United States District Court, N.D. Illinois, Eastern Division
American National Insurance Company, a Texas Insurance Company, Plaintiff,
American National Investment Advisors, LLC, an Illinois Limited Liability Company, Defendant
For American National Insurance Company, a Texas Insurance Company, Plaintiff: William A. Chittenden, III, LEAD ATTORNEY, Julie Freund Wall, Chittenden, Murday & Novotny, LLC, Chicago, IL; Margaret A Boulware, PRO HAC VICE, Boulware & Valoir, Houston, TX; Michael D LeBlanc, Greer Herz & Adams, LLP, League City, TX.
For American National Investment Advisors, LLC, an Illinois Limited Liability Company, Defendant: Edward Timothy Walker, James Austin Christman, LEAD ATTORNEYS, Edwards Wildman Palmer LLP, Chicago, IL; George Edward Bullwinkel, LEAD ATTORNEY, Naperville, IL.
MEMORANDUM OPINION AND ORDER
John Z. Lee, United States District Judge.
In October 2009, Defendant American National Investment Advisors, LLC (" ANIA") began offering investment advisory and financial planning services to clients in the Chicago area under the name " American National." By that time, however, Plaintiff American National Insurance Company (" ANICO"), an insurance company based in Texas, had already registered the trademark " American National, " and related permutations of " American National, " for use in connection with the various insurance and financial services it offered. ANICO requested that ANIA cease from using " American National" in connection with its business. When ANIA refused, ANICO commenced this lawsuit, asserting claims for trademark infringement and false designation of origin pursuant to the Lanham Act, 15 U.S.C. § § 1114, 1125(a); trademark infringement and unfair competition under Illinois common law; violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. 505/1; and violations of the Illinois Uniform Deceptive Trade Practices Act, 815 Ill. Comp. Stat. 510/1.
Having considered the evidence presented during the three-day bench trial as well as the numerous post-trial submissions, the Court finds that Defendant ANIA's use of " American National" infringes upon Plaintiff ANICO's " American National" mark as set forth in Registration No. 1, 837, 021. As discussed below, the Court finds no sufficiently compelling evidence to invalidate this registration. Furthermore, the similarity of ANIA's mark to ANICO's '021 mark, coupled with the similarity of goods and services sold under the parties' respective marks, creates a likelihood of consumer confusion sufficient to support findings of infringement and false designation of origin under the Lanham Act. Having satisfied the Lanham Act test, ANICO also succeeds on its Illinois statutory and common law claims for trademark infringement, unfair competition, and deceptive trade practices. Accordingly, the Court enters judgment in favor of ANICO and against ANIA as to Counts I through V of the Complaint with respect to the mark " American National" as set forth in Registration No. 1, 837, 021. As for ANICO's other federally registered trademarks, the Court finds that ANICO has failed to prove by a preponderance of the evidence that a likelihood of confusion exists with respect to these marks and enters judgment in favor of ANIA in this regard.
I. Procedural History
On June 13, 2011, ANICO filed a complaint against ANIA, which asserted five causes of action:
I. Federal trademark infringement in violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114, for using a counterfeit or colorable imitation of ANICO's federally registered " American National" marks;
II. Federal unfair competition in violation of Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a), for creating a false designation of origin or misleading representations by using the mark " American National";
III. State common law trademark infringement, for using ANICO's existing " American National" marks in a way likely to cause confusion, mistake or deception to the public;
IV. State statutory and common law unfair competition claims pursuant to the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Uniform Deceptive Trade Practices Act, 815 Ill. Comp. Stat. 505/1-12 and 815 Ill. Comp. Stat. 510/1-7 respectively, and Illinois common law, for creating a likelihood of confusion, mistake, or deception with the public as the origin of ANIA's goods and services; and
V. State statutory trademark dilution in violation of the Illinois Anti-Dilution Act, 765 Ill. Comp. Stat. 1035/15, for diluting the distinctiveness and identifiability of ANICO's " American National" marks.
Dkt. 1 (Compl.) at 4-7. The complaint sought recovery of lost profits, treble damages, attorney's fees, and an injunction regarding ANIA's alleged unauthorized use of the name " American National." Id. at 8-9.
