Provident Precious Metals, LLC v. Nw. Territorial Mint, LLC

• Decision Date: 27 July 2015
• Docket Number: No. 3:13–CV–02942–M.,3:13–CV–02942–M.
• Citation: 117 F.Supp.3d 879
• Parties: PROVIDENT PRECIOUS METALS, LLC, Plaintiff, v. NORTHWEST TERRITORIAL MINT, LLC, Defendant.
• Court: U.S. District Court — Northern District of Texas

117 F.Supp.3d 879

PROVIDENT PRECIOUS METALS, LLC, Plaintiff,

v.NORTHWEST TERRITORIAL MINT, LLC, Defendant.

No. 3:13–CV–02942–M.

United States District Court, N.D. Texas, Dallas Division.

Signed July 27, 2015.

Eric W. Buether, Timothy J.H. Craddock, Buether Joe & Carpenter LLC, Dallas, TX, Peter A. Hessler, Wegman Hessler & Vanderburg, Cleveland, OH, Robert W. McIntyre, Wegman Hessler & Vanderburg Co. LPA, Independence, OH, for Plaintiff.

Vincent J. Allen, Brandon Val Zuniga, Theodore G. Baroody, Carterns & Cahoon LLP, Dallas, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

BARBARA M.G. LYNN, District Judge.

Before the Court is Plaintiff's Motion for Summary Judgment [Dkt. No. 72]. For the reasons stated below, the Motion is GRANTED.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Provident Precious Metals, LLC ("Provident") brings this declaratory action against one of its competitors, Defendant Northwest Territorial Mint, LLC ("NWTM"), seeking a declaratory judgment of invalidity and non-infringement of NWTM's alleged copyrights, trademarks, and trade dress rights. Provident and NWTM manufacture precious metals in the shape of famous types of ammunition ("replica bullets"). The following facts detail the process and timeline by which NWTM and Provident conceived, manufactured, and marketed their respective replica bullets. Unless otherwise stated, these facts are undisputed.

I. NWTM Designs and Manufactures Replica Bullets

Both Provident and NWTM are Texas limited liability companies that make and sell novelty and commemorative items, like coins, medals, and replica bullets.¹ In 2008, NWTM first conceived of the idea of using silver bullion to copy famous ammunition into sizes that would easily convert to weights in even troy ounces.² Ross Hansen, who owns and controls NWTM, estimated that a .45 Automatic Colt Pistol (ACP) replica bullet made of silver would weigh approximately one troy ounce.³

To make the replica bullets, NWTM measured sample ammunition with a digital caliper and micrometer, viewed pictures of sample bullets on the Internet, and referenced the Sporting Arms and Ammunition Manufacturers' Institute's (SAAMI's) published industry standards for ammunition dimensions.⁴ NWTM also acquired hundreds of different ammunition rounds, focusing on popular shapes and sizes, and sought to replicate bullets at volumes that approximated even weights, which ultimately led it to first replicate the .45 ACP round.⁵ NWTM altered the dimensions of the original to match the desired bullion weight, but still sought to appeal to a "gun person, or anyone buying bullion."⁶ Although NWTM began by using a "trial and error" system to get the proper weight and dimensions, it ultimately resorted to computer software to make a computer-aided design ("CAD") of the particular bullet, before converting the design into code and uploading it to NWTM's manufacturing machines.⁷

According to NWTM's designer, Michael Shaudis, once the bullet was "machined," it would be weighed, and if it "weigh[ed] right they wouldn't adjust it to meet [the particular dimension]."⁸ In other words, "[i]f the weight [was] right and everything look[ed] right they would ignore the number and go off the weight."⁹ According to NWTM, "the weight dictated the form," although it was "going for looks" as well.¹⁰

NWTM stamped the base of each bullet with a "head stamp" containing certain information, including the product's metal designation (silver, or "Ag"), source (NWTM), weight, and purity.¹¹ The format of the head stamp intentionally resembled the format of head stamps on actual ammunition, and was intended to convey that the replica bullet "has intrinsical [sic] value," similar to money.¹² To make the head stamp, NWTM used a die to imprint a circle, similar to the primer of an actual bullet, and used Tahoma font to inscribe the substance, source, weight, and purity on the head stamp.¹³

NWTM's replica bullets are placed in boxes or plastic bags designed to "evoke the feeling of military surplus ammunition," and to "best present the product to a military customer, to evoke the military design."¹⁴ The NWTM boxes have labels on both the outside and inside of the cover or lid, with the inside label being visible only after a box is opened.¹⁵ The outside label identifies "NWTM" and lists the number of cartridges, the type of ammunition, grain count, weight, substance, and date of inspection.¹⁶

