Fabick, Inc. v. JFTCO, Inc.

944 F.3d 649

• Court: Court of Appeals for the Seventh Circuit
• Decided: December 9, 2019
• Docket: 19-1872
• Status: Published

Opinion

In the

United States Court of Appeals For the Seventh Circuit ____________________ Nos. 19-1760 & 19-1872 FABICK, INC., Plaintiff-Appellant, Cross-Appellee, v.

JFTCO, INC., Defendant-Appellee, Cross-Appellant. ____________________

Appeal from the United States District Court for the Western District of Wisconsin. No. 16-cv-00172 — William M. Conley, Judge. ____________________

ARGUED NOVEMBER 5, 2019 — DECIDED DECEMBER 9, 2019 ____________________

Before FLAUM, ROVNER, and HAMILTON, Circuit Judges. FLAUM, Circuit Judge. Two non-competing Midwestern companies operated by brothers used marks containing the family name, Fabick. The owner of the registered mark (or “senior user”) (Fabick, Inc., or “FI”), a small manufacturer of sealants, sued the “junior user” (JFTCO, Inc.), a larger distrib- utor of Caterpillar equipment, for trademark infringement. In a mixed verdict, a jury found that JFTCO had violated the 2 Nos. 19-1760 & 19-1872

Lanham Act but had not committed common law infringe- ment. FI sought an order permanently enjoining JFTCO from using the name “Fabick,” but the district court entered limited injunctive relief requiring that JFTCO issue, for five years, dis- claimers clarifying that it is not associated with FI. Both parties appealed. FI complains that the district court erred in setting remedies: it should have entered a broad per- manent injunction against JFTCO, and further should have al- lowed FI to recover JFTCO’s profits. JFTCO, in its counter-ap- peal, seeks reversal of the jury’s finding that it violated the Lanham Act based on an allegedly erroneous jury instruction and the district court’s refusal to overturn the jury’s verdict as a matter of law. We now affirm on each issue. I. Background FI is a Wisconsin corporation, based in Madison, dealing in protective coatings and sealants for various uses. JFTCO is a Delaware corporation and wholly owned subsidiary of the John Fabick Tractor Company, a Caterpillar equipment dealer based in Missouri. Both companies operate in Wisconsin and the Upper Peninsula of Michigan (the “UP”). This story of clashing family businesses begins with John Fabick, the founder of multiple business concerns operating throughout the Midwest. In 1982, his eponymous firm (the John Fabick Tractor Company, which used various marks in- cluding the word “Fabick” throughout its history) purchased two existing Caterpillar equipment dealerships serving Wis- consin and the UP. John intended for his son Joseph Fabick, Sr. (Joe Sr.) to operate the dealerships. Joe Sr. moved to Wis- consin and founded FABCO, selling new and used Caterpillar Nos. 19-1760 & 19-1872 3

machines, vehicles, attachments, and parts. In 2001, Joe Sr.’s son Jeré took over FABCO, which continued to operate Cater- pillar dealerships until 2015. For over a decade, FABCO pri- marily used a mark reading “FABCO CAT,” highlighting its affiliation with Caterpillar. FI began as a subsidiary of FABCO and was incorporated in 1993. Its core business concerned spray-on sealants for use in the beds of pickup trucks and similar vehicles. Another of Joe Sr.’s sons, Joseph “Jay” Fabick, Jr., worked at FI. Appar- ently, tensions between the brothers Jeré and Jay became un- tenable and, in 1997, Jay’s employment was terminated. His severance package included taking over FI (then primarily owned by FABCO) as its sole owner. FI and FABCO then op- erated independently, without apparent incident, for several years. In 1994, while still a subsidiary of FABCO, FI filed a trade- mark application and a service mark application with the U.S. Patent and Trademark Office for the mark “FABICK,” for “polyurethane-based and polyurea-based sealers and protect- ants to be applied as a coating to hard or flexible surfaces.” The service mark was granted in 1995 and the trademark in 1997. FI has used several logos featuring the “Fabick” mark. The dispute at hand was spurred by FABCO’s sale to a newly formed subsidiary of the John Fabick Tractor Com- pany, called JFTCO, in 2015. Having taken over FABCO’s op- erations, JFTCO began operating as the exclusive Caterpillar dealer in Wisconsin and the UP, using the trade name “Fabick CAT.” JFTCO engaged in an extensive rebranding effort un- der the Fabick CAT identity. FI claims that this rebranding be- gan a long period in which customers were confused, includ- ing those who called FI seeking JFTCO and misdirected 4 Nos. 19-1760 & 19-1872

