text:
    Robert Lee BURNHAM v. SUN OIL COMPANY.
    Civ. A. No. 83-0175.
    United States District Court, W.D. Louisiana, Lake Charles Division.
    Aug. 23, 1985.

      Wilson M. Montero and Joseph E. Roberts, Metairie, La., William Henry Sanders, Jena, La., Terry L. Jordan, Philadelphia, Miss., for plaintiff, Burnham.
    Allen L. Smith, Jr., Plauche, Smith & Nieset, Lake Charles, La., for Sun Oil Co.
    Susan A. Daigle & Edwin G. Preis, Jr., Preis, Kraft, LaBorde & Daigle, Lafayette, La., for Cactus Int’l., Inc.
    Randy J. Fuerst, Camp, Carmouche, Barsh, Hunter, Gray & Hoffman, Lake Charles, La., for Nat’l Union Fire Ins. Co. of Pittsburg, Pa.
   RULING

VERON, District Judge.

This matter comes before the Court on the motion or petition of third-party plaintiff Sun Oil Company for a declaratory judgment declaring its rights pertaining to its third-party claim for contractual defense and indemnity from Cactus International, Inc. The plaintiff in this suit, Robert Lee Burnham, alleges that he was injured on March 11, 1982 while employed by Cactus on a fixed offshore platform owned by Sun when he fell down an allegedly defective flight of stairs. Sun has in turn third-partied Cactus alleging that Burnham’s claim is encompassed by an indemnity provision contained in a platform drilling contract entered into by Sun and Cactus. Neither party disputes that the platform on which the accident allegedly occurred, a Sun platform in Block 648 of the West Cameron Area, is located on the Outer Continental Shelf some 120 miles off the Louisiana coast.

Several of the provisions of the platform drilling contract between Sun and Cactus, which is dated October 20, 1980, are pertinent to the issues raised in this motion. Paragraph 1.1 of Article I of the contract provides that “[Cactus] agrees to drill and complete according to the terms hereof, one or more wells in search of oil and/or gas on a Federal Lease in United States waters of The Gulf of Mexico, Offshore Louisiana, Offshore Texas, at a location on which Company will construct an eight pile, multiple slot, minimum self-contained type platform.” Paragraph 1.2 provides further that the drilling rig “Cactus 101” would be installed on the platform to drill the well or wells contemplated by the contract. Paragraph 2.1 of Article 2 provides that the contract will become effective from its date of execution, and “shall continue in effect until all Platform slots have been drilled,” subject to limited contract termination and contract extension rights in Sun and subject to immediate termination should the Cactus 101 rig become an actual or constructive total loss. Article 14 contains reciprocal indemnity provisions, which basically provide that each party will be responsible for the claims of their employees or the employees of their respective subcontractors. Paragraph 14.3 Contains the indemnity provision that is relevant to this case, which provides in pertinent part:

[Cactus] agrees to indemnify and hold harmless [Sun] ... against any and all claims, demands or suits (including, but not limited to, claims, demands, or suits for bodily injury ...) which may be brought against [Sun] or in which [Sun] is named a party defendant ... by any employee of [Cactus] in any wise arising out of or incident to the work performed under this Contract, irrespective of whether such suits are based on the relationship of master and servant, third party or otherwise and even though occasioned, brought about, or caused in whole or in part by the negligence of [Sun] ... [and] [Cactus] further agrees to investigate, handle, respond to, provide defense for and defend any such claim, demand or suit at its sole expense and agrees to bear all other costs and expenses related thereto, even if it is groundless, false or fraudulent____

Finally, Paragraph 19.2 of Article 19 provides that “[a]ll questions arising out of this Contract or its validity, interpretation, performance or breach shall be governed by the law of the State of Texas, not including, however, any conflicts-of-law rule of the State of Texas which may direct or refer any such determination to the laws of any other jurisdiction.”

In its principal argument opposing the motion, Cactus contends that the Louisiana Oilfield Anti-Indemnity Act, La.R.S. 9:2780, invalidates the indemnity provision set forth in Paragraph 14.3, and that, accordingly, the provision opting for Texas law should not be enforced because to do so would violate Louisiana public policy. Cf. NCH Corporation v. Broyles, 749 F.2d 247 (5th Cir.1985) (the provision for application of North Carolina law was not enforced because to do so would violate the strong public policy in Louisiana that disfavors covenants not to compete). Yet the contract in question was executed on October 20, 1980, which date is nearly one year prior to the effective date of the Act, September 11, 1981. If the Act does not retroactively invalidate the indemnity provision in the contract, then it follows that application of Texas law here would not violate Louisiana public policy. See Lirette v. Union Texas Petroleum Corporation, 467 So.2d 29, 32-33 (La.App. 1st Cir.1985) (the Texas choice-of-law provision was enforceable because section 2780 would not apply retroactively to invalidate the indemnity provision). Thus, the Court must determine whether section 2780 applies retroactively on the facts presented in this case.

Cactus characterizes the contract in this case as a “master service agreement” and urges that the Act therefore should apply because the injury is alleged to have occurred after the effective date of the Act. Paragraph (I) of section 2780 provides:

This Act shall apply to certain provisions contained in, collateral to or affecting agreements in connection with the activities listed in Subsection C which are designed to provide indemnity to the indemnitee for all work performed between the indemnitor and the indemnitee in the future. This specifically includes what is commonly referred to in the oil industry as master or general service agreements or blanket contracts in whatever form and by whatever name. The provisions of this Act shall not apply to a contract providing indemnity to the indemnitee when such contract was executed before the effective date of this Act and which contract governs a specific terminable performance of a specific job or activity listed in Subsection C.

This provision distinguishes “master service agreements” from contracts which govern a “specific terminable performance.” As Judge Shaw observed in Home Insurance Company v. Garber Industries, Inc., 588 F.Supp. 1218 (W.D.La.1984), the clear inference from the statutory distinction between the two types of contracts is that, while the Act cannot apply to a contract executed prior to its effective date that governs a specific terminable performance, the Act can apply in certain instances to a master service contract executed prior to the effective date of section 2780. 588 F.Supp. at 1222. It is well-established that the Act applies to indemnity claims under master service agreements executed prior to the effective date of the Act where both the issuance of the specific work order and the alleged injury occur after September 11, 1981. E.g., Moser v. Aminoil, U.S.A., Inc., 618 F.Supp. 774, 778-79 (W.D.La.1985) (collects citations to prior cases on point). Cactus relies upon this principle in its claim that the Act applies on the facts of this case.

The Court concludes, however, that this platform drilling contract is a contract that “governs a specific terminable performance of a specific job or activity” rather than a “master service contract.” Unlike a master service agreement, this contract does not purport to adopt blanket terms for any and all work that the parties might perform in the future. Instead, the contract is directed to a specific job or activity — the drilling of one or more wells with Cactus Rig 101 on the platform designated by Sun, that being the platform in Block 648 of the West Cameron Area, in search of oil and/or gas on an offshore federal mineral lease held by Sun. And, unlike the standard master service agreement, this drilling contract does not extend indefinitely until one of the parties gives notice of its intent to terminate the agreement. Rather, the drilling contract will terminate on its own terms at the completion of the specific job — when “all Platform slots have been drilled” — or upon the impossibility of further performance on the job occasioned by the loss of Cactus Rig 101. The inclusion of standard terms that grant Sun the option, within ninety days of the completion of the primary drilling period, of extending the contract for another platform drilling project does not render the contract anything other than a contract for a “specific terminable performance.” Whether in the original or an extended term, the contract is nonetheless subject to automatic termination at the completion of the specific job unless Sun exercises its option to extend the contract for another specific job.

