AGSouth Genetics LLC et al v. Georgia Farm Services LLC et al

Filing 181

ORDER denying ORAL Motion to Strike ; denying ORAl Motion for Judgment as a Matter of Law; granting ORAL Motion for Judgment as a Matter of Law.Ordered by U.S. District Judge W. Louis Sands on 10/24/2013, nunc pro tunc 10/18/2013. (bcl)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
ALBANY DIVISION
AGSOUTH GENETICS, LLC, et al.,

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Plaintiffs,
v.
GEORGIA FARM SERVICES, LLC, et al.,
Defendants.

CASE NO.: 1:09-CV-186 (WLS)

ORDER
The Court orally ruled on the parties’ pending motions: Defendant’s Oral Motion
to Strike Expert Testimony and the parties’ Oral Motions for Judgments as a Matter of
Law. The Court, as stated, enters this written order to fully state the reasons and basis
of its oral rulings. For the following reasons, Defendant’s Oral Motion for Judgment as
a Matter of Law as to Plaintiffs’ PVPA, trademark infringement, and false designation
claims are DENIED, Plaintiffs’ Oral Motion for Judgment as a Matter of Law as to
Defendant’s liability under the PVPA is DENIED, and Plaintiffs’ Oral Motion for
Judgment as a Matter of Law as to Defendant’s tortious interference counterclaim is
GRANTED. The oral rulings, by reference, are made a part of this written order.
BACKGROUND
On July 23, 2009, Plaintiffs AGSouth Genetics, LLC (“AGSouth”) and University
of Georgia Research Foundation, Inc. (“UGARF”) filed a Complaint against Defendant
Georgia Farm Services, LLC (“GFS”) and others in the Athens Division of this Court,
alleging violations of the Plant Variety Protection Act (“PVPA”) and the Lanham Act.
(Doc. 1.) District Court Judge Clay D. Land granted a Motion to Change Venue on

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December 9, 2009, and transferred the matter to this division. (Doc. 24.) Following
discovery and an unsuccessful Motion for Summary Judgment by Plaintiffs, trial in this
matter began on October 11, 2013. (Docs. 35, 109, 168.)
Among the witnesses tendered by Plaintiffs was Donald Davis, further tendered,
and permitted to testify, as an expert witness. (Doc. 172.) Mr. Davis testified on the
matter of damages under the PVPA. He testified that he had used a formula he authored
to determine a reasonable royalty, purporting to use the factors set out in GeorgiaPacific Corp. v. U.S. Plywood Corp., 243 F. Supp. 500 (S.D.N.Y. 1965). Following this
testimony, Defendant made an oral motion to strike the expert testimony, claiming that
it did not comport with the requirements of Federal Rule of Evidence 702.
Defendant moved for a judgment as a matter of law on Plaintiffs’ PVPA claim
claiming that no evidence had been introduced to suggest that the protected seeds had
been propagated, or that Defendant had the requisite knowledge for damages under the
PVPA. Also, Defendant claimed that the evidence was insufficient to prove willfulness
under the PVPA by clear and convincing evidence. Defendant argued that the expert’s
testimony should be stricken and, without the expert’s testimony, there was no evidence
in the record demonstrating damages.
Defendant moved for judgment as a matter of law on Plaintiffs’ Lanham Act
claims contending there was no evidence that the seeds were part of interstate
commerce or to suggest likelihood of confusion, the marking requirement was not met,
and no evidence of Lanham Act damages had been introduced. Plaintiffs moved for
judgment as a matter of law as to PVPA infringement liability, claiming that counsel for
Defendant’s opening statement and Mr. Wingate’s testimony at trial constituted
admissions of PVPA infringement as to at least 320 bags of AGS 2000. Also, Plaintiffs

