Process Controls International, Inc. v. Emerson Process Management et al

Filing 304

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Emerson's motion for summary judgment [# 251 ] as to counts 5 and 6 of Emersons fourth amended counterclaim is denied. IT IS FURTHER ORDERED that Automation's motion for summary judgment [# 256 ] as to counts 17 of Emerson's fourth amended counterclaim is granted as to counts 5 and 6 only, and is denied in all other respects. IT IS FURTHER ORDERED that Emerson's motion for summary judgment [# 257 ] as to counts 911 of Automa tion's third amended complaint is granted. IT IS FURTHER ORDERED that Automation's motion for summary judgment [# 262 ] as to counts 14 of Factory Mutuals counterclaim is denied. IT IS FURTHER ORDERED that Automation's motion for summa ry judgment [# 264 ] as to count 8 of Emerson's fourth amended counterclaim is denied. IT IS FURTHER ORDERED that Factory Mutual's motion for summary judgment [# 266 ] as to counts 14 of Factory Mutual's counterclaim and count 12 of Automation's third amended complaint is granted. Signed by District Judge Catherine D. Perry on October 22, 2012. (BRP)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

PROCESS CONTROLS
INTERNATIONAL, INC., d/b/a
AUTOMATION SERVICE,
Plaintiff,
vs.
EMERSON PROCESS
MANAGEMENT, et al.,
Defendants.

)
)
)
)
)
)
)
)
)
)
)
)

Case No. 4:10CV645 CDP

MEMORANDUM AND ORDER
Pending before me are numerous motions for summary judgment by all
parties. I will grant in part and deny in part the motions for the reasons discussed
below. This case remains set for trial on the two-week docket beginning
December 3, 2012.
Undisputed Facts
Defendant Emerson1 is an original equipment manufacturer (OEM) of
process control equipment, which is used to control and/or regulate the flow of
hazardous substances through piping systems. Plaintiff is Process Controls
International, Inc., doing business as Automation Service (Automation).

1

Emerson Process Management, Fisher Controls, International, LLC, and Rosemount,
Inc. are all entities within the Emerson company.

Automation and several other companies, including Emerson through its
Encore brand, remanufacture the process control equipment because some
consumers prefer to replace their worn-out equipment with used, but
remanufactured equipment rather than brand-new equipment.2 Factory Mutual
Insurance Company insures industrial companies that use process control
equipment. Its subsidiary, defendant FM Approvals, LLC has established safety
standards for these companies and certifies certain process control equipment as
“FM approved” if it satisfies those safety standards. Many Emerson products are
FM approved and bear the FM Approvals trademark. Automation has not been
approved as a repairer of process control equipment by FM Approvals.
When Automation remanufactures Emerson equipment, it sometimes leaves
the Emerson and FM Approvals trademarks on the equipment. This practice has
led to on-going disputes between Emerson and Automation, with Emerson
contending that Automation is wrongfully using Emerson’s trademarks, and
Automation contending that Emerson unfairly keeps it from competing in the
marketplace for remanufactured Emerson products. The latest iteration of this
dispute ended with a settlement agreement between the parties and a release of

2

Whether Automation reconstructs or repairs the process control equipment is a legal
question discussed more fully below. I use the word “remanufacture” here to reflect the parties’
pleadings, but in no way intend its use to imply any legal conclusions regarding Automation’s
activities.
-2-

their claims against one another for any activities that occurred before December
3, 2007.
Legal Standard
The standards for summary judgment are well settled. In determining
whether summary judgment should issue, the court must view the facts and
inferences from the facts in the light most favorable to the nonmoving party.
Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The moving party has the burden to establish both the absence of a genuine issue
of material fact, and that it is entitled to judgment as a matter of law. Fed. R. Civ.
P. 56(c); Anderson v. Liberty Lobby Inc., 477 U.S. 242, 247 (1986); Celotex Corp.
v Catrett, 477 U.S. 317, 322 (1986). Once the moving party has met this burden,
the nonmoving party may not rest on the allegations in the pleadings but must set
forth by affidavit or other evidence specific facts showing that a genuine issue of
material facts exists. Fed. R. Civ. P. 56(e). At the summary judgment stage, I will
not weigh evidence and decide the truth of the matter, but rather I need only
determine if there is a genuine issue of material fact. Anderson, 477 U.S. at 249.
Discussion
I.

