Lifshitz v. Walter Drake & Sons, Inc.

Citation806 F.2d 1426
Decision Date30 December 1986
Docket Number85-6130,Nos. 85-6087,s. 85-6087
Parties, 1987 Copr.L.Dec. P 26,042, 7 Fed.R.Serv.3d 16, 1 U.S.P.Q.2d 1254, 22 Fed. R. Evid. Serv. 415 Igor LIFSHITZ, Plaintiff-Appellee, v. WALTER DRAKE & SONS, INC., et al., Defendants, and Etna Products Co., Inc., Defendant-Appellant. Igor LIFSHITZ, Plaintiff-Appellee-Cross-Appellant, v. ETNA PRODUCTS CO., INC., Defendant-Appellant-Cross-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Clinton T. Bailey, Beverly Hills, Cal., for plaintiff-appellee.

Kathryn Tschopik, Los Angeles, Cal., Robert C. Faber, New York City, for defendant-appellant.

Appeal from the United States District Court for the Central District of California.

Before WALLACE, BOOCHEVER and KOZINSKI, Circuit Judges.

WALLACE, Circuit Judge:

Etna Products Co., Inc. (Etna) appeals from the district court's denial of its motion for a judgment notwithstanding the verdict (j.n.o.v.) or for a new trial on Lifshitz's unfair competition claim. Etna also contends that the district court erred in denying its motion for a new trial because of improper instruction to the jury regarding Lifshitz's unfair competition claims, and in improperly excluding certain evidence. Lifshitz cross-appeals from the entry by the district court of a j.n.o.v. on Lifshitz's copyright claim. The district court had jurisdiction under 28 U.S.C. Secs. 1332 and 1338(b). We have jurisdiction pursuant to 28 U.S.C. Sec. 1291, and we affirm.

I

Lifshitz, a native of the Soviet Union who emigrated to the United States in 1975, developed a mechanical device for making hors d'oeuvres that he began marketing to the general public in 1979. By 1981, Lifshitz had also sold his hors d'oeuvre maker to two mail order houses and was seeking to market it to several others, including Walter Drake & Sons, Inc. (Drake). In response to Lifshitz's efforts, Drake requested additional information and a sample of the device. Drake subsequently informed Lifshitz that it intended to include his product in its next catalogue. Ultimately, however, Drake purchased an apparently identical product from Etna and began to market it instead. In the latter part of 1982, Lifshitz learned that this replica was being advertised in Drake's 1982 Christmas catalogue and instituted this action against Etna and Drake, as well as several other mail order companies. The action was subsequently dismissed against all parties except Etna and Drake.

Lifshitz pleaded a wide variety of claims but pretrial motions and dismissals pared the issues substantially. The case was submitted to the jury on claims for trademark infringement, unfair competition, fraud, conspiracy, copyright infringement, and intentional infliction of emotional distress. The jury found in favor of Drake on all claims, and against Etna on only the unfair competition and copyright infringement claims. Etna then moved for a j.n.o.v. and for a new trial. The district court granted Etna's motion for a j.n.o.v. with respect to Lifshitz's copyright claim, but denied it with respect to Lifshitz's unfair competition claim, and denied Etna's motion for a new trial.

Etna appealed the denial of its j.n.o.v. motion with regard to the unfair competition claim and of its motion for a new trial. Lifshitz cross-appealed the j.n.o.v. in favor of Etna on the copyright infringement claim.

II

We treat first Etna's appeal from the district court's denial of its motions for a j.n.o.v. on Lifshitz's unfair competition claims and for a new trial.

In order to bring a motion for j.n.o.v., a party must have moved for a directed verdict at the close of all the evidence. Fed.R.Civ.P. 50(b). The motion Etna filed for a directed verdict after the close of evidence in the trial below requested a directed verdict only on Lifshitz's copyright and trademark claims. It did not address Lifshitz's unfair competition claims. Etna does not dispute this but rather asserts that the requirement of rule 50(b) is satisfied by its pretrial motion in limine for dismissal of Lifshitz's unfair competition claims. Although brought before trial, the district court did not rule on this motion until after further discussions with the parties following the close of evidence.

