B&B Hardware, Inc. v. Hargis Indus., Inc.

• Decision Date: 21 December 2018
• Docket Number: No. 17-1570, No. 17-1755,17-1570
• Parties: B&B HARDWARE, INC., a California Corporation, Plaintiff - Appellant v. HARGIS INDUSTRIES, INC., a Texas Corporation, doing business as East Texas Fasteners, doing business as Sealtite Building Fasteners, Defendant - Appellee East Texas Fasteners, a business entity of form unknown; Does, 1 through 10, inclusive, Defendants B&B Hardware, Inc., a California Corporation, Plaintiff - Appellee v. Hargis Industries, Inc., a Texas Corporation, doing business as East Texas Fasteners, doing business as Sealtite Building Fasteners, Defendant - Appellant East Texas Fasteners, a business entity of form unknown; Does, 1 through 10, inclusive, Defendants
• Court: U.S. Court of Appeals — Eighth Circuit

912 F.3d 445

B&B HARDWARE, INC., a California Corporation, Plaintiff - Appellant

v.HARGIS INDUSTRIES, INC., a Texas Corporation, doing business as East Texas Fasteners, doing business as Sealtite Building Fasteners, Defendant - Appellee

East Texas Fasteners, a business entity of form unknown; Does, 1 through 10, inclusive, Defendants

B&B Hardware, Inc., a California Corporation, Plaintiff - Appellee

v.Hargis Industries, Inc., a Texas Corporation, doing business as East Texas Fasteners, doing business as Sealtite Building Fasteners, Defendant - Appellant

East Texas Fasteners, a business entity of form unknown; Does, 1 through 10, inclusive, Defendants

No. 17-1570

No. 17-1755

United States Court of Appeals, Eighth Circuit.

Submitted: September 26, 2018

Filed: December 21, 2018

Rehearing and Rehearing En Banc Denied February 6, 2019

Counsel who presented argument on behalf of the appellant was Timothy James Cullen, of Little Rock, AR.

Counsel who presented argument on behalf of the appellee was Colleen E. Roh Sinzdak, of Washington, DC. The following attorney(s) appeared on the appellee brief; Trey Yarbrough, of Tyler, TX., Neal Katyal, of Washington, DC., Alexander Biays Bowerman, of Philadelphia, PA.

Before LOKEN, BENTON, and SHEPHERD, Circuit Judges.

SHEPHERD, Circuit Judge.

B&B Hardware, Inc. appeals the district court’s¹ judgment in favor of Hargis Industries, Inc. on B&B’s claim of trademark infringement and request for an accounting of profits. Hargis cross-appeals from the district court’s denial of its motion for fees and costs. We have jurisdiction pursuant to 28 U.S.C. § 1291. For the reasons set forth in this opinion, we affirm on all claims.

I.

Although we relate the circumstances underlying this case in great detail in our prior opinions concerning these parties, B&B Hardware, Inc. v. Hargis Indus., Inc. (Hargis V ), 716 F.3d 1020 (8th Cir. 2013) ; B&B Hardware, Inc. v. Hargis Indus., Inc. (Hargis III ), 569 F.3d 383 (8th Cir. 2009) ; B&B Hardware, Inc. v. Hargis Indus., Inc. (Hargis I ), 252 F.3d 1010 (8th Cir. 2001), Justice Alito has succinctly summarized the factual origins of this case and provides apt commentary:

Petitioner B & B and respondent Hargis both manufacture metal fasteners. B & B manufactures fasteners for the aerospace industry, while Hargis manufactures fasteners for use in the construction trade. Although there are obvious differences between space shuttles and A-frame buildings, both aerospace and construction engineers prefer fasteners that seal things tightly. Accordingly, both B & B and Hargis want their wares associated with tight seals. A feud of nearly two decades has sprung from this seemingly commonplace set of facts.

In 1993 B & B registered SEALTIGHT for "threaded or unthreaded metal fasteners and other related hardwar[e]; namely, self-sealing nuts, bolts, screws, rivets and washers, all having a captive o-ring, for use in the aerospace industry." In 1996, Hargis sought to register SEALTITE for "self-piercing and self-drilling metal screws for use in the manufacture of metal and post-frame buildings." B & B opposed Hargis’ registration because, although the two companies sell different products, it believes that SEALTITE is confusingly similar to SEALTIGHT.

The twists and turns in the SEALTIGHT versus SEALTITE controversy are labyrinthine. The question whether either of these marks should be registered, and if so, which one, has bounced around within the [Patent and Trademark Office] for about two decades; related infringement litigation has been before the Eighth Circuit three times; and two separate juries have been empaneled and returned verdicts. The full story could fill a long, unhappy book.

B&B Hardware, Inc. v. Hargis Indus., Inc. (Hargis VI ), 135 S. Ct. 1293, 1301 (2015) (first alteration in original) (citations omitted).

In B&B’s trademark infringement action against Hargis in May 2000, a jury found that B&B’s "Sealtight" mark was not entitled to protection because it lacked secondary meaning. We affirmed. Hargis I, 252 F.3d at 1011. In June 2006, B&B filed for incontestability status for its trademark with the Patent and Trademark Office (PTO). The PTO issued a Notice of Acknowledgment in September 2006, concluding that B&B’s affidavit of incontestability met the statutory requirements. Incontestability provided B&B with a presumption that its "Sealtight" mark carried secondary meaning. This constituted a significant intervening factual change from the 2000 jury trial, which resulted in the finding that "Sealtight" was merely descriptive, and B&B could thus escape the collateral estoppel bar that the 2000 jury verdict imposed on the issue of secondary meaning. See Hargis III, 569 F.3d at 388.

