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Media Alerts - Georgia-Pacific v. Von Drehle Corp. -- Fourth Circuit
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April 30, 2015
  Georgia-Pacific v. Von Drehle Corp. -- Fourth Circuit
Headline: Paper Towel Manufacturer Georgia-Pacific Absorbs Another Setback

Area of Law: Trademark Infringement

Issues Presented: (1) Whether a permanent, nationwide injunction was unduly broad given conflicting rulings in other circuits; (2) Whether the district court applied the wrong legal standard for trebling the jury award and for awarding attorneys fees and pre-judgment interest.

Extended Summary: Georgia-Pacific Consumer Products LP ("Georgia-Pacific") owns the trademark "enMotion" and uses it to brand paper towel dispensers designed to dispense only paper towels manufactured by Georgia-Pacific. Von Drehle, a competitor company, designed a less expensive paper towel called 810-B and sold it specifically for use in Georgia-Pacific's enMotion towel dispensers. In response, Georgia-Pacific commenced three separate actions in separate jurisdictions against von Drehle and von Drehle distributors Meyers Supply and Four-U-Packaging. The Georgia Pacific suit alleged that putting 810-B paper towels into Georgia-Pacific towel dispensers constituted contributory trademark infringement of Georgia-Pacific's enMotion trademark in violation of the Lanham Act.

In Georgia-Pacific's case against Meyers Supply, the Western District of Arkansas ruled against Georgia-Pacific finding no trademark infringement. Specifically, the court reasoned that the trademark on a dispenser did not create a likelihood of confusion as to the source of the paper towels inside. The Eighth Circuit affirmed.

In a parallel action against Four-U-Packaging in the Northern District of Ohio, the district court held the Arkansas judgment precluded Georgia-Pacific from re-litigating its trademark infringement claim. The Sixth Circuit affirmed.

Similarly, in Georgia-Pacific's case against von Drehle in the Eastern District of North Carolina, von Drehle filed a motion seeking judgment as a matter of law due to the Arkansas court's decision rejecting Georgia-Pacific's trademark infringement claims. Unlike in Ohio, however, the district court denied the motion finding von Drehle had inordinately delayed raising its preclusion argument. Trial ensued, and a jury awarded Georgia-Pacific $791,431 - 100% of the profits von Drehle made from trading on the enMotion trademark between 2005-2011.

Following trial, von Drehle renewed its motion for judgment as a matter of law based on claim and issue preclusion. The district court granted the motion, entering judgment for von Drehle and vacating the jury verdict. The United States Court of Appeals for the Fourth Circuit reversed, finding von Drehle waived its preclusion defense and remanded the case to the district court with instructions to reinstate the jury verdict and consider the other forms of relief requested by Georgia-Pacific. On remand, the district court entered a permanent, nationwide injunction prohibiting von Drehle from directly or indirectly infringing on Georgia-Pacific's trademark rights. In addition, the district court found von Drehle's infringement was willful and intentional, so the court (1) trebled the jury's award from $791,431 to $2,374,293; (2) awarded Georgia-Pacific attorneys' fees in the amount of $2,225,782; and (3) awarded prejudgment interest in the amount of $204,450. Finally, the court awarded Georgia-Pacific $82,758 in court costs. The total award was just shy of five million dollars.

Von Drehle responded with this appeal, challenging the geographic scope of the injunction and each monetary award except court costs. On appeal, the Fourth Circuit found the district court's injunction could not prohibit the use of 810-B paper towels in Georgia-Pacific dispensers in the Eighth and Sixth Circuits as a matter of comity, and that the injunction should not extend to the remaining circuits because those circuits should be free to resolve the trademark infringement question. The Fourth Circuit vacated the district court's injunction and remanded with instructions to limit the injunction to the Fourth Circuit only.

The Fourth Circuit also remanded each of the district court's monetary awards except court costs. First, the Fourth Circuit reversed the district court's treble damage award, finding the district court applied the wrong standard. On remand, the court directed the district court to enter judgment in the amount awarded by the jury, $791,431, unless it deemed the jury's award to be "inadequate or excessive" under § 1117(a) of the Lanham Act. Second, as to attorneys fees, the Fourth Circuit remanded to the district court with instructions to consider the recently decided Supreme Court case Octane Fitness, LLC v. ICON Health & Fitness, which interpreted a standard similar to that in the Lanham Act for awarding reasonable attorney fees to prevailing parties in "exceptional cases." Finally, the Fourth Circuit reversed the district court's award of prejudgment interest, finding § 1117(a) of the Lanham Act made no specific provision for prejudgment interest in cases involving a recovery of a defendant's profits. The court did not foreclose an award of prejudgment interest under § 1117(a), but instead held that because Georgia-Pacific did not undertake to prove its own damages, the award of prejudgment interest could not stand.

In a separate opinion, concurring in part and dissenting in part, Judge Shedd found the district court did not abuse its broad equitable discretion by entering a nationwide injunction. He explained that the majority opinion misapplied the discretionary doctrine of comity, failed to accord proper respect to the Fourth Circuit's 2013 opinion in this case, and ran counter to a fundamental purpose of the Lanham Act "to provide national protection for trademarks used in interstate and foreign commerce." In addition, because von Drehle is a North Carolina Corporation, Judge Shedd noted that unless von Drehle moved its manufacturing operations elsewhere, manufacturing paper towels in the Fourth Circuit would violate the majority's limited injunction even if the paper towels were not being distributed within the Fourth Circuit.

To read the full text of this opinion, please click here.

Panel: Judges Niemeyer, Shedd, and Keenan

Argument Date: 12/11/2014

Date of Issued Opinion: 03/30/2015

Docket Number: No. 13-2003

Decided: Vacated, reversed in part, and remanded in part, with instructions, by published opinion.

Case Alert Author: Bethany Henneman, Univ. of Maryland Carey School of Law

ARGUED: Carter Glasgow Phillips, SIDLEY AUSTIN LLP, Washington, D.C., for Appellant. Miguel A. Estrada, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for Appellee. ON BRIEF: Michael P. Thomas, PATRICK HARPER & DIXON, LLP, Hickory, North Carolina; Richard Klingler, Jacqueline G. Cooper, Nicolas W. Thompson, John Paul Schnapper-Casteras, SIDLEY AUSTIN LLP, Washington, D.C., for Appellant. Stephen P. Demm, John Gary Maynard, III, HUNTON & WILLIAMS LLP, Richmond, Virginia; Jonathan C. Bond, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C.; W. Kyle Carpenter, WOOLF, MCCLANE, BRIGHT, ALLEN & CARPENTER, PLLC, Knoxville, Tennessee, for Appellee.

Author of Opinion: Judge Niemeyer

Separate Opinion, Concurring in Part and Dissenting in Part: Judge Shedd

Case Alert Circuit Supervisor: Professor Renée Hutchins

    Posted By: Renee Hutchins @ 04/30/2015 09:36 AM     4th Circuit  

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