Zetor North America, Inc. v. Rozeboom

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

HARRISON DIVISION

ZETOR NORTH AMERICA, INC. PLAINTIFF

V. CASE NO. 3:15-CV-03035

BRENT ROZEBOOM, individually and d/b/a

Ridgeway Enterprises, and as director

of Alberni Enterprises;

GLENDA ROZEBOOM, individually and d/b/a

Ridgeway Enterprises;

RIDGEWAY ENTERPRISES, a private trust company;

ALAN SCOTT PETERSON, individually

and as Executive Trustee of Ridgeway Enterprises;

ANTONIE (a.k.a. Tony) ROZEBOOM;

and ALBERNI ENTERPRISES, a private trust company DEFENDANTS

MEMORANDUM OPINION AND ORDER

Now pending before the Court are the following Motions:

• Motion for Partial Summary Judgment (Doc. 154 ), Brief in Support (Doc.

155), and Statement of Facts (Doc. 156) by Plaintiff Zetor North America ,

Inc. ("Zetor NA"); Response in Opposition (Doc. 162) and Statement of

Facts (Doc. 163) by Defendants Brent Rozeboom , Glenda Rozeboom ,

Alan Scott Peterson , and Ridgeway Enterprises (collectively, "the

Ridgeway Defendants"); and Reply (Doc. 171) by Zetor NA;

• Motion to Dismiss Counts 111 , IV, and VII (Doc. 169) by Zetor NA;

• Motion for Summary Judgment (Doc. 157), Brief in Support (Doc. 158),

and Statement of Facts (Doc. 159) by the Ridgeway Defendants;

Response in Opposition (Docs. 176, 177) and Statement of Facts (Doc.

178) by Zetor NA; and Reply (Doc. 185) by the Ridgeway Defendants; and

• Motion in Li mine to Exclude Expert Testimony (Doc. 164) and Brief in

Support (Doc. 165) by the Ridgeway Defendants, and Response in

Opposition (Docs. 179, 180) by Zetor NA.

The Court will begin by reviewing the factual and procedural history of the case

and explaining the legal standard pertinent when evaluating motions for summary

judgment. Then the Court will consider Zetor NA's Motion for Partial Summary

Judgment as to Count II of the Ridgeway Defendants' Counterclaim , followed by Zetor

NA's Motion to Dismiss Counts Ill, IV, and VII of its Amended Complaint. Finally, the

Court will take up the Ridgeway Defendants' Motion for Summary Judgment as to all

rema ining claims in the Amended Complaint, along with Defendants' Motion in Limine to

exclude the testimony of Zetor NA's expert witnesses, Dr. Steven Kopp and Mr. Dennis

Sisson. For the reasons explained below, Zetor NA's Motion for Partial Summary

Judgment and Motion to Dismiss are both GRANTED , the Ridgeway Defendants'

Motion for Summary Judgment is DENIED IN PART AND MOOT IN PART, and the

Ridgeway Defendants' Motion in Limine is GRANTED IN PART AND DENIED IN

PART.

I. BACKGROUND

Zetor NA filed this case on June 1, 2015, alleging that Brent and Glenda

Rozeboom , d/b/a Ridgeway Enterprises ("Ridgeway"), engaged in trademark

infringement and dilution, injury to Zetor NA's business reputation , unfair competition ,

and deceptive trade practices arising under the Lanham Act and the Arkansas

Deceptive Trade Practices Act. See Doc. 1. After the parties engaged in some

discovery, Zetor NA sought and received leave to file an Amended Complaint (Doc. 21)

on January 4, 2016.

According to the Amended Complaint, the Rozebooms, joined by Defendants

Alan Scott Peterson , who is identified as the Executive Trustee of Ridgeway, and

Antonie (aka Tony) Rozeboom, who is named as an owner/operator of Ridgeway,

conspired together "to facilitate the infringing and deceptive acts or omissions of

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Ridgeway," id. at 3, along with separate Defendant Alberni Enterprises, which is

described as a "private trust company," id. at 4. Specifically, Ridgeway is accused of

advertising, marketing , selling , and distributing new and used tractor parts using the

Zetor mark. The Zetor tractor mark is owned by HTC Holding a.s. ("HTC"), which is a

Czechoslovakian company that has granted an exclusive license to use the Zetor mark

to its wholly-owned subsidiary, another Czech company called Zetor Tractors a.s.

("Zetor Tractors"). Plaintiff Zetor NA is described in the Amended Complaint as "a

Florida Corporation ... . [that] has been granted a license to use the Zetor trademark

and Zetor Tractors promotional materials in the United States .. . ." Id.

Since the Ridgeway Defendants are not authorized dealers of Zetor products,

Zetor NA believes that Ridgeway's advertising and sale of Zetor tractor parts, through

Ridgeway's website and other means, tend to create and have created confusion in

consumers as to the source of these tractor parts. According to Zetor NA, Ridgeway

fails to clearly distinguish in its advertising which tractor parts it sells that are genuine

Zetor parts , and which are manufactured by other entities. In addition , Zetor NA

accuses Ridgeway of using the Zetor mark in promotional materials without permission

and in a manner that is confusing to consumers. Counts I, 11, and Ill are claims arising

under the Lanham Act. Count I is for trademark infringement, Count II is for federal

unfair competition , and Count Ill is for dilution of a trademark's value. Count IV arises

under Arkansas law governing trademark , Ark. Code Ann. § 4-71-213 , and states a

cause of action for trademark dilution and injury to business reputation . Count V is a

common-law cause of action for trademark infringement and unfair competition . Count

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VI alleges a violation of the Arkansas Deceptive Trade Practices Act ("ADTPA"), with

respect to Ridgeway's "false and misleading representations with the intent to confuse

purchasers and potential purchasers .... " Id. at 14. Count VII is a claim for copyright

infringement as to certain photographic works created and published in the Czech

Republic and allegedly used in promotional materials by Ridgeway. Finally, Count VIII

is a claim for civil conspiracy to infringe trademark rights , asserted by Zetor NA against

all Defendants.

On January 29 , 2016, less than a month after Zetor NA filed its Amended

Complaint, separate Defendants Brent and Glenda Rozeboom moved to compel

arbitration , citing the Court to a settlement agreement they entered into with Zetor NA,

Zetor Tractors, and HTC on behalf of themselves and Ridgeway in 2009. This

settlement agreement resolved a previous , similar dispute between the

Rozebooms/Ridgeway and all three related Zetor companies concerning Ridgeway's

use of the Zetor mark in its advertising materials. See Doc. 28-2. On February 29,

2016 , separate Defendants Alan Scott Peterson and Ridgeway filed a similar motion to

compel arbitration . After the arbitration issue was fully briefed , the Court held a hearing

on March 17, 2016 , to allow the parties to present oral argument. On April 22, 2016, the

Court issued an Opinion and Order (Doc. 96) denying the motions to compel arbitration ,

and finding that the arbitration clause in the 2009 settlement agreement did not apply to

any of the claims raised in the instant lawsuit.

Shortly thereafter, Defendants filed an interlocutory appeal of the Court's order

denying arbitration , and the Court's decision was affirmed by the Eighth Circuit in an

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opinion filed on July 3, 2017. See Doc. 111 -1. The formal mandate issued on

September 11 , 2017 , (Doc. 111 ), and the Court reset the matter for a jury trial. See

Doc. 116. Then the Ridgeway Defendants filed a three-Count Counterclaim (Doc. 137)

on December 11 , 2017. After the parties finished taking discovery, they filed the

dispositive motions and the motion in limine that are now before the Court for resolution .

Zetor NA's Motion for Partial Summary Judgment seeks to dismiss Count II of the

Ridgeway Defendants' counterclaim for breach of contract. Zetor NA contends that the

2009 settlement agreement did not create a forward-looking contractual relationship

between the parties, including granting a license to Ridgeway to use the Zetor mark in a

particular manner-other than the legal ways trademarks may ordinarily be used under

the "fair use" doctrine, absent a license. Further, Zetor NA argues that it could not have

breached the settlement agreement merely by filing the instant lawsuit.

Next, Zetor NA moves to voluntarily dismiss Counts Ill , IV, and VII of its

Amended Complaint. The Ridgeway Defendants do not oppose the Motion and have

also moved for summary judgment as to all remaining claims in the Amended

Complaint. Assuming Counts Ill , IV, and VII are voluntarily dismissed , this leaves

Counts I, 11 , V, VI and VIII for substantive review on summary judgment.

Beginning with the trademark-related claims arising from either federal trademark

law or the common law, as stated in Counts I, II, and V, the Ridgeway Defendants

contend that: (1) Zetor NA lacks standing to bring such claims because it does not own

the trademark in question and has not acquired rights to sue on behalf of the owner of

the mark (HTC) for infringement or unfair competition , and (2) the Ridgeway

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Defendants' use of the mark is not likely to cause consumer confusion or damage.

Related to the second argument is the Ridgeway Defendants' Motion in Limine , which

argues among other things that the Court should exclude Zetor NA's expert witness

testimony and consumer survey concerning the likelihood of confusion that could result

from the Ridgeway Defendants' use of the Zetor mark.

As for Count VI of the Amended Complaint, which asserts violations of the

ADTPA, the Ridgeway Defendants argue the claim must be dismissed because there is

no proof that Zetor NA suffered "actual financial loss," as defined by the statute, since

Zetor NA is not a consumer of Ridgeway goods and therefore has not been damaged in

the manner that the statute contemplates.