We observe strictly the threshold requirement for a j.n.o.v. that a motion for a directed verdict must be made at the close of all the evidence. Farley Transportation Co. v. Santa Fe Trail Transportation Co., 786 F.2d 1342, 1346 (9th Cir.1985) (Farley ). The answer to the question before us, however, is determined by identifying what may be considered a sufficient motion for a directed verdict at the close of evidence for purposes of rule 50(b). Id. at 1347. In Bachtel v. Mammoth Bulk Carriers, Ltd., 605 F.2d 438, 441-42 (9th Cir.1979), cert. granted and judgment vacated on other grounds, 451 U.S. 978, 101 S.Ct. 2301, 68 L.Ed.2d 835 (1981), we held that a motion for a directed verdict at the close of plaintiff's evidence coupled with a request after the close of all the evidence for an instruction requiring the jury to return a verdict in the defendant's favor satisfied the requirements of rule 50(b). We stated that "[t]hese procedural steps placed the issue of the sufficiency of the evidence before the court [at the end of the case]." Id. at 441-42. Our inquiry must therefore focus on whether Etna's motion in limine and the subsequent colloquy with and ruling by the district judge following the close of evidence squarely placed the issue of the sufficiency of the evidence before the district court so we can say it was enough like a motion for a directed verdict that it satisfied the requirements of rule 50(b).

How much latitude we have in making this determination is governed by the reasons for the requirement. The motion for a directed verdict required by rule 50(b) as a prerequisite for a j.n.o.v. serves two important purposes. The first is to preserve the sufficiency of the evidence as a question of law. A subsequent motion for a j.n.o.v. will then allow the district court to reexamine its decision not to direct a verdict as a matter of law rather than to engage in an impermissible reexamination of facts found by the jury. Ohio-Sealy Mattress Manufacturing Co. v. Sealy, Inc., 585 F.2d 821, 825 (7th Cir.1978), cert. denied, 440 U.S. 930, 99 S.Ct. 1267, 59 L.Ed.2d 486 (1979). The second purpose of a motion for a directed verdict is to call the claimed deficiency in the evidence to the attention of the court and to opposing counsel at a time when the opposing party is still in a position to correct the deficit. Quinn v. Southwest Wood Products, Inc., 597 F.2d 1018, 1025 (5th Cir.1979). These purposes are served when a party, after the close of evidence and before the commencement of jury deliberations, clearly points out a claimed evidentiary deficiency to court and counsel and makes a request, however denominated, that the court determine the evidence to be insufficient as a matter of law. Id. at 1025; Elliott v. Group Medical & Surgical Service, 714 F.2d 556, 561-62 (5th Cir.1983), cert. denied, 467 U.S. 1215, 104 S.Ct. 2658, 81 L.Ed.2d 364 (1984).

A motion for a directed verdict, however characterized, must "state ... specific grounds." Fed.R.Civ.P. 50(a). A party may secure a j.n.o.v. only "in accordance with his motion for a directed verdict." Fed.R.Civ.P. 50(b). A directed verdict motion can therefore serve as the prerequisite to a j.n.o.v. only if it includes the specific grounds asserted in the j.n.o.v. motion. Bonjorno v. Kaiser Aluminum & Chemical Corp., 752 F.2d 802, 814 (3d Cir.1984) (directed verdict motion contending failure to show injury, improper inclusion of sales outside geographic market in damage calculations, and insufficiency of evidence of price squeeze did not preserve issue of damages based on diminution of going concern value for j.n.o.v. motion), cert. denied, --- U.S. ----, 106 S.Ct. 3284, 91 L.Ed.2d 572 (1986); Sulmeyer v. Coca Cola Co., 515 F.2d 835, 846 (5th Cir.1975) (directed verdict motion covering issues of group boycotts and tying arrangements in antitrust claim did not preserve issue of vertical territorial restrictions), cert. denied, 424 U.S. 934, 96 S.Ct. 1148, 47 L.Ed.2d 341 (1976); 5A Moore's Federal Practice, p 50.08 at 50-74 to 50-75 (1986). If this were not so, the directed verdict motion would not serve its purpose of providing clear notice of claimed evidentiary insufficiencies and of preserving the issue of the sufficiency of the evidence on a particular matter as a question of law. A directed verdict motion questions only the sufficiency of the evidence relevant to the grounds that it cites.

The motion in limine upon which Etna relies states only that the court was "without jurisdiction to entertain the 'common law unfair competition' claims" raised by Lifshitz because "California law does not prohibit copying under its unfair competition statutes." Etna's counsel subsequently stated to the court that this motion related only to unfair competition based on copying and misappropriation. The exchange between Etna's counsel and the district judge following the close of evidence is similarly limited to the issue of whether evidence of copying alone could make out a claim for unfair competition--an issue which the district judge treated as a mixed question of law and fact. At this time, Etna also proposed a single jury instruction on unfair competition that related solely to whether copying alone could constitute unfair competition.

Much of Lifshitz's argument at trial focused on this "unfair" or "fraudulent" copying theory. This was not the only unfair competition theory before the court, however. Lifshitz's amended complaint asserts not only that Etna and Drake had copied his product, but also that Lifshitz's product had acquired secondary meaning "among the trade and with consumers generally" and that subsequent sales by Etna and Drake of an identical...

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