Moreover, the contract presented here lacks the attributes that have been relied upon in earlier cases that apply section 2780 to pre-Act master service agreements. A master service agreement contemplates as yet unspecified and wholly contingent performance in the future. The agreement standing alone obligates neither party to perform any services. The issuance of a specific work order triggers the obligation to perform. Thus, when the Act is applied to work orders issued after September 11, 1981, it is in fact being applied only prospectively because it is being applied to a separate and independent contract that came into existence after its effective date. Moser, at 779-80; see also Hebert v. Kerr-McGee Corporation, 618 F.Supp. 767, 772-73 (W.D.La.1985) (related analysis in choice-of-law context). This platform drilling contract, on the other hand, immediately, and independently of any other agreement, binds both Sun and Cactus to perform certain specified obligations in furtherance of the particular offshore drilling project.

The foregoing discussion demonstrates that it would be more consonant with the statutory language and the prior jurisprudence to classify this platform drilling contract as a “specific terminable performance” contract rather than as a “master service” contract. Section 2780 therefore does not apply to this contract because it was executed prior to the statute’s effective date. La.R.S. 9:2780 (I). As the Act would not bar the indemnity claim if Louisiana law were to apply, enforcement of the contractual choice of Texas law would not violate Louisiana public policy here. Cf. Lirette, 467 So.2d at 32-33 (the Louisiana public policy embodied in section 2780 was not violated by enforcing a Texas choice-of-law provision in a specific terminable performance contract executed prior to September 11, 1981). Thus, Texas law governs here.

Texas statutory law also bars provisions in oilfield contracts purporting to indemnify an indemnitee against the consequences of its own negligence. Tex.Civ. Stat.Ann. art. 2212b § (2). Sun relies upon the exception contained in section 4(c) of article 2212b, which provides:

The provisions of Section 2 of this Act shall not apply to any agreement providing for indemnity with respect to claims for personal injury or death to indemnitor’s employees or agents, or the employees or agents of indemnitor’s sub-contractors if the parties agree in writing that such indemnity obligation will be supported by available liability insurance coverage to be furnished by indemnitor, provided, however, that such indemnity obligation shall be only to the extent of the coverages and dollar limits of insurance agreed to be furnished; but in no event shall said insurance be required in an amount in excess of twelve times state basic limits for bodily injury, approved by the Board of Insurance Commissioners in accordance with Article 5.15 of the Texas Insurance Code.

The parties do not dispute that the upper limit for permissible insurance coverage under section 4(c) is presently $300,000.00. Here, Burnham is in fact alleged to be an employee of Cactus, the indemnitor. The section 4(c) exception is therefore applicable because this claim falls within the scope of “claims for personal injury ... to indemnitor’s employees.” Thus, article 2212b permits Sun to enforce the indemnity clause relied upon in this case to the extent that the parties have agreed in writing that Cactus will support the indemnity obligation with liability insurance, subject to the $300,000.00 maximum upper limit.

Paragraph 14.1 of Article 14 of the drilling contract states that “[i]t is ... the intent and purpose of this Agreement to provide for indemnities to the maximum extent provided by law, and to support those indemnities by available liability insurance coverage furnished by the indemnitor.” In Exhibit “E” of the agreement, Cactus specifically agrees to maintain comprehensive general liability insurance with liability limits of not less than $1,000,000.00 for any one occurrence of bodily injury. Thus, Sun can enforce the indemnity obligation undertaken by Cactus in paragraph 14.3 of the contract because Cactus has agreed to support that obligation with liability insurance. Sun’s right to enforce the indemnity obligation is subject only to the present statutory maximum upper limit of $300,000.00.

Accordingly, the motion of Sun Oil Company for a declaratory judgment declaring its rights pertaining to its third-party claim for contractual defense and indemnity from Cactus International, Inc. is GRANTED such that Cactus International, Inc. must defend and indemnify Sun Oil Company against the claim of Robert Lee Burnham up to a maximum upper limit of $300,000. Counsel for Sun shall provide the Court with an appropriate form of judgment within ten days of his receipt of this ruling.

      . Cactus also contends that Paragraph 14.3 does not clearly and unambiguously require Cactus to defend and indemnify Sun for claims brought by Cactus employees. Yet the language excerpted in the text could hardly be clearer on this point. The express terms of the contract, if enforceable, bind Cactus to defend and indemnify Sun against claims brought by Cactus employees.

      . Cactus has not come forward with any evidence raising a factual issue as to whether Sun in fact exercised the option to extend the contract from an earlier platform drilling job to the Block 648 job. Nor has Cactus urged that such a factual issue might be material on the ground that exercise of the option to extend actually constituted a renewal of the contract and thereby created a new contract that came into existence after September 11, 1981. Cf. Long v. Diamond M Drilling Co., Inc., 674 F.2d 425, 427 (5th Cir.1982) (the court observed that, even if the extension of the original contract gave rise to a new contract under Texas law, article 2212b nonetheless applied because the last act necessary for the formation of the supposed new contract occurred prior to the effective date of the Act).


source: Caselaw Access Project

author: NOWLIN, District Judge.

license: Public Domain

text:
    AMERICAN AUTOMOBILE ASSOCIATION (INCORPORATED) v. AAA INSURANCE AGENCY, INC.
    Civ. No. A-84-CA-157.
    United States District Court, W.D. Texas, Austin Division.
    Aug. 23, 1985.

      Richard S. Siluk, Baker & Botts, Houston, Tex., Larry F. York, Baker & Botts, Austin, Tex., for plaintiff.
    James N. Rader, James M. Steed & Associates, Austin, Tex., for defendant.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

NOWLIN, District Judge.

This is an action for service mark infringement and unfair competition. Plaintiff contends that Defendant’s use of the designation “AAA” in its insurance business is likely to cause confusion and constitutes infringement of Plaintiff’s federally registered service marks under Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1), and that such use violates Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), the Texas Deceptive Trade Practices-Consumer Protection Act, Tex.Bus. & Com.Code Ann. §§ 17.41-63 (Vernon Supp. 1985), and the common law of unfair competition. Plaintiff seeks a permanent injunction and its costs of suit.

Defendant responds that its use of “AAA” is not likely to cause confusion. Defendant also contends that Plaintiff’s use of “AAA” for insurance services in Texas is illegal, and that Plaintiff’s Service Mark Registration No. 829,265 was fraudulently obtained, because Plaintiff is not licensed to engage in the insurance business in Texas. Finally, Defendant contends that Plaintiff’s action is barred by laches and acquiescence.

A trial was held on May 16,1985, and the parties presented testimony and introduced exhibits at that time. The parties also have stipulated to certain undisputed facts in a Joint Pretrial Order filed with the Court. Upon consideration of the stipulations and the evidence of record, and the applicable legal authorities, the Court finds that Defendant has infringed Plaintiff’s federally registered service marks and has committed acts of unfair competition in violation of federal and state law, as more fully detailed in the following findings of fact and conclusions of law. Accordingly, Plaintiffs are entitled to injunctive relief and to their costs of suit.

FINDINGS OF FACT

1. The American Automobile Association (Incorporated) (hereinafter sometimes referred to as “AAA”) is a Connecticut corporation having its principal place of business in Virginia. Plaintiff has been doing business under the name and mark “AAA” since at least as early as 1902.

2. Defendant, AAA Insurance Agency, Inc., is a Texas corporation having its principal place of business at 600 Ft. Hood Road, Killeen, Texas 76540. Defendant was incorporated in Texas in 1979 and is owned and operated by Delmer G. Tipps, who is the president of the corporation.

3. Plaintiff AAA is an organization that provides its members with a variety of services throughout the United States and Canada, including the State of Texas. Since at least as early as 1916, AAA has been providing its members with the service of placing insurance with underwriters. Plaintiff’s related company, Texas Club Service Agency, Inc. (“TCSA”), and other affiliated agents are duly licensed to act as insurance agents in the State of Texas. TCSA is wholly owned by Automobile Club Service Agency, Inc., a corporation that is wholly owned by Plaintiff. The “AAA” service marks are used prominently in the sale and advertising of TCSA’s insurance services in Texas.

