Global Protection Corp. v. Halbersberg, 2856.

Decision Date23 June 1998
Docket NumberNo. 2856.,2856.
Citation503 S.E.2d 483,332 S.C. 149
PartiesGLOBAL PROTECTION CORP., formerly known as The Puria Group, Inc., d/b/a Custom Condoms, Respondent, v. David HALBERSBERG, individually, and a/k/a King David and d/b/a King David, d/b/a S & M Enterprises, Inc., d/b/a Dave's Beachwear, d/b/a King David Wholesale; S & M Enterprises, Inc. d/b/a King David, and d/b/a King David Wholesale and d/b/a Dave's Beachwear, Appellants.
CourtSouth Carolina Court of Appeals

B. Craig Killough and M. Dawes Cooke, Jr., both of Barnwell, Whaley, Patterson & Helms, Charleston, for appellant.

Fred B. Newby, of Newby, Pridgen & Sartip, Myrtle Beach; and Wellington M. Manning, Jr., of Dority & Manning, Greenville, for respondent.

STILWELL, Judge:

Global Protection Corporation filed this action against David Halbersberg and his numerous businesses alleging common law trademark infringement, common law trade dress infringement, civil conspiracy, and unfair trade practices. Judgment was entered against Halbersberg for $1,249,451.38. We affirm in part and reverse in part.

Global developed its novelty glow-in-the-dark condom, called "Knight Light," in 1989 and began marketing it in early 1990. In July or August 1990, Halbersberg purchased boxes of the Knight Light in Myrtle Beach. In 1991 Halbersberg traveled to Korea to find a manufacturer for his own novelty glow-inthe-dark condom called "Love Light." Halbersberg's product appeared on the market in 1992. Although the processes for manufacturing the two condoms are different, the packages are virtually identical. Halbersberg admitted he sent the Korean manufacturers samples of Global's packaging and told the manufacturers he wanted his packaging to be like Global's packaging but did not want the exact wording on the boxes. Halbersberg also admitted selling his product in boxes bearing Global's name.

The case was referred to the master to determine findings of fact, conclusions of law and recommendations with a directive to report such findings back to the circuit court. In his report, the master dismissed the civil conspiracy cause of action but found Halbersberg committed common law trademark and trade dress infringement and that the conduct constituted unfair competition. The master awarded damages of $354,207.05 and trebled these to $1,062,621.15. He also awarded Global reasonable attorney fees with the amount to be determined later.

After reviewing the master's findings of fact, conclusions of law, and recommendations, the circuit court agreed with the portion of the master's report finding Halbersberg liable, but remanded the case to the master to redetermine lost profits and determine the amount of attorney fees, with direct appeal to the supreme court. The second master found Global's total damages to be $935,457.57, awarded attorney fees of $311,819.19, for a total judgment against Halbersberg of $1,249,451.38.

DISCUSSION

"In an action at law, on appeal of a case tried without a jury, the findings of fact of the judge will not be disturbed on appeal unless found to be without evidence which reasonably supports the judge's findings." Townes Assocs. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976). "[I]n a law case, the facts found by the judge on the judge's review of the master's report are accepted as final on appeal to either this court or the Supreme Court if the evidence reasonably supports the findings...." GHMSW Partnership v. Logan, 310 S.C. 555, 557, 426 S.E.2d 332, 334 (Ct.App.1992). Our standard of review is, therefore, whether there is evidence to support the trial court's findings.

I. TRADEMARK

The first issue on appeal is whether the trial court erred in finding Halbersberg infringed Global's common law trademark rights. We conclude the judge did not err.

The phrases in question, "Custom Condoms," "Adam and Davin Enterprises," and "I=Boston" appeared on the individual packages and the display boxes of Halbersberg's product. The parties do not dispute that Global was the senior user of these phrases. Although admittedly copying Global's phrases, Halbersberg asserts they are trade names of the business enterprise, not the product itself.

A trademark "means a word, name, symbol, or device or any combination of these used by a person to identify and distinguish the goods of that person, including a unique product, from those manufactured and sold by others and to indicate the source of the goods, even if that source is unknown." S.C.Code Ann. § 39-15-1105 (Supp.1997). Without question, the phrases indicate the product came from a particular source. Halbersberg's argument supports this conclusion. He admits that after he noticed the manufacturers had exactly copied the samples he sent them, he attempted to mark through those phrases.

