Caseflicks

Court of Appeals for the Federal Circuit • 1991

Larry Harmon Pictures Corporation v. The Williams Restaurant Corporation

929 F.2d 662 | 1991 U.S. App. LEXIS 4876 | 1991 WL 40616

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Takeaway

In short, this case holds that a single-location restaurant may federally register its service mark when it actually serves interstate travelers; the Lanham Act imposes no fixed minimum volume of interstate business.

Background

Williams had operated BOZO'S, a single-location pit-barbecue restaurant in Mason, Tennessee, since 1932. Although Mason is in Tennessee, the restaurant was within an approximately hour-long drive of Memphis, a regional commercial center spanning Tennessee, Mississippi, and Arkansas. The undisputed record showed that BOZO'S served some interstate travelers, was popular with Memphis-area customers, and had received mentions in publications originating outside Tennessee.

Williams applied to register BOZO'S as a service mark for restaurant services. Larry Harmon Pictures opposed, contending that a local, single-location restaurant had not made the federally required "use in commerce." The Trademark Trial and Appeal Board granted Williams summary judgment and dismissed the opposition, concluding that service to interstate travelers satisfied the Lanham Act's requirement. Harmon appealed.

Issues

Issue #1

Whether a single-location restaurant satisfies the Lanham Act's "use in commerce" requirement when it provides services to customers who travel across state lines to visit it.

Holding

Yes. BOZO'S use of its mark in connection with restaurant services rendered to interstate travelers was sufficient for federal service-mark registration.

Reasoning

Sections 1 and 3 of the Lanham Act allow registration of a trademark or service mark that is "used in commerce." Section 45 defines commerce broadly as "all commerce which may lawfully be regulated by Congress," and provides that a service mark is in use when it is used in the sale or advertising of services and those services are rendered in commerce. The statutory language does not require that the restaurant itself operate in more than one state.

Binding predecessor precedent treated the Lanham Act's definition as an intentional expansion of federal trademark jurisdiction. In re Silenus Wines held that Congress used the phrase "all commerce which may lawfully be regulated by Congress" according to its broad terms, including intrastate activity that affects interstate or foreign commerce. The court saw no basis for giving "commerce" a narrower meaning in registration cases than in infringement cases.

In re Bookbinder's Restaurant did not establish a categorical rule barring registration by single-location restaurants. There, the applicant supplied no competent evidence that its Philadelphia restaurant served interstate commerce; its attorney's unverified assertions were insufficient. By contrast, In re Gastown approved registration where services performed in one state had a direct relationship to interstate commerce. The cases differed because of their evidentiary records, not because one involved a restaurant at a single location.

Here, the record established that BOZO'S had served customers traveling across state lines. Williams submitted evidence, including an affidavit estimating that fifteen percent of its business came from out-of-state customers, visitor-register materials, and affidavits or letters from out-of-state patrons. Harmon's representative's observation that no out-of-state vehicles appeared during one two-hour visit, together with counsel's attacks on the affidavit's credibility, did not create a genuine factual dispute.

The court rejected Harmon's proposed extra-statutory thresholds: that a restaurant must sit on an interstate highway, serve at least fifty percent interstate travelers, or regularly advertise in out-of-state media. Because the Lanham Act reaches all commerce Congress may regulate, the court lacked authority to impose a quantitative or location-based restriction that Congress had not enacted.

Issue #2

Whether the Trademark Trial and Appeal Board properly granted summary judgment to Williams on the evidence of interstate use.

Holding

Yes. The Board correctly treated the material evidence as undisputed and properly concluded that Harmon had not produced probative contrary evidence creating a genuine issue of fact.

Reasoning

The Board stated that it resolved factual disputes and drew permissible inferences in Harmon's favor, as summary-judgment doctrine requires. The Federal Circuit agreed that this was the correct governing standard under Anderson v. Liberty Lobby.

Williams offered affirmative evidence that BOZO'S served interstate travelers. Harmon did not counter that evidence with competent proof; instead, it relied principally on attorney argument and a limited observation by its representative. Such material was inadequate to contradict Williams's evidence or require a trial on the extent of interstate patronage.

Because even some demonstrated service to interstate travelers satisfied the governing statutory standard, a dispute over whether Williams's claimed volume of interstate business was overstated was not material. The Board therefore properly entered summary judgment and dismissed the opposition.

Dissents

Judge Newman

Reasoning

Judge Newman concluded that the Board improperly granted summary judgment because the degree of BOZO'S interstate patronage was both disputed and material. In her view, the Board accepted Williams's estimate that fifteen percent of customers came from out of state while discounting Harmon's contrary evidence, thereby crediting the movant's version of disputed facts and shifting the burden improperly to the nonmovant.

She read the statutory phrase "services are rendered in commerce" more narrowly than the majority. Although Congress may regulate intrastate activity affecting interstate commerce, she argued that the Lanham Act does not automatically extend federal registration to every local service with some interstate contact. The relevant inquiry was Congress's intended scope for service-mark registration, not merely the outer limit of Commerce Clause power.

Judge Newman understood Gastown and Silenus Wines to require a substantial, direct connection between the intrastate service and interstate commerce. Gastown involved stations on federal highways, frequent service to out-of-state and interstate-commercial vehicles, road service, and interstate credit and billing. Silenus Wines involved intrastate sales intimately connected with imported wine. A local restaurant's occasional service to interstate travelers did not, in her view, establish the same kind of direct interstate effect.

The evidence also supported the restaurant's predominantly local character. BOZO'S was neither on an interstate highway nor near a state line; it did not advertise in out-of-state media, appear in travel or restaurant guides, accept credit cards, take reservations, or operate on Sundays. Judge Newman also viewed unsolicited out-of-state press references—most occurring after the application date—as not qualifying use of the mark in commerce.

She warned that granting nationwide federal registration to local restaurants on this limited showing would improperly displace the role of state trademark systems. She would have reversed the summary judgment and remanded for a developed evidentiary record and application of a standard requiring more than minimal interstate contact.