SW Recreational v. Fieldturf Inc ( 2002 )

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 01-50073
SOUTHWEST RECREATIONAL INDUSTRIES, INC.,
Plaintiff – Appellee – Cross-Appellant,
VERSUS
FIELDTURF, INC., and FIELDTURF INTERNATIONAL, INC.,
Defendants – Appellants – Cross-Appellees.
Appeals from the United States District Court
for the Western District of Texas
(00-CV-63)
August 13, 2002
Before DUHÉ, BARKSDALE, and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:*
Southwest Recreational Industries, Inc. sued FieldTurf, Inc. and FieldTurf International, Inc.
(collectively “FieldTurf”) for allegedly engaging in various unfair business practices. Both parties
now appeal various aspects of the jury’s verdict and the district court’s ruling. After carefully
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published
and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
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reviewing the record, briefs, and relevant authorities, we affirm the district court on all grounds
except for its award of attorneys’ fees for Southwest’s breach of contract claim.
I. BACKGROUND
Southwest manufactures and sells a popular artificial grass product called “AstroTurf.”
Commonly referred to as a “conventional” turf product, AstroTurf is a carpet-like surface consisting
of densely knitted fabric laid over a shock-absorbent foam pad. AstroTurf, and other artificial turf
products, are used as playing surfaces in stadiums and other multipurpose sports arenas. From its
inception in 1966 until the mid 1990s, AstroTurf was the dominant brand name in the artificial turf
market. Although Southwest did not develop AstroTurf, it has manufactured and sold the product
since it purchased the AstroTurf trademark from a competitor in 1994.
FieldTurf produces and sells a competing product, self-titled “FieldTurf” (“the FieldTurf
product”). FieldTurf purchased the patent for its product in 1988 and originally commercialized it
for use on golf courses and driving ranges.1 In 1993, FieldTurf began marketing its product as a
“next generation” playing surface for multipurpose athletic arenas. Commonly referred to as a “filled”
turf surface, the FieldTurf product consists of individual blades of synthetic grass that are knitted
together over an “infill” of sand and ground rubber. FieldTurf claims that its product is softer, safer,
and more closely emulates real grass than conventional turf products like AstroTurf.
Southwest produces its own filled turf product called “AstroPlay.” Although AstroPlay was
originally designed with a sand and rubber infill, Southwest now markets it with a rubber-only infill.
1
Befo re 1999, FieldTurf’s principals conducted business through a predecessor corporation
called SynTenniCo, Inc. Because the distinction between FieldTurf and SynTenniCo makes no
practical difference in t his case, we use the term FieldTurf to refer to the present FieldTurf
companies, as well as their predecessor corporation.
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AstroPlay was first installed in an athletic arena in 1989, before FieldTurf began competing for sports
arena contracts. Since the mid 1990s, Southwest and FieldTurf have competed for most of the
artificial turf contracts in this country.
The parties’ legal squabbles began in 1998. In a separate lawsuit filed in the Eastern District
of Kentucky (the “Kentucky lawsuit”), FieldTurf sued Southwest claiming that Southwest’s use of
sand and rubber infill in its AstroPlay product infringed FieldTurf’s patent. That litigation ended in
settlement (the “Kentucky settlement”), with the parties agreeing to four terms that are relevant to
the present suit. First, FieldTurf agreed to dismiss the Kentucky lawsuit and to abstain from suing
Southwest for infringing its patent. Second, Southwest agreed that, until FieldTurf’s patent expired,
it would sell AstroPlay “with an infill consisting entirely of resilient particles (rubber, cork, etc.).”
(Again, the FieldTurf product features an infill mixture consisting of sand and rubber.) Third, both
parties agreed to keep the terms of the settlement confidential. And fourth, both parties agreed that
they would make only the following public statement regarding the settlement:
The action in the United States District Court in Kentucky wherein [FieldTurf] has
asserted claims of patent infringement and trade disparagement against Southwest .
. . has been settled on terms acceptable to both parties and dismissed. The terms of
the settlement are confidential.
The Kentucky settlement, however, did not end the parties’ legal wrangling. Soon after
settlement, FieldTurf began advertising that AstroTurf and AstroPlay were inferior to FieldTurf’s
products and that the Kentucky settlement prohibited Southwest from selling sand and rubber
infills—a clear violation of the settlement’s confidentiality provisions. These statements were part
of an aggressive comparative advertising campaign whereby FieldTurf sought to portray its product
as safer, more technologically advanced, and favored among professional athletes and athletic
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organizations. As a result, Southwest began to lose a significant number of contracts to FieldTurf.
