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Timestamp: 2019-04-20 08:54:43+00:00

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FindACase | CSL Silicones, Inc v. Midsun Group Inc.
CSL Silicones, Inc v. Midsun Group Inc.
Plaintiff CSL Silicones, Inc. ("CSL") brought this action against Defendant Midsun Group Inc. ("Midsun") in connection with Midsun's alleged improper use of CSL's trademarks. CSL alleges that Midsun markets and sells two silicone-based coating products under marks similar to CSL's chosen marks for its own silicone-based coating products. CSL brings claims for trademark infringement and unfair competition pursuant to the federal Lanham Act, 15 U.S.C. § 1051 et seq., and claims pursuant to the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. § 42-110. Midsun has brought counterclaims against CSL, alleging violations of the Lanham Act and CUTPA. The Court has issued a number of rulings in this matter, familiarity with which is assumed.
The parties have filed cross-motions for partial summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure. Four motions are pending; this Ruling resolves them.
The following facts are derived from the parties' submissions pursuant to Local Rule 56(a);the uncontroverted deposition testimony; and the affidavits and exhibits attached to the parties' submissions. The facts recounted in this section are undisputed or indisputable.
CSL is a Canadian corporation with its principal place of business in Ontario, Canada. CSL's Local Rule 56(a)(1) Statement in Support of CSL Silicones Inc.'s Motion for Partial Summary Judgment, Doc. 171-1 ¶1. Midsun is a Connecticut corporation with its principal place of business in Southington, Connecticut. Id. ¶2. Founded in 1984, CSL develops and sells high-voltage silicone-based coatings for high voltage insulator, anti-corrosion, and anti-graffiti applications in certain industries. Id. ¶3. Midsun was founded in 1992, and started out as a distributor and applicator of other companies' coating systems for electrical applications. Id. ¶8, 10; Doc. 171-3 at 2. Initially, Midsun did not manufacture its own products. Id. ¶9.
In 1994, Midsun and CSL entered into a distribution agreement. Id. ¶11. The agreement stated that Midsun "wishes to establish an exclusive marketing arrangement with a manufacturer of high quality silicones." Doc. 171-3 at 2. The agreement further provided that "CSL has developed silicone coatings; 560, 570, 579 . . . for electrical applications hereafter referred to as the 'products'". Id. Under the agreement, CSL appointed Midsun to be the "exclusive agent for sales, distribution, marketing and application of products[.]" Id. Midsun agreed to "use its best efforts to promote the use of the 'products, '" including providing "advertising, publicity, direct sales and other marketing to cover all potential customers" in the relevant territories. Id. at 3. Midsun further agreed to "do nothing which would in any way damage the reputation of CSL or its products." Id. CSL agreed, inter alia, to permit Midsun to identify itself as the exclusive agent of the products and to publish Product Data Sheets, sales literature, and press releases. Id. Thus, under the agreement, Midsun would purchase products from CSL in Canada, and would resell the products to customers in the United States. Midsun's Local Rule 56(a)(1) Statement in Support of Midsun Group, Inc.'s Motion for Partial Summary Judgment on Plaintiff's Counts V and VI, Doc. 161-1 ¶9.
In 1995, CSL and Midsun entered into a second distribution agreement, entitled "Sales, Marketing & Distribution Agreement." Doc. 171-5. Under this agreement, Midsun was again appointed as "the exclusive agent for sales and marketing of Products" in specific territories, in exchange for meeting a specified sales target. Id. at 2. CSL permitted Midsun "to advertise as the exclusive agent in the territories of the products . . . and warranty that the products meet their specifications." Id. Pursuant to this agreement, Midsun purchased CSL's products and resold the products in the United States and other locations. Doc. 161-1 ¶11. The agreement contained annual sales targets. Doc. 161-1 ¶14. While the agreements were in effect, Midsun distributed and sold CSL's high voltage insulator coating (the '570' product) and an anti-corrosion coating (the '579' product) in the United States. Doc. 171-4 at 37. The 1995 Agreement was terminated by CSL on January 4, 1999. Doc. 161-1 ¶8.
After the termination of the Agreements, Midsun began developing its own products. Midsun's Local Rule 56(a)(2) Statement, Doc. 183-1 ¶22; Deposition of Robert Vojtila, Doc. 171-4 at 11-12. Midsun purchased silicone material from CSL, blended it with other materials, and called that product '570.' Doc. 171-4 at 12. Midsun used the '570' number to designate its product because it was determined to be a "good idea" from a marketing and engineering standpoint, as Midsun had created a "personality" for the high voltage coating. Id. at 41; see also Deposition of Midsun's 30(b)(6) Representative, Doc. 171-14 at 18. Around the same time, Midsun began marketing and selling an anti-corrosion coating that it designated with the '579' number. Doc. 171-1 ¶¶26-7. Midsun did not have an internal chemistry department nor a chemist on staff, and it did not directly manufacture the silicone-coating products it sold. Id. ¶¶28-9.
Dr. Edward Cherney was the general manager and late r the president and a director of CSL, from 1989 until he resigned from the company in 1999. Deposition of Faisal Huda, Doc. 171-22 at 10; Deposition of Edward Cherney, Doc. 171-7 at 43-4, 134; Doc. 175-1 ¶8. While employed by CSL, he expressly gave permission to Midsun to relabel CSL's product as 'Midsun 570.' Deposition of Faisal Huda, Doc. 175-10 at 18. Cherney also had a test conducted to compare the performance of Midsun's '570' product to CSL's '570' product. Doc. 171-7 at 135-36. The testing was performed by a University of Waterloo student, at the University of Waterloo, where Cherney was also employed as a Research Professor. Id. at 136; Doc. 171-17 at 2. In a letter to Midsun, Cherney described the results of the test, stating that Midsun's '570' product was superior in performance. Doc. 171-1 ¶32; Doc. 171-17 at 2. Cherney was asked to resign from CSL because, in CSL's view, he was not acting in the best interests of the company. Doc. 175-10 at 17. Soon after his resignation, Cherney was hired by Midsun as a consultant. Doc. 171-4 at 56.
