                       REVISED, May 27, 1998

               IN THE UNITED STATES COURT OF APPEALS

                       FOR THE FIFTH CIRCUIT

                       _____________________

                            No. 97-20096
                       _____________________


          ELVIS PRESLEY ENTERPRISES, INCORPORATED,

                                     Plaintiff-Appellant,

          v.

          BARRY CAPECE, A United States Citizen; VELVET
          LIMITED, A Texas Limited Partnership; AUDLEY
          INCORPORATED, A Texas Corporation,

                                     Defendants-Appellees.

_________________________________________________________________

           Appeal from the United States District Court
                for the Southern District of Texas
_________________________________________________________________
                            May 7, 1998

Before REYNALDO G. GARZA, KING, and BENAVIDES, Circuit Judges.

KING, Circuit Judge:

     Plaintiff-appellant Elvis Presley Enterprises, Inc. appeals

the district court’s judgment that defendants-appellees’ service

mark, “The Velvet Elvis,” does not infringe or dilute its federal

and common-law trademarks and does not violate its right of

publicity in Elvis Presley’s name.    See Elvis Presley Enters. v.

Capece, 950 F. Supp. 783 (S.D. Tex. 1996).     Because the district

court failed to consider the impact of defendants-appellees’

advertising practices on their use of the service mark and

misapplied the doctrine of parody in its determination that “The

Velvet Elvis” mark did not infringe Elvis Presley Enterprises,
Inc.’s marks, we reverse the district court’s judgment on the

trademark infringement claims and remand the case for entry of an

injunction enjoining the use of the infringing mark.

                          I.   BACKGROUND

     Plaintiff-appellant Elvis Presley Enterprises, Inc. (EPE) is

the assignee and registrant of all trademarks, copyrights, and

publicity rights belonging to the Elvis Presley estate.     EPE has

at least seventeen federal trademark registrations, as well as

common-law trademarks, for “Elvis Presley” or “Elvis” and other

registrations for his likeness.    However, none of these marks is

registered for use in the restaurant and tavern business.     Prior

to trial, EPE announced plans to open a Memphis nightclub as part

of a possible worldwide chain.    The Memphis nightclub opened

subsequent to trial.   EPE licenses a wide variety of products and

operates Graceland, Elvis’s home, as a tourist attraction with

adjacent retail stores and restaurants.     Over 700,000 visitors

per year come from all fifty states and from around the world to

visit Graceland.   Merchandise sales have brought in over $20

million in revenue over a five-year period and account for the

largest portion of EPE’s revenue.

     In April 1991, defendant-appellee Barry Capece, operating

through the limited partnership Beers ’R’ Us, opened a nightclub

on Kipling Street in Houston, Texas called “The Velvet Elvis.”

On August 28, 1991, Capece filed a federal service mark

application for “The Velvet Elvis” for restaurant and tavern

services with the United States Patent and Trademark Office


                                  2
(PTO).   In December 1992, the service mark was published in the

Official Gazette of the United States Patent and Trademark Office

as required by 15 U.S.C. § 1062(a).      EPE was aware of this

publication, but did not file an opposition to the mark’s

registration within thirty days under 15 U.S.C. § 1063.

Accordingly, the PTO issued a service mark registration to Capece

for use of “The Velvet Elvis” mark on March 9, 1993.      The Kipling

Street nightclub closed in July 1993 for business reasons.

     After the Kipling Street location’s closing, Capece began

soliciting investors to reopen the nightclub at a new location.

The new nightclub, to be located on Richmond Avenue, would have

the same name, “The Velvet Elvis,” but it would be run by a new

limited partnership, Velvet, Ltd.      Audley, Inc. is the general

partner of Velvet, Ltd., and Capece is the sole shareholder of

Audley, Inc.1    Capece began renovating the new location in

January 1994.    In July 1994, EPE contacted Capece by letter,

threatening him with legal action if the bar opened with “Elvis”

in its name.    The Richmond Avenue location opened in August 1994

under the name “The Velvet Elvis.”

     The Defendants’ bar serves a wide variety of food and

liquor, including premium scotches and bourbons.      The menu items

range from appetizers to full entrees.      Live music is regularly

featured at the bar, and the bar claims to be the first cigar bar

in Houston.     Its decor includes velvet paintings of celebrities


     1
        Hereinafter, we will refer to Barry Capece; Velvet, Ltd.;
and Audley, Inc. collectively as the Defendants.

                                   3
and female nudes, including ones of Elvis and a bare-chested Mona

Lisa.   Other “eclectic” decorations include lava lamps, cheap

ceramic sculptures, beaded curtains, and vinyl furniture.

Playboy centerfolds cover the men’s room walls.

     In addition to the velvet painting of Elvis, the bar’s menu

and decor include other Elvis references.       The menu includes

“Love Me Blenders,” a type of frozen drink; peanut butter and

banana sandwiches, a favorite of Elvis’s; and “Your Football

Hound Dog,” a hotdog.    The menu bears the caption “The King of

Dive Bars,” and one menu publicized “Oscar at The Elvis,” an

Academy Awards charity benefit to be held at the bar.       Numerous

magazine photographs of Elvis, a statuette of Elvis playing the

guitar, and a bust of Elvis were also among the decorations.         By

the time of trial, many of these decorations had been removed

from the Defendants’ bar and replaced with non-Elvis items.

     Pictures and references to Elvis Presley appeared in

advertising both for the Kipling Street location and for the

Richmond Avenue location from the date it opened through early

1995, and some ads emphasized the “Elvis” portion of the name by

“boldly display[ing] the ‘Elvis’ portion of ‘The Velvet Elvis’

insignia with an almost unnoticeable ‘Velvet’ appearing alongside

in smaller script.”     Elvis Presley Enters. v. Capece, 950 F.

Supp. 783, 789 (S.D. Tex. 1996).       The Defendants made direct

references to Elvis and Graceland in advertisements with phrases

such as “The King Lives,” “Viva la Elvis,” “Hunka-Hunka Happy

Hour,” and “Elvis has not left the building.”       Advertisements


                                   4
also included a crown logo above the “V” in “The Velvet Elvis”

mark.   Advertised promotional events at the Defendants’ bar have

included parties commemorating Elvis’s birth and death and

appearances by Elvis impersonators and Elvis Presley’s drummer.

Some advertisements publicizing the opening of the Richmond

Avenue location included direct references to Elvis and used the

tag-line “the legend continues” without using “The Velvet Elvis”

mark.

     In April 1995, EPE filed suit against the Defendants,

alleging claims for federal and common-law unfair competition and

trademark infringement, federal trademark dilution, and violation

of its state-law rights of publicity in Elvis Presley’s name and

likeness.   EPE sought injunctive relief, costs, attorneys’ fees,

and an order to the Commissioner of Patents and Trademarks to

cancel Capece’s registration for “The Velvet Elvis.”   The case

was tried to the district court, which ruled in favor of EPE on

its claims of trademark infringement and unfair competition

relating to the Defendants’ advertising practices, but not those

claims relating to their use of “The Velvet Elvis” service mark.

Id. at 796-97.   In addition, the court ruled in favor of EPE on

its right of publicity claim in relation to the use of Elvis’s

name and likeness, but again not in relation to the use of “The

Velvet Elvis” service mark.   Id. at 801-02.   As to the claims

upon which EPE succeeded, the district court granted injunctive

relief barring the use, in connection with the promotion or

advertising of the bar, of “the image or likeness of Elvis


                                 5
Presley, phrases that are inextricably linked to the identity of

Elvis, or from displaying the ‘Elvis’ portion of their service

mark in print larger than that used for its counterpart

‘Velvet.’”      Id. at 803.   Upon all other claims, the district

court ruled in favor of the Defendants and denied all other

relief.   Id.    EPE now appeals.

                              II.   DISCUSSION

     EPE has appealed that portion of the district court’s

judgment denying relief on its trademark infringement claims, its

federal dilution claim, and its right of publicity claim based

only upon the Defendants’ use of “The Velvet Elvis” mark and the

district court’s denial of an accounting of profits and

attorneys’ fees.     Because it ruled in favor of the Defendants,

the district court did not reach their defenses of laches or

acquiescence.     The Defendants reassert these defenses on appeal

as alternative bases for affirming the district court’s

judgment.2   We consider each issue in turn.