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argued that they were entitled to judgment as a matter of law on Defendant’s tortious
interference claim because Plaintiffs’ actions were privileged.
DISCUSSION
I. Motion to Strike Expert Testimony
A. Standard of Review
The Supreme Court made “abundantly clear” in Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579, 589 n.7, 597 (1993), that Federal Rule of Evidence
702 (“Rule 702”) compels a District Court to perform the critical gatekeeping function
concerning the admissibility of expert scientific evidence. Rule 702 requires the same
gatekeeping function for the admissibility of technical expert evidence. Kuhmo Tire Co.
v. Carmichael, 526 U.S. 137, 147 (1999); United States v. Frazier, 387 F.3d 1244, 1260
(11th Cir. 2004).
The District Court’s gatekeeping function “ ‘inherently require[s] the trial court to
conduct an exacting analysis’ of the foundations of expert opinions to ensure they meet
the standards for admissibility under Rule 702.” Frazier, 387 F.3d at 1260 (quoting
McCorvey v. Baxter Healthcare Corp., 298 F.3d 1253, 1257 (11th Cir. 2002)) (emphasis
and alteration in original). Courts in the Eleventh Circuit “engage in a rigorous threepart inquiry” in determining the admissibility of expert testimony under Rule 702. Id.
Trial courts must consider whether:
(1) the expert is qualified to testify competently regarding the matters he
intends to address; (2) the methodology by which the expert reaches his
conclusions is sufficiently reliable as determined by the sort of inquiry
mandated in Daubert; and (3) the testimony assists the trier of fact,
through the application of scientific, technical, or specialized expertise, to
understand that evidence or to determine a fact in issue.
Id. (quoting City of Tuscaloosa v. Harcros. Chems., Inc., 158 F.3d 548, 562 (11th Cir.
1998).

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Regardless of the overlap among the three requirements of qualification,
reliability, and helpfulness, “they remain distinct concepts and the courts must take care
not to conflate them.” Id. Furthermore, “[t]he burden of establishing qualification,
reliability, and helpfulness rests on the proponent of the expert opinion.”

Id.

Ultimately, the reliability inquiry must be tied to the particular facts of the case. Kuhmo
Tire Co., 526 U.S. at 150 (internal citations omitted). Equally important to the gatekeeping function is a determination of whether the proposed testimony is relevant.
Daubert, 509 U.S. at 591. Relevant testimony is that testimony that “logically advances
a material aspect” of a party’s case. Allison v. McGhan Medical Corp., 184 F.3d 1300,
1312 (11th Cir. 1999).
A witness may be qualified as an expert by reason of knowledge, skill, experience,
training, or education. FED. R. EVID. 702. Furthermore, “[d]isputes as to the strength of
[a witness’s] credentials, faults in his use of differential etiology as a methodology, or
lack of textual authority for his opinion, go to the weight, not the admissibility, of his
testimony.” McCurdy v. Ford Motor Co., No. 1:04-CV-155, 2006 WL 2793167, at *4
(M.D. Ga. Sept. 26, 2006) (quoting McCullock v. H.B. Fuller Co., 61 F.3d 1038, 1044 (2d
Cir. 1995)).

“Vigorous cross-examination, presentation of contrary evidence, and

contrary instruction on the burden of proof are the traditional and appropriate means of
attacking [debatable] but admissible evidence.” Maiz v. Virani, 253 F.3d 641, 666 (11th
Cir. 2001).

The Court’s role in addressing a Daubert motion “is not intended to

supplant the adversary system or the role of the jury.” Allison, 184 F.3d at 1311.
B. Analysis
Defendant claims that Mr. Davis’s methodology has not been accepted in the
scientific community, will not assist the trier of fact, and is not the product of reliable

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principles and methods. Defendant argues that Mr. Davis did not link damages to the
infringing acts, misinterpreted the law, and therefore produced an unreliable result.
Mr. Davis is a certified public accountant, licensed by the Arkansas, Kansas, and
Missouri State Boards of Accountancy. (Doc. 93-1 at 28.) He graduated from the
University of Central Arkansas with a Bachelor’s Degree in Business Administration,
with an emphasis in accounting in 1987. (Id. at 29.) He has worked in accounting since
that time, specializing in, among other things, agriculture. (Id.) He has previously
testified in matters involving the PVPA. (Id. at 31.) Based on this background and
experience, the Court finds that Mr. Davis is qualified to testify as an expert as to
damages under the PVPA. See FED. R. EVID. 702.
Mr. Davis claims that he based his reasonable royalty calculation on the fifteen
factors deemed relevant by Georgia-Pacific Corp. v. U.S. Plywood Corp., 243 F. Supp.
500 (S.D.N.Y. 1965), referred to as the Georgia-Pacific factors. Mr. Davis started his
analysis based on a retail value of $18.00 per bag of AGS 2000, and asserts that the
retail value is based on the assumption that the parties are willing to settle disputes that
arise in relation to that price. When there is no such meeting of the minds, Mr. Davis’s
reasoning continues, the reasonable royalty must compensate Plaintiffs for the damages
suffered in connection with the illegal sale, offer for sale, exchange, or conditioning of
AGS 2000. Mr. Davis concludes that, “at minimum Plaintiffs damages, or minimum
royalty is equal to the additional gross value gained illegally as compared to generic
public or lesser value seed,” which is $815.40 per bag. (Doc. 93-1 at 15-16.) Mr. Davis
asserts that this number does not take into consideration the nature of seed which
permits repeated and exponential infringements. (Id. at 16.)

