Marketing Displays, Inc. v. Traffix Devices, Inc.

• Decision Date: 02 June 1997
• Docket Number: Civil Action No. 95-40230.
• Citation: Marketing Displays, Inc. v. Traffix Devices, Inc., 967 F.Supp. 953 (E.D. Mich. 1997)
• Parties: MARKETING DISPLAYS, INC., Plaintiff, v. TRAFFIX DEVICES, INC., Defendant.
• Court: U.S. District Court — Eastern District of Michigan

967 F.Supp. 953

MARKETING DISPLAYS, INC., Plaintiff, v. TRAFFIX DEVICES, INC., Defendant.

Civil Action No. 95-40230.

United States District Court, E.D. Michigan, Southern Division.

June 2, 1997.

COPYRIGHT MATERIAL OMITTED

John A. Artz, Frank A. Angileri, Brooks & Kushman, Southfield, MI, for plaintiff.

Randall G. Litton, Price, Heneveld, Cooper DeWitt & Litt, Grand Rapids, MI, Jeanne-Marie Marshall, Richard W. Hoffman, Reising, Ethington, Barnard Perry & Milton, Troy, MI, for defendant.

AMENDED MEMORANDUM OPINION AND ORDER

GADOLA, District Judge.

Before the court are three motions by plaintiff, Marketing Displays, Inc. ("MDI"). The first motion is a motion for summary judgment, pursuant to Federal Rule of Civil Procedure 56(c), filed on October 16, 1996, seeking to have this court find, as a matter of law, that the use by defendant, TrafFix Devices, Inc. ("TrafFix"), of the mark WINDBUSTER infringes MDI's registered trademark WINDMASTER. The second motion, is a motion to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6) or alternatively for summary judgment, pursuant to Federal Rule of Civil Procedure 56(c), filed on October 30, 1996, on Count II of TrafFix's counterclaim. The third motion, is a motion for sanctions, pursuant to Federal Rule of Civil Procedure 11, filed on December 10, 1996, alleging that TrafFix's counterclaim is not well-grounded in fact or in law. This court, pursuant to Local Rule 7.1(e)(2) (E.D.Mich. Nov. 7, 1994), has decided to dispense with oral argument and will decide the motions on the submitted briefs.

I. Background

MDI manufactures and sells, inter alia, spring-mounted wind-resistant sign stands. MDI has been manufacturing and selling these sign stands since 1968 under the trademark WINDMASTER. The first sign stand sold under the WINDMASTER mark was a business-type wind-resistant sign stand that was used to display advertisements, such as those seen at gas stations.

In the mid 1970's MDI modified its business-type wind-resistant sign stands in order to utilize the wind-resistant concept for traffic warning signs. The traffic-type wind-resistant sign stands were used to hold signs such as "ROAD WORK AHEAD" and "ROAD CONSTRUCTION AHEAD". These traffic-type, spring-mounted wind-resistant sign stands were then sold under the same mark WINDMASTER in the traffic control field.

MDI's WINDMASTER mark and products have been used continuously since 1968 and have enjoyed substantial commercial success. In the traffic control field, the WINDMASTER mark and traffic-type sign stands have been used continuously since 1976. In 1977, MDI registered WINDMASTER as a federal trademark.¹

MDI sells several millions of dollars per year of these WINDMASTER sign stands and spends at least tens of thousands of dollars each year extensively promoting them in its advertising, literature, customer contacts, and trade shows. The name and product have each developed substantial goodwill and recognition in the sign stand industry.

In 1986 Mr. Jack Kulp started TrafFix Devices, Inc. to manufacture and sell traffic-type sign stands and related products. Prior to starting TrafFix, Mr. Kulp worked for Lear Siegler. During the time that Mr. Kulp was employed with Lear Siegler, it was a distributor of MDI's WINDMASTER traffic-type sign stands.

In the fall of 1994, TrafFix began selling a spring-mounted wind-resistant sign stand which was virtually identical to MDI's WINDMASTER product. In developing this sign stand, TrafFix sent one of MDI's WINDMASTER sign stands to Korea to be "reverse engineered."

On January 11, 1994, prior to adoption of the WINDBUSTER name, Mr. Donald Stout, a registered patent attorney, conducted a trademark search, on Mr. Kulp's behalf, to determine the availability of the name WINDBUSTER as a trademark for traffic sign stands. In his opinion letter, Mr. Stout considered MDI's prior "WINDMASTER" registration and concluded that TrafFix's use of WINDBUSTER was not confusingly similar to MDI's mark.

