Engineered Arresting Sys. Corp. v. Atech, Inc.

Citation: 356 F. Supp. 3d 1323Docket: Case No.: 5:14-CV-00518-MHH

Court: District Court, N.D. Alabama; September 24, 2018; Federal District Court

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Engineered Arresting Systems Corporation (ESCO) alleges that defendants Atech, Inc., SCAMA AB, Philip Ahagen, and Harald Ahagen infringed its "BAK-12" and "PORTARREST" trademarks in violation of the Lanham Act by responding to a U.S. Air Force solicitation for mobile aircraft arresting systems. ESCO's claims also include false designation of origin, false advertising, common law unfair competition, and trademark infringement. The case is currently before the Court on the defendants' motion for summary judgment regarding ESCO's trademark infringement claims, which the Court grants.

The Court's standard for granting summary judgment requires the movant to show no genuine dispute exists as to any material fact, allowing for judgment as a matter of law. To oppose a motion for summary judgment, the non-movant must cite specific parts of the record. Genuine disputes must have a factual basis that could lead a reasonable jury to rule for the non-movant. The Court must view all evidence in favor of the non-moving party and cannot make credibility determinations at this stage.

In the procedural context, ESCO's statement of facts primarily comes from the declarations of Dan Edwards and Alex Del Grosso, which the defendants seek to strike. The Court treats this motion as an objection under Rule 56(c)(2), which allows for the submission of evidence in an inadmissible form at the summary judgment stage. The burden rests on the proponent to demonstrate the admissibility of the material. The district court has broad discretion in determining what evidence to consider at this stage.

Defendants contest Dan Edwards's ability to testify regarding ESCO's predecessors, consumer perceptions of "BAK-12," the adoption of "BAK-12" by E.W. Bliss, SCAMA's BC-11 arresting system, and USAF's BAK-12 drawings, arguing he lacks personal knowledge. The Court counters this claim, noting Edwards's position as former president of ESCO and his designation to testify on behalf of the company in a Rule 30(b)(6) deposition. Edwards asserts his competence based on personal knowledge and review of ESCO's business records, detailing his familiarity with the history of the PORTARREST and BAK-12 brands, trademark ownership, advertising, sales, internal operations, and trade channels. The Court finds the defendants have not sufficiently demonstrated that Edwards lacks the necessary personal knowledge.

Additionally, defendants reference Rule 37(c)(1) of the Federal Rules of Civil Procedure, asserting Edwards should be barred from discussing ESCO's sales prior to 2006 due to failure to disclose information as required by Rule 26(a) or (e). However, while ESCO provided a sales list from 2006 to 2015 in response to Atech's interrogatories, the Court maintains that Edwards's statement about having sold at least 1200 BAK-12 and 450 PORTARREST systems does not violate this rule. The statement does not identify specific customers or potential customers, thus not contradicting the previous disclosures.

The defendants contest Mr. Edwards's declaration, asserting inconsistencies with his prior deposition testimony and claiming the declaration is self-serving and lacks corroboration. They specifically challenge his statement that ESCO sold arresting systems in Alabama, arguing it contradicts earlier testimony where he stated he did not believe full systems were sold there. However, the Court clarifies that it cannot weigh evidence or assess credibility at the summary judgment stage. Mr. Edwards's declaration, meeting Rule 56 standards, can establish a material factual issue, even if self-serving, unless it directly contradicts unambiguous prior testimony without explanation. The Court finds no inherent inconsistency between Mr. Edwards's declaration and deposition since the latter was limited to sales of specific equipment since his involvement with ESCO, while the declaration does not impose such restrictions. Consequently, the Court overrules the defendants' objection, noting that even if the declaration were partially struck under the "sham affidavit rule," it would not affect the substantive analysis of ESCO's trademark claims. Additionally, the defendants' hearsay objections are deemed vague and misplaced, as none of the challenged statements are out-of-court assertions meant to prove the truth of the matter.