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Mr. Davis arrived at the reasonable royalty of $815.40 by determining the value
of a bag of wheat seed other than AGS 2000 and the value of a bag of AGS 2000, based
on the expected yields of those seeds in the relevant geographical region. The expected
yield of a bag of wheat other than AGS 2000 was determined by Mr. Davis to be, on
average, 59.5 bushels per acre, at one acre per bag. The alleged expected yield of a bag
of AGS 2000 wheat was determined to be an average of 104.8 bushels, which is an
additional 45.3 bushels per acre than that produced by the average wheat seed that is
not AGS 2000.
Defendant argues that this analysis should be excluded from consideration by the
jury because (1) Mr. Davis’ theory has never been accepted by any circuit court, (2) the
theory has never been published, (3) Mr. Davis was denied the opportunity to conduct a
seminar on his theory, and (4) the theory is contrary to controlling law, namely
Georgia-Pacific because the reasonable royalty rate must be based on a hypothetical
negotiation between a willing licensor and licensee. The Court notes that these grounds
are somewhat different from the grounds for exclusion Defendant raised in its earlier
Motion to Exclude Expert Testimony. (Doc. 77 at 6-7.)
First, whether Mr. Davis’ theory has been accepted by another court, published,
or presented goes to whether the theory would be helpful to the jury. FED. R. EVID.
702(a); Daubert, 509 U.S. at 593. When actual damages cannot be proven, the proper
measure of damages is a reasonable royalty. “[A] reasonable royalty is often determined
on the basis of a hypothetical negotiation, occurring between the parties at the time the
infringement began.” Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1312 (Fed.
Cir. 2011) (citing Wang Labs, Inc. v. Toshiba Corp., 993 F.2d 858, 869 (Fed. Cir. 1993)).
At minimum, to be admissible under Daubert, an expert’s reasonable royalty calculation

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under the PVPA must “tie a reasonable royalty base to the facts of the case at issue.” Id.
at 1315; see Daubert, 509 U.S. at 591. The Georgia-Pacific factors have been accepted
as “valid and important factors in the determination of a reasonable royalty rate.”
Uniloc, 632 F.3d at 1317-18.
Mr. Davis’ theory uses the Georgia-Pacific factors. Although he may have put
heavier weight on some factors in relation to the weight he assigned other factors, such
does not necessarily render his opinion inadmissible. As this Court has previously held,
“the objections Defendant[] raise[s] to Davis’ testimony on the issue of damages are in
essence matters for cross-examination and do not present a basis to exclude the
testimony.” (Doc. 110 at 4.) The Court concludes, as it has previously, Mr. Davis’s
testimony is admissible under Daubert because it relies primarily on the GeorgiaPacific factors, which has been deemed an acceptable methodology by the Federal
Circuit. (Id. at 5.) Davis’ application of those factors is not so extreme and so without
logic as to render his opinion violative of Daubert and Rule 702. However, it remains
subject to attack by cross-examination.
The Court notes that the analysis is not particularly complicated, and therefore is
not likely to confuse the jury. The expert testimony will help, from Plaintiffs’ view, to
explain “matters that are beyond the understanding of the average lay person,” as the
average person is not likely to be aware of the issues evaluated in Mr. Davis’s report.
United States v. Henderson, 409 F.3d 1293, 1304 (11th Cir. 2005). The testimony’s
probative value is not “substantially outweighed by its potential to confuse or mislead
the jury.” United States v. Frazier, 387 F.3d 1244, 1263 (11th Cir. 2004). The jury is
fully capable of understanding the theory and weighing and including it with all the
other evidence, and Defendant has the opportunity to subject it to a thorough and sifting

