Jul 21, 2015

America’s Oldest Farming Association Separates Wheat From Chaff, Preventing Seceding Chapter From Using Its Name

In an important trademark decision handed down on July 14, the United States District Court for the Eastern District of California granted National Grange’s motion for summary judgment, holding that when a local chapter secedes from a national association, it cannot continue to use the national association’s name and trademarks.

The National Grange was founded in 1867 to champion the interests of farmers and farming, and is now the oldest fraternal agricultural association in the United States. In 1873, it chartered the California State Grange, one of many state and local Grange chapters in the National Grange’s hierarchy. The California State Grange was affiliated with the National Grange for 140 years, until the California Grange’s charter was revoked in 2013.

The trademark issue arose when the disaffiliated State Grange continued to call itself a “Grange.” Even though the National Grange instructed it to stop using the “Grange” name, its website insisted that “We are the Grange,” and it continued to solicit dues and membership applications from Grange members and prospective members under the “Grange” name.

As the National Grange alleged in its lawsuit for trademark infringement and unfair competition, the Grange’s good name was protected by over a dozen U.S. trademark registrations and common law rights stemming from nearly 150 years of continuous use. The “Grange” name was so well-known in the United States that the federal government issued a postage stamp to commemorate its centennial, and dictionaries in the United States define “Grange” as “… an association of farmers founded in the United States in 1867.” The disaffiliated State chapter was using the “Grange” name to divert dues and members from the Grange.

In granting its motion for summary judgment, the Court first recognized that the National Grange’s “Grange” trademarks are valid and enforceable. Federal registration of a mark constitutes prima facie evidence of the validity of the mark, and the Defendant failed to overcome that presumption. It tried to rely on dictionary definitions to show that the “Grange” name was generic or descriptive of any “farmers’ association,” but as the Court found, the dictionary definitions pointed to a particular farmers’ association, the National Grange. There are simply no other farmer’s associations in U.S. that use the term “Grange” besides the National Grange and its affiliates.

The Court also found that the disaffiliated Defendant’s statement “We are the Grange” on its website, among other similar uses, strongly suggested that it was still associated with the National Grange. And because the disaffiliated Defendant’s services were admittedly the same as those offered by the National Grange, a person seeking to join the official Grange would likely believe that the Defendant was somehow still affiliated. Beyond that, the Court found, the National Grange chartered a new State Grange in California, and the Defendant conceded that two State organizations using the same “Grange” name caused consumer confusion.

The Defendant’s counter Motion for Summary Judgment, largely based on its affirmative defenses, was summarily denied. The Court observed that the National Grange did not wait too long to bring its claim against the Defendant when it filed its trademark infringement action within four months after the Defendant disaffiliated from the Plaintiff. Of course, while the parties were affiliated, there was no risk of confusion to give rise to any claims of infringement—consumers would have correctly assumed that the parties were related. After disaffiliation that assumption became false.

The Defendant’s argument that the Plaintiff was licensing its marks without necessary quality control oversight was foiled when the Defendant could point to no facts other than that some of the Plaintiff’s licensees did not refer to their license agreements with the Plaintiff on their websites. That, held the Court, is not enough to show that the Plaintiff exercised no control over its licensees, and much less that the Plaintiff abandoned its Grange name as a result.

The Court ordered that upon entry of final judgment the Defendant, or any party acting in concert with the Defendant, be permanently enjoined from using marks containing the word “Grange.”

“Judge Shubb’s decision is not only important to our client, the Grange, but also to other hierarchical organizations, such as other fraternal religious or benevolent associations,” noted National Grange attorney James Bikoff of Smith, Gambrell & Russell LLP. If, like the National Grange, an organization is hierarchical, and its top level maintains control of the organization’s name and trademarks, it can stop seceding chapters from continuing to use its good name. The decision may also apply to international organizations with a hierarchical structure. The rationale behind the ruling is clear: such use of the name by seceding members, over whom the organization has no further control, amounts to a fraud upon the members of the organization and the public.

The National Grange was represented in the action by Smith, Gambrell & Russell attorneys James L. Bikoff, David K. Heasley, and Valeriya Sherman.                  

If you have any questions about this topic, please contact Jim Bikoff, Partner and Head of the International Trademark Practice Group at Smith, Gambrell & Russell, LLP.                                                                          

This legal alert is intended to inform clients and other interested parties about legal matters of current interest and is not intended as legal advice. 

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