Monday, March 13, 2017

How green was my tractor accessory? John Deere defeats aesthetic functionality defense for color scheme

Deere & Co. v. FIMCO Inc., No. 15-CV-105 (W.D. Ky. Mar. 8, 2017)      

Deere sued FIMCO for infringing on Deere’s green and yellow color scheme on agricultural equipment.  Deere has three green and yellow registrations: (1) the ‘103 Registration is from 1988 and covers green and yellow “agricultural tractors, lawn and garden tractors, trailers, wagons, and carts,” specifically those with green bodies/frames and yellow wheels; (2) the ‘576 Registration is also from 1988 and covers green and yellow “wheeled agricultural, lawn and garden, and material handling machines”; and (3) the ‘095 Registration is from 2010 and covers “tractor-towed agricultural implements,” including, among others, “fertilizer spreaders” and “nutrient applicators” with green bodies and yellow wheels. Deere also alleged common law trademark protection of its green and yellow color combination.

FIMCO makes lawn and garden sprayers, its main source of business, along with a smaller line of agricultural equipment, including towed agricultural sprayers and nutrient applicators, which FIMCO offers in multiple colors, including green and yellow. Deere sought to enjoin FIMCO’s use of green and yellow for sprayers and wheeled agricultural equipment, and its use of yellow tanks or wheels in connection with wheeled agricultural equipment having green vehicle bodies. 
screenshot from complaint
Here, the court rejected FIMCO’s functionality argument and several others, but allowed some elements of FIMCO’s defenses to proceed.

First, the court declined to exclude testimony from Deere’s expert, William Shanks, an investigator at Marksmen, “a private investigation firm that focuses on intellectual property investigations.”  Shanks summarized his investigation as follows:

Over several weeks in June 2016, I spoke with a total of 20 salespeople at different dealership locations, and with 18 of those 20 salespeople, I said something very close to the following: “I always thought [or assumed] that yellow/green farm equipment was made by . . . .” or “I always thought [or assumed] that the yellow/green coloring looked like . . . .” I would not finish the sentence, but would pause, to see if the sales personnel would finish the sentence. Each time I raised this unfinished sentence (18 of 18 times) the salesperson responded to my partial sentence and pause by stating promptly either “John Deere” or “Deere.”

He thus opined “that salespeople at dealerships that sell FIMCO’s agricultural equipment perceive the green and yellow colors on agricultural equipment as associated with Deere, or at a minimum, recognize or believe that people generally associate such colors with Deere.” Shanks presented himself in the role of “an employee of a film production company that wanted to rent or purchase agricultural equipment for a movie” so that dealers would “perceive[] [him] as someone not well- versed in that equipment, so the salespeople would be more inclined to educate [him] about the equipment than to assume [he] knew about it already.” He used “candid conversations” instead of “an interrogation or formal survey” in an effort to “ensure that the respondents felt comfortable enough with me to use their own words and give me their truthful, candid opinions.” He “offered an open- ended statement so people would feel free to fill in the gap however they wanted, instead of acting on a prompt or specific question from me.”

The court found that FIMCO’s criticisms went  to weight, not admissibility.  Shanks’ “twenty years of experience as a private investigator for an intellectual property investigation firm, which has often involved developing personas, conducting investigations, eliciting candid responses, and evaluating the results of such investigations, qualifies him to testify as to his opinions in this case.”  Would his testimony be “based on sufficient facts or data” and “the product of reliable principles and methods,” as the FRE require?  FIMCO argued that dealers would give different, less specific answers to a “random layman” than they would to a “true purchaser or shopper” and that it was likely that respondents were making “guesses . . . as to what they thought Shanks’ film producer character, as a completely uninformed, uneducated consumer, would think Shanks meant to finish the statement with. . . . Shanks’ [u]nfinished [s]tatements clearly lobbed for the respondents an answer going to what company most prominently features green and yellow on its agricultural equipment.”  But “errors in survey methodology are more properly directed against the weight a jury should give the survey, rather than overall admissibility,” and these problems were mere “technical inadequacies.”  

