BEACON MUTUAL INSURANCE COMPANY v. ONEBEACON INSURANCE GROUP

376 F.Supp.2d 251 (2005) | Cited 2 times | D. Rhode Island | July 15, 2005

DECISION AND ORDER

I. Introduction

The Beacon Mutual Insurance Company ("Plaintiff" or "Beacon")is the largest writer of workers' compensation insurance in thestate of Rhode Island. It has used the name "The Beacon MutualInsurance Company" (along with a lighthouse logo) since 1992.Meanwhile, OneBeacon Insurance Group ("Defendant" or"OneBeacon"), formerly known as CGU Insurance, adopted itscurrent name, and began using a lighthouse logo as well, in June2001. Following this name change, Beacon brought this lawsuitclaiming that Defendant's adoption of the name "OneBeacon" and alighthouse logo violated federal and state unfair competitionlaw. Beacon also asserted claims for service mark infringementand trademark dilution under state law.

OneBeacon responded to Beacon's suit with a Motion for SummaryJudgment, which this Court granted. Beacon Mut. Ins. Co. v. OneBeacon Ins. Group, 290 F. Supp. 2d 241 (D.R.I. 2003)("Beacon I"), rev'd 376 F.3d 8 (1st Cir. 2004). In grantingsummary judgment, this Court relied primarily on the FirstCircuit's opinion in Astra Pharm. Prods., Inc. v. BeckmanInstruments, Inc., 718 F.2d 1201 (1st Cir. 1983), which heldthat in order to find a likelihood of confusion between parties'marks sufficient to support a claim of unfair competition, thatconfusion "must be based on the confusion of some relevantperson; i.e., a customer or purchaser," id. at 1206 (emphasisadded). Because "Plaintiff ha[d] not established that the[allegedly confused] entities and persons . . . are ? consumersof the product," Beacon I, 290 F. Supp. 2d at 246, this Courtconcluded that Plaintiff failed "to demonstrate that theconfusion it identifies is connected in any way to its commercialinterests," id. at 252, as required to maintain an unfaircompetition claim.

On appeal, the First Circuit reversed. Beacon Mut. Ins. Co. v.OneBeacon Ins. Group, 376 F.3d 8 (1st Cir. 2004) ("BeaconII"). Without addressing its earlier holding in Astra that therelevant confusion must be shown to exist in customers orpurchasers, the First Circuit implicitly abdicated the Astrastandard by concluding that evidence of actionable commercialinjury in a case such as this was "not restricted to the loss ofsales to actual and prospective buyers of the product inquestion." Id. at 10. Instead, the First Circuit enunciated anew standard for what constitutes actionable confusion: "Confusion is relevant when itexists in the minds of persons in a position to influence thepurchasing decision or persons whose confusion presents asignificant risk to the sales, goodwill, or reputation of thetrademark owner." Id. (emphasis added). Further, "relevantcommercial injury includes not only loss of sales but also harmto the trademark holder's goodwill and reputation." Id.

As a result of the First Circuit's decision, the case returnedto this Court and a bench trial was held from February 28, 2005,to March 4, 2005, with final arguments on March 9, 2005. Whatfollows are the Court's findings of fact and conclusions of law.

II. Findings of Fact and Conclusions of Law

The marks that Plaintiff seeks to protect are not registered."Therefore the present claim is based upon § 43(a) of the LanhamAct which covers unregistered trademarks." Boston Beer Co. v.Slesar Bros. Brewing Co., 9 F.3d 175, 180 (1st Cir. 1993).Section 43(a) of the Lanham Act forbids persons from using, in connection with any goods or services . . . any word, term, name, symbol, or device, or any combination thereof . . . which — (A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.15 U.S.C. § 1125(a)(1)(A). To make out a claim under § 43(a), the owner of an unregisteredmark must establish that its mark is (1) either inherentlydistinctive or has acquired secondary meaning, and (2) is likelyto be confused with the defendant's mark. Two Pesos, Inc. v.Taco Cabana, Inc., 505 U.S. 763, 769-70 (1992).

A. The Spectrum of Distinctiveness

In analyzing whether a mark is distinctive, marks are dividedinto four categories: (1) generic, (2) descriptive, (3)suggestive, and (4) arbitrary or fanciful. Abercrombie & FitchCo. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976).Suggestive, arbitrary and fanciful marks are consideredinherently distinctive, while descriptive marks are deemeddistinctive only upon a showing that they have acquired secondarymeaning. I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27, 39(1st Cir. 1998). Generic marks are generally not protected. Id.Whether a mark is inherently distinctive is a question of fact.Boston Beer, 9 F.3d at 180.

To be classified as "fanciful," terms will usually have to havebeen "invented solely for their use as trademarks."Abercrombie, 537 F.2d at 11 n. 12. Arbitrary marks are "commonword[s] . . . applied in an unfamiliar way." Id. Suggestivemarks "require imagination, thought and perception to reach aconclusion as to the nature of goods." 537 F.2d at 11 (quotingStix Prods., Inc. v. United Merch. & Mfrs., Inc.,295 F. Supp. 479, 488 (S.D.N.Y. 1968)). Finally, "[a] term is descriptive ifit forthwith conveys an immediate idea of the ingredients, qualitiesor characteristics of the goods." Id. (quoting Stix Prods.,Inc., 295 F. Supp. at 488).

