Health & Sun Research, Inc. et al v. Designer Skin LLC

Filing 142

ORDER denying 89 Motion for Judgment as a Matter of Law; denying 91 Motion for Judgment as a Matter of Law; denying 96 Motion for Judgment as a Matter of Law; denying 97 Motion for Judgment as a Matter of Law; denying 99 Motion for Jud gment as a Matter of Law; denying 101 Motion for Judgment as a Matter of Law; denying 103 Motion for Judgment as a Matter of Law; denying 107 Motion for Judgment as a Matter of Law; denying 118 Motion for Judgment as a Matter of Law; deny ing 119 Motion for Judgment as a Matter of Law; denying 135 Motion for Judgment as a Matter of Law. The Clerk is directed to enter Judgment in accordance with the jury's verdict and to CLOSE THE CASE. See Order for details. Signed by Judge Virginia M. Hernandez Covington on 3/13/2014. (KAK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
HEALTH & SUN RESEARCH, INC.
d/b/a Kava Kava Intl. and
Vegas Tan,
Plaintiff,
v.

Case No. 8:12-cv-2319-T-33MAP

AUSTRALIAN GOLD, LLC,
Defendant,
________________________________/
AUSTRALIAN GOLD, LLC,
Counter-Plaintiff,
v.
HEALTH & SUN RESEARCH, INC.
d/b/a Kava Kava Intl. and
Vegas Tan,
Counter-Defendant.
______________________________/
ORDER
This cause comes before the Court pursuant to eleven ripe
Motions for Judgment as a Matter of Law regarding Health & Sun
Research, Inc.’s PURPLE RAIN trademark, filed by both Health
& Sun and Australian Gold, LLC. (Doc. ## 89, 91, 96, 97, 99,
101, 103, 107, 118, 119, 135).

After due consideration, the

Court denies the Motions.
I.

Background
On January 17, 2014, after a four-day trial, the jury

entered its verdict in favor of Health & Sun with respect to

Health & Sun’s PURPLE RAIN trademark. (Doc. # 109).1

Among

other relevant determinations, the jury found that (1) Health
& Sun “own[s] rights in the PURPLE RAIN trademark that are
entitled to protection;” (2) Health & Sun owns these rights on
a nationwide basis; (3) “Health & Sun used its PURPLE RAIN
trademark in commerce prior to the date of first use of
Australian Gold’s trademark in the geographic area(s) where
Health & Sun owns rights;” and (4) “Australian Gold’s use of
its PURPLE REIGN trademark causes a likelihood of confusion
with Health & Sun’s PURPLE RAIN trademark in the geographic
area(s) where Health & Sun currently owns trademark rights.”
(Doc. # 109 at 1-2).

The jury awarded

Australian Gold’s

profits to Health & Sun in the amount of $147,615. (Id. at 2).
The jury found against Australian Gold on Australian Gold’s
defense of trademark abandonment as to PURPLE RAIN. (Id. at
6).
At this juncture, Australian Gold seeks a Judgment as a
Matter of Law: (1) that Health & Sun’s trademark rights in the
PURPLE RAIN product should be limited to Ohio, and (2) that
Health & Sun abandoned the PURPLE RAIN mark. (Doc. ## 96, 97,

1

The jury’s verdict also concerned the ROYAL FLUSH
trademark; however, the parties’ Motions do not concern the
jury’s findings as to that mark, and the Court will not
address that mark herein.
2

118, 119). Health & Sun, on the other hand, seeks Judgment as
a Matter of Law on the issue of its damages, asserting that,
instead of $147,615, the jury should have awarded Australian
Gold’s profits in the amount of $367,663. (Doc. ## 107, 135).
The Court will address each issue in turn.
II.

Rule 50 Standard
Rule 50(b) governs the Court’s resolution of the pending

Motions and states:
If the court does not grant a motion for judgment
as a matter of law made under Rule 50(a), the court
is considered to have submitted the action to the
jury subject to the court’s later deciding the
legal questions raised by the motion. No later than
28 days after the entry of judgment . . . the
movant may file a renewed motion for judgment as a
matter of law and may include an alternative or
joint request for a new trial under Rule 59. In
ruling on the renewed motion, the court may: (1)
allow judgment on the verdict, if the jury returned
a verdict; (2) order a new trial; or (3) direct the
entry of judgment as a matter of law.
Fed. R. Civ. P. 50(b).

