Deere & Co. v. Fimco Inc.

Citation: 301 F. Supp. 3d 704Docket: CASE NO. 5:15–CV–00105–TBR

Court: District Court, W.D. Kentucky; March 21, 2018; Federal District Court

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The Court is addressing post-trial motions from both parties following a lawsuit initiated by Plaintiff Deere Company against Defendant FIMCO, Inc. Deere alleged that FIMCO infringed on its federal trademark and common law rights by producing agricultural sprayers and applicators in green and yellow colors similar to those used by Deere. Deere's claims included federal trademark infringement (15 U.S.C. § 1114), false designation of origin (15 U.S.C. § 1125(a)), trademark dilution (15 U.S.C. § 1125(c)), and common law trademark infringement. After a five-day bench trial, the Court ruled in favor of Deere on all claims, issuing a permanent injunction that prohibits FIMCO and its affiliates from using the combination of green and yellow colors in their agricultural equipment production and marketing. However, the injunction allows the use of either color alone or in combination with other colors.

Currently, FIMCO seeks to alter the Court's Findings, Conclusions, and Judgment, or alternatively, a new trial. Both parties dispute the interpretation and scope of the injunction, with FIMCO aiming to narrow it and Deere seeking to broaden it. A primary point of contention is the types of FIMCO equipment covered by the injunction. FIMCO argues that the injunction pertains solely to specific agricultural equipment with large yellow wheels, such as sprayers and applicators, and should not apply to equipment defined as "large" or "utility," which includes items with smaller white wheels or tanks over 500 gallons. Furthermore, FIMCO contends that the injunction should not apply to mounted equipment or lawn and garden equipment, as these do not have wheels and are not designated for agricultural use. The Court will address these disputes regarding the injunction's scope.

FIMCO argues that the injunction should only apply to its agricultural sprayers and applicators featuring bright green frames and bright yellow wheels, based on two points. First, FIMCO asserts that Deere's trademarks explicitly require these color specifications, implying that products with different colors cannot infringe. Second, FIMCO contends that Deere’s complaint and evidence were focused solely on its green and yellow 'trailed and wheeled' equipment, suggesting the injunction should not extend beyond this scope. However, the Court has consistently rejected FIMCO's claims that only identical equipment and color arrangements can infringe Deere's trademarks. The Court emphasized that confusion must be assessed based on public perception rather than direct comparisons of the marks in court. This means evaluating whether FIMCO's use of green and yellow is 'confusingly similar' to Deere’s marks. The Court also clarified that for trademark dilution, the key question is whether FIMCO's use impairs the distinctiveness of Deere's famous mark, regardless of whether the products are competing. The Court noted that FIMCO’s colors and their placement are indistinguishable from Deere’s, highlighting a significant similarity between the two companies' equipment. Thus, while FIMCO argues for a limited injunction, any confusingly similar use of green and yellow falls within the scope of the injunction, supporting Deere's position that prior court rulings have not restricted injunctions solely to goods found to infringe.

Deere references the Michigan district court case Audi AG v. D'Amato, where the court prohibited a defendant from using Audi trademarks and logos on any merchandise after finding trademark infringement and dilution. The court's injunction was broad, covering all services or products, not just specific items like hats and shirts. The Sixth Circuit upheld this decision. In a similar case, Rolls-Royce Motor Cards Ltd. v. Davis, the defendant was permanently enjoined from using Rolls Royce trademarks, despite using them in a different context than the company. Likewise, in Maker's Mark Distillery, Inc. v. Diageo North America, Inc., the court restricted the use of Maker's Mark's trademarked wax seal on all related products, not just the specific infringing item. The Court disagrees with FIMCO's assertion that an injunction should be limited to specific agricultural sprayers, expressing skepticism toward FIMCO's newly made distinctions between its product lines. Testimony from FIMCO's President clarified that the company operates two divisions: a lawn and garden division under the FIMCO brand and an agricultural division branded as Ag Spray, which includes various agricultural equipment. This division features large, heavy-duty sprayers and smaller models, all marketed under distinct color schemes.

