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

United States District Court, W.D. Wisconsin

February 9, 2018

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

          OPINION & ORDER

          JAMES D. PETERSON, DISTRICT JUDGE

         This is a dispute over the trademark NUTRITEK, to which both parties claim rights. Plaintiff Foremost Farms USA, Cooperative, uses NUTRITEK for demineralized whey powder, a by-product of cheese-making used primarily as an ingredient in processed foods, but sometimes as an ingredient in animal feed. Defendant Diamond V Mills, Inc., uses NUTRITEK for fermented yeast powder, used as a supplement in dairy cattle feed. Both parties have federal registrations for their marks, but Foremost alleges that it is the senior user and that Diamond V infringes its trademark rights.

         Diamond V moves for summary judgment, asking the court to decide as a matter of law that there is no likelihood of confusion. Diamond V's central premise is that the parties' branded products are sold in distinct markets. According to Diamond V, Foremost sells NUTRITEK-brand whey powder only for human consumption. It sells lesser-quality whey powder for use in animal feed, but only as an unbranded commodity. There is no likelihood of confusion, the argument goes, because the Foremost does not use its NUTRITEK mark in the animal feed market, and Diamond V does not sell NUTRITEK products as an ingredient for human foods.

         The court will deny Diamond V's motion. There is no dispute that Foremost sells demineralized whey powder as an ingredient for animal feed. But how it brands the product when it is sold for animal feed is genuinely disputed. Foremost adduces evidence that the product destined for animal feed is sometimes delivered in bags bearing the NUTRITEK mark, that its sales force and customers refer to the product as “NUTRITEK, ” and that its invoices use the term “NUTRITEK.” This evidence does not compel a jury to find that Foremost uses NUTRITEK as a trademark in the animal feed market, but it is enough to raise a genuine dispute of fact that requires trial.

         The court will grant Diamond V's motion for summary judgment on Foremost's separate claim for unjust enrichment, but otherwise Diamond V's motion is denied.

         PRELIMINARY MATTERS

         The court begins with two preliminary matters. First, Foremost moves to strike parts of Diamond V's motion for summary judgment for failure to comply with this court's procedures. Dkt. 87. Some of Diamond V's proposed findings of fact cite documents that have not been filed, cite wrong documents, and lack evidentiary support. But Foremost essentially asks for a sanction, and any sanction imposed by a court must be proportionate to the underlying violation. See Salgado by Salgado v. Gen. Motors Corp., 150 F.3d 735, 740 (7th Cir. 1998). The court will disregard proposed facts that significantly fail to comply with the court's procedures, but it will not strike any part of the motion.

         Second, Diamond V asks for leave to file corrected proposed findings of facts. Dkt. 99. The court will not force Foremost to expend unnecessary costs by requiring it to respond to the corrected proposed findings of fact. The court will deny Diamond V's motion for leave to file corrected proposed findings of facts.

         The main issue at this point turns on Foremost's evidence of how it uses the NUTRITEK mark, an issue not substantially affected by the deficiencies in Diamond V's proposed findings of fact. So it is fair to both sides to decide Diamond V's summary judgment motion on the merits.

         UNDISPUTED FACTS

         The following background facts are undisputed unless otherwise noted. Additional facts are discussed where pertinent in the analysis section.

         A. Foremost's NUTRITEK

         Foremost is a dairy cooperative based in Baraboo, Wisconsin. Foremost processes milk produced by its member farms to make dairy products, including fluid milk, butter, and cheese.

         Foremost also processes whey, a fluid by-product of cheese-making, into ingredients for processed foods. Besides water, whey comprises protein, lactose, and a variety of minerals. These components, especially the protein and the lactose, are useful as food ingredients. For many food applications, some minerals are removed to improve the taste, texture, and nutritional value of the final food product.

         Beginning in 1961, Foremost (through a predecessor) began selling partially demineralized whey powder as a food ingredient under the NUTRITEK mark. In 1963, the United States Patent & Trademark Office (USPTO) registered Foremost's NUTRITEK mark for use with “partially demineralized dried whey for human consumption, ” in old U.S. class 46. See U.S. Registration No. 747, 696.

         Foremost sells most of its demineralized whey powder as an ingredient for human food. It sells several varieties of NUTRITEK, which have been demineralized to different extents. For example, NUTRITEK 250 has 25% of the minerals removed; it is used in food products such as salad dressing. NUTRITEK 900 has 90% of the minerals removed; it is used as an ingredient in infant formula.

         For reasons not fully explained in the record, sometimes the demineralized whey powder does not meet the standards for human consumption. Foremost sells that “downgrade” demineralized whey through a distributor as an ingredient for animal feed. The downgrade product is sold at a significantly lower price than Foremost's human food products. Although only a small proportion of Foremost's demineralized whey powder is sold as an animal feed ingredient, the amount is nevertheless significant. Since 1998, Foremost has sold more than 12 million pounds of demineralized whey powder in the animal feed market, representing more than $3.2 million in sales. Dkt. 119, ¶ 29.

         The parties dispute whether Foremost actually uses the NUTRITEK mark in the animal feed market. Diamond V contends that the demineralized whey powder sold as an animal feed ingredient is essentially scrap, sold as an unbranded commodity. But Foremost adduces evidence that it sometimes delivers its animal feed product in bulk bags bearing the NUTRITEK mark. Foremost sometimes delivers the product in 2, 000-pound totes that do not bear the NUTRITEK mark. Dkt. 125, ¶ 66.

         Foremost sells demineralized whey powder for animal feed market through an exclusive distributor, Diversified Ingredients, Inc. Foremost adduces a declaration from Matthew Collins, a trader from Diversified, who states that he and his customers refer to Foremost's demineralized whey powder by a variety of terms, but that they all understand that they are referring to Foremost's NUTRITEK product. Dkt. 81, ¶¶ 6-7, 10-11. Collins has attached to his declaration invoices that show sales of demineralized whey powder. Some invoices refer to the whey powder as NUTRITEK, and others refer to it by other names. Dkt. 81-1.

         B. Diamond V's NUTRITEK

         Diamond V, based in Cedar Rapids, Iowa, makes animal feed supplements using microbial fermentation. Diamond V's product at issue here is fermented yeast powder that reduces inflammation in the digestive tracts of lactating cows. Diamond V sells this product under the NUTRITEK mark to animal feed ingredient manufacturers, to animal feed ingredient distributors, to animal feed manufacturers, and to dairy producers.

         On February 19, 2014, Diamond V applied to register its NUTRITEK mark on an intent-to-use basis. Diamond V contends that the first sale of its NUTRITEK product was in 2014 through a licensee, Dkt. 54, at 5 and Dkt. 85-35, at 2-3, even though Diamond V's filings with the USPTO indicate that the mark's first use in commerce was on February 11, 2015, Dkt. 85-47, at 4. The USPTO registered Diamond V's NUTRITEK mark on April 28, 2015, for “animal feed supplements” in Class 5. See U.S. Registration No. 4, 728, 885.

         C. Jurisdiction

         The court has subject matter jurisdiction under 28 U.S.C. § 1331 because Foremost asserts claims under the Lanham Act, 15 U.S.C. §§ 1114, 1125. The court has supplemental ...


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