Beacon's mark is most appropriately deemed descriptive. Theword "beacon" in the mark is meant to suggest that Beacon willserve as a good guide to consumers. See Miriam-Webster'sCollegiate Dictionary 98 (10th ed. 2002) (defining "beacon" as a"signal for guidance" and "a source of light or inspiration");see also Platinum Home Mortgage Corp. v. Platinum Fin.Group, Inc., 149 F.3d 722, 728 (7th Cir. 1998) ("In thisinstance, `platinum' describes the quality of plaintiff'smortgage services and suggests that it provides a superiorservice. . . ."); American Heritage Life Ins. Co. v. HeritageLife Ins. Co., 494 F.2d 3, 11 (5th Cir. 1974) (upholding adistrict court's conclusion "that the word `heritage' is genericor descriptive of life insurance"); Hiram Walker & Sons, Inc. v.Penn-Maryland Corp., 79 F.2d 836, 838 (2d Cir. 1935) (holdingthat "imperial" was descriptive of quality of whiskey). Thedescriptive nature of the mark is confirmed by the widespread useof the term "beacon" with a lighthouse logo by many othercompanies around the country.1 See American HeritageLife Ins., 494 F.2d at 11 ("The industry itself evidently recognizesthe truth of the district court's finding because the word`heritage' is used in the corporate names of insurance companiesall over the country."). Finally, Beacon itself has capitalizedupon the descriptive significance of its mark by putting out anewsletter in the past entitled "Guiding Light." (Tr. of 2/28/05at 85 (testimony of Michael Lynch, Vice President of LegalServices at Beacon).)

B. Proving Secondary Meaning

Because Beacon's mark is descriptive, and therefore notinherently distinctive, Beacon must show secondary meaning toavail itself of the protection of the Lanham Act. A mark that isnot inherently distinctive is protected under the Lanham Act onlyupon a showing by the mark owner, by a fair preponderance of theevidence, that the mark has acquired secondary meaning. See 2J. Thomas McCarthy, McCarthy On Trademarks And Unfair Competition§ 15:33 (4th ed. 2005) (hereinafter, "McCarthy"). A mark hasacquired secondary meaning only if its primary significance inthe minds of the public is to identify the source of the productor service. See I.P. Lund, 163 F.3d at 41. Market surveyshave "become a well-recognized means of establishing secondarymeaning." Boston Beer Co., 9 F.3d at 182. Other factors a courtmay look to "in determining whether a term has acquired secondarymeaning are: (1) the length and manner of its use, (2) the natureand extent of advertising and promotion of the mark and (3) the efforts made inthe direction of promoting a conscious connection . . . betweenthe name . . . and a particular product. . . ." Id. (citationomitted).

Beacon retained the services of Dr. Jacob Jacoby as an expertwitness on secondary meaning. Dr. Jacoby produced a writtenreport which concludes that the phrase "The Beacon," has acquireda substantial degree of secondary meaning among individuals inRhode Island responsible for selecting their company's workers'compensation insurance and/or commercial or industrial insurance.(Pl.'s Ex. 406.) This conclusion is based upon the results ofthree surveys conducted in Rhode Island in the Fall of 2001. Inthese surveys, a total of 237 targeted respondents (persons whochoose, or help to choose, the provider of workers' compensationor commercial/industrial insurance for their company) were askedwhat they thought of when they heard or saw the term "TheBeacon." According to Jacoby, 69% of the respondents who heardand 79% of the respondents who saw the term "The Beacon" saidthat it signified a workers' compensation insurance company.

Dr. Jacob Jacoby's survey supports the conclusion that Beacon'smarks have acquired secondary meaning.2 Dr. Jacoby's survey demonstrates that individuals in Rhode Island responsiblefor, or influential in, selecting their company's workers'compensation insurance and/or commercial or industrial insuranceare familiar with Beacon's name and lighthouse logo, and thatthey associate it with a particular source of workers'compensation insurance.

OneBeacon argues that since Beacon has surveyed a narrowerpopulation of persons for purposes of establishing secondarymeaning (those individuals likely to influence purchasingdecisions) than that in which it is looking to establish alikelihood of confusion (the general public), Beacon should beprecluded from relying on its survey evidence or, in thealternative, the evidence of confusion among the generalpopulation should be accorded less probative value. In support ofthis contention, counsel for Defendant, in his closing argument,stated that a highly respected commentator, J. Thomas McCarthy,has written that the respective universes "must" match. (Tr. of3/9/05 at 89.) However, a reading of the cited source discloses no suchassertion. Rather, McCarthy merely recognizes that there is"interdependence between buyer confusion and secondary meaning."2 McCarthy § 15:11. Thus, the "basic principle is that if thereis no secondary meaning, there is no mark to protect andconfusion is not possible." Id. This has been understood tomean that "proof of secondary meaning is a condition precedent toany discussion of likely confusion." Universal Frozen Foods, Co.v. Lamb-Weston, Inc., 697 F. Supp. 389, 394 (D. Or. 1987). Thisis a far cry from requiring that the respective populations forestablishing secondary meaning and likelihood of confusion mustbe identical.

OneBeacon acknowledges that it knows of no case that expresslyendorses its position on this point. OneBeacon does, however,cite to one case that seemingly advances the proposition. InLandscape Forms, Inc. v. Columbia Cascade Co., 113 F.3d 373 (2dCir. 1997), the Second Circuit recognized that "[t]he likelihoodof confusion test concerns not only potential purchasers but alsothe general public," id. at 382. The court went on to note,however, that "such third parties are only relevant if theirviews are somehow related to the goodwill of the aggrievedmanufacturer." Id. at 382-83. The court concluded that "wherethere is no showing that the general public is aware ofLandscape's `dress,' the district court erred in giving thisfactor great weight." Id. This language could possibly be readto imply that secondary meaning must be demonstrated as to the particular population in whichlikelihood of confusion is to be shown.