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cross-examination. The witness’s testimony could assist the jury in understanding the
different Georgia-Pacific factors, how they relate and interplay in determining a
reasonable royalty. Accordingly, Defendant’s Oral Motion to Strike Expert Testimony is
DENIED.
II. Judgment as a Matter of Law
A. Standard of Review
Judgment as a matter of law may be entered against a party “when a party has
been fully heard on an issue and there is no legally sufficient evidentiary basis for a
reasonable jury to find for that party on that issue.” Reeves v. Sanderson Plumbing
Prods., Inc., 530 U.S. 113, 149 (2000) (internal citation omitted). The standard for
granting a motion for judgment as a matter of law echoes that for summary judgment.
See id. at 151. Thus, a motion for judgment as a matter of law may be granted based
upon the evidence in the record, which shows that there is “no genuine issue as to any
material fact and that the moving party is entitled to [judgment as a matter of law].”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). An issue is “ ‘genuine’ if the record
taken as a whole could lead a rational trier of fact to find for the nonmoving party.”
Allen v. Tyson Foods, 121 F.3d 642, 646 (11th Cir. 1997) (citations omitted). A fact is
“material” if it hinges on the substantive law at issue and it might affect the outcome of
the nonmoving party’s claim. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986); see
also Allen, 121 F.3d at 646. Judgment as a matter of law is appropriate when the
“nonmoving party has failed to make a sufficient showing on an essential element of
[its] case with respect to which [it] has the burden of proof.” See Celetox, 477 U.S. at
323.

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To avoid judgment as a matter of law, the nonmoving party must “put forth more
than a mere scintilla of evidence suggesting that reasonable minds could reach differing
verdicts.” Abel v. Dubberly, 210 F.3d 1334, 1337 (11th Cir. 2000). “[I]f reasonable and
fair-minded persons in the exercise of impartial judgment might reach different
conclusions,” judgment as a matter of law will be denied. Id. (internal citation omitted).
On a motion for judgment as a matter of law, the Court must view all the evidence and
all factual inferences drawn therefrom in the light most favorable to the nonmoving
party and determine whether that evidence could reasonably sustain a jury verdict. See
Celotex, 477 U.S. at 322-23.
B. Analysis
i.

Plaintiffs’ claim under 7 U.S.C. § 25411

Plaintiffs claim they have raised a jury question as to whether Defendant has
violated 7 U.S.C. § 2541(a)(1), (a)(6), (a)(8), and (a)(10), whether Defendant did so
willfully thus entitling Plaintiffs to enhanced damages, and PVPA damages. Defendant
claims it is entitled to judgment as a matter of law because (1) no evidence has been
introduced to demonstrate it had the notice required by 7 U.S.C. § 2567, (2) no evidence
has been introduced to suggest any of the seeds were propagated, (3) no evidence has
been introduced to demonstrate the recklessness required for a showing of willfulness,
and, (4) without benefit of the expert opinion, the jury has no evidence upon which it
may base a damages finding with the requisite certainty. Because the Court has ruled
that the expert opinion is admissible, only the first three grounds of contention will be
considered.
The United States Court of Appeals for the Federal Circuit has exclusive jurisdiction over appeals under
the PVPA, and its precedent therefore controls for all substantive purposes. 7 U.S.C. § 2461; Delta & Pine
Land Co. v. Sinkers Corp., 177 F.3d 1343, 1350 (Fed. Cir. 1999).

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To get its claims under 7 U.S.C. § 2541 to the jury on the issue of infringement,
Plaintiffs must demonstrate that Defendant
without authority … in the United States, or in commerce which can be
regulated by Congress or affecting such commerce, prior to expiration of
the right to plant variety protection but after either the issue of the
certificate or the distribution of a protected plant variety with the notice
under [7 U.S.C. § 2567] (1) s[old] or market[ed] the protected variety, or
offer[ed] it or expose[ed] it for sale, deliver[ed] it, ship[ped] it, consign[ed]
it, exchange[d] it, or solicit[ed] an offer to buy it, or [otherwise
transferred] title or possession of it; (6) dispense[d] the variety to another,
in a form which can be propagated without notice as to being a protected
variety under which it was received; (8) stock[ed] the variety for [either of
these purposes]; or (10) instigate[d] or actively induce[d] performance of
any of the foregoing acts.”
7 U.S.C. 2541(a)(1), (a)(6), (a)(8) & (a)(10).
At trial, Plaintiffs introduced evidence that would support a finding that
Defendant’s employees loaded bags of AGS 2000 wheat, marked as such, into trucks
owned by Defendant, which were parked on land owned by Defendant. The evidence
also supports a finding that Defendant sold, transported, dispensed, and stocked AGS
2000.

