Bliss Clearing Niagara v. Midwest Brake Bond
| Decision Date | 30 August 2004 |
| Docket Number | No. 5:02-CV-67.,5:02-CV-67. |
| Citation | 339 F.Supp.2d 944 |
| Parties | BLISS CLEARING NIAGARA, INC., Plaintiff, v. MIDWEST BRAKE BOND CO, Defendant. |
| Court | U.S. District Court — Western District of Michigan |
John M. Brown, Bruce G. Davis, Dykema, Gossett PLLC, Lansing, MI, and Douglas A. Dozeman, Warner, Norcross & Judd, LLP, Grand Rapids, MI, for Plaintiff.
Dean W. Amburn, Robert J. Lenihan, II, Harness, Dickey & Pierce, P.L.C., Troy, MI, and Richard A. Gaffin, Miller, Canfield, Paddock & Stone, PLC, Grand Rapids, MI, for Defendant.
TABLE OF CONTENTS
I. Facts and Procedural History ......................................953
A. BCN/Clearing and its Predecessors ...............................953
B. Midwest .........................................................954
C. Business Transactions and Negotiations Between the Parties.......954
D. Midwest's Use of the Torc-Pac Mark ..............................955
E. The Litigation ..................................................956
II. Summary Judgment Standard ..........................................957
III. Discussion .........................................................957
A. Trademark Issues ................................................958
1. Standing .....................................................958
2. Limitations, Laches, and Acquiescence ........................961
3. Fair Use Defense .............................................962
4. Likelihood of Confusion ......................................963
a. Strength of the Plaintiff's Mark ..........................964
b. Relatedness of the Goods ..................................965
c. Similarity of the Marks ...................................965
d. Evidence of Actual Confusion ..............................966
e. Marketing Channels Used ...................................966
f. Likely Degree of Purchaser Care ...........................967
g. Intent of Defendant .......................................967
h. Expansion of Product Line .................................967
i. Conclusion Regarding Likelihood of Confusion ..............968
5. Actual Confusion — Dilution Claim ............................968
B. MUTSA Claim .....................................................969
C. Breach of Contract (Count V) ....................................969
D. Counts VI, VII, IX, and X .......................................971
1. Tortious Interference ........................................971
2. Unfair Competition ...........................................973
3. Fraud ........................................................973
4. Accounting ...................................................974
E. Determination of Trade Secret ...................................974
IV. Conclusion .........................................................974
Plaintiff, Bliss Clearing Niagara, Inc. ("BCN/Clearing"), has sued Defendant, Midwest Brake Bond Co. ("Midwest"), alleging claims for trademark infringement, unfair competition, and dilution under the Lanham Act, 15 U.S.C. §§ 1114, 1125(a) and (c), a claim for misappropriation under the Michigan Uniform Trade Secrets Act ("MUTSA"), M.C.L. § 445.1901-.1910, and various tort claims. BCN/Clearing alleges that, among other things, Midwest obtained and used BCN/Clearing's trade secrets and confidential and proprietary information to manufacture, distribute, and sell a machine and parts identical to BCN/Clearing's "Torc-Pac 40" clutch and parts. Now before the Court are the following motions filed by Midwest: (1) motion for summary judgment on Counts I, II, and III of BCN/Clearing's complaint (the Lanham Act claims) ("First Motion"); (2) motion for summary judgment on Count IV of BCN/Clearing's complaint on the basis that the Michigan Uniform Trade Secret Act mandates dismissal of BCN/Clearing's claim for trade secret misappropriation ("Second Motion"); (3) motion for summary judgment on Count V and the remaining portions of Counts IV, VI, and VII (statutory misappropriation of trade secrets; breach of contract; tortious interference with contractual relations and advantageous business opportunity; and unfair competition) on the basis that BCN/Clearing's purported trade secrets are not secret ("Third Motion"); (4) motion for summary judgment on Count V of BCN/Clearing's complaint (breach of contract) ("Fourth Motion"); and (5) motion for summary judgment on Counts VI, VII, IX, and X of BCN/Clearing's complaint (tortious interference with contractual relations and advantageous business opportunity; unfair competition in violation of the common law; fraud; and accounting) ("Fifth Motion").