A.   Trademark Infringement

     The district court clearly stated EPE’s claim:

     [EPE] claims the inclusion of its “Elvis” trademark in
     the service mark “The Velvet Elvis” coupled with
     Defendants’ use of the image and likeness of Elvis

     2
        The Defendants asserted a First Amendment defense to
trademark infringement below, but they do not reassert it on
appeal, thus abandoning the defense. See Brinkman v. Dallas
County Deputy Sheriff Abner, 813 F.2d 744, 748 (5th Cir. 1987)
(“We will not raise or discuss legal issues that [appellant] has
failed to assert.”); Fehlhaber v. Fehlhaber, 681 F.2d 1015, 1029
(5th Cir. Unit B 1982) (noting that a failure to brief and argue
a constitutional defense is grounds for finding that the defense
has been abandoned).

                                      6
     Presley in advertising, promoting, and rendering bar
     services creates confusion as to whether EPE licensed,
     approved, sponsored, endorsed or is otherwise
     affiliated with “The Velvet Elvis,” constituting unfair
     competition and trademark infringement under the common
     law and Lanham Act.

Id. at 789.   The district court also correctly stated the

generally applicable law in this circuit to a trademark

infringement claim.    Id. at 789-91.         First, we will summarize

this applicable law and then examine the district court’s

decision.

     1.     Applicable law

     For EPE to prevail on its trademark infringement claim, it

must show that the Defendants’ use of “The Velvet Elvis” mark and

image, likeness, and other referents to Elvis Presley creates a

likelihood of confusion in the minds of potential consumers as to

the source, affiliation, or sponsorship of the Defendants’ bar.

See Society of Fin. Exam’rs v. National Ass’n of Certified Fraud

Exam’rs, Inc., 41 F.3d 223, 227 (5th Cir.), cert. denied, 515

U.S. 1103 (1995); Oreck Corp. v. U.S. Floor Sys., Inc., 803 F.2d

166, 170 (5th Cir. 1986); see also 15 U.S.C. §§ 1114(1),

1125(a)(1)(A).    Liability for trademark infringement hinges upon

whether a likelihood of confusion exists between the marks at

issue.    See Society of Fin. Exam’rs, 41 F.3d at 227.                 Likelihood

of confusion is synonymous with a probability of confusion, which

is more than a mere possibility of confusion.                 See Blue Bell Bio-

Med. v. Cin-Bad, Inc., 864 F.2d 1253, 1260 (5th Cir. 1989); see

also 3 J. THOMAS MCCARTHY, MCCARTHY   ON   TRADEMARKS   AND   UNFAIR COMPETITION

§ 23:3 (4th ed. 1997).     A determination of a likelihood of

                                      7
confusion under federal law is the same as the determination of a

likelihood of confusion under Texas law for a trademark

infringement claim.    See Zapata Corp. v. Zapata Trading Int’l,

Inc., 841 S.W.2d 45, 47 (Tex. App.--Houston [14th Dist.] 1992, no

writ) (applying Texas law to a trademark infringement claim); see

also Blue Bell Bio-Med., 864 F.2d at 1261 (citing Chevron Chem.

Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d 695, 706 (5th

Cir. Unit A Oct. 1981) (applying Texas law to an unfair trade

practices claim)).3

     In determining whether a likelihood of confusion exists,

this court considers the following nonexhaustive list of factors:

(1) the type of trademark allegedly infringed, (2) the similarity

between the two marks, (3) the similarity of the products or

services, (4) the identity of the retail outlets and purchasers,

(5) the identity of the advertising media used, (6) the

defendant’s intent, and (7) any evidence of actual confusion.

See Conan Properties, Inc. v. Conans Pizza, Inc., 752 F.2d 145,

149 (5th Cir. 1985).   No one factor is dispositive, and a finding

of a likelihood of confusion does not even require a positive


     3
       The district court found that Texas law applied in its
discussion of EPE’s statutory right of publicity. Elvis Presley
Enters., 950 F. Supp. at 800-01. No explicit choice-of-law
determination was made in relation to the state trademark or
unfair competition claims. For the same reasons that the
district court stated in its opinion in relation to the right of
publicity, id., it would have determined that Texas law applied
to the trademark infringement claims. Because EPE does not
dispute this determination by the district court, we will follow
the district court and apply the laws of Texas to all the state
law claims. See Snydergeneral Corp. v. Continental Ins. Co., 133
F.3d 373, 375 (5th Cir. 1998).

                                  8
finding on a majority of these “digits of confusion.”     Id. at

150; see also Society of Fin. Exam’rs, 41 F.3d at 228 & n.15.      In

addition to the listed factors, a court is free to consider other

relevant factors in determining whether a likelihood of confusion

exists.   See Armco, Inc. v. Armco Burglar Alarm Co., 693 F.2d

1155, 1160-61 (5th Cir. 1982).   Parody is one such other relevant

factor that a court may consider in a likelihood-of-confusion

analysis.   See Dr. Seuss Enters. v. Penguin Books USA, Inc., 109

F.3d 1394, 1405 (9th Cir.), cert. dismissed, 118 S. Ct. 27

(1997); Nike, Inc. v. “Just Did It” Enters., 6 F.3d 1225, 1231

(7th Cir. 1993) (holding that parody is not an affirmative

defense to trademark infringement but that it can be an

additional factor in a likelihood-of-confusion analysis);

Jordache Enters. v. Hogg Wyld, Ltd., 828 F.2d 1482, 1486 (10th

Cir. 1987) (considering parody as a factor in determining whether

a likelihood of confusion exists).

      Neither the trademark and service mark registrations of EPE

or the service mark registration of Capece disposes of EPE’s

trademark infringement claim.    Proof of registration of a service

mark or trademark is only prima facie evidence of the

registrant’s exclusive right to use the mark in commerce for the

services specified in the registration.   15 U.S.C. § 1115(a).

However, such proof does “not preclude another person from

proving any legal or equitable defense or defect . . . which

might have been asserted if such mark had not been registered.”

Id.   A registration only becomes conclusive evidence of a


                                  9
registrant’s exclusive right to use a mark after five consecutive

years of continuous use in commerce, subject to a few enumerated

defenses.     Id. §§ 1065, 1115(b).       “The Velvet Elvis” mark has not

become incontestable, but Capece’s registration of the mark

constitutes prima facie evidence of the mark’s validity and that

there is no likelihood of confusion with previously registered

marks.    See id. § 1115(a).      EPE’s registration of the Elvis and

Elvis Presley marks establishes that it is entitled to protection

from infringement by junior users, thereby meeting the threshold

requirement that the plaintiff must possess a protectible mark,

which must be satisfied before infringement can be actionable.

Id. §§ 1052(d), 1057, 1115(a); see also Soweco, Inc. v. Shell Oil

Co., 617 F.2d 1178, 1184 (5th Cir. 1980).

     2.      The decision below

     After correctly summarizing the applicable law, the district

court then proceeded to consider EPE’s trademark infringement and

unfair competition claims.     In doing so, the court explicitly

isolated its consideration of “The Velvet Elvis” mark and the

bar’s decor from any consideration of the Defendants’ advertising

and promotional practices.        Elvis Presley Enters., 950 F. Supp.

at 791, 797.

             a.   Service mark and the bar’s decor

     Beginning with the bar’s decor and “The Velvet Elvis” mark,

the district court considered each of the digits of confusion in

turn.     First, on the type of mark, the district court found that

EPE has strong marks, but that the “Defendants’ use of the


                                     10
service mark ‘The Velvet Elvis’ when combined with the bar’s

gaudy decor form[s] an integral part of Defendants’ parody of the

faddish, eclectic bars of the sixties.”     Id. at 792.   The

district court found that the mark “symbolizes tacky, ‘cheesy,’

velvet art, including, but not limited to velvet Elvis paintings”

and that “the image of Elvis, conjured up by way of velvet

paintings, has transcended into an iconoclastic form of art that

has a specific meaning in our culture, which surpasses the

identity of the man represented in the painting.”     Id.    Despite

EPE’s strong marks which would normally be accorded broad

protection, the bar’s parody of “faddish, eclectic bars of the

sixties” led the district court to find that the name and decor

of the bar would not mislead consumers and that this digit

weighed against a likelihood of confusion.     Id. at 793.

