Weems Indus. v. Teknor Apex Co.

• Decision Date: 02 March 2023
• Docket Number: C20-108-LTS
• Parties: WEEMS INDUSTRIES, INC. d/b/a LEGACY MANUFACTURING COMPANY, Plaintiff, v. TEKNOR APEX COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Iowa

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WEEMS INDUSTRIES, INC. d/b/a LEGACY MANUFACTURING COMPANY, Plaintiff,
v.
TEKNOR APEX COMPANY, Defendant.

No. C20-108-LTS

United States District Court, N.D. Iowa, Cedar Rapids Division

March 2, 2023

MEMORANDUM OPINION AND ORDER ON CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT

Leonard T. Strand, Chief Judge

I. INTRODUCTION

This case is before me on cross-motions (Doc. 162, 165) for partial summary judgment by defendant Teknor Apex Company (Teknor) and plaintiff Weems Industries, Inc. (Weems). Weems requested oral argument, but I find it unnecessary. See Local Rule 7(c).

Weems filed its complaint (Doc. 1) on November 13, 2020, and filed an amended complaint (Doc. 21) on February 9, 2021. Weems asserts the following claims:

(1) trademark infringement under the Lanham Act, 15 U.S.C § 1114(1)

(2) common law trademark infringement under the Lanham Act 15 U.S.C. § 1125(a);^[1]

(3) unfair competition under the Lanham Act, 15 U.S.C. § 1125(a)

(4) unfair competition under Iowa common law; and

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(5) unjust enrichment.

Doc. 21. Teknor filed an answer and counterclaim (Doc. 39) on June 1, 2021, asserting nine affirmative defenses and 11 counterclaims.

II. RELEVANT FACTS

Weems is an Iowa corporation that manufactures and sells hose products through its subsidiary, Legacy Manufacturing Company. Many of these hoses are chartreusecolored and Weems asserts it has “maintained substantially exclusive use of the chartreuse color as applied to the body of its water hoses since 2009.” Doc. 166 at 3. Weems first trademarked its use of the color chartreuse in 2010. Doc. 171-3 at 22. Between 2010 and 2017, Weems registered various color-based trademarks related to its hoses. At issue is Registration No. 5,293,921 (the 921 Registration), which the United States Patent and Trademark Office (USPTO) registered in September 2017.

The trademark image is displayed on the registration as follows:

(Image Omitted)

Doc. 171-1 at 162. The registration describes the trademark as follows:

The mark consists of the color Chartreuse as applied to the exterior of the hose body of the goods wherein the color Chartreuse appears on the entire surface of the body of the hose. The color white in the mark is not part of the mark, but is used merely to indicate a functional part of the hose that is not claimed as part of the mark. The dotted outline of the goods is intended to show the position of the mark on the goods and is not part of the mark.

Doc. 171-1 at 162. Weems has termed the color of its hoses “ZillaGreen™” and has adopted the slogan, “If it's not ZillaGreen®, it's not Flexzilla®.” Doc. 39 at 4-5.

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Teknor is a Delaware corporation that also produces and sells various types of hoses. On July 25, 2018, Weems sent Teknor a letter stating:

It has come to our attention that Teknor Apex Company, Inc. may have plans to introduce a new chartreuse or similarly colored water hose into the market.

Please be advised that our client owns United States Trademark Registration No. 5,293,921 covering the color chartreuse as applied to the body of water hose [sic] .... Please know that your failure to confirm the above in a satisfactory manner will be viewed by our client as willful infringement of its trademark.

Doc. 39-1. Teknor subsequently introduced two hoses onto the market. On January 2, 2019, it introduced the NexFlex® hose and on January 9, 2019, it introduced the zero-G® Pro hose, both of which Weems argues are confusingly similar in color to Weems' chartreuse hoses. Doc. 21 at 4; Doc. 39 at 33.

(Image Omitted)

On March 5, 2020, Teknor filed a petition to cancel Weems' 921 Registration. Doc. 3914 at 1.

III. SUMMARY JUDGMENT STANDARDS

Any party may move for summary judgment regarding all or any part of the claims asserted in a case. Fed.R.Civ.P. 56(a). Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with

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affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A material fact is one that “‘might affect the outcome of the suit under the governing law.'” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Thus, “the substantive law will identify which facts are material.” Id. Facts that are “critical” under the substantive law are material, while facts that are “irrelevant or unnecessary” are not. Id.

