Stanfield v. Osborne Industries, Inc.

• Decision Date: 23 December 1993
• Docket Number: No. 92-4048-RDR.,92-4048-RDR.
• Citation: 839 F. Supp. 1499
• Parties: Phillip W. STANFIELD, Plaintiff, v. OSBORNE INDUSTRIES, INC., Stanley M. Thibault and Ronald Thibault, Defendants.
• Court: U.S. District Court — District of Kansas

839 F. Supp. 1499

Phillip W. STANFIELD, Plaintiff, v. OSBORNE INDUSTRIES, INC., Stanley M. Thibault and Ronald Thibault, Defendants.

No. 92-4048-RDR.

United States District Court, D. Kansas.

December 23, 1993.

Don W. Noah, Noah & Harrison, P.A., Beloit, KS, Dorsey L. Baker, Lubbock, TX, for plaintiff.

John J. Murphy, James D. Oliver, Foulston & Siefkin, Wichita, KS, for defendants.

MEMORANDUM AND ORDER

ROGERS, District Judge.

Plaintiff brings this action against the defendants alleging two claims under the Lanham Act, 15 U.S.C. § 1051 et seq., and various supplemental common law claims. Plaintiff's claims arise from the defendants' use of "Stanfield" in two trademarks they have registered with the United States Patent and Trademark Office. This matter is presently before the court upon defendant's motion for summary judgment. The court has heard oral argument and is now prepared to rule.

The three counts alleged in plaintiff's complaint are as follows: (1) a claim for unfair competition under 15 U.S.C. § 1125; (2) a claim for fraudulent procurement of a federal trademark registration under 15 U.S.C. § 1120; and (3) claims of trademark infringement, disparagement, slander and misappropriation of plaintiff's name. The defendants' motion for summary judgment is directed at Counts 1 and 2.

In considering the defendants' motion for summary judgment, the court must examine all the evidence in the light most favorable to the plaintiff. Barber v. General Electric Co., 648 F.2d 1272, 1276 n. 1 (10th Cir.1981). Summary judgment is proper only when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Under this rule, the initial burden is on the moving party to show the court "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). The moving party's burden may be met when that party identifies those portions of the record which demonstrate the absence of a genuine issue of material fact. Id. at 323, 106 S.Ct. at 2552.

Once the moving party has met these requirements, the burden shifts to the party resisting the motion. The non-moving party must "make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322, 106 S.Ct. at 2552. The party resisting the motion "may not rest upon the mere allegations or denials of his pleadings ..." to avoid summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The mere existence of a scintilla of evidence will not avoid summary judgment; there must be sufficient evidence on which a jury could reasonably find for the nonmoving party. Id. at 251, 106 S.Ct. at 2511 (quoting Improvement Co. v. Munson, 81 U.S. (14 Wall.) 442, 448, 20 L.Ed. 867 (1872)).

Many of the facts pertinent to this case are not in dispute. In their motion for summary judgment, defendants stated 35 uncontroverted facts. Plaintiff has attempted to controvert only five of these facts.¹ The court will initially provide a summary of the facts that are not in dispute and then discuss facts that remain in dispute as we consider the arguments of the parties.

Plaintiff is 62 years old and lives in Osborne, Kansas. He has an eighth grade education. In 1972, plaintiff developed several products, including a fiberglass heating pad for hogs. On December 6, 1972, he wrote the president of the First State Bank in Osborne with certain ideas he had for manufacturing agricultural products, including the heating pad for hogs. At the top of the letter appeared the words "Stanfield Products." Plaintiff has indicated that he was not in the business of manufacturing these products at the time of the letter, but that he expected to call his business "Stanfield Products" if he went into business. He subsequently presented his ideas to some Osborne businessmen, and defendant Osborne Industries, Inc. (OII) was thereafter created. In March 1973, the organizers of OII contacted defendant Stanley Thibault about becoming involved in a new company that would manufacture agricultural products. On May 15, 1973, OII was incorporated. In September, Stanley Thibault moved to Osborne to head up OII. The only products that OII had to manufacture and sell at the beginning were those that had been developed by plaintiff.

Plaintiff became employed by OII in September 1973. On October 3, 1973, plaintiff entered into a contract with OII in which he agreed to allow OII to manufacture certain products that he had invented, including the hog heating pad, in exchange for a royalty on sales.

