Doeblers PA Hybrids v. Doebler , 442 F.3d 812 ( 2006 )

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
3-23-2006
Doeblers PA Hybrids v. Doebler
Precedential or Non-Precedential: Precedential
Docket No. 04-3848
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 04-3848
DOEBLERS’ PENNSYLVANIA HYBRIDS, INC.
v.
TAYLOR DOEBLER, III, an individual;
DOEBLER SEEDS LLC d/b/a T.A. Doebler Seeds,
Defendants/Third-Party Plaintiffs
v.
WILLARD L. JONES;
WILLIAM R. CAMERER, III,
Third-Party Defendants
Taylor Doebler, III, an individual, and
Doebler Seeds LLC d/b/a T.A. Doebler Seeds,
Appellants
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. No. 03-cv-01079)
District Judge: Honorable James F. McClure, Jr.
Argued June 30, 2005
Before: NYGAARD,* SMITH, and FISHER, Circuit Judges.
(Filed March 23, 2006 )
Rees Griffiths
Barley Snyder
100 East Market Street
P.O. Box 15012
York, PA 17405
John G. Harkins, Jr. (Argued)
Steven A. Reed
Harkins Cunningham
2005 Market Street
2800 One Commerce Square
Philadelphia, PA 19103
Attorneys for Appellants
*
Judge Richard L. Nygaard assumed senior status on
July 9, 2005.
2
Lewis F. Gould, Jr.
Duane Morris
30 South 17th Street
United Plaza
Philadelphia, PA 19103-4196
Samuel W. Apicelli
Duane Morris
305 North Front Street, 5th Floor
P.O. Box 1003
Harrisburg, PA 17108-1003
Jams J. Kutz (Argued)
Post & Schell
17 North 2nd Street, 12th Floor
Harrisburg, PA 17101
Attorneys for Appellee, Doeblers’
Pennsylvania Hybrids, Inc.
Stephen Moniak
Thomas G. Collins
Buchanan Ingersoll
213 Market Street
One South Market Square, 3rd Floor
Harrisburg, PA 17101
Attorneys for Appellees, Willard L. Jones
and William R. Camerer, III
3
OPINION OF THE COURT
FISHER, Circuit Judge.
In this interlocutory appeal between corn-seed businesses
owned by relatives of the founder of the original business, we
are asked who owns the founder’s surname, Doebler, as a
trademark. We are also asked whether defendants – the
founder’s grandson and his business – have engaged in
trademark infringement, trade secret misappropriation, and
various other torts and fiduciary breaches. The District Court,
concluding that defendants engaged in those activities as a
matter of law, granted summary judgment to plaintiff and
entered a permanent injunction in its favor. Because we
conclude that plaintiff has not met its burden of showing that it
is entitled to judgment as a matter of law, we will reverse and
remand for further proceedings.
I.
Even the closest of families may battle, but when such a
feud occurs against the backdrop of family businesses – here,
dueling companies that trace their ancestry to one defendant’s
grandfather – the stakes include critical business assets.
Although the personal aspects of this dispute are not material to
our resolution of this appeal, the history of the Doebler family
businesses is critical to this matter, a case that is now before us
for a second time.
4
A. The Doebler Family Members and Their
Businesses
Taylor A. Doebler, Sr. (“Doebler I”) started the family
seed corn business in the 1930s doing business as T.A. Doebler.
In the early 1950s, his son Taylor A. Doebler, Jr. (“Doebler II”)
joined the business, which became a partnership under the name
of T.A. Doebler & Son (“Partnership”). For many years, the
Partnership used the “Doebler” surname as a trademark in
selling corn seed. Doebler I died in 1981. In the 1990s, Doebler
II’s son, Taylor A. Doebler, III (“Doebler III”), joined the
Partnership.
Other family members were involved in the business as
well, and on several occasions, Doebler II formed additional
entities. In December of 1972, Doebler II formed plaintiff
Doeblers’ Pennsylvania Hybrids, Inc. (“Hybrids”), to handle
sales and distribution. In addition to Doebler II, the
incorporators included his son-in-law Willard L. Jones, and his
nephew William R. Camerer, III. The vast majority of the initial
stock belonged to Doebler II, though Camerer and Jones owned
a small amount of stock. All three families were represented on
Hybrids’ board of directors as well. Currently, Jones and
Camerer are officers, directors, and shareholders in Hybrids.
Prior to the events directly leading to the present suit, the stock
owned by Jones and Camerer increased to approximately 36%
each.
In 1986, Doebler II formed another entity, Doebler
Farmland, Inc. (“Farmland”). Doebler II transferred land to
Farmland, which in turn leased the property back to Partnership
5
to grow seeds. As of 2003, Doebler III and his two sisters
collectively owned the majority of Farmland stock, with nearly
all the remainder belonging to Jones, Camerer, and various other
members of the Jones and Camerer families. Thus, the
Partnership’s original functions were ultimately split between
Partnership, Hybrids, and Farmland.
Before his relationship with Camerer and Jones soured,
Doebler III had ties to all three entities: he was partnered with
his father in the Partnership and remains an owner of the
successor LLC; he is co-owner of Farmland; and he was – but
no longer is – a shareholder, director, and secretary/treasurer of
Hybrids. After his father’s death in 2002 and as part of the
events leading to this lawsuit, Doebler III reorganized
Partnership as a limited liability company, Doebler Seeds, LLC,
d/b/a T.A. Doebler Seeds (“LLC”).
In contrast, at no point did Camerer or Jones ever have
any ownership interest in the Partnership or its successor LLC.
They are, however, shareholders and directors of Hybrids and
have served as officers in varying capacities. 1 Jones eventually
succeeded Doebler II as Hybrids president. Camerer served as
vice-president until he was removed in 2000 due to alleged
misconduct. Ironically, as noted below, Camerer succeeded
Jones as president in 2002. Camerer is also the owner and
1
They also own some stock in Farmland.
6
president of another entity, Camerer Farms, Inc. (“Camerer
Farms”), a farm that produces corn seed also sold by Hybrids.2
B. The DOEBLER Name
The Doebler name has been used as a trademark in
connection with corn seed in marks such as DOEBLER’S
PENNSYLVANIA HYBRIDS. In addition, the formative
DOEBLER has been used by T.A. Doebler & Son, Doeblers’
Pennsylvania Hybrids, Inc., and Doebler Farmland, Inc. as part
of their corporate and various trade names such as Doebler’s
Hybrids. Hybrids also registered the names “Doebler’s, Inc.”
and “Doebler’s Hybrids, Inc.” in Pennsylvania as fictitious
names.
The parties agree that Partnership used the DOEBLER
name at least until the formation of Hybrids at the end of 1972.
See Appellee Br. At 8 (“[Partnership] continued up until 1972
to cultivate, improve and sell agricultural seed products within
Pennsylvania, contracting with farmers to grow seeds which it
would market and sell under its name.”). The parties vigorously
contest, however, who used and owned the name after that point.
Interestingly, upon Hybrids’ formation, the following ad or press
release was issued:
2
In addition to selling Partnership’s corn seed, Hybrids
also appears to have sold corn produced by Camerer Farms,
non-family growers, and possibly Farmland.
7
On January 1, 1973 Doebler’s took a long
leap forward and announced the formation of a
new sales and distribution company – Doebler’s
Penna. Hybrids, Inc. This new unit will take
charge of the seed corn after it is produced and
bagged by the farms. This includes all aspects of
distribution in addition to a greatly expanded
research and testing program. The farms will
operate as before as T. A. Doebler and Son.
....
We are really enthused about our new
organization and its prospects in the years ahead.
We hope you will give Doebler’s an opportunity
to help in the continuing quest for higher yields
and better corn.
Sincerely,
/s/ T. A. Doebler Jr.
A6209 (emphasis in original). Next to the press release was a
picture of a seed bag saying “Doebler’s HYBRIDS” and “T.A.
DOEBLER & SON.” Plaintiff Hybrids asserts that upon its
formation, Partnership “conveyed its sales and other assets to
Hybrids.” Appellee Br. at 8. As discussed below, however,
there is no writing that expressly assigns the Doebler name to
plaintiff.
