Elvis Presley Enterprises, Inc. v. Capece , 141 F.3d 188 ( 1998 )

REVISED, May 27, 1998
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 97-20096
_____________________
ELVIS PRESLEY ENTERPRISES, INCORPORATED,
Plaintiff-Appellant,
v.
BARRY CAPECE, A United States Citizen; VELVET
LIMITED, A Texas Limited Partnership; AUDLEY
INCORPORATED, A Texas Corporation,
Defendants-Appellees.
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
_________________________________________________________________
May 7, 1998
Before REYNALDO G. GARZA, KING, and BENAVIDES, Circuit Judges.
KING, Circuit Judge:
Plaintiff-appellant Elvis Presley Enterprises, Inc. appeals
the district court’s judgment that defendants-appellees’ service
mark, “The Velvet Elvis,” does not infringe or dilute its federal
and common-law trademarks and does not violate its right of
publicity in Elvis Presley’s name. See Elvis Presley Enters. v.
Capece, 950 F. Supp. 783 (S.D. Tex. 1996). Because the district
court failed to consider the impact of defendants-appellees’
advertising practices on their use of the service mark and
misapplied the doctrine of parody in its determination that “The
Velvet Elvis” mark did not infringe Elvis Presley Enterprises,
Inc.’s marks, we reverse the district court’s judgment on the
trademark infringement claims and remand the case for entry of an
injunction enjoining the use of the infringing mark.
I. BACKGROUND
Plaintiff-appellant Elvis Presley Enterprises, Inc. (EPE) is
the assignee and registrant of all trademarks, copyrights, and
publicity rights belonging to the Elvis Presley estate. EPE has
at least seventeen federal trademark registrations, as well as
common-law trademarks, for “Elvis Presley” or “Elvis” and other
registrations for his likeness. However, none of these marks is
registered for use in the restaurant and tavern business. Prior
to trial, EPE announced plans to open a Memphis nightclub as part
of a possible worldwide chain. The Memphis nightclub opened
subsequent to trial. EPE licenses a wide variety of products and
operates Graceland, Elvis’s home, as a tourist attraction with
adjacent retail stores and restaurants. Over 700,000 visitors
per year come from all fifty states and from around the world to
visit Graceland. Merchandise sales have brought in over $20
million in revenue over a five-year period and account for the
largest portion of EPE’s revenue.
In April 1991, defendant-appellee Barry Capece, operating
through the limited partnership Beers ’R’ Us, opened a nightclub
on Kipling Street in Houston, Texas called “The Velvet Elvis.”
On August 28, 1991, Capece filed a federal service mark
application for “The Velvet Elvis” for restaurant and tavern
services with the United States Patent and Trademark Office
2
(PTO). In December 1992, the service mark was published in the
Official Gazette of the United States Patent and Trademark Office
as required by 15 U.S.C. § 1062(a). EPE was aware of this
publication, but did not file an opposition to the mark’s
registration within thirty days under 15 U.S.C. § 1063.
Accordingly, the PTO issued a service mark registration to Capece
for use of “The Velvet Elvis” mark on March 9, 1993. The Kipling
Street nightclub closed in July 1993 for business reasons.
After the Kipling Street location’s closing, Capece began
soliciting investors to reopen the nightclub at a new location.
The new nightclub, to be located on Richmond Avenue, would have
the same name, “The Velvet Elvis,” but it would be run by a new
limited partnership, Velvet, Ltd. Audley, Inc. is the general
partner of Velvet, Ltd., and Capece is the sole shareholder of
Audley, Inc.1 Capece began renovating the new location in
January 1994. In July 1994, EPE contacted Capece by letter,
threatening him with legal action if the bar opened with “Elvis”
in its name. The Richmond Avenue location opened in August 1994
under the name “The Velvet Elvis.”
The Defendants’ bar serves a wide variety of food and
liquor, including premium scotches and bourbons. The menu items
range from appetizers to full entrees. Live music is regularly
featured at the bar, and the bar claims to be the first cigar bar
in Houston. Its decor includes velvet paintings of celebrities
1
Hereinafter, we will refer to Barry Capece; Velvet, Ltd.;
and Audley, Inc. collectively as the Defendants.
3
and female nudes, including ones of Elvis and a bare-chested Mona
Lisa. Other “eclectic” decorations include lava lamps, cheap
ceramic sculptures, beaded curtains, and vinyl furniture.
Playboy centerfolds cover the men’s room walls.
In addition to the velvet painting of Elvis, the bar’s menu
and decor include other Elvis references. The menu includes
“Love Me Blenders,” a type of frozen drink; peanut butter and
banana sandwiches, a favorite of Elvis’s; and “Your Football
Hound Dog,” a hotdog. The menu bears the caption “The King of
Dive Bars,” and one menu publicized “Oscar at The Elvis,” an
Academy Awards charity benefit to be held at the bar. Numerous
magazine photographs of Elvis, a statuette of Elvis playing the
guitar, and a bust of Elvis were also among the decorations. By
the time of trial, many of these decorations had been removed
from the Defendants’ bar and replaced with non-Elvis items.
Pictures and references to Elvis Presley appeared in
advertising both for the Kipling Street location and for the
Richmond Avenue location from the date it opened through early
1995, and some ads emphasized the “Elvis” portion of the name by
“boldly display[ing] the ‘Elvis’ portion of ‘The Velvet Elvis’
insignia with an almost unnoticeable ‘Velvet’ appearing alongside
in smaller script.” Elvis Presley Enters. v. Capece, 950 F.
Supp. 783, 789 (S.D. Tex. 1996). The Defendants made direct
references to Elvis and Graceland in advertisements with phrases
such as “The King Lives,” “Viva la Elvis,” “Hunka-Hunka Happy
Hour,” and “Elvis has not left the building.” Advertisements
4
also included a crown logo above the “V” in “The Velvet Elvis”
mark. Advertised promotional events at the Defendants’ bar have
included parties commemorating Elvis’s birth and death and
appearances by Elvis impersonators and Elvis Presley’s drummer.
Some advertisements publicizing the opening of the Richmond
Avenue location included direct references to Elvis and used the
tag-line “the legend continues” without using “The Velvet Elvis”
mark.
In April 1995, EPE filed suit against the Defendants,
alleging claims for federal and common-law unfair competition and
trademark infringement, federal trademark dilution, and violation
of its state-law rights of publicity in Elvis Presley’s name and
likeness. EPE sought injunctive relief, costs, attorneys’ fees,
and an order to the Commissioner of Patents and Trademarks to
cancel Capece’s registration for “The Velvet Elvis.” The case
was tried to the district court, which ruled in favor of EPE on
its claims of trademark infringement and unfair competition
relating to the Defendants’ advertising practices, but not those
claims relating to their use of “The Velvet Elvis” service mark.
Id. at 796-97. In addition, the court ruled in favor of EPE on
its right of publicity claim in relation to the use of Elvis’s
name and likeness, but again not in relation to the use of “The
Velvet Elvis” service mark. Id. at 801-02. As to the claims
upon which EPE succeeded, the district court granted injunctive
relief barring the use, in connection with the promotion or
advertising of the bar, of “the image or likeness of Elvis
5
Presley, phrases that are inextricably linked to the identity of
Elvis, or from displaying the ‘Elvis’ portion of their service
mark in print larger than that used for its counterpart
‘Velvet.’” Id. at 803. Upon all other claims, the district
court ruled in favor of the Defendants and denied all other
relief. Id. EPE now appeals.
II. DISCUSSION
EPE has appealed that portion of the district court’s
judgment denying relief on its trademark infringement claims, its
federal dilution claim, and its right of publicity claim based
only upon the Defendants’ use of “The Velvet Elvis” mark and the
district court’s denial of an accounting of profits and
attorneys’ fees. Because it ruled in favor of the Defendants,
the district court did not reach their defenses of laches or
acquiescence. The Defendants reassert these defenses on appeal
as alternative bases for affirming the district court’s
judgment.2 We consider each issue in turn.
