Lutheran Assn. of Miss. v. Lutheran Assn. of Miss

Full title: LUTHERAN ASSOCIATION OF MISSIONARIES AND PILOTS, INC., a Canadian…

Court: United States District Court, D. Minnesota

Date published: Mar 15, 2005

Civil No. 03-6173 (PAM/RLE) (D. Minn. Mar. 15, 2005)

Opinion

Civil No. 03-6173 (PAM/RLE).

March 15, 2005

MEMORANDUM AND ORDER

PAUL MAGNUSON, Senior District Judge

This matter is before the Court pursuant to the Court's request for briefing on the remaining causes of action.

BACKGROUND

The parties and the Court are familiar with the facts. In November 2004, the Court determined that Plaintiff Lutheran Association of Missionaries and Pilots, Inc. ("LAMP-Canada") owned the disputed trademarks, and that Defendant Lutheran Association of Missionaries and Pilots, Inc. ("LAMP-US") was liable as a matter of law for trademark infringement. Although the Court permanently enjoined LAMP-US from further use of the disputed marks, the Court found that a genuine issue of material fact remained on the issue of monetary damages. The Court also dismissed LAMP-Canada's claim for tortious interference with prospective business advantage.

The Court then solicited additional briefing from the parties on the remaining claims. LAMP-Canada has three claims that remain: (1) unfair competition under 15 U.S.C. § 1125(a) and Minnesota common law; (2) false and misleading statements under 15 U.S.C. § 1125(a); and (3) disparagement under the Minnesota Deceptive Trade Practices Act ("DTPA"), Minn. Stat. § 325D.44. (See Compl. Counts II, III and IX.) LAMP-US has five counterclaims that remain: (1) misappropriation of trade secrets under Minn. Stat. § 325C.01 et seq.; (2) tortious interference with prospective business advantage; (3) conversion; (4) dissolution, liquidation, accounting, and distribution of joint venture assets; and (5) unjust enrichment. (2d Am. Countercl. Counts IV, V, VIII, IX, and X.) LAMP-US has voluntarily dismissed Counterclaims I, II, III, VI and VII.¹

1 These counterclaims include: (1) trademark infringement under the Lanham Act; (2) unfair competition under the Lanham Act and common law; (3) false designation in interstate commerce under the Lanham Act; (4) deceptive trade practices under Minn. Stat. § 325D.44; and (5) deceptive trade practices directed towards seniors citizens under Minn Stat. § 325F.71.

DISCUSSION

A. Standard of Review

Summary judgment is proper if there are no disputed issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The Court must view the evidence and the inferences that may be reasonably drawn from the evidence in the light most favorable to the nonmoving party.Enter. Bank v. Magna Bank, 92 F.3d 743, 747 (8th Cir. 1996). However, as the United States Supreme Court has stated, "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action."Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986).

The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Enter. Bank, 92 F.3d at 747. A party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials, but must set forth specific facts in the record showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Krenik v. Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995). The Court will address each remaining claim in turn.

B. LAMP-Canada's Claims

1. False and Misleading Statements, 15 U.S.C. § 1125(a)

LAMP-Canada claims that LAMP-US has made false and misleading statements in violation of the Lanham Act, 15 U.S.C. § 1125(a). To prevail on this claim, LAMP-Canada must demonstrate that LAMP-US made a false or misleading statement of material fact that either deceived or had the capacity to deceive a substantial segment of potential consumers. See e.g., Am. Italian Pasta Co. v. New World Pasta Co., 371 F.3d 387, 390 (8th Cir. 2004). Furthermore, LAMP-Canada must demonstrate that it has either been injured or is likely to be injured as a result of these false and misleading statements. Id.

LAMP-Canada contends that LAMP-US made allegedly false and misleading statements about the affiliation between LAMP-US and LAMP-Canada in various documents: (1) LAMP-US's June 7, 2000, letter to donors; (2) LAMP-US's November 14, 2000, letter to donors; (3) LAMP-US's January 2005 appeal letter to donors; and (4) other letters by LAMP-US that fail to specifically reference LAMP-US's Canadian ministry, My People International ("MPI"). LAMP-Canada also contends that other letters sent by LAMP-US "cast LAMP-Canada in a negative light" and are therefore false and misleading.

a. June 7, 2000 letter

LAMP-US sent a letter to donors shortly after the disaffiliation. This letter first informed donors of the split between the two entities, suggested that the two entities "may be working together on joint projects," and indicated that the two entities "will now operate on a fully independent basis." (Jan. 7, 2005, Ross Aff. Ex. B.) It also iterated the vision of LAMP-US, and explained that LAMP-US intended to "continue to expand ministry partnerships in both Canada and Alaska." (Id.) LAMP-Canada claims that these statements are false and misleading because the two entities always operated on an independent basis, LAMP-US had no Canadian ministry at the time of the disaffiliation, and there was no plan for the entities to participate on joint projects.