In January 2000, Southwest filed this suit against FieldTurf claiming that it infringed
Southwest’s trademarks, breached the confidentiality terms of the Kentucky settlement, and engaged
in unlawful business practices, including false advertising, commercial disparagement, and tortious
interference with contract. After a three day trial in November 2000, the jury found FieldTurf liable
for breach of contract and false advertising, awarding Southwest $1,040,000 in actual damages and
$500,000 in punitive damages. The jury did not find FieldTurf liable for tortious interference or
commercial disparagement and issued an advisory verdict that FieldTurf did not infringe Southwest’s
AstroTurf trademark.
The district court entered a judgment on the jury’s $1,040,000 actual damage award but
declined to award Southwest any punitive damages. The court also adopted the jury’s findings that
FieldTurf was not liable for tortious interference, commercial disparagement, or trademark
infringement, and it denied Southwest’s motions for an accounting of profits and a permanent
injunction on its trademark infringement claim. Although it was not necessary to the judgment, the
district court made the additional finding that Southwest’s AstroTurf trademark is not generic.
Finally, the court amended its judgment to include $240,480 in attorneys’ fees, significantly less than
the $1.7 million in fees that Southwest had requested.
Neither party was satisfied with the judgment. FieldTurf appealed challenging the sufficiency
of evidence for the actual damage award, the award of attorneys’ fees, various aspects of the jury
instruction, and the court’s finding that “AstroTurf” is not a generic term. Southwest filed a cross
appeal challenging the denial of relief on its trademark claims, the denial of a prejudgment interest
award, and the amount of its attorneys’ fee award. We address both parties’ arguments in turn.
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II. DISCUSSION OF FIELDTURF’S CLAIMS
FieldTurf contends that the district court erred in denying its motion for judgment as a matter
of law because there was insufficient evidence to support the jury’s actual damages award.
Specifically, FieldTurf argues that there is insufficient evidence to support Southwest’s false
advertising claims or a finding that FieldTurf’s activities caused Southwest to lose profits on its
AstroPlay sales.
We review de novo the district court’s denial of a motion for judgment as a matter of law,
applying the same standard as the district court.2 But when a case is tried by a jury, a Rule 50(a)
motion is a challenge to the legal sufficiency of the evidence.3 In resolving such challenges, we draw
all reasonable inferences and resolve all credibility determinations in the light most favorable to the
nonmoving party.4 Thus, we will reverse the denial of a Rule 50(a) motion only if the evidence points
so strongly and so overwhelmingly in favor of the nonmoving party that no reasonable juror could
return a contrary verdict.5 “This is true even when the jury reaches a general verdict based on two
alternative theories.”6
A. Sufficiency of Evidence on Southwest’s False Advertising Claim
Under this highly deferential standard of review, we find sufficient evidence to support
Southwest’s false advertising claims. Section 43(a) of the Lanham Act prohibits businesses and
2
Cozzo v. Tangipahoa Parish Council-President Gov’t, 279 F.3d 273, 280 (5th Cir. 2002).
3
Brown v. Bryan County, 219 F.3d 450, 456 (5th Cir. 2000).
4
Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).
5
Cousin v. Trans Union Corp., 246 F.3d 359, 366 (5th Cir. 2001).
6
United States v. Cisneros, 203 F.3d 333, 344 n.5 (5th Cir. 2000).
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individuals from misrepresenting the nature and quality of commercial products:
Any person who . . . in commercial advertising or promotion, misrepresents the
nature, characteristics, qualities, or geographic origin of his or her or another person’s
goods, services, or commercial activities, shall be liable in a civil action by any person
who believes that he or she is or is likely to be damaged by such act.7
In Pizza Hut, Inc. v. Papa John’s International, Inc.,8 we explained that a false advertising claim
under the Lanham Act includes five elements:
(1) A false or misleading statement of fact about a product;
(2) Such statement either deceived, or had the capacity to deceive a substantial
segment of potential consumers;
(3) The deception is material, in that it is likely to influence the consumer's purchasing
decision;
(4) The product is in interstate commerce; and
(5) The plaintiff has been or is likely to be injured as a result of the statement at issue.9
The first prong requires that the false advertising complained of involves, at the very least,
a “misleading statement of fact” as opposed to mere “puffery.” We have held that puffery comes in
two forms: “(1) an exaggerated, blustering, and boasting statement upon which no reasonable buyer
would be justified in relying; or (2) a general claim of superiority over comparable products that is
so vague that it can be understood as nothing more than a mere expression of opinion.”10 In contrast,
“a statement of fact is one that (1) admits of being adjudged true or false in a way that (2) admits of
empirical verification.”11
7
15 U.S.C. § 1125(a)(1)(B).
8
227 F.3d 489 (5th Cir. 2000).
9
Id. at 495.