William Douglas Wingate, representative for Defendant, admitted that his

company transported bags of AGS 2000 to Terrell Peanut Company on behalf of Edward
Parker. Although Defendant claims that such actions were at the direction of a third
party, such a fact does not serve as a defense to PVPA infringement.
The Court notes that Plaintiffs are not entitled to judgment as a matter of law as
to PVPA liability. “When a party testifying at trial or during a deposition admits a fact
which is adverse to his claim or defense, it is generally preferable to treat that testimony
as solely an evidentiary admission.” Keller v. United States, 58 F.3d 1194, 1199 n.8 (7th
Cir. 1995) (citation omitted). Statements made during the course of a trial are not
judicial admissions because they are not contained in pleadings, a stipulation, or a

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response to a request for admission. See Carl E. Woodward, LLC v. Acceptance Indem.
Co., No. 1:09-cv-781-LR-RHW, 2011 WL 98404, at *4 (S.D. Miss. Jan. 12, 2011).
For an infringer to be held liable for damages, the infringing bags must have been
labeled as a protected variety, or the infringer must have had “actual notice or
knowledge that propagation is prohibited or that the variety is a protected variety.” 7
U.S.C. § 2567.

Plaintiffs have introduced evidence that the bags were marked as

protected and that Mr. Wingate at least intimated to an investigator that the AGS 2000
Defendant was selling was certified. This evidence is sufficient for a jury to infer that
Defendant, at the relevant time, had actual knowledge that the variety was protected.
Neither actual propagation nor intent to propagate is required for violation of the
PVPA. See generally 7 U.S.C. § 2541. The first line of an opinion that interpreted the
version of the PVPA before the 1994 amendments noted that the PVPA “protects owners
of novel seed varieties against unauthorized sales of their seed for replanting purposes.”
Asgrow Seed Co. v. Winterboer, 513 U.S. 179, 181 (1995). That case, however, involved
a discussion of an exception, removed in the 1994 amendments, which permitted
farmer-to-farmer transactions involving saved seeds. See also Delta & Pine Land Co. v.
Sinkers Corp., 177 F.3d 1343, 1347 (Fed. Cir. 1999); AGSouth Genetics, LLC v.
Cunningham, No. CA 09-745-C, 2011 WL 1833016, at *3 (S.D. Ala. May 13, 2011). The
Court will not read an additional requirement into the plain language of 7 U.S.C. § 2541
based on dicta from a case based on a previous version of that statute.
The Court also finds that sufficient evidence has been introduced to support a
jury finding as to willfulness. A finding of willfulness is necessary to enhance statutory
damages under the PVPA. See In re Seagate Technology, LLC, 497 F.3d 1360, 1370
(Fed. Cir. 2007). To make such a showing, Plaintiffs must demonstrate by clear and

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convincing evidence that Defendant “acted despite an objectively high likelihood that its
actions constitute infringement of a valid [PVPA certificate].” Id. at 1371. In addition,
this objective risk must have been “known or so obvious that it should have been
known” by Defendant. Id. The Court finds that Plaintiffs have introduced sufficient
evidence to raise a jury question as to recklessness.

As mentioned above, the

investigator recorded Mr. Wingate’s intimation that the AGS 2000 wheat seed
Defendant was selling was certified. He further explained that the AGSouth wheat seed
was some of the best on the market. Also, testimony was introduced that informational
booklets outlining the protected nature of AGS 2000 were found in Mr. Wingate’s
possession on Defendant’s premises.

These circumstances sufficiently evidence

Defendant’s knowledge that a license was necessary for the lawful dispensation of AGS
2000, and doing so without such a license was attended by a high likelihood of
infringing on the licensor’s rights to create a question of fact for the jury on the question
of willfulness.
Based on the foregoing, the Court finds that Plaintiffs have introduced sufficient
evidence to raise a jury question as to infringement, willfulness, and damages under the
PVPA, but the evidence is not such as to entitle Plaintiffs to judgment as a matter of law
as to PVPA liability. To do so, the Court would be required to make impermissible
credibility determinations. Accordingly, Defendant’s Oral Motion for Judgment as a
Matter of Law as to Plaintiffs’ PVPA claim and Plaintiffs’ Oral Motion for Judgment as a
Matter of Law as to Defendant’s PVPA liability are DENIED.
ii.