4. AAA is a widely known organization that has been extensively advertised and promoted throughout the United States. AAA currently has more than 22 million members, and the “AAA” name has come to be relied upon by a significant segment of the public as indicating AAA and its services. As a result of its widespread public use and recognition, the “AAA” mark has become an asset of substantial value and good will as a symbol of Plaintiff and its services.

5. AAA is the owner of federal service mark registrations for the mark “AAA” for insurance services, including Registration Nos. 547,321 and 829,265, registered in the United States Patent and Trademark Office on August 28, 1951, and May 23, 1967, respectively. (P.Ex. 1 & 2.) These registrations afford constructive notice throughout the United States of Plaintiff’s claim to ownership of the “AAA” mark for insurance services. 15 U.S.C. § 1072 (1982). Furthermore, these registrations have become incontestable under Section 15 of the Lanham Act, 15 U.S.C. § 1065, and under 15 U.S.C. § 1115(b) they constitute conclusive evidence of AAA’s exclusive right to use the “AAA” marks in connection with insurance services.

6. Defendant also is engaged in the business of placing insurance with underwriters. Without authorization from AAA, and over AAA’s objection, Defendant and its predecessors have been doing business under the name “AAA Insurance Agency” since 1970. Defendant was incorporated as “AAA Insurance Agency, Inc.” in 1979.

7. Defendant’s insurance business is conducted at a single location in Killeen, Texas. Although Defendant has moved the location of its office in the past, Defendant has not expanded its business to more than one office. Defendant’s total advertising expenditures from 1970 through 1983 were approximately $10,000, or about $750 per year.

8. Upon learning of Defendant’s adoption and use of the “AAA” name in 1970, Plaintiff notified Defendant in writing that its use of “AAA” was an infringement of Plaintiff’s federally registered marks. Defendant nevertheless continued to use the name “AAA.” Upon learning of Defendant’s continued use of that name in late 1983, Plaintiff again requested that Defendant change its name. Defendant refused, and this action followed.

9. Defendant’s unauthorized use of the “AAA” designation in connection with its insurance business is likely to cause confusion as to Defendant’s connection or affiliation with AAA, or its approval or endorsement by AAA. Mr. Tipps testified that the Defendant receives about two calls a month intended for Plaintiff AAA, even though Plaintiff currently has no office in Killeen, Texas. These misdirected calls show that a significant amount of actual confusion has occurred, and they demonstrate that people seeing or hearing Defendant’s name are likely to associate Defendant with Plaintiff.

10. Any finding of fact which is deemed to constitute a conclusion of law is hereby adopted as such.

CONCLUSIONS OF LAW

1. This action arises under the Lanham Act, 15 U.S.C. § 1051 et seq. (1982), and the laws of the State of Texas. The Court has personal jurisdiction over the parties, and the Court has jurisdiction over the subject matter of this action pursuant to 15 U.S.C. § 1121, 28 U.S.C. § 1338, and the doctrine of pendent jurisdiction.

2. Plaintiff has standing under Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1), to prevent the infringement of its registered service marks. Plaintiff also has standing under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), to prohibit Defendant’s use of false designations of origin and false descriptions or representations.

I. SERVICE MARK INFRINGEMENT.

3. The parties have stipulated that Plaintiff is the owner of incontestable federal service mark registrations for the mark “AAA.” Under Section 33(b) of the Lanham Act, 15 U.S.C. § 1115(b), these registrations constitute conclusive evidence of Plaintiff’s exclusive right to use the “AAA” mark in commerce for the services of placing insurance with underwriters, subject to the seven defenses enumerated in that section. See, e.g., Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1184-85 (5th Cir.1980), cert. denied, 450 U.S. 981, 101 S.Ct. 1516, 67 L.Ed.2d 816 (1981). Since Plaintiff's exclusive right to use the mark “AAA” in connection with such services is conclusively established as a matter of law, it remains only to determine whether Defendant has infringed Plaintiff’s exclusive rights.

4. Section 32(1)(a) of the Lanham Act, 15 U.S.C. § 1114(l)(a), provides that a person shall be liable for infringement of a registered mark whenever, without the consent of the registrant, he uses in commerce “any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.” The test for infringement therefore is the likelihood of confusion. Sun-Fun Products, Inc. v. Suntan Research & Development Inc., 656 F.2d 186, 189 (5th Cir.1981). Actual confusion is not necessary. Sun-Fun Products, Id. at 191. Moreover, the likelihood of confusion is not limited to confusion as to the actual source of a product or service. The use of a name or mark that suggests an affiliation or connection with a trademark owner, or that causes a likelihood of confusion as to sponsorship or endorsement, also constitutes infringement. Professional Golfers Association of America v. Bankers Life & Casualty Co., 514 F.2d 665, 669-70 (5th Cir.1975).

5. In determining whether a likelihood of confusion exists, the courts consider a variety of factors, including the following:

(1) The strength of the plaintiff’s mark;

(2) The degree of similarity between the plaintiff’s and the defendant’s marks;

(3) The similarity of the plaintiff’s and the defendant’s goods or services;

(4) The kinds of customers and retail outlets of the plaintiff and defendant;

(5) The similarities in advertising;

(6) The defendant’s knowledge and intent in adopting its mark; and

(7) Actual confusion.

E.g., Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1185 (5th Cir.1980), cert. denied, 450 U.S. 981, 101 S.Ct. 1516, 67 L.Ed.2d 816 (1981). It is sufficient that any of the factors considered demonstrate a likelihood of confusion; it is not necessary that a majority of the factors be present in any given case. See Armco, Inc. v. Armco Burglar Alarm Co., 693 F.2d 1155, 1159-60 (5th Cir.1982) (strength of mark and actual confusion support finding of likelihood of confusion). Each of the foregoing factors will be considered in turn.

A. The Strength of Plaintiffs Mark.

6. The strength of the mark depends upon the degree of arbitrariness of the mark in relation to the products or services with which it is used. The cases generally identify four categories of marks in analyzing the scope of protection — in an ascending order of protection, marks are classified as (1) generic, (2) descriptive, (3) suggestive and (4) arbitrary or fanciful. Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1183-84 (5th Cir.1980), cert. denied, 450 U.S. 981, 101 S.Ct. 1516, 67 L.Ed.2d 816 (1981).

7. A “generic” term is the common descriptive name for a type of product or service (e.g., “car”, “bread”, “shoes”, etc.) and is entitled to no trademark protection. Soweco, Inc. v. Shell Oil Co., supra. A “descriptive” term is one that directly describes a characteristic or ingredient of a product or service, and it is entitled to protection only if it is shown to have acquired a degree of distinctiveness in identifying the plaintiff’s product or service. Id. A “suggestive” term is one that does not directly describe, but rather requires the exercise of thought or imagination to arrive at a connection between the mark and the corresponding product or service. Artcraft Novelties Corp. v. Baxter Lane Co., 685 F.2d 988, 991 (5th Cir.1982). A suggestive mark is entitled to protection without a showing of distinctiveness. Id. Finally, an “arbitrary or fanciful” mark, as the name suggests, is one which neither describes nor suggests the nature of the product or service with which it is used. An arbitrary or fanciful mark is considered inherently distinctive and is entitled to the greatest degree of protection. Waples-Platter Cos. v. General Foods Corp., 439 F.Supp. 551, 575 (N.D.Tex.1977); see also Armco, Inc. v. Armco Burglar Alarm Co., 693 F.2d 1155, 1159 (5th Cir.1982).

8. Use of the same or similar marks by third parties in unrelated businesses does not diminish the-distinctiveness of a mark in a particular field. Safeway Stores, Inc. v. Safeway Discount Drugs, Inc., 675 F.2d 1160, 1165 (11th Cir.1982).

