Test Masters Educ v. Singh

• Court: Court of Appeals for the Fifth Circuit
• Decided: July 25, 2002
• Docket: 01-20659
• Status: Unpublished

Opinion

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 01-20659

TEST MASTERS EDUCATIONAL SERVICES, INC.,

Plaintiff - Appellee - Cross-Appellant,

versus

ROBIN SINGH, doing business as Testmasters,

Defendant - Appellant - Cross-Appellee.

Plaintiff - Appellant - Cross Appellee,

TEST MASTERS EDUCATIONAL SERVICES, INC.; VIVEK ISRANI,

Defendants - Appellants - Cross-Appellees.

Appeal from the United States District Court For the Southern District of Texas (No. H-99-CV-2781) July 24, 2002 Before KING, Chief Judge, PARKER, Circuit Judge, and ELLISON,* District Judge.

PER CURIAM**:

Both sides in this complicated trademark case suffered a

partially adverse judgment from which they each appeal. We

reverse in part, vacate in part, and remand.

BACKGROUND

This matter arises from competing claims to the domain name

testmasters.com. Plaintiff is Test Masters Educational Services,

Inc.1 The company is in the test preparation business; it helps

individuals pass or achieve higher scores on the SAT, GMAT, MCAT,

and other standardized tests, and professional licensing exams,

like the Professional Engineer Exam. Haku Israni (“Israni”)

started the company in 1991 and offered his first test prep

course in March, 1992. In May 1994, Israni incorporated the

business, making his son Vivek (“Roger”) Israni its sole owner

and president. TES has offered courses continuously since 1992.

Most are taught in Houston, where the company is headquartered,

but some have been taught in other cities around Texas. The

* District Judge of the Southern District of Texas, sitting by designation. ** Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. 1 The record shows that the company does business under its full name, but for the sake of simplicity we will refer to it by the acronym used by the parties in their briefs--“TES.”

-2- company has never taught any courses outside the state.

Defendant is Robin Singh. He does business under the name

TestMasters,2 and like TES also offers test prep services. His

business is limited to the LSAT, however.3 Singh operates out of

Beverly Hills. He began business in 1991, and through 1996 only

offered courses in California.4 He applied for federal

registration of TestMasters on June 23, 1995. His application

was initially denied, the Patent and Trademark Office (“PTO”)

having found that three marks substantially similar to his had

already been registered. After determining that none of the

three marks were still in use, the PTO approved Singh’s

application in March, 1999 (No. 2,234,514).5

In October 1995, several months after Singh applied for

federal registration, TES acquired rights to the domain name at

issue. At first, TES used the domain name to operate a passive

web page--that is, one that only shows information posted by its

2 The words test and masters are run together without a space, with the T and M capitalized. Sometimes the mark appears in all capitals--“TESTMASTERS.” 3 TES does not provide LSAT instruction. 4 In 1997, Singh offered an LSAT prep course in Colorado. In 2000, he began offering courses in a number of states, including Illinois and New York and in the District of Columbia. 5 The mark is registered for use in connection with “educational services, namely, providing courses of instruction and materials to prepare students to take and achieve higher scores on standardized admission tests for graduate and professional schools.”

-3- sponsor. The page listed the exams for which TES helped

individuals prepare, gave the company’s Houston address and toll-

free phone number, and provided a link to the company’s email

address, info@testmasters.com.

In 1999, Singh decided to create his own web site, but soon

discovered that TES already had the rights to testmasters.com.

On August 7, his attorney sent TES a demand letter, claiming that

its use of the domain name infringed on Singh’s trademark rights.

He promised to file suit if TES did not relinquish the domain

name. TES instead itself filed suit on August 30. In its

complaint, TES sought a declaration of non-infringement and

asserted alternatively that Singh’s mark was invalid for being

descriptive without a secondary meaning and for Singh’s having

committed fraud on the PTO. On June 30, 2000, Singh initiated a

separate action against TES, alleging infringement and unfair

competition under California law. TES answered and asserted an

additional defense--that it was an innocent prior user of its

Test Masters mark. The two suits were consolidated. Following

discovery, the district court granted summary judgment on the

fraud claim, concluding that Singh had no duty to update his

application with the PTO upon learning of certain others’ use of

similar marks.

