Van Well Nursery, Inc. v. Mony Life Ins. Co.

• Decision Date: 16 March 2006
• Docket Number: No. CV-04-0245-LRS.,CV-04-0245-LRS.
• Citation: 421 F.Supp.2d 1321
• Parties: VAN WELL NURSERY, INC., a Washington Corp., Hilltop Nurseries, LLC, a Michigan limited liability company, Plaintiffs, v. MONY LIFE INSURANCE COMPANY, a New York corporation; A/B Hop Farms, Inc., a Washington corporation; Bennett G. Brulotte and Tracy A. Brulotte, individually and their marital community; Walla Walla Parcel No. 31-07-23-11-00-02 Defendants. Mony Life Ins. Co., a N.Y. corp., Third-Party Plaintiff, National Licensing Assoc., LLC., a Washington limited liability company (f/k/a Nursery Licensing Association, LLC), Third-Party Defendant.
• Court: U.S. District Court — District of Washington

421 F.Supp.2d 1321

VAN WELL NURSERY, INC., a Washington Corp., Hilltop Nurseries, LLC, a Michigan limited liability company, Plaintiffs, v. MONY LIFE INSURANCE COMPANY, a New York corporation; A/B Hop Farms, Inc., a Washington corporation; Bennett G. Brulotte and Tracy A. Brulotte, individually and their marital community; Walla Walla Parcel No. 31-07-23-11-00-02 Defendants Mony Life Ins. Co., a N.Y. corp., Third-Party Plaintiff National Licensing Assoc., LLC., a Washington limited liability company (f/k/a Nursery Licensing Association, LLC), Third-Party Defendant.

No. CV-04-0245-LRS.

United States District Court, E.D. Washington.

March 16, 2006.

COPYRIGHT MATERIAL OMITTED

Scott A. Bruns, Scott Bruns Law Office, Yakima, WA, for Plaintiffs and Third-Party Defendant.

David Tait Hunter, Paul D. Swanson, Lane Powell PC, Seattle, WA, for MONY Life Ins.

Roger William Bailey, Carlson Boyd & Bailey PLLC, Yakima, WA, for A/B Hop Farms and Brulottes.

OPINION AND ORDER ON MONY LIFE'S AND VAN WELL'S MOTIONS FOR SUMMARY JUDGMENT AND HILLTOP NURSERIES' MOTION TO SUBSTITUTE PARTY

SUKO, District Judge.

BEFORE THE COURT ARE: 1) Mony Life's Motion for Summary Judgment (Ct.Rec.65); 2) Van Well Nurseries' Motion for Summary Judgment (Ct. Rec.61) and 3) Hilltop Nurseries' Motion to Substitute Party (Ct.Rec.83). Having considered the parties' arguments and for the reasons stated below, the Court enters the following memorandum and order.

BACKGROUND

This is an action for plant patent and trademark infringement involving live apple trees and the marks used to designate them. In September 2002, third party defendant National Licensing Association ["NLA"] filed an action asserting plant patent and trademark infringement (as well as false designation of origin, counterfeiting, unfair competition, and Washington Consumer Protection Act claims) for United States Patent No. 4,839 Plant Patent ["'839 patent"], entitled "Spur-Type Red Delicious Apple Tree" and trademark Number 1,952,536 for "Scarlet Spur" and Number 1,241,362 for "Smoothee." These claims were dismissed on May 25, 2004 pursuant to a finding by this Court that the NLA did not have standing to assert these claims. Ct. Rec. 54, Cause No. CT-02-5077-LRS. On July 9, 2004, the same claims were refiled in the names of plaintiffs Van Well Nursery, Inc ["Van Well"] and Hilltop Nurseries, LLC. Defendant Mony Life responded with numerous defenses and counterclaims including, but not solely, invalid trademark registration based on both the generic nature of the supposed mark and fraud, abandonment, fair use, and lack of standing. Mony Life has also asserted counterclaims and third party claims against Van Well, Hilltop and NLA for unfair business practices, misuse of the patent and trademark statutes, violations of state and federal antitrust statutes, and violations of the Washington Consumer Protection Act. Mony Life seeks declaratory relief that the trademarks herein are generic, for the Court to cancel the trademarks and to declare this an "exceptional case" for the purpose of awarding attorney fees. The remaining defendants have not answered.

On January 24, 2005, the plant patent claims asserted against Mony Life were dismissed by entry of summary judgment. Mony Life's present motion for summary judgment seeks dismissal of the plaintiffs' remaining claims asserted against it, cancellation of the trademarks, and a finding that the plaintiffs have misused the patent and trademark statutes qualifying this an "exceptional case." Plaintiff Van Well's motion for summary judgment seeks judgment as a matter of law against defendants A/B Hop Farms and the Brulottes on its claims of infringement of the '839 patent. This motion is unopposed. Plaintiff Hilltop Nurseries, LLC also moves this Court to substitute in its stead "Hilltop Fruit Trees, LLC."

