Georgia Pacific Consumer Prod. v. Von Drehle Corporation
Filing
AMENDED OPINION filed amending and superseding opiniondated 3/30/15. Originating case number: 5:05-cv-00478-BO Copies to all parties. [13-2003]
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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
Amended:
Decided:
April 15, 2015
March 30, 2015
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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.
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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”
Georgia-Pacific
commenced
Drehle
into
distributors.
or
“stuffing”
its
practice
three
enMotion
separate
Each
constituted
towel
actions
action
dispensers,
against
alleged
contributory
that
von
the
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
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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
agreed
that
End-User
von
Customers.”
Drehle’s
In
conduct
January
2012,
constituted
a
jury
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
because
Georgia-Pacific’s
the
court
found
trademark
that
von
rights.
Drehle’s
In
addition,
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
concluding
action,
that
the
already
practice
ruled
of
4
against
stuffing
von
Georgia-Pacific,
Drehle’s
810-B
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paper towel into Georgia-Pacific’s enMotion dispensers “did not
create
Prod.
a
likelihood
LP
v.
Myers
of
confusion,”
Supply,
Inc.,
Georgia-Pacific
No.
Consumer
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
commenced
second
against
parallel
one
of
action,
von
which
Drehle’s
Georgia-Pacific
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 GeorgiaPacific 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
district court unduly broad.
the
injunction
entered
by
the
It also challenges the monetary
awards, contending that the district court applied the wrong
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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
award
damages
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, GeorgiaPacific sent von Drehle a letter “[d]emand[ing] . . . that von
Drehle
immediately
distributing
the
cease
810
and
desist
towel.”
von
marketing,
Drehle
selling
rejected
and
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
6
constituted
contributory
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trademark
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infringement,
in
15 U.S.C. § 1114(1)(a).
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violation
of
the
Lanham
Act,
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
dispensers,”
specifically
and
that
and
this
solely
practice
for
was
use
in
“likely
enMotion
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
use
in
of
its
enMotion
810-B
paper
dispensers
towel
caused
roll
to
distributors
for
confusion.”
Georgia-Pacific Consumer, Prods. LP v. von Drehle
Corp., 645 F. Supp. 2d 532, 536 (E.D.N.C. 2009).
consumer
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.
August
remanded,
10,
2010,
we
reversed
and
By order dated
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.
7
Georgia-Pacific
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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 nonpurchasing 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,
claims,
should
which
rejected
preclude
Georgia-Pacific’s
Georgia-Pacific
same claims in this case.
from
infringement
advancing
those
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
relief
and
trademark
disgorgement
infringement
of
von
and
requested
injunctive
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
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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
a
jury
whether
returned
von
Drehle
verdict
answering
infringed
“yes”
to
Georgia-Pacific’s
the
question
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
$791,431.
profits
amount
requested
to
arrive
at
its
award
of
The jury thus awarded Georgia-Pacific 100% of the
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
entering
judgment
Prods.
LP
v.
granted
for
von
(E.D.N.C. 2012).
it,
von
Drehle
vacating
Drehle.
Corp.,
the
jury
verdict
Georgia-Pacific
856
F.
Supp.
2d
Consumer
750,
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
and
757
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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).
concluding
that
“von
On appeal, we again reversed,
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 GeorgiaPacific 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.
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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 [GeorgiaPacific’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-478BO, 2013 WL 3923984, at *2 (E.D.N.C. July 29, 2013).
contends
that
the
district
court
should
not
have
von Drehle
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
prohibiting trademark infringement.
11
a
nationwide
injunction
See 15 U.S.C. § 1116(a);
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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
tailored
to
a
nationwide
prevent
injunction
irreparable
was
injury”
“appropriately
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
equity
issuing
requires
a
nationwide
that
injunction”).
injunctions
be
Nonetheless,
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
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Drehle 810-B paper towels into enMotion towel dispensers.
