The John Maye Company (Maye) appeals from the district court’s denial of its request for a preliminary injunction under the Wisconsin Fair Dealership Law. Wis. Stat. §§ 135.01-.07. Maye sought to enjoin the Nordson Corporation (Nordson) from terminating it as a regional sales representative of Nordson products without good cause. The district court refused to grant the injunction because Maye was unable to demonstrate that it was a dealer under the statute; the district court found that Maye had neither a right to sell Nordsоn products nor a right to use Nordson’s trademarks. Absent such a showing, Maye could not prove a reasonable likelihood of prevailing on the merits if the case went to trial, and so failed to meet the standard for a preliminary injunction.
John Maye Co., Inc. v. Nordson Corp.,
I. BACKGROUND
This case involves the Wisconsin Fair Dealership Law (WFDL) and the question of who qualifies as a “dealer” under the law. John Maye Company is a Wisconsin Corporation that sells packaging machinery, and Nordson Corporation is an Ohio corporation that manufаctures packaging machinery. The two companies entered into a “Sales Representation Agreement” (Agreement) in May of 1987. On October 1, 1990, Nordson notified Maye that it was terminating the Agreement as of November 5, 1990 because it wanted to utilize a direct sales force in Maye’s area. After receiving this notice Maye initiated a suit in state court, seeking both a preliminary and a permanent injunction prohibiting Nord-son from ending the business relationship. Nordson then removed the case to federal court under diversity jurisdiction.
The Agreement designates Maye as Nordson’s “representative” and requires it to “actively promote the sale and acceptance” of Nordson products in Wisconsin and the upper peninsula of Michigan. Maye’s authority in this territory is nonexclusive. Agreement, ¶ 1. The Agreement requires Maye to promptly transmit customer orders or inquiries to Nordson for approval (¶ 4b); to provide assistance and advice to Nordson customers (¶ 4c); to bear all of its own expenses in performing the Agreement (U 4e); to recognize Nordson’s exclusive ownership of its trademarks, trade names, and patents (¶ 4g); and to make sure that any price quotations contain Nordson’s standard conditions of sale (U 6a). Nordson, in turn, agreed to identify prospective customers for Maye (¶ 5a) and to supply Maye with literature, samples, and other material necessary for promoting Nordson products (¶ 5b). The Agreement also gave Nordson “sole discretion” to accept or reject any order (¶ 7). Once a contract was formed Nordson shipped products directly to the customer (If 7), transferring title from itself to the buyer without going through Maye. For its efforts Maye received, a commission on each sale it helped procure (U 8). 1
*1405 Other aspects of the relationship were defined by the parties’ course of dealing. For example, Nordson controlled how much it charged for products and decided whether to extend credit and the terms of any credit arrangemеnt. If a customer was late on a payment, Nordson contacted both the customer and Maye, and Maye was expected to help collect the money. If an account remained unpaid, however, Nord-son bore the loss. 2 Nordson assumed the risk for any damage to products during shipping. Maye did not have to pay any fee under the Agreement, and did not pay to advertise Nordson products. Instead, Nordson sent Maye sales brochures, pamphlets, and thank you notes, which Maye in turn delivеred to customers. Though not required to do so, Maye also maintained an inventory of $1,000 to $1,500 in spare parts for Nordson machines. After a sale Maye performed both warranty and non-warranty work on Nordson machines, doing the warranty work for free but at times charging for non-warranty work. It also trained customers in the upkeep of Nordson equipment. Of its eleven employees, one spent almost all of his time promoting Nordson, while two others spent a portion of their time doing so.
After examining thesе facts the district court analyzed the WFDL to see if Maye had made the requisite showing of a reasonable likelihood of prevailing on its claim.
Maye,
II. ISSUES
Maye contends that it meets the WFDL’s definition of a dealer because: (1) its many responsibilities under the Agreement, when taken as a whole, gave it the right to sell Nordson products, (2) its distribution of Nordson’s promotional materials to customers gave it the right to use Nordson’s trademark, and (3) the two companies shared a community of interest due to Maye’s financial dependence on the relationship. Accordingly, Maye asserts that since it is a dealer, it has demonstrated, a reasonable likelihood of prevailing at a trial regarding its alleged unlawful termination under the WFDL. We review the court’s denial of a preliminary injunction deferentially, reversing only if there has been an abuse of discretion.
