Clearline Techs. Ltd. v. Cooper B-Line, Inc.

• Decision Date: 03 June 2013
• Docket Number: Civil Action No. H–11–1420.
• Citation: 948 F.Supp.2d 691
• Parties: CLEARLINE TECHNOLOGIES LTD., Plaintiff, v. COOPER B–LINE, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

948 F.Supp.2d 691

CLEARLINE TECHNOLOGIES LTD., Plaintiff,

v.COOPER B–LINE, INC., et al., Defendants.

Civil Action No. H–11–1420.

United States District Court,

S.D. Texas,

Houston Division.

June 3, 2013.

Martin E. Rose, Alex Joseph Whitman, Michael Ross Cunningham, Thomas Copeland Wright, Rose Walker LLP, Jon Bentley Hyland, Munsch Hardt Kopf and Harr, Robert D. Katz, Katz PLLC, Dallas, TX, for Plaintiff.

John Lee Dagley, Robin L. Harrison, John Lee Dagley, Campbell Harrison et al., Houston, TX, Mitchell Craig Chaney, Colvin Chaney Saenz & Rodriguez LLP, Brownsville, TX, Richard Phillips Hogan, Jr., Hogan Hogan LLP, Houston, TX, for Defendants.

MEMORANDUM AND ORDER

KEITH P. ELLISON, District Judge.

Pending before the Court are the following motions:

1) Clearline Technologies, Ltd.'s (“Clearline” or “Plaintiff”) Motion for Pleading Amendment (Doc. No. 159);

2) Cooper B–Line Inc.'s (“Cooper”) Renewed Motion for Judgment as a Matter of Law (“JMOL”) (Doc. No. 161);

3) Clearline's Renewed Motion for JMOL (Doc. No. 160);

4) Clearline's Motion for Enhanced Damages (Doc. No. 156);

5) Clearline's Motion for Supplemental Actual and Enhanced Damages (Doc. No. 184);

6)Clearline's Motion for Award of Interest (Doc. No. 155);

7)Clearline's Motion for Permanent Injunction (Doc. No. 157); and

8) Clearline's Motion for Attorney's Fees and Costs (Doc. Nos. 158).

Upon considering the Motions, all responses thereto, the applicable law, and oral arguments, the Court finds that:

1) Clearline's Motion for Pleading Amendment must be DENIED;

2) Cooper's Renewed Motion for JMOL must be DENIED;

3) Clearline's Renewed Motion for JMOL must be DENIED;

4) Clearline's Motion for Enhanced Damages must be DENIED;

5) Clearline's Motion for Supplemental Actual and Enhanced Damages must be GRANTED IN PART AND DENIED IN PART WITHOUT PREJUDICE TO REFILING;

6) Clearline's Motion for Award of Interest must be GRANTED IN PART AND DENIED IN PART;

7) Clearline's Motion for Permanent Injunction must be GRANTED IN PART AND DENIED IN PART; 8) Clearline's Motion for Attorney's Fees and Costs must be DENIED.

I. BACKGROUND

This case involves claims of trade dress and trademark infringement. Clearline contends that Cooper's DURA–BLOK™ rooftop support products infringe on its C–PORT® products. At trial, Clearline argued that Cooper infringed on two aspects of its trade dress: a yellow reflective stripe and a yellow and black color scheme. It also argued the Cooper infringed on Clearline's C–PORT® trademark by using it in the meta-tags on Cooper's website and in a tradeshow catalog.

The jury returned a split verdict. (Doc. No. 151.) With regard to Clearline's trade dress claims, the jury found that the use of reflective yellow striping was not non-functional, and did not create a likelihood of confusion as to the source, affiliation, or sponsorship of Cooper's product, two independent reasons for finding no trade dress infringement as to the yellow reflective stripe. ( Id. at 2, 4.) As to the yellow and black color scheme, the jury determined that the color scheme was non-functional, had acquired a secondary meaning, and created a likelihood of confusion as to the source, affiliation, or sponsorship of Cooper's product. ( Id. at 2–4.) These conclusions constitute a finding of trade dress infringement as to use of the yellow and black color scheme. Furthermore, the jury concluded that Cooper's actions relating to its trade dress infringement were done willfully. ( Id. at 5.) It awarded Clearline $2,660,000 in lost profits, and $3,200,000 in profit disgorgement damages for Cooper's trade dress infringement. ( Id. at 6–7.)

As to Clearline's trademark infringement claims, the jury found that Cooper's use of the C–PORT® trademark in meta-tags on its website did not create a likelihood of confusion as to the source, affiliation, or sponsorship of Cooper's product. ( Id. at 8.) It found that Cooper's use of the C–PORT® trademark in a tradeshow catalog, however, did create a likelihood of confusion as to the source, affiliation, or sponsorship of Cooper's product, a finding that was sufficient to find trademark infringement, as none of the other elements of a trademark infringement claim were contested. ( Id.) Nonetheless, the jury concluded that this trademark infringement did not entitle Clearline to any amount of lost profits or profit disgorgement. ( Id. at 10–11.)

Both parties have now filed numerous post-trial motions. The Court will first turn to Clearline's Motion for Pleading Amendment. It will then address the motions for JMOL filed by both sides. Finally, the Court will address the motions regarding remedies, starting with damages.

