United States District Court, D. Minnesota
Patrick H. O'Neill, Jr., Esq., and Patrick J. Boley, Esq., Larson King, LLP, Saint Paul, MN, on behalf of Plaintiff.
David R. Marshall, Esq., and Leah C. Janus, Esq., Fredrikson & Byron, P.A., Minneapolis, MN; and Kevin P. Hickey, Esq., Bassford Remele, PA, Minneapolis, MN, on behalf of Defendants.
MEMORANDUM OPINION AND ORDER
ANN D. MONTGOMERY, District Judge.
On August 20, 2014, the undersigned United States District Judge heard oral argument on Defendants Dean R. Karau, David C. West, and Fredrikson & Byron, P.A.'s ("Fredrikson") Motion for Summary Judgment [Docket No. 105]. Plaintiff JJ Holand Limited ("JJH") opposes the motion. Also before the court is JJH's Objection [Docket No. 128] to Magistrate Judge Tony N. Leung's Order [Docket No. 111] dated July 17, 2014. For the reasons stated below, Defendants' motion is granted and Plaintiff's objection is overruled.
Almost 15 years ago, in December 1999, JJH retained Fredrikson's legal assistance in establishing the trademark "YES!" (or, the "Trademark") pursuant to United States law for JJH's cigarettes and other tobacco related products. Following a challenge from another company on the basis of fraud, JJH's Trademark was cancelled on December 14, 2006. Approximately six years later, JJH filed this lawsuit against Fredrikson, alleging multiple counts of legal malpractice. Compl. [Docket No. 1].
A. The Parties
Fredrikson is a law firm with its principal office in Minneapolis, Minnesota. David West and Dean Karau are attorneys practicing with Fredrikson. West represented JJH in the Trademark application, and Karau represented JJH later in the process.
JJH is a British Virgin Islands entity with a mailing address in Bangkok, Thailand. Janus Decl. [Docket No. 108] Attach. 1, Ex. A ("McCulloch Dep.") at 82:13-19. Keith McCulloch owned JJH during the time of Fredrikson's representation. JJH was operated by McCulloch and Ian Hoskins, both of whom claim to have been independent contractors. Id. at 69:23-70:3. McCulloch structured JJH to be owned by a trust located in the Bailiwick of Guernsey. Id. at 57:21-58:3. Because JJH was owned by a Guernsey trust, Guernsey-based trustees were the only individuals with the legal authority to sign documents on behalf of the company. Id. at 131:23-132:15. Wedlake Bell, a United Kingdom based law firm, also served as counsel for JJH. Wedlake Bell attorney David Harry served as director of JJH but was not involved in JJH's day-to-day operations. Janus Decl., Attach. 2, Ex. C ("Harry Dep.") at 12:20-13:7, 105:23-25. Many of the communications at issue between Fredrikson and JJH occurred through Wedlake Bell.
B. Fredrikson's Preparation of Intent to Use Application
At the time JJH hired Fredrikson, JJH had not used the YES! trademark on any products sold in the United States. Therefore, in February 2000, West prepared an application ("Intent to Use Application") to the U.S. Patent and Trademark Office ("USPTO") based upon JJH's "intent to use the mark in commerce." O'Neill Aff. [Docket No. 119], Attach. 6. Wedlake Bell suggested six tobacco-related goods to be covered by the Intent to Use Application. Fredrikson prepared the Intent to Use Application and suggested adding other tobacco related goods that JJH might want to cover as well. In its final form, the Intent to Use Application listed 21 tobacco-related goods. Attesting to its accuracy, Harry of Wedlake Bell signed the Intent to Use Application. Fredrikson filed the Intent to Use Application with the USPTO. Id., Attach. 8.
In February 2001, the USPTO issued a Notice of Allowance for the YES! trademark for the 21 tobacco-related goods, including cigarrettes, listed in the Intent to Use Application. Fredrikson sent Wedlake Bell the Notice, reminding JJH that the Intent to Use Application was filed based on products JJH had not yet used commercially and the Trademark registration would not issue until JJH filed a Statement of Use. Id., Attach. 9. Fredrikson alerted JJH that the Notice gave six months to file a Statement of Use along with specimens showing how JJH uses the marks in connection with the goods. "If JJH has not yet begun using the marks on a commercial basis, [Fredrikson] can obtain an extension of this deadline (assuming they still intend to actually use the marks)." Id . JJH had Fredrikson file four Requests for Extensions to File a Statement of Use, all signed by the Wedlake Bell attorney. Janus Decl., Attach. 1, Ex. B at 57-63 (McCulloch Dep. Exs. 20, 22 and 23). Each extension stated: "Applicant has a continued bona fide intention to use the mark in commerce in connection with those goods identified in the Notice of Allowance in this application." Id.
