Professional Documents
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OBX-STOCK, INC., 1
)
Plaintiff, )
)
v. 1 ORDER
)
BICAST, INC., )
)
Defendant. )
This matter is before the Court on Defendant's Motion for Summary Judgment. In the
underlying case, Plaintiff OBX-Stock, Inc. alleges intentional trademark infringement, unfair
dilution in violation of 15 U.S.C. 1125(c); violations of common law trademark rights; and
violations of North Carolina's unfair and deceptive trade practices statute, N.C. Gen. Stat. tj 75-
1.1. Defendant Bicast, Inc. did not file a counterclaim, but has requested that the Court consider
cancellation of Plaintiffs registered trademarks. A hearing on the instant motion was held in
Elizabeth City on March 27,2006. For the reasons discussed below, Defendant's Motion for
BACKGROUND
This case arises out of the efforts of two companies to capitalize on the popularity of
North Carolina's Outer Banks. The Outer Banks are North Carolina's unique access to the
Atlantic Ocean, consisting of hundreds of miles of barrier islands, sand beaches and nature
preserves. The area attracts tourists from around the world for its historical significance,
Case 2:04-cv-00045-BO Document 32 Filed 06/12/2006 Page 2 of 15
Plaintiff OBX-Stock , Inc. ("Stock") is based on the Outer Banks at Kill Devil Hills.
Plaintiffs former president, Jim Douglas, claims that he coined the term " O B X as an
abbreviation for the Outer Banks in 1994. In deposition testimony, Douglas recounted that
around that time he was vacationing in Nantucket, Massachusetts, and saw stickers with the
abbreviation "ACK." The ACK abbreviation for Nantucket comes from the identification code
for a World War 11-era airport located on Nantucket. The format of such stickers- generally a
round white sticker with a short abbreviation in a stark black font- is based on car decals in
Europe, which are used to identify a vehicle's country of origin. Similar stickers are now sold
throughout the United States, with different abbreviations for different regions or cities.
After seeing the Nantucket stickers, Douglas concluded that similar stickers with an
abbreviation for the Outer Banks could be successful. Douglas alleges that after returning from
Nantucket, he began selling "OBX" stickers at his restaurant "Chili Peppers" in Kill Devil Hills.
Shortly thereafter, Douglas and a partner incorporated Plaintiff OBX-Stock, and expanded into
other OBX-branded goods, including t-shirts, bottle openers, and other tourist sundries.
Plaintiff first sought federal trademark registration for OBX in 1998. Initially, the United
States Patent and Trademark Office ("USPTO") rejected Plaintiffs applications on the basis that
OBX was geographically descriptive, and thus not eligible for registration. However, since the
initial rejection, the USPTO has granted Plaintiff five registrations for various uses of " O B X :
Principal Registration No. 2,593,347: For metal license plates and sports clothing,
including t-shirts, shirts, hats and caps.
Principal Registration No. 2,837,794: For stickers.
Supplemental Registration No. 2,610,784: For beer.
Supplemental Registration No. 2,606,141 : For entertainment services.
Case 2:04-cv-00045-BO Document 32 Filed 06/12/2006 Page 3 of 15
Plaintiffs business has experienced significant growth, and OBX-branded stickers have
become popular. At the same time, OBX has become a widely-accepted abbreviation for the
Outer Banks.
