Filed: Mar. 30, 2015
Latest Update: Mar. 02, 2020
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-2003 GEORGIA-PACIFIC CONSUMER PRODUCTS LP, Plaintiff - Appellee, and GEORGIA-PACIFIC CORPORATION, Plaintiff, v. VON DREHLE CORPORATION, a North Carolina corporation, Defendant - Appellant, and CAROLINA JANITORIAL & MAINTENANCE SUPPLY, a North Carolina corporation, Defendant, MYERS SUPPLY, INCORPORATED, Intervenor/Defendant. Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. Te
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-2003 GEORGIA-PACIFIC CONSUMER PRODUCTS LP, Plaintiff - Appellee, and GEORGIA-PACIFIC CORPORATION, Plaintiff, v. VON DREHLE CORPORATION, a North Carolina corporation, Defendant - Appellant, and CAROLINA JANITORIAL & MAINTENANCE SUPPLY, a North Carolina corporation, Defendant, MYERS SUPPLY, INCORPORATED, Intervenor/Defendant. Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. Ter..
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-2003
GEORGIA-PACIFIC CONSUMER PRODUCTS LP,
Plaintiff - Appellee,
and
GEORGIA-PACIFIC CORPORATION,
Plaintiff,
v.
VON DREHLE CORPORATION, a North Carolina corporation,
Defendant - Appellant,
and
CAROLINA JANITORIAL & MAINTENANCE SUPPLY, a North Carolina
corporation,
Defendant,
MYERS SUPPLY, INCORPORATED,
Intervenor/Defendant.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. Terrence W. Boyle,
District Judge. (5:05-cv-00478-BO)
Argued: December 11, 2014 Decided: March 30, 2015
Before NIEMEYER, SHEDD, and KEENAN, Circuit Judges.
Vacated, reversed in part, and remanded in part, with
instructions, by published opinion. Judge Niemeyer wrote the
opinion, in which Judge Shedd concurred as to Parts I, III, IV,
and V and Judge Keenan concurred in full. Judge Shedd wrote a
separate opinion, concurring in part and dissenting in part.
ARGUED: Carter Glasgow Phillips, SIDLEY AUSTIN LLP, Washington,
D.C., for Appellant. Miguel A. Estrada, GIBSON, DUNN & CRUTCHER
LLP, Washington, D.C., for Appellee. ON BRIEF: Michael P.
Thomas, PATRICK HARPER & DIXON, LLP, Hickory, North Carolina;
Richard Klingler, Jacqueline G. Cooper, Nicolas W. Thompson,
John Paul Schnapper-Casteras, SIDLEY AUSTIN LLP, Washington,
D.C., for Appellant. Stephen P. Demm, John Gary Maynard, III,
HUNTON & WILLIAMS LLP, Richmond, Virginia; Jonathan C. Bond,
GIBSON, DUNN & CRUTCHER LLP, Washington, D.C.; W. Kyle
Carpenter, WOOLF, MCCLANE, BRIGHT, ALLEN & CARPENTER, PLLC,
Knoxville, Tennessee, for Appellee.
2
NIEMEYER, Circuit Judge:
This trademark infringement case presents several issues
regarding the appropriate relief that may be granted under the
Lanham Act, 15 U.S.C. §§ 1051-1141n, specifically § 1116
(authorizing injunctive relief) and § 1117 (authorizing monetary
relief).
Georgia-Pacific Consumer Products LP owns the trademark
“enMotion,” which it uses to brand a paper-towel dispenser that
dispenses paper towels when a motion sensor is triggered by the
user. Georgia-Pacific designed its enMotion dispenser to
dispense only ten-inch paper towels that it manufactured.
von Drehle Corporation, a North Carolina corporation that
competes with Georgia-Pacific in the sale of paper towels,
designed a less expensive paper towel -- the “810-B” paper towel
-- that it sold specifically for use in Georgia-Pacific’s
enMotion towel dispensers.
In response to von Drehle’s practice of selling its 810-B
paper towels for “stuffing” into enMotion towel dispensers,
Georgia-Pacific commenced three separate actions against von
Drehle or its distributors. Each action alleged that the
“stuffing” practice constituted contributory trademark
infringement of Georgia-Pacific’s enMotion mark, in violation of
the Lanham Act, 15 U.S.C. § 1114(1)(a). Specifically, in this
action, Georgia-Pacific claimed that von Drehle “knowingly and
3
intentionally” manufactured the 810-B paper towel “specifically
and solely for use” in Georgia-Pacific’s enMotion towel
dispensers and that the practice of stuffing enMotion dispensers
with the 810-B paper towel was “likely to cause confusion and
. . . deceive End-User Customers.” In January 2012, a jury
agreed that von Drehle’s conduct constituted contributory
trademark infringement and, as requested at closing argument,
awarded Georgia-Pacific $791,431, which represented all of the
profits that von Drehle earned from the sale of its 810-B paper
towels from 2005 to the date of trial. After the jury returned
its verdict, the district court entered a permanent, nationwide
injunction prohibiting von Drehle from directly or indirectly
infringing Georgia-Pacific’s trademark rights. In addition,
because the court found that von Drehle’s infringement was
“willful and intentional,” it (1) trebled the jury’s award from
$791,431 to $2,374,293; (2) awarded Georgia-Pacific attorneys
fees in the amount of $2,225,782; and (3) awarded it prejudgment
interest in the amount of $204,450. Finally, the court awarded
Georgia-Pacific $82,758 in court costs.
In a parallel action that Georgia-Pacific commenced in the
Western District of Arkansas against one of von Drehle’s
distributors, the district court had, by the time of the trial
in this action, already ruled against Georgia-Pacific,
concluding that the practice of stuffing von Drehle’s 810-B
4
paper towel into Georgia-Pacific’s enMotion dispensers “did not
create a likelihood of confusion,” Georgia-Pacific Consumer
Prod. LP v. Myers Supply, Inc., No. 6:08-cv-6086, 2009 WL
2192721, at *8 (W.D. Ark. July 23, 2009), and the Eighth Circuit
affirmed,
621 F.3d 771, 777 (8th Cir. 2010) (holding that the
district court did not “clearly err in finding that the
trademark on a dispenser does not indicate the source of the
paper towels inside, and concluding that there was no likelihood
of confusion, and thus no trademark infringement”).
In the second parallel action, which Georgia-Pacific
commenced against one of von Drehle’s distributors in the
Northern District of Ohio, the district court had, by the time
of the trial in this action, also ruled against Georgia-Pacific.
The court held that the Arkansas judgment precluded Georgia-
Pacific from relitigating its trademark infringement claim, see
Georgia-Pacific Consumer Prods. LP v. Four-U-Packaging, Inc.,
821 F. Supp. 2d 948 (N.D. Ohio 2011), and the Sixth Circuit
affirmed,
701 F.3d 1093, 1103 (6th Cir. 2012).
On appeal from the remedies award in this case, von Drehle
challenges the geographical scope of the district court’s
injunction, arguing that the Eighth and Sixth Circuits’ rulings
against Georgia-Pacific render the injunction entered by the
district court unduly broad. It also challenges the monetary
awards, contending that the district court applied the wrong
5
legal standards for trebling the jury award and for awarding
attorneys fees and prejudgment interest.
Because we agree with von Drehle, we reverse the district
court’s judgment in part and vacate and remand in part, with
instructions. As to the injunction, we instruct the district
court to narrow it to cover only the geographical area of the
Fourth Circuit. As to the monetary awards, (1) we reverse the
treble damages award and instruct the district court to
reinstate the jury’s award of $791,431; (2) we vacate the award
of attorneys fees and remand for application of the appropriate
standard; and (3) we reverse the award of prejudgment interest.
I
In 2005, after learning of von Drehle’s practice of
“stuffing” or “causing to be stuffed” Georgia-Pacific enMotion
towel dispensers with von Drehle 810-B paper towels, Georgia-
Pacific sent von Drehle a letter “[d]emand[ing] . . . that von
Drehle immediately cease and desist marketing, selling and
distributing the 810 towel.” von Drehle rejected Georgia-
Pacific’s demand, stating that it considered its conduct to be
legitimate competition that did not infringe Georgia-Pacific’s
enMotion trademark.
Georgia-Pacific thereafter commenced this action, alleging
that von Drehle’s stuffing practices constituted contributory
6
trademark infringement, in violation of the Lanham Act,
15 U.S.C. § 1114(1)(a). It alleged that von Drehle “knowingly
and intentionally manufactured -- or directed the manufacture --
and sold -- or directed the sale of -- finished paper towel
rolls designed specifically and solely for use in enMotion
dispensers,” and that this practice was “likely to cause
confusion and . . . to deceive End-User Customers . . . .”