Plaintiff AGSouth’s claim under 15 U.S.C. § 1114

Plaintiff AGSouth claims it has produced sufficient evidence to raise a jury
question as to whether Defendant has violated the trademark infringement provision of

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the Lanham Act, 15 U.S.C. § 1114. Defendant claims that there is no evidence to support
a finding that its use of the mark caused a likelihood of confusion, and no evidence
supports a finding that the marking requirement of 15 U.S.C. § 1111 was met. 15 U.S.C. §
1114 provides in pertinent part:
(1) Any person who shall, without the consent of the registrant—
(a)
use in commerce any reproduction, counterfeit, copy, or colorable
imitation of a registered mark in connection with the sale, offering for
sale, distribution, or advertising of any goods of services on or in
connection with which such use is likely to cause confusion, or to cause
mistake, or to deceive … shall be liable in a civil action by the registrant.
15 U.S.C. § 1114.
To succeed on this claim, Plaintiff AGSouth must prove that (1) it had trademark
rights in the mark or name at issue, and (2) Defendant adopted a mark or name that was
the same, or confusingly similar to its mark, such that consumers were likely to confuse
the two. Suntree Technologies, Inc. v. Ecosence Int’l, Inc., 693 F.3d 1338, 1346 (11th
Cir. 2012) (citing Tana v. Dantanna’s, 611 F.3d 767, 772-73 (11th Cir. 2010)). Typically,
“the outcome turns on the likelihood of confusion among prospective customers.”
Communications Satellite Corp. v. Comcet, Inc., 429 F.2d 1245, 1252 (4th Cir. 1970).
Factors relevant to this determination are distinctiveness of the mark, similarity of the
two marks, similarity of the goods or services that the marks purport to identify, the
defendant’s intent in adopting the same or similar mark, and actual confusion. See Sara
Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 463 (4th Cir. 1996). Where the parties are
not competitors, “the issue of infringement hinges on the likelihood of confusion about
the source or sponsorship of the defendant’s goods and services.” Communications
Satellite, 429 F.2d at 1252. (citations omitted).

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Plaintiff AGSouth complains that wheat seed was sold in bags bearing the name
AGS 2000, but the seed contained therein did not meet the quality standards of licensed
and controlled AGS 2000.

In support of this contention, Plaintiff has introduced

evidence that testing of bags of seeds marked AGS 2000 obtained by an investigator
revealed that not all seeds in the bags so marked were AGS 2000. Where products are
sold under a particular mark, but the products are not consistent with the quality
demanded by the entity with the rights to the mark, liability may lie for Lanham Act
trademark infringement. See, e.g., Mary Kay Inc. v. Ayres, 827 F. Supp. 2d 584, 590
(D.S.C. 2011). Thus, Plaintiff argues, infringement has been demonstrated.
The Court finds that the evidence, in a light most favorable to Plaintiff AGSouth,
supports a jury finding that a consumer could be confused and attribute the lower
quality seeds contained in the bags of wheat seed sold by Defendant marked AGS 2000
to Plaintiff. “The role of a trademark is its assurance of quality, and its value depends on
the consistent quality of the product that bears the mark.” Nitro Leisure Prods., LLC v.
Acushnet Co., 341 F.3d 1356, 1369-70 (Fed. Cir. 2003). Plaintiff AGSouth held the
rights to AGS 2000, and Mr. Clements testified that customers who bought and
conducted testing on those seeds would find that the bags did not in fact contain only
AGS 2000 seeds. This testimony is corroborated by laboratory testing of the contents of
the bags labeled AGS 2000 in Defendant’s possession. Selling bags of seed marked AGS
2000 containing a mixture consisting of seeds that are not AGS 2000 could certainly
cause consumer confusion, and cause those consumers to attribute the lower quality to
Plaintiff AGSouth.

Although no actual confusion has been demonstrated, actual

confusion is only one factor in the determination of the likelihood of confusion.