A variety of agricultural equipment is offered, including three-point hitch-mounted sprayers compatible with tractors, utility vehicles with boom attachments, and spot sprayers for tasks like fence row spraying. Additionally, a comprehensive selection of fluid-handling equipment is available, including storage tanks and nurse trailers designed for transporting liquid to stationary tanks. The company is also a leading parts supplier for major brands, and substantial sales of basic storage tanks occur as well. 

Wipson's testimony disputes FIMCO's claims that its Ag Spray equipment can be distinctly categorized, asserting that all equipment—including large, utility, mounted, and lawn and garden types—serves agricultural purposes. Notably, Wipson highlighted a mounted three-point sprayer on a tractor and utility vehicles that also serve agricultural functions. His trial testimony did not address specific features like tank or wheel sizes in relation to agricultural classification. However, in a subsequent declaration, Wipson asserted that smaller wheels typically indicate non-agricultural equipment, contrasting with FIMCO's larger wheels used for agricultural sprayers and applicators. 

The Court remains skeptical of Wipson's post-trial claims, noting the lack of trial testimony on these distinctions and the absence of evidence to support the assertion that smaller wheels signify non-agricultural use. Consequently, the Court concludes that restricting the injunction to only large agricultural sprayers, excluding other Ag Spray products, is unjustified based on prior case law extending injunctions to broader aspects of an infringing business.

Deere's request to modify the injunction to encompass "all goods and services of FIMCO" is deemed overly broad by the Court. While Deere asserts that its success on the dilution claim justifies a wide-ranging injunction—arguing that dilution law protects famous marks beyond traditional trademark infringement—the Court finds that the specific FIMCO-branded lawn and garden equipment in question, which has traditionally used other colors, was not central to the case. Consequently, the Court limits the extension of the injunction to agricultural equipment only, defining "agricultural equipment" to include all Ag Spray-branded items and any equipment used in agricultural activities, irrespective of its configuration or color.

Regarding color combinations, the injunction currently prohibits FIMCO from using a combination of green and yellow on its equipment but does not restrict the use of either color alone or in combination with other colors. FIMCO seeks to narrow this prohibition to only equipment with bright green frames and bright yellow wheels, arguing that a piece of large equipment with white wheels should not be covered. However, the Court rejects this limitation, emphasizing that allowing such arrangements could undermine trademark rights and dilute the effectiveness of the injunction.

Courts often issue injunctions against not only the exact trademark used by a plaintiff but also any marks that are confusingly similar. This principle stems from the idea that trademark infringement does not require identical marks; ownership of a trademark allows the owner to prevent others from using confusingly similar marks. Courts assess whether a mark might confuse the public based on their general recollection, even if the marks are not viewed side by side. In the case of Wynn Oil v. American Way Service Corporation, the Sixth Circuit upheld an injunction against the defendant's use of "X-TEND" or any confusingly similar term, emphasizing that injunctions against confusingly similar marks are common to prevent minor alterations meant to circumvent the injunction. FIMCO argues that cases involving trademarked words differ from those involving colors, claiming that past injunctions did not extend to combinations of letters or colors. However, the court noted that the Wynn Oil case explicitly prohibited any confusingly similar designations, countering FIMCO's assertion. In related cases, such as Elvis Presley Enterprises, courts have similarly prohibited use of any confusingly similar trademarks. The court concludes that an injunction must prevent FIMCO from using any confusingly similar combination of green and yellow on agricultural equipment, thus amending the injunction to reflect this broader protection against future infringement.

FIMCO challenges the Court's injunction against using a combination of green and yellow on its equipment, asserting that yellow levers and knobs are industry standards in agricultural machinery. Wipson's declaration mentions that FIMCO's Green Steel products contain yellow parts but does not confirm that yellow is the exclusive or standard color for such parts. Deere clarifies that the issue arises only if FIMCO continues using green frames, but FIMCO plans to introduce a new black and gray color scheme, which would not infringe upon the injunction since using yellow parts with this scheme is permissible.

