Sharkninja Operating LLC v. Dyson Inc.
Decision Date | 19 October 2016 |
Docket Number | No: 14-cv-13720-ADB,: 14-cv-13720-ADB |
Parties | SHARKNINJA OPERATING LLC, Plaintiff, v. DYSON INC. and DYSON LTD., Defendants. |
Court | U.S. District Court — District of Massachusetts |
BURROUGHS, D.J.
The parties, SharkNinja Operating LLC ("SharkNinja"), and Dyson Inc. and Dyson LTD (together, "Dyson"), are competitors in the household vacuum market. In this action, each accuses the other of disseminating false and misleading advertising about their respective vacuum products, in violation of the federal Lanham Act, 15 U.S.C. § 1125(a), and Massachusetts state law. Dyson has moved to strike SharkNinja's jury demand [ECF No. 432], and SharkNinja has opposed it [ECF No. 435]. For the reasons set forth in this Memorandum and Order, Dyson's Motion to Strike SharkNinja's Jury Demand [ECF No. 432] is DENIED without prejudice.
On June 9, 2016, SharkNinja filed a covenant not to sue Dyson for impliedly false advertising with regard to Dyson's "Twice the suction of any other vacuum" ("TTS") advertising claim. [ECF No. 328 at 3]. On August 3, 2016, this Court held that Dyson was liable under the Lanham Act because its TTS advertising claim was literally false as of July 8, 2014. [ECF No. 396]. The parties have each filed pre-trial memoranda [ECF Nos. 353, 356], proposed jury instructions [ECF Nos. 421, 426-2, 426-3], proposed voir dire questions, [ECF No. 423, 426-1], and proposed jury verdict forms [ECF Nos. 422, 426-4].
On the eve of trial, Dyson has moved to strike SharkNinja's jury demand, arguing that all issues remaining in the case are equitable, and that there are therefore no issues remaining that carry a right to a jury trial. [ECF No. 432]. SharkNinja, in opposition, argues that it is seeking an accounting of Dyson's profits as a proxy for harm it has suffered, and that it is entitled to a jury trial on that issue. [ECF No. 435]. Specifically, SharkNinja argues that "[b]ecause SharkNinja and Dyson are direct competitors, and Dyson engaged in false comparative advertising of directly competing products, SharkNinja's request for an accounting is justified as a rough measure of harm suffered by SharkNinja as a result of Dyson's unlawful conduct." [ECF No. 435 at 1]. In its brief opposing Dyson's motion to strike, SharkNinja lists several cases, including four First Circuit cases, in support of the proposition that "[i]n circumstances such as those presented in this case, in which the plaintiff and the defendant are direct competitors, the First Circuit and other courts recognize that a plaintiff seeking an accounting of the profits pursuant to 15 U.S.C. § 1117(a) is pursuing a claim under" the proxy rationale. [ECF No. 435 at 9-10].
Parties in a civil case have a right to a jury trial for a federal claim or defense only under the Seventh Amendment or as provided by statute. See Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 347 (1998). The First Circuit has recognized that the Lanham Act itself does not create a statutory right to a jury trial whenever a party requests an accounting of profits. See Visible Sys. Corp. v. Unisys Corp., 551 F.3d 65, 78 (1st Cir. 2008) (). Neither the Supreme Court nor the First Circuit has resolved thequestion of whether a party seeking an accounting of profits under the Lanham Act has a Seventh Amendment jury trial right. See id. at 80 & n.11. Other courts have disagreed on the issue. See Black & Decker Corp. v. Positec USA Inc., 118 F. Supp. 3d 1056, 1062 (N.D. Ill. 2015) ( ). In cases where the remedy sought is solely equitable, it is well recognized that parties generally do not have a jury trial right. 9 Wright & Miller, Fed. Prac. & Proc. Civ. § 2302 (3d ed. 2016). Whether a Seventh Amendment jury trial right exists is a two-part test that involves, first, "compar[ing] the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity;" and, second, determining "whether [the remedy sought] is legal or equitable in nature." Frappier v. Countrywide Home Loans, Inc., 750 F.3d 91, 98 (1st Cir. 2014) (quoting Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S. 558, 565 (1990)), cert. denied, 135 S. Ct. 179 (2014). An accounting of profits is generally described as an equitable remedy. Visible Sys., 551 F.3d at 78.
There are, however, certain situations where such an accounting can implicate legal issues which require a jury trial. See Dairy Queen, Inc. v. Wood, 369 U.S. 469, 477 (1962) ( ); see also Visible Sys., 551 F.3d at 78. One such situation is when a request for an accounting of profits is actually a proxy for legal damages. See Visible Sys., 551 F.3d at 80. While the First Circuit has not definitively held that an accounting of profits, when it is a proxy for legal damages, creates a right to a jury trial, it has recognized that "this proxy rationale may well present the strongest argument under the Seventh Amendment." See id. at n.11. Other courts have determined that the proxy rationale creates a jury trial right. See, e.g., Black & Decker, 118 F. Supp. 3d at 1062, 1064 ( ). Apart from the proxy rationale,SharkNinja has not provided any other theory under which an accounting of profits would be a legal, rather than equitable, issue or otherwise require a jury determination.
684 F.3d 187, 196 (1st Cir. 2012) (citing 15 U.S.C. § 1117(a) and Tamko Roofing Products, Inc. v. Ideal Roofing Co., Ltd., 282 F.3d 23, 37 (1st Cir. 2002)) (emphasis added). The Fishman Court further added that direct competition, as a justification for accounting, requires "a substantial degree of equivalence and substitutability" of the products such that a "plausible one-to-one equivalent exists" regarding "the number of sales diverted or the profits transferred." See id. While it is sound logic that direct competition can support the inferences described inFishman in a two-person market, as the Bern Court explained, "[t]he presumption of causation and injury" is "substantially undermined, if not negated altogether" in a multiple competitor market. See Bern Unlimited, Inc. v. Burton Corp., 95 F. Supp. 3d 184, 218 (D. Mass. 2015).
Furthermore, the proxy rationale for a defendant's profits is not available where there is an adequate remedy at law. The First Circuit in Visible Systems rejected the proxy rationale for an accounting in part because a jury could and did measure the harm to the plaintiff as a result of the infringement, and the court noted that "[t]he necessary prerequisite to the right to maintain a suit for an equitable accounting . . . [is] the absence of an adequate remedy at law." Visible Sys., 551 F.3d at 80 (quoting Dairy Queen, 369 U.S. at 478).
Before reaching the constitutional question, the Court will first address the threshold question of whether an accounting of Dyson's profits can be justified as a proxy for legal damages. See Visible Sys., 551 F.3d at 79-80 ( ). A proxy theory of damages is not viable in every case. See, e.g., id. at 80 (); Fishman, 684 F.3d at 196 ( ); Black & Decker, 118 F. Supp. 3d at 1063 (). In fact, some courts have rejected a plaintiff's characterization of its request for profits as a proxy for damages. See, e.g., Juicy Couture, Inc. v. L'Oreal, USA, Inc., No. 04-7203, 2006 WL 559675, at *1 (S.D.N.Y. Mar. 7, 2006).
SharkNinja's representations in its opposition to the motion to strike and elsewhere seem to be in tension with each other in terms of whether it seeks an accounting of profits as a measure of harm suffered. In its amended complaint, SharkNinja requested "actual monetary damages according to proof," and then separately requested "an accounting of Dyson's profits resulting from its ...
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