OPINION AND ORDER

WILLIAM M. CONLEY, District Judge.

During the pretrial conferences, the parties raised various objections and proposed modifications to the court's draft closing instructions. Having now considered the parties' arguments, the court issues this opinion and order explaining its reasons for accepting or rejecting those objections and proposed modifications. The court will also circulate revised closing instructions and special verdict consistent with this opinion, other rulings by the court and stipulation of the parties.

I. "Somehow become connected to"

In the likelihood of confusion instruction, plaintiff seeks to add language allowing for a likelihood of confusion if defendant used the FABICK mark in a manner that is likely to cause confusion "that plaintiff has somehow become connected to JFTCO." The first draft of the instruction, consistent with the pattern instruction, directed the jury to consider only whether defendant used the FABICK mark in a manner that is likely to cause confusion "as to the source of the origin of plaintiff's product."

Plaintiff contends that the "somehow become connected to" language is proper to use in the context of a reverse confusion claim, which plaintiff is pursuing here. In support of this addition, plaintiff directs the court to Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947 (7th Cir. 1992), the first case in which the Seventh Circuit recognized a reverse confusion claim. In that opinion, the court explained that:

Id. at 957-58 (emphasis added) (footnote omitted).

Defendant offers three core objections to the addition of this language. First, defendant argues that the court should simply stick with the pattern instruction. While it is the court's practice to rely heavily on the pattern instructions, however, the court is inclined to add the requested additional or modified language justified by the facts and law of an applicable case, particularly if the ruling is by the Seventh Circuit or United States Supreme Court. Second, defendant argues that the Sands citation to the requested language was in the context of talking about either the strength of the mark or the injury experienced by reverse confusion, but this is an unjustifiably narrow reading of this opinion. Indeed, in the section quoted above, the Seventh Circuit is generally describing the nature of a reverse confusion claim. Accordingly, the court sees no error in adopting the same language for a similar confusion claim here.1 Third, defendant argues that the use of the "somehow connected to" language could open the door to the jury impermissibly considering Fabick and FABCO Equipment's prior connection in finding a likelihood of confusion, citing to Shakey's Inc. v. Covalt, 704 F.2d 426 (9th Cir. 1983). In Shakey's, the Ninth Circuit cut off a finding of a likelihood of confusion based solely on a shared history between the parties, explaining "[t]he law of unfair competition does not impose upon [the defendant] a duty to ensure that all customers are aware that they are no longer affiliated with Shakey's, but merely a duty not to promote the perpetuation of the perception that they are." Id. at 432. The court is receptive to this concern up to a point.

As such, the court will change the instruction as reflected in the bolded addition below:

II. Evidence of actual confusion entitled to substantial weight

Plaintiff also requested a modification to the list of factors the jury may consider in determining whether there is a likelihood of confusion, specifically requesting that the court point out that evidence of actual confusion is "entitled to substantial weight." There is support for this proposition, at least in the context of a judge making the likelihood of confusion determination in the context of a preliminary injunction or as the ultimate trier of fact. See, e.g., CAE, Inc. v. Clean Air Eng'g, Inc., 267 F.3d 660, 685 (7th Cir. 2001) (reviewing TTAB determination); Int'l Kennel Club of Chi., Inc. v. Mighty Star, Inc., 846 F.2d 1079, 1090 (7th Cir. 1988) (affirming grant of preliminary injunction).

The pattern instructions, however, do not include this language, nor could the court find a Seventh Circuit case embracing this additional language in instructing the jury on this element in any trademark infringement case, not to mention a reverse confusion case like that at issue here. More problematic, the pattern instruction does provide that "[t]he weight to be given to each of these factors is up to you to determine. No particular factor or number of factors is required to prove likelihood of confusion." Seventh Cir. Pattern Jury Instructions § 13.1.2.3. To add plaintiff's requested language would conflict with this express instruction in the pattern jury instructions. As such, the court opts to not make this requested modification.

