United States District Court, N.D. Texas, Wichita Falls Division
PEARSON'S INC. d/b/a PEARSON LIVESTOCK EQUIPMENT CO., Plaintiff,
ROBERT DEAN ACKERMAN, et al., Defendants.
MEMORANDUM OPINION AND ORDER
RAY, JR. UNITED STATES MAGISTRATE JUDGE.
January 25, 2018, Pearson's Inc. d/b/a Pearson Livestock
Equipment Co. (“Pearson”), filed suit against
Robert Dean Ackerman and Heather Ackerman Badley
(collectively “Ackerman”) and Titan West, Inc.
(“Titan”) for trademark and trade dress
infringement under the Lanham Act, 15 U.S.C. §§
1051, et seq., trade dress dilution under Section
16.103 of the Texas Business and Commerce Code, and trade
dress infringement under Texas common law. (See
generally, ECF No. 1). On February 16, 2018, Ackerman
filed his Answer, Plea, and Counterclaims. (ECF No. 12).
Ackerman asserted counterclaims against Pearson for trademark
cancellation and antitrust violations. (Id.).
Subsequently, Pearson nonsuited its claims against Badley
(ECF No. 18), and Ackerman's antitrust counterclaims were
dismissed by agreement (ECF No. 32). Before trial, Pearson
settled its claims with Titan. (ECF No. 63).
Court conducted a three-day bench trial on April 29, 30, and
May 1, 2019. During the trial, the Court heard testimony from
Robert Dean Ackerman, Clint Newton, Ricky Rater, David Rater,
Van Neidig, Bret Hull, Cory Knight, Patrick Carhart, and Mark
McKenna. By agreement of the parties, the Court admitted in
evidence Pearson's Exhibit Nos. 1-2, 62-64, 81, 82, and
90-107 and also admitted Ackerman's Exhibit Nos. 201-221,
223-228, 231-234, 236, 237, 246, and 248.
trial, the Court admitted Pearson's Exhibit Nos. 6, 11,
17, 20, 23, 25, 27, 32, 36, 46-49, 52, 56-58, 65, 84, 85, 108
and Ackerman's Exhibit Nos. 222, 250, and 255.
Demonstrative Exhibit Nos. 9, 256, and 257 also were
admitted. Pearson withdrew Exhibit No. 89, and Ackerman
withdrew Exhibit Nos. 200, 230, 238, 241, 245, and 247. After
the trial concluded, Pearson and Ackerman timely submitted
their proposed findings of fact and conclusions of law.
considering the evidence and the arguments of counsel, and
for the reasons set forth below, the Court finds that
Pearson's mark is functional and nondistinctive. Thus,
its trade dress and trademark (“Pearson mark” or
“mark”) are not legally protectable. Therefore,
Pearson's registered trademark No. 5, 184, 202 is
canceled pursuant to 15 U.S.C. § 1119. Additionally,
Ackerman has not proven his fraudulent procurement claim by
clear and convincing evidence. Nor has he proven the case is
exceptional under 15 U.S.C. § 1117(a). Accordingly, his
request for attorney's fees is denied.
History of the Pearson Chute
designs, manufactures, and sells products for use in the
cattle industry. One of its products is the “Pearson
Chute, ” a manual, parallel squeeze cattle chute that
it has sold since the 1970s. The chute consists of a narrow,
cubical framed structure that is wide enough to accommodate a
single animal. The chute is designed to immobilize an animal
by uniformly squeezing it from both sides, thereby providing
easy access to the animal for examination and other
procedures. (Pl.'s Exh. 2 at 159). Pearson protected the
chute's functional features, including the squeeze
mechanism and other features, through a series of utility
patents issued by the United States Patent and Trademark
Office (“PTO”) in 1965, 1977, and 1982.
(Pl.'s Exh. 2 at 150-55, 156-63, 164-68).
the years, the design and overall look of the Pearson Chute
have evolved. The appearance of the modern-day Pearson Chute
has remained substantially unchanged since the early 1990s,
when circular disks were incorporated at opposite ends of the
raised front crossbar and rear squeeze hinge orientated
forward from its corner posts. (Transcript ("Tr.")
