including that the marks at issue are dissimilar and there has been an extensive period of coexistence with no confusion, there is no LOC. Kellogg Co. v. Pack'em Enterprises, Inc., 951 F.2d 330, 332-333 (Fed. Cir. 1991) (summary judgment for defendant in opposition because marks "Froot Loops" and "Frootee Ice" dissimilar; this factor outweighed all others); Toro
Purchasers of insurance services or real estate-related services use great care. See Order, p. 37, ll. 12-18; Safeway Stores, Inc. v. Safeway Ins. Co., 657 F. Supp. 1307, 1318 (M.D. La. 1985) (auto insurance a serious and costly purchase); Homeowners Group, Inc. v. Home Mktg. Specialists, Inc., 931 F.2d 1100, 1111 (6th Cir. 1991) (home buyers and real estate agents are careful when making buying decisions). 12 Order, p. 20, l. 12-p. 22, l.14; p. 24, l. 13 - p. 31, l. 21; p. 23, l. 19-p. 24, l. 12; p. 25 n. 20; p. 26 n. 21; p. 34 n. 25; p. 32, ll. 10-26; p. 33, l. 11-p. 36, l. ; p. 34 n. 25; p. 37, l. 19-p. 40, l. 12; p. 40, l. 13-p. 42, l. 7; p. 42, l. 8-p. 44, l. 6; p. 36, l. 24 - p. 37, l. 12; p. 35, ll. 13-17.
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Co. v. GrassMasters, Inc., 66 USPQ2d 1032, 1033 (TTAB 2003) (no LOC in opposition between "Lawn Pup" and famous "Lawn Boy" mark, even though the respective goods were identical and "Lawn Boy" mowers sold through a 3,000 dealer network, because of the degree of consumer care in purchasing mowers costing between $250 - $600 and since no reported instances of actual confusion). That leaves just the issue of C21's ISB Registration. Even if we assume that registration is valid and accurate (and it is neither)13 summary judgment should be granted for Century because "Century 21" and "Century" are dissimilar and Century's Registrations do not include "insurance brokerage services," but rather insurance underwriting.14 Those distinctions coupled with the Court's other factual findings (supra, p. 6, ll. 2-11) mandate a finding of no LOC. Finding no LOC between Century's Registrations and C21's registrations would comport with the opinion of the USPTO, which allowed both of Century's Registrations over all three of C21's registrations asserted here. Order, p. 22 n. 16. The TTAB also registered at least nine other marks for insurance that contain the word "Century" despite the existence of C21's registrations, and there is no record of C21's having objected to those registrations. Century's Response to C21's Statement of Fact No. 130. D. There is No Dilution. To the extent C21's Counts IX and X depend upon dilution, they fail as a matter of law because the Court has already found that (1) none of the Century 21 Marks are "nearly identical" to the marks shown in Century's Registrations, (2) there is no evidence of mental association, and (3) there is no blurring.15 Order, p. 46, l. 7 - p. 48, l. 28.

Order, p. 23, l. 19 - p. 30, l. 22 (C21 does not provide insurance services). See, e.g., Prudential Ins. Co. of Am. v. Gibraltor Fin. Corp. of Cal., 694 F.2d 1150, 1155 (9th Cir. 1982) (general insurance not similar to savings and loan services or mortgage insurance). 15 In opposition and cancellation proceedings, a showing of actual harm is not required if the harm is prospective because the marks have not been used. The NASDAQ Stock Market, Inc. v. Antartica, S.r.l., 2003 TTAB LEXIS 391, at *54-59 (TTAB 2003). Here, the marks have been used and no actual harm was found. Order, p. 49, l. 13 - p. 50, l. 26.
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E.

Century's Registrations Can Be Amended and C21's ISB Registration Can Be Amended or Cancelled.

