Lindy Pen Co., Inc. v. Bic Pen Corp.

• Decision Date: 14 January 1993
• Docket Number: 90-55249,Nos. 90-55248,s. 90-55248
• Citation: Lindy Pen Co., Inc. v. Bic Pen Corp., 982 F.2d 1400 (9th Cir. 1993)
• Parties: LINDY PEN COMPANY, INC.; Blackfeet Plastics, Inc., Plaintiffs-Appellants, Cross-Appellees, v. BIC PEN CORPORATION, Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1400

982 F.2d 1400

25 U.S.P.Q.2d 1570

LINDY PEN COMPANY, INC.; Blackfeet Plastics, Inc. Plaintiffs-Appellants, Cross-Appellees, v. BIC PEN CORPORATION, Defendant-Appellee, Cross-Appellant.

Nos. 90-55248, 90-55249.

United States Court of Appeals Ninth Circuit.

Argued and Submitted July 8, 1992.

Decided Jan. 14, 1993.

Thomas A. Turner, Jr., Los Angeles, CA, for plaintiffs-appellants, cross-appellees.

Jonathan A. Marshall, Rory J. Radding, Thomas A. Canova, Thomas F. Reddy, Jr., Pennie & Edmonds, New York City, Frederick A. Lorig, Bright & Lorig, Los Angeles, CA, for defendant-appellee, cross-appellant.

Appeal from the United States District Court for the Central District of California.

Before: SNEED and D.W. NELSON, Circuit Judges, and ROLL, ^* District Judge.

ROLL, District Judge:

This trademark infringement case brought by Lindy Pen Company, Inc. against Bic Pen Corporation returns to this court for the third time seeking review of the district court's damages order upon remand. For the reasons set forth below, we affirm the decision of the district court and deny Bic's cross-appeal.

INTRODUCTION

The origins of this case go back to the mid-1960s when Appellant Lindy Pen Company ¹ (Lindy) and Appellee Bic Pen Corporation (Bic) were competitors in the production and manufacture of ball point pens. Each marketed a fine-point tip for use by accountants and auditors. In 1965, before Lindy's trademark was perfected and registration issued, Bic used the mark "Auditor's" on its pen barrels. Lindy contacted Bic, making a claim to the mark, and Bic voluntarily agreed to stop using it. On September 20, 1966, United States Trademark Registration No. 815,488 was issued to Lindy for the word "Auditor's." Lindy Pen Co., Inc. v. Bic Pen Corp., 550 F.Supp. 1056, 1059 (C.D.Cal.1982). Lindy perfected the registration by filing the appropriate documents pursuant to federal statute. Id.

Fourteen years later, Bic adopted the legend "Auditor's Fine Point" to describe a certain pen model. Prior to this use, Bic researched the term "Auditor's" and found that at least three other manufacturers employed a variation of the word "Auditor's" in their marketing materials. This investigation revealed that Lindy also used the term, but that Lindy exerted no proprietary interest over it in its advertising.

Lindy learned of Bic's renewed use of the mark and filed suit in 1980 alleging trademark infringement, unfair competition, breach of contract, and trademark dilution. The district court entered judgment in favor of Bic on all claims. The circuit court upheld the district court's ruling that Bic did not infringe in the major retail markets, but remanded the case to determine whether there was a likelihood of confusion in telephone order sales. Lindy Pen Co., Inc. v. Bic Pen Corp., 725 F.2d 1240 (9th Cir.1984), cert. denied, 469 U.S. 1188, 105 S.Ct. 955, 83 L.Ed.2d 962 (1985) (Lindy I ). The court specifically found that "there is no evidence of actual confusion [and] that Bic adopted the designation 'Auditor's fine point' without intent to capitalize on Lindy's goodwill...." Id. at 1246.

Upon remand, the district court determined that there was a likelihood of confusion in the telephone order market because the purchaser did not have the opportunity to view the pens at the time of purchase. The court went on to find, however, that the confusion could be cured upon receipt of the goods because the purchaser could return the product. The circuit court again disagreed and found that Lindy had established a likelihood of confusion in the telephone order market which post-sale inspection could not cure. Lindy Pen Co., Inc. v. Bic Pen Corp., 796 F.2d 254 (9th Cir.1986) (Lindy II ). In words which now comprise the nub of the current appeal, this court ordered that the case be remanded to district court "with instructions to enter an order enjoining Bic from using the word 'Auditor's' on or in connection with its pens. We additionally instruct the district court to order an accounting and to award damages and other relief as appropriate." Id.

The district court thereafter issued an injunction and permitted the parties to conduct discovery regarding damages and profits. The court ordered the parties to submit briefs addressing four specific points directed at the damages claim. After reviewing the parties' briefs and exhibits, the court held that an accounting of profits was inappropriate because Bic's infringement was innocent and accomplished without intent to capitalize on Lindy's trade name. The court also found that an award of damages was inappropriate because Lindy had failed to establish the amount of damages. The court granted Lindy the opportunity to resubmit written argument on damages, but found that Lindy once again failed to sustain its burden of proof.