10
Id. at 497.
11
Presidio Enters., Inc. v. Warner Bros. Distrib. Corp., 784 F.2d 674, 679 (5th Cir. 1986).
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Our cases also clarify a plaintiff’s burden under the second and third elements. When a
defendant makes “ambiguous or true but misleading statements,” the plaintiff must show that
consumers were actually misled.12 But where a defendant has made literally false statements, the
plaintiff need not demonstrate that the statements actually misled consumers, for we assume that false
statements are materially deceptive.13
The exhibits in this case evince literally false statements of fact made by FieldTurf employees
attempting to lure customers away from Southwest. For example, in a letter to Humboldt State
University, FieldTurf’s president attempted to dissuade the school from purchasing AstroPlay by
highlighting FieldTurf’s endorsement from its national spokesman, football coach Tom Osborne. The
June 4, 1999 letter falsely states that FieldTurf had not paid for Mr. Osborne’s endorsement: “He is
not a paid endorser, but after his research into our product he is completely sold on it and its track
record.” The evidence shows, however, that FieldTurf and Osborne signed an agreement on February
19, 1999, whereby Osborne agreed to endorse FieldTurf’s product in exchange for stock options.
FieldTurf also dishonestly boasted that its product was the only artificial turf approved by the
Fédération Internationale de Football Association (“FIFA”) for use in international soccer
competitions. In its April 28, 2000 proposed bid to install a synthetic field at Gannon University,
FieldTurf stated that its product had recent ly become “the first artificial surface ever approved by
FIFA for all levels of international soccer, up to and including the World Cup Finals.” The proposal
went on to state that “[t]his wraps up months of investigation by FIFA on the safety and utility of
12
Pizza Hut, 227 F.3d at 497. Contrary to FieldTurf’s contention, the district court’s instruction
on materiality properly stated that Southwest was obligated to “present some evidence of actual
deception” if it did not prove that FieldTurf made statements that were literally false.
13
Id.
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FieldTurf for soccer.” In direct contradiction to that statement, however, Southwest presented a July
14, 2000 letter from FIFA’s legal counsel asking FieldTurf to refrain from using the phrase “approved
by FIFA,” or any similar phrase, because FIFA had not approved any artificial surface for
international competitions.
The statement that FIFA had approved FieldTurf’s product, like the statement that Coach
Osborne was an unpaid endorser, is an empirically verifiable, factual statement. Having shown that
these statements (and several others like them) were literal fabrications, Southwest was not obligated
to prove that FieldTurf actually deceived any given consumer. We therefore find sufficient evidence
to support Southwest’s false advertising claims and do not address whether there is sufficient
evidence of actual consumer deception.
B. Sufficiency of Evidence on Lost Profits
FieldTurf also complains that there was insufficient evidence to support the jury’s award of
$1,040,000 in actual damages because Southwest presented no objective evidence that FieldTurf
caused any customers to choose its product over AstroPlay. Since Southwest presented a cumulative
damage question, this award compensates Southwest both for its false advertising claims and for
FieldTurf’s breach of the confidentiality provisions in the Kentucky settlement. We find sufficient
evidence to uphold the award.
The jury heard two Southwest executives testify about how FieldTurf’s ad campaign harmed
the company. Reed Seaton, Southwest’s President and CEO, testified that he had personal
knowledge of fifteen or twenty prospective accounts that Southwest lost because of FieldTurf’s false
statements or violations of the Kentucky settlement. Mr. Seaton explained that FieldTurf’s
salespersons had revealed the terms of the Kentucky settlement to Southwest’s potential customers
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and led them to believe that Southwest’s all-rubber infill was inferior. That is, after learning that the
Kentucky settlement precluded Southwest from selling sand and rubber infills, Southwest’s customers
viewed its all-rubber infill as an afterthought and lost faith in AstroPlay:
We’re trying to stick to the merits of the product [(AstroPlay)]. And all the customer
really wants to speak to is why aren’t you selling sand and rubber because we’ve been
told that you can’t sell sand and rubber. So it’s a very difficult process because you
can’t explain to them why you can’t sell sand and rubber because it was not allowed
by the settlement agreement, but yet, the customer, in every case that I was involved
with, already knew the terms of the settlement agreement prior to my arrival.
