The full case caption appears at the
end of this opinion. RULON, J.: Defendant Carganza, Inc., appeals from the district court’sissuance of a permanent injunction precluding defendant’s misappropriation andinfringement of a servicemark known as “Carganza.” We affirm. The essential underlying facts are undisputed and as follows: In 1992, plaintiff Scholfield Auto Plaza, L.L.C., and several other used cardealers began a combined monthly sale of used cars. The dealers took their usedcar inventory to Century II Expo Hall in Wichita, where financing and trade-inswere available. In November 1993, plaintiff named the sale “Carganza.” Defendant was incorporated in September 1991 as “Creditcars, Inc.” to sellused cars and engage in “any other lawful . . . activity.” Defendant eventuallychanged its name to “Old Town Auto, Inc.,” then during 1996 changed its name to”Carganza, Inc.” “Carganza, Inc.” was the name of a complex that would includevarious car-related services, including a used car dealership. On January 29,1996, defendant registered the term “Carganza, Inc.” as a servicemark with theState of Kansas. Ultimately, plaintiff filed a petition for permanent injunction, temporaryinjunction, and temporary restraining order against defendant. After a bench trial,the district court entered judgment for plaintiff on its claims of unfair competitionand violation of � 43(a) of the Lanham Act (15 U.S.C. � 1125[c] [Supp. III 1997]). The district court issued a permanent injunction against defendant’s use of theterm “Carganza.” Resolution of this case requires interpretation of the Lanham Act. Thecourt’s interpretation of a statute is a question of law over which appellate reviewis unlimited. See
State v. Donlay, 253 Kan. 132, 133-34, 853 P.2d 680 (1993). Section 43(a) of the Lanham Act creates a federal cause of action forinfringement of unregistered marks. 15 U.S.C. � 1125(a)(1)(A) (1994). Thecommon-law tort of unfair competition allows a similar cause of action to preventconfusion between parties’ products. To prevail under either theory, plaintiff mustprove (1) it owns a valid, protectable servicemark and (2) defendant’s service is sosimilar to plaintiff’s it is likely to cause consumer confusion. See
Primedia IntertecCorp. v. Technology Marketing Corp., 35 F. Supp. 2d 809 (D. Kan. 1998). TheLanham Act authorizes courts to grant injunctions “according to the principles ofequity.” 15 U.S.C. � 1116(a) (1994). The parties agree plaintiff used the term “Carganza” before defendant usedthe term “Carganza, Inc.” Although plaintiff did not register “Carganza,” section43(a) of the Lanham Act protects qualifying unregistered trademarks. Servicemarks are registered the same way as trademarks under � 3 of the LanhamAct. 15 U.S.C. � 1053 (1994). The term “mark” encompasses both servicemarksand trademarks. If “Carganza” is a registrable servicemark under � 3 of theLanham Act, such term may receive protection under � 43(a). To determinewhether an unregistered mark is entitled to protection under � 43(a), the courtlooks at the general principles qualifying a mark for registration under � 2 of theLanham Act, 15 U.S.C. � 1052 (1994 & Supp. III 1997).
Two Pesos, Inc. v.TacoCabana, Inc., 505 U.S. 763, 768, 120 L. Ed. 2d 615, 112 S. Ct. 2753,
reh.denied 505 U.S. 1244 (1992). A servicemark is “any word, name, symbol, or device, or any combinationthereof . . . used by a person . . . to identify and distinguish the services of oneperson, including a unique service, from the services of others and to indicate thesource of the services, even if that source is unknown.” 15 U.S.C. � 1127 (1994). The Lanham Act does not define what is a service. Defendant asserts “Carganza”does not qualify as a servicemark because such term simply denotesadvertisement of the sale of goods. Unfortunately, the district court did notaddress this issue. Defendant relies heavily on
In re Dr. Pepper Co., 836 F.2d 508, 509 (Fed.Cir. 1987), where the court held “the rendering of a service which is normally’expected or routine’ in connection with the sale of one’s own goods is not aregistrable service.” The difference lies between services that are mandatory orcommon in promoting the sale of the type of merchandise and services which arenot so mandatory or common.