Regarding yellow caution labels, FIMCO claims a legal obligation to include them on its equipment but provides no supporting evidence. Deere agrees that if such labels are legally required, their combination with any green on the equipment would not violate the injunction. Thus, both the use of yellow parts and labels are deemed moot under FIMCO's upcoming black and gray color scheme.

FIMCO also seeks a designated period to sell off its infringing agricultural equipment, proposing a 12-month timeframe from the date of the Amended Injunction. The court may consider extending the injunction's implementation to allow FIMCO to sell its existing inventory and avoid waste associated with relabeling or discarding goods. FIMCO references case law supporting its request for a 12-month sell-off period, citing factors favoring this duration.

Deere did not seek a preliminary injunction and claims that FIMCO has not demonstrated lost sales or monetary damages. FIMCO's actions are described as neither willful nor malicious, and Deere has permitted other companies to sell its green and yellow equipment. FIMCO has incurred expenses related to ceasing the assembly of its green and yellow equipment and developing a new color scheme and marketing materials. FIMCO anticipates being able to sell its remaining 90 units within a year, but asserts that repainting these units is not feasible due to the complexity and high costs involved in the powder-coating process.

Deere argues that FIMCO should not be granted a sell-off period, asserting that FIMCO has not substantiated any specific hardship, unlike defendants in other cases that received sell-off periods. Deere maintains that any continued sales by FIMCO would dilute its trademarks due to the established trademark infringement and dilution findings. In response, FIMCO contends that the process of repainting the equipment is too complicated and costly, involving disassembly and reassembly.

Deere counters FIMCO's claims with an expert opinion stating that repainting is relatively straightforward and inexpensive. Despite the conflicting views, the Court acknowledges that FIMCO has demonstrated some hardship regarding the disassembly and repainting of its equipment. Deere expresses that its decision not to pursue lost sales or damages was not an indication of lacking harm, and insists that such reasonableness should not extend FIMCO's use of the Deere colors. Deere also argues that FIMCO's concerns about color scheme redesign costs and the agricultural economy are irrelevant to the case.

Arguments exist regarding whether the Court should grant FIMCO a sell-off period for its infringing inventory and the duration of such a period. Deere successfully demonstrated that FIMCO's use of green and yellow infringes and dilutes its trademarks. However, the Court found insufficient evidence that FIMCO intentionally selected these colors to cause confusion or that it was aware of Deere's trademark protection. Given FIMCO's substantial finished inventory, the Court determined that not allowing a reasonable sell-off period would lead to waste from relabeling or discarding goods. The Court concluded that permitting a twelve-month sell-off period from the Court's Order and Judgment is appropriate, allowing FIMCO until October 13, 2018, to liquidate its existing infringing stock.

Deere contends that while FIMCO can sell off its existing inventory, it should not promote or market its trailed agricultural equipment during this period. FIMCO argues that it needs to display its inventory to sell it and plans to inform customers via disclaimers at its stores and events that its products are not affiliated with John Deere. Deere counters that such disclaimers may exacerbate confusion and dilute its trademark. Citing previous cases, Deere argues that disclaimers do not effectively reduce consumer confusion and may lead to further dilution of its mark. The Court found the cited cases unpersuasive in this context.

The court determined that a disclaimer would not effectively reduce consumer confusion based on two findings: a field survey indicated it would not alleviate confusion, and the labels on products such as cheese, salami, and wine are unlikely to be read carefully by consumers. In a related case, the court rejected the defense's argument that using the domain name "greenproducts.com" was non-infringing because it did not actually sell Green Products goods. The court likened this to falsely advertising a business as affiliated with a trademark holder. In contrast, FIMCO's practice of clearly stating that its equipment is not associated with John Deere was deemed acceptable. 