Finally, as to Count VIII for civil conspiracy, the Ridgeway Defendants argue that

nothing more than threadbare allegations have been asserted to support the claim , and

there is no evidence that the Defendants conspired together to commit any underlying

tort.

II. LEGAL STANDARD

The Court "shall grant summary judgment 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." Fed . R. Civ. P. 56(a). "[A] genuine issue of material fact exists if: (1)

there is a dispute of fact; (2) the disputed fact is material to the outcome of the case;

and (3) the dispute is genuine, that is, a reasonable jury could return a verdict for either

party." RSBI Aerospace, Inc. v. Affiliated FM Ins. Co. , 49 F.3d 399 , 401 (8th Cir. 1995).

The moving party has the burden of showing the absence of a genuine issue of material

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fact and that they are entitled to judgment as a matter of law, but the nonmoving party

may not rest upon mere denials or allegations in the pleadings and must set forth

specific facts to raise a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 4 77

U.S. 242 , 256 (1986) ; Celotex Corp . v. Catrett, 477 U.S. 317 , 324 (1986) . The Court

must view all evidence and inferences in a light most favorable to the nonmoving party.

See McCleary v. ReliaStar Life Ins. Co., 682 F.3d 1116, 1119 (8th Cir. 2012).

Ill. DISCUSSION

A. Zetor NA's Motion for Partial Summary Judgment

on Count II of the Counterclaim

The Ridgeway Defendants' Counterclaim at Count II alleges that when Zetor NA

filed the instant lawsuit, it breached the parties' 2009 settlement agreement. The

Ridgeway Defendants contend that the instant suit "seek[s] damages for conduct

specifically permitted under the terms of the Agreement," which "granted Ridgeway a

license to make use of the Zetor name as specifically set forth therein. " (Doc. 137, p.

5). The argument goes that because Zetor NA sued Ridgeway for using the mark in the

manner the parties agreed was acceptable under the terms of their 2009 settlement

agreement, Zetor NA constructively breached the settlement agreement and damaged

the Ridgeway Defendants in the form of decreased sales, loss of good will , and damage

to Ridgeway's business reputation.

Zetor NA's position in its Motion for Partial Summary Judgment is that the 2009

settlement agreement did not grant Ridgeway a license to use the Zetor name and

mark. Instead , the settlement agreement merely listed-for purposes of clarity-many

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of the ways in which Ridgeway could legally use the Zetor mark without having to

secure a license and without violating federal or state trademark law.

In the settlement agreement, Ridgeway agreed that it would "permanently cease

and desist the use of the ZETOR Mark. " (Doc. 137-1, p. 3). In particular, Ridgeway

agreed not to not use the mark "or other indicator of source that is confusingly similar to

the Zetor mark," and also consented to stop "promoting and advertising that Ridgeway

sells 'Zetor original equipment manufacturer parts' or 'Zetor OEM parts' or similar

phrases." Id. The only instance when Ridgeway was permitted to use the Zetor mark

was in "promotional/advertising materials (printed or otherwise) to describe that a

Ridgeway product is compatible with a referenced Zetor product or technology."

However, when using the mark for this purpose, Ridgeway was required to make certain

that:

a. The Zetor word mark is not part of the advertised product name.

b. The Zetor word mark is used in a descriptive phrase such as "fits,"

"for use with, " "for," or "compatible with ."

c. The Zetor word mark appears less prominent than the product

name.

d. The product is in fact compatible with, or otherwise works with, the

referenced Zetor product.

e. The reference to Zetor does not create a sense of endorsement,

sponsorship , or false association with Zetor or Zetor products or

services.

f. The use does not show Zetor or its products in a false or

derogatory light.

Id.

Zetor NA argues that the settlement agreement did not create a license for

Ridgeway to use the mark, as Count II of the Counterclaim alleges. Instead , the

settlement agreement merely outlined for Ridgeway's benefit an acceptable set of uses

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of the mark that would not violate federal or state trademark law. According to Zetor

NA's analysis, anyone could use its mark in the ways described in the settlement

agreement and not run afoul of the law, since such uses would comport with the "fair

use doctrine," which the law has exempted from trademark enforcement. Zetor

contends that, since the settlement agreement conferred no special rights or privileges

on Ridgeway to use the mark, the agreement could not possibly have been breached ,

as a matter of law, by Zetor NA's decision to sue Ridgeway for illegally using the mark.

The Court agrees that the Ridgeway Defendants cannot make out a cognizable

breach of contract action based on Zetor NA's decision to sue for infringement in this

case. Although the Ridgeway Defendants argue that their usage of the Zetor mark

does, in fact , conform to the usage restrictions spelled out in the settlement agreement

or otherwise qualifies as fair use, this argument is simply an affirmative defense to the

claims in the Amended Complaint. The Amended Complaint itself does not allege that

Defendants used the Zetor mark according to the terms of the settlement agreement.

Instead , it alleges a use that was contrary to the terms of the settlement, in that it

maintains: "Ridgeway's advertising , marketing and sale of goods using the Zetor name

is confusing to the consumer as to the source of the goods and the quality of the

product, and dilutes and tarnishes the reputation and good will of the Zetor name."

(Doc. 21 , p. 7). All causes of action asserted in the Amended Complaint flow from Zetor

NA's contention that Defendants' illegal use of the mark. Therefore, as a matter of law,

Zetor NA's decision to file this lawsuit alleging such illegal use could not possibly have

breached the parties' settlement agreement. Zetor NA's Motion for Partial Summary

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Judgment is GRANTED , and Count II of the Counterclaim for breach of contract is

DISMISSED WITH PREJUDICE.

B. Zetor NA's Motion to Dismiss Counts Ill, IV, and VII

Zetor NA moves to voluntarily dismiss Counts 111 , IV, and VII of the Amended

Complaint, without prejudice . The Ridgeway Defendants did not file any opposition to

the Motion . Therefore , the Motion to Dismiss (Doc. 169) is GRANTED , and Counts 111 ,

IV, and VII are DISMISSED WITHOUT PREJUDICE pursuant to Federal Rule of Civil

Procedure 41 (a)(2).

C. Ridgeway Defendants' Motion for Summary Judgment and Motion in Limine

1. Motion for Summary Judgment

The Ridgeway Defendants' Motion for Summary Judgment seeks dismissal of all

Counts in the Amended Complaint. Now that Counts 111 , IV, and VII have been

dismissed , this leaves only Counts I, 11 , V, VI , and VIII.

a. Count I-Lanham Act Violation for Trademark Infringement

Count I pleads federal trademark infringement under the Lanham Act , 15 U.S.C.

§ 1114. To prove infringement, there must be evidence of a use of the mark in

commerce, without the owner's consent, in a manner that is likely to cause confusion .

15 U.S.C. § 1114(1 ); B & 8 Hardware, Inc. v. Hargis Indus., 569 F.3d 383 , 389 (8th Cir.

2009). The parties here do not dispute that the Zetor mark was used in commerce .

The only issues to consider on this claim are those of standing and likelihood of

consumer confusion .

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i. Standing

The Lanham Act requires that the "registrant" of the trademark bring suit for

infringement. 15 U.S.C. § 1114(1 ). The Act more broadly defines a "registrant" to

include "the legal representatives , predecessors, successors and assigns of such

applicant or registrant. " 15 U.S.C. § 1127. Courts have interpreted the Act to mean that

only the following entities or individuals have standing to bring suit to bring a trademark

infringement action: (1) the owner of the mark, (2) the person or entity to whom the

owner of the mark has completely assigned all rights to the mark, or (3) the exclusive

licensee of the mark who has either been granted the explicit contractual right to

enforce the mark and sue on the owner's behalf, or else is not restricted by virtue of any

term in the license from fully enforcing the mark in the owner's place .1 See Calvin Klein

Jeanswear Co. v. Tunnel Trading , 2001 WL 1456577, at *4 (S .D.N .Y. Nov. 16, 2001)

("Where a licensing agreement does not grant the licensee a property interest in the

mark or otherwise assign to the licensee the registrant-licensor's ownership rights , the

licensee, even if exclusive, cannot enforce the mark under § 1114." (citing cases));

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Some courts have refused to acknowledge that an exclusive licensee would have

standing to sue for infringement at all unless its license were "truly exclusive," meaning that

it excluded even the licensor from using the mark and , thus, was more analogous to a

complete assignment of all rights in the mark. See, e.g. , Quabaug Rubber Co. v. Fabian

Shoe Co. , 567 F.2d 154, 159 (1st Cir. 1977) (defining an "exclusive licensee" as a

distributor or seller of trademarked goods "who had a right by agreement with the owner

of the trademark to exclude even him from selling in their territory"); /GEE Dists., Inc. v J

and J Snack Foods Corp. , 325 F.3d 586 , 598 (5th Cir. 2003) (explaining that "[i]t would be

antithetical to the basic principles of trademark law to extend to a licensee the rights of an

assignee without caution, since deeming a licensee an assignee would allow the assignee

to hold the registered trademark owner liable under trademark law, rather than simply

under contract law, for diluting the mark by utilizing a similar trademark in the assignee's

area").

