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Fabick, Inc. v. Fabco Equipment, Inc.

United States District Court, W.D. Wisconsin

November 8, 2017

FABICK, INC., Plaintiff,
v.
FABCO EQUIPMENT, INC. and JFTCO, INC., Defendants.

          OPINION AND ORDER

          WILLIAM M. CONLEY District Judge

         This case illustrates some of the perils of going into business with family members, including the obvious risks of intermingling business and personal relationships, but also the less obvious risks associated with using a family name as a trademark. Here, plaintiff Fabick, Inc., asserts claims of trademark infringement under both federal and state common law against defendant FABCO Equipment, Inc., and JFTCO, Inc., based on defendants' use of the “Fabick CAT” name beginning in July 2015. The parties' cross motions for summary judgment are before the court. (Dkt. ##90, 117.) For the reasons that follow, the court will deny both motions, with one exception: defendant FABCO's motion for judgment in its favor on any claim of direct trademark infringement.

         PRELIMINARY ISSUES

         I. Motion to Strike Defendants' Affirmative Defenses (dkt. #195)

         In a prior order, the court granted defendants' motion to dismiss count I of plaintiff's first amended complaint and directed plaintiff to file a second amended complaint (dkt. #88), which it did (dkt. #143). In response, defendants filed their respective answers. (Dkt. ##144, 145.) Plaintiff now moves to strike two defenses which it contends were raised for the first time in the amended answers without leave of court: (1) a fair use defense under 15 U.S.C. § 1115(b)(4), and (2) a fraudulent procurement defense under 15 U.S.C. § 1115(b)(1).

         In opposing the motion, defendants contend generally that the motion should be denied solely “because a plaintiff's new complaint wipes away prior pleadings, [and, therefore, ] the amended complaint opens the door for defendants to raise new and previously unmentioned affirmative defenses.” (Defs.' Opp'n (dkt. #207) 1-2 (quoting Chasensky v. Walker, 740 F.3d 1088, 1094 (7th Cir. 2014)).) More precisely, however, Chasensky and other cases like it stand for the proposition that in answering the amended complaint, a party may respond to new allegations with new affirmative defenses. Similarly, if the amended complaint does not contain new allegations giving rise to new defenses, then the defendant must seek leave to amend its answer to add those new defenses. See generally 6 Charles Alan Wright, et al., Fed. Prac. & Proc. Civ. § 1476 (3d ed.) (“[W]hen the complaint is amended defendant should be entitled to amend the answer to meet the contents of the new complaint.”).

         With respect to the § 1115(b)(4), plaintiff asserts factual allegations for the first time in its second amended complaint that relate to fair use. (Compare 2d Am. Compl. (dkt. #143) ¶ 54 (“FABCO asserts that prior to selling its assets to JFTCO, and in spite of FABCO having previously sold the Fabick stock and the FABICK Marks to Jay Fabick, that FABCO had a common law ‘fair use' right to use the ‘Fabick' name in FABCO's business operations.”), with 1st Am. Compl. (dkt. #32) (containing no reference to “fair use”).) As such, the court finds that defendants reasonably added a fair use defense in their respective answers to the second amended complaint.

         Defendants' new affirmative defense of fraudulent procurement under 15 U.S.C. § 1115(b)(1), however, presents a different situation. With respect to this defense, defendants do not argue that new allegations in plaintiff's second amended complaint open the door to this defense; rather, defendants argue that they “did not have a basis to plead that Plaintiff fraudulently procured its trademark rights at the outset of this case.” (Defs.' Opp'n (dkt. #207) 4.) Instead, defendants maintain they only learned of the availability of this defense during Jay Fabick's deposition in this lawsuit, when he purportedly testified that he was award of the prior use of the Fabick mark by the John Fabick Tractor Company. (Id.) While perhaps this justified granting leave to amend their respective answers under Rule 15(a)(2), defendants did not seek leave to add this new defense either before or at the time they filed their respective amended answers. Still, the court is reluctant to exalt form over substance, particularly when answering an amended complaint may have seemed a convenient (if somewhat underhanded) opportunity to add this new defense. As such, the court will treat defendants' opposition as a motion for leave to amend their answers to add a defense under 15 U.S.C. § 1115(b)(1).