III. Appropriate versus substantial segment for purposes of determining prior use

The court previously rejected plaintiff's proposed instructions on continuous prior use. More specifically, the court rejected plaintiff's assertion that defendant must show "market penetration" of the FABICK mark, finding such a requirement was not adopted by the Seventh Circuit. Indeed, the court could find only one Seventh Circuit case discussing such a requirement, and that was in a dissent appearing to advocate a lower, "de minimis" use requirement. See Zazu Designs v. L'Oreal, S.A., 979 F.2d 499, 510 (7th Cir. 1992) (Cudahy, J., dissenting). Instead, in the draft circulated to the parties, the court relied upon Comment 2 of the "ownership and priority" instruction in Section 13.1.2.1 of, and specifically its citation to Johnny Blastoff, Inc. v. Los Angeles Rams Football Co., 188 F.3d 427 (7th Cir. 1999), which explained that "[t]he party seeking to establish appropriation of a trademark 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 433-34 (citing New West Corp. v. NYM Co. of Cal., Inc., 595 F.2d 1194, 1200 (9th Cir. 1979)).

Nevertheless, at the final pretrial conference, plaintiff asked the court to modify the proposed language of what constitutes "use" as follows:

As a result, the court ordered additional briefing on this issue, which has convinced the court that plaintiff's view of the required prior "use" does not reflect Seventh Circuit caselaw. In determining prior use — specifically, in determining whether prior common law trademark rights exist — the defendant need not establish market penetration, nor for that matter, a "substantial" segment associated the mark with the defendant, nor even that defendant's mark has gained "notoriety," as the Seventh Circuit recently characterized it.3 See S.C. Johnson & Son, Inc. v. Nutraceutical Corp., 835 F.3d 660, 666 (7th Cir. 2016) ("Ownership and notoriety are two different things. Thus, to prove ownership, a party need not show that the item in question has gained wide public recognition."). Instead, to demonstrate the continuous prior use 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 (citing Johnny Blastoff, 188 F.3d at 433-34).4

Accordingly, the court rejects plaintiff's proposed change, keeping its original language, while adding "as that of the John Fabick Tractor Company" to the end of element 2 above for the sake of completeness. The court will also add an additional paragraph to provide more guidance to the jury on what constitutes "use" and the "appropriate segment" as follows:

See 7th Circuit Pattern Jury Instructions § 13.1.2.1; S.C. Johnson, 835 F.3d at 669 (citing Kathreiner's Malzkaffee Fabriken Mit Beschraenkter Haftung v. Pastor Kneipp Med. Co., 82 F. 321, 326 (7th Cir. 1897)).

IV. Meaning of "substantial portion" for purposes of determining acquired distinctiveness of FABICK mark

Unlike the prior use instruction, the "acquired distinctiveness" or secondary meaning instruction does require plaintiff to demonstrate that "[a] substantial portion of the consuming public identifies plaintiff's FABICK mark with a particular source, whether or not consumers know who or what that source is (the consuming public consists of people who may buy or use, or consider buying or using, the product or similar products)." (Court's Draft Instructions (citing 7th Circuit Pattern Jury Instructions § 13.1.2.2.4) (emphasis added).) The court requested input from the parties as to an additional instruction defining or otherwise assisting the jury in determining what constitutes a "substantial portion."

Neither party offered much guidance. Instead, plaintiff used the opportunity to attempt to push its "substantial segment" change in the continuous prior use context, citing to Third Circuit cases for language to assist the jury in determining whether the John Fabick Tractor Company had obtained "market penetration" in Wisconsin and the UP with use of the FABICK mark, an argument that the court has already rejected. In contrast, defendant contends that additional clarification is not required, because the jury can simply rely on the four factors the instructions provide in determining whether plaintiff's FABICK mark has acquired distinctiveness. Based on these responses, and the fact that "substantial" is a familiar term, the court will simply stick with the pattern instruction and leave it to the parties to argue what constitutes "substantial portion."

ORDER

IT IS ORDERED that the parties' proposed modifications to the closing instructions are adopted or rejected for the reasons provided above.

CLOSING INSTRUCTIONS

A. Introduction

Ladies and Gentlemen of the Jury:

You are about to hear closing arguments of the parties. Before these arguments, I will instruct you on the law. After closing arguments, I will provide very brief instructions governing your deliberations. After that, the case will be in your hands.