Mr. Seaton’s testimony was corroborated in greater detail by James Savoca, Southwest’s Chief
Operating Officer of Domestic Turf. Mr. Savoca testified that he knew of twenty-nine prospective
AstroPlay installations during 2000 that Southwest lost due to FieldTurf’s unlawful activities. Of
those twenty-nine potential customers, Savoca explained that, in nineteen cases, FieldTurf’s negative
promotional tactics were the “focal point” and the “reason why we lost the job[s].” He further
explained that the average price to install an AstroPlay field was $400,000 and that Southwest
typically made a twenty-six to twenty-seven percent net profit on each field.
FieldTurf argues that Seaton and Savoca’s testimonies do not constitute objective evidence
of lost profits under Great Pines Water Co. v. Liqui-Box Corp., a case in which we set aside an
$800,000 damage award for insufficient evidence.14 We find the facts of that case to be materially
distinguishable from the present case. Great Pines, a bottled water distributor, sued the manufacturer
for making leaky bottles that ultimately caused Great Pines to lose customers.15 Three Great Pines
14
203 F.3d 920, 922–24 (5th Cir. 2000).
15
Id. at 921.
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employees testified on lost profits.16 The employees offered varying estimates that the company lost
between 4,000 and 8,000 orders due to the defective bottles.17 Not only were their estimates
inconsistent, but the employees admitted that they had no oral or written customer feedback to
support their conclusions.18
The evidence supporting lost profits in this case is clearly more reliable than the evidence
offered in Great Pines. Southwest’s managers testified about a relatively small number of lost
accounts based on their direct contact with the potential customers. And Mr. Savoca offered
objective testimony concerning the average profit earned on an installation that reflected his personal
experience in the industry. We conclude that this evidence of lost profits was competent enough for
the jury to calculate damages “with reasonable certainty.”19
C. Submission of Damages in the Form of a General Verdict
Rather than submitting separate damage questions on its Lanham Act and breach of contract
claims, Southwest presented a single question in the form of a general verdict. FieldTurf argues that
the district court erred in submitting these claims as a general verdict and that we should therefore
grant a new trial.
It is well established in this circuit that a single jury question “that submits multiple theories
16
Id. at 923.
17
Id. at 924.
18
Id.
19
Id. at 922 (stating that lost profits need not be “susceptible to exact calculation” and that the
amount must only “be shown by competent evidence with reasonable certainty”).
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is acceptable when each of the theories is sustained by the evidence and legally sound.”20 We have
already concluded that there was sufficient evidence to support a judgment on each of Southwest’s
claims. We therefore find no error on this ground.
D. Instruction on FieldTurf’s Discovery Abuses
FieldTurf next complains that the district court abused its discretion in instructing the jury that
it could infer that FieldTurf withheld documents that would have been damaging to its defense.
Despite repeated requests and warnings from the district judge, FieldTurf failed to produce hundreds
of relevant marketing correspondences that Southwest eventually obtained by directly subpoenaing
FieldTurf’s customers. When asked why FieldTurf failed to produce these documents, brochures,
and E-mails that were sent to prospective customers, FieldTurf executives offered suspect and
inadequat e explanations. With regard to FieldTurf’s failure to produce relevant and damaging E-
mails, company president John Gilman explained that his computer had been stolen, that FieldTurf
computers were infected with the “I Love You” virus, and that the company does not keep its E-
mails. With regard to FieldTurf’s failure to produce other relevant documents, Gilman offered no
explanation. Based on these facts, the district court did not abuse its discretion21 in submitting the
jury instruction as a discovery sanction for FieldTurf’s nondisclosure.22
20
Box v. Ferrellgas, Inc., 942 F.2d 942, 944 (5th Cir. 1991); accord United States v. Tomblin,
46 F.3d 1369, 1385 (5th Cir. 1995); Auster Oil & Gas, Inc. v. Stream, 835 F.2d 597, 603 (5th Cir.
1988); Nowell v. Universal Elec. Co., 792 F.2d 1310, 1312 (5th Cir. 1986).
