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FINDINGS OF FACT AND CONCLUSIONS OF LAW
INTRODUCTION
This action involves a dispute among parties who assert competing claims to exclusive rights to provide alcohol and drug dependency meetings under the name "SOS" or "Secular Organizations for Sobriety" in Northern California. The alcohol and drug dependency meetings are designed as secular alternatives to programs such as Alcoholics Anonymous. The parties to this litigation have all been involved in what they describe as a "grass roots movement" to develop and encourage these secular alternatives. The "movement" began in the 1980's, and the parties began providing the meetings and services on an informal and voluntary basis some time before any specific legal framework was adopted by any of them and before any formal claims to ownership were asserted.
This lawsuit is the result of the parties' after-the-fact efforts to impose legal order, and ownership, on various aspects of the "movement." It appears that personal acrimony has been a substantial motivating factor in these matters, but the actual claims brought to court center on alleged service mark and trademark infringement based on various federal and state law theories.
Plaintiff Secular Organizations for Sobriety, Inc. has sued defendants Hubert Michael Lenihan, Nancy Clark and SOS West Secular Organizations for Sobriety, Inc., for trademark infringement and unfair competition in violation of the Lanham Act, 15 U.S.C. §§ 1114 and 1125(a), and for violation of the trade- and service mark provisions of the California Business and Professions Code (Cal. B&P Code §§ 14300 and 14330). Plaintiff seeks an injunction barring defendants from using the service mark and trade name "SOS West Secular Organizations for Sobriety" and the marks "SOS" and "SOS West," plus attorneys fees and costs. Defendants deny plaintiff's claim to a valid service mark and contend, as affirmative defenses under the Lanham Act, prior use (15 U.S.C. § 1ll5(b)(5)), fraudulent registration (15 U.S.C. § 1115(b)(1)), abandonment, acquiescence and laches.
In addition, defendant SOS West Secular Organizations for Sobriety, Inc. has counterclaimed against Secular Organizations for Sobriety, Inc. for cancellation of trademark registration and fraudulent trademark registration (15 U.S.C. § 1120), and for violations of California B&P Code provisions governing unlawful use of corporate names (§§ 14415, 14402) and unfair competition (§ 17200). Counterclaimant seeks injunctive relief plus attorneys fees and costs.
This Court has previously found certain facts to be material and undisputed, in its Order Denying Cross-Motions for Summary Judgment dated August 12, 1996. The parties have listed those facts (Nos. 1-40) at pages 2-5 of their Amended Joint Pretrial Conference Statement (Joint Statement) filed January 7, 1997, and those facts are incorporated in this statement of findings as if set out in full. The parties have also submitted additional undisputed facts (Nos. 1-37), at pages 5-7 of their Joint Statement and "additional undisputed facts believed by one party to be immaterial" (Nos. 1-22) at pages 7-8 of their Joint Statement. Those facts are also incorporated in this statement of findings as if set out in full.
Court trial of the remaining issues in this case was held February 3-6, 1997. For the reasons set out below, this Court finds that plaintiff Secular Organizations for Sobriety, Inc. is not entitled to injunctive or other relief against defendants, because defendants established their prior use of the mark in Northern California, within the meaning of 15 U.S.C. § 1115(b)(1). This Court further finds that counterclaimant SOS West Secular Organizations for Sobriety Inc. sustained its burden under Cal. B&P Code §§ 14415 and 14402 to demonstrate its exclusive right to use its corporate name as a trade name in Northern California and its entitlement to an injunction against infringing use. In no other respects is counterclaimant entitled to relief.
FINDINGS OF FACT
1. Plaintiff Secular Organizations for Sobriety Inc. (hereinafter sometimes "SOS Inc.") is a nonprofit corporation, incorporated in New York in February, 1991. Defendant SOS West Secular Organizations for Sobriety, Inc. (hereinafter sometimes "SOS West") is a nonprofit corporation, incorporated in California in January, 1991. Both organizations sponsor self-help meetings for persons with alcohol or drug problems who want to become sober and drug free. Both organizations distinguish themselves from Alcoholics Anonymous and other self-help groups by emphasizing their secular, rather than religious or spiritual, approach to self-help.