Automation’s Claims for False Advertising, Tortious Interference, and
Defamation

-3-

Emerson has moved for summary judgment as to counts 9, 10, and 11 of
Automation’s third amended complaint. These three counts are brought against
Emerson, and allege, respectively, false advertising, tortious interference with
business expectancy, and defamation. Automation alleges that Emerson has
falsely and publicly asserted that products remanufactured by Emerson are safer
than products remanufactured by Automation.
A.

Claims arising before December 2007 are barred by the settlement
agreement between the parties.

Automation and Emerson entered into an agreement, effective December 3,
2007, to settle all claims related to a prior lawsuit between the parties. That
agreement contains a release that states, in part:
Automation Service . . . hereby releases and forever discharges
Fisher3 . . . from any and all manner of claims, causes of action,
demands for arbitration or mediation, or other manner of action,
formal or informal, whether known or unknown, of every nature and
type whatsoever that they may have heretofore had, now have, or, but
for this Agreement, might hereafter have had against Fisher . . .
connected with, resulting from, or arising out of:
(i)
any and all transactions or occurrences that were alleged
or could have been alleged in the aforesaid Complaint,
Automation Service’s answer to the Complaint, or any
counterclaim brought in response to the Complaint;
and/or
3

Fisher entered the Agreement on behalf of all “Fisher-Related Companies,” which the
Agreement defines as “Fisher; Fisher Rosemount Systems, Inc.; Rosemount, Inc.; Emerson
Electric Co.; any other company in which Fisher owns a controlling interest; any other company
that owns a controlling interest in Fisher; and any other company owned or controlled - directly
or indirectly - by, or under common control with, Fisher or Fisher’s parent, Emerson Electric
Co.”
-4-

(ii)

any and all transactions or occurrences between Fisher
and Automation Service that have occurred before the
date of this Agreement;

Docket No. 7 at 11-12.
Automation’s expert witness, in calculating damages for these counts,
included in his analysis some statements from Emerson allegedly made or received
before December 3, 2007. Automation argues that even though the statements
were made before December 3, 2007, it can recover if some of the damages arose
after that date. It also says that the claims now asserted were “unknowable” at the
time of the settlement and therefore not waived by the release. Docket No. 285 at
11-12. This position is in complete contradiction to the plain language of the
settlement agreement. See Grant Cnty. Sav. & Loan Ass’n, Sheridan, Ark. v.
Resolution Trust Corp., 968 F.2d 722, 724 (8th Cir. 1992) (holding that language
in a release must be given its plain, ordinary meaning). All of Automation’s
claims arising from pre-December 2007 statements are therefore barred by the
release.
B.

Automation has not produced sufficient evidence to prove damages.

Each of counts 9 through 11 requires a showing of damages. See Rusk
Farms, Inc. v. Ralston Purina Co., 689 S.W.2d 671, 679 (Mo. Ct. App. 1985)
(tortious interference); Nazeri v. Mo. Valley College, 860 S.W.2d 303, 313 (Mo.
1993) (defamation); Porous Media Corp. v. Pall Corp., 110 F.3d 1329, 1336 (8th
-5-

Cir. 1997) (false advertising). To support this element of its claims, Automation
has produced evidence of lost profits in the form of an expert report by Michael
Prost.
To recover lost profits damages, the plaintiff must produce evidence that
“provides an adequate basis for estimating the lost profits with reasonable
certainty.” Ameristar Jet Charter, Inc. v. Dodson Int’l Parts, Inc., 115 S.W.3d 50,
54-55 (Mo. 2005). The plaintiff must establish with reasonable certainty “both
that the defendant’s actions caused the plaintiff to lose profit and the amount of
those damages.” Metro. Express Servs., Inc. v. City of Kansas City, Mo., 71 F.3d
273, 275 (8th Cir. 1995).
Automation has not produced evidence to show with reasonable certainty
that Emerson’s statements caused any of Automation’s customers to reduce their
business with Automation. The only evidence Automation has produced is Prost’s
damages report. While Prost relied on some letters, emails, and articles written by
Emerson, there is little evidence that any of Automation’s customers received,
reviewed, or took action based on the communications.4
Automation relies on Prost’s report to show that its sales to customers
dropped after the point of alleged contact. However, Prost’s report does not prove

