Cache La Poudre Feeds, LLC v. Land O' Lakes, Inc.Cache La Poudre Feeds, LLC v. Land O' Lakes, Inc.
ORDER
I. Introduction
THIS MATTER is before the Court on the parties’ pending summary judgment motions. These include Defendants’ Motion for Partial Summary Judgment Regarding the Measure of Plaintiffs Alleged Damages (Refiling of Sealed Document # 145, # 156) [# 234], filed December 2, 2005; Defendants’ Motion for Summary Judgment Regarding Plaintiffs Claims against Bezdicek and DeGregorio (Refiling of Sealed Document # 151, # 159) [# 238], filed December 2, 2005; Plaintiffs Motion for Summary Judgment on the Counterclaims [# 153], filed September 15, 2005; Plaintiffs Motion for Summary Judgment and Opening Brief [# 143, # 155], filed September 15, 2005; and Defendants’ Motion for Partial Summary Judgment Regarding Plaintiffs Sixth Claim for Relief for “Deceptive Trade Practices” Related to LOL’s SEC Filings (Refiling of Sealed Document # 149, # 158) [# 236], filed December 2, 2005. I have reviewed the motions, responses, and replies, and on June 1, 2006, I heard argument from counsel on the same. I address each of these motions below.
II. Analysis
A. Summary Judgment Standard
Summary judgment may be granted where “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). “The burden of showing that no genuine issue of material fact exists is borne by the moving party.”
E.E.O.C. v. Horizon/CMS Healthcare Corp.,
B. Defendants’ Motion for Partial Summary Judgment Regarding the Measure of Plaintiffs Alleged Damages
In this motion, “Defendants seek a ruling (1) that Plaintiff is only entitled to an accounting of Defendants’ profits upon a showing of willful infringement, (2) that Co-op Defendants could not have willfully infringed the relevant trademark as a matter of law, thus precluding the claim for their profits, (3) that if willfulness is found, Plaintiff can only recover Land O’ Lakes Defendants’ profits in the geographical areas of Plaintiffs actual market penetration, and finally, (4) that a reasonable royalty based upon a hypothetical negotiation is not an appropriate measure.” Defs.’ Mot. at 1-2.
I first address whether willfulness is required for a recovery of profits. On its face, section 35 of the Lanham Act states: “the plaintiff shall be entitled, ... subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the cost of the action.” 15 U.S.C.A. § 1117(a). The Tenth Circuit has stated, “An accounting for profits is not automatically granted upon a showing of infringement.... Rather, the propriety of such relief is determined by equitable considerations.... Consequently, ‘the district court has wide discretion to fashion an appropriate remedy.’ ”
Bishop v. Equinox Int’l Corp.,
Recently, the Tenth Circuit issued an opinion that again addressed the willfulness issue. The court stated, “[W]e require a showing that Defendant actions were willful to support an award of profits under 15 U.S.C. § 1117(a).”
Western Diversified Servs., Inc. v. Hyundai Motor America, Inc.,
Plaintiff argues that because actual damages are at issue in this case and recovery is not based on preventing unjust enrichment or deterring willful infringement, a showing of willfulness is not required to recover profits. I disagree. The Tenth Circuit cases cited above make clear that willfulness is required for a recovery of profits irrespective of whether actual damages exist. While those cases concerned facts in which there were no actual damages, I do not find that the presence of actual damages changes the applicability of the Tenth Circuit cases. As such, I find that willfulness is required for Plaintiff to recover profits, and I grant Defendants’ Motion on that issue.
Defendants second request for relief in this motion is a ruling that the Coop Defendants—American Pride Co-Op and Poudre Valley Cooperative Association—could not have willfully infringed the relevant trademark as a matter of law, thus precluding the claim for their profits. Defs.’ Mot. at 6-7. Defendants argue that there is no evidence that either of these Defendants willfully infringed Plaintiffs PROFILE mark by selling LOL’s PROFILE product.
The Tenth Circuit has stated that willfulness involves an intent to benefit from the goodwill or reputation of the trademark holder. Western Diversified Servs., Inc. at 1274. Intent “requires something more than ‘indifference’ or a mere ‘connection.’ It is a conscious desire.” Id. Thus, in order to survive summary judgment, Plaintiff CLP “does not have to show that [Defendants’] ... decision was made with the intent to benefit from [Plaintiffs] ... reputation or goodwill. It needs only raise a genuine issue on this material fact.” Id. at 1274-75. I find that there is a factual dispute regarding the co-op Defendants’ intent and that this issue cannot be decided on summary judgment.
