Sweetheart Plastics, Inc. v. Detroit Forming, Inc.

• Decision Date: 13 September 1984
• Docket Number: No. 83-1988,83-1988
• Citation: 743 F.2d 1039
• Parties: , 223 U.S.P.Q. 1291 SWEETHEART PLASTICS, INC., Appellant, v. DETROIT FORMING, INC., Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1039

743 F.2d 1039

81 A.L.R.Fed. 659, 223 U.S.P.Q. 1291

SWEETHEART PLASTICS, INC., Appellant, v. DETROIT FORMING, INC., Appellee.

No. 83-1988.

United States Court of Appeals,

Fourth Circuit.

Argued April 4, 1984.

Decided Sept. 13, 1984.

Bernard L. Sweeney, Falls Church, Va. (Terrell C. Birch, Birch, Stewart, Kolasch & Birch, Falls Church, Va., on brief), for appellant.

Wellington M. Manning, Jr., Spartanburg, S.C. (Manning & Wilburn, Spartanburg, S.C., on brief), for appellee.

Before WIDENER, PHILLIPS and CHAPMAN, Circuit Judges.

CHAPMAN, Circuit Judge:

In this action for injunctive relief for false designation of origin under Sec. 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) and unfair competition, plaintiff Sweetheart Plastics, Inc. (Sweetheart) appeals from the judgment entered on the jury verdict in favor of defendant Detroit Forming, Inc. (Detroit). Sweetheart claims the district court erred in: (1) denying Sweetheart's motion to amend its complaint; (2) refusing to admit evidence of actions taken by Sweetheart against other manufacturers of substantially similar designs, and then charging the jury to consider whether Sweetheart, by taking no action against other manufacturers, acquiesced in the manufacture of the dishes by others or abandoned its rights; (3) admitting evidence of the existence of other manufacturers of similar designs; (4) charging the jury that evidence of Sweetheart's delay in taking action against other infringers could be considered relevant to Detroit's defenses of estoppel by acquiescence and abandonment; (5) submitting Detroit's defenses to the jury; and (6) refusing to grant a continuance of the trial. Finding that the district court abused its discretion in refusing to permit Sweetheart to amend its complaint under the circumstances; erred in charging the jury that the evidence of Sweetheart's failure to control other manufacturers could be considered relative to Detroit's defenses of estoppel by acquiescence and abandonment; and erroneously submitted the defense of abandonment to the jury, we reverse and remand.

I

This action concerns a series of four disposable plastic ice cream dishes which have been marketed by Sweetheart for the past twenty-five years. Two are rowboat-shaped dishes for banana splits, and two are bowl-shaped dishes for sundaes. Sweetheart does not have a registered trademark on the dish designs, ¹ but does own a registered trademark on the mark "Banana Boat." Sweetheart alleged in its complaint that by virtue of its having sold billions of the dishes, and spent considerable sums advertising and promoting them, the designs have come to identify its products as originating from a single source, Sweetheart.

During the 1960's a company called Van Brode Milling Company (Van Brode) marketed a boat-shaped plastic ice cream dish. This practice was discontinued when Sweetheart asked Van Brode to stop. More recently, three other companies marketed lines of plastic disposable ice cream dishes which were substantially similar in design to Sweetheart's line. These companies are Formfit Plastics, Inc. (Formfit), Douglas Stephens Plastics, Inc. (Douglas Stephens), and defendant Detroit. In addition to the instant litigation, Sweetheart has filed a companion case in the United States District Court for the District of New Jersey against Douglas Stephens.

On July 19, 1983, six days before trial commenced, Sweetheart received certain documents it had requested from Detroit on January 28, 1983. Although the documents were ones in which Detroit had claimed that trade secrets were contained, a stipulated protective order had been entered by the court on June 9, 1983 which provided that confidential documents filed with the court would be sealed and segregated in the court's files. One of the documents received by Sweetheart on July 19, 1983 was an invoice on which Detroit had described certain of its dishes as "Banana Boat Trays." On the first day of trial Sweetheart moved to amend its complaint to include a count for trademark infringement under 15 U.S.C. Sec. 1114(1). Detroit opposed the motion as untimely. The district court denied the motion, stating: "I deny your motion, plaintiff's motion, comes too late. If that's all the proof you've got, you should have had it before then."