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Ultrapure Sys. , Inc. v. HAM-LET Grp., 921 F.Supp . 659, 665-66 (N.D. Cal. 1996)

("[T]he licensee lacks standing when provisions in the contract indicate that the licensor

retains exclusive ownership of the mark."); Etri, Inc. v. Nippon Miniature Bearing

Corp. ,1989 WL 99575 , at *3 (N.D. Ill. Aug. 18, 1989) (finding that an exclusive licensing

agreement conferred standing on the licensee to sue for infringement of a trademark

because it specifically granted the licensee "the right to enforce any rights under the

Agreement, including but not limited to litigation" (internal quotation marks omitted)).

Here, the Ridgeway Defendants argue that Zetor NA is neither the owner of the

mark nor the exclusive licensee, and the distribution agreement between Zetor Tractors

and Zetor NA did not grant Zetor NA the explicit right to sue to enforce HTC's trademark

rights. Defendants further argue that the licensing agreement between HTC and Zetor

Tractors-which is more along the lines of an exclusive license to use the mark, as it

does not contain any geographical limitations-nonetheless does not contain any

language that grants Zetor Tractors the explicit right to sue on HTC's behalf. After

careful consideration of these issues, the Court finds that Defendants are correct.

Before delving more fully into the question of Zetor NA's standing, the Court must

point out the fact that it is most unfortunate that the issue was never raised in the nearly

three years this lawsuit has been pending-including when the case was brought before

the Eighth Circuit on interlocutory appeal. The parties have been familiar with one

another since at least 2008, when Zetor Tractors' legal counsel wrote a letter to

Ridgeway, accusing the company, through its principals, of infringing Zetor's licensed

mark. See Doc. 28-1. The threat of litigation in 2008 culminated in a settlement

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agreement signed in 2009 by representatives of a// three Zetor companies-HTC, Zetor

Tractors, and Zetor NA-as well as Brent Rozeboom, on behalf of Ridgeway, and Brent

and Glenda Rozeboom in their individual capacities. See Doc. 28-1 .

Up until the present, the Defendants have not suggested to the Court that Zetor

NA is the wrong entity to bring this lawsuit for trademark infringement, or that another

member of the Zetor family of companies should be joined as an indispensable party.

The first inkling the Court was given about the possible standing problem was on June

1, 2018, through the Ridgeway Defendants' Motion for Summary Judgment (Doc. 157).

At the time the Motion was filed , the trial of this matter was scheduled to commence

less than two months later, on July 23, 2018 .

With that background out of the way, the Court notes that even a cursory review

of the licensing and distribution agreements entered into by HTC, Zetor Tractors, and

Zetor NA-and submitted to the Court for the first time by the Ridgeway Defendants

along with their Motion for Summary Judgment-should have ra ised a red flag in the

parties' minds that the issue of standing was a potential problem. These agreements ,

when read together, set forth the nature of the three Zetor companies' business

relationship and their collective interest in the Zetor mark. Since these agreements

unambiguously show that Zetor NA is not the registrant of the Zetor trademark or the

registrant's assignee or legal representative , Zetor NA's right to sue for infringement is

certainly not obvious, and if such a right exists at all, it entirely "depends on the

language of [the] license agreement with [the mark's owner]. " See Fin. Inv. Co. v.

Geberit AG, 165 F.3d 526 , 532 (7th Cir. 1998).

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(1 ). Zetor Tractors' Rights in the Trademark

HTC is the registrant of the U.S. trademark for "ZETOR." HTC licensed its U.S.

mark to its wholly-owned subsidiary, Zetor Tractors, and Zetor Tractors, in turn, sub-

licensed the mark to its wholly-owned subsidiary and distributor in North America , Zetor

N.A. In analyzing the scope of Zetor Tractors' rights with respect to the trademark, the

Court has reviewed Document 158-1 in the record, which is titled "Amendment 9 to the

Trademark License Agreement" ("Licensing Agreement"). This Licensing Agreement

identifies HTC as the "Licensor" and Zetor Tractors as the "Licensee," and in Section 1.2

"gives the Licensee [Zetor Tractors] a non-exclusive right to use the trademark

mentioned in Article 1.1 of the Agreement" in all territories in which the mark is

registered. Id. at 3 (emphasis added). Lest the reader question whether the label ''non-

exclusive" is just that-a label-the Court is persuaded after reviewing the entirety of

the Licensing Agreement that the adjective "non-exclusive" accurately describes the

nature of Zetor Tractors' right to use and enforce the mark.

For example, in Section II of the Licensing Agreement, entitled "Rights and

Duties of the Licensor," and in Section 111, entitled "Rights and Duties of the Licensee ,"

HTC grants Zetor Tractors permission to "grant a sublicense for the use of trademarks;

which are the subject-matter of this Licensing Agreement" to any other entity or

entities-provided that certain conditions are met. Id. at 4. However, HTC specifies

that if Zetor Tractors "violates its obligations" by issuing a sub-license that does not

conform to HTC's conditions, Zetor Tractors "shall pay to [HTC] a contractual fine of . ..

ten million Czech Koruna." Id. at 5. Zetor Tractors lacks the unfettered discretion to

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decide who receives a sub-license and who does not. In fact, HTC retains control over

the sub-licensing process in that it requires Zetor Tractors "to notify [HTC] of each

provision of any sublicense regarding the trademarks for which a license is granted ...

to any third person in writing within 30 days after the granting of such sublicense" and to

attach "copies of contractors [sic] between the Licensee and the third person, to whom

the sublicense is granted .. . ." Id.

As for the question of who may enforce HTC's trademark rights in the event of

infringement, Zetor Tractors is not granted explicit permission to sue but instead is

directed "to immediately inform the Licensor [HTC] as soon as it learns of any violations

of the rights to the relevant trademarks and provide all necessary assistance in

protecting the rights to such trademarks." Id. Certainly, "providing assistance" to the

trademark owner is not the same as being granted permission to sue on the owner's

behalf, in the manner of an assignee.

The Licensing Agreement makes explicit the fact that HTC reta ins important

interests in the trademark and does not assign those rights to Zetor Tractors. In Section

111.3, the document provides:

The Licensee [Zetor Tractors] agrees not to take any steps to obtain

ownership rights to the relevant trademarks or other marking similar to

these trademarks without the written consent of the Licensor [HTC] during

the term and even after the termination of the Agreement. In addition, it

agrees not to take any measures aimed at registering such an identical or

similar designation in its own name. This also applies to other countries

where such designations are not protected .

Id.

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The Licensing Agreement also contains a cautionary statement directed to Zetor

Tractors, explaining that if Zetor Tractors "learns of any violations of the rights to the

relevant trademarks," it will "immediately inform [HTC] ... and provide all necessary

assistance in protecting the rights to such trademarks." Id. (emphasis added). The

agreement goes on to emphasize that in order to "avoid damage to the Licensor's

reputation and a reduction of the value of the relevant trademarks, " Zetor Tractors must

"maintain the quality of products and services covered by the relevant trademarks at the

highest level." Id. (emphasis added). All of these statements indicate that HTC retains

substantial interest in its trademark rights and has not assigned such rights, including

the right to sue on its behalf for infringement, to Zetor Tractors. Cf. OEP Corp. v.

Interstate Cigar Co., 622 F.2d 621 , 622 (2d Cir. 1980) (denying standing to sue to a

licensee whose contract stated it could not "claim any right whatsoever'' in the

trademark and was only directed to "notify" the owner and "take . .. steps as we may

reasonably require" to protect the mark); Gruen Mktg. Corp. v. Benrus Watch Co., 955

F.Supp. 979, 983 (N.D. Ill. 1997) (finding that the express language of the licensing

agreement required the trademark owner's approval before the licensee could assign

sub-licenses to others, and this showed that the owner retained ownership rights in the

mark so as to deny the licensee standing to sue for infringement).

(2). Zetor NA's Rights in the Trademark

At the outset, the Court observes that if Zetor Tractors lacks standing to sue for

infringement, then certainly its subsidiary, Zetor NA-whose rights to trademark usage

are more restricted , both geographically and otherwise-also lacks standing to sue.

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Zetor NA's interests as a sub-licensee are subordinate to Zetor Tractors'. The plain

language of the agreement between Zetor Tractors and Zetor NA, called the

"Distribution Agreement ," (Doc. 158-2), states explicitly that the Zetor mark is registered

in a variety of countries , including the U.S. , and that all marks are "owned by HTC." Id.

at 23. The Distribution Agreement provides that if Zetor NA (the "Distributor") learns

about any infringement activity, then Zetor NA "shall without undue delay inform the

Company [Zetor Tractors] of such an infringement and provide the Company and the

Owner of the Trademark [HTC] with necessary cooperation to protect the rights to the

Trademark. " Id. at 25. Again , the Court observes that having an obligation to "notify"

and "provide cooperation" to the owner of the mark is not the same as being

empowered by the owner to sue for infringement on the owner's behalf. Moreover,

Zetor NA is an order of magnitude removed from HTC in this contractual relationship,

and Zetor NA's property rights in the trademark are even more attenuated, as the

Distribution Agreement directs Zetor NA to report instances of infringement first to Zetor

Tractors, the mark's licensee , and not directly to HTC, the true owner of the mark.

The record also contains an amendment to the Distribution Agreement between

Zetor NA and Zetor Tractors ("Amendment"). See Doc. 158-3. The Amendment

extends the territory of Zetor NA from North America only to include South America and

Central America, as well. The Amendment reiterates that Zetor NA possesses a "non-

exclusive right for the word and graphic markings containing the expression ZETOR"

and directs Zetor NA to use the mark within its new geographic territory, but under the

set of conditions previously agreed to by the parties. Id. at 4 (emphasis added). In

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addition, the Amendment contains the following restriction regarding Zetor NA's use of

the mark:

The Distributor [Zetor NA] is not entitled to use the ZETOR Markings in

any other way different from the one specified in the Distribution

Agreement without prior written consent of the Company [Zetor Tractors].

