Blue Ribbon Feed Co., Inc. v. Farmers Union Cent. Exchange, Inc.

• Decision Date: 13 April 1984
• Docket Number: 82-2881 and 83-1547,Nos. 82-2796,s. 82-2796
• Citation: 731 F.2d 415
• Parties: BLUE RIBBON FEED COMPANY, INC., Plaintiff-Appellee, Cross-Appellant, v. FARMERS UNION CENTRAL EXCHANGE, INC., Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 415

731 F.2d 415

222 U.S.P.Q. 785

BLUE RIBBON FEED COMPANY, INC., Plaintiff-Appellee, Cross-Appellant, v. FARMERS UNION CENTRAL EXCHANGE, INC., Defendant-Appellant Cross-Appellee.

Nos. 82-2796, 82-2881 and 83-1547.

United States Court of Appeals Seventh Circuit.

Argued Dec. 1, 1983.

Decided April 6, 1984.

As Corrected April 13, 1984.

Eugene M. Bond, Eugene M. Bond & Associates, Washington, D.C., for defendant-appellant.

Gaar W. Steiner, Michael, Best & Friedrich, Milwaukee, Wis., for plaintiff-appellee.

Before PELL and BAUER, Circuit Judges, and MAROVITZ, Senior District Judge. ^*

PELL, Circuit Judge.

In this diversity case, Farmers Union Central Exchange, Inc. (CENEX) appeals from the judgment of the district court granting Blue Ribbon Feed Company, Inc. (BRF) monetary and injunctive relief under Wisconsin law for trade name infringement. BRF cross-appeals, contending that the monetary and injunctive relief are inadequate redress.

I. FACTS

The background of this dispute starts in the year 1951, when the Sather family purchased the Doughboy farm products retail store in New Richmond, Wisconsin. The Sathers changed the name of the store to Blue Ribbon Feed Company and commenced business selling agricultural products, in particular dairy animal feeds, to members of the neighboring farming communities in Wisconsin and Minnesota. Most products sold by the Sathers were labeled with the name of the actual producer, but some were also sold under the store's own Blue Ribbon label. In 1951, the Blue Ribbon retail store had gross sales of approximately $225,000. The turnover of products sold under the Blue Ribbon label constituted approximately ten percent of gross sales. By 1981, the store's gross sales reached $3,500,000, of which approximately $700,000 was attributable to products sold under the name Blue Ribbon. Since 1951, BRF has advertised its trade name and palette of products in various media, including periodicals, trade publications, and radio. It has concentrated its advertising in the area surrounding New Richmond, and it has allocated progressively larger sums each year for such advertising, starting with $1000 in 1951 and reaching $15,000 in 1981.

CENEX is a Minnesota corporation with its principal place of business in South St. Paul, Minnesota. It does business in thirteen states across the northern tier of the United States, selling farm products through a network of affiliated cooperatives. There are 112 CENEX cooperatives in Wisconsin. At least twenty-eight of these and an additional seven in Minnesota are located within a fifty-mile radius of BRF's store in New Richmond. In 1968, CENEX began marketing certain of its products under the name "Blue Ribbon," a designation it chose to signify products of the highest quality. Between 1968 and 1971, CENEX confined sales of Blue Ribbon feed products to Wisconsin. After 1971, it sold no more than $50,000 worth of Blue Ribbon feed products annually outside of Wisconsin. Its total sales volume for Blue Ribbon feed products in Wisconsin grew from $2600 in 1968 to $5,250,000 in 1980. CENEX has advertised its Blue Ribbon products in Wisconsin in specialized publications and on the radio as well as television. It has also provided its local affiliates with advertising slicks, to which the affiliates append their name and which they then run in publications covering local trade areas. CENEX has increased its annual advertising budget for its Blue Ribbon products from five dollars in 1968 to $34,000 in 1981, with the most marked increases coming in the years 1980 and 1981.

According to the Sathers, they became aware in the winter of 1978 that CENEX marketed products under the name Blue Ribbon. Early in 1980, the Sathers brought suit in the Circuit Court of Dane County, Wisconsin, seeking relief for CENEX's infringement of the Blue Ribbon trade name. The complaint alleged a cause of action under Wisconsin law and asserted no rights under either Minnesota law or the federal Lanham Act. ¹ CENEX removed to federal court, where the district court entertained BRF's motion and CENEX's cross-motion for summary judgment. By decision and order dated March 9, 1982, the district judge denied CENEX's motion to strike certain affidavits submitted by BRF, and it rendered summary judgment, interlocutory in character, in favor of BRF on the issue of liability alone. On August 30, 1982, the district court commenced trial on the issues of laches, damages, and injunction. In findings of fact and conclusions of law filed October 12, 1982, the district judge determined, inter alia, that CENEX had profits from the sales of Blue Ribbon products in the area within a twenty-mile radius of the BRF store, excluding Minnesota of $114,999, which it awarded to BRF as damages. The district judge also issued an injunction prohibiting CENEX from selling, distributing, or advertising any of its animal feed products under the name Blue Ribbon in that part of Wisconsin within a twenty-mile radius of the BRF store. Final judgment was entered accordingly.

