Farm Service, Inc. v. U.S. Steel Corp.

• Decision Date: 27 May 1966
• Docket Number: No. 9692,9692
• Citation: 90 Idaho 570,414 P.2d 898
• Parties: , 149 U.S.P.Q. 861 FARM SERVICE, INCORPORATED, Plaintiff-Respondent, v. UNITED STATES STEEL CORPORATION, Defendant-Appellant.
• Court: Idaho Supreme Court

Page 898

414 P.2d 898

90 Idaho 570, 149 U.S.P.Q. 861

FARM SERVICE, INCORPORATED, Plaintiff-Respondent, v. UNITED STATES STEEL CORPORATION, Defendant-Appellant.

No. 9692.

Supreme Court of Idaho.

May 27, 1966.

Rehearing Denied June 20, 1966.

Richards, Haga & Eberle, Boise, and Hume, Groen, Clement & Hume, Chicago, Ill., for appellant.

Elam, Burke, Jeppesen & Evans, Boise, Sellers, Conner & Cuneo, Washington, D. C., for amicus curiae Nat. Plant Food Institute.

Parry, Robertson & Daly, Twin Falls, for respondent.

TAYLOR, Justice.

Plaintiff (respondent) was chartered by the State of Idaho on March 13, 1957, under the name of Farm Service, Incorporated. Its place of business was located at Kimberly, in Twin Falls county. It was engaged in the business of marketing fertilizers, performing soil and tissue testing and fertilizer application services. During the eight years of its existence plaintiff had spent approximately $20,000 in advertising its products and services by means of newspaper ads, radio and television commercials and by direct mail. During that period plaintiff's gross sales had totaled $1,813,738; its trade area consisted of Gooding, Lincoln, Jerome, Twin Falls, Cassia, Minidoka, Camas, Blaine, Owyhee and Elmore counties.

Defendant (appellant) United States Steel Corporation, was a New Jersey corporation qualified to do business in Idaho. It manufactured and sold fertilizers and other farm supplies and had been selling fertilizers in Idaho through independent retailers from 1957 through 1964. Some 58 of such independent retailers operated in plaintiff's trade area. These dealers conspicuously displayed the United States Steel trademark by means of a large sign which identified each as a United States Steel dealer.

In 1964 defendant began to supplement the network of independent dealers with a series of retail sales and service centers operated by it directly. These centers were designed to provide farmers with soil testing; laboratory analysis; advisory services of trained agronomists; to custom blend fertilizer products; to sell such directly to the farmer; and to furnish advisory application service. These centers were to be advertised and identified by signs in front of each as "United States Steel Farm Service Center" or by defendant's registered trademark

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Upon learning of defendant's plan to establish such centers, plaintiff in September and October, 1964, protested to the defendant against the use by defendant of the words "Farm Service" in designating or advertising defendant's contemplated retail outlets, in plaintiff's service area. Defendant declined to heed the protest. In December, 1964, prior to the opening by defendant of any of its retail centers in plaintiff's trade area, plaintiff commenced this action seeking both a temporary and a permanent injunction forbidding defendant to use the words "Farm Service" in the advertising or designation of its proposed retail outlets. In February, 1965, defendant established a retail outlet in Paul, Idaho, 45 miles from plaintiff's place of business; and in March, 1965, defendant established another in Hansen, Idaho, two miles from plaintiff's place of business; each designated and advertised as "United States Steel Farm Service Center."

In this action plaintiff claimed the exclusive right to the use of the words "Farm Service" in its trade area; that it had acquired such right by the advertising and carrying on of its business under its corporate name, and that during the eight years of such advertising and business the words "Farm Service" had become identified in the public mind with plaintiff's business and had thus acquired a secondary meaning. Plaintiff also contended that since defendant had theretofore done business in plaintiff's trade area only as a wholesaler, and through independent dealers and since such independent dealers had prominently displayed the United States Steel Corporation trademark in connection with their business, farmers in the area would now be misled to believe that "United States Steel Farm Service Centers" were independent dealerships operated by plaintiff; that defendant was intentionally trading on plaintiff's good will; engaging in unfair competition; and that plaintiff would suffer irreparable injury thereby.