Immediately after its 2006 filing for incontestability, B&B brought suit against Hargis again for trademark infringement, unfair competition, trademark dilution, and false designation of origin. The case currently before us arises out of this second suit. However, only the period between June 2006, when B&B overcame collateral estoppel by filing for incontestability, see Dist. Ct. Dkt. 422; see also Hargis III, 569 F.3d at 388-89, and October 2013, when B&B allowed its trademark registration to expire and therefore no longer had statutory rights in that trademark, is at issue here.

The district court initially dismissed B&B’s new suit on collateral estoppel grounds. B&B Hardware, Inc. v. Hargis Indus., Inc. (Hargis II ), No. 4:06CV01654 SWW, 2007 WL 2711647, at *12-13 (E.D. Ark. Sept. 13, 2007). B&B appealed and this Court reversed and remanded, finding that incontestability was a significant factual change precluding application of collateral estoppel. Hargis III, 569 F.3d at 389-90. The district court then conducted a jury trial and the jury found against B&B on all claims. B&B Hardware, Inc. v. Hargis Indus., Inc. (Hargis IV ), 736 F. Supp. 2d 1212, 1214 (E.D. Ark. 2010). B&B again appealed to this Court, which upheld the jury’s verdict. Hargis V, 716 F.3d at 1022. B&B then appealed to the Supreme Court of the United States, which found that the district court should have given preclusive effect to a decision of the Trademark Trial and Appeal Board (TTAB) finding that there was a likelihood of confusion between "Sealtight" and "Sealtite." Hargis VI, 135 S. Ct. at 1299. The Supreme Court remanded the case for further proceedings.

We subsequently vacated the district court’s judgment and remanded. B&B Hardware, Inc. v. Hargis Indus., Inc. (Hargis VII ), 800 F.3d 427, 427 (8th Cir. 2015) (per curiam). Following our remand, the case proceeded in the district court on B&B’s claim that Hargis committed trademark infringement under the Lanham Act, false designation of origin, and unfair competition. B&B sought disgorgement of Hargis’s profits beginning in June 2006.

Hargis counterclaimed for false advertising and false designation of origin. A five-day jury trial ensued.

At trial, Hargis argued that B&B obtained its incontestability status through fraud, presenting evidence that B&B failed to inform the PTO about the 2000 jury verdict that B&B’s "Sealtight" mark was merely descriptive. Hargis also presented evidence that all of its profits stemmed from its personal relationships with its customers, exemplary customer service, and the quality of its products, rather than the "Sealtite" name.

At the close of evidence, B&B moved for judgment as a matter of law on Hargis’s counterclaims but failed to do so on its own claims. The jury found that Hargis infringed on B&B’s trademark but did not do so willfully, awarded B&B none of Hargis’s profits, and found for Hargis on its counterclaims and its affirmative defense of fraud. Based on the jury’s fraud finding, the district court found that "Sealtight" was not entitled to incontestability status, and that B&B therefore had not pled an intervening change in circumstances allowing it to relitigate claims raised in the 2000 jury trial. The district court therefore entered judgment for Hargis on all claims.

In determining that B&B was not entitled to any of Hargis’s profits, the district court recognized that, under 15 U.S.C. § 1117(a), it retained discretion to reduce or increase the jury’s profit award or to award profits itself. See Masters v. UHS of Del., Inc., 631 F.3d 464, 474-75 (8th Cir. 2011). Rather than basing its ruling solely on the jury’s refusal to award profits, it treated that refusal as advisory, considering it together with the six factors used by the Third, Fourth, and Fifth Circuits in balancing the equities. See, e.g., Synergistic Int’l, LLC v. Korman, 470 F.3d 162, 175 (4th Cir. 2006). The district court concluded that, because B&B did not lose sales, Hargis did not represent that its products were B&B’s products, and Hargis’s infringement was not willful, it would be inequitable to award B&B any of Hargis’s profits. It therefore refused to disgorge Hargis of its profits.

Hargis then filed a motion seeking attorneys’ fees, nontaxable litigation costs, and an injunction as sanctions against B&B. The district court awarded Hargis taxable litigation costs but otherwise denied Hargis’s motion, finding that protracted litigation, on its own, does not make a case an exceptional case justifying fee-shifting under the Lanham Act.

B&B appeals to this Court, arguing (1) the jury verdict finding fraud and a lack of willfulness was clearly erroneous; and (2) the district court abused its discretion in refusing to disgorge Hargis of its profits. On cross-appeal, Hargis argues that the district court abused its discretion in denying Hargis’s motion for fees and costs.

II.

B&B challenges the jury’s fraud finding, arguing that the verdict was not supported by sufficient evidence. Because B&B failed to file a Rule 50(b) motion as to the sufficiency of the evidence at the close of evidence, "our review is strictly limited. We cannot test the sufficiency of the evidence to support the jury’s verdict beyond application of the ‘plain error’ doctrine in...