Zelinski v. Columbia 300, Inc.

• Citation: 335 F.3d 633
• Decision Date: 10 July 2003
• Docket Number: No. 02-2574.,No. 02-2431.,02-2431.,02-2574.
• Parties: George ZELINSKI, Jr. and Pin Breaker, Inc., an Illinois corporation, Plaintiffs-Appellees, Cross-Appellants, v. COLUMBIA 300, INC., a Texas corporation, Defendant-Appellant, Cross-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

335 F.3d 633

George ZELINSKI, Jr. and Pin Breaker, Inc., an Illinois corporation, Plaintiffs-Appellees, Cross-Appellants, v. COLUMBIA 300, INC., a Texas corporation, Defendant-Appellant, Cross-Appellee.

No. 02-2431.

No. 02-2574.

United States Court of Appeals, Seventh Circuit.

Argued February 24, 2003.

Decided July 10, 2003.

Rehearing and Rehearing En Banc Denied, August 11, 2003.

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Stephen G. Kehoe (argued), Chicago, IL, Mark E. Wiemelt, Chicago, IL, for Plaintiffs-Appellants.

Todd A. Prins, Elias (argued), San Antonio, TX, Robert M. Riffle, Elias, Meginnes, Riffle & Seghetti, Peoria, IL, for Defendant-Appellee.

Before BAUER, RIPPLE, and EVANS, Circuit Judges.

TERRENCE T. EVANS, Circuit Judge.

Columbia 300 sold bowling balls and manufactured boxes under the federally registered mark "Pin Breaker"—without the written permission of George Zelinski, Jr., the owner of the mark. Zelinski and Pin Breaker, Inc. (which Zelinski co-owns with his father) sued Columbia and won actual and punitive damages. The parties filed post-trial motions and, while Columbia still lost the war, it won a major battle when the district court vacated the punitive damages award. Both parties appeal.

In 1990 Zelinski and his father founded Pin Breaker, Inc., a small company that manufactured and sold high-end bowling balls. For 6 years, Zelinski and Pin Breaker, Inc. (we'll refer to both as "Zelinski") sold Pin Breaker balls domestically and internationally. In 1996 another corporation made Zelinski a lucrative offer for his manufacturing equipment. The offer came at a good time because Joseph Gentiluomo had recently sued Pin Breaker in an industry-wide patent infringement lawsuit.¹ Zelinski wanted to stop manufacturing balls during the pendency of the suit, so he accepted the offer.

Despite selling his manufacturing equipment, Zelinski didn't exit the bowling ball industry entirely. While talking to people at Columbia 300 about defense efforts in the Gentiluomo lawsuit, Zelinski began discussing Pin Breaker's ball technology and whether Columbia might be interested in producing Pin Breaker balls. Negotiations continued during an in-person meeting in October 1996. The parties signed a confidentiality agreement and Zelinski gave Columbia samples of his ball chemistry to test. Zelinski also showed Columbia an invoice from B.S. Hong, Pin Breaker's distributor in Korea, requesting a certain number of balls in specific types and colors. Although the parties discussed possible royalty arrangements, the meeting concluded without a written agreement, and talks continued in the following months. In March 1997, at Columbia's request, Zelinski sent it sample Pin Breaker boxes. Still, no written agreement was reached. Zelinski proceeded to discuss producing Pin Breaker balls with two other bowling ball companies.

Time passed, and in January 1998, Zelinski was at a bowling pro-shop and discovered a Pin Breaker box that he didn't recognize. The design of the Pin Breaker logo was different, the logo's ® had been changed to a ™, and the identifying information, warranties, and certification from the American Bowling Congress and Women's International Bowling Congress had been eliminated. To add insult to injury, the ball in the box was a low-quality Columbia second, the "Bonanza."

Zelinski investigated and found out that Columbia was behind the Pin Breaker box and had proceeded full steam ahead with producing balls under the Pin Breaker name. Following the October 1996 meeting, Columbia talked to Hong and Myung Kwon, Pin Breaker's overseas shipping agent, and they decided to add names and colors to Pin Breaker balls. In addition to implementing changes to the appearance of the Pin Breaker balls, Columbia also changed the quality of the balls. Unlike the high-end balls that Zelinski had produced, Columbia used less expensive cores and created cheap plastic balls or shoddy mid-level balls prone to cracking. Columbia sold 2,580 of these balls to Hong for South Korean distribution and 496 to the Asia Merchandise Company for distribution in Taiwan.

Columbia also created generic Pin Breaker boxes for the balls. As Zelinski had discovered, Columbia used some of the leftover boxes to ship its own Bonanza balls. Although Columbia put Bonanza stickers on the Pin Breaker boxes, the stickers did not cover up the Pin Breaker mark. Columbia didn't tell Zelinski about any of the meetings it had with Hong and Kwon or the changes it had made to the Pin Breaker balls and boxes. In fact, during a customs snafu, Columbia even told Kwon not to contact Zelinski because it was in charge of the Pin Breaker line.