Nonetheless, the most generally accepted law is that: (1)secondary meaning is determined on the basis of purchaserperception, see Am. Assoc. for the Advancement of Science v.Hearst Corp., 498 F. Supp. 244, 257 (D.D.C. 1980) ("The questionis not whether the general public, but the relevant buyer classassociates a name with a product or its source.") (citing 1McCarthy § 15:11) (emphasis in original), and (2) non-purchasersare relevant for purposes of finding an actionable likelihood ofconfusion, see Beacon II, 376 F.3d at 10 (including anyone"whose confusion presents a significant risk to the sales,goodwill, or reputation of the trademark owner"). Thus, Plaintiffmay establish secondary meaning via a survey of those individuals"likely to influence purchasing decisions," while establishinglikelihood of confusion among a broader population. See PeriniCorp. v. Perini Constr., Inc., 915 F.2d 121, 125, 128 (4th Cir.1990) (recognizing that likelihood of confusion may bedemonstrated via a group made up of "the public, but not typicalpurchasers," while describing secondary meaning as based upon"the consuming public's understanding") (emphasis added). ThisCourt has found nothing to suggest that the 1962 amendment of theLanham Act, which broadened actionable confusion beyond that ofpurchasers was intended to change the standards for provingvalidity of a descriptive mark (i.e., establishing secondary meaning in the consuming public).See Payless Shoesource, Inc. v. Reebok Int'l Ltd.,998 F.2d 985, 989 (Fed. Cir. 1993) ("Section 32 of the Lanham Act wasamended in 1962 to include confusion of nonpurchasers as well asdirect purchasers by striking out language limiting its scope toconfusion of `purchasers as to the source of origin of such goodsor services.'").

Even if this Court did not find secondary meaning by virtue ofthe Jacoby market survey evidence, Beacon would be able toestablish secondary meaning on the basis of its promotion effortsand market share. See Boston Beer Co., 9 F.3d at 182 ("Amongthe factors this court generally looks to in determining whethera term has acquired secondary meaning are: (1) the length andmanner of its use, (2) the nature and extent of advertising andpromotion of the mark and (3) the efforts made in the directionof promoting a conscious connection, in the public's mind,between the name or mark and a particular product or venture.").Here, the Beacon name and lighthouse logo have been used by thecompany for over a decade as the primary designator of itsworkers' compensation product. Beacon was formed in 1990 as theState Compensation Insurance Fund to write workers' compensationinsurance for Rhode Island employers. To better compete, Beaconadopted its current name and lighthouse logo in June 1992. Sincethen, Beacon has been using "The Beacon Mutual InsuranceCompany," "Beacon Insurance," "The Beacon" and a lighthouse logo as its marks. Beacon hasextensively promoted its name and logo, and has acquiredsubstantial market share in Rhode Island. (See generally Tr. of2/28/05 at 60-108 (testimony of Michael Lynch, setting forthvarious promotional efforts).) Beacon immediately began topromote its new name and logo through advertising, sponsorshipsand civic participation throughout Rhode Island. Beacon increasedits advertising and promotional expenditures between 1992 and2001 from $4,600 to over $1 million per year, spending nearly $5million during that period overall. (Id. at 101-04.) In 2001,Beacon's share of the Rhode Island market for workers'compensation insurance was approximately 66%, having peaked at84.47%. (Id. at 105.) Beacon's drop in market share reflectsthe success of the company in that it brought competition backinto the market for workers' compensation insurance. As a resultof this long term use, extensive and broad-based promotionalefforts, and large market share, it is reasonable to infer that asignificant percentage of Rhode Islanders are familiar with theBeacon name and logo and associate it with a specific source forworkers' compensation insurance. See President and Trs. ofColby Coll. v. Colby Coll.-New Hampshire, 508 F.2d 804, 808 (1stCir. 1975) ("[W]hile secondary meaning is shown by the successrather than by the mere fact of an enterprise's promotionalefforts, the normal consequence of substantial publicity may beinferred."). Thus, based on Dr. Jacoby's survey evidence and the circumstantial evidence regarding length of use, promotion, andmarket share, the Court concludes that Beacon's marks haveacquired secondary meaning.

C. Likelihood of Confusion

Likelihood of confusion is "an essential element of a claim oftrademark infringement." Pignons S.A. de Mecanique de Precisionv. Polaroid Corp., 657 F.2d 482, 486-87 (1st Cir. 1981). Aplaintiff must prove that there exists "a substantial likelihoodthat the public will be confused as to the source" of therelevant goods or services. Fisher Stoves, Inc. v. All NighterStove Works, Inc., 626 F.2d 193, 194 (1st Cir. 1980). The FirstCircuit has enumerated eight factors to be used as guides inassessing likelihood of confusion as to source or affiliation:"(1) the similarity of the marks; (2) the similarity of thegoods; (3) the relationship between the parties' channels oftrade; (4) the relationship between the parties' advertising; (5)the classes of prospective purchasers; (6) evidence of actualconfusion; (7) the defendant's intent in adopting its mark; and(8) the strength of plaintiff's mark." Astra Pharm. Prods.,718 F.2d at 1205. "No one factor is necessarily determinative, buteach must be considered." Id. In this case, application of theeight factor test favors finding a substantial likelihood ofconfusion. 1. Similarity of Marks