Alex Del Grosso, the Director of Sales and Marketing for ESCO, provided testimony regarding his interactions with Polish Air Force (PAF) officials and the company's products, specifically the BAK-12 and PORTARREST systems. The defendants objected to this testimony on several grounds, primarily claiming it constituted inadmissible hearsay. However, ESCO clarified that the statements were intended to show the existence of meetings and Del Grosso's belief regarding PAF's interest in their products, not to assert the truth of those beliefs. 

The defendants also challenged Del Grosso's claim that ESCO supplied these systems through third-party companies, arguing it was not disclosed in response to Atech's interrogatories. ESCO contended that the information was not relevant to those interrogatories, as it did not imply that the third parties sold or advertised the systems.

Further objections included Del Grosso's identification of proprietary part numbers, which the defendants claimed were irrelevant and potentially false, as they were not mentioned in a related deposition. The court determined that Del Grosso could testify based on personal knowledge and that the relevance of the part numbers could support ESCO's case.

Lastly, the defendants argued against Del Grosso's employment history with ESCO, stating that ESCO was founded in 1999. The court noted that Del Grosso could be referencing ESCO’s predecessors and that it could not determine credibility at the summary judgment stage. The court overruled all objections from the defendants and allowed ESCO's facts to be presented favorably, denying the motion to strike Del Grosso's statements.

The case involves the procurement of aircraft arresting systems for the Polish Air Force, specifically focusing on the BAK-12 and PORTARREST systems developed by ESCO, a leader in military aircraft arresting systems. An aircraft arresting system is designed to quickly decelerate landing aircraft to prevent overruns, consisting of an energy absorber (friction brake, rotary hydraulic brake, or textile brake) and an engagement system (such as a net, cable, or engineered materials). The BAK-12 system, primarily a mechanical rotary friction brake utilizing a cable hook, is not a barrier system despite its name, but can be integrated with a net if required. ESCO has marketed the BAK-12 since 1963, and it has been the sole producer of systems under this name until the defendants' alleged infringement. ESCO claims it has maintained control over the design and updates of the BAK-12, which shares few parts with the original version from the 1960s. Additionally, ESCO has a registered federal trademark for the PORTARREST system, a mobile friction brake designed for ground-based aircraft arresting.

As of September 2016, ESCO had over 6,000 arresting systems installed globally across 86 countries and had invested significantly in marketing and promoting these systems over the past decade. ESCO utilizes various marketing channels, including the internet, trade shows, and industry publications. Both ESCO and its competitors market their products through similar media. By March 2014, ESCO had marketed its systems in over 20 countries. The company sold significant quantities of BAK-12 and PORTARREST systems, with at least 1,200 BAK-12 systems and 450 PORTARREST systems sold to the USAF and international military users.

On October 23, 2012, the USAF issued a solicitation for specific BAK-12 and PORTARREST systems for the Polish Air Force (PAF), with ESCO being the sole manufacturer of the BAK-12 at that time. To justify the brand-name specification in the solicitation, the USAF provided a "Brand Name Justification," stating that the Polish government specifically requested the BAK-12 system. This justification noted that multiple vendors, including ESCO and others, could fulfill the acquisition requirements. 

ESCO and its competitors submitted proposals in response to the solicitation, which underwent three amendments before the contract was awarded to the defendants on May 21, 2013. ESCO contended that the solicitation was intended solely for its products, as PAF expressed a preference for ESCO's systems, already in use in Poland. Mr. Del Grosso, an ESCO representative, indicated that PAF's interest in ESCO's systems was evident throughout the solicitation process, supported by a "sole source" letter from BAE Systems that authorized procurement of ESCO's products for Poland.

Mr. Del Grosso assessed the first amendment to the solicitation and found that the majority of required parts were proprietary to ESCO, with over ninety parts listed bearing ESCO part numbers. On March 21, 2014, ESCO initiated a lawsuit against the defendants, later amending its complaint on May 15, 2014, to include claims of registered trademark infringement, false designation of origin, false advertising, and common law unfair competition. The Court directed the parties to confine discovery and summary judgment discussions to the trademark infringement claims, focusing on the validity of the "BAK-12" mark and whether the defendants used "PORTARREST." On December 31, 2015, the defendants filed a summary judgment motion asserting no material fact issues regarding these points. ESCO opposed the motion on May 10, 2017, contending that a reasonable jury could determine that "BAK-12" is a valid mark and that the defendants' actions likely caused confusion. The ongoing discovery dispute, particularly the defendants' limited document production, prompted ESCO's counsel to file a Rule 56(d) declaration, seeking to defer the summary judgment motion until more discovery could be obtained. The Court acknowledged ESCO's claims regarding discovery deficiencies affecting its opposition to the summary judgment, emphasizing that ESCO's infringement claims extend beyond the procurement related to the Polish Air Force contract.

