228 F.3d 531 (4th Cir. 200), 99-2253, Emergency One, Inc. v. American Fireeagle, Ltd

Docket Nº:99-2253.
Citation:228 F.3d 531
Party Name:EMERGENCY ONE, INCORPORATED, D/B/A AMERICAN EAGLE FIRE APPARATUS COMPANY, INCORPORATED, PLAINTIFF-APPELLEE, V. AMERICAN FIREEAGLE, LIMITED, DEFENDANT-APPELLANT.
Case Date:September 28, 2000
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 531

228 F.3d 531 (4th Cir. 200)

EMERGENCY ONE, INCORPORATED, D/B/A AMERICAN EAGLE FIRE APPARATUS COMPANY, INCORPORATED, PLAINTIFF-APPELLEE,

V.

AMERICAN FIREEAGLE, LIMITED, DEFENDANT-APPELLANT.

No. 99-2253.

United States Court of Appeals, Fourth Circuit

September 28, 0200

Argued: June 9, 2000.

0

Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh.

W. Earl Britt, Senior District Judge. (CA-96-831-5-BR)

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[Copyrighted Material Omitted]

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L. Lawton Rogers, III, Rogers & Killeen, Alexandria, Virginia, for Appellant. Christopher Brennan Wilson, Grippo & Elden, Chicago, Illinois, for Appellee. ON Brief: Patrick D. McPherson, Mark C. Comtois, D. Joseph English, Rogers & Killeen, Alexandria, Virginia, for Appellant.

Darlene K. Alt, Grippo & Elden, Chicago, Illinois; Hugh Stevens, Everett, Gaskins, Hancock & Stevens, L.L.P., Raleigh, North Carolina; Jennifer L. Sherman, Federal Signal Corporation, Oak Brook, Illinois, for Appellee.

Before Michael and Traxler, Circuit Judges, and Butzner, Senior Circuit Judge.[*]

Vacated and remanded by published opinion. Judge Michael wrote the opinion, in which Judge Traxler joined.

OPINION

Michael, Circuit Judge

Emergency One, Inc. (E-One), a manufacturer of fire trucks and rescue vehicles, brought this trademark infringement suit against American FireEagle, Ltd. (AFE), a competing manufacturer of fire trucks. E-One alleged that AFE's AMERICAN FIREEAGLE mark, a bald eagle superimposed over an American flag, infringed E-One's rights in its AMERICAN EAGLE mark, also a bald eagle superimposed over an American flag. AFE defended on the ground that E-One had abandoned its mark. It also counterclaimed that E-One's renewed use of the AMERICAN EAGLE mark, after AFE had begun using its AMERICAN FIREEAGLE mark, was an infringement of American FireEagle's common law trademark rights. Pre-trial stipulations narrowed the case to a single issue: Had E-One abandoned the AMERICAN EAGLE mark? If yes, E-One was infringing AFE's rights; if no, AFE was infringing E-One's rights. The issue was ultimately submitted to a jury, which found that E-One had not abandoned the AMERICAN EAGLE mark.

AFE appeals, arguing (1) that it was entitled to judgment as a matter of law, (2) that the district court erred in excluding certain evidence, and (3) that the district court failed to instruct the jury properly on the law of trademark abandonment. Because we agree that certain of the district court's instructions to the jury were inadequate, we vacate the judgment (and injunction) and remand for a new trial.

I.

E-One is a fire and rescue truck manufacturer located in Ocala, Florida. In 1989 E-One bought American Eagle Fire Apparatus Co. (American Eagle), a Gainesville, Florida, fire truck manufacturer started by former E-One employees in 1985. The purchase price for American Eagle was $6.5 million, though only $1.6 million was attributed to the company's tangible assets. The balance was attributed to good will, including the value of the AMERICAN EAGLE trademark. Company officials at E-One believed that American Eagle's excellent reputation in rural markets, combined with the inherent patriotic appeal of its bald eagle and American flag trademark, would enable E-One to increase its sales to rural fire departments.

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Shortly after the purchase, E-One's president, Ted Fries, spoke to American Eagle's employees in Gainesville, Florida. Among other things, Fries said that E-One intended to continue building American Eagle fire trucks to satisfy existing orders, but that the company ultimately intended to build E-One products in Gainesville. Fries also said that E-One "wouldn't be building American Eagle branded products forever out of Gainesville." Between 1989 and June 1992 E-One built about thirty-five to forty fire trucks to satisfy American Eagle's back orders as well as some new orders that E-One accepted after the purchase. Although the trucks were built according to American Eagle blueprints and in keeping with American Eagle style, some left the factory bearing the E-ONE trademark, while others bore the AMERICAN EAGLE logo and nameplate.

The Gainesville plant was closed shortly after June 1992, ending the manufacture of fire trucks at that facility. However, E-One continued to provide exclusive warranty and repair services on American Eagle trucks. In 1993 and 1994 E-One also refurbished or substantially rebuilt old and damaged American Eagle trucks in a process known as "recycling." E-One would remove the engine, rear axle, transmission, and water pump from a used fire truck. Those components (assuming they were serviceable) would be installed on a new or rebuilt chassis. E-One would then construct a new American Eagle style body for that chassis. As with the brand-new trucks, most left the factory with the E-ONE nameplate. However, one recycled American Eagle truck left the factory in 1994 bearing the AMERICAN EAGLE nameplate and logo. Regardless of what mark appeared on the truck itself, all invoices after the acquisition carried only E-One's name.

By mid-1992 E-One was no longer manufacturing any new fire trucks under the AMERICAN EAGLE brand. However, it promoted the mark in various ways: by selling T-shirts, hats, tote bags, and nameplates bearing the AMERICAN EAGLE logo in "The Fire Locker" (a gift store at the factory), by distributing that merchandise at trade shows, and by requiring that its security guards wear AMERICAN EAGLE badges on their uniforms.

Despite its professed enthusiasm for the AMERICAN EAGLE brand, E-One had no specific plans for use of the mark when it bought the American Eagle company in 1989. E-One first considered using the AMERICAN EAGLE brand on its rescue trucks, but decided that the rescue and fire trucks were already so similar that no advantage would be gained by developing a separate brand. Eventually, E-One decided that the AMERICAN EAGLE mark would best be used to represent a separate product line. It appears that E-One's caution in deciding how to use the AMERICAN EAGLE mark stemmed from a disastrous product launch several years earlier. The company was wary of introducing a new line of trucks and particularly wary of tarnishing a valuable name by associating it with an inferior product.

In 1991 E-One introduced a low cost, limited option fire truck under the E-ONE mark. Around mid-1993 the company considered using the name AMERICAN EAGLE on those trucks, but instead marketed them using the E-One name and descriptive slogans such as "Budget Busters" and "Value and More."

In 1994 Michael Carter founded the defendant corporation, AFE. Carter had worked for American Eagle as a draftsman but left a few months after the company was sold to E-One in 1989. Apparently believing that E-One had abandoned its rights to the AMERICAN EAGLE mark, Carter designed a highly similar mark for AFE, a bald eagle superimposed over an American flag. In February 1994 AFE began using the eagle and flag mark in pre-manufacturing marketing of its fire trucks. In the summer of that same year fire truck dealers began to call both E-

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One and AFE with questions about the new company, asking whether E-One had started a new company or distribution arm. E-One complained to AFE that its mark was confusingly similar to the AMERICAN EAGLE mark. When AFE continued to use the mark, E-One sent a letter accusing it of infringement. AFE responded through its lawyers, asserting its belief that E-One had long since abandoned any...

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