The remaining claims were tried to a jury beginning February

5, 2001. After a five-day trial, the jury found that Singh’s

mark was descriptive but that it had acquired a secondary

-4- meaning; and that TES had infringed on Singh’s mark but that TES

was immune from liability as an innocent prior user. The jury

also found that TES had “engaged in unfair competition in the

State of California through the use of the domain name . . . .”

In all relevant respects, the district court denied the parties’

renewed motions for judgment as a matter of law. It subsequently

ordered the director of the PTO to modify Singh’s trademark

registration to confer in TES the exclusive right to use its mark

within Texas, in accordance with the jury’s finding on the scope

of TES’s prior usage. The district court also ordered TES to

transfer its ownership of testmasters.com to Singh.

Both sides appeal on numerous grounds.

DISCUSSION

Trademark law protects buyers and sellers against confusion

in the marketplace. See RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 9

cmt. c (1995)(hereafter “RESTATEMENT”). When a mark identifies the

manufacturer of the product on which it appears, buyers can “base

their purchasing decisions on the reputation of the business

identified by the mark.” See id. A distinctive mark is one that

identifies the source of its user. See Sugar Busters, LLC v.

Brennan, 177 F.3d 258, 268 (5th Cir. 1999). The holder of a

distinctive mark can enjoin the use of similar marks that are

likely to cause confusion. See 15 U.S.C. § 1114(1)(a). A

descriptive mark, on the other hand, denotes “a characteristic or

-5- quality of an article or service, such as its color, odor,

function, dimensions, or ingredients.” Zatarains, Inc. v. Oak

Grove Smokehouse, Inc., 698 F.2d 786, 790 (5th Cir. 1983). It is

not inherently connected with a particular seller and therefore

buyers do not treat it as a proxy for anyone’s products. Cf.

RESTATEMENT § 13. Without an association between the mark and a

seller in the minds of buyers, its use by multiple sellers will

not cause confusion. See 2 J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS

AND UNFAIR COMPETITION § 15:11 (4th ed. 1992)(hereafter “MCCARTHY”).

A descriptive mark can acquire distinctiveness, however, if

it attains a secondary meaning. See RESTATEMENT § 13(b). A

secondary meaning arises “when, because of association with a

particular product or firm over a period of time, the [mark] has

in the mind of the public come to stand as a name or

identification for that product or firm.” Continental Motors

Corp. v. Continental Aviation Corp., 375 F.2d 857, 861 (5th Cir.

1967). Where consumers have made such a connection, subsequent

use of similar marks may result in confusion. See 2 MCCARTHY

15:11. The question whether there “is a mental association in

buyer’s minds between the alleged mark and a single source of the

product . . . is primarily an empirical inquiry.” Sunbeam

Prods., Inc. v. West Bend Co., 123 F.3d 246, 253 (5th Cir.

1997)(internal quotations omitted). Thus, “survey evidence is

the most direct and persuasive evidence of secondary meaning.”

-6- Id. at 253-54. Other kinds of evidence tending to show secondary

meaning include “length and manner of the use of a mark, the

nature and extent of advertising and promotion of the mark, and

the sales volume of the product, and instances of actual

confusion.” Id. The holder of a descriptive mark has priority

over another’s use of a similar mark only in the area in which

secondary meaning has been established. See 2 MCCARTHY § 16:34.

The fact of registration is prima facie proof that a

registered mark is distinctive. See Vision Center v. Opticks,

Inc., 596 F.2d 111, 119 (5th Cir. 1979)(citing 15 U.S.C. §

1057(b)). This presumption can be overcome by showing that the

mark is merely descriptive. See id. The burden then shifts to

the registrant to prove that the mark has acquired a secondary

meaning. See 2 MCCARTHY 11:43. The burden is “substantial,” Bank

of Texas v. Commerce Southwest, Inc., 741 F.2d 785, 787 (5th Cir.

