## Facts

- Defendants The Heartland Company Ltd. and Steven Kline began using “Heartland” in July 1985 in connection with a clothing line (including men’s shirts, sweaters, trousers, jackets, and related apparel).
- Plaintiff Clark & Freeman Corp. began using “Heartland” in April 1986 in connection with men’s footwear.
- Sears, Roebuck & Co. had used “Heartland” since 1983 for a line of women’s boots and later obtained a federal registration covering that footwear use.
- In 1987, Sears assigned its “Heartland” mark to plaintiff (including the goodwill associated with Sears’s “Heartland” women’s boots), and plaintiff obtained the benefit of Sears’s registration for footwear.
- After building a footwear business under “Heartland,” plaintiff announced plans to expand into clothing under the same mark.
- The parties’ dispute intensified as plaintiff sought to establish priority and defendants pursued federal trademark rights for “Heartland” in apparel.
- Plaintiffs sued in the Southern District of New York alleging trademark infringement and unfair competition and seeking injunctive relief; plaintiffs also sought cancellation or blocking of defendants’ pending apparel application.
- Defendants counterclaimed, seeking cancellation of plaintiffs’ footwear registration and an injunction restricting plaintiffs’ use of “Heartland” to footwear (and preventing plaintiffs’ move into apparel).
- The case proceeded to a bench trial, after which the district court issued findings of fact and conclusions of law.

## Issues

1. Whether plaintiffs had enforceable priority rights in “Heartland” for footwear based on their own use and/or Sears’s earlier use through a valid assignment that transferred goodwill.
2. Whether defendants’ use of “Heartland” for apparel infringed or constituted unfair competition with plaintiffs’ “Heartland” use for footwear, applying the likelihood-of-confusion analysis.
3. Whether plaintiffs’ delay in challenging defendants’ apparel use barred plaintiffs’ requested injunctive and cancellation relief under laches.
4. Whether defendants were entitled to cancel plaintiffs’ footwear registration (including whether the Sears-to-plaintiff transfer was an invalid “assignment in gross”).
5. What equitable relief, if any, should issue—broad injunctions for either side, cancellation of registrations/applications, or a narrower order allowing continued use in existing product areas.

## Decision

- The court held that the Sears assignment to plaintiffs was not an invalid assignment in gross; it transferred the mark with the goodwill generated by Sears’s established “Heartland” women’s boot business.
- Because the assignment was valid, plaintiffs could rely on Sears’s earlier footwear use date for priority as to footwear, and plaintiffs’ federal footwear registration was not canceled.
- The court found that plaintiffs waited for years after learning of defendants’ “Heartland” apparel use before suing, while defendants continued to build their apparel business; laches barred plaintiffs from obtaining the requested injunctive and cancellation relief aimed at defendants’ apparel rights.
- On the likelihood-of-confusion record presented, the court found evidence of actual confusion to be limited and not enough, by itself, to justify shutting down either party’s established business in its existing product category.
- The court denied the parties’ requests for sweeping injunctions that would have eliminated the other side’s established “Heartland” use.
- The court permitted continued parallel use of “Heartland,” while crafting a narrow, category-based outcome: plaintiffs retained rights for footwear, and defendants were allowed to proceed with apparel-related rights, with relief aimed at preventing either party from moving into the other’s established product area.

## Legal Principles

- Trademark priority generally goes to the party that first uses the mark in commerce for the relevant goods, and priority is evaluated by product category (e.g., apparel vs. footwear) and marketplace realities.
- A trademark assignment must include the goodwill associated with the mark; a transfer that attempts to convey only the word mark without the associated business goodwill is an invalid assignment in gross.
- When a valid assignment transfers the mark with its goodwill, the assignee may claim the assignor’s priority date (often described as “tacking” to the earlier use).
- Trademark infringement and unfair competition turn on whether consumers are likely to be confused about source, sponsorship, or affiliation; limited instances of confusion may be insufficient to justify broad injunctive relief when the parties have long operated in separate product lines.
- Laches can bar injunctive relief and cancellation-type remedies when the plaintiff knew of the defendant’s use, unreasonably delayed suit, and the defendant was prejudiced by that delay.
- Injunctions in trademark cases are equitable remedies; where both parties acted in good faith and have established businesses, a court may deny sweeping relief and instead order narrower measures tailored to the proven risk of confusion.

## Conclusion

Clark & Freeman Corp. v. Heartland Co. Ltd. was a trademark dispute over the “Heartland” name used on footwear by plaintiffs and on apparel by defendants. After a bench trial, the court upheld plaintiffs’ footwear rights based on a valid assignment from Sears that transferred goodwill, rejected defendants’ attempt to cancel plaintiffs’ registration, and held that plaintiffs’ long delay barred the broad injunctive and cancellation relief sought against defendants’ apparel use. With only limited evidence of consumer confusion and established use on both sides, the court denied sweeping injunctions and fashioned a limited coexistence result that preserved each party’s existing market.


Clark & Freeman Corp. v. Heartland Co. Ltd., 811 F. Supp. 137 (1993)