Opinion
Civil No. 03-6173 (PAM/RLE).
November 19, 2004
MEMORANDUM AND ORDER
This matter is before the Court on Plaintiff's Motion for partial Summary Judgment and on Defendants' Motion for Summary Judgment. For the reasons that follow, both Motions are granted in part and denied in part.
BACKGROUND
A. Relationship Between LAMP-US and LAMP-Canada
Reverend Les Stahlke founded Lutheran Association of Missionaries and Pilots, Inc. ("LAMP-Canada"). LAMP-Canada was incorporated in Alberta, Canada in 1970 and nationally as "LAMP, Inc." in Canada in 1976. (See Aug. 16, 2004, Ross Decl. Ex.2; Ex. 3 at 40 (Stahlke Dep.).) Since its inception, LAMP-Canada solicited donations both in Canada and the United States. In 1985, LAMP-US, a United States based affiliate of LAMP-Canada, was formed and incorporated in Wisconsin by Ray Perry. (Aug. 16, 2004, Thompson Decl. ¶ 11, Ex. 10 ¶¶ 1-2.) LAMP-US and LAMP-Canada were legally separate entities, but nonetheless affiliated with one another and pursued the same "LAMP" mission. One of the motivating factors behind the creation of this organization was to permit United States citizens to receive tax deductions for their donations to the mission.
A "Statement of Relationship" governed the relationship between LAMP-Canada and LAMP-US. Although both organizations pursued a joint mission, the Statement of Relationship stated that the corporations were "legally independent of each other." (Id. Ex. 17.) Donations were to be "received, deposited, receipted and acknowledged" in the country where the donation originated. (Id.) Although both organizations shared the same Executive Director, each organization had its own Board of Directors. Board meetings were held both jointly and independently. (Id.) Long range plans regarding the ministry and annual financial budgets were approved by both boards at the joint annual meeting. (Id.) Both organizations published a joint annual report, but the financial statements for each organization were reported separately within this report. (Id.) From 1985 to 2000, LAMP-US forwarded some of its donations to LAMP-Canada. (See Aug. 16, 2004, Flaa Decl. ¶ 3; Sept. 10, 2004, Buchholtz Decl. ¶ 5; Sept. 10, 2004, Ross Decl. Ex. 5.) Fund-raising efforts did not distinguish between LAMP-Canada and LAMP-US, but rather appealed to the same mission.
In May 2000, the LAMP-US Board of Directors unilaterally decided to terminate the relationship between LAMP-Canada and LAMP-US. Following this split, LAMP-US stopped forwarding donations to LAMP-Canada. Instead, LAMP-US organized its own Canadian affiliate to pursue Canadian fund-raising efforts. LAMP-US modified its mission from that originally established by LAMP-Canada. Despite the separation, both LAMP-US and LAMP-Canada have continued to operate their charitable organizations.
B. Use of the Marks
On May 8, 1976, LAMP-Canada adopted the "LAMP" acronym and its corresponding airplane graphic logo. (See Aug. 16, 2004, Ross. Decl. Ex. 6 at 3; Ex. 3 at 41-42.) The graphic, which is depicted below, embedded the LAMP acronym into the design of a propeller airplane.
Between 1976 and 1985, LAMP-Canada was the sole user both in Canada and the United States of the airplane graphic logo and the names "LAMP" and "LAMPlighter" (hereinafter "marks"). LAMP-Canada used these marks on appeal letters, promotional materials, fund-raising materials, and devotionals to donors in both Canada and the United States. (See Aug. 16, 2004, Ross Decl. Ex. 3 at 35-36, 44 (Stahlke Dep.); Ex. 8.) The use of these marks continued after the incorporation of LAMP-US, and the materials sent out by the organizations did not differentiate between LAMP-Canada and LAMP-US. From 1985 to 2000, both corporations used the same marks in their operations. No formal license agreement existed between the corporations.
Following the termination of the relationship in May 2000, LAMP-Canada expressly notified LAMP-US that LAMP-US was no longer entitled to use the LAMP marks or logo:
[T]he name and trademark of the Canadian Charity is the property of the Canadian Charity and that no funds are to be raised, or activity undertaken, in the name or under the trademark of the Canadian Charity, or in any other name or trademark that may be so close to the name and trademark of the Canadian Charity as to confuse the donor, except with permission of the Canadian Charity's Board of Directors.
(Aug. 16, 2004, Ross Decl. Ex. 47.) On June 3, 2000, LAMP-Canada again informed LAMP-US that "[t]he `Lutheran Association of Missionaries and Pilots,' `L.A.M.P.' and `LAMP' names and identity in Canada, and the LAMP logo and trademark throughout Canada and the United States, is and shall be the property of LAMP-Canada." (Id. Ex. 48.) LAMP-US refused to stop using the LAMP acronym and airplane graphic logo. As a result, both corporations have continued to solicit donations under the LAMP acronym and airplane graphic logo. Despite their attempts to inform donors about the disaffiliation, some donors have expressed confusion as to the association between the two entities and many have requested to be removed from the mailing lists. (Id. Exs. 56-58.)
C. Procedural Posture
LAMP-Canada filed this lawsuit in November 2003 and LAMP-US counterclaimed. The instant Motions pertain to the issue of trademark infringement. LAMP-Canada contends that it owns the marks and that LAMP-US's continued use of the marks constitutes trademark infringement under the Lanham Act, 15 U.S.C. § 1051 et seq. LAMP-US contends that it owns the marks and thus cannot infringe as a matter of law, and alternatively, that it has a license to use the marks. LAMP-US also seeks summary judgment on LAMP-Canada's claims for tortious interference and violation of the Minnesota Deceptive Trade Practices Act ("DTPA").
In its Motion, LAMP-US requests dismissal of all three of LAMP-Canada's claims under the Lanham Act: (1) trademark infringement; (2) unfair competition; and (3) false and misleading statements. (See Compl. ¶¶ 54-72.) However, LAMP-US's arguments relate only to the trademark infringement claim. Therefore, the Court will only address this claim and denies the Motion on the remaining Lanham Act claims.