For
us to now countenance an injunction that would give GeorgiaPacific the right to enforce its mark in those States would
amount to a direct and unseemly affront to those courts.
And
such
our
an
affront
would
only
be
exacerbated
in
light
of
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
jurisdictions,
and
in
extending
accordingly
we
the
will
injunction
not
to
authorize
those
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
Pacific’s
authority
enMotion
stuffing practices.
regarding
trademark
the
in
enforceability
the
context
of
of
Georgia-
von
Drehle’s
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
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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
remaining circuits.
to
issue
an
ability
of
allow
injunction
to
extend
to
the
Cf. Va. Soc’y, 263 F.3d at 393-94 (refusing
injunction
other
the
that
circuits
would
to
have
“encroache[d]
consider”
an
on
important
the
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
argument to the district court.
this contention.
it
failed
to
present
the
The record, however, belies
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.”
hearing
before
the
district
court
on
In addition, at the
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
14
needs
to
take
.
.
.
into
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account
[those]
district
court
rulings.”
was
fully
Pg: 15 of 53
Finally,
aware
of
it
von
is
clear
Drehle’s
that
the
argument,
as
indicated by its remark to Georgia-Pacific’s attorney during the
same
hearing
Tennessee
that
where
“this
you’ve
injunction
lost.
It
can’t
can
go
only
into
hold
Ohio
water
and
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
issues involved.
when
considering
the
inter-circuit
comity
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
limited
circumstances
geographically
of
to
this
case,
the
States
that
the
in
this
injunction
be
circuit.
We
therefore vacate the injunction granted by the district court
and remand with instructions to modify it in accordance with
this opinion.
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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)).
testified
that
After noting that von Drehle’s president had
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
applying
the
because
Larsen
contends
“willful
applied
that
and
the
district
intentional”
to
a
recovery
court
standard
under
erred
from
in
Larsen
§ 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,
defendant.
16
not
to
punish
the
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Georgia-Pacific
§ 1117(b),
it
is
argues
hardly
Pg: 17 of 53
that
although
irrelevant
in
Larsen
this
case
interprets
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.
categorized
§ 1117,
with
Section 1117(a),
and
each
particularity
which
applies
type
of
monetary
and
separately
generally
to
award
is
addressed.
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;
cases, attorneys fees.
(3) court
costs;
and
(4) in
exceptional
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
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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.”
added).
This
section
15 U.S.C. § 1117(b) (emphasis
also
authorizes
prejudgment interest for such a violation.
a
court
to
award
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
Trademarks and Unfair Competition § 25:10 (4th ed. 2012).
18
on
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Section
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1117
provides
Pg: 19 of 53
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
therefore
using
erred
a
in
noncounterfeit
relying
on
mark.
Larsen,
The
a
district
case
court
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
determined to be just and compensatory, not punitive.
is
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.’
times
case.
actual
As for damages, the court may award up to three
damages,
depending
on
the
circumstances
of
the
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
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which
the
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district
court
Pg: 20 of 53
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
trademarked
made
selling
knock
dispenser. . . .
off
paper
[T]hat’s
what
to
put
we’re
into
our
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.
20
Here,
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there would be no basis for the district court to conclude that
the jury’s award was inadequate to compensate Georgia-Pacific
because
sought.
the
jury
gave
Georgia-Pacific
virtually
all
that
it
Moreover, Georgia-Pacific has never argued that the
jury’s award of profits was inadequate.
profits
recovery
Pacific
could
is
have
the
only
obtained
avenue
additional
Since enhancement of a
through
which
monetary
Georgia-
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.
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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).
WL 3923984, at *2.
exceptional
cases
prevailing
party.”