An issue of material fact is genuine if it has a real basis in the record, Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir. 1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)), or when “‘a reasonable jury could return a verdict for the nonmoving party' on the question.” Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005) (quoting Anderson, 477 U.S. at 248). Evidence that only provides “some metaphysical doubt as to the material facts,” Matsushita, 475 U.S. at 586, or evidence that is “merely colorable” or “not significantly probative,” Anderson, 477 U.S. at 249-50, does not make an issue of material fact genuine.

As such, a genuine issue of material fact requires “sufficient evidence supporting the claimed factual dispute” so as to “require a jury or judge to resolve the parties' differing versions of the truth at trial.” Anderson, 477 U.S. at 248-49. The party moving for entry of summary judgment bears “the initial responsibility of informing the court of the basis for its motion and identifying those portions of the record which show a lack of a genuine issue.” Hartnagel, 953 F.2d at 395 (citing Celotex, 477 U.S. at 323). Once the moving party has met this burden, the nonmoving party must go beyond the pleadings and by depositions, affidavits, or otherwise, designate specific facts showing that there is a genuine issue for trial. Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th Cir. 2005). The nonmovant must show an alleged issue of fact is genuine and material as it relates to the substantive law. If a party fails to make a sufficient showing of an essential element of a claim or defense with respect to which that party has the burden of proof,

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then the opposing party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 322.

In determining if a genuine issue of material fact is present, I must view the evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at 587-88. Further, I must give the nonmoving party the benefit of all reasonable inferences that can be drawn from the facts. Id. However, “because we view the facts in the light most favorable to the nonmoving party, we do not weigh the evidence or attempt to determine the credibility of the witnesses.” Kammueller v. Loomis, Fargo & Co., 383 F.3d 779, 784 (8th Cir. 2004). Instead, “the court's function is to determine whether a dispute about a material fact is genuine.” Quick v. Donaldson Co., Inc., 90 F.3d 1372, 1376-77 (8th Cir. 1996).

IV. ANALYSIS

Neither party seeks summary judgment on the substantive claims in Weems' complaint. Rather, Weems seeks summary judgment on two of Teknor's affirmative defenses and three of its counterclaims.^[2] Doc. 165-1 at 2. The affirmative defenses are:

(1) Fair Use and Non-Trademark Use (Seventh Affirmative Defense)

(2) Abandonment of Trademark Registration (Eighth Affirmative Defense)

The counterclaims are:

(1) Cancellation Based on Abandonment (Counterclaim Count V)

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(2) Cancellation Based on Registration Obtained by Fraud (Counterclaim Count VIII)

(3) Cancellation based on the Creation of an Impermissible Changeable/Phantom Mark (Counterclaim Count X)

Doc. 165-1 at 2.

For its part, Teknor seeks summary judgment on Weems' claims for actual and punitive damages. I will address each motion in turn.

A. Weems' Motion

1. Fair Use and Non-Trademark Use

To assert the “classic” fair use defense,^[3] Teknor must demonstrate it (1) used the trademark as a descriptor and not as a trademark and (2) did so in good faith. See 15 U.S.C. § 1115(b)(4); Kelly-Brown v. Winfrey, 717 F.3d 295, 308 (2d Cir. 2013). The fair use defense is intended to prevent a party from monopolizing the use of a term that has an ordinary, descriptive meaning. KP Permanent Make-Up, Inc, v. Lasting Impression I, Inc., 543 U.S. 111, 121-22 (2004). “The owner's rights in a mark extend only to its significance as an identifying source, not to the original descriptive meanings of a mark, and so where another person uses the words constituting that mark in a purely descriptive sense, this use may qualify as permissible fair use.” Kelly-Brown, 717 F.3d at 308 (cleaned up). Cases addressing the classic fair use defense often involve trademarked words or slogans. Id. (debating fair use of the trademarked phrase “Own Your Power”); see also Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Management, Inc., 618 F.3d 1025 (2010) (debating fair use of the trademarked term “Delicious”).

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Weems argues Teknor has not established its fair use of the trademarked color. Doc. 166 at 11. Teknor argues fair use is not limited to word-based trademarks and “a defendant may raise the fair use defense that it is not using the color as a trademark, but merely in its ornamental or functional sense.” Doc. 173 at 8-9 (citing Shakespeare Co. v. Silstar Corp. of America, Inc., 802 F.Supp. 1386 (D.S.C. 1993)). Weems does not argue that the fair use defense is limited to word marks but, instead, that it is more difficult to show that a trademark is being used descriptively when it is not a word mark. See, e.g., Doc. 166 at 11-12. (“Thus, for most non-word marks, it is not possible for defendants to argue that it is making a ‘descriptive' utilization of a non-word mark. The same is true in the instant case.”) (emphasis...