442 F.3d 812 (3rd Cir. 2006), 04-3848, Doeblers' Pennsylvania Hybrids, Inc. v. Doebler

Docket Nº:04-3848.
Citation:442 F.3d 812
Party Name:78 U.S.P.Q.2d 1509 DOEBLERS' PENNSYLVANIA HYBRIDS, Inc. v. Taylor DOEBLER, III, an individual; Doebler Seeds LLC d/b/a T.A. Doebler Seeds, Defendants/Third-Party Plaintiffs v. Willard L. Jones; William R. Camerer, III, Third-Party Defendants Taylor Doebler, III, an individual, and Doebler Seeds LLC d/b/a T.A. Doebler Seeds, Appellants.
Case Date:March 23, 2006
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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442 F.3d 812 (3rd Cir. 2006)

78 U.S.P.Q.2d 1509

DOEBLERS' PENNSYLVANIA HYBRIDS, Inc.

v.

Taylor DOEBLER, III, an individual; Doebler Seeds LLC d/b/a T.A. Doebler Seeds, Defendants/Third-Party Plaintiffs

v.

Willard L. Jones; William R. Camerer, III, Third-Party Defendants

Taylor Doebler, III, an individual, and Doebler Seeds LLC d/b/a T.A. Doebler Seeds, Appellants.

No. 04-3848.

United States Court of Appeals, Third Circuit.

March 23, 2006

Argued June 30, 2005.

As Amended May 5, 2006.

On Appeal from the United States District Court for the Middle District of Pennsylvania, (D.C. No. 03-cv-01079), District Judge Honorable James F. McClure, Jr.

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[Copyrighted Material Omitted]

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Rees Griffiths, Barley Snyder, York, PA, John G. Harkins, Jr. (Argued), Steven A. Reed, Harkins Cunningham, Philadelphia, PA, for Appellants.

Lewis F. Gould, Jr., Duane Morris, Philadelphia, PA, Samuel W. Apicelli, Duane Morris, Harrisburg, PA, Jams J. Kutz (Argued), Post & Schell, Harrisburg, PA, for Appellee, Doeblers' Pennsylvania Hybrids, Inc.

Stephen Moniak, Thomas G. Collins, Buchanan Ingersoll, Harrisburg, PA, for Appellees, Willard L. Jones and William R. Camerer, III.

Before: NYGAARD, [*] SMITH, and FISHER, Circuit Judges.

OPINION

FISHER, Circuit Judge.

In this interlocutory appeal between corn-seed businesses owned by relatives of the founder of the original business, we are asked who owns the founder's surname, Doebler, as a trademark. We are also asked whether defendants – the founder's grandson and his business – have engaged in trademark infringement, trade secret misappropriation, and various other torts and fiduciary breaches. The District Court, concluding that defendants engaged in those activities as a matter of law, granted summary judgment to plaintiff and entered a permanent injunction in its favor. Because we conclude that plaintiff has not met its burden of showing that it is entitled to judgment as a matter of law, we will reverse and remand for further proceedings.

I.

Even the closest of families may battle, but when such a feud occurs against the backdrop of family businesses – here, dueling companies that trace their ancestry to one defendant's grandfather – the stakes include critical business assets. Although the personal aspects of this dispute are not material to our resolution of this appeal, the history of the Doebler family businesses

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is critical to this matter, a case that is now before us for a second time.

A. The Doebler Family Members and Their Businesses

Taylor A. Doebler, Sr. ("Doebler I") started the family seed corn business in the 1930s doing business as T.A. Doebler. In the early 1950s, his son Taylor A. Doebler, Jr. ("Doebler II") joined the business, which became a partnership under the name of T.A. Doebler & Son ("Partnership"). For many years, the Partnership used the "Doebler" surname as a trademark in selling corn seed. Doebler I died in 1981. In the 1990s, Doebler II's son, Taylor A. Doebler, III ("Doebler III"), joined the Partnership.

Other family members were involved in the business as well, and on several occasions, Doebler II formed additional entities. In December of 1972, Doebler II formed plaintiff Doeblers' Pennsylvania Hybrids, Inc. ("Hybrids"), to handle sales and distribution. In addition to Doebler II, the incorporators included his son-in-law Willard L. Jones, and his nephew William R. Camerer, III. The vast majority of the initial stock belonged to Doebler II, though Camerer and Jones owned a small amount of stock. All three families were represented on Hybrids' board of directors as well. Currently, Jones and Camerer are officers, directors, and shareholders in Hybrids. Prior to the events directly leading to the present suit, the stock owned by Jones and Camerer increased to approximately 36% each.

In 1986, Doebler II formed another entity, Doebler Farmland, Inc. ("Farmland"). Doebler II transferred land to Farmland, which in turn leased the property back to Partnership to grow seeds. As of 2003, Doebler III and his two sisters collectively owned the majority of Farmland stock, with nearly all the remainder belonging to Jones, Camerer, and various other members of the Jones and Camerer families. Thus, the Partnership's original functions were ultimately split between Partnership, Hybrids, and Farmland.