Georgia-Pacific, 2013
Section 1117(a) provides, “The court in
may
award
reasonable
(Emphasis
willful-and-intentional
added).
finding
on
attorney
The
the
fees
court
fact
that
to
the
based
its
von
Drehle
specifically designed its 810-B paper towels for use in GeorgiaPacific’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
towels
for
conflating
relied
on
use
in
Georgia-Pacific’s
and
intentional
willful
its
purposeful
22
conduct
in
distributing
enMotion
conduct
with
machines,
willful
and
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intentional infringement.
Pg: 23 of 53
We agree, especially since von Drehle
reasonably believed that its conduct was lawful.
We
have
§ 1117(a)
defined
“as
malicious,
one
the
in
“exceptional”
which
fraudulent,
‘the
willful
case
for
defendant’s
or
purposes
conduct
deliberate
in
of
was
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.
Litig.,
748
F.
Supp. 2d
(“‘[W]illfulness’
means
infringement
was
done
because
accident
of
quotation
marks
See, e.g., In re Outsidewall Tire
and
557,
more
562
(E.D.
than
simply
that
voluntarily
or
other
citation
and
Va.
the
intentionally
innocent
omitted));
reason”
Vanwyk
2010)
act
and
of
not
(internal
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
necessarily mean willfulness in violating the law.
in
violating
the
law
may
qualify
the
case
as
not
Willfulness
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
infringement,
is
by
later
itself
determined
constitutes
23
to
involve
‘willful’
trade
dress
infringement
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. . .”); 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.
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Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d
1378, 1381 (Fed. Cir. 2005) (citation omitted).
Court
rejected
the
Federal
Circuit’s
But the Supreme
interpretation
of
“exceptional,” describing the Federal Circuit’s test as “unduly
rigid.”
Octane Fitness, 134 S. Ct. at 1755.
statute’s
simple
text
and
dictionary
Relying on the
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.
same
The Court then pointed the district courts to the
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
517,
Fogerty
v.
Fantasy,
Inc.,
510
U.S.
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).
25
But the language of
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§ 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
‘exceptional’
court’s
case
discretion
under
§ 285
to
of
award
the
Patent
controls our interpretation of [§ 1117(a)].
identical
to
[§ 1117(a)],
but
Congress
fees
for
Act,
[an]
the
case
Not only is § 285
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 nonprevailing party’s position as either frivolous or objectively
unreasonable, see Octane Fitness, 134 S. Ct. at 1756 n.6; (2)
the
non-prevailing
‘unreasonable
party
manner,’”
“has
Fair
litigated
Wind
Sailing,
the
case
764
F.3d
in
at
an
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 deterrence,” Octane Fitness,
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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
fees;
plaintiff’s
(5) treble
damages;
profits
or
(3) court
treble
27
costs;
damages;
(4) attorneys
(6) prejudgment
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interest;
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and
(7) statutory
Pg: 28 of 53
legislated
with
great
particular
type
of
damages.
precision
monetary
Because
in
relief
providing
is
Congress
when
available,
each
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,
defendant’s
sales,
in
§ 1117(a),
profits
subject
to
based
a
a
plaintiff
only
on
specific
may
of
proof
adjustment
be
the
when
awarded
the
defendant’s
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
express
use
of
provision
a
counterfeit
for
mark,
prejudgment
but
§ 1117
interest
makes
in
no
other
circumstances.
To be sure, as a general matter, prejudgment interest may
be
awarded
at
the
district
court’s
applicable statute provides otherwise.
discretion
unless
the
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
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prejudgment interest is not intended to be awarded except as
provided
in
the
Pepsico,
Inc.,
statute.
Nos.
See
Moscow
96-36217,
Distillery
96-36249,
Cristall
96-36250,
1998
v.
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.
Morgan,
486
U.S.
330,
See generally Monessen Sw. Ry. Co. v.
335
(1988)
29
(“Prejudgment
interest
is
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normally designed to make the plaintiff whole and is part of the
actual
damages
Airlines
sought
Corp.,
964
to
be
F.2d
recovered”);
1059,
1063
Johnson
(10th
v.
Cont’l
Cir.