Between July 1999 and October 2000, CSL sent Midsun several letters. Doc. 171-18. The first letter, sent on July 15, 1999, noted that CSL had recently become aware that, without its knowledge or approval, Midsun had sold CSL's '570' product under the name 'Midsun 570.' Doc. 171-18 at 8. The letter stated that CSL would only continue to supply Midsun with CSL products if Midsun agreed to cease from repackaging CSL's products. Id.
On October 4, 1999, CSL sent another letter to Midsun, stating that CSL has "recently learned that Midsun is still selling CSL 570 HVIC under the name Midsun 570, despite [CSL's July 15, 1999, letter]." Id. at 7. CSL stated that Midsun's actions are "unethical and totally unacceptable and were carried out without the knowledge or consent of CSL[.]" Id. CSL demanded that Midsun cease and desist the sale of any CSL product in non-CSL packaging, and also directed Midsun to respond by a date certain. Id. On October 13, 1999, CSL wrote again to Midsun, noting that no response to its previous letter had been received, and terminating its direct supply relationship with Midsun. Id. at 6. The letter concluded by warning that "[a]ny future occurrences of Midsun Group selling CSL product under the Midsun name will result in legal action by CSL[.]" Id.
On June 8, 2000, counsel for CSL sent a letter to Midsun, asserting that '570' and '579' were trademarks. Id. at 5. The letter stated that CSL had learned that during Midsun's term as CSL's authorized distributor, Midsun relabeled CSL's products with its own name, without CSL's knowledge or consent. Id. at 5. The letter further stated that CSL had become aware that Midsun was selling a product that had been manufactured for it under the name 'Midsun 570.' Id. at 5. The letter demanded that Midsun immediately "discontinue the use of the product designations MIDSUN 570, 579 or 587 or any other product designation or trade-mark confusingly similar to CSL's product designations and trade-marks including the trademarks 570, 579 and 587[.]" Id. at 5.
Midsun responded to this letter, stating that Midsun was "unaware that the numerals 570, 579 and 587 could be trademarked and in fact were trademarked as such. All CSL literature which we printed and which was approved by CSL never carried a 'tm' symbol indicating that they were anything other than just a numeral designation." Doc. 161-4 at 112. Midsun stated that it had been given consent to relabel and repackage all CSL products by Cherney. Id. The letter further represented that the former owner of CSL, Mr. Seraj Huda, had visited Midsun on three occasions in Connecticut and "was provided with literature denoting the labeling and the name Midsun 570" and that he did not stop Midsun from repackaging CSL's products. Id.
On September 28, 2000, counsel for CSL sent a letter to counsel for Midsun offering to "settle this matter" if Midsun "undertakes in writing to immediately discontinue the use of the product designations 570, 579, or 587 or any other designation or trademarks confusingly similar to CSL's product designations and trademarks including the trademarks 570, 579 and 587." Id. at 2. Midsun received each of these letters. Doc. 183-1 ¶¶35-9.
Midsun continues to market and sell a high voltage insulator coating product under the name '570' or 'Midsun 570.' Id. ¶43; Midsun's Answer to CSL's Complaint, Doc. 84 ¶14. Midsun marketed and sold an anti-corrosion product under the name '579, ' 'Silprocoat 579, ' or 'Midsun 579, ' but has discontinued its marketing and sale of this product. Doc. 183-1 ¶44; Doc. 84 ¶15. At present, Midsun and CSL are competitors, and target the same companies for sale of the parties' competing products. Doc. 171-1 ¶68.
On January 3, 2000, Midsun filed an intent to use trademark application for registration of the mark 'Midsun 570, ' in connection with a "Room-Temperature Vulcanizing Silicon Rubber Coating Material for Application to Electrical Equipment for Protection Against Electrical Failure." Doc. 183-2 at 208; Midsun's Motion to Dismiss, Doc. 10-1 at 2. CSL filed a trademark application for '570' in Canada in April 2000, and in the United States in May 2000, which included labels that showed the terms 'CSL, ' '570, " and 'Si-Coat' within close proximity of each other. Doc. 164-1 ¶11; ¶21. An office action was issued by the United States Trademark and Patent Office ("PTO") to CSL in November 2000, citing the 'Midsun 570' application as a potential basis for refusal. Id. ¶23. Midsun filed an application in March 2001 for 'Midsun 570' based on a first use date of at least as early as February 14, 2001. Id. CSL's '570' application was suspended pending the disposition of the 'Midsun 570' application. Id.
In connection with Midsun's trademark application for 'Midsun 570, ' in 2000, Midsun retained Ira Dorfman, a trademark attorney. Midsun's Local Rule 56(a)(1) Statement in Support of Midsun Group Inc.'s Motion for Partial Summary Judgment on Plaintiff's Count I, Doc. 164-1 ¶19. Dorfman prepared and filed Midsun's trademark application. Deposition of Ira Dorfman, Doc. 181- 24 at 12-13.
On November 13, 2001, Midsun was issued the registered trademark 'Midsun 570, ' Registration No. 2508019. Doc. 164-3 at 93. CSL's application to register '570' was then refused. Doc. 164-1 ¶24. In December 2002, CSL filed a Petition to Cancel Midsun's registered trademark for the mark 'Midsun 570, ' alleging, among other things, likelihood of confusion with CSL's use of '570' in commerce. Doc. 161-1 ¶22. Midsun filed two motions to dismiss; the first was rendered moot by the amendment of the petition and the second was denied. Doc. 181-24 at 39. On June 15, 2004, CSL withdrew its Amended Petition to Cancel the 'Midsun 570' trademark, and the Amended Petition was dismissed with prejudice on June 28, 2005. Doc. 161-1 ¶23. CSL withdrew its petition for financial reasons. Doc. 164-3 at 125.