4

Many of the communications also predate December 3, 2007, and thus cannot provide a
basis for any damages, as discussed above.
-6-

causation; in fact, it assumes it. Docket No. 259-2 at 4 (“The assumption that I
made was that due to the contact of the customer, sales suffered . . . I was not
asked to do anything on the causation side”). Automation also relies on Rusk
Farms to argue that causation can be inferred since Automation had an ongoing
business relationship with customers and sales dropped after the dates of alleged
contact. The evidence does not support this inference. In Rusk Farms, there was
evidence that customers actually received a letter from defendants, that the letter
explicitly warned the customers that the turkeys at issue were already under
contract, and that those customers then did not buy the turkeys; sales completely
ceased immediately after each customer received the letter. 689 S.W.2d at 680.
But here Automation has not produced evidence sufficient to show that any
customers received, reviewed, or relied on the alleged contacts from Emerson.
Even if the communications were received by Automation’s customers, the
communications were much less specific than those in Rusk Farms. And the sales
trend lines produced by Automation show that after the date of contact there was
not a complete cessation of sales. Rather, sales to some customers show a slow
decline, while others even show an increase. Docket No. 284-4. Automation has
thus not provided sufficient evidence to show causation of damages.
I will therefore grant Emerson’s motion for summary judgment with regard
to counts 9 through 11 of Automation’s complaint.
-7-

II.

Emerson’s Patent Infringement Claims
Both Automation and Emerson have moved for summary judgment on

counts 5 and 6 of Emerson’s fourth amended counterclaim. Counts 5 and 6 allege
that Automation infringes U.S. patents 7,516,043 and 5,532,925, respectively, by
remanufacturing the DVC6000 series digital valve controllers. Automation does
not dispute that the ‘043 and ‘925 patents read on the remanufactured DVC6000
controllers, nor does it challenge the validity of the patents. The only issue for
summary judgment is whether Automation’s activities constitute permissible
repair that do not infringe the patent. “Whether a defendant’s actions constitute a
permissible repair or an infringing reconstruction is a question of law.”
Aktiebolag v. E.J. Co., 121 F.3d 669, 672 (Fed. Cir. 1997).
The Supreme Court has defined when repair activities infringe a patent:
Impermissible “reconstruction of a patented entity, comprised of unpatented
elements, is limited to such a true reconstruction of the entity as to in fact make a
new article after the entity, viewed as a whole, has become spent.” Aro Mfg. Co.,
Inc. v. Convertible Top Replacement Co., Inc., 365 U.S. 336, 345 (1961) (internal
citations and quotations omitted). The courts have taken an expansive view of
what constitutes permissible repair.
In General Electric Company v. United States, 572 F.2d 745 (Ct. Cl. 1978),
the court held that the U.S. Navy’s activities regarding a gun mount for its ships
-8-

constituted permissible repair. Id. at 784. The Navy took decades-old gun
mounts, sent them to a factory, overhauled the sixty percent of mounts that were
serviceable, and scrapped the remaining forty percent for parts. Id. at 780. The
mounts were reduced to their smallest separable parts, and those parts which could
not be repaired were replaced, mostly by parts previously obtained from plaintiff
G.E. Id. Parts such as seals, bearings, and wiring were also replaced, though the
court did not identify the source of those parts. Id. The parts were reassembled
with no attempt to return them to the gun mounts from which they were originally
taken, nor were the mounts necessarily sent to their original ships. Id. at 781. The
court held that applying this process to a single gun mount would constitute
permissible repair, and so use of the assembly-line method “was simply a speedier,
less expensive, more efficient, and more effective means of refurbishing the gun
mounts,” and was thus permissible. Id. at 786.
A similar conclusion was reached in Dana Corporation v. American
Precision Company, Inc., 827 F.2d 755 (Fed. Cir. 1987). In Dana Corp., the
alleged infringer acquired worn truck clutches as trade-ins, which it then
disassembled, cleaned, sorted into bins, and reassembled using a production-line
process. Id. at 756-77. When there were insufficient parts in the bins, new parts
were used. Id. at 757. As in General Electric, the court held that “use of the
production-line method cannot convert . . . permissible repair to impermissible
-9-