9. In the present case, Plaintiff’s “AAA” mark is arbitrary in connection with insurance services. The term “AAA” is neither suggestive nor descriptive of insurance services, nor is it a generic term for such services. Plaintiff’s use of “AAA” is well known to its more than 22 million members throughout the United States and Canada, and others who have been exposed to the widespread use of Plaintiff’s name and marks. Accordingly, “AAA” is a strong and widely recognized mark in connection with Plaintiff’s insurance services.

B. Similarity of the Marks.

10. In determining whether two marks are confusingly similar, a side-by-side comparison of the marks, emphasizing differences in detail, is not the appropriate test. The proper test is whether the average consumer, upon encountering the allegedly infringing mark in the isolated circumstances of the marketplace and having only a general recollection of the plaintiff’s mark, would be likely to confuse or associate the defendant or his services with the plaintiff. James Burrough Ltd. v. Sign of the Beefeater, Inc., 540 F.2d 266, 275 (7th Cir.1976); National Association of Blue Shield Plans v. United Bankers Life Insurance Co., 362 F.2d 374, 376 (5th Cir.1966). Identity of the marks therefore is not required to establish infringement; the test is one of “resemblance rather than identity.” Syntex Laboratories, Inc. v. Norwich Pharmacal Co., 315 F.Supp. 45, 50 (S.D.N.Y.1970), aff'd, 437 F.2d 566 (2d Cir.1971). It is sufficient that there be similarity in sound, appearance or meaning: “Similarity in any of these respects creates a sufficient likelihood of confusion____” 3A R. Callmann, The Law of Unfair Competition, Trademarks and Monopolies § 20.13, at 67 (4th ed. 1983) (emphasis in original).

11. The dominant feature of Defendant’s name — the term “AAA” — is virtually identical to Plaintiff’s registered marks, and the likelihood of confusion is clear. It is the dominant feature of a name or mark that is most important in gauging the likelihood of confusion. See James Burrough Ltd. v. Sign of the Beefeater, Inc., 572 F.2d 574, 577 (7th Cir.1978). In fact, in similar cases in which the defendant had adopted as the dominant part of its name substantially the identical term used by the plaintiff, summary judgment has been granted for the plaintiff. See, e.g., Beef/Eater Restaurants, Inc. v. James Burrough Ltd., 398 F.2d 637 (5th Cir.1968). The presence of additional words of a common descriptive nature — such as “Insurance Agency” — does not dispel the likelihood of confusion. Safeway Stores, Inc. v. Safeway Discount Drugs, Inc., 675 F.2d 1160, 1166 (11th Cir.1982). On the contrary, the presence of additional words describing services related to those of Plaintiff actually increases the likelihood that consumers will conclude mistakenly that Defendant is connected with or licensed by Plaintiff. This is precisely the kind of confusion the trademark laws are intended to prevent. See Better Business Bureau v. Medical Directors, Inc., 681 F.2d 397, 403 (5th Cir.1982); Professional Golfers Association of America v. Bankers Life & Casualty Co., 514 F.2d 665, 670 (5th Cir.1975).

12. In considering the similarity of the marks, it also should be kept in mind that a party, in choosing a name or mark in a field already occupied, has an affirmative duty to avoid all possibility of confusion with existing names and marks. Union Carbide Corp. v. Ever-Ready Inc., 531 F.2d 366, 382 (7th Cir.), cert. denied, 429 U.S. 830, 97 S.Ct. 91, 50 L.Ed.2d 94 (1976). Moreover, any doubts as to confusing similarity are to be resolved against the newcomer. “A newcomer to a product field has a legal duty to select a mark that is totally dissimilar to trademarks already being used in the field.” Jockey International, Inc. v. Burkard, 185 U.S.P.Q. (BNA) 201, 208 (S.D.Cal.1975). It is apparent in the present case that the Defendant, in adopting the name “AAA” for its insurance business, has breached its duty to avoid any possibility of confusion with Plaintiff’s name and marks.

C. Similarity of Services and Customers.

13. With regard to the third and fourth of the above-mentioned tests, it has been repeatedly held that neither direct competition between the parties, nor identity of products or services, is necessary for infringement to occur. Professional Golfers Association of America v. Bankers Life & Casualty Co., 514 F.2d 665, 669-70 (5th Cir.1975). The Fifth Circuit has consistently rejected the argument that the infringement only occurs when the alleged infringer uses the mark on the same category of product with respect to the present trademark owner. See Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 388 (5th Cir.1977). Instead, the real issue is whether the products or services of the defendant are sufficiently related to those of the plaintiff that they are likely to be associated in some way with the plaintiff if sold under a similar name. Thus, a trademark owner’s exclusive rights preclude the use of a similar mark not only on products or services of the kind described in the registration, but also on any others which are likely to be associated with the plaintiff’s mark.

14. In the instant case, Plaintiff and Defendant provide the identical service of placing insurance with underwriters. Moreover, their classes of customers are the same, namely, those persons interested in obtaining insurance coverage, such as life, health, automobile, medical or casualty insurance. This factor therefore points strongly toward a likelihood of confusion.

D. Similarities in Advertising Media.

15. Both Plaintiff and Defendant advertise in the Yellow Pages. Plaintiff also engages in direct mail promotions, while Defendant advertises chiefly through newspaper ads. Because of the minimal nature of Defendant’s advertising, this factor does not weigh heavily in the balance.

E. Defendant’s Knowledge and Intent.

16. An accused infringer’s knowledge or intent in adopting or using a particular mark is another factor bearing on the question of infringement. This factor differs from the others, however, in that its presence weighs heavily against an accused infringer, but its absence does not excuse his actions. E.g., Fuji Photo Film Co. v. Shinohara Shoji Kabushiki Kaisha, 754 F.2d 591, 596-97 (5th Cir.1985). Thus, while the absence of an intent to cause confusion is no defense to a trademark infringement action, Frostie Co. v. Dr. Pepper Co., 341 F.2d 363, 366 (5th Cir.1965), when the defendant adopts a name or mark with knowledge of the plaintiff’s prior use, or expands his use after objection and warning by the plaintiff, infringement is readily found. See, e.g., Helene Curtis Industries, Inc. v. Church & Dwight Co., 560 F.2d 1325, 1333-34 (7th Cir.1977), cert. denied, 434 U.S. 1070,-98 S.Ct. 1252, 55 L.Ed.2d 772 (1978).

17. In the present case, Mr. Tipps knew of Plaintiff’s service mark rights and its objection to his use of “AAA” shortly after he adopted that name, but he continued to use it in spite of that knowledge. (Finding of Fact 8.) Even assuming that it was not done with the intent to mislead the public, it nevertheless demonstrates a knowing disregard of Plaintiff’s rights and the right of the public to be free from confusion. At the very least, it is clear that Defendant acted at its own risk in continuing to use the “AAA” designation after receiving notice of Plaintiff’s service mark rights and registrations. See Helene Curtis Industries, Inc. v. Church & Dwight Co., supra, 560 F.2d at 1333-34.

F. Actual Confusion.

18. Since the test of trademark or service mark infringement is the “likelihood” of confusion, evidence of actual confusion is not necessary. E.g., Sun-Fun Products, Inc. v. Suntan Research & Development, Inc., 656 F.2d 186, 191 (5th Cir.1981). It is widely recognized by the courts that reliable evidence of actual confusion is “almost impossible to secure.” Harold F. Ritchie, Inc. v. Chesebrough-Pond’s Inc., 281 F.2d 755, 761 (2d Cir.1960). Evidence of actual confusion, when it exists, is a strong indicator of the likelihood of confusion. Roto-Rooter Corp. v. O’Neal, 513 F.2d 44, 45-46 (5th Cir.1975). As the Fifth Circuit said in World Carpets, Inc. v. Dick Littrell’s New World Carpets, 438 F.2d 482, 489 (5th Cir.1971): “[Rjeason tells us that while very little proof of actual confusion would be necessary to prove the likelihood of confusion, an almost overwhelming amount of proof would be necessary to refute such proof.” Accord Fuji Photo Film Co. v. Shinohara Shoji Kabushiki Kaisha, supra, 754 F.2d at 597. It is therefore significant that Defendant’s president testified that Defendant receives some two dozen misdirected telephone calls per year. (Finding of Fact 9.) This alone is highly probative of the likelihood of confusion.