DISCUSSION
A. Standard of Review
The parties move for summary judgment pursuant to Rule 56(c), which provides that such a motion shall be granted only if "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). When considering a motion for summary judgment, the Court must view the evidence and the inferences that may be reasonably drawn from the evidence in the light most favorable to the non-moving party. Enter. Bank v. Magna Bank, 92 F.3d 740, 747 (8th Cir. 1996). The burden of demonstrating that there are no genuine issues of material fact rests on the moving party.Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party has carried its burden, the non-moving party must demonstrate the existence of specific facts in the record that create a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Krenik v. County of LeSueur, 47 F.3d 953, 957 (8th Cir. 1995).
B. Lanham Act
Trademark law exists not to protect the trademark, but rather to protect the consuming public from confusion. See Anheuser-Busch, Inc. v. Balducci Publ'ns, 28 F.3d 769, 774 (8th Cir. 1994). A claim for trademark infringement requires the claimant to prove (1) ownership of a valid trademark and (2) likelihood of confusion between the mark and the alleged infringing use. See Minn. Min. Mfg. Co. v. Taylor, 21 F. Supp. 2d 1003, 1004 (D. Minn. 1998) (Renner, J.). In the event that a defendant's previous use of the mark occurred with the claimant's permission, the claimant must also demonstrate that defendant's current use of the mark is unauthorized. See United States Jaycees v. Philadelphia Jaycees, 639 F.2d 124, 137 (3d Cir. 1981). All of these elements are in dispute.
C. Trademark Ownership
Both LAMP-Canada and LAMP-US maintain that they own the marks. LAMP-US submits that the marks are not entitled to protection and therefore LAMP-Canada did not have common law ownership of the marks prior to 1985. Alternatively, LAMP-US maintains that it is a joint owner of the marks.
1. Common Law Trademark
In 1976, LAMP-Canada began using the marks at issue, both in the United States and in Canada. Although LAMP-Canada did not register the marks in either Canada or the United States, ownership of the marks in the United States depends on use. See J. Thomas McCarthy, McCarthy on Trademarks Unfair Competition § 16:18 (4th ed. 2004). Neither party disputes that LAMP-Canada was the first entity to use the marks in the United States. However, LAMP-US argues that the marks are not sufficiently distinct.
"A common law trademark arises from the adoption and actual use of a word, phrase, logo, or other device to identify goods or services with a particular party." Mars Musical Adventures, Inc. v. Mars, Inc., 159 F. Supp. 2d 1146, 1148 (D. Minn. 2001) (Davis, J.). Thus, the party seeking protection must demonstrate that it actually used the marks in connection with its product or service and that these marks are distinctive. See id; see also Co-rect Prods. Inc. v. Marvy! Adver. Photography, Inc., 780 F.2d 1324, 1329 (8th Cir. 1986); see generally Rudolf Callman, 3 Callman Unfair Competition Trademarks Monopolies § 18:1 (4th ed. 1981). Marks are classified as either generic, descriptive, suggestive or arbitrary. See Co-rect Prods. Inc., 780 F.2d at 1329. Marks that are suggestive or fanciful are inherently distinctive.Id. A descriptive mark may be distinctive so long as it acquires a secondary meaning. Id.
A mark is suggestive if it requires imagination to reach a conclusion as to the nature of the service. Id. The marks at issue involve the acronym LAMP and an airplane graphic with this acronym embedded in the design. The underlying service provided by the organization is unrelated to the standard definition of the word "lamp." It requires a leap of imagination to correlate the acronym with the underlying Christian mission. Furthermore, the graphic airplane design is a fanciful and arbitrary mark associated with the charitable mission of LAMP. Moreover, LAMP-US originally represented to the Court that these marks were at least suggestive. (See Def.'s Mot. for Prelim. Inj. at 16.) Thus, the marks are distinctive and entitled to protection. Beginning in 1976, LAMP-Canada had a common law trademark over the marks in the United States.
2. Joint Ownership
In 1985, LAMP-Canada entered into the Statement of Relationship with LAMP-US. Although LAMP-Canada had common law ownership of the marks at the time of this contract, the parties dispute how their legal relationship affected this ownership. LAMP-US submits that the two organizations operated as a legal partnership or joint venture. Although the Statement of Relationship defines the parameters of the parties' relationship, it does not definitively articulate the legal relationship between the parties and is silent with respect to the rights of the marks.
As a threshold matter, the parties dispute whether nonprofit corporations can enter into joint venture arrangements. Prior to the parties' submission to the Court on summary judgment, this issue was presented to Magistrate Judge Erickson in LAMP-US's Motion to Amend the Complaint. See June 22, 2004, Order at 6-15. Although Magistrate Judge Erickson declined from conclusively deciding the issue, his thorough analysis is instructive.
LAMP-US initially argued that the two corporations formed a partnership, joint enterprise, or joint venture. However, the arguments focused primarily on the existence of a joint venture, and therefore the Court likewise focuses its analysis on whether the parties formed a joint venture.
The parties appear to dispute what law applies to this issue. As Magistrate Judge Erickson noted, because LAMP-US was incorporated in Wisconsin, Wisconsin law, rather than Minnesota law, applies to the legal relationship between the parties. (June 22, 2004 Order at 5 n. 1.) The record indicates that the parties agreed that Wisconsin law applied. However, in its reply brief, LAMP-US attempted to analyze the claims under Canadian law. In particular, LAMP-US argued that Canadian tax laws compelled the conclusion that a joint venture existed. LAMP-Canada sought to file a sur-reply, but the Court instructed LAMP-Canada to address the issue at oral argument. At oral argument, LAMP-Canada filed an affidavit of a witness to rebut LAMP-US's arguments. LAMP-US now objects and seeks to strike that affidavit for various reasons. Although the Court acknowledges that Canadian tax law is relevant to the establish the intent of the parties at the time they entered the Statement of Relationship, Canadian law is not dispositive as to the parties legal relationship. Moreover, the law relied upon by both parties is relevant for tax purposes, and terms that are relevant for tax purposes are not always interchangeable with business organization law. Although LAMP-Canada could have disclosed the affidavit at an earlier time, the Court is not convinced that the untimely submission warrants the draconian measure that LAMP-US suggests. Therefore, LAMP-US's Motion to Strike is denied.
