Opinion
Civ. No. 02-4290 (RHK/RLE)
March 20, 2003
Donald J. Brown, Winthrop Weinstine, P.A., Saint Paul, Minnesota, for Plaintiff.
Robert C. Friday, Law Office of Robert C. Friday, Maple Grove, Minnesota, for Defendants.
MEMORANDUM OPINION AND ORDER
Introduction
This case involves a dispute over who has the right to use the name MINNESOTA STATE ARCHERY ASSOCIATION and the acronym MSAA. Plaintiff Minnesota State Archery Association I, Inc.'s ("MSAA I") was founded in 1938 under the name "Minnesota State Archery Association" and first registered in Minnesota as a non-profit corporation in 1960. Since 1938, Plaintiff has used the marks MINNESOTA STATE ARCHERY ASSOCIATION and MSAA in connection with services pertaining to organized archery. In mid-April 2002, the Minnesota Secretary of State statutorily dissolved Plaintiff, apparently because it failed to file a certificate of renewal. One month later, the Secretary of State reactivated Plaintiff's non-profit registration, albeit under its current name.
Plaintiff's name change stems from the fact that Defendant Stephen H. Helland — a member of the Plaintiff organization for several years — incorporated a for-profit corporation called "Minnesota State Archery Association, Inc." with the Secretary of State within weeks after Plaintiff was statutorily dissolved. Helland also registered the mark "MSAA" with the Secretary of State. Defendant Minnesota State Archery Association, Inc. ("MN Archery") and Helland (collectively, "the Helland Defendants") thereafter immediately demanded that Plaintiff either cease using the marks MINNESOTA STATE ARCHERY ASSOCIATION and MSAA or pay Helland for the ability to use those marks. Plaintiff MSAA I has in turn demanded that the Helland Defendants stop using the marks in connection with services relating to organized archery. When the Helland Defendants failed to comply with Plaintiff's demands, this lawsuit followed.
Before the Court is Plaintiff's Motion for a Preliminary Injunction. MSAA I seeks an order enjoining the Helland Defendants, and any person or entity acting in concert with them, from using the marks in question for any purpose pending further order of the Court. For the reasons set forth below, the Court will grant the motion.
Background
Plaintiff MSAA I is the largest and oldest archery organization in Minnesota, having over 2,000 archer and bow hunter members. (Verified Compl. ¶ 8.) At the time of its founding in 1938, Plaintiff began using the marks MSAA and MINNESOTA STATE ARCHERY ASSOCIATION in connection with services pertaining to organized archery, including but not limited to information, activities, and events. (Id. ¶ 9.) Defendant Helland has been a member of Plaintiff since at least 1997.
On April 17, 2002, the Secretary of State statutorily dissolved the Plaintiff as a registered non-profit corporation. (Id. Ex. A.) Helland learned that Plaintiff had failed to renew its registration with the Minnesota Secretary of State's Office and that the Secretary of State had statutorily dissolved Plaintiff. (Id. ¶ 14.) Thus, on May 16, 2002, Helland registered a "Minnesota State Archery Association, Inc." as a domestic corporation pursuant to Chapter 302A of the Minnesota Statutes. (Business Orgs. Inquiry, Office of the Minnesota Secretary of State, www.sos.state. mn.us.) Within hours of Helland registering "Minnesota State Archery Association, Inc." as a Chapter 302A corporation, James Hemphill of QPA, Inc., sent an e-mail to James Anderson, Plaintiff's president, informing him that "the names `Minnesota State Archery Association' and `MSAA' were incorporated at the offices of the Minnesota Secretary of State and are now totally controlled by Stephen H. Helland." (Verified Compl. Ex. B.) Hemphill's e-mail further directed Anderson "to cease and desist from the use of the above names immediately. Should you desire to negotiate the transfer of these names and corporations back to your organization, Stephen is available at 952-471-7340." (Id.) Plaintiff tried to renew its registration as a non-profit corporation using its original name, the "Minnesota State Archery Association, Inc." (Verified Compl. ¶ 17.) The Secretary of State declined that re-registration, however, on the ground that the Helland Defendants had taken that name the day before. (Id. ¶ 14.) Therefore, Plaintiff submitteda modified name and, on May 17, 2002, the Secretary of State reactivated Plaintiff under the name "Minnesota State Archery Association I, Inc." (Id. ¶ 17 and Ex. A.) The Secretary of State presently lists Plaintiff "Minnesota State Archery Association I, Inc.," as an active, non-profit corporation in good standing, having an original filing date of September 8, 1960. (Verified Compl. Ex. A; Business Orgs. Inquiry, Office of the Minnesota Secretary of State, www.sos.state. mn.us.)