A. Trademark Infringement
The district court clearly stated EPE’s claim:
[EPE] claims the inclusion of its “Elvis” trademark in
the service mark “The Velvet Elvis” coupled with
Defendants’ use of the image and likeness of Elvis
2
The Defendants asserted a First Amendment defense to
trademark infringement below, but they do not reassert it on
appeal, thus abandoning the defense. See Brinkman v. Dallas
County Deputy Sheriff Abner, 813 F.2d 744, 748 (5th Cir. 1987)
(“We will not raise or discuss legal issues that [appellant] has
failed to assert.”); Fehlhaber v. Fehlhaber, 681 F.2d 1015, 1029
(5th Cir. Unit B 1982) (noting that a failure to brief and argue
a constitutional defense is grounds for finding that the defense
has been abandoned).
6
Presley in advertising, promoting, and rendering bar
services creates confusion as to whether EPE licensed,
approved, sponsored, endorsed or is otherwise
affiliated with “The Velvet Elvis,” constituting unfair
competition and trademark infringement under the common
law and Lanham Act.
Id. at 789. The district court also correctly stated the
generally applicable law in this circuit to a trademark
infringement claim. Id. at 789-91. First, we will summarize
this applicable law and then examine the district court’s
decision.
1. Applicable law
For EPE to prevail on its trademark infringement claim, it
must show that the Defendants’ use of “The Velvet Elvis” mark and
image, likeness, and other referents to Elvis Presley creates a
likelihood of confusion in the minds of potential consumers as to
the source, affiliation, or sponsorship of the Defendants’ bar.
See Society of Fin. Exam’rs v. National Ass’n of Certified Fraud
Exam’rs, Inc., 41 F.3d 223, 227 (5th Cir.), cert. denied, 515
U.S. 1103 (1995); Oreck Corp. v. U.S. Floor Sys., Inc., 803 F.2d
166, 170 (5th Cir. 1986); see also 15 U.S.C. §§ 1114(1),
1125(a)(1)(A). Liability for trademark infringement hinges upon
whether a likelihood of confusion exists between the marks at
issue. See Society of Fin. Exam’rs, 41 F.3d at 227. Likelihood
of confusion is synonymous with a probability of confusion, which
is more than a mere possibility of confusion. See Blue Bell Bio-
Med. v. Cin-Bad, Inc., 864 F.2d 1253, 1260 (5th Cir. 1989); see
also 3 J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION
§ 23:3 (4th ed. 1997). A determination of a likelihood of
7
confusion under federal law is the same as the determination of a
likelihood of confusion under Texas law for a trademark
infringement claim. See Zapata Corp. v. Zapata Trading Int’l,
Inc., 841 S.W.2d 45, 47 (Tex. App.--Houston [14th Dist.] 1992, no
writ) (applying Texas law to a trademark infringement claim); see
also Blue Bell Bio-Med., 864 F.2d at 1261 (citing Chevron Chem.
Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d 695, 706 (5th
Cir. Unit A Oct. 1981) (applying Texas law to an unfair trade
practices claim)).3
In determining whether a likelihood of confusion exists,
this court considers the following nonexhaustive list of factors:
(1) the type of trademark allegedly infringed, (2) the similarity
between the two marks, (3) the similarity of the products or
services, (4) the identity of the retail outlets and purchasers,
(5) the identity of the advertising media used, (6) the
defendant’s intent, and (7) any evidence of actual confusion.
See Conan Properties, Inc. v. Conans Pizza, Inc., 752 F.2d 145,
149 (5th Cir. 1985). No one factor is dispositive, and a finding
of a likelihood of confusion does not even require a positive
3
The district court found that Texas law applied in its
discussion of EPE’s statutory right of publicity. Elvis Presley
Enters., 950 F. Supp. at 800-01. No explicit choice-of-law
determination was made in relation to the state trademark or
unfair competition claims. For the same reasons that the
district court stated in its opinion in relation to the right of
publicity, id., it would have determined that Texas law applied
to the trademark infringement claims. Because EPE does not
dispute this determination by the district court, we will follow
the district court and apply the laws of Texas to all the state
law claims. See Snydergeneral Corp. v. Continental Ins. Co., 133
F.3d 373, 375 (5th Cir. 1998).
8
finding on a majority of these “digits of confusion.” Id. at
150; see also Society of Fin. Exam’rs, 41 F.3d at 228 & n.15. In
addition to the listed factors, a court is free to consider other
relevant factors in determining whether a likelihood of confusion
exists. See Armco, Inc. v. Armco Burglar Alarm Co., 693 F.2d
1155, 1160-61 (5th Cir. 1982). Parody is one such other relevant
factor that a court may consider in a likelihood-of-confusion
analysis. See Dr. Seuss Enters. v. Penguin Books USA, Inc., 109
F.3d 1394, 1405 (9th Cir.), cert. dismissed, 118 S. Ct. 27
(1997); Nike, Inc. v. “Just Did It” Enters., 6 F.3d 1225, 1231
(7th Cir. 1993) (holding that parody is not an affirmative
defense to trademark infringement but that it can be an
additional factor in a likelihood-of-confusion analysis);
Jordache Enters. v. Hogg Wyld, Ltd., 828 F.2d 1482, 1486 (10th
Cir. 1987) (considering parody as a factor in determining whether
a likelihood of confusion exists).
Neither the trademark and service mark registrations of EPE
or the service mark registration of Capece disposes of EPE’s
trademark infringement claim. Proof of registration of a service
mark or trademark is only prima facie evidence of the
registrant’s exclusive right to use the mark in commerce for the
services specified in the registration. 15 U.S.C. § 1115(a).
However, such proof does “not preclude another person from
proving any legal or equitable defense or defect . . . which
might have been asserted if such mark had not been registered.”
Id. A registration only becomes conclusive evidence of a
9
registrant’s exclusive right to use a mark after five consecutive
years of continuous use in commerce, subject to a few enumerated
defenses. Id. §§ 1065, 1115(b). “The Velvet Elvis” mark has not
become incontestable, but Capece’s registration of the mark
constitutes prima facie evidence of the mark’s validity and that
there is no likelihood of confusion with previously registered
marks. See id. § 1115(a). EPE’s registration of the Elvis and
Elvis Presley marks establishes that it is entitled to protection
from infringement by junior users, thereby meeting the threshold
requirement that the plaintiff must possess a protectible mark,
which must be satisfied before infringement can be actionable.
Id. §§ 1052(d), 1057, 1115(a); see also Soweco, Inc. v. Shell Oil
Co., 617 F.2d 1178, 1184 (5th Cir. 1980).
2. The decision below
After correctly summarizing the applicable law, the district
court then proceeded to consider EPE’s trademark infringement and
unfair competition claims. In doing so, the court explicitly
isolated its consideration of “The Velvet Elvis” mark and the
bar’s decor from any consideration of the Defendants’ advertising
and promotional practices. Elvis Presley Enters., 950 F. Supp.
at 791, 797.
a. Service mark and the bar’s decor
Beginning with the bar’s decor and “The Velvet Elvis” mark,
the district court considered each of the digits of confusion in
turn. First, on the type of mark, the district court found that
EPE has strong marks, but that the “Defendants’ use of the
10
service mark ‘The Velvet Elvis’ when combined with the bar’s
gaudy decor form[s] an integral part of Defendants’ parody of the
faddish, eclectic bars of the sixties.” Id. at 792. The
district court found that the mark “symbolizes tacky, ‘cheesy,’
velvet art, including, but not limited to velvet Elvis paintings”
and that “the image of Elvis, conjured up by way of velvet
paintings, has transcended into an iconoclastic form of art that
has a specific meaning in our culture, which surpasses the
identity of the man represented in the painting.” Id. Despite
EPE’s strong marks which would normally be accorded broad
protection, the bar’s parody of “faddish, eclectic bars of the
sixties” led the district court to find that the name and decor
of the bar would not mislead consumers and that this digit
weighed against a likelihood of confusion. Id. at 793.
