Trademark Trial and Appeal Board
Patent and Trademark Office (P.T.O.)
*1 BRT HOLDINGS, INC. D.B.A. HOMEWAY FURNITURE
November 17, 1987
Hearing April 15, 1987
Opposition No. 68,231, to application Serial No. 386,401, filed September 17, 1982.
John G. Mills III and Mills and Coats, P.A. for BRT Holdings, Inc. d.b.a. Homeway Furniture
Harvey B. Jacobson, Robert C. Garber and Clarence A. Jacobson and Marsha G. Gentner for Homeway, Inc.
Opinion by Rice
An application has been filed by Homeway, Inc. to register the mark "HOMEWAY RENTALS" and design, as shown below,
for rental services in the field of home furnishings and appliances, [FN1] use since August 1, 1981 being asserted. Applicant has disclaimed the word "rentals" apart from the mark as shown.
Registration has been opposed by BRT Holdings, Inc., doing business as Homeway Furniture, essentially on the ground that applicant's mark so resembles the mark "HOMEWAY", previously used by opposer in connection with retail furniture store services, as to be likely to cause confusion, mistake, or deception. Opposer also pleaded ownership of a pending application to register its mark, [FN2] and further asserted that its predecessor, Homeway Furniture Co., was the owner of Registration No. 963,852, issued July 10, 1973 for the mark "HOMEWAY FURNITURE" and cancelled under the provisions of Section 8 of the Trademark Act of 1946.
Applicant, in its answer to the notice of opposition, has admitted that it did not use the mark "HOMEWAY RENTALS" or the word "HOMEWAY" prior to August 1, 1981, but has denied the remainder of opposer's allegations.
The record consists of the pleadings; the file of applicant's involved application; applicant's responses to certain interrogatories propounded by opposer; opposer's original and supplemental responses (including documents) to certain interrogatories propounded by applicant; a copy of the registration owned by opposer's alleged predecessor (no evidence was introduced to prove that the registrant was, in fact, a predecessor of opposer), copies of several third-party registrations, and a copy of a magazine advertisement, all made of record by applicant by notice of reliance; and testimony in behalf of each party. [FN3] Both parties have briefed the case and were represented at oral hearing.
The record in this case indicates that in December of 1980, opposer acquired 80% to 100% of the stock of six corporations (the specific percentage of stock acquired varies from corporation to corporation), each of which owned the assets of a retail furniture store doing business under the mark "HOMEWAY" [FN4] (although there is evidence pertaining to use of the mark by opposer's asserted predecessors in interest since 1973, we need not detail the evidence for purposes herein, since ultimately opposer's case must stand or fall on the December 1980 acquisitions and opposer's activities thereafter). The six stores are all located in North Carolina, namely, in Rockingham, Wadesboro, Laurinburg, Whiteville, Albemarle, and Lumberton, North Carolina. Since the time of the acquisition, opposer has continuously operated the six stores as "HOMEWAY" stores.
*2 The six stores sell not only furniture but also appliances, including televisions, stereos, washers, dryers, refrigerators, etc. The stores provide in-house financing to purchasers, and compete with any store that is selling or providing furniture and appliances to the consumer, including cash-and-carry operations, rental operations, rent-to-own operations, and operations that provide in-house financing. According to opposer's president, Mr. Bruce Taylor, most of the store customers are interested in acquiring an item, they want to know how much it will cost them a month, and "we work out a set of terms that is affordable to them."
"HOMEWAY" retail furniture store services have been advertised through such media as newspapers, radio, television, direct mail, classified telephone directories, give-aways, etc. Advertising expenditures for the six stores increased from $156,000 in 1980 to over $240,000 in 1983, while sales grew steadily from nearly $2,800,000 in 1980 to more than $4,280,000 in 1983.
Since August of 1981, applicant has been engaged in the business of providing, under the mark "HOMEWAY RENTALS" and design, rental services in the field of furniture, appliances, and electronics. The services are provided both through applicant's company-owned stores (of which there were 10 in 1985) and through franchised stores (19 in 1985). The stores are concentrated primarily in the state of Georgia, but there are also four stores in Alabama, and two in South Carolina (in Aiken and Charleston, both of which are in the southern part of the state, not far from the South Carolina-Georgia border).