The third and fourth issues in Defendants’ Motion involve a request that if willfulness is found, the Court rule that Plaintiff can only recover Defendants’ profits in the geographical areas of Plaintiffs actual market penetration, and, finally, a ruling that a reasonable royalty based upon a hypothetical negotiation is not an appropriate measure. Both parties spend a good amount of time and paper arguing about these issues. However, as stated above, “An accounting of profits is not automatically granted upon a showing of infringement.... Rather, the propriety of such relief is determined by equitable considerations .... Consequently, ‘the district court has wide discretion to fashion an appropriate remedy.’ ”
Bishop v. Equinox Int’l Corp.,
Regarding the argument on the third issue that actual market reach should be considered in limiting possible profits, Plaintiff argues that “[s]uch a limitation would arise, if at all, from a court’s consideration
of
principles
of
equity
pertinent to
a particular case. Determinations of equity are case specific and revolve around the facts involved in the case.” Pl.’s Resp. at 8. Plaintiff further asserts, “What, if any, equitable considerations are necessary or appropriate in the present case cannot be determined until all the facts have been fully presented and thus summary judgment would be inappropriate.” PL’s Resp. at 8. I agree with Plaintiff on this issue and find that summary judgment must be denied to the extent Defendant seeks a ruling that Plaintiff can only recover Defendants’ profits in the geographical areas of Plaintiffs actual market penetration.
C. Defendants’ Motion for Summary Judgment Regarding Plaintiffs Claims against Bezdicek and De-Gregorio
Plaintiff has asserted claims against two former employees of Defendant Land O’Lakes Farmland Fee (LOLFF) in their individual capacities; these are Frank Bez-dieek and Robert DeGregorio. Plaintiff does not seek separate damages from these individuals, and Defendants assert that neither Bezdicek nor DeGregorio was the moving force behind the alleged infringement and request that all of Plaintiffs claims against these Defendants be dismissed with prejudice. Defs.’ Mot. at 2. Defendants argue that these individuals were on the sidelines of the PROFILE project — that DeGregorio was an executive “rubber stamp” and the Bezdicek was a marketing communications manager who acted as a liaison between the legal department and the marketing team that developed the PROFILE mark for use as a brand. Plaintiff, however, argues that both individuals played much larger roles in the development of the PROFILE brand.
The parties do not dispute the legal standard applicable for personal liability; rather, they dispute whether these individuals’ levels of involvement rise to the level necessary for personal liability. “To be personally liable, corporate officers or directors must do more than merely control corporate affairs: they must personally take part in infringing activities or specifically direct employees to do so.” McCarthy on Trademarks and Unfair Competition § 25:24 (4th ed.).
While the evidence is not strong that these two Defendants were the driving force behind the infringement, there is certainly a factual dispute about their roles in developing and launching LOLFF’s PROFILE brand. As such, I deem that summary judgment is inappropriate, and Defendants’ Motion is denied.
D. Plaintijf/Counterclaim Defendant’s Motion for Summary Judgment on the Counterclaims
Counter claimants Land O’ Lakes, Inc. and Land O’ Lakes Farmland Feed, LLC (collectively “LOL”) have asserted four counterclaims, including two based on trademark infringement and two based on defamation. Plaintiff/Counterclaim Defendant CLP claims that LOL has not produced evidence supporting either claim and that summary judgment is appropriate.
In addressing the trademark counterclaim, the parties don’t seem to dispute how it is evaluated. CLP stated, “Section 7(c) of the Lanham Act confers ‘a right of priority, nationwide in effect,’ in CLP’s favor unless LOLFF can establish it used the PROFILE mark prior to March 26, 2002.” Pl.’s Mot. at 8-9. March 26, 2002, is the date CLP filed its application to register the PROFILE mark, which ultimately matured into a registration. CLP claims that Defendant has produced no evidence that it actually used the PROFILE mark before this date. Pl.’s Mot. at 9. LOL, however, claims that it sold over $1 million in PROFILE products before March 26, 2002, in areas remote to CLP and that it has provided CLP with sales documentation to this effect. Counter-
I find that there is obviously a factual dispute regarding this issue and that summary judgment is not appropriate on this counterclaim. The number of exhibits alone show that there is a genuine issue of material fact as to Defendants’ sales prior to March 26, 2002. Accordingly, Plaintiffs motion is denied to the extent it seeks summary judgment on Defendant’s trademark counterclaim.