1992)
(“[P]rejudgment interest is an integral element of compensatory
damages . . .”).
undertake
to
But, in this case, Georgia-Pacific did not
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
consistent with this opinion.
damages
(leaving
in
place
for
further
proceedings
We reverse its awards of treble
the
jury’s
award
of
profits)
and
prejudgment interest.
IT IS SO ORDERED.
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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
against
Products,
von
LP
Drehle,
proceedings,
on
and
including
its
we
contributory
remanded
the
consideration
of
infringement
case
for
claim
further
Georgia-Pacific’s
request for injunctive relief. Despite the fact that GeorgiaPacific 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 GeorgiaPacific’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.
1
The
majority’s
contrary
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.
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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 GeorgiaPacific 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,
Philadelphia
see,
Jaycees,
e.g.,
639
F.2d
United
134,
States
142
(3rd
Jaycees
Cir.
v.
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
32
Consumer
Prods.,
LP
v.
von
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Pg: 33 of 53
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
were
Georgia–Pacific
designed
dispensers.
developed
specifically
for
Georgia-Pacific
distributors.
The
distributors,
and
leases
the
high-quality
use
in
leased
between
subleases
paper
the
its
towels
Georgia-Pacific
dispensers
Georgia–Pacific
that
the
that
and
distributors
to
its
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
33
one
for
contributory
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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 [GeorgiaPacific]
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
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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
Consumer
of
claim
Prods.,
and
LP
v.
issue
von
preclusion.
Drehle
Corp.,
See
Georgia-Pacific
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.
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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,
infringement.
The
did
Eighth
not
Circuit
constitute
subsequently
trademark
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,
November
2011,
Inc.
in
shortly
the
Northern
before
trial
District
in
the
of
North
Ohio.
In
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
36
2012,
while
Georgia-Pacific’s
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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
decision.
Sixth
See
Packaging,
Circuit
affirmed
Georgia-Pacific
Inc.,
701
F.3d
the
Consumer
1093
(6th
Ohio
district
Prods.
Cir.
LP
v.
2012).
court
Four-U-
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
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immediately
Filed: 04/15/2015
notified
of
Pg: 38 of 53
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,
erred
we
by
also
held
that
considering
the
the
North
Carolina
preclusion
district
defenses
sua
court
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.,
38
530
U.S.
392,
412
(2000)).
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However,
Filed: 04/15/2015
despite
von
Drehle’s
Pg: 39 of 53
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
decided
by
issue
the
consideration
of
trademark
jury.
of
Thus,
the
infringement
the
preclusion
district
already
court’s
defenses
had
sua
actually
been
sponte
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
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Pet. for Reh’g or Reh’g En Banc, No. 12-1444, at 10 (4th Cir.
Mar.
28,
invoked
district
2013)
“the
(emphasis
demands
court’s
sua
of
added).
comity”
sponte
Further,
in
von
seeking
consideration
to
of
Drehle
again
justify
the
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
protect
the
any
injunction
legitimate
“should
rights
of
be
narrowly
von
tailored
Drehle
and
to
its
distributors” and “must account for the rulings of the Eighth
40
Appeal: 13-2003
and
Doc: 56
Sixth
each
Filed: 04/15/2015
Circuits
distributor
and
and
for
each
Pg: 41 of 53
[Georgia-Pacific’s]
state
are
position
different.”
