Churchill Downs Incorporated v. Commemorative Derby Promotions, Inc. et al

Filing 98

ORDER AND OPINION granting in part and denying in part 86 Defendant's Motion for Reconsideration and Clarification. Signed by Judge Julie E. Carnes on 8/7/14. (ddm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

CHURCHILL DOWNS INC.,
Plaintiff,
CIVIL ACTION NO.
v.

1:12-cv-517-JEC

COMMEMORATIVE DERBY PROMOTIONS,
INC. and LEONARD LUSKY,
Defendants.
ORDER & OPINION
This matter is before the Court on defendants’ Motion for
Reconsideration and Clarification [86] of the Court’s previous Order
[85].
and

The Court has reviewed the record and the parties’ arguments,

GRANTS

in

part

and

DENIES

in

part

defendants’

Motion

for

Reconsideration and Clarification [86].
BACKGROUND
This case arises out of a trademark and licensing dispute.1
Plaintiff is the proprietor of the Churchill Downs racetrack and the
Kentucky Derby and Kentucky Oaks races.

Plaintiff holds various

trademarks associated with those. Defendants have long been involved
in marketing horse-racing memorabilia.

1

On September 23, 2013, this

The details of the dispute can be found in the Order.
Order [85] at pp. 2-4.)

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(See

Court considered both parties’ motions for summary judgment, granting
plaintiff’s and denying defendants’. (See Order [85].)

Over three

weeks later, on October 18, 2013, defendants filed an untimely Motion
to Reconsider and Clarify the Order [86].2
Memorandum in Opposition [92].

Plaintiffs filed a

Defendants filed a Reply [93].

MOTION FOR RECONSIDERATION
I.

MOTION FOR RECONSIDERATION STANDARD
Local Rule 7.2(E) authorizes a motion for reconsideration when

“absolutely necessary.”

N.D. Ga. R. 7.2(E).

“Reconsideration is

only ‘absolutely necessary’ where there is: 1) newly discovered
evidence; 2) an intervening development or change in controlling law;
or 3) a need to correct a clear error of law or fact.”
Murphy,

246

F.Supp.

2d

J.)(citations omitted).

1256,

1258-59

(N.D.

Ga.

Bryan v.

2003)(Martin,

A motion for reconsideration is not an

appropriate mechanism to set forth new theories of law, or introduce
new evidence, unless the evidence was previously unavailable.
v. U.S. Postal Serv., 122 F.3d 43, 46 (11th Cir. 1997).

Mays

Likewise,

parties cannot use a motion for reconsideration to “relitigate old
matters” or “raise argument[s] . . . that could have been raised
prior to the entry of judgment.”

Linet v. Vill. of Wellington, 408

2

Local Rule 7.2(E) states, in relevant part, that “the motion
shall be filed with the clerk of court within ten (10) days after
entry of the order or judgment.”
2

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F.3d 757, 763 (11th Cir. 2005).

See also, Mincey v. Head, 206 F.3d

1106, 1137 (11th Cir. 2000)(noting that the function of a motion for
reconsideration is not “to give the moving party another ‘bite at the
apple’”).
Here, defendants base their motion for reconsideration on the
grounds that the Court made errors of law or fact in its previous
Order.
II.

These are addressed below.

“LOUISVILLE JOCKEY CLUB” ISSUES
In the Order, the Court held that plaintiff has a common law

trademark in “Louisville Jockey Club,” a former name of the Churchill
Downs racetrack, based on plaintiff’s long history of use of the mark
in its promotional materials and merchandise. (Order [85] at p. 13.)
The Court further held that the License Agreement required defendants
to

transfer

their

registration

of

“Louisville

Jockey

Club”

to

plaintiff. (Id. at pp. 31-32.) Defendants raise objections to both of
these holdings.
A.

Plaintiff’s Trademark in “Louisville Jockey Club”

Defendants

argue

that

the

Court

erred

in

holding

that

plaintiff’s history of use of “Louisville Jockey Club” in its
merchandise and advertising material was sufficient to give rise to
a common law trademark.

In support of this, defendants reiterate

arguments from their earlier briefs that plaintiff has not used
“Louisville Jockey Club” in a commercial manner.
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Alternatively, and

more persuasively, defendants contend that even if plaintiff once had
a trademark in “Louisville Jockey Club” and has used it commercially,
that trademark has been lost to abandonment due to long gaps in that
history of commercial use.
Under

the

Lanham

Act,

a

formerly

valid

trademark

may

be

considered abandoned:
[w]hen [the mark’s] use has been discontinued with intent
not to resume such use. Intent not to resume may be
inferred from circumstances.
Nonuse for 3 consecutive
years shall be prima facie evidence of abandonment. ‘Use’
of a mark means 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.