Under Rule 50, a “district court

should grant judgment as a matter of law when the plaintiff
presents

no

legally

sufficient

evidentiary

basis

for

a

reasonable jury to find for [plaintiff] on a material element
of [plaintiff’s] cause of action.”

Pickett v. Tyson Fresh

Meats, Inc., 420 F.3d 1272, 1278 (11th Cir. 2005) (citations
omitted).

Stated differently, a district court should grant

a Rule 50 motion “only if the evidence is so overwhelmingly in
3

favor of the moving party that a reasonable jury could not
arrive at a contrary verdict.”

Middlebrooks v. Hillcrest

Foods, Inc., 256 F.3d 1241, 1246 (11th Cir. 2001).
The Court “must review all of the evidence in the record
and must draw all reasonable inferences in favor of the
nonmoving party[,]” but should nevertheless be mindful not to
intrude into the province of the jury.

Cleveland v. Home

Shopping Network, Inc., 369 F.3d 1189, 1192-93 (11th Cir.
2004).

“Credibility

determinations,

the

weighing

of

the

evidence, and the drawing of legitimate inferences from the
facts are jury functions, not those of a judge.”
Sanderson

Plumbing

Prods.,

530

U.S.

133,

150

Reeves v.
(2000).

Moreover, a court “must disregard all evidence favorable to
the moving party that the jury is not required to believe.”
Id. at 151. Thus “the court should give credence to the
evidence favoring the nonmovant as well as that evidence
supporting

the

moving

party

that

is

uncontradicted

and

unimpeached, at least to the extent that that evidence comes
from disinterested witnesses.” Id. (citation and quotations
omitted).
Although a jury’s findings are not inherently shielded
from review, a jury’s findings are nevertheless to be afforded
due deference. Alphamed Pharm. Corp. v. Arriva Pharm., Inc.,
4

432 F. Supp. 2d 1319, 1333 (S.D. Fla. 2006). In addition, a
“jury may properly reconstruct a series of events by drawing
an inference upon an inference[,]” Fenner v. Gen. Motors
Corp., 657 F.2d 647, 650-651 (5th Cir. June 8, 1981), insofar
as the inferences drawn are not “unreasonable inferences, or
those at war with the undisputed facts.”2 Alphamed, 432 F.
Supp. 2d at 1333 (quoting United Fire & Cas. Ins. Co. v.
Garvey, 419 F.3d 743, 746 (8th Cir. 2005) (citation omitted)).
III. Analysis
A.

Geographic Scope of PURPLE RAIN Trademark

As noted, the jury determined that Health & Sun enjoys
nationwide rights in its PURPLE RAIN mark. (Doc. # 109 at 1).
However, Australian Gold requests Judgment as a Matter of Law
arguing that “there is no basis to find nationwide trademark
protection for Health & Sun’s PURPLE RAIN.” (Doc. # 118 at
16).

In the alternative, Australian Gold seeks an order

limiting Health & Sun’s trademark rights in PURPLE RAIN to
Westlake, Ohio, and reducing the jury’s award from $147,615 to
$9,585.

Health & Sun counters that sufficient evidence

supports

the

jury’s

finding

2

that

Health

&

Sun

enjoys

In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th
Cir. 1981) (en banc), the Eleventh Circuit adopted as binding
precedent all decisions of the former Fifth Circuit handed
down prior to October 1, 1981.
5

nationwide rights to the relevant mark and that the jury’s
determination should not be disturbed.
1.

Common Law Trademark Rights in a Particular
Geographic Location

Trademark rights do not exist without bona fide use in
commerce. 15 U.S.C. § 1127.

The Lanham Act defines “use in

commerce” as “the bona fide use of a mark in the ordinary
course of business.” Id.

Bona fide use must be “sufficiently

public to identify or distinguish the marked goods in an
appropriate segment of the public mind as those of the adopter
of the mark . . . even without evidence of actual sales.”
Planetary Motion, Inc. v. Techplosion, Inc., 261 F.3d 1188,
1195 (11th Cir. 2001).