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Furthermore, the Court finds that the marking requirement has been met. 15
U.S.C. § 1111 requires that notice be given that the mark was registered with the United
States Patent and Trademark Office by, among other means, “displaying with the mark
… the letter R enclosed within a circle.” Defendant claims that this requirement was not
met because “the letter R enclosed within a circle” was not directly adjacent to the mark
“AGS.” The Court rejects Defendant’s assertion that the placement of the “®” was
improper and ineffective under 15 U.S.C. § 1111. The purpose of that provision is to
ensure any infringer had notice that the mark was a registered trademark before holding
such person liable for infringement. See Admiral Corp. v. Sewing Mach. Sales Corp.,
156 F. Supp. 796, 798 (S.D.N.Y. 1957). The “®” was placed in such a manner on the bag
containing AGS 2000 that any observer would be placed on sufficient notice of the
protected status of the mark. Additionally, for the reasons stated above, sufficient
evidence supports a finding that Defendant had actual knowledge of Plaintiff AGSouth’s
trademark.
Accordingly, Defendant’s Oral Motion for Judgment as a Matter of Law as to
Plaintiff AGSouth’s Trademark Infringement Claim is DENIED.
iii.

Plaintiff AGSouth’s claim under 15 U.S.C. § 1125

Plaintiff AGSouth claims that it has introduced sufficient evidence to raise a jury
question as to whether Defendant is liable for false designation of origin under the
Lanham Act, 15 U.S.C. § 1125.2 That provision provides, in pertinent part:

2 Trademark infringement under 15 U.S.C. § 1114 permits recovery for infringement of a registered
trademark. False designation of origin under 15 U.S.C. § 1125 permits recovery for improper use of
registered and unregistered trademarks. See 1-800 Contacts, Inc. v. Lens.com, Inc., 722 F.3d 1229, 1237
(10th Cir. 2013).

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(a) Civil Action
(1) Any person who, on or in connection with any goods or services, or any
container for goods, uses in commerce any word, term, name, symbol, or
device, or any combination thereof, or any false designation of fact which—
(A) is likely to cause confusion, or to cause mistake, or to deceive as to
the affiliation, connection, or association of such person with another
person, or as to the origin, sponsorship, or approval of his or her goods,
services, or commercial activities by another person.
15 U.S.C. § 1125(a)(1)(A).
Plaintiffs claim that Defendant is liable for false designation of origin because
some of the bags containing AGS 2000 were labeled “E & I Diversified Farm Service.”
In essence, Plaintiffs are claiming that Defendant wrongfully misrepresented Plaintiffs’
goods as goods originating from someone other than Plaintiffs. This fits closest to a
theory of false designation of origin referred to as “reverse palming off.” See Dastar v.
Twentieth Century Fox Film Corp., 539 U.S. 23, 28 n.1 (2003). To prove such a claim,
Plaintiffs must prove that (1) the product at issue originated with Plaintiffs, (2) origin of
the product was falsely designated by the Defendant, (3) the false designation of origin
was likely to cause consumer confusion, and (4) Plaintiffs were harmed by Defendant’s
false designation of origin. Syngenta Seeds, Inc. v. Delta Cotton Co-op, Inc., 457 F.3d
1269, 1277 (Fed. Cir. 2006) (citing Lipton v. Nature Co., 71 F.3d 464, 473 (2d Cir.
1995)).
Plaintiff AGSouth does not allege that the origin of the product was falsely
designated by Defendant. Instead, Plaintiff claims that the work was falsely designated
by E & I Diversified Farm Service. If the bags of seed had been labeled “Georgia Farm
Services AGS 2000,” Plaintiff would have clearly asserted a valid false designation of
origin claim. See Syngenta Seeds, 457 F.3d at 1278. As the evidence does not support

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this finding, the question for the Court is essentially whether Defendant’s act of selling
the bags labeled E & I Diversified Farm Service is sufficient to create a jury question on
Plaintiff’s false designation of origin claim. The Court finds that the plain language of 7
U.S.C. § 1125(a)(1)(A) supports an affirmative answer to this question. See Lorillard
Tobacco Co. v. Ahmad’s Pizza, Inc., 866 F. Supp. 2d 872, 878 (N.D. Ohio 2012).
Additionally, the Court notes that sufficient evidence supports a finding of
likelihood of confusion and that the marking requirement has been met for the reasons
stated above. Accordingly, Defendant’s Oral Motion for Judgment as a Matter of Law as
to Plaintiffs’ false designations claim is DENIED.
iv.