Georgia-Pacific sought injunctive relief, an accounting of von
Drehle’s profits, and damages.
The district court granted von Drehle’s motion for summary
judgment, concluding that Georgia-Pacific had “failed to show
that von Drehle’s sale of its 810-B paper towel roll to
distributors for use in enMotion dispensers caused consumer
confusion.” Georgia-Pacific Consumer, Prods. LP v. von Drehle
Corp., 645 F. Supp. 2d 532, 536 (E.D.N.C. 2009). The court
considered the end-users in this context to be “those business
owners who purchase[d] paper towel rolls from distributors for
the enMotion dispensers installed in their premises,” a class of
consumers who “kn[e]w exactly from which company they [were]
purchasing the paper towel rolls.”
Id. at 537. By order dated
August 10, 2010, we reversed and remanded, holding that the
district court “erred in limiting its likelihood of confusion
inquiry to distributors who purchased 810-B Toweling and their
respective end-user customers,” such as hotels. Georgia-Pacific
7
Consumer Prods., LP v. von Drehle Corp., 618 F.3d 441, 453 (4th
Cir. 2010). We pointed out that “Fourth Circuit case law makes
room for the factfinder to consider confusion among the non-
purchasing public in the likelihood-of-confusion inquiry.”
Id.
On remand, von Drehle filed a motion seeking judgment as a
matter of law, arguing that the decision of the Western District
of Arkansas, which rejected Georgia-Pacific’s infringement
claims, should preclude Georgia-Pacific from advancing those
same claims in this case. The district court, however, denied
von Drehle’s motion and set the matter for trial, explaining
that von Drehle had inordinately delayed raising its preclusion
argument.
At the three-day trial, Georgia-Pacific presented its case
to the jury for contributory trademark infringement and
requested injunctive relief and disgorgement of von Drehle’s
profits. At closing argument to the jury, counsel for Georgia-
Pacific stated:
So what we want is for [von Drehle] to quit doing it,
and we want damages. The damages we want and I think
from the Judge’s instructions you will find if we
prevail we are entitled to this -- [is] for them to
give up the profits that they made selling knock-off
paper to put into our trademarked dispenser. And the
only number in the record on that is in Plaintiff’s
Exhibit 266 [summarizing von Drehle’s annual gross
profits from the sale of 810-B paper towels from 2004
through 2011]. They made a profit of $794,000 from
the time that they put it on the market in 2004
through 2011. And that’s what we’re asking you for,
the profits, give us the profits that you made trading
8
on our name and our trademark. So I submit to you
when you get back there and you go through all these
packages, get to the verdict form, the first question
is, have we proven trademark infringement? Yes. The
second question is, what are the damages? $794,000.
(Emphasis added). Just as Georgia-Pacific’s counsel requested,
the jury returned a verdict answering “yes” to the question
whether von Drehle infringed Georgia-Pacific’s trademark and
awarding Georgia-Pacific: “$791,431 when the cease [and desist]
letter came out Jan 05.” Because Exhibit 266, to which counsel
referred at closing argument, included profit for 2004 in the
amount of $2,569, which was earned before the cease and desist
letter was sent, the jury apparently subtracted that sum from
the $794,000 amount requested to arrive at its award of
$791,431. The jury thus awarded Georgia-Pacific 100% of the
profits that it requested for the period beginning with its
cease-and-desist letter in January 2005 and ending in December
2011.
Following trial, von Drehle renewed its motion for judgment
as a matter of law based on claim and issue preclusion, and the
district court granted it, vacating the jury verdict and
entering judgment for von Drehle. Georgia-Pacific Consumer
Prods. LP v. von Drehle Corp., 856 F. Supp. 2d 750, 757
(E.D.N.C. 2012). The court explained:
The question submitted to the jury in this case was
whether “plaintiff established by a preponderance of
the evidence that the defendant infringed on
9
plaintiff’s valid trademark.” The jury responded to
this question in the affirmative. However, because
another court had previously decided this same
question in the negative, this Court now holds that
Defendant should be permitted to raise the affirmative
defense of claim and issue preclusion and that
judgment as a matter of law is appropriate.
Id. at 753 (citation omitted). On appeal, we again reversed,
concluding that “von Drehle [had] waived its preclusion
defenses” and that “the district court abused its discretion by
allowing von Drehle to assert its preclusion defenses 16 months
after the substantive basis for those defenses was known to von
Drehle.” Georgia-Pacific Consumer Prods., LP v. von Drehle
Corp.,
710 F.3d 527, 536 (4th Cir.), cert. denied,
134 S. Ct.
393 (2013). We remanded the case with instructions to reinstate
the jury verdict and to consider the other relief that Georgia-
Pacific had requested.
Id.
On remand, the district court granted Georgia-Pacific the
injunctive relief it requested and, finding von Drehle’s
infringement to have been willful and intentional, trebled the
jury verdict, awarded attorneys fees, and awarded prejudgment
interest. Including court costs, the total monetary award
amounted to $4,887,283.51.
From the judgment entered on July 28, 2013, von Drehle
filed this appeal, challenging the geographical scope of the
injunction and each monetary award except court costs.
10
II
As part of the post-verdict relief granted, the district
court entered a permanent, nationwide injunction prohibiting von
Drehle “from interfering directly or indirectly with [Georgia-
Pacific’s] trademark rights,” which, the court stated, included
“the right of [Georgia-Pacific] to enforce the use of only their
paper towel products in their enMotion dispensers.” Georgia-
Pacific Consumer Prods. LP v. von Drehle Corp, No. 5:05-cv-478-
BO, 2013 WL 3923984, at *2 (E.D.N.C. July 29, 2013). von Drehle
contends that the district court should not have issued a
nationwide injunction that “conflict[s] with the decisions of
other circuits” and that “undermine[s] the prerogatives of
courts of appeals that have yet to address the relevant legal
issues.” As noted, both the Eighth and the Sixth Circuits have
concluded that Georgia-Pacific may not enforce its enMotion mark
to prohibit the practice of stuffing von Drehle’s 810-B paper
towels into enMotion towel dispensers. See Myers
Supply, 621
F.3d at 777;
Four-U-Packaging, 701 F.3d at 1103.
We review the scope of a permanent injunction for abuse of
discretion. See Tuttle v. Arlington Cnty. Sch. Bd., 195 F.3d
698, 703 (4th Cir. 1999).
Neither party contends that a district court, as a general
matter, lacks authority to issue a nationwide injunction
prohibiting trademark infringement. See 15 U.S.C. § 1116(a);
11
see also Va. Soc’y for Human Life, Inc. v. FEC, 263 F.3d 379,
393 (4th Cir. 2001) (“Nationwide injunctions are appropriate if
necessary to afford relief to the prevailing party”), abrogation
on other grounds recognized in Real Truth About Abortion, Inc.
v. FEC,
681 F.3d 544, 550 n.2 (4th Cir. 2012); Richmond Tenants
Org., Inc. v. Kemp,
956 F.2d 1300, 1302, 1309 (4th Cir. 1992)
(holding that a nationwide injunction was “appropriately
tailored to prevent irreparable injury” where the various
plaintiffs resided in different parts of the country); see also
United States v. AMC Entm’t, Inc.,
549 F.3d 760, 770 (9th Cir.
2008) (“[T]he court has the power to enforce the terms of the
injunction outside the territorial jurisdiction of the court,
including issuing a nationwide injunction”). Nonetheless,
equity requires that injunctions be carefully tailored,
especially where, as here, questions of inter-circuit comity are
involved. See Va.
Soc’y, 263 F.3d at 393-94; AMC
Entm’t, 549
F.3d at 773 (“Principles of comity require that, once a sister
circuit has spoken to an issue, that pronouncement is the law of
that geographical area”);
id. at 770 (“Courts ordinarily should
not award injunctive relief that would cause substantial
interference with another court’s sovereignty”).
Within the 11 States comprising the Eighth and Sixth
Circuits, courts of appeals have held that Georgia-Pacific may
not enforce its enMotion mark to prohibit the stuffing of von
12
Drehle 810-B paper towels into enMotion towel dispensers. For
us to now countenance an injunction that would give Georgia-
Pacific the right to enforce its mark in those States would
amount to a direct and unseemly affront to those courts. And
such an affront would only be exacerbated in light of our
earlier ruling, where we refused to recognize their decisions
due to von Drehle’s tardiness. In addition, upholding the
nationwide injunction would, as a practical matter, create a
direct and perhaps irreconcilable conflict as to Georgia-
Pacific’s trademark rights in the Eighth and Sixth Circuits,
leaving litigants and others in those States confused. As a
matter of comity, therefore, we conclude that the district court
abused its discretion in extending the injunction to those
jurisdictions, and accordingly we will not authorize its
enforcement within the Eighth and Sixth Circuits.