reconstruction.” Dana Corp., 827 F.2d at 759 (emphasis in original). Further, in
determining whether the trade-in clutches were “spent,” the court held that it was
the physical characteristics of the worn clutch that mattered, and not the owner’s
evaluation of the clutch’s condition or economic value. Id. at 760.
The basics of Automation’s remanufacture process are undisputed.
Automation obtains used or inoperative DVC6000 controllers from third-party
users. Automation disassembles the controllers, tests the parts, and discards those
that do not work or are beyond repair. Salvageable parts are cleaned and placed in
bins. When a customer wants a DVC6000 controller, the necessary parts are
removed from the bins, assembled, and sold and delivered to the buyer. Some
hardware, such as nuts, bolts, screws, gaskets, o-rings, glass, and gauges are
purchased from third parties as needed. This process is comparable to both
General Electric and Dana Corp.
Nonetheless, Emerson argues that Automation commits impermissible
repair for four reasons: (1) Automation admits in its pleadings and marketing
materials that it reconstructs rather than repairs equipment; (2) Automation
procures parts from third-party vendors; (3) the controllers procured by
Automation are “spent;” and (4) Automation customizes its orders for customers.
First, Emerson points to Automation’s pleadings and marketing materials as
judicial admissions that its activities constitute impermissible reconstruction. See,
- 10 -

e.g. Docket No. 183 at ¶ 14 (“Remanufacture is different than repair”); Docket No.
252-5 at 16 (“Instead of simply repairing your old unit, have us remanufacture
your units”). Judicial admissions pertain only to matters of fact. State Farm Mut.
Auto Ins. Co. v. Worthington, 405 F.2d 683, 686 (8th Cir. 1968). The repair
versus reconstruction issue is a question of law. Aktiebolag v. E.J. Co., 121 F.3d
at 672. Furthermore, there is nothing in any of Automation’s materials that
indicates the distinction between repair and remanufacture was intended to
connote a technical legal attribution, rather than a practical way of distinguishing
between degrees of repair. See Vogrin v. Hedstrom, 220 F.2d 863, 866 (8th Cir.
1955); General Electric, 572 F.2d at 779 (U.S. Navy differentiated between
varying degrees of maintenance, all of which were held to constitute permissible
repair).
Regarding Automation’s procurement of parts from third parties, Emerson
relies on General Electric to argue that this takes Automation’s activities outside
the realm of permissible repair. In holding that the Navy conducted permissible
repair on its gun mounts, the court noted as a “significant fact” that “Of the 17
elements of the patented combination . . . G.E. appears to have itself supplied the
defendant . . . with at least fifteen elements.” Id. at 781. Even though this fact
was “cardinal” to the court’s decision, id. at 782, General Electric does not require
that every replacement item be purchased from the patentee, as Emerson suggests.
- 11 -

The use by Automation of third-party nuts, bolts, screws, gaskets, o-rings, glass,
and gauges therefore does not transform an otherwise permissible repair into an
impermissible reconstruction.
Emerson also argues that the DCV6000 controllers remanufactured by
Automation are “spent.” It is undisputed that Automation acquires the controllers
it remanufactures from third parties who have discarded them or placed them in
scrap bins. Other controllers were recovered after being damaged in Hurricane
Katrina, and were full of salt water and heavily corroded. Docket No. 254-5 at 2.
However, neither of these sets of controllers are “spent” as defined by the caselaw.
See Aro Manufacturing, 365 U.S. at 345. In Dana Corp., used clutches were also
recovered through a reclamation program from third-party users. 827 F.2d at 760.
The court dismissed the plaintiff’s argument that “whether the patented product is
‘spent’ should turn on the owner’s economic evaluation of the product, rather than
on an examination of its physical characteristics.” Id. Additionally, the corrosion
and flooding of the Katrina-recovered controllers does not make them “spent.”
See Wilbur-Ellis Co. v. Kuther, 377 U.S. 422 (1964). In Wilbur-Ellis, a secondhand purchaser recovered fish-packing machines that were “corroded, rusted, and
inoperative,” and returned them to working condition. Id. at 423. The Court held
that they were not spent, reasoning, “They had years of usefulness remaining
though they needed cleaning and repair.” Id. at 424.
- 12 -