19. In light of the foregoing discussion, Plaintiff has more than satisfied the test for infringement. The strength of the “AAA” mark for Plaintiff’s insurance services; the use of the identical term by Defendant as the dominant feature of its name; the identical nature of Plaintiff’s and Defendant’s services and customers; and instances of actual confusion — all are factors pointing to a likelihood of confusion, and therefore to infringement of Plaintiff’s service marks.

II. SECTION 43(a) OF THE LANHAM ACT.

20. Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1976), provides in pertinent part:

Any person who shall ... use in connection with any goods or services ... a false designation of origin, or any false description or representation, including words or other symbols tending falsely to describe or represent the same, and shall cause such goods or services to enter into commerce ... shall be liable to a civil action by any person ... who believes that he is or is likely to be damaged by the use of any such false description or representation.

It is settled that an action under Section 43(a) is available to prevent false representations as to the source or origin of goods or services by the use of a name or mark which is confusingly similar to a registered or unregistered mark. E.g., Boston Professional Hockey Association v. Dallas Cap & Emblem Mfg., 510 F.2d 1004, 1010 (5th Cir.), cert. denied, 423 U.S. 868, 96 S.Ct. 132, 46 L.Ed.2d 98 (1975). The test under Section 43(a) therefore is “essentially the same” as that for trademark infringement. Sun-Fun Products, Inc. v. Suntan Research & Development Inc., 656 F.2d 186, 192 (5th Cir.1981); accord Boston Professional Hockey Association, supra, 510 F.2d at 1013. In fact, the scope of Section 43(a) is even broader than federal trademark infringement, since its protection extends also to unregistered names and marks. Sun-Fun Products, 656 F.2d at 192; Boston Professional Hockey Association, 510 F.2d at 1010. Accordingly, Defendant’s actions also are in violation of Section 43(a) of the Lanham Act.

III. COMMON LAW UNFAIR COMPETITION.

21. Trademark and service mark infringement are but specific instances of the more broadly defined tort of unfair competition, and the same facts generally support a suit for either. Boston Professional Hockey Association v. Dallas Cap & Emblem Mfg., 510 F.2d 1004, 1010 (5th Cir.), cert. denied, 423 U.S. 868, 96 S.Ct. 132, 46 L.Ed.2d 98 (1975). Insofar as the unauthorized use of a party’s names and marks is concerned, claims of trademark infringement and unfair competition both are made out when a likelihood of confusion is shown. Boston Professional Hockey Association, 510 F.2d at 1010. Defendant’s unauthorized use of the “AAA” name therefore constitutes unfair competition as well as service mark infringement.

IV. THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT.

22. The Court will not reach the issue of liability under the Texas Deceptive Trade Practices-Consumers Protection Act, Tex.Bus. & Com.Code Ann. §§ 17.41-63 (Vernon Supp.1985) as the other conclusions of law resolve the issue squarely in Plaintiff’s favor.

V. DEFENDANT’S AFFIRMATIVE DEFENSES.

A. Laches and Acquiescence.

23. Defendant contends that Plaintiff’s claims are barred by laches and acquiescence. However, these are not among the seven defenses to an incontestable registration permitted under 15 U.S.C. § 1115(b). United States Jaycees v. Chicago Junior Association of Commerce & Industry, 505 F.Supp. 998, 1000-01 (N.D.Ill.1981), citing Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1184-85 (5th Cir.1980), cert. denied, 450 U.S. 981, 101 S.Ct. 1516, 67 L.Ed.2d 816 (1981). Since Plaintiff’s federal registrations are incontestable (Finding of Fact 5), the defenses' of laches and acquiescence are not available to Defendant.

24. The defenses of laches and acquiescence are unavailable to Defendant for another reason. These defenses “will not be applied to frustrate the purpose of [the] laws or to thwart public policy.” United States v. Second National Bank, 502 F.2d 535, 548 (5th Cir.1974), cert. denied, 421 U.S. 912, 95 S.Ct. 1567, 43 L.Ed.2d 777 (1975). Unlike most other kinds of litigation between private parties, trademark litigation is profoundly affected by considerations of the public interest. Thus, when the likelihood of confusion is not “reasonably in doubt,” laches and acquiescence are not available to bar relief. Cf. Ultra-White Co. v. Johnson Chemical Industries, Inc., 465 F.2d 891, 893-94 (C.C.P.A.1972) (trademark cancellation proceeding). In such cases, even a lengthy delay in bringing suit will not bar injunctive relief to protect the public from confusion, although it may bar recovery of damages. McLean v. Fleming, 96 U.S. 245, 253, 6 Otto 245, 24 L.Ed. 828 (1877); Menendez v. Holt, 128 U.S. 514, 523-24, 9 S.Ct. 143, 145, 32 L.Ed. 526 (1888).

25. Finally, the defenses of laches and acquiescence fail on the merits. Laches requires a showing of inexcusable delay in asserting a right, reliance thereon by the defendant, and undue prejudice to the defendant resulting from the delay. See Armco, Inc. v. Armco Burglar Alarm Co., 693 F.2d 1155, 1161 (5th Cir.1982). In the present case, Plaintiff notified Defendant in 1970 of its infringement of Plaintiffs federally registered marks shortly after Defendant’s first use of “AAA.” Defendant acted thereafter at its own risk in continuing to use “AAA.” See Helene Curtis Industries, Inc. v. Church & Dwight Co., 560 F.2d 1325, 1333-34 (7th Cir.1977), cert. denied, 434 U.S. 1070, 98 S.Ct. 1252, 55 L.Ed.2d 772 (1978). When Plaintiff learned in 1983 that Defendant was still using the “AAA” mark, Plaintiff again objected and requested that Defendant change its name. When Defendant refused, this action was brought. Throughout the entire period of its use of the “AAA” name, Defendant knew of Plaintiff’s objection but continued to use the name anyway. Moreover, Defendant’s president testified that nothing that Plaintiff did or failed to do ever affected any business decision of Defendant. (Deposition of Delmer G. Tipps, at 29.) This testimony negates the element of reliance by Defendant that is essential to a claim of laches. See Citibank, N.A. v. Citibanc Group, Inc., 724 F.2d 1540, 1546-47 (11th Cir.1984).

26. Defendant also has failed to show the requisite prejudice necessary for a finding of laches. Defendant has engaged in only minimal advertising and has not expanded beyond a single office in Killeen, Texas. (Finding of Fact 7.) Under the circumstances, whatever prejudice Defendant may incur in discontinuing its use of “AAA” does not outweigh the paramount interest of the public to be free from the likelihood of confusion caused by Defendant’s use of “AAA.”

27. The defense of acquiescence, as distinct from laches, is predicated upon a plaintiff’s affirmative conduct indicating active consent to the defendant’s actions or intentional abandonment of a right. See United States Jaycees v. San Francisco Junior Chamber of Commerce, 354 F.Supp. 61, 72 & n. 7 (N.D.Cal.1972), aff'd, 513 F.2d 1226 (9th Cir.1975). Defendant, however, has failed to show any evidence of Plaintiff’s affirmative consent to Defendant’s use of “AAA.” On the contrary, the evidence establishes that Plaintiff objected from the outset to Defendant’s use of “AAA,” and that Defendant continued its use of that name despite Plaintiff’s objection.

