Southern Illinois Storm Shelters, Inc. v. 4semo.com, Inc.
Filing
150
ORDER GRANTING 111 MOTION for Summary Judgment filed by 4semo.com, Inc. as to Counts 1 and 2 of Plaintiff's amended complaint. Further, the Court DENIES as moot plaintiff's motion to dismiss Counts 1 and 2 of the amended com plaint. The Court DIRECTS the Clerk of the Court to enter judgment in favor of defendant and against plaintiff on Counts 1 and 2 of plaintiff's amended complaint at the close of the case. See Order for details. (Final Pretrial Conference set for 2/10/2016 01:30 PM in East St. Louis Courthouse before Judge David R. Herndon.) Signed by Judge David R. Herndon on 8/26/15. (klh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
SOUTHERN ILLINOIS STORM
SHELTERS, INC.,
Plaintiff/Counterclaim Defendant,
v.
No. 13-0297-DRH
4SEMO.COM, INC.,
Defendant/Counterclaimant,
v.
INGOLDSBY EXCAVATING, INC. and
BOB INGOLDSBY,
Additional Counterclaim Defendants.
MEMORANDUM and ORDER
HERNDON, District Judge:
Introduction and Background 1
Now before the Court is defendant/counterclaimant 4SEMO.com, Inc.’s
motion to for summary judgment (Doc. 111) and Southern Illinois Storm Shelters,
Inc.’s motion to dismiss pursuant to Rule 41(a)(2) (Doc. 128). 2 Based on the
pleadings and the applicable law, the Court GRANTS the motion for summary
1 A brief recitation of the litigation history is necessary.
2 As the parties are aware, the Court is addressing only the arguments as to Counts 1 and 2 of the
amended complaint. On August 11, 2015, the Court adopted the Report and Recommendation
(Doc. 147), granted the motion to dismiss with prejudice pursuant to Rule 42(a)(2) as to Counts 3
through 7 of the amended complaint, and deferred ruling on the motion to dismiss as to Counts 1
and 2 of the amended complaint (Doc. 149).
Page 1 of 22
judgment as to Counts 1 and 2 of the amended complaint and DENIES as moot the
motion to dismiss pursuant to Rule 42(a)(2) as to Counts 1 and 2 of the amended
complaint.
On July 2, 2013, plaintiff, Southern Illinois Storm Shelters, Inc., filed an
amended
complaint
for
trademark
infringement,
unfair
competition,
cybersquatting, deceptive trade practices and intentional tortious interference with
contractual relations against 4SEMO.com, Inc. (Doc. 34).
The amended
complaint contains seven counts: Count I – Federal Unfair Competition Violation of
Section 43(a) of the Lanham Act; Count II – Federal Trademark Infringement
Violation of Section 43(a) of the Lanham Act; Count III – Cybersquatting in
Violation of the Anti-Cybersquatting Consumer Protection Act; Count IV – Violation
of the Illinois Uniform Deceptive Trade Practices Act; Count V – Violation of Illinois
Trademark Registration and Protection Act and Common Law; Count VI – Violation
of the Common Law of Unfair Competition and Count VII - Common Law
Intentional Tortious Interference with Contractual Relations.
Plaintiff is in the
business of designing, manufacturing and selling fiberglass storm shelters and
above ground metal safe rooms. Defendant is in the business of providing general
contracting work and is also a dealer of storm shelters. The amended complaint
alleges that, despite knowledge of plaintiff’s extensive use and substantial common
law rights in the marks “Southern Illinois Storm Shelters” and “Lifesaver Storm
Shelters,” defendant has attempted to register and use confusingly similar or
identical terms and domain names in connection with similar services in
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competition with plaintiff and in violation of plaintiff’s intellectual property rights.
Plaintiff’s lawsuit stems from defendant’s alleged infringement of the marks
through defendant’s website, related advertisements and on products not
manufactured by the plaintiff and defendant’s purchase of domain names identical
or related to the marks.
On October 28, 2013, defendant filed an amended counterclaim against
plaintiff and Ingoldsby Excavating, Inc. (Doc. 55).