checks between the companies. FI complained that as a small company with minimal advertising, its identity was being overwhelmed by JFTCO (which extensively advertised, in- cluding at major sporting events). FI sued JFTCO in March 2016; its operative complaint al- leged (among other charges) that JFTCO committed federal trademark infringement under the Lanham Act and at com- mon law. The case eventually went to trial. Certain pretrial holdings, the jury verdict itself, and posttrial decisions are now on appeal. The relevant district court decisions are as fol- lows. At summary judgment, JFTCO argued that FI should not be allowed to seek monetary damages because, prior to trial, it had not put forth evidence of damages due to the alleged infringement. The district court largely disagreed, noting that it would be possible for FI to prove up multiple categories of monetary damages, such as recompense for employee time spent addressing confused customers or harm to goodwill. The district court did agree, however, that FI could not seek JFTCO’s profits as damages: While plaintiff states in its opposition brief that a defendant’s profits may be awarded[,] it fails to develop any theory as to why such an award would be appropriate here, much less evidence supporting its award. On the contrary, as al- ready noted in discussing plaintiff’s reverse confusion theory, the court is hard-pressed to understand how defendants were unjustly en- riched by consumers assuming that Fabick’s sealants and coatings business is the same or re- lated to JFTCO’s business. Nos. 19-1760 & 19-1872 5

Both sides presented their cases at trial. JFTCO argued in part that by virtue of its association with the John Fabick Trac- tor Company’s longstanding use of a “Fabick” mark, the jury should find it established continuous prior use of the mark, a defense showing that it, and not FI, first used and was the original holder of the “Fabick” mark. At the close of evidence, the district court instructed the jury on the charges. In discussing Lanham Act liability, the judge diverged from strict adherence to Seventh Circuit pat- tern instructions, and provided the following element: “[D]efendant JFTCO used the FABICK mark in a manner that is likely to cause confusion as to the source or origin of plain- tiff’s product or that plaintiff has somehow become con- nected to JFTCO.” (additional language bolded; cf. Seventh Circuit Pattern Jury Instruction 13.1.2). The district court based its modification to the instructions on its reading of the caselaw, namely Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 957 (7th Cir. 1992), which de- scribed a case of reverse trademark confusion: “The public comes to assume that the senior user’s products are really the junior user’s or that the former has become somehow con- nected to the latter. The result is that the senior user loses the value of the trademark ….” Id. (emphasis added) (quoting Ameritech, Inc. v. Am. Info. Techs. Corp., 811 F.2d 960, 964 (6th Cir. 1987)). The jury returned a mixed verdict. It found JFTCO liable for federal trademark infringement and rejected JFTCO’s de- fenses, including prior use. The jury also rejected FI’s com- mon law infringement claim. 6 Nos. 19-1760 & 19-1872

After trial, JFTCO sought judgment as a matter of law in its favor and FI sought a permanent injunction against JFTCO. FI argued that because it prevailed on its Lanham Act claim, the district court should permanently enjoin JFTCO from us- ing the name “Fabick” as a part of its business in any way. The district court denied JFTCO’s motion for judgment as a matter of law and denied FI the requested permanent injunction. In- stead, the district court ordered JFTCO to provide multiple notices and disclaimers: • To defendant’s employees on the intranet and on ref- erence cards at each reception desk … for a period of five years from the date of this order. Specifically, de- fendant’s employees are to be regularly reminded to refer questions about Fabick, Inc., or its products and services to Fabick, Inc., including providing its phone number and address, in response to internet and tele- phone inquiries. • To defendant’s customers in an insert with invoices and on all invoices … for a period of five years from the date of this order. • To defendant’s vendors in an insert with all purchase orders … for a period of five years from the date of this order. • To the public on defendant’s websites … for a period of five years from the date of this order. • To plaintiff’s customers and vendors in the form to be drafted by plaintiff and approved by defendant to be mailed once per year for three years …. FI appealed; JFTCO responded and cross-appealed. Nos. 19-1760 & 19-1872 7