Examining this letter in its entirety, the Court finds that the statements in the letter are not false and misleading as a matter of law. Indeed, the letter explains the events from LAMP-US's point of view, but the statements made are not "capable of being proved false or of being reasonably interpreted as a statement of objective fact." See Am. Italian Pasta Co., 371 F.3d at 391. Instead, these statements are reflective of LAMP-US's opinion of the circumstances surrounding the disaffiliation and its intentions to operate in the future and therefore not actionable.See id.

b. November 2000 letter to donors

The November 2000 letter to donors states that donor "gifts will continue to support our ministry of proclaiming the Gospel in Canada, Alaska and the Olympic Peninsula in Washington." (Jan. 7, 2005, Ross Aff. Ex. C.) It further states that "LAMP-US's ministry staff in Canada . . . have embraced and affirmed the vision for ministry set forth by LAMP U.S.," and that "[y]ou can be sure there is no change in our mission or vision." (Id.) LAMP-Canada contends that these statements are false and misleading because LAMP-US fails to mention its Canadian counterpart, MPI. Although the letter does not specifically reference MPI, the letter distinguishes between LAMP-Canada and LAMP-US, focusing on LAMP-US and its programs.

Again, LAMP-Canada's arguments are unpersuasive. Although LAMP-US does not specifically reference its Canadian partner, the letter nonetheless differentiates between LAMP-US and LAMP-Canada. The letter also discusses a recent mailing sent out by LAMP-Canada. The Court finds that these statements reflect the subjective beliefs of LAMP-US, and are statements of future acts. Because the statements are not assertions of objective fact, LAMP-Canada's arguments relating to the November 2000 letter fail.

c. January 2005 letter

LAMP-US sent an appeal letter to donors in January 2005. This letter again references LAMP-US's Canadian ministry, without mention of MPI. However, the attachment sent with the letter does reference MPI and MPI's leader. (Feb. 7, 2005, Sautter Decl. Ex. 13.) As LAMP-US suggests, LAMP-Canada is going "to great lengths to interpret everything LAMP-US says as an elaborately coded reference to LAMP-Canada." (LAMP-US Mem. in Opp'n at 7.) Again, LAMP-US's failure to mention MPI is not a false or misleading statement as a matter of law.

d. Other letters

LAMP-Canada also argues that other letters and materials sent to donors are false and misleading because they also fail to reference MPI. LAMP-Canada contends that failing to mention MPI causes donors to believe that they are supporting LAMP-Canada rather than LAMP-US. Again, this argument merely recites LAMP-Canada's point of view, and does not identify an actionable false or misleading statement of fact.

Furthermore, although the Court found that LAMP-US's use of the disputed marks constituted infringement, the Court did not rely on any alleged statements made by LAMP-US to find likelihood of confusion. Rather, because LAMP-US was a former licensee using the marks, likelihood of confusion existed. See Northwest Airlines, Inc. v. NWA Fed. Credit Union, File No. 03-3625, 2004 WL 1968662, at *6 (D. Minn. Sept. 2, 2004) (Frank, J.). Thus, any argument by LAMP-Canada that its claim for false and misleading statements succeeds merely because it prevailed on its trademark infringement claim is unavailing.

e. Disparaging Statements

Finally, LAMP-Canada contends that other disparaging statements made by LAMP-US give rise to liability under the Lanham Act. In particular, LAMP-Canada contends that LAMP-US made statements: (1) informing donors that LAMP-Canada misrepresented the facts; (2) questioning LAMP-Canada's ability to fund-raise under the guidelines of the Lutheran Church; (3) accusing LAMP-Canada of frequent, confusing, and unnecessary mailings; and (4) questioning LAMP-Canada's faith in the Lutheran mission.

The Lanham Act requires that the statements be "specific and measurable , capable of being proved false or of being reasonably interpreted as a statement of objective fact." Am. Italian Pasta Co., 371 F.3d at 391. Although these statements may favorably portray LAMP-US over LAMP-Canada, these statements do not "suggest a benchmark by which the veracity of [LAMP-US's] statement can be verified." See id. at 392. Rather, these purported statements reflect LAMP-US's opinion of LAMP-Canada's operations. Thus, these statements do not give rise to liability under the Lanham Act.

f. Conclusion

LAMP-Canada has failed to show that any statements are false or misleading. In addition, LAMP-Canada has presented insufficient evidence to support that these statements were material. Accordingly, LAMP-Canada's claim for false and misleading statements under the Lanham Act fails.

2. Unfair Competition, 11 U.S.C. § 1125(a) and common law

LAMP-Canada also contends that LAMP-US's use of the marks constitute unfair competition under the Lanham Act and Minnesota common law. LAMP-Canada's claim for unfair competition under § 1125(a)(1)(A) requires LAMP-Canada to prove that the marks are distinctive and thus protectable, and that LAMP-US's use of the marks caused a likelihood of confusion among donors. See 15 U.S.C. § 1125(a)(1)(A); see also Birthright v. Birthright, Inc., 827 F. Supp. 1114, 1136 (D.N.J. 1993). "Trademark infringement is but a part of the broader law of unfair competition, and facts supporting a suit for infringement and one for unfair competition are substantially identical." Heaton Distrib. Co. v. Union Tank Car Co., 387 F.2d 477, 483 (8th Cir. 1967). The Court has already determined that LAMP-US's unauthorized use of the marks amounted to trademark infringement, and thus this use also amounts to unfair competition under the Lanham Act, 15 U.S.C. § 1125(a).

