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Foremost Farms USA, Cooperative v. Diamond V Mills, Inc.

United States District Court, W.D. Wisconsin

April 18, 2017

FOREMOST FARMS USA, COOPERATIVE, Plaintiff,
v.
DIAMOND V MILLS, INC., Defendant.

          OPINION & ORDER

          JAMES D. PETERSON District Judge

         This is a trademark case. Plaintiff Foremost Farms USA, Cooperative, sells a food ingredient, dried whey powder, under the mark NUTRITEK, which has been federally registered since in 1963. Defendant Diamond V Mills, Inc., sells animal feed supplements using the same mark, NUTRITEK, for which it acquired federal registration in 2015. Foremost contends that Diamond V's infringes its federal and common law trademark rights, and it seeks cancellation of Diamond V's NUTRITEK registration.

         Diamond V moves to dismiss Foremost's complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Dkt. 20. Diamond V argues that its NUTRITEK mark cannot infringe on Foremost's NUTRITEK mark because Diamond V's mark is registered and used for animal feed whereas Foremost's mark is registered and used solely for human consumption. The critical question is not whether the parties' products are identical or directly competitive, but whether potential customers might reasonably believe that the products come from the same source. This is a fact issue ill-suited for resolution at the pleading stage, despite Diamond V's insistence that this is an extraordinary case in which a likelihood of confusion is impossible. The court will deny Diamond V's motion.

         ALLEGATIONS OF FACT

         When evaluating a motion to dismiss for failure to state a claim under Rule 12(b)(6), the “court must accept the complaint's well-pleaded factual allegations as true and draw reasonable inferences from those allegations in the plaintiff's favor.” Transit Express, Inc. v. Ettinger, 246 F.3d 1018, 1023 (7th Cir. 2001). The court takes the following facts from Foremost's amended complaint. Dkt. 16.

         Foremost (through its predecessors, which are immaterial to this motion) has used the mark NUTRITEK in connection with dried whey powder since 1961. The mark was federally registered in 1963 for use with “partially demineralized dried whey for human consumption, in [old U.S.] class 46.” U.S. Registration No. 747, 696. Although its federal registration is for dried whey for human consumption, Foremost's complaint alleges that its dried whey is suitable for and used as an ingredient in products for both human and animal consumption. See, e.g., Dkt. 16, ¶¶ 47, 53. Foremost also alleges that it has sold dried whey under the NUTRITEK mark to “manufacturers, customers and ultimately consumers of animal feed products since at least 1995.” Id. at ¶ 55.

         Diamond V began using the mark NUTRITEK in 2014 or 2015 in connection with animal feed supplements. The mark was federally registered in 2015 for use with “animal feed supplements, in [current international] class 5.” U.S. Registration No. 4, 728, 885. Diamond V's supplements consist of “functional metabolites and fermentation compounds, ” which are added to other ingredients to make animal feed.

         As registered, the marks are identical. But there are subtle typographic differences in the marks as actually used. Both are printed in sans serif fonts and placed on bulk bags. An example of Foremost's packaging is on the left, and an example of Diamond V's is on the right:

         Id., ¶¶ 41, 68. Foremost alleges that the parties use their marks “in overlapping channels of trade” and that they market to “overlapping manufacturers, customers and consumers.” Id., ¶ 72.

         The court has subject matter jurisdiction under 28 U.S.C. §§ 1331 and 1367 because Foremost asserts claims under federal law, and its state-law claims are part of the same case or controversy.

         ANALYSIS

         The gist of Diamond V's motion is that Foremost uses its mark for human consumable products, a market separate and unrelated to the market for animal consumable products where Diamond V uses its mark. Thus, although the parties' marks as registered are identical, Foremost cannot plausibly allege a likelihood of confusion. Diamond V might ultimately prevail on some version of this theory, because even identical marks can be used on distinct products (think DELTA, used at the same time for an airline, plumbing fixtures, and power tools.) But this is not a matter that can be resolved on a motion to dismiss, because Foremost has adequately alleged that the parties use their marks in overlapping markets, which makes a likelihood of confusion plausible. The court will decline to consider the materials outside the pleadings that Diamond V adduces in an attempt to show that Foremost's market is really limited to human products, specifically an ingredient for infant formula.[1]

         When evaluating a motion to dismiss under Rule 12(b)(6), the question is “simply whether the complaint includes factual allegations that state a plausible claim for relief.” BBL, Inc. v. City of Angola, 809 F.3d 317, 325 (7th Cir. 2015); accord Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The plausibility requirement calls for “enough details about the subject-matter of the case to present a story that holds together.” Runnion ex rel. Runnion v. Girl Scouts of Greater Chi. & Nw. Ind., 786 F.3d 510, 526 (7th Cir. 2015) (citation and quotation marks omitted).

         Foremost asserts seven causes of action:

Count I: trademark infringement under the Lanham Act;
Count II: trademark infringement under common law;
Count III: false designation of origin under the ...

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