Midsun's registration expired and was canceled on July 8, 2008, after Midsun did not file the appropriate materials to maintain the registration by the May 13, 2008, deadline. Doc. 181-24 at 38; Doc. 181-16 at 2. On October 19, 2012, Midsun filed a U.S. trademark application seeking to register the mark '570' for "silicone rubber coating material for application to electrical equipment for protection against electrical failure." Doc. 171-1 ¶46; Doc. 164-1 ¶28. On October 26, 2012, CSL filed a U.S. trademark application to register the mark '570' for "silicone based coating for application to electrical insulators." Id. ¶55. CSL's application provided a first use in commerce date of December 31, 1991. Doc. 1-1 at 2. The application stated that "570 is a secondary trademark of the application, which is used in conjunction with its Si-Coat mark." Doc. 164-1 ¶11. The PTO initially refused CSL's application on several grounds. Doc. 181-20 at 2. CSL's application was then suspended pending resolution of the instant lawsuit. Doc. 181-20.
In 2014, Midsun filed a U.S. trademark application seeking to register the mark 'Midsun 570' for a "room-temperature vulcanizing silicone rubber coating material for application to electrical equipment for protection against electrical failure." Id. ¶47. Midsun does not own any trademark registrations for the 570 mark. Doc. 171-1 ¶57.
'570' does not relate to any inherent physical, chemical or other characteristic of room temperature vulcanizing silicone. Requests for Admission, Doc. 172-3 at 6. Nor does it have a publicly recognized meaning within the industry directed to coatings for electrical insulators other than as a source identifier. Id. The '570' mark used by Midsun is not famous. Doc. 171-1 ¶80. At the time that Midsun decided to name its product 'Midsun 570', it understood that there was a market for 'CSL 570.' Doc. 171-4 at 101.
Customers, or potential customers, have questioned Midsun about the similarities or differences between CSL's '570' product and Midsun's '570' product, and have asked Midsun if they are the same products. Id. at 7. CSL has produced sales data that show sales of its '570' product in the United States from February 2004 to present day. Doc. 164-1 ¶18. Midsun has consistently promoted and advertised the Midsun brand since at least 1999. Doc. 164-1 ¶29. CSL has promoted its '570' product since the early 1990's, and has referred to 'CSL 570' as a trademark since at least 1991 (in Canada) and 1992 (in the United States). Doc. 181-9; Doc. 181-12 at 8, 29.
Pursuant to Midsun and CSL's 1995 Agreement, Midsun used the numerals '579' in sales as early as November 1996. Doc. 161-1 ¶11. CSL would sometimes refer to the product identified as '579' as 'CSL-579, ' or 'CSL 579.' Doc. 175-1 ¶11; Doc. 161-4 at 75-6, 83. Starting in 2000, CSL would often use 'Si-Coat' in conjunction with '579'. Doc. 161-1 ¶13. On April 5, 2000, CSL filed a trademark application with the PTO for '579, ' a "silicone based corrosion protection coating for metal surfaces, " based on actual use in commerce. Doc. 161-1 ¶4; Doc. 171-1 ¶56. The application claimed a first use date of 1997, based on commerce between the United States and Canada. Id. Seraj Huda signed the '579' trademark application declaration on behalf of CSL. Id. On May 14, 2002, the mark '579' was registered under Registration Number 2, 569, 185. Doc. 161-1 ¶5(b); Doc. 171-1 ¶56.
On June 12, 2013, counsel for CSL sent a letter to counsel for Midsun regarding CSL's ownership of U.S. Trademark Registration No. 2, 569, 185, for the mark '579.' Doc. 161-4 at 120-21. The letter noted that Midsun appeared to be using the mark '579' in violation of CSL's rights in its own mark. Id. Following receipt of the letter, Midsun agreed to rename its '579' anti-corrosion product 'Midsun Silprocoat.' Doc. 161-1 ¶26.
On September 2, 2014, counsel for CSL signed a Declaration of Incontestability of a Mark, certifying that the '579' mark had "been in continuous use in commerce for five consecutive years after the date of registration, or the date of publication under 15 U.S.C. Section 1062(c), and is still in use in commerce on or in connection with all goods/services listed in the existing registration." Doc. 161-1 ¶5(b).
Midsun does not own any trademark registrations for the '579' mark. Doc. 171-1 ¶57. '579' does not relate to any inherent physical, chemical or other characteristic of room temperature vulcanizing silicone. Doc. 172-3 at 6. Nor does it have a publicly recognized meaning within the industry directed to anticorrosion coatings, other than as a source identifier. Id.
CSL has produced sales data showing that sales of the '579' product took place in the United States from 2004 to 2016. Doc. 161-1 ¶6. CSL has not produced sales data for the '579' product in the United States between the date of registration and March 10, 2004. Id.
This narrative of events reveals the deterioration of a once amicable and presumably mutually profitable business relationship into a welter of recriminations, claims, counterclaims, and energetic litigation. There are four pending motions. CSL has filed two motions for partial summary judgment: Doc. 170 and Doc. 120. These are separate motions which address different claims and counterclaims scattered throughout the pleadings. Midsun has filed two motions for partial summary judgment, Doc. 163 and Doc. 160, coupling the first of these with a motion for the taking of judicial notice on a particular point.
The Court will summarize the standard of review on motions and cross-motions for summary judgment, and will then consider these motions in that order.
A motion for summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party must "demonstrate the absence of any material factual issue genuinely in dispute" to be entitled to summary judgment. Am. Int'l Grp., Inc. v. London Am. Int'l Corp., 664 F.2d 348, 351 (2d Cir. 1981) (quoting Heyman v. Commerce & Indus. Ins. Co., 524 F.2d 1317, 1319-20 (2d Cir. 1975)) (quotation marks omitted).