Although a claim for common law unfair competition parallels a claim for unfair competition under the Lanham Act, Minnesota common law requires LAMP-Canada to prove that it suffered actual injury from LAMP-US's unauthorized use of the marks. See Multi-Tech Sys., Inc. v. Hayes Microcomputer Prods. Inc., 800 F. Supp. 825, 848 (D. Minn. 1992) (Doty, J.); see also LensCrafters, Inc. v. Vision World, Inc., 943 F. Supp. 1481, 1490-91 (D. Minn. 1996) (Davis, J.). As the Court notes below, this is precisely the issue that remains for trial and LAMP-Canada bears the burden to prove this actual injury. Therefore, a genuine issue of material fact remains on LAMP-Canada's claim for unfair competition under Minnesota common law.

3. Minnesota DTPA: Disparagement

As noted above, LAMP-Canada contends that LAMP-US made various disparaging statements. LAMP-Canada contends that these statements violate the Minnesota DTPA, Minn. Stat. § 325D.44. The statute imposes liability if a person "disparages the goods, services or business of another by false or misleading representation of fact." Minn. Stat. § 325D.44(8); see Multi-Tech Sys., 800 F. Supp. at 847 (Minnesota DTPA mirrors claim for false and misleading statements under Lanham Act). LAMP-Canada cannot overcome the fact that the purported disparaging statements are subjective, taken out of context, and reflect LAMP-US's point of view. Therefore, this claim also fails.²

2 Because this claim fails, LAMP-Canada's claim for attorneys' fees under the Minnesota DTPA also fails.

However, as a result of the supplemental briefing, the parties have agreed that injunctive relief is necessary to prevent any future potential disparagement by either entity. The Court therefore orders the parties to stipulate to an injunction that the Court may enter accordingly.

4. LAMP-Canada's Damages for Infringement and Unfair Competition

On its claims for trademark infringement and unfair competition, LAMP-Canada seeks: (1) actual damages, (2) an accounting of profits, and (3) costs of the litigation. See 15 U.S.C. § 1117(a).

a. Actual Damages

In its November 2004 Order, the Court concluded that LAMP-Canada had demonstrated a likelihood of confusion sufficient to warrant injunctive relief. However, the Court did not address whether LAMP-Canada had presented evidence of actual confusion. Under the Lanham Act, an award of actual damages depends on the existence of actual confusion. See Co-Rect Prods. Inc. v. Marvy! Adver., 780 F.2d 1324, 1330 (8th Cir. 1985). LAMP-Canada maintains that it has submitted sufficient evidence of actual confusion. LAMP-US objects to this evidence on various grounds, and requests that the Court not consider the evidence.

LAMP-Canada contends that the statements and declarations of thirteen witnesses demonstrate the existence of actual confusion: (1) Dean Wachholz; (2) Dan Karlin; (3) Kent Kaiser; (4) Jeanne Johnson; (5) Pat Reck; (6) Timothy Heupel; (7) Ron Ludke; (8) Darrel Buchholtz; (9) Bob Graham; (10) Walter Heinz; (11) Jacqueline Ingalls; (12) Sherrie Marsh; and (13) Barbara Ross. Most of these witnesses were disclosed for the first time in December 2004 or January 2005. On January 12, 2005, LAMP-Canada amended its Rule 26(a) disclosures to include these witnesses as well as ten new potential witnesses.

LAMP-US first argues that these witness declarations are untimely. Indeed, these disclosures are beyond the discovery deadline date. The evidence also suggests that LAMP-Canada was aware of at least six of these witnesses prior to the close of discovery. Although the Court acknowledges the untimeliness of these witnesses, the Court finds that LAMP-US is not prejudiced by this delay. Further, the Court will permit LAMP-US to examine the witnesses included in LAMP-Canada's January 12, 2005, supplemental disclosures. Therefore, LAMP-US's request on this point is denied.

LAMP-US also argues that these declarations are inadmissible because they lack foundation or are patently false. In addition, LAMP-US contends that some of the declarations are hearsay because each witness claims that he or she knew people who inadvertently gave money to LAMP-US. Indeed, three of these declarations ambiguously claim that confusion exists among donors. (See Reck Decl.; Kaiser Decl.; Johnson Decl.) Further, although one declarant states that he was unaware of the split between the two entities, he does not claim that he was actually confused to his detriment. (See Wachholz Decl.) Additionally, Bob Graham attests that he was confused and unaware of the split until 2002, and inadvertently donated money to LAMP-US when he intended to contribute to LAMP-Canada. (See Graham Decl. ¶¶ 6, 8.) Yet, LAMP-US points to a letter written by Graham in November 2000, to both LAMP-US and LAMP-Canada, that commented that he "was shocked and disappointed to see LAMP split into two organizations." (Feb. 7, 2005, Flaa Decl. Ex. 1.) Finally, although some of the declarants claim to have personally contributed to LAMP-US when they intended to contribute to LAMP-Canada, LAMP-US has no record of donations by those individuals. (See id. ¶ 5.)

