Deere & Co. v. FIMCO Inc., CASE NO. 5:15–CV–105–TBR

• Decision Date: 08 March 2017
• Docket Number: CASE NO. 5:15–CV–105–TBR
• Citation: 239 F.Supp.3d 964
• Court: U.S. District Court — Western District of Kentucky
• Parties: DEERE & COMPANY, Plaintiff/Counter–Defendant v. FIMCO INC., d/b/a/ Schaben Industries, Defendant/Counter–Claimant

239 F.Supp.3d 964

DEERE & COMPANY, Plaintiff/Counter–Defendant

v.FIMCO INC., d/b/a/ Schaben Industries, Defendant/Counter–Claimant

CASE NO. 5:15–CV–105–TBR

United States District Court, W.D. Kentucky.

Signed March 8, 2017

D. Craig York, Dinsmore & Shohl LLP, Louisville, KY, Ethan C. Forrest, Rebecca A. Jacobs, Simon J. Frankel, Covington & Burling LLP, San Francisco, CA, Neil K. Roman, Covington & Burling LLP, New York, NY, for Plaintiff/Counter–Defendant.

Gregory C. Scaglione, Koley Jessen PC, LLO, Omaha, NE, Nicholas M. Holland, Whitlow, Roberts, Houston & Straub, PLLC, Paducah, KY, for Defendant/Counter–Claimant.

MEMORANDUM OPINION AND ORDER

Thomas B. Russell, Senior Judge

Plaintiff Deere & Company ("Deere") brings this action alleging that Defendant FIMCO Inc. ("FIMCO") is using Deere's green and yellow color scheme on agricultural equipment in violation of federal trademark and common law. There are currently several pending motions ripe for adjudication by the Court, most notably the parties' cross–motions for summary judgment. Deere has filed a motion for partial summary judgment on its claim of trademark dilution, FIMCO's affirmative defense and counterclaim of functionality, and FIMCO's affirmative equitable defenses. [DN 99.] FIMCO responded. [DN 115.] Deere replied. [DN 141.] For the reasons stated herein, the Court will DENY Deere's motion with respect to its dilution claim and FIMCO's affirmative defenses of acquiescence and estoppel and GRANT its motion with respect to FIMCO's defense and counterclaim of functionality and FIMCO's affirmative defenses of laches and implied license.

FIMCO has moved for summary judgment finding that Deere has no trademark rights in yellow tanks, that Deere's registered trademarks have not become incontestable, and that farmers want their agricultural equipment to match their tractors. [DN 100.] Deere responded. [DN 113.] FIMCO replied. [DN 124.] For the reasons stated herein, FIMCO's motion is DENIED.

BACKGROUND

Although the parties dispute various factual matters, which will be addressed in detail below, the basic facts of the action are not in dispute. Deere sells tractors and towed and trailed agricultural equipment in "[i]ts distinctive green and yellow ‘Deere Colors.’ " [DN 98 at 8 (Deere's Memorandum in Support).] Deere has three trademarks registered with the United States Patent and Trademark Office (PTO) pertaining to the use of its green and yellow color scheme on its equipment. [DN 1–2 at 2; DN 1–3 at 2; DN 1–4 at 2.] The first of these registered trademarks, Reg. No. 1,502,103 (the '103 Registration), was obtained in 1988 and covers green and yellow "agricultural tractors, lawn and garden tractors, trailers, wagons, and carts," specifically those with green bodies/frames and yellow wheels. [DN 1–3 at 2.] The second, Reg. No. 1,503,576 (the '576 Registration), was obtained in 1988 and covers green and yellow "wheeled agricultural, lawn and garden, and material handling machines." [DN 1–2 at 2.] The third and most recent registration, Reg. No. 3,857,095 (the '095 Registration), was obtained in 2010 and covers "tractor-towed agricultural implements," including, among others, "fertilizer spreaders" and "nutrient applicators" with green bodies and yellow wheels. [DN 1–4 at 2.] In addition to its registered trademarks, Deere asserts common law trademark protection of its green and yellow color combination. [DN 1 at 8–9.]

FIMCO manufactures both lawn and garden sprayers, its main source of business, and agricultural equipment, "which is a much smaller line of products for FIMCO." [DN 100–1 at 2.] The agricultural equipment FIMCO manufactures includes towed agricultural sprayers and nutrient applicators, which FIMCO offers in multiple colors, including green and yellow. [Id. ]

Deere claims that it first learned of FIMCO's allegedly infringing use in 2011 and tried, unsuccessfully, to persuade FIMCO to cease the use of the green and yellow color combination. [DN 98 at 12.] Deere then brought suit against FIMCO on April 27, 2015, alleging that FIMCO is engaging in infringing activity by selling its sprayers and other agricultural equipment "bearing the Deere Colors or green bodies with yellow wheels or tanks." [DN 1 at 5.] Deere asserts four causes of action: 1) trademark infringement in violation of 15 U.S.C. § 1114, 2) federal false designation of origin and unfair competition in violation of 15 U.S.C. § 1125(a), 3) trademark dilution in violation of 15 U.S.C. § 1125(c), and 4) common law trademark infringement. [Id. at 6–9.] Deere seeks a permanent injunction prohibiting FIMCO from "using the Deere Colors trademark in connection with its sprayers and wheeled agricultural equipment, as well as an injunction ordering [FIMCO] to cease using yellow tanks or wheels in connection with wheeled agricultural equipment having green vehicle bodies." [Id. at 1–2.]