Whether “use” is sufficient to

establish trademark rights is dependent on the totality of the
circumstances, and “the existence of sales or lack thereof
does not by itself determine whether a user of a mark has
established ownership rights therein.” Id. at 1196; see also
Person’s Co., Ltd. v. Christman, 900 F.2d 1565, 1571 (Fed.
Cir. 1990)(“There is [] no rule of law that the owner of a
trademark must reach a particular level of success, measured
either by the size of the market or by its own level of
sales.”).

6

Common law trademark rights are established through
actual prior use in commerce.
Coll.

Dist.,

889

F.2d

Tally-Ho, Inc. v. Coast Cmty.
1018,

1022-23

(11th

Cir.

1989)(explaining that the rights of a holder of a federally
registered mark are subject to the rights of a holder of an
unregistered mark where the unregistered mark was used first
in the particular geographic market.).

As stated in Tana v.

Dantanna’s, 611 F.3d 767, 780 (11th Cir. 2010), “Geographic
considerations

are

also

particularly

relevant

where

a

plaintiff holds only common-law trademark rights in a mark
because it is well-established that the scope of protection
accorded his mark is coextensive only with the territory
throughout which it is known and from which it has drawn its
trade.”

The geographic location in which a common law

trademark is afforded protection also includes a “zone of
reasonable future expansion.” Tally-Ho, 889 F.2d at 1027; see
also Carnival Brand Seafood Co. v. Carnival Brands, Inc., 187
F.3d 1307, 1312-13 (11th Cir. 1999)(suggesting that the zone
of natural expansion applies not only to goods and services,
but also to geographic locations).
2.

Evidence of Nationwide Rights to PURPLE RAIN

Lewis Henry, the individual in charge of Health & Sun’s

7

day to day operations, testified that Health & Sun made sales
of its PURPLE RAIN product to distributors and to salons in
the following states: Alabama, Arkansas, California, Colorado,
Connecticut,

Florida,

Georgia,

Idaho,

Illinois,

Indiana,

Kentucky, Michigan, Minnesota, Missouri, North Carolina, Ohio,
Oklahoma,

Pennsylvania,

Tennessee,

Texas,

Virginia,

Washington, and Wisconsin. (Doc. # 121 at 194-196). Mr. Henry
further testified that he physically saw PURPLE RAIN in salons
in the following states, even though Health & Sun did not make
direct sales of the PURPLE RAIN product to any customer in
such

state:

Kansas,

Maine,

Massachusetts,

Mississippi,

Montana, New York, Oregon, and Rhode Island. (Id. at 201, Doc.
# 122 at 9).
That leaves several states where Mr. Henry testified that
he neither sold PURPLE RAIN directly nor had seen PURPLE RAIN
for sale in a salon.

During the trial, counsel for Health &

Sun asked Mr. Henry: “on the map, I see several states that
don’t have an X or a star [indicating direct sales or having
been observed in a state].
products

aren’t

in

those

Is it your understanding that the
states,

PURPLE

RAIN

products

specifically are not in those states?” (Doc. # 122 at 8). Mr.
Henry responded: “No, that’s not my understanding at all. Our

8

understanding is our distribution is selling to almost every
state. Even if I personally haven’t seen it in the state, you
have to assume that they are selling it to all states, because
even the states that I don’t have distribution in, I’ve seen
product there.” (Id.).

Mr. Henry also testified:

When I’m selling to distributors, our purpose is to
kind of call on the salons, advertise to the
salons, getting the salons interested in our
products, getting the distributors trained on our
products, getting distributors to push our products
in our market, our industry.
There is no such
thing as territories in our market.
Every
distributor we have would be responsible to . . .
be selling to every one of the 50 states.
(Doc. # 122 at 6-7).
As argued by Health & Sun in its Response to Australian
Gold’s Motion for Judgment as a Matter of Law, the jury could
reach

the

“reasonable

conclusion”

that

Health

&

Sun’s

“distributors were doing their job.” (Doc. # 131 at 7). While
Australian Gold contends that Health & Sun failed to show
nationwide distribution of its PURPLE RAIN product, it appears
that Australian Gold’s own corporate comptroller, Martin
Sperry,

confirmed

that

both

Ultraviolet

Resources

International and Four Seasons are nationwide distributors,
and both Australian Gold and Health & Sun utilize these

9

distributors. (Doc. # 122 at 221).3

Mr. Sperry explained that

he expected these common distributors to sell products on a
nationwide basis:
Q:
A:
Q:
A:
Q:
A:

And do you know what Ultraviolet Resources
does with the PURPLE REIGN after it receives
it?
Not specifically, I assume they sell it into
salons.
Do you know if they sell it only into salons
in Westlake, Ohio, or do they sell it to
salons outside of Westlake, Ohio?
Our distributors can sell to salons all over.
Across the country?
Yes.