1984), requiring a “high degree of proof,” Sugar Busters, 177

F.3d at 269. The proponent of a descriptive mark is not required

to show that a majority of the buying public associates the mark

with its business, but it must at least show that “a significant

quantity of the consuming public understand a name as referring

exclusively to the appropriate party . . . .” President &

Trustees of Colby College v. Colby College-N.H., 508 F.2d 804,

807 (1st Cir. 1975); see RESTATEMENT § 13 cmt. e. Failure to

establish secondary meaning is grounds for cancellation of a

-7- federal registration. See Zatarains, 698 F.2d at 792 (relying on

15 U.S.C. § 1119).

Singh does not contest the jury’s finding that his mark is

descriptive. Accordingly, we must only decide if the district

court erred in not granting judgment as matter of law on the

question of secondary meaning. We review the district court’s

denial of judgment a matter of law de novo, applying the same

legal standard as it did. See Cooper Indus., Inc. v. Tarmac

Roofing Sys., Inc., 276 F.3d 704, 707 (5th Cir. 2002). “If

during a trial by jury a party has been fully heard on an issue

and there is no legally sufficient evidentiary basis for a

reasonable jury to find for that party on that issue, the court

may determine the issue against that party and may grant a motion

for judgment as a matter of law . . . .” FED. R. CIV. P.

50(a)(1). To determine whether the evidence is legally

sufficient we view it against the non-movant’s substantive burden

of proof. See 9A CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE

AND PROCEDURE § 2524 (2d ed. 1994 & Supp. 2002).

Before proceeding to analyze the record on the question of

secondary meaning, we first address and dispose of an argument

advanced by TES in its briefs and during oral argument. TES

notes that the proponent of a descriptive mark must show that its

mark established a secondary meaning before others began using

it. See 2 MCCARTHY § 16:34. TES argues that its use of Test

-8- Masters was first and that Singh cannot therefore establish

secondary meaning. This would ordinarily be true--assuming for

the moment that TES’s use was indeed first-in-time--if TES and

Singh were operating in the same geographic area. See RESTATEMENT

§ 13 cmt. e; 2 MCCARTHY § 16:34. But they do not: TES and Singh

have their businesses far away from each other, and except for

TES’s use of the disputed domain name there is no claim by either

party that the other had a presence in its market area. Thus,

because TES never did business anywhere besides Texas, TES’s

having used its Test Masters mark first does not prevent Singh’s

mark from establishing a secondary meaning in California. See

Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 415

(1916)(“[W]here two parties independently are employing the same

mark upon goods of the same class, but in separate markets wholly

remote the one from the other, the question of prior

appropriation is legally insignificant . . . .”).

At trial, Singh introduced four advertisements that appeared

in the Daily Bruin, the student newspaper of the University of

California at Los Angeles. The ads ran in 1994. All compare

Singh’s product to those of his competitors--namely, Kaplan and

Princeton Review. One, for example, compares the features of

each course (Singh’s and the others’), including number of

lecture hours, instructor qualifications, class size, and cost.

-9- Two contain testimonials from satisfied customers.6 Another ad

was apparently run in response to Kaplan’s claims about Singh’s

course. Singh testified that Kaplan as well as Princeton Review

have referred to his company “hundreds of times” in their ads.

We conclude that these ads do little to prove that consumers

in southern California--which we assume is Singh’s product area

for purposes of this opinion--have associated TestMasters with

Singh’s business. The probative value of advertising depends on

the presence of data regarding its reach, frequency, and

duration. See 2 MCCARTHY § 15:51. In this case, there is no

evidence regarding the Daily Bruin’s area of distribution,

although it likely does not extend beyond the UCLA campus and its

environs. Further, it appears that the four ads in question ran

within just a few months of each other in 1994--a fact that

hardly suggests a lasting campaign of product promotion. As for

the testimonials, all told the ads contain only five. Obviously,

testimonials that are few in number or do not otherwise fairly

represent the public’s sense regarding a descriptive mark have

little probative value regarding secondary meaning. See

RESTATEMENT § 13 cmt. e. The record reveals no other evidence of

advertising, nor has Singh directed our attention to any.

6 This one is typical: “I commuted from Santa Barbara to take the TestMasters LSAT Course, and believe me, it was worth it. Nobody else could have taken me from a 157 (75th percentile) to a 166 (95th percentile).” TES has waived any challenge to the admissibility of these statements.

-10- (Indeed, Singh’s brief on this issue contains no record citations

at all.) Regarding Kaplan’s and Princeton Review’s advertising,

instances where third parties have used a descriptive mark to

refer to its holder may constitute evidence of secondary meaning.

See American Heritage Life Insur. Co. v. Heritage Life Ins. Co.,

494 F.2d 3, 13 (5th Cir. 1974). There is no direct evidence of

any such references in this case, however. And as with Singh’s

own ads, the record is silent regarding how prevalent they were.