On the other hand, Timothy Heupel, a Lutheran pastor, attests that his congregation inadvertently sent donations to LAMP-US, when it intended to send donations to LAMP-Canada. (Heupel Decl. ¶ 5.) Heupel claims that he has known of LAMP for twenty-six years, but was unaware of the split between the two organizations. (Id. ¶ 2.) He also averred that he had no reason to believe that the solicitation materials that the congregation received following the split, which included the marks, would not support LAMP-Canada. (Id. ¶¶ 4-5.) Thus, Heupel declares that donations from his congregation have been inadvertently sent to LAMP-US, despite their intent to support LAMP-Canada. (Id. ¶ 5.) Another donor, Walter Heinz, also declares that he was personally confused and that he also accidentally donated money to LAMP-US despite his intent to contribute to LAMP-Canada. (See Heinz Decl.) In fact, LAMP-US records indicate that Mr. Heinz has donated $270 since the disaffiliation. (Feb. 7, 2005, Flaa Decl. ¶ 8.) Although scant, this evidence suggests the existence of actual confusion. LAMP-Canada also points to other evidence to support its claim that actual confusion exists. LAMP-Canada has received letters from donors (1) requesting to be removed from LAMP-Canada's mailing list, (2) requesting more information about the organizations, and (3) accusing LAMP-Canada of "impersonat[ing]" LAMP-US and "dup[ing]" donors into giving money. (See e.g., Dec. 10, 2004, Rosenberg Decl. Exs. 17, 19, 32, 34, 35.) Although LAMP-US claims that this evidence demonstrates that donors were not confused because they were aware that two organizations existed, this evidence nevertheless has a propensity to show that LAMP-US's use of the marks confused donors about the disaffiliation, the circumstances surrounding the disaffiliation, and the resulting difference between the two organizations. LAMP-US argues that there can be no actual confusion because it distributed materials that referenced the disaffiliation and the separateness of the two organizations. However, the underlying issue is whether donors were confused as to the source of the charitable solicitations because of LAMP-US's use of the marks. The evidence presented creates a genuine issue of material fact on that very issue. Thus, although the Court notes that LAMP-Canada presents evidence that is both weak and nominal, the Court finds that a genuine issue of material fact remains on whether donors were actually confused as a result of LAMP-US's unauthorized use of the marks.

LAMP-Canada also bears the burden to prove causation — that is, that its actual damages were the result of LAMP-US's unauthorized use of the marks and unfair competition. "Damages recoverable may include all elements of injury to the business of the trademark owner proximately resulting from the infringer's wrongful acts," which may include lost profits or lost sales, loss of goodwill, and cost of corrective advertising. See Obear-Nester Glass Co. v. United Drug Co., 149 F.2d 671, 674 (8th Cir. 1945). LAMP-Canada has presented some evidence of damages and causation as it pertains to LAMP-US's unauthorized use of the marks. Thus, although LAMP-Canada has a difficult burden to prove damages, LAMP-Canada has presented sufficient evidence to survive summary judgment.

However, the Court reminds LAMP-Canada that it is only entitled to seek the recovery of damages attributable to LAMP-US's infringement and unfair competition. LAMP-Canada may not seek recovery of damages attributable to the breakdown of the joint venture or for any alleged breach of the Statement of Relationship.³

3 At oral argument, LAMP-Canada proposed, for the first time, that it was entitled to seek damages for LAMP-US's breach of the implied license to use the marks. However, in its November 2004 Order, the Court determined that LAMP-Canada had revoked LAMP-US's implied license to use the marks, and therefore LAMP-US's continued use of the marks amounted to trademark infringement. Thus, LAMP-Canada's claim that LAMP-US breached its implied license runs contrary to this Court's finding that LAMP-US is liable for trademark infringement. LAMP-Canada's recovery, if any, is limited to whether it can prove damages for LAMP-US's trademark infringement and unfair competition.

b. Accounting of Profits

The parties dispute what evidence is necessary to award an accounting of profits. The Eighth Circuit has explained:

If a registered owner proves willful, deliberate infringement or deception, an accounting of profits may be based upon (1) unjust enrichment, (2) damages, or (3) deterrence of a willful infringer. However, § 35(a) of the Lanham Act does not permit the award of monetary relief as a penalty. Moreover, because the Act is grounded in equity and bars punitive remedies, an accounting will be denied in a trademark infringement action where an injunction will satisfy the equities of the case. Minn. Pet Breeders, Inc. v. Schell Kampeter, Inc., 41 F.3d 1242, 1247 (8th Cir. 1994) (internal citations and quotations omitted). Thus, an award of profits requires LAMP-Canada to prove "willful, deliberate infringement or deception." Id.; see also Minn. Specialty Crops, Inc. v. Minn. Wild Hockey Club, LP, File No. 00-2317, 2002 WL 1763999, * 9 (D. Minn. July 26, 2002) (Tunheim, J.). An accounting of profits should be limited to cases involving bad faith. See Restatement (Third) of Unfair Competition § 37 cmts. e, f. Moreover, an accounting of profits is an equitable remedy, "subject to a balancing of the relative equities of the plaintiff, the defendant, and the public." See id. cmt. f. Thus, even if bad faith exists, the court should "consider whether the equities require additional monetary relief for willful infringement." Minn. Pet Breeders, Inc., 41 F.3d at 1247.

LAMP-Canada has not presented any concrete evidence of willfulness or deception. Rather, LAMP-US continued to use the marks, with the good faith belief that it had a lawful right to use them. Indeed, the decision regarding the ownership of the marks required a close examination of the law. Without evidence of bad faith, LAMP-Canada cannot sustain its claim for an accounting of profits. Even though LAMP-Canada contends that the 1999 amendments of the Lanham Act sought to eliminate the willfulness requirement, Minnesota Specialty Crops, Inc. was decided after the 1999 amendments and in light of Eighth Circuit law. LAMP-Canada's reliance on Birthright is also inapposite, because the defendants in that case were undoubtedly aware that their right to the marks had been revoked. See 827 F. Supp. at 1131, 1134. Thus, because there is no evidence of willfulness or bad faith, LAMP-Canada is not entitled to an accounting of profits.