"In order to defeat a summary judgment motion that is properly supported by affidavits, depositions, and documents as envisioned by [Rule 56], the opposing party is required to come forward with materials envisioned by the Rule, setting forth specific facts showing that there is a genuine issue of material fact to be tried." Gottlieb v. Cty. of Orange, 84 F.3d 511, 518 (2d Cir. 1996). The non-moving party cannot "defeat the motion by relying on the allegations in his pleading, or on conclusory statements, or on mere assertions that affidavits supporting the motion are not credible." Id. (citations omitted). In other words, "[w]hen the moving party has carried its burden under Rule 56, its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The nonmoving party "must present specific evidence demonstrating a genuine dispute." Gannon v. UPS, 529 Fed.Appx. 102, 103 (2d Cir. 2013) (citing Anderson, 477 U.S. at 248). "An issue of fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. A fact is material if it might affect the outcome of the suit under the governing law." Fincher v. Depository Tr. & Clearing Corp., 604 F.3d 712, 720 (2d Cir. 2010) (quotation marks and citation omitted); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) ("Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.").
All inferences and ambiguities must be viewed in the light most favorable to the nonmoving party. Rogoz v. City of Hartford, 796 F.3d 236, 245-46 (2d Cir. 2015). The same standard applies where the Court is evaluating cross-motions for summary judgment. See Morales v. Quintel Entertainment, Inc., 249 F.3d 115, 121 (2d Cir. 2001) ("[E]ach party's motion must be examined on its own merits, and in each case all reasonable inferences must be drawn against the party whose motion is under consideration." (citation omitted)).
"[W]hen both sides move for summary judgment, neither side is barred from asserting that there are issues of fact, sufficient to prevent the entry of judgment, as a matter of law, against it. When faced with cross-motions for summary judgment, a district court is not required to grant judgment as a matter of law for one side or the other." Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993) (citation omitted); see also Coutard v. Mun. Credit Union, 848 F.3d 102, 114 (2d Cir. 2017) ("The fact that both sides have moved for summary judgment does not guarantee that there is no material issue of fact to be tried and that one side or the other is entitled to that relief."). Instead, in evaluating cross-motions for summary judgment, "the court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration." Schwabenbauer v. Bd. of Ed. of City Sch. Dist. of City of Olean, 667 F.2d 305, 314 (2d Cir. 1981); see also Omega S.A. v. Omega Eng'g, Inc., 396 F.Supp.2d 166, 173 (D. Conn. 2005) ("When faced with cross-motions for summary judgment, the court must consider the evidence differently depending on which motion is being addressed."), opinion adhered to on reconsideration, No. 3:01-CV-2104(SRU), 2005 WL 3307277 (D. Conn. Dec. 6, 2005).
CSL seeks summary judgment on Counts I, V, and VI of its complaint. Counts I and VI allege claims of unfair competition under 15 U.S.C. § 1125(a) for Midsun's use of CSL's '570' mark and '579' mark, respectively. Count V alleges a claim of trademark infringement pursuant to 15 U.S.C. § 1114 for Midsun's use of CSL's '579' mark. CSL also moves for summary judgment on Midsun's counterclaims I through VI; Midsun's affirmative defenses; and on the issue of willful infringement. Finally, CSL requests that the Court award attorney's fees.
Section 32 of the Lanham Act prohibits the unauthorized use in commerce "of any 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 on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive." 15 U.S.C. § 1114(1)(a). Section 43(a) of the Lanham Act similarly prohibits the infringement of unregistered, common law trademarks. See 15 U.S.C. § 1125(a)(1); see also Time, Inc. v. Petersen Pub. Co. L.L.C., 173 F.3d 113, 117 (2d Cir. 1999).
To succeed on a trademark infringement or an unfair competition claim under the Lanham Act, a plaintiff must prove that: (i) the plaintiff's mark is entitled to protection; and (ii) defendant's use of the allegedly infringing mark would likely cause confusion with the plaintiff's mark. Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 588 F.3d 97, 114 (2d Cir. 2009); see also Christian Louboutin S.A. v. Yves Saint Laurent Am. Holdings, Inc., 696 F.3d 206, 224 (2d Cir. 2012) ("[W]e analyze a trademark infringement claim in two stages, asking first whether the mark merits protection and, second, whether the allegedly infringing use of the mark (or a similar mark) is likely to cause consumer confusion." (quotation marks and citation omitted)). "Preliminary to making this showing, however, a plaintiff must demonstrate its own right to use the mark or dress in question." ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 154 (2d Cir. 2007).
"The basic rule of trademark ownership in the United States is priority of use." 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition ("McCarthy") § 16:1 (5th ed. 2017)); see also ITC Ltd., 482 F.3d at 146 ("[T]rademark rights are acquired and maintained through use of a particular mark."). Ownership rights "develop when goods bearing the mark are placed in the market and followed by continuous commercial utilization." Buti v. Perosa, S.R.L., 139 F.3d 98, 103 (2d Cir. 1998) (quotation marks and citation omitted).
Although trademark ownership rights accrue to the "first to use, not the first to register, " 2 McCarthy § 16:18, the Lanham Act provides that registration of a mark is considered "prima facie evidence of the registrant's ownership of the mark, and of the registrant's exclusive right to use the registered mark[.]" 15 U.S.C. § 1115(a). Moreover, a registered mark attains an incontestable status "if it has been in continuous use for five consecutive years subsequent to its registration and is still in use." Gruner Jahr USA Pub., a Div. of Gruner Jahr Printing & Pub. Co. v. Meredith Corp., 991 F.2d 1072, 1076 (2d Cir. 1993) (quotation marks and citations omitted). For an incontestable mark, "its registration shall be conclusive evidence of the registrant's exclusive right to use the registered mark in commerce[.]" Id.
