James Hugunin v. Land O'Lakes, Inc. , 815 F.3d 1064 ( 2016 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 15-2815
JAMES G. HUGUNIN, LAND O’ LAKES OUTDOORS, INC., and
LAND O’LAKES TACKLE CO., INC.,
Plaintiffs-Appellants,
v.
LAND O’ LAKES, INC.,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 11 C 9098 — Joan B. Gottschall, Judge.
____________________
ARGUED JANUARY 21, 2016 — DECIDED MARCH 1, 2016
____________________
Before POSNER, EASTERBROOK, and KANNE, Circuit Judges.
POSNER, Circuit Judge. James Hugunin, the principal
plaintiff (the others are two companies he owns), manufac-
tures and sells fishing tackle. Although he lives in Illinois
and his companies are incorporated there, he began selling
his tackle in a town in northeastern Wisconsin called Land
O’ Lakes because it is located in a region dotted with lakes
and therefore attractive to fishermen—the region is also
2 No. 15-2815
called Land O’ Lakes. Since his first sale, made in 1997 to a
Wisconsin bait shop, Hugunin’s enterprise has grown to a
point at which his fishing tackle is sold to retailers in a num-
ber of states. In 2000 the U.S. Patent and Trademark Office
registered LAND O LAKES as the trademark of his fishing
tackle.
As it happens, Minnesota, which adjoins Wisconsin, is
the home of a large agricultural cooperative named Land O’
Lakes, Inc. that sells butter and other dairy products
throughout the United States. It uses the same trademark on
its products as Hugunin’s companies do on their products—
LAND O LAKES—and has been doing so since the 1920s,
when the company was formed.
In 1997—the year Hugunin began selling fishing tackle—
the dairy company became the official dairy sponsor of a
sport-fishing tournament called the Wal-Mart FLW Tour and
began advertising its dairy products in fishing magazines.
Three years later, having learned that Hugunin had regis-
tered LAND O LAKES as the trademark of his fishing tackle,
the dairy company wrote him that LAND O LAKES was its
trademark, was “famous” because it had been in use since
long before Hugunin had appeared on the scene, and that
Hugunin was infringing it and to be permitted to continue
using it would need a license from the dairy company. He
refused either to apply for a license or to give up the trade-
mark, thereby precipitating a proceeding by the dairy com-
pany in the Trademark Trial and Appeal Board of the U.S.
Patent and Trademark Office opposing registration of Hu-
gunin’s trademark. (The original registration had lapsed;
Land O’ Lakes was opposing Hugunin’s application to re-
No. 15-2815 3
register the trademark.) That proceeding is in a state of sus-
pended animation pending the outcome of this case.
We’re puzzled that the dairy company should have been
worried by Hugunin’s use of the same trademark. Though
besides sponsoring the fishing tournament the company has
advertised in fishing magazines and made other appeals to
fishermen to buy its dairy products, it neither makes nor
sells any devices or materials used in fishing (such as hooks,
lines, sinkers, floats, rods, reels, baits, lures, spears, nets,
gaffs, traps, waders, and tackle boxes—compendiously, fish-
ing tackle)—any products, therefore, that might be confused
with Hugunin’s fishing tackle. It would be strange indeed
for a dairy company to manufacture a product so remote
from milk, butter, and cream, and there is no sign that the
dairy company intends to take the plunge. The company
sponsors the angling tournament and advertises in fishing
magazines because fishermen, like the rest of us, are con-
sumers of dairy products. All it advertises in those maga-
zines are dairy products.
Equally puzzling, however, is why Hugunin and his
companies are suing the dairy company for trademark in-
fringement when there is nothing to suggest that the dairy
company is thinking of making or selling fishing tackle. Can
one imagine Land O’ Lakes advertising: “we sell the finest
dairy products and the best fishing tackle”? It might even
benefit Hugunin to have consumers confuse his modest en-
terprise with the mighty Land O’ Lakes and thus assume,
albeit incorrectly, that they were buying their fishing tackle
from a giant rather than a pygmy. Unsurprisingly there is no
evidence of any such confusion.
4 No. 15-2815
Hugunin claims to have encountered difficulty in inter-
esting investors in his companies because they’re afraid the
dairy company will sue the companies and may succeed in
enjoining their use of the trademark, which indeed would
hurt their sales. Presumably he filed this suit in order to
preempt such a suit by the dairy company—and sure
enough the dairy company counterclaimed, charging that
the use of the LAND O LAKES trademark by Hugunin’s
companies was diluting the value of the dairy company’s
identical trademark.
The district judge dismissed the dilution claim after a
bench trial as barred by laches (i.e., the dairy company had
waited too long to make the claim), though even if laches
hadn’t been in the picture the dairy company would not
have prevailed. As explained in Ty Inc. v. Perryman, 306 F.3d
509, 511 (7th Cir. 2002) (citations omitted), one theory under-
lying the dilution theory of trademark infringement is that
consumer search costs will rise if a trademark be-
comes associated with a variety of unrelated prod-
ucts. Suppose an upscale restaurant calls itself “Tif-
fany.” There is little danger that the consuming
public will think it’s dealing with a branch of the
Tiffany jewelry store if it patronizes this restaurant.
But when consumers next see the name “Tiffany”
they may think about both the restaurant and the
jewelry store, and if so the efficacy of the name as
an identifier of the store will be diminished. Con-
sumers will have to think harder—incur as it were
a higher imagination cost—to recognize the name
as the name of the store. So “blurring” is one form
of dilution.