II. Discussion We first address JFTCO’s arguments: (1) that the district court’s modification of the pattern jury instruction was inap- propriate, (2) that the district court should have entered judg- ment for JFTCO based on its prior use defense as a matter of law, and (3) that the district court should have found no like- lihood of confusion as a matter of law. We then turn to FI’s arguments about its remedies: that it should have been al- lowed to seek JFTCO’s profits and should have been awarded a sweeping permanent injunction. As an initial matter, it may be helpful to briefly discuss the theory of “reverse trademark confusion” under which FI pre- vailed on its Lanham Act claim. The typical trademark case involves a well-established senior user pursuing later infring- ers; think of a luxury fashion house suing the purveyors of counterfeit handbags, or an NFL team suing a small manufac- turer of goods bearing the team’s logo. Less common, but still actionable under the Lanham Act, are reverse confusion cases. There, the senior user is small and perhaps little-known, and the larger junior user threatens not to steal the goodwill of the smaller brand but to overwhelm its market identity. Reverse confusion occurs when a large junior user saturates the market with a trademark sim- ilar or identical to that of a smaller, senior user. In such a case, the junior user does not seek to profit from the good will associated with the senior user’s mark. Nonetheless, the senior user is injured because [t]he public comes to assume that the senior user’s products are really the jun- ior user’s or that the former has become some- how connected to the latter. The result is that the 8 Nos. 19-1760 & 19-1872

senior user loses the value of the trademark—its product identity, corporate identity, control over its goodwill and reputation, and ability to move into new markets. Sands, 978 F.2d at 957 (citation omitted). A. Jury Instructions “We review a district court’s choice of jury instruction de novo when the underlying assignment of error implicates a question of law.” Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., 831 F.3d 815, 835 (7th Cir. 2016). “In crafting jury instructions, however, the district court is afforded substan- tial discretion, and we will reverse only if it failed to state the law completely and correctly and the error caused prejudice.” Burzlaff v. Thoroughbred Motorsports, Inc., 758 F.3d 841, 846 (7th Cir. 2014). As described above, the district court provided the follow- ing instruction to the jury, with additions to the Seventh Cir- cuit pattern instruction in bold: “[D]efendant JFTCO used the FABICK mark in a manner that is likely to cause confusion as to the source or origin of plaintiff’s product or that plaintiff has somehow become connected to JFTCO.” JFTCO argues that the district court provided an “errone- ous instruction” to the jury, under which “the jury could find a likelihood of confusion not only based on confusion as to the source of Appellant’s products and services, but also based on any mistaken belief ‘that plaintiff has somehow [be- come] connected to JFTCO.’” The district court considered this issue in its ruling on jury instructions during trial. FI had proposed the additional lan- guage based on the law as expressed in Sands, 978 F.2d at 957, Nos. 19-1760 & 19-1872 9

and the district court agreed it was proper to include because FI based its claims on reverse confusion. JFTCO argues that the instruction runs afoul of this Court’s ruling in Fortres Grand Corp. v. Warner Bros. Ent. Inc., where we stated that “general confusion ‘in the air’ is not ac- tionable. Rather, only confusion about ‘origin, sponsorship, or approval of ... goods’ supports a trademark claim.” 763 F.3d 696, 701 (7th Cir. 2014) (quoting 15 U.S.C. § 1125). But in the context of the entire jury instruction below, the jury could not have been under the impression that “general confusion in the air” between the two parties would create li- ability. The instructions included the following: The purpose of trademark law is to prevent con- fusion among consumers about the source of products and/or services and to permit trade- mark owners to show ownership of their prod- ucts and/or services and control their product’s and/or service’s reputation. Plaintiff claims that defendant infringed plaintiff’s FABICK trade- mark and service mark for polyurethane-based and polyurea-based sealers and protectants to be applied as a coating to hard or flexible sur- faces by JFTCO’s use of the FABICK marks in commerce in Wisconsin and the Upper Penin- sula of Michigan in a manner that allegedly causes a likelihood of confusion as to the origin or source of the plaintiff’s goods or services or that plaintiff has somehow become connected to JFTCO. … 10 Nos. 19-1760 & 19-1872