Applicant's rental contracts range in length from one week to 18 months. Although most of the contracts are written for an 18-month term, the agreement can be terminated at any time with no penalty, and fewer than 25% of applicant's customers actually keep their rented goods for the full 18 months. If a customer does keep a rented item for 18 months, without missing any of his rental payments, applicant transfers title of the item to him, and there is no further charge. This "Rent To Own" feature of applicant's services is stressed in applicant's advertising materials and store signs. In addition, a customer can opt to buy a rented item prior to the expiration of the 18-month period, but he has to pay a high premium to do so.
Occasionally, a "HOMEWAY RENTAL" store may have a "yard sale" to dispose of used rental items which have come to the end of their useful rental life. Applicant's franchisees are otherwise precluded from engaging in the direct sale of goods. However, applicant's parent company, Warehouse Home Furnishings Distributors, Inc., ("Warehouse") operates a chain of 44 retail furniture and appliance stores in Georgia and Florida identified by the mark "FARMERS FURNITURE". According to applicant's witness, Jack Cammack, Executive Vice-President of Warehouse and Treasurer of applicant, the "HOMEWAY RENTAL" stores were started because Warehouse believed that there was a separate market niche, namely, the rental of home furnishings as opposed to the retail sale thereof, not being served by the "FARMERS FURNITURE" stores. Some of these "FARMERS FURNITURE" retail stores are located across the street from "HOMEWAY RENTAL" stores, and Mr. Cammack does not think that they cut into each other's markets.
*3 "HOMEWAY RENTALS" store services are advertised through a variety of media, including radio, television, newspapers, classified telephone directories, direct mailers, doorknob hangers, and store handouts. Applicant's advertising expenditures for company-owned "HOMEWAY RENTALS" stores were expected, as of the end of October 1985, to range around $150,000 for the 1985 year (this figure does not include expenditures by franchisees, who pay for their own local advertising). Applicant's "HOMEWAY RENTALS" revenues, including royalties from franchisees, were at least $500,000 per year for the first three years, and then began increasing, so that revenues for 1985 were expected to exceed $3,000,000.
The record also indicates that neither party is aware of any instances of actual confusion arising from their contemporaneous use of their respective marks, and that applicant was not aware of opposer until this opposition was filed. Applicant was advised by one of its employees, at about the time of its adoption of the mark "HOMEWAY RENTALS", that the mark "HOMEWAY" had previously been used in connection with retail furniture store services by Johnson Stores, Inc. (claimed by opposer herein to be one of its predecessors, with use of "HOMEWAY" for retail furniture store services beginning at least as early as September 19, 1973). However, applicant investigated the matter at that time and found out that Johnson Stores, Inc. "had gone out of business and was no longer using the name."
We turn first to the issues of standing and priority of use, both of which have been strenuously contested by applicant in its brief on the case and at oral hearing. Insofar as the matter of standing is concerned, it is settled that a plaintiff in a proceeding such as this may establish its standing to bring the proceeding by showing that it has a "real interest" in the case, that is, that it has a personal interest or stake in the outcome of the proceeding beyond that of the general public. See: Jewelers Vigilance Committee v. Ullenberg Corp., ___ USPQ ___, Appeal No. 86-1628 (CAFC June 9, 1987); Selva and Sons, Inc. v. Nina Footwear, Inc., 705 F.2d 1316, 217 USPQ 641 (CAFC 1983); and Lipton Industries, Inc. v. Ralston Purina Co., 670 F.2d 1024, 213 USPQ 185 (CCPA 1982). In the present case, even putting aside opposer's claim to a proprietary interest in the mark "HOMEWAY" for retail furniture store services, opposer owns a substantial portion (or, in one case, all) of the stock of the six corporations which own the physical assets of the six "HOMEWAY" retail furniture stores. Thus, any damage to the six corporations is likely to result also in financial injury to opposer. Under the circumstances, opposer clearly has standing to bring this proceeding. Cf. Jewelers Vigilance Committee v. Ullenberg Corp., supra; Universal Oil Products Co. v. Rexall Drug and Chemical Co., 463 F.2d 1122, 174 USPQ 458 (CCPA 1972); Tanner's Council of America, Inc. v. Gary Industries, Inc., 440 F.2d 1404, 169 USPQ 608 (CCPA 1971); Wilson v. Delaunay, 245 F.2d 877, 114 USPQ 339 (CCPA 1957); and cases cited in the foregoing cases.
