FS Services Inc. v. Custom Farm Services, Inc.

• Decision Date: 14 October 1970
• Docket Number: No. 68 C 2157.,68 C 2157.
• Citation: 325 F. Supp. 153
• Parties: FS SERVICES INC., Plaintiff, v. CUSTOM FARM SERVICES, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

325 F. Supp. 153

FS SERVICES INC., Plaintiff, v. CUSTOM FARM SERVICES, INC., Defendant.

No. 68 C 2157.

United States District Court, N. D. Illinois, E. D.

October 14, 1970.

Richard Bushnell and Richard R. Trexler, Olson, Trexler, Wolters & Bushnell, Harry Meloy, Chicago, Ill., for plaintiff.

Hume, Clement, Hume & Lee, Chicago, Ill., for defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

NAPOLI, District Judge.

This cause coming on for trial on the merits of the complaint and the answer thereto, the Court having heard the evidence, having considered the memoranda of counsel for the parties and being fully advised in the premises, now finds:

FINDINGS OF FACT

1. Plaintiff, FS Services Inc., is a Delaware Corporation with its principal place of business in Bloomington, Illinois. Defendant, Custom Farm Services, Inc., a Delaware Corporation with its principal place of business in Atlanta, Georgia, has sold products or rendered services under the trademark in issue within the jurisdiction of this Court.

2. Plaintiff was organized as a farm cooperative in Illinois in 1927 under the name Illinois Farm Supply and continued under various names until the present. In 1962, plaintiff merged with Farm Bureau Service Company of Iowa and in 1965 Wisconsin Farm Company also merged with plaintiff; as of the dates of those mergers, plaintiff's operations were expanded beyond the State of Illinois to Iowa and Wisconsin. Plaintiff does not do a retail business directly with the public but, instead, sells products to affiliated farm cooperatives which, typically, are organized and service a county-wide area. Plaintiff's ultimate customers, the farmers, have very little knowledge of the name of plaintiff's corporation but instead farmers would be more familiar with the name of the county member company with which the farmer does business.

3. Plaintiff's member companies are retail facilities which are operated in the form of farmer-owned cooperatives. The owners of each of the member companies are farmers in the particular area who are members of the farm bureau. A typical member company of plaintiff's organization has substantial physical facilities such as the company office, one or more bulk blending plants for farm fertilizers, anhydrous ammonia tanks for the handling and distribution of liquid farm fertilizers, petroleum bulk distribution docks for fuels and lubricants and warehouses for bagged feed and chemical products. Some of plaintiff's member stores also have general retail facilities which have other items such as tires, batteries, paint brushes, clothing, motor fuels, etc. Plaintiff's sales are very substantial and in a typical year such as 1969, the sales of plaintiff were in excess of $158,000,000 and the sales of its member companies, after retail markup, exceeded $220,000,000 in the states of Illinois, Iowa and Wisconsin. A substantial number of the people doing business with the plaintiff's member stores are members of the local farm bureau and as farm bureau members, they are also owners of plaintiff's affiliated cooperatives. The members of the cooperative are entitled to a patronage refund of any profits earned by the cooperative at the end of the year. Plaintiff plays up its affiliation with farm bureau members and in its advertising refers to itself as a "farmer-owned service" or as a "farm bureau service".

4. In 1955, plaintiff adopted the trademarks FS after a detailed study of its existing public image by a management consultant firm. The words "farm service", and "farm supply" are common generic terms for similar farm product companies, and plaintiff's management consultant firm recommended a change from plaintiff's corporate name, Illinois Farm Supply, because of its lack of distinctiveness and further recommended a change to IFS or IF or IS or FS because such initials would have an existing tie-in with the company name. To the present day, employees of plaintiff's member stores may still identify their company as "Farm Service" or "FS", or are identified by the public as "Farm Supply" or "Farm Service". The initials, FS, were selected as an apt abbreviation of plaintiff's prior public identification as "Farm Supply" or "Farm Service" and also as a reference to the tradenames of plaintiff's member stores which commonly had the words "Farm Supply" or "Farm Service" in the company name.