The question remains whether we should nonetheless
authorize the injunction to operate within those circuits that
have not yet had occasion to consider these issues. Courts in
circuits other than the Eighth and Sixth now face a significant
split of authority regarding the enforceability of Georgia-
Pacific’s enMotion trademark in the context of von Drehle’s
stuffing practices. Were Georgia-Pacific to commence identical
litigation against von Drehle or one of its distributors in the
First Circuit, for example, that court would be faced with the
13
question of whether to follow the Fourth Circuit on the one hand
or the Eighth and Sixth Circuits on the other. Because the
forum court should be free to resolve this question, comity also
requires that we not allow the injunction to extend to the
remaining circuits. Cf. Va. Soc’y, 263 F.3d at 393-94 (refusing
to issue an injunction that would have “encroache[d] on the
ability of other circuits to consider” an important legal
question and “impos[ed] our view of the law on all the other
circuits”).
Georgia-Pacific challenges this conclusion on two grounds.
First, it contends that von Drehle waived any challenge to the
scope of the injunction because it failed to present the
argument to the district court. The record, however, belies
this contention. In response to Georgia-Pacific’s motion for a
permanent injunction, von Drehle argued to the district court
that the judgment against it “has created a significant split
with the Sixth and Eighth Circuits” and that the district court
“cannot and should not enter any injunction which impacts . . .
the Sixth and Eighth Circuit decisions.” In addition, at the
hearing before the district court on the motion, von Drehle
pointed out that “the Eighth Circuit and the Sixth Circuit have
found [that] this conduct is not infringement” and accordingly
maintained that, “to the extent [the court] is going to grant an
injunction, . . . the injunction needs to take . . . into
14
account [those] rulings.” Finally, it is clear that the
district court was fully aware of von Drehle’s argument, as
indicated by its remark to Georgia-Pacific’s attorney during the
same hearing that “this injunction can’t go into Ohio and
Tennessee where you’ve lost. It can only hold water where
you’ve won.”
Second, Georgia-Pacific argues that “there is no basis for
von Drehle’s claim that the injunction . . . interferes with the
Myers or Four-U rulings” because “[n]either decision determined
the rights of von Drehle, which was not a party to either case.”
But such an argument takes a far too technical view of this
case, especially when considering the inter-circuit comity
issues involved. Even though there was not a precise identity
of parties, the fact remains that Georgia-Pacific has been given
the right to enforce its trademark against von Drehle’s stuffing
practices in the Fourth Circuit and has been denied that right
in the Eighth and Sixth Circuits.
Accordingly, for the sake of comity, we require, under the
unique circumstances of this case, that the injunction be
limited geographically to the States in this circuit. We
therefore vacate the injunction granted by the district court
and remand with instructions to modify it in accordance with
this opinion.
15
III
In response to Georgia-Pacific’s request for treble
damages, the district court observed that an award of treble
damages “is appropriate when there has been a finding of willful
or intentional infringement.” Georgia-Pacific, 2013 WL 3923984,
at *2 (citing Larsen v. Terk Techs. Corp.,
151 F.3d 140, 150
(4th Cir. 1998)). After noting that von Drehle’s president had
testified that von Drehle’s 810-B towels were specifically
designed to fit the Georgia-Pacific enMotion dispensers and that
he knew that they would be stuffed into enMotion dispensers, the
court concluded that von Drehle’s infringement was “willful and
intentional.” Relying on Larsen, it accordingly trebled the
jury’s award of $791,431 to $2,374,293.
von Drehle contends that the district court erred in
applying the “willful and intentional” standard from Larsen
because Larsen applied to a recovery under § 1117(b), which
requires a court to treble damages for a knowing and intentional
use of a counterfeit mark. This case, however, involves a
recovery of profits under § 1117(a), and therefore, von Drehle
argues, the court is authorized to adjust the jury’s award only
if it deems the recovery to be “inadequate or excessive,” and
then only to compensate the plaintiff, not to punish the
defendant.
16
Georgia-Pacific argues that although Larsen interprets
§ 1117(b), it is hardly irrelevant in this case because the
“counterfeiting claims addressed by [§ 1117(b)] provide a close
parallel to the claims at issue here.” And it contends that
“whatever the basis of the plaintiff’s proven injury -- profits,
damages, or both -- the statute expressly permits the court to
award a greater sum.”
We agree with von Drehle that, by relying on Larsen and
awarding treble damages for willful and intentional
infringement, the district court erroneously conflated § 1117(a)
and § 1117(b).
Monetary relief for trademark infringement is provided for
in 15 U.S.C. § 1117, and each type of monetary award is
categorized with particularity and separately addressed.
Section 1117(a), which applies generally to trademark
infringement cases (and which the parties agree applies in this
case), authorizes a plaintiff to recover (1) the defendant’s
profits based simply on proof of the defendant’s sales; (2) the
plaintiff’s damages; (3) court costs; and (4) in exceptional
cases, attorneys fees. The section also sets forth the criteria
and standards for awarding each type of recovery. As to a
recovery based on the defendant’s profits, § 1117(a) provides:
In assessing profits the plaintiff shall be required
to prove defendant’s sales only; defendant must prove
all elements of cost or deduction claimed. . . . If
17
the court shall find that the amount of the recovery
based on profits is either inadequate or excessive[,]
the court may in its discretion enter judgment for
such sum as the court shall find to be just, according
to the circumstances of the case. Such sum . . .
shall constitute compensation and not a penalty.
And as to a recovery based on the plaintiff’s damages, which the
statute distinguishes from an award based on the defendant’s
profits, § 1117(a) provides:
In assessing damages the court may enter judgment,
according to the circumstances of the case, for any
sum above the amount found as actual damages, not
exceeding three times such amount. . . . Such
sum . . . shall constitute compensation and not a
penalty.
Section 1117(b), on the other hand, mandates the award of
treble profits or treble damages for a defendant’s “use of [a]
counterfeit mark” if the infringement consists of (1)
“intentionally using a mark or designation, knowing such mark or
designation is a counterfeit mark,” or (2) “providing goods or
services [using such mark], with the intent that the recipient
of the goods or services would put the goods or services to use
in committing the violation.” 15 U.S.C. § 1117(b) (emphasis
added). This section also authorizes a court to award
prejudgment interest for such a violation. Thus, § 1117(b), by
providing for heightened monetary awards, reflects the fact that
use of a counterfeit mark is “the most blatant and egregious
form of ‘passing off.’” J. Thomas McCarthy, McCarthy on
Trademarks and Unfair Competition § 25:10 (4th ed. 2012).
18
Section 1117 provides vastly different legal standards,
based on the egregiousness of the offense, for determining when
a district court can modify an award -- distinguishing an award
for knowingly and intentionally using a counterfeit mark from an
award for using a noncounterfeit mark. The district court
therefore erred in relying on Larsen, a case involving a
counterfeit mark, to award treble damages here.
Nor can Georgia-Pacific seek to justify the award of treble
damages under the plain language of § 1117(a). Under that
section, when a plaintiff seeks recovery based on a defendant’s
profits, the court may adjust the jury’s verdict up or down, but
only if it finds the amount of recovery to be either “inadequate
or excessive,” and then only insofar as the adjustment is
determined to be just and compensatory, not punitive. Accord
Thompson v. Haynes, 305 F.3d 1369, 1380 (Fed. Cir. 2002) (“By
the terms of the statute, ‘damages’ are to be treated separately
from ‘profits.’ As for damages, the court may award up to three
times actual damages, depending on the circumstances of the
case. As for profits, however, the court is not authorized to
award up to three times the amount proved. For profits, the
court is constrained to award the amount proved, subject only to
an adjustment, up or down, where the recovery would be otherwise
unjust”); Badger Meter, Inc. v. Grinnell Corp.,
13 F.3d 1145,
1157 (7th Cir. 1994) (“[S]ection 1117(a) provides two methods
19
which the district court can utilize separately or in
combination to approximate a fair recovery for the plaintiff.
The first discretionary method is to award up to three times the
damages plaintiff can actually prove. . . . The second
discretionary method allows the court to award the plaintiff
‘such sum as the court shall find to be just, according to the
circumstances of the case,’ and is premised on the finding that
‘recovery based on [defendant’s] profits is either inadequate or
excessive’” (alteration in original) (quoting 15 U.S.C.