Defendant Bicast, Inc. ("Bicast") was formed in 1989, and is wholly-owned by William
and Jo Carolyn Gaertner. The company, based in Williamsburg, Virginia, provides souvenirs to
regional retail outlets. Since its founding, Defendant has sold many items with geographic
According to Defendant, in 2002, Mr. Gaertner's daughter Stacy Harris came up with a
new logo: "OBXtreme." Defendant claims that the logo was a combination of its pre-existing
"OB" sticker and the phrase "Xtreme," which refers to the many outdoor activities available on
the Outer Banks. In June 2003, Defendant began selling products with the "OBXtreme" logo,
including stickers, magnets, postcards, hats and license plates. Defendant claims that its sales
from "OBXtreme" logo goods have been minimal, accounting for a total of $9,663 in revenues
and $5,030 in gross profits. In April of 2005, Defendant stopped selling "OBXtreme" branded
registration of "OBXtreme." Soon thereafter, Defendant received a cease and desist letter from
Plaintiffs counsel, in which Plaintiffs counsel threatened to sue Defendant, and to oppose
Defendant's applications for trademark registration. Ultimately, Plaintiff did not oppose
Defendant's registration applications with the USPT0,2 and the USPTO granted Defendant 10
Plaintiff initiated this lawsuit in November of 2004, claiming that Defendant's use of
"OBXtreme" infringed on Plaintiffs trademark rights in "OBX." In the Complaint, Plaintiff sets
forth claims of: (1) Intentional trademark infringement and false designation of origin in
violation of 15 U.S.C. § 1125; (2) Trademark dilution in violation of 15 U.S.C. § 1125(c); (3)
common law trademark infringement; (4) wanton and reckless infringement of Plaintiffs
trademark right^;^ and (5) unfair and deceptive trade practices pursuant to N.C. Gen. Stat. 75-
4~efendant has treated Count Four of the Complaint as a state law unfair and deceptive
trade practices claim for purposes of summary judgment, given Plaintiffs explicit request in
Count Four that the Court find Defendant's conduct an unfair and deceptive trade practice. In
response, Plaintiff does nothing to clarify the cause of action, but simply denies that the count
lies under North Carolina's unfair and deceptive trade practices statute. Given Plaintiffs
representation that the count is not a state law claim for unfair and deceptive trade practices, it is
Case 2:04-cv-00045-BO Document 32 Filed 06/12/2006 Page 5 of 15
Defendant has moved for summary judgment as to all of Plaintiffs claims. In response,
Plaintiff concedes that it cannot establish actual damages, an element of the state law unfair and
deceptive trade practices claim. Plaintiff thus acquiesces in dismissal of Count 5 of the
Complaint. Plaintiff has responded in opposition to Defendant's Motion for Summary Judgment
on the other causes of action, and the motion is ripe for review.
ANALYSIS
I. Standard of Review
A court may grant summary judgment only if there is no genuine issue as to any material
fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c);
Celotex Corp. v. Catrett, 477 U.S. 3 17 (1986). The court must determine "whether the evidence
that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
251-52 (1986). The moving party bears the initial burden to show the court that there is an
absence of a genuine issue concerning any material fact and that the non-moving party cannot
prevail. See Celotex, 477 U.S. at 325. In order to survive the motion, the non-moving party must
then show that there is "evidence from which a jury might return a verdict in his favor."
Anderson, 477 U.S. at 257. The court must accept all of a non-moving party's evidence as true
and will view all inferences drawn from the underlying facts in the light most favorable to the
clear that Count Four of the Complaint, which refers to Defendant's "willful infringement" and
requests a permanent injunction, simply supplements Plaintiffs claims of intentional
infringement contained in Count One of the Complaint.
Case 2:04-cv-00045-BO Document 32 Filed 06/12/2006 Page 6 of 15
infringement, and dilution. To prevail on its infringement claims, Plaintiff must establish four
elements: "(1) ownership of (2) a valid trademark (3) which was used by Defendant in a
trademark sense without the owner's consent (4) in a manner likely to cause confusion." United
States Hosiery Corp. v. The Gap, Inc., 707 F. Supp. 800,810 (W.D.N.C. 1989).' Thus, at the
outset, Plaintiff must demonstrate ownership of a valid, protectible trademark to prevail on its
infringement claims.
Trademark Dilution Act ("FTDA") claim under 4 1125(c). The FTDA, which became effective
in 1996, created a new "federal cause of action to protect famous marks from unauthorized users
that attempt to trade upon the goodwill and established renown of such marks and, thereby, dilute
their distinctive quality." H.R. Rep. No. 104-374, at 3, reprinted n 1995 U.S.C.C.A.N at 1030.