         Typically, leave to amend should be “freely” given. Fed.R.Civ.P. 15(a)(2). Notwithstanding this “liberal attitude towards the amendment of pleadings, courts in their sound discretion may deny a proposed amendment if the moving party has unduly delayed in filing the motion, if the opposing party would suffer undue prejudice, or if the pleading is futile.” Soltys v. Costello, 520 F.3d 737, 743 (7th Cir. 2008) (internal quotation omitted). Accepting defendants' contention that they did not know of the availability of this defense until Jay Fabick's deposition, the deposition was held on March 14, 2017, while defendants' respective answers were not filed until June 28, 2017, more than three months later. Admittedly, defendants' answers to the second amended complaint were not due until that date, but defendants offer no reason for not seeking to amend more promptly, a particularly poor choice since even defendants concede the fraudulent procurement defense was not triggered by new allegations in the second amended complaint. In sum, defendants could have (and should have) sought leave to add this new defense shortly after Jay Fabick's deposition.

         Still, three months is not an inordinate delay absent some prejudice to plaintiff, and that is where plaintiff's opposition stalls. See Dubicz v. Commonwealth Edison Co., 377 F.3d 787, 792 (7th Cir. 2004) (“Delay, standing alone, may prove an insufficient ground to warrant denial of leave to amend the complaint; rather, the degree of prejudice to the opposing party is a significant factor in determining whether the lateness of the request ought to bar filing.” (internal citation and quotation marks omitted)). As far as the court can discern, defendants' unclean hands defense touches on the same factual allegations as those that would support a fraudulent procurement defense, and other than complaining generally about its need to conduct discovery relative to these defenses, plaintiff has identified no way in which its discovery efforts or trial preparations would be prejudiced by the late addition of this defense. See generally 6 J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition § 31:60 at 31-160 to 31-161 (discussing interplay between unclean hands defense based on fraud in obtaining registration and a § 1115(b)(1) defense).

         For these reasons, the court will deny plaintiff's motion to strike defendants' fair use and fraudulent procurement defenses under 15 U.S.C. §§ 1115(b)(4) and 1115(b)(1), respectively.

         II. Reserved Portion of Motion to Compel (dkt. #211)

         Defendants filed a motion to compel discovery or, alternatively, to preclude evidence and argument at trial on advice of counsel. (Dkt. #211.) After hearing argument from the parties on that motion, the court previously: (1) granted it in part by striking plaintiff's reliance on an advice of counsel defense in its summary judgment briefing and precluding certain related testimony at trial; (2) denied it in part by refusing to compel production of one of the categories of privileged documents; and (3) reserved on compelling production of the other category of documents to defendant JFTCO pending additional briefing from the parties. (10/5/17 Order (dkt. #215).) Having now reviewed certain of the withheld documents in camera and considered the parties' additional briefing, the court agrees with defendants that FABCO's right to attorney-client privilege transferred at the time of JFTCO's acquisition of substantially all of FABCO's assets. Accordingly, the court will direct plaintiff to produce the “first category” of documents identified in the court's prior order and filed by plaintiff for in camera review.

         As set forth in defendants' supplemental briefing, a corporation's rights and authority with respect to the attorney-client privilege passes to the new management along with control. See Commodity Futures Trading Comm'n v. Weintraub, 471 U.S. 343, 349 (1985); see also Am. Int'l Specialty Lines Ins. Co. v. NWI-I, Inc., 240 F.R.D. 401, 407 (N.D. Ill. 2007) (recognizing that following Weintraub, “several courts have recognized that assignees or transferees of most, if not all, of a corporation's assets will have the authority to assert or waive the attorney-client privilege” (internal citations omitted)). (See also Defs.' Suppl. Br. (dkt. #217) 2-3 & n.3 (citing other cases in support).)