*4 This brings us to the issue of priority of use. Opposer's case, as we have noted above, must stand or fall on the December 1980 stock acquisitions and its activities thereafter. In this regard, opposer claims, in effect, that it controls the nature and quality of the services rendered by the six "HOMEWAY" stores, and thus that their use of the mark inures to its benefit pursuant to the provisions of Section 5 of the Trademark Act of 1946, 15 U.S.C. 1055. [FN5]
Applicant, on the other hand, asserts that opposer, as a holding company, has failed to establish any use of the alleged mark "HOMEWAY" which lawfully would inure to its benefit prior to August of 1981, applicant's date of first use. In this regard, applicant contends that opposer has failed to prove that it acquired a controlling interest in the six corporations and also argues that opposer has not proved that it controls (and has controlled, since prior to August 1981) the nature and quality of the services rendered by the six "HOMEWAY" retail furniture stores.
Examples of applicant's specific arguments relating to the matter of the stock acquisitions include the arguments that the stock transfer agreements were only agreements to sell, which show the impending, not the actual, transfer of certain specified numbers of shares of stock in the six corporations to opposer; that none of the agreements (or testimony) indicated the total number of outstanding shares in each of the corporations as of December, 1980; that each of the six stock sale agreements contained a provision that opposer would obtain commitments from other shareholders owning at least 51% of the outstanding stock of the corporations to sell their stock to opposer; that thus it is clear that each agreement represented the intended sale of less than 51% of the outstanding stock of the six corporations, and that there is no basis for the inference that opposer did acquire 51% of the stock, or if it did, when; that two of the agreements required that opposer execute voting proxies in the names of the sellers listed in those agreements, which proxies were to be irrevocable for seven years from the date thereof, or for the joint lifetimes of the proxy holders, or until the payment of 80% of the purchase price and amount of debt owed, whichever period of time was shorter; that since there is no evidence relating to the lifetimes of the proxy holders or the payment of 80% of the outstanding debt, the record indicates that voting, and hence equitable, control of the stock shares remains with the sellers in these two agreements until at least December, 1987; that several agreements required opposer to place the stock to be transferred thereunder in negotiable form, to be held by the sellers as security for the debt owed; and that thus it is questionable whether opposer even had a legal interest in these particular stock shares.
We do not find applicant's arguments to be persuasive. Although the agreements themselves do not indicate what percent of the total outstanding shares of stock was to be transferred thereunder, there is repeated testimony by opposer's president, Mr. Bruce Taylor, that opposer acquired, in December of 1980, and still owns, 80% to 100% of the outstanding stock of the six corporations (the exact percentage owned by opposer varying from corporation to corporation). This testimony is convincing in nature and is not contradicted by any evidence. To the contrary, the stock transfer agreements and the copy of the "Affiliations Schedule" from opposer's federal income tax return for the tax year ended July 31, 1984 serve to support the testimony. The fact that each individual stock transfer agreement represented the intended sale of less than 51% of the outstanding stock of the six corporations does not mean that the six taken together represented the intended sale of less than 51%. Moreover, the proxy provisions and the "negotiable form" security agreement did not involve the stock of the corporation which owned the assets of the Lumberton store (Mr. Bruce Taylor testified that opposer acquired, in December of 1980, and still owns, 80% of the stock of this corporation). Use of the mark "HOMEWAY" through this store alone, if such use was and is controlled by opposer, would be sufficient to establish opposer's prior proprietary rights in the mark. Aside therefrom, the facts that the sellers of some of the stock of the other corporations retained (as security under the agreement) the voting rights thereto for a period of time, and that some sellers retained, as security, physical possession of the shares of stock involved in their agreements, do not establish that opposer did not acquire an ownership interest in the stock, [FN6] much less that opposer did not acquire rights in the mark "HOMEWAY" through the exercise of actual control over the nature and quality of the services rendered by the six stores under the mark. We note also, in this regard, that the individuals who owned the outstanding shares of the stock of the six corporations (and of Rustin Furniture Company of Greensboro, Inc.) prior to the sale of 80% to 100% of the stock to opposer were primarily members of Mr. Bruce Taylor's family.
