Barrington Music Products Inc v. Guitar Center Stores, Inc. et al

Filing 76

OPINION AND ORDER denying 72 Motion for Reconsideration of 50 order denying defendants'summary judgment motion. Signed by Judge Robert L Miller, Jr on 2/28/18. (kjp)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
BARRINGTON MUSIC PRODUCTS,
INC.,

)
)
)
Plaintiff
)
)
v.
)
)
GUITAR CENTER STORES, INC., et al., )
)
Defendants.
)

CAUSE NO. 3:16-CV-6-RLM-MGG

OPINION AND ORDER
Defendants Guitar Center Stores, Inc., Music & Arts Centers, Eastman
Music Company and Woodwind & Brasswind, Inc., (hereinafter, Guitar Center)
ask the court to reconsider its October 2017 order denying their summary
judgment motion [Doc. No. 50]. They ask the court to reconsider that order to
address a single narrow issue: whether Guitar Center’s registering the Ventus
mark on the principal register on August 2, 2011 put Barrington on constructive
notice of Guitar Center’s claim of ownership of its Ventus mark for the purposes
of laches. The October 2017 order includes a presentation of the relevant facts in
this case, which needn't be repeated here [Doc. No. 63 at 1-4]. For the reasons
that follow, the court denies the motion to reconsider.
Federal Rule of Civil Procedure 54(b) provides that a court may alter or
amend an interlocutory order any time before entry of final judgment. See Moses
H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 12 (1983) ("[E]very

order short of a final decree is subject to reopening at the discretion of the district
judge."). Unlike a motion to reconsider a final judgment, which must meet the
requirements of Federal Rules of Civil Procedure 59 or 60, "a motion to reconsider
an interlocutory order may be entertained and granted as justice requires." Akzo
Coatings, Inc. v. Aigner Corp., 909 F.Supp. 1154, 1160 (N.D. Ind. 1995).
Reconsideration of an interlocutory order may be appropriate when the facts
or law on which the decision was based change significantly after issuance of the
order, or when "the [c]ourt has patently misunderstood a party, or has made a
decision outside the adversarial issues presented to the [c]ourt by the parties, or
has made an error not of reasoning but of apprehension." Bank of Waunakee v.
Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir.1990). "These grounds
represent extraordinary circumstances, and the granting of a motion to reconsider
is to be granted only in such extraordinary circumstances . . . Indeed, the court's
orders are not mere first drafts, subject to revision and reconsideration at a
litigant's pleasure." United States Securities and Exch. Comm'n v. National Presto
Indus., Inc., No. 02-C-5027, 2004 WL 1093390, at *2 (N.D. Ill. Apr. 28, 2004)
(internal quotations omitted). Motions to reconsider serve a limited function: "to
correct manifest errors of law or fact or to present newly discovered evidence."
Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1269 (7th
Cir. 1996). A party seeking reconsideration can't introduce new evidence or legal

2

theories that could have been presented earlier or simply rehash previously
rejected arguments. Id.
Guitar Center wants the court to reconsider its finding that Guitar Center’s
use of 15 U.S.C. § 1072 doesn’t provide it with a strong basis of constructive
notice for the purposes of establishing a laches defense. The court should impute
Barrington with constructive notice of Guitar Center’s use of their Ventus
trademark as of August 2, 2011, as a matter of law and statutory interpretation.
See 15 U.S.C. § 1072 (Registration of a mark on the principal register . . . shall be
constructive notice of the registrant’s claim of ownership thereof); see also
Chattanoga Mfg., Inc. v. Nike, Inc., 301 F.3d 789, 793 (7th Cir. 2002) (“It is clear
that a plaintiff must have actual or constructive notice of the defendant's
activities.”).
Guitar Center says that 15 U.S.C. § 1072 doesn’t limit or qualify the effect
of the constructive notice created by registering a mark on the principal register;
the statute unambiguously states that “registration of a mark on the principal
register . . . shall be constructive notice of the registrant’s claim of ownership
thereof.” If the language of a statute is unambiguous, it should be applied as read.
Johnson v. Trail Creek, 771 F. Supp. 271, 276 (N.D. Ind. 1991).
When courts hold that the facts were such that plaintiff should have known
of the defendant's infringing activities, it is sometimes said that plaintiff was on
“constructive” notice. A “reasonably prudent person” standard may be used to