To succeed on its claim that defendant infringed plaintiff’s trademark and service mark, plaintiff must prove by a preponderance of the evidence that defendant used the FABICK mark in a man- ner that is likely to cause confusion or mistake as to the source or origin of plaintiff’s product or that plaintiff has somehow become con- nected to JFTCO. … Plaintiff must prove a likelihood of confusion among a significant number of people who buy or use, or consider buying or using, the prod- ucts or services or similar products or services. In deciding this, you should consider the fol- lowing factors: Whether the overall impression created by de- fendant’s use of the FABICK marks is similar to that created by plaintiff’s trademark in appear- ance or sound. Whether defendant and plaintiff use the FABICK marks on the same or related products or services. Whether plaintiff’s and defendant’s products or services are likely to be sold in the same or sim- ilar stores or outlets, or advertised in similar media. The degree of care that purchasers or potential purchasers are likely to exercise in buying or considering whether to buy the product or ser- Nos. 19-1760 & 19-1872 11

vice (this may depend on the level of sophistica- tion of potential buyers of the product or service and the cost of the product or service). The degree to which the consuming public rec- ognizes FABICK as an indication of origin of de- fendant’s goods or services. Whether defendant’s use of the trademark or service mark has led to instances of actual con- fusion among purchasers or potential purchas- ers about the source or origin of plaintiff’s prod- ucts or services, however, actual confusion is not required for finding a likelihood of confu- sion. In light of these detailed instructions, we cannot conclude that the district court “failed to state the law completely and correctly” or that any alleged error caused prejudice. When read in context, including their close proximity (all of the above quotations appear within about two pages of the writ- ten instructions), the district court’s language regarding whether “plaintiff has somehow become connected to JFTCO” clearly refers to the parties’ products and/or services, not an impermissibly vague “general confusion” in the ether. As such, the jury instructions are not reason to overturn the verdict. B. Judgment as a Matter of Law JFTCO appeals the district court’s denial of its motion for judgment as a matter of law, and specifically contends that (1) its prior use defense should have prevailed and (2) no rea- sonable jury could have found that JFTCO’s use of a “Fabick” mark caused a likelihood of confusion. We review denials of 12 Nos. 19-1760 & 19-1872

a motion for judgment as a matter of law de novo, viewing evidence in the light most favorable to the non-moving party. Palmquist v. Selvik, 111 F.3d 1332, 1343 (7th Cir. 1997). “In ap- plying this de novo standard of review, we evaluate whether any reasonable jury could have reached the same conclusion.” Liu v. Price Waterhouse LLP, 302 F.3d 749, 754 (7th Cir. 2002). 1. JFTCO’s Prior Use Defense JFTCO’s motion for judgment as a matter of law was pred- icated on a prior use defense, arguing that JFTCO, not FI, was actually the senior user of the mark (which would provide a complete defense to the Lanham Act infringement claim). “[A] trademark application is always subject to previously es- tablished common law trademark rights of another party.” S.C. Johnson & Son, Inc. v. Nutraceutical Corp., 835 F.3d 660, 665 (7th Cir. 2016). To establish this defense, “a party must show first, adoption, and second, use in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark.” Id. at 666 (citations and internal quotation marks omit- ted). JFTCO claims that it easily met the standard for establish- ing prior use under 15 U.S.C. § 1115(b), which it describes as requiring only that JFTCO or a party in privity with it: (1) used the trademark before FI applied for its registration, (2) “continuously used the trademark up until trial at the ge- ographic region at issue,” and (3) began using the mark with- out knowing FI was also doing so. JFTCO presented extensive evidence to both this Court and the district court of the John Nos. 19-1760 & 19-1872 13

Fabick Tractor Company’s past use of a mark reading “Fa- bick.” It is possible that a reasonable jury may have found continuous prior use established. 1 But JFTCO’s evidence is not so overwhelming as to carry the day on appeal, where it must show that, “viewing evi- dence in the light most favorable” to FI, no reasonable jury could have concluded JFTCO failed to show continuous prior use of the mark in Wisconsin and the UP. As the district court noted, FI cast doubt on JFTCO’s evidence of such use, and it identified multiple instances where FI successfully poked holes in the defense and upon which a reasonable jury could have rejected a prior use finding. FI introduced testimony: questioning John Fabick Tractor’s proof of sales in Wisconsin and the Upper Peninsula; noting that even if sales could be established in a particular time frame it did not follow that the Fabick mark was identified with the company; suggesting that any sales concluded were few in number (potentially as low as one unit per year in an 80,000 square mile region); and demonstrating the little evidence of any advertising prior to 1994. Finally, the district court noted that FI persuasively ar- gued to the jury that sales under the “Fabick” mark were likely dwarfed by sales under “FABCO,” thereby attenuating the identification of “Fabick” with John Fabick Tractor.

