Icee Distributors, Inc. v. J&J Snack Foods Corp.
| Decision Date | 11 April 2006 |
| Docket Number | No. 04-30060.,04-30060. |
| Citation | 445 F.3d 841 |
| Parties | ICEE DISTRIBUTORS, INC., Plaintiff-Appellant-Cross-Appellee-Cross-Appellant, v. J&J SNACK FOODS CORP.; Wal-Mart Stores, Inc., Defendants-Appellees-Cross-Appellants-Cross-Appellees, ICEE of America, Inc., Defendant-Cross-Appellant-Cross-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Daniel V. Thompson, Thompson & Gustavson, William Scott Hastings (argued), Locke, Liddell & Sapp, Dallas, TX, Cary A. Hilburn, Hilburn & Hilburn, Shreveport, LA, for Icee Distributors, Inc.
Jeffrey M. Goldfarb (argued), Heather Lynn Peckham, Akin, Gump, Strauss, Hauer & Feld, Dallas, TX, James Charles McMichael, Jr., McMichael, Medlin, D'Anna & Wedgeworth, Shreveport, LA, for Defendants-Appellees-Cross-Appellants.
Appeals from the United States District Court for the Western District of Louisiana.
Before JOLLY, WIENER, and DENNIS, Circuit Judges.
This case, which involves an allegation of infringement of the ICEE trademark, was previously before us on an interlocutory appeal, ICEE Distributors, Inc. v. J&J Snack Foods Corp., 325 F.3d 586 (5th Cir. 2003). We upheld an injunction, solely on breach-of-contract grounds, against J&J Snack Food Corp. ("J&J") and Wal-Mart Stores, Inc. prohibiting them from selling ICEE-marked squeeze tubes within the territory covered by the exclusive license agreement between ICEE Distributors, Inc. ("Distributors") and the ICEE trademark-owner, ICEE of America ("IOA"). On remand, the District Court denied Distributors' motion for reconsideration of its earlier summary judgment dismissing Distributors' trademark-infringement claim and partially granted defendants' motion to modify the judgment by narrowing the injunction so as to apply only to J&J.
In this appeal, Distributors challenges both the District Court's grant of summary judgment on the trademark-infringement claim and the District Court's modification of the injunction. We AFFIRM, in part, and REVERSE, in part, the grant of summary judgment and VACATE the modification of the injunction.
Our previous opinion lays out the background of this dispute:
In the 1960s, the John E. Mitchell Company ("Mitchell Company") developed the ICEE, a semi-frozen beverage consisting of carbonated water and syrup mixed together that stands up when poured into a cup. Through its subsidiary, ICEEQUIP, the Mitchell Company owned the trademark rights to the ICEE name on products such as the cups for holding the frozen carbonated beverage, the machines for making the beverage, and the beverage itself. ICEEQUIP entered into several trademark licensing agreements with ICEE distributors in different parts of the country. [Distributors], by virtue of its purchase of several regional distributorships that had each entered into these licensing agreements, is a party to these identically-worded agreements for its various distribution territories, which include most of Louisiana and Arkansas, and parts of Texas, Missouri, Alabama, and Georgia.
In the 1980s, the Mitchell Company went out of business. In response, the regional licensees, including Distributors and The ICEE Company, a subsidiary of J & J, formed ICEE of America ("IOA"). Upon execution of an assignment agreement, IOA acquired the ownership rights and interests in the trademarks previously held by ICEEQUIP. Both Distributors and The ICEE Company own stock in IOA, with The ICEE Company being the largest shareholder and Distributors the second largest.
In 1999, J&J began manufacturing frozen squeeze-up tubes under the name "ICEE" on a nationwide basis. Wal-Mart sold these tubes in its Sam's Club stores. Although J&J requested permission from Distributors to sell the tubes in its territory, Distributors refused. J&J sold the tubes in Distributors' territory nonetheless. Distributors filed this suit in May 1999 against J&J and Wal-Mart for trademark infringement and dilution.
After the case was filed, J&J attempted unsuccessfully to register with the U.S. Patent and Trademark Office a trademark for the use of the ICEE name on the tubes. The PTO rejected the application on the basis that the proposed trademark would likely be confused with IOA's trademarks on the ICEE beverage, cups, and beverage machine. J&J then assigned the trademark application to IOA, which successfully registered the trademark. IOA's president, Dan Fachner, who was also the president of J&J's subsidiary The ICEE Company, then granted J&J a license [dated February 25, 2000] to use the trademark in areas including Distributors' territory.