Nonstock corporations, which include nonprofit corporations, are governed by Chapter 181 of the Wisconsin Statutes. Chapter 181 provides that nonprofit organizations may "[b]e a promoter, partner, member, associate or manager of any entity." Wis. Stat. § 181.0302(9); see also Wis. Stat. § 181.0103(5) (including "nonprofit corporation" within definition of "nonstock corporation"). An "entity" is broadly defined as "any person other than a natural person." Id. § 181.0103(12). Although the definition does not explicitly include a joint venture, Chapter 181 does not exclude joint ventures from its broad definition. Thus, although the statute does not expressly state that a nonprofit organization may form a joint venture, the only logical reading of § 181.0302 is that nonprofit organizations may be a party or member of a joint venture.
A comparison between Chapters 180 and 191 also supports the conclusion that a nonprofit organization can form a joint venture. Chapter 180 is similar to Chapter 181, but governs for-profit and capital stock business corporations. Under Chapter 180, "person" is defined to include an entity. Id. § 180.0103(11m). Unlike Chapter 181, Chapter 180 narrowly and specifically defines "entity" by expressly identifying and limiting the types of entities governed by the statute. Id. § 180.0103(8). Notably, this narrow list includes "2 or more persons having a joint or common economic interest," or a joint venture. Id. As Magistrate Judge Erickson noted, the difference between the broad scope of § 181.0103 and the narrow list of § 180.0103 "demonstrates that the Wisconsin legislature has the ability to craft a narrow definition of `entity' and the fact that the legislature defined `entity' in the most broadest of terms suggests that the legislature intended the word `entity,' as used in [§ 181.0103(12)], to include joint ventures." Thus, the Court concludes that the phrase "any entity" of § 181.0302(9) includes joint ventures.
Furthermore, reference to other Wisconsin statutes demonstrates that "person" includes joint venture within its definition. See e.g., Wis. Stat. §§ 77.51(10); 133.02(3); 135.02(6); 214.01(rm); 299.33(1)(a); 880.81(11). Additionally, Chapter 229 permits quasi-governmental entities to form joint ventures. These institutions are not profit-seeking institutions but rather operate to raise money to benefit the public. As Magistrate Judge Erickson noted, this "plainly cuts" against LAMP-Canada's argument that nonprofit corporations cannot form joint ventures. June 22, 2004, Order at 11.
A joint venture has four elements: "(1) contribution of money or services by each of the parties; (2) joint proprietorship and mutual control over the subject matter of the venture; (3) an agreement to share profits; and (4) an express or implied contract establishing the relationship." Ruppa v. Am. States Ins. Co., 284 N.W.2d 318, 325 (Wis. 1979).
a. Joint contribution
LAMP-Canada and LAMP-US operated a joint ministry as separate and independent corporations. Although the two corporations retained their own independent board of directors, the two corporations shared ministry administration. LAMP-Canada provided for the services of the joint Executive Director, the joint Minister of Development, and other ministry administration. In turn, LAMP-US annually remitted a portion of the donations it received to LAMP-Canada. (See Aug. 16, 2004, Ross Decl. Ex. 27.) Because both entities contributed to the relationship, this element is satisfied.
b. Mutual Control
"[C]ourts ordinarily require clear evidence of a community of interest in a common undertaking in which each participant has or exercises the right of equal or joint control and direction. Each of the parties must have equal voice in the manner of its performance." Bowers v. Treuthardt, 92 N.W.2d 878, 883 (Wis. 1958). Thus, there must be evidence that LAMP-US and LAMP-Canada had equal control of the ministry. Although both entities retained their own individual board of directors, these boards of directors met jointly at least once a year. At joint annual meetings, joint decisions were made regarding the future of the mission and prospective financial budgets. Both corporations were likewise supervised by the same Executive Director. Each organization independently conducted their own charitable operations, and each organization solicited donations in their respective countries without interference from the other. Each organization controlled the donations it received. LAMP-US's decision to terminate the Statement of Relationship further demonstrates that each entity had equal power. Specifically, one of the motivating reasons behind LAMP-US's disaffiliation was its desire to modify the ministry's mission. LAMP-US did not have the power to unilaterally modify the joint mission as set forth in the Statement of Relationship. Thus, the evidence supports that neither entity possessed greater control over the other, but rather that each entity had equal control over the operation of the joint ministry.
The Court is further persuaded by Canadian and U.S. tax laws. In order for both organizations to retain their charitable organization status, each organization is required to retain sufficient discretion and control over the operations of their organization.
c. Agreement to Share Profits
Even though Wisconsin statutory law indicates that nonprofit corporations can form joint ventures, Magistrate Judge Erickson correctly noted that Wisconsin caselaw is "unsettled" on whether nonprofit corporations may form joint ventures. Caselaw indicates that Wisconsin courts are hesitant to find joint venture relationships in the absence of a business or commercial purpose.See e.g., Bowers, 92 N.W.2d at 883 ("joint proprietary interest and a right of mutual control over the subject matter" essential to joint adventure); Edlebeck v. Hooten, 121 N.W.2d 240, 244 (Wis. 1963) ("joint adventure must be for profit in a financial or commercial sense . . . there must be a joint financial interest in the undertaking"); Bach v. Liberty Mut. Fire Ins. Co., 152 N.W.2d 911, 915 (Wis. 1967) (same); see also Wis. JI-CIV § 1610 (jury instruction for joint adventure in automobile cases). Although these cases require that the parties agree to share profits, it is clear that this requirement intended to impose negligence in instances where more than a social relationship existed.
For example, in Ruppa v. American States Insurance Company, the plaintiff sought to pierce the corporate veil by arguing that individual defendants were engaged in a nonprofit joint venture. The individual defendants were members of the Saddle Club, a non-profit organization that sponsored local horse shows. The individual defendants did not have an agreement that entitled them to receive proceeds from the horse shows or receive payment for their services. Instead, the Saddle Club donated proceeds or retained funds for future horse shows. Thus, the Court concluded that the individual defendants could not form a joint venture because they did not share profits, and therefore, the individual defendants were not individually liable. 284 N.W.2d at 325.