§ 1117(a))).
In this case, Georgia-Pacific requested a recovery
consisting only of von Drehle’s profits, and the jury granted
that request. As counsel for Georgia-Pacific told the jury,
“[t]he damages we want . . . is for them to give up the profits
that they made selling knock off paper to put into our
trademarked dispenser. . . . [T]hat’s what we’re asking you
for, the profits, give us the profits that you made trading on
our name and our trademarks.” Indeed, it is uncontroverted that
Georgia-Pacific’s only claim for monetary relief in this case
was based on von Drehle’s profits. And, as noted, when a
recovery is based on the defendant’s profits, § 1117(a) gives
the district court the limited discretion to increase the award
only when and to the extent it deems the award to be inadequate
to compensate the plaintiff for the defendant’s profits. Here,
20
there would be no basis for the district court to conclude that
the jury’s award was inadequate to compensate Georgia-Pacific
because the jury gave Georgia-Pacific virtually all that it
sought. Moreover, Georgia-Pacific has never argued that the
jury’s award of profits was inadequate. Since enhancement of a
profits recovery is the only avenue through which Georgia-
Pacific could have obtained additional monetary relief under
§ 1117(a), the district court erred in awarding treble damages,
which are punitive and are not authorized by § 1117(a) for a
recovery based on profits.
Georgia-Pacific argues that von Drehle has waived any
argument that treble damages were illegally awarded, contending
that von Drehle did not present the issue to the district court.
Again, the record belies this contention. In response to
Georgia-Pacific’s request for treble damages, von Drehle pointed
out to the district court that enhanced damages were not
appropriate because “[t]his case was submitted to the jury on
Georgia-Pacific’s request for an award of von Drehle’s profits”
and Georgia-Pacific had presented no evidence that “the verdict
amount [was] insufficient to compensate [it],” and it referred
the court directly to § 1117(a). While von Drehle may not have
presented this argument in as detailed a fashion as it has to us
on appeal, it nonetheless preserved its point for appeal.
21
Accordingly, we reverse the district court’s order awarding
treble damages and direct the court to enter judgment in the
amount awarded by the jury, $791,431, which constitutes von
Drehle’s profits from the sale of its 810-B paper towels from
January 7, 2005, through the end of 2011.
IV
The district court also awarded Georgia-Pacific attorneys
fees of $2,225,782.35, finding that von Drehle’s “willful and
intentional” infringement rendered this case “exceptional,” as
that term is used in 15 U.S.C. § 1117(a). Georgia-Pacific, 2013
WL 3923984, at *2. Section 1117(a) provides, “The court in
exceptional cases may award reasonable attorney fees to the
prevailing party.” (Emphasis added). The court based its
willful-and-intentional finding on the fact that von Drehle
specifically designed its 810-B paper towels for use in Georgia-
Pacific’s enMotion dispenser and knew that they would be stuffed
in those dispensers.
von Drehle contends that this case is not “exceptional,” as
that term is used in § 1117(a), and that the district court
erroneously relied on its purposeful conduct in distributing
towels for use in Georgia-Pacific’s enMotion machines,
conflating willful and intentional conduct with willful and
22
intentional infringement. We agree, especially since von Drehle
reasonably believed that its conduct was lawful.
We have defined the “exceptional” case for purposes of
§ 1117(a) “as one in which ‘the defendant’s conduct was
malicious, fraudulent, willful or deliberate in nature.’”
Retail Servs., Inc. v. Freebies Publ’g, 364 F.3d 535, 550 (4th
Cir. 2004) (quoting PETA v. Doughney,
263 F.3d 359, 370 (4th
Cir. 2001)). But, in this context, the word “willful” does not
mean that the defendant’s actions were merely volitional, but
rather that the defendant acted with the intent to infringe the
plaintiff’s protected mark. See, e.g., In re Outsidewall Tire
Litig., 748 F. Supp. 2d 557, 562 (E.D. Va. 2010)
(“‘[W]illfulness’ means more than simply that the act of
infringement was done voluntarily and intentionally and not
because of accident or other innocent reason” (internal
quotation marks and citation omitted)); Vanwyk Textile Sys.,
B.V. v. Zimmer Mach. Am., Inc.,
994 F. Supp. 350, 381 (W.D.N.C.
1997) (“Willfulness in performing the act . . . does not
necessarily mean willfulness in violating the law. Willfulness
in violating the law may qualify the case as exceptional”
(citation omitted)); accord Badger
Meter, 13 F.3d at 1159 (“We
do not agree that intentionally copying a competitor’s product,
even if this is later determined to involve trade dress
infringement, by itself constitutes ‘willful’ infringement
23
. . .”); Tex. Pig Stands, Inc. v. Hard Rock Cafe Int’l, Inc.,
951 F.2d 684, 696-97 (5th Cir. 1992) (noting that the attorneys
fees provision in § 1117(a) “has been interpreted by courts to
require a showing of a high degree of culpability on the part of
the infringer”). To affirm the district court’s application of
its volitional standard would mean that every Lanham Act case
would qualify as “exceptional” unless the defendant could show
that it unintentionally or mistakenly performed the actions
later found to be a violation of the Act.
More importantly, after the court had received the parties’
briefs in this case, the Supreme Court handed down its decision
in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.
Ct. 1749 (2014). While Octane Fitness did not construe
§ 1117(a), it did construe a parallel and identical provision in
the Patent Act, which provides, “The court in exceptional cases
may award reasonable attorney fees to the prevailing party.”
35 U.S.C. § 285. The Federal Circuit had previously given § 285
a narrow interpretation, concluding:
A case may be deemed exceptional when there has been
some material inappropriate conduct related to the
matter in litigation, such as willful infringement,
fraud or inequitable conduct in procuring the patent,
misconduct during litigation, vexatious or unjustified
litigation, conduct that violates Fed. R. Civ. P. 11,
or like infractions. Absent misconduct in conduct of
the litigation or in securing the patent, sanctions
may be imposed against the patentee only if both
(1) the litigation is brought in subjective bad faith,
and (2) the litigation is objectively baseless.
24
Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d
1378, 1381 (Fed. Cir. 2005) (citation omitted). But the Supreme
Court rejected the Federal Circuit’s interpretation of
“exceptional,” describing the Federal Circuit’s test as “unduly
rigid.” Octane
Fitness, 134 S. Ct. at 1755. Relying on the
statute’s simple text and dictionary definitions of
“exceptional,” the Court concluded:
[A]n ‘exceptional’ case is simply one that stands out
from others with respect to the substantive strength
of a party’s litigating position (considering both the
governing law and the facts of the case) or the
unreasonable manner in which the case was litigated.
District courts may determine whether a case is
‘exceptional’ in the case-by-case exercise of their
discretion, considering the totality of the
circumstances.
Id. at 1756. The Court then pointed the district courts to the
same nonexclusive list of factors that it had previously
identified as relevant for use in determining whether to award
attorneys fees under a similar provision of the Copyright Act, a
list that included “frivolousness, motivation, objective
unreasonableness (both in the factual and legal components of
the case) and the need in particular circumstances to advance
considerations of compensation and deterrence.”
Id. at 1756 n.6
(quoting Fogerty v. Fantasy, Inc.,
510 U.S. 517, 534 n.19
(1994)) (internal quotation marks omitted).
To be sure, the Octane Fitness Court did not interpret the
attorneys fees provision of § 1117(a). But the language of
25
§ 1117(a) and § 285 is identical, and we conclude that there is
no reason not to apply the Octane Fitness standard when
considering the award of attorneys fees under § 1117(a). See
Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303, 314-15 (3d
Cir. 2014) (“While Octane Fitness directly concerns the scope of
a district court’s discretion to award fees for [an]
‘exceptional’ case under § 285 of the Patent Act, the case
controls our interpretation of [§ 1117(a)]. Not only is § 285
identical to [§ 1117(a)], but Congress referenced § 285 in
passing [§ 1117(a)]”).
Thus, we conclude that a district court may find a case
“exceptional” and therefore award attorneys fees to the
prevailing party under § 1117(a) when it determines, in light of
the totality of the circumstances, that (1) “there is an unusual
discrepancy in the merits of the positions taken by the
parties,” Fair Wind Sailing, 764 F.3d at 315, based on the non-
prevailing party’s position as either frivolous or objectively
unreasonable, see Octane
Fitness, 134 S. Ct. at 1756 n.6; (2)
the non-prevailing party “has litigated the case in an
‘unreasonable manner,’” Fair Wind
Sailing, 764 F.3d at 315
(quoting Octane
Fitness, 134 S. Ct. at 1756); or (3) there is
otherwise “the need in particular circumstances to advance
considerations of compensation and deference,” Octane Fitness,
26
134 S. Ct. at 1756 n.6 (quoting
Fogerty, 510 U.S. at 534 n.19)
(internal quotation marks omitted).
