Abraham v. Omega

• Decision Date: 07 February 2013
• Docket Number: No. 12–10525.,12–10525.
• Citation: 708 F.3d 614
• Parties: Thomas Kenneth ABRAHAM, doing business as Paddle Tramps Manufacturing Company, Plaintiff–Appellant Cross–Appellee v. ALPHA CHI OMEGA; Alpha Chi Omega Fraternity Incorporated; Alpha Delta Pi; Alpha Delta Sorority Corporation; Alpha Gamma Delta; et al., Defendants–Appellees Cross–Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

708 F.3d 614

Thomas Kenneth ABRAHAM, doing business as Paddle Tramps Manufacturing Company, Plaintiff–Appellant Cross–Appellee

v.ALPHA CHI OMEGA; Alpha Chi Omega Fraternity Incorporated; Alpha Delta Pi; Alpha Delta Sorority Corporation; Alpha Gamma Delta; et al., Defendants–Appellees Cross–Appellants.

No. 12–10525.

United States Court of Appeals, Fifth Circuit.

Feb. 7, 2013.

Jeffrey Scott Levinger, Levinger, P.C., Elizann Carroll, Molly Buck Richard, Richard Law Group, Dallas, TX, for Plaintiff–Appellant Cross–Appellee.

Jack Allen Wheat, Lindsay Yeakel Capps, Stites & Harbison, P.L.L.C., Louisville, KY, David Ronald Reneker, Munsch, Hardt, Kopf & Harr, P.C., Dallas, TX, for Defendants–Appellees Cross–Appellants.

Appeals from the United States District Court for the Northern District of Texas.

Before JONES, GARZA, and PRADO, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

The original opinion in this case was issued by the panel on December 6, 2012. No member of the panel nor judge in regular active service of the court having requested that the court be polled on rehearing en banc (Fed. R.App. P. 35 and 5th Cir. R. 35), the petition for rehearing en banc is DENIED.

Because this panel has revised Part IV.A of their prior opinion, the petition for panel rehearing is GRANTED in part. The following is substituted therefor. In all other respects, the petition for panel rehearing is DENIED:

Thomas Kenneth Abraham (“Abraham”), doing business as Paddle Tramps Manufacturing Company (“Paddle Tramps”), appeals the district court's order granting a partial preliminary injunction against his use of trademarks belonging to 32 fraternity and sorority organizations (the “Greek Organizations”). The Greek Organizations cross-appeal the limitation on the injunction. We AFFIRM.

I

Abraham founded Paddle Tramps in Lubbock, Texas in 1961 as a company that manufactured wooden paddles and decorations for fraternity and sorority members. Paddle Tramps has always sold products bearing the names of fraternities and sororities and has always used the names of fraternities and sororities to advertise its products.

Abraham began selling the paddles by showing samples and taking orders at fraternity and sorority house visits. He created the ordered products by carving Greek letters and affixing them and other decorations onto wooden paddles. By the late 1960s, Abraham began wholesaling the component parts of paddles, such as wooden Greek and Roman letters and wood-carved crests, to college bookstores or craft stores for customers to buy and assemble.Also in the late 1960s, Abraham began distributing catalogues with fraternity and sorority names and crests to advertise his products.

Abraham invested heavily in equipment, advertising, and employees. He had to completely rebuild his business three times—once after a fire in 1966, then after a tornado in 1970, and still again after another fire in Paddle Tramps's manufacturing plant in 1980.

In 1997, Abraham established a website for Paddle Tramps. The website initially only advertised Paddle Tramps's products, then in 2001 it began allowing customers to purchase items online. At all times the website displayed fraternity and sorority names, as well as Paddle Tramps's products that reproduced fraternity and sorority crests. Abraham testified Paddle Tramps continued to sell almost exactly the same products it had been selling in the 1960s after the creation of the website in 1997.

In 1990, 29 years after Abraham founded Paddle Tramps, the Greek Organizations contacted him for the first time about licensing. The entity that contacted him was called Greek Properties, and the letter invited Abraham to join their group. Abraham did not respond. Greek Properties followed up with another letter in 1991. It attached an application for admission into Greek Properties, which required Abraham to sign a statement promising not use any Greek Properties's member organizations's marks or terminology without written consent. Again, Abraham did not respond. The following year, Greek Properties sent Abraham a brochure, but never again attempted to get him to join.

