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Miyano Machinery USA, Inc. v. MiyanoHitec Machinery

September 5, 2008

MIYANO MACHINERY USA, INC., PLAINTIFF ,
v.
MIYANOHITEC MACHINERY, INC., THOMAS ("TOM") MIYANO, A/K/A TOSHIHARU MIYANO AND STEVEN MIYANO, A/K/A SHIGEMORI MIYANO, DEFENDANTS .



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff Miyano Machinery U.S.A., Inc. ("MMU") brings suit against MiyanoHitec Machinery, Inc. ("MiyanoHitec"), Tom Miyano and Steven Miyano alleging trademark infringement in violation of the Lanham Act, 15 U.S.C. §§ 1114 and 1125(a) as well as cybersquatting, unfair competition, deceptive trade practices, and seeking a declaratory judgment. Soon after filing suit, MMU moved for a preliminary injunction barring MiyanoHitec from using any of MMU's trademarks or tradenames, specifically the "Miyano" name, the Miyano plain text mark, and the "winged M" mark. A hearing was held on July eighteenth and twenty-third, 2008. The Plaintiff seeks the injunction prior to the International Machine and Tool Show scheduled to begin September eighth, 2008 in Chicago. For the reasons stated below, this Court grants MMU's Motion for a Preliminary Injunction.

STATEMENT OF FACTS

The Marks at Issue

The parties here dispute the use of the trade name "Miyano," the "plain text" and "stylized text" Miyano marks, and the triangle "winged M" mark. MMU argues that they have exclusive rights to use these marks. The triangle "winged M" mark was registered as registration number 1,217,317 on November 23, 1982. Marchionne Testimony at 68:8-11; Pl. Ex. 3. That registration eventually lapsed, and MMU filed to re-register the mark on May 9, 2007, stating a first-use date of January 1, 1970. Pl. Ex. 4. MMU registered the plain text Miyano mark on November 6, 2007, Pl. Ex. 1. The word "Miyano" in the marks has undergone some changes, and the new version is referred to as "stylized." Marchionne at 69:5-12; 23-25; see also Olczak 89:10-13. The M in the stylized version is a merger of the letter M and the infinity sign. Marchionne at 69:13-15. MMU registered the "stylized" Miyano text mark on March 7, 1989. Pl. Ex. 2. Tom Miyano testified that the companies began using the stylized Miyano to differentiate the company name from his family name. T. Miyano 112:1-6.

Defendants have opposed MMU's 2007 attempt to re-register the triangle "winged M" mark and have filed to cancel the original registration of the mark. Pl. Ex. 29, 33, 39. In addition, Defendants have petitioned the United States Patent and Trademark Office to cancel MMU's trademark of the non-stylized text Miyano, arguing that Tom Miyano did not give consent to register the mark and that the registration was fraudulently obtained. Pl. Ex. 34.

The History of MMU

MMJ is a wholly-owned subsidiary of Miyano Machinery, Inc., a Japanese company. ("MMJ"). MMU manufactures and sells lathes, including multiaxis machines, and accessories for those machines. See, e.g., Minemura Testimony at 13:20-14:3. The machines cut metal at a high degree of accuracy and can be used in a variety of trades including the orthopedic implant industry. In the 1960's, prior to the existence of MMU, Dynamic Machine Company became the American national distributor for Miyano Machinery Japan. Marchionne at 36:4-5. At that time, the name "Miyano" and the triangle "winged M" logo were placed on every machine. Id. at 36: 8-9. The marks appear as a supplement to this order. At some point thereafter, MMU came into existence, at first using the Dynamic Tools sales facility as their headquarters. They were incorporated in Illinois in 1975. Id. at 36:12-16. Dynamic Tools connected MMU with all their distributors, and MMU began distributing the lathes throughout the U.S. Id. at 36: 21-25. MMU invested a great deal of money in advertising through their distributors and in magazines and often entered trade shows. Id. at 37:3-10.

Initially some problems occurred with the machines MMJ distributed through Dynamic Tools. Id. at 38:7-9. Specifically, in the 1960's, the machines had difficulty making heavy cuts. Id. at 38: 8-9. However, over two years of adjustments, the machines became some of the best on the market. Id. at 38:11-39:10. MMU now distributes their lathes throughout the United States, Central and South America, and Canada. Id. at 39:12-16. MMU built a dealer network, good will, and a customer base over their many years' of operation. Id. at 37:25-38:4.