         In response, plaintiff does not cite any legal authority to the contrary, but instead argues that any attorney-client privilege attaching to the documents at issue had transferred from FABCO to plaintiff Fabick, Inc., at the time of the 1997 transfer of Fabick stock to Jay Fabick, and therefore had already been lost before the 2015 asset acquisition by JFTCO. (Pl.'s Opp'n (dkt. #218) 1.) The argument presumes that the attorney's involved in the creation of these communications from approximately 1993 to 1996 was solely representing Fabick's interest, when in fact the representation was plainly a joint one in which the law firm of Foley & Lardner was acting in the collective interest of two clients -- FABCO and Fabick -- meaning both had the right to the privilege. As a result, in transferring its ownership interests to Fabick in 1997, FABCO only transferred those interests held by Fabick, including Fabick's attorney-client privilege, but not that owed to FABCO. Indeed, this is the only way to interpret Foley & Lardner's agreeing to do the work of Fabick, Inc., and its far longer-standing, ongoing representation of FABCO, as Fabick's subsidiary entity. This is also the only way to make sense of plaintiff's position that FABCO was intimately involved in the trademark application process by securing representation by Foley & Lardner and paying the fees and expenses incurred as part of that process. Plaintiff simply cannot have it both ways.[1]

         Finally, in its supplemental brief, plaintiff reiterates its argument that even if FABCO retained a joint privilege after 1997, it still cannot unilaterally transfer that privilege to a third-party without Fabick's consent. True enough, but there are at least two problems with that argument on the facts here. First, JFTCO is not a typical third-party; rather, it sits in FABCO's shoes in light of its acquisition of substantially all of FABCO's assets. The question then is whether Fabick had a reasonable expectation that FABCO would not be allowed to transfer the joint privilege to a successor entity. For the most part, courts have concluded that the privilege transfers to the successor corporation even when that privilege arises out of a joint representation. See, e.g., 625 Milwaukee, LLC, v. Switch & Data Facilities Co., LLC, No. 06-C-0727, 2008 WL 582564, at *4 (E.D. Wis. Feb. 29, 2008); Bass Public Ltd. Co. v. Promus Cos., Inc., 868 F.Supp. 615, 619-20 (S.D.N.Y 1994); Polycast Tech. Corp. v. Uniroyal, Inc., 125 F.R.D. 47, 49 (S.D.N.Y. 1989). In addition, as defendants point out, and plaintiff fails to respond, the privilege was effectively waived in light of Fabick's suing FABCO under the adverse litigation exception to joint representation privilege. See In re Teleglobe Commc'ns Corp., 493 F.3d 345, 366 (3d Cir. 2007), as amended (Oct. 12, 2007).

         Accordingly, the court will grant defendants' motion to compel in part, and will order plaintiff to produce promptly to defendants the documents identified by the court in its prior order as the “first category.”

         SUMMARY JUDGMENT OPINION

         UNDISPUTED FACTS[2]

         A. Overview of the Parties

         Plaintiff Fabick, Inc., is a Wisconsin corporation, with its principal place of business in Madison, Wisconsin. Fabick is in the business of developing, selling and applying protective coatings and sealants for various construction, commercial, industrial, mining, agricultural, equipment, containment, maritime, military and automotive uses.

         Defendant FABCO Equipment, Inc., was a Wisconsin corporation, with its principal place of business in Milwaukee, Wisconsin. On July 1, 2015, co-defendant JFTCO, Inc., purchased substantially all of the assets of FABCO. Also on that date, FABCO changed its name to FEI Legacy, Inc., and that entity was dissolved on June 29, 2016.[3] Before July 1, 2015, FABCO operated as the exclusive Caterpillar dealer for Wisconsin and certain counties comprising the Upper Peninsula (“UP” of Michigan). In that capacity, FABCO was engaged in the business of selling, renting, servicing and repairing Caterpillar branded heavy equipment for use in a variety of industries including construction, agriculture, demolition and mining.

         JFTCO, Inc., was organized as a Delaware corporation on March 13, 2015, and it is registered as a foreign corporation in the state of Wisconsin, effective June 5, 2015. JFTCO is a wholly-owned subsidiary of the John Fabick Tractor Company, which is a Caterpillar dealership headquartered in Fenton, Missouri. On July 1, 2015, JFTCO began operating in Wisconsin and Northern Michigan as the exclusive Caterpillar dealership under the name “Fabick CAT.” JFTCO's primary business is the same as that previously engaged in by FABCO. Indeed, its assigned Caterpillar dealership territory is identical. Until July 1, 2015, the John Fabick Tractor Company was the Caterpillar dealer for an area encompassing parts of Missouri and Illinois, one county in Oklahoma and one county in Kansas.