BCN/Clearing is engaged in the business of developing, manufacturing, marketing, servicing, selling, and rebuilding industrial presses and components such as clutches and brakes and other machines under the trade names of Bliss, Clearing, Torc-Pac, and Niagara. One of BCN/Clearing's products is the well-known "Torc-Pac 40" wet-type clutch.1 The Torc-Pac was developed in approximately 1958 by the Clearing Division of U.S. Industries, Inc. to work with a press it manufactured for various industrial applications. Over the past 40 or so years, the press has become well known in the manufacturing industry as the "Clearing" press.
Gordon Sommer was the Director of Research for the Clearing division when the Torc-Pac 40 was developed, and in 1956 he became the Vice President — Engineering of Clearing-Chicago. Mr. Sommer spearheaded the initiative to develop a wet clutch, and in that effort he hired John Liu, an engineer, to design a wet clutch for Clearing presses.2 On February 13, 1962, the United States Patent office issued patent number 3,020,990 (the "'990 patent") for the Torc-Pac 40 in the name of John Liu. Liu subsequently assigned the '990 patent to Clearing.
In 1984, Clearing, Inc. acquired some or all of the assets of U.S. Industries, Inc. Clearing, Inc. subsequently changed its name to U.S.I. Press Company. In November 1986, U.S.I. Press Company transferred certain assets to Hitachi Zosen Clearing, Inc. (then known as HZ America Corp.), including those used in the manufacture of the Clearing press. In September 1992, Verson International Group and its subsidiary purchased the business and certain assets of Hitachi Zosen Clearing, Inc. Subsequent to that sale, Hitachi Zosen Clearing, Inc. changed its name to Chicago Service, Inc., and Verson International Group, through related transactions, assigned all of its rights, benefits, and liabilities acquired in the 1992 transaction, including the assets used in the Clearing press business, to a related entity, Clearing International, Inc. In approximately 1994, Clearing International, Inc. transferred its assets and liabilities to Niagara Machine & Tool Works, and Niagara Machine & Tool Works was renamed Clearing-Niagara, Inc. In March 1996, CNB International, Inc. ("CNB") acquired the assets of Clearing-Niagara, Inc. and E.W Bliss, Inc. In March 1999, CNB filed a Chapter 11 bankruptcy petition. BCN/Clearing was formed in connection with CNB's bankruptcy and acquired certain of CNB's assets pursuant to the Fifth Amended Plan of Reorganization. When used in this Opinion, "Clearing" refers to all of BCN/Clearing's predecessors that manufactured the Clearing press and Torc-Pac 40 clutch.
U.S. Industries, Inc. registered the Torc-Pac trademark on April 18, 1967. U.S. Industries, Inc. assigned the Torc-Pac mark and registration to U.S. Press, Inc. (Clearing, Inc.), and U.S. Press, Inc. subsequently assigned the Torc-Pac mark and registration to Chicago Service, Inc. (Hitachi Zosen Clearing, Inc.) Chicago Service, Inc. ("CSI") is currently the record owner of the Torc-Pac mark and registration. In connection with the 1992 asset sale, CSI licensed its trademark and proprietary rights, including the Torc-Pac trademark, to Clearing International, Inc. Pursuant to a Settlement Agreement (the "Settlement Agreement") dated January 27, 1995, CSI and Clearing International, Inc. agreed to resolve certain disagreements that had arisen following the 1992 asset sale. BCN/Clearing succeeded to the rights granted to Clearing International, Inc. pursuant to the Settlement Agreement as a result of the intervening transactions involving Clearing International, Inc., Clearing-Niagara, and CNB and the CNB bankruptcy.
Midwest was established in 1950 to provide friction products such as clutches, brakes, drives, and friction material to the automotive industry and other segments of the manufacturing industry. In addition to other products, Midwest has developed its own wet clutch/brake design. Midwest also makes replacement parts for other wet clutch manufacturers. Midwest began repairing Torc-Pac 40 wet clutches in approximately 1985 or 1986. Midwest has since competed with Clearing and other companies to service, repair, and provide replacement parts for Torc-Pac 40 wet clutches.3
Prior to 1993, Clearing had an established buyer/supplier relationship with Midwest. Clearing was aware that Midwest had manufactured a line of clutch and brake products and materials, and Clearing had purchased such materials from Midwest. In approximately 1993, Clearing and Midwest discussed the possibility of a joint venture aimed at capturing a greater share of the after-market for Torc-Pac 40s as well as for clutch and brake components for competitors' presses. Although the venture never...
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