Holiday Inns, Inc. v. 800 Reservation, Inc. - 86 F.3d 619 (6th Cir. 1996)

Rule:

Telephone numbers may be protected as trademarks and that a competitor's use of a confusingly similar telephone number may be enjoined as both trademark infringement and unfair competition. Telephone numbers that correlate with generic terms may be entitled to protection.

Facts:

Since 1952, Holiday Inns has operated an international chain of hotels through both franchise agreements and on its own, utilizing the name "Holiday Inn." Holiday Inns, Inc. owns registration in the United States Patent and Trademark Office for several service marks, including the "Holiday Inn" mark, which was registered in 1954. Holiday Inns has invested a great deal of time, money, and effort to increase the traveling public's awareness of its 1-800-HOLIDAY phone number, which can be dialed to secure reservations or to obtain information about lodging facilities. According to the vice president of Holiday Inns's marketing, the company's vanity number is included in virtually all of its extensive media, print, and radio advertisements. The telephone number is not, however, officially registered as a trademark.

On the other hand,Call Management operates as a "service bureau," formed to assist business customers in obtaining and processing their 1-800 numbers. Albert H. Montreuil, the 50% owner of Call Management, admitted that through his experience with Call Management and its 1-800 numbers, he became aware of the fact that consumers frequently misdial vanity numbers. The most common mistakes made by consumers occur when they dial the number "0" (zero) for the letter "O" and the number "1" (one) for the letter "I." If the complementary numbers dialed in error are not in active use, callers receive a busy signal or a recorded message that indicates that the number is not in service. Indeed, the phenomenon of misdialed vanity numbers is apparently so well known that businesses and hotel chains like the Marriott and Red Roof Inns, for example, subscribe to both their vanity and complementary numbers in order to ensure receiving calls from all their potential customers. Holiday Inns, however, neglected to take this precaution and did not reserve any complementary numbers. When Montreuil discovered that numbers complementing 1-800-HOLIDAY had not been reserved, he decided, in May 1993, to reserve them for Call Management. In fact, Montreuil freely admitted during the preliminary injunction hearing that his "sole purpose" in choosing the 405 number was to intercept calls from misdialed customers who were attempting to reach Holiday Inns, and he acknowledged that his company reaped benefits in direct proportion to Holiday Inns's efforts at marketing 1-800-HOLIDAY for securing reservations.

On June 15, 1993, Call Management entered into a verbal agreement with defendant Earthwinds, by which Earthwinds agreed to process calls from customers on the 405 number in return for 10% of all commissions received for placing hotel bookings. The parties further agreed that Earthwinds would answer calls on this 800 service until defendant 800 Reservations was ready to begin operations on its own. On August 18, 1993, Call Management terminated its arrangement with Earthwinds. As a result, the 405 number was not operational from August 18 to August 20, 1993, when it was reactivated for use by 800 Reservations. At that time, however, Holiday Inns filed suit and moved for a temporary restraining order to enjoin defendants' use of the 405 number. It also sought to restrain defendants from using the "Holiday Inns" trade name or trademark in connection with the advertising or sale of products or services, from representing themselves to be connected with Holiday Inns, and from injuring Holiday Inns's business reputation. Also, Holiday Inns moved for a partial summary judgment as to the defendants' liability for trademark infringement and unfair competition under the Lanham Act and requested that the district court limit the trial to issues involving the extent and nature of relief to be afforded the plaintiff. The district court granted the motion for partial summary judgment, denied Call Management and 800 Reservations' motion to modify the preliminary injunction, and denied the cross motions for summary judgment filed by the defendants. Subsequently, the district court entered a final judgment converting its preliminary injunction into a permanent injunction and enjoining Call Management from activating or operating its 405 number. 

Issue:

Did the defendants violate the Lanham Act by their "use" of Holiday Inns's trademark?

Answer:

No.

Conclusion:

Although Holiday Inns owns trademark rights in its vanity number 1-800-HOLIDAY, it cannot claim such rights to the 405 number. It follows that the defendant, Call Management, is the rightful assignee of the telephone number 1-800-405-4329. The plain language of § 32 of the Lanham Act forbids only the "use in commerce [of] any reproduction, counterfeit, copy, or colorable imitation of a registered mark . . . which . . . is likely to cause confusion." Additionally, § 43(a) of the Act provides a cause of action only against "[a] person who . . . uses in commerce any word, term, name, symbol, or device . . . or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact . . . ." The defendants in this case never used Holiday Inns's trademark nor any facsimile of Holiday Inns's marks. Moreover, the defendants did not create any confusion; the confusion already existed among the misdialing public. The defendants forward a plausible argument that the service bureau and its travel agents may have helped dispel the confusion by answering calls that would have gone unanswered and informing the customers of their error. In addition, Holiday Inns neglected to take the simple precaution of reserving its complementary number -- a practice which many of its competitors have chosen to take. Even the district court candidly admitted in its opinion that the defendants did not violate the letter of the Lanham Act. Holiday Inns also acknowledges that "given the creative nature of the scheming mind, the law cannot hope to spell out every forbidden act but must be content with general rules which limit competition to that which is fair and 'stop people from playing dirty tricks.'" Thus, both the district court and Holiday Inns acknowledge that the defendants never used a mark or a deceptively similar copy of a mark owned by Holiday Inns -- an essential element of proof of a Lanham Act violation.

Despite its failure to make this threshold showing, however, Holiday Inns still argues that a "likelihood of confusion" existed among consumers and that such probable confusion establishes the Lanham Act violation. Holiday Inns, in fact, insists that all eight factors which tend to establish the existence of a "likelihood of confusion" undermine the defendants' position in this case. In particular, Holiday Inns emphasizes that the defendants intended to intercept calls meant for 1-800-HOLIDAY and cites Frisch's Restaurants, Inc. v. Elby's Big Boy, Inc., for the proposition that the "intent of defendants in adopting [their mark] is a critical factor, since if the mark was adopted with the intent of deriving benefit from the reputation of [the plaintiff,] that fact alone may be sufficient to justify the inference that there is confusing similarity." Nevertheless, the defendants' use of a protected mark or their use of a misleading representation is a prerequisite to the finding of a Lanham Act violation. Absent such a finding, the eight-factor test of Frisch's Restaurants, Inc. is irrelevant. Holiday Inns does not offer, and the court’s own research has not produced, a case in which the defendant neither used the offending mark nor created the confusion and yet was deemed to have committed a trademark infringement. We believe that stretching the plain language of the Lanham Act to cover the present dispute is unjustified. As a matter of law, therefore, Call Management, 800 Reservations, and Earthwinds Travel did not violate §§ 32 and 43 of the Lanham Act by the use of the 405 number.