     Second, on the similarity of the marks, the district court

found that “The Velvet Elvis” has a meaning independent from

Elvis Presley.   Specifically, the district court concluded that

“The Velvet Elvis” “is symbolic of a faddish art style” that “has

no specific connection with the singer other than the coincidence

of its use to portray him.”   Id.    The district court noted that

“‘[t]he proper test is whether the average consumer, upon

encountering the allegedly infringing mark in the isolated

circumstances of the marketplace . . . would be likely to confuse

or associate the defendant or his services with the plaintiff.’”

Id. (quoting American Auto. Ass’n v. AAA Ins. Agency, 618 F.

Supp. 787, 792 (W.D. Tex. 1985)).    Because of the dissimilarity


                                11
in the meanings of the Defendants’ and EPE’s marks, the district

court found that this digit of confusion weighed against a

likelihood of confusion.   Id.

     Third, on the similarity of the products and services, the

district court noted that, at the time of trial, there was some

overlap between the parties’ services, but that the services were

not directly competitive because they served different clienteles

and had different purposes.      Id. at 794.   While noting that EPE’s

plan to open a chain of Elvis Presley nightclubs might weigh in

favor of a likelihood of confusion, the district court found that

“the relative clarity of ‘The Velvet Elvis’’ parodic purpose”

made it dissimilar from any business that EPE currently operates

or has plans to operate.   The district court thus concluded that

this digit weighed against a likelihood of confusion.        Id.

     Fourth, on the identity of the retail outlets and

purchasers, the district court found that the majority of EPE’s

customers are “middle-aged white women” and that the Defendants’

customers are generally “young professionals, ranging in age from

early twenties to late thirties.”       Id. at 794.   In the district

court’s analysis, this disparity between the customers weighed

against a likelihood of confusion.      Id. (relying upon Amstar

Corp. v. Domino’s Pizza, Inc., 615 F.2d 252, 262 (5th Cir.

1980)).

     Fifth, on the identity of the advertising media, the

district court found that this digit of confusion was irrelevant




                                   12
to the determination of a likelihood of confusion because the

parties operate in different geographic markets and because EPE

admits that it rarely advertises because of the strength of its

marks and Elvis’s image.    Id. at 795.

     Sixth, on the Defendants’ intent, the district court found

that the Defendants intended to parody “a time or concept from

the sixties--the Las Vegas lounge scene, the velvet painting

craze and perhaps indirectly, the country’s fascination with

Elvis.”   Id.   The district court noted that the references to

Elvis are indirect, but that the “use of his name is an essential

part of the parody because the term, ‘velvet Elvis,’ has become a

synonym for garish, passe black velvet art.”       Id.   The district

court found that the Defendants’ intent weighed against a

likelihood of confusion because the “clarity” of the Defendants’

parody showed that they did not intend to confuse the public.

     Seventh, on actual confusion, the district court found that

EPE failed to show any actual confusion because “each witness

acknowledged that once inside ‘The Velvet Elvis’ and given an

opportunity to look around, each had no doubt that the bar was

not associated or in any way affiliated with EPE.”       Id. at 796.

Additionally, the district court considered the fact that the

Defendants’ bar had been in operation at the Richmond Avenue

location without any complaints or inquiries about the

affiliation of the bar with EPE.      Id.   Relying upon this

evidence, the district found that this digit of confusion weighed

against a likelihood of confusion.


                                 13
     Having found none of the digits of confusion weighing in

favor of a likelihood of confusion, the district court found no

likelihood of confusion in relation to the bar’s decor or “The

Velvet Elvis” mark, and therefore found that the use of the

Defendants’ mark caused no infringement.

          b. The Defendants’ advertising practices

     The district court next turned to the Defendants’

advertising practices and found that their advertising scheme

would leave the ordinary customer with

     the distinct impression that the bar’s purpose was to
     pay tribute to Elvis Presley or to promote the sale of
     EPE related products and services. Consequently, use
     of this [advertising scheme] can only indicate a
     marketing scheme based on the tremendous drawing power
     of the Presley name and its ability to attract consumer
     interest and attention.

Id. at 797.   Further, the district court noted that the

advertising, without the backdrop of the parody, “will cause

confusion, leading customers to wonder if they might find [Elvis]

memorabilia” in the bar and that the Defendants’ emphasis of the

“Elvis” portion of the mark over the “Velvet” portion focusses

attention on Elvis and “creat[es] a definite risk that consumers

will identify the bar with Presley or EPE.”   Id.    Additionally,

the district court found that the Defendants’ advertising caused

actual confusion.   Based upon the above findings the district

court found that the Defendants’ advertising practices, including

the actual configuration of the mark emphasizing “Elvis,”

constituted trademark infringement and unfair competition.     Id.




                                14
       Despite the facts that the Defendants had discontinued the

activity that the district court found to be infringing and that

Capece stated that they would not resume the activity, the

district court believed that “there [was] a definite possibility

that ads including the image or likeness of Elvis Presley,

references to Elvis, or his name disproportionately displayed may

be used in connection with ‘The Velvet Elvis’ again.”    Id. at

803.    Even after acknowledging that the cessation of activity

might make an injunction unavailable, the court issued an

injunction barring the use in the Defendants’ advertising of “the

image and likeness of Elvis Presley, phrases that are

inextricably linked to the identity of Elvis, or from displaying

the ‘Elvis’ portion of their service mark in print larger than

that used for its counterpart ‘Velvet.’”     Id.

       3.   Standard of review

       We review questions of law de novo and questions of fact for

clear error.    Joslyn Mfg. Co. v. Koppers Co., 40 F.3d 750, 753

(5th Cir. 1994).    Likelihood of confusion is a question of fact

reviewed for clear error.    Society of Fin. Exam’rs, 41 F.3d at

225; Blue Bell Bio-Med., 864 F.2d at 1260.    However, “the

‘clearly erroneous’ standard of review does not insulate factual

findings premised upon an erroneous view of controlling legal

principles.”    Johnson v. Hospital Corp. of Am., 95 F.3d 383, 395

(5th Cir. 1996) (citing Johnson v. Uncle Ben’s, Inc., 628 F.2d

419, 422 (5th Cir. 1980), vacated on other grounds, 451 U.S. 902

(1981)); see also In re Auclair, 961 F.2d 65, 69 n.7 (5th Cir.


                                 15
1992) (“Factual findings made under an erroneous view of the law

are not binding on the appellate court.” (citing 1 STEVEN ALAN

CHILDRESS & MARTHA S. DAVIS, FEDERAL STANDARDS   OF   REVIEW § 2.16, at 2-116

(2d ed. 1992))).     When a likelihood-of-confusion factual finding

is “inextricably bound up” in, or infected by, a district court’s

erroneous view of the law, we may conduct a de novo review of the

fully-developed record before us.         See Anheuser-Busch, Inc. v.

Balducci Publications, 28 F.3d 769, 773 (8th Cir. 1994) (applying

de novo review where the district court misapplied the First

Amendment in relation to parody in its likelihood-of-confusion

determination); see also Roto-Rooter Corp. v. O’Neal, 513 F.2d

44, 46-47 (5th Cir. 1975) (reviewing the district court’s fact-

finding on a likelihood of confusion de novo where it applied the

incorrect legal standard).

     EPE argues that the district court erroneously applied

parody to its likelihood-of-confusion analysis and that this

error permeated its entire analysis, infecting nearly all of its

findings of fact.     Within EPE’s discussion of the digits of

confusion, it also argues that the district court erred in

isolating its consideration of the Defendants’ advertising from

its consideration of whether “The Velvet Elvis” mark infringes

EPE’s marks.    If the district court erred as EPE argues, then we

would review the likelihood-of-confusion finding de novo, rather

than for clear error.      We will consider the district court’s

isolation of the advertising evidence from its analysis first.

           a.    Isolated consideration of advertising


                                     16
     The use of a mark in advertising is highly probative of

whether the mark creates a likelihood of confusion in relation to

another mark.   “Evidence of the context in which a mark is used

on labels, packages, or in advertising material directed to the

goods is probative of the reaction of prospective purchasers to

the mark.”   In re Abcor Dev. Corp., 588 F.2d 811, 814 (C.C.P.A.