Second, on the similarity of the marks, the district court
found that “The Velvet Elvis” has a meaning independent from
Elvis Presley. Specifically, the district court concluded that
“The Velvet Elvis” “is symbolic of a faddish art style” that “has
no specific connection with the singer other than the coincidence
of its use to portray him.” Id. The district court noted that
“‘[t]he proper test is whether the average consumer, upon
encountering the allegedly infringing mark in the isolated
circumstances of the marketplace . . . would be likely to confuse
or associate the defendant or his services with the plaintiff.’”
Id. (quoting American Auto. Ass’n v. AAA Ins. Agency, 618 F.
Supp. 787, 792 (W.D. Tex. 1985)). Because of the dissimilarity
11
in the meanings of the Defendants’ and EPE’s marks, the district
court found that this digit of confusion weighed against a
likelihood of confusion. Id.
Third, on the similarity of the products and services, the
district court noted that, at the time of trial, there was some
overlap between the parties’ services, but that the services were
not directly competitive because they served different clienteles
and had different purposes. Id. at 794. While noting that EPE’s
plan to open a chain of Elvis Presley nightclubs might weigh in
favor of a likelihood of confusion, the district court found that
“the relative clarity of ‘The Velvet Elvis’’ parodic purpose”
made it dissimilar from any business that EPE currently operates
or has plans to operate. The district court thus concluded that
this digit weighed against a likelihood of confusion. Id.
Fourth, on the identity of the retail outlets and
purchasers, the district court found that the majority of EPE’s
customers are “middle-aged white women” and that the Defendants’
customers are generally “young professionals, ranging in age from
early twenties to late thirties.” Id. at 794. In the district
court’s analysis, this disparity between the customers weighed
against a likelihood of confusion. Id. (relying upon Amstar
Corp. v. Domino’s Pizza, Inc., 615 F.2d 252, 262 (5th Cir.
1980)).
Fifth, on the identity of the advertising media, the
district court found that this digit of confusion was irrelevant
12
to the determination of a likelihood of confusion because the
parties operate in different geographic markets and because EPE
admits that it rarely advertises because of the strength of its
marks and Elvis’s image. Id. at 795.
Sixth, on the Defendants’ intent, the district court found
that the Defendants intended to parody “a time or concept from
the sixties--the Las Vegas lounge scene, the velvet painting
craze and perhaps indirectly, the country’s fascination with
Elvis.” Id. The district court noted that the references to
Elvis are indirect, but that the “use of his name is an essential
part of the parody because the term, ‘velvet Elvis,’ has become a
synonym for garish, passe black velvet art.” Id. The district
court found that the Defendants’ intent weighed against a
likelihood of confusion because the “clarity” of the Defendants’
parody showed that they did not intend to confuse the public.
Seventh, on actual confusion, the district court found that
EPE failed to show any actual confusion because “each witness
acknowledged that once inside ‘The Velvet Elvis’ and given an
opportunity to look around, each had no doubt that the bar was
not associated or in any way affiliated with EPE.” Id. at 796.
Additionally, the district court considered the fact that the
Defendants’ bar had been in operation at the Richmond Avenue
location without any complaints or inquiries about the
affiliation of the bar with EPE. Id. Relying upon this
evidence, the district found that this digit of confusion weighed
against a likelihood of confusion.
13
Having found none of the digits of confusion weighing in
favor of a likelihood of confusion, the district court found no
likelihood of confusion in relation to the bar’s decor or “The
Velvet Elvis” mark, and therefore found that the use of the
Defendants’ mark caused no infringement.
b. The Defendants’ advertising practices
The district court next turned to the Defendants’
advertising practices and found that their advertising scheme
would leave the ordinary customer with
the distinct impression that the bar’s purpose was to
pay tribute to Elvis Presley or to promote the sale of
EPE related products and services. Consequently, use
of this [advertising scheme] can only indicate a
marketing scheme based on the tremendous drawing power
of the Presley name and its ability to attract consumer
interest and attention.
Id. at 797. Further, the district court noted that the
advertising, without the backdrop of the parody, “will cause
confusion, leading customers to wonder if they might find [Elvis]
memorabilia” in the bar and that the Defendants’ emphasis of the
“Elvis” portion of the mark over the “Velvet” portion focusses
attention on Elvis and “creat[es] a definite risk that consumers
will identify the bar with Presley or EPE.” Id. Additionally,
the district court found that the Defendants’ advertising caused
actual confusion. Based upon the above findings the district
court found that the Defendants’ advertising practices, including
the actual configuration of the mark emphasizing “Elvis,”
constituted trademark infringement and unfair competition. Id.
14
Despite the facts that the Defendants had discontinued the
activity that the district court found to be infringing and that
Capece stated that they would not resume the activity, the
district court believed that “there [was] a definite possibility
that ads including the image or likeness of Elvis Presley,
references to Elvis, or his name disproportionately displayed may
be used in connection with ‘The Velvet Elvis’ again.” Id. at
803. Even after acknowledging that the cessation of activity
might make an injunction unavailable, the court issued an
injunction barring the use in the Defendants’ advertising of “the
image and likeness of Elvis Presley, phrases that are
inextricably linked to the identity of Elvis, or from displaying
the ‘Elvis’ portion of their service mark in print larger than
that used for its counterpart ‘Velvet.’” Id.
3. Standard of review
We review questions of law de novo and questions of fact for
clear error. Joslyn Mfg. Co. v. Koppers Co., 40 F.3d 750, 753
(5th Cir. 1994). Likelihood of confusion is a question of fact
reviewed for clear error. Society of Fin. Exam’rs, 41 F.3d at
225; Blue Bell Bio-Med., 864 F.2d at 1260. However, “the
‘clearly erroneous’ standard of review does not insulate factual
findings premised upon an erroneous view of controlling legal
principles.” Johnson v. Hospital Corp. of Am., 95 F.3d 383, 395
(5th Cir. 1996) (citing Johnson v. Uncle Ben’s, Inc., 628 F.2d
419, 422 (5th Cir. 1980), vacated on other grounds, 451 U.S. 902
(1981)); see also In re Auclair, 961 F.2d 65, 69 n.7 (5th Cir.
15
1992) (“Factual findings made under an erroneous view of the law
are not binding on the appellate court.” (citing 1 STEVEN ALAN
CHILDRESS & MARTHA S. DAVIS, FEDERAL STANDARDS OF REVIEW § 2.16, at 2-116
(2d ed. 1992))). When a likelihood-of-confusion factual finding
is “inextricably bound up” in, or infected by, a district court’s
erroneous view of the law, we may conduct a de novo review of the
fully-developed record before us. See Anheuser-Busch, Inc. v.
Balducci Publications, 28 F.3d 769, 773 (8th Cir. 1994) (applying
de novo review where the district court misapplied the First
Amendment in relation to parody in its likelihood-of-confusion
determination); see also Roto-Rooter Corp. v. O’Neal, 513 F.2d
44, 46-47 (5th Cir. 1975) (reviewing the district court’s fact-
finding on a likelihood of confusion de novo where it applied the
incorrect legal standard).
EPE argues that the district court erroneously applied
parody to its likelihood-of-confusion analysis and that this
error permeated its entire analysis, infecting nearly all of its
findings of fact. Within EPE’s discussion of the digits of
confusion, it also argues that the district court erred in
isolating its consideration of the Defendants’ advertising from
its consideration of whether “The Velvet Elvis” mark infringes
EPE’s marks. If the district court erred as EPE argues, then we
would review the likelihood-of-confusion finding de novo, rather
than for clear error. We will consider the district court’s
isolation of the advertising evidence from its analysis first.
a. Isolated consideration of advertising
16
The use of a mark in advertising is highly probative of
whether the mark creates a likelihood of confusion in relation to
another mark. “Evidence of the context in which a mark is used
on labels, packages, or in advertising material directed to the
goods is probative of the reaction of prospective purchasers to
the mark.” In re Abcor Dev. Corp., 588 F.2d 811, 814 (C.C.P.A.
1978). Courts consider marks in the context that a customer
perceives them in the marketplace, which includes their
presentation in advertisements. See The Sports Auth., Inc. v.