1 In their briefs, the parties dispute whether this Court should adopt a bright-line rule that the parent corporation’s use of a mark should not inure to the benefit of its subsidiary. There is no need to reach this question as we must affirm the district court if any reasonable jury could have de- termined JFTCO had not established its prior use defense. 14 Nos. 19-1760 & 19-1872

Moreover, a reasonable jury could have found that the ev- idence presented by JFTCO did not establish continuous use of the Fabick mark in the region sufficient to establish senior holder status. “Only active use allows consumers to associate a mark with particular goods and notifies other firms that the mark is so associated.” Zazu Designs v. L'Oreal, S.A., 979 F.2d 499, 503 (7th Cir. 1992). For example, the jury may have be- lieved any or all of the following: that historical photos of equipment showing a “Fabick” decal did not prove that such decals were continuously used within Wisconsin and the UP; that perhaps one invoice a year bearing the mark to a single customer in the region was insufficient; that no documentary evidence verified sales in the UP prior to 2002; and that mid- century era advertising with the logo did not prove such ad- vertising was continuous through 1994 and beyond. JFTCO argues that the “holes” poked by FI are minimal compared to the evidence it presented in favor of the defense, but this ignores the standard of review weighing heavily in favor of the non-movant. We cannot hold, viewing all evi- dence in the light most favorable to FI, that no reasonable jury could have been convinced by the doubts cast over JFTCO’s prior use claim. 2. Likelihood of Confusion JFTCO also appeals the denial of its motion for judgment as a matter of law on the basis that “no reasonable jury could find a likelihood of reverse confusion” based on the evidence presented in the case. According to JFTCO, the marks at issue are not similar, the parties’ products and services are not sim- ilar, the area and manner of use of the marks are not concur- rent, customers of the parties exercise a high degree of care, Nos. 19-1760 & 19-1872 15

the “Fabick” mark is weak, and there was insufficient evi- dence of actual confusion as to the source or origin of FI’s products or services. See Sands, 978 F.2d at 959 (listing factors in analyzing likelihood of confusion). It is unnecessary to address each of these points because, again, we must affirm if any reasonable jury could have found a likelihood of confusion between the parties’ goods and ser- vices. Despite JFTCO’s protests, there are abundant bases in the record to uphold the jury’s finding of a likelihood of con- fusion. These include the use of the same relatively unusual surname as the mark’s primary descriptor, the fact that it is reasonable to assume FI’s sealants could have been used on the type of equipment sold by JFTCO, and, most importantly, the 240+ recorded instances of actual confusion demonstrated by FI (primarily customers trying to reach JFTCO but contact- ing FI instead). Taking the factors as a whole, the massive amount of undisputed evidence FI presented showing that hundreds of customers confused the two parties (based on JFTCO’s “Fabick CAT” advertising) prevents us from over- turning the jury’s verdict on this point. JFTCO contends that most of the confusion seemed to be among its own customers mistakenly contacting FI. Because this is a reverse confusion case, JFTCO argues, the focus should be on FI’s customers mistakenly calling JFTCO. Re- gardless of whether this is the case (and JFTCO fails to cite any case making such a holding), FI identified multiple joint customers of the parties who actually confused them. Because a reasonable jury could have found against JFTCO on the like- lihood of confusion, we affirm the judgment of the district court. 16 Nos. 19-1760 & 19-1872

C. Remedies FI appeals two decisions of the district court: (1) the ruling that FI could not seek JFTCO’s profits and (2) the imposition of limited injunctive relief instead of a permanent, sweeping injunction against JFTCO’s use of “Fabick” as a mark. Neither argument prevails. 1. JFTCO’s Profits At summary judgment, the district court ruled that FI could not seek JFTCO’s profits as a remedy for trademark in- fringement. “We review the district court's grant of summary judgment de novo and draw all reasonable inferences from the evidence in the light most favorable to the nonmoving party.” Harmon v. Gordon, 712 F.3d 1044, 1050 (7th Cir. 2013). In rejecting FI’s requests for JFTCO’s profits, the district court noted that “plaintiff has offered nothing to support such an award” and had failed to “develop any theory as to why such an award would be appropriate here.” Because FI was proceeding on a reverse infringement theory, the district court stated it was “hard-pressed to understand how defend- ants were unjustly enriched by customers assuming that [FI’s] sealants and coatings business is the same or related to JFTCO’s business.” FI appeals, arguing that the Lanham Act explicitly allows the recovery of a defendant’s profits and that recovery of profits should be the assumed remedy where in- fringement is found. Tellingly, FI lacks any citations, to the Seventh Circuit or otherwise, mandating such a result. This likely is because dis- trict courts are granted broad discretion in fashioning reme- dies for trademark infringement; the district court here was Nos. 19-1760 & 19-1872 17

