DAKOTA INDUSTRIES, INC.,
DAYTON HUDSON CORP.
John R. Pekas, Sioux Falls, SD
Attorney for Plaintiff
John B. Gordon, Michael A. Ponto, Calvin L. Litsey
Faegre & Benson, Minneapolis, MN
William F. Day, Jr., Lee A. Magnuson, Todd David Epp
Lynn, Jackson, Shultz & Lebrun, Sioux Falls, SD
Attorneys for Defendant
Filed Sept 12, 2001.
Hon. Karen E. Schreier, U. S. District Judge
[¶1] Plaintiff, Dakota Industries, Inc., brings this action against defendant, Dayton Hudson Corporation, seeking a permanant injunction for Dayton Hudson's alleged advertisement and sale of garments in violation of its "Dakota" trademark. Dayton Hudson contends that injunctive relief should be denied because they did not violate the "Dakota" trademark and because the issue is now moot. After a bench trial on the merits, the court finds that Dakota Industries is not entitled to a permanent injunction.
[¶2] The following constitutes the court's findings of fact pursuant to Federal Rule of Civil Procedure 52(a):
[¶3] Dakota Industries received a federal trademark registration for the mark "Dakota" in 1972 for snowmobile suits, jackets, coats, coveralls, ski pants and jackets, jumpsuits, and jackets in Class 39. This trademark was declared "incontestable" by the federal Patent and Trademark Office in August of 1978. Dakota Industries entered into a licensing agreement with M. Fine & Sons, which allowed M. Fine to use the "Dakota" trademark on men's and boy's jeans. Pursuant to the licensing agreement, M. Fine manufactured and sold jeans with labels bearing the words "Dakota" and "Dakota Blues."
[¶4] In 1989, a competitor, Dakota Blue Corp., began shipping a line of women's denim clothing into the United States from China and Hong Kong through a company called Ever Best Ltd., bearing the words "Dakota Blue." See Dakota Indus. v. Ever Best Ltd., 944 F2d 438 (8th Cir. 1991). Between 1989 and 1992, Dayton Hudson purchased blue jeans carrying the name "Dakota Blue" from Ever Best and sold those garments at retail. These blue jeans were not manufactured, sold, or licensed by Dakota Industries. In 1989, Dakota Industries sued Dakota Blue Corp. and Ever Best Ltd., alleging infringement of its "Dakota" trademark.
[¶5] Dakota Industries sent two letters in 1989 to Dayton Hudson informing it that the "Dakota Blue" jeans infringed on its trademark. Dayton Hudson received assurances from Ever Best and Dakota Blue Corp. that the "Dakota Blue" clothing did not infringe on the trademark of Dakota Industries. Ever Best and Dakota Blue Corp. also agreed to indemnify Dayton Hudson for any losses in the event the garments did infringe Dakota Industries' trademark. Dayton Hudson continued to sell the "Dakota Blue" jeans until 1992. No credible evidence was presented at trial that Dayton Hudson sold any "Dakota Blue" jeans after 1992.
[¶6] On May 7, 1998, the Ever Best litigation was terminated by a consent judgment that barred Dakota Blue and its principals from selling any "Dakota Blue" garments. There is no evidence that any "Dakota Blue" garments remain in the stream of commerce.
[¶7] During the trial, only one witness, Donald Mackintosh, the president of Dakota Industries, offered testimony about the alleged infringing garments. Dakota Industries did not offer into evidence either its garments or the alleged infringing garments that were sold by Dayton Hudson. Mackintosh initially testified that he saw all the buttons, buckles, hangtags, and labels on Exhibits 53 and 54 on garments in Dayton's. During cross-examination, he recanted that testimony and admitted seeing only a portion of the buttons, labels, and decals in the Dayton's store. Exhibits 53 and 54 were then "redacted" to reflect only those items that Mackintosh saw on garments in Dayton's. Upon further cross-examination, he again revised his testimony and admitted that some of the items remaining on the "redacted" Exhibits 53 and 54 were not seen by him in Dayton's. The court finds the testimony of Mackintosh not credible. In a bench trial, the court is the trier of fact and the judge of credibility of the witnesses and of the weight of the evidence. See Noland v. Buffalo Ins. Co., 181 F2d 735, 738 (8th Cir. 1950). In this opinion, the court disregards the portion of Mackintosh's testimony that it believes is not credible. DISCUSSION
[¶8] Under § 34 of the Lanham Act, the court may grant injunctions according to principles of equity and upon such terms deemed reasonable to prevent the violation of any mark registered in the Patent and Trademark Office. See 15 USC § 1116. In determining whether to issue a permanent injunction, the court must balance four factors. These factors are: (1) the movant's actual success on the merits; (2) the threat of irreparable harm to the movant; (3) the balance of the hardships; and (4) the public interest. See Dataphase Sys. v. C L Sys., Inc., 640 F2d 109, 113 (8th Cir. 1981) (en banc). The standard for granting a permanent injunction is essentially the same as for a preliminary injunction with the exception that the movant must show actual success on the merits. See Amoco Prod. Co. v. Village of Gambell, Alaska, 480 US 531, 546 n.12, 107 SCt 1396, 1404, 94 LEd 2d 542 (1987).