B. Plaintiffs Alleged Fraudulent Registration and Illegal Use of “AAA for Insurance Services in Texas.

28. Defendant alleges that Plaintiff’s Service Mark Registration No. 829,265 for the mark “AAA” was fraudulently obtained, and that its use of “AAA” for insurance services in Texas is illegal, because Plaintiff is not authorized to engage in the insurance business or to act as an insurance agent in the State of Texas. Defendant has failed to prove either of these claims.

29. To establish fraud in the registration, Defendant must show that Plaintiff knowingly made a false statement of material fact that would have constituted grounds for denial of the registration if the truth had been known. E.g., Citibank, N.A. v. Citibanc Group, Inc., 724 F.2d 1540, 1544 (11th Cir.1984); Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 14 (2d Cir.1976). Defendant bears a heavy burden of proof, since an allegation of fraud must be proved by clear and convincing evidence. Money Store v. Harriscorp Finance, Inc., 689 F.2d 666, 670 (7th Cir.1982); see also King-Size, Inc. v. Frank’s King Size Clothes, Inc., 547 F.Supp. 1138, 1166 (S.D.Tex.1982). Defendant has failed to meet that burden of proof.

30. First, Defendant’s claim of fraudulent registration is insufficient as a matter of law, since a valid federal registration does not depend upon Plaintiff’s authorization to engage in the insurance business in the State of Texas. In order to support an application for federal registration, it is sufficient that a service mark be used in the sale or advertising of services rendered in more than one state or in commerce with a foreign country. 15 U.S.C. § 1127 (1982) (defining “use in commerce” for purposes of federal registration). Since all that is required, therefore, is that Plaintiff’s insurance services be rendered in at least two states, Defendant’s allegation that Plaintiff is not authorized to engage in the insurance business in Texas is not sufficient to state a claim for fraudulent registration, even if it could be proved. Instead, Defendant must allege and prove that, at the time Plaintiff’s application for registration was filed, Plaintiff’s insurance services were not rendered in “commerce” as that term is defined in 15 U.S.C. § 1127, and that Plaintiff knowingly misrepresented the facts to the Patent and Trademark Office. This Defendant has not done.

31. In addition to Defendant’s failure to allege a valid claim for fraudulent registration, Defendant’s allegations are not supported by the facts. The evidence shows that Plaintiff's related company, Texas Club Service Agency, Inc., is licensed to act as an insurance agent in the State of Texas. (Finding of Fact 3.) Under the Lanham Act, the use of a mark by a related company inures to the benefit of the registrant or applicant for registration. 15 U.S.C. § 1055, 1127 (1982).

32. For the same reason, Defendant’s claim that Plaintiff’s use of “AAA” for insurance services in Texas is illegal must fail, since that use is made through Plaintiff’s related company, Texas Club Service Agency, Inc., and other affiliated agents, all of whom are duly licensed as insurance agents in the State of Texas.

C. Defendant’s Incorporation and Li- . censing in Texas.

33. The fact that Defendant’s name was accepted by the State Board of Insurance or by the Secretary of State for incorporation in Texas does not affect Plaintiff’s service mark rights. The acceptance or approval of a name by a state agency is no defense to an action for infringement or unfair competition. E.g., Foxtrap, Inc. v. Foxtrap, Inc., 671 F.2d 636, 640 n. 7 (D.C.Cir.1982) (“this circuit, following the general rule, has declined to accord any weight to a state agency’s general acceptance of a corporate name”). In Children’s Bootery v. Sutker, 91 Fla. 60, 107 So. 345, 349, 44 A.L.R. 698, 705 (1926), the Florida Supreme Court made the following cogent observations (emphasis added):

The grant of a corporate charter by the state can confer no power to perpetrate wrong. The act of sovereignty in allowing incorporation under a particular name is permissive only. It sanctions the act of incorporation under the name chosen and for the business proposed, if that name and that business be otherwise lawful, but in granting a corporate charter the sovereign adjudges neither the legality of the business nor of the name chosen. That is a matter for judicial determination by a court of competent jurisdiction.

Moreover, a foreign corporation need not itself be licensed or qualified to do business in the state in order to be entitled to relief. Radio Shack Corp. v. Radio Shack, Inc., 180 F.2d 200, 204-05 (7th Cir.1950); Great Western Financial Corp. v. Great Western Savings & Loan Association, 406 F.Supp. 1286, 1291-92 (W.D.Okla.1975).

34. The foregoing judicial pronouncements are completely in accord with Texas policy and practice as embodied in the Texas Administrative Code. With regard to corporate name availability, the Texas Administrative Code provides as follows:

Only the proposed corporate name and the names of active ... corporations on file are considered in determining name availability. Among the matters not considered are the following:
(10) Whether the applicant has a pri- or or superior right to the use of a name apart from what might be shown on inspection of the names of active corporations on file in the corporate records of the secretary of state.
(11) Whether infringement or unfair trade practice has occurred or might occur.

Texas Admin.Code tit. 1, § 79.48 (1982) (emphasis added). Thus, the Secretary of State of Texas does not even purport to screen proposed names for potential infringement of existing rights. Moreover, the State Board of Insurance does not make an independent evaluation of the name of a corporation seeking a license to act as an insurance agent, but relies instead upon the corporate charter from the Secretary of State. See Tex.Ins.Code Ann. art. 21.07, sec. 2(b)(1) (Vernon 1981).

35. In any event, it is settled that state law cannot defeat or limit in any way the protection given to federally registered marks under the Lanham Act. Any state law that would infringe on the registrant’s right to the exclusive use of its mark is preempted by federal law. E.g., Golden Door, Inc. v. Odisho, 646 F.2d 347, 352 (9th Cir.1980). The Lanham Act specifically provides that “[t]he intent of this chapter is ... to protect registered marks used in [interstate] commerce from interference by State, or territorial legislation.” 15 U.S.C. § 1127 (1982). Since Defendant can acquire no rights under state law superior to Plaintiff’s federal service mark rights, see, e.g., John R. Thompson Co. v. Holloway, 366 F.2d 108, 114-16 (5th Cir.1966), neither Defendant’s incorporation in Texas under the name “AAA Insurance Agency, Inc.,” nor acceptance of that name by the State Board of Insurance, constitutes a defense to this action for infringement.

36. Finally, it is admitted that Plaintiff’s federal service mark registrations for “AAA” are incontestable. (Finding of Fact 5.) Since incorporation or licensing by a state agency is not one of the defenses to an incontestable registration permitted under 15 U.S.C. § 1115(b), that defense is not available to Defendant. Cf. Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1184-85 (5th Cir.1980), cert. denied, 450 U.S. 981, 101 S.Ct. 1516, 67 L.Ed.2d 816 (1981).

37. Defendant has failed to establish any of the asserted defenses to Plaintiff’s claims of infringement and unfair competition, and Plaintiff is entitled to injunctive relief.

VI. DEFENDANT’S COUNTERCLAIM.

38. Defendant has counterclaimed for costs and attorneys’ fees under Section 17.-50(c) of the Texas Deceptive Trade Practices-Consumer Protection Act, on grounds that Count IV of Plaintiff’s complaint to enjoin Defendant’s violation of that Act is groundless and was brought in bad faith and for purposes of harassment. Defendant’s claim is without merit.

39. Defendant’s claim also is insufficient as a matter of law, since a claim for costs and attorneys’ fees under Section 17.-50(c) of the DTPA is limited to actions by consumers arising under the DTPA. It is undisputed that Plaintiff is not a consumer under the DTPA, and Count IV of Plaintiff’s complaint arises under Texas common law. Accordingly, Section 17.50(c) has no application here, and Defendant’s counterclaim fails to state a proper claim for relief.