Prime Hospitality Corp., 89 F.3d 955, 962 (2d Cir. 1996)
(considering the appearance of the mark in advertising in
determining similarity of marks); Nikon Inc. v. Ikon Corp., 987
F.2d 91, 94-95 (2d Cir. 1993) (same); Oreck Corp., 803 F.2d at
171 (considering the presentation of the marks in advertising in
determining the similarity of the marks and the defendant’s
intent); Sun Banks of Fla., Inc. v. Sun Fed. Sav. & Loan Ass’n,
651 F.2d 311, 318 (5th Cir. 1981) (considering the presentation
of the marks in advertising in determining the similarity of the
marks); National Ass’n of Blue Shield Plans v. United Bankers
Life Ins. Co., 362 F.2d 374, 378 (5th Cir. 1966) (comparing marks
as used in advertising in newspapers and on television where the
black and white format did not allow for color distinctions); see
also Sun-Maid Raisin Growers v. Sunaid Food Prods., Inc., 356
F.2d 467, 469 (5th Cir. 1966) (“[I]t is the labels that the
prospective purchaser sees. The trademarks cannot be isolated
from the labels on which they appear.”).
17
In the case of a service mark, advertising is of even
greater relevance because the mark cannot be actually affixed to
the service, as a trademark is to the goods. Many prospective
purchasers first encounter the mark in advertising, rather than
on the product; therefore, the service mark cannot be isolated
from the advertising in which it appears. See RESTATEMENT (THIRD)
OF UNFAIR COMPETITION § 21(a)(i) (1995) (stating that “the overall
impression created by the [marks] as they are used in marketing
the respective goods and services” is relevant to how similar two
marks are (emphasis added)). The Lanham Act itself makes
advertising relevant to a service mark infringement claim. In
order to infringe another’s mark, the infringing mark must be
used in commerce. 15 U.S.C. § 1114. By definition, a service
mark is used in commerce “when it is used or displayed in the
sale or advertising of services.” Id. § 1127 (emphasis added).
In summary, advertisements used by the alleged infringer, which
incorporate the allegedly infringing mark, are relevant in
determining whether a mark has been infringed. Advertisements
are therefore relevant to the likelihood-of-confusion analysis.
In addition, the context of the presentation of a mark,
including advertising, is relevant to the meaning that the mark
conveys. McGregor-Doniger Inc. v. Drizzle Inc., 599 F.2d 1126,
1133 (2d Cir. 1979) (“‘[T]he setting in which a designation is
used affects its appearance and colors the impression conveyed by
it.’” (brackets in original) (quoting RESTATEMENT OF TORTS § 729
cmt. b, at 593 (1938))). The Supreme Court has said that “[t]he
18
protection of trade-marks is the law’s recognition of the
psychological function of symbols.” Mishawaka Rubber & Woolen
Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 205 (1942). To
understand a symbol’s psychological function, one must consider
it in the context in which it is used and not in a vacuum. See
American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494
F.2d 3, 11 & n.7 (5th Cir. 1974) (“[W]ords are chameleons, which
reflect the color of their environment.”); 2 JEROME GILSON, TRADEMARK
PROTECTION AND PRACTICE § 5.09[1], at 5-137 n.1 (Jeffrey M. Samuels
ed., 1997) (noting that advertising is used by the holders of
marks to “establish[] a sufficient aura of desirability to induce
the public to purchase” their products and services). Courts
have recognized this fact in determining whether a mark has
developed a secondary meaning as an indicator of source
independent from its everyday meaning, entitling the mark to
protection under the Lanham Act. See, e.g., G. Heileman Brewing
Co. v. Anheuser-Busch, Inc., 873 F.2d 985, 994-95 (7th Cir.
1989); American Heritage Life Ins. Co, 494 F.2d at 12;
Volkswagenwerk Aktiengesellschaft v. Rickard, 492 F.2d 474, 478
(5th Cir. 1974). In an extreme example of a word taking on
meaning from the context of its use, the Court of Customs and
Patent Appeals found that the word “stain” connoted a “a state of
relative cleanliness”--a meaning contrary to its normal meaning--
when used in connection with a cleaning product, making marks
that included “stain” and “clean” similar despite the aural and
optical dissimilarity of the marks. See Proctor & Gamble Co. v.
19
Conway, 419 F.2d 1332, 1335-36 (C.C.P.A. 1970) (finding that
“Mister Stain” infringed “Mr. Clean”).
In this case, we are dealing with a service mark, “The
Velvet Elvis,” which the Defendants have used at their business
location and extensively in advertising. To consider only the
Defendants’ use of the mark at their business location would
ignore highly probative evidence of the meaning of the mark as
the public encounters it in commerce and of the Defendants’
intent in using the mark. By placing the mark in an Elvis
context and in configuring the mark to highlight the “Elvis”
portion of the mark, the Defendants have placed the mark in a
context that does not alone connote tacky, cheesy art as the
district court found. This contrary context of the mark has the
ability to alter the psychological impact of the mark and must be
considered in determining whether the Defendants’ mark creates a
likelihood of confusion in relation to EPE’s marks. In failing
to consider the Defendants’ presentation of “The Velvet Elvis”
mark to the public in advertising in determining whether the
Defendants’ use of their mark created a likelihood of confusion,
the district court failed to consider the mark as perceived by
the public. In addition, by isolating the advertising, the
district court failed to consider how the Defendants configured
the mark in emphasizing the “Elvis” portion of the name, which is
highly probative of the impression they intended to convey.
The fact that the Defendants ceased many of the problematic
advertising practices after receiving the cease and desist letter
20
and shortly before EPE filed suit does not make the advertising
any less relevant to the question of whether the Defendants’ use
of the “The Velvet Elvis” mark infringes EPE’s marks. The
cessation of infringing activity does not affect the
determination of liability, but it may make an injunction
unnecessary. See M-F-G Corp. v. Emra Corp., 817 F.2d 410, 411
(7th Cir. 1987); see also Blisscraft v. United Plastics Co., 294
F.2d 694, 702 (2d Cir. 1961) (finding it necessary to fully
consider the liability issue and issue an injunction despite
cessation of infringing use); Esquire, Inc. v. Esquire Slipper
Mfg. Co., 243 F.2d 540, 542, 546 (1st Cir. 1957) (reversing a
decision dismissing an action based upon the defendant’s promise
to cease infringing conduct because the plaintiff was entitled to
an enforceable judgment). In this case, the district court found
“a definite possibility,” Elvis Presley Enters., 950 F. Supp. at
803, that the Defendants would resume their infringing
advertising practices and therefore granted injunctive relief in
spite of the Defendants professed intent to discontinue
infringing activities. Ceasing the infringing activity does not
allow an infringing party to escape liability. See Spring Mills,
Inc. v. Ultracashmere House, Ltd., 689 F.2d 1127, 1133 (2d Cir.
1982).
b. Parody
As noted earlier, parody is not a defense to trademark
infringement, but rather another factor to be considered, which
weighs against a finding of a likelihood of confusion. See Dr.
21
Seuss Enters., 109 F.3d at 1405; 4 MCCARTHY, supra, § 31-153, at
31-222 to 31-223. As a leading treatise has stated,
Some parodies will constitute an infringement,
some will not. But the cry of “parody!” does not
magically fend off otherwise legitimate claims of
trademark infringement or dilution. There are
confusing parodies and non-confusing parodies. All
they have in common is an attempt at humor through the
use of someone else’s trademark. A non-infringing
parody is merely amusing, not confusing.
4 id. § 31:153, at 31-223 (emphasis added); cf. Dallas Cowboys
Cheerleaders, Inc. v. Scoreboard Posters, Inc., 600 F.2d 1184,
1188 (5th Cir. 1979) (noting that parody is relevant to a fair-
use defense to copyright infringement but does not establish the
defense). Therefore, while not a defense, parody is relevant to
a determination of a likelihood of confusion and can even weigh
heavily enough to overcome a majority of the digits of confusion
weighing in favor of a likelihood of confusion.
