Bauer Lamp Co., Inc. v. Shaffer

• Citation: 941 F.2d 1165
• Decision Date: 12 September 1991
• Docket Number: No. 89-6209,89-6209
• Parties: BAUER LAMP CO., INC., Plaintiff-Appellee, v. Martin SHAFFER, Howard Levi, Shaffer & Levi, Inc., a Florida Corp., Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1165

941 F.2d 1165

20 U.S.P.Q.2d 1128

BAUER LAMP CO., INC., Plaintiff-Appellee, v. Martin SHAFFER, Howard Levi, Shaffer & Levi, Inc., a Florida Corp., Defendants-Appellants.

No. 89-6209.

United States Court of Appeals Eleventh Circuit.

Sept. 12, 1991.

Harvie S. Duval, Louis C. Arslanian, Greenfield & Duval, North Miami, Fla., for defendants-appellants.

Edward M. Joffe, Sandler, Travis & Rosenberg, P.A., Miami, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before TJOFLAT, Chief Judge, DUBINA, Circuit Judge, and HENDERSON, Senior Circuit Judge.

PER CURIAM:

Martin Shaffer, Howard Levi and Shaffer & Levi, Inc. appeal from the judgment of the United States District Court for the Southern District of Florida based on a jury verdict finding them jointly and severally liable for damages arising out of two counts of trade dress infringement and one count of tortious interference of business relations. The focus of the appeal is the denial by the district court of their motions for a directed verdict or a judgment notwithstanding the verdicts on these three counts. Finding no error, we affirm.

On August 7, 1986, Bauer Lamp Co., Inc. (Bauer) filed a complaint against Shaffer, Levi and their company Shaffer and Levi, Inc. ¹ and also against two other companies, Sunset Lamp Corp. d/b/a Richards Manufacturing Company and Visual Effects, Inc., which eventually settled before trial and are not parties to this appeal. Counts I and II sought injunctive relief and damages for trade dress infringement pursuant to the provisions of 15 U.S.C. § 1125(a) (hereinafter § 43(a) of the Lanham Act). ² These two counts were based on defendants efforts to retain Richards Manufacturing Company and Visual Effects, Inc., to manufacture lamps that were identical to Bauer's neo-classic line of lamps. Count III sought damages for slander. Count IV claimed dilution of trademark under Fla.Stat.Ann. section 495.151 ³ and sections 501.201-501.213 ⁴ (West 1982). In Count V, Bauer charged tortious interference with business relationships and Count VI alleged misappropriation of trade secrets. ⁵

Trial commenced on June 27, 1988. At the close of the evidence, the district court directed a verdict in favor of the defendants on Counts IV and VI. On July 6, 1988, the jury returned a verdict in favor of plaintiffs on Counts I, II, III, and V. The jury was provided with a verdict form for each count containing interrogatories to enable the jurors to precisely apportion liability and damages. The jury found the defendants jointly and severely liable on Count I for trade dress infringement, growing out of the defendants' involvement with Richards Manufacturing Company, and awarded damages in the amount of $16,000.00. As a result of defendants' association with Visual Effects, Inc., the jury found the defendants jointly and severely liable on Count II and assessed damages at $16,900.00. On Count III, the slander count against the individual defendants, the jury returned a verdict against Shaffer only, imposed no actual damages and $1.00 in punitive damages. On Count V, the claim for tortious interference with business relationships, the jury found the defendants jointly and severely liable but found no compensatory damages. However it did award $60,000.00 in punitive damages against each of the three defendants for a total of $180,000.00.

On July 12, 1988, the court entered its final judgment based on the jury verdicts. On July 22, 1988, the defendants filed motions for judgment notwithstanding the verdict. Over a year later, on October 27, 1989, the district court denied both of these motions. Notice of appeal was filed on November 17, 1989.

The suit arose out of a disagreement between Bauer Lamp Company, Inc., and Shaffer and Levi, who through their company, Shaffer and Levi, Inc., served as Bauer's exclusive sales representative in Florida. After a seven-year business relationship, Bauer terminated this association in 1984 because Bauer believed that Shaffer and Levi had falsified orders and financial records involving their business transactions. At the same time Bauer also learned that Shaffer and Levi were representing other home furnishing companies and, as a result, were unable to adequately service its account.

The termination of the relationship was not amicable and consequently caused hard feelings between the parties. Shaffer told Eric Bauer, the president of Bauer Lamp Company, Inc., that he felt that he and his partner had received a "royal screwing" and that he was going to even the score. R7-38. To accomplish this purpose, Shaffer planned to copy Bauer's lamps and sell them at a lower price in an effort to put the company out of business.