NWTM first offered silver replica bullets for sale in January 2013, and introduced copper

replica bullets two months later.¹⁷ NWTM advertised its replica bullets as being virtually identical to their ammunition counterparts. For example, NWTM stated to prospective customers that it "faithfully duplicates the famed .50 BM so well-known to military personnel and weapon enthusiasts," that its silver 7.62 NATO (.308) is a "near exact, non-firing replica of the round developed in the 1950s as the small arms standard for NATO countries," that its solid silver bullets are "nearly identical to a real .45 cartridge [which] celebrates the cartridges designed by John Browning in 1904 for use in his Colt semi-automatic .45 pistol," and that its 25 troy ounce 20 MM Cannon shell replica is a "solid silver replica of the shell used in cannons."¹⁸

Provident claims NWTM's advertising is significant because NWTM has repeatedly asserted in the course of this litigation that its bullets are not replicas, but rather are "sculptures" that only resemble real ammunition.¹⁹ Provident claims that a visual comparison and dimensional measurements show that there is virtually no variation between both parties' replica bullets and their real ammunition counterparts.²⁰

II. Provident Designs and Manufactures Replica Bullets

Provident claims to have conceived of the idea of making replica bullets and to have developed its manufacturing process independently of NWTM, and that no one at Provident or its affiliated manufacturer, NTR Metals ("NTR"), copied any replica bullets or any other material or process belonging to NWTM.²¹

In early 2013, Provident instructed NTR to get live ammunition and replicate it in copper

.²² NTR machinist Chanphang Phanid followed steps similar to those used by NWTM designer Shaudis.²³ Whether NTR used knowledge of NWTM's process to make Provident's replica bullets is the subject of dispute between NWTM and Provident. As did NWTM, NTR made minor adjustments in its CAD program to obtain the desired weight for Provident's replica bullets.²⁴

Figure 1: Comparison of Bullet Shapes [Dkt. No. 74 at 23]

Provident instructed NTR on how to make a head stamp, asking that it look as similar to live ammunition as possible, and that it include the weight, purity, composition, and "PM," Provident's "mint mark."²⁵ Provident claims that the ordering and orientation of the words on its head stamp are consistent with the usual practice for bullion products, and that Provident has used similar stamping techniques on its other silver and copper

coin and medallion products.²⁶ Phanid, Provident's designer, claims he chose the Tahoma font on the head stamp by simply selecting the font that looked most similar to the lettering on live ammunition.²⁷

Figure 2: Comparison of Head Stamps [Dkt. No. 74 at 31]

Provident's "in-house creative guy," Josh Merrick, designed the packaging for Provident's replica bullets to "look like an ammo box."²⁸ Provident began selling one-ounce copper

replicas of the .45 ACP in May 2013, twenty-one ounce copper.45 ACP replicas in September 2013, two-ounce copper 308 Winchester replicas in October 2013, one-ounce silver .45 ACP replicas in November 2013, five-ounce silver 12 gauge shotgun shell replicas in May 2014, ten-ounce silver .50 BMG replicas and 25–ounce silver 20 MM replicas in December 2014, and 100–ounce silver 30 MM replicas in March 2015.²⁹

Figure 3: Comparison of Packaging [Dkt. No. 74 at 30]

III. NWTM Contacts Provident

Provident claims it first learned about NWTM's replica bullets in the summer of 2013.³⁰ Steve Loftus, an executive of NTR, showed executives at Provident a YouTube video from NWTM's website.³¹

At the meeting, Mr. Loftus allegedly remarked that it "look[ed] easy" to make bullets.³² NWTM argues this to be circumstantial evidence of copying.³³

On July 15, 2013, on behalf of NWTM, Hansen called Provident, and stated that Provident was infringing NWTM's intellectual property rights. A cease-and-desist letter followed, claiming Provident was unlawfully copying NWTM's Silver Bullet Bullion .45 Caliber ACP round, in violation of NWTM's copyright and trademark rights.³⁴

IV. NWTM's Trademark and Copyright Applications

NWTM has filed three trademark applications relating to its replica bullets. On January 16, 2013, NWTM filed an intent-to-use application with the Patent and Trademark Office (PTO) for "SILVER BULLET BULLION," for use in association with "[p]recious metals, namely, gold and silver bullion."³⁵ NWTM disclaimed the term "BULLION" during prosecution of the application, and the mark was published for opposition on June 25, 2013, as to which Provident instituted its opposition to the registration on October 18, 2013.³⁶ The PTO suspended further proceedings on January 13, 2014, pending the outcome of this suit.³⁷

On August 2, 2013, NWTM filed another intent-to-use application for "BULLET BULLION," for use in association with "[p]recious metals, namely gold and silver bullion."³⁸ On September 3, 2013, the PTO issued an office action, refusing to register the applied-for mark under 15 U.S.C. § 1052(e)(1), because the mark "merely describes a characteristic of [NWTM's] goods and/or services."³⁹ On March 3, 2014, NWTM responded to the office action, disclaiming the term "BULLION," electing not to address the likelihood of confusion with prior applications, and disputing the PTO's characterization of the mark as merely descriptive.⁴⁰ On April 14, 2014, the PTO sent NWTM a notice suspending the mark until final disposition of a prior application filed by a person not...