Rickard v. Auto Publisher, Inc.

• Decision Date: 02 July 1984
• Docket Number: No. 83-7227,83-7227
• Citation: 735 F.2d 450
• Parties: Edgar Alan RICKARD, d/b/a Trader Publications of Alabama, Plaintiff-Appellant, v. AUTO PUBLISHER, INC., a corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 450

735 F.2d 450

222 U.S.P.Q. 808

Edgar Alan RICKARD, d/b/a Trader Publications of Alabama Plaintiff-Appellant, v. AUTO PUBLISHER, INC., a corporation, Defendant-Appellee.

No. 83-7227.

United States Court of Appeals Eleventh Circuit.

July 2, 1984.

John Martin Galese, Birmingham, Ala., for plaintiff-appellant.

Peck & Slusher, John R. Benn, Rodney B. Slusher, Florence, Ala., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Alabama.

Before GODBOLD, Chief Judge, JOHNSON and CLARK, Circuit Judges.

CLARK, Circuit Judge:

Appellant, Edgar Alan Rickard, d/b/a Trader Publications of Alabama (Rickard), appeals from a judgment in an unfair competition action in which the district court found that appellee, Auto Publisher, Inc. (Auto Publisher), had misappropriated appellant's unregistered trademark and had violated a preliminary injunction, but denied Rickard's request for damages and attorneys' fees. The court had bifurcated the trial such that the question of unfair competition and contempt would be tried first and the question of relief addressed in a later hearing. The court conducted a non-jury trial and found for appellant on the unfair competition and contempt matters but declined to hold a hearing on the question of damages and attorneys' fees, finding that, as a matter of law, appellant was not entitled to such relief. Appellant contends in this appeal that the district court erred in denying him the opportunity to prove his entitlement to the relief sought.

I.

In March 1979, appellant purchased from Trader Publications for $7,500 a license to publish "Auto Trader" magazine in and around Birmingham, Alabama. Auto Trader is a local weekly publication advertising used vehicles for sale. The publisher derives its income from the magazine's advertisers and from sales at convenience stores. Initially, Rickard sold Auto Trader in Jefferson, Shelby, Etowah, Calhoun, St. Clair, Cullman, Walker, Winston and Morgan Counties. By late 1980, Rickard had penetrated Madison, Talladega, Montgomery, Elmore, Bibb, Tuscaloosa, Hale, Jackson, DeKalb and Blount Counties. Rickard's licensing agreement was then amended, extending its territory to all of "North Alabama."

In 1980, appellee began publishing a magazine called "Auto Weekly Publisher" in Lauderdale and Colbert Counties. Like Rickard's magazine, appellee's publication advertised used vehicles for sale. Appellee subsequently extended its sales into counties in which Rickard was already selling his magazine.

In September 1982, Rickard filed suit for relief under the Lanham Act, 15 U.S.C. Sec. 1051, et seq. (1982), the Alabama Fair Trade Practices Act, Ala.Code Sec. 8-19-1, et seq. (Supp.1983), and under the state common law doctrine of unfair competition. Specifically, Rickard sought a preliminary and permanent injunction, compensatory and exemplary damages, an accounting of appellee's profits, attorneys' fees, and costs. Rickard had no copyright or registered trademark protecting his magazine; however, appellant alleged that the manner, design and style of the publication was his distinctive trademark, and that appellee had misappropriated that trademark.

On October 14, 1982, the district court held a hearing on Rickard's request for a preliminary injunction. On October 21, 1982, the court entered its findings of fact and preliminarily enjoined Auto Publisher. Among these findings were the following: (1) Rickard and appellee compete in many of the same counties; (2) the magazines shared many similar features, and recent issues were increasingly similar; (3) there had been actual confusion by members of the buying public; (4) because appellee's infringement did not have to be intentional to support the issuance of a preliminary injunction, the court made "no finding at this time as to intentional wrong"; (5) Rickard's format, layout and method were sufficiently unique and distinctive to warrant protection under the Lanham Act; and (6) Rickard's damages were possibly irreparable, though difficult to calculate.

On November 5, 1982, Rickard filed a motion for an order to show cause why Auto Publisher should not be held in contempt for violating the preliminary injunction issued on October 21. This motion was consolidated with the trial of the unfair competition claim on the merits. Trial was set for January 12, 1983.