The statutory language allows redress to be obtained only by "[tlhe owner of a famous mark."
See 15 U.S.C. 4 1125(c)(l). Therefore, a dilution action cannot lie absent ownership of a valid
In order to prevail on its infringement and dilution claims, Plaintiff must first demonstrate
a valid, protectible interest in OBX. See Resorts of Pinehurst v. Pinehurst Nut 'I Corp., 148 F.3d
4 17 (4th Cir. 1998). Defendant argues that OBX, as a geographical designation, is not worthy of
trademark protection. Defendant also argues that Plaintiffs trademark registrations should be
cancelled, given the widespread understanding that OBX refers to the Outer Banks.
Marks are generally divided into four categories, in "ascending order of strength or
Uno, 747 F.2d at 1527. Marks that are simply generic, or descriptive (without having acquired a
secondary meaning), are not entitled to trademark protection, while suggestive and arbitrary
marks are. Id. The term "secondary meaning" is "shorthand for saying that a descriptive mark
has become sufficiently distinctive to establish 'a mental association in buyers' minds between
the alleged mark and a single source of the product."' Retail Services, Inc. v. Freebies Pub1 'g,
364 F.3d 535, 539 (4th Cir. 2004) (quoting 2 J. Thomas McCarthy, McCarthy on Trademarks
The parties dispute the appropriate category of the " O B X mark. Defendant contends
that OBX is a generic or geographically descriptive reference to the Outer Banks, while Plaintiff
argues that it has submitted sufficient evidence of secondary meaning such that the mark is
entitled to protection. Under the Lanharn Act, a party cannot obtain a trademark interest in a
that when a geographic term is used primarily to denote where a product originates, such a mark
is unprotectible because it does not perform the traditional trademark function of distinguishing a
good or service. See Elgin National Watch Co v. Illinois Watch Case Co., 179 U.S. 665,673
(1901). North Carolina courts have reiterated that geographically descriptive designations are not
accorded trademark rights at common law. See Charcoal Steak House, Inc. v. Staley, 263 N.C.
199,201 (1964). However, a geographic designation may obtain trademark protection if the
Case 2:04-cv-00045-BO Document 32 Filed 06/12/2006 Page 8 of 15
designation has acquired secondary meaning. Resorts of Pinehurst, 148 F.3d at 421. As the
Fourth Circuit Court of Appeals explained in Resorts of Pinehurst, "[slecondary meaning has
been established in a geographically descriptive mark where the mark no longer causes the public
to associate the goods with a particular place, but to associate goods with a particular source."
Id. (quoting Boston Beer Co. Ltd Partnership v. Slesar Bros. Brewing Co., Inc., 9 F.3d 175, 181
On this issue, the Court is guided by the fact that the USPTO granted Plaintiff trademark
registrations for several uses of the abbreviation "OBX." The fact that the Office granted this
registration isprima facie evidence that the trademark in question is not generic or descriptive
(without secondary meaning), and is therefore entitled to protection. See US. Search, LLC v.
US. Search.com Inc., 300 F.3d 517, 524 (4th Cir. 2002).
Courts do have the power, however, to overrule the Office's determination of a mark's
strength. See 15 U.S.C. $ 11 19. In the trial context, the existence of a registration produces a
burden-shifting effect in which the burden of production is placed on the opposing party to
produce sufficient evidence to show by a preponderance of evidence that a mark is generic. See
Glover v. Ampak, Inc., 74 F.3d 57, 59 (4th Cir. 1996). Further, the fact that the Office has
granted a registration does not per se create an issue of fact sufficient to defeat a motion for
summary judgment if the defendant offers the requisite proof that the mark is only generic or
descriptive. See Retail Services, 364 F.3d at 543-46 (4th Cir. 2004) (upholding cancellation of
trademark after finding at summary judgment that term was generic); Convenient Food Mart,
Inc. v. 6-Twelve Convenient Mart, Inc., 690 F. Supp. 1457 (D. Md. 1988), afd 870 F.2d 654
(4th Cir. 1989) (cancelling trademark registration at summary judgment after finding that term
Case 2:04-cv-00045-BO Document 32 Filed 06/12/2006 Page 9 of 15
was generic).