8
C. The Relationship Between the Family
Businesses
The relationship between the family businesses is not
altogether clear. Doebler III states that until the time of his
father’s death in 2002, Doebler II “selected the seed corn grown
by all these seed production farms.” Appellants’ Br. at 6.
Defendants further claim that even after the formation of
Hybrids, Doebler II and Partnership “remained in charge and
was the driving force in [Hybrids’s] affairs.” Id. For its part,
plaintiff argues that it was Hybrids that set up the dealer
network, controlled the use of the mark after 1972, and that it “is
and has always been known to the public and the agriculture
industry as ‘DOEBLER’S.’” Appellee Br. at 9.3 Partnership
had no customers and made no retail sales of seed corn after
1972 through 2002, except to Hybrids and Farmland. In
addition, Hybrids did not just sell seed provided by Partnership;
it also appears to have sold, under the DOEBLER name, seed
produced by Camerer Farms and other non-family providers.
D. The Family Business Unravels
Doebler II died in August 2002. Shortly thereafter,
Doebler III approached Jones and offered to buy him out in
exchange for his stock and retirement. For his part, Jones began
3
The parties also dispute how much money was spent by
Hybrids on marketing, research, and advertising. As such
factual disputes are not determinative here, we do not focus on
them.
9
secret negotiations with Camerer, who had been fired three years
earlier for alleged misconduct. At a meeting of Hybrids’ board
on October 31, 2002, Camerer – who had been earlier
terminated as vice-president – was named president. Doebler III
formally resigned from Hybrids on November 15, 2002. On that
same day, he filed documents creating LLC. On December 6,
2002, he resigned as a Hybrids director. The assets of
Partnership – including its goodwill – were transferred to LLC
on April 23, 2003.
E. The Seed Business
The plaintiff’s trade secret claims regard the names of
their “hybrid” strains of corn seed. These seeds are created by
mixing the parentage of male and female “inbred” strains. Seed
sellers like Hybrids appear to often get their inbred strains and
recommendations on hybrid combinations from providers called
“foundation companies.” Foundation companies indicate what
hybrid strains might be worth producing in a particular
geographic area. It is not entirely clear, but it appears that
plaintiff does not own the genetics of the disputed hybrids and
instead licenses them from foundation companies, and that the
plaintiff’s trade secret claims are instead premised in the names
used in connection with those hybrids. Also, at least some of the
research done by Hybrids is shared with foundation companies
as part of cooperative testing.
It further appears that although multiple seed sellers may
offer the same hybrid combinations, that each seller sells its
hybrid under a particular product name. For example, Hybrids
appears to have sold one strain under the name 667SL; the same
10
hybrid was offered by defendants under the name TA 6890F.
This information appears not to be made publicly available to
retailers or buyers.
Doebler III, who was once a shareholder, director, and
officer of Hybrids, had knowledge of the hybrids marketed by
Hybrids and the product names used in connection with each
hybrid. He signed a confidentiality agreement with Hybrids.
After leaving Hybrids and starting LLC, Doebler III started to
offer sales of seed corn directly through LLC. Of the hybrids
offered by LLC, 21 were identical in genetic make-up to hybrids
offered by Hybrids. LLC’s advertising also noted which of its
hybrids were identical to hybrids offered by Hybrids.
It should also be noted that a Hybrids employee who left
the corporation to join LLC, Robert Laub, brought with him a
computer disk with Hybrids’ information. Doebler III states that
upon learning that the employee had brought the information
with him, he had his counsel send the information back to
Hybrids.
F. District Court Proceedings
On June 27, 2003, Hybrids filed a complaint against
Doebler III and LLC in the United States District Court for the
Middle District of Pennsylvania. The complaint alleged federal
unfair competition and false designation of origin; federal
dilution; common law unfair competition; breach of board
member agreement; misappropriation of trade secrets;
11
interference with contract and with prospective economic
advantage; breach of fiduciary duty; and vicarious liability.4
On September 23, 2003, the District Court entered a
preliminary injunction in Hybrids’ favor. The Court rejected the
contention that customer lists was a trade secret but concluded
that the hybrids were trade secrets. It enjoined use of
DOEBLER-related marks and use of the hybrids. On September
30, 2003, defendants moved for reconsideration, a motion that
the District Court granted in part on October 15, 2003, by
allowing defendants to sell the enjoined 21 hybrids, but only as
feed corn.5 On April 19, 2004, the District Court denied a
second motion for reconsideration.
On September 8, 2004, the District Court granted
motions for summary judgment filed by Hybrids and by third-
4
On December 3, 2003, defendants filed an answer along
with affirmative defenses and counterclaims, including
trademark claims. On that same date, defendants filed a
third-party complaint against Jones and Camerer, alleging
multiple counts including trademark claims.
5
On February 12, 2004, this Court affirmed the
preliminary injunction in a non-precedential opinion. See
Doebler’s Pennsylvania Hybrids, Inc. v. Doebler Seeds, LLC, 88
Fed. Appx. 520 (3d Cir. Feb. 12, 2004). The decision focused
on the trade secret issues, concluding that LLC and its
employees could not use the plaintiff’s trade secrets to compete
against Hybrids.
12
party defendants Camerer and Jones. It granted judgment to
Hybrids on all outstanding counts of the complaint.6 Regarding
the trademark claims, the District Court concluded that although
there was never any formal agreement transferring the
DOEBLER mark, that plaintiff was nevertheless the owner of
the mark as a matter of law and that the defendants’ use of
DOEBLER led to infringement and dilution. The District Court
further held that the inbred and hybrid information was a trade
secret, and that the family of Doebler businesses were “in
practical effect one organization.” Regarding interference with
contract, the District Court held that defendants had (1) set up
their own dealership network using former Hybrids sales
managers; and (2) represented that they could sell the same
products as Hybrids but under a different name. This was
facilitated by trademark and trade secret violations, leading to
losses to Hybrids of contracts it had with growers. Regarding
the fiduciary duties claim, the District Court pointed to, among
other things, the trade secret and trademark violations.
Accordingly, the District Court granted plaintiff a
permanent injunction, including enjoining defendants from:
using DOEBLER’S or any confusingly similar variant as a
mark, trade name, business name, domain name, or symbol of
origin; making statements that are likely to mislead the public to
believe that defendants’ goods or services are associated or
6
The Court also dismissed the remaining counterclaims
and third-party claims. As noted in Part II, infra, our decision
addresses only the permanent injunction and underlying grant of
summary judgment in favor of Hybrids.
13
affiliated with plaintiff, or false descriptions, representations, or
designations of origin that falsely associate defendants’ goods
or services with plaintiff; diluting the DOEBLER’S mark;
engaging in false description, false representation, false
designation of origin, or any other activity constituting unfair
competition with plaintiff; offering for sale any of the 21
hybrids sold by plaintiff; disclosing or using the pedigrees of the
21 hybrids sold by plaintiff; or setting forth to any third party
any comparison of any hybrid offered for sale by plaintiff with
any hybrid sold by defendants.
The Court also noted that counsel had previously
stipulated that LLC would cease using the trade name T.A.
Doebler Seeds and would instead use T.A. Seeds; the Court
indicated that it would find the new trade name acceptable and
directed the parties to attempt to propose a new corporate name.
The Court also instructed counsel for plaintiff to later notify the
Court whether it would pursue a claim for damages, and
instructed the clerk to defer entry of final judgment until further
order of the court.
II.
The District Court had subject-matter jurisdiction over
the plaintiff’s federal claims pursuant to 28 U.S.C. §§ 1331 and
1338, and supplemental jurisdiction over its state-law claims
pursuant to 28 U.S.C. § 1367. The appeal is timely.
The labyrinthine posture of this appeal makes it essential
to carefully circumscribe the propriety and scope of our review.
This case was previously before this Court on appeal from a
14
grant of preliminary injunction, and is before us once again after
a grant of summary judgment to plaintiff. We note that the
District Court’s order is not final for purposes of 28 U.S.C.
§ 1291 because the District Court did not issue a final judgment
pending resolution of damages issues. In Re Good Deal
Supermarkets, Inc., 528 F.2d 710, 712 (3d Cir. 1975). We
nevertheless have appellate jurisdiction under 28 U.S.C.