On the day of trial, the district court entered a pretrial order. That order, first, set forth the parties' positions, stating, inter alia, that appellant sought "an accounting for all profits earned by [appellee], attorney's fees, treble damages, punitive damages and costs...." Further, the order specified that a non-jury, bifurcated trial would be held. The court would conduct the first part on January 12 to determine liability and decide Rickard's motion to show cause. The second part of the trial would determine appellee's profits, attorney's fees, costs and other damages in a later hearing.

After conducting the first part of the bifurcated trial but before resetting the matter for a hearing on damages, the court entered additional findings of fact and conclusions of law. With respect to contempt, the court found appellee actually guilty of civil contempt because it continued to distribute its magazine after the issuance of the preliminary injunction without sufficient alterations and because appellee failed to instruct convenience store operators to refrain from placing appellee's magazine in appellant's display racks. The court noted, however, that appellee eventually did make significant changes in its magazine, and that any confusion which existed at the time of the issuance of the preliminary injunction had now been eliminated or reduced to a negligible level. Furthermore, if any confusion presently existed, it was limited to Jefferson County. The court, however, awarded no actual damages for appellee's contempt, because appellant "offered no proof of any damage which he may have sustained by virtue of the violation of the preliminary injunction...." The court, therefore, imposed a civil contempt fine in the amount of $750, payable to Rickard.

With respect to the merits of the unfair competition action, the court found, first, that appellant had withdrawn all of its pendent claims under Alabama law. In addressing appellant's Lanham Act claim, the court found that, although the degree of similarity between appellant's and appellee's magazines which originally existed "indicate[d] an intent to trade upon [appellant's] name or to 'palm off' [appellee's] magazine as [appellant's]," appellant's efforts to redesign its magazine since the issuance of the preliminary injunction had reduced the likelihood of confusion to a permissible level. Accordingly, the district court refused to enjoin appellees from publishing in all of North Alabama, as requested by appellant, and instead limited the injunction only to those counties specified in the preliminary injunction.

Notwithstanding the fact that the district court had separated the question of damages from that of liability and had indicated that relief would be determined in a later hearing, the court ruled on damages. Finding it "virtually impossible to ascertain with any degree of certainty the amount of damage, if any, [appellant] has sustained as a proximate result of the Lanham Act violation ...," the court denied Rickard's request for damages. The court also denied attorneys' fees, concluding that fees are awardable only in actions involving registered marks, and Rickard's mark was unregistered.

On February 2, 1983, Rickard filed a motion for new trial raising as his chief contention that, due to the bifurcated nature of the trial, Rickard had never had an opportunity to put forth evidence as to damages. Appellant also challenged the court's conclusion that he had voluntarily dismissed all state claims. In an order denying a new trial, the court admitted that the pretrial order contemplated a bifurcated trial for liability and damages and further agreed that Rickard had not withdrawn his state common law claims; nevertheless, the court affirmed its earlier conclusion that Rickard was not entitled to damages. First, he could not obtain an accounting of appellee's profits under the Lanham Act because the only provision of the Act allowing such an award, Sec. 35, 15 U.S.C. Sec. 1117, applied only in actions involving registered marks. Second, as described in the pretrial order, none of the relief requested, including an accounting of profits, was obtainable under the Alabama common law. For these reasons, the district court found that a damages trial was unnecessary.

Finally, the court further explained its reason for denying attorneys' fees. The court reasserted that Sec. 35 of the Lanham Act, which authorized attorneys' fees, applied only in actions involving registered trademarks. Alternatively, the court noted that, even if Sec. 35 applied to unregistered marks, the Act permitted attorneys' fees awards only in "exceptional cases," and the instant case was not "exceptional."

Accordingly, on March 10, 1983, Rickard's motion for new trial was denied. On March 24, 1983, Rickard filed a notice of appeal. We have jurisdiction. 15 U.S.C. Sec. 1121 (1982). ¹

II.

Our disposition of this appeal requires us to resolve the following issues. First, with respect to the merits of the trademark action, whether Sec. 35 (15 U.S.C. Sec. 1117), which catalogues the remedies available in an infringement action under the Lanham Act, is applicable to suits under Sec. 43(a) (15 U.S.C. Sec. 1125(a)) not involving registered marks, even though Sec. 35, by its terms, applies to a violation of the rights of a "registrant." Second, with respect to the contempt ruling, whether the district court erred in denying an award of damages and attorneys' fees on the grounds that appellant failed to produce sufficient evidence to support such an award, where the...