Before his relationship with Camerer and Jones soured, Doebler III had ties to all three entities: he was partnered with his father in the Partnership and remains an owner of the successor LLC; he is co-owner of Farmland; and he was – but no longer is – a shareholder, director, and secretary/treasurer of Hybrids. After his father's death in 2002 and as part of the events leading to this lawsuit, Doebler III reorganized Partnership as a limited liability company, Doebler Seeds, LLC, d/b/a T.A. Doebler Seeds ("LLC").

In contrast, at no point did Camerer or Jones ever have any ownership interest in the Partnership or its successor LLC. They are, however, shareholders and directors of Hybrids and have served as officers in varying capacities.1 Jones eventually succeeded Doebler II as Hybrids president. Camerer served as vice-president until he was removed in 2000 due to alleged misconduct. Ironically, as noted below, Camerer succeeded Jones as president in 2002. Camerer is also the owner and president of another entity, Camerer Farms, Inc. ("Camerer Farms"), a farm that produces corn seed also sold by Hybrids.2

B. The DOEBLER Name

The Doebler name has been used as a trademark in connection with corn seed in marks such as DOEBLER'S PENNSYLVANIA HYBRIDS. In addition, the

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formative DOEBLER has been used by T.A. Doebler & Son, Doeblers' Pennsylvania Hybrids, Inc., and Doebler Farmland, Inc. as part of their corporate and various trade names such as Doebler's Hybrids. Hybrids also registered the names "Doebler's, Inc." and "Doebler's Hybrids, Inc." in Pennsylvania as fictitious names.

The parties agree that Partnership used the DOEBLER name at least until the formation of Hybrids at the end of 1972. See Appellee Br. At 8 ("[Partnership] continued up until 1972 to cultivate, improve and sell agricultural seed products within Pennsylvania, contracting with farmers to grow seeds which it would market and sell under its name."). The parties vigorously contest, however, who used and owned the name after that point. Interestingly, upon Hybrids' formation, the follow ing ad or press release was issued:

On January 1, 1973 Doebler's took a long leap forward and announced the formation of a new sales and distribution company – Doebler's Penna. Hybrids, Inc. this new unit will take charge of the seed corn after it is produced and bagged by the farms. This includes all aspects of distribution in addition to a greatly expanded research and testing program. The farms will operate as before as T. A. Doebler and Son.

....

We are really enthused about our new organization and its prospects in the years ahead. We hope you will give Doebler's an opportunity to help in the continuing quest for higher yields and better corn.

Sincerely,

T. A. Doebler Jr.

A6209 (emphasis in original). Next to the press release was a picture of a seed bag saying "Doebler's hYBRIDS" and "T.A. DOEBLER & SON." Plaintiff Hybrids asserts that upon its formation, Partnership "conveyed its sales and other assets to Hybrids." Appellee Br. at 8. As discussed below, however, there is no writing that expressly assigns the Doebler name to plaintiff.

C. The Relationship Between the Family Businesses

The relationship between the family businesses is not altogether clear. Doebler III states that until the time of his father's death in 2002, Doebler II "selected the seed corn grown by all these seed production farms." Appellants' Br. at 6. Defendants further claim that even after the formation of Hybrids, Doebler II and Partnership "remained in charge and was the driving force in [Hybrids's] affairs." Id. For its part, plaintiff argues that it was Hybrids that set up the dealer network, controlled the use of the mark after 1972, and that it "is and has always been known to the public and the agriculture industry as 'DOEBLER'S.' " Appellee Br. at 9.3 Partnership had no customers and made no retail sales of seed corn after 1972 through 2002, except to Hybrids and Farmland. In addition, Hybrids did not just sell seed provided by Partnership; it also appears to have sold, under the DOEBLER name, seed produced by Camerer Farms and other non-family providers.

D. The Family Business Unravels

Doebler II died in August 2002. Shortly thereafter, Doebler III approached Jones and offered to buy him out in exchange for his stock and retirement. For his part, Jones began secret negotiations with Camerer, who had been fired three years earlier for alleged misconduct. At a meeting of Hybrids' board on October 31, 2002, Camerer – who had been earlier terminated as

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vice-president – was named president. Doebler III formally resigned from Hybrids on November 15, 2002. On that same day, he filed documents creating LLC. On December 6, 2002, he resigned as a Hybrids director. The assets of Partnership – including its goodwill – were transferred to LLC on April 23, 2003.

E. The Seed Business

The plaintiff's trade secret claims regard the names of their "hybrid" strains of corn seed. These seeds are created by mixing the parentage of male and female "inbred" strains. Seed sellers like Hybrids appear to often get their inbred strains and recommendations on hybrid combinations from providers called "foundation companies." Foundation companies indicate what hybrid strains might be worth producing...

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