Abandonment thus requires both non-use and a lack

of intent to resume commercial use of the mark.

Sheila’s Shine

Products, Inc. v. Sheila Shine, Inc., 486 F.2d 114, 124 (5th Cir.
1973)(“[M]ere non-use for a period of time is insufficient to
constitute abandonment of a mark.

Rather, an intent to abandon the

mark must also be evident.”)(citations removed).3

In AmBrit, the

Eleventh Circuit held that a mark was abandoned because of the length
of time involved (48 years) and the fact that the mark owner had
offered as evidence of its intent to resume commercial use only its
renewal (twice) of the registration of the trademark. AmBrit, Inc. v.

3

Decisions of the former Fifth Circuit rendered prior to October
1, 1981 are binding precedent in the Eleventh Circuit. Bonner v.
City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981)(en banc).
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Kraft, Inc., 812 F.2d 1531, 1550-51 (11th Cir. 1986).
Even with plaintiff’s documented uses of “Louisville Jockey
Club,” there are lengthy temporal lapses, such that the first prong
of the abandonment test is satisfied.4
burden

of

producing

evidence

commercial use of the mark.

of

a

This shifts to plaintiffs the
continuing

Id. at 1550.5

intent

to

make

The Court finds that

plaintiff has not responded to defendants’ abandonment defense with
sufficient evidence to rebut the presumption of abandonment raised by
the lapse in use of the “Louisville Jockey Club” mark.6

Instead,

plaintiff simply asserts that it “continues to make commercial use of
Louisville Jockey Club as a reference to Churchill Downs.” (Pl.’s
Memo. in Opposition [92] at p. 20.)

4

Defendants count five uses between 1938 and 2011. (Defs.’
Memo. in Supp. of Mot. for Recon. [86-1] at p. 7.)
Plaintiff
provides no evidence of additional uses.
5

However, the ultimate burden of proof remains with the party
challenging the trademark-holder’s rights. Cumulus Media, Inc. v.
Clear Channel Communications, Inc., 304 F.3d 1167, 1177 (11th Cir.
2002).
6

Nor has plaintiff decided to raise arguments relating to
abandonment, such as those involving modification or “tacking” of an
older mark onto a newer one. See, e.g., Sands, Taylor & Wood Co. v.
Quaker Oats Co., 978 F.2d 947, 955 (7th Cir. 1992)(not using the
entire mark, but maintaining “key elements” of it, may be sufficient
to avoid a determination of abandonment); Van Dyne-Crotty, Inc. v.
Wear-Guard Corp., 926 F.2d 1156, 1160 (Fed. Cir. 1991)(“Tacking is
occasionally permitted where the two marks, though differing slightly
in their literal meaning or grammatical presentation, nevertheless
possess the same connotation in context.”)
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Plaintiff also emphasizes that defendants’ abandonment defense
was not made prior to their present motion, and thus is an illicit
“second bite at the apple.” (Id. at p. 4.)

It is true that it takes

some effort to find defendants’ abandonment theory in the earlier
briefs. This Court can find the argument stated once, in defendants’
motion

for

summary

judgment:

“Even

if

Plaintiff

could

somehow

establish that it held a property right in the corporate names
‘Louisville Jockey Club’ and/or ‘New Louisville Jockey Club’ any such
rights are no longer in effect due to Plaintiff’s failure to use the
marks for upwards of 80 years.” (Defs.’ Mot. for Summ. J. [67-1] at
p. 20.)

There, defendants cited two cases, one of which makes no

mention of abandonment, the other merely mentioning it in the course
of a discussion of various defenses to trademark claims.

See Galt

House, Inc. v. Home Supply Co., 483 S.W.2d 107, 110 (Ky. 1972)(no
mention of abandonment) and Consumers Petroleum Co. v. Consumers Co.
of Ill., 169 F.2d 153, 161-62 (7th Cir. 1948)(passing mention of
abandonment defense).

Defendants did not there cite AmBrit in

support of their abandonment argument, which is the case they now
rely upon to support their abandonment defense. Although defendants’
efforts to make their abandonment argument were minimal, the Court
cannot say that defendants did not raise the argument at all.
The Court thus GRANTS defendants motion to reconsider on this
point, and modifies its Order to hold that plaintiff had abandoned
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its trademark in “Louisville Jockey Club.”
B.