§ 1292(a)(1), which states: “the courts of appeals shall have
jurisdiction of appeals from: (1) Interlocutory orders of the
district courts of the United States . . . granting, continuing,
modifying, refusing or dissolving injunctions, or refusing to
dissolve or modify injunctions, except where a direct review
may be had in the Supreme Court.” 28 U.S.C. § 1292(a)(1); see
also Cureton v. National Collegiate Athletic Ass’n, 198 F.3d
107, 113 (3d Cir. 1999) (basing appellate jurisdiction over non-
final order under § 1292(a)(1) where permanent injunction was
based on summary judgment ruling); 15B Charles Alan Wright
et al., Federal Practice and Procedure § 3914.28 (“if an
injunction is issued on the basis of the summary judgment
appeal can be taken under § 1292(a)(1),” but “scope of the
appeal, however, is likely to be confined to matters necessary to
review the injunction.”).7
7
In its appellee’s brief, plaintiff inexplicably claims
“there is no permanent injunction currently in effect.” Appellee
Br. at 1. This is flatly incorrect. In its order, the District Court
granted a permanent injunction to plaintiff, stating that
defendants “are permanently enjoined . . . .” A2 (emphasis
added); see also A71-72 (entry 210 of docket sheet). Indeed,
after being prompted by a letter sent by the Court, appellee
15
We review the grant or denial of a permanent injunction
for an abuse of discretion. Citizens Financial Group, Inc. v.
Citizens Nat’l Bank of Evans City, 383 F.3d 110, 126 (3d Cir.
2004), cert. denied, 125 S. Ct. 1975 (2005). “‘An abuse of
discretion exists where the District Court’s decision rests upon
a clearly erroneous finding of fact, an errant conclusion of law,
or an improper application of law to fact.’” Id. (quoting
A.C.L.U. of N.J. v. Black Horse Pike Reg’l Bd. of Educ., 84
F.3d 1471, 1476 (3d Cir. 1996)) (additional internal quotes
omitted). Here, of course, the permanent injunction is premised
entirely on the District Court’s grant of summary judgment to
plaintiff. Accordingly, to resolve the propriety of the permanent
injunction, we must determine whether the District Court erred
in granting summary judgment.
“‘[S]ummary judgment should be granted if, after
drawing all reasonable inferences from the underlying facts in
the light most favorable to the non-moving party, the court
concludes that there is no genuine issue of material fact to be
resolved at trial and the moving party is entitled to judgment as
a matter of law.’” Kornegay v. Cottingham, 120 F.3d 392, 395
(3d Cir. 1997) (quoting Spain v. Gallegos, 26 F.3d 439, 446 (3d
Cir. 1994)). “We have held repeatedly that the party moving for
backed away from its jurisdictional challenge, conceding that “it
does appear that the trial court intended to have a permanent
injunction effective upon the issuance of its Order.” Plaintiff
Letter of June 9, 2005. However, our appellate jurisdiction is
not boundless, and we limit our review to the permanent
injunction and underlying grant of summary judgment.
16
summary judgment under Fed.R.Civ.P. 56(c) bears the burden
of demonstrating the absence of any genuine issues of material
fact.” Aman v. Cort Furniture Rental Corp., 85 F.3d 1074, 1080
(3d Cir. 1996). “When determining whether there is a triable
dispute of material fact, the court draws all inferences in favor
of the non-moving party.” Country Floors, Inc. v. Partnership
Composed of Gepner and Ford, 930 F.2d 1056, 1061 (3d Cir.
1991).
The District Court’s earlier grant of a preliminary
injunction, and this Court’s affirmance thereto, is irrelevant to
our review of the grant of summary judgment. In the posture
before us – a trademark case in which summary judgment
proceedings follow a grant of a preliminary injunction in the
plaintiff’s favor – the distinction between the standards for
summary judgment and preliminary injunction become critical.
“Failure to strictly observe the principles governing summary
judgment becomes particularly significant in a trademark or
tradename action, where summary judgments are the exception.”
Country Floors, 930 F.2d at 1062-63. “[I]nferences concerning
credibility that were previously made in ruling on [a] motion for
a preliminary injunction cannot determine [a] Rule 56(c) motion
and should not be used to support propositions that underpin the
decision to grant the motion for summary judgment.” Id. at
1062. This is because, inter alia, “[c]redibility determinations
that underlie findings of fact are appropriate to a bench verdict.”
Id. But “[t]hey are inappropriate to the legal conclusions
necessary to a ruling on summary judgment.” Id. A District
Court should not weigh the evidence and determine the truth
itself, but should instead determine whether there is a genuine
issue for trial. Id. Thus, the sole question before this Court is
17
whether plaintiff met its burden of demonstrating that it was
entitled to judgment as a matter of law. As discussed below, we
conclude that it did not.8
8
We must also note that we are troubled by plaintiff’s
failure to provide proper citations to the appendix. Rather than
providing citations to places in the 8000+ page appendix where
original documents and deposition testimony may be found,
plaintiff cites almost exclusively to the “Concise Statement of
Undisputed Facts” it submitted to the District Court in support
of its motion for summary judgment. This submission is not
evidence, and unsurprisingly, defendants disputed the accuracy
of much of this document before the District Court. As noted by
the Second Circuit, a “district court may not rely solely on the
statement of undisputed facts . . . .” Vermont Teddy Bear Co.,
Inc. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004).
This admonition applies with equal force to this Court on
appeal. Cf. Holland v. New Jersey Dept. of Corrections, 246
F.3d 267, 285 (3d Cir. 2001) (court should not “be required to
scour the District Court’s records and transcripts, without
specific guidance, in order to construct specific findings of fact
that support the District Court’s Order”). As noted by the
Seventh Circuit, “‘Judges are not like pigs, hunting for truffles
buried in’ the record.” Albrechtsen v. Board of Regents of
University of Wisconsin System, 309 F.3d 433, 436 (7th Cir.
2002) (quoting United States v. Dunkel, 927 F.2d 955, 956 (7th
Cir. 1991)). Here, the plaintiff’s near-complete reliance on its
“Concise Statement of Undisputed Facts” does not fulfill the
mandate in Federal Rule of Appellate Procedure 28(e) for
citations to the appendix, particularly considering that it is the
18
III.
This case demonstrates what may happen when
trademark ownership is not explicitly spelled out between a
group of related and apparently closely-held companies that use
the same name in concert. When things go well, everyone
happily uses the name together, but when things go sour, a
dispute may arise over a critical business asset: the name.
Indeed, the scenario at hand – a family surname used by family
companies with a high degree of overlapping ownership and
management – is ripe with potential for this very kind of
dispute.9
Much of the permanent injunction is premised on the
District Court’s conclusion that defendants – as a matter of law
– engaged in federal unfair competition and false designation of
movant who carries the burden of showing a lack of disputed
material facts. See Aman, 85 F.3d at 1080 (party moving for
summary judgment bears burden of demonstrating absence of
genuine issues of material fact). To be clear, however, our
reversal is based solely on our examination of the issues and the
record in the case and is not premised on a potential Rule 28
violation.
9
Cf. E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d
1280, 1297 (9th Cir. 1992) (brother of Ernest and Julio Gallo
permitted in marketing cheese to “continue to explain to
customers his participation in his business, but not as a
trademark or trade name that causes confusion”).
19
origin in violation of 15 U.S.C. § 1125(a), federal dilution in
violation of 15 U.S.C. § 1125(c), and common law unfair
competition. The threshold premise underlying this outcome is
the District Court’s conclusion that plaintiff owns the name and
mark DOEBLER. Plaintiff provides several arguments as to
why it now owns exclusive rights to the name, mark, and
formative DOEBLER. First, it argues that the mark was
assigned to it by Partnership upon the formation of Hybrids in
1972. Second, plaintiff argues that defendants have abandoned
any ownership of DOEBLER and that plaintiff’s post-
abandonment use vested it with full ownership. Finally, plaintiff
suggests that its use of the mark after 1972 effected a transfer.
All three of these arguments raise numerous and disputed
questions of material fact, making summary judgment
inappropriate.10
A. Assignment
Plaintiff first asserts that Partnership assigned the
DOEBLER name to Hybrids in 1972. In response, the District
Court succinctly noted, “no formal agreement transferring the
DOEBLER’S mark from [Partnership] to [Hybrids] ever
10
Plaintiff also suggests in passing that defendants may
have lost their trademark rights through acquiescence or waiver.