On June 2, 2002, Helland wrote to Anderson and the officers and board of directors of Plaintiff MSAA I indicating that he "can and will contest" Plaintiff's registration as the "Minnesota State Archery Association I, Inc.":
My attorneys and I are comfortable that you will lose this case and you are still without a name for your organization. This is my proposal to you, the officers and directors.
1. I will license the name Minnesota State Archery Association to your new corporate organization for $1000.00 per year for ten years with a financial guarantee.
2. You can purchase out right the name for $10,000.00.
3. Your attorney can draft up the agreement, and you will cover the cost of my attorneys to review the documents.
4. Should this proposal not meet your requirements on this situation, just change your name to a name that is not in conflict with mine.
* * * * *
I intend to use my name and new corporation to form a new organization that is inclusive to all archers, not just the ones that seem to meet some yet undefined criteria established by you and some board members.
This offer is valid until June 15th.
(Verified Compl. Ex. C.) Plaintiff did not purchase the name "Minnesota State Archery Association, Inc.," from Helland. On October 18, 2002, counsel for the Helland Defendants sent a letter to Anderson directing him and his non-profit organization to cease and desist all corporate activity under the name of "Minnesota State Archery Association" on the grounds that the "Minnesota State Archery Association" ceased to exist on April 17, 2002, and the name is now being used by Helland's corporation. This action followed.
The Court refuses to consider the unsigned and un-notarized Affidavit of Robert C. Friday that was attached directly to the Defendants' Memorandum of Law in Opposition to Motion for Preliminary injunction. Furthermore, counsel are cautioned that it is improper to attach either affidavits or exhibits directly to a memorandum of law; they must be filed separately. See, e.g. D. Minn. L.R. 7.1(a)(2)(B) and 7.1(b)(2)(B).
Analysis I. Standard of Decision
Whether preliminary injunctive relief should be granted depends on an evaluation of the following factors: (1) the threat of irreparable harm to the movant; (2) the state of the balance between this harm and the injury that granting the injunctive relief will inflict on other parties litigant; (3) the probability that the movant will succeed on the merits; and (4) the public interest. See Dataphase Sys., Inc. v. C.L. Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981). "When applying the Dataphase factors, as they have come to be called, a court should flexibly weigh the case's particular circumstances to determine whether the balance of equities so favors the movant that justice requires the court to intervene." Hubbard Feeds, Inc. v. Animal Feed Supplement, Inc., 182 F.3d 598, 601 (8th Cir. 1999) (internal quotation marks and citations omitted). The party requesting preliminary injunctive relief bears the "complete burden" of proving all the factors listed above. Gelco Corp. v. Coniston Partners, 811 F.2d 414, 418 (8th Cir. 1987).
The likelihood of success on the merits is not, alone, determinative. SeeDataphase, 640 F.2d at 113. Rather, a court must consider the particular circumstances of each case, remembering that, "[a]t base, the question is whether the balance of equities so favors the movant that justice requires the court to intervene to preserve the status quo until the merits are determined." Id. If the threat of irreparable harm to the movant is slight when compared to the likely injury to the other party, the movant carries a particularly heavy burden of showing a likelihood of success on the merits. See Dataphase, 640 F.2d at 113.
II. Subject Matter Jurisdiction
As a threshold matter, the Helland Defendants have questioned whether this Court has federal question jurisdiction over the Plaintiff's Complaint. "Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action." Fed.R.Civ.P. 12(h)(3). The sole federal claim asserted by Plaintiff is for trademark infringement under the Lanham Act. The Court therefore considers the scope of jurisdiction conferred by section 43(a) of the Lanham Act.
As federal district courts are courts of limited jurisdiction, dismissal for lack of subject matter jurisdiction would be without prejudice to the plaintiff asserting the same claims in state court.