Unlike Ruppa, this case presents a different scenario, where two nonprofit corporations are engaged in a relationship with the specific purpose to further a joint charitable mission. The two nonprofit corporations, already protected by a corporate veil, were clearly engaged in more than a social relationship. According to the Statement of Relationship, both nonprofit corporations retained power and control over the donations they received. LAMP-Canada paid for the administration of the joint ministry, and LAMP-US annually remitted a portion of its donations to LAMP-Canada. An annual joint budget was adopted by both boards of directors, taking into account the donations received by each corporation. Although nonprofit corporations do not distribute profits to its members, the Statement of Relationship expressly allowed both LAMP-US and LAMP-Canada to control the disposition of the donations it received. Moreover, the joint ministry could only function if the two corporations successfully solicited charitable monetary contributions. Thus, LAMP-US and LAMP-Canada both shared a "pecuniary interest" in the joint ministry. See Spearing v. Bayfield County, 394 N.W.2d 761, 765 (Wis.Ct.App. 1986) (adopting "joint enterprise" as defined by Restatement (Second) of Torts). The Court finds that the pecuniary interests shared by the two corporations is consistent with Wisconsin statutory authority and the progression of Wisconsin case law, therefore satisfying this element.
d. Implied or Express Contract Establishing the Relationship
The Statement of Relationship was formed by the parties in 1985 to pursue the joint ministry. Although this agreement does not definitively classify the type of relationship the parties shared, it does reflect that the two entities were "interdependent by virtue of their commitment to a single mission." (Aug. 16, 2004, Ross Decl. Ex. 29.) The agreement identified the obligations and powers of each corporation to successfully contribute to the operation of the joint ministry, and therefore sufficiently demonstrates that the two corporations intended to form a joint venture. Thus, this element is also satisfied.
e. Conclusion
Based on the foregoing analysis, the Court finds that LAMP-Canada and LAMP-US formed a joint venture.
3. Property of the Joint Venture
By virtue of this joint venture relationship, LAMP-US maintains that it is a joint owner of the marks at issue. LAMP-US is correct that in the absence of an express agreement, Wisconsin applies the law of partnership to joint ventures. See Employers Mut. Liability Ins. Co. of Wausau v. Parker, 63 N.W.2d 101, 101 (Wis. 1954). Thus, LAMP-US submits that LAMP-Canada contributed the marks to the joint venture, and therefore, the marks are legally owned by both LAMP-Canada and LAMP-US. See Wis. Stat. § 178.05.
LAMP-US's reliance on § 178.05 is misplaced. Wisconsin Statute § 178.05 states: "All property originally brought into the partnership stock or subsequently acquired, by purchase or otherwise, on account of the partnership is partnership property." However, the relationship between LAMP-US and LAMP-Canada is not one involving capital or stock. The Statement of Relationship does not discuss the transfer or assignment of intellectual property. In fact, the Statement of Relationship does not discuss the contribution of any property by either LAMP-US or LAMP-Canada, nor does it reference that the two entities intended to create joint venture property. Rather, the Statement of Relationship expressly required that each corporation maintain their own financial statements, manage their own received donations, and independently operate. No evidence indicates that either party contributed property to the joint venture or that LAMP-Canada intended to transfer the marks to the joint venture. (Sept. 10, 2004, Buccholz Decl. ¶ 4.) See In re Schreiber's Estate, 227 N.W.2d 917, 925 (Wis. 1975) ("[w]hen title to property is held in the name of a partner, the question of whether it is partnership property or not hinges on the intention of the parties"); see also In re Mahoney's Estate, 288 N.W. 763, 765 (Wis. 1939) (individually owned land used for partnership purposes is alone insufficient evidence to support claim that land is partnership property).
Moreover, because the Statement of Relationship is silent as to the marks, the Court may look to extrinsic evidence to interpret the parties' intent at the time that they executed the Statement of Relationship. Since its inception, LAMP-Canada had solicited donations both in the United States and Canada for its ministry. However, in order to permit United States donors to claim a deduction under United States tax laws, LAMP-Canada had to funnel donations through churches in the United States. In an effort to simplify the process, LAMP-Canada sought to establish a United States based affiliate to solicit donations for the ministry while simultaneously allowing United States donors to claim tax deductions. LAMP-Canada did not intend to modify the ministry or extinguish control over the marks. Rather, LAMP-Canada sought to market itself directly to donors and increase donations. Despite the affiliation, the ministry's administration, purpose, and operations remained the same. As a matter of law, no evidence indicates that LAMP-Canada assigned or transferred the marks to the joint venture. See TMT North Am., Inc. v. Magic Touch GmbH, 124 F.3d 876, 884 (7th Cir. 1997) ("[r]equiring strong evidence to establish an assignment is appropriate both to prevent parties from using self-serving testimony to gain ownership of trademarks and to give parties incentives to identify expressly the ownership of the marks they employ");see also McCarthy, supra § 18.4 ("[i]f there is no documentary evidence of an assignment, it may be proven by the clear and uncontradicted oral testimony of a person in a position to have actual knowledge"). Thus, common law ownership of the marks remained with LAMP-Canada, despite the formation of the joint venture.
LAMP-US alternatively argues that because its efforts increased the goodwill of the marks, the marks became joint venture property. See Holiday Inns, Inc. v. Trump, 617 F. Supp. 1443, 1469 (D.N.J. 1985) ("[o]ne who develops goodwill in a service mark acquires property rights in the mark"). However, this argument puts the cart before the horse. Because LAMP-Canada did not transfer the marks to the joint venture at the time of its formation, the Court must examine the right that LAMP-US had to the marks in 1985.
D. License
LAMP-Canada and LAMP-US operated a joint venture to pursue a common mission. Throughout the pursuit of this mission, LAMP-Canada permitted LAMP-US to use the marks in its fund-raising efforts. LAMP-Canada maintains that LAMP-US used the marks under an implied license, while LAMP-US contends that it had a naked license to use the marks.
