Opinion
CAUSE NO. SA-98-CA-1006-OG
October 15, 1999.
ORDER ACCEPTING RECOMMENDATION OF MAGISTRATE JUDGE AND GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
On this date came on to be considered the Memorandum and Recommendation of United States Magistrate Judge John W. Primomo (docket no. 50), and the objections of plaintiff Terry McDonald (docket no. 55). The Court has also reviewed defendant's response to plaintiffs objections (docket no. 56). When a party objects to a memorandum and recommendation, the Court is required to make a de novo determination of those portions of the report or proposed findings or recommendations to which objection is made.Kreimerman v. Casa Veerkamp, 22 F.3d 634, 646 (5th Cir. 1994),cert. denied, 513 U.S. 1016 (1994); 28 U.S.C. § 636(b)(1)(C); FED. R. Civ. P. 72(b).
Plaintiff Terry McDonald began selling his portion liquor control pourers in 1991 under the name of "Shur-Shot." In the years from 1991 to 1998, plaintiffs approximate sales were $100,000. In the five years he sold his pourers before defendants entered the market, he had spent $8,400 on advertising and had sold approximately $80,000 of his product. Defendant Precision Pours entered the market in 1996 using the name "Sure-Shot." It was unaware at the time that McDonald was using a similar name. In 1997 through 1998, Precision Pours spent a total of $322,911 in advertising, and its sales totaled $2.2 million.
Several tests have been developed by the courts to determine the territorial rights of those seeking trademark protection. The Fifth Circuit in Peaches Entertainment Corp. v. Entertainment Repertoire Associates, Inc., 62 F.3d 690, 694 (5th Cir. 1995) held that the zone of reputation is controlling, although it developed no specific formula to determine how far this zone extends. The zone does, however, include factors such as reputation, advertising, and proven sales in a given service area. Id.
The Magistrate Judge's report applies other tests that have been developed to determine whether the market penetration of a trademark in an area is sufficient to warrant protection. One such test comes from Natural Footwear Ltd. v. Hart, Schaffner Marx, 760 F.2d 1383 (3d Cir.), cert. denied, 474 U.S. 920, 106 S.Ct 249 (1985). That case sets forth four factors to be considered: (1) the volume of sales of the trademarked product; (2) the growth trends, both positive and negative, in the area; (3) the number of persons actually purchasing the product in relation to the potential number of customers; and (4) the amount of product advertising in the area. Id. at 1398-99. Under an analysis using the Natural Footwear standard, McDonald clearly has not sufficiently penetrated the market in order to have trademark protection. His volume of sales falls below that set forth inNatural Footwear; his growth trends are clearly negative in that he has had decreasing sales between 1991 and 1996, with no sales at all in 1997 and 1998; he has made minimal inroads in sales to potential customers; and his advertising is clearly insignificant. McDonald mistakenly portrays the advertising factor as some type of "effectiveness of advertising" standard. This is clearly not what was intended by the courts. It signifies amount spent in advertising, of which McDonald only spent $8,400 on advertising in five years as compared to $322,911 in two years by Precision Pours.
McDonald objects to the use of a state-by-state analysis of his market penetration. But the very case he cites to support his argument actually approves such an analysis. Sheila's Shine Products, Inc. v. Sheila Shine. Inc., 486 F.2d 114, 124 (5th Cir. 1973). There must be some analysis of the sales figures to determine trade territory and extent of protection for the disputed mark. As a result of McDonald's failure to provide any analysis of his sales figures, the use of Precision Pours's figures, done on a state-by-state basis, is appropriate. McDonald was given every opportunity to refute the Precision Pours's figures and failed to do so.
McDonald objects to the use of Appendices A, B and C in that they are incomplete and constitute inadmissible summaries of evidence. However, as pointed out by the Magistrate Judge, McDonald was given every opportunity to submit other, more accurate data but failed to do so. In fact, McDonald earlier stated in its Motion to Strike Appendix A that he had no objection to Appendices B and C.
McDonald next objects to the use of the Natural Footwear test as opposed to such other tests as the Peaches test (whether plaintiff established a zone of reputation) and the Sheila Shine test (which held that use of a mark may be so transitory, spasmodic, and inconsiderable as not to vest title in the user, whereas continuous use of a mark over a substantial period of time will create a property right, 486 F.2d at 123). On the contrary, the magistrate judge carefully analyzed all of these tests. Further, these tests all utilize substantially similar considerations — advertising, proven sales, reputation in a given service area, length of use, and so on. And all the tests weigh against McDonald. Once the moving party has properly supported its motion for summary judgment, the nonmoving party must "do more than simply show there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986). The nonmoving party may not rest on mere allegations or denials of his pleading, but must "come forward with `specific facts showing that there is a genuine issue for trial.'" Id. at 587 (quoting FED. R. Civ. P. 56(e) and adding emphasis). See also Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 256 (1986). This McDonald has failed to do.
The Court has conducted an independent review of the entire record, a de novo review of the matters raised by the objections, and has reviewed the applicable law. The Court concludes that plaintiff's objections lack merit, and that they should be overruled. The Court further concludes that the Memorandum and Recommendation should be accepted.
Accordingly, it is ORDERED that plaintiffs objections are OVERRULED, and that the Memorandum and Recommendation is ACCEPTED pursuant to 28 U.S.C. § 636 (b)(1) and Rule 72(b). It is further ORDERED that defendant's motion for summary judgment (docket no. 36) is GRANTED.
The Court notes that Precision Pours's counterclaims remain pending (even though they are trademark-related claims that are based on the same arguments and factual assertions that Precision Pours relied upon in defending against McDonald's claims). Thus, the parties are instructed to inform the Court in writing no later than October 25, 1999 whether any pending matters must be addressed before this case is closed.