Defendants argue that ESCO's requests for discovery of documents unrelated to the solicitation are overly broad and primarily aimed at gaining business intelligence on SCAMA. Despite the Court's efforts to resolve the issue through three telephone conferences, the dispute remains unresolved. Under Amended Rule 26 of the Federal Rules of Civil Procedure, discovery is limited to nonprivileged matters relevant to any party's claims or defenses and proportional to the case's needs. The Supreme Court has affirmed that trial judges have broad discretion over discovery scope and sequence. Before granting summary judgment, the district court must ensure parties have sufficient discovery opportunities. For a nonmoving party to defer a summary judgment ruling under Rule 56(d), it must demonstrate that further discovery will help rebut the moving party's absence of genuine factual issues. 

The key issues in the defendants' summary judgment motion relate to whether "BAK-12" is a protectable mark and whether "PORTARREST" was used by the defendants, which are critical to ESCO's trademark infringement claims. ESCO has conducted ample discovery, having received extensive documentation from the defendants regarding USAF procurement, including proposal documents and various communications. Depositions of SCAMA, Atech, and USAF personnel were also performed. Despite this, ESCO claims it requires additional information to respond to the summary judgment motion, specifically regarding the significance of "BAK-12," the use of "PORTARREST," and potential confusion caused by these terms.

However, the Court finds that ESCO does not need more information on the primary significance of "BAK-12," as defendants have provided sufficient evidence regarding its significance to themselves, USAF, and the public. ESCO's global presence and substantial investment in marketing BAK-12 systems further support its ability to demonstrate non-generic use and consumer significance.

ESCO has had ample opportunity to gather evidence regarding the defendants' use of "PORTARREST" since the defendants filed their motion for summary judgment. The defendants provided materials that ESCO claims show multiple uses of the mark, but the Court finds ESCO's assertion that additional documents exist to be vague and unpersuasive. During depositions of SCAMA and Atech, ESCO did not adequately inquire about the use of "PORTARREST," with ESCO's counsel only briefly mentioning the term and receiving an unclear response from SCAMA. SCAMA's counsel did not restrict ESCO from asking about "PORTARREST," and ESCO's decision to move on from inquiries about the mark indicates a lack of diligence in discovery. The Court concludes that ESCO has already had sufficient discovery opportunities and has not established a genuine issue of material fact regarding its rights to "BAK-12" or the defendants' use of "PORTARREST." Consequently, the Court denies ESCO's request to delay proceedings under Rule 56, asserting that further discovery is unnecessary and would only lead to delays that are not proportional to ESCO's needs.

"BAK-12" is considered generic as a matter of law. For ESCO to succeed against the defendants' motion for summary judgment concerning trademark infringement, it must demonstrate ownership of a valid trademark in "BAK-12" and establish that the defendants' usage is likely to cause confusion. Although ESCO has not formally registered "BAK-12," common law trademark rights can exist without registration, provided the mark is sufficiently associated with ESCO's goods to mislead consumers about the source. Distinctiveness is essential for common law protection, with four categories recognized: arbitrary or fanciful, suggestive, descriptive, and generic. Arbitrary or fanciful marks are inherently distinctive, while suggestive marks require consumer imagination to connect them to the product. Descriptive marks need to acquire secondary meaning to be protectable, and generic terms denote the basic nature of products or services. The definition of generic can vary; it may refer to a genus of products, be a common name for the product, or describe the product overall. The context of usage determines whether a term is generic, as a word may be generic in some contexts but not in others.

