Chemlawn Services Corp. v. GNC Pumps, Inc.

• Decision Date: 29 January 1988
• Docket Number: Civ. A. No. H-86-1693.
• Citation: 690 F. Supp. 1560
• Parties: CHEMLAWN SERVICES CORPORATION, A Corporation of Ohio; CL Licensing Corporation, A Corporation of Delaware v. GNC PUMPS, INC. and R. Gary Palmer.
• Court: U.S. District Court — Southern District of Texas

690 F. Supp. 1560

CHEMLAWN SERVICES CORPORATION, A Corporation of Ohio; CL Licensing Corporation, A Corporation of Delaware v. GNC PUMPS, INC. and R. Gary Palmer.

Civ. A. No. H-86-1693.

United States District Court, S.D. Texas, Houston Division.

January 29, 1988.

COPYRIGHT MATERIAL OMITTED

Thomas W. Flynn, Biebel, French & Nauman, Dayton, Ohio, Stephen H. Cagle, Arnold, White & Durkee, Houston, Tex., for plaintiffs.

Donald H. Fidler, Houston, Tex., for defendants.

DeANDA, Chief Judge.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Pending before the Court in the above-referenced cause is Plaintiffs' renewed and opposed motion for a preliminary injunction. Plaintiffs filed this action on April 24, 1986, alleging infringement of two patents, infringement of their trademark in violation of section 43(a) of the Lanham Trade-Mark Act, 15 U.S.C. § 1125(a), and common-law unfair competition by Defendants' manufacture, distribution, and sale of Mag-P spray guns to the gardening industry. Plaintiffs originally moved for a preliminary injunction on the trademark infringement and common-law unfair competition claims on June 4, 1986.

A full evidentiary hearing was then held on October 9, 1986. At its conclusion, the Court orally granted the requested injunction and ordered the parties to submit proposed findings of fact and conclusions of law. Subsequently, on November 14, 1986, at Plaintiffs' request after Defendant GNC Pumps, Inc., allegedly violated the October ruling, the district judge entered a temporary restraining order and simultaneously reiterated that a preliminary injunction had been in effect since the October hearing. Defendants appealed to the Federal Circuit on November 18, 1986. The Court failed to enter written findings of fact and conclusions of law to support its previous orders until February 3, 1987, at which time the district court no longer had jurisdiction over the matter. Chemlawn Services Corp. v. GNC Pumps, Inc., 652 F.Supp. 1382, 2 U.S.P.Q.2d 1416 (S.D.Tex.1987).

On November 20, 1986, GNC moved for a stay of the preliminary injunction, pursuant to Fed.R.App.P. 8(a). The matter was taken under advisement by the district court. On February 5, 1987, GNC again petitioned the Federal Circuit for a stay when relief from the district court no longer seemed practicable. In an unpublished order, dated March 11, 1987, the Fifth Circuit granted the stay in light of Defendants' likelihood of success on appeal due to procedural deficiencies in the handling of the preliminary injunction.

On July 2, 1987, the Federal Circuit reversed and remanded the November ruling and vacated the preliminary injunction on two grounds. First, the district court had failed to issue findings of fact and conclusions of law simultaneously with its order, pursuant to Rule 52(a). Its attempt to cure that error in February 1987 failed for lack of jurisdiction after Defendants' November 18, 1986 appeal. Second, the district court did not provide for a security bond, as mandated by Fed.R.Civ.P. 65(c). The Federal Circuit noted that the incomplete record before it prevented it from ruling on the merits, as the Federal Circuit is permitted to do in unusual cases to promote judicial economy. In particular, the Federal Circuit observed that the Court's findings of fact might no longer be valid in light of changed circumstances and commercial activities permitted when the stay was lifted on the preliminary injunction. The appellate court suggested that Defendants' inventory of spray guns might be exhausted or they might no longer be available for distribution and sale, thereby making the issue moot. As it happens, later materials submitted to this Court indicate that Defendants received an additional 1600 guns after the stay was lifted and have sold most of them. Nevertheless, it is clear why the Fifth Circuit remanded the action for reconsideration.

This case was subsequently transferred to the docket of the undersigned judge. The Court has reviewed the district court's prior extensive and detailed findings of fact and conclusions of law in conjunction with the record and applicable law, with a scrutinizing eye for any factual issues arising as a result of the passage of time.

On October 23, 1987, this Court held a conference with the parties to discuss the matter and ordered both sides to submit materials citing any changed circumstances arising since the evidentiary hearing a year earlier. The Court stressed that it would not reopen and retry issues already ruled upon by the presiding judge concerning which Defendants have had their day in court with a full and fair opportunity to litigate. Instead, the Court emphasized that it would only consider relevant factual occurrences since the 1986 hearing which bear on the central issue of the likelihood of confusion. At this conference, in an effort to expedite proceedings, Plaintiffs stipulated that there was no "actual confusion" by purchasers between Chemlawn's and Defendants' spray guns, one factor weighed in determining the likelihood of confusion between products. The Court previously had not made a finding on this factor because of the limited number of guns sold by Defendants by the 1986 hearing.