Dederich Corp. v. Eurozyme S.N.C.,
III. DISCUSSION
The WFDL is intended to protect small businesses (dealers) that deal in the goods or services . of a larger company (grantor) аnd which, because of the link between their economic health and their ability to deal in the grantor’s goods or services, are in an inferior bargaining position and could be unfairly exploited by the grantor. Wis.Stats. § 135.025(2). As the court stated in
Kenosha Liquor Co. v. Heublein, Inc.,
The stаtute attempts to achieve its goal by defining the protected business relationships in terms of their characteristics, intending to encompass those situations where grantors are most likely to have superior bargaining power and the ability to oppress dealers. A “dealer” is defined as “a person who is a grantee of a dealership situated in this state.” Wis.Stats. § 135.02(2). A “dealership” must have the following elements:
1. a contract or agreement between two or more persons;
2. by which a person is granted
a. the right to sell goods or services; [or]
b. the right to distribute goods or services; or
c. the right to use a trade name, trademark, service mark, logotype, advertising or other commercial symbol; and
3. in which there is a community of interest in the business of
a. offering goods or services;
b. selling goods or services; or
c. distributing goods or services at wholesale, retail, by lease, agreement or otherwise.
Foerster, Inc. v. Atlas Metal Parts Co.,
A. The Right to Sell
In interpreting the WFDL, courts have concluded that the single most important factor in determining whether an alleged dealer has the right to sell a grant- or’s goods or services is the dealer’s ability to transfer the product itself (or title to the product) or commit the grantor to a transaction at the moment of the agreement to sell.
Foerster,
As support for its argument, Maye relies on
Bush v. National School Studios, Inc.,
Bush by contract was the sole representative of National in Northern Wisconsin. Pursuant to his contract Bush solicited business, set prices, collected payment, and at times extended credit. Moreover, he provided a substantial and integral part of the portrait service— photographing the students. As required by contract he purchased the film from National and bore fifty percent of the cost of advertising in the territory. In addition, Bush extensively used National’s trademark and logo on a variety of solicitation materials as well as his letterhead and calling cards. See Foerster,105 Wis.2d at 26 [313 N.W.2d 60 ]. As the court in Foerster recognized, the right to sell “generally includes authority to commit the grantor to a sale.... ” Id. In this case the record amply demonstrates that Bush had such authority. Based on these facts we conclude that Bush was granted the right to sell National’s services and to use its tradename and logo.
Id.
at 654,
Maye hails
Bush
as a breakthrough in extending the scope of the WFDL to include dealers who have the authority to do everything
but
unilaterally commit the grantor to a sale. We do not read the case so broadly. Though it is true that
Bush
looked to “the actual duties and responsibilities of each party” in finding a right to sell,
id.
at 653,
Under Foerster, it is not enough that Wilburn “did everything to sell the defendant’s products but give final approval of the order.” Wilburn II [v. Jack Cartwright Inc.], 543 F.Supp. [174] at 177 [ (E.D.Wis.1982) ]. Where a dealer purchases goods for resale, he makes the sort of substantial investment contemplated by the WFDL; however, where a sales representаtive merely solicits orders that are subject to the manufactur *1408 er’s approval, no such investment has occurred.
The question, then, is whether Maye had an independent right to commit Nordson to a sale. First of all, the terms of the contract make it clear that Maye did not have the power to commit Nordson to a sale; paragraph 7 invests in Nordson the “sole discretion” to accept or reject a contract. But we cannot stop here. Just as the court in
Bush
looked beyond the “employee” label to determine the true naturе of the dealer-grantor relationship, so we look beyond the letter of the contract. In this case Maye has the burden of demonstrating that, despite the restrictions in the contract, in the course of performing the contract Nordson gave Maye the right to commit it to a sale.
See Komacki v. Norton Performance Plastics,
Furthermore, Maye’s duties make it look very much like a typical manufacturer’s representative, a position consistently excluded from the WFDL.
See, e.g., Kornacki,
B. Use of Commercial Symbols
Maye also attempts to qualify as a dealer based on its (alleged) right to use Nord-son’s trademark and lоgo. Recently revisiting the issue of what constitutes a right to use a trademark, we said that “[i]n order to satisfy the requirements of the WFDL, a dealer must
prominently use and display
a grantor’s logo.”