*5 Further, we believe that the evidence is sufficient to show prima facie that opposer does in fact exercise control over the nature and quality of the services rendered by the six stores under the mark "HOMEWAY". The evidentiary factors which we find persuasive on this point include (1) Bruce Taylor's testimony that opposer has continuously operated and managed the "HOMEWAY" stores since December of 1980; (2) testimony by Mr. Roger Taylor, Vice-President of opposer, that he is in charge of merchandising, coordination, advertising, planning, and personnel; that these have been his duties ever since December of 1980; that he visits the six stores regularly (i.e., no less than once every month, he visits 80% of the stores); that prior to 1980 he worked for two partnerships which successively managed the six stores during the years 1975 until 1980, and his duties were the same then as they are now; and that (while each store is responsible for preparing and placing its own advertisements) he is responsible for giving the managers advertising ideas and takes part in the creation of advertisements; (3) Bruce Taylor's testimony that opposer has at its headquarters the corporate records for the six corporations; and (4) a provision in several of the stock transfer agreements that as long as opposer's outstanding debt under the agreement remained unpaid, opposer was to provide the seller(s) with audited annual accounting reports and other available operating data of the involved companies and allow the seller(s) to examine the company books and invite the seller(s) to attend all stockholder meetings. This evidence, considered together, convinces us that opposer is not a mere holding company, but rather actively operates and manages the six "HOMEWAY" stores, and has done so since December 1980. Under the circumstances, we conclude that the use of the mark by the six stores inures to the benefit of opposer (and has done so since December 1980) under the provisions of Section 5 of the Trademark Act of 1946, 15 U.S.C. 1055, and hence that opposer has priority of use, applicant's use not having commenced until August of 1981.
We turn then to the issue of likelihood of confusion. Both parties have store services through which they provide furniture, appliances, and electronics (such as stereos and televisions) to consumers, the only difference being that opposer sells the goods while applicant rents them. Moreover, opposer provides in-house financing to purchasers of its goods, so that a purchaser can obtain goods by making a monthly payment. Applicant also provides goods for a monthly payment, and customers who keep their rented goods and continue to make rental payments until the expiration of their rental contract wind up owning the goods. It is clear that the respective services of the parties are very closely related, and we have no doubt that the offering of these services by different parties under the same or similar marks would be likely to cause confusion.
*6 As to the marks, opposer's mark "HOMEWAY" is and has been, since prior to applicant's date of first use, used both in all capital letters and in the form "HomeWay". Moreover, despite applicant's arguments to the contrary, the mark "HOMEWAY", considered in its entirety, is not descriptive or "weak" as applied to retail furniture store services.
Applicant seeks to register its mark in the form "HomeWay Rentals", with a design of a house between the two words. The disclaimed term "Rentals", which merely names the method by which applicant provides goods to customers, is devoid of origin-indicating significance, and the design of a house simply serves to illustrate and emphasize the word "Home". Manifestly, it is the word "HomeWay" which dictates and dominates the commercial impression created by applicant's mark as a whole.
Comparing applicant's mark, in its entirety, with opposer's mark, we believe that the marks create substantially identical commercial impressions, and that the use of these marks by opposer and applicant in connection with their closely related services is likely to cause confusion, mistake, or deception. While applicant's rental operation may appeal to a different market segment than opposer's retail sale operation, the rental versus retail sale distinction does not serve to preclude confusion as to source. To the contrary, it appears to us that customers who encounter these two types of stores identified by the marks of the parties are almost inevitably likely to conclude, because of the similarity in the marks and the close relationship between the services, that these stores are affiliated with one another, that is, that the services which they offer stem from the same ultimate source.
The lack of evidence of actual confusion is not persuasive of a different conclusion in this case. [FN7] First, this factor (as well as the fact that the goods involved in this case are expensive, rather than impulse, items) is far outweighed by the strong similarities in the marks and services. Second, inasmuch as there has not yet been any real geographical overlap in the activities of the parties, there has not been any real opportunity for confusion to arise. Third, evidence of actual confusion is notoriously difficult to come by, and the test under Section 2(d) of the Statute is likelihood of confusion, not actual confusion.