Vol. 1 at 142; Defs.' Exh. 257).
photograph of the modern-day Pearson Chute, without the
squeeze handle in place, is shown below:
Exh. 246 at 193).
original owners of Pearson sold the business to Ricky and
David Rater in January 2013. (Tr. Vol. 2 at 50). Originally,
Pearson only produced chutes in Thedford, Nebraska. Shortly
after purchasing the business, the Raters expanded its
manufacturing capabilities to Vernon, Texas. (Id. at
184). Ricky Rater is Pearson's Vice President and General
Manager with overall responsibility for operations, and David
Rater is Pearson's President with responsibly for
banking, marketing, and distributor relationships.
(Id. at 185). David Rater is Ricky Rater's
father. (Id. at 174).
Pearson produces approximately 400 cattle chutes annually and
sells anywhere from five to thirty-three percent of its
chutes into the international market. (Id. at
54-56). Domestically, Pearson sells its products directly to
consumers and through regional distributors who may or may
not have local dealer relationships. (Id. at 54).
Pearson's relationship with Ackerman
has been in the retail cattle equipment business for nearly
forty years. (Tr. Vol. 1 at 180). His wife, Donna Ackerman,
and daughter, Heather Badley, are employees of the business,
which is located in La Salle, Colorado. (Id. at
178-80). In 1983, Ackerman began selling Pearson Chutes as a
local dealer. (Id. at 180). From 1993 to 2014,
Ackerman served as Pearson's exclusive regional
distributor of Pearson Chutes for the Colorado Region of the
United States. (Id. at 184).
Pearson Chute is a popular, high-quality chute with a good
reputation in the cattle industry. (Id. at 183; Tr.
Vol 2 at 12). Although distributing the Pearson Chute had
been fairly profitable, Ackerman wanted to sell a more
economical chute that functioned like a Pearson Chute, but
without the price and geographical restrictions imposed by
Pearson. (Id. at 186-87; Tr. Vol. 3 at 115-16).
Ackerman's idea was not new. Since the 1990s, after
Pearson's utility patents expired, other manufacturers of
cattle chutes began incorporating aspects of the Pearson
Chute's design, mimicking its function and shape. (Tr.
Vol. 2 at 14, 74-83, 138-40; Defs.' Exh. 256). However,
aside from the chutes co-developed by Ackerman, there is
little evidence to establish the market success and adoption
of these third-party competitors throughout the cattle chute
industry. (See Tr. Vol. 2 at 74-83, 141-43).
and WW Manufacturing (“WW”), one of Pearson's
competitors, developed a new cattle chute called the Next
Generation Beefmaster (“Beefmaster”). (Tr. Vol. 1
at 187-90). WW already manufactured a cattle chute called the
Stampede that incorporated many of the design features
comprising the Pearson Chute. (Id. at 187, Tr. Vol.
2 at 15-16). As a result, the Stampede resembles the Pearson
Chute, but is substantially heavier and contains additional
design features making it a more expensive cattle chute than
what Ackerman wanted to sell. (Id.; Tr. Vol. 2 at
6). To aid WW in designing a more economical chute, Ackerman
sent a Pearson Chute to WW. (Id.). Ackerman asked WW
to implement specific features of the Pearson Chute, the
circular disks and removable wings or side panels, into the
Beefmaster's design. (Id. at 190-91; Tr. Vol. 2
circular disks allow the chute to operate as either a left-
or right-handed chute and permit a user to orient the squeeze
handle attached to the disk in multiple directions. (Tr. Vol.
2 at 16-19; Tr. Vol. 3 at 117; See Pl.s' Exh. 2
at 53, 141, 146). The circular disks' functionality,
combined with the raised front crossbar and squeeze handle,
provide both safety and operational benefits. (Id.
at 16-19, 115-16; Tr. Vol. 3 at 117; See Pl.s'
Exh. 2 at 53, 141, 146). The combination allows a user to
orientate the squeeze handle to the position and stature of
the user, thereby providing extra leverage and promoting
safety by keeping a user out of harm's way in the event
of any unforeseen release of the animal inside the chute.
(Id. at 16-19; Tr. Vol. 3 at 117). The removable
side panels allow for easier access to the animal once it
enters the chute. (Pl.s' Exh. 2 at 53).
learned that Ackerman sent a Pearson Chute to WW. (Tr. Vol. 1
at 191). David Rater telephoned Ackerman on or about March
20, 2014 to confront him about sending the chute to WW to be
“copied.” (Id. at 193). Ackerman
confirmed he sent a Pearson Chute to WW and understood that
Pearson did not want him copying any Pearson Chute design
features into any other competing chutes. (Id. at
195). On the call, David Rater terminated Ackerman as a
Pearson distributor. (Id.; Tr. Vol. 2 at 195).