On the other hand, there is evidence that some would-be

customers contacted TES but meant to contact Singh’s business

instead. Such evidence tends to show that the public has

connected the TestMasters mark with Singh’s business. See 2

MCCARTHY § 15:11 (“[I]f buyers are confused, then this also means

that they must have recognized plaintiff’s word as a trademark

and associated it only with plaintiff.”). The evidence is in the

form of forty or so email messages from individuals interested in

taking an LSAT prep course. The first messages are dated May and

June, 2000. Most are from individuals writing from California.

In some messages, it is clear that the writers specifically

intended to contact Singh’s business, as opposed to merely

inquiring whether TES itself offered LSAT preparation.7 But the

7 For example, one reads: “I plan to take the June 2001 LSAT exam. A co-worker of mine recommended that I contact you. She took your LSAT prep course and will be attending the University of Michigan in the Fall! I am very interested in your services and would like to receive some information.” Another reads: “I

-11- majority of email messages are more ambiguous. Typical is this

one: “I was interested in finding out some information about your

lsat course.” Such messages--there are about twenty or so like

it--indicate that the writer understands that the addressee in

fact offers an LSAT prep course (“your LSAT course”). Of course

the addressee in this case--TES--does not, which may suggest the

writers intended to contact Singh’s business in the first place.

A third class of messages shows no evidence of confusion at all.

These messages simply request information about LSAT prep

courses, but in no way demonstrate extant knowledge about the

addressee’s business. One for example says: “I was wondering if

you offered courses for LSAT prep?” In response to all of these

messages, TES, through its attorney, wrote that it does not offer

LSAT courses, and sometimes said, “I think the company you are

looking for is www.testmasterslastprep.com” (i.e., the web site

address for Singh’s business). Other responses referred the

sender to Singh’s page as well as to Kaplan’s and Princeton

Review’s.

We conclude that these email messages are some evidence that

Singh’s mark has established a secondary meaning.8 But we must

signed up and took your LSAT course in the summer of 1999 at Bo[a]lt Law School, UC Berkeley. I decided against taking the exam last year and would like to take it this year. I understand if I already payed for the course the first time it is much cheaper to retake it. . . .” 8 It is unclear when TES first established a web page at testmasters.com. If it did soon after it acquired rights to the

-12- evaluate this evidence against Singh’s overall substantive burden

of proof--which as we noted is quite high. Besides the above-

discussed messages, there is little or no evidence regarding

secondary meaning. We have already commented on Singh’s evidence

of advertising and product promotion. Additionally, Singh has

introduced no evidence of his sales and revenues. Such data

would help us understand Singh’s market penetration.

Furthermore, Singh has failed to offer any survey evidence--a

fact though not fatal substantially diminishes the overall

strength of his proof in a case as close as this one. Other

kinds of helpful evidence are also lacking. For example, if

Kaplan and Princeton Review are as familiar with his business as

he claims, testimony from their representatives would help show

Singh’s business is well-established and prominent.

Additionally, he could have secured affidavits from individuals

who have learned of his business through word-of-mouth or

personal experience. Simply put, Singh has failed to show that

“a significant quantity of the consuming public” associates the

TestMasters mark with his business. We are therefore constrained

to conclude that the district court erred in denying TES’s Rule

50 motion on the question of secondary meaning.

Having determined that Singh’s mark has not established a

domain name, in 1995, as some evidence indicates, then the fact that there is no evidence of confusion from 1995 until mid 2000 suggests that the email messages discussed above are anomalous.

-13- secondary meaning, we vacate judgment for Singh on his common law

unfair competition claim. The district court instructed the jury

that to find TES liable for unfair competition under California

law Singh had to show that TES’s “actions are likely to cause

confusion, or to cause mistake, or to deceive . . . .” For any

of these things to occur, consumers must first “be looking for”

the TestMasters mark. See 2 MCCARTHY 15:11 (internal quotation

omitted). Because Singh has failed to prove that individuals in

southern California “look for” Singh’s mark, “no act of [TES’s]

can operate to deceive the public in its identification of

[Singh]” Id.

CONCLUSION

In light of the foregoing, we REVERSE the district court’s

denial of TES’s motion for judgment as a matter of law on the

issue of secondary meaning. We VACATE its judgment for Singh for

unfair competition under California law and RENDER for TES

instead. We VACATE its order compelling TES to relinquish the

disputed domain name. Finally, we REMAND for entry of a order

that Singh’s trademark is invalid. See 15 U.S.C. § 1119.

-14-