II. TRADE DRESS

The second issue on appeal is whether the trial court erred in finding Halbersberg infringed Global's common law trade dress rights. Based on the allegations of the complaint, this action could have been brought under either the Lanham Act, 15 U.S.C. §§ 1051-1127, South Carolina's Unfair Trade Practices Act (UTPA), S.C.Code Ann. §§ 39-5-10 to -160 (1976), or both. See Restatement (Third) Unfair Competition 21 (1995) ("Actions for deceptive marketing are generally brought under § 43(a) of the Lanham Act, 15 U.S.C.A. § 1125(a), or under the various state statutes prohibiting deceptive trade practices.").

We are not aware of a common law trade dress cause of action in South Carolina and we decline to create one here. Global opted to pursue remedies available under the UTPA, but attempted to state a cause of action for common law trade dress infringement. Halbersberg's misappropriation of Global's packaging constituted unfair competition and Global was awarded damages for Halbersberg's wrongful conduct under the UTPA. We see no reason to create a new cause of action to apply to a situation already covered by a federal act and a state act. We therefore hold South Carolina does not recognize a cause of action for common law trade dress infringement independent of the Lanham Act or the UTPA. The master erred in finding Halbersberg liable for common law trade dress infringement.

III. UNFAIR TRADE PRACTICES

The third issue on appeal is whether the trial court erred in finding Halbersberg violated South Carolina's UTPA which provides: "(a) Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." S.C.Code Ann. § 39-5-20 (1976).

"To be actionable under the UTPA, the unfair or deceptive act or practice must have an impact upon the public interest. Unfair or deceptive acts or practices have an impact upon the public interest if the acts or practices have the potential for repetition." York v. Conway Ford, Inc., 325 S.C. 170, 173, 480 S.E.2d 726, 728 (1997) (citation omitted).

The package in question was an exact copy, including the trademarks, of Global's product. Unquestionably, this practice is deceptive. Furthermore, because the copying produced a substantially identical product, a consumer had no way of knowing the truth about the source of the item in question. Halbersberg testified he sold approximately 48,000 condoms, each of which was deceptive. We think this supports the master's finding that the public interest requirement was met.

In order to recover treble damages and attorney fees under the UTPA, the plaintiff must demonstrate the acts causing the damages were willful. S.C.Code Ann. § 39-5-140 (1976). Halbersberg's own testimony is sufficient to prove he willfully appropriated Global's marks and packaging and he acknowledged he had done the same with other products. We hold the trial court did not err in finding Halbersberg liable for unfair trade practices and trebling the actual damages.

IV. DAMAGES

The fourth issue on appeal is whether the master erred in awarding $935,457.57 in damages. The master determined on remand the actual damages were $311,819.19, trebled to $935,457.57. To this amount he added $2,174.62 in costs and $311,819.19 in attorney's fees.

A. Causation

Halbersberg first disputes that his actions caused Global's injuries. This, however, is a finding of fact not to be disturbed on appeal unless found to be without evidentiary support.

The evidence clearly shows that Global's profits on the East Coast were down in 1991-92, the time in which Halbersberg was marketing his virtually identical product. After Global obtained an injunction prohibiting Halbersberg from using Global's trade dress, Global's East Coast profits increased in 1993. Global had to lower the price of its product to compete. This evidence supports the trial court's finding of causation.

B. Lost Profits

Halbersberg argues Global's proof of lost profits was speculative.

The law does not require absolute certainty of data upon which lost profits are to be estimated, but all that is required is such reasonable certainty that damages may not be based wholly upon speculation and conjecture, and it is sufficient if there is a certain standard or fixed method by which profits sought to be recovered may be estimated and determined with a fair degree of accuracy.

Beck v. Clarkson, 300 S.C. 293, 298-99, 387 S.E.2d 681, 684 (Ct.App.1989) (quoting South Carolina Fin. Corp. of Anderson v. West Side Fin. Co., 236 S.C. 109, 113 S.E.2d 329 (1960)).

In Drews Co. v. Ledwith-Wolfe Assocs., 296 S.C. 207, 371 S.E.2d 532 (1988), our supreme court cited numerous techniques for proving lost profits. Proof may be established through expert testimony, economic and financial data, market surveys and analyses, business records of similar enterprises, comparison with profit performance of businesses similar in size, nature and location, comparison with profit history of plaintiffs successor, comparison of similar businesses owned by plaintiff himself, and use of...

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