2. In the early 1980s, James Christopher founded a grass roots movement advocating this secular approach to such self-help groups. Christopher had a professional background in advertising and promotion. The secular self-help approach was first dubbed "SSG" for "Secular Sobriety Groups," but thereafter, at the suggestion of Paul Kurtz, this grass roots movement began to be referred to as "Secular Organizations for Sobriety" or the "SOS movement." There was no national legal or organizational structure for this grass roots movement prior to 1991. Until that point, the various SOS groups functioned autonomously, although with coincident interests. In early 1991, various participants in the SOS movement began jockeying for legal position; the corporate parties to this litigation, and ultimately this litigation itself, were the result.
3. The first appearance of the mark "Secular Organizations for Sobriety" or "SOS" in any document associated with CODESH (the Council for Democratic and Secular Humanism), occurred with the publication of Volume 1, Number 1 of the SOS National Newsletter in the spring of 1988. The first three issues of the SOS National Newsletter included the "TM" symbol by the words "Secular Organizations for Sobriety." No evidence was submitted at trial concerning whether or when the first issues of this newsletter were actually received by individuals in the Northern California area.
4. The first SOS-type meeting in the San Francisco Bay Area occurred in March, 1988, in El Cerrito, in a meeting organized by Janis Goodall, who at that time maintained frequent contact with and received assistance from Christopher. SOS of San Francisco also began operating about this time.
5. On May 25, 1988, the San Francisco Chronicle published an article about the E1 Cerrito meeting, and used the descriptions "SOS" and "Secular Organizations for Sobriety" several times. Christopher was identified as the founder of a "grass roots movement" related to this kind of self-help group; CODESH was not mentioned. No evidence suggests that CODESH had established any secondary meaning in the descriptions "SOS" or "Secular Organizations for Sobriety" as of 1988.
6. In early 1988, the local groups that made up the SOS movement in California grew in numbers, but there was no central office or organization to the movement. Each local SOS group was self-governing and acted independently in providing recovery services. The local groups in California had no formal relationship with CODESH and received no financial support from CODESH, although CODESH provided support for the movement in 1988 by helping to publish the SOS newsletter.
7. The SOS grass roots organization was informally structured. No rules governed the procedure to start a new local group. Neither Christopher nor CODESH controlled the way local meetings were conducted, what literature was distributed, or how local groups interacted with other community organizations. There were no articles or bylaws binding SOS groups together into a national organization.
8. The growth of the SOS movement in Northern California was largely the result of the work of Charles Bufe, Janis Goodall, Michael Lenihan, Dave Wilson and their associates, who later formed SOS West. During the early years, Christopher was an ally and supporter of these individuals and actively sought media coverage for their activities.
9. By 1990, there were about twenty active SOS meetings in San Francisco, Sonoma, Santa Clara, Alameda, Contra Costa, and Santa Cruz counties. These groups drew moral support and guidance from Christopher's books and the SOS newsletter, but they operated on an autonomous, volunteer basis. Christopher and CODESH encouraged such independent operations
10. In the spring of 1990, SOS movement participants in Northern California became increasingly disaffected from Christopher and CODESH. Meetings were held to discuss organizational issues; Christopher participated in one such meeting in June, 1990. After the June 1990 meeting, Christopher departed for Buffalo, New York, for employment with CODESH, and had no further communication with the SOS groups in Northern California until late 1992.
11. Christopher and CODESH incorporated plaintiff SOS, Inc. without input from any of the local groups. SOS, Inc. was controlled through a board of directors composed entirely of CODESH members, including Christopher.
12. One month earlier, defendant SOS West had been incorporated as a membership corporation independent of CODESH. Neither Christopher nor CODESH objected to the incorporation of SOS West at the time.
13. No Northern California SOS groups are members of SOS, Inc. or CODESH; have ever paid dues to SOS, Inc. or CODESH; have ever signed charters or agreements with SOS, Inc. or CODESH; or have ever taken any vote to authorize SOS, Inc. or CODESH to speak on their behalf. Between 1988 and the present, neither Christopher nor CODESH exercised control over the meetings or other activities of the local SOS groups in Northern California.
14. In October 1990, without the knowledge of the SOS groups in Northern California, CODESH applied for federal registration of the term "Secular Organizations for Sobriety." Neither CODESH nor Christopher had any other prior federal registration of the mark.