(Doc. # 122 at 221-222).
Considering Health & Sun’s direct sales and sales to
distributors, and taking into consideration the aforementioned
testimony from Mr. Henry and Mr. Sperry, the Court determines
that the jury’s finding of nationwide trademark protection was
supported by the evidence. The Court declines to limit Health
& Sun’s trademark protection to Westlake, Ohio, as suggested
by Australian Gold.
B.

“De Minimis” Sales

Australian Gold also characterizes Health & Sun’s sales
of PURPLE RAIN as “de minimis” and asserts that nationwide

3

Mr. Sperry is the corporate comptroller for New Sunshine
(Australian Gold’s parent company) and is also the corporate
comptroller for Australian Gold. (Doc. # 122 at 214).
10

protection is not warranted because Health & Sun’s sales were
“transitory, spasmodic, and inconsiderable.” (Doc. # 118 at
9)(internal citation omitted).
As stated above, “[t]here is [] no rule of law that the
owner of a trademark must reach a particular level of success,
measured either by the size of the market or by its own level
of sales.” Person’s Co., Ltd., 900 F.2d at 1571. “[T]here is
no simple dollar amount or population-to-sales ratio that will
apply across the board to products of different types.” Inmuno
Vital, Inc. v. Golden Sun, Inc., 49 F. Supp. 2d 1344, 1353
(S.D. Fla. 1997).
Furthermore, “[t]he fact that a business is small and its
trade immodest does not necessarily preclude the acquisition
of trademark rights.” Harod v. Sage Prods., Inc.,

188 F.

Supp. 2d 1369, 1378 (S.D. Ga. 2002). The Court agrees with
Health & Sun that “the fact that [Health & Sun’s] overall
volume of sales may be small as compared to [Australian
Gold’s] sales of the infringing PURPLE REIGN lotion does not
preclude

a

finding

of

9)(emphasis in original).

infringement.”

(Doc.

#

131

at

Both Health & Sun’s president and

CEO Mr. Carollo and Australian Gold’s comptroller Mr. Sperry
testified that their sales of the respective PURPLE RAIN and

11

PURPLE REIGN lotions were each less than 1% of the annual
sales of products overall for their respective companies.
(Doc. # 121 at 123, Doc. #

122 at 233).

Although Australian

Gold is a larger company than Health & Sun, the sales of both
parties’ lotions are similar when compared as a portion of
overall sales. The Court accordingly denies Australian Gold’s
Motion for Judgment as a Matter of Law premised on “de
minimis” sales and upholds the jury’s verdict reflecting that
Health & Sun’s PURPLE RAIN trademark is entitled to nationwide
protection.
C.

PURPLE RAIN Trademark Abandonment

Australian Gold previously moved for summary judgment in
its favor on the theory that Health & Sun abandoned its PURPLE
RAIN trademark.

The Court denied the summary judgment motion

and submitted the issue to the jury.

(Doc. # 56).

The jury

found that Health & Sun did not abandon its PURPLE RAIN mark.
(Doc. # 109 at 6). Specifically, the jury answered “no” to
whether “Health & Sun ceased using the PURPLE RAIN trademark
with the intent not to resume its use in the reasonably
foreseeable future in one or more geographic areas.” (Id.).
At this juncture, Australian Gold seeks judgment as a matter
of law on the issue of trademark abandonment as to PURPLE

12

RAIN.
1.

Trademark Abandonment

Under the Lanham Act, a trademark is deemed abandoned
“when its use has been discontinued with intent not to resume
such use.” 15 U.S.C. § 1127; see also Cumulus Media, Inc. v.
Clear Channel Commc’ns, Inc., 304 F.3d 1167, 1173 (11th Cir.
2002)(“a defendant who successfully shows that a trademark
plaintiff has abandoned a mark is free to use the mark without
liability to the plaintiff.”); Tally-Ho, Inc., 889 F.2d at
1022-23

(“Trademark

ownership

commercial activity.

is

always

appurtenant

to

Thus, actual and continuous use is

required to acquire and retain a protectible interest in a
mark.”).
As

stated

in

Cumulus

Media,

Inc.,

“Abandonment

is

trademark law’s way of recognizing that trademark rights flow
from use.” 304 F.3d at 1173.