1978).   Courts consider marks in the context that a customer

perceives them in the marketplace, which includes their

presentation in advertisements.    See The Sports Auth., Inc. v.

Prime Hospitality Corp., 89 F.3d 955, 962 (2d Cir. 1996)

(considering the appearance of the mark in advertising in

determining similarity of marks); Nikon Inc. v. Ikon Corp., 987

F.2d 91, 94-95 (2d Cir. 1993) (same); Oreck Corp., 803 F.2d at

171 (considering the presentation of the marks in advertising in

determining the similarity of the marks and the defendant’s

intent); Sun Banks of Fla., Inc. v. Sun Fed. Sav. & Loan Ass’n,

651 F.2d 311, 318 (5th Cir. 1981) (considering the presentation

of the marks in advertising in determining the similarity of the

marks); National Ass’n of Blue Shield Plans v. United Bankers

Life Ins. Co., 362 F.2d 374, 378 (5th Cir. 1966) (comparing marks

as used in advertising in newspapers and on television where the

black and white format did not allow for color distinctions); see

also Sun-Maid Raisin Growers v. Sunaid Food Prods., Inc., 356

F.2d 467, 469 (5th Cir. 1966) (“[I]t is the labels that the

prospective purchaser sees.   The trademarks cannot be isolated

from the labels on which they appear.”).


                                  17
       In the case of a service mark, advertising is of even

greater relevance because the mark cannot be actually affixed to

the service, as a trademark is to the goods.       Many prospective

purchasers first encounter the mark in advertising, rather than

on the product; therefore, the service mark cannot be isolated

from the advertising in which it appears.       See RESTATEMENT (THIRD)

OF   UNFAIR COMPETITION § 21(a)(i) (1995) (stating that “the overall

impression created by the [marks] as they are used in marketing

the respective goods and services” is relevant to how similar two

marks are (emphasis added)).      The Lanham Act itself makes

advertising relevant to a service mark infringement claim.          In

order to infringe another’s mark, the infringing mark must be

used in commerce.     15 U.S.C. § 1114.   By definition, a service

mark is used in commerce “when it is used or displayed in the

sale or advertising of services.”       Id. § 1127 (emphasis added).

In summary, advertisements used by the alleged infringer, which

incorporate the allegedly infringing mark, are relevant in

determining whether a mark has been infringed.       Advertisements

are therefore relevant to the likelihood-of-confusion analysis.

       In addition, the context of the presentation of a mark,

including advertising, is relevant to the meaning that the mark

conveys.     McGregor-Doniger Inc. v. Drizzle Inc., 599 F.2d 1126,

1133 (2d Cir. 1979) (“‘[T]he setting in which a designation is

used affects its appearance and colors the impression conveyed by

it.’” (brackets in original) (quoting RESTATEMENT    OF   TORTS § 729

cmt. b, at 593 (1938))).     The Supreme Court has said that “[t]he


                                   18
protection of trade-marks is the law’s recognition of the

psychological function of symbols.”          Mishawaka Rubber & Woolen

Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 205 (1942).          To

understand a symbol’s psychological function, one must consider

it in the context in which it is used and not in a vacuum.           See

American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494

F.2d 3, 11 & n.7 (5th Cir. 1974) (“[W]ords are chameleons, which

reflect the color of their environment.”); 2 JEROME GILSON, TRADEMARK

PROTECTION   AND   PRACTICE § 5.09[1], at 5-137 n.1 (Jeffrey M. Samuels

ed., 1997) (noting that advertising is used by the holders of

marks to “establish[] a sufficient aura of desirability to induce

the public to purchase” their products and services).          Courts

have recognized this fact in determining whether a mark has

developed a secondary meaning as an indicator of source

independent from its everyday meaning, entitling the mark to

protection under the Lanham Act.           See, e.g., G. Heileman Brewing

Co. v. Anheuser-Busch, Inc., 873 F.2d 985, 994-95 (7th Cir.

1989); American Heritage Life Ins. Co, 494 F.2d at 12;

Volkswagenwerk Aktiengesellschaft v. Rickard, 492 F.2d 474, 478

(5th Cir. 1974).        In an extreme example of a word taking on

meaning from the context of its use, the Court of Customs and

Patent Appeals found that the word “stain” connoted a “a state of

relative cleanliness”--a meaning contrary to its normal meaning--

when used in connection with a cleaning product, making marks

that included “stain” and “clean” similar despite the aural and

optical dissimilarity of the marks.          See Proctor & Gamble Co. v.


                                      19
Conway, 419 F.2d 1332, 1335-36 (C.C.P.A. 1970) (finding that

“Mister Stain” infringed “Mr. Clean”).

     In this case, we are dealing with a service mark, “The

Velvet Elvis,” which the Defendants have used at their business

location and extensively in advertising.   To consider only the

Defendants’ use of the mark at their business location would

ignore highly probative evidence of the meaning of the mark as

the public encounters it in commerce and of the Defendants’

intent in using the mark.   By placing the mark in an Elvis

context and in configuring the mark to highlight the “Elvis”

portion of the mark, the Defendants have placed the mark in a

context that does not alone connote tacky, cheesy art as the

district court found.   This contrary context of the mark has the

ability to alter the psychological impact of the mark and must be

considered in determining whether the Defendants’ mark creates a

likelihood of confusion in relation to EPE’s marks.   In failing

to consider the Defendants’ presentation of “The Velvet Elvis”

mark to the public in advertising in determining whether the

Defendants’ use of their mark created a likelihood of confusion,

the district court failed to consider the mark as perceived by

the public.   In addition, by isolating the advertising, the

district court failed to consider how the Defendants configured

the mark in emphasizing the “Elvis” portion of the name, which is

highly probative of the impression they intended to convey.

     The fact that the Defendants ceased many of the problematic

advertising practices after receiving the cease and desist letter


                                20
and shortly before EPE filed suit does not make the advertising

any less relevant to the question of whether the Defendants’ use

of the “The Velvet Elvis” mark infringes EPE’s marks.    The

cessation of infringing activity does not affect the

determination of liability, but it may make an injunction

unnecessary.   See M-F-G Corp. v. Emra Corp., 817 F.2d 410, 411

(7th Cir. 1987); see also Blisscraft v. United Plastics Co., 294

F.2d 694, 702 (2d Cir. 1961) (finding it necessary to fully

consider the liability issue and issue an injunction despite

cessation of infringing use); Esquire, Inc. v. Esquire Slipper

Mfg. Co., 243 F.2d 540, 542, 546 (1st Cir. 1957) (reversing a

decision dismissing an action based upon the defendant’s promise

to cease infringing conduct because the plaintiff was entitled to

an enforceable judgment).   In this case, the district court found

“a definite possibility,” Elvis Presley Enters., 950 F. Supp. at

803, that the Defendants would resume their infringing

advertising practices and therefore granted injunctive relief in

spite of the Defendants professed intent to discontinue

infringing activities.   Ceasing the infringing activity does not

allow an infringing party to escape liability.   See Spring Mills,

Inc. v. Ultracashmere House, Ltd., 689 F.2d 1127, 1133 (2d Cir.

1982).

          b.   Parody

     As noted earlier, parody is not a defense to trademark

infringement, but rather another factor to be considered, which

weighs against a finding of a likelihood of confusion.    See Dr.


                                21
Seuss Enters., 109 F.3d at 1405; 4 MCCARTHY, supra, § 31-153, at

31-222 to 31-223.   As a leading treatise has stated,

          Some parodies will constitute an infringement,
     some will not. But the cry of “parody!” does not
     magically fend off otherwise legitimate claims of
     trademark infringement or dilution. There are
     confusing parodies and non-confusing parodies. All
     they have in common is an attempt at humor through the
     use of someone else’s trademark. A non-infringing
     parody is merely amusing, not confusing.

4 id. § 31:153, at 31-223 (emphasis added); cf. Dallas Cowboys

Cheerleaders, Inc. v. Scoreboard Posters, Inc., 600 F.2d 1184,

1188 (5th Cir. 1979) (noting that parody is relevant to a fair-

use defense to copyright infringement but does not establish the

defense).   Therefore, while not a defense, parody is relevant to

a determination of a likelihood of confusion and can even weigh

heavily enough to overcome a majority of the digits of confusion

weighing in favor of a likelihood of confusion.

