Court Opinion

ID: 3023118
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:28:22.098488+00
Date Added: 2024-06-11T18:18:25.921915
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 98-3586
                                   ___________

Hubbard Feeds, Inc.,                    *
a Minnesota corporation,                *
                                        *
             Appellant,                 *
                                        *
      v.                                * Appeal from the United States
                                        * District Court for the
Animal Feed Supplement, Inc.,           * District of Minnesota.
d/b/a New Generation Feeds, Inc.;       *
Denis J. Daly; Jeff Westberg; Larry     *
Russell Smith; Keith Hollingsworth,     *
                                        *
             Appellees.                 *
                                   ___________

                             Submitted: May 11, 1999
                                 Filed: July 7, 1999
                                  ___________

Before RICHARD S. ARNOLD, JOHN R. GIBSON, and BOWMAN, Circuit Judges.
                            ___________

BOWMAN, Circuit Judge.

      Hubbard Feeds, Inc. (Hubbard) commenced this lawsuit against Animal Feed
Supplement, Inc. (AFS) in Minnesota state court, alleging that AFS had engaged in
trademark and trade dress infringement, unfair competition, deceptive trade practices,
and various other Lanham Act and state law violations. To remedy the alleged
trademark and trade dress infringement, Hubbard requested a preliminary injunction
prohibiting AFS from using Hubbard's registered half-barrel container. AFS removed
the case to federal court, where the District Court1 denied Hubbard's motion for a
preliminary injunction. Hubbard appeals. We have jurisdiction over this interlocutory
appeal pursuant to 28 U.S.C. § 1292(a)(1).

       Hubbard produces an animal block-feed product that sells throughout the United
States and Canada under the name "Crystalyx." Hubbard packages Crystalyx in a half-
barrel container configuration in which it owns an incontestable trademark.2 AFS
produces a competing block-feed product called "Smartlic," which also is packaged in
a half-barrel container and is sold primarily in a seven-state region of the midwestern
and southwestern United States. AFS has packaged its product in the half-barrel
container since 1977 and recently made a substantial investment in equipment for
producing the half-barrel.

      Hubbard became aware of AFS's allegedly infringing use of the half-barrel
container in 1988, but did not object until October 14, 1997, when Hubbard sent a
cease and desist letter to AFS. AFS failed to heed Hubbard's request, and Hubbard
brought this action on October 31, 1997. Hubbard alleged, inter alia, that AFS's
continued use of the half-barrel amounts to trademark and trade dress infringement, and

      1
        The Honorable Michael J. Davis, United States District Court Judge for the
District of Minnesota.
      2
          That a registered trademark has achieved incontestable status is conclusive
evidence of the mark's registration and validity, and of the registrant's ownership and
exclusive right to use the mark, subject to certain enumerated defenses not implicated
in this case. See 15 U.S.C. § 1115(b) (1994); Dakota Indus. v. Ever Best Ltd., 28 F.3d
910, 912-13 (8th Cir. 1994). Though critical minds might question the extension of
trademark protection to an apparently unremarkable steel half-barrel, Hubbard explains
that its mark was registered in recognition of the half-barrel's "secondary meaning," that
is, its association with Hubbard's product. See, e.g., First Bank v. First Bank Sys., Inc.,
84 F.3d 1040, 1045 (8th Cir. 1996) (defining secondary meaning as the association in
consumers' minds of a mark with a particular source).

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requested a preliminary injunction prohibiting AFS's use of the container. The District
Court denied the preliminary injunction based on its determination that the equitable
defense of laches applies, making it unlikely, in the District Court's view, that Hubbard
could succeed on the merits of the case. It is from this interlocutory ruling that
Hubbard appeals.

       We review the denial of a motion requesting a preliminary injunction under the
abuse-of-discretion standard. See Kirkeby v. Furness, 52 F.3d 772, 774 (8th Cir. 1995).
An abuse of discretion has occurred when an injunction has been denied "on the basis
of any clearly erroneous findings of fact or any clear error on an issue of law that may
have affected the ultimate balancing of the factors considered for a preliminary
injunction." National Credit Union Admin. Bd. v. Johnson, 133 F.3d 1097, 1101 (8th
Cir. 1998) (internal quotation and alteration omitted). The factors considered for a
preliminary injunction are: (1) the probability that the moving party will succeed on the
merits; (2) the threat of irreparable harm to the moving party; (3) the balance of
hardships; and (4) the public interest. See United Indus. Corp. v. Clorox Co., 140 F.3d
1175, 1178-79 (8th Cir. 1998); DataPhase Sys. v. C L Sys., Inc., 640 F.2d 109, 114 (8th
Cir. 1981) (en banc). When applying the DataPhase factors, as they have come to be
called, "'a court should flexibly weigh the case's particular circumstances to determine
whether the balance of equities so favors the movant that justice requires the court to
intervene.'" Clorox, 140 F.3d at 1179 (quoting DataPhase, 640 F.2d at 113).