[¶9] I. Actual Success on the Merits
[¶10] To prevail under the Lanham Act, Dakota Industries must prove that use of the "Dakota" trademark creates a likelihood of confusion, deception, or mistake among an appreciable number of ordinary buyers as to the source of or association between the two trademarks. See Duluth News-Tribune v. Mesabi Pub. Co., 84 F3d 1093, 1096 (8th Cir. 1996). The likelihood of consumer confusion is the "hallmark of any trademark infringement claim." Minnesota Mining & Mfg. Co. v. Rauh Rubber, Inc., 130 F3d 1305 (8th Cir. 1997) (quoting Polymer Technology Corp. v. Mimran, 37 F3d 74, 80 (2d Cir. 1994)).
[¶11] Likelihood of confusion is a factual issue. See Squirt Co v. Seven-Up Co., 628 F2d 1086, 1091 (8th Cir. 1980). To determine whether a likelihood of confusion exists, the court must consider: (A) the strength of the marks; (B) the similarity between the parties' marks; (C) the competitive proximity of the parties' products; (D) the defendant's intent to confuse; (E) evidence of actual confusion; and (F) the degree of care reasonably expected of potential customers. See Duluth News-Tribune, 84 F3d at 1096.
[¶12] A. Strength of the Trademark
[¶13] The strength of a trademark dictates the level of protection that it will be afforded by the court. A strong mark is one that has established a significant impression in the consciousness of consumers because of its fame or uniqueness. J. McCarthy, Trademarks and Unfair Competition §§ 11:73-11:75 (2001). The impact the mark has on the public consciousness leads the court to grant greater protection because there is a greater risk of confusion by consumers when they casually notice similar marks. See id.
[¶14] The court analyzes the relative strength of the mark within the broad spectrum of trademark protection. There are three factors in particular that possess great significance: (a) the type of trademark, i.e., whether it is fanciful, arbitrary, suggestive, descriptive, or generic; (b) whether the trademark is registered; and (c) the nature and extent and use of the similar marks by others. See General Mills, Inc. v. Kellogg Co., 824 F2d 622, 626-27 (8th Cir. 1987).
[¶15] The first factor in determining the strength of a trademark does not support granting significant protection to the "Dakota" mark. Dakota Industries conceded during oral argument on its motion for summary judgment that it possesses a descriptive trademark. A descriptive mark, however, can be protected only if it has become distinctive through acquiring secondary meaning. See Duluth News, 84 F3d at 1096; General Mills, 824 F2d at 625. Secondary meaning exists if the mark is closely identified with the goods of one producer or if it has otherwise garnered public recognition. See Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F2d 794 (9th Cir. 1970). Dakota Industries contends the court should grant great significance to the fact that "Dakota" has been in the stream of commerce for thirty years. No credible evidence was admitted, however, to show that this mark is publicly recognized or that advertising expenditures transformed this descriptive mark into a strong mark. See Brookfield Communications, Inc. v. West Coast Entm't Corp., 174 F3d 1036, 1058 (9th Cir. 1999). The longevity of "Dakota" is circumstantial evidence that does not directly address the specific issue of public recognition. There is no additional evidence in the record that "Dakota" has become distinctive through secondary meaning.
[¶16] The second factor weighs in favor of Dakota Industries as its trademark is registered and is incontestable. It must be noted, however, that "[A] mark's registered status is only an evidentiary tool, and the fact of registration does not affect the plaintiff's ultimate burden of proof in an infringement action." General Mills, 824 F2d at 626. A trademark's incontestable status alone is not sufficient to prove that a mark is strong. See Hubbard Feeds, Inc. v. Animal Feed Supplement, Inc., 182 F3d 598, 602 (8th Cir. 1999).