21
United States v. Katz, 178 F.3d 368, 372 (5th Cir. 1999) (“We review remedies for discovery
violations imposed by a district court for abuse of discretion.”).
22
See Fed. R. Civ. P. 37(c) (allowing district courts to inform the jury of a party’s discovery
abuse and permitting the judge to order as a sanction that certain matters or facts be taken to be
established).
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E. Southwest’s Award for Attorneys’ Fees
Finally, FieldTurf argues that Southwest was not entitled to its $240,480 award for attorneys’
fees. The district court awarded attorneys’ fees under section 38.001 of the Texas Practice and
Remedies Code, which makes fees and costs recoverable on a successful breach of contract claim.23
Section 38.002 of the Texas Practice and Remedies Code, however, conditions the recovery of fees
on the claimant’s presentment of the claim to the opposing party.24 FieldTurf argues that Southwest
failed to present its breach of contract claim and therefore is not entitled to recover fees under section
38.001.
The purpose of the presentment requirement under Texas law is “to allow the person against
whom the claim is asserted to pay the claim within 30 days after they have notice of the claim without
incurring an obligation for attorney’s fees.”25 Although presentment may be informal, it is necessary
that the claimant make some form of “presentment of the contract claim to the opposing party . . .
.”26
As its sole evidence that it presented its breach of contract claim, Southwest relies on an April
10, 2000 letter, in which it offered to settle its claims against FieldTurf. That letter does not
constitute adequate presentment of Southwest’s breach of contract claims. Although the letter offers
to settle all pending claims against FieldTurf in exchange for $2.5 million and other stipulations, there
23
See Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (Vernon 1997).
24
Id. § 38.002(2) (“To recover attorney’s fees under this chapter . . . the claimant must present
the claim to the opposing party or to a duly authorized agent of the opposing party . . . .”).
25
Jones v. Kelly, 614 S.W.2d 95, 100 (Tex. 1981).
26
Id. (emphasis added).
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were no contract claims pending against FieldTurf at the time; Southwest did not add breach of
contract claims to its complaint until over a month after it presented FieldTurf with the settlement
offer. When FieldTurf received the April 10 letter, the only claims pending against it were for
trademark infringement, trademark dilution, and unfair competition. Neither Southwest’s original
complaint nor its offer letter makes any reference to injuries that Southwest suffered due to
FieldTurf’s breach of the Kentucky settlement. The letter refers to the Kentucky settlement only to
state that FieldTurf must confirm its terms to settle the present litigation; it does not allege that
FieldTurf ever actually breached the Kentucky settlement. Thus, the district court erred in awarding
attorneys’ fees on Southwest’s breach of contract claims because Southwest failed to present
FieldTurf with an opportunity to pay those claims and avoid the burden of paying attorneys’ fees.
III. DISCUSSION OF SOUTHWEST’S CLAIMS
A. Trademark Infringement
Southwest claims that the district court erred in denying its trademark infringement claim.
Specifically, it challenges the district court’s findings that (1) FieldTurf’s inclusion of “AstroTurf”
meta tags27 on its website was not likely to cause customer confusion and (2) FieldTurf’s use of the
AstroTurf mark on its website constituted fair use of the mark.
“The gravamen for any action of trademark infringement . . . is whether the challenged mark
27
Meta tags are essentially programming code instructions given to on-line search engines.
“Although normally invisible to the Int ernet user, meta-tags are detected by search engines and
increase the likelihood that a user searching for a particular topic will be directed to that Web
designer’s page.” Nat’l A-1 Adver., Inc. v. Network Solutions, Inc., 121 F. Supp. 2d 156, 164
(D.N.H. 2000). Hidden in the code of FieldTurf’s webpage were several “AstroTurf” meta tags. As
a result, web browsers searching for “AstroTurf” would find links to FieldTurf’s website, sometimes
even before they found their way to Southwest’s website.
