Reynolds Consumer Prods., Inc. v. Handi-Foil Corp.
| Decision Date | 18 July 2014 |
| Docket Number | Case No. 1:13-cv-214 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | REYNOLDS CONSUMER PRODUCTS, INC. Plaintiff, v. HANDI-FOIL CORPORATION, Defendant. |
Following a four day trial, a jury found the Defendant liable of willfully infringing on the Plaintiff's trade dress rights in violation of the Lanham Act. The jury found in favor of the Defendant on all other counts. The parties have filed numerous post-trial motions. The Defendant's primary request is that the Court set aside the verdict. The Plaintiff requests the Court enforce the jury's verdict by way of permanent injunction and award it its costs and fees. For the reasons set forth below, the Court upholds the jury's verdict and grants an injunction in the Plaintiff's favor. The Court also grants the Plaintiff's motion for costs, but denies its request for attorney's fees.
This dispute began on February 15, 2013 when the Plaintiff, Reynolds Consumer Products Inc. ("Reynolds") sued the Defendant, Handi-Foil Corporation ("Handi-Foil"). Each party manufactures, markets, and sells aluminum roll foil. Reynolds' version of this product, Reynolds Wrap, has been the leading brand in the field for decades. In 2012, Handi-Foil launched a line of roll foil products bearing the Handi-Foil name and claiming to be new to themarket. This matter arises from Reynolds' allegation that the packaging of this Handi-Foil product infringed and diluted the "famous and distinctive" Reynolds Wrap trade dress.
Reynolds twice moved to amend its complaint. Each time the motion was granted. On August 28, 2013, Reynolds filed its Second Amended Complaint, which became the operative complaint for the litigation. All told, Reynolds raised eight causes of action against Handi-Foil based on the marketing of the Handi-Foil roll foil product.1 In its answer, Handi-Foil asserted two counterclaims. The first sought a cancellation of Reynolds' trademark registrations and the second sought a declaratory judgment of non-infringement.
The parties filed extensive pre-trial motions including cross-motions for partial summary judgment. At the time, the parties fervently debated whether or not Reynolds had abandoned its pertinent trade mark registrations. In a Memorandum Opinion dated February 27, 2014, the Court granted Reynolds' motion for partial summary judgment, thus dismissing Handi-Foil's abandonment counterclaim. The court also denied Handi-Foil's corresponding motion for partial summary judgment and its motion to strike Reynolds' jury demand.
On March 21, 2014 the Court held argument on multiple evidentiary motions. Upon ruling on those motions the Court invited the parties to contact a Magistrate Judge to further mediate their dispute. The Court also invited the parties to consider voluntarily waiving the jury and conducting a bench trial instead. Both invitations were refused. With the parties having agreed to dismiss Reynolds' seventh cause of action (unjust enrichment) as well as Handi-Foil's declaratory judgment counterclaim, the seven remaining counts of Reynolds' complaint were left to be tried by jury.
The jury trial began on March 21, 2014. Four days later the jury unanimously found that Handi-Foil had willfully infringed on Reynolds' federal trade dress rights (Count 3). The jury found in favor of Handi-Foil on the remaining counts and awarded no damages.
The parties submitted post-trial motions on April 30, 2014, pursuant to their agreed upon post-trial briefing schedule. Handi-Foil submitted (i) a motion for judgment as a matter of law and costs, or, in the alternative, a motion for new trial; and (ii) a motion to bar Reynolds from seeking relief under the doctrine of laches. Reynolds filed (i) a request for a permanent injunction; and (ii) a motion for costs and attorney's fees. All four motions were fully briefed, and the Court heard oral argument on them in open court on June 13, 2014.
Handi-Foil requests the Court enter judgment as a matter of law in its favor on Count 3, or, in the alternative, order a new trial. Additionally, Handi-Foil argues that its affirmative defense of laches should bar Reynolds from obtaining any relief on Count 3.
Handi-Foil appropriately moved for judgment as a matter of law before the case was submitted to the jury. Handi-Foil now renews its motion for judgment as a matter of law pursuant to Fed. R. Civ. P. 50(b). Such a motion "should be granted if a district court determines, without weighing the evidence or considering the credibility of the witnesses, that substantial evidence does not support the jury's findings." Konkel v. Bob Evans Farms Inc., 165 F.3d 275, 279 (4th Cir. 1999) (citing White v. County of Newberry, 985 F.2d 168, 172 (4th Cir. 1993)). In considering Handi-Foil's Rule 50(b) motion, the Court views all the trial evidence in the lightmost favorable to Reynolds and draws all reasonable inferences in its favor. Id. (citing Austin v. Torrington Co., 810 F.2d 416, 420 (4th Cir. 1987)).
