Hensley Mfg., Inc. v. Propride, Inc.

• Decision Date: 19 June 2008
• Docket Number: Civil Case No. 08-10425.
• Citation: 622 F.Supp.2d 554
• Parties: HENSLEY MANUFACTURING, INC., Plaintiff, v. PROPRIDE, INC., Sean Woodruff, and James C. Hensley, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

622 F.Supp.2d 554

HENSLEY MANUFACTURING, INC., Plaintiff, v. PROPRIDE, INC., Sean Woodruff, and James C. Hensley, Defendants.

Civil Case No. 08-10425.

United States District Court, E.D. Michigan, Southern Division.

June 19, 2008.

COPYRIGHT MATERIAL OMITTED

Marshall G. MacFarlane, Craig A. Redinger, Young Basile, Ann Arbor, MI, for Plaintiff.

John F. Early, Jr., Southfield, MI, Josh J. Moss, Barris, Sott, Detroit, MI, for Defendant.

OPINION AND ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS AND DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION

MARIANNE O. BATTANI, District Judge.

I. INTRODUCTION

Before the Court are Plaintiff's Motion for Preliminary Injunction (Doc. No. 18), Defendant Hensley's Motion to Dismiss (Doc. No. 9), and Defendants Propride and Woodruff's Motion to Dismiss (Doc. No. 13). Plaintiff Hensley Manufacturing, Inc., has filed suit against Defendants for statutory and common law trademark infringement, unfair competition, breach of contract (against Hensley), misappropriation of trade secrets (against Woodruff and Propride) and tortious interference with a business relationship.

Plaintiff, the manufacturer of a trailer hitch called the "Hensley Arrow", is seeking to preliminarily enjoin all Defendants from using Defendant James Hensley's name in connection with the sale or advertising of their product. Defendants are seeking to dismiss Plaintiff's complaint for failure to state a claim; Defendant Hensley argues that under the plain terms of the contract between him and Plaintiff there has been no breach, while Defendants Propride and Woodruff (the "Propride Defendants") argue that Plaintiff has alleged no acts of trademark infringement. For the reasons stated below, the Court grants the motions to dismiss and denies the motion for preliminary injunction.

II. STATEMENT OF FACTS

Plaintiff is a manufacturing company operating out of Davison, Michigan, and is engaged in the business of making trailer products. Defendant James Hensley is an inventor and designer. Defendant Sean Woodruff was employed by Plaintiff as a sales and marketing manager until 2007, when he left and formed Defendant Propride. Defendant Propride is a manufacturing company operating out of Grand Blanc, Michigan, and engaged in the business of making trailer products.

In 1994, Plaintiff and Defendant Hensley entered into a Licensing Agreement (referenced in Plaintiff's complaint, and provided by Defendant Hensley), which allowed Plaintiff to manufacture and sell Defendant Hensley's trailer hitch design in exchange for cash, shares in Plaintiff, and a continuing royalty.¹ Plaintiff sold Defendant Hensley's trailer hitch under the name "Hensley Arrow" or "Arrow". Plaintiff registered a trademark for the name "Hensley" and has also trademarked the "Hensley Arrow" graphic, both in 2003.

Defendant Hensley split with Plaintiff in 2007, and designed a new trailer hitch. He then licensed the new design to Defendant Propride. Defendant Propride markets this hitch as the "Propride Pivot Point Projection Hitch". In advertising the hitch, Defendant Propride has used Defendant Hensley's name to describe his relationship with the company.

The uses that Plaintiff cites are as follows:

• Print and mail advertisements in which Defendant Propride says: "Only one man has ever designed a trailer hitch that effectively eliminates trailer sway before it begins. That man is Jim Hensley. Now he has done it again and improved the performance of his old design."

• An advertisement that states: "The ProPride hitch was designed and patented by Jim Hensley."

• The website of Propride includes a section on "The Jim Hensley Hitch Story", which explains Defendant Hensley's background and relationship to Defendant Propride.

• An eBay.com listing which was entitled "Used Hensley Arrow Hitch? Buy New J. Hensley Design".

• An internet domain name—www.jim hensleyhitch.com—which redirects users to Defendant Propride's website.

Plaintiff filed suit against Defendants for (1) statutory and (2) common law trademark infringement, (3) unfair competition resulting from the confusion of the trademarks, (4) breach of contract (against Defendant Hensley), (5) misappropriation of trade secrets (against the Propride Defendants) and (6) tortious interference with a business relationship.

Defendant Hensley filed a motion to dismiss, claiming that he has not violated any term of the contract referenced in Plaintiff's complaint, and that Plaintiff failed to state a claim against him for trademark violation, tortious interference, unfair competition or misappropriation of trade secrets, as the facts plead establish violations only as to the Propride Defendants.