On the defamation claim, CLP argues that LOL cannot sustain its burden of proving that CLP acted with malice. CLP points to testimony that in publishing the press release and brochure about PROFILE, it simply wanted to stop the confusion about PROFILE, tell its side of the story and “open a dialogue.” Pl.’s Mot. at 12. LOL asserts that there are facts in dispute concerning actual malice. LOL points to the following facts to illustrate that LOL did not act in good faith: CLP filed suit and issued the press release the day before LOL’s annual meeting, CLP sought media attention and to get the attention of LOL with its actions, and that CLP published statements that LOL “mislead” investors and the SEC. Counter-claimant’s Resp. at 9.
The Colorado Supreme Court has stated, “[T]he existence of malice, the question of good faith on the part of the defendants, and their honest belief in the truth of the statements put forth by them, all are matters of fact which are to be determined exclusively by the jury.”
Abrahamsen v. Mountain States Telephone and Telegraph Co.,
CLP next claims that even if the statements in the press release and brochure are found to be defamatory, those statements are privileged. CLP claims that these materials were published in the course of or pertinent to a judicial proceeding and are, thus, absolutely privileged. Pl.’s Mot. at 13. Colorado follows the Restatement of Torts in holding that: “An attorney at law is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding or in the institution of, or during the course and as part of, a judicial proceeding in which he participates as counsel, if it has some relation to the proceeding.”
Seidl v. Greentree Mortgage Co., 30
F.Supp.2d 1292, 1313 (D.Colo.1998)(Johnson, J.). Colorado courts have found that for the privilege to apply, “the maker of the statement and the recipient must be involved in and closely connected with the proceedings.”
Id.
at 1314 (internal citations omitted). “This inquiry ... turns to a large extent on determining to whom the publication was made. A measure of protection is, thus, afforded to an alleged victim of defamation for publication to the public at large or to third parties unconnected with the proposed proceeding.”
Id.
(internal citations omitted). Further, “The privilege may be lost by unnecessary or unreasonable publication to one for whom the occasion is not privileged. Thus, unnecessary publication to the news media may result in loss of the privilege, as well as publication to those wholly unconnected with the judicial process.”
Id.
(internal citations omitted). CLP’s statements, which were contained in a brochure and
CLP further claims that even if it is not entitled to an absolute privilege, it is entitled to a qualified privilege. “Colorado law recognizes a qualified privilege for communications by a party with a legitimate interest to persons having a corresponding interest and communications promoting legitimate individual, group, or public interests.”
Burke v. Greene,
E. Plaintiff’s Motion for Summary Judgment Regarding Affirmative Defenses
Plaintiff seeks summary judgment on two defenses asserted by Defendants. These include (1) that Defendant is an “innocent prior user of the ‘PROFILE’ mark under 15 U.S.C. § 1115(b)(5)” (Answer to Pl.’s Third Am. Compl. ¶ 137) and (2) that “Defendants have acted in good faith and are therefore immune from liability and damages.” Answer to PL’s Third Am. Compl. ¶ 142. I address both of these in turn.
Plaintiff asserts that the statutory defense set forth at 15 U.S.C. § 1115(b)(5) does not apply because “[b]y its title and language, this statute applies to a particular class of federal trademark registrations, namely those that have become ‘incontestable’ under section 1065.” Pl.’s Mot. at 7. Plaintiff further states, “It is undisputed that CLP’s PROFILE registration has not yet become ‘incontestable.’ Incontestability has never been asserted in this case.” Pl.’s Mot. at 8.
The Tenth Circuit has recognized that “[b]ecause section 33(b)(5) is a defense only to the conclusiveness of an evi-dentiary presumption arising from incontestability, it is clear that ‘[f]or marks whose registrations have not yet become incontestable, § 33(b)(5) is irrelevant.’ ”
GTE Corp. v. Williams,
Defendants do not claim the mark is incontestable and at the hearing on these motions, Defendants conceded that this defense is not applicable to the present action. Because there is no dispute over whether the mark is incontestable and because this statutory defense applies only to trademark registrations which have become incontestable, I find that summary judgment is proper and that Plaintiffs motion should be granted to the extent it seeks summary judgment on Defendants’ defense under 15 U.S.C. § 1115(b)(5).