“Louisville Jockey Club” and the License Agreement

As for the issue of whether the License Agreement prohibits
defendants (or at least Commemorative Derby Promotions) from seeking
registration of a trademark in “Louisville Jockey Club,” defendants
contend

that

because

plaintiff

does

not

have

a

trademark

in

“Louisville Jockey Club” and the term is not explicitly listed in the
License Agreement as being among the “Licensed Indicia,” defendants
are not in breach of the License Agreement in seeking to register the
mark.
The relevant portion of the License Agreement states that
Commemorative Derby Promotions must “not, at any time, file a
trademark application with the United States Patent and Trademark
Office for the Licensed Indicia.” (Compl. [1] at Ex. 1, § 7(a).)
License

Agreement

defines

“Licensed

Indicia”

as

“the

The

designs,

trademarks, service marks, logographics, copyrights and symbols
associated with or referring to CDI, including those set forth in
Appendix A and/or any attachments thereto.” (Id. at § 1(a).) Because
the Court now holds that plaintiff has abandoned its trademark in
“Louisville Jockey Club,” it follows that defendants are not in
breach of the License Agreement in registering the “Louisville Jockey
Club” mark.
The Court thus GRANTS defendants’ motion to reconsider and now
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holds that defendants did not breach the License Agreement in
registering a trademark in “Louisville Jockey Club.”
III. LUSKY AND THE LICENSE AGREEMENT
Defendants

contend

that

the

Court

erred

in

finding

both

Commemorative Derby Promotions and Lusky in violation of the License
Agreement, on the grounds that only Commemorative Derby Promotions,
was a party to the License Agreement.
The License Agreement is, in its terms, a contract between
Churchill Downs, Inc. and Commemorative Derby Promotions. (See Compl.
[1] at Ex. 1).

However, in the complaint, plaintiff alleged that

Lusky at all times “has been the sole, or principal owner, officer
and manager of CDP” and “has had the right and ability to supervise
the actions complained of in each of the counts brought herein and
actually directed, controlled and participated in as the moving force
behind the actions complained of and has had direct financial
interest

in

the

proceeds

of

same.”

(Compl.

[1]

at

¶¶

36-37.)

Defendants admitted these allegations. (Ans. [17] at ¶ 4.)
Throughout the pleadings, plaintiff refers to “defendants” in
its allegations of License Agreement breach.

For example, plaintiff

refers to “licensed products also produced by Defendants.” (Pl.’s St.
of Mat. Facts [72-1] at ¶ 45.)
licensed product.

Only a licensee could produce a

In its motion for summary judgement, plaintiff

concludes that “[i]t is apparent Defendants . . . have further
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violated the Churchill Downs License Agreement by applying for
registration of the mark LOUISVILLE JOCKEY CLUB.”
Supp. of Mot. for Summ. J. [72-2] at p. 25.)

(Pl.’s Memo. in

This indicates that

plaintiff believed both defendants to be subject to the obligations
of the License Agreement.
Defendants, for their part, give similar indications in their
pleadings. Defendants write that “Article 2 of the License Agreement
refers to the grant of license provided to the Defendants under the
Agreement.” (Defs.’ Response to Pl.’s Mot. for Summ. J. [74] at p.
21.)

This

suggests

that

Lusky

personally

held

Defendants elsewhere make similar representations:

the

license.

“Churchill Downs

was willing to enter into a license agreement with the Defendants,”
“[t]hroughout the term of the License Agreement, the Defendants were
only

notified

of

a

problem

with

their

merchandising

involving

Plaintiff’s marks on a single occasion,” and “Churchill Downs has
never advised Defendants that the use of a historically accurate
listing of the past Kentucky Derby winners in conjunction with
Defendants’ merchandise would or even could constitute a violation of
the License Agreement.” (Id. at pp. 4-5.) Defendants even refer to
plaintiff “negotiating the License Agreement with the Defendants”
(Defs.’ St. of Mat. Facts [67-1] at ¶ 16.)
be

found

throughout

the

record,

This language, which can

suggest

that

defendants

also

understood the License Agreement’s obligations to extend to Lusky.
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However, because the Court now holds that there was no breach of
the License Agreement, the issue of whether defendant Lusky is a
party to the License Agreement is MOOT.
IV.

“JULEP CONDITION”
In the Order, the Court noted in its analysis of the trademark

dispute that:
defendants’ marks are sometimes only slight modifications
of the marks it used previously under its License Agreement
with the plaintiff.
For example, one of the licensed
products included an image of a mint julep with the words
‘Mint Condition at the Kentucky Derby.’
After the
expiration of the License Agreement, Defendants produced a
shirt with a nearly identical image of a mint julep
accompanied by the words ‘Julep Condition.’
(Order [85] at p. 21.)