15. Although the application represented to the PTO that SOS had been founded by CODESH and that SOS had been a subcommittee of CODESH since 1985, Christopher was the founder of the SOS movement. As of the October 1990 filing date, CODESH had not conducted any of the relevant services itself, and had only recently put Christopher on the CODESH payroll. At most, CODESH had made donations to Christopher to help him in his endeavors prior to 1990. The SOS movement was not a subcommittee of CODESH in 1985, 1986, 1987 or 1988.
16. When CODESH applied to the federal trademark office to register the mark, "Secular Organizations for Sobriety," it knew that the mark had been used freely and openly by many local SOS groups in Northern California since early 1988.
17. Members of what became SOS West began using the mark in Northern California before its use in the southern part of the state, and members of SOS West were the only parties in Northern California actively using the mark in that region as of 1988. At the time defendants began using the mark in early 1988, plaintiff SOS, Inc. did not exist.
18. No restrictions or limitations have ever been placed by plaintiff on use of the mark by local groups. Local groups have been actively encouraged to use the SOS mark and to establish their own trademark rights in the locale where their group meetings are held. Defendants in this case had no knowledge that CODESH did claim or would claim ownership of the mark "SOS" or the descriptive words "Secular Organizations for Sobriety" at the time defendants began operating SOS meetings in Northern California, or at the time defendants incorporated SOS West in January, 1991.
19. There are no documents referring to, evidencing or constituting any license agreement between Christopher, SOS Inc. or CODESH and defendants at any time, nor was any evidence presented that there was an oral license agreement regarding use of the name "Secular Organizations for Sobriety" between any of these parties. There is no basis on which to imply such a license.
20. The PTO issued the federal registration of "Secular Organizations for Sobriety" to CODESH on August 18, 1992. On August 25, 1994, CODESH executed an assignment of the said mark and goodwill to plaintiff SOS, Inc.
21. A California state trademark registration for "SOS West Secular Organizations for Sobriety, Inc." was issued to SOS West on March 17, 1993.
22. Defendants established considerable goodwill in their corporate name and service mark from 1988 to the present. CODESH and plaintiff SOS, Inc. were aware of the efforts and money that SOS West and its members expended to build goodwill in Northern California. Defendants worked ardently and without pay to build membership, acquire meeting places, create literature, and network with other groups and spend thousands of dollars in operating costs.
23. Certain East Bay groups which had been participants in defendant SOS West split off from SOS West in 1992 in order to become "affiliated" with plaintiff SOS, Inc. Prior to becoming members of SOS West, these East Bay groups did not use either of the disputed marks. It would be inequitable to permit them to cause confusion by adopting and using those marks now.
24. SOS, Inc. has only recently relocated to California from New York and attempted to solicit funds and members in Northern California. It has never offered any services here to drug or alcohol dependent individuals. Because SOS, Inc. is the newcomer to this region, it is equitable to enjoin any further activities by that corporation that are likely to cause confusion.
25. Based upon the facts presented before and during trial, and upon the balance of equities in this matter, it is appropriate that each party bear its own fees and costs of this litigation.
CONCLUSIONS OF LAW
1. Ownership of a trademark is established through public use of the mark; mere oral use of a term at private meetings does not constitute "use" of a mark. 2 J. McCarthy, McCarthy on Trademarks and Unfair Competition §16.01[1] at 16-3 and §16.02(2)(b), at 16-10. (3d ed. 1996) ("McCarthy"); 15 U.S.C. §1127. No one had established any rights to the marks "SOS" or "Secular Organizations for Sobriety" prior to their public use in early 1988.
2. Paul Kurtz testified that he coined the phrases "Secular Organizations for Sobriety" and "SOS" sometime in 1985. Coining of a phrase, without use in commerce, does not create rights under state or federal law. La Maur, Inc. v. International Pharmaceutical Corp., 199 U.S.P.Q. 612, 616 (1978) (mere conception of a mark and discussion with others does not establish priority of use); 2 McCarthy §16.03, at 16-16-16-16.1. Neither term was used in commerce at that time or until early 1988.
