Chattanoga Mfg., Inc. v. Nike, Inc.

140 F.Supp.2d 917

CHATTANOGA MANUFACTURING, INC., Plaintiff, v. NIKE, INC., Michael Jordan, an individual, and Does 1-10, Defendants.

No. 99 C 7043.

United States District Court, N.D. Illinois, Eastern Division.

March 16, 2001.

John L. Leonard, Timothy J. Riordan, Michael Howard Erdman, Defrees & Fiske, Chicago, IL, Himanshu R. Sharma, Kenneth F. McCallion, Goodkind, Labaton, Rudoff & Sucharow, Nancy Meridith Dodderidge, Anthony F. LoCicero, Amster, Rothstein & Ebenstein, New York, NY, Robert I. Goodman, Attorney at Law, Ryebrook, NY, for Chattanoga Manufacturing Inc., plaintiffs.

Charles Robert McKirdy, Keith William Medansky, Alan S. Dalinka, Piper, Marbury, Rudnick & Wolfe, Frederick J. Sperling, Clay A. Tillack, Adam S. Weiss, Schiff, Hardin & Waite, Chicago, IL, for Nike, Inc., Michael Jordan, an individual, Does, 1 through 10, defendants.

MEMORANDUM OPINION AND ORDER

CASTILLO, District Judge.

Chattanoga Manufacturing, Inc. sued Nike, Inc., Michael Jordan, and Does 1-10,¹ alleging: (1) trademark infringement in violation of § 32 of the Lanham Act, 15 U.S.C. § 1114(1); (2) unfair competition in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (3) common law trademark infringement and unfair competition; and (4) violation of the Illinois Deceptive Trade Practices Act, 815 ILCS 510/2. Nike filed counterclaims alleging that Chattanoga's JORDAN trademark was improperly granted by the United States Patent and Trademark Office ("PTO") and should be canceled because: (1) Chattanoga's JORDAN trademark is primarily merely a surname without secondary meaning; (2) at the time Chattanoga applied to register its mark, the term had already acquired secondary meaning and was identified with Michael Jordan and/or products associated with him; and (3) at the time Chattanoga applied to register its mark, it had not been using the trademark in connection with all the goods it described in its application for trademark registration. Plaintiff filed a motion for partial summary judgment against Nike and Jordan ("Defendants"). Defendants also filed a motion for summary judgment as to all of Plaintiff's claims and, in addition, ask for summary judgment on Counts II and III of their counterclaims. For the reasons stated below, we grant Defendants' motion for summary judgment on all of Plaintiff's claims. We deny Plaintiff's motion for partial summary judgment against Defendants. Finally, we deny Defendants' motion for summary judgment on counts II and III of its counterclaims as moot.

RELEVANT FACTS²

I. Chattanoga Manufacturing, Inc.

In 1979, Morris Moinian and Jimmy Soufian founded Chattanoga and its Jordan Blouse Division. The purpose of Chattanoga and its Jordan Blouse Division has been to manufacture women's blouses and related items. Since 1979, Chattanoga has sold only women's apparel. Initially coined by Mr. Moinian, Chattanoga claims that it has continuously used the term JORDAN to identify the products of its Jordan Blouse Division. Defendants disagree that Chattanoga has continuously used the JORDAN mark and point out that Chattanoga has used various labels other than JORDAN on its products. (R. 62, Defs.' Resp. to Pl.'s 56.1(a)(3) Statement of Facts ¶ 8.) In addition, Chattanoga uses a flower symbol on its "hand tags, bags and some of its letterhead," but Chattanoga claims that it does not consider the flower symbol to be a logo and that it is not intended to identify products with Chattanoga. (R. 57, Pl.'s Resp. to Defs.' 56.1(a)(3) Statement of Facts ¶ 51.)

In 1997, Chattanoga retained trademark counsel and applied for trademark registration for JORDAN for use on "women's wearing apparel, namely blouses, sweaters, tee shirts[,] jackets, vests, pants, trousers, skirts, suits, dresses, jumpers, jump suits, jogging suits, exercise wear and women's underwear." (R. 43, Pl.'s 56.1(a)(3) Statement of Facts ¶ 9; Pl.'s Ex. 20, Pl.'s Trademark Application for JORDAN.) When it applied for registration of the mark JORDAN in 1997, Chattanoga did not submit evidence that the mark had become distinctive of the Chattanoga goods in commerce. (R. 57, Pl.'s Resp. to Defs.' 56.1(a)(3) Statement of Facts ¶ 59.) Chattanoga's first trademark application was rejected by the PTO for two reasons. First, the examining attorney found a likelihood of confusion with another registered mark, J. JORDAN, for "clothing, namely, coats, jackets, pants, skirts, blouses, shirts, sweaters, dresses, and bathrobes," which was, in some cases "identical" to products in Chattanoga's application. (R. 62, Defs.' Resp. to Pl.'s 56.1(a)(3) Statement of Facts ¶ 12 (citing Pl.'s Ex. 21, Denial of First Trademark Application).) In addition, the application was rejected because the examining attorney determined that "[t]he wording `exercise wear' in the identification of goods [was] unacceptable as indefinite." (Id.) Thus, to register the mark, Chattanoga needed to either specify the common commercial name of the clothing items it had originally identified as "exercise wear" or describe the product and its intended uses. (R. 57, Pl.'s Resp. to Defs.' 56.1(a)(3) Statement of Facts ¶ 62.) In Spring 1998, Chattanoga purchased the rights to use the term J. JORDAN and then filed a second trademark application. The Certificate of Registration was issued in October 1998.³