In Aktiebolag, the court found that replacement of a drill tip constituted
impermissible repair because the drill tip was not manufactured to be a replaceable
part, there was no evidence of a substantial market for retipping, and the patentee
never intended for its drills to be retipped. Id. at 674. But in this case, Emerson’s
controllers have readily replaceable parts, there is a substantial market for the
repaired products, and Emerson must have intended for the controllers to be
repaired in this manner, since it itself if one of several companies doing the same
type of repairs as Automation.
Finally, Emerson cites no cases to support its position that customization
indicates impermissible reconstruction, but instead relies on the testimony of its
expert, Dr. Albert Karvelis. Dr. Karvelis’s testimony is ultimately a legal analysis,
and is therefore inadmissible. See S. Pine Helicopters, Inc. v. Phoenix Aviation
Managers, Inc., 320, F.3d 838, 841 (8th Cir. 2003). The actual caselaw does not
support this position. For instance, in Wilber-Ellis, the machines had originally
been constructed to pack fish into one-pound cans, but were remanufactured to
pack fish into five-ounce cans. 377 U.S. at 423. Nonetheless, the Court held that,
“Petitioners in adapting the old machines to a related use were doing more than
repair in the customary sense; but what they did was kin to repair for it bore on the
useful capacity of the old combination.” Id. at 425. Similarly here, Automation’s

- 13 -

customization of the DVC6000 controllers does nothing more than “bear on the
useful capacity of the old combination.”
For the reasons stated above, I conclude that Automation’s activities amount
to permissible repair of the DVC6000 controllers as a matter of law. I will
therefore grant Automation’s motion for summary judgment as to counts 5 and 6
of Emerson’s counterclaims, and will deny Emerson’s motion for summary
judgment as to the same counts.
III.

Emerson’s Trademark Claim
Automation has moved for summary judgment on count 2 of Emerson’s

counterclaims, which alleges trademark infringement under the Federal Lanham
Act. Emerson alleges that Automation offers remanufactured equipment bearing
Emerson-owned trademarks. In moving for summary judgment, Automation
argues that it is allowed to retain the trademark under Champion Spark Plug Co. v.
Sanders, 331 U.S. 125 (1947). Automation argues that its activities amount to
permissible repair, that it clearly indicates that the items have been repaired, and
that the sophisticated consumers of process controls equipment are not likely to be
confused by the presence of the trademark.
In Champion, the Court upheld the Second Circuit’s decree allowing
defendant to retain plaintiff’s trademark on its refurbished spark plugs so long as
they were clearly marked as “repaired.” Id. at 127-28. While the Court
- 14 -

acknowledged that, “Cases may be imagined where the reconditioning or repair
would be so extensive or so basic that it would be a misnomer to call the article by
its original name, even though the words ‘used’ or ‘repaired’ were added,” it held
that in the case at hand, the repair of the spark plugs “did not give them a new
design” and was “no more than a restoration.” Id. at 129. Other cases have held
that the trademark cannot be retained when defendant’s actions result in a “new
construction,” Bulova Watch Co. v. Allerton Co., 328 F.2d 20, 23 (7th Cir. 1964),
or are “structurally different.” Schütz Container Sys., Inc. v. Mauser Corp.,
1:09CV3609 RWS, 2012 WL 1073153, at *21 (N.D. Ga. Mar. 28, 2012).
Despite Automation’s argument to the contrary, this is not an identical test
to the permissible repair/impermissible reconstruction question that applies in
patent cases. Thus, my holding that Automation’s activities constitute permissible
repair under Aro does not automatically entitle it to judgment on the trademark
infringement claims. While the patent cases are chiefly concerned with the
physical condition of the invention, Dana Corp., 827 F.2d at 760, Champion
ultimately turns on the issue, central to trademark law, of whether “the
unauthorized use was likely to deceive, cause confusion, or result in mistake.”
Nitro Leisure Prods., LLC v. Acushnet Co., 341 F.3d 1356, 1359, 1361 (Fed. Cir.
2003); Champion, 331 U.S. at 129. The Champion line of cases is concerned both
with the nature of the repaired product and any disclaimer notifying customers of
- 15 -

its repaired nature. Champion, 331 U.S. at 130; Nitro, 341 F.3d at 1364; Bulova,
328 F.2d at 23-24. This analysis is very fact-specific. The evidence produced in
this case shows that Automation does not repair every item in an identical manner,
nor are the same disclaimers used for every product.
Genuine issues of material fact remain regarding Automation’s alleged
trademark infringement, and so I will deny Automation’s motion for summary
judgment as to count 2 of Emerson’s counterclaims.
IV.