[¶17] The third factor weighs in favor of Dayton Hudson. Evidence was introduced showing that the word "Dakota" was used by third parties with regard to non-clothing products. Because the word "Dakota" is used to describe everything from trucks to water, this reinforces the conclusion that the mark "Dakota" is not publicly recognized as being associated with garments.
[¶18] After considering all three factors and the entire evidentiary record, it is evident that the Dakota Industries' "Dakota" mark is relatively weak. Although "Dakota" is not a strong mark, it may still be entitled to protection. This is particularly true where a conflicting mark is similar and the goods are closely related. Brookfield Communications, 174 F3d at 1059.
[¶19] B. Similarity of Trademarks
[¶20] In determining the similarity of the marks, the court must assess the impression that each mark in its entirety is likely to have on a consumer exercising the attention normally given by consumers of such products. See Duluth News, 84 F3d at 1097. Less similarity in the trademarks is necessary to support a finding of infringement if the products are closely related. See SquirtCo., 628 F2d at 1091.
[¶21] The similarities between "Dakota" and "Dakota Blue" are not significant. The more significant comparison is between "Dakota Blue" and "Dakota Blues." The marks are aurally similar, there is only a slight distinction between plaintiff's "Dakota Blues" and Dayton Hudson's product "Dakota Blue." Visually, however, there are several significant distinctions between the two marks. Dakota Industries' label is very plain with a simple design of a straight leg pair of pants, a symbol indicating the pants were crafted in the USA., an eagle over the word "Dakota," and the words "Dakota Blues" in plain block lettering at a slant. The Dayton Hudson product, on the other hand, has a label with a bold graphic design. The word "Dakota" is in a half circle with a star () for the "o" prominently placed above the word "blue." The label has a patriotic and contemporary appearance with stripes and a star. The size of type is much larger than the type in Dakota Industries' mark.
[¶22] The two marks are visually distinct, but aurally they are almost identical. The court finds that the aural similarities between "Dakota Blue" and "Dakota Blues" might cause confusion to a typical consumer.
[¶23] C. Degree of Competition Between the Products
[¶24] Less similarity between the marks is required if the products are closely related. See ConAgra, Inc. v. Geo. A. Hormel & Co., 990 F2d 368, 371 (8th Cir. 1993). The word "Dakota" is utilized by both parties for the sale of blue jeans. While there is some difference in the jeans product, this factor weighs toward the finding of likelihood of confusion.
[¶25] D. The Alleged Infringer's Intent to Confuse
[¶26] "Proof of an intent to confuse the public is not necessary to a finding of a likelihood of confusion," but "[i]f a mark was adopted with the intent to confuse the public, that alone may be sufficient to justify an inference of a likelihood of confusion." Elvis Presley Enter., Inc. v. Capece, 141 F3d 188, 203 (5th Cir. 1998).
[¶27] Dakota Industries alleges that two letters written by Dayton Hudson in 1984 and sent to Dakota Industries regarding the Frank Shorter line of clothing provides proof of an intent to confuse. The letters, however, relate to an issue extraneous to this case and do not evince an intent on the part of Dayton Hudson to confuse consumers with regard to the "Dakota Blues" jeans. Dakota Industries also contends that an intent to confuse may be implied from Dayton Hudson's actions after it received notice of Dakota Industries' mark. This allegation has no merit. Dayton Hudson obtained assurances from Ever Best and Dakota Blue Corp. that they were not infringing on Dakota Industries' mark, and this assurance was supported by an indemnification agreement. The district court denied Dakota Industries' request for a preliminary injunction against Ever Best and Dakota Blue Corp. Thus, Dayton Hudson had a good faith belief that its sale of "Dakota Blues" jeans did not violate Dakota Industries' trademark. This factor weighs in favor of Dayton Hudson.
[¶28] E. Evidence of Actual Confusion
[¶29] Dakota Industries is not required to prove any instances of actual confusion, but consideration is given to the number and extent of instances of actual confusion. See Duluth News, 84 F3d at 1098. Dakota Industries proffers multiple examples of confusion in various Dayton Hudson accounting documents as evidence of actual confusion. The problem with Dakota Industries evidence is two-fold. First, there is no evidence that a Dayton Hudson employee who mistakenly referred to its vendor as "Dakota Blues" rather than "Dakota Blue" had ever seen or heard of the "Dakota Blues" garments. Second, the appropriate inquiry is whether any ordinary purchasers were confused. See Duluth News, 84 F3d at 1098. The record contains no evidence of actual confusion by a purchaser and thus, this factor weighs in favor of Dayton Hudson.