Generic terms lack the capacity for trademark protection, as established in case law. A term cannot be registered as a trademark if it is used generically, even if the public associates it with a specific source. Courts maintain that generic terms cannot be appropriated from the public domain; thus, a generic mark cannot achieve secondary meaning, making evidence of confusion or secondary meaning irrelevant unless the mark is non-generic. In this case, the defendants assert that "BAK-12" is a generic military designation for a standard type of USAF arresting system, and the Court concurs. Evidence shows multiple uses of "BAK-12" as a generic term, with ESCO acknowledging that the USAF coined the term in the early 1960s. ESCO's internal materials and publications use "BAK-12" descriptively and have not employed trademark symbols with it, unlike their other marks. The BAK series, which includes various models, can be produced by any manufacturer following USAF technical specifications. Additionally, USAF documents refer to "BAK-12" generically, supporting its classification as a generic term.

The BAK-12 is recognized as the standard aircraft arresting system of the USAF, as detailed in a technical report and various publications, including the Air Force Handbook and Federal Aviation Administration documentation. The BAK-12 is described as a key component of a mobile aircraft arresting system (MAAS), which consists of two mobile units each equipped with a BAK-12 barrier on a trailer. Christopher Peisher, a USAF engineer, affirmed that the term 'BAK-12' denotes a specific aircraft arresting system meeting military standards, and indicated that any system built in accordance with the USAF's technical specifications for the BAK-12 would also be termed a "BAK-12." 

ESCO argues that the documents cited by the defendants demonstrate that 'BAK-12' is used in a non-generic manner, contending that it is accompanied by additional descriptors, which implies it is not simply a generic term. ESCO references their own material which redundantly labels the BAK-12 as a "friction brake" and "USAF NATO Standard Arresting System," but the majority of other documents refer to it as "BAK-12 Aircraft Arresting System" or similar phrases without claiming they are more generic. 

ESCO also points out that many documents lack definitions for 'BAK' or 'BAK-12' in glossaries, arguing this absence suggests the term is not generic; however, ESCO does not clarify why a generic term must appear in those glossaries. Communications from USAF personnel include statements that label 'BAK-12' as a brand name specific to ESCO, indicating a belief that it pertains to a sole manufacturer. Notably, a contract negotiator and a contracting officer confirmed their understanding of 'BAK-12' as a proprietary term associated with ESCO based on previous contracts.

On February 11, 2013, Farah N. Keller, a USAF Contract Negotiator, inquired with Dr. Ronald Schumann, a USAF attorney, about the possibility of awarding the BAK-12 contract to certain defendants despite a proposal from ESCO, which claimed to be the sole manufacturer of the BAK-12. Following this, Dr. Schumann convened a meeting to address procurement concerns. Evidence suggests that USAF initially believed ESCO was the only manufacturer of the BAK-12. However, this perception does not negate the generic nature of the term "BAK-12." Courts generally hold that a generic term, even if associated with a specific source, cannot obtain trademark protection or prove secondary meaning, as established in relevant case law. ESCO's long-standing production of generically-termed arresting systems faced minimal competition, supporting the argument that "BAK-12" is indeed a generic term used by the USAF. Although ESCO pointed to a memo by Ms. Keller indicating that "BAK-12" is not generic, the memo actually states that it is a generic term for the aircraft arresting gear system and is not linked to any particular manufacturer. Further, it notes that the USAF holds a current drawing package for the BAK-12, which can be utilized by any party, including ATECH, to manufacture the system. ESCO contended that the memo only reflected the views of a few USAF procurement team members and lacked thorough research into the term "BAK-12." However, the memo explicitly states that the USAF conducted research on the term itself, not merely on the underlying system.

'BAK-12' is identified as a generic term used by the USAF for the aircraft arresting gear system (AAS) and is referred to generically in multiple instances within the memo. The BAK-12 is the standard operational AAS for the USAF, while the ESCO drawing package is specific to the ESCO BAK-12 system. ESCO posits that whether BAK-12 functions as a trademark is a material fact in dispute, but the research conducted does not diminish the term's generic nature. The mere knowledge of a single supplier does not imply that the term is not generic. ESCO also claims that the generic name for the device is a “friction brake” or “rotary friction brake,” but these terms are deemed too vague to adequately describe the BAK-12, as they do not encompass its complete characteristics.

