The Pinnacle of Trademark Infringement

A case captioned “Pinnacle Advertising and Marketing Group, Inc. v. Pinnacle Advertising and Marketing Group, LLC” is bound to be ripe with interesting trademark issues, and this one did not disappoint. After a three day jury trial, the Plaintiff (the senior user and registrant of the trademark PINNACLE) secured a favorable verdict that its PINNACLE trademark was distinct, protectable, and that the senior user was entitled to $550,000 in damages on its trademark infringement and unfair competition claims.

Any elation at the jury’s verdict, however, was subsequently dashed by the district court which decided to grant defendant’s Rule 50 motion for judgment as a matter of law. In so doing, the court ruled that plaintiff’s trademark infringement claims were barred by the equitable defense of laches. The judge went on to order that the PINNACLE registration was not distinct and protectable and ordered that the PINNACLE trademark be cancelled.

Plaintiff appealed the case to the Eleventh Circuit, whose omnibus 39-page opinion has a host of good take-aways for trademark practitioners.
(PDF Available Here.) First, the Court reiterated that there is no formal requirement to file a motion under rule 15 for a claim to be amended and, unless there is some clear prejudice, an amendment allowed by the district court judge on the eve of trial will likely be upheld on appeal. In this case, that meant that defendant’s cancellation claim (formally amended ten-days before trial) was allowed.

Takeaway: A clear articulation of prejudice at the district court level combined with a request to reopen discovery and/or delay trial, better preserves the issue of late amendment of claims for appeal.

The Eleventh Circuit, however, agreed with plaintiff that the district court erred in invalidating the PINNACLE registration. As a registered mark, PINNACLE was entitled to a presumption of distinctiveness which was further buttressed by a jury verdict confirming said distinctiveness. While the district court determined that it was inconclusive whether the jury verdict found PINNACLE to be distinctive, the Eleventh Circuit disagreed. Implicit in the jury verdict was a determination as the the validity of the mark. Indeed, the jury instructions and special verdict form specifically asked:

The Eleventh Circuit also found that the parties statement in a pre-trial conference that the court should decide the cancellation counterclaim, merely meant that the Court would decide the remedy under § 1119–not that the court could completely disregard the jury findings entirely. As a result, the district court erred by not giving the jury’s findings the required deference and this point was remanded for a determination as to “whether a reasonable jury could have decided that [defendant] was not entitled to cancellation of the [Pinnacle registrations].” “[I]f a reasonable jury could have so concluded” then the district court must uphold the jury’s findings and deny defendant’s motion for judgment as a matter of law as it relates to its cancellation counterclaim. On top of this, the Eleventh Circuit also held that the defendant has the additional burden of rebutting the presumption that the PINNACLE mark, as a registered mark, is inherently distinctive.

Takeaway: Statements made in pre-trial conferences commonly are thrown around on appeal as evidence of waiver or acquiescence. Being as precise and narrow as possible in statements made to the court during oral hearings is essential.

So, while the Eleventh Circuit rescued plaintiff’s PINNACLE mark from cancellation, the Court then went on to affirm the district court’s finding that laches barred plaintiff from recovering any damages, and the decision to remove the $550,000 jury award was affirmed. In so concluding, the Eleventh Circuit focused on the delay between the moment “the plaintiff knows or should know [it] has a provable claim for infringement” until it files suit. Here, the Eleventh Circuit found that the district court did not abuse its discretion in finding that the decision to wait over 4 years (the statute of limitations for similar claims in Florida) was sufficient to key up a laches defense and that defendants had proven the required elements: delay, no excuse, and undue prejudice.

Takeaway: The Court highlighted the circuit split on the undue prejudice prong. In the Ninth Circuit, a showing of prejudice must be “based on an investment in the [trademark] as the identity of the business in the minds of the public[,]” which is different than “mere[] . . .expenditures in promoting the infring[ing] name[.]” Internet Specialties W., Inc. v. Milon-DiGiorgio Enters., Inc., 559 F.3d 985, 991–92 (9th Cir. 2009). In that case, the Ninth Circuit held that no prejudice was shown merely by the growth of the defendant’s business and customer base during the delay when the defendant presented no evidence of its investment in the public’s awareness of the trademarked brand. Other circuits take a broader view of prejudice and have held that any showing of economic prejudice related to the business because of the delay is sufficient. Herman Miller, Inc. v. Palazzetti Imps. & Exps., Inc., 270 F.3d 298, 322 (6th Cir. 2001) (holding that increased potential liability for damages by itself was sufficient to show prejudice); Hubbard Feeds, Inc. v. Animal Feed Supplement, Inc., 182 F.3d 598, 602 (8th Cir. 1999) (holding that substantial investments in equipment used to produce the infringing product were sufficient to show prejudice).

The Eleventh Circuit, however, made clear that the doctrine of laches applies only to monetary damages and not the equitable relief of an injunction. With respect to injunctive relief, the Court remanded the matter to the district court to determine whether it is in the public interest to avoid further confusion and to permit injunctive relief.

Takeaway: Even if laches bars monetary relief, if the likelihood of confusion is inevitable, or so strong as to outweigh the effect of the plaintiff’s delay in bringing a suit, a court may in its discretion grant injunctive relief, even in cases where a suit for damages is appropriately barred.

When it comes to intellectual property matters—be they simple trademark applications, reviews of established intellectual property protection plans, or expansive federal litigation—I can help. Give me a call or email and find out how.