     This court has yet to consider parody in relation to

trademark law.   However, recently in Campbell v. Acuff-Rose

Music, Inc., 510 U.S. 569 (1994), the Supreme Court considered

parody in the copyright context, which is relevant to the

treatment of parody in the trademark context.     See Balducci

Publications, 28 F.3d at 776; 4 MCCARTHY, supra, § 31:153, at 31-

222; Gary Myers, Trademark Parody: Lessons from the Copyright

Decision in Campbell v. Acuff-Rose Music, Inc., LAW & CONTEMP.

PROBS., Spring 1996, at 181.   The Campbell Court noted that

     the heart of any parodist’s claim to quote from
     existing material, is the use of some elements of a
     prior author’s composition to create a new one that, at
     least in part, comments on that author’s works. If, on
     the contrary, the commentary has no critical bearing on

                                 22
     the substance or style of the original composition,
     which the alleged infringer merely uses to get
     attention or to avoid the drudgery in working up
     something fresh, the claim to fairness in borrowing
     from another’s work diminishes accordingly (if it does
     not vanish), and other factors, like the extent of its
     commerciality, loom larger. Parody needs to mimic an
     original to make its point, and so has some claim to
     use the creation of its victim’s (or collective
     victims’) imagination, whereas satire can stand on its
     own two feet and so requires justification for the very
     act of borrowing.

510 U.S. at 580-81 (emphasis added and citations and footnotes

omitted) (considering parody in relation to the fair-use defense

to copyright infringement).   From the Supreme Court’s statements,

it is clear that a parody derives its need and justification to

mimic the original from its targeting of the original for comment

or ridicule.   Id. at 588 (“When parody takes aim at a particular

original work, the parody must be able to ‘conjure up’ at least

enough of that original to make the object of its critical wit

recognizable.”).   If the original is not a target of the parody,

the need to “conjure up” the original decreases as the parody’s

aim moves away from the original.4

     This same need to conjure up the original exists when a

parody targets a trademark or service mark.   In the case of the

standard likelihood-of-confusion analysis, a successful parody of

the original mark weighs against a likelihood of confusion

because, even though it portrays the original, it also sends the

message that it is not the original and is a parody, thereby

     4
        Justice Kennedy would go further and limit parody’s
ability to insulate copyright infringement only to circumstances
in which the original is a target of the parody. See Campbell,
510 U.S. at 597 (Kennedy, J., concurring).

                                23
lessening any potential confusion.    See Cliffs Notes, Inc. v.

Bantam Doubleday Dell Publ’g Group, Inc., 886 F.2d 490, 494 (2d

Cir. 1989) (“A parody must convey two simultaneous--and

contradictory--messages: that it is the original, but also that

it is not the original and is instead a parody.”); see also

Anheuser-Busch, Inc. v. L & L Wings, Inc., 962 F.2d 316, 321 (4th

Cir. 1992); 4 MCCARTHY, supra, § 31:155, at 31-235 (“‘[T]he joke

itself reinforces the public’s association of the mark with the

plaintiff.’” (quoting Robert C. Denicola, Trademarks as Speech:

Constitutional Implications of the Emerging Rationales for the

Protection of Trade Symbols, 1982 WIS. L. REV. 158, 188)).

Therefore, a parody of a mark needs to mimic the original mark

and from this necessity arises the justification for the mimicry,

but this necessity wanes when the original mark is not the target

of the parody.

     In this case, the district court found that “The Velvet

Elvis” mark, when combined with the bar’s gaudy decor, was “an

integral part of Defendants’ parody of the faddish, eclectic bars

of the sixties.”    Elvis Presley Enters., 950 F. Supp. at 792.

The intent was to parody “a time or concept from the sixties--the

Las Vegas lounge scene, the velvet painting craze and perhaps

indirectly, the country’s fascination with Elvis.”    Id. at 795

(emphasis added).   In his testimony, Capece stated that the

Defendants “were trying to make fun of the Hardrock Cafes, the

Planet Hollywoods, or some of the places that were more

pretentious” and that the Defendants could successfully perform


                                 24
their parody without using Elvis Presley’s name.   This testimony

and the district court’s analysis both indicate that neither

Elvis Presley nor EPE’s marks were a target of the Defendants’

parody.

     The Defendants argue that a parody of society can still

parody a celebrity, see Cardtoons, L.C. v. Major League Baseball

Players Ass’n, 95 F.3d 959, 972 (10th Cir. 1996) (noting that “a

parody of a celebrity does not merely lampoon the celebrity, but

exposes the weakness of the idea or value that the celebrity

symbolizes in society”), but in Cardtoons, the parody of society

was through the parody of the celebrity.   Here, we have a direct

parody of society that does not even attempt to parody the

celebrity--Elvis Presley.

     The Defendants’ parody of the faddish bars of the sixties

does not require the use of EPE’s marks because it does not

target Elvis Presley; therefore, the necessity to use the marks

significantly decreases and does not justify the use.   Capece

himself conceded that the Defendants could have performed their

parody without using Elvis’s name.   Without the necessity to use

Elvis’s name, parody does not weigh against a likelihood of

confusion in relation to EPE’s marks.   It is simply irrelevant.

As an irrelevant factor, parody does not weigh against or in

favor of a likelihood of confusion, and the district court erred




                               25
in relying upon parody in its determination of the likelihood of

confusion.5

     In its likelihood-of-confusion analysis, the district court

made determinations on five of the seven digits of confusion

which either ignored relevant advertising evidence or relied upon

the Defendants’ parody of the sixties lounge scene.   These errors

have permeated the district court’s findings of fact on the

likelihood of confusion and on each of those digits of confusion.

Therefore, we will review the likelihood-of-confusion

determination and those infected findings on the digits of

confusion de novo based upon the well-developed record.   See

Balducci Publications, 28 F.3d at 773; Roto-Rooter Corp., 513

F.2d at 46-47.

     4.   Likelihood of confusion

     In our de novo consideration of the likelihood of confusion,

we will accept the district court’s findings that the identity of

retail outlets and purchasers weighs against a likelihood of

confusion and that the identity of advertising media is

irrelevant.   Neither finding is challenged by the parties nor

implicates the district court’s errors in isolating the


     5
       We have considered parody separately from the other digits
of confusion and recommend this approach, but in no way do we
suggest at this time that the district court’s approach of
considering parody within its analysis of the standard digits of
confusion in itself constitutes reversible error. But cf.
Balducci Publications, 28 F.3d at 773 (finding that the district
court’s consideration of First Amendment concerns in its
likelihood-of-confusion analysis caused it to hold the plaintiff
to a higher standard than required to prove trademark
infringement).

                                26
Defendants’ advertising practices from the analysis or in its

application of parody; therefore, we leave those findings

undisturbed.6   This acceptance leaves the following digits of

confusion for our consideration: (1) the type of mark, (2) the

similarity of marks, (3) the similarity of products and services,

(4) the Defendants’ intent, and (5) actual confusion.      We

consider each digit of confusion in turn and then weigh them to

determine whether a likelihood of confusion exists.

          a.      Type of trademark

     The type of trademark refers to the strength of the mark.

In looking at the strength of the mark, the focus is the senior

user’s mark.    See RESTATEMENT, supra, § 21(d) & cmt. i; 3 MCCARTHY,

supra, § 23:19.    The stronger the mark, the greater the

protection it receives because the greater the likelihood that

consumers will confuse the junior user’s use with that of the

senior user.    RESTATEMENT, supra, § 21 cmt. i; see also Amstar

Corp., 615 F.2d at 259.

     The Defendants conceded that EPE’s marks have “worldwide

fame and almost instantaneous recognition,” leading the district

court to find that EPE’s marks are strong.      Elvis Presley Enters,

950 F. Supp. at 792.    The Defendants do not dispute this on


     6
        While accepting the district court’s findings that the
identity of advertising media does not weigh into the likelihood-
of-confusion analysis because the parties do not challenge it, we
note that EPE advertises nationwide and its licensees distribute
products nationwide. Thus the parties’ geographic markets do
overlap despite the district courts’s finding that they operate
in different markets. See Elvis Presley Enters., 950 F. Supp. at
795.