Next, I address the “common law defense.” “The common law has long recognized that ‘the national senior user of a mark cannot oust a geographically remote good-faith user who has used the mark
Plaintiff believes that summary judgment should be granted on this defense because LOL’s use of PROFILE was not remote from CLP’s market area. LOL intended to use the term nationwide, which would, Plaintiff argues, encompass Plaintiffs market area. LOL, however, states that by the time CLP filed its application to register the PROFILE mark (March 26, 2002), LOL had already been selling feed throughout the United States, including in 18 states where Plaintiff never sold its product. Def.’s Resp. at 12. Plaintiff simply points to the fact that LOL intended for its product to have a nationwide reach as proof that LOL’s use was not remote. It states, “LOL even admits that its [sic] did overlap CLP’s market area. The most clear example of this is the fact that CLP sells its feed in the state of Colorado (among other locations).” Pl.’s Mot. at 11.
I do not find Plaintiffs argument convincing. Defendants have provided evidence that LOL used its PROFILE brand in areas where Plaintiff had not sold its product. While the entirety of Defendants’ sales were not remote, there is evidence that some of Defendants’ sales were in a geographic areas remote to Plaintiffs use. Because I find there is an issue of fact regarding geographical remoteness and because the issue of whether LOL acted in good faith clearly involves a genuine issue of material fact, I find that summary judgment is not appropriate on this defense.
F. Defendants’ Motion for Summary Judgment Regarding Plaintiffs Sixth Claim for Relief for “Deceptive Trade Practices” Related to SEC Filings
In this motion, Defendants move for summary judgment on Plaintiffs Sixth Claim for Relief as it relates to statements made by LOL in its Securities and Exchange Commission (“SEC”) filings. Defs.’ Mot. at 1. It specifically addresses whether LOL’s 2003 Form 10-K filed with the SEC contained misrepresentations concerning the PROFILE trademark that can form the basis for a deceptive trade practice under the Colorado Consumer Protection Act (“CCPA”). Defendants note that “[w]ith respect to Plaintiffs claim that the alleged trademark infringement constitutes a deceptive trade practice under the Colorado Consumer Protection Act, Defendants do not seek summary judgment related to that specific claim.” Defs.’ Mot at 1, n. 1.
To sustain a claim under the CCPA, Plaintiff must show the following: (1) that Defendants engaged in an unfair or deceptive trade practice; (2) that the challenged practice occurred in the course of Defendants’ business; (3) that it significantly impacts the public as actual or potential consumers of Defendant’s goods, services, or property; (4) that Plaintiff suffered injury in fact to a legally protected interest; and (5) that the challenged practice caused Plaintiffs injury.
Rhino Linings USA v. Rocky Mountain Rhino Lining, Inc.,
III. Conclusion
Based on the foregoing, it is
ORDERED that Defendants’ Motion for Partial Summary Judgment Regarding the Measure of Plaintiffs Alleged Damages (Refiling of Sealed Document # 145, # 156) [# 234], filed December 2, 2005, is GRANTED IN PART AND DENIED IN PART. It is granted to the extent it seeks a ruling that willfulness is required for a recovery of profits; it is denied in all other respects. It is
FURTHER ORDERED that Defendants’ Motion for Summary Judgment Regarding Plaintiffs Claims against Bezdicek and DeGregorio (Refiling of Sealed Document # 151, # 159) [# 238], filed December 2, 2005, is DENIED. It is
FURTHER ORDERED that Plaintiffs Motion for Summary Judgment on the Counterclaims [# 153], filed September 15, 2005, is DENIED. It is
FURTHER ORDERED that Plaintiffs Motion for Summary Judgment and Opening Brief [# 143, # 155], filed September 15, 2005, is GRANTED IN PART AND DENIED IN PART. It is granted as to the 15 U.S.C. § 1115(b)(5) defense, and it is denied as to the common law defense. It is
FURTHER ORDERED that Defendant’s Motion for Partial Summary Judgment Regarding Plaintiffs Sixth Claim for Relief for “Deceptive Trade Practices” Related to LOL’s SEC Filing (Refiling of Sealed Document # 149, # 158) [# 236], filed December 2, 2005, is DENIED.