We have carefully considered other arguments offered by applicant, but not specifically detailed herein, with respect to the various issues in this case, but do not find any of them to be persuasive of a different result. [FN8]
Decision: The opposition is sustained, and registration to applicant is refused.
J. E. Rice
L. E. Rooney
R. L. Simms
Members, Trademark Trial and Appeal Board
FN2. One year after commencement of this proceeding, opposer's pleaded application, Serial No. 439,783 filed August 17, 1983 with a claimed date of first use of March 1, 1972, matured into Registration No. 1,295,201 issued September 11, 1984 for the mark "HOMEWAY" for retail store services specializing in furniture. That registration is the subject of a pending cancellation proceeding filed by the applicant herein, namely, Cancellation No. 15,333.
FN3. Materials attached to opposer's brief on the case, and not previously introduced as evidence in accordance with the applicable rules, can be given no consideration herein.
FN4. On February 1, 1985, applicant filed a motion to strike ten of opposer's exhibits, and testimony related thereto, on the ground that the exhibits and related information should have been, but were not, furnished to applicant in response to applicant's interrogatories and requests for production of documents. In an action mailed July 8, 1985, the Board denied all of a motion to compel filed by applicant on January 8, 1985 except for that part of the motion relating to applicant's interrogatory 15. In the same action, the Board deferred determination of applicant's motion to strike until final hearing. In its brief on the case, filed July 25, 1986, applicant argued only that opposer's Exhibits 10 and 11, and related testimony, should be stricken. Accordingly, that portion of applicant's original motion which sought to strike eight of opposer's other exhibits, and related testimony, is deemed to have been waived or withdrawn (and properly so, in our opinion, in view of the Board's disposition of applicant's motion to compel).
Applicant's interrogatory 14 asked whether opposer's mark had ever been the subject of an oral or written assignment. Interrogatory 15 requested that if the response to interrogatory 14 was other than an unqualified negative, opposer provide certain information for each such assignment. The requested information included the date and place of the assignment, whether it was oral or written, the identity of the assignor and assignee, whether the goodwill in any business was transferred as part of or in connection with the assignment, whether the assignor was still doing business at the time of the assignment, whether the assignment was one in bankruptcy, and the identity of all documents which evidenced or referred or related in any way to the assignment. Applicant also asked, in its associated request for production of documents, that opposer produce all documents identified in its response to interrogatory 15, and produce all documents reflecting or containing information used in the preparation of, or relating in any way to, opposer's responses to applicant's interrogatories.
Opposer, in its original answers to applicant's interrogatories, answered "yes" to applicant's interrogatory 14. In its answer to interrogatory 15, opposer provided information about an agreement whereby, on May 12, 1975, its asserted predecessor in interest, Johnson Stores, Inc., being in bankruptcy, sold to Rustin Furniture Company of Greensboro, Inc. (referred to in the answer as "Opposer's immediate predecessor") the assets of three stores (located in Rockingham, Wadesboro, and Laurinburg, North Carolina) along with the exclusive right to use the name "Homeway Furniture" in the trading areas (only) of the stores. In connection therewith, opposer provided to applicant a copy of the written agreement in question. Moreover, opposer stated, in its written response to applicant's request for production of documents, that it objected to producing the documents at the offices of applicant's counsel because of the large volume of documents, but that the documents would be made available for review and copying by applicant's counsel at opposer's headquarters in Greensboro, North Carolina. Applicant never availed itself of this offer. Thereafter, in conversations with opposer as to applicant's dissatisfaction with some of opposer's discovery responses, applicant pointed out that opposer had failed to provide any information as to transfer of rights in the mark "HOMEWAY" from Rustin to opposer. In a supplemental response to applicant's requests for discovery, opposer provided to applicant copies of what opposer described, in its supplemental response to interrogatory 15, as "copies of the various agreements that show the chain of title with respect to various 'Homeway' stores and also show the various agreements that relate to the mark 'Homeway.' " The agreements in question were the 1980 agreements by which several individuals agreed to sell to opposer their shares of stock in the six corporations which owned the assets of the six "HOMEWAY" stores, as well as their shares in Rustin Furniture Company of Greensboro, Inc. No further information about these agreements, beyond that quoted above, was provided in opposer's supplemental answer to applicant's interrogatory 15. The agreements make no mention of the name or mark "HOMEWAY"; they relate only to the sale of stock.