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is likely to cause confusion.”28 In this circuit, whether FieldTurf’s use of the “AstroTurf” trademark
is “likely to cause confusion” is a question of fact which can only be set aside if clearly erroneous.29
Southwest asserts that the district court misapplied trademark law by ignoring the possibility
that FieldTurf’s meta tags created “initial interest confusion” for web browsers searching for
“AstroTurf.” Contrary to Southwest’s assertion, the district court acknowledged that a likelihood
of confusion can be established through initial interest confusion. The court found, however, that
there was no evidence of “even fleeting customer confusion” in this case, rightfully distinguishing it
from Elvis Presley Enterprises Inc. v. Capece.30 In Elvis Presley Enterprises, we upheld a finding of
trademark infringement based on the “initial interest” confusion experienced by patrons of a bar called
“The Velvet Elvis.”31 Several customers testified that they initially entered the bar believing that it
was affiliated with rock ’n’ roll legend Elvis Presley, and that even after determining that it was not
affiliated with Mr. Presley, some customers continued to patronize the bar.32 Contrary to Elvis
Presley Enterprises, there is no evidence in this case that any customers visited FieldTurf’s website
intending to purchase AstroTurf. Southwest proffers the testimony of its Internet expert, Eric
Peabody, as proof of customer confusion. Mr. Peabody’s testimony was limited, however, to
demonstrating that a web browser search for “AstroTurf” would generate hits on FieldTurf’s website;
it provided no insight into whether these hits actually or initially confused any customers.
28
Marathon Mfg. Co. v. Enerlite Prods., 767 F.2d 214, 217 (5th Cir. 1985) (citations omitted).
29
Amstar Corp. v. Domino’s Pizza, Inc., 615 F.2d 252, 258 (5th Cir. 1980).
30
141 F.3d 188 (5th Cir. 1998).
31
Id. at 204.
32
Id.
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Furthermore, Southwest mistakenly argues that meta tagging another company’s trademark
necessarily constitutes trademark infringement. The meta tag cases in which our sister circuits have
found trademark infringement involve either evidence of customer confusion or evidence that the
meta tags were used illegitimately. For instance, in Brookfield Communications, Inc. v. West Coast
Entertainment Corp., the Ninth Circuit held that West Coast infringed Brookfield’s trademark term
in part by encoding it into the meta tags of its website.33 Brookfield produced computer software
packages under t he “MovieBuff” trademark and marketed them through its website,
www.moviebuffonline.com. Brookfield’s MovieBuff software offered information useful to
professionals in the entertainment industry, including databases and software applications containing
movie credits, box office receipts, and listings of actors, directors, and agents. West Coast ran a
website named www.moviebuff.com that offered a searchable entertainment database similar to
Brookfield’s. The court found that West Coast’s use of the “MovieBuff” trademark both in its
domain name and through its imbedded meta tags was likely to cause customer confusion largely
because it offered a nearly identical service marketed under Brookfield’s trademark. Because West
Coast’s website made no legitimate reference to Brookfield’s product and used the “MovieBuff”
trademark exclusively to market its own product, the court held that the use was likely to confuse
Internet browsers and exploit Brookfield’s goodwill.
The Ninth Circuit recently explained in Playboy Enterprises, Inc. v. Welles, however, that
meta tagging another party’s trademark does not necessarily constitute trademark infringement.34
Terri Welles, the 1981 Playboy Playmate of the Year, maintains an independent website showcasing
33
174 F.3d 1036, 1061–65 (9th Cir. 1999).
34
279 F.3d 796, 804 (9th Cir. 2002).
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erotic images of herself.35 The website advertises Ms. Welles as a former Playboy Playmate and
contains the meta tags “Playboy” and “Playmate,” both of which are registered trademarks of
Playboy Enterprises, Inc. (“PEI”).36 Although Internet searches of the terms “Playboy” and
“Playmate” generated hits to Ms. Welles’s site, the court held that Ms. Welles had not infringed PEI’s
trademarks because her use of the marks was nominative.37 Despite Ms. Welles’s competition with
PEI in the sale of adult web content, her reference to PEI’s marks was legitimate and practically
necessary to adequately describe the actual content of her site.38
FieldTurf had similarly legitimate reasons for meta tagging Southwest’s “AstroTurf” mark.39
As the district court noted, FieldTurf’s website engaged in comparative advertising with AstroTurf,
including links to third-party articles on AstroTurf. This circuit has acknowledged that a party
engaged in direct advertising may make “nominative use” of a competitor’s trademark as long as the
party uses only so much of the mark as is necessary to identify the competing product, and the party
does nothing to suggest affiliation, sponsorship, or endorsement by the markholder.40 FieldTurf’s
35
Id. at 799.
36
Id. at 800.
37
Id. at 804.
38
Id.