This court has yet to consider parody in relation to
trademark law. However, recently in Campbell v. Acuff-Rose
Music, Inc., 510 U.S. 569 (1994), the Supreme Court considered
parody in the copyright context, which is relevant to the
treatment of parody in the trademark context. See Balducci
Publications, 28 F.3d at 776; 4 MCCARTHY, supra, § 31:153, at 31-
222; Gary Myers, Trademark Parody: Lessons from the Copyright
Decision in Campbell v. Acuff-Rose Music, Inc., LAW & CONTEMP.
PROBS., Spring 1996, at 181. The Campbell Court noted that
the heart of any parodist’s claim to quote from
existing material, is the use of some elements of a
prior author’s composition to create a new one that, at
least in part, comments on that author’s works. If, on
the contrary, the commentary has no critical bearing on
22
the substance or style of the original composition,
which the alleged infringer merely uses to get
attention or to avoid the drudgery in working up
something fresh, the claim to fairness in borrowing
from another’s work diminishes accordingly (if it does
not vanish), and other factors, like the extent of its
commerciality, loom larger. Parody needs to mimic an
original to make its point, and so has some claim to
use the creation of its victim’s (or collective
victims’) imagination, whereas satire can stand on its
own two feet and so requires justification for the very
act of borrowing.
510 U.S. at 580-81 (emphasis added and citations and footnotes
omitted) (considering parody in relation to the fair-use defense
to copyright infringement). From the Supreme Court’s statements,
it is clear that a parody derives its need and justification to
mimic the original from its targeting of the original for comment
or ridicule. Id. at 588 (“When parody takes aim at a particular
original work, the parody must be able to ‘conjure up’ at least
enough of that original to make the object of its critical wit
recognizable.”). If the original is not a target of the parody,
the need to “conjure up” the original decreases as the parody’s
aim moves away from the original.4
This same need to conjure up the original exists when a
parody targets a trademark or service mark. In the case of the
standard likelihood-of-confusion analysis, a successful parody of
the original mark weighs against a likelihood of confusion
because, even though it portrays the original, it also sends the
message that it is not the original and is a parody, thereby
4
Justice Kennedy would go further and limit parody’s
ability to insulate copyright infringement only to circumstances
in which the original is a target of the parody. See Campbell,
510 U.S. at 597 (Kennedy, J., concurring).
23
lessening any potential confusion. See Cliffs Notes, Inc. v.
Bantam Doubleday Dell Publ’g Group, Inc., 886 F.2d 490, 494 (2d
Cir. 1989) (“A parody must convey two simultaneous--and
contradictory--messages: that it is the original, but also that
it is not the original and is instead a parody.”); see also
Anheuser-Busch, Inc. v. L & L Wings, Inc., 962 F.2d 316, 321 (4th
Cir. 1992); 4 MCCARTHY, supra, § 31:155, at 31-235 (“‘[T]he joke
itself reinforces the public’s association of the mark with the
plaintiff.’” (quoting Robert C. Denicola, Trademarks as Speech:
Constitutional Implications of the Emerging Rationales for the
Protection of Trade Symbols, 1982 WIS. L. REV. 158, 188)).
Therefore, a parody of a mark needs to mimic the original mark
and from this necessity arises the justification for the mimicry,
but this necessity wanes when the original mark is not the target
of the parody.
In this case, the district court found that “The Velvet
Elvis” mark, when combined with the bar’s gaudy decor, was “an
integral part of Defendants’ parody of the faddish, eclectic bars
of the sixties.” Elvis Presley Enters., 950 F. Supp. at 792.
The intent was to parody “a time or concept from the sixties--the
Las Vegas lounge scene, the velvet painting craze and perhaps
indirectly, the country’s fascination with Elvis.” Id. at 795
(emphasis added). In his testimony, Capece stated that the
Defendants “were trying to make fun of the Hardrock Cafes, the
Planet Hollywoods, or some of the places that were more
pretentious” and that the Defendants could successfully perform
24
their parody without using Elvis Presley’s name. This testimony
and the district court’s analysis both indicate that neither
Elvis Presley nor EPE’s marks were a target of the Defendants’
parody.
The Defendants argue that a parody of society can still
parody a celebrity, see Cardtoons, L.C. v. Major League Baseball
Players Ass’n, 95 F.3d 959, 972 (10th Cir. 1996) (noting that “a
parody of a celebrity does not merely lampoon the celebrity, but
exposes the weakness of the idea or value that the celebrity
symbolizes in society”), but in Cardtoons, the parody of society
was through the parody of the celebrity. Here, we have a direct
parody of society that does not even attempt to parody the
celebrity--Elvis Presley.
The Defendants’ parody of the faddish bars of the sixties
does not require the use of EPE’s marks because it does not
target Elvis Presley; therefore, the necessity to use the marks
significantly decreases and does not justify the use. Capece
himself conceded that the Defendants could have performed their
parody without using Elvis’s name. Without the necessity to use
Elvis’s name, parody does not weigh against a likelihood of
confusion in relation to EPE’s marks. It is simply irrelevant.
As an irrelevant factor, parody does not weigh against or in
favor of a likelihood of confusion, and the district court erred
25
in relying upon parody in its determination of the likelihood of
confusion.5
In its likelihood-of-confusion analysis, the district court
made determinations on five of the seven digits of confusion
which either ignored relevant advertising evidence or relied upon
the Defendants’ parody of the sixties lounge scene. These errors
have permeated the district court’s findings of fact on the
likelihood of confusion and on each of those digits of confusion.
Therefore, we will review the likelihood-of-confusion
determination and those infected findings on the digits of
confusion de novo based upon the well-developed record. See
Balducci Publications, 28 F.3d at 773; Roto-Rooter Corp., 513
F.2d at 46-47.
4. Likelihood of confusion
In our de novo consideration of the likelihood of confusion,
we will accept the district court’s findings that the identity of
retail outlets and purchasers weighs against a likelihood of
confusion and that the identity of advertising media is
irrelevant. Neither finding is challenged by the parties nor
implicates the district court’s errors in isolating the
5
We have considered parody separately from the other digits
of confusion and recommend this approach, but in no way do we
suggest at this time that the district court’s approach of
considering parody within its analysis of the standard digits of
confusion in itself constitutes reversible error. But cf.
Balducci Publications, 28 F.3d at 773 (finding that the district
court’s consideration of First Amendment concerns in its
likelihood-of-confusion analysis caused it to hold the plaintiff
to a higher standard than required to prove trademark
infringement).
26
Defendants’ advertising practices from the analysis or in its
application of parody; therefore, we leave those findings
undisturbed.6 This acceptance leaves the following digits of
confusion for our consideration: (1) the type of mark, (2) the
similarity of marks, (3) the similarity of products and services,
(4) the Defendants’ intent, and (5) actual confusion. We
consider each digit of confusion in turn and then weigh them to
determine whether a likelihood of confusion exists.
a. Type of trademark
The type of trademark refers to the strength of the mark.
In looking at the strength of the mark, the focus is the senior
user’s mark. See RESTATEMENT, supra, § 21(d) & cmt. i; 3 MCCARTHY,
supra, § 23:19. The stronger the mark, the greater the
protection it receives because the greater the likelihood that
consumers will confuse the junior user’s use with that of the
senior user. RESTATEMENT, supra, § 21 cmt. i; see also Amstar
Corp., 615 F.2d at 259.
The Defendants conceded that EPE’s marks have “worldwide
fame and almost instantaneous recognition,” leading the district
court to find that EPE’s marks are strong. Elvis Presley Enters,
950 F. Supp. at 792. The Defendants do not dispute this on
6
While accepting the district court’s findings that the
identity of advertising media does not weigh into the likelihood-
of-confusion analysis because the parties do not challenge it, we
note that EPE advertises nationwide and its licensees distribute
products nationwide. Thus the parties’ geographic markets do
overlap despite the district courts’s finding that they operate
in different markets. See Elvis Presley Enters., 950 F. Supp. at
795.