In 1984, Chattanoga's net sales were almost $3.6 million. By 1998, net sales had grown to almost $16 million. Chattanoga sells directly to wholesalers and retailers, who, in turn, market Chattanoga's products to the ultimate consumer. Chattanoga's intended consumer market has, to date, principally been middle class women in the twenty-five to fifty year old age group, and its products are sold at moderate prices. Over the years, Chattanoga developed a sizeable list of domestic and international clients, numbering in the thousands. Chattanoga's women's clothing products are very diverse. Chattanoga does not currently make, sell or distribute men's clothing or any footwear, and has never done so. (Id. at ¶ 7.) Chattanoga does not engage in direct advertising and has no advertising budget. Instead, monies are allocated to advertising on an "as needed" basis. (R. 43, Pl.'s 56.1(a)(3) Statement of Facts ¶ 21.)

II. The Defendants

A. Nike, Inc.

Nike, established in 1971, is the world's leading sports and fitness company. Nike designs, manufactures and markets high quality footwear, apparel, equipment, and accessory products. Nike sells its products through approximately 19,000 retail accounts in the United States, through its nike.com website and its Nike Town retail stores and through a mix of independent distributors, licensees and subsidiaries in approximately 140 countries around the world.

B. Michael Jordan

Michael Jordan is a man of extraordinary fame throughout the world. ESPN's "SportsCentury" named Jordan the greatest North American athlete of the 20th Century. Jordan's fame began at least as far back as 1982 when, as a freshman at the University of North Carolina, he hit the game-winning shot in the 1982 NCAA Championship basketball game. In both 1983 and 1984, Jordan was named "College Player of the Year" by The Sporting News and was a unanimous selection for First Team All-American. Jordan was a member of the gold medal-winning United States Olympic men's basketball team in 1984. Also in 1984, Jordan joined the NBA's Chicago Bulls and became the NBA Rookie of the Year, an All Star and the Slam Dunk Champion. Jordan won a second Olympic gold medal in 1992. In all, Jordan played twelve full seasons with the Bulls, leading the league in scoring a record ten times and achieving the highest career scoring average of any player in NBA history. Jordan led the Bulls to six NBA championships, winning the regular season MVP award five times and the Finals MVP award six times. During his professional basketball career, Jordan's uniform prominently displayed the name "JORDAN" and, except for a brief use of the number "45," the number "23."

C. Nike and Jordan's Relationship

Since 1984, Jordan has endorsed and given valuable input into the design of Nike products, and Nike has promoted Jordan in its marketing campaigns. Jordan's first contract with Nike, effective September 1, 1984, was a "Pro Basketball Consultant Contract," which had a term of five years.⁴ At the expiration of the first contract, Jordan and Nike entered into a second five-year agreement, effective September 1, 1989, also denoted "Pro Basketball Consultant Contract."⁵ Nike and Jordan's current relationship is governed by a "Personal Services and Endorsement Contract" ("Endorsement Contract"), effective September 1, 1994, which has a term of twenty-nine years. Under the Endorsement Contract, Nike, in exchange for its agreement to pay compensation to Jordan, has the right to use Jordan's name and image in connection with a variety of Nike products. Furthermore, under the Endorsement Contract, Jordan has rights of approval, which he may not unreasonably withhold, for proposed trademarks or marketing materials that use an element of the JORDAN endorsement. (R. 65, Pl.'s Resp. to Defs.' 56.1(b)(3)(B) Statement of Additional Facts ¶ 144.) The Endorsement Contract states that Nike is the "sole and absolute owner" of the JORDAN-related marks. (Defs.' Ex. 202, Endorsement Contract ¶ 9A.) Moreover, the Endorsement Contract states that Jordan's "performance of services is as an independent contractor." (R. 65, Pl.'s Resp. to Defs.' 56.1(b)(3)(B) Statement of Additional Facts ¶ 148.) Jordan, his agent David Falk, President of Nike's Jordan Brand Division Larry Miller, and Vice President of Sports Marketing for Nike's Jordan Brand Division Howard White all testified that Jordan is not a Nike officer or a member of the Board of Directors. Furthermore, they each testified that Jordan does not have the authority of an officer or director; he does not have the authority to hire or fire employees nor the authority to approve or...