Because the district court did not have the benefit of the
Octane Fitness standard when considering whether Georgia-Pacific
was entitled to attorneys fees under § 1117(a), we vacate the
court’s award of attorneys fees and remand the question for
further consideration in light of this standard.
V
Finally, the district court awarded Georgia-Pacific
prejudgment interest in the amount of $204,450, based on its
conclusion that this was an “exceptional” case. Georgia-
Pacific, 2013 WL 3923984, at *3.
von Drehle contends that the district court erred in
awarding prejudgment interest because (1) prejudgment interest
is not an available remedy under 15 U.S.C. § 1117(a), and (2) in
any event, this is not an “exceptional” case.
Section 1117, authorizing monetary relief for trademark
infringement, particularizes in considerable detail the types of
monetary relief available for trademark infringement and defines
the criteria for awarding each type. It thus authorizes, in
specified circumstances, awards of (1) the defendant’s profits;
(2) the plaintiff’s damages; (3) court costs; (4) attorneys
fees; (5) treble profits or treble damages; (6) prejudgment
27
interest; and (7) statutory damages. Because Congress
legislated with great precision in providing when each
particular type of monetary relief is available, it is
appropriate to conclude that if Congress provided for a certain
type of monetary relief only in a given specified circumstance,
that type of relief is not available in other circumstances.
For example, in § 1117(a), a plaintiff may be awarded the
defendant’s profits based only on proof of the defendant’s
sales, subject to a specific adjustment when necessary to
compensate for an inadequate or an excessive award of profits.
Yet in § 1117(b), a plaintiff may be awarded three times the
defendant’s profits when the specific criteria of § 1117(b) are
satisfied. Similarly, as relevant here, § 1117(b) authorizes an
award of prejudgment interest in cases involving the knowing and
intentional use of a counterfeit mark, but § 1117 makes no
express provision for prejudgment interest in other
circumstances.
To be sure, as a general matter, prejudgment interest may
be awarded at the district court’s discretion unless the
applicable statute provides otherwise. See Quesinberry v. Life
Ins. Co. of N. Am., 987 F.2d 1017, 1030 (4th Cir. 1993) (en
banc). But when, as here, a statute provides particularized
forms of monetary relief and explicitly authorizes prejudgment
interest in some circumstances but not others, we conclude that
28
prejudgment interest is not intended to be awarded except as
provided in the statute. See Moscow Distillery Cristall v.
Pepsico, Inc., Nos. 96-36217, 96-36249, 96-36250, 1998 WL
101696, at *3 (9th Cir. Mar. 9, 1998) (“Prejudgment interest is
available under the Lanham Act only for counterfeiting . . .”
(citing 15 U.S.C. § 1117(b))). As relevant here, § 1117(a)
makes no specific provision for prejudgment interest in cases
involving a recovery of a defendant’s profits, nor does
prejudgment interest itself constitute a profit, as that term is
generally used.
We recognize that at least one court has authorized
prejudgment interest under § 1117(a) in an “exceptional” case.
See Am. Honda Motor Co. v. Two Wheel Corp., 918 F.2d 1060, 1064
(2d Cir. 1990). But we can find no support for its conclusion
in the text of the statute. Indeed, § 1117(a) employs the
“exceptional case” standard only for an award of attorneys fees,
not prejudgment interest.
That said, we do not categorically foreclose an award of
prejudgment interest under § 1117(a) as an element of a damages
award in a trademark infringement case. To be sure, one’s loss
of the use of a particular sum of money over a period of time
causes damage, for which the law generally allows an award of
prejudgment interest. See generally Monessen Sw. Ry. Co. v.
Morgan, 486 U.S. 330, 335 (1988) (“Prejudgment interest is
29
normally designed to make the plaintiff whole and is part of the
actual damages sought to be recovered”); Johnson v. Cont’l
Airlines Corp., 964 F.2d 1059, 1063 (10th Cir. 1992)
(“[P]rejudgment interest is an integral element of compensatory
damages . . .”). But, in this case, Georgia-Pacific did not
undertake to prove its own damages, claiming instead only a
disgorgement of von Drehle’s gross profits.
For these reasons, we reverse the district court’s award of
prejudgment interest to Georgia-Pacific.
VI
In sum, we vacate the district court’s injunction and its
award of attorneys fees and remand for further proceedings
consistent with this opinion. We reverse its awards of treble
damages (leaving in place the jury’s award of profits) and
prejudgment interest.
IT IS SO ORDERED.
30
SHEDD, Circuit Judge, concurring in part and dissenting in part:
I agree with the majority except for its unnecessary
restriction of the nationwide injunction entered by the district
court in response to von Drehle Corporation’s unlawful actions. 1
In 2013, we affirmed a jury verdict in favor of Georgia-Pacific
Consumer Products, LP on its contributory infringement claim
against von Drehle, and we remanded the case for further
proceedings, including consideration of Georgia-Pacific’s
request for injunctive relief. Despite the fact that Georgia-
Pacific had by that time lost similar litigation in the Eighth
and Sixth Circuits, we rejected von Drehle’s belated attempt to
assert claim and issue preclusion as affirmative defenses, and
we also found that there were no “special circumstances”
(including comity) permitting the district court to raise the
preclusion defenses sua sponte. On remand, the district court
permanently enjoined von Drehle from interfering with Georgia-
Pacific’s trademark rights. The parties agree that the scope of
the injunction is nationwide.
Viewing this appeal under our normal standard of review,
the district court did not abuse its broad equitable discretion
by entering a nationwide injunction. The majority’s contrary
1
Despite my partial concurrence, I do not agree with the
majority’s assertion that “von Drehle reasonably believed that
its [infringing] conduct was lawful.” Majority Op., at 23.
31
decision, limiting the scope of the injunction to the states
within this circuit, is based on misapplication of the
discretionary doctrine of comity; fails to accord proper respect
to our 2013 opinion; and runs counter to a fundamental purpose
of the Lanham Act, which is “to provide national protection for
trademarks used in interstate and foreign commerce.” Park ’N
Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 193
(1985). The result of the majority’s opinion is that Georgia-
Pacific will be deprived of the complete and effective relief to
which it is entitled, and von Drehle, relying on that opinion,
will believe that it is permitted to continue interfering with
Georgia-Pacific’s trademarks in 45 states. The Lanham Act
authorizes federal courts to issue injunctive relief “according
to the principles of equity and upon such terms as the court may
deem reasonable,” 15 U.S.C. § 1116(a), but there is nothing
equitable or reasonable about this result, and its peculiarity
is self-evident, see, e.g., United States Jaycees v.
Philadelphia Jaycees,
639 F.2d 134, 142 (3rd Cir. 1981)
(“Protection of infringers is not a purpose of the Lanham Act.
On the contrary, the Act’s objective is the protection of the
trademark and the public.”).
I
We have previously detailed the history of this and related
litigation. See Georgia-Pacific Consumer Prods., LP v. von
32
Drehle Corp., 618 F.3d 441 (4th Cir. 2010) (“Georgia-Pacific
I”); Georgia-Pacific Consumer Prods., LP v. von Drehle Corp.,
710 F.3d 527 (4th Cir.) (“Georgia-Pacific II”), cert. denied,
134 S. Ct. 393 (2013). I will highlight certain aspects of this
litigation history to better explain my disagreement with the
majority’s decision.
Since the early 2000s, Georgia–Pacific has manufactured and
marketed throughout the country a touchless paper towel
dispenser under the “enMotion” product line. The dispenser is
designed for use in the “away-from-home” restroom market, and
Georgia-Pacific owns several federally registered trademarks
associated with the enMotion line. The Georgia-Pacific dispenser
was different in size and dimensions from competing dispensers,
and Georgia–Pacific developed high-quality paper towels that
were designed specifically for use in the Georgia-Pacific
dispensers. Georgia-Pacific leased its dispensers to
distributors. The leases between Georgia–Pacific and its
distributors, and the subleases that the distributors were
required to enter into with end-user customers such as hotels
and restaurants, stipulated that only Georgia-Pacific paper
towels were to be used in the dispensers.