27
appeal. Rather, the Defendants argue that “The Velvet Elvis” has
a different meaning than EPE’s marks and that EPE has not shown
distinctiveness outside the entertainment industry. However,
these issues are more appropriately considered in relation to
other digits of confusion. EPE’s marks are very strong and
therefore strongly weigh in favor of a likelihood of confusion.
b. Similarity of marks
The similarity of the marks in question is determined by
comparing the marks’ appearance, sound, and meaning. See
Jordache Enters., 828 F.2d at 1484; RESTATEMENT, supra, § 21(a);
3 MCCARTHY, supra, § 23:21. “Even if prospective purchasers
recognize that the two designations are distinct, confusion may
result if purchasers are likely to assume that the similarities
in the designations indicate a connection between the two users.
The relevant inquiry is whether, under the circumstances of the
use,” the marks are sufficiently similar that prospective
purchasers are likely to believe that the two users are somehow
associated. RESTATEMENT, supra, § 21 cmt. c. However, different
meanings of otherwise similar marks may overcome a likelihood of
confusion that would otherwise result. See 3 MCCARTHY, supra,
§§ 23:26, :28; see also Long John Distilleries, Ltd. v. Sazerac
Co., 426 F.2d 1406, 1407 (C.C.P.A. 1970) (finding the marks,
“Long John” and “Friar John,” to have obvious meanings that are
in no way suggestive of one another). “In determining the
meaning and connotation which the trademark projects, it is
proper to look to the context of use, such as material on labels,
28
packaging, advertising and the like.” 3 MCCARTHY, supra, § 23:26,
at 23-61 (citing In re Nationwide Indus., Inc., 6 U.S.P.Q.2d 1882
(T.T.A.B. 1988)); see also Hormel Foods Corp. v. Jim Henson
Prods., Inc., 73 F.3d 497, 503-04 (2d Cir. 1996) (noting the
relevance of the placement of the mark next to other dissimilar
symbols); discussion supra Part II.A.3.a.
The district court found that “The Velvet Elvis” mark is
“symbolic of a faddish art style that belongs to the culture that
created it” and that the mark “has no specific connection with
[Elvis] other than the coincidence of its use to portray him.”
Elvis Presley Enters., 950 F. Supp. at 793. The district court
made this finding without considering the context into which the
Defendants placed their mark. The Defendants used “The Velvet
Elvis” mark in advertising that included (1) the image of Elvis
Presley; (2) direct references to Graceland and Elvis Presley
with phrases such as “The King Lives,” “Viva la Elvis,” and
“Elvis has not left the building”; and (3) the “Elvis” portion of
the mark boldly displayed with “an almost unnoticeable ‘Velvet’
appearing alongside in smaller script.” Id. at 789. On one of
their menus, the Defendants also advertised “Oscar at The Elvis,”
an Academy Awards charity benefit to be held at the bar. The
context of the Defendants’ advertising for the first nine months
of operation of the Richmond Avenue location has imbued “The
Velvet Elvis” mark with a meaning that directly evokes Elvis
Presley, despite any independent meaning the mark might have.
Cf. id. at 797 (noting that the Defendants’ advertisements in
29
which “Elvis” is emphasized “creat[e] a definite risk that
consumers will identify the bar with Presley or EPE” and that
advertisements using Elvis’s image cause confusion). The
Defendants’ mark’s connection to Elvis is enhanced by the
inclusion of “Elvis” in the mark and the Defendants’ decision to
emphasize the “Elvis” portion of the mark, leaving the “Velvet”
portion almost unnoticeable. See Lone Star Steakhouse & Saloon,
Inc. v. Alpha of Va., Inc., 43 F.3d 922, 936 (4th Cir. 1995)
(giving greater weight to the dominant or “salient portions” of a
mark); Oreck Corp., 803 F.2d at 171 (focussing on “attention-
getting” feature in comparing marks); 3 MCCARTHY, supra, § 23:44
(noting that it is proper to give greater effect to the dominant
feature of a mark in the comparison). The Defendants’ use of the
mark outside this suggestive context where the faddish art style
connotation might predominate does not counteract the Defendants’
deliberate association with Elvis in their advertising. The
connotation of the marks are similar, and this digit of confusion
therefore weighs in favor of a likelihood of confusion.
c. Similarity of products and services
“The greater the similarity between products and services,
the greater the likelihood of confusion.” Exxon Corp. v. Texas
Motor Exch. of Houston, Inc., 628 F.2d 500, 505 (5th Cir. 1980).
Direct competition between the parties’ services or products is
not required in order to find a likelihood of confusion.
Professional Golfers Ass’n of Am. v. Bankers Life & Cas. Co., 514
30
F.2d 665, 669-70 (5th Cir. 1975); see also 3 MCCARTHY, supra,
§§ 24:13-:14.
One such relationship where this is true exists when
the sponsor or maker of one business or product might
naturally be assumed to be the maker or sponsor of
another business product. . . . [T]he deceived
customer buys the infringer’s product in the belief
that it originates with the trademark owner or that it
is in some way affiliated with the owner.
World Carpets, Inc. v. Dick Littrell’s New World Carpets, 438
F.2d 482, 488 (5th Cir. 1971), cited in Professional Golfers
Ass’n, 514 F.2d at 670. When products or services are
noncompeting, the confusion at issue is one of sponsorship,
affiliation, or connection. See Kentucky Fried Chicken Corp. v.
Diversified Packaging Corp., 549 F.2d 368, 388 (5th Cir. 1977);
3 MCCARTHY, supra, §§ 24:3, :6.
The danger of affiliation or sponsorship confusion increases
when the junior user’s services are in a market that is one into
which the senior user would naturally expand. See RESTATEMENT,
supra, § 21(e) & cmt. j. The actual intent of the senior user to
expand is not particularly probative of whether the junior user’s
market is one into which the senior user would naturally expand.
Id. cmt. j.; 3 MCCARTHY, supra, § 24:19. Consumer perception is
the controlling factor. See Dreyfus Fund Inc. v. Royal Bank of
Can., 525 F. Supp. 1108, 1119-20 (S.D.N.Y. 1981) (noting that
consumer perception controls over the actual intent of the senior
user); 3 MCCARTHY, supra, § 24:19. “If consumers believe, even
though falsely, that the natural tendency of producers of the
type of goods marketed by the prior user is to expand into the
31
market for the type of goods marketed by the subsequent user,
confusion may be likely.” RESTATEMENT, supra, § 21 cmt. j.
While we recognize that EPE has plans to open a worldwide
chain of Elvis Presley restaurants and has opened its Memphis
restaurant since the district court’s decision, our proper focus
is on (1) whether the products and services of EPE and the
Defendants are similar enough to cause confusion as to source or
affiliation or (2) whether the Defendants’ bar is in a market
into which EPE would naturally be perceived to expand. The
Velvet Elvis serves food, cigars, and alcohol; provides live
music; and sells t-shirts and hats. EPE licenses its marks on a
wide variety of products, including t-shirts and hats, and the
Defendants concede that EPE’s marks are particularly strong in
the music, television, and movie industries. EPE also operates
family-oriented restaurants and an ice cream parlor at Graceland.
Despite the breadth of EPE’s licensed products, these products
and services may not be similar enough to weigh in favor of a
likelihood of confusion, but it is a question that we need not
reach.
The pervasiveness of EPE’s marks across the spectrum of
products and the success and proliferation of entertainment and
music-themed restaurants like Planet Hollywood and Hard Rock
Cafe--which Capece testified inspired their parody--support a
likelihood of confusion. Cf. Armco, 693 F.2d at 1161
(“Diversification makes it more likely that a potential customer
would associate the nondiversified company’s services with the
32
diversified company, even though the two companies do not
actually compete.”). These restaurants have led the way, and an
Elvis Presley restaurant would be a natural next step due to the
public’s strong familiarity with such restaurants and with Elvis.
Given that EPE licenses so many products and is a strong presence
in the entertainment business and that Planet Hollywood and Hard
Rock Cafe have shown the success and popularity of entertainment
and music-themed restaurants, the restaurant and bar business
with live music is a natural area of expansion for EPE, and this
digit of confusion weighs in favor of a likelihood of confusion.
d. The Defendants’ intent
Proof of an intent to confuse the public is not necessary to
a finding of a likelihood of confusion. Fuji Photo Film Co. v.