Federal district courts have original jurisdiction over all actions arising under the trademark statutes of Title 15 of the United States Code. 15 U.S.C. § 1121(a); 28 U.S.C. § 1338(a). Plaintiff MSAA I has asserted trademark infringement in violation of section 43(a) of the Lanham Act. That section states as follows:
Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which —
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.15 U.S.C. § 1125(a)(1). Plaintiff MSAA I does not claim that the marks in question — MINNESOTA STATE ARCHERY ASSOCIATION and MSAA — are registered with the United States Patent and Trademark Office. That omission does not, however, defeat the existence of federal question jurisdiction. "[I]t is common ground that § 43(a) protects qualifying unregistered trademarks. . . ." Two Pesos, Inc., v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992); see also Gilbert/Robinson, Inc. v. Carrie Beverage-Missouri, Inc., 989 F.2d 985, 991 (8th Cir. 1993) ("While federal registration triggers certain substantive and procedural rights, the absence of federal registration does not unleash the mark to public use. The Lanham Act protects unregistered marks as does the common law."). To present a justiciable claim under section 43(a) of the Lanham Act, Plaintiff must show a connection to interstate commerce. The Helland Defendants argue that no federal question jurisdiction exists because Plaintiff has not alleged and cannot establish that either Helland or his corporation has used the marks in interstate commerce. The Eighth Circuit long ago flatly rejected such an argument:
By consistent interpretation, jurisdiction under the Lanham Act encompasses intrastate activity that substantially affects interstate commerce. . . . Thus, "in commerce" refers to the impact that infringement has on interstate use of a trademark; it does not mean that an infringer is immune from prosecution under the statute so long as he keeps his infringement entirely within the confines of a state. . . . "A substantial effect on interstate commerce is present when the trademark owner's reputation and good will, built up by use of the mark in interstate commerce, are adversely affected by an intrastate infringement."
Coca-Cola Co. v. Stewart, 621 F.2d 287, 290 (8th Cir. 1980) (emphasis added and internal citations omitted); see also 15 U.S.C. § 1127; Highmark, Inc. v. UPMC Health Plan, Inc., 276 F.3d 160, 165 (3d Cir. 2001) ("Congress's authority under the interstate commerce clause extends even to purely intrastate activity if that activity substantially affects interstate commerce."); Falcon Rice Mill, Inc. v. Community Rice Mill, Inc., 725 F.2d 336, 343 n. 5 (5th Cir. 1984) ("The Lanham Act clearly prohibits infringement, within a single state, of a trademark used in interstate commerce."); Franchised Stores of New York, Inc. v. Winter, 394 F.2d 664, 669 (2nd Cir. 1968) (observing that "federal subject matter jurisdiction has been upheld where an act of infringement though occurring in intrastate commerce has a substantial effect on interstate commerce").
Plaintiff MSAA I is the chartered state affiliate of the National Field Archery Association ("NFAA"), a non-profit corporation dedicated to the practice of archery that is headquartered in Redlands, California. (See www.nfaa-archery. org/about/info.cfm.) MSAA I's membership form gives the applicant an opportunity to join both the state and national organizations. (See www.mnarchery.com/join.html.) MSAA I recently hosted the NFAA Midwest Indoor Sectionals in Hutchinson, Minnesota; thus, archers from the Midwest region came to this state to compete in a tournament sanctioned by the national organization. (See, e.g., www.mnarchery.com/tournaments.html.) Conversely, archers who belong to MSAA I travel to other states to compete in regional and national NFAA tournaments, such as the national tournament held in Las Vegas, Nevada this winter. (Id.) The Grand Forks Herald newspaper in North Dakota reports on archery tournaments sponsored by MSAA I in northwestern Minnesota. (See www.grandforks. com.) Several archery and hunting organizations in the United States and oversees provide links to the MSAA I's website from their own websites. (See, e.g., www.oregonbowhunters.com, www. sportsmanschoice.com, www.capablepartners.org, www.letiralarc.free.fr, and www.huntingbuddy.com.). Indeed, the Minnesota Department of Natural Resources maintains a list of acronyms on its website that identifies "MSAA" as the "Minnesota State Archery Association." (See www.dnr.state.mn.us/aboutdnr/acronyms.hmtl.) From the foregoing, it is evident that MSAA I uses the marks at issue in interstate commerce and has obtained a measure of both national and international name recognition and good will in connection with its activities. Helland's incorporation of a for-profit corporation in Minnesota under the same name, "Minnesota State Archery Association," although an intrastate activity, threatens Plaintiff's good will and name recognition. There is a sufficient nexus to interstate commerce to warrant this Court's exercise of federal question jurisdiction.
The NFAA hosts three National championship tournaments and several "Sectional" indoor and outdoor championships throughout the country. (See www.nfaa-archery.org/about/info.cfm.) The NFAA also operates a liability insurance program for affiliated clubs and state associations. (Id.)