"To be valid and protectible, a mark must be capable of distinguishing the products it marks from those of others." Lane Capital Mgmt., Inc. v. Lane Capital Mgmt., Inc., 192 F.3d 337, 344 (2d Cir. 1999) (citation omitted). "There are five different categories of terms with respect to the protection of a mark: generic, descriptive, suggestive, arbitrary, and fanciful. The categories reflect both the eligibility for protection and the degree of protection accorded." Lane Capital Mgmt., Inc., 192 F.3d at 344 (citation omitted). "A mark is entitled to protection when it is inherently distinctive; if the mark is 'merely descriptive, ' it qualifies for protection only if it has acquired secondary meaning, i.e., if it 'has become distinctive of the . . . goods in commerce.'" Time, Inc., 173 F.3d at 117 (quoting 15 U.S.C. § 1052(e)).
(1) strength of the trademark; (2) similarity of the marks; (3) proximity of the products and their competitiveness with one another; (4) evidence that the senior user may “bridge the gap” by developing a product for sale in the market of the alleged infringer's product; (5) evidence of actual consumer confusion; (6) evidence that the imitative mark was adopted in bad faith; (7) respective quality of the products; and (8) sophistication of consumers in the relevant market.
Starbucks Corp., 588 F.3d at 115. "The application of the Polaroid test is not mechanical, but rather, focuses on the ultimate question of whether, looking at the products in their totality, consumers are likely to be confused." Int'l Info. Sys. Sec. Certification Consortium, Inc. v. Sec. Univ., LLC, 823 F.3d 153, 160 (2d Cir. 2016) (quotation marks and citation omitted), cert. denied, 137 S.Ct. 624 (2017). While no one factor is dispositive, and in some cases, a factor may be irrelevant to the facts before it, "it is incumbent upon the district judge to engage in a deliberate review of each factor, and, if a factor is inapplicable to a case, to explain why." Arrow Fastener Co. v. Stanley Works, 59 F.3d 384, 400 (2d Cir. 1995) (citation omitted).
With this guidance in mind, the Court turns the merits of CSL's motion.
The initial dispute before the Court centers on whether CSL has ownership in the '570' and '579' marks, as established through priority and continuous use. CSL contends that the undisputed evidence shows CSL's ownership in the '570' and '579' marks. For its part, Midsun argues that CSL cannot demonstrate its right to use the marks in question. The Court will consider whether CSL has established its ownership of each mark separately.
CSL contends that it is indisputable that it was the first to use the '570' mark in commerce in the United States, and argues that Midsun has admitted to CSL's priority in the mark through its witnesses' testimony. Midsun claims that CSL cannot establish priority in the '570' mark because, during the 1990's, CSL did not use '570' as a trademark; and that CSL cannot establish use of the mark in commerce prior to Midsun's own use of the mark. Midsun also contends that CSL cannot rely on the testimony and declaration of its president Faisal Huda to establish priority, as Huda has no firsthand knowledge of certain events that transpired during his absences from CSL. Finally, Midsun argues that the Court should determine which party has priority to the mark by consideration of the parties' previous manufacturer-distributor relationship, and analyze the factors discussed in Haggar Int'l Corp. v. United Co. for Food Indus. Corp., 906 F.Supp.2d 96 (E.D.N.Y. 2012).
The first question to consider is whether CSL has established priority in the '570' mark as a matter of law. Under the Lanham Act, "use in commerce" is defined as "the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. [A] mark shall be deemed to be in use in commerce on goods when it is placed in any manner on the goods . . . and the goods are sold or transported in commerce. . . ." 15 U.S.C. § 1127. "Adoption and a single use of the mark may be sufficient to entitle the user to register the mark." La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1271 (2d Cir. 1974) (collecting cases). While evidence of mere advertising, without more, is inadequate to establish "use" within the meaning of the Lanham Act, if the use is "calculated to consummate a sale, " it can be sufficient. 3 McCarthy § 19:108.
"A court must determine whether a trademark has been used in commerce, on a case by case basis, considering the totality of the circumstances around the use of the mark." Threeline Imports, Inc. v. Vernikov, 239 F.Supp.3d 542, 558 (E.D.N.Y. 2017) (quotation marks and citation omitted). See also La Societe Anonyme des Parfums le Galion, 495 F.2d at 1274 n.11 (noting that "what constitutes sufficient use for trademark ownership purposes is obviously a case-by-case task").
Here, although there is no admissible evidence of actual sales made in the United States prior to the parties' distribution agreement, there is evidence that CSL offered, promoted, and sold its '570' product in the United States, prior to engaging in a business relationship with Midsun in 1994. CSL has established that its employees visited companies in the United States in 1990 in an effort to persuade them to purchase and apply the '570' product to electrical equipment. See December 1, 2016, Deposition of Edward Cherney, Doc. 180-5 at 60-3; Doc. 183-2 at 61-2; Doc. 171-7 at 45-6. Cherney's testimony also establishes that in 1990, CSL retained a distributor in the United States to sell its '570' product, Doc. 183-2 at 62, and that CSL sold the product to Midsun prior to the formation of their exclusive distributor relationship. Id. at 64-5.
Such evidence that CSL's '570' product was on the market prior to Midsun's engagement as exclusive distributor, coupled with CSL's clear intention at that time to continue to exploit its trademark commercially, as evidenced by the parties' 1994 Agreement, is sufficient to establish that CSL was the first to use the '570' mark in the United States. Cf. Cross Commerce Media, Inc. v. Collective, Inc., 841 F.3d 155, 167-68 (2d Cir. 2016) (finding that defendant had raised a genuine issue of fact as to use in commerce where it offered evidence that it had a commercial website featuring the mark and several stand-alone advertisements directing consumers to the website prior to plaintiff's use); Marvel Comics Ltd. v. Defiant, a Div. of Enlightened Entm't Ltd., 837 F.Supp. 546, 549 (S.D.N.Y. 1993) (finding, on a motion to dismiss, the plaintiff adequately alleged commercial use that may be sufficient to establish its right to a mark where, without making sales, the plaintiff promoted and advertised the mark); La Societe Anonyme des Parfums le Galion, 495 F.2d at 1272, 1275 (noting that in determining whether bona fide use exists, "[t]here must be a trade in the goods sold under the mark or at least an active and public attempt to establish such a trade" and a "present plan of commercial exploitation" or "present intent . . . to market the trademarked product" may be considered in making such a determination (quotation marks and citation omitted)).