sufficient proof that "the primary significance of the mark [is] its indication of the nature of class
of the product or service, rather than an indication of source." Glover v. Ampak, Inc., 74 F.3d 57,
59 (4th Cir. 1996) (emphasis in original). Similarly, in the context of a geographical designation,
evidence that the mark is primarily associated with a location rather than a product serves the
same ends. Such evidence may come from various sources, including "purchaser testimony,
consumer surveys, listings and dictionaries, trade journals, newspapers, and other publications."
Id. "If sufficient evidence of genericness is produced to rebut the presumption, the presumption
is "neutralized' and essentially drops from the case, although the evidence giving rise to the
Defendant has offered overwhelming evidence from appropriate sources that OBX is a
geographically descriptive or generic term for the Outer Banks. Defendant's evidence includes
Internet searches demonstrating that thousands of internet pages use OBX to refer to the
Outer Banks.
Several companies other than Plaintiff selling clothing featuring an OBX logo.
Several companies using OBX in marketing to refer to the Outer Banks, such as the "Best
Pizza in OBX."
News stories using OBX as an abbreviation for the Outer Banks.
Vacation guides using OBX to refer to the Outer Banks.
The above are only a few of the examples of the widespread usage of OBX as a
acronym for the Outer Banks. Douglas, the original coiner of the phrase, has admitted in
deposition testimony that OBX signifies the Outer Banks. An exhibit submitted by Plaintiff
Case 2:04-cv-00045-BO Document 32 Filed 06/12/2006 Page 10 of 15
entitled "Frequently Asked Questions About O B X states that "OBX stands for the Outer Banks
of North Carolina."
Here, taken in the light most favorable to Plaintiff, OBX-Stock is the successor in interest
to rights in the OBX mark, which was created by Plaintiffs former president. Plaintiffs efforts
to market OBX car stickers and other products have been largely responsible for the term's local
ubiquity. However, this does not mean that Plaintiff is entitled to trademark protection for use of
the phrase in particular contexts. Rather, Plaintiff must demonstrate that the abbreviation has
acquired some form of secondary meaning in the mind of the consuming public. Resorts of
Pinehurst, 148 F.3d at 421. Specifically, given that OBX is a geographical designation, Plaintiff
must come forward with some evidence that consumers associate OBX-branded goods with a
Ayuntarniento de Barcelona, 330 F.3d 617,629 (4th Cir. 2003) ("Barcelona" not worthy of
trademark protection where no evidence in record that consumers associate mark with anything
As the Fourth Circuit explained in US. Search, "[slecondary meaning is defined as 'the
consuming public's understanding that the mark, when used in context, refers not to what the
descriptive word ordinarily describes, but to the particular business that the mark is meant to
identify."' US. Search, 300 F.3d at 525. While no one factor is determinative, in resolving
whether secondary meaning has been established a court will consider: "(1) advertising
expenditures, (2) consumer studies linking the mark to a source, (3) sales success, (4) unsolicited
media coverage of the product, (5) attempts to plagiarize the mark, and (6) the length and
Plaintiff argues that it has supplied affirmative evidence that the OBX mark has obtained
secondary meaning. Plaintiff alleges that the evidence submitted to the Court- including
financial records and tax returns for Plaintiff, as well as copies of publicity concerning the OBX
mark- constitute evidence of secondary meaning. Nowhere in its response brief does Plaintiff
explain what secondary meaning the 340 exhibits illustrate. Nor does Plaintiff explain where the
documents come from or what their significance is in the context of Defendant's motion.
Instead, Plaintiff has supplemented its response with an affidavit by Plaintiffs counsel Donald
Casey, which states that "[oln information and belief the [attached exhibits] constitute evidence
of secondary meaning." At the summary judgment stage, the non-moving party must "go beyond
the pleadings" and "designate specific facts showing that there is a genuine issue for trial."