Trial began on July 25, 1983. During cross-examination of one of Sweetheart's witnesses, counsel for Detroit was permitted to inquire, over Sweetheart's objection, as to Sweetheart's knowledge of the use by Van Brode of a design alleged by Detroit to be similar to one of the designs in question. Also over Sweetheart's objection, Detroit was permitted to publish deposition testimony of Stewart M. Graff, president of Douglas Stephens, and Norman Thrope, president of Formfit, which showed the use by both companies of dishes similar in design to the dishes manufactured by Sweetheart.

The district court then permitted counsel for Sweetheart, by way of cross-examination, to publish other portions of the same depositions which revealed acts taken by Sweetheart against the two companies. Specifically, the portion of the Thrope deposition published by Sweetheart showed that Sweetheart had notified Formfit that it was unhappy with Formfit's shipping of boat-shaped dishes, and considered Formfit's acts to be infringements on Sweetheart's trademark rights. The portion of the Graff deposition published by Sweetheart showed that Sweetheart asked Douglas Stephens to cease manufacturing rowboat-shaped dishes and subsequently brought suit in New Jersey against Douglas Stephens for manufacturing the products.

Later in Sweetheart's rebuttal case, the trial court permitted Sweetheart's president to testify that Sweetheart had complained to Van Brode about the boat- shaped dish it produced, and that Van Brode thereafter stopped producing it. However, the trial judge prohibited Sweetheart from introducing in its rebuttal case evidence of the remedial actions taken by Sweetheart against Douglas Stephens and Formfit because there had been no formal adjudications in those actions.

Subsequently, the court instructed the jury to consider remedial actions taken by Sweetheart against the other manufacturers in determining whether Sweetheart acquiesced in the manufacture of similar dishes by others or abandoned its rights in the designs in question. These comments were reiterated when the district court, at the jury's request, recharged the jury as to Detroit's defenses.

II

The initial question to be decided is whether the district court erred in denying Sweetheart's motion to amend its complaint. Detroit asserts Sweetheart could have included the count for trademark infringement in its complaint as originally filed, or moved to amend its complaint earlier because the words "Banana Boat" had previously appeared in certain documents which Detroit produced at the time it filed its answer and counterclaim. Detroit further contends it would have been unduly prejudiced if Sweetheart had been permitted to add a count for trademark infringement on the first day of trial. ²

Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend a pleading "shall be freely given when justice so requires." The United States Supreme Court has admonished that "this mandate is to be heeded." Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). In Foman v. Davis, the Court stated further,

If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In the absence of any apparent or declared reason--such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.--the leave sought should, as the rules require, be "freely given." Of course, the grant or denial of an opportunity to amend is within the discretion of the District Court, but outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely abuse of that discretion and inconsistent with the spirit of the Federal Rules.

Id. at 182, 83 S.Ct. at 230.

No apparent or declared reason for denial of the motion to amend exists in the instant case. Detroit's assertion that Sweetheart should have included a count for trademark infringement in its complaint as originally filed is without merit. Rule 11 of the Federal Rules of Civil Procedure as it existed at the time Sweetheart's complaint was filed on January 28, 1983 provided in pertinent part:

Every pleading of a party represented by an attorney shall be signed by at least one attorney of record in his individual name, whose address shall be stated ... The signature of an attorney constitutes a certificate by him that he has read the pleading; that to the best of his knowledge, information, and belief there is good ground to support it; and that it is not interposed for delay. ³

Clearly, Sweetheart's counsel could not in good faith have included in his complaint a count for trademark infringement before he was aware of evidence to support such a claim. Such conduct would have violated both the letter and the spirit of Rule 11.

Detroit also asserts that Sweetheart could have moved to amend its complaint earlier because the mark "Banana Boat" appeared on certain documents submitted previously by Detroit. Detroit fails to cite to any evidence in the record which supports this contention. Our review of the record reveals only two documents, a blueprint drawing clearly designed for internal use by Detroit containing the words "Banana Boat Tray," and a letter to the secretary of Detroit from a distributor in which the distributor referred to Detroit's dishes as large and small "Banana Boat[s]." There was no...