Dr. Pepper, 836 F.2d at 511. Plaintiff argues itsuse of the term “Carganza” denoted a separate service different from its everydayoperation of selling used cars. Plaintiff’s use of “Carganza” is not merely an advertisement but is the nameof the event held at Century II. We are convinced that even using defendant’s
Dr.Pepper analysis, plaintiff’s “Carganza” does qualify as a service. Taking used carsfrom a number of dealerships to a central indoor area, with trade-ins and financingapproval available, is not a routine and ordinary activity in the sale of used cars. Unquestionably, the purpose of the Lanham Act is to “‘secure to the ownerof the mark the goodwill of [a] business [use] and to protect the ability ofconsumers to distinguish among competing producers.’”
Two Pesos, 505 U.S. at774 (quoting
Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 198, 83L.Ed. 2d 582, 105 S. Ct. 658 [1985]). “The Lanham Act [is further] intended tomake ‘actionable the deceptive and misleading use of marks’ and ‘to protectpersons engaged in . . . commerce against unfair competition.’”
Two Pesos, 505U.S. at 767-68. We conclude the intent of the Lanham Act is upheld by finding”Carganza” is a servicemark. After concluding “Carganza” is a servicemark, this court must nextdetermine how such servicemark is classified. Marks are classified in fivecategories: (1) generic, (2) descriptive, (3) suggestive, (4) arbitrary, or (5) fanciful.
Two Pesos, 505 U.S. at 768. Generic marks refer to the genus of which theparticular product is a species and are not registrable as trademarks.
Two Pesos,505 U.S. at 768. Arbitrary and fanciful marks have no relationship to the produceor service with which they are associated; such marks are inherently distinctiveand registrable with no further showing requirement.
Two Pesos, 505 U.S. at 768;
Primedia, 35 F. Supp. 2d at 815. “Carganza” is not a generic, arbitrary, or fancifulmark. Plaintiff’s use of “Carganza” is either a descriptive mark or a suggestivemark. Descriptive marks are registrable upon a showing of secondary meaning,while suggestive marks are registrable without any further showing. Here, thedistrict court found “Carganza” was a suggestive mark. We agree. Defendant contends plaintiff’s use of “Carganza” is a descriptive mark,because it describes a large car sales event. A descriptive mark conveys animmediate idea of the ingredients, qualities, or characteristics of the services. See
Primedia, 35 F. Supp. 2d at 816. A descriptive mark may be protected by theLanham Act if such mark has become distinctive of the applicant’s goods incommerce.
Two pesos, 505 U.S. at 769. A descriptive mark is distinctive if it (1)is inherently distinctive or (2) has acquired distinctiveness through secondarymeaning.
Two Pesos, 505 U.S. at 769. We conclude “Carganza” is not a descriptive mark. If so, such term wouldconvey the same meaning in defendant’s use as in plaintiff’s use of the term. Aswe understand, defendant does not claim “Carganza” denotes a large car salesevent when used by defendant. “Carganza” does not convey an immediate idea ofthe characteristics of the indoor, multi-dealer car sale. Consequently, plaintiff isnot required to prove any secondary meaning. Suggestive marks require imagination, thought, and perception to reach aconclusion as to the nature of the service. See
Primedia, 35 F. Supp. 2d at 815. Suggestive marks are inherently distinctive and are entitled to protection, becausetheir intrinsic nature serves to identify a particular source of a service. See
TwoPesos, 505 U.S. at 768. Two tests are commonly used to determine whether a mark is suggestive. The imagination test focuses on the amount of imagination required for aconsumer to associate a given mark with the services it identifies. If a consumermust use more than token imagination to make the association, the mark issuggestive and not descriptive.