MMU and its products are known as "Miyano" in the machine tool industry. Id. at 50:14-19; Tom Miyano Declaration at ¶ 6. Indeed, they are referred to as such in various machining industry magazines (see Pl. Ex. 8, 11, and 12, such as in an October 2005 issue of TMW Machining World); Marchionne at 1-52:15 (news articles as recent as 2007); see Pl. Ex. 6, 10. MMU refers to themselves as Miyano on their own website and in their advertisements. See Pl. Ex. 13, 67-68. The Miyano brand name is still used on MMU products for sale in North America. Seito Testimony at 48:8-13.

Defendant Tom Miyano was the head of MMU and MMJ for many years in Japan prior to 2004. Marchionne at 62:20-25. Tom Miyano is well-known in the machine tool industry and some of MMU and MMJ's good will is likely attributable to him. Id. at 63:1-16. Tom Miyano is the named inventor on approximately twenty-three patents in the Machine Tool industry. T. Miyano at 109:9-11.

Tom Miyano left MMJ in 2004 pursuant to an agreement with Japan's Industrial Revitalization Corp. ("IRC"). Pl. Ex. 46, 63. Pursuant to their agreement, the IRC purchased Tom Miyano's shares in MMJ, relieving him of approximately one-hundred-twenty million dollars in debt. As a condition of Japan's relief of this debt, Tom Miyano was required to leave the company and abdicate his role with MMJ. Id.

MMU's Use of the Triangle "Winged M" Mark

MMU argues that it has used the Miyano name, text marks, and triangle "winged M" mark since its inception. MMU has used the name Miyano on machines, literature, stationary, checks, packing lists, service reports, warranties, shopping bags, on servicemen's and distributors' shirts, and binders and folders given to potential customers. Marchionne 39:20-40:7; Pl. Ex. 9, 16, 44-45, 49, 65, 67. For example, the triangle "winged M" mark is worn on the servicemen's shirt that has been worn by employees of MMU since 1997 or 2000. Marchionne at 40:11-19; Olczak at 76:15-21. Individuals wearing those shirts with the mark travel to customer locations to repair machines throughout North and South America. Olczak at 77:10-20. Indeed, Derek Olczak ("Olczak"), MMU's service manager, testified that he wears such a shirt when he performs installations, which are included in the sale of the product. Id. at 93:18-94:2.

The triangle "winged M" mark and the Miyano name also appear on a machine warranties (e.g. a machine warranty issued April 25, 2008 bears the "winged M" Marchionne 42:14-43:8; 44:24-25). A similar form has been in use since the 1970's, and this exact form has been in use since January of 1998. Id. at 45:1-9; 16-24. The triangle "winged M" mark also appears on a packing slips that have been used since th early 1980's (e.g. an order shipped on January 26, 2007, Id. at 47:1-48:10), service reports (e.g. a report on September 27, 2005, Olczak at 79:22-80:12), and on information regarding MMU's maintenance training classes for customers, which is available only to customers and incorporated into the price of the product itself. Id. at 81:14-82:18. The triangle "winged M" also appears on invoices for machine repairs (e.g. invoices issued on May 2, 2002 and June 26, 2003. Id. 83:6-24; 84:13-85:8). It is also worthy of note that the triangle "winged M" mark appeared on the actual refurbished and resold machine that the May 2, 2002 invoice refers to. Id. 84:6-12. In addition, the Miyano name and triangle "winged M" mark also appear on folders, shopping bags, and sample parts handed out at the International Machine Tool Show up until at least 2000. Marchionne at 48:12-50:13.

The Miyano name and the triangle "winged M" mark also appear on MMU's website. Minemura at 9:16-10:15. Only dealers and authorized customers have access to the website, which has been active for about three years. Id. at 10:16-18; 11:12-14.

As for the machines themselves, Henry Marchionne, corporate advisor to MMU and also a former president of MMU and MMU employee for at least 36 years, testified that MMU stopped putting the triangle "winged M" mark on most of its machines by 1999. Marchionne at 72: 7-14.