I. Hilltop Nurseries' Motion to Substitute Party (Ct.Rec.83)

Plaintiff Hilltop Nurseries moves pursuant to Federal Rule of Civil Procedure 17(a) to substitute in its stead Hilltop Fruit Trees, LLC on the basis that plaintiff believes Hilltop Fruit Trees, LLC is the real party in interest, owning the exclusive license to the Smoothee trademark. Inter-Plant Patent Marketing, Inc. is the "last listed owner" appearing on the Smoothee trademark registration. On June 15, 1995 Inter-Plant entered into a licensing agreement with Hilltop Nurseries, LLC regarding the Smoothee trademark. Plaintiff asserts that "through a regrettable communication error" which was not discovered by plaintiff's attorney until following the close of discovery, this lawsuit was filed in the name of Hilltop Nurseries though that entity had transferred its interest in the Smoothee trademark to Keybank, who had in turn transferred it to a company which became Hilltop Fruit Trees, LLC, prior to the commencement of this action. In the motion, Hilltop Fruit Trees, LLC agrees to bind itself to all previous ruling and motions in this matter, as well as previous discovery, and the outcome of this matter.

Mony Life opposes the motion on the basis it is an improper attempt to correct Article III standing and furthermore that Hilltop Fruit Trees cannot establish standing. However, in light of Hilltop Fruit Trees' agreement to be bound by the rulings and discovery in this case and the Court's ruling on the motion for summary judgment, the Court finds there is no prejudice in substituting Hilltop Fruit Trees at this time. In permitting the substitution, the Court makes no finding as to the effect, validity, or enforceability of the various transfers of interest in the Smoothee mark. The case caption of all future pleadings shall reflect the substitution of Hilltop Fruit Trees, LLC as a plaintiff.

II. MONY LIFE'S MOTION FOR SUMMARY JUDGMENT (CT. REC.65)

A. Undisputed Facts

The Scarlet Spur trademark was registered by Van Well on January 30, 1996. At least as early as April 1981, Van Well began using the term Scarlet Spur in conjunction with live apple trees propagated from the cultivar of red delicious apple tree covered by the '839 patent. The '839 patent expired on May 9, 2000. The trademark for Scarlet Spur expressly disclaims the use of term "Spur" apart from "Scarlet Spur," as trademarked. Van Well claims the use of the term "Scarlet Red Delicious" infringes the "Scarlet Spur" trademark. The commercial fruit industry uses a number of different designations to denote the Scarlet Spur variety of apple tree, including "Scarlet", "Scarlet Red", and "Reds-Scarlet." Other apple varieties also use the term "scarlet" in their nomenclature.

On April 16, 1968, U.S. Plant Patent 2, 803 ('803 patent) was issued for a new variety of Golden Delicious apple tree discovered and propagated by Carl R. Gibson. The patent expired on April 16, 1985. Since as early as 1976, the term "Smoothee" has been used by Hilltop to denominate the Gibson cultivar of Golden Delicious apple tree described in the '803 patent. Mony Life Statement of Facts ["SOF"] ¶ 29. Hilltop Orchards and Nurseries initially applied for placement of "Smoothee" on the Principal Register, but the Patent and Trademark Office ["PTO"] denied this request because the mark was deemed "a variety name for the particular trees rather than a trademark" and "[v]ariety names are not regarded as subject matter for trademark registration." Mony Life SOF ¶ 26, Ex. 40, p. 10. Hilltop Orchards thereafter petitioned for revival of the application, claiming the Smoothee mark "from 1976 and even before", had been consistently "claimed" as a "house brand" and that it had not "dedicated it to the public as a varietal denomination for the particular strain (Gibson) of Golden delicious apple." Mony Life Ex. 40. Hilltop represented to the patent examiner that Hilltop "intends to use the name `Smoothee' as a house brand name to cover a whole group of improved golden delicious apple trees . . ." Mony Life Ex. 40, pg. 18. On June 7, 1983, Hilltop Orchards and Nurseries received the U.S. Trademark registration for "Smoothee."

Defendant Mony Life Insurance is a New York corporation which owns or has owned orchard properties within this judicial district. Answer ¶ 4. Mony Life loaned money to A/B Hop Farms, Inc. in 1991, and subsequently in 1993, 1995, and 1996 (mortgage) and 1998 (mortgages). These loans were secured by properties, improvements and equipment located in Benton, Grant and Walla Walla counties. A/B Hop Farms' loans subsequently went into default, and on or after November 27, 2001, ownership, possession and title to the referenced properties was transferred to Mony Life through Quit Claim Deeds in Lieu of Foreclosure. In conjunction with taking title to the properties, Mony Life hired a management company to maintain the properties until they could be sold. In addition, it entered into a sales agreement with Clark Jennings & Associates to market the properties.

Between 1991 and 2001, Mony Life had a number of appraisals done on all or part of the A/B Hop farms properties to value the assets. In the appraisals, the two relevant apple tree varieties were variously identified or abbreviated as "Scarlet Delicious", "Scar Del", "S Del", "Scarlett Red Delicious", "Scarlet Red Delicious", "Apples (Scarlett)", "Scarlet III early Red Delicious", "Smoothee' early Golden Delicious", "Smoothee Golden", "Smoothie Golden Delicious", and/or "Red Delicious/Scarlet."

In conjunction with their marketing activities, Clark Jennings prepared sale materials for each property describing the properties, their improvements and equipment. Ex. 67, Ex. 75. This lawsuit involves the sales brochure regarding the "Wallula Orchard Property." Complaint at 9. Stephen J. Weber, President of Clark Jennings, has declared he recalls the Wallula Orchard property sales brochure being disseminated to approximately 4-5 persons.¹ Mony Life Ex. 75, ¶ 6 The sales brochure contains "fewer than five" references to "Smoothie" or "Smoothies" and "fewer than eight" references to...