The Propride Defendants filed a motion to dismiss, claiming that the use of Defendant Hensley's name is not a trademark infringement, and that Plaintiff has failed to state a claim for the unfair competition, misappropriation of trade secrets, and tortious interference claims.

Plaintiff subsequently filed the present motion for a preliminary injunction on the trademark infringement claim.

III. STANDARDS OF REVIEW

Motion to Dismiss Standard

FED. R. CIV. P. 12(b)(6) allows district courts to dismiss a complaint which fails "to state a claim upon which relief may be granted." "This rule allows a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief even if every allegation in the complaint is true. Under this standard, a complaint should be dismissed only where it appears that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Tidik v. Ritsema, 938 F.Supp. 416, 421 (E.D.Mich.1996). The Sixth Circuit has made it clear that "[a] complaint must contain either direct or inferential allegations with respect to all material elements necessary to sustain a recovery under some viable legal theory." Weiner v. Klais & Co., 108 F.3d 86, 88 (6th Cir.1997). When faced with a FED. R. CIV. P. 12(b)(6) motion to dismiss, a district court,

. . . must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, and determine whether the plaintiff undoubtedly can prove no set of facts in support of his claims that would entitle him to relief. Meador v. Cabinet for Human Resources, 902 F.2d 474, 475 (6th Cir.), cert. denied, 498 U.S. 867, 111 S.Ct. 182, 112 L.Ed.2d 145 (1990). A complaint need only give "fair notice of what the plaintiff's claim is and the grounds upon which it rests." Lawler v. Marshall, 898 F.2d 1196, 1199 (6th Cir.1990) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957)). A judge may not grant a FED. R. CIV. P. 12(b)(6) motion to dismiss based on a disbelief of a complaint's factual allegations. Id.

In re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir.1993). Accordingly, to determine whether a complaint should be dismissed for failure to state a claim under Rule 12(b)(6), this Court must examine the applicable substantive law and the facts alleged in the plaintiff's complaint.

Preliminary Injunction Standard

To determine whether to grant a preliminary injunction, a district court must consider: (1) the plaintiff's likelihood of success on the merits; (2) whether the plaintiff may suffer irreparable harm absent the injunction; (3) whether granting the injunction will cause substantial harm to others; and, (4) the impact of an injunction upon the public interest. Deja Vu of Nashville, Inc. v. Metro. Gov't of Nashville & Davidson County, 274 F.3d 377, 400 (6th Cir.2001). These four considerations "are factors to be balanced, not prerequisites that must be met." Hamad v. Woodcrest Condo. Ass'n, 328 F.3d 224, 230 (6th Cir.2003).

IV. ANALYSIS

1) Trademark Infringement and Unfair Competition

Plaintiff's claims of trademark infringement under the Lanham Act, trademark infringement under MICH. COMP. LAWS § 18.638, and unfair competition under 15 U.S.C. § 1125(a)² all employ the same "likelihood of confusion" test. Daddy's Junky Music Stores, Inc. v. Big Daddy's Family Music Ctr., 109 F.3d 275, 280 (6th Cir.1997) (employing the "likelihood of confusion" standard to a federal trademark infringement claim); The Sports Authority v. Abercrombie & Fitch, 965 F.Supp. 925, 934, fn. 5 (E.D.Mich.1997) (holding that "trademark infringement under Michigan common law is governed by the "likelihood of confusion" standard"); Champions Golf Club v. The Champions Golf Club, 78 F.3d 1111, 1123 (6th Cir.1996) (holding that "[a]s in an action alleging infringement of a mark, likelihood of confusion is the essence of an unfair competition claim").

The essence of this standard is "whether the Defendant's use of the disputed mark is likely to cause confusion among consumers regarding the origin of the goods offered by the parties." Big Daddy's, 109 F.3d at 280 (6th Cir.1997). The Sixth Circuit has held that "whether there is a likelihood of confusion depends on consideration of eight factors:

1. the strength of the plaintiff's mark;

2. the relatedness of the services;

3. the similarity of the marks;

4. the evidence of actual confusion;

5. the marketing channels used;

6. the likely degree of purchaser care;

7. the defendant's intent in selecting the mark; and

8. the likelihood of expansion of the product lines."

Champions Golf, 78 F.3d at 1116. These factors are not mathematically precise or equally weighted, but are to be used as a guide in determining whether "relevant consumers are likely to believe that the products or services offered by the parties are affiliated in some way." Homeowners Group, Inc. v. Home Mktg. Specialists, Inc., 931 F.2d 1100, 1107 (6th Cir.1991).

The Lanham Act provides for several fair use defenses against a claim of trademark infringement. See 15 U.S.C. § 1115(b). The relevant statutory defense here is the allowance for the descriptive use of individual names. 15 U.S.C. § 1115(b)(4) ("the use of the name, term, or...