Herstal v. Clyde Armory, Inc.

ORDER ON SUMMARY JUDGMENT

C. ASHLEY ROYAL, UNITED STATES DISTRICT JUDGE.

This trademark infringement action is currently before the Court on Plaintiff FN Herstal, S.A.'s Motion for Summary Judgment [Doc. 85] and Defendant Clyde Armory, Inc.'s Motion for Partial Summary Judgment [Docs. 85]. Having considered the parties' arguments, the record, and the applicable law, both Motions are DENIED.^[1]

LEGAL STANDARD

Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment must be granted " if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." ^[2] A genuine issue of material fact only exists when " there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." ^[3] Thus, summary judgment must be granted if there is insufficient evidence for a reasonable jury to return a verdict for the nonmoving party or, in other words, if reasonable minds could not differ as to the verdict.^[4] When ruling on a motion for summary judgment, the Court must view the facts in the light most favorable to the party opposing the motion.^[5]

The moving party " always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact" and that entitle it to a judgment as a matter of law.^[6] If the moving party discharges this burden, the burden then shifts to the nonmoving party to go beyond the pleadings and present specific evidence showing that there is a genuine issue of material fact.^[7] This evidence must consist of more than mere conclusory allegations or legal conclusions.^[8]

The standard of review for cross-motions for summary judgment does not differ from the standard applied when only one party files a motion, but simply requires a determination of whether either of the parties deserves judgment as a matter of law on the facts that are not disputed.^[9] The court must consider each motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration.^[10] The Eleventh Circuit has explained that " [c]ross-motions for summary judgment will not, in themselves, warrant the court in granting summary judgment unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely disputed." ^[11] Cross-motions may, however, be probative of the absence of a factual dispute where they reflect general agreement by the parties as to the controlling legal theories and material facts.^[12]

BACKGROUND

The current trademark dispute arises out of the parties' use of the " SCAR" and " SCAR-Stock" marks in the firearms industry. Unless otherwise indicated, the facts presented below are undisputed.

A. Plaintiff's Use of SCAR

Plaintiff is a firearms and weapons manufacturer incorporated under the laws of Belgium with its principal place of business in Herstal, Belgium.^[13] Plaintiff manufactures and distributes a full range of firearms and accessories for defense, law enforcement, hunting, marksmanship, and others having an interest in acquiring such firearms and accessories.^[14] The current dispute arises out of Plaintiff's development and branding of its SCAR rifle.

1. Plaintiff's Sales to the U.S. Military

In 2003, the United States Special Operations Command (" USSOCOM") initiated the Special Operation Forces (" SOF") Combat Assault Rifle Program, which was abbreviated at times as the " SCAR" Program.^[15] Publicized as the first full and open competition since the M16 trials held in the mid-1960s, the USSOCOM Program solicited an open bid to firearm manufacturers to design a new modular assault rifle system for the U.S. Military.^[16] Defendant contends that the USSOCOM Program serves as the origin of the SCAR mark at issue in this case. Plaintiff, however, represents that it adopted the SCAR mark in 2003 prior to the USSOCOM Program to designate a specifically designed weapon for commercialization in the North American market and abroad.^[17]

Pursuant to the Program, USSOCOM specified that the SCAR rifle would be a modular system in two threshold configurations, a " SCAR-Light (SCAR-L)" and a " SCAR-Heavy (SCAR-H)." ^[18] Both the SCAR-L and the SCAR-H were available in three variants: Standard (S), Close Quarter Combat (CQC), and Sniper Variant (SV).^[19]

In 2003 and 2004, Plaintiff and other firearm manufacturers submitted prototypes of rifles meeting USSOCOM specifications.^[20] USSOCOM officially awarded the contract to Plaintiff to produce the SCAR rifle and attachments on November 5, 2004.^[21] On that same day, USSOCOM ordered over $634, 000 of firearms and attachments from Plaintiff.^[22] Shortly thereafter, the ordered weapons were shipped to Crane, Indiana, inspected, and accepted by the U.S. government.^[23] To fulfill its obligations under the USSOCOM Program, Plaintiff shipped firearms bearing the SCAR mark throughout 2004 and 2005 to various U.S. military institutions, including USSOCOM, Naval Air Systems Command (" NAVAIR") and Naval Surface Warfare Center (" NSWC" ).^[24]

Throughout 2005 and 2006, magazine and newspaper articles tracked the development of the new assault rifle for the USSOCOM Program, highlighted Plaintiff's role in the Program, and outlined the features and benefits of the different variants and forms of the new SCAR rifle system.^[25]