The parties now argue, on appeal and cross-appeal, that the remand determination regarding damages is in error. A determination of damages is left to the sound discretion of the trial court. In the instant case, there has been no abuse of discretion; therefore, the judgment is affirmed.

INTERPRETATION OF LINDY II

The threshold question of this appeal is whether the language of Lindy II entitled Lindy to an accounting and monetary damages upon remand. Lindy maintains that the district court had no choice but to order an accounting pursuant to this court's mandate. Undeniably, the decision of the circuit court in a prior appeal must be followed in all subsequent proceedings in the same case under the law of the case doctrine. Eichman v. Fotomat Corp, 880 F.2d 149, 157 (9th Cir.1989). The law of the case controls unless evidence on remand is substantially different from that presented in previous proceedings. Waggoner v. Dallaire, 767 F.2d 589, 593 (9th Cir.1985), cert. denied, 475 U.S. 1064, 106 S.Ct. 1374, 89 L.Ed.2d 601 (1986). An order issued after remand may deviate from the mandate, however, if it is not counter to the spirit of the circuit court's decision. King Instrument Corp. v. Otari Corp., 814 F.2d 1560, 1563 (Fed.Cir.1987). The district court must be given a meaningful opportunity to follow the directive of the circuit court in resolving the issues. Portsmouth Square. Inc. v. Shareholders Protective Committee, 770 F.2d 866, 872 (9th Cir.1985). The district court should not be reversed for failing to follow a mandate if its decision is within the scope of the remand. Little v. United States, 794 F.2d 484, 488 (9th Cir.1986).

We find that the district court established Lindy's damages upon remand in accordance with the mandate of Lindy II. We base this decision upon a thorough reading of the decision as a whole which quite clearly remanded the action for a "determination of damages." Lindy II, 796 F.2d at 255. We also draw support for this interpretation from case law that holds that a determination of damages in a trademark infringement action, including an accounting, is to be pursued in light of equitable considerations. Maier Brewing Co. v. Fleischmann Distilling Corp., 390 F.2d 117, 120 (9th Cir.), cert. denied, 391 U.S. 966, 88 S.Ct. 2037, 20 L.Ed.2d 879 (1968). "The equitable limitation upon the granting of monetary awards ... would seem to make it clear that such a remedy should not be granted as a matter of right." Id. See also Burger King Corp. v. Mason, 855 F.2d 779, 780 (11th Cir.1988). When fashioning a remedy in a given case, the court must rely "not merely on the legal conclusion of liability, but [must] also ... consider the nature of the infringing actions, including the intent with which they were motivated and the actuality, if any, of their adverse effects upon the aggrieved party." Bandag, Inc. v. Al Bolser's Tire Stores, 750 F.2d 903, 918 (Fed.Cir.1984) (applying Ninth Circuit law). See also Highway Cruisers of California, Inc. v. Security Industries, Inc., 374 F.2d 875, 876 (9th Cir.1967) ("One may get just enough relief to stop the evil....").

The district court adhered to the spirit of Lindy II and the dictates of controlling precedent by proceeding with additional discovery and argument prior to ordering an accounting of Bic's profits. The district court ultimately determined that an accounting was not appropriate under the circumstances of this case and its decision will therefore be reviewed for an abuse of discretion. "There is an abuse of discretion when a judge's decision is based on an erroneous conclusion of law or when the record contains no evidence on which [s]he rationally could have based that decision." Petition of Hill, 775 F.2d 1037, 1040 (9th Cir.1985).

ACCOUNTING OF PROFITS

Following the damages proceeding, the district court held that an accounting of profits was inappropriate because Bic's infringement was innocent and accomplished without intent to capitalize on Lindy's trade name. Section 35 of the Lanham Act, 15 U.S.C. § 1117(a), governs the award of monetary remedies in trademark infringement cases and provides for an award of defendant's profits, any damages sustained by the plaintiff, and the costs of the action. ²

The Supreme Court has indicated that an accounting of profits follows as a matter of course after infringement is found by a competitor. Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251, 259, 36 S.Ct. 269, 271, 60 L.Ed. 629, 634 (1916). Nonetheless, an accounting of profits is not automatic and must be granted in light of equitable considerations. Champion Spark Plug Co. v. Sanders, 331 U.S. 125, 131, 67 S.Ct. 1136, 1139, 91 L.Ed. 1386, 1391 (1947). Where trademark infringement is deliberate and willful, this court has found that a remedy no greater than an injunction "slights" the public. Playboy Enterprises, Inc. v. Baccarat Clothing Co., Inc., 692 F.2d 1272, 1274 (9th Cir.1982). This standard applies, however, only in those cases where the infringement is "willfully calculated to exploit the advantage of an established mark." Id. The intent of the infringer is relevant...