The Distributor is not entitled to use the ZETOR Markings for its own

benefit to gain any profit from using the ZETOR Markings for other

purpose than stipulated herein.

Id. at 4-5 . And rather than empower Zetor NA to sue to act of its own accord to stop

infringement activity, the amendment instead encourages Zetor NA "to immediately

inform the Company [Zetor Tractors] about any violation of rights concerning the

ZETOR Markings" and "provide the Company with the required cooperation" to protect

the owner's rights . Id. at 5. For all these reasons , the Court finds that Zetor NA is not

an exclusive licensee of the mark and that it lacks both statutory and contractual

standing to sue for infringement under Section 1114 of the Lanham Act.

(3). Effect of Blaskovic Affidavit

It appears Zetor NA saw the writing on the wall when its counsel reviewed the

Ridgeway Defendants' Motion for Summary Judgment and realized-too late-that both

the case law and all relevant licensing agreements fail to provide it with a sufficient legal

basis to sue in its own right for trademark infringement. In a last-ditch attempt to fix the

problem and create standing , Zetor NA submitted an affidavit (Doc. 176-1) signed by

Martin Blaskovic, the Chairman of the Board of both HTC and Zetor Tractors, which

purports to explain away the language of the Licensing Agreement, Distribution

Amendment, and Amendment, and claim that the Zetor companies' true intention in

18

forming those agreements was to confer on Zetor NA the exclusive right to sue on

HTC's behalf for infringement in North America . (Doc. 176-1 ).

In the affidavit, Mr. Blaskovic begins by explaining that, despite any contractual

language to the contrary, it was always HTC's intent to exclusively license the Zetor

mark to Zetor Tractors and to confer on that company "the sole and exclusive right and

license to use, monitor, and enforce the 'Zetor' mark." Id. at 3. He goes on to explain

that, in his understanding , Zetor NA was granted a sub-license by Zetor Tractors to

"monitor and enforce the mark in its respective territories, which includes North America

and South America. " Id. He claims that both HTC and Zetor Tractors "are aware of the

present case ," "have remained informed of the proceedings ," and desire Zetor NA to

serve as Plaintiff in this action so that HTC and Zetor Tractors-both foreign

companies-may avoid "the burdensome costs and complexities accompanying a suit

in a foreign country. " Id. Finally, he affirms that, if the Court deems it necessary, both

HTC and Zetor Tractors "agree to be subject to the jurisdiction of this Court for the sole

and limited purpose of joining this case as owners of property rights of the mark at issue

in this case ." Id. at 4.

In considering Mr. Blaskovic's affidavit, the Court first observes that it cannot

trump the unambiguous language of the relevant agreements themselves. What Mr.

Blaskovic claims was the true intent of HTC, Zetor Tractors, and Zetor NA regarding

which entity may sue to protect HTC's trademark rights in North America is flatly

contradicted by the terms of the Licensing Agreement, Distribution Agreement, and

Amendment. His sworn statement of what all three companies intended cannot

19

overcome the fact that Zetor NA failed to submit any evidence of oral agreements that

modified the terms of the original contracts, or else written modifications of those terms.

Accordingly, the agreements explain the three Zetor companies' understanding about

their respective property rights in the Zetor mark, and the Court is unwilling to make

constructive amendments to the contracts' terms or interpret them in a manner that is

opposite to their plain meanings simply because Mr. Blaskovic says so . See Montwood

Corp. v. Hot Springs Theme Park Corp., 766 F.2d 359 , 361-62 (8th Cir. 1985) (finding

parol evidence inadmissible under Arkansas law if the contract at issue is clear and

unambiguous).

Important to all of the above concerns, however, is the fact that Mr. Blaskovic

claims that both HTC and Zetor Tractors have known about and been kept apprised of

Zetor NA's prosecution of this lawsuit and have agreed to Zetor NA taking the lead role

as Plaintiff. Also of consequence is Mr. Blaskovic's affirmation , presumably made on

behalf of HTC and Zetor Tractors, that neither company would object if the Court

determined that either or both of them was indispensable to resolving this litigation and

required either or both of their participation as plaintiffs.

In reviewing the Ridgeway Defendants' Reply to Zetor NA's Response to the

standing argument, it appears Defendants object to the Court joining or substituting

HTC and Zetor Tractors as plaintiffs at this late hour because Defendants "will not have

the opportunity to depose anyone from HTC or Zetor a.s. before the trial of this matter

or otherwise conduct discovery with respect to these entities. " (Doc. 105, p. 5). The

Court finds this objection to be frivolous for a number of reasons. First, the issue as to

20

standing should have been raised earlier in the proceedings. The settlement agreement

that the parties entered into in 2009 was signed by HTC, Zetor Tractors , and Zetor NA.

HTC was identified as the owner of the trademark in the original Complaint filed in 2015.

If the Ridgeway Defendants had questions or concerns about whether Zetor NA

possessed the authority to sue for infringement, and whether either of the other related

entities should have been joined as plaintiffs, the issue should have been ferreted out

years ago instead of raised in "gotcha" fashion on summary judgment, barely two

months before the scheduled date of trial.

Second , the Court disagrees that the Ridgeway Defendants will need to depose

anyone specifically from HTC or take further discovery from HTC to defend against the

trademark infringement claims lodged in this lawsuit. Even if HTC is added to the

lawsuit as the true owner of the mark, the nature of these claims and the Ridgeway

Defendants' theory of defense will not change. The Ridgeway Defendants already

briefed the merits of the claims on summary judgment, and in both the original and the

Amended Complaints , they were on notice that HTC owned the mark. They deposed

Mr. Blaskovic. See Doc. 158-10. They could have taken discovery as to the issues

concerning ownership at any point but chose not to do so. Furthermore, Plaintiff

informed the Court in an email , with a copy sent to the Ridgeway Defendants' counsel,

that Mr. Blaskovic intends to be present at trial and to testify. That same email , dated

July 2, 2018 , states that Mr. Blaskovic is President of Zetor NA. The relatedness of the

three companies-HTC , Zetor Tractors, and Zetor NA-and the fact that Mr. Blaskovic

21

has a leadership role in all three also indicates that none of the Defendants will suffer

prejudice if HTC is added to the lawsuit.

Lastly, the Ridgeway Defendants reference Federal Rule of Civil Procedure 19(a)

and suggest that the Court should dismiss the case with prejudice due to Zetor NA's

failure to join necessary parties Zetor Tractors and/or HTC. Rule 19 arguments are

ordinarily asserted in the context of a Rule 12(b)(7) motion to dismiss, and the

Ridgeway Defendants failed to make such a motion or make a failure-to-join claim as an

affirmative defense to the Amended Complaint in either their original answer (Doc. 27)

or their Amended Answer (Doc. 136). In their Motion for Summary Judgment, they do

not suggest that joinder of HTC is somehow infeasible due to the proposed joined

party's objection to venue, or because joinder would rob the Court of jurisdiction. In

general, when a necessary party is identified by the court, the ordinary remedy is to

dismiss the matter without prejudice and afford the plaintiff an opportunity to file an

amended complaint to include the necessary party. See Fed. R. Civ. P. 19(a) ("If a

person has not been joined as required, the court must order that the person be made a

party."); Sladek v. Bell Sys. Mgmt. Pension Plan, 880 F.2d 972, 980 (7th Cir. 1989)

("The dismissal of a complaint for failure to join an indispensable party is entirely

appropriate under Rule 12(b )(7), but dismissal with prejudice should ordinarily result

only after the court has ordered the party joined and the plaintiff has failed to do so."

(emphasis in original)).

The Court finds that Zetor NA lacks standing to assert claims for trademark

infringement, and HTC, the trademark's owner, has retained all substantial rights in the

22

mark and is necessary to join as a plaintiff in this case in order to fully dispose of all

pending claims. However, the Court also finds that dismissing this Count without

prejudice would serve no constructive purpose and would only protract the litigation

further. Therefore, the Court DIRECTS Plaintiff to file an amended complaint that adds

HTC Holding a.s. as an additional plaintiff by no later than Friday. August 17. 2018.

Plaintiff is not permitted to add any new factual allegations, claims, or causes of action

to the amended complaint beyond the minimal additions that will be required in the

"Parties" and "Jurisdiction" sections of the pleading. 2 Once HTC is added as a plaintiff,

there will no longer be a standing issue. In light of these decisions, the Court will

proceed in the next section of its discussion to examine the second part of the prima

facie case for trademark infringement: likelihood of consumer confusion.

ii. Likelihood of Consumer Confusion

If a plaintiff succeeds in making out a prima facie case of trademark

infringement, including the element of likelihood of consumer confusion,

the defendant may offer rebutting evidence to undercut the force of the

plaintiffs evidence on this (or any) element, or raise an affirmative defense

to bar relief even if the prima facie case is sound , or do both.

KP Permanent Make-Up, Inc. v. Lasting Impression I, 543 U.S. 111, 120 (2004); see

also 15 U.S.C. § 1115(b) (listing defenses). Indeed, "merely rebutting the plaintiff's case

on confusion would entitle the defendant to judgment, good faith or not." KP, 543 U.S. at

120.