However, it provides neither argument nor legal support as to
how this may have occurred. Such passing and conclusory
statements do not preserve an issue for appeal. Lunderstadt v.
Colafella, 885 F.2d 66, 78 (3d Cir. 1989); see also Fed. R. App.
Proc. 28(a)(9), (b).
20
existed.” We agree and we further conclude that to the extent
plaintiff argues it was assigned the mark, this issue raises
numerous questions of fact and credibility that preclude
summary judgment.
As support for plaintiff’s assertion that Partnership
conveyed all assets to Hybrids, plaintiff cites to the second
meeting minutes dating back to the time of Hybrids’ formation
over 30 years ago. See A6206-08.11 These minutes note, among
other things, that the operation and maintenance of trucks and
cars was to be done by Hybrids, but make no mention of the
DOEBLER name or mark, nor do they refer to any transfer of
the underlying goodwill. Accordingly, plaintiff does not point
to conclusive evidence of an express written assignment.12
11
In fact, plaintiff does not even cite to this page range,
instead variously citing its “Concise Statement of Undisputed
Facts,” A447, and to an inapposite page range of A1372 to 1374
of the appendix. This appears to be an error, and we understand
plaintiff to instead refer to the second meeting minutes starting
at A6206.
12
During the preliminary injunction proceedings,
defendants stated Doebler III and “TADS” (apparently LLC)
were the “junior user” of DOEBLER, see Supp. App. at 34.
Plaintiff argues in passing that the statement is a concession in
support of its position that Partnership never acquired rights in
the DOEBLER name prior to the incorporation of Hybrids in
1972. For their part, defendants vigorously argue that
Partnership had prior rights to DOEBLER and that those rights
21
Plaintiff also cites to deposition testimony by Camerer
stating that the mark was assigned to Hybrids. Even if a writing
is lacking, an assignment may be proven in other ways. “If 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.” 2 J. Thomas McCarthy,
McCarthy on Trademarks and Unfair Competition § 18:4 (4th
ed. 2005). However, courts must be cautious in scenarios that
do not involve clear written documents of assignment.
“Requiring 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
incentive to identify expressly the ownership of the marks they
employ.” TMT North America, Inc. v. Magic Touch GmbH,
124 F.3d 876, 884 (7th Cir. 1997).
The plaintiff’s reliance on the possibly self-serving
testimony of one of its principals regarding events occurring
more than 30 years ago creates important questions for a fact-
finder regarding Camerer’s credibility, and is simply insufficient
to prove a trademark assignment as a matter of law. Moreover,
there is documentary evidence that might be found to contradict
Camerer: the 1973 advertisement issued upon Hybrids’
formation could be read to reflect an intention that the
DOEBLER name was to remain in the possession of
Partnership. It states “Doebler’s took a long leap forward and
announced the formation of a new sales and distribution
now belong to LLC. Such factual disputes preclude summary
judgment.
22
company,” and that “We hope you will give Doebler’s an
opportunity to help in the continuing quest for higher yields and
better corn.” A6209 (first emphasis in original, second bold
added). The “Doebler’s” being referred to the press release
appears to be Partnership, not Hybrids. Accordingly, we cannot
conclude as a matter of law that the DOEBLER name and mark
was transferred to Hybrids, whether in writing or orally.
B. Abandonment
Plaintiff next argues that even if Partnership’s rights were
never assigned to it, those rights were abandoned as a matter of
law. Accordingly, suggests plaintiff, its subsequent use of
DOEBLER gave it full ownership of the name without any need
for assignment. Plaintiff’s argument is premised on the
assumption that Partnership ceased all direct use of the mark
after 1972 and that this cessation constitutes an abandonment.
Plaintiff’s position ignores the fact that the use of DOEBLER
never ceased after Hybrids’ incorporation in 1972 and more than
likely increased. Plaintiff apparently means to suggest that all
use after 1972 was made by Hybrids rather than Partnership, and
assuming that to be so, that Partnership abandoned its rights.
We cannot agree that Partnership abandoned its rights to
DOEBLER as a matter of law. The Lanham Act states in
relevant part that a “mark shall be deemed to be ‘abandoned’
. . . [w]hen its use has been discontinued with intent not to
resume such use. Intent not to resume may be inferred from
circumstances. Nonuse for 3 consecutive years shall be prima
facie evidence of abandonment.” 15 U.S.C. § 1127. A party
arguing for abandonment has a high burden of proof: in United
23
States Jaycees v. Philadelphia Jaycees, we held that
“abandonment, being in the nature of a forfeiture, must be
strictly proved.” 639 F.2d 134, 139 (3d Cir. 1981).
Even assuming that only Hybrids used the DOEBLER
name after 1972, that would not constitute an abandonment of
Partnership’s rights as a matter of law. The simple fact is that
the use of DOEBLER never ceased. Defendants appear to
concede that use of the name was made by Hybrids, but argue
that such uses were made with the permission of Partnership.
Use of a trademark need not always be made directly by the
trademark owner and is often made “with the permission” of the
owner via a licensing agreement. Indeed, sometimes the only
use of a mark is through a licensee. See 2 McCarthy on
Trademarks § 18:46 (“Ownership rights in a trademark or
service mark can be acquired and maintained through the use of
the mark by a controlled licensee even when the first and only
use of the mark was made, and is being made, by the licensee.”).
Such licensing arrangements are permissible so long as the
license agreement provides for adequate control by the licensor
of the nature and quality of the goods or services.13 See id.
13
As noted in the Lanham Act in relation to registered
marks, legitimate trademark use by a “related company” shall
inure to the benefit of the mark’s owner:
Where a registered mark or a mark sought to be
registered is or may be used legitimately by
related companies, such use shall inure to the
benefit of the registrant or applicant for
registration, and such use shall not affect the
24
§ 18:42 (“Today, trademark licensing is permitted so long as the
licensor maintains adequate control over the nature and quality
of goods and services sold under the mark by the licensee.”).
Moreover, as we have noted:
the proponent of a claim of insufficient control
must meet a high burden of proof. The purpose of
the control requirement is the protection of the
public. If a licensor does not maintain control of
his licensees in their use of the license, the public
may be damaged by products that, despite their
trademark, do not have the normal quality of such
goods.
United States Jaycees, 639 F.2d at 140 (citing Edwin K.
Williams & Co., Inc. v. Edwin K. Williams & Co.-East, 542
F.2d 1053, 1059 (9th Cir. 1976)).
A trademark license is typically written and contains
express terms giving the licensor power to engage in quality
validity of such mark or of its registration,
provided such mark is not used in such manner as
to deceive the public. If first use of a mark by a
person is controlled by the registrant or applicant
for registration of the mark with respect to the
nature and quality of the goods or services, such
first use shall inure to the benefit of the registrant
or applicant, as the case may be.
15 U.S.C. § 1055.
25
control to ensure that the licensee does not engage in mere
“naked” use of the mark. Naked licensing is an “[u]ncontrolled
licensing of a mark whereby the licensee can place the mark on
any quality or type of goods or services,” raising “a grave
danger that the public will be deceived by such a usage.” 2
McCarthy on Trademarks § 18:48. “[T]he only effective way to
protect the public where a trademark is used by licensees is to
place on the licensor the affirmative duty of policing in a
reasonable manner the activities of his licensees.” Dawn Donut
Co. v. Hart’s Food Stores, Inc., 267 F.2d 358, 367 (2d Cir.
1959); see also Kentucky Fried Chicken Corp. v. Diversified
Packaging Corp., 549 F.2d 368, 387 (5th Cir. 1977) (“Courts
have long imposed upon trademark licensors a duty to oversee
the quality of licensees’ products.”).
Failure to provide quality control may constitute naked
licensing, leading to abandonment of the mark. Ditri v.
Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869, 873
(3d Cir. 1992). “When the trademark owner fails to exercise
reasonable control over the use of the mark by a licensee, the
presence of the mark on the licensee’s goods or services
misrepresents their connection with the trademark owner since
the mark no longer identifies goods and services that are under
the control of the owner of the mark.” 2 McCarthy on
Trademarks § 18:48 (quoting Restatement (Third) of Unfair
Competition § 33, cmt. b (1995)). This may result in the
trademark ceasing to function as a symbol of quality and
controlled source, leading to an involuntary loss of trademark
rights. Id.
26
To the extent that plaintiff may rely on a naked licensing
theory, its burden is high. “Because naked licensing if
established is treated as an abandonment of the trademark,
which triggers the loss of trademark rights against the world,
anyone attempting to show such abandonment via naked
licensing faces a stringent burden of proof.” Creative Gifts, Inc.
v. UFO, 235 F.3d 540, 548 (10th Cir. 2000); see also United
States Jaycees, 639 F.2d at 139 (“abandonment, being in the
nature of a forfeiture, must be strictly proved”); Edwin K.
Williams & Co., Inc. v. Edwin K. Williams & Co.-East, 542
F.2d 1053, 1059 (9th Cir. 1976) (“Because a finding of
insufficient control essentially works a forfeiture, a person who
asserts insufficient control must meet a high burden of proof.”).
We cannot conclude that the facts establish naked
licensing as a matter of law. Although it appears that there is no
express written license agreement between the parties, a
trademark license can also be implied. See Villanova University
v. Villanova Alumni Educational Foundation, Inc., 123 F. Supp.
2d 293, 308 (E.D. Pa. 2000) (“It is irrelevant whether the parties
thought of the arrangement at the time in terms of an implied
license. The test for whether or not an implied license existed
is based solely on the objective conduct of the parties.”) (citing,
inter alia, United States Jaycees, 639 F.2d at 140 n.7).
Moreover, the nature of the parties’ relationship and
conduct may evidence sufficient quality control. The Tenth
Circuit has noted that a licensor may justifiably rely on its
licensee for quality control where there is a “special
relationship” between the parties. Stanfield v. Osborne Indus.,
Inc., 52 F.3d 867, 872 (10th Cir. 1995) (“In cases in which
27
courts have found that a licensor justifiably relied on a licensee
for quality control, some special relationship existed between
the parties.”); Transgo, Inc. v. Ajac Transmission Parts Corp.,
768 F.2d 1001, 1017-18 (9th Cir. 1985) (in light of the fact that
licensor supplied at least 90% of the components sold by the
licensee and there had been years without complaint, and “[d]ue
to [licensor’s] association with [licensee] for over ten years and
his respect for his ability and expertise, [licensor] felt he could
rely on [licensee] to maintain high standards by performing his
own quality control”).
Such a “special relationship” may exist here, considering
that the litigants were closely-held business entities owned and
managed by family members and which included a high degree
of interlocking ownership and control. Doebler II was a partner
in Partnership, and a shareholder, officer, and director of
Hybrids. So was defendant Doebler III. In 1972, Doebler II
participated in the founding of Hybrids, which was established
at least in part to handle marketing and sales. In 1986, Doebler
II also founded Farmland, to own and lease the farm for
Partnership seed corn production.
It is true that the corn seed sold by Hybrids was not solely
from Partnership. In addition to selling Partnership’s corn seed,
Hybrids also sold corn produced by Camerer Farms and non-
family growers. However, evidence exists that Doebler II was
involved in selecting corn grown by these farms up until 2002,
the year he died. As plaintiff itself notes, “the Doebler family
companies were always intended to work together.” Appellee
Br. at 32 n.7. A reasonable fact-finder could conclude that these
companies worked together, and that Doebler II, in his dual
28
roles in Partnership and Hybrids, ensured that Hybrids’ use of
the mark was conducted with appropriate quality controls. Such
a fact may be highly pertinent in persuading a fact-finder that
Partnership, via an implied license agreement, consented to
Hybrids’ use of the mark and exercised adequate quality control.
We therefore cannot conclude as a matter of law that the
DOEBLER name and mark was abandoned.14
C. Divestment of Ownership Via Hybrids’ Use
Hybrids’ final argument is that it somehow came to own
the mark through its use starting in 1972. The District Court
held that it did:
A review of the evidence reveals that upon the
formation of [Hybrids] in 1972, it took over from
[Partnership] all of the research, marketing, sales,
and distribution activities previously performed
by [Partnership]. Therefore, since 1972,
[Partnership] has functioned solely as a
production company. Despite the fact that no
formal agreement transferring the DOEBLER’S
mark from [Partnership] to [Hybrids] ever existed,
it is clear that the mark belongs to [Hybrids].
14
We do not at this time address the propriety or
applicability of “licensee estoppel,” which has been held by
some courts to estop a trademark licensee from challenging the
validity of marks it has licensed. See generally 2 McCarthy on
Trademarks § 18:63.
29
[Hybrids] has spent more than 30 years setting up
a dealer distribution network and using and
promoting the DOEBLER’S mark on and in
connection with the agricultural seed products it
sold. As noted by plaintiff, [Partnership] was not
the sole producer of DOEBLER’S products –
Camerer Farms, Inc., [Farmland], and several
outside growers also produced DOEBLER’S
products. It was [Hybrids], however, that
continuously, extensively, and exclusively used
the DOEBLER’S mark in connection with its
business. Moreover, [Hybrids] has spent more
than $800,000 in advertising in the last five years,
and has come to be known as “Doebler’s” among
its customers and dealers. Thus, no reasonable
juror could find that the DOEBLER’S mark does
not belong to plaintiff.
A25-26.
We disagree with the District Court’s reasoning.
Assuming that Partnership did not enter into a formal
assignment as a matter of law, nor that it abandoned the mark as
a matter of law, the District Court appears to nevertheless
conclude – as a matter of law – that Hybrids now owns the mark
through its assumption of research, marketing, sales, and
distribution activities. Paring this analysis to its core, it appears
that the District Court would hold that a distributor that takes on
too much of the trademark owner’s former activities can take
over the mark as well.
30
It is true that in a manufacturer-distributor relationship,
sometimes the distributor will own a mark rather than the
manufacturer. Professor McCarthy notes two scenarios where
ownership might be disputed between manufacturer and
distributor:
(1) When the manufacturer is the user and
owner of a mark and then enters into a
distribution relationship with a dealer, the dealer
does not acquire trademark rights in the goods it
distributes. Such a relationship is simply either
one of a non-trademark-licensed buyer who
resells branded merchandise or of a dealer
licensed under the trademark to hold himself out
as an authorized dealer. In either case, the dealer
does not own the trademark.
(2) When a dealer buys goods from a
manufacturer and applies or has someone else
apply the dealer’s own “merchant’s mark” to the
goods, the dealer, not the manufacturer, is the
owner of such a trademark. If the dealer orders
the manufacturer to place the mark on the product
prior to delivery, then the manufacturer is acting
as a “ licensee” of the dealer.
2 McCarthy on Trademarks § 16:48 (footnotes omitted). The
first scenario arises when a manufacturer who already owns a
mark enters into an agreement with a distributor to sell the
manufacturer’s branded goods. As McCarthy notes, such a
relationship may operate under a trademark license or it may
31
not. But such conduct does not, by itself, vest ownership of the
mark in the distributor. The second scenario arises when the
distributor (or dealer) takes goods from the manufacturer and the
dealer puts its own mark on the goods. In that case, the dealer
is the owner of the mark, even if the manufacturer affixes the
mark to the goods on behalf of the dealer.
It is clear that the DOEBLER mark existed long before
Hybrids came into existence, so it can hardly be said that
Hybrids affixed its “merchant’s mark” to the goods. Unless
ownership to the name vested in Hybrids via assignment or
abandonment – issues that raise numerous disputed questions of
material fact – the mere fact that the parties may have had a
manufacturer-distributor relationship does not by itself vest
ownership of the mark in Hybrids.15
In disputes between a manufacturer and distributor over
ownership of a mark, Professor McCarthy suggests that a court
first look to contractual expectations. 2 McCarthy on
Trademarks § 16:48. He further suggests that if there is no
contractual provision regarding ownership, courts should look
at consumer expectations, weighing factors such as the
following:
1. Which party invented or created the mark.
15
Hybrids argues that it was no mere distributor, but it is
clear that the nature of the parties’ relationship is yet another
disputed question of material fact that precludes summary
judgment.
