In the 1930’s, North Carolina began an ad campaign describing the state as "Variety Vacationland."  UNC’s Wilson library says that the advertising resulted in a "growing number of visitors to places like Asheville, Pinehurst, and the Outer Banks" and that it "heightened their reputation as excellent vacation areas."

What do places like Pinehurst and the Outer Banks have to do with business litigation in North Carolina?  The answer is in the Fourth Circuit Court of Appeals’ opinion yesterday in OBX-Stock, Inc. v. Bicast, Inc.  The OBX case involves a trademark referencing the Outer Banks, and it discusses an earlier Fourth Circuit opinion addressing the "Pinehurst" trademark.

The Plaintiff had conceived of the OBX abbreviation to designate the Outer Banks of North Carolina, placing it on stickers, t-shirts, and other items. The Plaintiff was so successful that a broad variety of businesses began using the term as a shorthand designation for the Outer Banks.  The result, said Judge Niemeyer, was that "[t]he initials OBX are omnipresent in the Outer Banks and are universally understood as an abbreviation for ‘Outer Banks.’"

The Defendant came into Plaintiff’s crosshairs when it began selling stickers using the term OBXtreme "to denote the wide variety of extreme sports available at the Outer Banks."  The Plaintiff, which held four federally registered trademarks for OBX, sued for infringement.  It lost at summary judgment and the Court of Appeals affirmed.

The reason was that OBX wasn’t identified with any product.  Instead, it was merely descriptive of a geographical location.  The Court held that the term had become so widely and generally used that it had "entered the ‘linguistic commons’ as an often-used, everyday abbreviation of ‘Outer Banks.’"  Thus, In order to prevail, the Plaintiff needed to show that its descriptive mark had secondary meaning associated not with the Outer Banks, but with Plaintiff’s products.  The Court said that there was no such evidence.

In an interesting sidelight, the Fourth Circuit held that OBX couldn’t rely on its federal registrations because "the PTO only grudgingly issued the registrations after intervention by North Carolina’s congressional delegation."  The registrations had been rejected five times by the PTO based on its determination that OBX "had become nothing more than an alternative to Outer Banks and the terms were used ‘interchangeably.’"  The Court said that "quick process through the PTO," conversely, would "weigh[] in favor of validity."

In the earlier case involving the "Pinehurst" trademark, Resorts of Pinehurst, Inc. v. Pinehurst Nat’l Corp., 148 F.3d 417 (4th Cir. 1998), the Fourth Circuit held that Defendant had infringed by using "Pinehurst" in connection with its competing golf resort.  Pinehurst is a geographic location also, so what was the difference from the OBX case?  In Resorts of Pinehurst, the Court found the secondary meaning lacking in OBX, holding that the "Pinehurst" mark "had a clear secondary meaning in consumers’ minds, making it an enforceable trademark even if it might have been geographically descriptive.  Resorts of Pinehurst communicated its name to the consuming public effectively to associate the name with a private provider of golf courses and golf services, and not the geographical location in North Carolina."

My partners Reid Phillips and David Sar represented the prevailing Defendant.