von
that
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
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prevent von Drehle “from continu[ing] to infringe in the future,
policing
[von
onerous,
and
actions
did
balance
of
“activities
Drehle’s]
[von
not
sales
Drehle]
has
constitute
hardship
have
its
paper
asserted
trademark
favors
been
of
to
would
throughout
have
as
von
infringed
be
that
infringement;”
Georgia-Pacific
found
towels
its
(3)
the
Drehle’s
[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
indirectly”
von
with
Drehle
“from
interfering
Georgia-Pacific’s
trademark
directly
rights
or
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,
42
a
federal
court’s
injunctive
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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
federal
Lanham
courts
Act
to
reflects
issue
this
injunctive
broad
relief
power,
to
authorizing
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
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Pg: 44 of 53
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
Georgia-Pacific’s
interfering
trademark
directly
rights
and
or
indirectly”
specifying
that
with
“any
deliberate or purposeful placement” of von Drehle’s paper towels
44
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in
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Georgia-Pacific’s
enMotion
Pg: 45 of 53
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-UPackaging, 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
Pacific’s
–
when
presented
trademarks
–
with
“would
litigation
be
faced
involving
with
the
Georgia-
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
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of
Doc: 56
others,
Filed: 04/15/2015
since
it
has
a
Pg: 46 of 53
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)
estoppel
not
(explaining
only
reduce
that
“res
judicata
unnecessary
and
litigation
collateral
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
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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
consider
to
have
action.
been
In
the
other
words,
creation
47
of
in
an
what
some
could
“embarrassment
of
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conflicting judgments,” see In re Naranjo, 768 F.3d at 348, and
“a
direct
Circuits,
and
unseemly
Majority
Op.,
affront”
at
13,
to
we
the
Sixth
rejected
and
“the
Eighth
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,
consider
and
remanded
the
Georgia-Pacific’s
case
request
for
the
for
district
injunctive
court
and
to
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.
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Second, and in any event, the comity doctrine applied by
the majority simply has no bearing in this case. Georgia-Pacific
proved
at
trial
rights
on
a
that
national
von
Drehle
scale,
infringed
we
on
its
affirmed
that
trademark
judgment
in
Georgia-Pacific II, and the nationwide injunction prohibits von
Drehle – and no one else – from further infringement. Like all
injunction
enforce
cases,
its
the
district
injunction
court
against
retains
von
Drehle
the
by
power
to
contempt
proceedings, but it has no authority under the injunction to
command any other party (or any court) with respect to GeorgiaPacific’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” GeorgiaPacific’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,
5
including
trademark
and
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.
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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. CocaCola Co., 134 S.Ct. 2228, 2239 (2014).
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that the injunction was “broader than necessary to afford full
relief”
to
adequately
the
protected
concluded
other
advocacy
that
circuits
the
regulation
enforce
it.
Id.
because
group.
the
263
injunction
from
because
group
ruling
had
on
F.3d
“the
the
it
prohibited
Unlike
Virginia
a
limited
at
393.
effect
injunction
Second,
of
precluding
constitutionality”
the
FEC
Society
from
for
of
attempting
Human
we
Life,
the
to
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
proven
out
in
marketing
caused
of
this
Hickory,
case
activities,
infringement
North
that
that
Carolina.
von
Drehle’s
emanated
nationally,
51
from
Georgia-Pacific
has
manufacturing
and
North
constitute
Carolina
but
contributory
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trademark infringement. Presumably, if von Drehle is freed from
the nationwide constraints of the injunction, it will resume its
North
and
Carolina-based
marketing
towels
will
activities
them
be
to
of
manufacturing
distributors
stuffed
into
with
paper
knowledge
Georgia-Pacific’s
towels
that
the
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,
and
marketing
reasonable
to
unless
von
activities
believe
Drehle
outside
that
any
relocates
of
this
its
manufacturing
it
seems
distribution
future
circuit,
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
injunction
seeking
would
damages,
not
and
preclude
the
lack
of
Georgia-Pacific
a
from
nationwide
recovering
all of the profits von Drehle earned anywhere in the nation as a
result of its infringing activities.
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V
Georgia-Pacific
injunctive
relief
is
to
entitled
prevent
von
to
complete
Drehle
and
from
effective
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
because
we
its
discretion
should
Georgia-Pacific
accord
II,
we
in
reaching
proper
should
respect
this
to
affirm
conclusion,
our
the
Accordingly, I concur in part and dissent in part.
53
decision
and
in
injunction.
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