The amended counterclaim
contains twelve counts: Count I - Trademark Infringement; Count II – Trademark
Dilution; Count III – Violation of the Lanham Act, 15 U.S.C. § 1225, et seq., For
False Advertising, False Endorsement, and/or Unfair Competition; Count IV –
Common Law Unfair Competition; Count V – Violation of Illinois Uniform
Deceptive Trade Practices Act; Count VI – Violation of Illinois State Trademark
Registration and Protection Act/Common Law Trademark Infringement; Count VII
– Misappropriation of Time and Investment; Count VIII – Breach of Contract; Count
IX – Unjust Enrichment; Count X – Civil Conspiracy; Count XI – Fraud and Count
XII – Cybersquatting in Violation of the Anti-Cybersquatting Consumer Protection
Act. 4SEMO.com alleges that it conceived, created and developed the LifeSaver
Storm Shelters mark at its own cost and on its own initiative to indicate the retail
source of the shelters it sold and installed.
4SEMO.com also alleges that plaintiff,
as a supplier to 4SEMO.com, learned of 4SEMO.com’s marks from 4SEMO.com
and eventually asked 4SEMO.com if it could use the 4SEMO.com marks in
Southern Illinois and 4SEMO.com agreed to that limited use.
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4SEMO.com also
alleges that plaintiff and Ingoldsby Excavating moved beyond the approved use and
that plaintiff had started using the marks when selling to their other dealers and
had purported to license their other dealers to the marks.
On February 22, 2014, the Court denied 4SEMO.com’s motion to dismiss
(Doc. 68). After that time, discovery in this matter slowly progressed and the
Court extended the discovery and scheduling deadlines on April 10, 2014 (Doc.
74).
On June 6, 2014, 4SEMO.com, with consent, filed a second amended
complaint adding Bob Ingoldsby as a counter defendant (Doc. 78). Subsequently,
the Court granted another motion for extension of time and extended the
scheduling and discovery deadlines another 90 days (Doc. 83).
Thereafter,
Magistrate Judge Williams granted another extension of time to complete discovery
and again extended the discovery deadlines (Doc. 95).
On January 5, 2015, 4SEMO.com filed a motion to strike Southern Illinois
Storm Shelter’s claims for monetary damages (Doc. 103) and on January 21, 2015,
4SEMO.com filed the pending motion for summary judgment (Docs. 111, 112, and
113). On February 20, 2015, the Court granted the motion to strike and struck
Southern Illinois Storm Shelter’s claims for monetary damages finding that
plaintiff as to the trademark claims voluntarily abandoned the monetary damages
and finding as to the tortious interference claims that Southern Illinois failed to
disclose any damages as required by Federal Rule of Civil Procedure 26 (Doc. 123).
Six days later, Southern Illinois Storm Shelters filed a motion to dismiss pursuant
to 41(a)(2) (Doc. 128). In that motion, plaintiff proposed certain conditions as to
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the dismissal with prejudice of its amended complaint: (1) to dismiss with
prejudice and without condition Counts 3 through 7 of the amended complaint; (2)
to dismiss with prejudice, but with certain conditions Counts 1 and 2 of the
amended complaint; and (3) in the alternative, to dismiss without prejudice Counts
1 and 2 of the amended complaint if the Court is unwilling to impose the requested
conditions to the dismissal with prejudice. 4SEMO.com filed an opposition to the
motion as to the conditions as to Counts 1 and 2 (Doc. 139). 3
In an effort to streamline the pending issues, the Court referred the motion
to dismiss and the motion for summary judgment to Magistrate Judge Williams
“for the purpose of meeting with the parties and entering a Report and
Recommendation on the terms and conditions of dismissal and to narrow the
issues which the Court needs to decide as to the summary judgment motion as well
as explore the possible resolution of the case.” (Doc. 141).
On June 11, 2015,
Magistrate Judge Williams entered the Report and Recommendation (“the
Report”)(Doc. 147) and on June 22, 2015, 4SEMO.com filed its objection to a
portion of the Report (Doc. 148). Thereafter, the Court entered a Memorandum
and Order adopting the Report, granting in part the motion to dismiss with
prejudice Counts 3 through 7 pursuant to Rule 42(a)(2), and deferring ruling on the
motion to dismiss pursuant to Rule 42(a)(2) as to Counts 1 and 2 (Doc. 149).
Thus, the Court now turns to address the motion for summary judgment as to
3 4SEMO.com joined in the request to dismiss with prejudice and without condition as to Counts 3
through 7 of the amended complaint (Doc. 139, p. 2).
