The opinion of the court was delivered by: STANLEY S. BROTMAN
Before the court is a trademark infringement and unfair competition case brought by plaintiff Birthright under the Lanham Act, 15 U.S.C. § 1051 et seq, and the common law. Count I of plaintiff's second amended complaint states a claim for trademark infringement under Section 32, 15 U.S.C. § 1114. In count II, plaintiff makes a claim of unfair competition under Section 43(a)(1)(A), 15 U.S.C. § 1125(a)(1)(A). In count III, plaintiff alleges a claim of false or misleading representations of fact under Section 43(a)(1)(B), 15 U.S.C. § 1125(a)(1)(B). Finally, count IV is a pendant state claim of common law unfair competition. Plaintiff seeks injunctive and monetary relief, as well as an award of attorneys' fees. Also before the court are defendants' counterclaims for common law unfair competition, breach of contract, and defamation.
Plaintiff filed suit on April 24, 1992. The court held hearings on the parties' motions for preliminary relief on July 17, August 10, and August 11, 1992. On October 5, 1992, the court, with the consent of the parties, ordered the consolidation of the hearings on preliminary relief with the trial on the merits pursuant to Federal Rule of Civil Procedure 65(a)(2). On December 26, 1992, defendants submitted proposed findings of fact and proposed conclusions of law. On December 28, 1992, plaintiffs submitted the same. After careful consideration of the entire record in this matter, the court enters the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).
1. The "Birthright" name is a service mark, registered with the United States Patent Office in the name of plaintiff Birthright. The "Birthright" name functions to identify the kind of pregnancy counselling services offered by the entities affiliated with the Birthright movement. Pl.'s Exs. 7, 7A, 7B.
2. The stylized "B" logo is an unregistered service mark that also functions to identify the kind of pregnancy counselling services offered by the entities affiliated with the Birthright movement. The logo consists of the letter "B" in heavy print, surrounding the silhouette of a telephone handset that resembles a fetus. Defs.' Ex. 5 (Louise Summerhill, The Story of Birthright 19 (1973)).
I. The Parties, Witnesses, and Key Figures
3. Plaintiff Birthright is a Canadian corporation, organized on February 4, 1969 under the laws of Ontario by Louise Summerhill ("mother Louise") and others, with offices in Toronto, Canada. Pl.'s Ex. 19.
4. Mother Louise was the founder and dominating figure in the Birthright movement from its origins until the time of her death in August 1991. II Tr. at 46, 53, 83, 210. At all times relevant to this litigation, mother Louise actions were taken in her official capacity as a member of the Board of Directors of plaintiff Birthright. II Tr. at 276.
5. Louise R. Summerhill ("daughter Louise") is one of three co-presidents and a member of the board of directors of Birthright. She is the daughter of mother Louise. I Tr. at 24, 31.
6. Defendant Birthright Inc. is a United States corporation, organized on June 17, 1972 under the laws of New Jersey by mother Louise and others. Defs.' Ex. 1; II Tr. at 209.
7. Joan Evelyn Coleman has been active in the Birthright movement since the summer of 1971 and currently serves on the board of directors of Birthright Inc. She is also the director of a Birthright chapter in Alexandria, Virginia, and holds the positions of regional consultant and regional representative. II Tr. at 154-55.
8. Denise Cocciolone is the executive director and member of the board of directors of defendant Birthright Inc. and a member of the board of directors of Birthright of Woodbury ("Woodbury Birthright"). Defs.' Ex. 11 ("Aff. of Cocciolone") P 1. She is the leading figure of both Birthright Inc. and Woodbury Birthright, and controls and directs these two entities. II Tr. at 295. Cocciolone first became involved in the Birthright movement in 1970, and she formerly served as the national director for Birthright in the United States. II Tr. at 202.
9. Terry Weaver is a member of the board of directors of Birthright and the national director for Birthright in the United States. She assumed these positions in September 1991. She first became active in the Birthright movement in 1969, when she founded an Atlanta chapter. She has also served as a regional consultant and as a co-national director for Birthright. II Tr. at 86, 87, 92.
10. Bernadette Sanders is the director of the Wichita, Kansas Birthright Center, which she founded in 1971. She also serves as a regional consultant for Birthright. II Tr. at 127.
11. Defendant Woodbury Birthright is a United States corporation, organized on November 17, 1975 under the laws of New Jersey. Pl.'s Ex. 58. Its offices are located in Woodbury, New Jersey. Before its incorporation, Woodbury Birthright operated as an unincorporated entity since December 1970. II Tr. at 204. On December 1, 1971, plaintiff Birthright issued Woodbury Birthright a charter document making the latter a "Chartered Member of Birthright" with the right to use the "Birthright" name.