5. Plaintiff uses the mark FS in plain block letters in some advertising but the more common use of the mark is with a parallelogram and with the color combinations red and black. The mark FS, within its indicated design, is displayed on the buildings, equipment, products and advertising of plaintiff and its member farm cooperatives. Plaintiff is the owner of numerous registrations in the United States Patent Office for the mark FS, and design, registered for a wide variety of farm products and related services. Plaintiff's registrations claim use of FS and design for some products as early as August, 1955, and plaintiff's mark has been used continuously in Illinois since that date.

6. Plaintiff has extensively advertised its trademark and over a period of 15 years has spent slightly less than $15 million in advertising. Plaintiff advertises products and services in farm publications such as Prairie Farmer, Wisconsin Agriculturist, Wallace's Farmer, Dairy Herd Management, Feed Lot, Hog Farm Management, Successful Farming, and the Farm Journal. These are general farm magazines directed to farmers principally in the states of Illinois, Iowa and Wisconsin.

7. Plaintiff's customers are farmers that represent a general cross-section of farmers in the area in terms of educational background and size of their farms. Purchases of fertilizer by plaintiff's customers tend to be substantial in size and almost 80% of plaintiff's customers purchase $500 or more of fertilizer during each purchase. In a typical transaction, involving the bulk sale of fertilizer to a farmer, the farmer would bring his custom-designed specifications for the fertilizer to the plaintiff's blending plant. In many instances, the farmer's specification would be based on a soil test taken some months before which was then interpreted and translated by an agronomist into blend recommendations for the particular farm. The specified ingredients are weighed in the bulk blending plant and put into a mechanical blender and mixed. In most instances, the mixed product would not be bagged but would be removed from the bulk blending plant by the farmer in a fertilizer spreader. A typical fertilizer spreader is worth about $1,800, but it is the custom for plaintiff to loan the spreader to the farmer without security because in a typical transaction the seller knows the farmer and trusts him. A farmer with a 400-acre farm would spend approximately $8,000 per year for fertilizer and, in addition to that, approximately $1,500 for agricultural chemicals such as pesticides and herbicides. There are two general periods in which these products are applied by the farmers. The first is in the fall at the time of plowing and the farmer shops during the summer in order to select the products that he will apply at that time. The other traditional time is the spring of the year and a farmer will generally shop all winter long to compare price and products before deciding where to buy. Farmers are generally quite conscious of price and will compare the competitive prices.

8. Cities Service Company organized the corporation known as Custom Farm Services, Inc. in order to provide retail outlets for the phosphate plants of its subsidiary, Tennessee Corporation. The decision was made to initially buy existing fertilizer blending plants because Cities Service lacked the experience in the market and the experienced personnel in order to construct and operate bulk fertilizer facilities. In December of 1964, Tennessee Corporation contracted to purchase the Liquilizer Companies, a group of eight affiliated Indiana corporations that had eight custom blending fertilizer plants in Indiana. Defendant corporation was incorporated on December 24, 1964 and the Liquilizer Companies were acquired by defendant. The Liquilizer Companies had been using the corporate name Custom Farm Services for four of its fertilizer blending plants continuously since at least as early as September, 1960. The marketing concept for defendant's developing retail activities was based on the custom blending of bulk fertilizer and the name Custom Farm Services was selected for the new corporation because it described the principal marketing activities of defendant. At the time that the name, Custom Farm Services was selected for the new corporation because it described the principal marketing activities of defendant. At the time that the name, Custom Farm Services was approved for use by the new corporation, the management personnel responsible for this decision had no conscious prior knowledge of plaintiff's use of the trademark FS and, to the extent they had heard of plaintiff at all, it was under plaintiff's old corporate name, Illinois Farm Supply. Defendant commenced retail sales early in January, 1964 and, from the very start of its business, the use of the letters CFS developed as an abbreviation for defendant's corporate name, Custom Farm Services. The CFS logo, with a round shield design and arrows, was developed during the spring of 1965 and was first used on July 1, 1965. At the time the management personnel of defendant approved the CFS logo, they had no conscious prior knowledge of any use of the letters FS by plaintiff; at that time they still knew of plaintiff only by its former name, Illinois Farm Supply. At no time in the process of adoption of defendant's corporate name, or the CFS logo, was there any intent on the part of management of defendant to trade upon plaintiff's goodwill. At the time the colors red and white were selected for use with the new CFS logo, defendant's management...