[¶30] F. The Degree of Care Reasonably Expected of Potential Costumers
[¶31] Generally, consumers of low-cost goods are less careful, and therefore, more likely to be confused by a similarity in marks. See ConAgra, Inc. v. Geo. A. Hormel & Co., 784 FSupp 700, 736 (D. Neb. 1992). The retail price of "Dakota Blues" jeans was approximately $40. Mackintosh testified that the unit cost of Dakota Industries' goods were not lower-priced garments. "Dakota Blue" and "Dakota Blues" products were being marketed in some of the same stores between 1989 and 1992. The garments as described in court by Mackintosh, however, are not similar. The "Dakota Blues" jean was a plain utility jean. The "Dakota Blue" jean was a stonewashed fashion jean. Blue jean consumers are discerning shoppers. Due to the dissimilarity between the design of the jeans and the degree of care reasonably exercised by shoppers of blue jeans, this factor weighs in favor of Dayton Hudson.
[¶32] G. Balance of Evidence
[¶33] Several of the factors weigh in favor of a finding of trademark infringement. The marks are similar and the clothing products are closely related. These factors are overridden, however, by the relative weakness of the mark within the clothing industry, the lack of evidence of any actual confusion by consumers, the lack of evidence of intent to infringe on the part of Dayton Hudson, and the lack of danger of confusion by purchasers of blue jean products.
[¶34] After weighing these factors against each other, the court finds that Dakota Industries has not proven that Dayton Hudson's use of "Dakota Blue" created a likelihood of confusion among an appreciable number of ordinary buyers as to the source or association between the two trademarks. Thus, Dakota Industries does not prevail on its Lanham Act cause of action. Because Dakota Industries has not shown actual success on the merits, this court does not need to review the other Dataphase factors to determine whether a permanent injunction is appropriate.
[¶35] II. Mootness
[¶36] Even if Dakota Industries could have proven actual success on the merits, the court would not grant Dakota Industries a permanent injunction because of mootness. It is not appropriate for the court to issue an injunction unless the record reveals a real threat of future violations or a contemporary violation of a nature likely to continue or recur. See Webb v. Missouri Pacific R.R. Co., 98 F3d 1067, 1068 (8th Cir. 1996) (citing United States v. Oregon State Medical Soc'y, 343 US 326, 333, 72 SCt 690, 695, 96 LEd 978 (1952)). Injunctive relief is unnecessary if the defendant has rectified the infringement and there is no likelihood of repetitive future infringement. See Burndy Corp. v. Teledyne Indus., Inc., 748 F2d 767, 773 (2d Cir. 1984).
[¶37] Dakota Industries contends that it will suffer an injury if the injunction is not granted. Dakota Industries claims that if the permanent injunction is denied then other encroachers will begin to violate their trademark and the value of the "Dakota" mark will be diminished. It is irrelevant, however, whether this injunction may prevent future infringement by unknown competitors.
[¶38] The purpose of an injunction is to "forestall future violations" by this infringer. United States v. Oregon State Medical Soc'y, 343 US 326, 333, 72 SCt 690, 695, 96 LEd 978 (1952). Dayton Hudson is not likely to again infringe on the "Dakota Blues" trademark. Dayton Hudson has not purchased clothing from Dakota Blue Corp. or Ever Best since 1993. Furthermore, Dayton Hudson cannot purchase "Dakota Blue" clothing in the future because Dakota Blue Corp. and its principals are barred by consent judgment from selling "Dakota Blue" garments. Dayton Hudson has not sold "Dakota Blue" clothing for over eight years and the court has no reason to doubt Dayton Hudson's promise to not sell "Dakota Blue" products in the future. See id. at 696. Thus, even if Dayton Hudson had violated Dakota Industries' "Dakota Blues" trademark, an injunction would not be an appropriate remedy because there is no real threat of a future violation of the law or a contemporary violation likely to continue or recur. Accordingly, it is
[¶39] ORDERED that judgment is entered in favor of defendant Dayton Hudson and against plaintiff Dakota Industries on the merits and that plaintiff's request for a permanent injunction is denied.