On April 30, 2001, JJH inquired through Wedlake Bell "what exactly constitutes use in the USA?" O'Neill Aff., Attach. 5 at 32 (West Dep. Ex. 145). On May 9, 2001, Fredrikson responded:
The mark is in actual use in commerce if products are transported between states in the U.S. or between a U.S. state and a foreign country (i.e. interstate commerce or commerce between the U.S. and a foreign country). Further, the mark must be used in the ordinary course of trade in connection with the goods stated in the application, rather than merely in attempt to reserve the right to a mark. Thus, for your client's purposes, it must have verifiable sales of its tobacco products to its U.S. customers. Once use in commerce has begun, we will need to provide the U.S. Trademark Office with the date of first use along with a specimen. A specimen would be a label, tag or container for the goods which depicts the mark.
Id. at 33 (West Dep. Ex. 147).
On May 11, 2001, attorneys at Wedlake Bell asked if shipping one container of 10, 000 cigarettes to the USA for sale would satisfy the requirement for use, or if a greater volume was required. Id. at 36 (West Dep. Ex. 149). West responded that the volume was sufficient to constitute "use" when a U.S. customer first purchased a packet of cigarettes, but cautioned, "please note that this should not be just one singular shipment but rather the beginning of continuous shipments of the goods which depict the mark YES." O'Neill Aff., Attach. 2 at 8 (McCulloch Dep. Ex. 12).
C. Potomac Tobacco Company informs JJH of its intent to challenge YES! trademark
On June 5, 2002, the Potomac Tobacco Company ("Potomac") contacted JJH by letter stating it was seeking to register a "YES" trademark in the United States, as it already had the trademark registered internationally. Potomac informed JJH that it intended to take legal action against JJH and its YES! trademark application. Id. at 10 (McCulloch Dep. Ex. 15). JJH then requested Fredrikson's advice on how to proceed. On June 21, 2002, Fredrikson attorney West responded. First, he assured JJH that Potomac would have to wait until JJH's application process was complete before taking legal action against it. At that point, "to succeed in the cancellation action, Potomac would have to show that it has superior rights to the mark in the U.S. or that JJHL committed some type of fraud in obtaining the registration." Id. at 11 (McCulloch Dep. Ex. 16). "In that regard, we will want to make sure that we have proper evidence of JJHL's use of the YES mark in the U.S. so that Potomac cannot later attack the registration on the basis of use." Id.
Prior to filing the Statement of Use, Fredrikson never clarified, and JJH never asked, what was needed beyond what had already been discussed. JJH and Fredrikson continued to act as if all that was needed were form filings. On June 2, 2003, JJH, through Wedlake Bell, informed Fredrikson it had sold 10.3 million units to its customers in the U.S. and asked about the "precise nature of the evidence we should submit" for the Statement of Use. O'Neill Aff., Attach. 5 at 43 (West Dep. Ex. 155). West of Fredrikson responded, "just the packaging." Id. at 44 (West Dep. Ex. 156). Fredrikson prepared the Statement of Use form. The form requires attesting that the applicant "is using the mark in commerce on or in connection with the following goods: (check one)
[Box 1] Those goods identified in the Notice of Allowance in this application.
[Box 2] Those goods in the Notice of Allowance in this application except: (Identify goods to be deleted from application)
Janus Decl., Attach. 1, Ex. B, p. 69 (McCulloch Dep. Exs. 28). Fredrikson checked Box 1. Fredrikson sent the form to attorney Harry at Wedlake Bell. Harry signed the document on behalf of JJH attesting to the truthfulness of the document as "a person with firsthand knowledge of the facts" in the application. Id. at 70. Hoskins and McCulloch of JJH did not review the Statement of Use form. West reviewed and filed the document with the USPTO on ...