During the testimony depositions of its two witnesses, opposer offered as exhibits a number of documents (including opposer's Exhibits 10 and 11), which had not been produced in response to applicant's request for production of documents. Opposer's Exhibit 10 consisted of three separate proposals, all dated May 29, 1975, whereby Rustin Furniture Company of Greensboro, Inc. offered to sell the physical assets and leases of the three stores which it had acquired from Johnson Stores, Inc. to three of the six corporations later acquired by opposer (that is, Rustin proposed to sell the assets of the Rockingham store to BMRT Corporation of Rockingham, Inc., the assets of the Wadesboro store to BRT Corporation of Wadesboro, Inc., and the assets of the Laurinburg store to BRT Corporation of Laurinburg, Inc.). The proposals, each of which was signed by the corporation in question under the word "ACCEPTED", made no mention of the name or mark "HOMEWAY". In related testimony, opposer's president, Mr. Bruce Taylor, testified that immediately after Rustin acquired the assets of the three stores from Johnson Stores, it spun the assets of the stores off to form the three aforesaid corporations, and that all the while the three stores continued to be operated under the mark "HOMEWAY". Exhibit 11 is a copy of the "Affiliations Schedule" from opposer's federal income tax return for the tax year ended July 31, 1984. The schedule shows the number of the shares of outstanding stock owned by opposer in each of the six "HOMEWAY" store-owning corporations, and the percent of voting power opposer has in each, as well as the number of the shares and the percent of voting power which opposer owns in Rustin Furniture Company of Greensboro, Inc. and in other corporations. In the schedule, opposer is listed as the "common parent corporation" and the other corporations are listed as subsidiaries.
We cannot agree with applicant's argument that opposer's Exhibits 10 and 11, and the information contained in related testimony, should have been furnished to applicant in response to applicant's interrogatory 15 and associated requests for production of documents. Neither exhibit involves or relates to an "assignment" of the mark "HOMEWAY". Indeed, the only evidence offered by opposer herein relating to anything like an assignment is the agreement (and related testimony) between Johnson Stores, Inc. and Rustin Furniture Company of Greensboro, Inc. (applicant itself argues that even this document is not a real assignment). As noted above, opposer, in its original responses to applicant's requests for discovery, provided to applicant both a copy of this agreement and also the specific information relating thereto which was requested in applicant's interrogatory 15. Moreover, opposer voluntarily supplied to applicant, in a supplemental response to interrogatory 15, additional material which clearly did not fall within the scope of the interrogatory. Under the circumstances, applicant's motion to strike is denied.
FN5. Section 5 of the Act provides that where a registered mark or a mark sought to be registered is or may be used legitimately by related companies, such use shall inure to the benefit of the registrant or applicant for registration and such use shall not affect the validity of such mark or of its registration, provided such mark is not used in such manner as to deceive the public. The term "related company" is defined in Section 45 of the Act, 15 U.S.C. 1127, as "any person who legitimately controls or is controlled by the registrant or applicant for registration in respect to the nature and quality of the goods or services in connection with which the mark is used."
FN6. Although the sellers were to retain physical possession of the stock shares in negotiable form, it is clear that the stock was to be in opposer's name. For example, some of the agreements specifically provided that in the event of default, the seller would have the right to immediately transfer the shares of stock held as security into his own name and to vote said shares pending any disposition or settlement.
FN7. Similarly, the three third-party registrations made of record by applicant are without any particular persuasive value. All three of them (two of the three are owned by the same party) are for goods and services unrelated to those involved in this case.
FN8. In this regard, we note that Monorail Car Wash, Inc. v. McCoy, 178 USPQ 434, 435-436, fn. 1 (TTAB 1973), cited by applicant in footnote 1, page 5 of its brief, pertained to evidence of use by an opposer's related company of an unpleaded mark, which is not the case here.