FIMCO denies having engaged in any infringing activity, claims that it and its alleged predecessor in interest, J–D–D Lubricants Co. ("JDD"), have long used yellow and green on its equipment, and asserts, in defense, that Deere's claims are barred by the doctrines of laches, estoppel, implied license, acquiescence, and functionality. [DN 5 at 7.] In addition to these defenses, FIMCO brought four counterclaims against Deere. [Id. at 13–16.] The first, second, and fourth claims seek a declaratory judgment finding that FIMCO has not infringed on or diluted Deere's trademarks, has not unfairly competed, and has not falsely designated the origin of FIMCO's products. [Id. ] FIMCO's third claim seeks to have Deere's trademarks held invalid and cancelled pursuant to 15 U.S.C. § 1119 on the grounds that Deere's yellow and green colors are functional and therefore cannot comprise valid trademarks. [Id. at 15.]

DISCUSSION

I. Preliminary Motions

Before the Court can proceed to the parties' summary judgment motions, it must first address several other non-dispositive motions that are currently pending.

A. FIMCO's Motion in Limine to Exclude Testimony of Deere's Expert William Shanks [DN 95]

FIMCO requests that the Court, pursuant to the standards set out in Daubert and Federal Rule of Evidence 702, exclude all testimony from Deere's expert, William Shanks. [DN 95.] Deere responded. [DN 110.] FIMCO replied. [DN 123.] For the following reasons, FIMCO's motion is denied.

Shanks has, since 1998, been an investigator at a firm called Marksmen, Inc., "a private investigation firm that focuses on intellectual property investigations." [DN 110–1 at 1.] Marksmen "primarily assists trademark and other intellectual property attorneys in investigating the use of trademarks or other intellectual property, so the intellectual property owners can prosecute or defend infringement claims." [Id. ] As the Lead Investigator at Marksmen, Shanks' duties include "investigating possible infringement, locating witnesses, and supervising other intellectual property investigators." [Id. ] At the request of Deere, Shanks conducted an investigation and wrote a report based upon his findings. In his Declaration, Shanks summarized his investigation as follows:

Over several weeks in June 2016, I spoke with a total of 20 salespeople at different dealership locations, and with 18 of those 20 salespeople, I said something very close to the following: "I always thought [or assumed] that yellow/green farm equipment was made by...." or "I always thought [or assumed] that the yellow/green coloring looked like...." I would not finish the sentence, but would pause, to see if the sales personnel would finish the sentence. Each time I raised this unfinished sentence (18 of 18 times) the salesperson responded to my partial sentence and pause by stating promptly either "John Deere" or "Deere." (In two of the 20 interviews, I did not put this statement to the salesperson.) I took notes of these conversations, which eventually became part of my Report in this case.

[Id. at 2 (internal citations omitted).] Based upon this investigation, Shanks opined "that salespeople at dealerships that sell FIMCO's agricultural equipment perceive the green and yellow colors on agricultural equipment as associated with Deere, or at a minimum, recognize or believe that people generally associate such colors with Deere." [DN 89–4 at 54 (Shanks Report).]

As part of Shanks' investigation, he presented himself in the role of "an employee of a film production company that wanted to rent or purchase agricultural equipment for a movie." [Id. ] Shanks took this approach so that dealers would "perceive[ ] [him] as someone not well-versed in that equipment, so the salespeople would be more inclined to educate [him] about the equipment than to assume [he] knew about it already." [Id. ] Shanks also explained that his investigation consisted of "candid conversations" more so than "an interrogation or formal survey" in an effort to "ensure that the respondents felt comfortable enough with me to use their own words and give me their truthful, candid opinions." [Id. at 3.] Shanks "offered an open-ended statement so people would feel free to fill in the gap however they wanted, instead of acting on a prompt or specific question from me." [Id. ]

In the instant motion, FIMCO asserts that Shanks is unqualified to testify as to his opinions in this case and that any expert testimony regarding Shanks' report and investigation is irrelevant, unreliable, and based on inadmissible hearsay. [DN 95–1 at 4–7.] In response, Deere argues that Shanks is properly qualified to testify under Federal Rule of Evidence 702, that his opinion is not based on hearsay, and that FIMCO's criticisms of Shanks' survey and testimony go to weight, not admissibility. [DN 110.] The Court agrees.

Pursuant to Rule 702, experts must be qualified by "knowledge, skill, experience, training, or education." Fed. R. Evid. 702. Here, the Court agrees with Deere that Shanks' twenty years of experience as a private investigator for an intellectual property...