32
2. Which party first affixed the mark to goods
sold.
3. Which party’s name appeared on packaging
and promotional materials in conjunction with the
mark.
4. Which party exercised control over the nature
and quality of goods on which the mark appeared.
5. To which party did customers look as standing
behind the goods, e.g., which party received
complaints for defects and made appropriate
replacement or refund.
6. Which party paid for advertising and
promotion of the trademarked product.
Id. (footnotes omitted).
We conclude that this approach is inapplicable in cases
where initial ownership has already been established and an
express assignment is lacking. In TMT North America, Inc. v.
Magic Touch GmbH, the Seventh Circuit held that although
such factors may be appropriate where initial ownership of a
mark is in dispute, once initial ownership is established, a multi-
factor test would be inappropriate to divest that ownership – a
trademark owner may “lose its rights by assignment or by
abandonment, but not by some nebulous balancing test.” 124
F.3d 876, 884 n.4 (7th Cir. 1997). We agree. The Lanham Act
expressly provides how ownership may be divested through
33
abandonment, see 15 U.S.C. § 1127, and how ownership of
registered marks may be divested through assignment, see id.
§ 1060. To follow a divestive balancing test where initial
ownership is already established, and where assignment or
abandonment cannot be shown, would flout the Lanham Act by
permitting a finding of abandonment under another name, even
when abandonment cannot be established under the statute.
Considering that abandonment must be “strictly proved,” United
States Jaycees, 639 F.2d at 139, we will not permit it to be found
under a different name through a balancing test.
Moreover, even if we were to apply the
contractual/consumer expectations approach, we could not
conclude that ownership was divested as a matter of law.
Regarding the parties’ contractual expectations, there was no
express assignment.16 Even if we turned to consumer
16
The present dispute is thus different from Premier
Dental Products Co. v. Darby Dental Supply Co., Inc., 794 F.2d
850 (3d Cir. 1986), where a domestic distributor was expressly
assigned a mark by a foreign manufacturer; the distributor (the
assignee) then sued a grey marketer. At issue was whether the
express assignment from the foreign manufacturer to the
domestic distributor was effective. We stated that although
ownership “is largely determined by the parties’ agreement,” id.
at 854, that under the circumstances of that case, a written
agreement was not completely determinative, requiring us to
further inquire as to who owned the goodwill, looking to:
(1) who engages in control over the quality of goods; or (2) who
is perceived by the public as to who stands behind the mark. Id.
34
expectations, those factors would not point towards Hybrids as
a matter of law because: (1) Partnership created the mark;
(2) Partnership first affixed the mark to goods; (3) Partnership’s
name initially appeared on packaging and promotional materials,
and later on, Hybrids’ name (and perhaps Partnership on
occasion as well); (4) Partnership’s quality control is a disputed
issue of material fact; (5) Hybrids may have become the party to
whom consumers eventually looked as standing behind the
goods but that again appears to be a question of fact; and (6) the
parties dispute the nature and significance of any reimbursement
by Partnership to Hybrids for marketing expenses. Thus, even
if we applied a balancing test, numerous disputes of material
fact would prevent it from supporting the grant of summary
judgment.17
at 854-55. To the extent that we followed a balancing approach
in Premier Dental, that case – which involved an express
trademark assignment – is not controlling here, particularly
considering that the question of assignment is heavily disputed.
17
It may be that the family name “Doebler” is “primarily
merely a surname,” and that the DOEBLER mark and marks
incorporating DOEBLER as a formative are descriptive rather
than inherently distinctive. Cf. 15 U.S.C. § 1052(e)(4) (such
marks not registrable). The parties recognize, however, that
even descriptive marks can attain “secondary meaning” and thus
attain trademark protection. See Checkpoint Systems, Inc. v.
Check Point Software Technologies, Inc., 269 F.3d 270, 282-83
(3d Cir. 2001) (“descriptive marks with a demonstrated
secondary meaning are entitled to trademark protection”)
35
IV.
We turn next to the other major premise underlying the
District Court’s grant of a permanent injunction: the conclusion
that defendants engaged in trade secret misappropriation as a
matter of law. Plaintiff asserts that its trade secrets consist “of
the brand names attached to the various hybrids researched,
developed and marketed” by Hybrids. Appellee Br. at 56. It is
undisputed that defendant Doebler III signed a confidentiality
agreement with plaintiff, was a fiduciary to that corporation, had
access to the information, and used the information.18
Nevertheless, we conclude that plaintiff has not met its burden
of showing an absence of any genuine issues of material fact
(footnotes omitted). Unsurprisingly, as both parties vie for
ownership of DOEBLER, each takes the position that the
various DOEBLER marks have attained secondary meaning.
That may be correct but we need not address that matter because
we resolve the trademark issues before us on the basis of
ownership. Along similar lines, we do not address whether the
use of DOEBLER by defendants would cause trademark
infringement, trademark dilution, or unfair competition.
18
A former employee of plaintiff, Robert Laub, took a
disc containing allegedly proprietary information with him when
he joined LLC as an employee. The disc was later returned to
plaintiff by defendants’ counsel. Because we conclude that
plaintiff cannot establish that its brand names are trade secrets
as a matter of law, the contents of the disc are not determinative
at this juncture.
36
regarding the threshold question of whether the plaintiff’s brand
names are legally protected as trade secrets.
Plaintiff sells “hybrid” strains of corn seed, which are
created by mixing the parentage of male and female “inbred”
strains. Seed sellers like Hybrids (and for that matter,
defendants) appear to get their inbred strains and
recommendations on hybrid combinations from providers called
“originator” or “foundation companies” that patent seed genetics
and license seed companies to plant, grow, and sell hybrids they
recommend. The foundation companies sell to the grower the
inbred strains, and the growers combine them to make the
recommended hybrids. The growers then sell the hybrid corn
seeds.19
19
“Hybrid” corn seed is produced by planting two
inbred parents together and allowing pollen from
one inbred (used as the male parent) to fertilize
silks on the other inbred (used as the female
parent). In corn, inbred lines are lines developed
by self-pollination and selection until the line is
relatively homozygous. Inbred lines may be
“public” if developed and released by a public
university, or “private” if developed by a private
entity.
Pioneer Hi-Bred Int’l v. Holden Foundation Seeds, Inc., 35 F.3d
1226, 1228 n.2 (8th Cir. 1994).
37
Defendants assert that neither plaintiff nor defendants
developed or own any of the hybrids which were enjoined, but
rather, that they are recommended by foundation companies.
The hybrid pedigrees that are well adapted to growing
conditions in a geographic area are known by the foundation
companies, which make recommendations to their licensees as
to which hybrids they might grow. Barry Johnson of MBS
Genetics (a foundation company) testified that he would have no
hesitation to recommend the same hybrids to Doebler III or
anyone else with a license. Matthew Nice of Thurston Genetics
(also a foundation company) testified that “in reality most
companies are selling the same pedigrees under their own brand
names to customers.”
At least some of plaintiff’s research regarding the hybrids
is passed on to foundation companies such as Monsanto (and
apparently to other respective foundation companies), which in
turn shares some of those findings with other licensees who
report their findings. Defendant LLC has a similar license with
Monsanto.
The nature of the trade secret here, as stated by plaintiff,
is the name used by Hybrids in selling a particular hybrid. For
example, Hybrids appears to have sold one strain under the
name 667SL; the same hybrid was offered by defendants under
the name TA 6890F. This information appears not to be made
publicly available to retailers or buyers. The trade secret
misappropriation alleged arises from the fact that defendants
used their knowledge of the pedigree corresponding to Hybrids’
667SL to market the same hybrid pedigree as LLC’s TA 6890F.
38
Defendants further used a comparison sheet to indicate which of
its hybrids corresponded to the same hybrids sold by plaintiff.
Under the circumstances of this case, we cannot agree
that the brand names attached to the plaintiff’s hybrids – 21 of
which defendants were enjoined from selling – are trade secrets
as a matter of law. Under Pennsylvania law, a plaintiff must
show:
(1) that the information constitutes a trade secret;
(2) that it was of value to the employer and
important in the conduct of his business; (3) that
by reason of discovery or ownership the employer
had the right to the use and enjoyment of the
secret; and (4) that the secret was communicated
to the defendant while employed in a position of
trust and confidence under such circumstances as
to make it inequitable and unjust for him to
disclose it to others, or to make use of it himself,
to the prejudice of his employer.
