Resorts had charged Pinehurst National and Pinehurst Plantation golf communities with infringement of its Pinehurst marks. Resorts demonstrated that since the turn of the century the public has associated the name "Pinehurst" with its golf resort and its championship golf courses and, in particular, with Pinehurst course No. 2, which is commonly known simply as "Pinehurst." As a result, Resorts claimed that the unauthorized use of the term "Pinehurst" in the name of any golf related goods or services would cause confusion in the marketplace.

In the District Court, Resorts demonstrated that there is substantial evidence of worldwide recognition of the "Pinehurst" mark, which Resorts and its legendary predecessor, the Tufts family, have created over the course of this century. This recognition is a result of the championship golf courses that Resorts owns, major golf tournaments sponsored by the Resort and substantial investments in marketing and advertising. Resorts also introduced a nationwide survey that showed that Pinehurst is one of the three most well- known golf courses in the U.S. The Court of Appeals confirmed the defendants were unable to offer any evidence to demonstrate that
the Pinehurst marks are not internationally recognized.

The Court of Appeals also observed that the defendants' use of the term "Pinehurst" had caused confusion for people calling to make room and golf reservations. Given this confusion and the worldwide recognition of the Pinehurst Resort, the Court held that defendants' use of the term "Pinehurst" in their names had infringed Resorts' federal and common law rights to the use of the name "Pinehurst."

The defendants had argued that they are located in Pinehurst and that because there is a town called "Pinehurst" they were permitted to use the term "Pinehurst" in their names. The Court of Appeals affirmed the District Court's decision rejecting that argument because even if Pinehurst is considered a geographic name it had become associated with Resorts and its predecessors long before the defendants first used that term.

However, the Court of Appeals went even further in ruling in favor of Pinehurst Resorts. The Court held that the District Court erred in refusing to enter an immediate and complete permanent injunction prohibiting the defendants' use of the Pinehurst name in their names and marks. Accordingly, the Court of Appeals reversed in part the District Court's decision and ordered that the District Court enter an immediate injunction in Resorts' favor.

"Resorts is very pleased with the Fourth Circuit's decision. It allows us the right to have the exclusive control of the reputation and good will that we have earned for our 'Pinehurst' name," said Resorts President Patrick Corso. "We are also relieved that we achieved this victory before we host next year's greatest golf championship, the 1999 U.S. Open," Corso said, "We have an obligation to ensure the public is not confused about the use of the term 'Pinehurst,' and this favorable decision permits us to continue to meet that obligation in the clearest possible way."