Around the time of Zelinski's investigation, Columbia learned that it had failed to pay him any royalties. Although Columbia offered to send Zelinski a check, he refused to accept the payment. Zelinski did ask Columbia to destroy its leftover Pin Breaker boxes. Although Columbia promised to do so, Zelinski found a stash of Pin Breaker boxes in Columbia's warehouse during discovery for this suit—2 years later.

Zelinski filed suit in the Central District of Illinois, asserting federal claims of trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. § 1114(1) and § 1125(a), state law claims under the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS 510/1 et seq., and the Illinois Consumer Fraud Act, 815 ILCS 505/2 et seq., and a common law claim of unfair competition. Prior to trial, Chief Judge Joe Billy McDade partially granted Zelinski's motion for summary judgment, subject to Columbia's success at trial on its affirmative defenses and a factual finding whether a contract existed between the parties. During trial, Columbia moved for a directed verdict on its abandonment affirmative defense and to exclude punitive damages and damages based on corrective advertising. The district court denied these motions and the jury found in favor of Zelinski, awarding him $70,000 in actual damages for corrective advertising and lost royalties and $710,000 in punitive damages.

After trial, Columbia made a renewed motion for judgment as a matter of law and Zelinski moved to alter or amend the judgment. Columbia had only one victory, but it was a big one—the district court eliminated the punitive damages award. Zelinski's motion sought various forms of injunctive relief, such as preventing Columbia from using the Pin Breaker mark and destroying anything that bore the mark, which Columbia did not oppose. He also requested treble his actual damages, attorneys fees, costs in bringing the action, and pre-judgment interest. The district court granted Zelinski costs and pre-judgment interest but denied the remainder of his motion.

Both parties appeal the district court's decision on their motions. We'll start with the decision partially granting Columbia's renewed motion for judgment as a matter of law, which we review de novo. See Massey v. Blue Cross-Blue Shield of Ill., 226 F.3d 922, 924 (7th Cir. 2000). The parties' arguments primarily focus on the jury's findings. When reviewing a jury verdict, "the question is not whether the jury believed the right people, but only whether it was presented with a legally sufficient amount of evidence from which it could reasonably derive its verdict." See id. Overturning a jury verdict is a "hard row to hoe." Sheehan v. Donlen Corp., 173 F.3d 1039, 1043 (7th Cir.1999).

Because Columbia's affirmative defenses are potentially dispositive of this case, we'll start there. Columbia argues that the jury wrongly rejected its acquiescence and abandonment defenses. We can make short work of the acquiescence defense because Columbia failed to move for a directed verdict on that issue. As the district court pointed out during its review of Columbia's post-trial motion, that is a prerequisite to judgment as a matter of law. See McCarty v. Pheasant Run, Inc., 826 F.2d 1554, 1555-56 (7th Cir.1987) (citing Fed.R.Civ.P. 50(b)). Columbia does not address this problem. We've examined the record ourselves and can't find any sign that Columbia made an oral or written motion regarding acquiescence. Under these circumstances, Columbia has waived review of this issue.

Columbia did preserve review of its abandonment defense. Under 15 U.S.C. § 1127, Columbia had a presumption of abandonment because Zelinski let his mark lie dormant for three consecutive years. Zelinski can rebut this presumption with "evidence explaining the nonuse or demonstrating the lack of an intent not to resume use." Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 955 (7th Cir.1992). Zelinski's mere statement that he didn't abandon his mark is insufficient. See Imperial Tobacco Ltd., Assignee of Imperial Group PLC v. Philip Morris, Inc., 899 F.2d 1575, 1581 (Fed.Cir. 1990) ("In every contested abandonment case, the respondent denies an intention to abandon its mark; otherwise there would be no contest.").

Zelinski had more than his own say-so to rebut Columbia's presumption of abandonment. Specifically, he relies on the Gentiluomo lawsuit. While Zelinski did testify that he thought the lawsuit was frivolous and fraudulent, the jury could still have reasonably found that he was concerned about it having a significant financial impact on his business. This is particularly true when the jury was aware that the suit had enough substance that it was still lingering on at the time this case was tried. Although the Gentiluomo suit didn't stop Columbia from making bowling balls, a jury could conclude that a small company might be more cautious than Columbia, one of the world's largest bowling ball producers. In addition to explaining his non-use, Zelinski demonstrated that he intended to resume using the Pin Breaker mark. Starting in 1997, Zelinski discussed producing Pin Breaker balls with two other bowling ball companies. So, while Columbia does have some evidence to support its abandonment...