On February 10, 1994, also prior to adoption of the WINDBUSTER name, TrafFix filed an application with the United States Patent and Trademark Office ("PTO") for the purpose of obtaining a Federal Registration for the WINDBUSTER mark.

The WINDBUSTER mark was published in the Trademark Gazette for an opposition period² beginning on March 14, 1995. No opposition was filed. On June 21, 1995, the Trademark Office allowed the WINDBUSTER trademark. On January 9, 1996, United States Trademark Registration No. 1,947,386, ("386") for TrafFix's WINDBUSTER mark, issued.

On July 11, 1995, MDI filed its first complaint alleging: in Count I, Lanham Act trademark infringement; in Count II, violation of federal trade dress law; in Count III, Michigan common law unfair competition. On September 7, 1995, this court dismissed, without prejudice, Count III of MDI's complaint.

On August 21, 1996, MDI filed an amended complaint in which it realleged all three counts and added a fourth count claiming Lanham Act unfair competition. On September 30, 1996, TrafFix answered MDI's amended complaint and asserted two counterclaims. Count I alleged Lanham Act unfair competition and Count II alleged federal antitrust violations.

II. Legal Standard

a. Motion For Summary Judgment

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Summary judgment is appropriate where the moving party demonstrates that there is no genuine issue of material fact as to the existence of an essential element of the non-moving party's case on which the non-moving party would bear the burden of proof at trial. Martin v. Ohio Turnpike Commission, 968 F.2d 606, 608 (6th Cir.1992); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). In considering a motion for summary judgment, the court must view the facts and draw all reasonable inferences therefrom in a light most favorable to the non-moving party. 60 Ivy Street Corporation v. Alexander, 822 F.2d 1432, 1435 (6th Cir.1987). The court is not required or permitted, however, to judge the evidence or make findings of fact. Id. at 1435-36. The moving party has the burden of showing conclusively that no genuine issue of material fact exists. Id. at 1435.

A fact is "material" for purposes of summary judgment where proof of that fact would have the effect of establishing or refuting an essential element of the cause of action or a defense advanced by the parties. Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir.1984). In other words, the disputed fact must be one which might affect outcome of the suit under the substantive law controlling the issue. Henson v. National Aeronautics and Space Administration, 14 F.3d 1143, 1148 (6th Cir.1994). A dispute over a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Id. Accordingly, where a reasonable jury could not find that the non-moving party is entitled to a verdict, there is no genuine issue for trial and summary judgment is appropriate. Feliciano v. City of Cleveland, 988 F.2d 649 (6th Cir. 1993).

Once the moving party carries its initial burden of demonstrating that no genuine issues of material fact are in dispute, the burden shifts to the non-moving party to present specific facts to prove that there is a genuine issue for trial. To create a genuine issue of material fact, the non-moving party must present more than just some evidence of a disputed issue. As the United States Supreme Court stated in Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986):

There is no issue for trial unless there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party. If the [non-moving party's] evidence is merely colorable, or is not significantly probative, summary judgment may be granted.

(Citations omitted); see also Celotex, 477 U.S. at 322-23, 106 S.Ct. at 2552-53; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986). Consequently, the non-moving party must do more than raise some doubt as to the existence of a fact; the non-moving party must produce evidence that would be sufficient to require submission of the issue to the jury. Lucas v. Leaseway Multi Transp. Serv., Inc., 738 F.Supp. 214, 217 (E.D.Mich.1990), aff'd, 929 F.2d 701 (6th Cir.1991).

b. Motion To Dismiss

Federal Rule of Civil Procedure 12(b)(6) authorizes the district courts to dismiss any complaint which fails "to state a claim upon which relief can be granted." Rule 12(b)(6) affords a defendant an opportunity to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint is true. In applying the standards under Rule 12(b)(6), the court must presume all well-pleaded factual allegations in the complaint to be true and draw all reasonable inferences from those allegations in favor of the non-moving party. Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir.1993); Miller v. Currie, 50 F.3d 373, 377 (6th Cir. 1995). The court need not, however, accord the presumption of truthfulness to any legal conclusion, opinions or deductions, even if they are couched as factual allegations. Western Mining Council v. Watt, 643 F.2d 618, 629 (9th Cir.1981); Mitchell v. Archibald & Kendall, Inc., 573 F.2d 429, 432 (7th Cir. 1978); Sexton v. Barry, 233 F.2d 220, 223 (6th Cir.1956). Dismissal for failure to state a claim is disfavored:

[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of...