The existence of an implied license depends on the objective conduct of the parties. See McCarthy, supra § 18:43.1; see also Villanova Univ. v. Villanova Alumni Educ. Found., Inc., 123 F. Supp. 2d 293, 308 (E.D. Pa. 2000); Birthright v. Birthright, Inc., 827 F. Supp. 1114, 1134 (D.N.J. 1993). However, a license is naked, resulting in trademark abandonment, when the trademark owner fails to retain sufficient control to ensure the quality of the service provided and prevent public confusion. See, e.g. Barcamerica Int'l USA Trust v. Tyfield Importers, Inc., 289 F.3d 589, 596 (9th Cir. 2002); see also United States Jaycees, 639 F.2d at 140. "The ultimate issue is whether the control exercised by the licensor is sufficient under the circumstances to satisfy the public's expectation of quality assurance arising from the presence of the trademark on the licensee's goods or services." Restatement (Third) of Unfair Competition § 33 cmt. c (1995).
LAMP-US maintains that LAMP-Canada did not retain sufficient control and that LAMP-US used the marks pursuant to a naked license. LAMP-US submits that because LAMP-Canada and LAMP-US were corporate equals, there was no element of control within their relationship. Although the Court agrees that this situation is inapposite to those cases involving national organizations, local affiliates and formalized control, see Birthright, 827 F. Supp. at 1135, such formalized control is not required for an implied license. To the contrary, only minimal control is required to make the trademark license valid. See Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 387 (5th Cir. 1977). The Trademark Trial and Appeal Board has explained:
Sufficient control by a licensor may exist despite the absence of any formal arrangements for policing the quality of the goods sold or services rendered under the mark by its licensee(s). Control may also be adequate where the licensor justifiably relies on the integrity of the licensee to ensure the consistent quality of the services performed under the mark.Woodstock's Enter., Inc. v. Woodstock's Enter., Inc., 1997 WL 440268, 43 U.S.P.Q.2d 1440, 1446 (1997) (citations omitted),aff'd 152 F.3d 942 (Fed. Cir. 1998) (unpublished table decision). Moreover, "[w]here the license parties have engaged in a close working relationship, and may justifiably rely on each parties' intimacy with standards and procedures to ensure consistent quality, and no actual decline in quality standards is demonstrated," the lack of formalized control does not negate the existence of an implied license. Taco Cabana Int'l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1121 (5th Cir. 1991).
Examining the relationship in its entirety, the Court concludes as a matter of law that LAMP-Canada permitted LAMP-US to use the marks under an implied license. From 1985 to 2000, LAMP-Canada and LAMP-US were separate and distinct corporate entities that were connected by a common purpose. Although LAMP-US and LAMP-Canada retained independent control over donations they received, the evidence demonstrates that LAMP-Canada retained at least minimal control over both the mark and the services rendered by the joint ministry. LAMP-Canada first established the mission of the joint ministry and LAMP-US was required to submit to this ministry when it entered the Statement of Relationship. LAMP-Canada employed and operated the administration of the joint ministry. Although both LAMP-Canada and LAMP-US retained their own boards of directors to assist in operations, neither board had the power to unilaterally dictate the direction of the mission, future planning, nor annual budgets. Rather, both entities were required to comply with the terms of the Statement of Relationship, and both entities had the power and ability to ensure compliance with this contract. Thus, LAMP-Canada retained minimum control over the charitable services rendered by the joint mission.
There appears to be a dispute between the parties as to whether the element of control applies to the use of the mark or the services rendered. Because the Court finds that LAMP-Canada retained minimal control over both the use of the mark and the services rendered, the Court will not address this issue.
Moreover, LAMP-Canada retained sufficient control over the marks. LAMP-US was specifically organized to pursue the original mission of LAMP-Canada in the United States. Prior to the joint ministry, LAMP-Canada solicited donations to benefit the ministry using the marks, and the joint ministry continued this practice. In addition, in 1999, LAMP-Canada created the LAMP website. (Aug. 16, 2004, Buchholtz Dec. ¶ 3.) This website was developed for the joint ministry, was administered and registered in Canada, and maintained by LAMP-Canada. (Id.) The LAMP acronym and airplane graphic logo were displayed on this website. LAMP-Canada originally created the solicitation materials and provided these materials to LAMP-US, and LAMP-US utilized these materials both in form and in practice. LAMP-US argues that because LAMP-Canada did not specifically monitor the production of solicitation materials that used the marks, LAMP-Canada therefore lacked sufficient control. However, the two corporations operated closely together, and decisions were made by both entities to benefit this joint ministry. The close, intimate relationship between the two entities and their pursuit of a joint common mission alleviates a stringent focus on formalized control. Thus, LAMP-Canada retained sufficient control over LAMP-US's use of the mark.
Throughout this period, LAMP-Canada knowingly permitted LAMP-US to use the marks in its fund-raising efforts, so long as LAMP-US conformed with the terms of the Statement of Relationship. See Coach House Rest., Inc. v. Coach Six Rest., Inc., 934 F.2d 1551, 1563 (11th Cir. 1991) ("Acquiescence to one's use of a trademark is analogous to an implied license to use the mark."). LAMP-Canada retained at least minimal control over the use of the mark and over the services rendered by the joint ministry, negating the existence of a naked license. Viewing the conduct of the parties in its entirety, LAMP-Canada permitted LAMP-US to use LAMP-Canada's marks pursuant to an implied license as a matter of law.
Because LAMP-US retained an implied license to use the marks, LAMP-US's argument that it acquired a property interest in the marks fails. See Aveda Corp. v. Evita Mktg, Inc., 706 F. Supp. 1419, 1427 (D. Minn. 1989) (MacLaughlin, J.) (licensee could take no rights in the mark); see also McCarthy, supra § 18:52 ("licensee acquires no ownership rights in the mark itself"); § 18:63 ("licensee acquires no title to the mark").
E. Infringement
When LAMP-US chose to disaffiliate with LAMP-Canada, the joint ministry ceased. LAMP-Canada contends that the implied license terminated in 2000 when LAMP-US disaffiliated, and that LAMP-US's continued use of the marks amounts to infringement. LAMP-US argues that LAMP-Canada acquiesced to LAMP-US's continued use of the marks following the disaffiliation, therefore precluding infringement.