In the first year of production of the heating pads, OII made most of the pads for another company, Moorman Manufacturing Company, and affixed that company's name to them. OII also sold heating pads with the name "Stanfield" on them. Plaintiff had no objection to the use of his name on those pads.

In April 1974, defendant Ronald Thibault undertook several projects for OII. He designed a full line of heating pads, changed the material composition of OII's heating pads, and persuaded Moorman to order a large quantity of heating pads from OII for the 1974-75 season. In March 1975, Ronald Thibault began working full time for OII. Ronald Thibault determined that it was time for OII to reduce its dependence on Moorman and develop its own markets, reputation and identity. He concluded that in order to do this, OII needed to develop and consistently use its own trademark. Plaintiff became agitated when he learned of this plan and threatened a walkout of OII employees if the word "Stanfield" was not used in OII's trademark. Ronald Thibault, after discussion with Stanley Thibault, determined that "Stanfield" would be acceptable because "Stan" was the first name of OII's president (Stanley Thibault) and "field" had an agricultural connotation.

Thereafter, in July 1975, plaintiff and OII entered into an agreement designated as a "License Agreement." This agreement provided as follows:

THIS AGREEMENT, made and entered into as of this 5th day of July, 1975, by and between Phillip W. Stanfield, of the County of Osborne, State of Kansas, hereinafter referred to as First Party, and Osborne Industries, Inc., hereinafter referred to as Second Party:

WITNESSETH THAT:

WHEREAS, Second Party is manufacturing certain products of which First Party is the inventor as enumerated in a certain License Agreement by and between said parties dated the 3rd day of October, 1973, and

WHEREAS, Second Party is manufacturing certain products other than invented by First Party, and

WHEREAS, Second Party desires to use the name "Stanfield" on all or part of the products manufactured by Second Party whether or not the same be invented by First Party, as a distinctive mark on said products in conjunction with the name of said products, and

WHEREAS, Second Party desires to use the name "Stanfield" as a distinctive mark on all or part of its products manufactured, at its discretion for a period of Fifteen (15) years from the date of this agreement and that said design of the distinctive mark bearing the name "Stanfield" shall be at the sole discretion of said party of the Second Part as to the design of the same, and

WHEREAS, both parties agree that all products manufactured by Second Party shall bear a distinctive mark and shall bear all marks required by the patent laws pertaining to and in conjunction with a License Agreement between the parties entered into on the 3rd day of October, 1973, and in the event that any of these distinctive marks referring specifically to "Stanfield" products or used in connection with "Stanfield" products shall be registered as a trademark, Second Party will be entitled to use said trademark in connection with the License Agreement dated the 3rd day of October, 1973 by and between the parties and shall use said mark in accordance with the trademark laws.

WHEREAS, in consideration of the use of the name "Stanfield" as above described in this Agreement in regard to any or all products manufactured by Second Party, the sum of $75.00 shall be paid to First Party by Second Party for the use of said name as above described.

This Agreement shall inure to the benefit of and be binding upon the Parties hereto, their respective heirs, legal representatives, successors and assigns.

OII then hired an artist to design trademarks incorporating the word "Stanfield." The artist ultimately developed two marks that OII found acceptable — one involved a printing of the word "Stanfield" to be embossed on OII products, and the other was a circle design that incorporated the word "Stanfield." Plaintiff had no involvement in the design of these marks.

On September 23, 1975, plaintiff resigned from OII due to illness and his dissatisfaction with the way things were being run. In February 1976, plaintiff's application for a patent on his heating pad was rejected. By September 1976, OII was using the word "Stanfield" on certain of its products. OII was also using the word on its labels and other promotional materials. In December 1976, OII stopped paying royalties on the sales of heating pads.

In March 1977, OII applied for registration of its trademarks with the United States Patent and Trademark Office. In its applications, Stanley Thibault stated that to the best of his knowledge and belief no other person had the right to use these marks in commerce. In October 1977, the United States Patent and Trademark Office gave notice of publication of OII's circle design, and on January 24, 1978, the mark was registered on the Principal Register.

Plaintiff filed a lawsuit in state court against OII in February 1977. Plaintiff was represented by the same two attorneys who represent him in this lawsuit. In that action, plaintiff...