On July 12, 2011, ANIA filed its answer to the complaint and raised five affirmative defenses, asserting that: (1) the mark " American National" was merely descriptive, mis-descriptive, geographically descriptive, or otherwise lacking in distinctiveness; (2) the complaint failed to state a claim upon which relief could be granted; (3) the claims were barred by the doctrines of laches and estoppel; (4) ANICO abandoned its '021 mark; and (5) ANICO perpetrated a fraud on the USPTO when registering the '021 mark. Dkt. 10 (Ans.) at 9-13.
On July 5, 2012, ANIA asked the Court to stay these proceedings pending the outcome of the USPTO's cancellation proceeding for one of the registered marks at issue. Dkt. 43. In that proceeding, ANIA had petitioned the USPTO's Trademark Trial and Appeal Board (" TTAB") to cancel the mark. Id. at 4. This motion was denied. Dkt. 46.
ANICO subsequently moved for summary judgment on ANIA's first, third, fourth, and fifth affirmative defenses. Dkt. 72. The Court granted summary judgment in favor of ANICO as to the first affirmative defense, holding that ANICO's '021 mark is incontestable. ANIA's third affirmative defense was withdrawn, and the remainder of the motion was denied. Dkt. 97. The Court then conducted a three-day bench trial on ANICO's claims and ANIA's remaining affirmative defenses. In its post-trial brief, ANICO withdrew the claim of state trademark dilution asserted in Count V of its complaint, which was based upon an Illinois statute that had been repealed in 1998. Dkt. 103 (Pl.'s Post-Trial Br.) at 2.
II. Standard of Decision
Where an action is " tried on the facts without a jury, " Fed.R.Civ.P. 52 requires the district court to " find the facts specially and state its conclusions of law separately." Fed.R.Civ.P. 52(a); see Khan v. Fatima, 680 F.3d 781, 785 (7th Cir. 2012). " The district court must 'explain the grounds' of its decision and otherwise demonstrate a 'reasoned, articulate adjudication.'" Susan Patterson Interiors, Inc., v. Tobias, No. 11-C-221, 2012 WL 4578694, at *3 (N.D.Ill. Oct. 1, 2012) (quoting Arpin v. United States., 521 F.3d 769, 776 (7th Cir. 2008)).
In rendering its decision in this case, the Court has considered the admissible testimony and documentary evidence offered at trial. In so doing, the Court has considered the weight to be given to the evidence and has assessed the credibility of the witnesses in light of their demeanor, their ability to see, hear, and know the matters about which they testified, and any potential for bias. Furthermore, the Court has considered the memoranda submitted by the parties after the trial and the legal and factual arguments set forth therein.
III. The Trial
During the trial, ANICO presented evidence of the validity of its trademarks and the likelihood of confusion caused by ANIA's use of the name " American National." ANIA disputed the validity of ANICO's '021 registration on the grounds of abandonment and fraud, and further argued against a likelihood of confusion caused by ANIA's use of its mark.
A. Fact Witnesses
ANICO called Deborah Janson, Dwain Akins, and Max Davenport as fact witnesses. Ms. Janson is vice president of corporate planning at ANICO and provided testimony regarding ANICO's financial products, entity structure and operations, and market strength. Mr. Akins is a senior vice president of corporate relations and chief compliance officer at ANICO. He attested to ANICO's financial products, entity structure, and operations. Mr. Davenport, a multiple line general agent at ANICO, testified regarding ANICO's financial products and the activities of ANICO's agents.
For its part, ANIA presented Peter C. Claeys. Mr. Claeys is the founder and president of ANIA, and testified regarding ANIA's financial services and operations.
B. Expert Witnesses
ANICO presented Timothy C. Pfeifer as an expert witness. Mr. Pfeifer is an actuarial consultant in the area of insurance and investment products. He opined as to the likelihood of consumer confusion caused by use of the " American National" mark.
ANIA called Thomas J. Maronick as an expert witness. Dr. Maronick is a professor of marketing at Towson University and a former director of impact evaluation in the Bureau of Consumer Protection at the Federal Trade Commission. He testified regarding the results of a consumer survey that he performed to evaluate the likelihood of consumer confusion caused by ANIA's use of the name " American National."
On rebuttal, ANICO tendered Gabriel M. Gelb, a professional market researcher, as an expert witness. Mr. Gelb testified regarding survey research generally and Dr. Maronick's survey in particular.