2

As previously mentioned, the current version of the Amended Complaint (Doc. 21)

already identifies HTC as the owner of the trademark.

23

The Ridgeway Defendants contend that Zetor NA has failed to make out a prima

facie case of trademark infringement because it has failed to establish proof of a

likelihood of consumer confusion . The following six factors should be considered in

determining whether there is a likelihood of confusion:

(1) the strength of the owner's mark; (2) the similarity between the owner's

mark and the alleged infringer's mark; (3) the degree to which the products

compete with each other; (4) the alleged infringer's intent to 'pass off' its

goods as those of the trademark owner; (5) incidents of actual confusion ;

and , (6) the type of product, its cost, and conditions of purchase.

Sensient Techs. Corp. v. SensoryEffects Flavor Co. , 613 F.3d 754, 763 (8th Cir. 2010).

As to the first factor, the Court finds that Zetor NA has set forth enough proof on

summary judgment to establish a prima facie case for the strength of the Zetor mark.

The Ridgeway Defendants concede that "the Zetor mark may possess inherent

conceptual strength ," but they dispute its overall strength because it allegedly lacks

"commercial strength ." (Doc. 158, p. 8). In support of this argument, the Ridgeway

Defendants note that many consumers "had never even heard of Zetor," and the brand

purportedly occupies only a small percentage of the market share for tractors in the

United States. Id. But the "strength of the mark" inquiry has nothing to do with the

commercial strength/success of the mark or the marked product in the marketplace. It

refers instead to whether the mark is distinctive-as opposed to generic. Here, the

Ridgeway Defendants have fai led to rebut Zetor NA's contention that "ZETOR" is a

fanciful term that is neither generic nor descriptive. See Sensient, 613 F.3d at 763

(explaining that marks may be "generic, descriptive, suggestive , or arbitrary or fanciful"

and that "an arbitrary or fanciful mark is entitled to the highest level of protection").

24

The second factor in the test is the similarity between the owner's mark and the

alleged infringer's mark. The dispute at hand does not center on whether Zetor's mark

is confusingly similar to Ridgeway's. Instead, Zetor NA accuses Ridgeway of

appropriating the Zetor mark for use in Ridgeway's advertising and marketing materials

without permission , and in a way that would tend to confuse consumers as to the source

of Ridgeway's products (which is not Zetor). The evidence presented by Zetor NA

satisfies its prima facie burden as to this factor, as there is no dispute that Ridgeway

uses Zetor's actual mark on its advertising and marketing materials.

The third factor is the degree to which the products at issue compete with one

another in the market. The parties do not dispute that: (1) Ridgeway sells tractor parts

and advertises to its customers that those parts may be used in Zetor tractors, (2)

Ridgeway sells parts made by manufacturers other than Zetor that, nonetheless, may fit

in Zetor tractors and are generally sold at lower prices than genuine, licensed Zetor

parts, and (3) Ridgeway is not a licensed dealer of Zetor parts. Zetor NA has produced

evidence that the tractor parts that Ridgeway sells are in direct competition with Zetor's

genuine parts . For example, Brent Rozeboom , who was identified by Ridgeway as a

Rule 30(b)(6) witness, testified that he considered Zetor NA to be a competitor of

Ridgeway. See Doc. 148-8, p. 9. The evidence presented is therefore sufficient to

meet Zetor NA's burden of establishing the element of market competition.

The fourth factor of the test considers the Ridgeway Defendants' intent to "pass

off' the tractor parts it sells as genuine, licensed Zetor tractor parts. See Dakota Indus.

v. Dakota Sportswear, 946 F.2d 1384, 1388 (8th Cir. 1991) (defining "passing off' as

25

when "the deceived customer buys the defendant's product in the belief that he is

buying the plaintiff's" (internal quotation and citation omitted)). Zetor NA points out that

the parties were previously embroiled in a dispute over whether Ridgeway infringed

upon the Zetor mark. After that, Ridgeway was arguably placed on notice as to what

sorts of activities would constitute infringement, and what would not, as memorialized in

the parties' 2009 settlement agreement. A factfinder could therefore gather that proof of

Ridgeway's unauthorized use of the mark in its advertising and marketing would tend to

indicate the intentional nature of that use, rather than merely accidental use.

Furthermore, Zetor NA has produced other evidence of intentional use, including a copy

of Ridgeway's website in October of 2014, in which Ridgeway represented that it sold

"genuine original equipment manufacturer parts that are shipped to us from the Czech

Republic" as well as "parts from other manufacturers that will work for Zetor equipment. "

(Doc. 177-6, p. 2). Considering the evidence presented by Zetor NA, the Court finds

that it has met its prima facie burden to show intentional "passing off."

The fifth factor concerns evidence of actual consumer confusion. Here, Zetor NA

has presented evidence of actual confusion from multiple sources, but the Ridgeway

Defendants have largely ignored this evidence and have instead focused on the

sufficiency of a survey conducted by Zetor NA's purported expert, Dr. Stephen Kopp.

Dr. Kopp's survey is intended to show the likelihood that consumers viewing Ridgeway's

website will be confused as to the source of Ridgeway's tractor parts. The Court will

separately address the sufficiency of the survey evidence and Dr. Kopp's opinion later

in its discussion, but for now notes that the evidence of actual confusion that Zetor NA

26

has presented is sufficient to meet its burden of production and justify sending the

matter to the jury on the issue of likelihood of confusion, even if the survey evidence

were discounted. For example, Ridgeway customer Darryl Vaughn testified that he

assumed that certain tractor parts he ordered from Ridgeway were genuine Zetor parts

"by the packaging ... they come in ." (Doc. 176-10, p. 6). He testified that "over the

course of the years most everything came in packaging that looked like had Zetor

numbers and I assumed were OEM [Original Equipment Manufacturer] products." Id. at

10-11 . He further testified that he had conversations with Brent Rozeboom in which Mr.

Rozeboom had intimated that the parts came from Czechoslovakia and were therefore

genuine Zetor parts. Id.

Next, Zetor tractor dealer Wayne Middendorf testified that he had "quite a few"

customers talk to him about parts they purchased from Ridgeway that were problematic.

(Doc. 176-11 , p. 7). In one instance, Mr. Middendorf's customer brought him a tractor

part he ordered from Ridgeway that did not fit the customer's Zetor tractor. The part

"had a part number that is the same number as the Zetor part number," had a Zetor logo

on it, and looked like a Zetor part, but was not the same size and specifications as the

Zetor part, so the part did not fit properly in the Zetor tractor. See id. at 9. Mr.

Middendorf explained that he had also ordered tractor parts directly from Ridgeway for

his customers, when the parts were on back-order from Zetor NA (the licensed dealer).

Although Mr. Middendorf stated that he did not specifically ask Brent Rozeboom

whether the parts were "original," Mr. Middendorf believed that "the way they were

packaged, the way they came, they .. . sure looked ... original, like the same parts I

27

would get from Zetor. In the same packaging ." Id. at 13-14. "But when you t[ook] it out

of the package you could see some . . . differences" that would "probably not" be

apparent to someone who was not a Zetor dealer. Id. at 14.

Christine Gyllenberg testified in her deposition that she Googled Zetor parts one

day and came across Ridgeway's website. (Doc. 176-12, p. 5). She noticed that the

particular tractor part she was interested in was offered at a lower price by Ridgeway,

as compared to the price offered by Zetor NA. This was confusing to her. Id. at 6. She

emailed Petr Laznicka, Spare Parts Manager for Zetor NA, and asked why the price to

order a part directly from Zetor NA was higher than the price from Ridgeway. Id. Ms.

Gyllenberg stated that she was unsure whether Ridgeway's parts were genuine Zetor

parts, due in part to the fact that she obtained a price book from Ridgeway, "and there

was some stuff in here that said that the parts were from Czech Republic. And there

were also some parts pictures that showed the Zetor logo." Id. at 7. Brent Rozeboom

also confirmed in his deposition that some of his customers and potential customers

previously indicated that they thought he was affiliated with Zetor and that Ridgeway

was "[p]robably . . . a Zetor Dealer." (Doc. 177-1, p. 15).

Lastly, Petr Laznicka of Zetor NA testified that he received phone calls from

customers who received Zetor tractor parts from Ridgeway that did not fit their tractors.

(Doc. 176-1 , p. 6). The customers expressed confusion about whether the part they

purchased from Ridgeway was a genuine Zetor part. Mr. Laznicka claimed in his

deposition that he inspected some of the parts in question and took pictures of the

packaging. Id. at 9. He provided copies of emails and photographs from customers

28

and dealers to substantiate his claim that they were confused about whether the source

of Ridgeway's parts was Zetor and whether Ridgeway was selling OEM parts. See

Doc. 17-7. The above evidence of actual consumer confusion weighs in favor of a

finding that Zetor has met its burden of showing a likelihood of confusion on summary

judgment.

Moving on to the sixth and final factor in the analysis, the Eighth Circuit directs

the district court to consider the type of product at issue, its cost, and the conditions of

purchase to determine whether the typical consumer of the product-one who may

have more expertise in the market, for example-might not, in fact, be confused as to

the source of the product. Sensient, 613 F.3d at 769 . If the Court were to conclude that

the product is typically sold to sophisticated consumers after a collaborative process,

then it would follow that the likelihood of confusion would be diminished. Id. The

Ridgeway Defendants through their expert witness, Hal Poret, contend that buying

tractor parts is a serious, considered affair, "not like grabbing a candy bar off the

counter at a supermarket which you might do without thinking in three seconds." (Doc.