That is, “if a trademark holder

ceases using a mark with an intent not to resume its use, the
mark is deemed abandoned and falls into the public domain and
is free for all to use.

Abandonment paves the way for future

possession and property in any other person.” Natural Answers,
Inc. v. SmithKline Beecham Corp., 529 F.3d 1325, 1329 (11th
Cir. 2008).

13

Australian Gold seeks a finding that Health & Sun has
abandoned its trademark and, therefore, must establish two
elements: “(1) that [Health & Sun] ceased using the mark in
dispute and (2) that [Health & Sun] has done so with an intent
not to resume its use.” Cumulus Media, Inc., 304 F.3d at 1174.
For the purpose of determining when abandonment has occurred,
the Lanham Act defines “use” as “the bona fide use of such
mark made in the ordinary course of trade, and not made merely
to reserve a right in a mark.” 15 U.S.C. § 1127.

The Lanham

Act directs that “intent not to resume [use] may be inferred
from the circumstances.” Id. As discussed in Natural Answers,
Inc., the intent to resume use of a trademark “cannot be farflung or indefinite; rather, there must be an intent to resume
use within the reasonably foreseeable future.” 529 F.3d at
1329.

Under the Lanham Act, “Nonuse for 3 consecutive years

shall be prima facie evidence of abandonment, 15 U.S.C.
§ 1127, which creates a rebuttable presumption of intent not
to resume use.” Id. at 1329-1330.
Ultimately, Australian Gold faces a strict burden on its
abandonment theory.

“Because a finding of abandonment works

an involuntary forfeiture of rights, federal courts uniformly
agree that defendants asserting abandonment face a stringent,
heavy, or strict burden of proof.” Cumulus Media, Inc., 304
14

F.3d at 1175. “[B]oth non-use and intent not to resume must be
strictly proved.” Id.
2.
In

the

Health & Sun’s Use of its PURPLE RAIN Mark
persuasive

case

of

Electro

Source,

LLC

v.

Brandess-Kalt-Aetna Group, Inc., 458 F.3d 931, 938 (9th Cir.
2006), the court indicated, “abandonment requires complete
cessation or discontinuance of trademark use.” Id. (citing 15
U.S.C. § 1127). “Even a single instance of use is sufficient
against a claim of abandonment of a mark if such use is made
in good faith.” Id.

Under the Lanham Act, “‘use’ of a

trademark defeats an allegation of abandonment when: the use
includes placement on goods sold or transported in commerce;
is bona fide; is made in the ordinary course of trade; and is
not made merely to reserve a right in a mark.” Id. at 936; see
also 15 U.S.C. § 1127.

Health & Sun can prove use of its mark

with “[e]ven marginal, sporadic sales” as such sales “qualify
as use and thereby preclude a finding of abandonment.” Int’l
Stamp Art, Inc. v. U.S. Postal Serv., No. 1:02-cv-2459-TWT,
2005 WL 3947951, at *6 (N.D. Ga. May 27, 2005).
Australian Gold asserts that because Health & Sun’s sales
of PURPLE RAIN were limited, Health & Sun abandoned its mark.
However, the evidence, including Health & Sun’s Sales History
Report, shows that Health & Sun sold thousands of bottles of
15

its PURPLE RAIN product to distributors, as follows:
2003:
2004:
2005:
2006:
2007:
2008:
2009:
2010:
2011:
2012:

1,300
2,121
409
409
0
0
1,468
540
1,970
0

(Doc. # 121 at 197; Plf. Trial Ex. 133).4
The Court agrees with Health & Sun that “[t]he existence
of these sales alone is sufficient to demonstrate that [Health
& Sun] had continued its use of the PURPLE RAIN mark.” (Doc.
# 132 at 5). In addition, because Health & Sun sold its PURPLE
RAIN

product

to

multiple

distributors,

the

jury

could

reasonably infer that, even during months when Health & Sun
did not make any direct sales of its product, the distributors
made sales to salons.

