Fisons Horticulture, Inc. v. Vigoro Industries, Inc.

• Decision Date: 22 July 1994
• Docket Number: No. 93-7224,No. 93-7287,93-7287,Nos. 93-7224,93-7224,s. 93-7224
• Citation: 30 F.3d 466,31 U.S.P.Q.2d 1592
• Parties: FISONS HORTICULTURE, INC., Appellant in, v. VIGORO INDUSTRIES, INC., Appellant in
• Court: U.S. Court of Appeals — Third Circuit

Page 466

30 F.3d 466

31 U.S.P.Q.2d 1592

FISONS HORTICULTURE, INC., Appellant in No. 93-7224, v. VIGORO INDUSTRIES, INC., Appellant in No. 93-7287.

Nos. 93-7224, 93-7287.

United States Court of Appeals, Third Circuit.

Argued Jan. 20, 1994.

Decided July 22, 1994.

Jack R. Pirozzolo (argued), Willcox, Pirozzolo & McCarthy, Boston, MA, Donald F. Parsons, Jr., Morris, Nichols, Arsht & Tunnell, Wilmington, DE, for appellant/cross-appellee Fisons Horticulture, Inc.

Byron L. Gregory (argued), Michelle C. Burke, McDermott, Will & Emery, Chicago, IL, for appellee/cross-appellant Vigoro Industries, Inc.

Before SCIRICA, LEWIS and GARTH, Circuit Judges.

OPINION OF THE COURT

SCIRICA, Circuit Judge.

This is a trademark infringement case concerning products in the home lawn and garden market. The owner of the trademark "Fairway" for peat moss alleges another company infringed its right to the mark and competed unfairly by selling fertilizer under the name "Fairway Green."

Fisons Horticulture, Inc. ("Fisons"), a Canadian corporation with its principal place of business in Bellvue, Washington, brought this suit against Vigoro Industries, Inc., ("Vigoro"), a Delaware corporation with its principal place of business in Fairview Heights, Illinois. Fisons, which markets peat moss under the registered trademark "Fairway", claims Vigoro's use of the brand name "Fairway Green" for fertilizer constitutes trademark infringement ¹ and unfair competition ² under the Lanham Act, 15 U.S.C. Secs. 1051-1127 (1988 and Supp. IV 1992), infringement of a common law trademark, common law unfair competition, and violates the Delaware Deceptive Trade Practices Act, Del.Code Ann. tit. 6, Secs. 2531-33 (1993).

After a bench trial, the district court entered judgment for Vigoro on Fisons' claims and for Fisons on Vigoro's cross-claim for attorneys' fees under 15 U.S.C. Sec. 1114(1), as provided by 15 U.S.C. Sec. 1117. Both parties appealed. For reasons that follow, we will reverse the district court's judgment for Vigoro on Fisons' Lanham Act claims, affirm its judgment for Fisons on attorneys' fees, and remand for a new trial.

I.

A. Fisons Horticulture, Inc. and Fairway Peat Moss

Fisons is a subsidiary of a British-owned company, Fisons, PLC, which has three divisions pharmaceuticals, scientific equipment, and horticultural products. Its horticulture division has companies in the United Kingdom, France, and the Benelux Countries, as well as in North America.

Fisons markets Canadian sphagnum peat moss, a natural organic product used to improve soil texture and protect plants from temperature extremes, under the registered trademark "Fairway" in the United States. Fisons acquired the Fairway trademark in 1980 from the original owner, Western Peat Company, Ltd., which first used the trade name in 1959 and registered it in 1960.

Fairway is not the only name under which Fisons sells peat moss; it also uses the names "Sunshine" and "Parkland." Sunshine and Parkland together account for over 95% of its sales in the United States and Fairway accounts for the remainder. ³ Fisons' three brands of peat moss account for about 25% of the U.S. peat moss market. From 1987 through 1991, Fisons sold over $500,000 of Fairway peat moss each year. Fisons sells Fairway peat moss primarily to homeowners for lawn and garden care through the traditional channels--lawn and garden stores, hardware stores, home improvement centers, supermarkets, drug stores, and discount stores. Fisons does not advertise Fairway peat moss directly to consumers. Instead, it promotes its product to retailers, makes advertising copy available to them, and reimburses them for their advertising expenses. ⁴

Besides selling peat moss, Fisons sells to the U.S. greenhouse market potting mixes; analyses of soil, water and tissue samples; and professional fertilizer. It also offers an extensive line of lawn and garden products in Canada. Fisons has been considering expanding its product line in the United States by acquiring regional fertilizer brands and unifying them as a national brand for the consumer fertilizer market. One of the proposed trademarks for the national fertilizer brand is Fairway.

