Agenda - Planning Commission - 06/02/1998

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Page 2 -- May 25, 1998 Z.B. Enforcement -- Can city enforce zoo':lng regulation that requires alteration of registered trademark? Citation: Blockbuster Videos Inc. v. City of Tempe, 9th U.S. Circuit Court of Appeals, No. 97-15535 (1998) The 9th U.S. Circuit Court of Appeals has jurisdiction over Alaska, Arizona, California, Guam, Hawaii, Idaho, Montaha, Nevada, Oregon, and Washington. Blockbuster Videos Inc. and Video Update Inc. were national chains that rented videos. Both had registered service marks. Video Update's mark had the words "Video Update" in stylized red lettering wider at the bottom than the top. Blockbuster had two registered service marks. One was a torn ticket with a blue background and yellow lettering, and the other was a blue awning with the words "Blockbuster Video" in yellow block letters. In 1996, Blockbuster and Video Update leased space in the city of Tempe, Ariz. Under the city's zoning ordinance, all exterior signs in a shopping center had to conform to the center's sign package, which outlined such things as the color, size and location of signs. Individual tenants had to apply to the city design review board for variances from their center's sign package. The sign package for Video Update's location required white letters on a turquoise background. Video Update applied to the review board to use red letters on two storefront signs. The board allowed red letters on one sign, but required white letters on the other. The sign package for Blockbuster's location required blue, red or yellow letters. Blockbuster applied to the review board to use its torn ticket logo ser- vice mark on exterior signs and to build its blue awning service mark. The board approved the torn ticket sign, but not installation of the awning. In place of the awning, the board approved a sign with blue letters. Both Blockbuster and Video Update appealed to the city council. The council affirmed the review board's decisions. Blockbuster and Video Update separately sued the city in federal court, claiming the city violated the federal Lanham Act. The Act provided that no state or political subdivision could require the alteration of a registered trade- mark or service mark. The city claimed the Act didn't prohibit it from enforcing zOning ordi- nances that specified the color, size and general architectural features of store- front signs, even if the signs incorporated a registered service mark. It also claimed it could require the alteration of registered marks to ensure compli- ance with aesthetic zoning..According to the city, requiring all signs in a given shopping center to have, for example, white letters on a turquoise background would give a uniform, aesthetically pleasing look to the shopping center. The court consolidated the cases and issued a temporary order allowing the companies to display their marks. The city appealed. DECISION: Affirmed in part.