Olczak confirmed, noting that the mark does not appear on most new machines and that he has not seen it on a new machine in at least seven years. Olczak at 87:11-17. However, Yoshiharu Seito ("Seito"), the president of MMJ, testified that the triangle "winged M" has been used on machines in the past five years, and noted that the machines last a long time; so machines displaying the mark are still in operation. Seito at 48: 14-23, 62:22-63:2. Indeed, it appears that the triangle "winged M" does not appear on machines in MMU's 2007 product guide. Minemura 23:22-25:10. Similarly, it does not appear on MMU machines in MMU's 2000, 2004 and 2006 IMTS pamphlets, Minemura at 29:16-30:11; 32:1-10, although the mark appears on a mechtron machine in the 2004 pamphlet. Id. at 30:12-18.

However, the triangle "winged M" mark still appears on at least two series of MMU machines: Ocean and Mectron machines. For example, the triangle "winged M" mark appears on Miyano's Ocean line of machines and has for at least 10 years. Id. at 18:7-19:15, 19:23-20:2. Such machines have been sold in the United States for at least twenty years, and the last sale of such a machine took place in December of 2007. Id. at 19:19-24, 20:9-12. The mark on the Ocean machines is slightly different than the exact registered mark in that the text is stylized and the word "ocean" also appears. Id. at 22:10-23:6. The triangle "winged M" also appears on Mectron series machines. Id. at 40:12-41:6. Although they are not technically MMU machines, MMU distributed Mectron's machines in the United States, and Akihiko Minemura ("Minemura"), the General Manager of MMU, believed that they had some responsibility for the quality. Id. at 31:8-12; 35:17-24.

Events Leading to this Lawsuit

The year after his father was required to leave MMJ, Defendant Steven Miyano, Tom Miyano's 29 year-old son, formed Defendant MiyanoHitec in March of 2005, although it was originally incorporated as "Hitec Machinery International, Inc." Pl. Ex. 17, 19. Tom Miyano joined the company in October of 2006, although Steven remains the sole owner. Steven Miyano Testimony 70:12-16; Pl. Ex. 17. In September of 2006, the company changed its name from Hitec Machinery International, Inc. to MiyanoHitec because Steven Miyano wanted to put his name on it. S. Miyano at 71:11-16. He was aware that MMU was already using the name Miyano in the United States. Id. at 71:17-21. MiyanoHitec officially registered its name change on November 3, 2006.*fn1 MiyanoHitec plans to manufacture and sell CNC Lathes, most notably a multiaxis machine. Id. at 74: 2-6. Steven Miyano claims to have designed the multiaxis machine, although his undergraduate degree is in economics and he has taken only a one week course in CAD design. Id. at 74:7-24; 75: 8-12. He alleges that he had the requisite experience to design such a complex machine because the machine tool industry is "in his blood," he "grew up" in the industry, and he has visited all of MMU and MMJs facilities. Id. at 77:8-22. Steven Miyano claims that Tom Miyano is not part of the company but is merely "helping" him. Id. at 76:8-10. Tom Miyano testified that he is helping Steven Miyano to design, produce, and sell new machines and is the coinventor on the relevant patent applications. T. Miyano 109: 12-20.

Seito met with Tom Miyano and Steven Miyano on November 7, 2006 at Tom Miyano's request. Seito at 43:17-44:7, 44:19-20. At that meeting Tom Miyano asked Seito to give him or sell to him the triangle "winged M" logo. Id. at 45:25-46:9. Tom Miyano gave Seito two business cards for his business then called Hitec Machinery International, Inc. Id. at 46:16-47:5. Tom and Steven Miyano did not mention the impending name change to MiyanoHitec Machinery. Id. at 47:6-8; S. Miyano 72:25-73:6. MMU rejected Mr. Miyano's proposal. Seito 47:16-18.

