Minnesota Min. & Mfg. Co. v. Rauh Rubber, Inc.
| Decision Date | 11 December 1997 |
| Docket Number | 97-1019MN,Nos. 97-1018M,s. 97-1018M |
| Citation | 130 F.3d 1305 |
| Parties | MINNESOTA MINING & MANUFACTURING COMPANY, Appellant, v. RAUH RUBBER, INC.; Gaia Enterprises, Inc.; James T. Rauh; and James Thomas, Appellees. Minnesota Mining and Manufacturing Company, Appellee, v. Rauh Rubber, Inc.; Gaia Enterprises, Inc.; and James T. Rauh, Appellants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Rita Coyle DeMeules, Minneapolis, MN, argued (Ronald J. Schutz, Mathias W. Samuel, on the brief), for appellant.
Thomas Henry Boyd, St. Paul, MN, argued (Stephen J. Snyder, on the brief), for appellee.
Before RICHARD S. ARNOLD, Chief Judge, LOKEN and HANSEN, Circuit Judges.
In this case, Minnesota Mining & Manufacturing Company ("3M") appeals the District Court's order granting only in part 3M's motion for a preliminary injunction. This litigation involves claims by 3M against Rauh Rubber, Inc., GAIA Enterprises, Inc., James T. Rauh, and James Thomas (the "Rauh defendants"), alleging trademark infringement in violation of the Lanham Trademark Act of 1946, 15 U.S.C. §§ 1114(1) and 1125(a) (1994); trademark dilution in violation of the Lanham Act, 15 U.S.C. § 1125(c); common-law breach of express and implied contract; and deceptive trade practices in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1), and the Minnesota Deceptive Trade Practices Act, Minn.Stat. §§ 325D.43--325D.58 (1997). Rauh Rubber and GAIA Enterprises cross-appeal, arguing that the district judge 1 erred in denying their motion to increase the amount of the bond 3M was required to deposit with the District Court. We now affirm the District Court's holding as to both the appeal and the cross-appeal.
3M is a Delaware corporation based in St. Paul, Minnesota, which manufactures industrial, commercial, residential, and office products. Part of 3M's business involves the manufacture of reflective material, which is done primarily at a facility in Brownwood, Texas. The reflective material is manufactured in large rolls and then is subjected to an extensive quality-control process. Surplus or inadequate reflective material is either sold or discarded in a landfill. Beginning in September 1993, 3M began selling this surplus or inadequate material to Rauh Rubber, Inc., a family-owned Ohio corporation which buys scrap material to resell or recycle it. James Rauh is an officer and 40% shareholder in Rauh Rubber. Rauh and his family own and operate both Rauh Rubber and GAIA Enterprises, Inc., which also buys and then resells or recycles scrap products, and which also bought reflective materials from 3M.
After purchasing these materials from 3M, Rauh Rubber and GAIA began to sell them to 3M's customers at lower prices than 3M was offering for its own reflective material. In September 1994, when 3M learned that Rauh Rubber and GAIA were selling these materials, 3M began negotiating the repurchase of the materials. The negotiations continued through 1995, and were not successful. 3M filed a complaint with the District Court on March 3, 1996, alleging trademark infringement, trademark dilution, breach of contract, and unfair trade practices on the part of the Rauh defendants.
On March 8, 1996, after a hearing, the District Court granted 3M's motion for a temporary restraining order, which prevented the Rauh defendants from selling or disposing of any reflective materials they had purchased from 3M. The Court also required 3M to post a $100,000 bond. The District Court conducted an extensive four-day hearing in May 1996 to consider a motion by 3M for a preliminary injunction and motions by the Rauh defendants to dismiss the complaint for lack of personal jurisdiction and improper venue. At this hearing, both sides presented evidence of the quality of the reflective materials 3M sold to the Rauh defendants and evidence of confusion of the Rauh defendants' customers as to the quality of the materials that Rauh Rubber and GAIA had bought from 3M. On October 17, 1996, the District Court issued an opinion denying most of the Rauh defendants' motion to dismiss and granting in part 3M's motion for a preliminary injunction. 2
In its October 17 order, the District Court held that 3M is unlikely to prevail in a trial on the merits on its claim that an express or an implied contract existed between 3M and the Rauh defendants obligating the Rauh defendants not to resell the reflective material bought from 3M, but instead to grind it up for use in rubber products. 3 The District Court also held that 3M is likely to succeed on its trademark-infringement claims, because it demonstrated that some of the reflective material it sold to the Rauh defendants was not "genuine," and that there was some likelihood of confusion by the Rauh defendants' customers as to the quality of the reflective materials. Next, the Court held that 3M is not likely to prevail in its trademark-dilution claim. Finally, the Court held that 3M is likely to prevail in its state and federal unfair-trade-practices claims against the Rauh defendants. The Court went on to consider any irreparable harm 3M might have faced if the District Court did not issue an injunction, to balance the harms each party might face, and to consider the public interest in issuing an injunction. See Minnesota Mining & Manufacturing Co. v. Rauh Rubber, Inc., 943 F.Supp. 1117 (D.Minn.1996).
Taking these factors into account, the District Court granted in part 3M's motion for a preliminary injunction. In an order dated November 15, 1996, the Court required the Rauh defendants to include the following written disclosure statement on any documents accompanying an offer to sell or deliver the reflective materials they bought from 3M:
Please take notice that this product may not be first-quality goods. This product was purchased by Seller from 3M as rejected, excess and/or scrapped material. Seller is not an authorized 3M dealer and 3M has not authorized the sale of this product. You should do your own inspection or testing to determine whether this product is suitable for your intended use. 3M does not extend any express or implied guarantees, representations, or warranties with respect to this product.
In this order, the Court also denied an earlier motion by the Rauh defendants to increase the bond 3M was required to submit to the Court. This case is now before us on appeal of 3M, which argues that this injunction was insufficient, and that the District Court should have enjoined the Rauh defendants from selling any reflective materials they bought from 3M. The Rauh defendants cross-appeal, arguing that the District Court should have increased the amount of 3M's bond.
In affirming the District Court's order, we emphasize the preliminary nature of our holding. This opinion reflects our view that the District Court's injunction adequately preserves the status quo while protecting the interests of all parties and the public at this stage of the litigation. Any conclusions of law we announce today are tentative, and 3M is not prohibited from pursuing claims raised in its complaint with respect to the Rauh defendants' pre-suit conduct in a trial on the merits.
A district court considering a motion for a preliminary injunction should consider the likelihood that the moving party will prevail on the merits, the threat of irreparable harm to the moving party, the balance between the harm to the moving party and the harm the injunction will cause to other parties, and the public interest. Goff v. Harper, 60 F.3d 518, 520 (8th Cir.1995). The District Court considered these factors in deciding whether to issue an injunction, including the likelihood that 3M would prevail on the merits on its trademark-infringement claim.
In order to prevail on a trademark-infringement claim, a plaintiff must prove a likelihood of consumer confusion, which is the "hallmark of any trademark infringement claim." Polymer Technology Corp. v. Mimran, 37 F.3d 74, 80 (2d Cir.1994). See also Shell Oil Co. v. Commercial Petroleum, Inc., 928 F.2d 104, 107-08 (4th Cir.1991). In determining whether a likelihood of confusion exists, a court should take the following factors into consideration:
1) the strength of the owner's mark; 2) the similarity between the owner's mark and the alleged infringer's mark; 3) the degree to which the products compete...
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