H-D U.S.A., LLC v. SunFrog, LLC

• Decision Date: 12 April 2018
• Docket Number: Case No. 17–CV–711–JPS
• Parties: H–D U.S.A., LLC and Harley–Davidson Motor Company Group, LLC, Plaintiffs, v. SUNFROG, LLC d/b/a SunFrog Shirts and John Does, Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

311 F.Supp.3d 1000

H–D U.S.A., LLC and Harley–Davidson Motor Company Group, LLC, Plaintiffs,

v.SUNFROG, LLC d/b/a SunFrog Shirts and John Does, Defendants.

Case No. 17–CV–711–JPS

United States District Court, E.D. Wisconsin.

Signed April 12, 2018

David M. Kelly, Sabrina Y. Shyn, Stephanie H. Bald, Kelly IP LLP, Washington, DC, Katherine W. Schill, Michael Best & Friedrich LLP, Milwaukee, WI, for Plaintiffs.

Christopher R. Liro, Aaron T. Olejniczak, Andrus Intellectual Property Law LLP, Milwaukee, WI, Eric Misterovich, Revision Legal PLLC, Portage, MI, John Di Giacomo, Revision Legal PLLC, Traverse City, MI, for Defendants.

ORDER

J. P. Stadtmueller, U.S. District Judge

This is a trademark and copyright infringement case brought by Plaintiffs, collectively referred to as "Harley–Davidson," against Defendants, collectively referred to as "SunFrog." SunFrog runs a website where third parties can upload designs and logos, place them onto clothing, hats, mugs, or other items, and sell them. SunFrog handles printing the goods and shipping them, and it takes the majority of the profits from the sales. Harley–Davidson noticed that SunFrog advertised and sold many items bearing its trademarks, including both word-marks and logos, and it filed this lawsuit as a result. Before the Court is Harley–Davidson's motion for partial summary judgment. For the reasons stated below, it will largely be granted.

1. LEGAL STANDARD

Federal Rule of Civil Procedure 56 provides that the court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; Boss v. Castro , 816 F.3d 910, 916 (7th Cir. 2016). A fact is "material" if it "might affect the outcome of the suit" under the applicable substantive law. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute of fact is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.

The court construes all facts and reasonable inferences in the light most favorable to the non-movant. Bridge v. New Holland Logansport, Inc. , 815 F.3d 356, 360 (7th Cir. 2016). The court must not weigh the evidence presented or determine credibility of witnesses; the Seventh Circuit instructs that "we leave those tasks to factfinders." Berry v. Chicago Transit Auth. , 618 F.3d 688, 691 (7th Cir. 2010). The party opposing summary judgment "need not match the movant witness for witness, nor persuade the court that [its] case is convincing, [it] need only come forward with appropriate evidence demonstrating that there is a pending dispute of material fact." Waldridge v. Am. Hoechst Corp. , 24 F.3d 918, 921 (7th Cir. 1994).

To meet its burden, the non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co, Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). "It is well-settled that speculation may not be used to manufacture a genuine issue of fact." Amadio v. Ford Motor Co. , 238 F.3d 919, 927 (7th Cir. 2001) ; McDonald v. Vill. of Winnetka , 371 F.3d 992, 1001 (7th Cir. 2004) ; Palucki v. Sears, Roebuck & Co. , 879 F.2d 1568, 1572 (7th Cir. 1989) ("A party to a lawsuit cannot ward off summary judgment with an affidavit or deposition based on rumor or conjecture" but must instead rest on the witness' personal knowledge). The Seventh Circuit has repeatedly emphasized that summary judgment "is the put up or shut up moment in a lawsuit, when a party must show what evidence it has that would convince a trier of fact to accept its version of the events." Hammel v. Eau Galle Cheese Factory , 407 F.3d 852, 859 (7th Cir. 2005).

2. RELEVANT FACTS

2.1 Harley–Davidson and Its Marks

Harley–Davidson is the largest manufacturer of motorcycles in the United States and has long been one of the world's most recognized motorcycle companies. For more than 110 years, it has continuously manufactured, promoted, and sold motorcycles and related products.¹

Harley–Davidson owns several marks relevant to this litigation. They include the word marks HARLEY–DAVIDSON, HARLEY, H–D, HD, FAT BOY, and SPORTSTER, as well as Harley–Davidson's Bar & Shield logo, Willie G. Skull logo, and Number 1 logo trademarks shown below.