Furthermore, even if a genuine issue of material fact existed on the issue of willfulness and bad faith, the decision to award profits is within the equitable powers of the Court. See e.g., 15 U.S.C. § 1117(a); Sweetarts v. Sunline, Inc. 436 F.2d 705, 711 (8th Cir. 1971) ("an accounting for profits is a form of equitable relief and does not follow as a matter of course upon the mere showing of trademark infringement"); see also Ford Motor Co. v. BH Supply, Inc., 646 F. Supp. 975, 998 (D. Minn. 1986) (Magnuson, J.) ("[u]nder this section, the district court is given a great deal of discretion in fashioning the appropriate monetary remedy necessary to serve the interests of justice"). Thus, even if a genuine issue of fact existed on the issue of willfulness and bad faith, the Court nonetheless has the equitable power to decline to award an accounting of profits. For these reasons, the Court finds that an accounting of profits is inappropriate and denies LAMP-Canada's request on this point.⁴ See also Champion Spark Plug Co. v. Sanders, 331 U.S. 125, 131 (1947) (injunction satisfied equities of the case).

4 This finding does not preclude LAMP-Canada from using LAMP-US's profits in an effort to prove actual damages for infringement and unfair competition.

c. Costs

Under the Lanham Act, the Court may award reasonable attorneys' fees in "exceptional cases." 15 U.S.C. § 1117(b). Fees are typically awarded only in cases of deliberate infringement or when the prosecution of the claim is in bad faith, although this is not required. See Restatement of Unfair Competition § 36 cmt. o; see also Hartman v. Hallmark Cards, Inc., 833 F.2d 117, 123-24 (8th Cir. 1987) (reviewing under an abuse of discretion standard and stating that bad faith is not a prerequisite to an award of fees and costs). As the Birthright court noted, "[w]here a defendant's trademark violation occurs in a non-profit, noncommercial context, the equities favor a denial of an award of attorneys' fees." 827 F. Supp. at 1144. The Court finds the analysis in Birthright persuasive, and concludes that the equities in this case favor a denial of an award of attorneys' fees and costs.

5. Conclusion

The Court has found LAMP-US liable for trademark infringement, and therefore, finds LAMP-US liable for unfair competition under the Lanham Act. However, LAMP-US's liability for unfair competition under Minnesota common law depends on whether LAMP-Canada can prove actual injury from LAMP-US's unauthorized use of the marks. Thus, LAMP-Canada is entitled to present at trial actual confusion and actual damages for LAMP-US's trademark infringement and unfair competition under the Lanham Act.

B. LAMP-US Claims

LAMP-US has five counterclaims: (1) misappropriation of trade secrets under Minn. Stat. § 325C.01 et seq.; (2) tortious interference with prospective business advantage; (3) conversion; (4) dissolution, liquidation, accounting, and distribution of joint venture assets; and (5) unjust enrichment. These claims depend on ownership of the United States and Canadian donor lists, as well as an investment fund located in Canada.

1. Joint Venture Property

In its November 2004 Order, the Court concluded that the two entities operated a joint venture, but that LAMP-Canada owned the disputed marks prior to the joint venture and that LAMP-Canada did not assign these marks to the joint venture. It also found that LAMP-US used these marks pursuant to an implied license. Although the Court noted that the Statement of Relationship was silent on the issue of joint venture property, the absence of evidence demonstrating LAMP-Canada's intent to transfer or assign the marks to the joint venture compelled the conclusion that the marks were not joint venture property. The Court's ruling did not conclusively apply to any other aspect of joint venture property.

At issue now is whether any joint venture property existed. Again, because the Statement of Relationship is silent on the issue of joint venture property, the Court must look to extrinsic evidence to determine the parties' intent at the time they executed the Statement of Relationship. Ultimately, the Court must evaluate whether the parties intended to create joint venture property. In particular, the Court must determine the ownership of the donor lists used by LAMP-Canada and LAMP-US and ownership of an investment fund located in Canada.⁵

5 The parties only address ownership of the United States donor list, the Canadian donor list, and a purported investment fund located in Canada. Therefore, this Order narrowly applies to those assets.

As a threshold matter, the Court notes that LAMP-US claims no right to LAMP-Canada's donor list. (LAMP-US Mem. in Supp. of Summ. J. at 22.) Therefore, the Court finds that LAMP-Canada owns the Canadian donor list.

a. Donor Lists

From the 1970s until 1985, LAMP-Canada⁶ solicited donations both in Canada and the United States. In 1985, LAMP decided to incorporate a United States based affiliate to assist in its solicitation of donations in the United States. As part of this incorporation, LAMP-Canada provided LAMP-US with its list of donors living in the United States. This list, with its 4,471 donors, formed the foundation for the donor list that presently exists. As a joint ministry, both LAMP-US and LAMP-Canada solicited donations from United States donors from 1985 to 2000. Both LAMP-US and LAMP-Canada had access to the donor list. All solicitations contained the "LAMP" acronym and airplane graphic logo, and failed to differentiate between LAMP-US and LAMP-Canada. Indeed, all solicitations sought to further the single joint mission. Both parties contributed to and prepared solicitation materials. Furthermore, the evidence indicates that although LAMP-Canada used the list, it relinquished its control over the list to the joint ministry. These facts indicate that the United States donor list was thus the property of the joint venture.