The Court held that the “Julep Condition”

shirt, despite its revisions, conveyed the same reference to the
Kentucky Derby as that of the licensed shirt.

This was further

supported by the fact that the shirts are sold during Derby season
alongside more explicitly Derby-related items.

Defendants, however,

object to the inclusion of “Julep Condition” among the marks the
Court held to violate plaintiff’s marks on the grounds that “[t]he
‘Julep Condition’ shirt contains no reference to the Kentucky Derby
or even to horses, and Plaintiff has no trademark rights in the term
‘mint julep’ or ‘mint condition.’” (Defs.’ Memo. in Supp. of Mot. for
Recon. [86-1] at p. 20.)
The Court relied in part on the reasoning in two out-of-circuit

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cases with similar facts. See Boston Athletic Ass’n v. Sullivan, 867
F.2d 22 (1st Cir. 1989) and Bd. of Supervisors for Louisiana State
Univ. Agric. and Mech. Coll. v. Smack Apparel Co., 550 F.3d 465 (5th
Cir. 2008).

These cases involved defendants that made apparel that,

without using the exact trademarks of plaintiffs, exhibited design
elements and were marketed in ways that were likely to produce
confusion in the public.

See Boston Athletic Ass’n, 867 F.2d at 28

(“Defendants are using the Boston Marathon sponsored and operated by
the BAA to promote the sale of goods which are adorned so as to
capitalize

on

the

race.”)

and

Smack

Apparel,

550

F.3d

at

473

(“Smack’s products are similar to and competed with goods sold or
licensed

by

the

Universities

and

are

sold

directly

alongside

merchandise authorized by the plaintiffs at or near events referenced
in the shirts.”) Those Courts held that the defendants had infringed
the plaintiffs’ marks.
In Boston Athletic Ass’n, the defendant apparel company produced
licensed shirts for the plaintiff, the proprietor of the Boston
Marathon. 867 F.2d at 25.

After that license expired and the

plaintiff licensed another party to produce its Boston Marathon
apparel, defendant continued to sell similar apparel that, although
avoiding

explicit

reference

to

the

Boston

Marathon,

contained

elements that together, and in the context in which they were
marketed, clearly referred to the Boston Marathon. Id.
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For example,

in one t-shirt, the defendant dropped “Boston” from the name “Boston
Marathon,” but included images of runners (an obvious reference to a
competitive race) and the words “Hopkinton-Boston” (which denote the
beginning and end points of the Boston Marathon). Id. at 29.

The

shirts were sold in the vicinity of the Marathon, adding further
contextual confirmation of the reference. The First Circuit rejected
“[t]he district court’s holding that plaintiff’s rights did not sweep
any further than their actual marks” as “not a correct application of
trademark law.” Id. at 29-30.

Instead, it based its finding of

infringement on the fact that, despite the superficial differences,
“the meaning of the two marks is more than similar, it is identical.”
Id. at 30.

The Court concluded:

There can be no doubt that the language and design on
defendant’s shirts intentionally calls attention to an
event that has long been sponsored and supported by the
BAA–an event that is, in fact, the subject of its
registered mark. Defendant’s shirts are clearly designed
to take advantage of the Boston Marathon and to benefit
from the good will associated with its promotion by
plaintiffs.
Defendants thus obtain a ‘free ride’ at
plaintiff’s expense.
Boston Athletic Ass’n, 867 F.2d at 33.
Here, as was the case in Boston Athletic Ass’n, the licensed
“Mint Condition at the Kentucky Derby” shirt gains its meaning
through

the

association.

combination

of

text,

image,

and

basic

historical

Defendants, with their “Julep Condition” shirt, try to

avoid violating plaintiff’s trademark rights by dropping the term
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“Kentucky Derby,” while leaving the meaning and reference of the
shirt unchanged. Clearly, however, the shirt only “works” as long as
the buying public understands it as Kentucky Derby memorabilia.
Although the parallels with Boston Athletic Ass’n are obvious,
the Court, upon reconsideration, finds the defendants have as a
factual matter made somewhat more extensive modifications to the mark
for their “Julep Condition” shirt than had the defendant in Boston
Athletic Ass’n.
retained

the

“Marathon”),

Where the defendant in

words

of

defendants

the
here

reference to “Kentucky Derby.”