Woodbury Birthright is located at the same address as Birthright Inc., and is directed and controlled by Denise Cocciolone. II Tr. at 272, 295; Defs.' Ex. 10; Decl. of Berney, Ex. F.
II. Goals and Activities of the Birthright Organizations
12. The Birthright movement comprises non-profit, charitable, interdenominational, and non-political organizations that provide emergency services to counsel women with crisis pregnancies. Based on the idea that every pregnant women has the right to give birth and every unborn child has the right to live, the Birthright movement encourages women with unplanned and/or unwanted pregnancies to bear their babies and not to have abortions. I Tr. at 31; Pl.'s Ex. 20 ("Decl. of Daughter Louise") P 6.
13. Formulated in 1971, the Birthright Charter articulates the underlying philosophy and guiding principles of the Birthright movement.
I Tr. at 36-37; II Tr. at 131.
14. The Birthright Charter also provides the standards that govern the activities of the Birthright chapters. I Tr. at 36-37; Pl.'s Ex. 4 ("Decl. of Birthright Administration") P 5; Pl.'s Ex. 65 ("Decl. of Weaver"), Ex. A.
15. The Declaration of Birthright Administration outlines the administrative structure of the Birthright movement and the relationship among the entities comprising it. I Tr. at 43.
16. Article I of the Birthright Charter states that:
The guiding principle of every Birthright Chapter shall be:
"It is the right of every pregnant woman to give birth, and the right of every child to be born."
Pl.'s Ex. 1; Defs.' Ex. 10.
17. The Birthright Charter states the following aims for all entities affiliated with the Birthright movement:
1. To uphold at all times, that every pregnant woman has the right to whatever help is needed to bring her child to term.
2. To attempt to effect in every possible way, a decrease in the number of abortions by encouraging pregnant girls and women to have their babies, that is, to offer them the alternative to abortion.
3. To maintain a crisis centre where any pregnant girl or woman, wed or unwed, may find help as near as her telephone.
4. To create and maintain in society an awareness of the needs of pregnant girls and women, to remove the social stigma associated with the unwed mother and her child and to encourage a more humane understanding of her and her problems.
Pl.'s Ex. 1; Defs.' Ex. 10.
18. The Birthright Charter articulates the following policies, to which all entities affiliated with the Birthright movement must adhere:
1. To refrain, at all times, and in every situation from giving aid to induced abortion, directly or indirectly.
2. To refrain in every instance from offering or giving advice on the subjects of contraception or sterilization, and to refrain from referring any person to another person, place or agency for this type of advice.
3. To remain strictly and completely separate from all lobbying groups, and from activities affecting abortion legislation.
4. To remain strictly inter-denominational, in name, function and advertising.
6. To refer all matters concerning adoption and adoption procedures to legally authorized agencies.
7. To offer person to person help, giving love, understanding, and all needed moral, emotional and practical support to every pregnant woman who requests it, employing the use of non-professional workers. Birthright does not function solely as a referral agency although use is made of the professional service agencies.
8. To keep all services strictly confidential refusing to discuss any girl's problems with any person or agency without her consent, and to preserve her anonymity if she so desires.
9. To use the official and registered symbol, the stylized "B", on all official Birthright stationary and documents and when possible, in all advertising.
Pl.'s Ex. 1; Defs.' Ex. 10.
19. To supplement and clarify the Birthright Charter, the Birthright Board has the exclusive authority to issue policy directives. These policy directives are "as important as any of the terms of the Charter," and all entities and individuals connected to the Birthright movement are required to follow them. I Tr. at 40-42; II Tr. at 186-87; Pl.'s Ex. 8 ("The Birthright Charter and Policy Directives: Additional Comments").
20. One of the purposes of the Birthright Charter and the policy directives is to ensure that the Birthright entities maintain a separate and distinct identity as providers of a pregnancy counselling service. In line with this goal, the Charter and the policy directives prohibit conduct and activities which the Birthright Board believes will undermine Birthright's distinctive identity. According to the Introduction to the policy directives:
Many of the activities that Birthright intentionally does not engage in are well meaning and desirable. However, in virtually all cases, these services are provided by other organizations. If Birthright engages in additional activities it will only detract from our main purpose. As indicated, it will also create confusion in the minds of those we are attempting to serve.
Pl.'s Ex. 3. As mother Louise stated: "'Birthright's' image must be uniform from coast to coast." The Story of Birthright at 23.
