Ambient Heating and Cooling, LLC v. Ernest D. Shepherd, Jr., an individual, and Christopher Ferguson, an individual both d/b/a Ambient
CA 9596-MA
| Del. Ch. | Mar 28, 2017Background
- Ambient Heating & Cooling, LLC (Ambient LLC) formed in Delaware in 2007 and performed residential/light-commercial HVAC services in Kent and New Castle Counties using the trade name/mark “Ambient Heating & Cooling.”
- In late 2012/early 2013 Ernest Shepherd and Christopher Ferguson formed a separate HVAC partnership (later Ambient, Inc.) and registered the trade name “Ambient” in New Castle County; they used similar wording and a logo with a thermometer replacing the letter I.
- Lang (Ambient LLC’s managing member) learned of Shepherd/Ferguson’s business in 2013, asked them to change their name, and was refused; Shepherd later attempted USPTO registration but was denied based on likelihood of confusion with an existing mark.
- Since 2013 there were multiple instances of actual confusion (customers, supplier invoices, a municipal code notice), lost time and advertising hesitation by Ambient LLC, and growth by Respondents’ business.
- The Master found Ambient LLC had priority in the local market, that “Ambient” is at least suggestive (thus a strong mark), that actual confusion and some intent to trade on Ambient LLC’s goodwill existed, and recommended a permanent injunction and remedies under Delaware’s Deceptive Trade Practices Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Petitioner has protectable trademark rights in “Ambient” | Lang: “Ambient” is suggestive (not merely descriptive) and has acquired secondary meaning in the local market; thus entitled to protection | Shepherd/Ferguson: “Ambient” is generic or at most descriptive in HVAC trade; even if descriptive, Petitioner lacks evidence of secondary meaning | Held for Petitioner: “Ambient” is suggestive in context and Petitioner has priority and community recognition in the local market |
| Whether Respondents’ use causes likelihood of confusion | Lang: substantial overlap in name/words, similar services, same geographic market, and instances of actual confusion show likelihood of confusion | Respondents: marks and graphics differ; few confusions and prompt corrections; no intent to mislead | Held for Petitioner: marks are similar in text, services and territory overlap, and actual confusion is probative of likelihood of confusion |
| Whether Respondents acted with improper intent | Lang: Respondents knew of Ambient LLC and refused to change name after notice, then grew business | Respondents: no intent to trade on goodwill; limited confusion events and corrective responses | Held for Petitioner: evidence supports at least some intent to trade on Ambient LLC’s goodwill (knowledge + refusal to change) |
| Whether injunctive relief is appropriate (irreparable harm/balance of equities) | Lang: ongoing confusion causes irreparable harm to reputation, business development, and wasted time; equities favor injunction | Respondents: changing a now-successful business imposes hardship; they had invested in their name | Held for Petitioner: irreparable harm shown, equities favor Ambient LLC (Respondents could have changed earlier), injunction recommended |
Key Cases Cited
- Coca-Cola Co. v. Nehi Corp., 36 A.2d 156 (Del. 1944) (trademark/unfair competition principles under Delaware law)
- Air Reduction Co. v. Airco Supply Co., 258 A.2d 301 (Del. Ch. 1969) (trademark protection and unfair competition analysis)
- United States Plywood Co. v. United Plywood Corp., 161 A. 913 (Del. Ch. 1932) (priority and protectability of trade names)
- American Radio Stores, Inc. v. American Radio & Television Stores Corp., 150 A. 180 (Del. Ch. 1930) (trade name confusion and unfair competition principles)
- Draper Commc’ns, Inc. v. Del. Valley Broadcasters Ltd. P’ship, 505 A.2d 1283 (Del. Ch. 1985) (factors for assessing likelihood of confusion and trademark strength)
- Scott Paper Co. v. Scott’s Liquid Gold Inc., 589 F.2d 1225 (3d Cir. 1989) (discussion of secondary meaning concept)
- Pathfinder Commc’ns Corp. v. Midwest Commc’ns Co., 593 F. Supp. 281 (N.D. Ind. 1984) (evidence of intent and bad faith in trade name disputes)
- Gimbel v. Signal Cos., Inc., 316 A.2d 599 (Del. Ch. 1974) (injunction standards in competition/trademark matters)