40. Any conclusion deemed to be a finding of fact is hereby adopted as such. of law which is

RELIEF

Based upon the foregoing findings of fact and conclusions of law, IT IS HEREBY ORDERED:

1. Defendant and its officers, agents, servants, employees, attorneys, successors and assigns, and all persons in active concert or participation with any of them, are permanently enjoined from engaging in any of the following acts:

(a) Using the designation “AAA” in any form, or any other name or mark confusingly similar to “AAA,” either alone or in combination with other words or symbols, in the marketing, sale, distribution, promotion, advertising, identification, or in any other manner in connection with any insurance business or services; and
(b) Using any multiple combination of letters “A” in any form or manner that would tend to identify or associate Defendant or its business or services with Plaintiff (including, without limitation, any multiple combination of letters “A” in which the central or interior “A” or “A’s” are larger or in bolder print than the remaining letters, or any multiple combination of letters “A” in conjunction with an oval or circle design) in the marketing, sale, distribution, promotion, advertising, identification, or in any other manner in connection with any insurance business or services.

2. Defendant may use its presently existing supplies of business forms bearing the designation “AAA” for a period not to exceed one year from the date of entry of judgment in this case. In all other respects, Defendant shall promptly comply with the terms of the foregoing injunction, and Defendant shall be in full compliance within thirty (30) days after the entry of judgment.

3. Within forty-five (45) days after the entry of judgment in this case, Defendant shall file with the Court and serve on Plaintiffs attorney a report in writing under oath setting forth the actions taken by Defendant to comply with the terms of the judgment.

4. Pursuant to 15 U.S.C. § 1117 and Rule 54(d) of the Federal Rules of Civil Procedure, Plaintiff is awarded its costs of suit. Each party shall bear its own attorneys’ fees.

5. Defendant’s counterclaim is dismissed with prejudice.

6. Judgment shall be entered in accordance with the terms of this order.


author: SWEET, District Judge.

text:
    UNITED STATES of America, v. Raymond JIMENEZ, Defendant.
    No. 84 Cr. 947(RWS).
    United States District Court, S.D. New York.
    Aug. 23, 1985.

      Rudolph W. Giuliani, U.S. Atty. for the S.D. of N.Y., New York City by Mary T. Shannon, Asst. U.S. Atty., New York City, for U.S. of America.
    Donald D. Buchwald, New York City, for defendant.
   OPINION

SWEET, District Judge.

On May 9, 1985, following a four-day trial, a jury returned a guilty verdict on each of two counts against Raymond Jimenez (“Jimenez”). He was found guilty of violating 21 U.S.C. §§ 812, 841, and 846. Jimenez has now moved to set aside the verdict and to suppress certain evidence at any retrial, alleging 1) that the government failed to comply with its obligations under Fed.R.Crim.P. 12(d)(2) to disclose to the defense prior to trial statements made by Jimenez to Detective Dennis Casey (“Casey”) at the time of Jimenez’s arrest on November 20, 1984; 2) that the introduction into evidence of post-arrest statement by Jimenez to Casey, in response to questions posed prior to Miranda warnings in the absence of a public emergency or exigent circumstances violated Jimenez’s Fifth and Sixth Amendment rights; and 3) the admission of certain “similar fact” evidence was improper. The motions are denied.

Facts

Jimenez was arrested on November 20, 1984 at 175th Street and Audubon Avenue. After being handcuffed but before being given his Miranda warnings, Jimenez was asked by the arresting officers “where he had come from.” Jimenez responded that he had just been at an apartment at 532 West 175th Street, and based on Jimenez’ answer, the officer, with Jimenez, proceeded to the apartment. There the officers made further arrests and seized $6,595.00 in cash which Curtis Ross, the apartment’s occupant, stated belonged to Jimenez. Jimenez was given his Miranda warnings while at the apartment and thereafter acknowledged that the cash was his.

During the informal discovery that preceded trial, Assistant United States Attorney Stephen Markstein (“Markstein”) advised Don Buchwald, counsel for Jimenez (“Defense Counsel”), that Jimenez had made no post-arrest statements. In a letter of December 21, 1984 to Markstein, Defense Counsel wrote:

You have advised me that no statements of any kind were obtained by the government from my client ... to the best of your knowledge. You agreed to promptly advise me otherwise if you learn to the contrary.

Defense Counsel also subsequently requested, pursuant to Fed.R.Crim.P. 12(d)(2), all evidence the government intended to use at trial that was discoverable pursuant to Rule 16. In a letter dated January 4, 1985, Markstein wrote to Defense Counsel that:

Since I last spoke to you concerning the case, I have been informed that defendant Jimenez, following his arrest and being advised of his rights, admitted that the $6,959 confiscated from a brief case at 532 West 175th Street, see 2(d) above, belonged to him.

No disclosure of any other post-arrest statements was made.

No allegation has been made that the failure to disclose Jimenez’ statements was intentional or more than inadvertance. Assistant United States Attorney Charles La Bella, who tried the case, submitted an affidavit in response to this motion stating:

In preparation for trial I thoroughly reviewed the case file, including all DEA reports and GX 35021, Agent Mark Moger’s Surveillance Report, which constituted the primary report of the activities leading up to the arrest of Raymond Jimenez and the post-arrest activities.
In preparation for trial I also interviewed Agent Mark Moger and Agent Dennis Casey. I have no recollection of being told of Casey’s question nor Jimenez’ answer before trial. It was my understanding during pretrial preparation that one of the many surveillance agents outside of 532 West 175th Street had observed the defendant come from the Ross apartment.

In the morning of the second day of trial, Casey, an investigator with the New York Drug Enforcement Task Force, testified on direct examination as follows:

A. Okay. When I returned to that location we were still conducting surveillance on this auto which was double parked on 175th Street just over Audubon Avenue. The ear I am referring to is the Oldsmobile, and at approximately 7:30 p.m., a gentleman sitting over there with the white shirt on and a young lady headed towards that auto.
Q. Was that the defendant who headed towards the car?
A. That’s correct.
Q. Was that the same car you had followed earlier into New Jersey and back again to New York?
A. Yes, it is.
Q. When they approached the car, what did you do?
A. At that time I identified myself, I grabbed Mr. Jimenez, placed him under arrest, I rear cuffed him. The other officer assisted me, took custody of the young lady that was there. We asked him where they came from and then we went to an apartment on 175th Street.
Q. Did he tell you where he had come from?
A. Yes, he did.
Q. Did you go back to that location? A. Yes, we did.
Q. What happened when you got there? A. Okay. I had Mr. Jimenez in custody at that time. We knocked on the door, identified ourselves as police officers, and I believe it was Mr. Ross who let us in, it is a basement apartment on 175th Street.
Q. Was that the same person you had seen earlier accompany the defendant to New Jersey?
A. That is correct.
Q. What happened when you got to the door?
A. Okay. Once we got into the apartment, at that time I gave Mr. Jimenez his rights, and I also gave him a search while the other officers were conducting, taking anybody into custody who might have been there and getting everybody to stay where they were in the apartment.

On cross-examination Casey testified:

Q. And you said, stop, you are under arrest or what did you do?
A. I told him, police. Don’t move.
Q. And he didn’t move? ■
A. No, he didn’t. I didn’t give him a chance to.
Q. And Gloria Toledo didn’t move?
A. No, she didn’t.
Q. And you said where are you coming from or where are you going?
A. Not at that time, I didn’t.
Q. What did you say?
A. After I placed him under arrest, identified myself, I then asked him where he had come from.
Q. Now did you know where he had come from?
A. I knew approximately, but I wasn’t sure. What exact apartment. I know from the location where he came from.
Q. You knew from the building, or the direction or what?
A. Yes, that’s correct, across the street from, I guess you would say that would be the south side of 175th Street, his car was on the north side double parked on 175th Street facing east.
When he crossed the street, that is when we approached him.
Q. So you knew the general direction that he was coming from?
A. That’s correct.
Q. And it is correct, is it not, that you did not know the actual building that he was coming from?
A. I wasn’t sure.
Q. And you didn’t know the apartment he was coming from?
A. No, I didn’t.
Q. And, to your knowledge, no officers, agents, city police, federal, whatever, the whole group, none of them knew the building and the apartment he was coming from. They knew the general direction, isn’t that correct?
A. That’s correct.
Q. And he then told you where he had come from?
A. Yes, he did.
Q. And you proceeded back with him to that place?
A. Yes, I did.
Q. He was led away in handcuffs?
A. He was cuffed.
Q. Now, of course, he didn’t have to tell you where he was coming from, right? He could have remained silent?
A. He probably could have, yes.
Q. You had given him his warnings, had you not?
A. Not until we got into the apartment.
Q. I see. In other words, you asked him, where are you coming from? And he told you, and then it was later that you gave him his warning?
A. I gave him his rights in the apartment. I wanted to get him off the street.