The fonts Beacon and OneBeacon use in their marks are notidentical.3 (See Pl.'s Ex. 411, 412 (setting forthOneBeacon's and Beacon's marks).) Beacon uses a standard typefacefont in a stylized orientation with the text placed to the rightof the illustration. OneBeacon uses a modern-looking, roundedfont, with the text centered below its illustration. Beacon usesa realistic depiction of a traditional lighthouse on land.OneBeacon's illustration is a suggestion of a lighthouseilluminating the sky, drawn in negative space and contained in anoval centered above the text. In Beacon's designation, thelighthouse appears in black and white and the text in bluelettering. In OneBeacon's designation, the lighthouse imageappears in yellow and the text in blue. In Beacon's mark, themost prominent word is "beacon" and the word "the" is orientedperpendicularly to "beacon." In OneBeacon's mark, the words "one"and "beacon" are equally prominent, and there is no space betweenthem.

In spite of their differences, Beacon's and OneBeacon's marksare fundamentally similar. The marks have two identical elements:use of the word "Beacon," and incorporation of the visualreference to a lighthouse. These marks are displayed withoutother names, logos, or source-identifying designations that would help todifferentiate them. See Beacon II, 376 F.3d at 18 ("The firstfactor, similarity of marks, weighs in Beacon Mutual's favor.This factor is evaluated based on the ? designation's totaleffect. Here, the marks use different fonts and colors, but afactfinder could reasonably find the total effect to besimilar.") (internal quotation marks and citation omitted).

2. Similarity of Goods

Beacon sells only workers' compensation insurance to employerswithin the state. Beacon presently insures approximately 14,500employers. (Tr. of 2/28/05 at 120 (testimony of Michael Lynch).)OneBeacon, on the other hand, offers property, casualty and otherforms of commercial insurance (including workers' compensationinsurance) in New York, New Jersey, and the six New Englandstates. In 2004, OneBeacon had twenty-four workers' compensationpolicies in all of Rhode Island. (Tr. of 3/3/05 at 102 (testimonyof Roger Pare, OneBeacon Branch Manager).) While OneBeacon sellsother insurance products besides workers' compensation, andworkers' compensation makes up only a small part of its business,the workers' compensation insurance coverage that is offered byOneBeacon in Rhode Island is the same as that offered by Beacon.(Tr. of 2/28/05 at 123 (testimony of Michael Lynch, citing R.I.Gen. Laws § 28-36-5).) Thus, the Court concludes this factorweighs in favor of Beacon. Both Beacon and OneBeacon deal in insurance, and both parties specifically offer workers'compensation insurance. See Beacon II, 376 F.3d at 18 ("Thesecond factor, similarity of goods and services, also favorsBeacon Mutual. OneBeacon conceded this point in its summaryjudgment papers before the district court and thus has abandonedany argument to the contrary.").

3. Channels of Trade, Advertising, and Classes of ProspectivePurchasers

Employers with at least one employee in Rhode Island mustpurchase workers' compensation insurance. R.I. Gen. Laws §28-296-. The majority of Rhode Island employers who purchaseworkers' compensation insurance are small businesses who employless than five people. (Tr. of 2/28/05 at 139 (testimony ofMichael Lynch).)

Every insurance broker licensed by the State of Rhode Island isan agent of Beacon. (Tr. of 2/28/05 at 132.) All insuranceoffered by OneBeacon, in contrast, is sold exclusively throughthe company's independent insurance agents. (Id. at 133.) Eachof these agents in Rhode Island is also an agent for Beacon.(Id.) Beacon offers its workers' compensation insurance throughagents, as well as through direct sales. (Id. at 132.)OneBeacon restricts workers' compensation offerings to those whopurchase other types of coverage. (Tr. of 3/3/05 at 109.) Therates OneBeacon charges for workers' compensation coverage aregenerally the same as Beacon's rates.4 (Tr. of 2/28/05 at124.)

The parties' channels of trade, advertising, and classes ofprospective purchasers weigh against Beacon. Workers'compensation insurance is a costly product generally purchased inconsultation with licensed insurance agents. Those agents knowthe difference between OneBeacon and Beacon. Meanwhile, OneBeacondoes not advertise its workers' compensation insurance in RhodeIsland. Finally, the overlapping customers are business owners orindividuals charged with purchasing workers' compensationinsurance on behalf of their employers. Thus, the relevant classof consumers is sophisticated and has a professional incentive tomake informed judgments.

4. Actual Confusion

Shortly after OneBeacon's name change, Beacon became aware ofnumerous instances of apparent confusion. (See generally Tr. of2/28/05 at 149-217; Tr. of 3/1/05 at 16-85 (testimony of MichaelLynch, setting forth various instances of confusion).) RhodeIsland employers, employees, vendors, doctors, court personneland others have all demonstrated confusion over the relationshipbetween the two companies.

Beacon has received checks from Rhode Island employers forpremiums on OneBeacon policies, letters from employers meant forOneBeacon, and telephone and email inquiries indicating confusionabout the distinction between the two companies. Beacon has alsoreceived medical records, physician letters, health insuranceclaim forms, and statements from health care providers intendedfor OneBeacon. In addition, Beacon has received correspondenceintended for OneBeacon from third party insurance companies, aswell as from attorneys and workers' compensation court personnel.The reverse is also true: OneBeacon has received documents intended for Beacon. Beacon has summarized much of this evidencein a "confusion matrix," which is further discussed below.

