Posner won’t butter up Dairy Maiden: In trademark dilution, fame isn’t everything

Originally posted 2016-03-06 14:52:52. Republished by Blog Post Promoter

Is this logo even allowed in the first place?

There is a puzzling aspect to much of what emits from U.S. Circuit Court Judge Richard Posner, he of the “strange new respect” earned on certain issues not (usually) germane to this blog.  But his expression of puzzlement in Hugunin v. Land O’ Lakes, Inc. (full opinion here), while impossibly coy, has done a great service in drawing the limits on just how far fame will and won’t get “enforcement” efforts for a trademark under federal trademark dilution statute.  This one just may result in another request to Congress to tweak the language … again.

As it stands now, however, even the holder of a famous trademark can’t, as explained by this important Seventh Circuit opinion, rely on a dilution claim to shut down all non-competing junior users just because a trademark is super famous.  Let’s work through this along with the opinion, which is a short one, and very clear as a result.

Procedurally speaking, the setting is as follows:  James Hugunin owns, basically, a bait and tackle shop in northeastern Wisconsin — the region called the “Land O’ Lakes,” which is what he called his bait shop.  In fact, he’s been calling his bait shop that for a long time, and even had a registered word trademark* for LAND O’ LAKES for use in connection with worms and other things like that for ages, but the registration lapsed.  Attempting to re-up during this, the uber-due-diligence and all-monetizing, all-the-time era of “brand equity,” Hugunin was detected at the border, presumably by the monitoring services. He was then confronted by the fountain-pen-tie-and-vest gang over at the dairy outfit Land O’ Lakes, which moved $12 billion worth of delicious artery-clogging stuff in 2012, according to the opinion.

The stout dairymen demanded tribute from the hook-and-reel shack:  A so-called “license,” or else immediate ceasement and desistation of the trademark he’d been using for years.  An opposition in the TTAB ensued, which was then stayed pending big-boy District Court litigation brought by Hugunin who, it turns out, was a poorly chosen “mark.”  For his part there were affirmative claims, too, filed as a matter of course, but they are not of consequence and are justifiably both dumped and dumped on; nothing notable there.  The trial court dismissed everyone’s claims on summary judgment, up it went to the Circuit Court of Appeals.

Question number one, focusing on the “real” complaint here, namely the one originally styled as an opposition by the dairy Land O’ Lakes:  Is there a “classic” trademark infringement claim here?

No, says the court, for two reasons (emphasis added):

We’re puzzled that the dairy company should have been worried by Hugunin’s use of the same trademark. Though besides sponsoring the fishing tournament the company has advertised in fishing magazines and made other appeals to fishermen to buy its dairy products, it neither makes nor sells any devices or materials used in fishing (such as hooks, lines, sinkers, floats, rods, reels, baits, lures, spears, nets, gaffs, traps, waders, and tackle boxes—compendiously, fishing tackle)—any products, therefore, that might be confused with Hugunin’s fishing tackle. It would be strange indeed for a dairy company to manufacture a product so remote from milk, butter, and cream, and there is no sign that the dairy company intends to take the plunge.

The court here makes two determinations, one of which strikes me as particularly notable, though it’s not the main point of this post.  The first is that, unsurprisingly, there is no LIKELIHOOD OF CONFUSION between the two companies’ respective lines of goods.  Fair enough.

The second, more interestingly — though under the facts of this case, not at all novel — is last phrase, “there is no sign that the dairy company intends to take the plunge.”  I’m not that impressed with the pun, because all smart, confident people make puns, but rather the Seventh Circuit’s employment here of a standard for LIKELIHOOD OF CONFUSION not found in its usual recitation of factors. It’s something we in the Second Circuit call “(4) evidence that the senior user may ‘bridge the gap'” — i.e., between its present goods and services and those of the junior user — “by developing a product for sale in the market of the alleged infringer’s product,” as set out in Polaroid Corp. v. Polarad Electronics, Corp., 287 F.2d 492 (2d Cir. 1961). Or, as we say in the Third Circuit, “factors suggesting that the consuming public might . . . expect that the prior owner is likely to expand into the defendant’s market” under Interpace Corporation v. Lapp, Inc., 721 F.2d 460 (3d Cir. 1983).

You won’t find “bridging the gap” as a factor listed in Seventh Circuit cases such as Sullivan v. CBS Corp., 385 F.3d 772 (7th Cir. 2004) or others that set out the longstanding test for LOC in the Seventh.  Of course, it is a pretty common criterion for infringement, and a logical one — see here (I did look around to see if there’s been anything new, though not extensively).  Hugunin may be the first Seventh Circuit opinion to endorse this criterion for infringement explicitly.  I digressed here, but you will understand that I am likely to be distracted by LIKELIHOOD OF CONFUSION tests.