III. Threat of Irreparable Harm
MSAA I contends that the unauthorized use of marks by a competing organization will obviously cause irreparable harm. A presumption of irreparable harm arises upon a showing that there is a likelihood of confusion between the marks at issue. Mutual of Omaha Ins. Co. v. Novak, 836 F.2d 397, 403 (8th Cir. 1987) ("In trademark infringement, it is not necessary for plaintiff to prove actual damage or injury to obtain injunctive relief. Injury is presumed once a likelihood of confusion has been established."); General Mills v. Kellogg Co., 824 F.2d 622, 625 (8th Cir. 1987) ("Since a trademark represents intangible assets such as reputation and goodwill, a showing of irreparable injury can be satisfied if it appears that [plaintiff] can demonstrate a likelihood of consumer confusion."); see also Jews for Jesus v. Brodsky, 993 F. Supp. 282, 311 (D.N.J. 1998) ("lost control of [one's] reputation and goodwill" constitutes irreparable injury). Helland's assertions that he has no intention of "competing" with Plaintiff are belied by the record before the Court. Shortly after incorporating Defendant MN Archery, Helland informed Plaintiff as follows: "I intend to use my name and new corporation to form a new organization that is inclusive to all archers, not just the ones that seem to meet some yet undefined criteria established by you and some board members." (Verified Compl. Ex. C (emphasis added).) Helland has attempted to seize the MSAA acronym and the name "Minnesota State Archery Association," marks that Plaintiff MSAA I has used for years and that are clearly associated with its operations. The Helland Defendants argue that, following Helland's formation of Defendant MN Archery, he has not engaged in any commercial activity under that name, such as advertising or marketing. He has clearly threatened to do so, however. The Helland Defendants' voluntary abstention from activities in commerce does not deprive this Court of the power to afford Plaintiff relief, given their ability to resume allegedly improper behavior at any time. See United States v. W.T. Grant, Co., 345 U.S. 629, 632 (1953); Armstrong v. Fairmont Community Hosp. Assoc., Inc., 659 F. Supp. 1524, 1538 (D.Minn. 1987) (MacLaughlin, J.) ("Voluntary cessation of allegedly illegal conduct does not deprive a court of the power to hear and decide a case, because a defendant is free to engage in the conduct again.")
Internecine squabbles at Plaintiff MSAA I led to Helland's formation of his "for-profit" corporation bearing the name that Plaintiff — the NFAA's Minnesota affiliate — has borne for years. Plaintiff MSAA has established a threat of irreparable harm sufficient to support a preliminary injunction.
IV. Likelihood of Success on the Merits
Plaintiff asserts five causes of action in its Verified Complaint against the Helland Defendants, four of which it presents as the basis for a preliminary injunction: trademark infringement in violation of the Lanham Act, deceptive trade practices in violation of the Minnesota Deceptive Trade Practices Act, unfair competition, and conversion. Plaintiff does not separately analyze each cause of action, but rather asserts that the elements of these claims are "similar and overlapping." The Court will consider the claims separately, beginning with the Lanham Act claim for trademark infringement.
A. Trademark infringement (Section 43(a) of the Lanham Act)
To succeed on the merits of its section 43(a) trademark infringement claim, Plaintiff MSAA I must demonstrate that the Helland Defendants' use of the marks MINNESOTA STATE ARCHERY ASSOCIATION and MSAA will create a likelihood of confusion, deception, or mistake on the part of persons as to an association between Plaintiff and the Helland Defendants. See General Mills, Inc., 824 F.2d at 626. As set forth above, MINNESOTA STATE ARCHERY ASSOCIATION and MSAA are distinctive marks recognized in the relevant consuming market. Furthermore, there is a significant likelihood of confusion in the consuming market arising from the Helland Defendants' planned use of these marks "to form a new organization that is inclusive to all archers." (Verified Compl. Ex. C.)
There is no merit to the Helland Defendants' contention that MSAA I abandoned the use of its marks when it was statutorily dissolved. Plaintiff has presented persuasive evidence that the Minnesota Secretary of State reactivated MSAA I's corporate status retroactive to the date of dissolution; the Minnesota Secretary of State indicates that Plaintiff MSAA I was incorporated in 1960 (not 2002, as the Helland Defendants contend). There is no evidence that MSAA I ever stopped using the marks or intended to stop using them. There is no evidence that Helland, as a member of MSAA I, knew or had reason to know that MSAA I intended to cease operations. In short, nothing in the record supports Helland's assertion that the marks were abandoned. Plaintiff MSAA I has established a significant likelihood of success on the merits of its trademark infringement claim.
B. Deceptive trade practices (Section 325D.44 of the Minnesota Statutes)
The Minnesota Deceptive Trade Practices Act identifies several categories of conduct that constitute "deceptive trade practices":
A person engages in a deceptive trade practice when, in the course of business, vocation, or occupation, the person:
(1) passes off goods or services as those of another;
(2) causes likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services;
(3) causes likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or certification by, another;
* * * * *
(5) represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that the person does not have;
* * * * *
(13) engages in any other conduct which similarly creates a likelihood of confusion or of misunderstanding.