No. 15-2815 5
Now suppose that the “restaurant” that adopts the
name “Tiffany” is actually a striptease joint. Again,
and indeed even more certainly than in the previ-
ous case, consumers will not think the striptease
joint under common ownership with the jewelry
store. But because of the inveterate tendency of the
human mind to proceed by association, every time
they think of the word “Tiffany” their image of the
fancy jewelry store will be tarnished by the associa-
tion of the word with the strip joint. So “tarnish-
ment” is a second form of dilution. Analytically it is
a subset of blurring, since it reduces the distinct-
ness of the trademark as a signifier of the trade-
marked product or service.
It’s difficult to fit the present case into either species of
dilution. Everyone recognizes “Tiffany” as the name of a
luxury jewelry store on Fifth Avenue in New York (with
stores in other major cities), and seeing the name on a hot-
dog stand a passerby might think of the jewelry store and of
the incongruity of a hot-dog stand’s having the same name;
he might think the jewelry store’s cachet impaired by the co-
incidence and switch his patronage to Cartier or Harry Win-
ston. Many consumers would recognize the name “LAND O
LAKES” as referring to the dairy company, but we can’t see
how the company could be hurt by the use of the same name
by a seller just of fishing tackle. The products of the two
companies are too different, and the sale of fishing tackle is
not so humble a business as the sale of hot dogs by street
vendors. And so it is beyond unlikely that someone dissatis-
fied with LAND O LAKES fishing tackle would take revenge
on the dairy company by not buying any of its products, or
that a customer would have difficulty identifying Land O’
Lakes’ dairy products because he had seen the LAND O
6 No. 15-2815
LAKES mark used on Hugunin’s fishing tackle. Land O’
Lakes products are advertised on their labels as dairy or oth-
er food products (such as instant cappuccino mixes), never
as products relating to fishing.
And the dairy company’s mark is itself derivative from
Minnesota’s catchphrase “Land of 10,000 Lakes,” see Wikipe-
dia, “Minnesota,” https://en.wikipedia.org/wiki/Minnesota
(visited February 29, 2016), a phrase in such widespread use
that the company could not insist that it was the sole lawful
user of the phrase in advertising for all products.
The disparity in size between the contenders deserves
emphasis. In 2012, the last year for which we have statistics,
Land O’ Lakes’ sales of dairy foods exceeded $4 billion,
while Hugunin’s sales were less than $30,000. It’s hard to be-
lieve that a giant dairy company wants to destroy or annex
Hugunin’s tiny fishing-tackle business, or that Hugunin’s
tackle sales are being kept down by Land O’ Lakes’ having
an identical trademark.
As for Hugunin’s claim of trademark infringement,
which the district judge dismissed on Land O’ Lakes’ motion
for summary judgment, it is not based on a contention that
Land O’ Lakes’ trademark is invalid because it’s identical to
his trademark; that would be absurd, because Land O’ Lakes
has been using the trademark since the 1920s. His contention
is that he is the first user of the mark in the fishing industry
and therefore has priority over Land O’ Lakes’ use of the
mark in that industry. Reverse confusion, as Hugunin’s the-
ory is called, refers to the situation in which a junior user of
a trademark uses his size and market penetration to over-
whelm the senior, but smaller, user. Custom Vehicles, Inc. v.
Forest River, Inc., 476 F.3d 481, 484 (7th Cir. 2007); Peaceable
No. 15-2815 7
Planet, Inc. v. Ty, Inc., 362 F.3d 986, 992–93 (7th Cir. 2004).
Hugunin argues that consumers will be deceived into believ-
ing that the dairy company is the actual producer of his fish-
ing tackle. But the dairy company’s use of the same trade-
mark is confined to products so different from Hugunin’s
that few if any consumers would think that simply by virtue
of having an identical trademark the dairy company was
competing with Hugunin in a different industry. See Sands,
Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 958 (7th
Cir. 1992); 2 J. Thomas McCarthy, Trademarks and Unfair
Competition § 24:3, at 166 (1991 Supp.); see also McGraw-
Edison Co. v. Walt Disney Productions, 787 F.2d 1163, 1166 (7th
Cir. 1986).
A typical fishing-themed ad by the dairy company de-
picts the “Land O’ Lakes Walleye Pro,” a champion fisher-
man whom Land O’ Lakes sponsors in fishing competitions
in return for his promoting its dairy products. The fisherman
is shown sitting next to packages of Land O’ Lakes butter
and cheese. The dairy company’s logo is also found on fish-
ing boats during tournaments. But just as no one watching a
NASCAR race and seeing a racing car emblazoned with
Budweiser’s logo would think that the beer company had
entered the automobile industry, so no one reading the
“Walleye Pro” ad or seeing a boat sponsored by the dairy
company would think that the advertiser sells fishing tackle.
Hugunin also complains that the dairy company has
permitted some producers and sellers of fishing tackle—
competitors of Hugunin’s companies—to use its trademark.
Were those firms licensees of Land O’ Lakes, Hugunin might
have a colorable claim of trademark infringement because
then Land O’ Lakes could be thought to be intentionally en-
8 No. 15-2815
couraging other fishing-tackle companies to infringe Hu-
gunin’s mark, as that would increase Land O’ Lakes’ reve-
nues from licensing. In that event the dairy company might
well be guilty of what is called secondary liability or con-
tributory infringement. But there is no evidence that Land O’
Lakes has issued any such licenses or is even aware that oth-
er producers of fishing tackle have used its mark.
So in this unusual case two firms sued each other though
neither had been, is, or is likely to be harmed in the slightest
by the other. The suit was rightly dismissed.