                                  27
appeal.   Rather, the Defendants argue that “The Velvet Elvis” has

a different meaning than EPE’s marks and that EPE has not shown

distinctiveness outside the entertainment industry.      However,

these issues are more appropriately considered in relation to

other digits of confusion.    EPE’s marks are very strong and

therefore strongly weigh in favor of a likelihood of confusion.

          b.     Similarity of marks

     The similarity of the marks in question is determined by

comparing the marks’ appearance, sound, and meaning.       See

Jordache Enters., 828 F.2d at 1484; RESTATEMENT, supra, § 21(a);

3 MCCARTHY, supra, § 23:21.   “Even if prospective purchasers

recognize that the two designations are distinct, confusion may

result if purchasers are likely to assume that the similarities

in the designations indicate a connection between the two users.

The relevant inquiry is whether, under the circumstances of the

use,” the marks are sufficiently similar that prospective

purchasers are likely to believe that the two users are somehow

associated.    RESTATEMENT, supra, § 21 cmt. c.   However, different

meanings of otherwise similar marks may overcome a likelihood of

confusion that would otherwise result.     See 3 MCCARTHY, supra,

§§ 23:26, :28; see also Long John Distilleries, Ltd. v. Sazerac

Co., 426 F.2d 1406, 1407 (C.C.P.A. 1970) (finding the marks,

“Long John” and “Friar John,” to have obvious meanings that are

in no way suggestive of one another).     “In determining the

meaning and connotation which the trademark projects, it is

proper to look to the context of use, such as material on labels,


                                  28
packaging, advertising and the like.”   3 MCCARTHY, supra, § 23:26,

at 23-61 (citing In re Nationwide Indus., Inc., 6 U.S.P.Q.2d 1882

(T.T.A.B. 1988)); see also Hormel Foods Corp. v. Jim Henson

Prods., Inc., 73 F.3d 497, 503-04 (2d Cir. 1996) (noting the

relevance of the placement of the mark next to other dissimilar

symbols); discussion supra Part II.A.3.a.

     The district court found that “The Velvet Elvis” mark is

“symbolic of a faddish art style that belongs to the culture that

created it” and that the mark “has no specific connection with

[Elvis] other than the coincidence of its use to portray him.”

Elvis Presley Enters., 950 F. Supp. at 793.    The district court

made this finding without considering the context into which the

Defendants placed their mark.   The Defendants used “The Velvet

Elvis” mark in advertising that included (1) the image of Elvis

Presley; (2) direct references to Graceland and Elvis Presley

with phrases such as “The King Lives,” “Viva la Elvis,” and

“Elvis has not left the building”; and (3) the “Elvis” portion of

the mark boldly displayed with “an almost unnoticeable ‘Velvet’

appearing alongside in smaller script.”     Id. at 789.   On one of

their menus, the Defendants also advertised “Oscar at The Elvis,”

an Academy Awards charity benefit to be held at the bar.     The

context of the Defendants’ advertising for the first nine months

of operation of the Richmond Avenue location has imbued “The

Velvet Elvis” mark with a meaning that directly evokes Elvis

Presley, despite any independent meaning the mark might have.

Cf. id. at 797 (noting that the Defendants’ advertisements in


                                29
which “Elvis” is emphasized “creat[e] a definite risk that

consumers will identify the bar with Presley or EPE” and that

advertisements using Elvis’s image cause confusion).   The

Defendants’ mark’s connection to Elvis is enhanced by the

inclusion of “Elvis” in the mark and the Defendants’ decision to

emphasize the “Elvis” portion of the mark, leaving the “Velvet”

portion almost unnoticeable.   See Lone Star Steakhouse & Saloon,

Inc. v. Alpha of Va., Inc., 43 F.3d 922, 936 (4th Cir. 1995)

(giving greater weight to the dominant or “salient portions” of a

mark); Oreck Corp., 803 F.2d at 171 (focussing on “attention-

getting” feature in comparing marks); 3 MCCARTHY, supra, § 23:44

(noting that it is proper to give greater effect to the dominant

feature of a mark in the comparison).   The Defendants’ use of the

mark outside this suggestive context where the faddish art style

connotation might predominate does not counteract the Defendants’

deliberate association with Elvis in their advertising.    The

connotation of the marks are similar, and this digit of confusion

therefore weighs in favor of a likelihood of confusion.

          c.   Similarity of products and services

     “The greater the similarity between products and services,

the greater the likelihood of confusion.”   Exxon Corp. v. Texas

Motor Exch. of Houston, Inc., 628 F.2d 500, 505 (5th Cir. 1980).

Direct competition between the parties’ services or products is

not required in order to find a likelihood of confusion.

Professional Golfers Ass’n of Am. v. Bankers Life & Cas. Co., 514




                                30
F.2d 665, 669-70 (5th Cir. 1975); see also 3 MCCARTHY, supra,

§§ 24:13-:14.

     One such relationship where this is true exists when
     the sponsor or maker of one business or product might
     naturally be assumed to be the maker or sponsor of
     another business product. . . . [T]he deceived
     customer buys the infringer’s product in the belief
     that it originates with the trademark owner or that it
     is in some way affiliated with the owner.

World Carpets, Inc. v. Dick Littrell’s New World Carpets, 438

F.2d 482, 488 (5th Cir. 1971), cited in Professional Golfers

Ass’n, 514 F.2d at 670.    When products or services are

noncompeting, the confusion at issue is one of sponsorship,

affiliation, or connection.    See Kentucky Fried Chicken Corp. v.

Diversified Packaging Corp., 549 F.2d 368, 388 (5th Cir. 1977);

3 MCCARTHY, supra, §§ 24:3, :6.

     The danger of affiliation or sponsorship confusion increases

when the junior user’s services are in a market that is one into

which the senior user would naturally expand.      See RESTATEMENT,

supra, § 21(e) & cmt. j.    The actual intent of the senior user to

expand is not particularly probative of whether the junior user’s

market is one into which the senior user would naturally expand.

Id. cmt. j.; 3 MCCARTHY, supra, § 24:19.     Consumer perception is

the controlling factor.    See Dreyfus Fund Inc. v. Royal Bank of

Can., 525 F. Supp. 1108, 1119-20 (S.D.N.Y. 1981) (noting that

consumer perception controls over the actual intent of the senior

user); 3 MCCARTHY, supra, § 24:19.     “If consumers believe, even

though falsely, that the natural tendency of producers of the

type of goods marketed by the prior user is to expand into the


                                  31
market for the type of goods marketed by the subsequent user,

confusion may be likely.”   RESTATEMENT, supra, § 21 cmt. j.

     While we recognize that EPE has plans to open a worldwide

chain of Elvis Presley restaurants and has opened its Memphis

restaurant since the district court’s decision, our proper focus

is on (1) whether the products and services of EPE and the

Defendants are similar enough to cause confusion as to source or

affiliation or (2) whether the Defendants’ bar is in a market

into which EPE would naturally be perceived to expand.    The

Velvet Elvis serves food, cigars, and alcohol; provides live

music; and sells t-shirts and hats.   EPE licenses its marks on a

wide variety of products, including t-shirts and hats, and the

Defendants concede that EPE’s marks are particularly strong in

the music, television, and movie industries.    EPE also operates

family-oriented restaurants and an ice cream parlor at Graceland.

Despite the breadth of EPE’s licensed products, these products

and services may not be similar enough to weigh in favor of a

likelihood of confusion, but it is a question that we need not

reach.

     The pervasiveness of EPE’s marks across the spectrum of

products and the success and proliferation of entertainment and

music-themed restaurants like Planet Hollywood and Hard Rock

Cafe--which Capece testified inspired their parody--support a

likelihood of confusion.    Cf. Armco, 693 F.2d at 1161

(“Diversification makes it more likely that a potential customer

would associate the nondiversified company’s services with the


                                 32
diversified company, even though the two companies do not

actually compete.”).   These restaurants have led the way, and an

Elvis Presley restaurant would be a natural next step due to the

public’s strong familiarity with such restaurants and with Elvis.

Given that EPE licenses so many products and is a strong presence

in the entertainment business and that Planet Hollywood and Hard

Rock Cafe have shown the success and popularity of entertainment

and music-themed restaurants, the restaurant and bar business

with live music is a natural area of expansion for EPE, and this

digit of confusion weighs in favor of a likelihood of confusion.

            d.   The Defendants’ intent

     Proof of an intent to confuse the public is not necessary to

a finding of a likelihood of confusion.    Fuji Photo Film Co. v.