OneBeacon has challenged the admissibility of much, if not all,of Beacon's evidence of actual confusion (see Def.'s Mot. inLimine to Exclude Evidence of Confusion), and some discussion ofthe legal framework which guided this Court's rulings duringtrial is in order. Where Beacon sought to introduce evidence ofactual confusion on the part of a member of the public (asmanifested by behavior, rather than a statement such as "I'mconfused") via the live testimony of an employee (for example, areceptionist testifying to someone calling Beacon looking for carinsurance, which OneBeacon sells but Beacon does not), thetestimony was ruled admissible as non-hearsay since it was notbeing offered for the truth of the matter asserted.5Where Beacon sought to introduce evidence of actual confusion on the part of a member of thepublic (as manifested by a statement equivalent to: "I'mconfused") via the live testimony of an employee, the testimonywas admissible under the then-existing state of mind exception tothe hearsay rule.6 However, Beacon's attempt to admit its"confusion matrix," either directly or via the testimony of acorporate officer, could not survive OneBeacon's objection. Thematrix is hearsay (i.e., the document states that someone said,in effect, "I received a letter that indicated confusion on thepart of the author"). The business record exception is notavailable because the matrix was prepared by Beacon inanticipation of litigation. See Source Servs. Corp. v. SourceTelecomputing Corp., 635 F. Supp. 600, 612 n. 9 (N.D. Ill.1986). Nor can Beacon overcome OneBeacon's objection by arguingthe matrix constitutes a recorded present sense impression ofanother's then-existing mental state. See Ocean Bio-Chem, Inc.v. Turner Network Television, Inc., 741 F. Supp. 1546, 1559(S.D. Fla. 1990). Finally, the Court declined to admit the matrixas a recorded present sense impression of non-hearsay behaviorindicating confusion because the matrix does not disclose the time between forming the impression and recordingthe information. See United States v. Ferber,966 F. Supp. 90, 99 (D. Mass. 1997) ("A present sense impression, in contrast,is admissible so long as it explains an event immediately afterit happens.").

Defendant argues that the probative weight accorded theadmitted evidence should be de minimus.7 (See Def.'sMot. in Limine to Exclude Inadmissible Hearsay.) The casesDefendant provides set out a number of reasons why Plaintiff'sactual confusion evidence may be of limited probative worth. Forinstance, courts have refused to give much credence to actualconfusion evidence similar to the misdirected communications here where: (1) the total number of misdirected communicationsrepresents a small portion of the total number of communicationsreceived, see Therma-Scan, Inc. v. Thermoscan, Inc.,295 F.3d 623, 632 (6th Cir. 2002); Checkpoint Sys., Inc. v. Check PointSoftware Techs., Inc., 269 F.3d 270, 299 (3d Cir. 2001); (2)there is no evidence that the misdirected communications were theresult of anything other than clerical error,8 seeTherma-Scan, 295 F.3d at 636; Checkpoint, 269 F.3d at 298;(3) the total amount of misdirected communications was small inrelation to the total time the senior and junior user had beenusing the marks at issue, see Therma-Scan, 295 F.3d at 636;Checkpoint, 269 F.3d at 298-99; and (4) the testimony regardingthe misdirected communications came from employees of theplaintiff, see Checkpoint, 269 F.3d at 298. All these reasonsfor giving limited weight to actual confusion evidence arepresent here, and the Court accordingly limits the probativeweight accorded to evidence of actual confusion fitting into oneor more of the preceding categories.

Plaintiff, however, points out that at least some of themisdirected communications not only were sent to the wrongaddress, but included the wrong name as well — thus indicatingmore than mere clerical error. Also, the relatively small numberof incidents cannot be held against Plaintiff without accounting for the factthat Defendant has an admittedly small Rhode Island presence andPlaintiff has not had similar confusion problems with otherinsurers. Finally, Plaintiff points out that because "[a]ctualconfusion is often taken to be the most persuasive possibleevidence that there is a likelihood of confusion . . . [e]ven aminimal demonstration of actual confusion may be significant."Three Blind Mice Designs Co., Inc. v. Cyrk, Inc.,892 F. Supp. 303, 312 (D. Mass. 1995).

Furthermore, even if Plaintiff's actual confusion evidence isfound to be de minimus, Plaintiff points out that it can provelikelihood of confusion independently. See Nautilus Group,Inc. v. Icon Health and Fitness, Inc., 372 F.3d 1330, 1339 (Fed.Cir. 2004) (concluding that "it was improper for the districtcourt to consider ? scant and ambiguous evidence of actualconfusion in Nautilus's favor for purposes of granting apreliminary injunction," but nonetheless upholding determinationthat there was a likelihood of confusion as to registered mark onthe basis of plaintiff's strength of mark and similarity betweenthe marks and products); Frehling Enters., Inc. v. Int'l SelectGroup, Inc., 192 F.3d 1330, 1340 (11th Cir. 1999) (stating thatactual confusion evidence "is not a prerequisite" and finding alikelihood of confusion as to registered mark on the basis ofplaintiff's strength of mark, similarity of the marks, and defendant's intentto copy).

In light of all the above, the Court concludes that theevidence of actual confusion presented by Beacon, while clearlynot overwhelming, is sufficient to tip the scale in its favor asto this factor.