Midsun also argues that CSL did not use - or intend to use - '570' as a mark during the relevant time frame. Midsun's argument appears two-fold: One, that CSL failed to designate '570' as a trademark; and two, that CSL's use of 'CSL' in conjunction with '570' is evidence that '570', standing alone, was not a mark. Both arguments are without merit, and fail to raise a material issue of fact.
First, as discussed supra, trademark ownership rights are established through use of the mark in commerce. The use of a 'TM' symbol in connection with a mark, either registered or unregistered, is not statutorily required, and does not, by itself, establish trademark rights. See 3 McCarthy § 19:148 n.5 (collecting cases). Midsun does not point to a single court decision finding otherwise. CSL's failure to use the 'TM' symbol in literature, advertising, labels, or its agreements with Midsun is not determinative of whether CSL has ownership rights in '570'.
Second, CSL's use of 'CSL' in connection with '570' is considered use of the mark, relevant to determining priority. "A 'housemark' or 'house mark' is a trademark that identifies the business that produces the product." Arrow Fastener Co., 59 F.3d at 388 n.1 (citation omitted); see also 4 McCarthy, § 23:43 ("A 'house mark' is a mark used on several different goods or services which themselves use a particular 'product mark.'"). The use of a house mark in connection with a trademark is common, and does not speak to the validity of the trademark of the product itself. See 1 McCarthy § 7:5 (explaining that "the mark KELLOGG may appear on a label along with POP-TARTS, but this does not per se detract from the trademark function of the product mark POP-TARTS"). "Whether or not a product mark always used with a house mark possesses a separate trademark significance depends upon the manner of use and the commercial impression engendered by that use." Id. In line with these principles, "use of house and product marks together does not constitute abandonment of each one individually." BeautyBank, Inc. v. Harvey Prince, LLP, No. 10-CV-00955(AJN), 2013 WL 11327097, at *9 (S.D.N.Y. Mar. 29, 2013) (citing Bridgestone Americas Tire Operations, LLC v. Fed. Corp., 673 F.3d 1330, 1336 (Fed. Cir. 2012)).
Here, in instances where 'CSL' appears next to '570', 'CSL' is the house mark and '570' is the product mark. Midsun does not cite to any authority for the proposition that CSL's use of its 'CSL' house mark in conjunction with the '570' trademark precludes or minimizes the individual "use" of the '570' mark. That is to say: Notwithstanding CSL's juxtaposition of its house mark 'CSL' with the trademark '570, ' the use of the trademark may be considered individually for the purpose of establishing priority.
Midsun also argues that CSL's sales of the '570' product under the parties' exclusive distribution agreements were made in Canada, to Midsun, and thus do not constitute sales in the United States sufficient to establish "use in commerce." In effect, Midsun's argument is that the sales that were performed in the United States through Midsun from 1994 until the termination of the parties' agreement in 1999 do not inure to CSL's benefit for the purposes of determining use of the '570' mark.
"[W]here two companies operate within a manufacturer-distributor arrangement, the 'exclusive U.S. distributor does not acquire ownership of a foreign manufacturer's mark any more than a wholesaler can acquire ownership of an American manufacturer's mark, merely through the sale and distribution of goods bearing the manufacturer's trademark.'" Haggar Int'l Corp., 906 F.Supp.2d at 110-11 (quoting 2 McCarthy § 29.02). Here, CSL has established that it was the first to use the '570' mark in commerce in the United States. While Midsun acquired an exclusive right to distribute CSL's products through the 1994 and 1995 Agreements, the Agreements did not confer trademark rights upon Midsun.
Midsun urges the Court to engage in a multi-factor analysis to determine priority of rights between a distributor and a manufacturer, citing to Haggar Int'l Corp., 906 F.Supp.2d at 96, in support. Haggar is a trademark infringement matter involving a foreign manufacturer and a domestic distributor. Following a bench trial, Magistrate Judge Pollack applied a test to determine which party had acquired ownership of the mark in question. Id. at 112-25. This analysis has been referred to as the "modified Wrist-Rocket test, " id. at 112, so named for its application by the District of Nebraska in Wrist-Rocket Mfg. Co. v. Saunders, 379 F.Supp. 902, 913-14 (D. Neb. 1974) ("Wrist-Rocket I"), aff'd in part, rev'd in part on other grounds, 516 F.2d 846 (8th Cir. 1975) ("Wrist-Rocket II"), and its subsequent modification by the Ninth Circuit in Sengoku Works Ltd. v. RMC Int'l, Ltd., 96 F.3d 1217, 1220 (9th Cir.), as modified, 97 F.3d 1460 (9th Cir. 1996). As the Eighth Circuit made clear in Wrist-Rocket II, however, this analysis only applies to resolve the question of "who, as between the manufacturer and distributor, has ownership of a trademark created after the formation of the business relationship, " as opposed to "a case where a distributor appropriates to its own use an existing trademark of the manufacturer." Wrist-Rocket Mfg. Co., 516 F.2d at 850 (emphasis added).
Here, it has been established that CSL was first to use the '570' mark in the United States, prior to any distribution agreement between the parties. Midsun has not raised a genuine issue of fact as to CSL's priority in the '570' mark. Thus, despite Midsun's contentions otherwise, the modified Wrist-Rocket test, as applied in Haggar, does not come into play. Midsun's sales of the products affixed with the '570' mark while the parties' distribution agreements were in effect are evidence of CSL's continuous use of the mark in the United States.