Despite Seito's lack of agreement, Tom and Steven Miyano began to use the name "MiyanoHitec" and have continued to use the almost identical version of the "winged M" logo on their business cards and web site. See Pl. Ex. 20-27, 53. Their "winged M" logo appears identical to MMU's "winged M" that appears inside a triangle in its logo. MMU's counsel sent a cease and desist letter to MiyanoHitec, demanding that they stop using the Miyano name and the "winged M" mark. Pl. Ex. 21. In return, Defendants offered to use a disclaimer, but MMU responded that this was not satisfactory. Pl. Ex. 52. Defendants responded, indicating that they were now doing business as "Tom & Steven Miyano Machinery" and intended to use a disclaimer. Id.

In spite of the fruitless meeting with Seito and the letter from MMU's counsel, MiyanoHitec began exhibiting at minority trade shows in 2007, attending four shows and using the name and the logo. S. Miyano at 80:11-18; Pl. Ex. 53. MiyanoHitec has already attended the minority trade fair in Detroit. S. Miyano at 73:9-10. At that trade fair, they displayed a small piece of paper at their cubicle containing a "disclaimer" indicating that they were not affiliated with MMU. Id. at 73:17-21; Pl. Ex. 53. Steven Miyano asserts that such a disclaimer was used at all the trade shows. S. Miyano at 81:24-82:3. He asserts that he does not want to be associated with MMU/MMJ because the quality of his machine (which is yet to be displayed or sold) is superior. Id. at 82:9-18.

MMU is now aware that MiyanoHitec is planning on attending the International Manufacturing Technology Show ("IMTS") in September of 2008. Seito at 48:24-25. IMTS is one of the three largest machinery tool shows in the world. Id. at 44:11-15. Steven Miyano stated that they have spent appoximately 300 to 400 thousand dollars in preparation for IMTS. S. Miyano at 80:19-81:5. Steven Miyano says he intends to display a larger disclaimer and he will direct consumers looking for MMU to their booth at the IMTS show. Id. at 83:1-20. Notably, he does not assert that his new company will be unable to survive if it is unable to receive orders at the IMTS show. Id. at 84:14-20. Also notably, he was extremely evasive when questioned at the hearing as to why a disclaimer is necessary if there would not be any confusion between MMU and MiyanoHitec. Id. at 85: 12-86:10.

MiyanoHitec has not yet sold any machines, but it plans to bring one for exhibition at the IMTS show. Id. at 75: 15-16, 85:6-11. Steven Miyano hopes to sell five to ten of his multiaxis machines at the IMTS show. Id. at 78:20-25. Each machine costs approximately fifty to seventy thousand dollars. Id. at 79:18. MiyanoHitec will also be showing a second single spindle turret machine, for which Steven Miyano hopes to receive 10 to 15 orders. Id. at 79:8-16. Steven Miyano plans to place the "winged M" mark on the machines, and he has already been using the name MiyanoHitec and the mark on the company's folders, shirts, and website. Id. at 75:20-76:7.

MMU became aware of Tom and Steven Miyano's use of the name and mark due to specific instances of confusion between the MMU and the MiyanoHitec. Machine Tool Bearing, one of MMU's vendors, having seen the MiyanoHitec website, called to ask if it was affiliated with MMU. Marchionne at 52:20-53:5. Also, Dunn & Bradstreet called MMU in 2008 to ask if they were affiliated with MiyanoHitec. Id. at 53:7-15. Lastly, the Association for Manufacturing Technology, the entity that manages the machine tool shows and regularly deals with machine tool builders, called MMU to inquire regarding the IMTS show. The caller was looking for MMU on the list of exhibitors and asked if they were MiyanoHitec. Id. at 53:16-54:2. Still, it is worthy of note that buyers of the relevant machines generally do extensive research before purchasing the machines because they are extremely expensive and will be used for a long period of time. Id. at 65:13-67:4; Minemura 27:11-14.

When questioned as to why he should be allowed to use the "winged M" mark, Steven Miyano asserted that it is his "family symbol." S. Miyano at 81:6-12. Steven Miyano testified that if he cannot use the symbol and his family name, Miyano, his identity will be erased and he will be and forced to turn his back on his ancestors. Id. 84:3-13. When asked if he could sell the same machine under a different name, Steven Miyano, rather than directly responding, repeatedly asserted that he wanted "his name" on the machine, eventually stating that he could "possibly" do so. Id. at 87:9-23. Steven Miyano admitted that he knew MMU held a trademark ...


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