Nor would his testimony be inadmissible hearsay: “evidence of the state of mind of persons surveyed is not inadmissible as hearsay.” “Here, Shanks phrased his questions to dealers as inquiring into what they always ‘thought [or assumed]’ about the colors green and yellow on agricultural equipment” (emphasis added because of factual mistake).  The Court was satisfied that “experts in Shanks’ field would reasonably rely on this kind of data in forming opinions.”

Comment: When I think about how hard real surveys struggle to get attention paid to them, this result makes me sad.  Shanks explicitly induced salespeople to read his mind and complete his sentence with what they thought he thought.  The problem isn’t that Shanks is in the courtroom instead of the salespeople—he can testify to their present mental impressions—it’s that he isn’t testifying to the salespeople’s present mental impressions of what they thought, but rather what they thought he, as a novice, would be thinking.  After [gulp] years of teaching, even I can anticipate a number of standard student responses, and fill them in once a student starts down some particular path.  That doesn’t mean that the student is correct or that I think the way the student thinks; it means I’ve seen the argument before and I know what it sounds like.  Nothing in his report is evidence of what dealers or ordinary customers think.

Deere also failed to exclude five FIMCO expert witnesses qualified by their years of experience in the industry.  However, they lacked the expertise to testify about likely confusion as an ultimate issue, rather than about their own experience, because surveys are what proves likely confusion.  [And Shanks apparently did a “survey,” albeit one without controls, which alone would ordinarily have been enough to exclude a real survey in the modern era.] As McCarthy says, “A survey expert has conducted a scientific test and asked questions of potential buyers: other experts have not,” and thus “expert who has not conducted such a survey must articulate and describe some other reliable methodology that forms the basis for the conclusion that confusion is or is not likely in this case.” FIMCO’s witnesses didn’t offer reliable methodologies sufficient to offer the blanket opinions that “[t]here is no actual or likely confusion by U.S. consumers.”

However, FIMCO’s witnesses could testify about their own experiences with their customers throughout their careers, as well as “subsidiary factual questions, such as … the sophistication of buyers and the degree of care buyers typically exercise when making a purchasing decision of these kinds of goods or services.” For example, one witness testified, “reliably in the Court’s view, that he based [his] opinion on ‘[t]he price difference. The farmer is either looking for self-propelled that doesn’t compete because it’s a 300, $400,000 sprayer self-propelled sprayer versus a $50,000 or less sprayer.’”  Even though they did no separate research before forming their opinions, that went only to weight.

On to substance: in terms of fame, Deere claimed fame since 1923, or at the latest 1950.  Deere’s advertising expenditures were $34,000 in 1903 (roughly 1.1% of total company expenditures), $1.59 million in 1948, $5.4 million in 1957 (roughly $46.3 million today), and $75.3 million in 2015. Since the 1920s, it has advertised in color, clearly depicting its yellow and green color scheme, and often referred to this color scheme as the “John Deere Colors.” Its US sales have been extensive throughout its history, beginning in 1905, reaching $299.7 million in 1950 (roughly $3 billion today) and $29 billion today, and many of those sales were of products using the color scheme.  Deere’s archivist cited a 1923 article published in Implement & Tractor Trade Journal, discussing an upcoming convention at which a “Model Store” would be featured for agricultural dealers to see, which said that “[t]he glassed-in front is painted in the Deere colors, green and yellow.”  A novel, originally published in 1950 as Reluctant Farmer, also discusses a new wagon “painted the bright John Deere green and yellow” and a “side-delivery rake” painted “the usual bright John Deere green and yellow.” A article from 2011 called “Happy Birthday, John Deere!” begins with the following statement:

Unless, like my husband, you hail from a place like Nebraska, where it is  common knowledge that Farmall tractors are candy apple red, New Hollands’ are royal blue and Allis Chalmers are orange, I suspect that John Deere tractors, with their kelly green bodies and bright yellow hubcaps, are the only ones that are instantly recognizable.