The court allowed FIMCO to continue marketing its infringing agricultural equipment until October 13, 2018, provided it prominently displays signs indicating non-affiliation with John Deere. An Amended Injunction was issued, permanently enjoining FIMCO and its associates from using a combination of green and yellow colors that is confusingly similar to Deere's trademarked color scheme in any agricultural equipment marketing or sales within the U.S. The injunction specifies that FIMCO cannot make minor alterations to circumvent this prohibition. It defines agricultural equipment broadly and permits the use of either color separately or in combination with other colors, but prohibits any confusingly similar green and yellow combinations. FIMCO is also barred from manufacturing new infringing equipment but has until the specified date to sell off existing inventory.

FIMCO is authorized to market infringing agricultural equipment solely to facilitate sales, with a mandatory disclaimer in all advertisements stating no affiliation with John Deere. The Amended Injunction specifically targets "agricultural equipment" and "confusingly similar combinations of green and yellow." However, the Court retains the authority to modify the injunction to address future infringing behaviors. Courts have the ability to adjust injunctions as needed, necessitating ongoing judicial oversight and responsiveness to the parties involved. The Safe Distance Rule allows courts to prevent known infringers from using similar trademarks, emphasizing that minor changes do not eliminate confusion and may require a significant departure from the original mark to avoid consumer misperception. This rule is particularly crucial in cases of repeated infringement. The district court previously determined that FIMCO’s modified products maintained a confusing resemblance to protected trademarks, indicating that any attempts by FIMCO to evade the injunction would not be favorably viewed in future contempt proceedings. Additionally, FIMCO has filed a motion for a new trial regarding prior findings and judgment.

FIMCO filed a motion under Federal Rules of Civil Procedure 52 and 59, seeking to vacate, alter, or amend prior rulings, specifically the denial of its motion for partial summary judgment and the granting of summary judgment to Deere regarding FIMCO's affirmative defenses of laches and aesthetic functionality. FIMCO asserted that the court erred in admitting and refusing evidence, relied too heavily on an expert report, misjudged the fame of Deere's colors, dismissed eyewitness accounts regarding FIMCO's color use, and found insufficient evidence for confusion and dilution claims. FIMCO also requested reconsideration of the injunction's scope and timing, indicating that further details would be provided in an upcoming brief.

The court noted that subsequent submissions primarily addressed the injunction's interpretation and modification, while FIMCO did not provide additional briefing or case law for the other issues raised. The court confirmed that FIMCO did not seek an extension for these matters and emphasized the necessity for a final decision after extensive consideration of the case. Ultimately, FIMCO's motion to alter, amend, vacate, or request a new trial was denied.

An amended injunction has been issued, replacing the previous October 13, 2017 injunction, against FIMCO, Inc. and related parties. The injunction permanently prohibits them from using a combination of green and yellow colors that closely resembles the trademarked color scheme owned by Deere in the manufacturing, selling, or advertising of any agricultural equipment within the United States. The term "confusingly similar" is defined to prevent FIMCO from making minor alterations to evade this injunction. Agricultural equipment is broadly defined, encompassing all Ag Spray-branded and other FIMCO equipment used in agricultural activities, irrespective of size or color variations.

While FIMCO cannot use a similar combination of green and yellow, they are allowed to use either color alone or in combination with other colors. FIMCO is required to cease the manufacture of new infringing agricultural equipment but is permitted until October 13, 2018, to sell existing infringing inventory, with marketing allowed only to facilitate these sales and accompanied by a disclaimer indicating no affiliation with John Deere.

Deere is instructed to file a motion for costs and attorneys' fees within 14 days, with FIMCO required to respond within the same timeframe. No replies to the motion will be allowed. The order is final and appealable, as the parties have acknowledged that the green and yellow colors used by both companies are indistinguishable. Future use of these colors on FIMCO-branded lawn and garden equipment may lead to modifications of the injunction based on the Safe Distance Rule.