39
Contrary to Southwest’s assertions, the fact that FieldTurf made some false and misleading
statements about “AstroPlay”does not undermine FieldTurf’s claim that it made legitimate references
to “AstroTurf” for product comparison purposes. Southwest has already recovered for the false and
misleading statements that FieldTurf made about AstroPlay; the present claim concerns the separate
question of whether FieldTurf’s use of the AstroTurf trademark created a likelihood of confusion as
to the source of the information on FieldTurf’s website.
40
Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526, 546 (5th Cir. 1998).
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website does not suggest any affiliation or endorsement by Southwest; rather, its site contains several
articles highlighting the differences between its product and AstroTurf. Thus, in light of FieldTurf’s
legitimate references to AstroTurf and the complete absence of actual or initial customer-confusion
evidence, the district court’s refusal to find trademark infringement was not clearly erroneous.
Furthermore, because we find that FieldTurf was not liable for trademark infringement, we need not
decide whether, as FieldTurf claims, the “AstroTurf” mark has become generic.
B. Denial of Permanent Injunctive Relief
Southwest next contends that the district court abused its discretion in denying its post-trial
motion for permanent injunctive relief. Southwest proffered thirteen specific statements that
FieldTurf should be enjoined from making and eleven statements that FieldTurf must affirmatively
post on its website and distribute to customers to correct the false impression created by its false
advertising.
“An order granting or denying a preliminary injunction will be reversed only upon a showing
that the district court abused its discretion.”41 “The district court abuses its discretion if it (1) relies
on clearly erroneous factual findings when deciding to grant or deny the permanent injunction, (2)
relies on erroneous conclusions of law when deciding to grant or deny the permanent injunction, or
(3) misapplies the factual or legal conclusions when fashioning its injunction relief.”42 The district
court’s statements imply that a permanent injunction prohibiting FieldTurf employees from making
certain statements and requiring them to make other statements would be difficult or impossible to
41
Martin’s Herend Imports, Inc. v. Diamond & Gem Trading United States of Am. Co., 195 F.3d
765, 772 (5th Cir. 1999).
42
Causeway Med. Suite v. Ieyoub, 109 F.3d 1096, 1102 (5th Cir. 1977).
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enforce. The court also noted that there was no evidence that FieldTurf continued to engage in false
advertising after trial. Based on these reasonable conclusions, we cannot say that the district court
clearly abused its discretion in denying Southwest’s request for permanent injunctive relief.43
C. Refusal to Award an Accounting of FieldTurf’s Profits
Southwest also contends that the district court abused its discretion in denying it recovery of
the profits that FieldTurf earned as a result of its false advertising campaign. Section 1117(a) of the
Lanham Act entitles a markholder to recover the defendant’s profits, subject to the principles of
equity.
An award of the defendant’s profits is not automatic, and is committed to the
discretion of the district court, whose decision we review for an abuse of discretion.
While this court has not required a particular factor to be present, relevant factors to
the court’s determination of whether an award of profits is appropriate include, but
are not limited to, (1) whether the defendant had the intent to confuse or deceive, (2)
whether sales have been diverted, (3) t he adequacy of other remedies, (4) any
unreasonable delay by the plaintiff in asserting his rights, (5) the public interest in
making the misconduct unprofitable, and (6) whether it is a case of palming off.44
In this case, we cannot say that the district court abused its discretion in denying an accounting of
profits. Although there is some evidence that FieldTurf intended to mislead customers and there is
certainly an interest in making this conduct unprofitable, the other factors could reasonably be seen
to weigh against an accounting of profits. First, the $1.04 million dollars in lost profits that the jury
awarded to Southwest could certainly be seen as an adequate remedy in this case. Second, because
of the way that Southwest presented its damage evidence in this case, it is impossible to tell which
43
See, e.g., Complete Auto Transit, Inc. v. Reis, 451 U.S. 401, 420 (1981) (acknowledging that
courts are reluctant to grant injunctions that would be difficult to enforce); Moto-Sports, Inc. v. Gulf
States Toyota, Inc., 324 F. Supp. 653, 656 (S.D. Tex. 1971) (stating that injunctive relief is
appropriately denied if it involves the “impossible task of supervising continuous performance”).
44
Pebble Beach, 155 F.3d at 554 (citations omitted).
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sales were diverted as a result of FieldTurf’s breach of the Kentucky settlement and which sales were
diverted as result of FieldTurf’s false or misleading advertising. Finally, there is no evidence that
FieldTurf palmed its product off as one of Southwest’s products.