Deere also surveyed members of the general public, 153 out of 156 of which identified a tractor bearing the yellow and green colors as being a Deere brand. Deere also has registrations for its color scheme, but those were not obtained until 1988 and 2010, long after the years in which Deere alleges its mark became famous—and long after FIMCO began using the colors.  The court found that the issue of when Deere’s colors became famous was a genuine issue of material fact.  “[T]he mere fact that Deere’s use of yellow and green were referenced in 1923 and 1950 is insufficient, at this stage, to say that 1923 or 1950 are the years Deere’s mark became so ‘widely recognized’ so as to make it famous for dilution purposes. Indeed, our sister courts have stated that ‘general media assertions and acclamations of fame are not strong evidence’ of fame because fame for trademark dilution purposes ‘is not proven through the words of trade publication articles declaring it so.’”

FIMCO alleges that, through its alleged predecessor in interest, JDD, it used green and yellow on its agricultural equipment from “either [19]32 or [19]38 forward.” The problem was that FIMCO couldn’t prove that JDD was its predecessor in interest, since the only evidence was from the current owner, Kevin Vaughn, who testified to his childhood memories from 1966 when, in his understanding, his father took over JDD’s assets out of bankruptcy.  [One might think that this is one reason we have laches, but the courts have been very hesitant to find laches in trademark cases, though perhaps once the court gets around to likely confusion Deere’s apparent inability to find real confused consumers over the past half century might matter.]  This evidence couldn’t be presented in admissible form, so FIMCO was left to its own start date in 1966, when it started to use the green and yellow colors.

Functionality: basically, FIMCO couldn’t prove that, even assuming that a desire to match equated to competitive necessity, the desire to match couldn’t be satisfied with either yellow or green, perhaps with black or gray; Deere limited its claims to the yellow and green combo.  Deere & Co. v. Farmhand, Inc., 560 F. Supp. 85 (S.D. Iowa 1982), aff’d, 721 F.2d 253 (8th Cir. 1983), found aesthetic functionality in the color green in similar circumstances, but (1) Deere clearly claimed only the combo this time, (2) the case predated Qualitex and Traffix (which I think is a bad argument because Breyer cited the case specifically in his discussion of aesthetic functionality in Qualitex) and didn’t apply the modern test.  “It may present a different question if Deere sought to completely prohibit all use of the color green or all use of the color yellow, as was the case in Farmhand.”   Trademark rights in one color “may differ from trademark rights in a combination of colors.”  [See also Louboutin.] 

Anyway, since Farmhand, courts have rejected claims based on a mere desire to match, because that’s not an aesthetic purpose “wholly independent of any source-identifying function.”  [I think that interpretation equivocates about independence. The desire to match, given a previous purchase of durable equipment, is independent of source-identifying function; it would apply no matter which brand of tractor the buyer had.  The matching color is related in a but-for sense to the choice of Deere, but I don’t think that source-identifying function should be deemed a proximate cause of the choice of matching equipment.]  Testimony that half of customers wanted their equipment to match, and half of those would change a purchase over that requirement, wasn’t convincing to the court—which I find a bit perplexing, since functionality has never required a showing that every single customer thinks there’s no alternative; 25% is a pretty significant chunk of a market.  But the broader point that the color combo wasn’t shown to be necessary to match is still a good one.

FIMCO’s laches defense failed because it couldn’t prove privity with JDD, which had received C&Ds in 1944 and 1963, as did its implied license defense. However, there was a genuine dispute of material fact as to acquiescence and estoppel. FIMCO put in a lot of evidence that its products would have been visible to Deere representatives at farm shows for years before 2011, when Deere allegedly discovered them.

The court also rejected FIMCO’s arguments about the scope of Deere’s registrations as covering yellow tanks/other aspects of FIMCO’s products; the question was not what the registrations covered but whether confusion was likely.  There were also some issues with incontestability—whether Deere made/sold all the items listed in the registrations continuously.  (Among other things, the ‘576 Registration includes “sprayers”; the court wasn’t persuaded by FIMCO’s argument that Deere didn’t sell trailed sprayers because it did sell self-propelled sprayers.)  Mostly there were genuine disputes of fact.

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