Emerson’s Other Claims Against Automation
Automation also seeks summary judgment on Counts 1, 3, 4, 7, and 8 of

Emerson’s fourth amended counterclaims. These counts claim, respectively,
breach of contract, unfair competition under the Federal Lanham Act, false
advertising under the Federal Lanham Act, unfair competition under Missouri
state law, and misappropriation of trade secrets. After carefully reviewing the
parties’ submissions, I find that genuine issues of material fact remain on all of
theses claims. I will therefore deny Automation’s motions for summary judgment
as to counts 1, 3, 4, 7, and 8 of Emerson’s fourth amended counterclaims.
V.

FM Approvals’ Certification Mark
Both FM Approvals and Automation have moved for summary judgment on

counts 1–4 of FM Approvals’ counterclaim. FM Approvals seeks summary
judgment as to liability only. All counts stem from Automation’s use of the FM
- 16 -

Approvals certification marks on its remanufactured process controls equipment.
In Count 1 FM Approvals seeks a declaratory judgment regarding the alleged
trademark violation, and in counts 2, 3, and 4 it alleges, respectively, trademark
infringement, unfair competition under the Federal Lanham Act, and unfair
competition under Missouri state law. FM Approvals has also moved for
summary judgment on count 12 of Automation’s complaint for declaratory
judgment.5
FM Approvals is a Nationally Recognized Testing Laboratory (NRTL),
authorized by the U.S. Occupational Safety and Health Administration to test and
certify certain process controls equipment as safe for use in the U.S. workplace.
As such, FM Approvals has provided for three ways to ensure that repaired
equipment remains compliant with its certification standards: repair by the OEM,
repair by an independent repair facility under FM Approval’s Standard 3606, or
repair by an end user that has been approved under 3606. Docket No. 179-6, 17930. Notably, all three of these methods involve an audit or inspection of the repair
facilities and processes by FM Approvals. Id.; Docket No. 275-7 at 6-7.
Automation does not claim that it has been approved by FM Approvals as a
producer or repairer of process control equipment, but rather argues that as an

5

Automation’s count 12 is brought against both FM Approvals and Emerson, but only FM
Approvals has moved for summary judgment on this count.
- 17 -

owner of the equipment it is entitled to repair it according to the OEM’s manual
without voiding the equipment’s FM Approvals certification. Automation further
argues that its repaired equipment meets the FM Approvals certification standards.
This is not the issue; the FM Approvals certification mark does not simply
represent the quality of the equipment, but the fact that FM Approvals has in fact
inspected the equipment, facility, or repair processes and approved it. Docket No.
275-7 at 6-7. Not only does Automation’s argument ignore the process for repair
approvals, it would completely undermine the value of the certification system,
which relies on testing and oversight by a NRTL such as FM Approvals.
Automation also argues that even if its equipment can no longer be
classified as “FM Approved,” Automation is entitled to retain the FM Approvals
mark under Champion. I disagree. As discussed above, in Champion, the Court
held that the defendant could retain plaintiff’s trademark on its remanufactured
sparkplugs in light of the fact that they were clearly disclaimed as being
“repaired.” 331 U.S. at 127-28. Central to this decision was the fact that because
“inferiority is expected in most second-hand articles . . . [i]nferiority is immaterial
so long as the article is clearly and distinctively sold as repaired or reconditioned.”
Id. at 129-30. However, certification marks are different in nature from other
trademarks. See, e.g., Idaho Potato Comm’n v. G&T Terminal Packaging, Inc.,
425 F.3d 708, 716 (9th Cir. 2005). Disclosing that an item is “repaired” may
- 18 -

effectively inform a consumer of the product’s nature as compared to a new item
of the same origin. However, simply disclosing that an item is “repaired” does not
similarly inform a consumer that the repair process has not been re-audited by the
holder of the certification mark it bears. See id. at 721 (“In the certification mark
context, the mark holder’s ability to institute quality controls seems vital if a mark
is to serve its purpose”). Champion does not protect Automation’s activities with
regard to the FM Approvals certification mark.
Accordingly, Automation’s activities were “likely to cause confusion, or to
cause mistake, or to deceive.” See SquirtCo. v. Seven-Up Co., 628 F.2d 1086,
1090-91 (8th Cir. 1980). FM Approvals has produced evidence not only of likely
confusion, but of actual customer confusion. See, e.g., Docket No. 267-21 at 3-4,
7, 10; 267-33 at 5; 267-36 at 5-6. Automation does not dispute this evidence
except to argue that no confusion could exist because its products are, in fact, still
allowed to be marketed as FM Approved even though FM Approvals has not
actually approved the repairs or Automation’s facilities or systems for making
those repairs. While the parties argue over which standards and factors should be
used in evaluating likelihood of confusion, the evidence of actual confusion makes
those arguments moot. SquirtCo., 628 F.2d at 1091 (“Actual confusion is not
essential to a finding of trademark infringement, although it is positive proof of
likelihood of confusion”).
- 19 -