well within its rights to find at summary judgment that FI had failed to make a case for getting JFTCO’s profits. As noted, the Lanham Act does contemplate awarding de- fendants’ profits to prevailing plaintiffs. “When a violation of any right of the registrant of a mark … shall have been estab- lished[,] the plaintiff shall be entitled, subject to … the princi- ples of equity, to recover (1) defendant’s profits, (2) any dam- ages sustained by the plaintiff, and (3) the costs of the action.” 15 U.S.C. § 1117(a). Not only does § 1117(a) qualify the avail- ability of profits as “subject to the principles of equity,” but further explains that “[i]f the court shall find that the amount of the recovery based on profits is [] excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case.” Id. As the district court found that no evidence (such as bad faith or unjust enrichment) supported an award of profits, it was consistent with the statutory language to deny FI such an award. Indeed, the authorities FI cites elsewhere hold that reverse confusion cases present meager justification for profit awards. See, e.g., Sands, 978 F.2d at 963 (stating that “[w]e do think, however, that the evidence of bad faith here is marginal at best. Further, this is not a case where the senior user’s trade- mark is so well-known that the junior user’s choice of a con- fusingly similar mark, out of the infinite number of marks in the world, itself supports an inference that the junior user acted in bad faith,” and reversing award of profits); 4 McCar- thy on Trademarks § 23:10 (“Because in a reverse confusion case the infringer is not seeking to take away the plaintiff’s customers through confusion, awarding the plaintiff the prof- its of the infringer is not a proper basis for recovery.”). The 18 Nos. 19-1760 & 19-1872

district court’s decision that FI was not eligible to recover JFTCO’s profits comports with the facts of this case and the law generally. 2. Injunctive Relief Having prevailed on its federal trademark claim, FI sought a broad, sweeping injunction that would have pre- vented JFTCO from using “Fabick” in any business context. The court denied this request, and instead entered limited in- junctive relief requiring that JFTCO, for five years, issue dis- claimers clarifying that it is a different company from FI. Un- der the Lanham Act, the district court may “grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable, to prevent the violation” of a trademark. 15 U.S.C. § 1116(a). We review the district court’s denial of a permanent injunction for an abuse of discretion. 3M v. Pribyl, 259 F.3d 587, 597 (7th Cir. 2001). “Factual deter- minations are reviewed for clear error and legal conclusions are given de novo review. A factual or legal error may be suf- ficient to establish an abuse of discretion.” Id. The district court based its decision on two primary points: that Jay Fabick, on behalf of FI, applied for the “Fa- bick” trademark in 1994 while aware of the John Fabick Trac- tor Company’s previous use of a such a mark, and the nature of the harm claimed by FI, lacking much evidence at all of harm to its reputation, lost sales, or similar damages. Instead, FI presented a great deal of evidence of people confusing it for JFTCO, but not otherwise causing harm, irreparable or otherwise. Checks were ultimately re-directed to their proper destination, and there was not significant evidence of lost manpower to resolve the confusion. FI argued below and ar- gues now that the reverse infringement committed by JFTCO Nos. 19-1760 & 19-1872 19

should automatically lead to a finding of irreparable harm and, thus, a permanent injunction. The law, however, is not as forceful as FI would have it. The Lanham Act places broad discretion in the district court to fashion an appropriate rem- edy. FI primarily relies on Int’l Kennel Club of Chicago, Inc. v. Mighty Star, Inc., which shares some factual elements with the instant case. 846 F.2d 1079 (7th Cir. 1988). A plush toy manu- facturer created and marketed a line of “International Kennel Club” stuffed dogs, despite the earlier existence and mark of the International Kennel Club of Chicago. Following the pub- lication of multiple advertisements in national magazines, “IKC officials began receiving telephone calls (at a rate of about one per day), letters, and personal inquiries from peo- ple expressing confusion as to the plaintiff’s relationship to the International Kennel Club stuffed dogs.” Id. at 1082. The district court entered a preliminary injunction against the toymaker, finding a strong likelihood of confusion between the parties was likely to occur absent relief. This Court af- firmed that decision, holding that Although as the defendants point out, the plain- tiff failed to establish that people stopped going to the plaintiff’s shows or that it lost vendors or advertisers as a result of the defendants’ use of the International Kennel Club name, we have never recognized this as the controlling legal standard. To the contrary, we have held that “the owner of a mark is damaged by a later use of a similar mark which place[s] the owner’s reputation beyond its control, though no loss in business is shown.” 20 Nos. 19-1760 & 19-1872