21. The Life Guardian is the official Birthright newsletter. Among its purposes is to publish the Birthright Board's policy directives, as well as explanations and clarifications of policy issues. I Tr. at 60.
22. In an editorial published in the Life Guardian in October 1979, Denise Cocciolone recognized the necessity for policy directives in a growing organization as well as the exclusive authority of the Birthright Board to issue such directives.
Birthright belongs to no one person. I believe that the larger we become, the more specific our guidelines must become, and there will naturally be more possibilities of deviation. The fact that [a Birthright chapter] received a charter under one mode of operation does not make it an absolute, meaning that those methods can never be changed. The governing Board of the parent organization [i.e., the Birthright Board] obviously has the right and duty to direct in a manner that will benefit the whole of the organization.
Pl.'s Ex. 57 ("Supp. Decl. of Daughter Louise"), Ex. J.
23. A Birthright Board policy directive prohibits Birthright chapters from being associated with any political or religious organization. The reason for this prohibition is that:
The essential purpose of Birthright has always been to provide the greatest possible assistance to pregnant women and engaging in activities which are political, religious or judgmental can only create a reluctance on the part of pregnant women to use Birthright services.
Pl.'s Ex. 3; see also The Story of Birthright at 22.
24. A further Birthright Board policy directive states that:
25. A further Birthright Board policy directive states that:
a) Birthright volunteers are not to get involved in the abortion controversy. We do not demonstrate, carry placard[s] or go on anti-abortion marches or "sit-ins". This includes Operation Rescue. It is important always to maintain our identity as a service. Any public display will do harm to our public image and abortion-minded women might not then come to Birthright. . . .
b) It is important that we have a good relationship with other pro-life groups but we must be separate in that we are not to speak on the same platform or share booths at fairs. It is difficult enough to maintain our own identity.
Pl.'s Ex. 3. As explained by mother Louise:
Birthright, being an entirely new type of service should be careful not to be identified as a "lobbying group," working for further changes in abortion legislation. I honestly think that this would weaken the influence with the girls we hope to help, and will alienate many in the community.
The Story of Birthright at 21.
26. A further Birthright Board policy directive states that:
a) Under no circumstance must Birthright centres affiliate with other organizations or services. There is often pressure put on centres to join other pro-life groups but we must remain separate. We must maintain our own identity. You do not need to affiliate. . . .
b) There are many other pregnancy services although Birthright in Toronto was the first in the world. Many do not operate as we do. Some evangelize, some give contraceptive counselling, some deceive by pretending to offer abortion referrals, and some are into adoptions. Birthright's reputation could be harmed if we are linked to any of these by affiliation.
27. The Birthright movement, through its chapters in North America, provides the following services to pregnant women in order to achieve its goal of counselling women with unexpected pregnancies to bear their babies and not to have abortions:
b. educational services, such as home tutoring or night school;
c. medical and hospital assistance;
d. maternity and infant clothing and layettes;
f. referrals for professional counseling for marriage, family and financial problems;
g. referrals to licensed adoption agencies;
h. emergency and long-term accommodation through "shelter" homes;
i. pre- and post-natal classes on fetal development, childbirth, and childcare.
Decl. of Daughter Louise P 10.
28. The Birthright chapters offer these services to any girl or woman who finds herself with an unplanned or unexpected pregnancy. II Tr. at 129. They also provide counselling services to the family and boyfriend of a woman with an unexpected pregnancy. II Tr. at 74-75.
29. The Birthright chapters typically provide these services free-of-charge, whenever financially feasible. Decl. of Daughter Louise P 11.
30. The Birthright chapters support their activities through donations from private individuals and some churches. II Tr. at 128; Decl. of Daughter Louise P 12.
31. Birthright, Birthright Inc., and the Birthright chapters regularly advertise and publicize services in local newspapers, telephone directory books, and other publications and media. These entities regularly use the "Birthright" name and the "B" logo is these advertisements. II Tr. at 128-29; Decl. of Daughter Louise P 20 & Ex. C.
33. To pay for the hotline's operation, Birthright Inc. raises funds by means of a national direct mailing campaign to individuals and organizations throughout the United States. II Tr. at 232.
34. The hotline fundraising letters are sent to prior Birthright donors and volunteers, to Birthright chapters, and to individuals on lists compiled by a fundraising consultant. The lists are obtained by renting lists from organizations, magazines, or other entities that the fundraising consultant believes will be sympathetic to the Birthright movement. II Tr. at 146-47, 241, 269. These hotline fundraising letters are mailed on letterhead that uses the "Birthright" name and the "B" logo. Decl. of Daughter Louise P 29 & Ex. E.