6 The Court acknowledges that only one LAMP existed at this time. However, for consistency purposes, the Court will refer to the organization that predates the joint venture as "LAMP-Canada."

However, the record also indicates that LAMP-US may own the United States donor list. The parties' joint venture is governed by an ambiguous Statement of Relationship, which is silent on the issue of joint venture property. The Statement of Relationship requires that each organization independently account for and control the disposition of the donations it receives. Thus, regardless of whether LAMP-US or LAMP-Canada actually solicited a particular donation, all donations were "deposited, receipted and acknowledged" by LAMP-US. In accord with the Statement of Relationship and United States law, LAMP-US retained all discretion and physical control over donations received from donors on the United States donor list. Furthermore, the evidence indicates that LAMP-US is largely responsible for increasing the amount of United States donors. At the time the joint ministry was formed, there were 4,471 group and individual donors on the United States donor list. (Jan. 7, 2005 Flaa Decl. ¶ 6.) Of these original 4,471 donors, only 590 of these donors have contributed to LAMP-US since June 1, 2003. Nevertheless, the current United States donor list contains 54,336 names.⁷ (Id. ¶ 7.) LAMP-US has presented evidence that its affirmative efforts have resulted in significant increases in the amount of donors. (See id. ¶ 10, Ex. 1.) Moreover, LAMP-Canada refrained from using the United States donor list for over a two-year period following the disaffiliation, implying that LAMP-US owned the donor list.

7 Since the disaffiliation in 2000, LAMP-US has added 9,697 new donors. (Jan. 7, 2005 Flaa Decl. ¶ 7.)

Viewing this evidence in its entirety, the Court finds that a genuine issue of material fact exists as to the ownership of the United States donor list. Specifically, the Court finds that a genuine issue of material fact exists as to ownership of the list during the years of the joint ministry. Therefore, both LAMP-US and LAMP-Canada's Motions are denied on this point.

b. Investment Fund

LAMP-US contends that it contributed nearly $1 million in investment funds that it is entitled to recover. In 1997 and 1998, LAMP-US allegedly sent funds to Canada in order to take advantage of better exchange rates. LAMP-Canada's financial statements demonstrate that it opened an investment account in 1998, with a balance of approximately $1.135 million. LAMP-US seeks to recover these funds. LAMP-Canada contends that it owns over 90% of these funds as a result of Canadian donations or donations made before LAMP-US was incorporated. The parties have created a genuine issue of material fact, and the issue of ownership of this investment fund remains for trial.

2. Misappropriation of Trade Secrets, Minn. Stat. § 325C.01 et seq.

LAMP-US claims that LAMP-Canada improperly used the United States donor list following the disaffiliation in 2000. "[A] trade secret is information that: (1) is not generally known or readily ascertainable, (2) has value as a result of its secrecy, and (3) is the subject of reasonable efforts under the circumstances to protect its secrecy." Wyeth v. Natural Biologics, Inc., 395 F.3d 897, 899 (8th Cir. 2005); see also Minn. Stat. § 325C.01, subd. 5. Misappropriation of a trade secret arises if a party acquires the trade secret through improper means, or if a party wrongfully discloses or uses the trade secret. See Minn. Stat. § 325C.01, subds. 2-3; see also Wyeth, 395 F.3d at 900. An action for misappropriation of a trade secret must be brought "within three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered." Minn. Stat. § 325C.06.

The Court notes that the viability of this claim depends on who owns the United States donor list. If LAMP-US is not the owner of the United States donor list, then this claim must be dismissed.See e.g., Surgidev Corp. v. Eye Tech., Inc., 648 F. Supp. 661, 680 (D. Minn. 1986) (citing Milgrim on Trade Secrets). In an effort to consolidate the issues for trial, the Court will assume for purposes of this Motion that LAMP-US owns the United States donor list and analyze the legality of this claim.

a. Statute of Limitations

LAMP-Canada contends that this claim is barred by the three-year statute of limitations because LAMP-US first discovered the purported misappropriation on November 4, 2000, but did not file its counterclaims until December 26, 2003. LAMP-US contends that even though the first purported misappropriation occurred in October 2000, the more recent misappropriation in April 2003 permitted the statute of limitations to run anew.

At issue is when LAMP-US's claim accrued. Under the terms of the statute, the claim accrues either when the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered. See Minn. Stat. § 325C.06. In November 2000, LAMP-US promptly notified LAMP-Canada that it was aware that LAMP-Canada had sent a mailing to the United States donor list in October 2000. Thus, a claim for misappropriation accrued at that time. However, the record demonstrates that LAMP-Canada stopped using the list in response to LAMP-US's objection, and that LAMP-Canada did not again use the United States donor list until two and one-half years later, in April 2003. Hence, the issue is whether the April 2003 incident triggers a new statute of limitations period, or whether the October 2000 incident is the trigger date for statute of limitations purposes.