Shinohara Shoji Kabushiki Kaisha, 754 F.2d 591, 597 (5th Cir.

1985) (noting that “‘[w]hile evil intent may evidence unfair

competition and deception, lack of guile is immaterial’”

(brackets in original) (quoting Communications Satellite Corp. v.

Comcet, Inc., 429 F.2d 1245, 1249 (4th Cir. 1970)); RESTATEMENT,

supra, § 22 cmt. b; 3 MCCARTHY, supra, § 23:107.   If a mark was

adopted with the intent to confuse the public, that alone may be

sufficient to justify an inference of a likelihood of confusion.

Amstar Corp., 615 F.2d at 263; RESTATEMENT, supra, § 22 cmt. c.     A

good-faith intent to parody, however, is not an intent to

confuse.    Nike, 6 F.3d at 1231 (citing Jordache Enters., 828 F.2d

at 1486).    If the defendant acted in good faith, then this digit

of confusion becomes a nonfactor in the likelihood-of-confusion


                                 33
analysis, rather than weighing in favor of a likelihood of

confusion.   See Fuji Photo, 754 F.2d at 597-98.   However, an

innocent intent in adopting a mark does not immunize an intent to

confuse in the actual use of the mark.    Cf. RESTATEMENT, supra,

§ 22 cmt. c (“Even if an actor believes in good faith that the

copying of another’s designation is justified, an inference that

confusion is likely may arise from other circumstances that

suggest an intent to confuse, such as a failure to take

reasonable steps to minimize the risk of confusion.”).

     The district court found that the Defendants’ subjective

intent was an intent to parody, rather than an intent to confuse.

Based upon this finding, the Defendants’ intent would not support

a finding of a likelihood of confusion.    However, the Defendants’

advertisements using the image of Elvis, referencing Elvis, and

emphasizing the word “Elvis” in the mark are other circumstances

that support an intent to confuse.    See Elvis Presley Enters.,

950 F. Supp. at 797 (noting that “use of this type of

advertisement can only indicate a marketing scheme based on the

tremendous drawing power of the Presley name and its ability to

attract consumer interest and attention” (emphasis added)).

These circumstances increase the risk of confusion and are more

than just “a failure to take reasonable steps to minimize the

risk of confusion.”   See RESTATEMENT, supra, § 22 cmt. c.   The

district court found that Capece’s subjective intent in adopting

the mark was an intent to parody, but in determining a

defendant’s intent, evidence of the defendant’s actions is highly


                                 34
probative and should be considered.        See Oreck Corp., 803 F.2d at

173 (“[The defendant’s] actions speak louder than its words . . .

.”); 3 MCCARTHY, supra, § 23:113, at 23-216 to 23-217.      The

Defendants’ use of “The Velvet Elvis” mark in their advertising

evidences an intent to market the bar by relying upon the drawing

power of Elvis, as found by the district court.        See Elvis

Presley Enters., 950 F. Supp. at 797.       Therefore, the facts under

this digit of confusion weigh in favor of a likelihood of

confusion.

           e.      Actual confusion

     Evidence of actual confusion is not necessary to a finding

of a likelihood of confusion, but “it is nevertheless the best

evidence of a likelihood of confusion.”        Amstar Corp., 615 F.2d

at 263.   Actual confusion that is later dissipated by further

inspection of the goods, services, or premises, as well as post-

sale confusion, is relevant to a determination of a likelihood of

confusion.      See 3 MCCARTHY, supra, §§ 23:6-:7.   “Infringement can

be based upon confusion that creates initial consumer interest,

even though no actual sale is finally completed as a result of

the confusion.”      3 id. § 23:6; see also Dr. Seuss Enters., 109

F.3d at 1405 (noting that no sale must be completed to show

actual confusion); Mobil Oil Co. v. Pegasus Petroleum Corp., 818

F.2d 254, 259 (2d Cir. 1987) (finding liability for initial-

interest confusion).      Initial-interest confusion gives the junior

user credibility during the early stages of a transaction and can




                                      35
possibly bar the senior user from consideration by the consumer

once the confusion is dissipated.    Id.; 3 MCCARTHY, supra, § 23:6.

     EPE presented witnesses who testified that they initially

thought the Defendants’ bar was a place that was associated with

Elvis Presley and that it might have Elvis merchandise for sale.

The witnesses all testified that, upon entering and looking

around the bar, they had no doubt that EPE was not affiliated

with it in any way.   Despite the confusion being dissipated, this

initial-interest confusion is beneficial to the Defendants

because it brings patrons in the door; indeed, it brought at

least one of EPE’s witnesses into the bar.    Once in the door, the

confusion has succeeded because some patrons may stay, despite

realizing that the bar has no relationship with EPE.7    This

initial-interest confusion is even more significant because the

Defendants’ bar sometimes charges a cover charge for entry, which

allows the Defendants to benefit from initial-interest confusion

before it can be dissipated by entry into the bar.    Additionally,

the finding by the district court that the Defendants’

advertising practices caused actual confusion shows that actual

confusion occurred when consumers first observed the mark in

commerce.   See Elvis Presley Enters., 950 F. Supp. at 797 (noting

that EPE also established actual confusion in relation to

advertisements with “The Velvet Elvis” mark in a context

connoting Elvis Presley).


     7
        One witness who was initially confused stayed and
purchased a beer.

                                36
     An absence of, or minimal, actual confusion, however, over

an extended period of time of concurrent sales weighs against a

likelihood of confusion.    Id. at 263 (finding no likelihood of

confusion based upon concurrent sales over fifteen years with

minimal instances of confusion); see also Oreck Corp., 803 F.2d

at 173 (finding no likelihood of confusion based upon concurrent

sales over seventeen months with no evidence of actual

confusion); RESTATEMENT, supra, § 23(2) & cmt. d.    In this case,

the lack of complaints is relevant but should have less weight

than the district court gave it.      Approximately one year after

the Richmond location opened, EPE’s suit against the Defendants

was reported in the press, and this lessens the weight of the

lack of complaints because there would be no reason to complain

to EPE if one knows EPE is aware of the possible infringer and

has begun legal action.    In the instant case, the lack of

complaints is over a thirteen-month period, which is shorter than

the periods in Oreck Corp. (seventeen months) and Amstar Corp.

(fifteen years), and actual confusion has been shown by the

evidence of initial-interest confusion unlike in Oreck Corp.

     Based upon the above facts, this digit of confusion weighs

in favor of a likelihood of confusion, and this finding is

supported by the district court’s finding of actual confusion in

relation to the Defendants’ advertising practices.

          f.   Weighing the digits of confusion

     After considering the Defendants’ advertising practices and

dropping parody from the analysis, all five digits of confusion


                                 37
that we considered de novo weigh in favor of a likelihood of

confusion, and only the identity of retail outlets and purchasers

weighs against a likelihood of confusion.    Giving each digit of

confusion its due weight, we find that a likelihood of confusion

exists between EPE’s marks and the Defendants’ use of “The Velvet

Elvis” mark.    Therefore, the Defendants have infringed EPE’s

marks with the use of their service mark, “The Velvet Elvis.”8

B.   Defenses

     The Defendants argue that EPE is barred from seeking relief

for their use of “The Velvet Elvis” mark by the defenses of

laches or acquiescence.    They claim that EPE should have known

about their use of “The Velvet Elvis” mark in August 1991 when

Capece applied for federal registration of the mark because it

uses the services of a trademark search firm to aid it in

defending its marks.    The Defendants contend that EPE rested on

its rights by failing to object when it received actual notice of

their conduct by the December 1992 publication of the mark in the

     8
        Given that all the remedies that EPE seeks and that were
properly preserved below, see infra Part III, are available under
its successful claims for trademark infringement, we need not
reach its federal trademark dilution claim nor its right of
publicity claim under Texas law.

     In addition, we reach our decision on the trademark
infringement claims without considering the PTO’s action in
denying EPE’s application to register “Elvis” as a service mark
in the restaurant and tavern business because of a likelihood of
confusion with the Defendants’ mark. Without deciding whether we
should or could have taken judicial notice of the action, we note
that the PTO’s finding of a likelihood of confusion supports our
decision here even though the PTO was considering a slightly
different circumstance of clearly competing services. Because we
did not need to take judicial notice of the action in reaching
our decision, EPE’s motion is now moot.