Boston Athletic Ass’n

plaintiff’s
have

marks

removed

all

(“Boston”
direct

and

textual

Although, in the context of horse-

racing memorabilia sold in the vicinity of Louisville around the time
that the Kentucky Derby is held, the “Julep Condition” shirt conveys
a clear reference to the Kentucky Derby, the mint julep cocktail is
not itself a trademark held by plaintiff.

There is, therefore, an

extra step involved in this case that was not present in Boston
Athletic Ass’n, in that one has to make the final leap from “mint
julep” to “Kentucky Derby,” rather than just from “marathon in
Boston” to “Boston Marathon.” The matter is close, but the Court now
holds that the “Julep Condition” mark does not cross the line of
infringement.
The Court GRANTS defendants’ motion to reconsider, and modifies
the Order to hold that defendants’ “Julep Condition” mark does not
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infringe plaintiff’s marks.
V.

DEFENDANTS’ INTENT TO INFRINGE
Defendants contend that the Court was incorrect in finding an

intent to infringe on plaintiff’s marks.

Defendants state that they

“believed in good faith that they could use terms that could be
associated with the Kentucky Derby as long as they did not use
Plaintiff’s marks on their products based on the License Agreement
and their communications with Plaintiff relating to the Agreement.”
(Defs’. Memo. in Supp. of Mot. to Recon. [86-1] at p. 24.)

Further,

Defendants contend that “the issues of this case are novel to the
Eleventh Circuit.”

(Id. at pp. 24-25.)

Faced with similar facts,

the Fifth Circuit in Smack Apparel declined to find an intent
sufficient to justify attorney’s fees. (Id. at p. 24)(citing Smack
Apparel, 550 F.3d at 491.)
In

the

Order,

the

Court

discussed

defendants’

“intent

to

misappropriate the good will” of plaintiff in the context of the
“likelihood of confusion” test.

(See Order [85] at pp. 24-26.)

The

Court found such intent in, for example, defendants’ labeling “some
of

their

products

as

‘authentic’

or

‘official’

Derby

items,

indicating an intent to lead consumers to believe there was an
association with the Kentucky Derby.” (Id. at p. 25.) The Court also
noted

defendants’

characterization

merchandise

as

“officially licensed Kentucky Derby products.” (Id. at p. 24.)

The

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of

their

Court

held

that

defendants

did

demonstrate

an

intent

to

misappropriate the good will of plaintiff, and that this lent support
to finding a likelihood of confusion.

(Id. at pp. 25-26.)

Further,

defendants, on account of the prior License Agreement with plaintiff,
were well aware of plaintiff’s trademarks.

The Court thus finds no

error in its determination.
The Court did not, however, give any indication in the Order as
to whether the facts that supported a finding of an intent to
misappropriate the good will of plaintiff would also suffice to
support an award of attorney’s fees under the Lanham Act, which
permits such recovery “in exceptional cases.” 15 U.S.C. § 1117(a).
The Eleventh Circuit has held that such fees “should be awarded only
if there was evidence of fraud or bad faith.”

Welding Services, Inc.

v. Forman, 301 Fed.Appx. 862, 863 (11th Cir. 2008).

“Even if the

trial court finds that the circumstances of the case are, in fact,
exceptional, the decision whether to award attorney’s fees is still
discretionary.” Dieter v. B & H Indus. of Sw. Fla., Inc., 880 F.2d
322, 329 (11th Cir. 1989).

This clearly involves an analysis of

factors beyond those the Court was required to consider in applying
the likelihood of confusion test to determine if there was trademark
infringement.

As the parties are still briefing on the issue of

damages, the Court declines to decide whether this is an exceptional
case under 15 U.S.C. § 1117(a).
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The Court therefore DENIES defendants’ motion to reconsider its
finding of an intent to infringe.
VI.

CLARIFICATION OF WHICH PRODUCTS INFRINGE WHICH TRADEMARKS
Defendants further request that the Court specify in greater

detail the bases for finding that defendants’ products infringe
plaintiff’s marks. The Court has provided, in the Order, the grounds
upon which defendants’ products infringe upon plaintiff’s marks, and
will not present an itemized list at this point.

Instead, the Court

will address defendants’ concerns when it turns its attention to the
permanent injunction.
The Court DENIES defendants’ motion to clarify.
CONCLUSION
Based on the above, the Court GRANTS in part and DENIES in part
defendants’ motion for reconsideration and clarification.
So Ordered, this 7th day of August, 2014.

/s/ Julie E. Carnes
JULIE E. CARNES
Circuit Judge, sitting by
designation as District Judge

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