In July 2005, Georgia-Pacific filed this lawsuit against
von Drehle in the Eastern District of North Carolina asserting
several claims for relief, including one for contributory
33
trademark infringement in violation of 15 U.S.C. § 1114(1). 2 The
gist of the contributory infringement claim is that von Drehle,
a North Carolina corporation with its principal place of
business in Hickory, North Carolina, manufactured and marketed
nationally a line of paper towels (sometimes referred to as “the
810-B paper towels”) that were designed for use in Georgia-
Pacific’s paper towel dispensers. “The von Drehle paper towels
were inferior in quality to the [Georgia-Pacific] paper towels,
but von Drehle and its distributors marketed the von Drehle
paper towels as a cheaper alternative for use in the [Georgia-
Pacific] dispensers, a practice known in the industry as
‘stuffing.’” Georgia-Pacific II, 710 F.3d at 529.
Partially due to an erroneous summary judgment ruling in
von Drehle’s favor, which we vacated in our 2010 Georgia-Pacific
I decision, over six years elapsed before Georgia-Pacific was
able to present its contributory trademark infringement claim to
a jury. During a January 2012 trial, the jury found in Georgia–
Pacific’s favor and awarded damages in the amount of $791,431,
which represent “all of the profits that von Drehle earned from
2
See Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844,
854 (1982) (“[I]f a manufacturer or distributor intentionally
induces another to infringe a trademark, or if it continues to
supply its product to one whom it knows or has reason to know is
engaging in trademark infringement, the manufacturer or
distributor is [contributorily] responsible for any harm done as
a result of the deceit.” (emphasis added)).
34
the sale of its 810-B paper towels from 2005 to the date of
trial.” Majority Op., at 4. In the damages award, no distinction
has ever been made between the profits earned from von Drehle’s
sales within or outside the Fourth Circuit.
Initially, Georgia-Pacific’s victory was short-lived. Two
months after trial, the North Carolina district court (acting on
von Drehle’s motion and sua sponte) set aside the jury verdict
and granted judgment as a matter of law to von Drehle based on
grounds of claim and issue preclusion. See Georgia-Pacific
Consumer Prods., LP v. von Drehle Corp., 856 F. Supp. 2d 750
(E.D.N.C. 2012). The court’s decision stemmed from the judgments
in two related cases filed by Georgia-Pacific against von Drehle
distributors. In both cases, Georgia-Pacific asserted, among
other things, a claim for contributory trademark infringement
based on these distributors’ marketing of the von Drehle paper
towels for use in Georgia-Pacific’s dispensers. 3
3
Von Drehle has criticized Georgia-Pacific’s “multi-front
litigation” strategy, but “[e]ffective enforcement of trademark
rights is left to the trademark owners and they should, in the
interest of preventing purchaser confusion, be encouraged to
enforce trademark rights.” Scotch Whisky Ass’n v. Majestic
Distilling Co., 958 F.2d 594, 599 (4th Cir. 1992) (internal
punctuation and citation omitted). Moreover, under the
majority’s view that the nationwide injunction is inappropriate,
Georgia-Pacific will be required to engage in a multi-front
strategy in the future to protect its trademark rights.
35
Georgia-Pacific filed the first of these cases in September
2008 - more than three years after it filed this action - in the
Western District of Arkansas against Myers Supply, Inc. In July
2009, while the original case against von Drehle was pending in
the North Carolina district court, the Arkansas district court
conducted a bench trial and ruled against Georgia-Pacific.
Applying a different legal analysis than the one we set forth in
Georgia-Pacific I, see Georgia-Pacific II, 710 F.3d at 531 n.5,
the Arkansas district court determined that Myers Supply was
aware that its customers were “stuffing” von Drehle paper towels
into Georgia-Pacific’s dispensers, but the stuffing did not
create a likelihood of confusion as to the origin of the paper
towels and, therefore, did not constitute trademark
infringement. The Eighth Circuit subsequently affirmed the
Arkansas district court decision. See Georgia-Pacific Consumer
Prods. LP v. Myers Supply, Inc.,
621 F.3d 771 (8th Cir. 2010).
Georgia-Pacific filed the second action in May 2009 against
Four-U-Packaging, Inc. in the Northern District of Ohio. In
November 2011, shortly before trial in the North Carolina
district court, the Ohio district court granted summary judgment
against Georgia-Pacific, holding that the action was barred by
the judgment in the Myers Supply case. See Georgia-Pacific
Consumer Prods. LP v. Four-U-Packaging, Inc., 821 F. Supp. 2d 948
(N.D. Ohio 2011). In December 2012, while Georgia-Pacific’s
36
appeal of the North Carolina district court’s decision to grant
judgment as a matter of law to von Drehle was pending in this
Court, the Sixth Circuit affirmed the Ohio district court
decision. See Georgia-Pacific Consumer Prods. LP v. Four-U-
Packaging, Inc., 701 F.3d 1093 (6th Cir. 2012). The Sixth
Circuit based its ruling in part on the fact that the North
Carolina district court had set aside the jury verdict against
von Drehle and dismissed the case. The Sixth Circuit explained
that a primary goal of issue preclusion “is to ‘foster[]
reliance on judicial action by minimizing the possibility of
inconsistent decisions,’” and it concluded that “[b]ecause
judgment in Georgia–Pacific’s favor was set aside, application
of issue preclusion in this case poses no risk of creating
inconsistent rulings.”
Id. at 1103 (quoting Montana v. United
States,
440 U.S. 147, 153–54 (1979)).
At the time, the Sixth Circuit’s observation about the
status of the North Carolina district court case was accurate.
However, four months after the Sixth Circuit’s decision, we held
in Georgia-Pacific II that the North Carolina district court
erred in setting aside the jury verdict and awarding judgment in
favor of von Drehle. We first concluded that von Drehle waived
the preclusion defenses by not asserting them in a timely manner
and, therefore, the district court abused its discretion by
considering them. As we explained, von Drehle’s counsel had been
37
immediately notified of the 2009 Arkansas district court
decision in Myers Supply, but von Drehle waited approximately
480 days before attempting to amend its answer to assert
preclusion as an affirmative defense.
More pertinent to the comity issue on which the majority
relies, we also held that the North Carolina district court
erred by considering the preclusion defenses sua sponte.
Notably, von Drehle specifically argued to us that the district
court was empowered to act sua sponte “where, as here, all
relevant data and legal records are before the court and the
demands of comity, continuity in the law, and essential justice
mandate judicial invocation of the principles of res judicata.”
Brief of Appellee, No. 12-1444, at 30 (4th Cir. Sept. 6, 2012)
(emphasis added) (internal punctuation and citation omitted).
Further, von Drehle argued that “[i]n raising preclusion on its
own motion as an independent ground for dismissal, the trial
court was protecting not just itself, but also the entire
judiciary. . . .” Id. at 31.
We recognized that sua sponte consideration of a preclusion
defense may be appropriate in “‘special circumstances,’” such as
when a court is on notice that it has previously decided the
issue in another case and raises the defense to avoid
“‘unnecessary judicial waste.’” Georgia-Pacific II, 710 F.3d at
535 (quoting Ariz. v. Calif.,
530 U.S. 392, 412 (2000)).
38
However, despite von Drehle’s invocation of the doctrine of
comity and the need to protect “the entire judiciary,” we found
that “von Drehle [had] not identified [any] ‘special
circumstance’ justifying the district court’s unusual action.”
Georgia-Pacific II, 710 F.3d at 535. We explained that “this
case was particularly ill-suited for sua sponte consideration of
preclusion defenses that were known long before trial, given
that the issue of trademark infringement already had been
decided by the jury. Thus, the district court’s sua sponte
consideration of the preclusion defenses actually wasted
judicial resources, rather than sparing them.”
Id.
Finally, we also observed that by relying on Myers Supply
as grounds for setting aside the jury verdict, the district
court violated the mandate rule because it failed to “implement
both the letter and spirit” of the mandate of Georgia-Pacific I.
Georgia-Pacific
II, 710 F.3d at 536 n.13. For all of these
reasons, we remanded this case “with the specific instruction
that the district court reinstate the jury verdict in favor of
Georgia–Pacific and consider Georgia–Pacific’s requests for
injunctive and other appropriate relief.”
Id. at 536.
Von Drehle petitioned for panel rehearing or rehearing en
banc arguing, among other things, that “[a]voiding conflict with
sister circuits is especially important,” and the panel’s waiver
analysis “violates principles of comity, fairness, and justice.”
39
Pet. for Reh’g or Reh’g En Banc, No. 12-1444, at 10 (4th Cir.