Harley–Davidson has used each of these marks, which will be referred to collectively as the "H–D Marks," for many years in connection with motorcycles, motorcycle parts and accessories, and various other products and services, including apparel, mugs, and posters. The H–D Marks are part of premium brands and Harley–Davidson has a reputation for providing a wide variety of high-quality merchandise under those brands itself and through its dealers and licensees.²

Given the incredible commercial success of Harley–Davidson's motorcycle business over the years and its status as an iconic brand, there has long been a strong demand from motorcycle enthusiasts as well as the general public for other products bearing the H–D Marks, so they can show their affinity for Harley–Davidson. To satisfy this demand and to further build awareness of the H–D Marks, Harley–Davidson has for decades engaged in an extensive program of licensing the H–D Marks for use on a wide range of products, including apparel, mugs, and posters, among others.

Consistent with its image as a premium brand, Harley–Davidson positions its licensed merchandise as high-quality, sold at a premium price point sold through select channels of trade. The retail prices of Harley–Davidson's licensed products typically range between $25 and $80 for apparel, between $20 and $45 for hats, and between $9 and $23 for mugs.

To ensure and maintain the high-quality reputation of licensed merchandise sold under the H–D Marks, Harley–Davidson requires its licensees to comply with stringent quality standards, including that: (1) licensees must first submit product concepts and artwork for Harley–Davidson's prior written approval; (2) once the concept and artwork is approved, licensees must submit a pre-production product sample for Harley–Davidson's prior written approval; and (3) once the pre-production product sample is approved, licensees must submit for Harley–Davidson's prior written approval a production sample of the actual product that will be sold to the public. Licensees cannot promote or advertise any licensed products without completing all of these steps. As part of this quality-control review process, Harley–Davidson carefully reviews the licensed products in numerous respects, including the materials used, the quality of the craftsmanship and construction, the design, style, and appearance of the products, and their overall quality.³

According to its trademark counsel, Harley–Davidson's trademark license agreements typically contain a provision that the licensee may not use the marks "in any manner that would disparage, tarnish, or dilute the distinctive quality of the Licensed Marks or the reputation and goodwill represented by the Licensed Marks or which would reflect adversely on the Licensed Marks, [Harley–Davidson], or any of [its] products or services," to be determined in Harley–Davidson's sole discretion. (Docket # 47 ¶ 3). In addition, Harley–Davidson has various guidelines in place for reviewing the artwork and other content on licensed products, including prohibitions against:

• depictions of religious symbols or language from any religion;

• vulgar, crude, or offensive content;

• satanic or excessively violent depictions of skulls;

• display of guns or the word "gun," except in rare instances (e.g. , military motorcycles);

• displaying certain of Harley–Davidson's trademarks on licensed products, including the "corporate" Bar & Shield Logo with the text "HARLEY–DAVIDSON MOTOR COMPANY" that is reserved for corporate use; and

• any modified or mutilated versions of any of the H–D Marks.

Id. ¶ 4.

Harley–Davidson has achieved significant commercial success in the motorcycle business, which includes the sales and servicing of motorcycles and the sales of motorcycle parts, accessories, and riding gear. Harley–Davidson and its authorized dealers have sold many billions of dollars of such products and services over the years. Harley–Davidson's licensed products business has also been wildly successful, with Harley–Davidson's royalty revenues from licensing exceeding $400 million during 2005–2016 alone, which translates into billions of dollars of sales of licensed products at retail.

Apparel is a significant part of Harley–Davidson's business and has been for many years. The majority of Harley–Davidson's licensing royalty revenues are from its apparel licensees. Harley–Davidson currently has approximately ten apparel licensees and has had a similar number of apparel licensees or more for many years. For decades, Harley–Davidson has offered and sold, itself and through its dealers and licensees, riding gear and apparel bearing the H–D Marks, including t-shirts, shirts, sweatshirts, sweaters, pants, vests, jackets, and hats. During this same time, Harley–Davidson has offered and sold through its licensees a wide range of merchandise bearing the H–D Marks, including licensees for mugs and posters.

The H–D Marks have been extensively promoted nationwide across Harley–Davidson's many product lines. Harley–Davidson markets and sells motorcycles, motorcycle parts and accessories, and riding gear, including apparel, under the H–D Marks through a network of more than 690 authorized dealers located throughout the country, and through numerous other authorized Harley–Davidson retail outlets, including high-profile and high-traffic outlets (e.g. , stores located at popular airports). Harley–Davidson's apparel products are also sold online through harley-davidson.com and the websites of Harley–Davidson's authorized dealers and licensees.

Harley–Davidson and its authorized...