158, p. 19). The Ridgeway Defendants argue unpersuasively that it is unlikely that a

potential customer would be confused as to any affiliation between Ridgeway and the

Zetor mark because "[a]ny person shopping for a Zetor part necessarily spend[s] an

ample amount of time searching for the specific part needed to fix his or her Zetor

tractor." Id. The Court notes that the instances of actual consumer confusion

documented in the previous several paragraphs contradict this reasoning. Moreover, if

Ridgeway's website, catalog , and other marketing materials use the Zetor mark in an

29

unauthorized manner, and if Ridgeway's principals and other representatives make

representations to consumers as to the source of the parts, it follows that no amount of

time spent by consumers studying these materials would clear up the confusion or

potential for confusion.

Accordingly, the Court finds that the balance of the six factors described herein

weigh in favor of finding that Zetor NA has met its prima facie burden of showing a

likelihood of consumer confusion, even before the survey evidence produced by its

expert is considered. As the Ridgeway Defendants have not produced any affirmative

rebuttal evidence of their own-in the form of oppositional surveys or other documents

or testimony-that would tend to undercut the force of Zetor NA's evidence or raise an

affirmative defense to bar relief even if the prima facie case is established , the Court

finds that Count I survives summary judgment, subject to Zetor NA amending its

complaint to add HTC as a plaintiff. Once that amendment is made, this claim will be

ready for trial.

b. Count II-Lanham Act Violation for Unfair Competition

Count II of the Amended Complaint alleges a violation of the Lanham Act at 15

U.S.C. § 1125(a)(1) for using "any word , term, name, [or] symbol . . . or any false

designation of origin , false or misleading description of fact, or false or misleading

representation of fact," in a way that "is likely to cause confusion , or to cause mistake,

or to deceive as to the affiliation ... as to the origin, sponsorship , or approval" of the

goods. Unlike a suit under Section 1114, a violation of Section 1125 does not

necessarily require the owner of the trademark to serve as plaintiff. Instead "any person

30

who believes that he or she is or is likely to be damaged by such act" may bring suit. 15

U.S.C. § 1125(a)(1 )(B).

Zetor NA suggests that it may bring suit in its own right, as one who is or is likely

to be damaged by Defendants' alleged "passing off' activity. The United States

Supreme Court has held that to bring suit under Section 1125(a), "a plaintiff must allege

an injury to a commercial interest in reputation or sales." Lexmark Int'/. v. Static Control

Components, 134 S. Ct. 1377, 1390 (2014). Other than the issue of standing to bring

suit, the elements of a claim for unfair competition under Section 1125(a) are essentially

the same as those for trademark infringement under Section 1114. Davis v. Walt

Disney Co., 430 F.3d 901, 903 (8th Cir. 2005). As the Court found in its earlier

discussion that Zetor NA met its burden on summary judgment to establish: (1) that the

Zetor mark is entitled to protection, (2) was used by the Ridgeway Defendants in

commerce, and (3) was used in a manner that was likely to cause consumer confusion,

the only element left for the Court to consider as to Count II is Zetor NA's standing to

bring the claim.

As previously discussed, the Court finds that the Licensing Agreement between

HTC and Zetor Tractors did not specifically grant Zetor Tractors the right to sue and

enforce the mark on HTC's behalf, and instead reserved many rights with respect to the

mark to HTC for its exclusive use. Also, the Court found that the Distribution Agreement

between Zetor Tractors and Zetor NA specified that Zetor NA's non-exclusive sub-

license to use the mark was even more restricted than Zetor Tractors' license,

particularly with respect to restrictions on geography, as well as other factors. In

31

addition, the Distribution Agreement did not specifically grant Zetor NA the right to sue

and enforce the mark on HTC's behalf and reserved substantial rights to the mark for

HTC's benefit and use. Because of these findings , and because no specific evidence

was presented on summary judgment as to what particular injury Zetor NA suffered as

to its commercial interest or sales-as distinguished from HTC's-the Court is reluctant

to find that Zetor NA has sufficiently established standing to bring this claim on its own.

All doubts as to standing are satisfied, however, if HTC is added to the lawsuit.

The Court has already ordered Zetor NA to file an amended complaint to add HTC as a

plaintiff, and once this occurs , there will be standing for Zetor NA and HTC to bring

Count II.

c. Count V-Trademark Infringement and Unfair Competition

Count V is a claim for trademark infringement and unfair competition under the

common law. The claim is essentially the same as the Lanham Act claims in Counts I

and 11 , both of which the Court has dismissed without prejudice, due to standing, but has

declined to dismiss on the merits on summary judgment. Both claims will be reinstated

following the filing of an amended complaint , and the Court anticipates that they will

ultimately go to trial.

The parties agree in their respective briefs on summary judgment that the

common law on trademark is in accord with the law concerning violations of the Lanham

Act. Indeed , as this Court previously explained in Visual Dynamics, LLC v. Chaos

Software, Ltd., 2018 U.S . Dist. LEXIS 24362 , at *21-22 (W .D. Ark. Feb. 12, 2018), "a

claimant may establish violations of all of 15 U.S.C. § 1114(1 )(a), 15 U.S.C.

32

§ 1125(a)(1 )(A), Ark. Code Ann . 4-71-212 , Arkansas common-law trademark

infringement, and Arkansas common-law unfair competition , simply by proving both of

the following elements: '(1) that it owns a valid , protectable mark; and (2) that there is a

likelihood of confusion between its mark and [the] defendant's mark. "' (quoting B & B

Hardware, Inc. v. Hargis Indus., 569 F.3d 383, 389 (8th Cir. 2009)). As the Court finds

that Zetor NA has raised a genuine dispute of material fact as to whether the Ridgeway

Defendants committed trademark infringement and unfair competition , Count

V-asserting the same claims under the common law-is also preserved for trial.

d. Count VI-ADTPA Violation

Count VI asserts that the Defendants violated the ADTPA by making false or

misleading representations in their marketing and advertising in a way that was

deceptive and intended to confuse consumers as to the source of the goods. (Doc. 21 ,

pp . 13-14). The ADTPA provides a private right of action to "any person" who suffers

actual damage or injury as a result of a violation of the Act. See Ark. Code Ann.

§ 4-88-113(f). The Act prohibits a variety of listed practices, including "[k]nowingly

making a false representation as to the . . . source , sponsorship, approval, or

certification of goods or services" and "any other unconscionable, false, or deceptive act

or practice in business , commerce, or trade. " Ark. Code Ann . § 4-88-107(a)(1 ), (a)(10) .

Under the version of the statute that was in effect at the time of the alleged wrongful

conduct, a private right of action was available for "[a]ny person who suffers actual

financial damage or injury as a result of an offense or violation. " Ark. Code Ann .

§ 4-88-113(f) (2011 ). The ADTPA was amended in 2017. The amended statute now

33

states that a private right of action can only be brought by "[a] person who suffers an

actual financial loss as a result of his or her reliance on the use of a practice declared

unlawful" by the Act. Ark. Code Ann . § 4-88-113(f)(1 )(A) (2017) . The 2017 amendment

also clarified that a claimant "must prove individually that he or she suffered an actual

financial loss proximately caused by his or her reliance on the use of a practice declared

unlawful under this chapter. " Ark. Code Ann. § 4-88-113(f)(2).

The Court interprets the 2017 amendment to the ADTPA to mean that in most, if

not all , cases , an individual or entity bringing a private right of action must suffer

financial loss as a result of its own reliance on another party's unlawful and misleading

business practices. Here , Zetor NA is not a consumer of Ridgeway's goods, so it did

not suffer any alleged financial loss as a result of its reliance on Ridgeway's advertising

and marketing . However, the Court previously considered the retroactive effect of the

2017 amendment to the ADTPA in Mounce v. CHSPCS, LLC, 2017 WL 4392048 , at *7

(Sept. 29 , 2017 W .D. Ark.), and found at the time that the textual changes to the ADTPA

cited above-namely, the additional requirement of proof of actual financial loss and

proximate causation/direct reliance-were substantive in nature, "in that [they] could

deprive a claimant of the ability to assert a cause of action that she could have asserted

under the former version of the Act. " Id. This Court in Mounce therefore concluded :

"Because the amendment is substantive, it should only be given prospective effect." Id.

Other courts in Arkansas applying the 2011 version of the ADTPA-prior to the

2017 amendment-have also found that businesses that were not direct consumers of

products deceptively advertised , but were "persons" suffering damage as a result of an

34

alleged deceptive act or practice, could , in fact, reasonably file suit under the plain

language of the statute . See Vanoven v. Chesapeake Energy Corp., 2011 WL

1042251, at *5 (E.D. Ark. Mar. 22, 2011) ("Accordingly, by its plain terms, the ADTPA

protects the business community at large, providing its members with a broad cause of

action to remedy harms suffered from deceptive or unconscionable conduct.");

ElectroCraft Ark. , Inc. v. Super Elec. Motors, 2009 WL 5181854, at *7 (E.D. Ark. Dec.

23, 2009) ("The Court additionally finds that the ADTPA is not limited to actions brought

by consumers . . .. The ADTPA does not state that business entities or non-consumers

cannot utilize its provisions as a basis for recovery and, thus, one does not have to be a

consumer to recover under the ADTPA." (internal quotation marks and citation

omitted)).

