Oreck Corp. v. U.S. Floor Systems, Inc.

• Decision Date: 24 October 1986
• Docket Number: No. 85-3297,85-3297
• Citation: 803 F.2d 166,231 USPQ 634
• Parties: ORECK CORPORATION, Plaintiff-Appellee Cross-Appellant, v. U.S. FLOOR SYSTEMS, INC., Defendant-Appellant Cross-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 166

803 F.2d 166

231 U.S.P.Q. 634

ORECK CORPORATION, Plaintiff-Appellee Cross-Appellant, v. U.S. FLOOR SYSTEMS, INC., Defendant-Appellant Cross-Appellee.

No. 85-3297.

United States Court of Appeals Fifth Circuit.

Oct. 24, 1986.

Rehearing and Rehearing En Banc Denied Dec. 10, 1986.

Larry L. Coats, Raleigh, N.C., Keaty & Keaty, Thomas S. Keaty, David M. Kelly, New Orleans, La., for U.S. Floor Systems, Inc.

Paul T. Meiklejohn, Hopgood, Calimafda, Kalil, Blaustein & Judlowe, Michael W. Ferrell, New York City, Liskow & Lewis, George W. Pugh, Jr., New Orleans, La., for Oreck Corp.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before GARWOOD and HILL, Circuit Judges, and WILL ^*, Senior District Judge.

WILL, Senior District Judge:

In this action for trademark infringement under the Lanham Act, 15 U.S.C. Secs. 1051, et seq., a jury found for the plaintiff Oreck Corporation ("Oreck") and against the defendant U.S. Floor Systems, Inc. ("U.S. Floor"). On appeal and cross-appeal the parties raise numerous issues, only two of which we must decide: (1) whether U.S. Floor had sufficient contacts with the state of Louisiana to be subject to the jurisdiction of a district court located in Louisiana, and (2) whether there is sufficient evidence to support the jury's finding that U.S. Floor's use of Oreck's "XL" trademark resulted in a likelihood of confusion. We conclude that U.S. Floor was subject to personal jurisdiction in the Louisiana district court, but that the jury verdict is not supported by the evidence. Accordingly, we reverse.

I.

U.S. Floor manufactures a line of carpet cleaning equipment known as extraction machines under the federally registered trademark "STEAMEX." STEAMEX models are identified by series (e.g., "PRO" or "DELUXE") and capacity (e.g., 10 for 10 gallons). Thus, a ten gallon carpet extraction machine in the PRO series is known as the "STEAMEX PRO 10," and a fifteen gallon machine in the DELUXE series is known as the "STEAMEX DELUXE 15."

In 1982, U.S. Floor introduced an upgraded fifteen gallon machine and designated it the "STEAMEX DELUXE 15 XL." This model was similar to U.S. Floor's existing fifteen gallon unit but included an extra blower and a high pressure pump. According to U.S. Floor, the suffix "XL" was arbitrarily chosen to distinguish the upgraded model from the existing "STEAMEX DELUXE 15."

Oreck produces floor care equipment under the federally registered trademarks "XL" and "ORECK XL." Each of these marks has acquired incontestable status under 15 U.S.C. Sec. 1065. Oreck's product line includes vacuum cleaners and rug shampooers but no extraction machines. Each year Oreck spends millions of dollars advertising its products under the XL mark in trade journals, general interest periodicals, and at trade fairs. U.S. Floor also advertised the STEAMEX DELUXE 15 XL, and in some instances it promoted its product in the same trade journals and at the same trade fairs as Oreck. Reproduced below are examples of a typical Oreck advertisement (Fig. 1) and an advertisement for the STEAMEX DELUXE 15 XL (Fig. 2).

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Figure 1.

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Figure 2. (Except for differences in price terms, this is the only advertisements for the STEAMEX DELUXE 15 XL in the record).

U.S. Floor began marketing the STEAMEX DELUXE 15 XL in October, 1982. On September 30, 1983, Oreck wrote to U.S. Floor and demanded that it cease using the XL mark. Although U.S. Floor's counsel took the position that no infringement had occurred because U.S. Floor was using XL as a model designation rather than as a trademark. U.S. Floor offered to phase out the use of XL by April 15, 1984. At first, U.S. Floor proposed to change its designation by adding an "S," making it the "STEAMEX DELUXE 15 XLS." Oreck rejected this proposal. By May 1, 1984, U.S. Floor had ceased using XL and was marketing its upgraded fifteen gallon model as the "STEAMEX DELUXE 15 X2." Nevertheless, Oreck filed this lawsuit on May 9, 1984, alleging trademark infringement, false designation of origin, and unfair competition.