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Counts 1 and 2 of the amended complaint.
Facts 4
Southern Illinois Storm Shelters, Inc. (“Southern Illinois”) is in the business
of designing, manufacturing and selling fiberglass storm shelters and the
installation of storm shelters. Southern Illinois was incorporated in Illinois on
September 6, 2000. Southern Illinois is owned by Robert “Bob” Ingoldsby and is
operated by Bob’s brother, Scott Ingoldsby. 4SEMO.com, Inc. (“4SEMO.com”) is
a Missouri business, which among other things, sells storm shelters and operates
in the residential and commercial construction industries. Southern Illinois sells
its storm shelters through a network of dealers. 4SEMO.com became a dealer of
Southern Illinois on May 5, 2005.
4SEMO.com created a related mark, a logo comprised of a Greek cross with
all arms of equal length, and embedded the “LifeSaver Storm Shelters” mark in the
cross.
Southern Illinois does not claim any rights to the logo mark used by
4SEMO.com and admits that 4SEMO.com put the name “LifeSaver Storm
Shelters” inside of a red Greek cross.
4SEMO.com applied to the United States Patent and Trademark Office
(“USPTO”) on January 11, 2012 for registration of the Lifesaver name and related
logo mark.
Southern Illinois offered 4SEMO.com $40,000.00 for the right to use the
Lifesaver mark prior to learning the red cross specimen submitted to the USPTO
4 These facts are agreed to and admitted to by the parties.
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had been denied.
Southern Illinois purchased Life-Saver Storm Shelters, LLC (“LSS”). From
at least May 5, 2005, Storm Shelters was aware that 4SEMO.com was using the
name and logo marks in conjunction with its business and the sale of storm
shelters. According to Southern Illinois, 4SEMO.com, as a dealer of Southern
Illinois, was authorized to use the phrase Southern Illinois Storm Shelters in
conjunction with the sale of storm shelters manufactured by Southern Illinois.
4SEMO.com was allowed to do its own advertising using the Lifesaver Storm
Shelter and Southern Illinois Storm Shelter names. During this time frame that
4SEMO.com was a dealer of Southern Illinois, Southern Illinois was not aware of
any advertising by 4SEMO.com that it found objectionable.
Southern Illinois has no evidence that 4SEMO.com sold any other product
other than Southern Illinois products using the Southern Illinois Storm Shelters
name. While a dealer for Southern Illinois, 4SEMO.com was authorized to use the
Lifesaver Storm Shelters name in conjunction with the sale of Southern Illinois
Storm Shelter products.
Lifesaver name.
Southern Illinois encourages its dealers to use the
Dealers of Southern Illinois have the right to use the phrase
Southern Illinois Storm Shelters and the Lifesaver Storm Shelters mark when
selling a storm shelter made by Southern Illinois.
4SEMO.com was given access to storm shelters and advertising materials
containing the marks.
Southern Illinois provided marketing and advertising
materials that were created by 4SEMO.com to its dealers, including materials that
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contained the logo mark. Southern Illinois is not aware of 4SEMO.com putting
the name Southern Illinois Storm Shelters on any product other than one that was
manufactured by Southern Illinois. Southern Illinois terminated 4SEMO.com as
a dealer on June 7, 2013; this was handled by Southern Illinois’ attorneys.
Southern Illinois filed the complaint in this matter on March 25, 2013, which
was later amended on July 2, 2013, in which it claims that 4SEMO.com infringed
and used unfair competition in relation to the mark “Lifesaver Storm Shelters” and
the phrase “Southern Illinois Storm Shelters.”
According to Southern Illinois, Life-Saver Storm Shelters, LLC used the
Lifesaver Storm Shelters mark in a signed Warranty Registration Card, a business
card, and an envelope, with a cancelled stamp.
There is no evidence, facts,
indication or anything else that shows John Grone or Lifesavers Storm Shelters,
LLC, purchased or sold any storm shelters between 2005 and 2012. Southern
Illinois is not aware of any advertisement disseminated by John Grone or Lifesaver
Storm Shelters, LLC, at any time between 2005 and 2012. Southern Illinois is not
aware of any brochure being handed out by John Grone or Lifesaver Storm
Shelters, LLC, at any time between 2005 and 2012. Southern Illinois is not aware
of John Grone of Lifesaver Storm Shelters, LLC, using the phrase Lifesaver Storm
Shelters in any purpose between 2005 and 2012. The last storm shelter that
Lifesaver Storm Shelters, LCC, purchased for resale from Southern Illinois prior to
the eventual purchase of the company by Southern Illinois in 2012, was in 2004.