The parties also dispute whether CSL has demonstrated its continuous use of the '570' mark so as to establish ownership rights in the mark. "To prove bona fide usage, the proponent of the trademark must demonstrate that his use of the mark has been deliberate and continuous, not sporadic, casual or transitory." La Societe Anonyme des Parfums le Galion, 495 F.2d at 1271-72.
For evidence of continuous sales from 1999 to 2004,  CSL relies primarily on Faisal Huda's declaration that CSL's product "has been continuously marketed and sold in the United States in connection with the mark 570 from at least as early as 1994 and up to and including the present." Doc. 171-2 ¶3. Huda states that "CSL does not currently maintain records of its sales prior to February 28, 2002, or from the time period of January 31, 2003 - February 23, 2004, but CSL sold and offered for sale the 570 . . . product in the United States continuously from at least as early as 1994 to the present." Id. ¶10. Submitted in support of this declaration is a chart documenting invoices and customers from 2004 onward, Doc. 171-20; and a sales history document that references sales of CSL's '570' product from February 2002 through January 2003, but is silent as to the location of the sales. Doc. 171-21.
Midsun argues that CSL has not produced records of sales for the period of time immediately following the termination of the parties' agreements, from January 1999 through March 2004. Midsun also posits that Huda has no personal knowledge of those matters which occurred prior to his employment with CSL, or those which occurred during Huda's "extended absences from CSL." Doc. 183 at 8. Midsun points to Huda's testimony that he attended college from 1993 to 1998, and was studying for his MBA in France during a portion of the relevant time period. Midsun raises this objection in its opposition, and also has specifically objected to certain parts of CSL's Local Rule 56(a)(1) Statement, where it relies in part or in full on Huda's declaration to support its factual assertions.
CSL responds that Midsun's "attempt to undermine CSL's evidence by challenging the personal knowledge of CSL's declarant, Faisal Huda, is a red herring." Doc. 195 at 10. Without directly addressing Midsun's central position that Huda lacks personal knowledge of the events that transpired at CSL in his absence, CSL contends that it has offered other evidence that supports its main arguments. CSL also argues that Huda's declaration can serve to lay the foundation for CSL's business records, regardless of whether Huda was present at the time the records were created.
Rule 56(c) of the Federal Rules of Civil Procedure provides that "[a]n affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated." Fed.R.Civ.P. 56(c)(4). "An affiant's conclusions based on personal observations over time . . . may constitute personal knowledge, and an affiant may testify as to the contents of records he reviewed in [his] official capacity." Searles v. First Fortis Life Ins. Co., 98 F.Supp.2d 456, 461 (S.D.N.Y. 2000) (footnotes omitted).
Huda is President and CEO of CSL. Huda Declaration, Doc. 171-2 ¶1. CSL was founded by his father, id. ¶2, who passed away in March 2008. Doc. 164-3 at 25. Huda joined CSL in April 1999. Doc. 183-2 at 86. From 1999 to August 2001, Huda worked at CSL in a marketing position, Doc. 161-4 at 31, and "performed a sales support function." Doc. 180-14 at 4. In this capacity, in addition to performing marketing functions, he attended and delivered sales presentations in the United States. Id. Huda left the United States in August 2001 to attend graduate school; he returned in January 2003. Doc. 161-4 at 30. Upon his return, he rejoined CSL in a sales and marketing role. Id. Huda has worked at CSL ever since; he became General Manager in 2004, and took on the titles of President and CEO upon the death of his father in March 2008. Id. at 25.
Huda declares that the statements contained within his declaration are from his "personal knowledge or upon information and belief after having reviewed CSL's business records." Doc. 171-2 ¶1. Huda's testimony regarding his involvement in sales presentations in the United States from 1999 through 2001 does not speak to whether such presentations were for the '570' product, and CSL has not submitted any business records that conclusively establish sales of '570' in the United States from 1999 to 2004. Thus, the only admissible evidence before the Court to establish continuous use during this time is Huda's declaration. However, Midsun raises the factual issue that Huda was not at CSL from August 2001 to January 2003, calling into question his personal knowledge during that time. Midsun also points to Huda's conflicting testimony that he couldn't "claim to have full knowledge" of certain sales activity from 1999-2001, because he "wasn't focused on sales, " he was "focused on marketing." Doc. 161-4 at 32.
Viewing the evidence in the manner most favorable to Midsun, the Court concludes that a genuine issue of fact exists as to whether CSL continuously used the '570' mark in commerce in the United States from 1999 to January 2003. Huda's conflicting testimony and his absence from CSL during a time in which no other evidence of sales has been submitted is sufficient to raise a issue of material fact. A reasonable jury could determine that Huda's knowledge of CSL's sales of '570' does not extend to this time period, and that CSL cannot establish continuous use -- and thus ownership --of the '570' mark. Accordingly, resolution of this issue is reserved for the trier of fact.
CSL owns an incontestable trademark for the '579' mark. As noted above, an incontestable registration is "conclusive evidence of the validity of the registered mark and of the registration of the mark, of the registrant's ownership of the mark, and of the registrant's exclusive right to use the registered mark in commerce." 15 U.S.C. § 1115(b). A mark gains incontestable status when it "has been in continuous use for five consecutive years subsequent to the date of such registration and is still in use in commerce[.]" 15 U.S.C. § 1065 (including other conditions not at issue in this matter). CSL qualifies for that status, having achieved registration of the '579' mark in May 2002. Thus, CSL's incontestable registration for the '579' mark is conclusive evidence that CSL owns the mark and has an exclusive right to use the mark in commerce in the United States.