Defense Counsel did not object to the admission of the statements that violated Jimenez’ rights following either Casey’s direct testimony or his cross-examination, nor did he object to the admission of statements that had not been turned over during discovery or to the admission of evidence — the $6,595.00 in cash, or Jimenez’ admission of ownership of the money — that were apparently the fruit of the illegal interrogation.

Upon argument of this motion, it was argued that in view of the known surveillance, Defense Counsel assumed that the government had an independent basis for establishing the link between Jimenez and the apartment. The government called three witnesses subsequent to Casey, none of whom testified to any link between Jimenez and the apartment in which the cash was found. At the close of the government’s case, on the third day of trial, Defense Counsel moved for a mistrial alleging the government’s failure to comply with discovery rules 12 and 16 and the introduction of evidence obtained in violation of Jimenez’ constitutional rights.

Discussion

The government concedes that Casey’s pre-Miranda questions to Jimenez were per se violations. The government also concedes that the failure to disclose Jimenez’ statements constitutes a violation of the discovery rules. The government argues, however, that by failing to object until the close of the government’s case, although Defense Counsel knew of the violation as soon as Casey testified, the right to object has been waived.

An objection or motion to strike is untimely if not “ ‘made as soon as the ground of it is known, or reasonably should have been known to the objector.’ ” 21 C. Wright and K. Graham, Federal Practice and Procedure: Evidence § 5037, quoted in U.S. v. Cheek, 582 F.2d 668, 676 (2d Cir.1978). While the objection cannot be waived if the facts upon which it is based are unknown, the objection must be made as soon as those facts are revealed. See DiPaola v. Riddle, 581 F.2d 1111, 1113 (4th Cir.1978), cert. denied, 440 U.S. 908, 99 S.Ct. 1215, 59 L.Ed.2d 455 (1979). In United States v. Kanousby, 618 F.2d 229 (2d Cir. 1980), the Court found an objection to be untimely after a witness had already been excused. Id. at 231. And in United States v. Frank, 520 F.2d 1287 (2d Cir.1975), cert. denied, 423 U.S. 1087, 96 S.Ct. 878, 47 L.Ed.2d 97 (1976), the Court found an objection raised in a post-trial Rule 29 motion to be untimely. Id. at 1291.

At least two purposes are served by requiring a contemporaneous objection. First, a prompt objection preserves the opportunity for curative instructions or the opportunity to adduce admissible evidence to establish the desired point. The Honorable Paul R. Hays, writing in United States v. Indiviglio, 352 F.2d 276 (2d Cir.1965) (en banc), cert. denied, 383 U.S. 907, 86 S.Ct. 887, 15 L.Ed.2d 663 (1966), explained:

The reason for requiring that a specific objection be made is, of course, to give the judge an opportunity to correct the error and thus to avoid the necessity of further proceedings, possibly including a new trial. In the present case, for example, a proper objection might have resulted in the striking out of the evidence objected to and an admonition to the jury to disregard it. It seems entirely possible that the Government could have secured a conviction without the challenged evidence. Or, as an alternative, the judge might have conducted a voir dire into the circumstances surrounding Indiviglio’s statement.

Id. at 280. See also United States v. Mangers, 575 F.2d 32, 44 (2d Cir.1978), cert. denied, 439 U.S. 931, 99 S.Ct. 320, 58 L.Ed.2d 324 (1979).

Second, requiring a contemporaneous objection denies an attorney the opportunity to use an objection for tactical purposes, awaiting the outcome of events or the disclosure of additional information before challenging the propriety of evidence. While an objection cannot be waived before the facts upon which the objection is based are known, an objection may be waived where an attorney attempts to use the elicited information for tactical advantage and only subsequently objects to its admission. See United States v. Katz, 601 F.2d 66, 67 (2d Cir.1979).

The government argues that Defense Counsel should have known of the preMiranda questions when Agent Mark Moger testified that his knowledge that Jimenez had come from 532 West 175th Street was not based on personal observation. The government asserts that this information, considered in conjunction with the assumed interview of Jimenez in preparation of an affidavit for a prior motion to suppress, should have provided a foundation for an objection. The presumption that information of the pre-Miranda question flowed from Jimenez to Defense Counsel is inappropriate:

The defendant in a criminal case often mistrusts his counsel who, in most instances, has been assigned and not chosen, or believes that his counsel will best defend him if he is kept ignorant of the facts. Even a defendant who cooperates with his counsel cannot always remember all of the relevant facts, or realize the importance to his defense of seemingly inconsequential police actions. Defense lawyers, as a result, often learn much more about what has happened from government discovery, formal and informal, than they do from their clients.

United States v. McElroy, 697 F.2d 459, 465 (2d Cir.1982). Defense Counsel cannot be held accountable for information that may have been elicited from Jimenez, in the absence of proof that such information actually was transferred.

Upon Casey’s direct examination, however, Defense Counsel was squarely informed of both the failure to produce Jimenez’ statement in violation of the discovery rules and the unconstitutionality of the question posed by Casey. Counsel can properly be required to have objected on either ground at the time to the introduction into evidence of the statement. The cross-examination of Casey, supra, demonstrates knowledge of both the failure to disclose and the impropriety of Jimenez’ post-arrest interrogation. Having knowledge of the grounds upon which an objection to the evidence could have been made, counsel delayed raising an objection until the close of the government’s case, over a full day and three witnesses later, constitutes waiver.

The waiver is a consequence not only of the delay itself, but also of the tactical choice made by Defense Counsel to seek advantage by delaying. At oral argument on this motion Defense Counsel stated:

Let us suppose that another agent had seen Mr. Jimenez leaving the apartment, so that this was largely academic whether he told them or not, that they knew about it, then I would have done — I would have wanted to do that which I did here, show the voluntary — you know, it is in evidence, the fact that the money is there, is in evidence. I would have wanted to show sort of lack of consciousness of guilt, if those were the facts, if there was no way of being able to keep out the subsequent information that developed in the apartment.

Aware that a basis for objecting to the interrogation of Jimenez existed, counsel chose to retain the option of using the improper evidence to his own advantage, thereby countering evidence which he feared might not be a fruit of the improper question because of the existence of an independent foundation. However, Casey’s answer on cross-examination that no officers or agents knew which apartment Jimenez was coming from establish the apartment search as a fruit of the question, and counsel can properly be charged with this knowledge. Having sufficient information to challenge the evidence introduced by the government, counsel chose to retain the option of using Jimenez’ voluntary response as evidence of lack of consciousness of guilt, an option he would have sacrificed by keeping the statement out of evidence. Defense Counsel cannot simultaneously preserve this option and the ability to object to the improper evidence. The objection must be deemed waived by his choice not to object until the close of the government’s case, at which time he knew he would not call Jimenez as a witness in order to use his voluntary answer as evidence of lack of consciousness of guilt.

The introduction of similar act evidence was proper for the reasons stated at trial. See United States v. Figueroa, 618 F.2d 934 (2d Cir.1980); United States v. Manafzadeh, 592 F.2d 81 (2d Cir.1979).

Conclusion

Jimenez’ motions for a new trial are denied. Jimenez will be sentenced on September 11, 1985.

IT IS SO ORDERED.