Rodeo Collection, Ltd. v. West Seventh, 812 F.2d1215, 1218 (9th Cir. 1987). Although “Carganza” combines the normal words”car” and “extravaganza,” the fact “Carganza” is a large used car sale is not readilyapparent. The consumer must use more than token imagination to make theassociation, making “Carganza” a suggestive mark. The need test focuses on the extent to which a mark is actually needed bycompetitors to identify their services.
Union Carbide Corp. v. Ever-ready, Inc., 531F.2d 366, 379 (7th Cir.),
cert. denied 429 U.S. 830 (1976). Competitors in thebusiness of selling used cars would never need the term “Carganza” to identifytheir goods or services. Under the need test, plaintiff’s use of “Carganza” was asuggestive mark. The district court did not err in finding “Carganza” was asuggestive servicemark, requiring no evidence of secondary meaning to beprotectable under the Lanham Act. After proving registrability under the Lanham Act, � 43(a) requires plaintiffto further prove defendant’s use of “Carganza, Inc.” created a likelihood ofconfusion with plaintiff’s use of “Carganza.” See
Two Pesos, 505 U.S. at 769. Here, the district court found defendant’s use of the term “Carganza” presentedthe likelihood of confusion. The
Primedia court set forth a list of nonexclusive factors to determinewhether the use of a mark creates a likelihood of confusion. A reviewing courtconsiders (1) the degree of similarity between the marks; (2) the intent of thealleged infringer in adopting its mark; (3) the relation in use and the manner ofmarketing between the goods or services marketed by the competing parties; (4)the degree of care likely to be exercised by purchasers; (5) evidence of actualconfusion; and (6) the strength or weakness of the marks.
Primedia, 35 F. Supp.2d at 818. Likelihood of confusion is a question of fact this court reviews underthe clearly erroneous standard.
Jordache Enterprises, Inc. v. Hogg Wyld, Ltd., 828F.2d 1482, 1484 (10th Cir. 1987). To evaluate the similarity between the use of marks, a court must considerthe overall impression given by the servicemark.
Fotomat Corp. v. Cochran, 437 F.Supp. 1231, 1243 (D. Kan. 1977). The degree of similarity between marks istested on three levels: sight, sound, and meaning. In evaluating similarity, thecourt determines whether the alleged infringing mark will be confusing to thepublic when singly presented.
Universal Money Centers, Inc. v. American Tel. &Tel. Co., 22 F.3d 1527, 1530-31 (10th Cir.),
cert. denied 513 U.S. 1052(1994). “Carganza, Inc.” and “Carganza” are the same term, creating a likelihood ofconfusion. See
Cullman Ventures, Inc. v. Columbian Art Works, Inc., 717 F. Supp.96, 127 (S.D.N.Y. 1989) (where marks are virtually identical, consumer confusionis inevitable). Further, plaintiff and defendant are both associated with the sale ofused cars, adding to the likelihood of confusion. This record contains evidence ofactual confusion by consumers who asked plaintiff and defendant if “Carganza”and “Carganza, Inc.” were related. Defendant does not dispute the district court’sfinding that it used the term “Carganza, Inc.” with the intent to capitalize onplaintiff’s advertising. We are satisfied the district court did not err in finding defendant’s use of”Carganza, Inc.” presented a likelihood of confusion with plaintiff’s use of”Carganza.” Because “Carganza” is a protected servicemark and there is alikelihood of confusion, the district court did not err in issuing a permanentinjunction against defendant’s use of the term “Carganza, Inc.” Affirmed.
SCHOLFIELD AUTO PLAZA, L.L.C., Appellee, v. CARGANZA, INC., Appellant. No. 78,289 In The Court Of Appeals Of The State Of Kansas Appeal from Sedgwick District Court; MICHAEL CORRIGAN, judge. Opinion filed April 30, 1999. Affirmed.
Fred A. Johnson, of Busch & Johnson, of Wichita, for appellant.
Christopher A. McElgunn, of Klenda, Mitchell, Austerman & Zuercher,L.L.C., of Wichita, for appellee. Before MARQUARDT, P.J., RULON, J., and WAHL, S.J.