As explained in the preceding sections, the factual findings that are law of the case establish that there is no LOC or dilution and neither Century's Registrations nor C21's ISB Registration need be disturbed. If that were not true, however, the Court should amend Century's Registrations and/or amend or cancel C21's ISB Registration to conform with the factual findings, and such would necessarily result in summary judgment for Century since then the facts relevant to Counts IX and X would be essentially identical to the Court's findings. The Court may, upon motion or consent of the parties, order that the services description in Century's Registrations be amended (called a "restriction") to conform to the Court's finding of the actual insurance services Century provides.16 Century plans to request that its services description be so restricted and, if a motion is required, the Court would not rule on it immediately, but would wait until after reviewing the parties' summary judgment motions on Counts IX and X to determine whether such a restriction would be required, or whether summary judgment should be granted in Century's favor without such a restriction. TBMP § 514.03.17 If the Court believes the restriction is required to dispose of the remaining issues here, the Court should order the restriction. Id. The Court may also restrict or cancel C21's ISB Registration. C21 apparently seeks to pursue Counts IX and X with full knowledge that its ISB Registration, for "insurance brokerage services," is invalid, but hopes to be allowed to maintain the paper fiction it has established in the Trademark Office. The Court, however, is not required to indulge a known fiction. The fact is that C21 does not sell insurance or provide insurance services under the mark "Century 21," and its registration for "insurance brokerage services" should be cancelled to conform to the evidence. Order, p. 24, l. 13 - p. 31, l. 21; Fed. R. Civ. P. 15(b); Wembley, Inc. v. Diplomat Tie Co., 216 F. Supp. 565, 575-76 (D. Md. 1963) (validity of mark raised and tried by implied consent of the parties). Alternatively, the services
For example, Century's services description could be amended to reflect the Court's finding that Century's insurance is commercial and sold through a wholesale distribution channel. Order, p. 23, l. 26 - p. 24, l. 8. 17 Section 514.03 of the Trademark Trial and Appeal Board Manual of Procedure ("TBMP") describes the procedure and can be found on line at www.uspto.gov/web/offices/dcom/ttab/tbmp/.
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description in C21's ISB Registration should be restricted to the actual services C21 provides, e.g., "referrals to third parties that sell insurance." In the event cancellation or restriction of C21's ISB Registration requires an amendment to the pleadings, C21 cannot claim to be surprised or prejudiced since much of this case has focused on whether C21 actually provides insurance. See Wembley, 216 F. Supp. at 575-76.
IV.

Conclusion.

Other courts have decided litigation, cancellation and opposition matters without bifurcating the counts and permitting piecemeal litigation. This Court's findings in its Order of March 16, 2006 effectively dispose of C21's remaining two counts and those should be decided now rather than litigating the matters separately. There is no basis for allowing piecemeal litigation, which will only protract the proceedings and increase the expense. Respectfully submitted this 21st day of July, 2006. /s/ David E. Rogers Donald A. Wall David E. Rogers SQUIRE, SANDERS & DEMPSEY L.L.P. Two Renaissance Square 40 North Central Avenue, Suite 2700 Phoenix, Arizona 85004-4498 602-528-4000 Attorneys for Defendant Century Surety Co.

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I hereby certify that on July 21, 2006, I electronically transmitted the attached document to the Clerk's office using the ECF System for filing and transmittal of a Notice of Electronic Filing to the following ECF registrants: Michael A. Grow [email protected] Elizabeth H. Cohen [email protected] Janine A. Carlan [email protected] Arent Fox PLLC 1050 Connecticut Avenue NW. Washington, D.C. 20036-5339 and Rick N. Bryson [email protected] Brent M. Hager [email protected] Sanders & Parks PC 3030 North Third Street, Suite 1300 Phoenix, Arizona 85012-3099 Attorneys for Plaintiff Century 21 Real Estate Corp. COPY of the foregoing and Notice of Electronic Filing mailed this 21st day of July, 2006, to: The Honorable Stephen M. McNamee Sandra Day O'Connor U.S. Courthouse, Suite 625 401 West Washington Street, SPC 60 Phoenix, Arizona 85003-2158 By: s/Denise H. Dolan ______________________

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