Finally, Automation argues that it is entitled to summary judgment on FM
Approvals’ declaratory judgment action, relying on a recent case where I stated
that, “The purpose of the Declaratory Judgment Act . . . in patent cases is to
provide the allegedly infringing party relief.” American Piledriving Equipment,
Inc v. Hammer & Steel, Inc., 4:11CV811 CDP, 2012 WL 1414837, at *3 (Apr. 24,
2012) (internal citations omitted) (emphasis added). It is true that when FM
Approvals – the trademark owner – brought this declaratory judgment claim, it
reversed the roles of the parties in a typical declaratory judgment action. See
Geisha, LLC v. Tuccillo, 525 F. Supp. 2d 1002, 1010 (N.D. Ill. 2007).
Nonetheless, such declaratory judgment actions are still available if “the facts
alleged, under all the circumstances, show that there is a substantial controversy,
between parties having adverse legal interests, of sufficient immediacy and reality
to warrant the issuance of a declaratory judgment.” MedImmune, Inc. v.
Genentech, Inc., 549 U.S. 118, 127 (2007)); Geisha, 525 F. Supp. 2d at 1013.
This is not a case of uncertain prospective infringement – here the evidence shows
that there is a real possibility of infringing activity going forward. See Geisha,
525 F. Supp. 2d at 1018. Nor is this a case, like American Piledriving, where the
intellectual property owner is barred from recovering damages and a declaration
would have no practical effect. 2012 WL 1414837 at *3. Accordingly,
declaratory judgment is appropriate.
- 20 -

For the reasons stated above, I will grant FM Approvals’ motion for
summary judgment on liability for counts 2 through 4 of its counterclaims. The
issue of damages under those counts remains for trial. I will also grant FM
Approvals’ motion for summary judgment for declaratory judgment under count 1
of its counterclaims. I will deny Automation’s motion for summary judgment as to
counts 1 through 4 of FM Approvals’ counterclaims. I will grant FM Approvals’
motion for summary judgment dismissing count 12 of Automation’s complaint for
declaratory judgment, only as to defendant FM Approvals.
Conclusion
The following claims remain for trial. From Automation’s third amended
complaint: count 12 for declaratory judgment, against defendant Emerson only.
From Emerson’s fourth amended counterclaim: count 1 for breach of contract,
count 2 for trademark infringement, count 3 for unfair competition under the
Federal Lanham Act, count 4 for false advertising under the Federal Lanham Act,
count 7 for unfair competition under Missouri state law, and count 8 for
misappropriation of trade secrets. From FM Approvals’ counterclaim, damages
only on each count: count 2 for trademark infringement, count 3 for unfair
competition under the Federal Lanham Act, and count 4 for unfair competition
under Missouri state law.
Accordingly,
- 21 -

IT IS HEREBY ORDERED that Emerson’s motion for summary judgment
[#251] as to counts 5 and 6 of Emerson’s fourth amended counterclaim is denied.
IT IS FURTHER ORDERED that Automation’s motion for summary
judgment [#256] as to counts 1–7 of Emerson’s fourth amended counterclaim is
granted as to counts 5 and 6 only, and is denied in all other respects.
IT IS FURTHER ORDERED that Emerson’s motion for summary
judgment [#257] as to counts 9–11 of Automation’s third amended complaint is
granted.
IT IS FURTHER ORDERED that Automation’s motion for summary
judgment [#262] as to counts 1–4 of Factory Mutual’s counterclaim is denied.
IT IS FURTHER ORDERED that Automation’s motion for summary
judgment [#264] as to count 8 of Emerson’s fourth amended counterclaim is
denied.
IT IS FURTHER ORDERED that Factory Mutual’s motion for summary
judgment [#266] as to counts 1–4 of Factory Mutual’s counterclaim and count 12
of Automation’s third amended complaint is granted.

CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 22nd day of October, 2012.
- 22 -