The sole remaining owner of Lifesaver Storm Shelters, LLC, prior to its purchase
Page 8 of 22
by Southern Illinois, Linda Grone, responded to an email from Southern Illinois’
counsel inquiring about the purchase of the company that she thought the company
had been dissolved prior to the death of her husband.
Bob Ingoldsby, the President of Southern Illinois, is not sure whose idea it
was to use the Lifesaver mark in conjunction with the sales of storm shelters by
Southern Illinois and admits that neither he nor Scott came up with the Lifesaver
name.
Bob Ingoldsby admits that if the Lifesaver name was used under
permission by another, and that permission expired, it would not have the right to
use the Lifesaver name. He also admits that if Southern Illinois had been using
the Lifesaver name without the legal right to do so, the fact that Southern Illinois
had used it for a such a long time would not allow them to continue to use it.
Southern Illinois does not own any dealer of its storm shelters in Illinois,
Missouri or Indiana other than Lifesaver Storm Shelters, LLC. Lifesaver Storm
Shelters, LLC, was acquired by Southern Illinois based upon the advice of its
attorney. Lifesaver Storm Shelters, LLC, was purchased by Southern Illinois on
September 10, 2012 for $4,000. Bob Ingoldsby estimates that the earliest that
Southern Illinois ever used the Lifesaver name was in 2005. In 2005, Southern
Illinois was not using a Lifesaver shelter email address and was answering the
phones as Southern Illinois Storm Shelters. Southern Illinois has done nothing
different as a result of 4SEMO.com’s asserted ownership in the Lifesaver name,
and would have done nothing different if it had known earlier of 4SEMO.com’s legal
claim to the Lifesaver Storm Shelters mark and logo. Southern Illinois stopped
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using the logo upon the denial of the red cross specimen by the USPTO and the
break-down in negotiations between Southern Illinois and 4SEMO.com.
Southern Illinois is not aware of any confusion between Southern Illinois and
4SEMO.com or of any actual person whoever believed that anything 4SEMO.com
did was actually being done by Southern Illinois or any confusion about the two
companies.
Southern Illinois has no evidence, knowledge or facts that would
establish that 4SEMO.com used the Southern Illinois name to sell any products
other than those that are manufactured by Southern Illinois and has no knowledge
of 4SEMO.com ever using the Southern Illinois Storm Shelters name in an attempt
to claim that storm shelters or any product that sold came from Southern Illinois,
when in fact it did not. Southern Illinois is not aware of anyone who ever bought
something from 4SEMO.com thinking they were buying it from Southern Illinois.
Southern Illinois is not aware of when 4SEMO.com used a domain name that
included the Southern Illinois Storm Shelter phrase to redirect consumers to
4SEMO.com’s website or that it was done during the period in which they were an
authorized dealer for Southern Illinois. Southern Illinois registered, owns and
maintains
the
website
www.lifesaverstormshelters.com.
The
southernillinoisstormshelters.com domain was registered on August 9, 2011 at the
same time 4SEMO.com registered over 87 similar regionally descriptive names
referencing geographic regions of other states. At all times that 4SEMO.com was
using southernillinoisstormshelters.com, it was only used as a redirector, directing
people to the 4SEMO.com website, which advertised the Southern Illinois products
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it sold. At all times that 4SEMO.com used the redirector, it was authorized to sell,
and were selling, Southern Illinois manufactured storm shelters.
Southern
Illinois never mentioned or complained about 4SEMO.com’s use of the redirectors
in any fashion before filing its amended complaint in this action because it had no
knowledge of the use prior to the filing.
4SEMO.com sent out a form letter on or about May 28, 2013 to persons
believed to be dealers of Southern Illinois who were using the Lifesaver Storm
Shelters trademark because Southern Illinois had claimed they had the right to,
and had, authorized such dealers to do so. Neubert Homes does not know when he
last bought a storm shelter from Southern Illinois. Sidney Neubert voluntarily
drove to the offices of counsel for Southern Illinois, in a rented car, obtained a hotel
room and spent the night, and then agreed to give a deposition, all at his own
expense and without any prior communication with Southern Illinois – saying he
got a deposition notice in the mail, and simply packed up and drove at least six
hours without any communication with anyone from Southern Illinois beforehand.