On defendant's motion the cause was removed to the United States District Court for the District of Idaho, Southern Division, on the ground of diversity of citizenship, and that the controversy involved more than $10,000. Plaintiff moved for a remand to the state court, contending that the amount in controversy did not exceed $10,000. In support of its motion plaintiff submitted an affidavit by its president in which he averred:

"That except for the minor annoyances arising out of the misdelivery of mail and packages plaintiff, Farm Service, Incorporated, has not sustained any diminution of its volume of business or any damages whatsoever.

"That affiant is not aware of the value of the good will of the business of Farm Service, Incorporated, if any it has. Any damage Farm Service, Incorporated will or may suffer in the event the defendant uses a similar name in plaintiff's trade area is not known. Any calculations with respect to any of these items would be entirely speculative and conjectural."

In its brief, supporting its motion for remand, plaintiff stated to the federal court:

"Mr. Coulson P. Parris, President of Farm Service, Inc., states in his affidavit that Farm Service, Inc. has not now sustained any diminution in its volume of business or any monetary damages whatsoever and he is not aware of the value of the good will of the business of the plaintiff, if it has any. It is entirely possible that, in the event the defendant is granted the right to use a name similar to that of plaintiff that plaintiff will not suffer any diminution of business or loss of good will."

The federal court remanded the cause to the state court on the ground that the amount in controversy did not exceed $10,000. Thereafter, on April 9, 1965, a hearing was had upon plaintiff's motion for a preliminary injunction. Upon the hearing, plaintiff's secretary and plant manager testified that following defendant's publicity campaign in connection with the opening of its farm service centers:

"We received certain items of mail which were addressed originally to Hansen, to various names. One of them was Farmers Service Center, one was U. S. Steel, care of Farm Service Center. In each case, these addresses had been changed and they had appeared in our post office box at Kimberly, Idaho. We received some phone calls about this time asking for people or for individuals. They were largely long distance calls asking for individuals unknown to us, and in checking back with the person placing the call, we found they were trying to reach U. S. Steel at Hansen. We had several requests from prople in the area regarding the construction that was in progress and asking if it was any part of our organization."

Plaintiff also produced evidence that freight companies misdelivered to it, packages intended for U. S. Steel; that its advertising in the trade area had brought to it the volume of sales which it had achieved; that plaintiff's officers thought the words "Farm Service" had acquired a secondary meaning among fertilizer users in the area and had become synonymous with plaintiff's business and corporate name; and that most of the fertilizer to be sold in the area during the year 1965 would be sold within the following 30 to 45 days; and that if defendant used the words "Farm Service" in its business and advertising plaintiff would suffer irreparable injury.

Defendant's showing, consisting of exhibits and affidavits, among other things, revealed that a number of retail dealers in and around plaintiff's service area used the words "Farm Service" in the name identifying their business, and in their advertising. While some of these firms were not located within plaintiff's trade area, their advertising did extend over a portion or all of that area. In all, defendant named eight of such business establishments in southern Idaho using the words "Farm Service" in their names and advertising. Of these, four were located in or near plaintiff's service area, so that their business and advertising would cover portions of that area. Exhibits were admitted showing plaintiff's name and advertising as follows:

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Exhibits showing defendant's designation of its service centers and advertising were as follows:

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The trial court found that the words "Farm Service" had acquired a secondary meaning designating the business conducted by plaintiff within its trade area; that

"The names 'USS Farm Service Center', 'United States Steel Farm Service Center' and 'Farm Service Center' are deceptively similar to the words 'Farm Service Incorporated', 'Farm Service Inc' and 'Farm Service'."

that continued use by defendant of the words "Farm Service" would permit defendant to engage in unfair competition, and unfair practice; that plaintiff will suffer irreparable damage therefrom; that the use by defendant of the words "Farm Service" in plaintiff's trade area over plaintiff's prior protest constituted a deliberate and intentional trading on the good will of the plaintiff; and that the use by defendant of the words "Farm Service" is likely to deceive, mislead and confuse the public, and has deceived, misled and confused certain of the public.

The court then made and entered its order granting preliminary injunction in terms as follows:

"Ordered, that defendant, its agents, servants, employees and attorneys and all persons in...