Fourth Circuit Dismisses “OBX” Trademark Infringement Suit Versus Bicast

Holding:

In this trademark infringement suit, the U.S. Court of Appeals for the Fourth Circuit upheld a district court’s ruling that the “OBX” mark had become generic or a geographically descriptive term without secondary meaning. Plaintiff OBX-Stock, Inc. (“OBX-Stock”) coined this term as an abbreviation for the region called “Outer Banks” of North Carolina, and obtained trademark registrations for selling goods and services. Plaintiff alleged trademark infringement and requested an injunction when defendant Bicast, Inc. began selling stickers with the text "OB Xtreme." The U.S. District Court for the Eastern District of North Carolina ruled against plaintiff. Specifically, the district court found that plaintiff lacked a secondary meaning as the term is associated with a geographic location. On appeal, the Fourth Circuit affirmed the questioned decision. The Fourth Circuit explained that OBX-Stock never attempted to associate the geographically descriptive abbreviation for Outer Banks with its products or itself, but rather with the Outer Banks as a location. The Fourth Circuit thus concluded that the district court did not err in holding that OBX is not a valid trademark.

Detailed Summary:

By way of background, James Douglas, the founder of OBX-Stock, invented “OBX” as an abbreviation for the “Outer Banks” of North Carolina. OBX-Stock began using the letters OBX on oval stickers for automobiles to indicate that the automobile was from or had visited the Outer Banks. Plaintiff attached these letters to souvenirs and other sundries to indicate that they were sold at the Outer Banks.

The Outer Banks of North Carolina is a geographical region consisting of approximately 200 miles of barrier islands off the coast of North Carolina. The Outer Banks, which encompasses several counties and numerous towns, is a major attraction for vacationers, windsurfers, paragliders, hang gliders, as well as sunbathers and swimmers.

After obtaining trademark registrations, OBX-Stock undertook efforts to police its trademarks, sending out cease-and-desist letters.

Bicast, Inc., was the target of one of the OBX-Stock’s cease and desist letters because it sold oval stickers bearing “OB Xtreme” in pink cursive script. While Bicast had long sold products bearing “OB” for the Outer Banks, in 2003, it began producing stickers that added the “Xtreme” language to denote the wide variety of extreme sports available at the Outer Banks. When Bicast refused OBX-Stock’s demand to cease and desist, OBX-Stock commenced the present action. On Bicast’s motion, the district court granted summary judgment in favor of Bicast.

In finding for Bicast, the district court concluded that OBXStock “ha[d] not established ownership in a valid trademark” because it failed to present any evidence of secondary meaning. Opinion, p. 6. The district court noted that the evidence indicated overwhelmingly that “OBX” is “a geographically descriptive or generic term for the Outer Banks” and that no evidence was presented to show that “any consumer associates OBX with Plaintiff’s products or Plaintiff itself.” Id.

From the district court’s judgment dated June 11, 2006, OBX-Stock filed this appeal, challenging the summary judgment entered in favor of Bicast. Bicast filed a cross-appeal, challenging the district court’s refusal to cancel the OBX registrations.

In this appeal, the Fourth Circuit affirmed the district court’s determination.  Specifically, the Fourth Circuit agreed with the district court’s holding that there is no evidence on record that any consumer associates PBX with plaintiff’s products or plaintiff itself.  The Fourth Circuit explained that OBX-Stock never attempted to associate the geographically descriptive abbreviation for Outer Banks with its products or itself, but rather with the Outer Banks.

The Fourth Circuit rejected OBX-Stock’s argument that its four certificates of registration on the Principal Register of the PTO provided evidence of secondary meaning. The Fourth Circuit reasoned that entry on the Principal Register does not shift the burden of persuasion on validity, merely the burden of production. Id., p. 11, citing Retail Services, Inc. v. Freebies Publ’g, 364 F.3d 535, 542 (4th Cir. 2004).

The Fourth Circuit noted that the letters OBX had the potential of becoming a valid and enforceable trademark to identify an OBX brand product and OBX-Stock as the source of the product. But the Fourth Circuit qualified that from the beginning, Douglas, the inventor of “OBX,” never intended that OBX be associated with a product as its brand or source.

Rather, Douglas intended solely that OBX become associated with and descriptive of a geographical location, the Outer Banks. The Fourth Circuit observed that Douglas repeatedly stated this fact in his deposition, and continued to maintain it in arguments made on appeal.

The Fourth Circuit gave the example of a T-shirt with OBX on it: according to the Fourth Circuit, such shirt does not indicate that the consumer bought an OBX brand T-shirt or that the T-shirt was a product of OBX-Stock. Rather, the letters OBX indicate that the T-shirt was purchased at the Outer Banks of North Carolina or is promoting the Outer Banks. Such a mark on plaintiff’s product is not the secondary meaning that allows a geographically descriptive word to indicate, by usage and promotion, its product or source of its own product.

At bottom, the Fourth Circuit concluded that the district court did not err in concluding that OBX is a geographically descriptive abbreviation that has no secondary meaning and therefore is not a valid trademark.

On the matter of Bicast’s cross-appeal, the Fourth Circuit rejected Bicast’s argument that the district court abused its discretion in failing to order the Patent and Trademar Office (“PTO”) to cancel plaintiff’s registrations under 15 U.S.C. § 1119.

The Fourth Circuit wrote that the district court correctly ruled that Bicast did not file a counterclaim for cancellation, choosing simply to argue the point as part of its motion for summary judgment on OBX-Stock’s claims. Id., p. 13, citing 37 C.F.R. §§ 2.106(b), 2.114(b).

The Fourth Circuit added that Bicast has received an adequate remedy through the district court’s summary judgment in its favor. The district the court’s final advcerse decision on trademark validity will preclude OBX-Stock’s marks from becoming incontestable. Id., citing 15 U.S.C. § 1065(1).

Also See:

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