Fairway peat moss is sold in a white plastic bag with the mark "Fairway" in large script in green letters above the words "peat moss" in block red letters. The bag has a central design of a golf course green surrounded by roses. A pin with a red triangular flag appears in the center of the green, and the word "sphagnum" is printed in white on the flag. On the back of the package, recommended uses are listed as "preparing new lawns," "top dressing old lawns," and "garden soil mix or mulch." The package notes that peat moss is used with fertilizer and that it "saves fertilizer".

B. Vigoro Industries, Inc. and Fairway Green Fertilizer

Vigoro Industries has been in the fertilizer business in the United States since 1890, and the Vigoro name has been used on products since 1924. It is a prominent name in the industry and it plans to compete with the market leader, O.M. Scott & Sons Co., across the full range of Scott products. Vigoro sells its products to consumers through garden centers, discount stores, hardware stores, seed and feed stores, home improvement centers and supermarkets and drug stores.

Before 1991, Vigoro offered standard quality fertilizer to consumers, but in 1991, it decided to offer to the upscale consumer market a new line of premium-quality fertilizers, containing the patented slow-release nitrogen ingredient it used in its premium golf course fertilizer. Vigoro hired an advertising agency to help select a name and promotional program for the new product. After a search disclosed that many proposed names were registered as trademarks by other companies, the agency recommended "Fairway Green." ⁵

The agency's trademark counsel stated in her recommendation that "Fairway" was registered as a trademark by several companies:

As we discussed, there is a possibility that one or more of the owners of "fairway" marks might contest Vigoro's right to use FAIRWAY GREEN. However, since there is no history of any of the prior users opposing each other's uses of "fairway," the risk should be acceptabl[y] low.

There is also a risk that the application will be assigned to an examiner who will take a strict position and site [sic] one or more of the prior "fairway" registrations as grounds for refusing to register your mark. Because so many "fairway" marks have been registered in the past I believe this risk is also low.

Fisons Horticulture, Inc., v. Vigoro Indus., No. 92-66, slip op. at 3 (D.Del. Mar. 3, 1993).

There were several other registrations and applications including the word "Fairway," but few of them were in the same trademark category as Fisons' Fairway, that is, U.S. class 10, "Fertilizers." In that class, Western Peat, Fisons' predecessor, had registered "Fairway" for peat moss in 1960 and O.M. Scott had registered "Super Fairway" for agricultural and horticultural fertilizers in 1988. O.M. Scott marketed Super Fairway for commercial but not consumer use. After Vigoro applied for registration of "Fairway Green" for its fertilizers in May, 1991, Fisons contested both that application and O.M. Scott's prior registration and applied for its own registration of "Fairway" for fertilizer.

In addition to these trademark registrations and applications in U.S. trademark class 10, approximately six companies had registered or were trying to register "Fairway" for one or more other products and services related to lawns and gardens: grass seed, lawn and garden machinery and equipment, and lawn services; but only three such registrations were completed and active at the time the survey was made. Others were pending or had been abandoned. Finally, there were unregistered uses of the name "Fairway" for goods and services relating to lawns and gardens, as shown by surveys of telephone books.

In May, 1991, Vigoro decided on the Fairway Green name. It filed its trademark application on May 20, 1991 and introduced the new product line at the National Hardware Show in August, 1991. The Hardware Show was the first notice Fisons had of Vigoro's use of the name "Fairway Green." By June, 1992, Vigoro had spent over $500,000 on advertising and promotion and had sold approximately $1.3 million of Fairway Green products in 33 states. Fisons protested Vigoro's attempt to register the trademark on September 26, 1991 and filed a suit in Delaware Chancery Court on January 10, 1992; Vigoro removed it to United States District Court.

Fairway Green fertilizer is sold in a heavy paper bag. The background color of the bag is green, red, purple or magenta, depending on which of four varieties of the fertilizer it contains. On the front of the bag is a large yellow rectangle that has in white on purple the words "Vigoro" at the top and "Premium Lawn Fertilizer" just below the middle. Between these two, in larger green letters with yellow highlighting borders, are the words "Fairway Green." The word "Fairway" arches over the word "Green," and in the arch is a golf course green containing a golf ball, cup, and a pin with a red triangular flag. Behind the golf course green is a yellow setting sun with blue rays. On the package is the statement: "Keeps grass green longer with fewer clippings when compared with soluble fertilizers. Contains the controlled-release nitrogen used on 70 of America's top 100 golf courses. Environmentally-oriented, formulated without nitrates."

C. Purchase and Use of the Products

Fairway peat moss and Fairway Green fertilizer occupy the same segment of the lawn and garden products market, the "fertilizer/soil conditioner" segment. They are frequently used together to prepare the soil for planting, but the use of peat moss may cut down on the use of fertilizer, as noted on the Fairway peat moss package. The two products are both low-cost items, ⁶ and there was testimony that...