Eleventh Circuit Digs Deep to Revive SCAD Trademark Suit

In an October 3, 2017, opinion, a panel of the Eleventh Circuit reversed the Northern District of Georgia’s grant of summary judgment for the defendant in a trademark-infringement suit brought by Savannah College of Art and Design (SCAD).  In Savannah College of Art and Design, Inc. v. Sportswear, Inc., 2017 WL 4369451, the court held that the district court erred in concluding that SCAD had failed to establish that it controlled the use of its name and acronym for use on clothing.  The Court reminded that, while “[i]mitation may be the sincerest form of flattery,” when that imitation “consists of commercial reproduction for profit,” even parties looking to praise mark owners need to remember that a service mark owner’s rights may extend beyond those explicitly listed in the mark’s registration and cover products as well.

SCAD holds several federally-registered marks—including the word marks SCAD and SAVANNAH COLLEGE OF ART AND DESIGN at issue here—for “education services.”  In 2014, SCAD became aware that Sportswear, Inc. had been using SCAD’s marks on products offered for sale through its interactive online website for “fan” clothing and memorabilia.  SCAD filed suit asserting a number of claims against Sportswear, including service mark infringement under 15 U.S.C. § 1114 and unfair competition and false designation of origin under 15 U.S.C. § 1125.  Sportswear conceded it was selling products with virtually indistinguishable reproductions of the SCAD marks but asserted that its website contained a prominent disclaimer of affiliation with the school, which prevented any consumer confusion.

The district court had relied on Crystal Entertainment & Filmworks, Inc. v. Jurado, 643 F.3d 1313 (11th Cir. 2011), which involved a dispute over common-law trademark rights to a band name.  Because SCAD’s marks were registered only in connection with “education services,” the district court concluded, SCAD did not have enforceable rights in its marks that extended to apparel.  And SCAD failed to show that it had used its marks on apparel earlier than Sportswear in order to establish common-law rights in its marks for “goods.”  See, Savannah Coll. of Art & Design, Inc. v. Sportswear, Inc., 2015 WL 462911, at *2 (N.D. Ga. 2015).

In reversing the district court’s judgment, the Eleventh Circuit discussed at length the differences between the Lanham Act’s treatment of federally registered marks, under § 1114(a), and both registered and unregistered marks, under § 1125.  The court noted that the district court’s reliance on Jurado, dealing with an unregistered mark, was misplaced because SCAD had federal registrations.  Accordingly, the court explained the correct question was “whether SCAD has enforceable service mark rights that extend—beyond the services listed in its federal registrations—to goods in order to satisfy the first prong of the infringement analysis.”

The court found controlling the 1975 decision in Boston Professional Hockey Ass’n, Inc. v Dallas Cap & Emblem Manufacturing, Inc., 510 F.2d 1004 (5th Cir. 1975), which extended the protection for federally-registered service marks to goods.  Despite significant discussion about the sufficiency of the analysis in Boston Hockey itself, the court concluded that Boston Hockey “though . . . lacking critical analysis, implicitly but necessarily supports the proposition that the holder of a federally-registered service mark need not register that mark for goods—or provide evidence of prior use of that mark on goods—in order to establish the unrestricted validity and scope of the service mark, or to protect against another’s allegedly infringing use of that mark on goods.”  Accordingly, the Eleventh Circuit remanded the case to the district court with instructions first to apply Boston Hockey to the validity and scope of the SCAD marks and then to conduct an appropriate likelihood-of-confusion analysis to determine whether SCAD has satisfied the second prong of the infringement test.

The panel (aside from Judge Martin, who did not join in this portion of the opinion) was clearly hesitant about its application of Boston Hockey, going so far as suggesting “there may be [an] ‘error in [the] precedent.’”  Although Boston Hockey has been narrowly applied, the court noted that it “seems to provide the holder of a service mark with a form of monopolistic protection, a so-called ‘independent right to exclude’” that exceeds the protection established by the Lanham Act and conflicts with rulings from other circuits that have said service marks do not automatically extend to goods.  It remains to be seen whether the en banc Eleventh Circuit will clarify this decades-old precedent.

Posted by Walter Freitag.

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