See Reeves, 530 U.S. at 150 (stating

that “all reasonable inferences” from the evidence must be
drawn in favor of the non-moving party in the context of a
motion for judgment as a matter of law).

4

Mr. Carollo testified that sales data is not available
for 2001 and 2002 because of a change in software programs at
Health & Sun. (Doc. # 121 at 105). He also testified that
Health & Sun made sales of PURPLE RAIN in 2013. (Id. at 106)>
However, those sales are not reflected in the Sales History
Report, as that Report was generated in 2012.
16

3.

Intent Not to Resume Use of the Mark

The Court’s determination that Australian Gold failed to
show that Health & Sun ceased using the mark warrants the
denial of Australian Gold’s Motion for Judgment as a Matter of
Law on the issue of abandonment.

However, for the sake of

completeness, the Court will also address the second element
for trademark abandonment - the intent not to resume use of
the mark.
Even assuming that Health & Sun ceased using its mark,
“[i]t is difficult for a defendant to prove a plaintiff’s
subjective intent to abandon a mark.”

Int’l Stamp Art, Inc.,

2005 U.S. Dist. LEXIS 42073, at *21.
provides

two

aids

for

demonstrating

“[T]he Lanham Act
intent.

First,

it

provides that intent not to resume may be inferred from the
circumstances.” Cumulus, 304 F.3d at 1174. “Second, it allows
a showing of three years of consecutive nonuse to create a
rebuttable presumption of intent not to resume use.” Id.
Here, it is undisputed that there has never been a threeyear period in which Health & Sun stopped selling PURPLE RAIN
lotion.

Therefore,

Australian

Gold

does

not

enjoy

a

presumption of abandonment, and must meet its strict burden of
demonstrating that Health & Sun ceased using the PURPLE RAIN
mark with the intent not to resume use of the mark.
17

The

evidence

adduced

at

trial

supports

the

jury’s

determination that Health & Sun did not cease using the PURPLE
RAIN mark with the intent not to resume use.

Mr. Carollo

testified that he launched the PURPLE RAIN product in 2001.
(Doc. # 121 at 101).

At that time, Health & Sun advertised

the product at a Nashville, Tennessee trade show, created
brochures and magazine ads featuring the product, and even
sponsored a NASCAR driver. (Id. at 101-103).

Mr. Carollo

testified that Health & Sun made sales of PURPLE RAIN since
its

launch

in

2001,

through

2013.

(Id.

at

106).

He

acknowledged that there were some periods where Health & Sun
did not sell any of its PURPLE RAIN product (for instance,
2007 and 2008). (Id.). However, Mr. Carollo testified that
Health & Sun “never discontinued . . . PURPLE RAIN” and
explained that any period lacking in sales was due to a
downturn in the economy and not due to Health & Sun’s intent
not to sell its PURPLE RAIN product. (Id. at 107-108).
Health & Sun’s witnesses consistently testified that
PURPLE RAIN has always been available for purchase since its
creation in 2001, and Health & Sun never ceased using the
PURPLE RAIN mark with intent not to resume use.

Furthermore,

Mr. Carollo testified that Health & Sun has consistently
defended its PURPLE RAIN mark by contacting Australian Gold
18

when Health & Sun discovered the infringing PURPLE REIGN
product, sending a pre-suit cease and desist demand, and,
ultimately, filing this lawsuit. (Doc. # 121 at 115-117); see
also Blue & White Food Prods. Corp. v. Shamir Food Indus.,
Ltd., 350 F. Supp. 2d 514, 519 (S.D.N.Y. 2004)(finding that a
mark holder’s “willingness to invest in legal proceedings and
other efforts to protect the mark from infringement” is
evidence that the mark holder did not intend to abandon the
mark).
Australian

Gold

has

not

pointed

to

any

evidence

concerning abandonment which invalidates the jury’s verdict.
“If the jury’s verdict is supported by substantial evidence–
that is, enough evidence that reasonable minds could differ
concerning material facts–the motion [for judgment as a matter
of law] should be denied.” U.S. Anchor Mfg. v. Rule Indus.,
Inc., 7 F.3d 986, 993 (11th Cir. 1993).

Finding that such

substantial evidence in favor of Health & Sun is present here,
the Court upholds the jury’s determination that Health & Sun
did not abandon the PURPLE RAIN mark.
D.