The jury, concluding that U.S. Floor's use of "XL" was "likely to cause confusion, or to cause mistake, or to deceive," 15 U.S.C. Sec. 1114(1), found for Oreck and awarded damages of $20,000. Subsequently, the district court denied U.S. Floor's motions for judgment n.o.v. and to dismiss for lack of personal jurisdiction, and also denied Oreck's motions for an injunction, increased damages, and attorney's fees. U.S. Floor appealed and Oreck cross-appealed.

II.

U.S. Floor contends that it was not subject to personal jurisdiction in the district court under the Louisiana longarm statute. La.R.S. 13:3201. The statute provides in part that a court

may exercise personal jurisdiction over a nonresident, who acts directly or by an agent, as to a cause of action arising from any one of the following activities performed by the nonresident: (1) Transacting any business in this state.... (3) Causing injury or damage by an offense or quasi-offense committed through an act or omission in this state.

Alternatively, U.S. Floor argues that it did not have the requisite "minimum contacts" with Louisiana to satisfy the due process clause. Due process requires that a defendant have such minimum contacts with the forum state that "the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945).

U.S. Floor makes much of the fact that no STEAMEX DELUXE 15 XL machine ever was sent into Louisiana. While one XL machine was billed to a distributor in Louisiana and shipped to a customer in Mississippi, U.S. Floor asserts that this is not the sort of purposeful or consistent business activity that would subject it to the jurisdiction of the Louisiana courts.

U.S. Floor misstates the issue, however. The fact is that U.S. Floor did considerably more than mail a single invoice into Louisiana. As the district court noted, U.S. Floor had at least two distributors in Louisiana who presumably received the price lists U.S. Floor sent to its distributors on a regular basis. These price lists, as shown in the record, included the STEAMEX DELUXE 15 XL. Moreover, U.S. Floor placed ads for the XL model in nationally-distributed trade magazines. From this evidence it is clear that U.S. Floor "sought to serve a national market" and "made no attempt to limit the states in which its product was marketed." Vault Corp. v. Quaid Software, Ltd., 775 F.2d 638, 640 (5th Cir.1985).

Additionally, U.S. Floor engaged in substantial business activity in Louisiana that was not directly related to its promotion of the STEAMEX DELUXE 15 XL. The record shows that from March 1, 1983 through August 31, 1984, U.S. Floor billed its two Louisiana distributors and five other Louisiana customers for over $20,000 in sales. U.S. Floor also placed numerous ads for non-XL products in trade magazines distributed in Louisiana.

According to U.S. Floor, those of its business activities that were not directly related to use of the offending mark are not relevant for purposes of the Louisiana long-arm statute. We disagree. Though it is true that in some respects the long-arm statute is more restrictive than federal due process, requiring a showing of some connection between the business transacted in Louisiana and the cause of action, Farnham v. Bristow Helicopters, Inc., 776 F.2d 535, 537 (5th Cir.1985), this is not a case in which the defendant's activities in the forum have no relationship to the plaintiff's claim. As indicated, U.S. Floor promoted the STEAMEX DELUXE 15 XL in Louisiana through its distributors and through nationally distributed trade journals. Moreover, the promotion and sales of U.S. Floor's other products in Louisiana was still the same sort of business conduct that gave rise to Oreck's trademark claims.

By contrast, Farnham and the Louisiana cases on which it relied all were suits against out-of-state defendants for personal injuries that in no sense related to the defendants' Louisiana business activities. See Farnham, 776 F.2d 535 (wrongful death suit arising out of helicopter crash in Indonesia); Robinson v. Vanguard Ins. Co., 468 So.2d 1360 (La.Ct.App. 1st Cir.1985) (suits for property damage, wrongful death, and survival arising out of airplane crash in Mississippi); Alba v. Riviere, 457 So.2d 33 (La.Ct.App. 4th Cir.1984) (suit for personal injuries suffered in Belize). The same is true of a recent, post-Farnham Louisiana case, Drago v. Home Ins. Co., 486 So.2d 940 (La.Ct.App. 1st Cir.1986) ("slip and fall" in Canada). Considering U.S. Floor's sales and promotional activities in Louisiana as a whole, we think it clear that jurisdiction was proper under the Louisiana long-arm statute.

U.S. Floor also had sufficient contacts with the state of Louisiana to satisfy the requirements of the due process clause. It purposefully entered the Louisiana marketplace and sought the benefits of doing business there. In fairness, it should have expected to be subject to the jurisdiction of the Louisiana courts. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Accordingly, we conclude that the district court properly denied U.S. Floor's motion to dismiss for lack of personal jurisdiction.

III.

The next question is whether the jury verdict is supported by the evidence. The verdict must be upheld "unless the facts and inferences point so strongly and so overwhelmingly in favor of one party that reasonable persons could not arrive at a contrary verdict." Conan Properties, Inc. v. Conans Pizza, Inc., 752 F.2d 145, 149 (5th Cir.1985). In other words, we must determine "whether the jury had before it any competent and substantial evidence that fairly supports the...