Handi-Foil first claims it is entitled to judgment as a matter of law due to the Supreme Court's recent opinion in Lexmark International, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014). Handi-Foil asserts that under Lexmark Reynolds cannot prevail on its trade dress infringement claim because it did not produce "substantial evidence" of harm during trial. Putting aside the contention that Reynolds failed to demonstrate harm, Handi-Foil's argument fails because Lexmark is totally inapplicable to the issue of whether the jury's finding of trade dress infringement was appropriate.
In Lexmark, the Supreme Court "granted certiorari to decide the appropriate analytical framework for determining a party's standing to maintain an action for false advertising under the Lanham Act." 134 S. Ct. at 1385 (emphasis added) (internal citations omitted). A unanimous Supreme Court answered this question by holding that "[t]o invoke the Lanham Act's cause of action for false advertising, a plaintiff must plead (and ultimately prove) an injury to a commercial interest in sales or business reputation proximately caused by the defendant's misrepresentations." Id. at 1395 (emphasis added). Neither the Court nor Handi-Foil has ever questioned Reynolds' standing to bring its various Lanham Act claims. Moreover, the jury's false advertising verdict in Handi-Foil's favor is not being challenged. Consequently, Handi-Foil's attempt to broaden the ruling in Lexmark—which applies specifically to standing in false advertising claims—to the issue of whether Reynolds provided substantial evidence to support the jury's finding of trade dress infringement is entirely unavailing.
As an alternative basis for its Rule 50(b) motion, Handi-Foil asserts it was unreasonable for the jury to find that Handi-Foil's packages create a likelihood of confusion with Reynolds'trade dress. Under well-settled Fourth Circuit precedent, the Court instructed the jury that it should consider nine factors in determining whether there was a likelihood of confusion:
(1) The strength or distinctiveness of Reynolds' mark as actually used in marketplace; (2) The similarity of the two marks to consumers; (3) The similarity of the goods or services that the marks identify; (4) The similarity of the facilities used by the markholders; (5) The similarity of advertising used by the markholders; (6) The defendant's intent; (7) Actual confusion; (8) The quality of the defendant's product; and (9) The sophistication of the consuming public.
See Trial Tr. vol. 4, 1117-1118, Apr. 14, 2014 [hereinafter "Tr."]. See also Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150, 158-59 (4th Cir. 2014) (citing George & Co. v. Imagination Entm't Ltd., 575 F.3d 383, 393 (4th Cir. 2009)).
After reviewing the nine factors listed above, the Court instructed the jury that See Tr. at 1118:2-4. This clarifying instruction is also firmly supported by Fourth Circuit law. See Swatch AG, 739 F.3d at 158-59 .
In Handi-Foil's view, the packages in question are indisputably dissimilar and there was no evidence of actual consumer confusion. In its memorandum in support of its motion for judgment as a matter of law, Handi-Foil states that "where the marks at issue are dissimilar and there is no evidence of actual confusion, extrinsic factors such as the strength of the plaintiff's mark and the similarity of the products, sales outlets, and advertising are insufficient to create a likelihood of confusion." See Dkt. No. 266 at 9. Handi-Foil maintains that this alleged absence of the second and seventh factors alone requires setting aside the jury's verdict.
In support of this far-reaching proposition, Handi-Foil first turns to Anheuser-Busch, Inc. v. L&L Wings, Inc., 962 F.2d 316, 320 (4th Cir. 1992). Rather than back this claim, Anheuser-Busch directly contradicts Handi-Foil's contention. There the Fourth Circuit reversed a grant of judgment as a matter of law and affirmed a jury verdict. In so doing the Fourth Circuit noted that the "pivotal" issue of likelihood of confusion is "particularly amendable to resolution by a jury." Anheuser-Busch, 962 F.2d at 318 ("Likelihood of confusion is 'frequently a fairly disputed issue of fact on which reasonable minds may differ.'" (citing Warner Bros., Inc. v. American Broad Cos., 720 F.2d 231, 246 (2d Cir. 1983)). Additionally, the Anheuser-Busch court noted the likelihood of confusion factors are "not meant to be a 'rigid formula' for...
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