      To succeed on the merits of its trademark and trade dress3 infringement claims,
Hubbard will have to demonstrate at trial that the half-barrel container is entitled to
protection and that AFS's use of the container is likely to confuse consumers as to the

      3
       Trade dress is defined as "the 'total image of a product, the overall impression
created, not the individual features.'" Children's Factory, Inc. v. Benee's Toys, Inc., 160
F.3d 489, 493-94 (8th Cir. 1998) (quoting Insty*Bit, Inc. v. Poly-Tech Indus., 95 F.3d
663, 667 (8th Cir. 1996), cert. denied, 519 U.S. 1151 (1997)).

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source of AFS's product.4 See 15 U.S.C. § 1114(1)(a) (1994); see also Insty*Bit, Inc.
v. Poly-Tech Indus., 95 F.3d 663, 667 (8th Cir. 1996), cert. denied, 519 U.S. 1151
(1997); Dakota Indus. v. Ever Best Ltd., 944 F.2d 438, 440 (8th Cir. 1991). Hubbard
asserts the incontestability of its trademark as conclusive proof that the mark is valid
and that the container thus is entitled to protection. The District Court determined,
however, that Hubbard's laches in asserting its trademark against AFS stands in the way
of a preliminary injunction.

       The equitable defense of laches is applicable to an action to enforce an
incontestable trademark and, therefore, should be considered in evaluating the
likelihood of success on the merits of a trademark infringement claim. See United
States Jaycees v. Cedar Rapids Jaycees, 794 F.2d 379, 382-83 (8th Cir. 1986);
Pyrodyne Corp. v. Pyrotronics Corp., 847 F.2d 1398, 1402-03 (9th Cir.) (relying on
Jaycees), cert. denied, 488 U.S. 968 (1988). Laches applies when a claimant
inexcusably delays in asserting its claim and thereby unduly prejudices the party against
whom the claim ultimately is asserted. See, e.g., Elvis Presley Enters. v. Capece, 141
F.3d 188, 205 (5th Cir. 1998).

       Hubbard was aware of any infringing conduct by AFS in 1988 and failed to
object to AFS's use of the half-barrel container until October 1997, thus delaying nine
years in asserting its rights. Hubbard does not posit any plausible excuse for its delay.5

      4
        Although Hubbard's complaint to the District Court charged nine counts of
various kinds of tortious conduct, Hubbard argued, and continues to argue, the merits
of only its trademark and trade dress infringement claims in support of a preliminary
injunction. We therefore consider Hubbard's likelihood of success on the merits of only
the trademark and trade dress claims.
      5
        Hubbard asserts that AFS was a licensee with permission to use the half-barrel
container until at least May 31, 1993, and that the period of non-infringing use should
not contribute to the calculation of Hubbard's delay. Even if Hubbard is correct in its
assertion that the relevant time period should begin to run from May 1993, a delay of

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Relying on its apparent authorization to use the half-barrel, AFS made a substantial
investment in equipment for use in producing the half-barrel and has $250,000 worth
of block-feed inventory already packaged in half-barrel containers. Cf. Landers, Frary
& Clark v. Universal Cooler Corp., 85 F.2d 46, 49 (2d Cir. 1936) (Hand, J.) ("[T]he
defendant spent large sums in reliance upon its apparent immunity . . . . Moreover, the
estoppel need not depend upon expenditure alone. When for eight years one plans
one's business on the assumption that one may use a mark, it is a grave dislocation of
the business to stop its use . . . ."); Hilton Int'l Co. v. Hilton Hotels Corp., 888 F. Supp.
520, 535 (S.D.N.Y. 1995) (quoting Landers). Thus, for all that presently appears,
laches applies and equity dictates that Hubbard may not enforce its mark, incontestable
though it may be, against AFS.

        Furthermore, laches aside, the District Court did not abuse its discretion in
concluding that Hubbard did not establish a likelihood of consumer confusion from
AFS's continued use of the half-barrel container. The ultimate inquiry always is
whether, considering all the circumstances, a likelihood exists that consumers will be
confused about the source of the allegedly infringing product. See Children's Factory,
Inc. v. Benee's Toys, Inc., 160 F.3d 489, 496 (8th Cir. 1998); ConAgra, Inc. v.
George A. Hormel, & Co., 990 F.2d 368, 369 (8th Cir. 1993); Mutual of Omaha Ins.
Co. v. Novak, 836 F.2d 397, 399 nn.3, 4 (8th Cir. 1987), cert. denied, 488 U.S. 933
(1988). Factors relevant to this inquiry include: (1) the strength of the owner's mark;
(2) the similarity of the owner's mark to the alleged infringer's mark; (3) the degree to
which the products compete with each other; (4) the alleged infringer's intent to "pass
off" its goods as those of the trademark owner; (5) incidents of actual confusion; and
(6) whether the degree of care exercised by the consumer can eliminate a likelihood of

over four years is sufficient for laches. See, e.g., Conopco, Inc. v. Campbell Soup Co.,
95 F.3d 187, 192-93 (2d Cir. 1996) (five-year delay); Tough Traveler, Ltd. v.
Outbound Prods., 60 F.3d 964, 968 (2d Cir. 1995) (one-year delay); MCV, Inc. v.
King-Seeley Thermos Co., 870 F.2d 1568, 1571-72 (Fed. Cir. 1989) (four-year delay).