Under the 2011 version of the ADTPA, to establish a claim for damages, a

plaintiff was required to set forth proof of: "(1) a deceptive consumer-oriented act or

practice which is misleading in a material respect, and (2) injury resulting from such

act." Skalla v. Canepari, 2013 Ark. 415, at *14 (2013). The Court finds that the

Ridgeway Defendants are not entitled to summary judgment on the ADTPA claim

because there remain genuine, material questions of fact as to whether the Defendants

engaged in a deceptive consumer-oriented act with respect to their advertising and

marketing of tractor parts , and whether Plaintiffs suffered actual damages as a result.

This claim will be preserved for trial.

35

e. Count VIII-Civil Conspiracy

The last cause of action in the Amended Complaint is one for civil conspiracy.

"Civil conspiracy is an intentional tort requiring a specific intent to accomplish the

contemplated wrong ." Dodson v. Allstate Ins. Co. , 345 Ark. 430, 445 (2001). A claim

for civil conspiracy must allege the existence of an agreement to accomplish a purpose

"that is unlawful or oppressive or to accomplish some purpose, not in itself unlawful,

oppressive, or immoral, by unlawful, oppressive or immoral means , to the injury of

another." Id. (citing Mason v. Funderburk, 247 Ark. 521 , 529 (1969)). Because civil.

conspiracy is not a separate tort, it must be premised on some underlying tortious

activity. Varner v. Peterson Farms, 371 F.3d 1011 , 1016 (8th Cir. 2004). "Infringement

of a trademark is a tort," Dakota Indus. v. Dakota Sportswear, 946 F.2d 1384, 1388 (8th

Cir. 1991 ), and in the case at bar, Zetor NA contends that Defendants conspired to pass

off their products as authentic OEM Zetor parts, in violation of trademark law. Further,

Zetor NA argues that by purposefully structuring Ridgeway as a "private company trust,"

the business structure obscures who is liable for the acts and omissions of Ridgeway

and furthers the conspiracy.

The Ridgeway Defendants' Motion for Summary Judgment recites the elements

of a claim for civil conspiracy and then states without further explanation that "the only

evidence cited by Plaintiff is insufficient as a matter of law to establish that any of the

Defendants entered into a conspiracy with one another. " (Doc. 158, p. 30). The Court

disagrees and finds that there remain genuine , material disputes of fact as to whether

the Defendants consp ired to infringe upon the registered mark in question and trade on

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the goodwill and brand-recognition inspired by the mark. There are further questions of

fact as to whether the Defendants collectively acted to obscure the identities of the

individuals, companies, and other entities behind the conspiracy by setting up

illegitimate business organizations. This claim will remain for trial.

2. Motion in Limine

In their Motion in Limine, the Ridgeway Defendants seek to exclude testimony

offered by Zetor NA's experts , Dr. Steven Kopp and Dennis Sisson, CPA. Specifically,

they seek to exclude: (1) Dr. Kopp's survey and opinion testimony about the likelihood

of consumer confusion resulting from Ridgeway's advertising and marketing , and (2) Mr.

Sisson's opinion that Ridgeway's business structure is designed to conceal assets and

avoid paying taxes. Zetor NA opposes the Motion.

a. Dr. Kopp and the Consumer Confusion Survey

Dr. Kopp is a marketing professor at the University of Arkansas who teaches

marketing and research strategy. According to his affidavit, he has worked in the area

of trademark and intellectual property research for almost 30 years and has published

numerous peer-reviewed articles related to trademark. See Doc. 176-15, p. 3. The

Ridgeway Defendants contend that Dr. Kopp possesses only generalized knowledge of

market and consumer research, has never testified as an expert in a trademark case ,

and is unfamiliar with the term "net confusion ," which the Ridgeway Defendants' expert

claims is a common term that federal courts use in determining likelihood of confusion .

For those reasons , the Ridgeway Defendants claim Dr. Kopp is not qualified to offer an

expert opinion in this case.

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The decision whether to exclude expert testimony is committed to a district

court's discretion, subject to the Federal Rules of Evidence , including Rule 702.

Johnson v. Mead Johnson & Co. , LLC, 754 F.3d 557, 561 (8th Cir. 2014). Rule 702

states that:

A witness who is qualified as an expert by knowledge , skill , experience,

training , or education may testify in the form of an opinion or otherwise if:

(a) the expert's scientific, technical , or other specialized knowledge will

help the trier of fact to understand the evidence or to determine a fact in

issue; (b) the testimony is based on sufficient facts or data; (c) the

testimony is the product of reliable principles and methods; and (d) the

expert has reliably applied the principles and methods to the facts of the

case.

The Eighth Circuit has simplified these requirements into a three-part test:

First, evidence based on scientific, technical, or other specialized

knowledge must be useful to the finder of fact in deciding the ultimate

issue of fact. This is the basic rule of relevancy. Second , the proposed

witness must be qualified to assist the finder of fact. Third , the proposed

evidence must be reliable or trustworthy in an evidentiary sense, so that, if

the finder of fact accepts it as true, it provides the assistance the finder of

fact requires.

Johnson, 754 F.3d at 561 (quoting Polski v. Quigley Corp ., 538 F.3d 836, 839 (8th Cir.

2008)).

The proponent of expert testimony bears the burden of showing by a

preponderance of the evidence that these requirements are satisfied , but "[c]ourts

should resolve doubts regarding the usefulness of an expert's testimony in favor of

admissibility." See Marmo v. Tyson Fresh Meats, Inc., 457 F.3d 748 , 757-58 (8th Cir.

2006). Nevertheless, "a court should not admit opinion evidence that 'is connected to

existing data only by the ipse dixit of the expert."' Id. at 758 (quoting Gen. Elec. Co. v.

Joiner, 522 U.S . 136, 146 (1997)).

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In reviewing Dr. Kopp's CV and affidavit, the Court finds that his background ,

experience , and education are adequate to allow him to opine on the subject of market

and consumer research , including trademark-related issues such as likelihood of

confusion. According to his CV, he received a Master's of Business Administration as

well as a doctoral degree in Marketing and has taught at the university level and

gathered and analyzed survey data for over 25 years. (Doc. 165-2, p. 2). He serves on

the editorial review board for five different marketing or advertising journals and

critiques experimental and survey-based studies in his editorial capacity. Id. He also

claims authorship of 13 published articles in peer-reviewed journals, three of which

appear to concern product marketing and/or intellectual property rights. His affidavit

lists nine peer-reviewed conference presentations on the subject of trademark

infringement, including consumer confusion. The fact that Dr. Kopp has never served

as an expert witness at a trademark trial is not disqualifying. This Court therefore

concludes that Dr. Kopp's qualifications are sufficient to allow him to offer expert

opinions on the subject matter of his proposed testimony.

The Johnson Court, interpreting Daubert v. Merrell Dow Pharmaceuticals, Inc.,

509 U.S. 579 , 592-9 (1993), explained that a trial court evaluating the sufficiency of an

expert's proposed testimony must make an "assessment of whether the reasoning or

methodology underlying the testimony is scientifically valid and of whether that

reasoning or methodology properly can be applied to the facts in issue." Johnson, 754

F.3d at 562. Rather than exclude any of Dr. Kopp's opinions at the outset, as

Defendants urge, the Court finds instead that they should be "tested by the adversary

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process with competing expert testimony and cross-examination . " Id. (quoting

Daubert, 509 U.S. at 590).

As for the admissibility of Dr. Kopp's survey on likelihood of confusion ,

Defendants' expert, Hal Poret, opined that Dr. Kopp's survey is flawed because he did

not: (1) survey the proper universe , (2) utilize a proper control group , (3) realistically

simulate market conditions , and (4) properly account for "survey noise" and assess what

Mr. Poret calls "net confusion. " With regard to the first criticism , Mr. Poret claims that

Dr. Kopp did not properly survey a group of persons that would include the potential

purchasers of Zetor tractor parts. When Mr. Poret testified in his deposition, he

explained that the universe of survey participants must be "a realistic test that's going to

tell us whether real consumers in the real world will be confused. " (Doc. 165-4, p. 12).

In his opinion , those who were surveyed had to have been those "who own a Zetor

tractor or otherwise have some reason to consider going on a website to buy parts for a

Zetor tractor," otherwise the universe would have been unrealistic. Id.

Dr. Kopp's survey included "known farmers, farm equipment dealers, farm

equipment repair, Ridgeway customers , Zetor dealers (and owners), and other people

who had experience with or involvement with farm equipment." See Doc. 176-14, p. 9.

Responses to the survey came from 46 states and 5 Canadian provinces, with

traditional farming states-such as Iowa, Illinois, Missouri, Indiana, California , Ohio , and

Wisconsin-returning the majority of the responses . Id.

After examining Dr. Kopp's survey, the Court is unpersuaded that it is so

fundamentally flawed and devoid of scientific validity that it lacks probative value on the

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issue of likelihood of confusion . While Mr. Poret has pointed out a few ways in which he

would have conducted the survey differently, including selecting a more limited

universe, it is not facially unreasonable for Dr. Kopp to have defined the universe as

including both actual and potential buyers of Zetor tractor parts, including those

participants who own farm equipment and are familiar with farming methods, even if

they do not currently own Zetor tractors . The Eighth Circuit has previously held that "an

action for trademark infringement may be based on confusion of consumers other than

direct purchasers, including observers of an allegedly infringing product in use by a

direct purchaser." lnsty*Bit, Inc. v. Poly-Tech Indus., Inc., 95 F.3d 663 , 672 (8th Cir.