Minn. Stat. § 325.D44, subd. 1; see United Healthcare Ins. Co. v. AdvancePCS, 316 F.3d 737, 742 (8th Cir. 2002). To the extent Plaintiff has established a "likelihood of confusion" in connection with the Lanham Act claim, that showing also applies to its claims under the MDTPA. With respect to subsection (1), the Eighth Circuit has recently concluded that
[p]rior to the MDTPA's enactment, the Supreme Court of Minnesota described "passing off" as conduct that "deceives, or is likely to deceive, a customer exercising ordinary care in the making of a purchase of the particular goods, and induces him to purchase defendant's goods in the belief that they are those of plaintiff." The MDTPA, enacted in 1973, evidently endorsed this definition of "passing off," since it explicitly states that proof of an "intent to deceive is not required."
United Healthcare Ins. Co., 316 F.3d at 743 (internal citations omitted). Plaintiff MSAA contends that the Helland Defendants will use the name "Minnesota State Archery Association" in connection with the provision of archery-related services in the state of Minnesota. Helland has acknowledged as much in his correspondence to Plaintiff. (See Verified Compl. Ex. C.) Whether Defendants intend to deceive those who purchase archery-related services in Minnesota is irrelevant; their plan to operate a "more inclusive" organization for archers under the same name as Plaintiff's non-profit organization is likely to mislead customers, even those exercising ordinary care. Plaintiff MSAA I has established a likelihood of success on its MDTPA claim.
In light of the foregoing, the Court finds it unnecessary to address Plaintiff's common law claims. The Court turns to the remaining factors in the Dataphase analysis.
V. Balance of Harms
After evaluating the threat of irreparable harm to the movant, the Court must assess "the state of balance between this harm and the injury that granting the injunction will inflict on other parties litigant." Safety-Kleen Systems, Inc. v. Hennkens, 301 F.3d 931, 935 (8th Cir. 2002). Essentially, this factor requires the Court to balance the equities in considering what type of temporary relief, if any, is warranted under the unique factual circumstances presented in this case. Here, the equities favor Plaintiff MSAA I. The entry of an injunction prohibiting Helland and his fledgling corporation from using the marks MINNESOTA STATE ARCHERY ASSOCIATION and MSAA for any purpose will have little impact on Helland's business. Helland and his corporation have voluntarily abstained from any commercial activity for over five months and are plainly in no hurry to operate a business under the name "Minnesota State Archery Association." Indeed, Helland's lack of activity with respect to his "Minnesota State Archery Association" seemingly confirms Plaintiff's assertions that Helland has acted for the sole purpose of extorting money from a non-profit organization with which he has had a falling out. On the other side of the balance, failing to grant a preliminary injunction would expose Plaintiff to the risk of further activities by Defendants, who purportedly intend to be regarded as the "truly inclusive" archery organization in Minnesota. The balance of harms tips in favor of granting an injunction.
VI. Public Interest
When addressing the public interest factor in a trademark infringement case, the district court must weigh the interest in protecting the public from confusion or deception against the interest in maintaining a competitive marketplace. See Calvin Klein Cosmetics Corp. v. Lenox Labs., Inc., 815 F.2d 500, 505 (8th Cir. 1987). There is no evidence before the Court that interests in a competitive marketplace would be furthered by denying the injunction and allowing Defendants to proceed. Indeed, Helland cannot articulate the purpose of Defendant MN Archery beyond its existence as a "for-profit" organization. Plaintiff has used the MINNESOTA STATE ARCHERY ASSOCIATION and MSAA marks for decades; as discussed above, having two organizations with the same name operating in the specialized area of organized archery will inevitably be confusing. The Court concludes that this factor favors the issuance of injunctive relief.
Conclusion
Based on the foregoing, and all of the files, records, and proceedings herein, IT IS ORDERED that Plaintiff Minnesota State Archery Association I, Inc.'s Motion for a Preliminary Injunction (Doc. No. 2) is GRANTED as follows:
1. Defendants Stephen H. Helland and Minnesota State Archery Association, Inc., and any person or entity acting in concert with them, are hereby ENJOINED, pending further order of this Court, from using "MINNESOTA STATE ARCHERY ASSOCIATION" and "MSAA" for any purpose, including but not limited to commercial advertising or promotions, and applications to state or federal governmental agencies.
2. Pursuant to Federal Rule of Civil Procedure 65(d), Plaintiff Minnesota State Archery Association I, Inc. shall post a bond in the amount of one thousand dollars ($1,000.00) for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined. Upon the posting of the bond, the injunction provided for herein will become effective.