The Measure of Australian Gold’s Profits

After determining that Australian Gold’s PURPLE REIGN
product infringed Health & Sun’s PURPLE RAIN product, the jury
awarded “Australian Gold’s profits” in the amount of $147,615.
19

(Doc. # 109 at 2).

In its Motion for Judgment as a Matter of

Law, Health & Sun asks the Court to adjust this figure to
$367,663.

Health & Sun indicates that Australian Gold’s

relevant sales of PURPLE REIGN amounted to $686,223, and
Australian Gold’s profit margin was 55.6%. (Doc. # 135 at 2).
The jury presumably deducted other expenses to arrive at the
“profits” award of $147,615.

Health & Sun contends that the

jury should not have deducted certain expenses (such as
“selling costs” and “new product development costs”), which
reduced the award. (Id.).
Under

the

Lanham

Act,

“[i]n

assessing

profits

the

plaintiff shall be required to prove defendant’s sales only;
defendant

must

prove

all

elements

of

cost

or

deduction

claimed.” 15 U.S.C. § 1117(a); Wesco Mfg., Inc. v. Tropical
Attractions of Palm Beach, Inc., 833 F.2d 1484, 1487-88 (11th
Cir. 1987).

“To allow a deduction from gross profits,

Defendant must establish that the claimed expenses actually
relate to the sale and production of the infringing product.”
Burger King Corp. v. Pilgrim’s Pride Corp., 934 F. Supp. 425,
426 (S.D. Fla. 1996).
While Health & Sun now claims that the jury deducted too
many costs, leaving Health & Sun with inadequate damages,
during its closing argument, Health & Sun invited the jury to
20

do exactly what it did:
Now, the burden that we have with regard to
damages is to prove Australian Gold’s gross sales.
Under the law, they are allowed to deduct from
those gross sales reasonable expenses that are
attributable to the infringing products.
. . . .
Australian Gold provided . . . their estimated
product development cost.
This is approximately
$13,877.
We don’t dispute that’s a legitimate
deduction for a product.
Further, you heard testimony about pop-up
displays, Designer Skin posters, other marketing
materials that were legitimately tied to the launch
of the Love DS line. I’m not going to sit here and
argue that those are not legitimate expenses. If
I’ve missed any expenses . . . Go ahead and deduct
those. That’s fine.
If I missed any costs that you find through
your review of the evidence that you feel should be
deducted, feel free. I have no problem with that.
(Doc. # 124 at 51-53).

Health & Sun also noted during its

closing argument that “it’s up to your discretion to make any
additional deductions based on the invoices and other expenses
proven by Australian Gold.” (Id. at 82).
Health & Sun’s current argument that the jury made
improper deductions rings hollow in light of Health & Sun’s
closing argument statements inviting the jury to make any
deductions proven by Australian Gold. It seems to this Court
that any deductions made by the jury in arriving at the
damages award were invited by Health & Sun.
Furthermore, while Health & Sun’s Motion is premised on
the argument that the jury utilized a “simple mathematical
21

formula” to reach its verdict on damages (Doc. # 135 at 2),
the reality is that the jurors were not required to provide
any formula to the Court or enumerate the costs deducted to
arrive

at

the

profits

determination.

As

asserted

by

Australian Gold, Health & Sun’s arguments regarding what costs
the jury considered and deducted are pure “speculation.” (Doc.
# 141 at 10).
Here, Australian Gold presented substantial evidence
through witness testimony and trial exhibits, which provides
ample support for the jury’s profits determination. Mr. Sperry
testified

about

the

costs

of

creating

the

PURPLE

REIGN

product, including the bottles and packets containing the
product. (Doc. # 122 at 222). Mr. Sperry also testified about
costs that are necessarily incurred in order to sell PURPLE
REIGN, including sales and marketing employee costs, sales and
marketing expenses, packaging, shipping, inventory, returns,
and payroll. (Id. at 226-237). Mr Sperry also explained that
“selling expenses” for PURPLE REIGN included: “costs incurred
for rebates . . . trade show expenses, product giveaway,
promotions that we offer, internet advertising, salon and
trade magazine advertising, [and] includes also credit card
fees for collecting the money.” (Id. at 226).

