Mobil Oil Corporation v. Pegasus Petroleum Corporation

United States Court of Appeals, Second Circuit
818 F.2d 254 (1987)

ELI5:

Rule of Law:

A junior user's word mark can infringe on a senior user's famous pictorial trademark if the word is synonymous with the picture in the public mind, creating a likelihood of confusion, even among sophisticated purchasers or in a market where the senior user does not use the specific pictorial mark.

Facts:

Since 1931, Mobil Oil Corporation has made extensive use of its registered trademark, a 'flying horse' symbol representing the mythological Pegasus, making it an exceptionally strong and well-known mark in the petroleum industry.
Mobil is engaged in a wide range of petroleum-related activities, including the bulk buying and selling of oil products, known as oil trading.
Mobil does not use its flying horse symbol in connection with its oil trading business.
In 1981, Gregory Callimanopulos founded Pegasus Petroleum Corporation, a company that confines its activities exclusively to oil trading.
Callimanopulos admitted he was aware of Mobil's flying horse symbol when he chose the name 'Pegasus Petroleum' for his company.
Pegasus Petroleum has never used a pictorial flying horse symbol, only the word mark 'Pegasus' and an interlocking 'PP' logo.
After being founded, Pegasus Petroleum sent letters to hundreds of people in the oil trading business announcing its formation.
Mobil contacted Pegasus Petroleum in 1982 regarding its use of the name, but the parties failed to reach an agreement.

Procedural Posture:

Mobil Oil Corporation filed suit against Pegasus Petroleum Corporation in the U.S. District Court for the Southern District of New York.
Mobil alleged trademark infringement, unfair competition, false designation of origin, and trademark dilution.
Pegasus Petroleum asserted counterclaims seeking to cancel Mobil's trademark registration.
After a three-day bench trial, the district court judge entered judgment for Mobil on all claims and dismissed Pegasus Petroleum's counterclaims.
The district court enjoined Pegasus Petroleum from using the mark 'Pegasus' in the petroleum industry.
Pegasus Petroleum appealed the district court's judgment to the U.S. Court of Appeals for the Second Circuit.

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does a junior user's use of a word mark ('Pegasus') that evokes a senior user's famous pictorial trademark (a flying horse) create a likelihood of confusion sufficient to constitute trademark infringement under the Lanham Act, even when the parties' direct competition is limited and the buyers are sophisticated?

Opinions:

Majority - Lumbard, Circuit Judge

Yes. A junior user's use of a word mark that evokes a senior user's pictorial trademark can create a likelihood of confusion sufficient for a trademark infringement claim. The court applied the eight-factor test from Polaroid Corp. v. Polarad Electronics Corp. to reach its conclusion. The court found Mobil's flying horse mark to be exceptionally strong. Crucially, it determined that as a factual matter, the word 'Pegasus' is synonymous with the pictorial representation of the flying horse in the minds of the public. Although Mobil does not use the symbol in the oil trading market, both companies operate in the petroleum industry, establishing competitive proximity. The court also inferred bad faith, finding that Pegasus Petroleum's founder, a sophisticated businessman, must have known the name would infringe on Mobil's mark and chose it to get a 'free ride' on Mobil's reputation. Finally, the court held that even sophisticated purchasers in the oil trading market are not immune to 'initial interest confusion,' where Pegasus Petroleum might gain credibility and access it would not otherwise have due to a perceived association with Mobil. This initial confusion is a sufficient injury under the Lanham Act.

Analysis:

This decision significantly broadens the scope of protection for famous trademarks, confirming that infringement can occur across different formats (pictorial vs. word) when the two are synonymous. It solidifies the 'initial interest confusion' doctrine, establishing that a trademark can be infringed even if confusion is dispelled before a final sale occurs, particularly in markets with sophisticated buyers. The case serves as a strong precedent that a 'second comer' has a significant duty to choose a mark that avoids any likelihood of confusion with an established, famous senior mark, especially within the same general industry.

Gunnerbot

AI-powered case assistant

Loaded: Mobil Oil Corporation v. Pegasus Petroleum Corporation (1987)

Try: "What was the holding?" or "Explain the dissent"

Premium Feature