Southern Illinois dropped all claims for monetary damages for Counts 1
through 6 of the amended complaint and only seeks injunctive relief, if available.
On June 4, 2013, Southern Illinois sent out a letter where it alleged that it was the
owner of the Lifesaver mark, that Southern Illinois owned the Lifesaver mark for
over 15 years, and that Southern Illinois had instituted legal actions against
4SEMO.com.
Southern Illinois identified two dealers, “to the best of SISS
knowledge”, that allegedly breached contracts with Southern Illinois as a result of
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the letter sent on May 28, 2013 entitled “Notification of Trademark Dispute
Litigation”, Dick Bragg Excavating and Brunk Excavating. Prior to the letter sent
May 28, 2013, Brunk Excavating had only purchased three shelters, with the last
one being nearly seven months earlier, and no evidence exists of any “termination”
or “breach.”
On January 19, 2014, Southern Illinois filed a memorandum in opposition
to 4SEMO.com’s motion to strike Southern Illinois’ claim for damages, and stated
that “although prayed for in the Amended Complaint, as discovery progressed in
this case counsel for SISS has decided to drop its claims as to monetary damages
related to trademark counts, and only seek equitable relief.”
Summary Judgment
Summary judgment is
proper
when
the
pleadings,
discovery,
and
disclosures establish that there is no genuine issue of material fact and the movant
is entitled to judgment as a matter of law. Winsley v. Cook Cnty., 563 F.3d 598,
602–03 (7th Cir. 2009); Fed. R. Civ. P. 56(a); see Celotex Corp. v. Catrett, 477
U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of
material fact exists if “the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Pugh v. City of Attica, Indiana, 259 F.3d 619,
625 (7th Cir. 2001); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct.
2505, 91 L.Ed.2d 202 (1986). The court must view the facts in the light most
favorable to the non-moving party and draw all reasonable inferences in that party's
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favor, as well as resolve all factual disputes in favor of the non-moving party. Scott
v. Harris, 550 U.S. 372, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007); Fischer v.
Avanade, Inc., 519 F.3d 393, 401 (7th Cir. 2008).
The party seeking summary judgment bears the initial burden of
establishing the absence of factual issues and entitlement to judgment as a matter
of law. Santaella v. Metro. Life Ins. Co., 123 F.3d 456, 461 (7th Cir.
1997) (citing Celotex, 477 U.S. at 323, 106 S.Ct. 2548). In response, the
non-moving party may not rest on bare pleadings alone, but instead must highlight
specific material facts to show the existence of a genuine issue to be resolved at
trial. Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir.2000). The Court
will enter summary judgment against a party who does not “come forward with
evidence that would reasonably permit the finder of fact to find in [its] favor on a
material question.” McGrath v. Gillis, 44 F.3d 567, 569 (7th Cir. 1995).
Analysis
“Congress passed the Lanham Act in 1946 to ‘federalize” existing common
law protection of trademarks used in interstate commerce. CAE, Inc. v. Clean Air
Eng’g, Inc., 267 F.3d 660, 672 (7th Cir. 2001).
“The Lanham Act provides
national protection of trademarks in order to secure to the owner of the mark the
goodwill of his business and to protect the ability of consumers to distinguish
among competing producers.” Park 'N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S.
189, 198, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985). Under the Lanham Act, a
defendant is liable for federal trademark infringement and counterfeiting if the
Page 13 of 22
defendant:
[W]ithout the consent of the registrant … use[s] in commerce any
reproduction, counterfeit, copy or colorable imitation of a registered
trademark in connection with the sale, offering for sale, distribution,
or advertising of any goods or services or in connection with which
such use is likely to cause confusion, or to cause mistake, or to
deceive.
15 U.S.C. § 1114(1)(a). The Lanham Act further imposes liability upon:
Any person who, or in connection with any goods or services … uses in
commerce any … false designation of origin, false or misleading
description of fact, or false or misleading misrepresentation of fact,
which is likely to cause confusion or mistake, or to deceive as to the
affiliation, connection, or other association of such person with
another person, or as to origin, sponsorship, or approval of his or her
goods … by another person.