In opposition to CSL's motion for summary judgment, Midsun argues that CSL's registration for the '579' mark was obtained by fraud. The Lanham Act provides that one may defend a charge of infringement of an incontestable trademark by establishing that "the registration or the incontestable right to use the mark was obtained fraudulently." 15 U.S.C. § 1115(b)(1). "Fraud in procuring a trademark registration occurs when an applicant knowingly makes false, material representations of fact in connection with his application." MPC Franchise, LLC v. Tarntino, 826 F.3d 653, 658 (2d Cir. 2016) (quotation marks and citation omitted). "A party seeking cancellation of a registered trademark on grounds of fraud must demonstrate the alleged fraud by clear and convincing evidence." Orient Exp. Trading Co. v. Federated Dep't Stores, Inc., 842 F.2d 650, 653 (2d Cir. 1988) (quotation marks and citation omitted). "To rise to the level of fraud, the false statement must be made knowingly and have been material to the PTO's decision to grant [the] trademark application." Haggar Int'l Corp., 906 F.Supp.2d at 127 (citation omitted).
Midsun's first claim of fraud is based on the first use date of 1997 in CSL's 2000 trademark application for the '579' mark. Midsun contends that the declaration of the date of first use was fraudulent, as there is no evidence of sales in the United States of the '579' product until March 10, 2004. Midsun claims that CSL's fraudulent intent to deceive the PTO "can be reasonably inferred" from "the evidence produced by CSL." Doc. 183 at 31. This argument is insufficient to establish, by clear and convincing evidence, that CSL committed fraud on the PTO. As an initial matter, there is admissible evidence in the record that CSL had sales of its '579' product in the United States prior to 1997, and Midsun offers no evidence to the contrary. Thus, the date of first use, as indicated on the '579' trademark application, does not appear to be inaccurate, let alone fraudulent.
Further, even assuming, arguendo, that the supplied date was inaccurate, Midsun has fallen far short of showing, by clear and convincing evidence, that such a representation was a deliberate material misrepresentation of fact. There has been no evidence submitted that would show that the first use date of 1997 had any bearing on the PTO's decision to grant the trademark application. See Haggar Int'l Corp., 906 F.Supp.2d at 127 (finding no clear and convincing evidence of fraud where there was no indication that an inaccurate date of first use was material to the PTO's decision to grant a trademark application, noting that an inaccurate dates "only becomes relevant and material if the PTO had to determine which of two companies had the superior claim because of first use in United States commerce").
Midsun's second claim of fraud is based on CSL's Declaration of Incontestability, filed in 2014. Midsun argues that CSL's statement of continuous use was fraudulent, based on a lack of evidence of sales of the '579' product in the United States from 2002 to 2004.
Pursuant to the Code of Federal Regulations, the affidavit or declaration for acquiring incontestability for a mark registered under the Trademark Act must be "filed within one year after the expiration of any five-year period of continuous use following registration." 37 C.F.R. § 2.167(f) (emphasis added). See also Trademark Man. of Exam. Proc., 1605.03, (5th ed. 2007) ("A §15 affidavit may not be filed until the federally registered mark has been in continuous use in commerce for at least five consecutive years after the date of registration. This may be any five-year period after the date of registration for marks registered under the Act of 1946. . . .The registrant may file the affidavit within one year after the five-year period that is selected."). As it is undisputed that CSL's '579' product was in continuous use from 2004 to present, there is no merit to Midsun's argument that CSL's Declaration of Incontestability in 2014 was fraudulent.
Thus, Midsun has not raised a material issue of fact to show that CSL obtained its '579' incontestable trademark registration through fraud. CSL's conclusive ownership in the '579' mark has therefore been established as a matter of law.
The parties also dispute the validity of the marks in question. As previously noted, "[t]o be valid and protectible, a mark must be capable of distinguishing the products it marks from those of others." Lane Capital Mgmt., Inc., Inc., 192 F.3d at 344 (citation omitted). Thus, whether the marks are valid speaks to the question of whether the marks are entitled to protection. The Court will examine each mark in turn.
CSL argues that the '570' mark is an arbitrary mark, inherently distinctive and entitled to protection, as the number '570' is not descriptive or suggestive of silicone high voltage insulator coatings. Midsun contends that '570' is not inherently distinctive.
A mark is generic if it is a common description of products and refers to the genus of which the particular product is a species. A mark is descriptive if it describes the product's features, qualities, or ingredients in ordinary language or describes the use to which the product is put. A mark is suggestive if it merely suggests the features of the product, requiring the purchaser to use imagination, thought, and perception to reach a conclusion as to the nature of the goods. An arbitrary mark applies a common word in an unfamiliar way. A fanciful mark is not a real word at all, but is invented for its use as a mark.
Lane Capital Mgmt., Inc., 192 F.3d at 344 (citation omitted).
"Arbitrary marks consist of words that neither suggest nor describe any characteristic of the particular good or service with which it is used." Jordache Enterprises, Inc. v. Levi Strauss & Co., 841 F.Supp. 506, 515 (S.D.N.Y. 1993) (citation omitted). CSL has submitted evidence that '570' is not descriptive or indicative of a silicone-based coating for high voltage insulators. The evidence shows that '570' does not pertain to a characteristic or quality of silicone coatings.
Midsun suggests that CSL's use of '570' is not inherently distinctive, because at one time, CSL used the mark as a model number or grade designator. Midsun suggests that the Court should "accord deference to the PTO's determination" in response to CSL's '570' trademark application that '570' is a grade designator.
Although "deference should be given by a court to the interpretation by the agency charged with its administration[, ]" Buti, 139 F.3d at 105, the PTO examiner's initial rejection of CSL's '570' trademark application was not a final determination. See Therapy Prod., Inc. v. Bissoon, 623 F.Supp.2d 485, 495 (S.D.N.Y. 2009) (rejecting an argument that "significant weight" should be afforded to the PTO's determination to approve a registration, "because the PTO's approval is only a preliminary determination"), aff'd in part, remanded in part sub nom on other grounds, Erchonia Corp. v. Bissoon, 410 Fed.Appx. 416 (2d Cir. 2011); but see Arrow Fastener Co., 59 F.3d at 392-93 (according weight to the PTO's "initial conclusion" that the mark was a model designator, and to the decision "not to register the mark without evidence of secondary meaning").

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