3

impute notice. See 6 J. Thomas McCarthy, MCCARTHY ON TRADEMARKS AND UNFAIR
COMPETITION § 31:38 (5th ed. 2018). McCarthy points to Chattanoga Manufacturing, Inc., v. Nike, Inc., the controlling authority in this matter. “[T]he law is well
settled that where the question of laches is in issue the plaintiff is chargeable with
such knowledge as he may have obtained upon inquiry, provided the facts already
known by him were such as to put upon a man of ordinary intelligence the duty
of inquiry.” 301 F.3d at 793 (citing Johnston v. Standard Mining Co., 148 U.S. 360
(1893)). McCarthy notes that this kind of “constructive notice” is different from the
statutory constructive notice created by a federal registration owned by defendant.
See 6 MCCARTHY § 31:38 (emphasis added).
The statutory constructive notice under 15 U.S.C. § 1072 concerns the
existence of a federal registration of a mark. It is not constructive notice of a
potential infringer's use of a mark in the marketplace. See 6 MCCARTHY § 31:40
(citing Valmor Products Co. v. Standard Products Corp., 464 F.2d 200, 204, 174
U.S.P.Q. 353 (1st Cir. 1972)) (holding that in infringement proceedings, constructive notice of a defendant's federal registration does not start the time running on
laches: only the time of plaintiff's actual notice is relevant) (citations omitted)
(emphasis added). “[T]he offense of infringement is a continuing one, and
appellant has not suggested that the statute of limitations is a bar. Laches, on the
other hand, is an equitable doctrine which penalizes a litigant for negligent or
wilful failure to assert his rights, and is not appropriately applied here, where [the

4

plaintiff] was unaware of the infringement and [the defendant] made no claim that
the lack of knowledge was itself wilful or negligent.” Valmor Prod. Co. v. Standard
Prod. Corp., 464 F.2d at 204 (emphasis added).
Although Valmor isn’t controlling precedent, the court won’t necessarily
reject its reasoning. Our court of appeals has followed the trend of starting the
laches clock at the earliest possible date of infringement—not the date of mere use
or registration of a potentially infringing mark—as a matter of equity, not
statutory interpretation. In Chattanoga, the court of appeals charged the plaintiff
with constructive knowledge as early as 1985, when defendant first launched a
prominent national advertising campaign. Although this date was measured from
the defendant’s very first use of the mark, the court of appeals made it clear that
laches shouldn’t always be measured from a defendant’s very first use of the
mark, see e.g., 5 MCCARTHY § 31:39, at pp 31-47, but only when it’s appropriate
to do so. See, e.g., Chattanoga Mfg., Inc. v. Nike, Inc., 301 F.3d at 793, n.3. It
wouldn’t be appropriate to impute Barrington with statutory constructive notice
at the date Ventus was registered under these circumstances.
Guitar Center points to several cases in its attempt to establish that
registration under 15 U.S.C. § 1072 triggers constructive notice for the purposes
of asserting a laches defense; two of which are in this circuit. Neither case shows
that the court made any errors in reaching its decision. See Bank of Waunakee v.
Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990).

5

Guitar Center first points to Gaffrig Performance Industries v. Livorsi
Marine, Inc. The defendant registered the “GAFFRIG PRECISION INSTRUMENTS” mark
after its license to use the mark was expired. An ex-licensee's continued use of the
trademark after the period of the license is a violation of trademark law. 2003 WL
23144859, at *9 (N.D. Ill. Dec. 22, 2003) (citing Gorenstein Enterprises, Inc., v.
Quality Care-USA, Inc., 874 F.2d 431, 435 (7th Cir. 1989)). In determining
whether laches applied, the court found that the plaintiff had actual or constructive notice of the defendant’s infringing activities as early as 1993, when the
defendant received a federally registered trademark for [infringing mark], because
registration of a mark provides constructive notice throughout the United States
of the registrant's claim to ownership. Gaffrig Performance Industries v. Livorsi
Marine, Inc., 2003 WL 23144859, at *16.
Next, Guitar Center points to Oreck Corp. v. Thomson Consumer Elecs., Inc.
Ten years before Gaffrig, the Southern District of Indiana reached the same
conclusion, imputing constrictive notice on the plaintiff under 15 U.S.C. § 1072.
See 796 F. Supp. 1152, 1162 (S.D. Ind. 1992) (“Thus, [the defendant’s] registration of ‘XL–100,’ effective December 9, 1975, placed [the plaintiff] on constructive
notice that [the defendant] was taking a position contrary to a claimed license
agreement and that it owned and had an exclusive right to use [infringing mark].”)
(emphasis added).