1. Termination of the License
LAMP-Canada contends that the implied license terminated when LAMP-US disaffiliated, stopped sending donations it collected to LAMP-Canada, and set up its own Canadian affiliate charity. Generally, an implied license is terminable at will of the licensor, and once such termination occurs, use of the formerly licensed mark constitutes infringement. See Birthright, 827 F. Supp. at 1135; see also Northwest Airlines, Inc. v. NWA Fed. Credit Union, No. 03-3625, 2004 WL 1968662, at *6 (D. Minn. Sept. 2, 2004) (Frank, J.). On May 11, 2000, the LAMP-US board of directors agreed to separate from the joint ministry that was created by the Statement of Relationship. The two entities adopted a joint resolution, and the two entities ceased operating in association with each other. Following the disaffiliation, the two corporations exchanged correspondence in an effort to amicably resolve outstanding disputes. In particular, on May 18, 2000, LAMP-Canada sent a proposed resolution that specifically included a provision that demanded that LAMP-US cease using the marks in its fund-raising efforts. (Aug. 16, 2004, Ross Decl. Ex. 47.) On June 3, 2000, LAMP-Canada sent LAMP-US an email that declared LAMP-Canada the owner of the marks and requested that LAMP-US change its name and logo. (Id. Ex. 48.) At this point, LAMP-Canada made clear to LAMP-US that continued use of the marks was no longer permitted, thus terminating the license. See Northwest Airlines, Inc., No. 03-3625, 2004 WL 1968662, at *6.
However, the defenses of acquiescence or laches may estop LAMP-Canada from claiming infringement. See Coach House, 934 F.2d at 1563; see also SunAmerica Corp. v. Sun Life Assurance Co. of Canada, 77 F.3d 1325, 1334-35 (11th Cir. 1996). Acquiescence requires LAMP-US to demonstrate that (1) LAMP-Canada actively represented that it would not assert a right or a claim; (2) the delay between LAMP-Canada's active representation and assertion of the right or claim was not excusable; and (3) the delay caused LAMP-US undue prejudice.Coach House, 934 F.2d at 1558.
The elements of a laches defense are encompassed by the elements of an acquiescence defense. Therefore, the Court's acquiescence analysis equally applies to the defense of laches.
Following the disaffiliation, the two organizations continued to communicate with one another in an effort to resolve outstanding disputes. In response to a letter by LAMP-US, LAMP-Canada sent a letter to LAMP-US in November 2000 and suggested that the two entities could continue their charitable missions, with LAMP-US using the name "LAMP-USA" in the United States and LAMP-Canada using the name "LAMP-Canada" in Canada. (Aug. 16, 2004, Thompson Decl. Ex. 44.) This letter lacked any reference to the airplane graphic design and apparently went without response from LAMP-US. In January 2002, in an effort to pursue amicable resolution, LAMP-Canada expressed an interest to "find ways in which [LAMP-US and LAMP-Canada] can work side by side and/or together in order to make sure that the ministry of the Gospel in northern Canada and USA can continue." (Id. Ex. 45.) While the corporations attempted to resolve their differences without resorting to litigation, both entities continued to use the same marks in their fund-raising efforts. (See Orman Decl. Ex. 7.) However, there is no evidence that suggests that LAMP-Canada affirmatively endorsed LAMP-US's use of the marks or that it consented to such a use. Indeed, when the relationship between the two corporations irreparably deteriorated, LAMP-Canada again demanded that LAMP-US stop using the marks. (See, e.g. Sept. 10, 2004, Ross Decl. Ex. 34.) And, when LAMP-US continued to use the marks over LAMP-Canada's protests, LAMP-Canada brought this lawsuit.
The evidence is insufficient to support LAMP-US's affirmative defense of acquiescence. Although LAMP-Canada originally demanded that LAMP-US cease using the marks, LAMP-Canada's continued negotiation with LAMP-US regarding the marks does not amount to active consent by LAMP-Canada for LAMP-US to use the marks. The evidence does not show that LAMP-Canada assured LAMP-US that it would not assert its trademark rights. See ProFitness Physical Therapy Ctr. v. Pro-Fit Orthopedic Sports Physical Therapy P.C., 314 F.3d 63, 68 (2d Cir. 2002). Immediately following the disaffiliation, LAMP-Canada maintained that it rightfully owned the marks at issue. As owner of the marks and in an attempt to salvage the underlying mission of the organizations, LAMP-Canada and LAMP-US continued to seek resolution to their dispute. Throughout these negotiations, LAMP-Canada maintained that it owned the marks and did not indicate, expressly or impliedly, that it would not assert its legal rights in the marks. When hope for resolution disappeared, LAMP-Canada again asserted its legal rights and filed this lawsuit. LAMP-Canada's delay in filing this lawsuit is justified by the efforts of the two entities to maintain a close working relationship. See id. Indeed, a plaintiff has no obligation to sue until its "right to protection has clearly ripened." Id. (citing Sara Lee Corp. v. Kayser-Roth Corp., 81 F. 3d 455, 462 (4th Cir. 1996)). For the three years between the disaffiliation and the filing of this lawsuit, the two entities were involved in negotiations. This delay is sufficiently excusable to preclude acquiescence or laches. See N.A.A.C.P. v. N.A.A.C.P. Legal Def. Educ. Fund, Inc., 753 F.2d 131, 139 (D.C. Cir. 1985). Thus, LAMP-US's affirmative defenses of acquiescence and laches fails. LAMP-Canada properly revoked the implied license, and LAMP-US's continued use of the marks was unauthorized.
2. Likelihood of Confusion
LAMP-Canada must demonstrate that LAMP-US's use of the mark after LAMP-Canada revoked the implied license creates a likelihood of confusion, deception or mistake. See General Mills, Inc. v. Kellogg, Co., 824 F.2d 622, 626 (8th Cir. 1997). Likelihood of confusion refers to confusion of any type, including confusion as to source, sponsorship, affiliation, or connection. See 15 U.S.C. § 1125(a)(1); see also McCarthy, supra § 23:8. A former licensee's unauthorized use of the mark "presents a particular danger of confusion to the public." Villanova Univ., 123 F. Supp. 2d at 309; see also Northwest Airlines, Inc., 2004 WL 1968662, at *6; McCarthy,supra § 25:31. And, "continued use by one whose trademark license has been canceled satisfies the likelihood of confusion test and constitutes trademark infringement." Northwest Airlines, File No. 03-3625, 2004 WL 1968662, at *6 (quotingBurger King Corp. v. Mason, 710 F.2d 1480, 1493 (11th Cir. 1983). Because LAMP-US, as a former licensee, continues to use the marks without authorization, the Court finds that a likelihood of confusion exists as to the continued use of the marks.