Id. at 1091 (quoting James Burrough Ltd. v. Sign of Beefeater, Inc., 540 F.2d 266, 276 (7th Cir. 1976)). FI argues that its situation is analogous: Although it cannot show a loss of business, the damage is in the loss of control of its mark, and a full injunc- tion should issue. The district court, however, distinguished International Kennel Club. “In that case[,] the plaintiff presented evidence of damages to its goodwill, including customers and other ven- dors expressing concerns about the apparent affiliation be- tween the plaintiff, an organization devoted to purebred dog shows, and the infringing defendant, who sold stuffed toy dogs.” FI is correct that irreparable harm can be shown even without showing lost profits, but is wrong to suggest that dis- trict courts do not have the discretion to compare and evalu- ate different types or degrees of non-monetary harm. The dis- trict court recognized that FI was, indeed, harmed by the in- fringement even though it could not show any loss of business or reputation to date, but it was appropriate for the court to evaluate the nature of the infringement and harm in crafting its injunctive remedy. While a permanent injunction may be the typical remedy for trademark infringement, it is by no means automatically applied. See 5 McCarthy on Trademarks § 30:1. “In trademark cases, the scope of the injunction to be entered depends upon the manner in which plaintiff is harmed, the possible means by which that harm can be avoided, the viability of the de- fenses raised, and the burden that would be imposed on de- fendant and the potential effect upon lawful competition be- tween the parties.” Id. § 30:3. This is a reverse infringement case, involving formerly related entities, who do not compete, disputing the use of a shared family name, and concerning a Nos. 19-1760 & 19-1872 21

small number of customers of the senior user. In such a cir- cumstance, it was reasonable for the district court to deter- mine that a permanent injunction barring JFCTO from ever using its owner’s family name in a business context was over- kill. The ordered disclaimers are reasonably designed to no- tify any and all of the people whose confusion could cause an issue for FI for five years. It is tailored to remedy the infringe- ment; it does not constitute an abuse of discretion. A family dispute involving a historic German restaurant is instructive. In Berghoff Rest. Co., Inc. v. Lewis W. Berghoff, Inc., the famed gasthaus sued its erstwhile employee, Lewis, who had been terminated from the family business and then opened his own eponymous restaurant in suburban Elgin. 499 F.2d 1183 (7th Cir. 1974). The district court found in favor of the prominent eatery but denied the Berghoff the full perma- nent injunction it sought. While recognizing that plaintiff’s goodwill was established through effort and labor and de- serving of some consideration despite the fact that defendant’s surname was identical, the court noted that the individual defendant had previously contributed to the Berghoff name, thus requiring a delicate balancing of the equi- ties. Instead of affording complete relief to plaintiff, the court fashioned an injunction re- quiring defendants to use the individual de- fendant’s given name ‘Lewis’ with his surname in operating a restaurant business. ‘Lewis’ was to be in the same size letters as ‘Berghoff.’ Ex- cept for one billboard and the sign above the El- gin restaurant, defendants were directed to use 22 Nos. 19-1760 & 19-1872

the disclaimer ‘Not affiliated with the Berghoff Restaurants of Chicago’ in their advertising and on the front of their menus. The individual de- fendant was ordered to file a report with the dis- trict court 60 days after the entry of the decree showing how compliance was effected. Id. at 1185. This Court affirmed the district court’s decision to apply a limited injunction, holding that “[t]he Lanham Act did not require the court below to restrain all use of the ‘BERGHOFF’ name.” Id. at 1185–86; see also 5 McCarthy on Trademarks § 30:3 (“In litigation between persons of the same personal name using the name as a trademark, it is common practice to balance the rights by a limited injunction which, while not preventing the use of a personal name altogether, requires … disclaimers.”). Considering that we have held lim- ited injunctions to be acceptable in traditional infringement cases, they may be even more appropriate in the reverse con- fusion context, where no brand has sought to steal the good- will of another. III. Conclusion For the foregoing reasons, we AFFIRM the judgment of the district court.