2. Promotion of Plaintiff's SCAR Rifles

After the USSOCOM Program award, Plaintiff began promoting its SCAR mark to the wider commercial market. In 2005 and 2006, Plaintiff promoted its SCAR rifles at trade shows and during visits to gun dealers, law enforcement agencies, stores, and distributors.^[26] For example, in February 2006, Plaintiff unveiled its SCAR-Light and SCAR-Heavy prototypes during the SHOT Show held in Las Vegas, Nevada, a major industry trade show attended by military personnel, other government agencies, law enforcement organizations, manufacturers, distributors, retailers, sportsmen, hunters, and other firearms enthusiasts.^[27]

During these promotional activities, it is undisputed that Plaintiff did not have a semi-automatic version available for purchase by law enforcement and civilian consumers. The firearms displayed at the tradeshows were fully automatic machine guns, the sale of which is restricted to military and law enforcement agencies only.^[28] In order for Plaintiff to sell a semi-automatic SCAR to the civilian market, Plaintiff first needed government approval.^[29]

Nevertheless, Plaintiff continued to promote its SCAR rifle to law enforcement and civilian markets. Plaintiff distributed hats, t-shirts, brochures, and other marketing materials bearing the SCAR mark to others in the firearm industry.^[30] Plaintiff even referenced the new SCAR rifle in its 2006 product log and highlighted its role in creating USSOCOM's SCAR rifle.^[31] In several of Plaintiff's advertisements, the SCAR mark is displayed beside or above the words " S.O.F. Combat Assault Rifle" or some variant thereof.^[32] Several of Plaintiff's advertisements boast that Plaintiff's SCAR rifle was chosen by " U.S. Special Operations Command, " ^[33] and three of those advertisements depict the official emblem of the U.S. Special Operation Forces for the U.S. Military in connection with Plaintiff's SCAR mark.^[34]

Then, on March 2, 2006, Plaintiff issued a press release, entitled " The Making of the 21st Century Assault Rifle: SCAR SOF Combat Assault Rifle, " announcing its plan to introduce a semi-automatic version of the SCAR " in the next two years" for law enforcement and commercial markets.^[35]

Plaintiff began accepting orders for SCAR rifles from law enforcement agencies in either 2007 or 2008, and filled its first orders to law enforcement and civilian consumers in late 2008.^[36] Since that time, Plaintiff has sold nearly one hundred million dollars ($100, 000, 000.00) of SCAR firearms to law enforcement and civilian consumers.^[37]

3. Plaintiff's Trademark and Patent Registrations

To protect its interest in the SCAR mark, Plaintiff filed three trademark applications with the United States Patent and Trademark Office (the " USPTO" ).^[38] On April 22, 2008, Plaintiff filed the first application (the '575 Application) for the use of SCAR on firearms and related items, which is still pending before the USPTO.^[39] On January 13, 2009, Plaintiff filed a trademark application for SCAR and Design for use in connection with firearms and related items.^[40] The application claimed Plaintiff first used the mark in commerce on November 1, 2008.^[41] The USPTO registered the SCAR and Design mark on June 15, 2010 (the '448 Registration).^[42] On January 13, 2011, Plaintiff filed its third trademark application for SCAR for use in connection with games, toy replicas of weapons, and other related items.^[43] The USPTO registered the SCAR mark on February 21, 2012 (the '728 Registration).^[44]

In addition to registering the SCAR mark, Plaintiff obtained a design patent for its assault rifle (the '824 Patent) on July 19, 2011.^[45] On January 10, 2012, Plaintiff filed an action for patent and trade dress infringement involving the '824 Patent in the U.S. District Court for the Northern District of Texas, wherein Plaintiff alleged that it " introduced the FNH SCAR (Special Combat Assault Rifle) assault rifle, today known by two different models including the FN SCAR 16 and FN SCAR 17" in 2009.^[46] Plaintiff voluntarily dismissed the Texas suit prior to service of the complaint.^[47]

B. Defendant's Use of SCAR-Stock

Defendant is a firearms retailer and distributor incorporated under the laws of Georgia with its principal place of business in Bogart, Georgia.^[48] In 2005, Andrew Clyde, Defendant's CEO and owner, contacted John Klein, the president of Sage International, Ltd., to discuss the possibility of making replacement stock for certain rifles made by Sturm Ruger & Co., including the Mini-14, Mini-30, and AC-556, among others.^[49] The two followed up with each other in person at the February 2006 SHOT show in Las Vegas to discuss the details of the new product.^[50] After the February 2006 SHOT Show, Defendant adopted the SCAR-Stock ...