In 1995, Dan Shaver (“Shaver”) sent a letter to Abraham on behalf of Sigma Chi threatening to sue Paddle Tramps for trademark infringement. Abraham's son Kyle responded, saying Paddle Tramps was not interested in licensing Sigma Chi's marks after continuously using Sigma Chi's name and crest on its products for 34 years without complaint. Over the next 13 years, Shaver periodically sent additional letters to Abraham on behalf of an entity called Affinity Marketing Consultants. Affinity Marketing Consultants represented about 70 fraternities and sororities. These letters sometimes invited Paddle Tramps to join a fraternity or sorority's licensing program, sometimes ordered Paddle Tramps to cease and desist, and sometimes threatened to sue. Abraham either ignored these letters or responded by stating he refused to enter into a licensing agreement.

In December 2007, the 32 Greek Organizations in this litigation, represented by Affinity Marketing Consultants and Shaver, sued Abraham for patent infringement and unfair competition in the Southern District of Florida. The Florida district court dismissed the suit for improper venue. Abraham then sued the Greek Organizations in April 2008 in the instant litigation for a declaratory judgment that he was not infringing on their marks. The Greek Organization asserted counterclaims for trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. § 1051 et seq., and for unfair competition and trademark dilution under Texas state-law claims. They sought monetary and injunctive relief.

Abraham moved for summary judgment on his affirmative defenses of laches and acquiescence, and the Greek Organizations moved for summary judgment on the liability portion of their substantive claims, injunctive relief, and an accounting. The district court granted the Greek Organizations's motion in part, concluding Abraham infringed the Greek Organizations's names, insignia, and symbols, creating a likelihood of confusion among the public in violation of the Lanham Act and Texas's unfair competition law. Further, the district court concluded Abraham diluted the Greek Organizations's marks in violation of Texas's trademark dilution law. Abraham does not contest these determinations on appeal. The court denied Abraham's motion for summary judgment on his affirmative defenses of laches and acquiescence, denied the Greek Organizations's counter-defense of unclean hands, and ordered a trial on those issues.

At the end of the evidence presented at that trial, the district court denied the parties's motions for judgment as a matter of law. The jury returned a special verdict finding: (1) Abraham proved his laches defense; (2) Abraham proved his acquiescence defense with respect to one of the Greek Organizations (Pi Kappa Alpha); and (3) the Greek Organizations did not prove their unclean hands counter-defense.

Abraham moved for judgment on the verdict, and the Greek Organizations renewed their motion for judgment as a matter of law. In an unorthodox point of error, the Greek Organizations collapsed an improper jury instruction claim with a sufficiency of the evidence claim, arguing the jury was improperly instructed on unclean hands and laches and no properly instructed jury would have had a legally sufficient evidentiary basis to find Abraham established his laches defense or had clean hands. The Greek Organizations's motion also asserted the issue of acquiescence should not have gone to the jury, and asked the court to enter a permanent injunction barring Abraham's future use of their marks. The district court denied the Greek Organizations's renewed motion, finding the jury was properly instructed, the issue of acquiescence was properly submitted to the jury, and there was sufficient evidence to support Abraham's laches defense and the jury's finding of clean hands. The court granted Abraham's motion for judgment on the verdict, finding his laches defense precluded the monetary relief sought by the Greek Organizations.

The court further determined laches did not bar entry of a permanent injunction on Abraham's future use of the Greek Organizations's marks. The court permanently enjoined Abraham from some future uses of the Greek Organizations's marks, concluding the “degree of prejudice” such an injunction would impose on Abraham was not significant enough to bar injunctive relief. The injunction prevents Abraham from selling or using in his advertising three categories of the Greek Organizations's marks: (1) the Greek letter combinations associated with the parties to this lawsuit; (2) the full names or nicknames associated with the parties to this lawsuit; and (3) any crest, coat of arms, seal, flag, badge, emblem, or slogan identifiable with any of the parties to this lawsuit, including copies of the Greek Organizations's crests Abraham carved out of wood.

The injunction allows Abraham to sell and include in his advertising decals of the Greek Organizations's crests he purchased wholesale from licenced vendors, as well as what Abraham calls the “double raised crest backing.” This crest backing is carved in the shape of a given Greek Organization's crest, upon which Paddle Tramps affixes a licenced decal.

Abraham timely appealed the district court's entry of a permanent injunction based on the jury finding that he established a laches affirmative defense, and because the laches here were particularly long, unreasonable, and inexcusable. The Greek Organizations timely cross-appealed the district court's rejection of their motion for judgment as a matter of law, asserting the jury instructions were improper and the jury findings on laches and unclean hands are unsupported by the evidence. They also appeal the scope of the injunction, asserting Abraham should have been enjoined from continuing to sell...