5. Defendant's Intent

OneBeacon (then known as "CGU Insurance") was sold to WhiteMountains Insurance Group, Ltd. ("White Mountains") in 2001 andOneBeacon adopted its current name and lighthouse logo inconnection with that sale. (Tr. of 3/3/05 at 58-59.) The choiceof name and logo resulted from a year-long process thatculminated with a naming contest in which employees and agentssubmitted their proposals. (Id. at 67-71.) The name "OneBeacon" was one of 2000 submissions. (Id. at 69.) It was chosenby senior management from among twelve finalists. (Id. at 70,83.) The choice of the name was influenced by several factors,including the fact that (a) One Beacon Street in Boston was thelongstanding address of the Company's corporate headquarters,which its employees and agents had come to refer to as "OneBeacon," and (b) it connected the Company to its base in Bostonand, more broadly, New England. (Id. at 71, 84.) Management ofthe company's new owner, White Mountains, endorsed the choice.(Id. at 84.) Throughout the naming process, the Company wasaware of the existence of Beacon (id. at 92-93), which it did not view as an impediment to theadoption of "OneBeacon" because it did not view the companies asbeing in direct competition (id. at 83) and the name had beencleared for use by outside counsel (id. at 81-82). Around thetime that "OneBeacon" was emerging as the consensus choice forthe new name, the Company's in-house design staff and anadvertising consultant developed over fifty potential logos.(Id. at 84.) The chosen logo is a combination of a lighthouseand obelisk designed by the outside consultant. (Id. at 85-86.)

The seventh factor in the likelihood of confusion inquiry — thedefendant's intent in adopting its mark — falls in OneBeacon'sfavor. In this case, the record is clear that OneBeacon adoptedits name and logo in good faith, without intending to copyBeacon's marks or deceive relevant purchasers. However, as theCircuit Court pointed out, "[u]nder this circuit's precedents . . .this factor usually matters only where an alleged infringercopied a mark in bad faith; a converse finding of good faithcarries `little weight.'" Beacon II, 376 F.3d at 19.

6. Strength of Mark

OneBeacon offered the following evidence at trial: A search ofyellowpages.com showed fourteen companies using "beacon" in theirnames in Rhode Island. (Tr. of 3/3/05 at 117.) One of thosecompanies was in the insurance/financial industry and also used alighthouse logo. (Id.) In Massachusetts, 289 companies listedin yellowpages.com used "beacon" in their name. (Id. at 119.) Tenof those companies were in the insurance/financial industry, andfive of those used a lighthouse logo. (Id.) In New York, therewere 233 listings, including one company in theinsurance/financial industry. (Id. at 120.) In Connecticut,there were 101 such listings, including three in theinsurance/financial industry, one of which used a lighthouselogo. (Id.) A search of the world wide web showed, nationwide,an additional thirty-four companies in the insurance/financialindustry using "beacon" in their names, twenty-nine of which alsoemployed a lighthouse logo. (Id. at 125.)

Beacon raised many legitimate challenges to the accuracy ofthis evidence. Nonetheless, after reviewing all the evidence andobjections thereto, the Court finds that: (1) the word "beacon"has been used by companies nationwide; (2) many of the companiesusing the word "beacon" in their mark are in the financialservices/insurance industries; and (3) it is not uncommon forthese marks to include a lighthouse logo.

However, even given this finding, the Court concludes thatBeacon's marks are strong marks. As the Court of Appeals statedin Beacon II: OneBeacon argues that the mark is weak because a yellow pages search shows that the term `beacon' is used by other financial services companies in the Northeast. But none of the Rhode Island companies listed appear to be insurance companies and there is no evidence that any of the other companies do business in Rhode Island. 376 F.3d at 19 n. 5. And so the evidence remained after trial. Beacon has used its marks since 1992, has promoted them actively, and has gained renown in the field, as evidenced by Dr. Jacoby's consumer survey and Beacon's substantial market share. Thus, the strength of the marks weighs in Beacon's favor.

Having reviewed the eight factors, the Court concludes Beaconhas carried its burden of proving a likelihood of confusion.Defendant argues Plaintiff must directly prove harm to itsgoodwill or reputation. But this is not correct. See SocieteDes Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633,640 (1st Cir. 1992) (Selya, J.) ("[T]he district court erred insuggesting that proof of actual harm to Nestle's goodwill was aprerequisite to finding a Lanham Trade-Mark Act violation. TheLanham Act contains no such proof-of-injury requirement. By itsvery nature, trademark infringement results in irreparable harmbecause the attendant loss of profits, goodwill, and reputationcannot be satisfactorily quantified and, thus, the trademarkowner cannot adequately be compensated. Hence, irreparable harmflows from an unlawful trademark infringement as a matter oflaw."). Plaintiff put on evidence of, inter alia, mistakencancellations of coverage for failure to pay premiums, improperdisclosure of confidential medical records, and delayedreimbursement of health care providers. (See Tr. of 2/28/05 at90.) This evidence, which this Court accepts, providesindependent support for concluding that Beacon's goodwill and reputation have been damaged. The nextissue is remedy.