                                 38
PTO’s Official Gazette and by failing to protest the Defendants’

use until July 1994 when over $100,000 had been invested in the

Richmond Avenue location and customer loyalty had been built up

by the use of the mark at the Kipling Street location.

     “Laches is commonly defined as an inexcusable delay that

results in prejudice to the defendant.”    Conan Properties, 752

F.2d at 153.   A defense of laches has three elements: “(1) delay

in asserting a right or claim; (2) that the delay was

inexcusable; [and] (3) that undue prejudice resulted from the

delay.”   Armco, 693 F.2d at 1161.   The period for laches begins

when the plaintiff knew or should have known of the infringement.

Id. at 1161-62.   Any acts after receiving a cease and desist

letter are at the defendant’s own risk because it is on notice of

the plaintiff’s objection to such acts.    See Conan Properties,

752 F.2d at 151-52.   Noninfringing use of a mark is not relevant

to a defense of laches.   See Mead Johnson & Co. v. Baby’s Formula

Serv., Inc., 402 F.2d 19, 22 (5th Cir. 1968) (finding long years

of noninfringing use of mark would not establish laches as to a

later infringing use).

     EPE knew of the Defendants’ use of “The Velvet Elvis” mark

when it was published in the PTO’s Official Gazette in December

1992.   The Defendants have not shown that EPE should have known

at an earlier time nor shown why employing a search service

should have given EPE that knowledge earlier.   After the Kipling

Street location’s closing, no infringing use of the mark was




                                39
occurring because the mark was not being used in commerce,9 and

the Richmond Avenue location’s opening is not relevant to the

laches period because it occurred after the Defendants’ receipt

of the cease and desist letter.    Therefore, the period relevant

for the application of laches is eight months, beginning in

December 1992 and running until July 1993 when the Kipling Street

location closed.   We do not find that eight months was an

inexcusable delay.

     Additionally, even if we assume eight months to be an

inexcusable delay or that the relevant period of delay should

include the period the Richmond Avenue location was open until

suit was filed in April 1995,10 no undue prejudice has been shown

as a result of the delay in this case.    Capece has conceded that

he did not purchase the signs for the Richmond Avenue location

until after he received the cease and desist letter from EPE and

that he did not need to use Elvis’s name in order to parody his

intended target of the “faddish, eclectic bars of the sixties.”

Changing the name of the bar would not have destroyed the

investment of capital in the nightclub.   Additionally, the short

     9
        Similarly, the nonuse of the mark during the period while
no nightclub was open may also break the period of continuous use
required to establish the mark as incontestable under 15 U.S.C.
§ 1065. See Brittingham v. Jenkins, 914 F.2d 447, 454 (4th Cir.
1990) (finding that a business’s closing interrupted the
continuous use period even though the mark was still used in
business transactions because the mark was not used in
conjunction with the sale of goods or services).
     10
        By no means do we voice an opinion on whether this type
of tacking is ever proper, especially where the period of delay
is broken by the mark’s not being used in commerce due to a
business failure.

                                  40
period of delay here would not justify finding prejudice on the

Defendants’ claims of customer goodwill from the earlier

location.

     “[A]cquiescence involves the plaintiff’s implicit or

explicit assurances to the defendant which induce[] reliance by

the defendant.”     Conan Properties, 752 F.2d at 153.   Other than

EPE’s silence, the Defendants identify no assurances made by EPE

to the Defendants upon which they could have relied.     The period

of silence relevant to acquiescence would not include any time

after the cease and desist letter was sent because EPE explicitly

communicated its objection, nor would it include the time while

no nightclub was open because permission cannot be inferred from

silence in the absence of infringing activity.     Cf. Mead Johnson

& Co., 412 F.2d at 22.    The eight months of silence does not rise

to the level of an assurance upon which the Defendants could

reasonably rely or by which they could claim to have been induced

into reliance.

                            III.   REMEDIES

     EPE appeals the district court’s denial of an accounting of

profits from the Defendants and its denial of attorneys’ fees.

Both of these claims were not properly preserved below and are

therefore waived.    “‘It is a well-settled rule that a joint

pretrial order signed by both parties supersedes all pleadings

and governs the issues and evidence to be presented at trial.’”

McGehee v. Certainteed Corp., 101 F.3d 1078, 1080 (5th Cir. 1996)

(quoting Branch-Hines v. Hebert, 939 F.2d 1311, 1319 (5th Cir.


                                   41
1991)).    The claims, issues, and evidence are narrowed by the

pretrial order, thereby narrowing the trial to expedite the

proceeding.    See Flannery v. Carroll, 676 F.2d 126, 129 (5th Cir.

1982); see also Branch-Hines, 939 F.2d at 1319 (finding that the

pretrial order asserted the plaintiff’s full range of damages);

Morales v. Turman, 535 F.2d 864, 867 n.7 (5th Cir. 1976) (noting

that a pretrial order can be relied upon to indicate the nature

of the relief requested), rev’d on other grounds, 430 U.S. 322

(1977).    Once the pretrial order is entered, it controls the

course and scope of the proceedings under Federal Rule of Civil

Procedure 16(e), and if a claim or issue is omitted from the

order, it is waived, even if it appeared in the complaint.       See

Valley Ranch Dev. Co. v. FDIC, 960 F.2d 550, 554 (5th Cir. 1992)

(citing Flannery, 676 F.2d at 129-30).

     In the Joint Pre-Trial Order signed by the parties’ counsel,

EPE’s demand for an accounting of profits is not mentioned, but

the Joint Pre-Trial Order does mention EPE’s demands for

injunctive relief, damages, and attorneys’ fees under the Lanham

Act, 15 U.S.C. § 1117(a).    Section 1117(a) also provides for the

remedy of an accounting of profits and lists it separately from

damages.    Therefore, EPE’s listing of injunctive relief, damages,

and attorneys’ fees under the Lanham Act in the Joint Pre-Trial

Order does not act to preserve its claim for an accounting of

profits, and the issue therefore was waived.

     Likewise, EPE has waived its claim for attorneys’ fees under

the Texas right of publicity statute, TEX. PROP. CODE ANN.


                                 42
§ 26.013(4) (Vernon Supp. 1998), because EPE never references the

Texas statute in its request for attorneys’ fees.      All references

to attorneys’ fees in the Joint Pre-Trial Order request

attorneys’ fees under the Lanham Act, 15 U.S.C. §§ 1051-1127,

explicitly or by referencing the Lanham Act’s standard for their

award.     The first request for attorneys’ fees under the Texas

statute occurs in EPE’s brief on appeal; as the availability of

attorneys’ fees under the Texas statute was never placed before

the district court, we will not consider it on appeal.

     While an accounting of profits and attorneys’ fees are not

available to EPE, EPE is entitled to an injunction enjoining the

Defendants’ use of “The Velvet Elvis” mark based upon the

Defendants’ infringement of EPE’s marks by their use of that

mark.     See 15 U.S.C. § 1116.   We find that enjoining only the

activities that have associated the mark with Elvis Presley will

not provide EPE with the proper relief.11     The Defendants’

advertising practices over many months imbued “The Velvet Elvis”

mark with a meaning directly related to Elvis Presley, which

cannot now be erased by altering the context of the mark’s use.

Because the Defendants have imbued the mark with an infringing

meaning, use alone in the future would continue the infringement

of EPE’s marks.     On remand, the district court shall enter the

appropriate injunction enjoining the Defendants’ use of “The

     11
        We state no opinion as to whether “The Velvet Elvis”
would have infringed EPE’s marks if the mark had never been used
in ways that connote Elvis Presley. We recognize that such a
circumstance would constitute a closer case, but that it is not
the circumstance before us.

                                   43
Velvet Elvis” mark and grant any other appropriate relief.    All

injunctive relief entered should cover not only the Defendants

and those acting in concert with them but also their successors

and assigns.

                          IV.   CONCLUSION

     For the foregoing reasons, we REVERSE the district court’s

judgment and REMAND this case to the district court to enter

judgment for EPE and for further proceedings consistent with this

opinion.   EPE’s motion for this court to take judicial notice of

an action of the PTO, which was carried with the appeal, is

dismissed as moot.




                                 44