II. PLEADING AMENDMENTA. Legal Standard

Rule 15(b) provides in relevant part:

When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.... [F]ailure so to amend [the pleadings] does not affect the result of the trial of these issues.

Fed.R.Civ.P. 15(b). “The purpose of the rule is to allow the course of the trial, rather than the formal pleadings, to control the outcome.” Flannery v. Carroll, 676 F.2d 126, 131 (5th Cir.1982). However, “it is not often that amendments are allowed after the close of evidence, since the opposing party may be deprived of a fair opportunity to defend and to offer any additional evidence.” Triad Elec. & Controls, Inc. v. Power Sys. Eng'g, Inc., 117 F.3d 180, 193–94 (5th Cir.1997) (citing T.J. Stevenson & Co., Inc. v. 81,193 Bags of Flour, 629 F.2d 338, 370 (5th Cir.1980)) (emphasis in original). Accordingly, “trial of unpled issues by implied consent is not lightly to be inferred under Rule 15(b), [and] such inferences are to be viewed on a case-by-case basis and in light of the notice demands of procedural due process.” Triad, 117 F.3d at 193–94 (citing Jimenez v. Tuna Vessel Granada, 652 F.2d 415, 422 (5th Cir.1981)).

“[T]rial by implied consent turns on: whether the parties recognized that the unpleaded issue entered the case at trial, whether the evidence that supports the unpleaded issue was introduced at trial without objection, and whether a finding of trial by consent prejudiced the opposing party's opportunity to respond.” Portis v. First Nat'l Bank of New Albany, 34 F.3d 325, 332 (5th Cir.1994) (citing United States v. Shanbaum, 10 F.3d 305, 312–13 (5th Cir.1994)). A party does not consent to try “a new issue by introducing evidence or failing to object to evidence when the evidence is relevant to pleaded issues in the case.” Moody v. FMC Corp., 995 F.2d 63, 66 (5th Cir.1993) (citing Jimenez, 652 F.2d at 422;Int'l Harvester Credit Corp. v. E. Coast Truck, 547 F.2d 888, 890 (5th Cir.1977)).

B. Analysis

Clearline seeks leave to amend its complaint to add a claim that Cooper used its C–PORT® trademark in its internet website code. (Doc. No. 159–1 at 2.) Plaintiff's live complaint alleges only that Cooper used Clearline's trademark in its meta-tags, a specific type of code. (Doc. No. 67 at 39.) Prior to trial, the parties filed a joint pre-trial order indicating that the parties disagreed as to the level of specificity with which the trademark infringement question ought to be posed to the jury. ( Compare Doc. No. 128–8 at 27 with Doc. No. 128–9 at 15.) Clearline requested a broad question on the verdict form, asking whether Clearline had proven by a preponderance of the evidence that Cooper infringed on Clearline's trademark. (Doc. No. 128–8 at 27.) Cooper requested more granular questions on the verdict form. With regard to the allegations of trademark infringement on Cooper's website, Cooper requested the jury be asked specifically whether Cooper's use of Clearline's trademark in its meta-tags was infringing. (Doc. No. 128–9 at 15.) ¹ The Court, upon reviewing the competing jury instructions and the live pleadings, and after hearing arguments on the jury charge, agreed with Cooper that the charge and the verdict form should limit the trademark infringement claim to use of the C–PORT® trademark in meta-tags. ( See Doc. No. 161–1, Ex. A at 11, Doc. No. 161–2 at 8.)

At trial, the jury heard evidence that Cooper used the C–PORT® trademark in its alt-tags, a code distinct from meta-tags. (Trial Tr. 181:18–184:24; 804:18–22; 921:7–13, 921:22–922:8, 926:25–927:3, 934:6–936:9; 957:14–21; 1097:16–1099:22.) Some of this evidence was presented by Cooper to rebut Clearline's allegations that the C–PORT® mark was used in Cooper's meta-tags, by showing that, to the extent the mark was present in Cooper's code, it was in the alt-tags and not the meta-tags. ( See, e.g., 1097:16–1099:22.) During deliberations, the jury specifically asked whether meta-tags and alt-tags are interchangeable. ( See Doc. No. 167–1 at 5.) After hearing argument from the parties, the Court instructed the jury that “[m]eta-tags and alt-tags refer to different types of code used on web pages.” ( Id.) The jury subsequently answered “no” to Question 7, Part A, which asked, “Did Cooper B–Line's use of the C–PORT trademark in its meta-tags without the consent of Clearline create a likelihood of confusion as to the source, affiliation, or sponsorship of Cooper B–Line's product?” (Doc. No. 151 at 8.)

On this set of facts, the Court concludes that Clearline's Motion for Pleading Amendment must be denied. During the period leading up to trial, and during trial, Cooper clearly opposed Clearline's attempts to broaden its trademark infringement claim beyond the scope of the live pleadings. See Portis, 34 F.3d at 332. This is evident from Cooper's insistence on a jury charge and verdict question limiting the inquiry to meta-tags. (Doc. No. 128–9 at 15; Doc. No. 142.) Furthermore, Cooper relied on evidence that Clearline's mark was in alt-tags, not meta-tags, to defend itself against Clearline's claim. ( See, e.g., 1097:16–1099:22.) There is no doubt that Cooper would be prejudiced by any grant of leave to amend at...