At the Dallas Home Furnishing Show in July, 1984, words were exchanged between Eric Bauer and Shaffer and Levi, sometimes in front of prospective clients, which gave rise to the slander count. Shaffer repeated his scheme to drive Bauer out of business to numerous clients. He specifically revealed his strategy to manufacture replicas of Bauer's new line of neo-classic lamps and sell them at a lower price.

In August, 1984, Shaffer and Levi once again encountered Eric Bauer at a home furnishing show in Miami. Shaffer and Levi had rented space along with two other companies, Visual Effects, Inc. and Richards Manufacturing Company, to solicit orders for their lamps. The floor models were actually lamps manufactured by Bauer Lamp Company. Again, the defendants made derogatory remarks about the plaintiff. Eric Bauer did not become aware that the defendants were producing the infringing lamps until July 1, 1986, when a customer showed him the sales literature used by Shaffer and Levi to promote the lamps manufactured by Visual Effects, Inc. and Richards Manufacturing Company. The lamps in the promotional literature looked exactly like the Bauer lamps. After the filing of this lawsuit, both Richards Manufacturing Company and Visual Effects, Inc. consented to a permanent injunction to cease the manufacture and sale of the infringing lamps.

Shaffer, Levi and Shaffer & Levi, Inc., essentially allege three grounds of error. In the first two, Shaffer and Levi urge that the district court erred in denying their motions for a directed verdict or a judgment notwithstanding the verdict on the trade dress counts. As to Count V, the count alleging tortious interference with business relationships, the defendants take the position that the jury's verdict contradicted the applicable law because it awarded punitive damages without first finding any compensatory damages. Shaffer does not appeal the jury verdict finding him liable for slander.

In their appeal from the denial of their motions for a judgment not withstanding the verdict on Counts I and II, the trade dress infringement counts, the defendants argue that (1) Bauer failed to prove that its lamps had developed a secondary meaning to the general consumer; (2) the district court erred by instructing the jury that trade dress infringement could be redressed under § 43(a) of the Lanham Act; (3) even if Bauer could prove that its lamps were distinctive, thus, negating the requirement to prove secondary meaning, the court erroneously denied them the right to introduce evidence that the Copyright Office had refused to register Bauer's lamps as a copyrighted design; (4) the court erred in allowing the plaintiff to proceed on a theory of contributory infringement since the other infringers had consented to an injunction; (5) the finding by the jury of the likelihood of confusion was not supported by the evidence; and (6) the evidence neither supports the verdicts nor the award of damages on Counts I and II. Their challenge to the award of punitive damages on the tortious interference claim (Count V) is premised on their contention that punitive damages are not recoverable under Florida law because there was no award of compensatory damages.

The standard of review for granting a motion for a directed verdict or a judgment notwithstanding the verdict is the same as that of the district court. When considering such a motion, the court must view the evidence in the light most favorable to the mon-moving party. Castle v. Sangamo Weston, Inc., 837 F.2d 1550, 1558 (11th Cir.1988). After viewing the evidence as such, the motion should be denied where there exist substantial evidence over which reasonable persons could differ. Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969). The application of the law to the facts by the judge or jury is reviewed de novo. United States v. Forker, 928 F.2d 365 (11th Cir.1991). Allegations of error in ruling on an evidentiary matter is subject to an abuse of discretion standard. Jones v. Automobile Ins. Co. of Hartford Conn., 917 F.2d 1528, 1537 (11th Cir.1990).

This court has recognized a cause of action under § 43(a) of the Lanham Act for trade dress infringement. Original Appalachian Artworks, Inc. v. Toy Loft, Inc., 684 F.2d 821 (11th Cir.1982). "Trade dress" is defined as "the total image of a product and may include features such as size, shape, color or color combinations, texture, graphics, or even particular sales techniques." AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531, 1535 (11th Cir.1986). Also, the principle inquiry in infringement cases is the likelihood of confusion between the alleged infringer's product or mark and that of the plaintiff's. J. Thomas McCarthy, TRADEMARKS AND UNFAIR COMPETITION § 23:1 (2d ed. 1984).

In order to establish trade dress infringement, three elements must be proved. First, the plaintiff must show that the product is distinctive or has developed a secondary meaning; second, that the features in question are nonfunctional and third, that the resemblance between the two products is confusingly similar. AmBrit, 812 F.2d at 1535. Since each element is fact sensitive, we cannot reverse the jury verdict "absent clear...