Holiday Inns, Inc. v. 800 Reservation, Inc., et al.
86 F.3d 619 (1996)
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Rule of Law:
A defendant's use of a telephone number that is a common misdialing of a competitor's trademarked vanity number does not constitute trademark infringement under the Lanham Act if the defendant does not use the competitor's actual mark and did not create the initial consumer confusion.
Facts:
- Holiday Inns, Inc. operates an international hotel chain and extensively markets its trademarked vanity telephone number, 1-800-HOLIDAY.
- Consumers frequently misdial vanity numbers, often substituting the number '0' for the letter 'O'.
- Albert H. Montreuil of Call Management Systems, Inc. discovered that the complementary number to 1-800-HOLIDAY, which corresponds to 1-800-H[zero]LIDAY (1-800-405-4329), had not been reserved by Holiday Inns.
- In May 1993, Montreuil reserved the 1-800-405-4329 number with the admitted 'sole purpose' of intercepting calls from misdialed customers attempting to reach Holiday Inns.
- Call Management Systems arranged for 800 Reservations, Inc. to answer calls to the 405 number.
- Callers to the 405 number were played a recorded message stating they had misdialed and had not reached Holiday Inns, before being offered hotel reservation services for multiple chains, including Holiday Inns.
Procedural Posture:
- Holiday Inns, Inc. filed suit against Call Management Systems, Inc., 800 Reservations, Inc., and Earthwinds Travel, Inc. in the U.S. District Court for the Eastern District of Tennessee.
- The district court granted Holiday Inns's motion for a temporary restraining order, which was later converted into a preliminary injunction.
- The defendants' motion to modify the preliminary injunction was denied by the district court.
- The district court granted Holiday Inns's motion for partial summary judgment, finding the defendants liable for trademark infringement.
- Subsequently, the district court entered a final judgment making the injunction permanent, but it denied Holiday Inns's request for enhanced damages and attorney fees.
- The defendants appealed the summary judgment and permanent injunction to the U.S. Court of Appeals for the Sixth Circuit, and Holiday Inns cross-appealed the denial of enhanced fees.
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Issue:
Does a company's use of a telephone number that is a common misdialing of a competitor's trademarked vanity number, for the purpose of intercepting the competitor's customers, constitute trademark infringement or unfair competition under the Lanham Act when the company does not use or promote the competitor's trademark?
Opinions:
Majority - Daughtrey
No, this conduct does not constitute trademark infringement or unfair competition under the Lanham Act. The plain language of the Lanham Act prohibits the 'use in commerce' of a competitor's trademark or a colorable imitation thereof. In this case, the defendants never used Holiday Inns's trademark '1-800-HOLIDAY' or any similar mark; they used the numeric telephone number 1-800-405-4329, which is neither phonetically nor visually similar. Crucially, the defendants did not create the consumer confusion; the confusion already existed among the misdialing public. Merely taking advantage of pre-existing consumer error without actively using the protected mark does not satisfy the statutory requirements for an infringement claim. Therefore, the eight-factor test for 'likelihood of confusion' is irrelevant because the prerequisite of trademark 'use' by the defendant has not been met.
Analysis:
This decision narrowly interprets the 'use in commerce' requirement of the Lanham Act, establishing that passively benefiting from consumer confusion is not a violation if the defendant does not actively use the plaintiff's mark. It creates a distinction between creating confusion (which is illegal) and merely intercepting pre-existing confusion (which is not). The ruling suggests that trademark holders bear the responsibility to be proactive in protecting their brands, for instance by registering common misdialings of their vanity numbers, as competitors may legally exploit such oversights.