Ackerman competes with Pearson
the Beefmaster was unsuccessful. (Tr. Vol. 2 at 20).
Undeterred, Ackerman developed a relationship with another
chute manufacturer called Pro Farm Manufacturing, Inc.
(“Pro Farm”), a Canadian company with
manufacturing capabilities in China. (Tr. Vol. 1 at 201,
204-05). Ackerman's wife first saw a Pro Farm chute at a
cattle equipment auction. (Id. at 201- 02). At the
time, the Pro Farm chute was painted a green color.
(Id. at 202-03; Pl.s' Exh. 6). But it had many
of the same features of a Pearson Chute, including the raised
front crossbar, circular disks, and squeeze handle.
(Id. at 213). On or about March 18, 2014, Ackerman
accompanied his wife to the auction to collect equipment she
had purchased. (Tr. Vol. 3 at 119). While there, he saw the
Pro Farm chute and remarked that it looked like a Pearson
Chute. (Id. at 120; Tr. Vol. 1 at 213).
after David Rater terminated Pearson's distributorship,
Ackerman contacted Pro Farm about distributing the Pro Farm
chute. (Tr. Vol. 1 at 201). After Pro Farm sent Ackerman his
first order of Pro Farm chutes, a representative from Pro
Farm visited Ackerman in La Salle, where the representative
saw a Pearson Chute. (Id. at 206). Much like his
experience with the Beefmaster, Ackerman helped develop the
Pro Farm chute for the domestic market. (Id. at
209-10). Ackerman rebranded the Pro Farm chute to be named
the Renegade; instructed Pro Farm to change the color of the
Renegade from green to gray; advised Pro Farm on how to
improve the chute; and advertised the gray Renegade chute.
(Id. at 204, 214-15, 217; Pl.s' Exh. 11, 36,
65). As a result of Pro Farm and Ackerman's joint
development, the Renegade Chute looks very similar to the
Pearson Chute, as shown below.
distributes the majority of Pro Farm's Renegade chutes
that are sold in the United States. (Id. at 211).
From early 2014 through May 2018, Ackerman sold approximately
244 Renegade and eight Equalizer chutes. (Id. at
225-26). The Equalizer is a cattle chute manufactured by
Titan. For unknown reasons, Ackerman allowed Titan to copy
the Renegade chute. (Id. at 219). Ackerman went so
far as to request that Titan incorporate the circular disks
found on the Pearson Chute into the Equalizer's design.
(Id.). A review of the Equalizer confirms that it is
nearly identical to the Pearson Chute. (Id. at 66,
76; Pl.s' Exh. 3).
result of Ackerman's actions in co-developing the
Beefmaster and actively competing against Pearson with the
Renegade, Pearson filed for trademark registration on
September 17, 2014 to protect the shape of the Pearson Chute.
(Tr. Vol. 2 at 109). A week prior to filing its trademark
application, Pearson mailed to Ackerman a cease and desist
letter demanding that he stop using Pearson's logo and
name on his website. (Id. at 36, 103, 146). The
cease and desist letter did not demand that Ackerman stop
producing the Renegade or stop copying the shape of the
Pearson Chute. (Id.). Ackerman stated it was clear
to him from his conversation with David Rater terminating him
as a distributor that Pearson did not want him to incorporate
features of the Pearson Chute into other chutes. (Tr. Vol. 1
at 195). However, Ackerman did not understand the Pearson
Chute could be trademarked, especially in light of other
chutes that incorporated features of Pearson's mark like
the 2W Wrangler and WW Stampede. (Tr. Vol. 2 at 36; Tr. Vol.
3 at 118). Pearson did not inform Ackerman that the Renegade
potentially infringed the Pearson mark until Pearson filed
suit in this case in January 2018. (Tr. Vol. 2 at 38, 146).
After that time, Ackerman began producing and marketing the
Renegade Star, another model of chute. (Id. at 38-
40). The only difference between the Renegade and Renegade
Star is that the latter has a star-shaped metal plate in
place of the circular disk. (Id.). Even with the
star plate affixed, the circular disk outline is still
present. (Tr. Vol. 1 at 225; Pl.s' Exh. 58).
Distinctiveness and Confusion
Pearson Chute's design has remained largely unchanged
since 1993. (Tr. Vol. 1 at 142). Although Pearson did not
offer any evidence of the number of chutes it sold after
1993, consumers and distributors of cattle chutes generally
recognize a Pearson Chute. Testimonials presented to the PTO
during prosecution of the Pearson mark showed that customers
recognized the Pearson Chute. (Pl.s' Exh. 2 at 141-48).