1996).

In considering the universe of survey subjects Dr. Kopp used and the reasons

why he selected them, the Court finds Dr. Kopp 's decision to survey customers who

were familiar with farming and likely to buy tractor and/or farm equipment-but who

were not necessarily owners of Zetor tractors-is supported by reasonable assumptions

and conclusions and is the product of testable research methods and principles.

Though Dr. Kopp and Mr. Poret may reasonably disagree about whether the universe of

survey participants was too broad or just broad enough, these objections go more to the

weight of the evidence, not to its admissibility. Even Mr. Poret concedes that "there is

nothing that tells you exactly how to [choose an appropriate universe of respondents] in

any particular case, " (Doc. 165-4, p. 16), and in any event, the bottom line is that the

"proper universe consists[s] of potential purchasers of the products at issue," id. at 17.

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As for Mr. Poret's claim that Dr. Kopp failed to use a proper control group , the

Court once again finds that this criticism does not mean that the survey lacks testable

scientific value and would not be potentially relevant and helpful to the jury. Dr. Kopp

explained in his testimony that he did use control groups in conducting the survey. A

control is used to compare how participants are answering the survey questions in order

to determine whether outside forces or assumptions may be influencing the answers. In

the survey here, Dr. Kopp showed the survey participants four webpages similar to

Ridgeway's in order to test whether Ridgeway's advertising and marketing were likely to

cause confusion as to the source/quality/authenticity of the products. Two of the pages

Dr. Kopp created were designed to be the controls. One of those controls was a

webpage that did not contain a disclaimer as to the website's affiliation with Zetor, and

the second webpage featured an image of a Kubota tractor, rather than a Zetor tractor.

Dr. Kopp used the first control webpage to compare whether the participants'

responses to the survey varied depending on whether a disclaimer appeared on the

bottom of the page. He used the second control webpage to test whether depicting a

particular brand of tractor on the webpage would cause confusion among consumers

and influence their responses. Mr. Poret explains that "[w]hat a control group is

supposed to do is it's supposed to be an alternate version of the website that eliminates

any supposedly improper use ," but he criticizes Dr. Kopp for creating an alternate

version of the website that is "more confusing" because it eliminated the disclaimer

language that Ridgeway currently has on its website . (Doc. 165-4, p. 21 ). Though the

Court finds Mr. Poret' s objections to be sincerely held and potentially good subject

42

matter for debate, it is not clear to the Court that Dr. Kopp failed to include a control or

controls in the survey, such as to render the survey scientifically invalid .

Moving on to Mr. Poret' s criticism about the survey simulating true market

conditions, he believes that there were no quality control standards in place to make

certain that participants "meaningfully reviewed the web page," and he believes the fact

that survey participants could take the survey on their mobile phones tends to imply that

they were more likely to be distracted while taking the survey and were not able to see

the website clearly. Id. at 25. Zetor NA disagrees with these arguments, pointing out

that Ridgeway's website was reformatted in 2015 specifically to accommodate

customers using mobile devices. Zetor NA also observes that some Zetor consumers

actually view Ridgeway's webpage from their mobile phones.

Dr. Kopp points out that his survey advised participants to take as much time as

they needed to review the web page before moving on . Mr. Poret' s testimony does not

persuasively explain why Dr. Kopp's written advice to participants to pay attention and

take their time was not sufficient to create a testable, verifiable result, over some other

method of verification.

Mr. Poret' s final criticism of the survey is that it fails to properly account for

"survey noise" and assess what Mr. Poret calls "net confusion. " This criticism is closely

related to Mr. Poret' s critique about the lack of a proper control group. He argues that

because Dr. Kopp failed to set up proper control webpages, he was unable to screen

out the "noise" resulting from survey participants being confused by other, extraneous

information that could also cause confusion. As previously explained , the Court finds

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that Dr. Kopp's use of controls and his design of the survey appear supported by

scientific methods and are capable of reproduction. In addition, the Court finds that Dr.

Kopp is qualified to render an expert opinion on the topic of likelihood of confusion, and

he has meaningful professional experience in designing , conducting , and analyzing

surveys based on marketing and advertising. Rather than exclude the survey, the Court

will permit its introduction and afford the Ridgeway Defendants, through their expert, an

opportunity to attack the weight of the evidence presented in the survey and attempt to

convince the jury that its value is negligible.

b. Mr. Sisson's Opinion

The Ridgeway Defendants also critique Plaintiff's second expert, Mr. Dennis

Sisson, arguing that his opinion is not based on established scientific principles, is

unrelated to any claim or defense, constitutes an impermissible legal conclusion, and , if

allowed into evidence, would unduly prejudice and confuse the jury. Mr. Sisson , who is

a Certified Public Accountant ("CPA"), was hired by Zetor NA to consider whether

Ridgeway's business organization and the business practices of its managers, Brent

and Glenda Rozeboom , were designed to conceal assets and income from third parties,

particularly the Internal Revenue Service ("IRS"). The Ridgeway Defendants label Mr.

Sisson's opinions about Ridgeway's business organization as "inflammatory" as well as

confusing and misleading. (Doc. 165, p. 12).

Mr. Sisson's CV reveals that he holds a Bachelor of Science in Business

Administration and is a licensed CPA. He was an Internal Revenue Agent for the IRS

for eight years, and then he worked in the private sector as an accountant for the next

44

24 years. See Doc. 179-6, p. 2. He describes himself as having "[c]onsiderable training

and experience in the application of tax laws and dealing with taxing authorities and

their related investigations ," as well as experience in "the preparation of all forms of tax

returns" and work on "business start-ups, consolidations and liquidations." Id. The

Court finds that Mr. Sisson's background qualifies him to offer expert opinions related to

accounting , the tax treatment of business entities , and the use of fictitious business

structures to avoid paying taxes.

Even though Mr. Sisson is a qualified expert, this does not mean that his

proposed testimony would be both proper and relevant to present to a jury. Importantly,

Mr. Sisson was not hired by Zetor NA to opine about the validity of any of the

Defendants' income tax returns . Instead, Mr. Sisson was provided with copies of

documents that memorialized the "pure trust" business structure used by Defendant

Alberni Enterprises and the "private business company trust" used by Ridgeway. He

was then asked to opine about whether these business structures were "designed for

the purpose of concealing assets from third parties. " (Doc. 177-2, p. 2). Mr. Sisson

explains in his expert report what he believes is "the purpose of pure trusts," and then

he goes on to list the "common feature[s]" of these types of business structures. Id. at

3.

Regardless of how Zetor NA frames Mr. Sisson's opinions , the Court does not

believe they will aid the jury in its determination of the fact issues in this case. None of

the claims have to do with income tax fraud. Instead , the case alleges trademark

infringement and unfair competition , consumer fraud and deception, and civil

45

conspiracy. Arguably, knowing what a "pure trust" and a "private company trust" are

might be of assistance if the jury were being asked to determine whether to pierce the

corporate veil and hold the principals of these businesses personally liable for

wrongdoing done by their companies. But piercing the corporate veil is a legal analysis ,

and Mr. Sisson may not offer legal opinions to the jury. Moreover, the Court does not

anticipate that any fact issues related to piercing the corporate veil would ever go to the

jury, based on how the case has been postured to date. Finally, even if Mr. Sisson's

opinions on these matters could be characterized as marginally relevant or useful, the

Court finds that their probative value would be substantially outweighed by the danger

of unfair prejudice. Fed. R. Evid. 403.

For all of these reasons, the Court grants the Ridgeway Defendants' request to

exclude Mr. Sisson from rendering expert testimony at trial and finds his expert report

and conclusions therein to be inadmissible.

IV. CONCLUSION

In accordance with the reasoning set forth above , IT IS ORDERED that Zetor

NA's Motion for Partial Summary Judgment (Doc. 154) and Motion to Dismiss Counts

111, IV, and VII (Doc. 169) are GRANTED . Count II of the Counterclaim is DISMISSED

WITH PREJUDICE, and Counts Ill , IV, and VII of the Amended Complaint are

DISMISSED WITHOUT PREJUDICE pursuant to Rule 41 (a)(2).

IT IS FURTHER ORDERED that the Ridgeway Defendants' Motion for Summary

Judgment (Doc. 157) is DENIED IN PART AND MOOT IN PART. The Motion is

DENIED with respect to Counts V, VI , and VIII of the Amended Complaint. The Motion

46

is MOOT as to Counts Ill , IV, and VII , which were dismissed without prejudice on

Plaintiff's motion , pursuant to Rule 41 (a)(2). The Court declines to dismiss Counts I and

II due to lack of standing and instead DIRECTS Plaintiff to file an amended complaint

that adds HTC Holding a.s. as an additional plaintiff by no later than Friday, August 17,

2018. Plaintiff is not permitted to add any new factual allegations, claims, or causes of

action to the amended complaint beyond the minimal additions that will be required in

the "Parties" and "Jurisdiction" sections of the pleading.

IT IS FURTHER ORDERED that the Ridgeway Defendants' Motion in Limine to

Exclude Expert Testimony (Doc. 164) is GRANTED IN PART as to the expert testimony

of Mr. Dennis Sisson AND DENIED IN PART as to the expert testimony and written

report of Dr. Steven Kopp. This matter remains set for trial to commence on September

1?, 201s. tl.

IT IS SO ORDERED on this I~ ':ay of A g

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