Posted on April 27, 2016 by admin in Corporations
Note: Attorney Davis original wrote this post in her capacities as a contributor to SCOV Law.
In this case, Defendant Albert Bingham appeals from the trial court's declaratory judgment. Before the SCOV even rules on it, Bingham files a motion to recuse the entire SCOV because his appeal had been pending for so long. That doesn't work, and barely makes a footnote in the decision.
Anywho, plaintiff TLOC Senior Living operates a senior living community in Middlebury, Vermont. Plaintiff did business under the name "The Lodge at Otter Creek." Plaintiff lapsed in its re-registration of the name, and in July 2013, Bingham registered the name under his own name with the Vermont Secretary of State's Office. Plaintiff sued alleging slander of title, trade infringement, unfair competition, and tortious interference with contract. Bingham argued (through many counterclaims) that by registering the name "The Lodge at Otter Creek" as his business name, he foreclosed any right plaintiff had to the name.
Bingham filed a motion to dismiss, a motion for summary judgment, and a motion for default judgment in his favor. Plaintiff moved for summary judgment in its favor. The court denied both motions for summary judgment, as well as Bingham's motion for default judgment.
On the merits, the trial court recounted the following. Plaintiff alleged that it had continuously used the business name "The Lodge at Otter Creek" since 2005. In addition to itself, TLOC Real Estate had also used the name. Because these corporate entities were using "The Lodge at Otter Creek" as an alternative business name, the name had to be registered with the Secretary of State. Plaintiff's parent company, Middlebury Heights Holding Company, LLC (MHHC), first registered the name in 2005, but failed to re-register in the name in 2011. Thus, when Bingham registered "The Lodge at Otter Creek" under his own name, it was not registered with any other entity.
The court relied on the Restatement (Third) of Unfair Competition (2015) to determine the nature of the trade name. The court found that plaintiff was the first to appropriate the designation of "The Lodge at Otter Creek," and had been doing business under that name for more than five years. The trial court also concluded that plaintiff had established rights to the name under common law, but could not declare that plaintiff was entitled to the actual use of the name. But, the court also said that the conclusion did not provide Bingham with any rights to actually use "The Lodge at Otter Creek" as his own name. Registering the name with the Secretary of State was not enough, by itself, to support Bingham's counterclaim of unfair competition.
The trial court concluded that although Bingham had been able to register the name, plaintiff's failure to re-register did not allow Bingham to use "The Lodge at Otter Creek." Citing the Restatement (First) of Torts in regards to a trade name and market reputation, the court concluded that plaintiff's common law rights to the name had not dissipated enough to allow Bingham to use it. Even if plaintiff stopped using the name, it would take considerable time before another person or entity could acquire rights to its actual use.
The court denied summary judgment, then gave the parties thirty days to show why their respective claims should not be dismissed in their entirety. Plaintiff asked for a declaratory judgment that it had retained the right under common law principles to use "The Lodge at Otter Creek" as its trade name. Bingham asked for a declaratory judgment requiring the plaintiff to cease all use of the name, and requested that one of plaintiff's corporate executives be fined and imprisoned.
Plaintiff won its declaratory judgment, concluding that even though Bingham registered the name, he was not entitled to use the trade name without violating plaintiff's common law rights to the trade name. The court dismissed all remaining claims and counterclaims. Bingham appealed, claiming that because he registered the name with the Secretary of State, his rights were better than the plaintiff's rights.
Because the trial court granted the relief based on plaintiff's summary judgment motion, the SCOV reviews using the same standard as the trial court—it will uphold the judgment if the moving party has demonstrated there are no genuine issues of material fact and that it is entitled to judgment as a matter of law.
Reiterating the trial court's decision, the SCOV notes that common law rights to trade names are created and preserved by use, and not simply registration. Registering a name does not overcome existing common law rights to said name. The law does not support Bingham's position that he got rights to the name by registering it with the secretary of state.
The SCOV also notes that Bingham raised an argument regarding trademarks in his brief. Even if this case involved a trademark instead of a trade name, plaintiff would still win because the trademark statutes state that "nothing herein shall adversely affect the rights or the enforcement of rights in marks acquire in good faith at any time at common law." So, Bingham loses for the same reason. The rest of Bingham's arguments hold no water, and are quickly dismissed.
The SCOV, finding no genuine issue of material fact, and no error below, affirms.
Justice Dooley dissents, with Justice Eaton joining, refusing to accept the trial court's decision that it had no power to invalidate Bingham's registration. The dissent goes a bit further, stating that it cannot figure out why the court did not grant declaratory relief to the plaintiff to the effect that it is unlawful for Bingham to use the trade name. The dissent agrees that use trumps registration, then states that Bingham could not lawfully use the trade name on the date he acquired it.
The effect from the trial court is that Bingham cannot use the name "The Lodge at Otter Creek" because of plaintiff's common law rights, and plaintiff cannot use the name without violating this statute. The result is that Bingham can continue to hold the name hostage. The dissent would adopt a broader reading of the statute to allow the remedy of cancellation of the registration by the court.
declaratory judgment
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