The opinion of the court was delivered by: Joe Billy McDADE, Chief District Judge.
According to the Complaint, Plaintiff World Church of the Creator is a
religious organization that espouses the doctrine of "Creativity." The
self-styled "Pontifex Maximus" ("highest priest") of this organization is
Matt Hale, who resides in East Peoria, Illinois. Defendant TE-TA-MA
Foundation Family of U.R.I., Inc. is a California corporation
headquartered in Oregon. Defendant James Germain is the president of
TE-TA-MA. Defendants registered the "Church of the Creator" trademark
with the United States Patent and Trademark Office ("PTO") that is at the
heart of this dispute. Defendants obtained this registration in 1988.
In 2000, Defendants filed a lawsuit alleging infringement of its
"Church of the Creator" mark under § 43(a) of the Lanham Act,
15 U.S.C. § 1114(a)(1), in the Northern District of Illinois. The
district court granted judgment in favor of Plaintiff, finding the term
"creator" to be generic. See TE-TA-MA Truth Foundation-Family of URI,
Inc., v. World Church of the Creator, 2002 U.S. Dist. LEXIS 1478
(N.D.Ill. Jan. 31, 2002). Upon appeal, the Seventh Circuit reversed the
district court's ruling and remanded the case back with instructions to
enter judgment in favor of Defendants. See TE-TA-MA Truth
Foundation-Family of URI, Inc., v. World Church of the Creator,
297 F.3d 662, 667 (7th Cir. 2002). Accordingly, the district court
entered judgment in favor of Defendants and enjoined Plaintiff from using
Defendants' mark and ordered Plaintiff to "deliver up for destruction"
all of its materials bearing the mark.
In the instant suit, Plaintiff seeks to: (1) enjoin Defendants from
using Defendants' registered "Church of the Creator" mark; (2) have the
Defendants deliver up for destruction any materials bearing the alleged
"disputed mark;" (3) have Defendants account for and disgorge any profits
derived from use of their mark, (4) have Defendants pay costs and
attorney's fees; (5) have Defendants pay punitive damages; and (6) cancel
the registration for Defendants' mark. (Plaintiff's Complaint pp. 9-10).
Res judicata is an affirmative defense. See Fed.R.Civ.P. 8(c). It
is a general principle of federal civil procedure that courts can raise
affirmative defenses sua sponte if it "is so plain from the face of the
complaint that the suit can be regarded as frivolous; and the district
judge need not wait for an answer before dismissing the suit." Walker
v. Thompson, 288 F.3d 1005, 1009 (7th Cir. 2002). This is the case here,
as further explained below.
The Court finds that this suit is barred by the application of res
judicata. "Under res judicata, `a final judgment on the merits bars
further claims by parties or their privities based on the same cause of
action.'" Brown v. Felsen, 442 U.S. 127, 147 (1979) (quoting Montana v.
United States, 440 U.S. 147, 153 (1979)). Accordingly, there are three
elements constituting res judicata. "There must be 1) an identity of the
parties or their privities, 2) an identity of the causes of action, and 3)
a final judgment on the merits." People Who Care v. Rockford Bd. of
Educ., 68 F.3d 172, 177 (7th Cir.
1995). In the instant case, the parties
are identical to those in the TE-TA-MA Truth Foundation-Family of URI,
Inc., v. World Church of the Creator, 2002 U.S. Dist. LEXIS 1478
(N.D.Ill. Jan. 31, 2002) case, and there has been a final judgment on the
merits in said case. The only remaining question before this Court is
whether both cases are based on the same cause of action.
Courts in this Circuit utilize the "same transaction" test for
determining the scope of a cause of action. See Car Carriers, Inc. v.
Ford Motor Co., 789 F.2d 589, 593 (7th Cir. 1986). Under this test, a
"cause of action" consists of a "`single core of operative facts' which
give rise to a remedy." Alexander v. Chicago Park District, 773 F.2d 850,
854 (7th Cir. 1985); see also, Mandarino v. Pollard, 718 F.2d 845, 849
(7th Cir. 1983). The "same transaction" test is "decidedly
fact-oriented." Car Carriers, Inc., 789 F.2d at 593. "Once a transaction
has caused injury, all claims arising from that transaction must be
brought in one suit or be lost. Thus, a mere change in the legal theory
does not create a new cause of action. . . . Therefore, prior litigation
acts as a bar not only to those issues which were raised and decided in
the earlier litigation but also to those issues which could have been
raised in that litigation." Id. (citations and quotations omitted).
Plaintiff's claims in the instant suit are aimed at the very validity
of Defendants' "Church of the Creator" mark, which formed the basis for
Defendants' prior trademark infringement suit. These claims, if borne
out, would mean that Defendants' mark is invalid and therefore ineligible
for protection under the Lanham Act since owning a "protectable mark" is
one of the pre-requisites for prosecuting a trademark infringement
claim. See 15 U.S.C. § 1114(1)(a); 15 U.S.C. § 1125(a); A.J.
Canfield Co. v. Vess Beverages, Inc., 796 F.2d 903, 906 (7th Cir. 1986)
(Under § 43(a) of the Lanham Act, a plaintiff must establish: (1)
that it has a protectable trademark; and (2) a "likelihood of confusion"
exists as to the origin of the defendant's products). As the validity of
Defendants' mark gives rise to the remedies in both cases, the Court
finds that this suit arises from the same cause of action as the
Defendants' earlier trademark infringement suit before the Northern
District of Illinois.
Additionally, by filing the instant suit, Plaintiff is really seeking
to circumvent the normal appellate review process and engage in a
"horizontal review" of the prior district court's ruling. Plaintiff's
requested relief would have the effect of nullifying the rights
established by Defendants in its prior trademark infringement action.
In such cases, the Seventh Circuit has recognized that "[b]oth
precedent and policy require that res judicata bar a counterclaim when its
prosecution would nullify rights established by a prior action. Judicial
economy is not the only basis for the doctrine of res judicata. Res
judicata also preserves the integrity of judgments and protects those who
rely on them." Rudell v. Comprehensive Accounting Corp., 802 926, 928
(7th Cir. 1986) (quoting Martino v. McDonald's System, Inc., 598 F.2d 1079,
1085, cert. denied, 444 U.S. 966, 100 S.Ct. 455, 62 L.Ed.2d 379 (1979)
(emphasis added)). See Restatement (Second) of Judgments § 22(2)(b)
(1982) (a defendant is precluded from raising a claim that could have
been raised as a counterclaim or a defense in the previous action if the
relationship between the claim now being raised and the counterclaim or
defense "is such that successful prosecution of the second action would
nullify the initial judgment or would impair rights established in the
initial action."). Accordingly, the Court finds that this case is barred
application of the doctrine of res judicata and is therefore dismissed
with prejudice. Each party is to bear its own costs.
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