Great Star Industrial USA, LLC v. Apex Brands, Inc.

CourtDistrict Court, W.D. North Carolina
DecidedApril 14, 2020
Docket3:20-cv-00042
StatusUnknown

This text of Great Star Industrial USA, LLC v. Apex Brands, Inc. (Great Star Industrial USA, LLC v. Apex Brands, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Great Star Industrial USA, LLC v. Apex Brands, Inc., (W.D.N.C. 2020).

Opinion

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION DOCKET NO. 3:20-cv-00042-FDW-DSC GREAT STAR INDUSTRIAL USA, LLC ) and HANGZHOU GREAT STAR ) INDUSTRIAL CO., LTD., ) ) Plaintiffs, ) ) vs. ) ) APEX BRANDS, INC., ) ) Defendant. ) ) ) ORDER APEX BRANDS, INC. and APEX TOOL ) GROUP, LLC, ) ) Counterclaimants, ) vs. ) ) GREAT STAR INDUSTRIAL USA, LLC ) and HANGZHOU GREAT STAR ) INDUSTRIAL CO., LTD., ) ) Counterdefendants. ) )

THIS MATTER is before the Court on the Motion for Preliminary Injunction (Doc. No. 8) filed by Defendant Apex Brands, Inc. (“ABI”) and Counterclaimants Apex Brands, Inc. and Apex Tool Group, LLC (“Apex Tool”) (collectively, “Apex”). Apex requests the Court to preliminarily enjoin Plaintiffs and Counterdefendants Great Star Industrial USA, LLC (“Great Star USA”) and Hangzhou Great Star Industrial Co., Ltd. (“Hangzhou Great Star”) (collectively, “Great Star”) from using an allegedly infringing name or mark in any way until the above-captioned case is 1 resolved. (Doc. No. 8-1, p. 1-2). For the reasons which follow, Apex’s Motion (Doc. No. 8) is DENIED. I. BACKGROUND Great Star filed a Complaint for Declaratory Judgment of Non-Infringement against ABI on January 21, 2020. (Doc. No. 1). On February 19, ABI filed its answer denying Great Star’s claims of non-infringement and validity, as well as a counterclaim against Great Star, which Apex Tool joined. See generally (Doc. No. 7). Apex filed the instant motion on the same day. (Doc. No. 8).

In the counterclaim, Apex asserted seven counterclaims against Great Star, including trademark infringement, cancellation of federal trademark registration, unfair competition, cybersquatting under the Anticybersquatting Consumer Protection Act, state law unfair competition under the North Carolina Unfair & Deceptive Trade Practices Act, common law trademark infringement, and common law unfair competition. See generally (Doc. No. 7). Apex’s counterclaims are based on its allegations that Great Star unlawfully used a confusingly similar variation of Apex’s common law trademark consisting of the word “GEARDRIVER” and a gear design. (Doc. No. 7, p. 9-11, ¶¶ 9, 10, 12, 13, 20). Great Star filed its Response to Apex’s motion, (Doc. No. 17), and its answer to the counterclaim, (Doc. No. 18), on March 4, 2020. Apex filed its Reply shortly thereafter, thereby

making the motion ripe for review. (Doc. No. 19). The Court had originally scheduled a hearing on the motion for April 8, 2020, (Doc. No. 16), but in light of the rapid spread of the COVID-19 novel coronavirus, the Court vacated the hearing, (Doc. No. 21). The Court determined it could

2 rule on Apex’s motion based on the briefs, and invited both parties to file a proposed Order containing findings of fact and conclusions of law. Id. at 1-2. Il. FINDINGS OF FACT Having considered Apex’s Motion for Preliminary Injunction, Great Star’s Response, Apex’s Reply, and the exhibits and attachments to each document, the Court makes the following findings of fact:! 1. Hangzhou Great Star was established in 1993 and operates a machinery and hand tool enterprise. (Doc. No. 17-1, p. 2, J 2-3). A significant portion of Great Star’s marketing activities in the United States are conducted through Great Star USA. Id. at 2, ¥ 3. 2. Apex is a manufacturer of hand and power tools, serving the industrial, vehicle service and assembly, aerospace, electronics, construction, and do-it-yourself markets. (Doc. No. 8-2, p. 2, J] 2). 3. Apex and its predecessors in interest have used the composite mark @ GEARDRIVER (“GEARDRIVER Design Mark”) in commerce throughout the United States since at least 2003. Id. at 3, 47. 4. Apex obtained a federal registration for the GEARDRIVER Design Mark, which lapsed in 2017. Id. at 3, 4] 8. Apex has, however, continued to use, on a continuous basis, the GEARDRIVER Design Mark on products sold in the United States. Id. at 3-4, 49. 5. Products bearing Apex’s GEARDRIVER Design Mark are sold through retail stores including Home Depot and Lowe’s and other online channels such as Amazon.com. Id.