1. Questions for Deliberations

As I explained at the outset of this trial, my job is to decide what rules of law apply to this case and to explain those rules to you. It is your job to follow the rules, even if you disagree with them or don't understand the reasons for them. You must follow all of the rules; you may not follow some and ignore others.

The case will be submitted to you in the form of a special verdict consisting of 5 questions. [Read special verdict form.] In answering the questions, you should consider only the evidence that has been received at this trial. Do not concern yourselves with whether your answers will be favorable to one side or another, or with what the final result of this lawsuit may be. Please read any directions after a question carefully to ensure you are not answering questions needlessly.

2. Burden of Proof

On the questions in the special verdict, the burden of proof is generally on the party contending that the answer to a question should be "yes." You should base your decision on all of the evidence, regardless of which party presented it.

When a party has the burden to prove any matter by "a preponderance of the evidence," it means that you must be persuaded by the testimony and exhibits that the matter sought to be proved is more probably true than not true.

When a party has the burden to prove any matter by "clear and convincing evidence," it means that you must be persuaded by the testimony and exhibits that the matter sought to be proved is highly probable or reasonably certain.

When determining your answer to any of the special verdict questions, keep in mind the burden of proof that applies to that question or issue.

3. Answers Not Based on Guesswork

If, after you have discussed the testimony and all other evidence that bears upon a particular question or issue, you find that the evidence is so uncertain or inadequate that you have to guess what the answer should be, then the party having the burden of proof as to that question or issue has not met the required burden of proof. Your answers are not to be based on guesswork or speculation. They are to be based upon credible evidence from which you can find the existence of the facts that the party must prove in order to satisfy the burden of proof on the question or issue under consideration.

4. All Litigants Equal Before the Law

In this case, the parties are corporations. All parties are equal before the law. Each corporation is entitled to the same fair consideration that you would give an individual person.

B. Special Verdict

1. Overview

Plaintiff claims that defendant has infringed plaintiff's FABICK trademark and service mark. A trademark or service mark is a word, symbol, or combination of words or symbols used to identify a product or service, to distinguish that product or service from those manufactured, sold, or offered by others, and to indicate the source of the product or service. For these instructions, the court will use the term "trademark" to refer to both a trademark for products and a service mark for services.

The purpose of trademark law is to prevent confusion among consumers about the source of products and/or services and to permit trademark owners to show ownership of their products and/or services and control their product's and/or service's reputation. Plaintiff claims that defendant infringed plaintiff's FABICK trademark and service mark for polyurethane-based and polyurea-based sealers and protectants to be applied as a coating to hard or flexible surfaces by JFTCO's use of the FABICK marks in commerce in Wisconsin and the Upper Peninsula 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. Plaintiff bears the burden of proof on these issues.

Defendant denies that its use of FABICK causes a likelihood of confusion. Defendant also asserts that it cannot be liable for infringement because (1) it was a prior and continuous user of the FABICK mark in Wisconsin and the Upper Peninsula of Michigan before plaintiff's trademark application was filed, (2) the FABICK marks are unenforceable because plaintiff failed to exercise reasonable control over quality, and (3) the registrations for the FABICK marks were fraudulently procured. Defendant bears the burden of proof on these defenses.

2. Trademark and Service Mark Infringement

a. Likelihood of Confusion

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 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. In making this determination, however, you may not rely on confusion caused by Fabick and FABCO's prior related history.

Plaintiff must prove a likelihood of confusion among a significant number of people who buy or use, or consider buying or using, the products or services or similar products or services.

In deciding this, you should consider the following factors:

When considering the above factors, you must focus on whether there is a likelihood of confusion after July 1, 2015. The weight to be given to each of these factors is up to you to determine. No particular factor or number of factors is required to prove likelihood of confusion.

b. Distinctiveness

Plaintiff pursues claims under federal statutory law, as well as the common law. For the common law claim, you will need to determine whether the FABICK mark is a valid, unregistered mark. A valid, unregistered trademark is a term that is "distinctive," which means that the term is capable of distinguishing plaintiff's products from the products and services of others. As indicated above, you may also consider this instruction in determining the degree to which the consuming public recognizes FABICK as an indication of origin of defendant's goods or services.