6

It was appropriate for the Gaffrig and Oreck courts to impute the plaintiffs
with constructive notice. When the defendants registered their trademarks in
contravention of their respective contractual agreements, infringement was
instantaneous. As already stated, an ex-licensee's continued use of the trademark
after the period of the license is a violation of trademark law. See Gorenstein
Enterprises, Inc., v. Quality Care-USA, Inc., 874 F.2d at 435; see also Oreck Corp.
v. Thomson Consumer Elecs., Inc., 796 F. Supp. 1152, 1162 (S.D. Ind. 1992)
(Registration by licensee of licensed mark constitutes trademark infringement
because it misleads the public into thinking that the registrant owns the mark)
(citations omitted); 796 F. Supp. at 1162 ([Plaintiff’s] contention that the license
agreement was first breached when his dealership authorization was cancelled in
1988 is simply inconsistent with the nature and effect of a federal trademark
registration, where the registrant claims that it has an exclusive right to the
registered trademark) (citations omitted).
In contrast to Gaffrig and Oreck, no licensing relationship flows between
Barrington and Guitar Center—or any relationship for that matter—that would
justify to charging Barrington with constructive notice at the very moment Guitar
Center registered the Ventus mark. To impute constructive notice under 15 U.S.C.
§ 1072 to Barrington would go against controlling precedent that requires plaintiff
to have knowledge of a “provable infringement claim,” see Chattanoga Mfg., Inc.

7

v. Nike, Inc., 301 F.3d at 793, and Guitar Center hasn’t shown the court that
Barrington has a “provable infringement claim” as of August 2, 2011.
Guitar Center next points to several cases that reference the Federal
Circuit’s holding in National Cable Television Asociation, Inc. v. American Cinema
Editors, Inc. to further support its argument. "Publication of the marks in the
Official Gazette constitutes constructive notice of the applications at issue . . .
[L]aches begins to run from the time action could be taken against the acquisition
by another of a set of rights to which objection is later made. In an opposition or
cancellation proceeding the objection is to the rights which flow from registration of
the mark . . . [15 U.S.C. § 1072] of the Lanham Act provides that registration on
the Principle Register shall be constructive notice of the registrant's claim of
ownership." 937 F.2d 1572, 1581 (Fed. Cir. 1991); see also 15 U.S.C. § 1072. This
isn’t a cancellation proceeding before the Trademark Trial and Appeals Board.
This is an action for infringement under the Lanham Act and state trademark and
unfair competition laws, and 15 U.S.C. § 1072 doesn’t trigger laches in an
infringement case. See 6 MCCARTHY § 31:40.
Lastly, Guitar Center challenges the citation in the October 2017 order to
Mobile Anesthesiologists Chi., Ltd. Liab. Co. v. Anesthesia Assocs. of Hous.
Metroplex, P.A. 623 F.3d 440 (7th Cir. 2010). Guitar Center is right that Mobile
Anestesiologists doesn’t address the issue of laches or foreclose the possibility that
registration of a mark on the principal register triggers constructive notice for the

8

purposes of laches. The case wasn’t cited for either proposition, but rather as an
indication of how 15 U.S.C. § 1072 is used as a matter of law—the statute is used
for the benefit of the senior trademark holder—and how courts in our circuit
approach constructive notice from the perspective of equity rather than statutory
interpretation.
CONCLUSION
The court DENIES the defendants’ motion for reconsideration [Doc. No.
72].
SO ORDERED.
ENTERED:

February 28, 2018
/s/ Robert L. Miller, Jr.
Judge
United States District Court

9