A federal court judge has ruled that A/B Hop Farms and the Brulotte family illegally propagated Scarlet Spur Red Delicious trees in violation of Van Well Nursery’s plant patent, but threw out complaints relating to trademark infringement. The judge ordered that Van Well Nursery’s Scarlet Spur trademark be cancelled, saying it is no longer valid—an action that could have implications for many other fruit varieties.
In 2002, the National Licensing Association sued A/B Hop Farms and the Brulotte family, who owned or had owned orchards in Washington State where, it was alleged, illegally propagated Scarlet Spur Red Delicious and Smoothee Golden Delicious had been planted.
Also named in the suit was the lender MONY Life Insurance Company of New York, which foreclosed on some of the Brulotte properties in 2001.
The NLA alleged plant patent and trademark infringement. In 2004, U.S. District Court Judge Lonny Suko dismissed the case on the grounds that the NLA did not have legal standing to bring the suit because it did not own the patent.
The NLA refiled the suit against MONY and the Brulotte family on behalf of plaintiffs Van Well Nursery and Hilltop Nurseries, alleging infringement of the Scarlet Spur patent and trademark and of the Smoothee trademark.
In January 2005, Judge Suko ruled that, as a lender, MONY could not be held liable for patent infringement on the properties, because it did not own or have control over the trees at the time of the infringement.
MONY then responded with various counterclaims, including invalid trademark registration and unfair business practices. MONY argued that the Scarlet Spur and Smoothee trademarks had become generic and asked the court to order their cancellation.
Judge Suko ruled in March of this year that Scarlet Spur had become a generic name for that type of Red Delicious tree, and that the trademark could not be protected. The judge, in his written opinion, noted that the function of a trademark is to identify and distinguish the goods of one seller from those goods sold by another.
Although the nursery contends that the varietal/generic name for Scarlet Spur is “Snipes cultivar,” Scarlet Spur has become known to growers as the name of the cultivar, rather than a brand identifier for the source of the trees, the judge said. The public views the trademark not as a brand name, but as the name of the product. Even the nursery uses the term “Scarlet Spur” as the name of the patented variety in its catalog, he noted. The fact that the nursery uses the symbol ® with the name does not stop a trademark from becoming generic, he said.
The Smoothee trademark was registered to Hilltop Orchards and Nurseries in 1983.
The same situation applied to the Smoothee trademark, the judge wrote, but because that trademark is now owned by Inter-Plant Patent Marketing, Inc., which was not a party in the lawsuit, the judge did not order its cancellation.
Because of the invalidity of the trademarks, the judge dismissed all the trademark infringement, false designation of origin, and counterfeiting claims against A/B Hops, the Brulotte family, and MONY.
But he found that A/B Hops and the Brulotte family did infringe the Scarlet Spur patent. The amount of damages has yet to be determined. Yakima, Washington, attorney Roger Bailey, who represents the Brulotte family, said Arnold Brulotte, one of the defendants, died three years ago of a heart attack, which was thought to be related to the stress of farming. The family decided at that time to get out of the farming business.
“It’s an unfortunate situation when the NLA decides to come after these guys because they don’t have the resources to fight them, and they’re not in the farming business any more,” he said.
However, Bailey thought the NLA was not primarily targeting the Brulotte family, but was trying to establish what the law is in that area. In a deal made with the NLA, the Brulottes admitted the patent infringment so they would not have to spend money fighting the suit. In return, the NLA said it would not pursue damages even if it got a judgment against them, Bailey said.
MONY, in its counterclaims, sought attorney’s fees, which MONY’s attorney, David Hunter, estimates amount to close to $500,000. “Our main goal right now is to get the money back that we spent on this litigation,” he said.
Judge Suko said he would make a decision on attorney’s fees at the conclusion of the case, when all remaining claims have been resolved.
Unfair business practices
Still pending are MONY’s counterclaims accusing the nurseries of unfair business practices, violations of state and federal antitrust statutes, and violations of the Washington Consumer Protection Act.
“You have a group of nurseries, all of whom are horizontal competitors in the marketplace, suddenly getting together and creating a cartel to go out and selectively enforce their individual intellectual property rights, which are supposed to be their own, and share the recoveries with each other,” Hunter said.
MONY filed similar third-party claims against the NLA. It alleges that the NLA used its muscle power to coerce settlements for alleged patent and trademark infringement.
“We think their decisions on who to sue and who not to go after were done somewhat selectively,” Hunter said. “From our way of looking at it, and who they’ve done it to, it seems like they’ve gone for entities that were more likely to roll over as opposed to fight it.”
Hunter said the judge’s decision that the trademarks are invalid means that other varietal names, such as Gale Gala and others, should not have trademark protection either.
The ruling will not affect those who have already settled with the NLA for trademark infringement, he said. “But if we end up having to take the case all the way to trial and the court rules that their conduct was a violation of the Consumer Protection Act or antitrust misconduct, or was a knowing misuse of the patent or trademark statutes, that would be a hook for those who have been strong-armed to be able to go back and say they were hoodwinked,” he said.
Rex Stratton, a manager of the NLA, said that the nursery plaintiffs in the case were not happy with the decision and were considering whether to appeal.
Stratton said he believed the court’s decision was important, however, because it was another significant step in creating a body of law establishing clear boundaries and rules for the protection of permanent crops by plant patents and trademarks.
The ruling will impact some other varieties, he expects.
“We’re in the process of studying what varieties we think are affected. It gives us guidance and it gives us the ability to talk to nurseries about how they can protect the new varieties coming on line, and that’s good for the industry so that people who want to cheat are not going to be unfairly competing with those who legitimately pay for trees,” he added.
“We’re going to make it so the new varieties should be better protected than the old varieties, and we have some very good guidance from Judge Suko.”