Mar. 28, 2013) (emphasis added). Further, von Drehle again
invoked “the demands of comity” in seeking to justify the
district court’s sua sponte consideration of the preclusion
defenses, and it noted that “[u]nder the panel’s holding, there
will now be years of litigation as [Georgia-Pacific] invokes the
result here and seeks to apply it to new and pending cases,
seeking to undo the decisions in Myers, Four-U, and the two
Courts of Appeals that have affirmed those decisions.” Id. at
15. Von Drehle concluded that it “is difficult to imagine a
result less conducive to judicial efficiency or less respectful
of the decisions of coordinate courts that have previously
addressed the identical dispute.”
Id. The rehearing petition was
denied. Von Drehle subsequently asserted comity as a ground
warranting review in its unsuccessful petition for certiorari
review of the Georgia-Pacific II decision. See Pet. for Writ of
Cert., No. 13-41, at 22-25 (U.S. July 8, 2013).
On remand to the North Carolina district court, the parties
briefed and argued whether Georgia-Pacific is entitled to
injunctive relief and, if so, what the scope of that relief
should be. Regarding the scope, von Drehle argued (among other
things) that any injunction “should be narrowly tailored to
protect the legitimate rights of von Drehle and its
distributors” and “must account for the rulings of the Eighth
40
and Sixth Circuits and for [Georgia-Pacific’s] position that
each distributor and each state are different.” von Drehle
Corp.’s Response in Opp. to Georgia-Pacific’s Renewed Mot. for
Perm. Inj., No. 5:05cv478-BO(1), at 16 (E.D.N.C. May 24, 2013).
However, despite specifically arguing in the Georgia-Pacific II
appeal and petition for certiorari review that the doctrine of
comity factors in this case, von Drehle does not appear to have
specifically invoked comity as a basis for denying or limiting
injunctive relief. 4
Following full briefing and a hearing, the North Carolina
district court granted Georgia-Pacific’s motion for injunctive
relief. Applying the proper legal test, which it gleaned from
eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006), the court
found: (1) Georgia-Pacific “suffered irreparable injury to its
trademark and the reputation of its enMotion brand” by von
Drehle’s infringing activities, which prevented Georgia-Pacific
“from controlling the quality of paper towels dispensed from its
enMotion dispensers and further confused and deceived
customers;” (2) the jury award is inadequate as it would not
4
In addition to not arguing comity per se before the North
Carolina district court, von Drehle did not cite to any
authority holding that comity warranted denial or limitation of
injunctive relief. This fact stands in contrast to von Drehle’s
argument to us. See Appellant’s Opening Brief, at 50-56 (citing
Va. Soc’y for Human Life, Inc. v. FEC, 263 F.3d 379 (4th Cir.
2001), and arguing that the injunction “violates this Court’s
precedent and basic principles of comity”).
41
prevent von Drehle “from continu[ing] to infringe in the future,
policing [von Drehle’s] sales of its paper towels would be
onerous, and [von Drehle] has asserted throughout that its
actions did not constitute trademark infringement;” (3) the
balance of hardship favors Georgia-Pacific as von Drehle’s
“activities have been found to have infringed [Georgia-
Pacific’s] trademarks and [von Drehle] has no equitable interest
in perpetrating trademark infringement;” and (4) “the public
interest is best served by a permanent injunction that would
prevent further trademark infringement.” J.A. 854 (internal
punctuation and citations omitted). Based on these findings, the
court enjoined von Drehle “from interfering directly or
indirectly” with Georgia-Pacific’s trademark rights and
specified that “any deliberate or purposeful placement” of von
Drehle’s paper towels in Georgia-Pacific’s enMotion dispensers
“shall constitute a violation of this permanent injunction.”
J.A. 855.
II
“A federal court has broad power to restrain acts which are
of the same type or class as unlawful acts which the court has
found to have been committed or whose commission in the future
unless enjoined, may fairly be anticipated from the defendant’s
conduct in the past.” NLRB v. Express Pub. Co., 312 U.S. 426,
435 (1941). As a general rule, a federal court’s injunctive
42
order “operate[s] continuously and perpetually upon the [party]
in relation to the prohibited conduct,” and it extends
“throughout the United States.” Leman v. Krentler-Arnold Hinge
Last Co., 284 U.S. 448, 451 (1932).
The Lanham Act reflects this broad power, authorizing
federal courts to issue injunctive relief to a prevailing
plaintiff “according to the principles of equity and upon such
terms as the court may deem reasonable.” 15 U.S.C. § 1116(a).
When trademark infringement has been proven, “an injunction is
the preferred remedy to insure that future violations will not
occur,” Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va.,
Inc., 43 F.3d 922, 939 (4th Cir. 1995) (internal punctuation and
citation omitted), and it should be crafted to provide complete
relief to the plaintiff, PBM Prods, LLC v. Mead Johnson & Co.,
639 F.3d 111, 128 (4th Cir. 2011). The “scope of injunctive
relief is dictated by the extent of the violation established,”
Califano v. Yamasaki,
442 U.S. 682, 702 (1979), and the Lanham
Act authorizes a district court to enter a nationwide injunction
prohibiting trademark infringement, see Majority Op., at 11.
A trademark plaintiff who is entitled to injunctive relief
“is entitled to effective relief; and any doubt in respect of
the extent thereof must be resolved in its favor as the innocent
producer and against the [defendant], which has shown by its
conduct that it is not to be trusted.” William R. Warner & Co.
43
v. Eli Lilly & Co., 265 U.S. 526, 532 (1924). “The decision to
grant or deny permanent injunctive relief is an act of equitable
discretion by the district court, reviewable on appeal for abuse
of discretion.” eBay,
Inc., 547 U.S. at 391. Under this
standard, we are not at liberty to disturb an injunction simply
because we would have decided the matter differently in the
first instance. Centro Tepeyac v. Montgomery County,
722 F.3d
184, 188 (4th Cir. 2013) (en banc). Instead, we may find an
abuse of discretion only if the court applied an incorrect
injunction standard, rested its decision on a clearly erroneous
finding of a material fact, or misapprehended the law with
respect to underlying issues in litigation.
Id.
Viewing this appeal properly and under this standard, the
district court did not abuse its discretion. The court applied
the correct injunction standard, did not rely on a clearly
erroneous finding of material fact, and did not misapprehend the
law with respect to the underlying issues of this case. Notably,
the majority does not challenge the court’s determination that
injunctive relief is necessary to provide complete relief to
Georgia-Pacific for von Drehle’s infringing activities; does not
quarrel with the language of the injunction order prohibiting
von Drehle “from interfering directly or indirectly” with
Georgia-Pacific’s trademark rights and specifying that “any
deliberate or purposeful placement” of von Drehle’s paper towels
44
in Georgia-Pacific’s enMotion dispensers “shall constitute a
violation of this permanent injunction;” and does not assert
that the evidence presented below fails to support the court’s
determination that a nationwide injunction is warranted.
Instead, relying on the doctrine of comity, the majority
holds that the nationwide scope of the injunction is overbroad
under the circumstances of this case. In the majority’s view,
the injunction should not extend to the Eighth and Sixth
Circuits, which (respectively) decided Myers Supply and Four-U-
Packaging, because that “would amount to a direct and unseemly
affront to those courts” and would “create a direct and perhaps
irreconcilable conflict as to Georgia-Pacific’s trademark rights
[in those circuits], leaving litigants and others in those
States confused.” Majority Op., at 13. The majority extends its
limitation on the injunction to the remainder of the federal
circuits (other than the Fourth Circuit) because courts in those
circuits – when presented with litigation involving Georgia-
Pacific’s trademarks – “would be faced with the question of
whether to follow the Fourth Circuit on the one hand or the
Eighth and Sixth Circuits on the other.” Id. at 13-14.
The doctrine of comity is “not a rule of law, but one of
practice, convenience, and expediency.” Mast, Foos, & Co. v.
Stover Mfg. Co., 177 U.S. 485, 488 (1900). “It is something more
than mere courtesy, which implies only deference to the opinion
45
of others, since it has a substantial value in securing
uniformity of decision, and discouraging repeated litigation of
the same question. But its obligation is not imperative.” Id.
(emphasis added). Although “comity governs relations between
courts of the same sovereign,” Ulmet v. United States,
888 F.2d
1028, 1031 (4th Cir. 1989), the rule is rarely applied in this
context, and only when it is essential to avoid “an unnecessary
burden on the federal judiciary” and to prevent “the
embarrassment of conflicting judgments.” In re Naranjo,
768 F.3d
332, 348 (4th Cir. 2014) (internal punctuation and citation
omitted).