III. Remedy

The Lanham Act affords the Court the "power to grantinjunctions, according to the principles of equity and upon suchterms as the court may deem reasonable." 15 U.S.C. § 1116.Indeed, "an injunction is the standard remedy in unfaircompetition cases." 5 McCarthy § 30:2. While the Court has a"wide range of discretion in framing an injunction in terms itdeems reasonable to prevent wrongful conduct," Soltex PolymerCorp. v. Fortex Indus., Inc., 832 F.2d 1325, 1329 (2d Cir. 1987)(quoting Spring Mills, Inc. v. Ultra-cashmere House, Ltd.,724 F.2d 352, 355 (2d Cir. 1983)), injunctive relief should belimited to the senior user's geographic market, Citizens Fin.Group, 383 F.3d at 132 ("[T]he senior user of a common law markmay not be able to obtain relief against the junior user in anarea where it has no established trade, and hence no reputationand goodwill.").

OneBeacon has argued that it should not be enjoined from usingits mark in Rhode Island, but rather should be allowed to curethe actionable confusion via disclaimers and, perhaps, a directedadvertising campaign. The Court, however, is not convinced such asolution would be effective. First of all, the efficacy ofdisclaimers generally is in doubt. See Home Box Office, Inc.v. Showtime/The Movie Channel, Inc., 832 F.2d 1311, 1315-16 (2dCir. 1987) (recognizing "body of academic literature that questionsthe effectiveness of disclaimers in preventing consumer confusionas to the source of a product"); see also Jacob Jacoby & GeorgeJ. Szybillo, Why Disclaimers Fail, 84 Trademark Rep. 224, 224(1994) ("most disclaimers do not in fact eliminate the potentialfor confusion"). Second, OneBeacon has put on no evidence tosuggest a disclaimer would be effective in this case. SeeVincent N. Palladino, Disclaimers Before and After HBO v.Showtime, 82 Trademark Rep. 203, 218 (1992) (summarizing casesfollowing HBO as standing for the proposition that a disclaimer"should not be ordered where plaintiff establishes a substantiallikelihood of confusion, unless defendant shoulders the heavyburden of proving a disclaimer will effectively alleviate thatsubstantial likelihood"). Finally, because Beacon is the onedoing the vast majority of advertising in Rhode Island, theburden to correct confusion via disclaimer would arguably fall tothem.9 Given that Beacon is not the creator of the actionable confusion in thiscase, it would be manifestly unfair to impose the burden ofclearing up that confusion on it. In light of these concerns, theCourt concludes that the only practical remedy that canmeaningfully protect Beacon's mark is an injunction prohibitingOneBeacon from using the OneBeacon name and lighthouse logo inRhode Island.

IV. Rhode Island Law Claims

Beacon also seeks injunctive relief under its state law claims.Because this Court has already concluded that Beacon is entitledto the relief it seeks pursuant to resolution of its Lanham Actclaims, there is no need to further address Beacon's state lawclaims. V. Conclusion

For the foregoing reasons, the Court hereby ENJOINS DefendantOneBeacon Insurance Group from using the OneBeacon name andlighthouse logo in Rhode Island.

IT IS SO ORDERED.

1. For example, Sara Soubosky, a paralegal for the Defendant'slaw firm, Ropes & Gray, LLP, testified at trial that a search ofthe internet revealed 289 businesses in Massachusetts used thename Beacon, with ten of those businesses being in thefinancial/insurance industry, and five of those employing alighthouse logo as well. (Tr. of 3/3/05 at 119.)

2. OneBeacon challenges Dr. Jacoby's methodology in conductingthe survey on a number of grounds. However, after an extensiveDaubert hearing on this matter, this Court concluded Dr.Jacoby's survey evidence constitutes admissible expert testimony.Beacon Mut. Ins. Co. v. OneBeacon Ins. Group,253 F. Supp. 2d 221 (D.R.I. 2003). OneBeacon also challenges Dr. Jacoby's surveyon the ground that it only tested the term "The Beacon," whilePlaintiff here is claiming infringement of "The Beacon," "BeaconInsurance," and "The Beacon Mutual Insurance Company." (SeeDef.'s Mot. to Exclude Evidence Relating to Marks other than "TheBeacon.") The Court concludes Dr. Jacoby's explanation forconstructing the surveys as he did makes sense and deniesDefendant's motion. (See Pl.'s Ex. 406 at 6 ("Because theentire name, The Beacon Mutual Insurance Company, actually tellsthe respondent that it refers (1) to a company, and (2) that thatcompany is an insurance company, no effort was made to testwhether the full name effectively communicates that it is thename of an insurance company.").)

3. OneBeacon argues that the names "Beacon Mutual InsuranceCompany" and "OneBeacon Insurance Group" should be compared here.However, this Court will follow the First Circuit's lead andfocus on the similarity of the visual marks. See Beacon II,376 F.3d at 18.