Furthermore, an examination of the factors pertinent to the existence of a likelihood of confusion supports this conclusion. Whether a likelihood of confusion exists depends on the: (1) strength of the trademark; (2) similarity between the marks; (3) competitive proximity of the parties' services; (4) alleged infringer's intent to confuse the public; (5) evidence of any actual confusion; and (6) the degree of care reasonably expected of the plaintiff's potential customers. See Anheuser-Busch, Inc., 28 F.3d at 774.
LAMP-Canada originally adopted the marks and solicited donations using the marks on behalf of its organization. In 1985, LAMP-US was incorporated and actively solicited donations using similar fund-raising materials and the same marks that LAMP-Canada had used in years prior. During this period, the same solicitation materials were used in both LAMP-Canada and LAMP-US. (See Aug. 16, 2004, Ross Decl. Ex. 44.) LAMP-US fund-raising activities from 1985 to 2000 directly benefitted the joint ministry of the two corporations, and these fund-raising efforts did not distinguish between LAMP-US and LAMP-Canada, but rather sought to serve a common mission. (See id.) Some solicitation materials generally referred to LAMP, and included both the Canadian address and the Wisconsin address. (Id.) Moreover, the joint ministry maintained one website that promoted the common mission and provided devotional material.
In May 2000, LAMP-US chose to disaffiliate from LAMP-Canada. From 2000 to the present, both corporations have used the same marks in their United States fund-raising efforts. They both continue to use the airplane graphic logo and LAMP acronym, and distribute the "LAMPlighter" newsletter. Both of their websites clearly display the marks at issue. Except for the differences in their mailing addresses, the two entities appear to be related and serve the same purpose. (See id. Exs. 49-52.) Moreover, the missions of the two organizations remain strikingly similar. (Compare id. Ex. 61 ("[LAMP-US] is a cross cultural Ministry sharing the Gospel of Jesus Christ in partnership with people and communities through mutual witness, nurture and discipleship")with id. Ex. 49 ("[LAMP-Canada] is a cross-cultural ministry sharing Jesus Christ with God's people in remote areas of Canada").) Even though both corporations have attempted to distinguish their organizations with prospective donors (See id. Exs. 49, 54-55, 62; Aug. 16, 2004, Thompson Decl. Ex. 47, 48.), there is evidence that indicates that some donors may be actually confused by both the source of the solicitations sent by the organizations and the affiliation between the two organizations. (See Aug. 16, 2004, Ross Decl. Exs. 57-58, 62.) Furthermore, the evidence also suggests that both organizations believed that their donors were actually confused. (See id. Ex. 55; see also id. Ex. 30 at 293-95 (Kahlfeldt Dep.).) Thus, the evidence shows that the two organizations are former affiliates that directly compete for donations, use nearly identical marks in their activities, and might actually confuse charitable donors.
3. Relief
LAMP-Canada fails to specify in its Motion the type of relief that it seeks. Thus, because the Court only concludes that a likelihood of confusion exists, LAMP-Canada is only entitled to injunctive relief. See 15 U.S.C. § 1116; see also Minnesota Pet-Breeders, Inc. v. Schell Kampeter, Inc., 843 F. Supp. 506, 511-12 (D. Minn. 1993) (Kyle, J.) ("A plaintiff need not prove actual damages or injury to obtain an injunction; it need only establish a likelihood of confusion among consumers."). However, until the Court receives some clarification from the parties as to the scope of the relief that LAMP-Canada seeks, the Court refrains from granting an injunction at this time.
In order for LAMP-Canada to obtain monetary damages, a showing of actual confusion is required. See Co-Rect Prods. Inc., 780 F.2d 1324, 1330 (8th Cir. 1985). Although the Court finds that a likelihood of confusion exists, the Court cannot conclude as a matter of law that actual confusion exists. Rather, the Court finds that a genuine issue of material fact exists as to whether LAMP-US's unauthorized use of the marks resulted in actual confusion. LAMP-Canada has presented evidence that indicates that confusion may exist among some donors as to the affiliation and relationship between the two organizations, but the issue remains as to whether the donors are actually confused as to the source of the solicitations. See Gateway Inc. v. Companion Prods. Inc., 384 F.3d 503, 510 (8th Cir. 2004) (nationwide survey demonstrated high level of actual confusion);Mutual of Omaha Ins. Co. v. Novak, 836 F.2d 397, 400 (8th Cir. 1987) (survey evidence used to demonstrate actual confusion). Indeed, the evidence indicates that donors recognize that two organizations exist. See Duluth News-Tribune v. Mesabi Publ'g Co., 84 F.3d 1093, 1098 (8th Cir. 1996). Moreover, the Court acknowledges the minimal evidence submitted by LAMP-Canada relating to monetary damages, and advises LAMP-Canada that it bears the burden of presenting sufficient evidence to support an award of damages pursuant to 15 U.S.C. § 1117(a).
F. State Law Claims
LAMP-US's Motion for Summary Judgment also pertains to LAMP-Canada's claim for tortious interference with prospective business advantage and for violation of the Minnesota Deceptive Trade Practices Act.