Based upon the evidence admitted at trial and the post-trial submissions of the parties, the Court enters the following findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).
IV. Factual Background
ANICO is an insurance company founded in 1905 and headquartered in Galveston, Texas. Dkt. 92 (Stipulations) at 12. It creates insurance and financial products and provides other financial services tied to its core insurance business. Id. Over the years, ANICO has expanded its offerings to include a wider array of other financial and investment-related products, including variable annuities and other variable products, in-house funds bundled into its products, retail mutual funds, securities brokerage, and investment and financial consulting services. Id. at 12-13.
ANICO has offered these products through a somewhat complicated network of subsidiaries, licensees, and agents. According to Mr. Akins of ANICO, the United States Securities and Exchange Commission (" SEC") and applicable state regulations generally dictate that a company must segregate its insurance-related assets from its customer securities. Dkt. 106 (Trial Testimony, hereinafter, " Tr.") at 170:20-171:13; see generally 17 C.F.R. § 240.15c3-3 (requiring segregation of customer securities); 215 Ill. Comp. Stat. 5/274 (requiring segregation of insurance accounts). In addition, ANICO, while registered to provide insurance products, does not directly broker securities such as mutual funds or variable products to the public. Instead, it does so through its subsidiaries and agents. Dkt. 106, Tr. at 146:16-147:4, 178:20-24.
B. ANICO's Subsidiaries SM& R and ANRIA
ANICO's family of insurance and financial products have generally been offered under the " American National" mark, although the subsidiaries that manage and sell the products have not always taken the " American National" brand as a company name. Specifically, from 1967 to 2010, ANICO operated a wholly-owned subsidiary called Securities Management and Research, Inc. (" SM& R"). Id. at 155:14-25, 166:11-167:5, 168:15-17. SM& R was the principal underwriter, broker-dealer, and investment advisor for ANICO's retail mutual fund and general investment advisory business. Id. SM& R also supervised a subset of ANICO's agents who were licensed with the SEC to sell securities and were referred to as " SM& R registered representatives." Dkt. 92 at 10. The services offered or supervised by SM& R were presented, promoted, and marketed under the " American National" brand. See, e.g., Pl.'s Exhs. 91-93, 105, 108, 110, 118, 193, 194, 234-250, 252, 256-261, 269-272, 290, 292-293, 298-302, 314, 362.
From 1968 to the present, ANICO has also retained " multiple-line" insurance agents, some of whom are " registered representatives" with the SEC. Dkt. 107, Tr. at 274:14-275:7. Again, as Mr. Akins testified, registered representatives may sell securities, including retail mutual funds and variable products, to the public by virtue of their individual licenses even when ANICO itself cannot do so directly. Id.; Dkt. 106, Tr. at 178:20-24. These agents are referred to as " American National agents" in publicly-available advertising and use " American National" branding on their promotional materials and other items. See, e.g., Pl.'s Exhs. 91-93, 234-250, 252, 290, 292-293, 298-302, 314, 362. However, as registered representatives directly selling securities to the public, these agents were supervised by SM& R, as noted above. Dkt. 106, Tr. at 174:16-175:14; Pl.'s Ex. 300. ANICO's agents, who are registered representatives, continue to sell retail mutual funds and variable products today. Dkt. 105, Tr. at 35:4-5.
During approximately the same period of time, from 1968 to 1993, ANICO licensed the " American National" mark to its subsidiary for use on its retail mutual funds, including American National Growth Fund, Inc., and American National Income Fund, Inc. Dkt. 106, Tr. at 172:23-173:4; Pl.'s Exh. 226. These funds were wholly managed by SM& R and were offered for sale to the public by American National agents, who also served as SM& R registered representatives. Dkt. 106, Tr. at 168:2-17; Dkt. 107, Tr. at 274:23-276:19.
From 1988 to 2010, ANICO managed another wholly-owned subsidiary, American National Investment Accounts, Inc., which created numerous other " American National" branded portfolios to be bundled into ANICO's variable products. Dkt. 106, Tr. at 169:12-25, 190:20-25. Examples include the American National Growth Portfolio and the American National Balanced Portfolio. Id. at 185:7-23; Pl.'s Exhs. 193-94.