         B. History of FABCO

         The history of FABCO begins with a falling out between siblings in the previous generation of Fabicks, particularly John Fabick's sons Joseph Fabick, Sr. (“Joe”)[4] and his brothers. In 1982, the John Fabick Tractor Company acquired two pre-existing Caterpillar dealerships serving Wisconsin and the Upper Peninsula of Michigan with the intent that Joe could ultimately own a separate newly-formed Caterpillar dealership. Prior to acquiring these dealerships, Joe had worked with his brothers for the John Fabick Tractor Company, which ran a highly successful Caterpillar dealership serving its designated territory. So, in 1982, Joe moved to Wisconsin, founded FABCO, and served as President and CEO of FABCO from 1982 until 2001 over its own highly successful dealership. Joe then turned over FABCO to his son Jeré Fabick (“Jeré”) and assumed the title of Chairman of FABCO, until his retirement in 2002.

         FABCO continued to operate the Caterpillar dealership at multiple retail locations in Wisconsin and the UP of Michigan until it was sold on June 30, 2015. Within its territory, FABCO had three different types of location: (1) FABCO Equipment, primarily dealing with Caterpillar equipment and machines; (2) FABCO Power Systems, primarily dealing with Caterpillar engines and generators; and (3) FABCO Rents, which provided contractors with daily, weekly, monthly or longer-term rentals of equipment, usually the “smaller end of the Caterpillar line of equipment.” FABCO Equipment and FABCO Power Systems may have been combined in one location, but FABCO Rents locations were independent, standalone facilities. FABCO sold new and used Caterpillar equipment, including Caterpillar trucks (at least for a few years) and attachments for Caterpillar equipment, such as snow wings. FABCO also serviced equipment, sold parts for Caterpillar machines and installed those parts as a function of its service component. FABCO customers' industries covered farming, mining, manufacturing, government entities and municipalities, construction and contractors.

         Many of Joe's eight children were employed by FABCO at some point in time. Joseph Fabick, Jr. (“Jay”) worked at FABCO from 1982 until December 31, 1997. Jay's brother Jeré worked for FABCO from 1982 until its sale to JFTCO on June 30, 2015. Jeré became the regional manager of FABCO's Madison and La Crosse branches in 1992 and held that position for about three years. From 1995 until 2001, Jeré was the Executive Vice President of FABCO. In 2001, he became its President and CEO. Beginning in June 2002, Jeré and his father Joe became the sole shareholders of FABCO; before that time, the shareholders included Joe, his eight children (including Jay and Jeré) and seventeen grandchildren.

         In 2004, Jeré became the sole shareholder of FABCO. Jeré remained the President, CEO and sole shareholder of FABCO until FABCO ceased its operations and sold its assets to JFTCO. Currently, Jeré is the President of the John Fabick Tractor Company and its wholly owned subsidiaries, including JFTCO. He is also the Co-Dealer Principal of both the John Fabick Tractor Company and JFTCO. Doug Fabick is the current CEO and the other Co-Dealer Principal of the John Fabick Tractor Company.

         For over a decade, FABCO primarily used the following mark in commerce:

         (Image Omitted)

         (Defs.' Add'l PFOFs (dkt. #153) ¶ 103 (citing Jeré Fabick Decl. (dkt. #123) ¶ 18).)

         C. History of Fabick, Inc.

         Around the time that Jeré became the heir apparent of FABCO, Fabick was formed and began operating as a division of FABCO, originally identified as FABCO Surface Protection for about a year before it was incorporated in December 1993. Fabick's business focused primarily on spray-on bedliners for pickup trucks and similar vehicles, though its products provide protection and coating in a variety of applications for an assortment of products, including products owned and operated by defendants' customers. At the time it was incorporated, FABCO owned 100% of Fabick's stock, and Joe was the majority shareholder of FABCO. At some point, Joe acquired 25% of the Fabick stock.

         Jay was instrumental in the startup and operation of Fabick, and he was centrally involved in the business from its inception, including taking a leave of absence from his FABCO duties in 1995 to concentrate his efforts on building Fabick. During this time, Jay remained employed by FABCO as the Vice President of Product Support. Plaintiff also contends that Joe was also involved in Fabick's startup, and according to Jay, Joe was “probably the biggest supporter and promoter of Fabick, Inc.” (Pl.'s Reply to PFOFs (dkt. #175) ¶ 56.)