Defendant’s tortious interference claim

Defendant argues that it has made a claim for tortious interference with business
relations by providing at least some evidence that Plaintiffs refused to settle the case on
fair and reasonable terms and refused to grant Defendant licenses for other varieties of
seeds in an effort to extract a high settlement from Defendant in the instant matter.
Plaintiffs claim they are entitled to judgment as a matter of law as to Defendant’s
tortious interference counterclaim.
To make out a claim for tortious interference under Georgia law, counterclaimant
GFS must introduce sufficient evidence to raise a jury question that (1) AGSouth and/or
UGARF acted improperly and without privilege, (2) purposely and with malice with the
intent to injure, (3) induced a third party or parties not to enter into or continue a
business relationship with GFS, (4) for which GFS suffered some financial injury.
Walker v. Gowen Stores LLC, 322 Ga. App. 376, 376 (2013) (citing Integrated Micro
Sys. Mfg. v. Rule Indus., 264 Ga. 295 (1994)). “The malice element of the cause of
action ‘is broadly construed to encompass any unauthorized interference or any

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interference without legal justification or excuse.’ ”

Id. (citations omitted).

“It is

generally held that no liability for [intentional interference with business relations]
exists where the breach is caused by the exercise of an absolute right—that is, an act
which a [person] has a definite legal right to do without any qualification.” Russell
Corp. v. BancBoston Financial Co., 209 Ga. App. 660, 663 (1993) (citing Schaeffer v.
King, 223 Ga. 468 (1967)).
Article I, Section 8, Clause 8 of the United States Constitution empowers
Congress “[t]o promote the Progress of Science and useful Arts, by securing for limited
Times to Authors and Inventors the exclusive Right to their respective Writings and
Discoveries.”

The foundation of intellectual property rights is the right to exclude

others. See Patlex Corp. v. Mossinghoff, 758 F.2d 594, 599 (Fed. Cir. 1985). “A
trademark owner has the absolute right to prevent others from affixing the mark with
neither license nor quality control by the trademark owner.” Nitro Leisure Prods., LLC
v. Acushnet Co., 341 F.3d 1356, 1369-70 (Fed. Cir. 2003). As the trademark holder,
AGSouth had the absolute right to refuse to grant GFS intellectual property licenses.
Whether AGSouth harbored ill motives in making this determination is irrelevant.
The Court notes that Defendant asserted that it is not complaining that the
licenses were not issued to it, but rather that Plaintiffs refused to settle the case. The
Court disagrees with this characterization of the facts. Defendant complains that its
business relationships were harmed because it was unable to sell popular peanut
varieties since Plaintiffs refused to grant licenses to Defendant for those varieties.
Plaintiffs’ reason for doing so may have been related to their refusal to settle the case.
But the crux of the harm to Defendant arises from Plaintiffs’ refusal to grant it licenses.
Refusal to settle alone did not interfere with Defendant’s business relationships. Even if

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the harm emanated from Plaintiffs’ refusal to settle, such a decision was Plaintiffs to
make, without qualification or reason.
Furthermore, Defendant introduced no particularized evidence of the business
relationships that were harmed by Plaintiffs’ actions. Without such evidence, Plaintiffs
are entitled to judgment as a matter of law. See Am. S. Ins. Group, Inc. v. Goldstein, 291
Ga. App. 1, 12 (2008). To the extent the exercise of a right could ever possibly be the
basis of an action for tortious interference, Defendant has failed to present such facts.
Accordingly, Plaintiffs’ Oral Motion for Judgment as a Matter of Law is GRANTED.
CONCLUSION
Defendant’s Oral Motion for Judgment as a Matter of Law as to Plaintiffs’ PVPA,
trademark infringement, and false designation of origin claims are DENIED, Plaintiffs’
Oral Motion for Judgment as a Matter of Law as to Defendant’s PVPA liability is
DENIED, and Plaintiffs’ Oral Motion for Judgment as a Matter of Law as to
Defendant’s tortious interference counterclaim is GRANTED.
SO ORDERED, this

24th

day of October, 2013, Nunc pro tunc October 18,

2013.
/s/ W. Louis Sands
THE HONORABLE W. LOUIS SANDS,
UNITED STATES DISTRICT COURT

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