                                            -5-
confusion that otherwise would exist. See Minnesota Mining & Mfg. Co. v. Rauh
Rubber, Inc., 130 F.3d 1305, 1308 (8th Cir. 1997); SquirtCo v. Seven-Up Co., 628 F.2d
1086, 1091 (8th Cir. 1980).

       Hubbard argues that its mark is strong based on its incontestable status alone,
that the half-barrel container configurations used by Hubbard and AFS are identical,
and that the products packaged by Hubbard and AFS in the half-barrel container
directly compete with one another. Hubbard concedes, however, that it did not present
evidence that consumers actually are confused by AFS's use of the half-barrel.
Although evidence of actual confusion is not necessary for a finding that a likelihood
of confusion exists, it is perhaps the most effective way to prove a likelihood of
confusion. See Stuart Hall Co. v. Ampad Corp., 51 F.3d 780, 790-91 (8th Cir. 1995);
Woodsmith Pub. Co. v. Meredith Corp., 904 F.2d 1244, 1249 (8th Cir. 1990); SquirtCo,
628 F.2d at 1091. Considering that AFS has persisted in using the half-barrel container
for over two decades, and has done so with Hubbard's knowledge since 1988,
Hubbard's failure to present evidence of consumer confusion owing to AFS's allegedly
infringing conduct is telling. Furthermore, that AFS affixes a large Smartlic label to its
half-barrel and paints the half-barrel a light tan color, while Hubbard's half-barrel is
black and unlabeled, repudiates the contention that AFS intends to pass its Smartlic
product off as Hubbard's Crystalyx. In these circumstances, the District Court did not
abuse its discretion in determining that the likelihood-of-confusion facet of the case,
which is central to success on the merits, see Minnesota Mining, 130 F.3d at 1308
("[C]onsumer confusion . . . is the hallmark of any trademark infringement claim."
(internal quotation omitted)), does not sustain Hubbard's motion for a preliminary
injunction.

      In support of the second DataPhase factor, irreparable harm in the absence of a
preliminary injunction, Hubbard repeats its assertion of consumer confusion resulting
from AFS's use of the half-barrel container. As we already have concluded, Hubbard's
evidence fails to show any likelihood of consumer confusion. Moreover, as the District

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Court determined, Hubbard's delay in objecting to AFS's use of the half-barrel belies
any claim of irreparable injury pending trial. See Tough Traveler, Ltd. v. Outbound
Prods., 60 F.3d 964, 968 (2d Cir. 1995) (stating that delay in moving for preliminary
injunctive relief negates any presumption of irreparable harm based on consumer
confusion and may, standing alone, justify denial of preliminary injunctive relief).

        Finally, Hubbard's remaining arguments regarding the third and fourth Dataphase
factors, the balance of hardships and the public interest, are unconvincing and cannot
overcome Hubbard's failure to show a probability of success on the merits and a threat
of irreparable injury. See Baker Elec. Coop., Inc. v. Chaske, 28 F.3d 1466, 1472 (8th
Cir. 1994) ("No single factor in itself is dispositive[,] . . . . [h]owever, a party moving
for a preliminary injunction is required to show the threat of irreparable harm." (internal
quotation and citation omitted)); Modern Computer Sys., Inc. v. Modern Banking Sys.,
Inc., 871 F.2d 734, 738 (8th Cir. 1989) (en banc) (same).

       We hold the District Court did not abuse its discretion in denying Hubbard's
motion for a preliminary injunction. Of course, neither the District Court's denial of the
motion nor our affirmation of the District Court's judgment will bind the District Court
or the parties in any further proceedings in this case, for adjudication of a motion for
a preliminary injunction is not a decision on the merits of the underlying case. See
Campbell "66" Express, Inc. v. Rundel, 597 F.2d 125, 130 (8th Cir. 1979) (per curiam)
(quoting Benson Hotel Corp. v. Woods, 168 F.2d 694, 697 (8th Cir. 1948)); see also
Coteau Properties Co. v. Department of Interior, 53 F.3d 1466, 1482 n.2 (8th Cir. 1995)
(Heaney, J., dissenting).

      The judgment of the District Court is affirmed.

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A true copy.

      Attest:

         CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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