Shinohara Shoji Kabushiki Kaisha, 754 F.2d 591, 597 (5th Cir.
1985) (noting that “‘[w]hile evil intent may evidence unfair
competition and deception, lack of guile is immaterial’”
(brackets in original) (quoting Communications Satellite Corp. v.
Comcet, Inc., 429 F.2d 1245, 1249 (4th Cir. 1970)); RESTATEMENT,
supra, § 22 cmt. b; 3 MCCARTHY, supra, § 23:107. If a mark was
adopted with the intent to confuse the public, that alone may be
sufficient to justify an inference of a likelihood of confusion.
Amstar Corp., 615 F.2d at 263; RESTATEMENT, supra, § 22 cmt. c. A
good-faith intent to parody, however, is not an intent to
confuse. Nike, 6 F.3d at 1231 (citing Jordache Enters., 828 F.2d
at 1486). If the defendant acted in good faith, then this digit
of confusion becomes a nonfactor in the likelihood-of-confusion
33
analysis, rather than weighing in favor of a likelihood of
confusion. See Fuji Photo, 754 F.2d at 597-98. However, an
innocent intent in adopting a mark does not immunize an intent to
confuse in the actual use of the mark. Cf. RESTATEMENT, supra,
§ 22 cmt. c (“Even if an actor believes in good faith that the
copying of another’s designation is justified, an inference that
confusion is likely may arise from other circumstances that
suggest an intent to confuse, such as a failure to take
reasonable steps to minimize the risk of confusion.”).
The district court found that the Defendants’ subjective
intent was an intent to parody, rather than an intent to confuse.
Based upon this finding, the Defendants’ intent would not support
a finding of a likelihood of confusion. However, the Defendants’
advertisements using the image of Elvis, referencing Elvis, and
emphasizing the word “Elvis” in the mark are other circumstances
that support an intent to confuse. See Elvis Presley Enters.,
950 F. Supp. at 797 (noting that “use of this type of
advertisement can only indicate a marketing scheme based on the
tremendous drawing power of the Presley name and its ability to
attract consumer interest and attention” (emphasis added)).
These circumstances increase the risk of confusion and are more
than just “a failure to take reasonable steps to minimize the
risk of confusion.” See RESTATEMENT, supra, § 22 cmt. c. The
district court found that Capece’s subjective intent in adopting
the mark was an intent to parody, but in determining a
defendant’s intent, evidence of the defendant’s actions is highly
34
probative and should be considered. See Oreck Corp., 803 F.2d at
173 (“[The defendant’s] actions speak louder than its words . . .
.”); 3 MCCARTHY, supra, § 23:113, at 23-216 to 23-217. The
Defendants’ use of “The Velvet Elvis” mark in their advertising
evidences an intent to market the bar by relying upon the drawing
power of Elvis, as found by the district court. See Elvis
Presley Enters., 950 F. Supp. at 797. Therefore, the facts under
this digit of confusion weigh in favor of a likelihood of
confusion.
e. Actual confusion
Evidence of actual confusion is not necessary to a finding
of a likelihood of confusion, but “it is nevertheless the best
evidence of a likelihood of confusion.” Amstar Corp., 615 F.2d
at 263. Actual confusion that is later dissipated by further
inspection of the goods, services, or premises, as well as post-
sale confusion, is relevant to a determination of a likelihood of
confusion. See 3 MCCARTHY, supra, §§ 23:6-:7. “Infringement can
be based upon confusion that creates initial consumer interest,
even though no actual sale is finally completed as a result of
the confusion.” 3 id. § 23:6; see also Dr. Seuss Enters., 109
F.3d at 1405 (noting that no sale must be completed to show
actual confusion); Mobil Oil Co. v. Pegasus Petroleum Corp., 818
F.2d 254, 259 (2d Cir. 1987) (finding liability for initial-
interest confusion). Initial-interest confusion gives the junior
user credibility during the early stages of a transaction and can
35
possibly bar the senior user from consideration by the consumer
once the confusion is dissipated. Id.; 3 MCCARTHY, supra, § 23:6.
EPE presented witnesses who testified that they initially
thought the Defendants’ bar was a place that was associated with
Elvis Presley and that it might have Elvis merchandise for sale.
The witnesses all testified that, upon entering and looking
around the bar, they had no doubt that EPE was not affiliated
with it in any way. Despite the confusion being dissipated, this
initial-interest confusion is beneficial to the Defendants
because it brings patrons in the door; indeed, it brought at
least one of EPE’s witnesses into the bar. Once in the door, the
confusion has succeeded because some patrons may stay, despite
realizing that the bar has no relationship with EPE.7 This
initial-interest confusion is even more significant because the
Defendants’ bar sometimes charges a cover charge for entry, which
allows the Defendants to benefit from initial-interest confusion
before it can be dissipated by entry into the bar. Additionally,
the finding by the district court that the Defendants’
advertising practices caused actual confusion shows that actual
confusion occurred when consumers first observed the mark in
commerce. See Elvis Presley Enters., 950 F. Supp. at 797 (noting
that EPE also established actual confusion in relation to
advertisements with “The Velvet Elvis” mark in a context
connoting Elvis Presley).
7
One witness who was initially confused stayed and
purchased a beer.
36
An absence of, or minimal, actual confusion, however, over
an extended period of time of concurrent sales weighs against a
likelihood of confusion. Id. at 263 (finding no likelihood of
confusion based upon concurrent sales over fifteen years with
minimal instances of confusion); see also Oreck Corp., 803 F.2d
at 173 (finding no likelihood of confusion based upon concurrent
sales over seventeen months with no evidence of actual
confusion); RESTATEMENT, supra, § 23(2) & cmt. d. In this case,
the lack of complaints is relevant but should have less weight
than the district court gave it. Approximately one year after
the Richmond location opened, EPE’s suit against the Defendants
was reported in the press, and this lessens the weight of the
lack of complaints because there would be no reason to complain
to EPE if one knows EPE is aware of the possible infringer and
has begun legal action. In the instant case, the lack of
complaints is over a thirteen-month period, which is shorter than
the periods in Oreck Corp. (seventeen months) and Amstar Corp.
(fifteen years), and actual confusion has been shown by the
evidence of initial-interest confusion unlike in Oreck Corp.
Based upon the above facts, this digit of confusion weighs
in favor of a likelihood of confusion, and this finding is
supported by the district court’s finding of actual confusion in
relation to the Defendants’ advertising practices.
f. Weighing the digits of confusion
After considering the Defendants’ advertising practices and
dropping parody from the analysis, all five digits of confusion
37
that we considered de novo weigh in favor of a likelihood of
confusion, and only the identity of retail outlets and purchasers
weighs against a likelihood of confusion. Giving each digit of
confusion its due weight, we find that a likelihood of confusion
exists between EPE’s marks and the Defendants’ use of “The Velvet
Elvis” mark. Therefore, the Defendants have infringed EPE’s
marks with the use of their service mark, “The Velvet Elvis.”8
B. Defenses
The Defendants argue that EPE is barred from seeking relief
for their use of “The Velvet Elvis” mark by the defenses of
laches or acquiescence. They claim that EPE should have known
about their use of “The Velvet Elvis” mark in August 1991 when
Capece applied for federal registration of the mark because it
uses the services of a trademark search firm to aid it in
defending its marks. The Defendants contend that EPE rested on
its rights by failing to object when it received actual notice of
their conduct by the December 1992 publication of the mark in the
8
Given that all the remedies that EPE seeks and that were
properly preserved below, see infra Part III, are available under
its successful claims for trademark infringement, we need not
reach its federal trademark dilution claim nor its right of
publicity claim under Texas law.
In addition, we reach our decision on the trademark
infringement claims without considering the PTO’s action in
denying EPE’s application to register “Elvis” as a service mark
in the restaurant and tavern business because of a likelihood of
confusion with the Defendants’ mark. Without deciding whether we
should or could have taken judicial notice of the action, we note
that the PTO’s finding of a likelihood of confusion supports our
decision here even though the PTO was considering a slightly
different circumstance of clearly competing services. Because we
did not need to take judicial notice of the action in reaching
our decision, EPE’s motion is now moot.