3. This Court has serious question whether CODESH owned the mark "Secular Organizations for Sobriety" at the time it sought registration, and whether cancellation would be required because of misstatements as to the date of first use and as to actual use of the mark. See In re Wella A.G., 787 F.2d 1549, 1554 (Fed. Cir. 1986) (Nies, J. concurring) (citing Smith v. Tobacco By-Prods. Chem. Corp., 243 F.2d 188 (C.C.P.A. 1957)); 15 U.S.C. §1051; Midwest Fur Producers Ass'n. v. Mutation Mink Breeders Ass'n, 127 F. Supp. 217, 229 (W.D. Wis. 1954); Torres v. Cantine Torresella S.r.1., 808 F.2d 46, 49 (Fed.Cir. 1986). For the same reason, this Court questions whether CODESH can or has established common law trademark rights in "SOS." However, in light of the determination that defendants have established prior use, no determination on these issues is made here.
4. Because CODESH was not related as a parent company or in any other manner to the local SOS groups, the related companies doctrine does not entitle CODESH to the benefit of the use of the mark by the local SOS groups. In re Wella A.G., 787 F.2d at 1554; 2 McCarthy §18.16[2].
5. To establish infringement of a descriptive mark, a plaintiff must demonstrate not only that it was the senior user of the mark, but that its mark acquired secondary meaning before the defendant began to use the mark. Perini Corp. v. Perini Constr., Inc., 915 F.2d 121, 125-26 (4th Cir. 1990); Burke-Parsons-Bowlby Corp. v. Appalachian Log Homes, Inc., S71 F.2d 590, 596 (5th Cir. 1989). Because CODESH was not the senior user in Northern California and because neither CODESH nor Christopher achieved secondary meaning in the mark prior to its use by defendants in this area, plaintiff has failed to establish infringement.
6. The prior user of a mark is entitled to common law protection for continued use of a mark in the geographic area of actual use, where that use predates another's registration. Architemps, Inc. v. Architemps, Ltd., 704 F.Supp. S9, 40 (S.D.N.Y. 1988). Defendants are therefore entitled to common law protection for continued use of their mark in Northern California.
7. A mark may not be enforced, where the mark was adopted by the alleged infringer without knowledge of the registrant's prior use and has been continuously used by such party or those in privity with him from a date prior to registration of the mark. 15 U.S.C. §1115(b)(5). Plaintiff accordingly may not enforce the mark against defendants, who used the mark continuously in Northern California long before its registration by CODESH and without knowledge of CODESH's claim of ownership or claim to prior or exclusive use. T Shirts Plus v. T-Shirts Plus, Inc., 222 U.S.P.Q. 117, 120 (C.D. Cal. 1983). Accordingly, Defendants have established a prior use defense because defendants adopted the mark in Northern California in early 1988, and could not have had any knowledge of prior use by CODESH because no such use had been made.
8. In light of defendants' establishment of a prior use defense, no federal injunction may issue (Golden Door, Inc. v. Odisho, 646 F.2d 347, 351 (9th Cir. 1980)) and defendants retain exclusive rights in Northern California. Minuteman Press Int'l, Inc. v. Minute-Men Press, Inc., 219 U.S.P.Q. 426, 431-32 (N.D. Cal. 1983).
9. Defendant SOS West is presumed to have the exclusive right to use its corporate name as a trade name in California under Business & Professions Code §14415, subject only to rebuttal by a showing that plaintiff had priority of use in this state. Plaintiff has made no such showing in the Northern California area. Thus SOS West has the exclusive right to use its corporate name in the Northern California area and plaintiff will be enjoined from infringement thereof.
10. The parties devoted considerable time at trial to the question whether recovering alcoholics can or should ever engage in controlled drinking; whether defendant Lenihan does or did advocate such controlled drinking; whether the general principles of SOS-type self-help groups include or exclude controlled drinking; and the extent to which defendant Lenihan himself did or does engage in such drinking. The Court finds such questions generally irrelevant to the determination of the issues in this case, beyond observing that the initial concepts articulated for the secular sobriety movement appeared to provide great freedom and latitude to the volunteers engaged in the movement. Nothing in the undisputed facts set out at pages 7-8 of the Joint Statement alters the Court's legal conclusions.
11. Each side shall bear its own attorneys fees and costs of litigation.
12. Counsel for counterclaimant SOS West shall prepare, submit to plaintiff for approval as to form and present to the Court a proposed injunction pursuant to California Business & Professions Code § 14402.
Dated: August 26, 1997