An inherently distinctive trademark is one that almost automatically tells a consumer that it refers to a brand or a source for a product. A trademark is inherently distinctive if it is a "fanciful," "arbitrary," or "suggestive" term.

Another type of valid unregistered trademark is a "descriptive" term; that has "acquired distinctiveness." A "descriptive" term directly identifies or describes some characteristic or quality of the product in a straightforward way that requires no imagination or reasoning to understand the meaning of the trademark. For example, "All Bran" for cereal is a descriptive trademark because it describes a characteristic of the cereal; similarly, a yellow container in the shape of a lemon is a descriptive trade dress when used as a container for lemon juice. A descriptive trademark can also identify the geographic location where a product is made (for example, "Omaha" for steaks) or the name of the person who makes or sells the product (for example, "Mrs. Fields" for cookies). In this case, "Fabick" is a descriptive term.

A descriptive, unregistered trademark like "Fabick" can be valid only if it has "acquired distinctiveness." To show that plaintiff's FABICK mark has "acquired distinctiveness" for purposes of an unregistered trademark, plaintiff must prove by a preponderance of the evidence both of the following:

To decide whether plaintiff's FABICK mark has "acquired distinctiveness," you may consider the following:

3. Continuous Prior Use Defense

Defendant contends that it has the right to use the trademark within the United States, including Wisconsin and the Upper Peninsula of Michigan, because of the continuous prior use of the FABICK mark by its parent company, the John Fabick Tractor Company, and, more recently, by defendant's own use.

To succeed on this defense, defendant must prove by a preponderance of the evidence the following five elements:

There are two additional instructions on how to think about element two. First, in considering whether defendant has proven the required use, you may consider the volume of sales of products bearing the FABICK mark and the amount of advertising, promotion or publicity relating to the products bearing the FABICK mark. Defendant, however, need not show either high volume of sales or wide recognition. Second, the parties disagree as to what the "appropriate segment" is and part of your job will be to decide what that market segment is based on evidence and argument of the parties.

4. Failure to Exercise Reasonable Control Defense

Defendant also contends that the FABICK marks have become unenforceable because plaintiff failed to exercise reasonable control over a licensee's use of the FABICK mark. To prevail on this defense, defendant must prove by clear and convincing evidence the following two elements:

A license to the FABICK marks need not be written, and may be either express or implied. A trademark owner can grant an implied license where the right to use the trademark is implied based on the entire course of objective conduct and the relationship between the parties.

5. Fraud in the Procurement Defense

Defendant claims that plaintiff obtained its trademark and service mark registrations through fraud on the Patent and Trademark Office. To succeed on this defense, defendant must prove by clear and convincing evidence that plaintiff made material misrepresentations or failed to disclose material information to the Patent and Trademark Office, with the intent to deceive the Patent and Trademark Office.

Information that was misrepresented is "material" if it influenced the Patent and Trademark Office's decision to register the trademark or service mark. Information is also "material" if it would have caused the Patent and Trademark Office not to register the trademark or service mark had it been disclosed.

We, the jury, for our special verdict, do find as follows:

QUESTION NO. 1: Did plaintiff Fabick, Inc., prove by a preponderance of the evidence that defendant JFTCO, Inc., used the FABICK mark in a manner that is likely to cause confusion?

If you answered Question No. 1 "no," please proceed to the end of the verdict form, sign and date it. If you answered Question No. 1 "yes," please answer Question No. 2.

QUESTION NO. 2: Did plaintiff prove by a preponderance of the evidence that its unregistered FABICK marks have acquired distinctiveness?

QUESTION NO. 3: Did defendant prove by a preponderance of the evidence a continuous prior use defense?

QUESTION NO. 4: Did defendant prove by clear and convincing evidence that plaintiff failed to exercise reasonable control over quality?

QUESTION NO. 5: Did defendant prove by clear and convincing evidence that the FABICK marks were procured by fraud on the Patent and Trademark Office?