There is conflicting authority among jurisdictions on this issue. The issue focuses on the theory of a continuing tort, and whether a particular jurisdiction views the theoretical basis for legal protection of trade secrets as one of property or one of a confidential relationship. See e.g., Amalgamated Indus., Ltd. v. Tressa, Inc., 69 Fed. Appx. 225, 260-61, 2003 WL 21397898 (6th Cir. June 13, 2003). As that court explained:

Under the property view, each unauthorized use of a trade secret by the misappropriator is a separate claim, representing the continuing tort of misappropriating the intellectual property of another, and the statute of limitations runs on each new act of misuse anew. Under the confidential relationship view, the first discovered (or discoverable) misappropriation of a trade secret commences the limitation period, placing the focus instead on the breach of the relationship between the parties at the time the secret is disclosed.

Id. As noted, jurisdictions view the law of trade secrets differently. See Monolith Portland Midwest Co. v. Kaiser Aluminum Chem. Corp., 407 F.2d 288, 293 (9th Cir. 1969) ("The fabric of the relationship once rent is not torn anew with each added use or disclosure . . . [t]he cause of action arises but once, and recovery for the wrong is barred . . . unless the statute has been effectively tolled"); Underwater Storage, Inc. v. United States Rubber Co., 371 F.2d 950, 955 (D.C. Cir. 1966) (under general legal principles and policy considerations, "a cause of action for each invasion of the plaintiff's interest arose at the time of that invasion and that the applicable statute of limitations ran from that time and not from the time of the first invasion"); see also Cadence Design Sys., Inc. v. Avant! Corp., 57 P.3d 647, 650 (Cal. 2002) ("the continuing use or disclosure of a trade secret after that secret was acquired by improper means" is a continuing misappropriation, and therefore a single claim for statute of limitations purposes).⁸ Undoubtedly, LAMP-US's claim for misappropriation would be barred under the confidential relationship view yet permitted under the property view of trade secrets.

8 The Court notes that California's misappropriation statute bears strong resemblance to Minnesota's misappropriation statute. Unlike California, however, Minnesota has not adopted the Uniform Trade Secrets Act ("UTSA") and therefore the Court is not bound to apply the law in accordance with UTSA. See Glue-Fold, Inc. v. Slautterback Corp., 98 Cal. Rptr. 2d 661, 664 (Cal.App.Ct. 2000) (determining that because California adopted the Uniform Act "without significant change," it is "appropriate to accord substantial weight to the Commissioners' comment[s]" and to apply the act uniformly). Furthermore, California's trade secret law is designed to protect the confidential relationship of the trade secret, whereas Minnesota law provides protection for both the confidential relationship and the property interest of the trade secret. See Jostens, Inc. v. Nat'l Computer Sys., Inc., 318 N.W.2d 691, 701 (Minn. 1982).

Minnesota courts have not addressed this issue. However, the Minnesota Supreme Court has expressed that the misappropriation of trade secrets is not just an issue of confidentiality. Although "the gist" of a misappropriation claim is the breach of the confidential relationship, "the property view underlies protection of trade secret decisions and is, in fact, the keystone upon which the protection body of case law rests."Jostens, Inc., 318 N.W.2d at 701 n. 6. Thus, under Minnesota law, both the confidential relationship view and the property view "overlap," and "should not be artificially separated for purposes of analysis since, in a significant sense, they are interdependent." Id. (quoting Milgrim on Trade Secrets).

Indeed, this case presents a unique scenario because LAMP-US has alleged breach of both the confidential relationship and the property interest of the United States donor list. Furthermore, this case does not involve the disclosure of secret information, but rather allegedly involves the use of such information for pecuniary gain. Because Minnesota law protects both the confidentiality and the proprietary nature of a trade secret, the Court finds that Minnesota courts would hold that the statute of limitations commences to run anew with each wrongful use of the trade secret. Therefore, the effect of the statute of limitations does not bar LAMP-US's claim for LAMP-Canada's alleged misappropriation of the United States donor list in April 2003.

b. Merits

Assuming that LAMP-US owns the United States donor list, LAMP-US must prove that the United States donor list is both a trade secret and that LAMP-Canada misappropriated that trade secret. See Minn. Stat. § 325C.01. There is no dispute that the United States donor list is a trade secret.⁹ Thus, the issue is whether LAMP-Canada misappropriated the trade secret. Misappropriation arises if a party acquires the trade secret through improper means, which includes theft, bribery, and misrepresentation.See Minn. Stat. § 325C.01, subd. 2. Misappropriation also arises if a party discloses or uses the trade secret in violation of the owner's rights. See id. subd. 3. LAMP-US does not contend that LAMP-Canada acquired the United States donor list through improper means. Rather, LAMP-US asserts that LAMP-Canada used the United States donor list without LAMP-US's authorization, and that LAMP-Canada "knew or had reason to know that its 15-year cooperative relationship with LAMP-US gave rise to a duty to maintain the secrecy of LAMP-US's donor list and to not use or otherwise disclose the list." (2d Am. Countercl. ¶ 29.)

9 LAMP-Canada appears to assert that the United States donor list is not a trade secret because the United States donor list has been shared in a donor list exchange. (LAMP-Canada Opening Br. at 26 n. 7.) However, LAMP-Canada cites no authority to support this proposition. Indeed, donor list exchanges do not destroy the economic value of the donor list, but rather contribute to its value. Further, donor list exchanges are the product of contractual relationships that impose confidentiality obligations, and therefore trade secret status is not destroyed.See e.g., Picker Int'l Corp. v. Imaging Equip. Servs., Inc., 931 F. Supp. 18, 42 (D. Mass. 1995) (discussing cases).