SI Handling Systems, Inc. v. Heisley, 753 F.2d 1244, 1255 (3d
Cir. 1985).20
20
Since the complaint was filed, Pennsylvania enacted the
Uniform Trade Secrets Act, 12 Pa.C.S.A. § 5301 et seq.
However, the Act “shall not apply to misappropriation occurring
prior to the effective date of this act [April 19, 2004], including
a continuing misappropriation that began prior to the effective
date of this act and which continues to occur after the effective
39
Here, the threshold question is whether the brand names
attached to the hybrids are trade secrets. A trade secret is
defined as “‘any formula, pattern, device or compilation of
information which is used in one’s business, and which gives
him an opportunity to obtain an advantage over competitors who
do not know or use it.’” Id. (quoting Restatement of Torts § 757
cmt. b). Factors to be considered in determining whether given
information is a trade secret are: (1) the extent to which the
information is known outside of the owner’s business; (2) the
extent to which it is known by employees and others involved in
the owner’s business; (3) the extent of measures taken by the
owner to guard the secrecy of the information; (4) the value of
the information to the owner and to his competitors; (5) the
amount of effort or money expended by the owner in developing
the information; and (6) the ease or difficulty with which the
information could be properly acquired or duplicated by others.
Id. at 1256 (quoting Restatement of Torts § 757 cmt. b).
Assuming that the names of the plaintiff’s hybrids might
constitute a trade secret, disputed questions of material fact
remain. Hybrids did not get Doebler III to sign a confidentiality
agreement until 2001. Although this fact does not mean that
Doebler III – a fiduciary to plaintiff – lacked duties of
confidentiality towards Hybrids, it may suggest that Hybrids did
not consider the names of its hybrids to be a trade secret.
Doebler III also asserts that the relationship between hybrid
varieties and Hybrids’ brand names was not discussed in board
date of this act.” Id. § 5301 hist. & stat. note. We therefore rely
on the approach taken prior to the Act’s enactment.
40
meetings. Also, Camerer testified that he may have disclosed
“characteristics” of some of Hybrids’ enjoined pedigrees to
Matthew Nice, a representative of a foundation company. It is
unclear, but we infer, that these characteristics may include the
brand names of some of the enjoined hybrids.21
Although foundation companies do not tell their
customers which seeds other growers use, such information
appears to be indirectly discernable to competitors. A seed
grower need only contact a foundation company, which will
provide the grower with information on which hybrids are best
adapted to particular growing areas. It is possibly significant
21
In addition, defendants assert that Camerer himself sold
corn produced by his own company, Camerer Farms, with the
same pedigree combinations sold by Hybrids. Because the
asserted trade secret was the brand name of the relevant hybrids,
perhaps Hybrids did not object because Camerer Farms did not
reveal Hybrids’ corresponding brand names. If true, this would
underscore that the real dispute is not over the sale of genetically
identical hybrids, but rather the defendants’ actions in
identifying which Hybrids products correspond to LLC
products. This would appear to implicate the Federal Seed Act,
discussed infra. Indeed, if the sum of the asserted trade secret
is simply the brand name of a particular hybrid, and if the
foundation companies recommend the same hybrids to all
growers in the same geographical area, it is hard to fathom how
an injunction could properly bar defendants from selling any of
the enjoined hybrids. This leaves simply the question of
whether the brand names are trade secrets.
41
that Hybrids was required to share some research with other
licensees through the foundation companies’ cooperative
research programs. The nature of the research being shared may
include what hybrids are generally grown in particular areas;
such information would appear to be available to others,
including LLC. Significantly, Daniel Anderson, a Monsanto
representative testified that although he would not tell LLC what
hybrids he would recommend to Hybrids, or vice-versa, he
admitted that in all likelihood, he would recommend the very
same lines to both. It would appear as a practical matter that all
growers in a particular area would grow many of the same
hybrids.
In addition, and depending on how the facts are
developed on remand, we are troubled by the prospect that the
assertion of trade secret protection may violate the Federal Seed
Act, 7 U.S.C. §§ 1551 et seq. “The Federal Seed Act makes it
unlawful for any person to transport or to deliver for
transportation in interstate commerce agricultural seeds with
untruthful labels.” E.K. Hardison Seed Co. v. Jones, 149 F.2d
252, 256 (6th Cir. 1945). Part of the labeling requirement is that
when variety names are used, all sellers use the same variety
name. Thus, to the extent that the plaintiff’s “brand names”
might turn out to be “variety” names, the Federal Seed Act
would appear to require all others – including defendants – to
42
use the same variety name. Regarding agricultural seeds,22 the
Federal Seed Act provides:
It shall be unlawful for any person to transport or
deliver for transportation in interstate commerce–
(a) Any agricultural seeds or any mixture of
agricultural seeds for seeding purposes, unless
each container bears a label giving the following
information, in accordance with rules and
regulations prescribed under section 1592 of this
title.
22
“Agricultural seeds” are defined as “grass, forage, and
field crop seeds which the Secretary of Agriculture finds are
used for seeding purposes in the United States and which he lists
in the rules and regulations prescribed under section 1592 of this
title.” 7 U.S.C. § 1561(a)(7)(A). “Vegetable seeds” “shall
include the seeds of those crops that are or may be grown in
gardens or on truck farms and are or may be generally known
and sold under the name of vegetable seeds.” Id.
§ 1561(a)(7)(B). The Federal Seed Act imposes somewhat
similar requirements for vegetable seeds, requiring a label with
the “name of each kind and variety of seed.” Id.
§ 1571(b)(1)(A) (certain containers under one lb.),
1571(b)(2)(A) (certain containers under one lb.), 1571(b)(3)(A)
(containers over one lb.). It would appear that the plaintiff’s
seeds are agricultural seeds, but this matter should be resolved
on remand.
43
(1) The name of the kind or kind and
variety for each agricultural seed component
present in excess of 5 per centum of the whole
and the percentage by weight of each: Provided,
That (A), except with respect to seed mixtures
intended for lawn and turf purposes, if any such
component is one which the Secretary of
Agriculture has determined, in rules and
regulations prescribed under section 1592 of this
title, is generally labeled as to variety, the label
shall bear, in addition to the name of the kind,
either the name of such variety or the statement
“Variety Not Stated” . . . .
7 U.S.C. § 1571(a)(1).
The Federal Seed Act and regulations require labels for
agricultural corn seed include either the kind and variety,23 or
the kind and the statement “Variety Not Stated.” 24 The
23
“Kind” “means one or more related species or
subspecies which singly or collectively is known by one
common name,” such as soybeans. 7 U.S.C. § 1561(a)(11).
“Variety” “means a subdivision of a kind which is characterized
by growth, plant, fruit, seed, or other characters by which it can
be differentiated from other sorts of the same kind,” such as
“‘Manchu’ soybeans.” Id. § 1561(a)(12).
24
7 U.S.C. § 1571(a)(1). For agricultural corn seeds,
labeling by type alone is impermissible because of implementing
44
regulations require that brand names be used separately and
distinctly from the variety name, and not as the variety name:
Brand names and terms taken from trademarks
may be associated with the name of the kind or
variety of seed as an indication of source:
Provided, That the terms are clearly identified as
being other than a part of the name of the kind or
variety; for example, Ox Brand Golden Cross
sweet corn. Seed shall not be advertised under a
trademark or brand name in any manner that may
create the impression that the trademark or brand
name is a variety name. If seed advertised under
a trademark or brand name is a mixture of
varieties and if the variety names are not stated in
the advertising, a description similar to a varietal
description or a comparison with a named variety
shall not be used if it creates the impression that
the seed is of a single variety.
regulations. Although section 1571(a)(1) indicates that labels
normally may include type alone, that section further indicates
that the Secretary of Agriculture may additionally require that
variety be disclosed unless the “Variety Not Stated” disclaimer
is used. The relevant regulations expressly state that field corn
be “generally labeled as to variety and shall be labeled to show
the variety name or the words ‘Variety Not Stated.’” 7 C.F.R.