1 These findings of fact are based on the limited record before the Court and are not intended to be binding for purposes of ruling on dispositive motions that may arise and/or trial.

6. Apex sold over 18,000 units of GEARDRIVER products during 2019. Id. at 5, ¶ 16. 7. Apex’s GEARDRIVER mark is inextricably linked to its GEARWRENCH brand. Id. at 5, ¶ 15. Apex spends millions of dollars per year on advertising on its GEARWRENCH brand, including a sponsorship of the No. 1 Chevrolet for Chip Ganassi Racing in the NASCAR Cup Series, which is currently driven by Kurt Busch, thereby exposing the brand to many viewers. Id. 8. The GEARDRIVER Design Mark is used prominently on products and product

packaging. See generally (Doc. No. 8-4). 9. From 2016 to March 2019, Great Star manufactured a GEARWRENCH hand tool tote bag for Apex, which was in accordance with the standards and specifications provided by Apex. (Doc. No. 17-1, p. 2, ¶ 4). 10. In 2015, Great Star developed new ratcheting screwdrivers and mechanical tool products (the “GEARDRIVE hand tool products”) with which Great Star has since continuously used the GEARDRIVE designation. Id. at 3, ¶ 6. 11. Great Star chose the GEARDRIVE designation because it was based on Great Star’s success with its DOUBLEDRIVE tools. Id. at p. 3, ¶ 7. 12. In Q2 of 2018, Great Star sold 41,872 units of GEARDRIVE hand tool products to

Lowe’s. Id. at 4, ¶ 9. In Q4 of 2019, Great Star sold 58,224 units of GEARDRIVE hand tool products to Home Depot. Id. Customer review ratings for GEARDRIVE products range between 4.5 and 5 stars out of 5 stars, and approximately 1 percent of Amazon reviews have been negative. Id. 4 13. Since at least May 2015, Great Star has used the designation © GEARDRIVE (the “GEARDRIVE & Circular Gear Design Mark”’) as one of the trademarks for its hand tools. Id. at 4, | 10. 14. Great Star owns a federal trademark registration for the GEARDRIVE & Circular Gear Design Mark, namely, Registration No. 5,676,681, which pertains to the use of the mark on various hand tools. Id. at 5, 4 11. 15. That registration issued after the United States Patent and Trademark Office (“USPTO”) examined Great Star’s application for registration, searched its records, and “found no conflicting marks that would bar registration.” Id. at 5, 12 (quotation omitted). 16. The USPTO published Great Star’s application for registration of the GEARDRIVE & Circular Gear Design Mark on September 11, 2018, allowing any interested entity the opportunity to challenge the registration. Id. at 6, 4 12. After no party opposed the application, the USPTO issued registration of the GEARDRIVE & Circular Gear Design Mark to Great Star on February 12, 2019. Id. 17. Since at least January 2017, Great Star has also used the mark shown below (“GEAR DRIVE & Bisected Gear Design Mark”; together with the GEARDRIVE & Circular Gear Design Mark, “GEARDRIVE & Gear Design Marks”), as another trademark for its hand tool products:

GEAR DRIVE

Id. at 6, J 13.

18. Great Star owns a federal trademark registration for the composite GEAR DRIVE & Bisected Gear Design Mark, namely, Registration No. 5,453,697, which covers use of that mark on hand tools and other goods. Id. at 7, ¶ 14. 19. That registration issued after the United States Patent and Trademark Office (“USPTO”) examined Great Star’s application for registration, searched its records, and found no conflicting marks that would bar registration. Id. at 8, ¶ 15. 20. The USPTO published Great Star’s application for registration of the GEAR DRIVE & Bisected Gear Design Mark on February 6, 2018, allowing any interested entity the

opportunity to challenge the registration. Id.

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