         Tom Svetnicka, currently the Vice President of Marketing for JFTCO, held positions in marketing and advertising with FABCO dating back to 1987. Svetnicka was also involved in Fabick's startup, though the parties dispute the extent of his involvement. At a minimum, Svetnicka attended at least one business meeting with a business consultant regarding Fabick's startup, created a list of potential names for Fabick, though “Fabick” was not on that list, was involved in creating and designing the original logo for Fabick, including the color scheme, and assisted in creating an advertisement for Fabick.[5]

         While owned by FABCO, Fabick had access to and used FABCO's customer lists, marketing personnel and product service representatives (“PSRs”) to build its business. Fabick created a sales manual and a sales kit for use by PSRs, which described Fabick's products and services. Joe also sent a letter to PSRs, describing Fabick's business.[6] Fabick similarly participated in FABCO customer meetings and seminars and FABCO trade shows, with Fabick displaying its own products and brochures. Fabick further sent direct mail pieces to FABCO's customer list, which promoted its products and services. Finally, Fabick advertised in the same media as FABCO, including Western Builder publication and Terra Construction and Engineering Corporation's publication.

         On December 30, 1997, Jay's employment was formally terminated by FABCO. FABCO negotiated with Jay and ultimately offered him a severance package that included taking over Fabick, Inc., as its sole owner. On December 31, 1997, FABCO and Joe transferred 100% of the corporation's stock in Fabick to Jay. Since acquiring the stock, Jay has been the President and sole shareholder of Fabick. After Fabick and Jay separated from FABCO, Fabick and FABCO operated entirely independently without incident for a number of years.

         D. Fabick's Trademarks, Service Marks and Domain Names

         On March 25, 1994, while still a wholly-owned subsidiary of FABCO, Fabick filed a trademark application with the United States Patent and Trademark Office for the mark “FABICK” for a “polyurethane-based and polyureabased sealers and protectants to be applied as a coating to hard or flexible surfaces.” On April 11, 1994, Fabick also filed a service mark application with the USPTO for the mark “FABICK.” On August 22, 1995, Fabick's service mark application was granted, with a date of first use of October 5, 1995, identified. On December 4, 1995, Fabick registered the domain name www.fabick.com. Finally, on January 14, 1997, while FABCO still owned 75% of Fabick's stock, its trademark application was granted. (See Dettmann Decl., Exs. TT, UU (dkt. ##113-10, 113-11).)

         In his capacity as President and based on 20 years' experience with Fabick, as well as with the coatings and sealants industry, Jay represents that the FABICK marks have become well known in the coatings and sealants industry. (Pl.'s PFOFs (dkt. #93) ¶ 85 (citing Jay Fabick Decl. (dkt. #105) ¶ 28).) Fabick's basic logo, depicted below, has remained unchanged since Fabick filed its trademark and service mark applications (including this logo in both):

         (Image Omitted)

         (Pls.' Reply to PFOFs (dkt. #175) ¶ 85.a (citing Dettmann Decl., Exs. RR, SS (dkt. ##113-8, 113-9).) Defendants direct the court to two other logos to argue that Fabick has used a number of different logos, though these two share the same basic attributes as the one above:

         (Image Omitted)

         (Defs.' Resp. to Pl.'s PFOFs (dkt. #150) ¶ 85.a (citing Schroeder Decl., Ex. P (dkt. #125-16); Schroeder Decl., Ex. WW (dkt. #165-2).)

         DISCUSSION

         Plaintiff asserts claims against both JFTCO and FABCO for trademark infringement and false advertising under the Lanham Act, 15 U.S.C. § 1114(1) and § 1125 (claims 1 and 2) and for trademark infringement under state common law (claim 3). (2d Am. Compl. (dkt. #143).) The parties' cross motions for summary judgment raise a variety of arguments, including several that apply to all three claims, which the court attempts to address in an orderly fashion in this opinion.