Celotex v. Catrett, 477 U.S. 3 17, 324. A lack of specificity is endemic in Plaintiffs response to
the instant motion. Not only has Plaintiff failed to identify for the Court what secondary
meaning the evidence supports, but Plaintiffs response, which essentially asks that the Court
divine the meaning of Plaintiffs hundreds of proffered exhibits, is not indicative of a serious
The unexplained exhibits supplied by Plaintiff do conform with some of the factors
supporting secondary meaning listed in US. Search. For example, it is evident that Stock has
been fairly successful in the sales and promotion of OBX-branded products. In its early years the
company experienced significant revenue growth in the sale of OBX products, and in 2004 it had
sales of over $1 million The company has sponsored sporting competitions and scholarship^.^
6Plaintiff has also sponsored sports teams under the moniker "OBX Extreme Team."
However, Plaintiff does not claim trademark rights in the name, nor are the instant claims based
on the similarity of OBXtreme and OBX Extreme Team.
Case 2:04-cv-00045-BO Document 32 Filed 06/12/2006 Page 12 of 15
With Plaintiffs permission, the Dare County DMV began offering rear mounted license plates
with an "OBX" prefix in the spring of 2001. Plaintiffs exhibits also contain news articles about
Plaintiffs efforts to obtain federal trademark registration for OBX. However, in the context of a
geographical abbreviation, the type of evidence offered by Plaintiff does little, if anything, to
demonstrate that consumers associate OBX with either Plaintiff or its products.
meaning must demonstrate that consumers associate goods with a particular source. Resorts of
Pinehurst, 148 F.3d at 421. There is simply no evidence in the record of this case that any
sales might ordinarily imply secondary meaning, in this case Plaintiffs sales occurred despite
Plaintiffs representatives, strongly suggests that the popularity of OBX was self-perpetuating?
Plaintiffs sales are not instructive absent evidence that the sales were the result of trademark
71n contrast to this case, in Resorts of Pinehurst the district court was confronted with
overwhelming evidence of secondary meaning. Resorts of Pinehurst v. Pinehurst Nat 'I Corp.,
1997 U.S. Dist. LEXIS 11597 (M.D.N.C. 1997). The case involved a dispute over whether the
Pinehurst Golf Resort could maintain trademark rights in "Pinehurst," which is also the name of
the town where the resort and its courses are located. The golf resort presented substantial
evidence that consumers associate the name Pinehurst with the resort's courses, including
consumer surveys, books, and articles detailing the courses' worldwide fame. The district court
also noted that the Pinehurst mark had been used by the plaintiff since the early 1900s. Id. at
*29. The district court ultimately found that Pinehurst Golf Resort had demonstrated secondary
meaning, and thus had trademark rights in the name "Pinehurst."
'Stock's records indicate that it averaged between $1 0,000 and $1 5,000 in advertising
expenditures per year between 1994 and 2004.
91n his deposition, Stock co-owner Donald Watson states [in reference to OBX]: "It was a
phenomenon. It was self-promoting, so you didn't have to promote it; you didn't have to
advertise it." D. Watson Depo. pp. 165.
Case 2:04-cv-00045-BO Document 32 Filed 06/12/2006 Page 13 of 15
recognition, which Plaintiff has failed to provide. Moreover, Plaintiffs use of the OBX mark has
hardly been exclusive, as evidenced by the plethora of third party-usage evidence. Plaintiff has
fought the rising tide of third-party usage by sending several "cease and desist" letters to alleged
infringers, but at this point, the term's widespread acceptance as an abbreviation for the Outer
Most fatal to Plaintiffs claims is the fact that Plaintiff has failed to explain what type of
secondary meaning the submitted evidence might support. Plaintiff has not offered consumer
surveys, expert reports, or testimony from any witness indicating that consumers associate OBX
with Plaintiff or its products. The evidence proffered by both Plaintiff and Defendant strongly
supports the conclusion that OBX means the Outer Banks, and nothing else. In fact, nowhere in
its response does Plaintiff argue that OBX means anything but the Outer Banks. Instead,
Plaintiff acknowledges that OBX has become a geographically descriptive mark, but argues that
its trademark rights survive the geographical usage of the abbreviation, due to the fact that
Plaintiff is partly responsible for the acronym's prevalence. Plaintiffs argument is unavailing.