35. None of the money raised by means of the hotline fundraising letters and telephone solicitations is ever used to pay for the activities of the Birthright chapters. Rather, this money goes solely to defray the costs of operating the hotline. II Tr. at 245.
36. It is estimated that the fundraising letters for the crisis hotline raise approximately $ 600,000 per year. II Tr. at 244.
III. Organizational History and Structure
37. Mother Louise established Birthright in Toronto, Canada on October 15, 1968 in order to provide a counselling service for pregnant women that would aid and assist them to carry their pregnancies to term and not to have abortions. The Story of Birthright at 8.
38. Birthright operated initially in Toronto as an unincorporated association under the direction and leadership of mother Louise. I Tr. at 44. It was incorporated as an Ontario corporation in February 1969. See supra Findings of Fact P 3.
39. Mother Louise introduced the Birthright idea into the United States through speaking engagements and by meeting with individuals who were interested in providing crisis pregnancy services. For example, Terry Weaver heard mother Louise speaking at a pro-life meeting in the Chicago area in July 1969, and was inspired to establish the first Birthright center in the United States in Atlanta, Georgia, in October 1969. II Tr. at 85-86; Decl. of Weaver P 3; Decl. of Daughter Louise P 15.
40. By 1971, a "Directory of Birthright Groups" identified 43 entities operating in 21 states and the District of Columbia. Aff. of Cocciolone, Ex. J.
41. On August 15, 1971, mother Louise convoked a meeting of all people involved in Birthright. At this time, the language for the Birthright Charter was drafted and finalized by mother Louise and a group of 15-18 other people. II Tr. at 131, 224-25.
42. Throughout the 1970s and 1980s, the Birthright movement continued to grow, with more Birthright chapters and more pregnant women obtaining counselling services. Today, there are approximately 600 Birthright chapters worldwide and almost 500 chapters in the United States. Decl. of Daughter Louise P 8.
43. Toward the end of the 1980s, the Birthright movement addressed the issue of who would assume leadership upon the death of mother Louise. At the 1989 Birthright International Convention held in Toronto, mother Louise announced that her daughters would take over her role as head of Birthright upon her death or when she was no longer physically capable of carrying out her duties. Although some individuals questioned, or may even have opposed, this decision, it was in fact implemented upon mother Louise's death in 1991. Pl.'s Ex. 17; Decl. of Berney P 14; Aff. of Sanders PP 7-8.
44. Throughout its history, the Birthright movement has as a general rule operated through an informal and decentralized organizational structure. According to mother Louise, this organizational model was better suited to attract volunteers and encourage spiritual people to open new centers. In addition, mother Louise believed that a formal, centralized organization would create internal lobbying for power among members and volunteers. The Story of Birthright at 18, 41-42, 95-96, 118; Aff. of Cocciolone PP 14, 15.
45. Despite this generally informal and decentralized structure, authority over critical aspects of the Birthright movement, including over monitoring the use of the name and logo, lay in the hands of plaintiff Birthright. See infra Findings of Fact PP 69-74.
46. Today, the Birthright movement is comprised of local chapters, regional consultants, regional representatives, regional directors, a U.S. national office, Birthright Inc., and an international office located in Toronto, Canada. I Tr. at 32-34; see infra Findings of Fact PP 47-74.
A. Local Birthright Chapters
47. Birthright provides its services to pregnant women primarily through local Birthright chapters. There are currently approximately 500 Birthright chapters in the United States. Decl. of Daughter Louise P 8. Defendant Woodbury Birthright is one such local chapter.
48. Birthright chapters are formed by local volunteers who understand and concur in the goals and philosophy of Birthright. I Tr. at 54, 61.
49. To become a Birthright chapter, a group of people must apply to plaintiff Birthright for a charter. Defs.' Ex. 5 (Handbook for Birthright at 4); Decl. of Birthright Administration P 7. Generally, Birthright receives an inquiry as to the formation of a chapter directly or through a regional consultant. Plaintiff then sends out information, including a copy of the charter. The Birthright Board then reviews the application and, if it is in order, issues a charter. I Tr. at 54-56.
50. The Birthright Board has the sole authority to grant charters for the establishment of a local Birthright chapter. The Board issues charters only to entities that share the Birthright philosophy. The Birthright Board also has the exclusive authority to terminate the charter of a local chapter. Included in this authority to grant and revoke charters is the authority to grant and terminate a local chapter's authorization to use ...