After execution of the licensing agreement between IOA and J & J, Distributors added IOA as a defendant, alleging that IOA, as the assignee of the trademarks previously held by ICEEQUIP, was bound to the licensing agreements with Distributors, and had breached those contracts by entering into the squeeze tube agreement with J&J. The district court granted summary judgment in the defendants' favor on the trademark infringement claim, but held a trial on the trademark dilution and breach of contract claims, bifurcating the liability and damages stages. After the liability stage of the trial, the jury found J&J and Wal-Mart liable for willful trademark dilution and IOA liable for breach of contract. Based on the jury verdict, the trial court subsequently entered a permanent injunction against J&J and Wal-Mart forbidding the sale of squeeze tubes within Distributors' territory.
J & J, Wal-Mart, and IOA immediately filed an interlocutory appeal seeking to set aside the injunction, which appeal led to the 2003 opinion quoted above. We affirmed the injunction, but solely on the basis of the breach-of-contract claim. We held that Distributors' trademark-dilution claim failed because Distributors was not the owner of the ICEE trademark and thus did not have standing to sue under the Federal Trademark Dilution Act. Id. at 597-99. Because our review was limited to the propriety of the injunction, we remanded to allow further proceedings consistent with our interlocutory opinion. Thus, once the case had been remanded, the District Court had before it: first, the damages issue on the breach-of-contract claim against IOA, and, second, the grant of summary judgment it had earlier entered against Distributors on the trademark-infringement claim.
On remand, Distributors moved the District Court for reconsideration of summary judgment based on facts that came to light post-summary judgment during trial of the trademark-dilution and breach-of-contract claims. The District Court denied the motion to reconsider, and Distributors waived its right to a trial to quantify its damages against IOA on the breach-of-contract claim. The District Court entered final judgment keeping the original permanent injunction in force and denying all other relief. Defendants then moved to vacate and modify the judgment and moved for a new trial on the breach-of-contract claim. The District Court denied the motion for new trial, but narrowed the permanent injunction so as to prohibit J & J, but not Wal-Mart, from selling the tubes in Distributors' territory.
Distributors appeals the summary judgment denying the trademark-infringement claim, the denial of the motion made on remand to reconsider the summary judgment, and the modification of the permanent injunction. Defendants cross-appeal the denial of their motion for retrial.
We first address the District Court's grant of summary judgment dismissing Distributors' trademark-infringement claim. A grant of summary judgment is reviewed de novo, using the same standard applied by the District Court. Hall v. Gillman, Inc., 81 F.3d 35, 36 (5th Cir. 1996). "Summary judgment is appropriate only if there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c).
Distributors sued for trademark infringement under 15 U.S.C. § 1114:
(1) Any person who shall, without the consent of the registrant —
(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive;
. . .
shall be liable in a civil action by the registrant for the remedies hereinafter provided . . . .
We considered this provision in Matrix Essentials, Inc. v. Emporium Drug Mart, Inc. of Lafayette, 988 F.2d 587 (5th Cir. 1993), which the District Court cited as controlling its analysis. In Matrix Essentials, a manufacturer ("Matrix") of specialty hair-care products sold only at salons licensed to carry the products sued a retail drug store ("Emporium") stocking Matrix products on its shelves, claiming that Emporium's unauthorized sale of Matrix products constituted trademark infringement. Matrix relied on two theories. First, it claimed that Emporium was not selling "genuine" Matrix products because Emporium sold the products without the professional consultation supposed to be available to a customer purchasing Matrix products from a licensed salon. Second, Matrix contended that Emporium deceived the public into believing that Matrix had authorized Emporium to sell its products. We rejected both theories on the ground that "consumer confusion" is the "linchpin" of trademark infringement analysis, and concluded that "trademark law does not apply to the sale of genuine goods bearing a true mark, even if the sale is without the mark-owner's consent." Id. at 590. Consumer confusion could not be established in Matrix Essentials because the products bearing the mark were clearly authorized by the holder of the trademark; in fact, the products were manufactured by Matrix itself. Thus, the mark on the product properly indicated that Matrix was the ultimate source of the goods, controlling the...
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