However, it is unclear whether the entire mark; individual
features of the mark such as the circular disks, raised front
crossarm, gray color, or removable side panels; or some
combination of features is what they identify as the Pearson
mark. Pearson also did not offer any consumer survey evidence
to substantiate what features of the Pearson mark are
recognizable in the marketplace.
himself, exclaimed upon seeing the Pro Farm chute that it
looked like a Pearson Chute, except that it was green instead
of gray. (Tr. Vol. 1 at 213). Van Neidig,  a cow-calf
operator and designer of several cattle chutes, testified the
Renegade was a direct copy of the Pearson Chute, but
manufactured at substantially lower quality. According to
Neidig, Ackerman copied the arrangement of the raised front
crossbar, circular disks, and squeeze handle combination from
the Pearson Chute. He described how the Pearson Chute has a
good reputation in the industry and is of higher quality than
the Renegade. The differences between the Renegade and
Pearson Chute are weight, size of material, and quality of
Hull, 2 a longtime cattle rancher who mainly uses a chute
manufactured by WW, also stated the Pearson Chute has a
recognizable shape, specifically noting the raised front
crossbar and circular disks. Hull described the look as a
“praying mantis, ” recognizable from 300 yards
away. Further, he noted that the gray color of the chute is
distinctive to Pearson, and the basic design has not changed
for the last twenty-five years. Hull also testified that he
first saw a Renegade at a trade show two years earlier and
was surprised to see that it was virtually identical to the
Pearson Chute, specifically the raised head gate, parallel
chute frame, raised circular disks, tail gate, and color.
Notwithstanding the similarities, Hull was able to
distinguish the Renegade from a Pearson because of its weight
and quality of construction.
offered the testimony of Patrick Carhart, retired WW national
sales manager. (Tr. Vol. 3 at 36). Carhart worked in the
agricultural equipment industry for forty-five years before
his retirement on January 1, 2016. (Id. at 36, 38).
During his career, he sold chutes for various manufacturers
and was WW's sales representative from 1995 until being
promoted to national sales manager in 2004. (Id. at
37). He testified that there were around two dozen parallel
squeeze chutes on the market when he retired. (Id.
at 38). He stated that the Pearson Chute is recognizable
because of its parallel squeeze function. (Id. at
40-41). Further, because there are similarities between
parallel squeeze chutes, it would be hard to identify a
Pearson Chute from a line-up of other parallel chutes.
(Id. at 40). He testified that the Pearson Chute is
distinguishable from other parallel chutes because of its
“pull-out sheet, ” a reference to the removable
side panels. (Id. at 44, 49). He also stated that
although the color of a chute is an indicator of the
manufacturer, there are multiple chutes using a gray color,
and there is nothing special about the shade of gray used by
Pearson. (Id. at 41). When asked if he could
distinguish a Pearson from the other chutes he had sold or
was familiar with during his career, Carhart responded in the
affirmative. (Id. at 49).
cattle chutes are advertised in print and at trade shows, and
more recently, on the internet. (Tr. Vol. 2 at 3, 52, 57-58).
Manufacturers display the functionality of their chutes
through demonstrations with live cattle at trade shows. (Tr.
Vol. 3 at 124). In September 2014, at the Husker Harvest Days
trade show in Nebraska, industry representatives and
participants confused the Renegade with the Pearson Chute at
one such demonstration. (Tr. Vol. 2 at 42-43). Ackerman took
two Renegade chutes to the Husker Harvest trade show.
(Id. at 44; Tr. Vol. 3 at 121-22). Participants at
the show remarked how the Renegade looked like a Pearson
Chute. Initially, show officials prevented Ackerman from
demonstrating the Renegade, thinking it was a Pearson Chute.
(Id. at 45). After Ackerman explained that he was
marketing the chute as a Renegade and not a Pearson Chute, he
was allowed to demonstrate the Renegade. (Tr. Vol. 3 at 123).
Later, at the Dakota Fest trade show, consumers who had
purchased a Pearson Chute and needed replacement parts,
initially confused the Renegade for a Pearson Chute. (Tr.
Vol. 1 at 223; Tr. Vol. 2 at 73, 100; Pl.s' Exh. 52).
Ackerman clarified the confusion.