38
PTO’s Official Gazette and by failing to protest the Defendants’
use until July 1994 when over $100,000 had been invested in the
Richmond Avenue location and customer loyalty had been built up
by the use of the mark at the Kipling Street location.
“Laches is commonly defined as an inexcusable delay that
results in prejudice to the defendant.” Conan Properties, 752
F.2d at 153. A defense of laches has three elements: “(1) delay
in asserting a right or claim; (2) that the delay was
inexcusable; [and] (3) that undue prejudice resulted from the
delay.” Armco, 693 F.2d at 1161. The period for laches begins
when the plaintiff knew or should have known of the infringement.
Id. at 1161-62. Any acts after receiving a cease and desist
letter are at the defendant’s own risk because it is on notice of
the plaintiff’s objection to such acts. See Conan Properties,
752 F.2d at 151-52. Noninfringing use of a mark is not relevant
to a defense of laches. See Mead Johnson & Co. v. Baby’s Formula
Serv., Inc., 402 F.2d 19, 22 (5th Cir. 1968) (finding long years
of noninfringing use of mark would not establish laches as to a
later infringing use).
EPE knew of the Defendants’ use of “The Velvet Elvis” mark
when it was published in the PTO’s Official Gazette in December
1992. The Defendants have not shown that EPE should have known
at an earlier time nor shown why employing a search service
should have given EPE that knowledge earlier. After the Kipling
Street location’s closing, no infringing use of the mark was
39
occurring because the mark was not being used in commerce,9 and
the Richmond Avenue location’s opening is not relevant to the
laches period because it occurred after the Defendants’ receipt
of the cease and desist letter. Therefore, the period relevant
for the application of laches is eight months, beginning in
December 1992 and running until July 1993 when the Kipling Street
location closed. We do not find that eight months was an
inexcusable delay.
Additionally, even if we assume eight months to be an
inexcusable delay or that the relevant period of delay should
include the period the Richmond Avenue location was open until
suit was filed in April 1995,10 no undue prejudice has been shown
as a result of the delay in this case. Capece has conceded that
he did not purchase the signs for the Richmond Avenue location
until after he received the cease and desist letter from EPE and
that he did not need to use Elvis’s name in order to parody his
intended target of the “faddish, eclectic bars of the sixties.”
Changing the name of the bar would not have destroyed the
investment of capital in the nightclub. Additionally, the short
9
Similarly, the nonuse of the mark during the period while
no nightclub was open may also break the period of continuous use
required to establish the mark as incontestable under 15 U.S.C.
§ 1065. See Brittingham v. Jenkins, 914 F.2d 447, 454 (4th Cir.
1990) (finding that a business’s closing interrupted the
continuous use period even though the mark was still used in
business transactions because the mark was not used in
conjunction with the sale of goods or services).
10
By no means do we voice an opinion on whether this type
of tacking is ever proper, especially where the period of delay
is broken by the mark’s not being used in commerce due to a
business failure.
40
period of delay here would not justify finding prejudice on the
Defendants’ claims of customer goodwill from the earlier
location.
“[A]cquiescence involves the plaintiff’s implicit or
explicit assurances to the defendant which induce[] reliance by
the defendant.” Conan Properties, 752 F.2d at 153. Other than
EPE’s silence, the Defendants identify no assurances made by EPE
to the Defendants upon which they could have relied. The period
of silence relevant to acquiescence would not include any time
after the cease and desist letter was sent because EPE explicitly
communicated its objection, nor would it include the time while
no nightclub was open because permission cannot be inferred from
silence in the absence of infringing activity. Cf. Mead Johnson
& Co., 412 F.2d at 22. The eight months of silence does not rise
to the level of an assurance upon which the Defendants could
reasonably rely or by which they could claim to have been induced
into reliance.
III. REMEDIES
EPE appeals the district court’s denial of an accounting of
profits from the Defendants and its denial of attorneys’ fees.
Both of these claims were not properly preserved below and are
therefore waived. “‘It is a well-settled rule that a joint
pretrial order signed by both parties supersedes all pleadings
and governs the issues and evidence to be presented at trial.’”
McGehee v. Certainteed Corp., 101 F.3d 1078, 1080 (5th Cir. 1996)
(quoting Branch-Hines v. Hebert, 939 F.2d 1311, 1319 (5th Cir.
41
1991)). The claims, issues, and evidence are narrowed by the
pretrial order, thereby narrowing the trial to expedite the
proceeding. See Flannery v. Carroll, 676 F.2d 126, 129 (5th Cir.
1982); see also Branch-Hines, 939 F.2d at 1319 (finding that the
pretrial order asserted the plaintiff’s full range of damages);
Morales v. Turman, 535 F.2d 864, 867 n.7 (5th Cir. 1976) (noting
that a pretrial order can be relied upon to indicate the nature
of the relief requested), rev’d on other grounds, 430 U.S. 322
(1977). Once the pretrial order is entered, it controls the
course and scope of the proceedings under Federal Rule of Civil
Procedure 16(e), and if a claim or issue is omitted from the
order, it is waived, even if it appeared in the complaint. See
Valley Ranch Dev. Co. v. FDIC, 960 F.2d 550, 554 (5th Cir. 1992)
(citing Flannery, 676 F.2d at 129-30).
In the Joint Pre-Trial Order signed by the parties’ counsel,
EPE’s demand for an accounting of profits is not mentioned, but
the Joint Pre-Trial Order does mention EPE’s demands for
injunctive relief, damages, and attorneys’ fees under the Lanham
Act, 15 U.S.C. § 1117(a). Section 1117(a) also provides for the
remedy of an accounting of profits and lists it separately from
damages. Therefore, EPE’s listing of injunctive relief, damages,
and attorneys’ fees under the Lanham Act in the Joint Pre-Trial
Order does not act to preserve its claim for an accounting of
profits, and the issue therefore was waived.
Likewise, EPE has waived its claim for attorneys’ fees under
the Texas right of publicity statute, TEX. PROP. CODE ANN.
42
§ 26.013(4) (Vernon Supp. 1998), because EPE never references the
Texas statute in its request for attorneys’ fees. All references
to attorneys’ fees in the Joint Pre-Trial Order request
attorneys’ fees under the Lanham Act, 15 U.S.C. §§ 1051-1127,
explicitly or by referencing the Lanham Act’s standard for their
award. The first request for attorneys’ fees under the Texas
statute occurs in EPE’s brief on appeal; as the availability of
attorneys’ fees under the Texas statute was never placed before
the district court, we will not consider it on appeal.
While an accounting of profits and attorneys’ fees are not
available to EPE, EPE is entitled to an injunction enjoining the
Defendants’ use of “The Velvet Elvis” mark based upon the
Defendants’ infringement of EPE’s marks by their use of that
mark. See 15 U.S.C. § 1116. We find that enjoining only the
activities that have associated the mark with Elvis Presley will
not provide EPE with the proper relief.11 The Defendants’
advertising practices over many months imbued “The Velvet Elvis”
mark with a meaning directly related to Elvis Presley, which
cannot now be erased by altering the context of the mark’s use.
Because the Defendants have imbued the mark with an infringing
meaning, use alone in the future would continue the infringement
of EPE’s marks. On remand, the district court shall enter the
appropriate injunction enjoining the Defendants’ use of “The
11
We state no opinion as to whether “The Velvet Elvis”
would have infringed EPE’s marks if the mark had never been used
in ways that connote Elvis Presley. We recognize that such a
circumstance would constitute a closer case, but that it is not
the circumstance before us.
43
Velvet Elvis” mark and grant any other appropriate relief. All
injunctive relief entered should cover not only the Defendants
and those acting in concert with them but also their successors
and assigns.
IV. CONCLUSION
For the foregoing reasons, we REVERSE the district court’s
judgment and REMAND this case to the district court to enter
judgment for EPE and for further proceedings consistent with this
opinion. EPE’s motion for this court to take judicial notice of
an action of the PTO, which was carried with the appeal, is
dismissed as moot.
44