15 U.S.C. § 1125(a)(1)(A).
The purpose of the trademark “is to provide the
consuming public with a concise and unequivocal signal of the trademarked
product’s source and character.” Draeger Oil, Inc. v. Uno-Ven, Co., 314 F.3d 229,
301 (7th Cir. 2002). However, this “function is thwarted if the quality and the
uniformity of the trademarked product are allowed to vary significantly without
notice to the consumer.” Id.
4SEMO.com argues, inter alia, that it is entitled to summary judgment as (1)
Southern Illinois has no rights to the “Lifesaver” mark; (2) that Southern Illinois
has no rights in the purported “Southern Illinois Storm Shelters” phrase/mark; and
(3) even if Southern Illinois had protectable rights in the marks, 4SEMO.com was
permitted to use them because 4SEMO.com was an authorized dealer of Southern
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Illinois. Southern Illinois counters that there are genuine issues of material fact
regarding both the Lifesaver mark and the Southern Illinois Storm Shelters’ mark
that preclude summary judgment. Based on the following, the Court finds that
4SEMO.com is entitled to summary judgment on Counts 1 and 2 of the amended
complaint.
First, 4SEMO.com asserts that it is entitled to summary judgment as
Southern Illinois does not possess any enforceable rights in the Lifesaver Storm
Shelter mark. 4SEMO.com argues that there is no evidence that LSS possessed a
protectable mark in “Lifesaver.” Further, 4SEMO.com maintains that Southern
Illinois cannot establish that its use of the mark was sufficient to establish
ownership of the mark prior to 4SEMO.com’s creation of the mark in 2005.
Southern Illinois counters that LSS, LLC had rights in the mark and that Southern
Illinois sufficiently used the mark as a regular part of its advertising and marketing
plan prior to 4SEMO.com’s creation.
In order to prevail on a claim of trademark infringement and counterfeiting
under 15 U.S.C. § 1125(a)(1)(A), Southern Illinois must prove two elements. See
15 U.S.C. § 1125(a); Segal v. Geisha NYC LLC, 517 F.3d 501, 506 (7th Cir. 2008).
First, it must show that “its mark is protected under the Lanham Act.” Barbecue
Marx, Inc. v. 551 Ogden, Inc., 235 F.3d 1041, 1043 (7th Cir. 2000). Second, the
plaintiff must allege that the challenged mark is “likely to cause confusion among
consumers.” Id. However, “a court does not even reach the question of likelihood of
confusion until persuaded that the putative mark is sufficiently distinctive to
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warrant a prima facie protection as a trademark.” Blau Plumbing, Inc. v. S.O.S.
Fix-It, Inc., 781 F.2d 604, 610 (7th Cir. 1986).
A party may obtain “a protectable right in a trademark only through the use
of the mark in connection with its product.” Johnny Blastoff, Inc. v. Los Angeles
Rams Football Co., 188 F.3d 427, 433-34 (7th Cir. 1999).
The party
seeking trademark right must show appropriation of the mark and “‘use in a
way sufficiently public to identify or distinguish the marked goods in an appropriate
segment of the public mind as those of [the adopter of the mark].’ ” Id. at 433–34
(quoting New West Corp. v. NYM Co. of Cal., Inc., 595 F.2d 1194, 1200 (9th
Cir.1979)). “Only active use allows consumers to associate a mark with particular
goods.” Zazu Designs v. L’Oreal, S.A., 979 F.2d 499, 503-505 (7th Cir. 1992).
The law is clear that trademark rights exist only in connection with an
existing business. See United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90,
97, 39 S.Ct. 48, 63 L.Ed. 141 (1918) (“There is no such thing as property in
a trade-mark except as a right appurtenant to an established business or trade in
connection with which the mark is employed.”); Electro Source, LLC, 458 F.3d at
939 (“Trademark use requires an existing business.”). The registration of a mark
with the USPTO does not alter this principle. See Basile, S.p.A. v. Basile, 899
F.2d 35, 37 n. 1 (D.C.Cir.1990) (“Although [a mark's] registration is a predicate to
its protection under the Lanham Act, the underlying right depends not on
registration but rather on use.”).