The document parallels a precedent in Colt Def. LLC v. Bushmaster Firearms, Inc., where the First Circuit ruled that the term "M4" was generic despite arguments that other descriptors were sufficient. The BAK-12 is defined as an aircraft arresting system featuring a rotary friction brake and capable of integrating with a net/barrier system. Its installation can be above or below ground, or trailer-mounted, and it operates automatically when an aircraft engages with its hook cable. Aircraft can land in either direction utilizing the BAK-12. Just as "carbine" failed to capture the specifics of an M4, "rotary friction brake" does not adequately describe the BAK-12, which encompasses attributes beyond just being a friction brake. Thus, 'BAK-12' serves to characterize the unique assembly rather than merely describing a type of brake.

ESCO failed to demonstrate a genuine issue of material fact regarding the distinctiveness of "BAK-12" compared to "barrier arresting kit-12." An abbreviation of generic terms can be considered distinctive only if it conveys a separate meaning to the public. ESCO claimed that "BAK-12" should be seen as distinct because it employs a cable rather than a net, but did not clarify how this supports its distinctiveness argument. Both terms refer to the same system. ESCO also contended that the USAF's Brand Name Justification implied "BAK-12" was a unique trademark for ESCO, but the justification noted that multiple sources could provide the system, undermining ESCO's claim. The Brand Name Justification indicated that the Polish government specifically requested the BAK-12, yet this did not prove that "BAK-12" was non-generic. Although ESCO was the sole manufacturer for years, the term is a generic designation for the system and thus not eligible for trademark protection.

Regarding the "PORTARREST" mark, the initial requirement for a trademark infringement claim is to show unauthorized use of the mark in commerce. The defendants argued that they had not used "PORTARREST" improperly, and the court agreed. ESCO did not provide evidence that the defendants marketed or referred to any products as "PORTARREST," nor did they suggest an affiliation with the term. The defendants clarified their proposal would deliver a generic "BAK-12 mobile hook cable system," indicating no use of "PORTARREST." Additionally, the solicitation indicated that the USAF was seeking either a "PORTARREST-IV" or a generic BAK-12 system, further supporting the defendants' position.

ESCO does not contest that the USAF awarded a contract to the defendants with the understanding that Atech would manufacture and supply its own BAK-12 systems per USAF specifications. ESCO claims the defendants referenced "PORTARREST" in an email from Harold Ahagen, representing SCAMA, which submitted a Capabilities Package for a USAF solicitation. However, these references are linked to the solicitation title and do not constitute a "use in commerce" of the "PORTARREST" trademark. Further, ESCO points out that in the annex of their proposal, the defendants included "Portarrest IV/MAAS" in a table listing past performance contracts, yet these remain references to contract titles, not commercial uses. SCAMA's promotional materials also describe the solicitation process, using US Air Force terminology without making a trademark use. The defendants did not refer to "PORTARREST" in their responses or contracts, as it was included by the USAF. They clarified their intent to provide a generic system rather than a branded one, which the USAF understood. ESCO failed to demonstrate any commercial use of the "PORTARREST" trademark by the defendants, leading to the conclusion that they cannot be liable for trademark infringement. Consequently, the Court granted the defendants' motion for summary judgment on ESCO's trademark infringement claims and indicated that remaining claims would be addressed separately.

The 2010 amendments to Rule 56(c)(2) eliminate the necessity for a separate motion to strike evidence during summary judgment procedures, indicating that objections regarding the admissibility of evidence should now be integrated into the summary judgment process itself. Specifically, parties may object to evidence in their responsive briefs rather than through a preliminary motion. In the case referenced, the defendants claim that the term "BAK-12" is overly generic. Atech and SCAMA, in collaboration with D'Salint Technologies and DCM Support Services, submitted a joint bid. ESCO initially brought suit against other defendants who have since been dismissed. The Court clarifies that while a military designation may be a protectable mark, the key factor is the mark's usage, not its origin. Since "BAK-12" is deemed generic and ESCO failed to demonstrate that the defendants' use of "PORTARREST" violated the Lanham Act, the Court does not address ESCO's argument regarding potential confusion caused by the defendants' use.