In 2010, ANICO sold SM& R and subsequently transferred its registered investment advisory business to a new subsidiary, American National Registered Investment Advisors, Inc. (" ANRIA"). Dkt. 92 (Stipulations) at 13. This new subsidiary fulfills a similar role as SM& R, incorporating broker-dealer, underwriting, and investment advisory services under the " American National" brand name. Id.
C. ANICO's Federal Trademark Registrations
Over more than a century of operations, ANICO has accumulated a number of trademarks pertaining to the " American National" brand. ANICO asserts ownership of the following federal service mark registrations: Reg. No. 1, 207, 499 for the word mark " American National Insurance Company" covering " underwriting life and health insurance" (" Reg. '499"); Reg. No. 1, 207, 500 for the word mark " American National Life Insurance Company of Texas" also covering " underwriting life and health insurance" (" Reg. '500"); Reg. No. 1, 308, 303 for the word mark " American National" covering " property and casualty insurance underwriting services" (" Reg. '303"); Reg. No. 1, 837, 021 for the word mark " American National" covering " mutual fund investment services" (" Reg. '021"); and Reg. No. 3, 217, 075 for the word and logo mark " American National Designed Benefits: The Financial Building System" covering " insurance consultation, investment consultation, financial analysis and consultation, and financial planning for employees, and employee groups; mutual fund and securities brokerage, distribution, and investment, and insurance underwriting services for all types of insurance" (" Reg. '075").
That ANICO owns these federal service mark registrations, as well as the chronology of ANICO's registration processes, is undisputed. Dkt. 92 (Stipulations) at 12-13. Of ANICO's registrations at issue in this case, Reg. '021 for " mutual fund investment services" alone applies the plain word mark " American National" to financial and investment services outside of the insurance product context. See AMERICAN NATIONAL, Registration No. 1, 837, 021. Reg. '021 was registered on May 17, 1994, and became incontestable on July 19, 2000. Id. Not surprisingly, the parties have focused almost exclusively on this mark during the course of the trial.
D. ANICO's '021 Registration
At the time of Reg. '021's initial filing on June 5, 1992, ANICO's attorney Margaret Boulware submitted with the application an affidavit signed the day before by ANICO's president, Orson C. Clay. Id. at 13. The Clay affidavit included as a specimen of use a prospectus and application for the American National Growth Fund, Inc., which was a retail mutual fund controlled and licensed by ANICO and using the " American National" mark. Id. The prospectus disclosed that investment in the fund was available through ANICO's wholly-owned subsidiary SM& R, which did not use the " American National" mark. Dkt. 106, Tr. at 221:6-21. After the USPTO initially rejected the application for lack of distinctiveness, ANICO submitted a separate affidavit from February 25, 1992, also executed by Clay, attesting that the mark had become distinctive for mutual fund investment services due to ANICO's " substantially exclusive and continuous use [of the mark] in commerce" for at least five years prior to the date of that affidavit. Pl.'s Exh. 226.
Then, on May 2, 2000, ANICO's executive vice president Michael W. McCroskey executed an affidavit attesting to the continuous use of the mark in commerce. Id. As a specimen of use, ANICO included a prospectus from American National Investment Accounts, Inc., another wholly-owned subsidiary that created " American National" branded funds for bundling in ANICO's variable products. Id.; Pl.'s Exh. 276. This prospectus also contained a disclaimer that direct investment in the branded funds was not possible and that investors could only purchase shares as part of ANICO's insurance or annuity contracts. Pl's Exh. 193.
Finally, on May 10, 2004, ANICO submitted an additional affidavit in support of trademark renewal, signed by ANICO's senior executive vice president Ronald J. Welch. Pl.'s Exh. 277. Included in this affidavit was a screenshot of ANICO's webpage showing " mutual funds" as one of the financial products provided by ANICO or its subsidiaries. Id.
In October 2009, ANIA, an Illinois LLC, commenced operations offering investment advisory and financial planning services to the public. Dkt. 92 (Stipulations) at 14. As part of these services, ANIA has offered brokerage and consultation for securities, including mutual funds and variable products. Dkt. 107, Tr. at 310:17-25. ANIA's business was presented to the public under the " American National Investment Advisors" or " American National" name in all ...