Here, Southern Illinois has not set forth any evidence that LSS used
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“Lifesaver” as a protectable mark. There is no evidence that LSS used Lifesaver in
relation to the consuming public or that the use was continuous. There is no
evidence that LSS used or placed the name directly on the storm shelters or how,
when or where or if LSS did any advertising or marketing. However, the evidence
does reveal that LSS did use Lifesaver in the context of its corporate name which is
insufficient to establish a protectable mark. “The names of corporate, business
and professional organizations are generally labeled ‘trade names’ as opposed to
‘trademarks.’”
1 McCarthy on Trademarks § 9:3 (2002); 15 U.S.C. § 1127.
Further, a “business name that is not used in a trademark sense in connection with
the goods in question, is not registerable as a trademark.”
Trademarks 9:14.
1McCarthy on
Despite Southern Illinois’ suggestion otherwise, the record
reveals that LSS used its corporate name on business cards, letterhead and similar
documents. There is no evidence in these documents that that LSS considered the
Lifesaver name as a trademark or that it identified its products as such. Thus, the
Court finds that LSS did not have a protectable interest in the Lifesaver mark.
Accordingly, summary judgment is appropriate.
Assuming arguendo that LSS did have a protectable mark, the Court agrees
with 4SEMO.com and finds that Southern Illinois cannot prove ownership through
abandonment. LSS ceased all operations as of 2005 and Southern Illinois admits
that from 2005 and 2012, LSS did not sell any storm shelters, did not disseminate
any advertising, did not have any sales and did not use the phrase Lifesaver Storm
Shelters for any purpose. In response to this argument, Southern Illinois merely
Page 17 of 22
states: “Regardless of whether any of these arguments have merit, SISS established
a protectable mark through independent use of the Lifesaver mark prior to 4SEMO
becoming a dealer and allegedly creating the name.” (Doc. 134, p. 9). Clearly, this
is not sufficient to survive summary judgment based on ownership through
abandonment.
Thus, the Court finds that Southern Illinois cannot prove
ownership of the Lifesaver mark due to abandonment.
Next, 4SEMO.com argues that since Southern Illinois Storm Shelters is not a
protectable mark, Southern Illinois cannot prevail on its claims based on
4SEMO.com’s purported improper use. Specifically, 4SEMO.com contends that
Southern Illinois does not claim that it has a registered mark and the amended
complaint states that the corporate name is registered as a business in the State of
Illinois, thus, this is insufficient as a matter of law. Southern Illinois counters that
there are genuine issues of material fact that preclude summary judgment.
Specifically, Southern Illinois argues that the evidence shows that Southern Illinois
has used the Southern Illinois Storm Shelter name in commerce as more than just
a business name and that the Southern Illinois Storm Shelter name is more than a
descriptive identifier.
A mark is only entitled to protection under trademark law when “that mark
specifically identifies and distinguishes one company’s goods and services from
those of competitors.” Platinum Home Mortgage Corp. v. Platinum Financial Grp.,
Inc., 149 F.3d 722, 726 (7th Cir. 1998).
“The validity of a mark pertains to
whether a ‘word, term, name, symbol or device,’ 15 U.S.C. § 1125(a)(1), is entitled
Page 18 of 22
to protection under trademark law by focusing on whether that mark specifically
identifies and distinguishes one company's goods or services from those of its
competitors.” Platinum Home Mortgage Corp. v. Platinum Financial Grp., Inc., 149
F.3d 722, 726 (7th Cir. 1998). When the mark at issue is not registered with the
United States Patent and Trademark Office, “the burden is on the claimant” to
establish that it is entitled to protection. Id. at 727 (citing Mil–Mar Shoe Co., Inc. v.
Shonac Corp., 75 F.3d 1153, 1156 (7th Cir. 1996)).
Marks are classified into five categories of increasing distinctiveness: (1)
generic; (2) descriptive; (3) suggestive; (4) arbitrary; and (5) fanciful. Id. (citing Two
Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 767–68, 112 S.Ct. 2753, 120
L.Ed.2d 615 (1992)). The level of protection to which a mark is entitled depends
on where it falls on the spectrum of distinctiveness, the least distinctive being the
“generic” mark to the most distinctive being the “fanciful” mark. Two Pesos,
Inc., 505 U.S. at 768, 112 S.Ct. 2753. Generic marks are commonly used, do not
identify a particular source and are entitled to no trademark protection. Id.