Kornacki,
Conversely, mere
de minimis
use of a trademark does not satisfy the WFDL.
Moodie,
The facts in this case fall in line with the cases holding that dealers did not qualify under the WFDL because their use of the grantor’s trademark was
de minim-is.
Like the plaintiff in
Kornacki,
Maye is forbidden by contract to appropriate any Nordson trademark to its own use. Agreement, ¶ 4g. Like the plaintiffs in
Moodie
and
Foerster,
Maye’s only use of Nord-son’s trademark was in distributing thank you notes, pamphlets, and brochures designed and supplied by the grantor. Furthermore, similar to the plaintiff in
Wilburn,
Maye includes a letter written on its own stationery whenever it sends out a folder full of Nordson promotional materials, and the company president, John Maye, does not use the Nordson logo on his business card. Finally, Maye neither paid for nor engaged in any advertising using Nord-son’s trademark.
Compare Bush,
Maye’s alternative argument that its use of the trademarks satisfies the letter of the WFDL, and so is sufficient, is not so easily put aside. Though paragraph 7 of the Agreement prohibits Maye from appropriating Nordson’s trademarks or patents, paragraph 15
requires
Maye to promi
*1410
nently display the appropriate Nordson trademark on any literature or promotional documents it produces. This would seem to satisfy the literal language of the WFDL, as Maye plainly has “the right to ... use a trade name, trademark, service mark, logotype, advertising or other commercial symbol.” Wis.Stat. § 135.02(3). Maye argues that this ought to be enough, and some commеntators have agreed.
See
M. Bowen & B. Butler,
The Wisconsin Fair Dealership Law,
§ 3.19, at 3-33 (1988); Note, Foerster, Inc. v. Atlas Metal
Parts
— The
Wisconsin Supreme Court Takes a Narrow View of the Dealer’s Financial Interest Protected By the Wisconsin Fair Dealership Law,
1985 Wis.L.Rev. 155, 191. Judicial interpretation of the WFDL, however, has made it clear that more is required than the mere right to use a commercial symbol, or even
de minimis
use. Rather, to meet the “prominently use and display” standard of
Kornacki,
a dealer must use the trademark or logo in a way that ties its fortunes to the reputation of the grantor, giving the grantor superior bargaining рower that it might use to exploit the dealer.
See Moore v. Tandy Corp.,
C. Community of Interest
Maye makes the argument that even if it has neither the right to sell Nordson’s goods nor the right to use its trademark, it can still qualify as a dealer if the two share a community of interest. It pins this argument on a perceived liberalization of the Wiscоnsin Supreme Court’s interpretation of the WFDL. Whatever the trend, the Court has not re-written the statute. A community of interest between a dealer and a grantor is required before a dealer will be protected by the WFDL, but the mere fact that a dealer and grantor share a community of interest is not of itself sufficient to create a WFDL “dealership”.
See Bong v. Cerny,
The district court’s denial of the preliminary injunction is
Affirmed.
Notes
. Neither party mentions paragraph 18 of the Agreement, which states that "The Agreement shall be governed and construed in accordance with the laws of the State of Ohio." Apparently neither believes that the provision applies here. In any event, the strong policy concerns of the WFDL have led the Wisconsin Supreme Court to dishonor at least one such choice of law clause.
Bush v. National School Studios, Inc.,
The statement of purpose and policy contained in the statute sec. 135.025(2), ... coupled with the explicit directive that the effect of the WFDL "may not be varied by contract or agreement” and "[a]ny contract or agreement purporting to do so is void and unenforceable to that extent ...,” amply support this court’s conclusiоn that a strong public policy is implicated in this case. Section 135.-025(3)_ Therefore the court will not hon- or the parties’ choice of law clause.
Id.
at 644-45,
. This is true except for the occasional small purchase (under $10,000) where Nordson agrees to ship goods without a purchase order based on Maye’s assurances of the customer’s creditworthiness. In such cases Maye is responsible for payment if the customer fails.
. Neither party argues that Maye had a right to distribute Nordson products, and thus we do not consider the issue.