In response to the Court's request for evidence of changed circumstances due to the passage of time, Defendants have improperly raised questions about the accuracy of testimony during the prior hearing; thus their allegations fail to fall within the ambit of this Court's restrictions. Defendants also challenge the determination that the Chemlawn gun is not solely functional. Because functionality is a legal question and because the underlying facts are already before this Court, the Court concluded that an additional evidentiary hearing was unnecessary.

Therefore, in light of Plaintiffs' stipulation that there is no actual confusion and of Defendants' failure to demonstrate any additional factual issues due to changed circumstances since the 1986 hearing, this Court enters the following findings of fact and conclusions of law, essentially adopted, with minor modifications, from those belatedly entered by the then presiding judge. This Court concludes that Plaintiffs' renewed motion for a preliminary injunction should be granted.

FINDINGS OF FACT

A. Parties To This Action

1. Plaintiff CL Licensing Corporation is a Delaware corporation and the owner of record of the patents made the basis of the instant lawsuit. (Defendants' Exhibits 4, 13, 14).

2. Plaintiff Chemlawn Services Corporation is a corporation of Ohio and the exclusive licensee of the patents in suit with the right to bring suit for infringement in its own name. (Defendants Exhibits 4 and 15).

3. Plaintiff Chemlawn Corporation is a corporation of Ohio, and through its wholly-owned subsidiary, CL Investments Corporation, owner of all stock in Plaintiffs CL Licensing Corporation and Chemlawn Services Corporation. (Defendants' Exhibit No. 4).

4. Defendant GNC is a corporation of Texas having a place of business in Houston, Texas. Admission of Fact.

5. Defendant Palmer is the registered agent of Defendant GNC, its president, principal stockholder and incorporator, and resides in Houston, Texas. Admission of Fact.

B. History—Background

6. Chemlawn was founded in 1969 for the business of providing professional lawn care to homeowners and others. (Testimony of Miller).

7. In performing these services Chemlawn applied various liquid products to lawns utilizing spray guns for the purpose of providing professional lawn care to homeowners and others. (Testimony of Miller).

8. Chemlawn Corporation initially used a homemade spray gun in its lawncare services. However, the homemade gun was replaced by a commercially available spray gun known as the John Bean spray gun. (Testimony of Miller; Plaintiffs' Exhibit No. 1; Defendants' Exhibit No. 3).

9. The John Bean spray gun was used by Chemlawn Corporation for approximately five to six years. Subsequently, the Equipment Research Center of Chemlawn Corporation developed a gun to be used specifically for the spraying of lawns. (Testimony of Miller; Plaintiffs' Exhibit No. 2).

10. After approximately a year and a half, this gun was replaced in 1976 by another spray gun referred to herein as the "Chemlawn Gun" and designed by the Equipment Research Center of Chemlawn Corporation. (Testimony of Miller; Plaintiffs' Exhibit No. 3).

11. The Chemlawn Gun has been used as the primary lawn spray gun of Chemlawn Corporation and its operating subsidiary Chemlawn Services Corporation from the date of its introduction to the present without any appreciable change in exterior configuration. (Testimony of Miller).

12. Following introduction and use of the Chemlawn Gun, Chemlawn Corporation service personnel experienced losses of the Chemlawn Guns from their service trucks. Various competitors of Chemlawn Corporation began requesting that Chemlawn Corporation sell them Chemlawn Guns. Mr. Gene Probasco, Vice-President of Lesco, Inc., suggested to Miller of Chemlawn Services Corporation an arrangement whereby Lesco would market the Chemlawn Gun to competitors of Chemlawn. (Testimony of Miller and Probasco).

13. Lesco, Inc., manufactures and sells equipment, products, and chemicals to the lawn care industry. (Testimony of Miller).

14. In response to the request for Chemlawn Guns, Chemlawn Corporation entered into an oral arrangement in 1978 with Lesco, Inc. Pursuant to the arrangement, Chemlawn Corporation sold Chemlawn Guns to Lesco for resale by Lesco, primarily to competitors of Chemlawn, golf course maintenance personnel and others engaged in lawn and turf care. (Testimony of Miller; Testimony of Probasco).

15. There was not another acceptable lawn spray gun prior to the introduction and use of the Chemlawn Gun by Chemlawn Corporation in 1976. (Testimony of Miller; TR 62, 63).

16. Other existing spray guns, besides the John Bean spray gun, include a metal spray gun made in Taiwan, a ...