Descriptive marks are those that describe “the ingredients, qualities, or
characteristics of an article of trade or a service.” Id. (quoting Liquid Controls Corp.
v. Liquid Control Corp., 802 F.2d 934, 936 (7th Cir .1986)). They do not generally
receive trademark protection, but may if they acquire secondary meaning “in the
collective consciousness of the relevant community.” Id. (quoting Mil–Mar Shoe Co.,
75 F.3d at 1157). Finally, suggestive, arbitrary or fanciful marks, “because their
intrinsic nature serves to identify a particular source of a product, are deemed
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inherently distinctive and are entitled to protection.” Two Pesos, 505 U.S. at 768.
Secondary meaning arises when a mark “has been used so long and so
exclusively by one company in association with its goods or services that the word
or phrase has come to mean that those goods or services are the company's
trademark.” Packman v. Chicago Tribune Co., 267 F.3d 628, 641 (7th Cir. 2001).
In determining whether a mark has acquired secondary meaning, the Seventh
Circuit considers seven factors: (a) direct consumer testimony; (b) consumer
surveys; (c) exclusivity, length and manner of use; (d) amount and manner of
advertising; (e) amount of sales and number of customers; (f) established place in
the market; and (g) proof of intentional copying. Echo Travel, Inc. v. Travel Assocs.,
Inc., 870 F.2d 1264, 1267 (7th Cir.1989).
Here, the Court finds that Southern Illinois Storm Shelters is not a
protectable trademark because it is merely a descriptive term; it is a corporate
name that describes the geographic region from which the storm shelters are made.
Despite Southern Illinois’ assertions to the contrary, Southern Illinois has not pled
or provided any evidence that would make the term be considered secondary to
allow it protection. Because the phrase Southern Illinois Storm Shelters is not a
entitled to trademark protection, the Court finds that summary judgment is
appropriate.
Next, 4SEMO.com argues that even if Southern Illinois had protectable rights
in both of the marks, it is entitled to summary judgment on Counts 1 and 2 because
it was an authorized distributor and reseller of Southern Illinois products. The
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Court agrees with 4SEMO.com.
As noted by the Report, Southern Illinois
conceded this argument: “At the May 13, 2015 hearing, SISS stated affirmatively on
the record that they withdraw any opposition to the argument that 4SEMO had the
right to use the mark because they were an authorized dealer, which is reflected in
the record at Doc. 113, p. 5, line 6 (item 3 in the list on that page).5 SISS also
affirmatively agrees that the Court could grant summary judgment on this basis
alone.” (Doc. 147, p. 2). Thus, based on Southern Illinois’ concession, the facts
contained in the record and the applicable law, the Court finds that summary
judgment is proper also on this basis as to Counts 1 and 2.
Also, the Court finds that summary judgment is proper as to the monetary
damages contained in Counts 1 and 2. As stated previously, the Court struck
Southern Illinois monetary damages since it did not produce any evidence of
damages.
Conclusion
Accordingly, the Court GRANTS 4SEMO.com’s motion for summary
judgment as to Counts 1 and 2 of Southern Illinois Storm Shelters’ amended
complaint (Doc. 111). The Court finds in favor of 4SEMO.com, Inc., and against
Southern Illinois Storm Shelters on Counts 1 and 2 of Southern Illinois Storm
Shelters’ amended complaint. The Court DIRECTS the Clerk of the Court to enter
judgment at the close of the case reflecting the same.
Further, the Court DENIES
5 Item 3 reads: “(3) even if SISS had protectable rights in the marks, 4SEMO was permitted to use
them because 4SEMO was an authorized dealer of SISS,” (Doc. 113, pg. 5).
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as moot Southern Illinois Storm Shelters’ motion to dismiss pursuant to Rule
41(a)(2) as to Counts 1 and 2 (Doc. 128).
The Court SETS this matter for final pretrial conference on February 10,
2016 at 1:30 p.m. Lastly, the Court encourages the parties to contact Magistrate
Judge Williams’ chambers if another settlement conference would be beneficial.
IT IS SO ORDERED.
Digitally signed by
David R. Herndon
Date: 2015.08.26
16:13:33 -05'00'
.
Signed this 26th day of August, 2015.
United States District Court
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