The evidence demonstrates that LAMP-US immediately asserted its ownership rights in the United States donor list following the disaffiliation, and that despite these assertions, LAMP-Canada continued to use the United States donor list to solicit donations. On November 4, 2000, LAMP-US sent a cease and desist letter to LAMP-Canada. (Jan. 7, 2005 Sautter Decl. Ex. 30.) On November 10, 2000, LAMP-Canada responded and informed LAMP-US that it had "no plans for solicitation in the near future." (Id. Ex. 29.) LAMP-Canada did not use the United States donor list again until April 2003. In May 2003, LAMP-US again requested that LAMP-Canada "cease and desist from any use of LAMP US's proprietary donor list." (Id. Ex. 42.) Despite these requests, LAMP-US argues that LAMP-Canada has continued to use the United States donor list.

Because a genuine issue of material fact exists as to LAMP-Canada's ownership rights with respect to the United States donor list, a genuine issue of material facts remains on whether LAMP-Canada knew or otherwise should have known that it should not have used the United States donor list at the time of the alleged misappropriation. Thus, two issues remain for trial on this claim: who owns the United States donor list and, if LAMP-US prevails as the rightful owner of the United States donor list, whether LAMP-Canada misappropriated the list under Minn. Stat. § 325C.01.

4. Conversion and Tortious Interference with Prospective Business Advantage

The Minnesota Uniform Trade Secrets Act ("MUTSA") states that it "displace[s] conflicting tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a trade secret." Minn. Stat. § 325C.07(a). It further provides, however, that it does not affect contractual remedies or other civil remedies not based on misappropriation of a trade secret.Id. § 325C.07(b). LAMP-US contends that its counterclaims for conversion and tortious interference with prospective business advantage are not displaced by the MUTSA. LAMP-Canada asserts otherwise, and also argues that to the extent that LAMP-US's claims are based on LAMP-Canada's use of the marks, they must be dismissed.

The displacement provision of the MUTSA has been interpreted to allow plaintiffs to maintain separate causes of action "to the extent that the causes of action have `more' to their factual allegations that the mere misuse or misappropriation of trade secrets." SL Montevideo Tech., Inc. v. Eaton Aerospace, LLC, 292 F. Supp. 2d 1173, 1179 (D. Minn. 2003) (Kyle, J.) (quotingMicro Display Sys. Inc. v. Axtel, Inc., 699 F. Supp. 202, 205 (D. Minn. 1988) (Alsop, J.)). LAMP-US's counterclaim for conversion does not contain "more" to its factual allegation than misuse or misappropriation of the United States donor list. LAMP-US's counterclaim for conversion alleges that despite LAMP-US's "reasonable efforts to maintain the secrecy of the donor list . . . Plaintiff continues to use the donor list . . . without LAMP-US's permission and in complete disregard of LAMP-US's demands." (2d Am. Countercl. ¶¶ 53, 55.) Because LAMP-US's conversion claim is nothing more than its claim for misappropriation of trade secrets, it is dismissed. See SL Montevideo Tech., 292 F. Supp. 2d at 1179.

Furthermore, LAMP-US's claim for tortious interference is premised on LAMP-Canada's allegedly unlawful use of the marks, and since the Court has already determined that LAMP-Canada owns the marks, this claim must also fail as a matter of law.

5. Dissolution, Liquidation, Accounting and Distribution of Joint Venture Assets and Unjust Enrichment

LAMP-US also brings a claim in equity for dissolution of joint venture assets, and alternatively a claim for unjust enrichment. LAMP-US asserts that if the Court finds that joint venture assets existed, then the joint venture must be dissolved in equity. LAMP-US alternatively contends that if there are no joint venture assets, then it is at least entitled to recover some of the assets under the theory of unjust enrichment.

The Court has already determined that LAMP-Canada and LAMP-US formed a joint venture, and that this joint venture dissolved when the two entities disaffiliated. Under Wisconsin law, joint ventures, like partnerships, are subject to equitable dissolution. Because a genuine issue of fact remains on whether or not the joint venture owned property, the Court finds that it is premature to rule on these claims.

CONCLUSION

LAMP-Canada is entitled to present at trial its claim for actual damages for trademark infringement and unfair competition under the Lanham Act. It is further entitled to present its common law claim for unfair competition. However, the Court finds that LAMP-Canada's remaining claims must be dismissed. A genuine issue of material fact also remains on LAMP-US's claim for misappropriation of trade secrets, but as noted, the viability of this claim depends on ownership of the United States donor list. However, LAMP-US's claims for conversion and tortious interference are dismissed as a matter of law.

The Court further finds that a genuine issue of material fact remains on whether joint venture property existed, and what property, if any, is subject to equitable dissolution. In particular, ownership of the United States donor list and ownership of the investment fund located in Canada are issues that remain for trial. Finally, pursuant to the parties' stipulation, the Court will enter an injunction prohibiting either party from future disparagement.

Accordingly, IT IS HEREBY ORDERED that:

1. Counts III and IX of the Complaint (Clerk Doc. No. 1) are DISMISSED;

2. Counterclaims I, II, III, V, VI, VII and VIII of the Second Amended Counterclaim (Clerk Doc. No. 137) are DISMISSED;

3. Counts I and II and Counterclaim IV REMAIN for trial as set forth in this Order;

4. Trial materials must be submitted by March 28, 2005; and

5. Trial in this matter will begin on Monday, April 4, 2005, at 9:00 a.m.