The instant appeal and cross-appeal present four principal issues: (1) Whether the district court erred when it granted BRF summary judgment on the issue of liability; (2) whether BRF is entitled to damages, and if so if the damages found by the district court are adequate; (3) whether the twenty-mile restriction is the proper geographical scope for the injunction; and (4) whether BRF is entitled to attorney's fees. We address each issue in turn.

II. DISCUSSION

A. The Propriety of the District Court's Rendering Summary Judgment on the Issue of Liability

1. The Elements of a Trade Name Infringement Action under Wisconsin Law

CENEX argues at the outset that BRF has merely asserted rights in its trade name, that a trade name is legally distinct from a trademark, and that under the law of Wisconsin governing the former, the district court improperly granted BRF summary judgment. CENEX's argument is based on the traditional common law rule that in cases alleging misuse of a trade name, as opposed to a trademark, the plaintiff must prove the defendant's intent to deceive prospective purchasers. See Vredenburg v. Safety Devices Corp., 270 Wis. 36, 41, 70 N.W.2d 226, 230 (1955). CENEX contends that the district court erred when it rendered summary judgment in BRF's favor because BRF never established defendant's fraudulent intent. Recent decisions of the Wisconsin Supreme Court, however, undercut CENEX's position. In First Wisconsin National Bank v. Wichman, 85 Wis.2d 54, 270 N.W.2d 168 (1978), the Supreme Court of Wisconsin expressly adopted Restatement (Second) of Torts Secs. 715-717 (Tent. Draft No. 8, 1963) as the common law of Wisconsin. See also Hirsch v. S.C. Johnson & Son, Inc., 90 Wis.2d 379, 399-400, 280 N.W.2d 129, 139 (1979) (affirming continued vitality of First Wisconsin, supra ). The Restatement (Second) took the position that adoption and use of a trade name gives rise to the right to bring an infringement action. Comment a to Section 717 explains:

The weight of the authority ... supports the proposition that if a tradename has acquired distinctiveness, or secondary meaning, and thus identifies a particular business entity, the user of such tradename is entitled to protection against infringement of that tradename in the same manner and to the same extent as the user of a trademark which has acquired secondary meaning ....

CENEX next contends that even if BRF was not obligated to show fraud, it failed to establish the absence of a genuine triable issue regarding the other elements necessary under Wisconsin law to prevail in an action for trade name infringement. In First Wisconsin, supra, the Supreme Court of Wisconsin cautioned that the mere use of a trade name does not lead automatically to exclusive rights in that name. Rather, to be entitled to prevent others from using a name, "it is necessary [for the plaintiff] to show that the effect of the use has been to identify the particular business entity and to distinguish it from others and that the actor's use is likely to cause confusion and deception." Id. 85 Wis.2d at 63, 270 N.W.2d at 172, quoting Restatement (Second) of Torts Sec. 717 comment a (Tent. Draft No. 8, 1963). Accordingly, in assessing the correctness of the grant below of summary judgment on the issue of liability, we must determine whether the district court properly found no genuine triable issue regarding the following facts: (1) Blue Ribbon identifies BRF's business and distinguishes it from others, and (2) CENEX's later use of the name Blue Ribbon is likely to cause confusion and deception.

2. The Affidavits and the Absence of a Genuine Issue of Material Fact

The district court principally relied on the pleadings and affidavits of farmer-customers to determine the absence of a genuine issue as to either of the two material facts in this case. Each of the seven affidavits submitted by BRF in support of its motion for summary judgment follows the same four-paragraph format. Paragraph one recites that the affiant is a farmer in the New Richmond area and has been engaged in the farming business for close to a decade, and in some instances longer. The second and third paragraphs state that the farmer has purchased Blue Ribbon products from BRF for numerous years and that he strongly associates the name Blue Ribbon with BRF. In the fourth paragraph, each farmer declares that he had difficulty identifying the Blue Ribbon name with BRF once CENEX began to advertise its Blue Ribbon products. For example, affiant Stephens states: "I have been confused by the Blue Ribbon advertising used by someone else in the area. I thought they were selling Blue Ribbon Feed Company feed. I was confused on where or what was the Blue Ribbon 40 percent concentrate."

CENEX contends that it could survive summary judgment without submitting to the trial court evidentiary matter to oppose the affidavits submitted by BRF. We...