4. OneBeacon retained the services of Jessica Pollner, Ph.D.,to determine whether there was a likelihood of confusion betweenOneBeacon and Beacon among OneBeacon agents in Rhode Island whoproduce commercial insurance policies. OneBeacon seeks to havethe testimony of Dr. Pollner admitted as expert testimony to theeffect that the results of the survey she conducted demonstrate alack of likelihood of confusion among OneBeacon agents in RhodeIsland. Beacon filed a motion to exclude this testimony and theCourt conducted a Daubert hearing in the course of the trial,reserving ruling until the issuance of this opinion. This Courtgrants Beacon's motion for the following reasons: First, theCourt does not need an expert to testify to the non-startlingconclusion that OneBeacon agents in Rhode Island are not confusedbetween OneBeacon and Beacon. Cf. United States v. Sebaggala,256 F.3d 59, 65 (1st Cir. 2001). Second, Dr. Pollner'smethodology raises a number of questions as to the reliability ofher conclusions. As just one example, after receiving responsesfrom only forty-eight of the 140 agents from whom she soughtresponses (for a response rate of 34%), Dr. Pollner's primaryeffort to verify the representativeness of the sample was to askOneBeacon itself whether the forty-eight agents wererepresentative of the larger group. This Court concludes thatsuch methodology is not sufficiently rigorous to meet therequirements of Rule 702 of the Federal Rules of Evidence. (Cf.Pl.'s Mem. for Exclusion at 14 (pointing out that the Guidelinesfor Statistical Surveys issued by the former U.S. Office ofStatistical Standards provide that, in the case of probabilitysamples, "[p]otential bias should receive greater scrutiny whenresponse rate drops below 75%" and "[i]f the response rate dropsbelow 50%, the survey should be regarded with significantcaution").)

5. See Boston Athletic Assoc. v. Sullivan, 867 F.2d 22, 31(1st Cir. 1989) ("Mickey Lawrence, president of Image Impact,reported in her affidavit that she had encountered a shopper atthe Filene's department store who expressed surprise whenLawrence told her that defendants' shirt, which the shopper waswearing, was not an `official' Boston Marathon shirt. Thedistrict court refused to consider this account, holding that itwas inadmissible hearsay. We think that the account was nothearsay, however, because it was not `offered in evidence toprove the truth of the matter asserted.' Fed.R. Evid. 801(c).The statement was made not to prove that the defendants' shirtswere in fact officially authorized, but rather to show that thedeclarant, a member of the public, believed that they wereofficially authorized.") (emphasis in original); Citizens Fin.Group, Inc. v. Citizens Nat'l Bank of Evans City, 383 F.3d 110,133 (3d Cir. 2004) ("In this case, the tellers described whatthey saw and the action they took with respect to customers whoappeared to be confused with respect to CFG and CNBEC. This isnot hearsay.").

6. See Citizens, 383 F.3d at 133 ("Fed.R. Evid. 803(3)allows statements, otherwise excluded as hearsay, to be receivedto show the declarant's then-existing state of mind. To theextent that any of the customers' statements may be deemedhearsay, we believe Rule 803(3) would apply."); Programmed TaxSys., Inc. v. Raytheon Co., 439 F. Supp. 1128, 1131 n. 1(S.D.N.Y. 1977) ("[A]n exception [to the hearsay rule] isavailable for the statements of those `declarants' who weredescribing to Kanofsky their `then existing state of mind,' i.e.,their confusion.").

7. Defendant also argues the evidence should be deemedirrelevant. However, the cases Defendant cites for thisproposition are not particularly compelling. For example, inLang v. Ret. Living Publ'g Co., Inc., 949 F.2d 576 (2d Cir.1991), the Second Circuit held that evidence of 400 misdirectedphone calls was not relevant because it only showed (at best)that "consumers erroneously believed that the senior user(Lang) was the source of the junior user's (Retirement Living)magazine," id. at 583 (emphasis in original). This was notsufficient because, according to the Second Circuit, in order tobe relevant the evidence needed to show that "purchasers orprospective purchasers of Lang's products" believed the products"were produced by or affiliated with Retirement Living'smagazine." Id. This Court, however, is not bound by such alimitation. See Beacon II, 376 F.3d at 10 (noting that theevidence of misdirected communications in this case could supportthe inference that Beacon's goodwill and reputation had beendamaged). The Sixth Circuit, in Therma-Scan, also foundevidence of actual confusion to be irrelevant where thecommunications that had been misdirected to plaintiff made nomention of defendant's product, 295 F.3d at 635. Since at leastsome of the inquiries to Plaintiff here did mention products soldonly by Defendant, this rationale for finding irrelevance is alsonot applicable.

8. In addition to the parties having similar names, they sharesimilar addresses. Beacon is located at One Beacon Centre inWarwick, Rhode Island, while OneBeacon's headquarters is at OneBeacon Street in Boston, Massachusetts.

9. This fact may be the source of OneBeacon's suggestion thatit be permitted to avoid an injunction by implementing a directedadvertising campaign. This Court, however, foresees needlesslydifficult logistical issues involving the form, quantity, andduration of such proposed advertising. Moreover, such a campaignmight actually make the problem worse. See Jacobs v. Beecham,221 U.S. 263, 272 (1911) (Holmes, J.) ("To call pills Beecham'spills is to call them the plaintiff's pills. The statement thatthe defendant makes them does not save the fraud. That is notwhat the public would notice or is intended to notice, and, if itdid, its natural interpretation would be that the defendant hadbought the original business out and was carrying it on."); seealso Jacob Jacoby, Margaret C. Nelson, & Wayne D. Hoyer,Corrective Advertising and Affirmative Disclosure Statements:Their Potential for Confusing and Misleading the Consumer, 46 J.Marketing 61 (1982) ("Studies on corrective advertising suggestthat remedial messages may also fail to be correctlycomprehended. Mazis and Adkinson (1976, p. 182) noted that 39% oftheir subjects misunderstood the corrective message they used,while Russo et al. (1981) obtained a median miscomprehension rateof 61% for corrective ads for 10 different products. In otherwords, remedial statements may be at least as confusing andmisleading as the advertising they are designed to counteract.").Thus, the Court does not view directed advertising as aneffective solution to the problem of confusion as to source inthis case.

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