§ 201.10(a).
45
7 C.F.R. § 201.36b(e). This regulation indicates that one cannot
use a brand name as the variety name, or vice-versa.25 The
regulations further indicate that “[h]ybrid designations shall be
treated as variety names.” 7 C.F.R. § 201.2(y). Here, although
the briefs are less than clear on this point, it would appear that
the plaintiff’s hybrid seeds might be marketed in a manner like
“Doebler’s Hybrids 667SL,” making “Doebler’s Hybrids” a
25
The Patent and Trademark Office (“PTO”) takes a
similar approach to variety names in trademark applications,
instructing trademark examiners that “[v]arietal or cultivar
names” are names that might “consist of a numeric or
alphanumeric code or can be a ‘fancy’ (arbitrary) name,” and
which “amount to the generic name of the plant or seed by
which such variety is known to the public.” United States Patent
and Trademark Office, Trademark Manual of Examination
Procedures § 1202.12 (4th ed. April 2005). The manual further
indicates that if wording sought to be registered as a mark for
agricultural seeds comprises a varietal or cultivar name, then
trademark registration must be refused or accompanied by a
disclaimer, “on the ground that the matter is the varietal name of
the goods and does not function as a trademark.” Id.; see also
In re KRB Seed Co., 76 U.S.P.Q.2d 1156 (T.T.A.B. 2005)
(refusing registration to REBEL because it is a varietal name for
a type of grass seed). The plaintiff’s brand names, which appear
to include terms such as 667SL, seem to fall within the PTO’s
description of marks that consist of a numeric or alphanumeric
code, and thus varietal names.
46
trademark and “667SL” the variety name.26 The regulations
indicate, however, that “[t]he same variety name shall not be
assigned to more than one variety of the same kind of seed.” 7
C.F.R. § 201.34(d)(3). Assuming that plaintiff was the first to
name this particular hybrid, the Federal Seed Act would appear
to require defendants to use the same designation – 667SL –
when selling the same hybrid.
Support for this conclusion may be found with the
Agricultural Marketing Service of the U.S. Department of
Agriculture (“AMS”), which states that once any seller has
named a hybrid, all sellers must use the same hybrid name so
that buyers know what they are getting. AMS, Facts About:
Naming and Labeling Varieties of Seed
(“AMS, Facts
About Seeds”). The publication states: “The originator or
discoverer of a new variety may give that variety a name.” Id.
In addition, “the name first used when the seed is introduced
into commerce will be the name of the variety.” Id. “It is illegal
to change a variety name once the name has been legally
assigned. In other words, a buyer may not purchase seed labeled
as variety ‘X’ and resell it as variety ‘Y.’” Id. “Marketing seed
under the wrong name is misrepresentation.” Id.
The flyer goes on to note a scenario that could be pulled
directly from the facts of this case:
26
Of significance is the fact that the defendants’
comparison sheet listed its own codes under a column entitled
“variety.”
47
In the case of hybrids, however, the
situation is potentially more complex since more
than one seed producer or company might use
identical parent lines in producing a hybrid
variety. One company could then produce a
hybrid that was the same as one already
introduced by another firm.
When this happens, both firms must use
the same name since they are marketing the same
variety.
If the people who developed the parent
lines have given the hybrid variety a name, that is
the legal name. Otherwise, the proper name
would be the one given by the company that first
introduced the hybrid seed into commerce.
U.S. Department of Agriculture seed
regulatory officials believe the following situation
occurs far too often:
“State University” releases hybrid corn
parent lines A and B.
John Doe Seed Company obtains seed of
lines A and B, crosses the two lines, and is the
first company to introduce the resulting hybrid
into commerce under a variety name. John Doe
Seed Company names this hybrid “JD 5259.”
48
La Marque Seeds, Inc., obtains lines A and
B, makes the same cross, and names the resulting
hybrid variety “SML 25.” There has been no
change in the A and B lines that would result in a
different variety. La Marque ships the hybrid
seed, labeled “SML 25,” in interstate commerce,
and violates the Federal Seed Act because the
seed should have been labeled “JD 5259.”
Id.
The scenario described above appears to be squarely on-
point with the current case, and if there is an explanation for
why it does not apply to this situation, plaintiff has failed to
indicate why; indeed, plaintiff does not bother at all to respond
to the merits of the defendants’ Federal Seed Act argument.27 If
27
Although defendants discuss the Federal Seed Act in
their opening brief, plaintiff does not bother to address the
questions on the merits, instead claiming without citation or
explanation that the defendant’s Federal Seed Act argument was
“abandoned.” See Appellee Br. at 54-55 n.17. Plaintiff further
complains that there is no private right of action under the Seed
Act, but the question of whether the Act provides a private right
of action (which defendants do not suggest) is irrelevant as to
whether the Act requires defendants and plaintiff to use the
same variety names. Finally, plaintiff appears to suggest that
defendants are equally guilty of wanting to protect the pedigrees
underlying their variety names, but two wrongs don’t make a
right.
49
defendants are required by the Federal Seed Act to use the same
variety name as defendants when selling the same hybrid of corn
seed, and if the plaintiff’s disputed “brand names” are in fact
mere variety names,28 it is difficult to understand how plaintiff
may consider the variety name corresponding to a particular
pedigree to be a trade secret at all.29
Our analysis, however, is hampered by the lack of clarity
in the briefs and record as to how variety names are chosen by
the parties and within the industry. We do not understand, for
example, how it is possible for a pedigree to be secret if the
Federal Seed Act requires all persons selling a particular hybrid
variety to use the same variety name. Yet if all seed sellers keep
their pedigrees secret (either because they do not disclose the
pedigrees or because sellers and foundation companies work
together to maintain such secrets), then how would seed sellers
ever be able to comply with the Federal Seed Act? Regardless,
under the unique facts of this case – where the defendants’
28
“The status under the Federal Seed Act of a variety
name is not modified by the registration of such name as a
trademark.” 7 C.F.R. § 201.34(d)(4).
29
This case is therefore unlike Pioneer Hi-Bred
International v. Holden Foundation Seeds, Inc., 35 F.3d 1226
(8th Cir. 1994), where the Court affirmed a finding of trade
secret misappropriation regarding the genetic make-up of certain
seed corn. The Federal Seed Act’s labeling requirements were
not at issue in that case, and we do not understand plaintiff to
assert trade secret rights in the genetic make-up of its seed.
50
relationship to plaintiff gave them specific knowledge of the
hybrid pedigrees underlying the plaintiff’s brand names – it
would appear that the Act would require use of the pre-existing
variety names. If the brand names at issue are not variety
names, plaintiff does not explain why that would be so.
Accordingly, the grant of summary judgment for trade
secret misappropriation will also be reversed.30 In light of the
lack of clarity regarding this matter, we do not at this time hold
that the Federal Seed Act prohibits the assertion of trade secret
rights. But on remand, the District Court should permit further
development of this issue with particular regard to, among other
things: the variety names used for the relevant hybrids; who
created those hybrids; who named the hybrids; and the practices
of the industry.
V.
The entry of a permanent injunction was premised
entirely on the District Court’s conclusion that plaintiff was
entitled to summary judgment. We conclude that the existence
of numerous issues of material fact precludes summary
judgment on any of these counts.31 Accordingly, the order of the
30
Plaintiff does not suggest that its hybrids are being used
in violation of Patent Law or the Plant Variety Protection Act.
31
We note that the District Court also granted summary
judgment to plaintiff on its claims for interference with contract,
breach of fiduciary duty, and vicarious liability. Plaintiff does
51
District Court will be reversed, and the matter will be remanded
for further proceedings.
not bother to brief these claims, instead incorporating by
reference the analysis of the District Court. Because the fate of
those claims is inextricably tied to the outcome of the plaintiff’s
trademark and trade secret claims, we do not address whether
the plaintiff’s attempt to incorporate the decision below flouts
Federal Rule of Appellate Procedure 28(a)(9) & (b)
(requirements for argument section of appellee’s brief) or
32(a)(7) (length of briefs). Accordingly, the grant of summary
judgment to plaintiff for those counts will be reversed as well.
52