         I. FABCO's Liability

         As an initial matter, defendants seek summary judgment as to all claims asserted against defendant FABCO because it did not use the name FABICK in commerce.[7] To demonstrate direct infringement, plaintiff's federal statutory claims and the state common law claim require “use in commerce” to be liable. See 15 U.S.C. § 1114(1) (requiring proof of defendant's “use in commerce and reproduction, counterfeit, copy, or colorable imitation of a registered mark 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 . . . ” (emphasis added)); 15 U.S.C. § 1125(a)(1)(A) (providing a claim for false advertising against “any person who . . . uses in commerce . . . any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which - (A) is likely to cause confusion . . .” (emphasis added)); Echo Travel, Inc. v. Travel Assocs., Inc., 870 F.2d 1264, 1266 (7th Cir. 1989) (explaining that Wisconsin common law claim for trademark infringement requires the same core elements as under federal law).

         To understand this basis for summary judgment, the parties provide additional details about the acquisition of FABCO, creation of JFTCO and use of the Fabick CAT name. In 2014, Jeré began considering a succession plan for FABCO. Specifically, in an effort to keep FABCO in the Fabick family, Jeré considered approaching his cousin, Doug Fabick, the CEO of the John Fabick Tractor Company, which originally formed FABCO in 1982, about a possible acquisition or merger. Before approaching the John Fabick Tractor Company regarding a possible merger or acquisition, however, Jeré first approached Caterpillar to get its approval. During the fall of 2014, FABCO and the John Fabick Tractor Company then engaged in discussions with Caterpillar to obtain final approval of the proposed acquisition.

         A December 9, 2014, letter from Jeré and Doug to Caterpillar, states that “[t]he intent is to begin changing the ‘FABCO' brand to ‘FABCO - a Fabick family company' immediately and eventually moving to the Fabick brand.” (Pl.'s PFOFs (dkt. #93) ¶ 152 (citing Dettmann, Decl., Ex. K (dkt. #109-7)).) Jeré testified at his deposition that this brand name change was “intended to provide a smooth transition. You know, they know the Fabick family name, but probably to get the Fabick family name out a little bit more prominently in advance of -- as part of the transition process.” (Defs.' Resp. to Pl.'s PFOFs (dkt. #150) ¶ 153 (quoting Jeré Fabick Dep. (dkt. #126) 108).)

         By December of 2014, the decision was made to rebrand FABCO as “Fabick CAT.” JFTCO was then formed in 2015 in anticipation of the purchase of FABCO's assets for the purposes of operating the Caterpillar dealerships located in Wisconsin and Northern Michigan. Caterpillar approved the merger on January 27, 2015.

         In February, the merger, including the planned rebranding to Fabick CAT, was communicated to employees, customers and partners of both companies. The latter announcement stated that: FABCO and the John Fabick Tractor Company “have reached an agreement to join FABCO and Fabick CAT into one Caterpillar dealership”; “[o]ver the next several months, FABCO/Fabick teams will be working together to complete this transformation with an expected closing date of June 30, 2015”; the “the FABCO identity will transition over time to the Fabick Cat identity; [and] this change is expected to take place over the next 36 months.” (Pl.'s PFOFs (dkt. #93) ¶ 163 (quoting Dettmann Decl., Ex. O (dkt. #109-11).)

         A February 2015 press release also used the “Fabick CAT” name and logo. (Id. at ¶ 166 (citing Dettmann Decl., Ex. M (dkt. #109-9).) FABCO issued similar notices and advertisements between February and June 30, 2015, which referenced bringing “Fabick family dealerships back together” and used the phrase “A Fabick Family Company.” (Id. at ¶¶ 167-75.) Defendants do not dispute any of this, although they point out that any reference to “Fabick” by FABCO was only “in a limited number of advertisements that were placed over a very brief period of time.” (See, e.g., Defs.' Resp. to Pl.'s PFOFs (dkt. #175) ¶ 173.) Plaintiff also points out that Tom Svetnicka, the current Vice President of Marketing for JFTCO who held prior positions in marketing and advertising with FABCO dating back to 1987, created various iterations of the Fabick CAT logo.[8]

         While defendants originally intended to phase out FABCO and transition to Fabick CAT over a 36-month period, the John Fabick Tractor Company and JFTCO decided to accelerate the rebranding. Accordingly, as of July 1, 2015, the date JFTCO began operating the Wisconsin and Northern Michigan Caterpillar dealership, FABCO logos were replaced with Fabick logos. JFTCO spent over $250, 000 on new signage in 2015, and approximately $45, 000 more in 2016. FABCO's websites are no longer operational. On certain signs in Madison, Wisconsin and Marquette, Michigan, the FABCO signs were replaced with signs containing only the word “Fabick, ” without any reference to “CAT, ” although after plaintiff's filing of this complaint, which referenced the “Fabick” sign on the Madison building facing the Beltline, JFTCO removed these signs.