Raters anecdotally discussed how consumers on Facebook.com
and at trade shows remarked that the Renegade and Pearson
Chute look similar. (Tr. Vol. 2 at 96, 99-100, 103, 198). An
email from a Pearson customer asked Ricky Rater about
Ackerman's website advertisement of the Renegade,
questioning whether it was a Pearson Chute. (Id. at
97-98; Pl.s' Exh. 81). In the same email, the customer
understood that Ackerman had previously been a Pearson
confused not only the shape, but also the color of the
Renegade with the Pearson Chute. And, at least one consumer
purchased a Pearson Chute after finding the Renegade was of
lower quality. (Tr. Vol. 3 at 125-26). Although Ackerman used
Pearson's name as a metadata tag in his website, aside
from nonspecific, anecdotal comments made by the Raters,
Pearson offered no persuasive evidence to establish that any
consumer purchased a Renegade thinking it was a Pearson
Chute. (Tr. Vol. 1 at 134; Tr. Vol. 2 at 32, 170-71). The
Raters did not specify or generally discuss how many more
Pearson Chutes would have been sold but for the existence of
the Renegade and Equalizer chutes in the cattle chute market.
Raters testified that due to quality concerns related to the
Renegade, Pearson's reputation had been damaged, though
their testimony regarding the amount was speculative at best
and was not sufficient to support an award of damages. No.
expert quantified the impact or damage to Pearson. The
Renegade encountered quality control problems as a result of
Pro Farm's manufacturing inconsistencies. (Tr. Vol. 1 at
228-29). Because of these inconsistencies, Ackerman had to
rework or repair nearly every Pro Farm chute he received
before selling them. (Id. at 228- 29). The Renegade
chutes as received from Pro Farm were basically unsellable
before Ackerman reworked them. (Id. at 229).
Ackerman even characterized some of the chutes as unsafe.
(Id. at 230). Neidig testified that during trade
show demonstrations of the Renegade, the chute malfunctioned,
and participants in the trade show steered clear of the
Renegade. Although Ackerman reworked defective Renegade
chutes before selling them and provided customers with
replacement parts and services, Pro Farm's manufacturing
problems negatively affected the Renegade's reputation
for quality. (Tr. Vol. 1 at 227; Tr. Vol. 2 at 11, 109-10,
Pearson obtains trademark registration over elements of the
The registered trademark
September 17, 2014, several years after the Pearson
Chute's patents expired, and shortly after the Husker
Harvest Days trade show, Pearson applied for trademark
registration with the PTO. After the PTO limited the scope of
the mark, Pearson received trademark registration in the
principal register (Registration No. 5, 184, 202) on April
18, 2017. Below is an illustration of the Pearson mark
(highlighted for ease of reference):
Exh. 2 at 12). Pearson's trademark covers the following
The mark consists of a three-dimensional configuration of a
cattle chute, specifically having four vertical corner posts
extending upwardly from a rectangular base, parallel upper
side rails that connect front and rear corner posts, a rear
cross arm connecting the upper side rails adjacent the rear
cross arm, a raised front cross arm connecting the front
vertical posts and having extensions extending rearwardly
therefrom and circular disks on opposite ends, a squeeze
handle extending upward from one of the disks of the front
cross arm, upper and lower front squeeze hinge arms extending
rearward from the front corner post, and the upper and lower
rear squeeze hinge arms extending forward from the rear
(Id. at 4). Color was specifically disclaimed by
Pearson and is therefore not part of the trademark.
does Pearson explicitly claim color as part of its trade
Prosecution of the Trademark
prosecution of the trademark is at issue, a summary of the
prosecution history, supporting evidence, and arguments made
during prosecution are described below. The summary is based
on the trademark file wrapper. (See generally
Pl.'s Exh. 2 and Defs.' Exh. 246).
The PTO's Initial Rejection and Pearson's
Trademark Examiner (“Examiner”) initially
rejected Pearson's application because it appeared to be
functional and nondistinctive, and the illustration of the
trademark did not match the specimen provided by Pearson. In
explaining the initial rejection, the Examiner listed several
competing chutes with similar functional features, including
the Stampede and Renegade chutes. Pearson responded to the
Examiner's functionality rejection. It argued that (1)
because the Examiner is not a consumer of cattle chutes, what
may appear similar to a normal person would not be similar to
a cattle chute consumer; (2) the competing chutes listed,
though they may function similarly, do not incorporate the
Pearson Chute's shape; and (3) the Ackerman chute is a
direct copy of the Pearson Chute. In response to ...