22

Australian Gold employees Angela Provo and Emily Golay
testified about the marketing and promotional efforts related
to

selling

PURPLE

advertisements

which

included,

national

in

REIGN,

trade

inter

magazines,

alia,

promotional

videos, and social media. (Doc. # 123 at 44-45, 110, 112, 118129, 141).

Furthermore, Michael Mard, Australian Gold’s

accounting expert corroborated that Australian Gold’s method
of allocating costs actually related to its product sales is
in

accordance

practices.

with

(Doc.

#

generally
123

at

accepted

195-202).

modern

accounting

Australian

Gold’s

detailed evidence concerning its costs in creating, marketing,
and selling its PURPLE REIGN product support the jury’s profit
determination.
In addition, assuming that the jury deducted any portion
of Australian Gold’s overhead or administrative costs, the
Court also rejects Health & Sun’s assertion that such costs
should not have been deducted because Australian Gold’s PURPLE
REIGN product’s sales constituted a “small percentage” of
Australian Gold’s total sales. See Maltina Corp. v. Cawy
Bottling Co., Inc., 613 F.2d 582, 586 (5th Cir. 1980).

The

Eleventh Circuit has not endorsed Maltina’s “small percentage”
exception in case law, and to the contrary, the 2013 pattern
jury instructions, which this Court utilized in this case, do
23

not include any reference to Maltina or the “small percentage”
exception.

As this Court recognized during the charging

conference, the Eleventh Circuit has had over 30 years to
consider
Maltina

Maltina,
or

its

but

has

damages

not

included

calculus

in

the

instructions. (Doc. # 124 at 15-16).
instructions,

adapted

from

the

a

Eleventh

discussion
pattern

of

jury

The Court’s jury
Circuit

pattern

instructions, explained:
In determining Australian Gold's profits, Health &
Sun only is required to prove Australian Gold's
gross sales. Australian Gold may then prove the
amount of sales made for reasons other than the
infringement. Australian Gold also may prove its
costs or other deductions which it claims should be
subtracted from the amount of its sales to
determine its profits on such sales. Any costs or
deductions that Australian Gold proves by a
preponderance of the evidence are required to be
subtracted from the sales attributable to the
infringement, and the difference is the amount that
may be awarded to Health & Sun.
(Doc. # 113 at 25). Health & Sun has not convinced the Court
that a different jury charge should have been included, nor
has Health & Sun convinced the Court that the jury’s verdict
should be augmented.

Health & Sun’s Motion for Judgment as a

Matter of Law is denied.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)

Australian Gold’s Oral Motion for Judgment as a Matter of
24

Law (No. 1) (Doc. # 89) is DENIED.
(2)

Australian Gold’s Oral Motion for Judgment as a Matter of
Law (No. 2) (Doc. # 91) is DENIED.

(3)

Australian Gold’s Motion for Judgment as a Matter of Law
(No. 1) on Geographic Scope (Doc. # 96) is DENIED.

(4)

Australian Gold’s Motion for Judgment as a Matter of Law
(No. 2) on Abandonment (Doc. # 97) is DENIED.

(5)

Health & Sun’s Oral Motion for Judgment as a Matter of
Law (Doc. # 99) is DENIED.

(6)

Australian Gold’s Renewed Oral Motion for Judgment as a
Matter of Law (No. 1) (Doc. # 101) is DENIED.

(7)

Australian Gold’s Renewed Oral Motion for Judgment as a
Matter of Law (No. 2) (Doc. # 103) is DENIED.

(8)

Health & Sun’s Motion for Judgment as a Matter of Law
(Doc. # 107) is DENIED.

(9)

Australian Gold’s Renewed Motion for Judgment as a Matter
of Law (No. 1) on geographic Scope (Doc. # 118) is
DENIED.

(10) Australian Gold’s Renewed Motion for Judgment as a Matter
of Law (No. 2) on Abandonment (Doc. # 119) is DENIED.
(11) Health & Sun’s Renewed Motion for Judgment as a Matter of
Law (Doc. # 135) is DENIED.
(12) The Clerk is directed to enter the Court’s Judgment in
25

accordance with the jury’s verdict (Doc. # 109).
(13) The Clerk is directed to CLOSE THE CASE.
DONE and ORDERED in Chambers in Tampa, Florida, this 13th
day of March, 2014.

Copies:

All Counsel of Record

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