         On this record, defendants maintain that neither FABCO nor FEI Legacy used the Fabick CAT mark in commerce. Instead, the first use of the Fabick CAT mark in commerce occurred after the APA was consummated on July 1, 2015, and thus after FABCO ceased all operations. Defendants argue, therefore, that FABCO's responsibility is limited to using the Fabick name in announcements of the merger, which courts have generally found forms an insufficient basis to qualify as “use in commerce.” See Sensient Techs. Corp. v. SensoryEfforts Flavor Co., 613 F.3d 754, 762-63 (8th Cir. 2010) (affirming grant of summary judgment to defendant, finding “two customer presentations, a press release, an announcement, and a website” without any sale or transport of goods containing the mark insufficient to demonstrate “use in commerce”); Aycock Eng'g, Inc. v. Airflite, Inc., 560 F.3d 1350, 1359-60 (Fed. Cir. 2009) (“[M]ere preparations to use that mark sometime in the future will not do.”).

         In response, plaintiff argues that FABCO is liable for contributory infringement because “FABCO was directly involved in the joint decision to begin using the infringing Fabick CAT tradename, ” including issuing a press release, accelerating the transition to that name, and using one of its employees to create the Fabick CAT logo. (Pl.'s Opp'n (dkt. #147) 4.)[9] To establish contributory infringement, however, a plaintiff must show intent on the part of the defendant and knowledge of the wrongful activities of the direct infringer. See David Berg & Co. v. Gatto Int'l Trading Co., 884 F.2d 306, 311 (7th Cir. 1989). Contributory infringement typically occurs in the context of a manufacturer - distributor relationship:

A manufacturer can be held liable for contributory trademark infringement even if it does not itself mislabel the goods or deceive any customers. If a distributor “[i]ntentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement the ... distributor is contributorily responsible....”

Id. (quoting Inwood Laboratories v. Ives Laboratories, 456 U.S. 844, 853-54 (1982)). Still, as plaintiff points out, the Seventh Circuit in Hard Rock Café Licensing Corp. v. Concession Services, Inc., 955 F.2d 1143 (7th Cir. 1993), “treated trademark infringement as a species of tort” and “have turned to common law to guide our inquiry into the appropriate boundaries of liability, ” including expanding the doctrine to cover landlords and licensees, for example. Id. at 1148-49.

         Here, plaintiff contends that FABCO knew of its FABICK trademarks and, at a minimum, facilitated JFTCO's adoption of a trademark that infringes plaintiff's. Notwithstanding defendants' denials, moreover, there are factual disputes as to the extent of FABCO's knowledge, as described in the section of the opinion below dealing with defendant's unclean hands defense. (See infra Opinion § IV.) In particular, there appears to be no dispute that FABCO was involved in arranging and paying for Fabick's legal representation in 1994 and 1995 to pursue the trademark applications, nor that Tom Svetnicka (a FABCO employee at the time and a current JFTCO employee) was involved in designing the Fabick mark. As such, plaintiff has raised a genuine issue of material fact as to whether FABCO had actual knowledge of the Fabick trademarks.

         Alternatively, defendants argue that the decision to use the Fabick name was made by the John Fabick Tractor Company, consistent with its own, long-standing use of the Fabick name, and not by FABCO. But here, too, the record permits a contrary inference, including FABCO's involvement in the discussions with the John Fabick Tractor Company and Caterpillar on post-acquisition, re-branding plans. Moreover, Svetnicka contributed to the design of the Fabick CAT lock up, even if the contribution were limited to italicizing the Fabick name to resemble the FABCO mark.

         On this record, therefore, a reasonable jury could find that FABCO was involved in the decision to adopt the Fabick name, sufficient to hold it liable under a contributory infringement theory, although not that FABCO used the mark in commerce itself. As such, the court will grant judgment to FABCO on any direct infringement claim, but will deny it as to a claim for contributory infringement.

         II. Prior Use of ...


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