1. Tortious Interference with Prospective Business Advantage
In order to maintain an action for tortious interference with prospective business advantage, LAMP-Canada must establish that LAMP-US intentionally or improperly interfered with LAMP-Canada's prospective business relation, either by inducing or otherwise causing a third person not to enter into or continue the prospective relation or preventing LAMP-Canada from acquiring or continuing the prospective relation. See Hern v. Bankers Life Cas. Co., 133 F. Supp. 2d 1130, 1137 (D. Minn. 2001) (Erickson, Mag. J.); see also Hunt v. Univ. of Minn., 465 N.W.2d 88, 95 (Minn.Ct.App. 1991) (requiring proof that "defendant intentionally committed a wrongful act which improperly interfered with the prospective business relationship"). LAMP-Canada contends LAMP-US improperly used the marks to solicit donations from potential LAMP-Canada donors. LAMP-Canada further contends that these solicitations interfered with LAMP-Canada's ability to generate donations from donors that previously contributed to the joint ministry. It also argues that LAMP-US's solicitations "intentionally poisoned" LAMP-Canada's image. (Pl.'s Mem. in Opp'n at 32.) But for LAMP-US's unauthorized solicitations and alleged disparagement, LAMP-Canada maintains that "long-time LAMP donors likely would have contributed to LAMP-Canada." (Id. at 31.) LAMP-Canada claims that it has lost $8.4 million dollars as a result. (See Sept. 10, 2004, Ross Decl. Ex. 35 at 10.)
LAMP-US maintains that LAMP-Canada fails to create a genuine issue of fact on this claim because LAMP-Canada fails to demonstrate both actual loss of revenue and causation. LAMP-Canada's expert submits that LAMP-Canada has lost at least $500,000 per year since the two corporations split. However, this estimate is based on the assumptions that LAMP-Canada would have continued to receive donations forwarded from LAMP-US and that the two organizations had not disaffiliated. As LAMP-US points out, this figure represents damages for termination of the Statement of Relationship, and the Court has already dismissed LAMP-Canada's claim for breach of contract.
LAMP-Canada's expert also submits that LAMP-US has received $8.2 million in donations since the two corporations disaffiliated. (Id. at 6.) LAMP-Canada submits that but for LAMP-US's unauthorized use of the mark, it would have successfully secured those donations. LAMP-Canada submits no evidence to support its contention that it would have received these donations but for LAMP-US's alleged interference. See Rainforest Café, Inc. v. Amazon, Inc., 86 F. Supp. 2d 886, 909 (D. Minn. 1999) (Davis, J.) (denying summary judgment because plaintiff presented "sufficient testimony from potential investors to create a genuine issue of fact as to whether, [but for defendant's interference], said investors would have provided financing" to plaintiff). Rather, LAMP-Canada maintains that those donors "likely would have contributed to LAMP-Canada." This is simply not enough to create a genuine issue of material fact as to causation, and therefore LAMP-Canada's claim for tortious interference must be dismissed.
2. Minnesota Deceptive Trade Practice Act
Count IX of the Complaint alleges that LAMP-US "disparaged the services of [LAMP-Canada], using false or misleading facts to induce donors to withdraw support from [LAMP-Canada]." (Compl. ¶ 99.) LAMP-Canada claims that this conduct constitutes deceptive trade practices under Minn. Stat. § 325D.44 and Minnesota common law. (See id. ¶ 100.) LAMP-US contends that LAMP-Canada's DTPA claim fails because it is not pled with specificity. LAMP-US further submits that any claim for damages under the DTPA fails because the statute only permits equitable relief.
LAMP-US argues that any claim under the DTPA must be pled with specificity as required by Federal Rule of Civil Procedure 9(b). In Tuttle v. Lorillard Tobacco Co., this Court dismissed the plaintiff's DTPA claim because it failed to satisfy this heightened pleading standard. 118 F. Supp. 2d 954, 963 (D. Minn. 2000) (Magnuson, J.). In Tuttle, the gravamen of the plaintiff's complaint was fraud, and both of the plaintiff's common law and statutory law fraud claims failed the pleading requirements of 9(b). See id. In this case, LAMP-Canada's claims are not wholly based on fraud. Even so, the Court finds that LAMP-Canada's allegations sufficiently articulate a claim for product disparagement under the DTPA, as the Complaint specifically identifies allegedly false and misleading statements made by LAMP-US. (See Compl. ¶¶ 49-53.) LAMP-US's Motion is denied on this point.
However, LAMP-Canada does not sufficiently articulate a claim for trademark infringement under the DTPA. Although a claim for trademark infringement under the Lanham Act and the DTPA requires the same analysis, see Group Health Plan, Inc. v. Philip Morris, Inc., 68 F. Supp. 2d 1064, 1069 (D. Minn. 1999) (Magnuson, J.), the Complaint does not allege a DTPA claim for trademark infringement. Rather, LAMP-Canada's DTPA claim relates to product disparagement. (See Compl. ¶ 99-100.) Because LAMP-Canada fails to state a claim for trademark infringement under the DTPA, LAMP-Canada cannot pursue a trademark infringement claim under the DTPA. However, the Complaint sufficiently states a claim for product disparagement under the DTPA, allowing LAMP-Canada to seek equitable relief under the DTPA. See Minn. Stat. § 325D.45.
CONCLUSION
It is with a heavy heart that the Court issues this Memorandum and Order. The Court exists to resolve disputes and to ultimately provide justiciable relief. This case presents the unusual scenario in which no clear winner emerges. Since the beginning of this litigation, the Court has persistently encouraged the parties to amicably resolve this dispute, so that the underlying charitable mission could continue. Unfortunately, the philosophical problem that originally separated these two entities has resulted in division that cannot be repaired. The Court struggles to understand how two charitable organizations, that exist solely to provide benefit to others, has permitted such a result that contradicts their underlying purpose. The Court is struck by the irony of the parties' original mission:
Proclaiming the Gospel of Jesus Christ . . . is our unifying purpose . . . We desire a relationship that will be characterized by a high level of cooperation and trust. . . .
(Aug. 16, 2004, Thompson Decl. Ex. 17.) Although the Court does not believe that this ruling achieves justice, this ruling follows the law.
Accordingly, based on the files, records and proceedings herein, IT IS HEREBY ORDERED that:
1. Plaintiff LAMP-Canada's Motion for Partial Summary Judgment (Clerk Doc. No. 151) is GRANTED in part and DENIED in part;
2. Defendant LAMP-US's Motion for Summary Judgment (Clerk Doc. No. 145) is GRANTED in part and DENIED in part;
3. Count VII of the Complaint is DISMISSED with prejudice; and
4. Defendant LAMP-US's Motion to Strike (Clerk Doc. 181) is DENIED.