While Plaintiffs efforts to promote OBX may be laudable, trademark rights are not granted for a
defined period, and a mark's federal registration may be cancelled when it becomes generic. See
15 U.S.C. § 1064.
It is firmly established that abbreviations and acronyms for generic terms are themselves
generic, where recognized by the public as such. See, e.g., National Conference of Bar
Examiners v. Multistate Legal Studies, Inc., 692 F.2d 478 ( 7th Cir. 1982) (MBE generic
abbreviation of "multistate bar examination"). For example, it is widely accepted that "NYC"
refers to New York City; more recently, "the O.C." has entered the public consciousness as an
Case 2:04-cv-00045-BO Document 32 Filed 06/12/2006 Page 14 of 15
abbreviation for Orange County, California. Neither acronym would be worthy of trademark
Product marks such as "Aspirin" and "Thermos" often become generic and thus lose
trademark protection. America Online, Inc. v. AT& T Corp., 243 F.3d 8 12, 82 1 (4th Cir. 200 1).
Such principles are equally applicable to geographic acronyms and abbreviations, despite the fact
that novel geographic designations are less common than new products. "The O.C." is
trademarkable as applied to television shows, because of the fact that the term has secondary
meaning in the eyes of the relevant consuming public. Here, Plaintiff concedes that OBX means
only the Outer Banks; Plaintiff does not argue that consumers associate OBX with Plaintiffs line
The Court is mindful of the Fourth Circuit's admonition that "a district court should not
freely substitute its opinion for that of the PTO." America Online, 243 F.3d at 8 17. However, as
the Fourth Circuit noted in Retail Services, at the summary judgment stage a plaintiff is not
entitled to survive summary judgment simply by virtue of having a registered mark. 364 F.3d at
543-46. As the non-moving party, Plaintiff is obligated to respond with specific evidence from
which a jury might return a verdict in its favor. Even accepting Plaintiffs trademark
create a question of fact as to the nature of the OBX mark.'' It is patently incongruous for
''As the district court noted in Retail Services, "[a]lthough genericness is a question of
fact, resolution of this question on summary judgment is nevertheless appropriate where the
evidence is so one-sided that there can be no doubt about how the question should be answered."
Retail Services, Inc. v. Freebies Pub1 'g, 247 F. Supp. 2d 822 (E.D.Va. 2003), aff'd, 364 F.3d 535
(4th Cir. 2004).
Case 2:04-cv-00045-BO Document 32 Filed 06/12/2006 Page 15 of 15
simultaneously acknowledging that OBX means only one thing in the minds of the consuming
public- the Outer Banks." Accordingly, Defendant's Motion for Summary Judgment is
CONCLUSION
For the reasons discussed above, Plaintiff has failed to present sufficient evidence from
which a jury could conclude that OBX has secondary meaning in the eyes of consumers.
descriptive term for the Outer Banks. Thus, Plaintiff has not established ownership in a valid
SO ORDERED, this A
-
day O K . 2006.
I2TheCourt also notes that Plaintiffs dilution claim is deficient not only because of a
failure to demonstrate ownership of trademark rights in OBX, but also because Plaintiff has
failed to show actual dilution. Actual dilution is a required element of a dilution claim.
CareFirst of Md., Inc. v. Firstcare P. C., 434 F.3d 263,274 (4th Cir. 2006). Plaintiff has
conceded that it has no evidence of damages or consumer confision. Courts will accept
circumstantial evidence of actual dilution where the marks are identical, however, a mere
similarity of the marks will not suffice. Id. Here, the marks are not sufficiently similar to
provide circumstantial evidence of actual dilution.