D. Denial of Prejudgment Interest
Southwest next contends that the district court abused its discretion in denying prejudgment
interest on Southwest’s breach of contract claims. With regard to Southwest’s request for
prejudgment interest, the district court held that “there is no way in the record of this case the Court
can determine applicable dates when damages occurred, therefore, the Court declines to award the
same.” This reasoning for denying prejudgment interest was erroneous because prejudgment interest
under Texas law begins to accrue on the earlier of 180 days after the date a defendant receives written
notice of a claim or the date the suit is filed.45 Notwithstanding this error, the district court did not
abuse its discretion in denying Southwest’s request for prejudgment interest.46 As the district court
cautioned on several occasions, Southwest’s submission of a general damage question made it
impossible for the court to determine which portion of the award was attributable to its breach of
contract claims and which portion was attributable to its false advertising claims. Because Southwest
is seeking prejudgment interest only on its breach of contract claim, there is no way for the district
court to determine which portion of the damage award is chargeable with interest. The denial of
45
Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 530–31 (Tex.
1998).
46
Cf. Coxson v. Commonwealth Mortgage Co. of Amer., 43 F.3d 189, 192–93 (5th Cir. 1995)
(holding that the district court did not abuse its discretion in denying prejudgment interest where there
was a legitimate reason to do so, notwithstanding that the court failed to justify its decision).
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prejudgment interest therefore did not constitute an abuse of discretion.47
E. Denial of Attorneys’ Fees Under 15 U.S.C. § 1117(a)
Finally, Southwest argues that the district court abused its discretion in declining to award
attorneys’ fees under 15 U.S.C. § 1117(a). The Lanham Act provides that a court may award the
prevailing party reasonable attorneys’ fees in “exceptional cases.”48 As we explained in Seven-Up
Co. v. Coca-Cola Co., the prevailing party bears the heavy burden of establishing that a case is
exceptional, and the district court has broad discretion to determine whether a case qualifies as such:
The prevailing party has the burden to demonstrate the exceptional nature of a case
by clear and co nvincing evidence. The determination as to whether a case is
except ional is left to the sound discretion of the trial court. An exceptional case is
one where the violative acts can be characterized as “malicious,” “fraudulent,”
“deliberate,” or “willful.” We have recognized that the statutory provision has been
interpreted by the courts “to require a showing of a high degree of culpability on the
part of the infringer, for example, bad faith or fraud,” and a few cases have gone as
far as to require “very egregious conduct” to constitute an “exceptional” case.49
We agree with the district court that whether this qualifies as an “exceptional case” under the Lanham
Act is a close question. But mindful that “the district court heard the evidence, saw the witnesses,
47
See Daniels v. Pipefit ters’ Ass’n Local Union, 945 F.2d 906, 925 (7th Cir. 1991) (denying
prejudgment interest “[b]ecause the jury awarded a general verdict . . . [and] the district judge had
no way of reading the minds of the deliberating jurors to determine how they arrived at the final,
comprehensive amount”); Landes Constr. Co. v. Royal Bank of Canada, 833 F.2d 1365, 1375 (9th
Cir. 1987) (holding that the district court did not err in denying prejudgement interest on a general
verdict even though it may have considered some irrelevant factors in its determination); Wojtkowski
v. Cade, 725 F.2d 127, 129 (1st Cir. 1983) (holding that the district court did not abuse its discretion
in denying prejudgment interest on a general verdict with mixed federal and state claims because the
court could not determine to what extent the award was based on state claims); cf. Arleth v. Freeport-
McMoran Oil & Gas Co., 2 F.3d 630, 636 (5th Cir. 1993) (recognizing the holding in Wojtkowski,
but distinguishing it in the case where the same damages flow from each of the causes of action
constituting the general verdict).
48
15 U.S.C. § 1117(a).
49
86 F.3d 1379, 1390 (5th Cir. 1996) (citations omitted).
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and appraised their motives,”50 we cannot say that the district court abused its discretion in denying
the recovery of attorneys’ fees in this case.
IV. CONCLUSION
Because Southwest failed to satisfy the presentment requirement under Texas law, we vacate
the award of attorneys’ fees on Southwest’s breach of contract claim and render judgment on that
issue in favor of FieldTurf. On all other grounds, we affirm.
AFFIRMED IN PART, VACATED IN PART, AND RENDERED.
50
Taco Cabana Int’l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1127 (5th Cir. 1991) (internal
quotation and citation omitted).
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