Having dispensed of garden-variety infringement, Judge Posner turns to the dilution claim.  Right off, he notes that it was dismissed below as barred by laches; he can’t, however, resist saying that even had there had not been laches, the claim would have failed, and then he and the panel explain why.  (But does that make this dictum?  Please tell me it isn’t.)

The reason there is no dilution is that, as we all know, dilution can come about either as a result of blurring — he gives the example of “an upscale restaurant [that] calls itself “Tiffany” posited in Ty Inc. v. Perryman, 306 F.3d 509, 511 (7th Cir. 2002) — or tarnishment — going to Ty Inc. again for the example of the “Tiffany strip joint,” and here there is neither. Thus the coup de grace, emphasis added by me, again:

It’s difficult to fit the present case into either species of dilution. Everyone recognizes “Tiffany” as the name of a luxury jewelry store on Fifth Avenue in New York (with stores in other major cities), and seeing the name on a hotdog stand a passerby might think of the jewelry store and of the incongruity of a hot-dog stand’s having the same name; he might think the jewelry store’s cachet impaired by the coincidence and switch his patronage to Cartier or Harry Winston. Many consumers would recognize the name “LAND O LAKES” as referring to the dairy company, but we can’t see how the company could be hurt by the use of the same name by a seller just of fishing tackle. The products of the two companies are too different, and the sale of fishing tackle is not so humble a business as the sale of hot dogs by street vendors. And so it is beyond unlikely that someone dissatisfied with LAND O LAKES fishing tackle would take revenge on the dairy company by not buying any of its products, or that a customer would have difficulty identifying Land O’ Lakes’ dairy products because he had seen the LAND O LAKES mark used on Hugunin’s fishing tackle. Land O’ Lakes products are advertised on their labels as dairy or other food products (such as instant cappuccino mixes), never as products relating to fishing.

Land O Lakes BumperstickerSo, three things, in opposite order:

  1. “have difficulty identifying” — that means blurring;
  2. “take revenge” — that refers to the mechanism by which the theory of dilution by tarnishment is assumed to operate; and
  3. “beyond unlikely” — there’s your likelihood of dilution in action.

In other words, there is a point, reminds the Seventh Circuit, where there’s no real tarnishment going on, of course — here that’s easy; nothing untoward about a bait shop.  But there’s also a point where the distance between the two businesses is neither so great or, significantly, so close (remember, the restaurant in Ty Inc. was “upscale”)  that not even blurring can be claimed credibly.

This is a far bigger novelty of a holding, and seems to cut at the heart of dilution, at first blush.  If there’s no blurring, what is there?!

But of course it makes perfect sense.  You can only have a blurred image at something that is in the frame of the picture you’re trying to take.  What is outside the scope of your view has moved too fast even to leave a smudgy ghost.  If there is any rationale at all for the dilution tort, the Seventh Circuit has saved it by this opinion, because absent such a limitation fame would allow any trademark to become that bad old bogeyman, a “right in gross,” utterly divorced from goodwill — just a cudgel with which landlords of famous marks can beat anyone who wanders onto their semiotic real estate.

Indeed, as a reminder of where trademarks come from, or at least this one did, the court notes as follows, almost in passing:

And the dairy company’s mark is itself derivative from Minnesota’s catchphrase “Land of 10,000 Lakes,” see Wikipedia, “Minnesota,” https://en.wikipedia.org/wiki/Minnesota (visited February 29, 2016), a phrase in such widespread use that the company could not insist that it was the sole lawful user of the phrase in advertising for all products.

Oh, it couldn’t?  Well, not any more, anyway.  You want puzzling?  Try this line from the decision:

It’s hard to believe that a giant dairy company wants to destroy or annex Hugunin’s tiny fishing-tackle business . . .

Right, very hard to believe. Because doing so would only completely vindicate Land O’ Lakes’ take-no-prisoners policy, completely standard in the corporate world and the stuff of which awards are doled out for “IP Department of the Year” to those who effectuate it, regarding anyone getting anywhere near its billion-dollar trademark.  So why believe that?

What’s puzzling, if anything, is that these guys didn’t know, unlike certain others, when to blink and break off the engagement.  It may not bring honor to flee, but he who fights and runs away, lives to fight another day!

Now what kind of threatening letters are the dairymen of Land O’ Lakes going to be able send out to bait shops dotting the Land O’ Lakes?


*Let’s not get started with its logo, which evidently — for reasons already known to readers of this blog — has troubles of its own to contend with.

By Ron Coleman

I write this blog.