In this context, comity is closely akin to the doctrines of
issue and claim preclusion, see Allen v. McCurry, 449 U.S. 90,
95-96 (1980) (explaining that “res judicata and collateral
estoppel not only reduce unnecessary litigation and foster
reliance on adjudication, but also promote the comity between
state and federal courts that has been recognized as a bulwark
of the federal system”). Like those doctrines, “[c]omity works
most efficiently where previously filed litigation is brought
promptly to the attention of the district court, and the court
defers,” Church of Scientology of Cal. v. U.S. Dept. of Army,
611 F.2d 738, 750 (9th Cir. 1980).
46
III
The majority’s limitation of the scope of the injunction to
the five states within this circuit deprives Georgia-Pacific of
the complete and effective relief to which it is entitled. I
have concerns generally about utilizing the doctrine of comity
in this manner. See United States v. Gillock, 445 U.S. 360, 373
(1980) (noting that “where important federal interests are at
stake, . . . comity yields”); Nelson v. Berry,
59 F.2d 351, 353
(Ct. Cust. and Pat. App. 1932) (noting that when applying the
doctrine of comity, “courts are not at liberty to disregard
rights which the law assures to litigants”). However, I will
limit my discussion to two specific reasons why I believe the
majority has erred.
First, in Georgia-Pacific II, we rejected application of
the comity doctrine in this litigation. As noted, by the time we
decided Georgia-Pacific II, both the Eighth and Sixth Circuits
had resolved the Myers Supply and Four-U-Packaging cases, and we
were presented squarely with the question of whether “special
circumstances” existed to warrant the district court’s sua
sponte consideration of von Drehle’s preclusion defenses based
on those cases. Despite von Drehle’s invocation of the comity
doctrine, we held that no “special circumstances” justified the
district court’s action. In other words, in what some could
consider to have been the creation of an “embarrassment of
47
conflicting judgments,” see In re Naranjo, 768 F.3d at 348, and
“a direct and unseemly affront” to the Sixth and Eighth
Circuits, Majority Op., at 13, we rejected “the demands of
comity,” Brief of Appellee, No. 12-1444, at 30 (4th Cir. Sept.
6, 2012), allowed the jury verdict in favor of Georgia-Pacific
to stand, and remanded the case for the district court to
consider Georgia-Pacific’s request for injunctive and other
relief.
Of course, the injunction per se was not then before us,
but the same comity concerns now raised by von Drehle and the
majority were. Given that we had previously admonished the
district court of its obligation to “implement both the letter
and spirit” of our mandate, Georgia-Pacific II, 710 F.3d at 536
n.13, it is hardly surprising that the court determined that the
comity doctrine had no bearing on the scope of injunctive relief
to which Georgia-Pacific is entitled. Indeed, our rejection of
the comity doctrine arguably had become – and remains - the law
of the case. See Winston v. Pearson,
683 F.3d 489, 498 (4th Cir.
2012) (explaining law of the case doctrine). Under these
circumstances, where von Drehle barely argued (if at all) comity
in opposition to the injunction request and the court’s
injunction order is entirely consistent with our mandate, the
court did not abuse its discretion.
48
Second, and in any event, the comity doctrine applied by
the majority simply has no bearing in this case. Georgia-Pacific
proved at trial that von Drehle infringed on its trademark
rights on a national scale, we affirmed that judgment in
Georgia-Pacific II, and the nationwide injunction prohibits von
Drehle – and no one else – from further infringement. Like all
injunction cases, the district court retains the power to
enforce its injunction against von Drehle by contempt
proceedings, but it has no authority under the injunction to
command any other party (or any court) with respect to Georgia-
Pacific’s trademarks. 5
Nothing about this rather ordinary process undermines the
law in any other circuit, where any party other than von Drehle
is currently permitted (at their own risk) to “stuff” Georgia-
Pacific’s dispensers. If Georgia-Pacific chooses to litigate its
trademark rights against other parties in other circuits, the
nationwide injunction will not preclude courts in those circuits
from deciding all pertinent issues, including trademark and
5
Under the majority’s rationale, I cannot help but wonder
when my colleagues would ever uphold a nationwide injunction.
Anytime such an injunction is entered, the argument could be
made that the injunction interferes with other courts’ ability
to decide the matter at issue.
49
preclusion issues. 6 Of course, those courts will be presented
with the so-called “embarrassment” of the conflicting circuit
court judgments, but that circumstance arose when we filed
Georgia-Pacific II, not when the district court enjoined von
Drehle, and it remains in existence regardless of whether the
injunction is limited or not. 7
The facts and circumstances of this case differ from
Virginia Society for Human Life, a case in which we vacated a
nationwide injunction based on the comity doctrine. There, an
issue advocacy group sued the Federal Election Commission
(“FEC”) seeking a declaration that a particular regulation was
unconstitutional. The district court held that the regulation
was unconstitutional and issued a nationwide injunction
preventing the FEC from enforcing the regulation. We found the
injunction to be overbroad for two reasons. First, we concluded
6
In that event, under the generally prevailing “last in
time” rule, the later judgment – i.e., Georgia-Pacific II -
would likely be accorded preclusive effect. See, e.g., Fresenius
USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330, 1347 n.14 (Fed.
Cir. 2013) (noting that where final judgments conflict, “the
settled rule is that the later judgment, not the earlier, has
preclusive force going forward”).
7
Contrary to the majority’s concern, the “conflict” between
the various judgments is not necessarily unseemly. As the
Supreme Court has explained: “Although the application of a
federal statute such as the Lanham Act by judges and juries in
courts throughout the country may give rise to some variation in
outcome, this is the means Congress chose to enforce a national
policy to ensure fair competition.” POM Wonderful, LLC v. Coca-
Cola Co., 134 S. Ct. 2228, 2239 (2014).
50
that the injunction was “broader than necessary to afford full
relief” to the advocacy group because a limited injunction
adequately protected the group. 263 F.3d at 393. Second, we
concluded that the injunction had “the effect of precluding
other circuits from ruling on the constitutionality” of the
regulation because it prohibited the FEC from attempting to
enforce it.
Id. Unlike Virginia Society for Human Life, the
nationwide injunction before us is necessary to provide complete
relief to Georgia-Pacific, and as I have explained, the
injunction does not preclude other courts from ruling on the
propriety of the “stuffing” practice of parties other than von
Drehle in relation to Georgia-Pacific’s trademarks.
IV
One final observation is in order. Even though I believe
that it is unfair to deny Georgia-Pacific the nationwide
injunctive relief to which it is entitled, I question whether
the limitation of injunctive relief to the states within this
circuit ultimately will protect von Drehle from liability in
future litigation.
As noted, von Drehle is a North Carolina corporation that
operates out of Hickory, North Carolina. Georgia-Pacific has
proven in this case that von Drehle’s manufacturing and
marketing activities, that emanated from North Carolina but
caused infringement nationally, constitute contributory
51
trademark infringement. Presumably, if von Drehle is freed from
the nationwide constraints of the injunction, it will resume its
North Carolina-based activities of manufacturing paper towels
and marketing them to distributors with knowledge that the
towels will be stuffed into Georgia-Pacific’s dispensers.
Although von Drehle may limit its distribution of paper towels
to entities outside of the Fourth Circuit in an effort to comply
with a limited injunction, it will nonetheless be engaging in
the very conduct (i.e., manufacturing and marketing) that gave
rise to its liability in this case, and it will be doing so
within the Fourth Circuit, where such conduct is prohibited.
Therefore, unless von Drehle relocates its manufacturing
and marketing activities outside of this circuit, it seems
reasonable to believe that any future distribution of paper
towels for the purpose of stuffing Georgia-Pacific’s dispensers
anywhere would violate even the limited injunction called for by
the majority, and Georgia-Pacific would be entitled to seek
contempt relief. Moreover, even assuming that such conduct would
not violate a limited injunction, there seems to be no reason
that Georgia-Pacific could not file another lawsuit similar to
this one seeking damages, and the lack of a nationwide
injunction would not preclude Georgia-Pacific from recovering
all of the profits von Drehle earned anywhere in the nation as a
result of its infringing activities.
52
V
Georgia-Pacific is entitled to complete and effective
injunctive relief to prevent von Drehle from continuing to
infringe on its trademarks. The district court considered the
proper factors and concluded that a nationwide injunction is
necessary to provide this relief. Because the district court did
not abuse its discretion in reaching this conclusion, and
because we should accord proper respect to our decision in
Georgia-Pacific II, we should affirm the injunction.
Accordingly, I concur in part and dissent in part.
53
