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Idaho Golf Partners, Inc. v. Timberstone Management, LLC

United States District Court, D. Idaho

August 17, 2017

IDAHO GOLF PARTNERS, INC., Plaintiff,
v.
TIMBERSTONE MANAGEMENT, LLC., Defendant. TIMBERSTONE MANAGEMENT, LLC., Counterclaimant,
v.
IDAHO GOLF PARTNERS, INC., Counterdefendant.

          MEMORANDUM DECISION AND ORDER

          B. LYNN WINMILL CHIEF JUDGE.

         INTRODUCTION

         This case concerns a trademark dispute between two golf courses over the use of the mark “TIMBERSTONE.” Plaintiff-Counterdefendant Idaho Golf Partners, Inc. (“IGPI”) operates a golf course in Caldwell, Idaho under the assumed business name “TimberStone Golf Course.” Defendant-Counterclaimant TimberStone Management, LLC (“TimberStone Management”) operates the “TimberStone Golf Course” in Iron Mountain, Michigan. On June 13, 2014, IGPI filed a complaint alleging a claim for tortious interference with prospective economic advantage, seeking a declaratory judgment that TimberStone Management does not own an exclusive right to the TIMBERSTONE mark, and seeking to enjoin TimberStone Management from interfering with its use of the mark. TimberStone Management asserted counterclaims for trademark infringement (15 U.S.C. § 1114), unfair competition and false designation of origin (15 U.S.C. § 1125(a)), trademark dilution (15 U.S.C. § 1125(c)), and cybersquatting (15 U.S.C. § 1125(d)).

         Trial in this case took place from September 26 to September 30, 2016 on TimberStone Management's counterclaims. The parties' claims for injunctive and declaratory relief were reserved for the Court. The jury returned a verdict for TimberStone Management on its counterclaims for trademark dilution and unfair competition and false designation of origin, and awarded $9, 808 in damages against IGPI. Additionally, the jury found that IGPI acted willfully, maliciously, or fraudulently. The jury found no trademark infringement or cybersquatting by IGPI.

         Both parties filed omnibus post-trial briefs, addressing their equitable claims and post-trial motions Dkts. 122, 123. These include (1) IGPI's motion for judgment as a matter of law, or alternatively for a new trial, on the trademark dilution and unfair competition and false designation of origin counterclaims; (2) IGPI's request for a declaratory judgment; (3) TimberStone Management's motion to enhance the jury's damages award; (4) TimberStone Management's motion for attorneys' fees and costs; (5) TimberStone Management's motion for a permanent injunction.

         A hearing was held on the post-trial motions on November 30, 2016. At the conclusion of that hearing, the Court requested supplemental briefing on the following issues: (1) whether the Court can consider an issue not specifically raised in a Rule 50(a) motion, but later presented in a Rule 50(b) motion, in order to avoid plain error; (2) whether a statutory or common law “good faith remote use” defense applies to an unfair competition claim under 15 U.S.C. § 1125(a); (3) whether, even if applicable, a prior use defense on the unfair competition claim was waived when IGPI failed to ask for an instruction on that defense; and (4) whether the Ninth Circuit has held in any post-2006 case that “fame” may exist in niche market.

         This memorandum opinion and order addresses the parties' post-trial motions. The Court will issue a separate decision addressing their requests for equitable relief.

         LEGAL STANDARD

         A. Rule 50 - Motion for Judgment as a Matter of Law

         Federal Rule of Civil Procedure 50 governs a request for a judgment as a matter of law. Under Rule 50(a), a party must first move for judgment as a matter of law before the case is submitted to the jury and “specify . . . the law and facts that entitle the movant to the judgment.” Fed.R.Civ.P. 50(a)(2). Under Rule 50(b), if the court denies the pre-verdict motion, “the movant may file a renewed motion for judgment as a matter of law and may include an alternative or joint request for a new trial under Rule 59.” Fed.R.Civ.P. 50(b). The failure to make a Rule 50(a) motion before the case is submitted to the jury forecloses the possibility of the Court later considering a Rule 50(b) motion. Tortu v. Las Vegas Metropolitan Police Dep't., 556 F.3d 1075, 1083 (9th Cir. 2009). Furthermore, “[a] post-trial motion for judgment can be granted only on grounds advanced in the pre-verdict motion.” Fed.R.Civ.P. 50(b), 1991 advisory committee notes.

         A court may grant a Rule 50 motion for judgment as a matter of law only if “there is no legally sufficient basis for a reasonable jury to find for that party on that issue.” Krechman v. County of Riverside, 723 F.3d 1104, 1109 (9th Cir. 2013) (citing Jorgensen v. Cassiday, 320 F.3d 906, 917 (9th Cir. 2003) (quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 149 (2000)). “A jury's verdict must be upheld if it is supported by substantial evidence . . ., even if it is also possible to draw a contrary conclusion from the same evidence.” Wallace v. City of San Diego, 479 F.3d 616, 624 (9th Cir. 2007). “[I]n entertaining a motion for judgment as a matter of law, the court . . . may not make credibility determinations or weigh the evidence.” Go Daddy Software, Inc., 581 F.3d at 961 (quoting Reeves, 530 U.S. at 150). Rather, “[t]he evidence must be viewed in the light most favorable to the nonmoving party, and all reasonable inferences must be drawn in favor of that party.” Id.

         B. Rule 59 - Motion for New Trial

         Federal Rule of Civil Procedure 59(a)(1) states, “A new trial may be granted . . . in an action in which there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States.” “Historically recognized grounds include, but are not limited to, claims ‘that the verdict is against the [clear] weight of the evidence, that the damages are excessive, or that, for other reasons, the trial was not fair to the party moving.'” Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007) (quoting Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 251 (1940). Erroneous or inadequate jury instructions are also bases for a new trial. See Murphy v. City of Long Beach, 914 F.2d 183, 187 (9th Cir. 1990).

         A verdict is against the “clear weight of the evidence” when, after giving full respect to the jury's findings, the judge “is left with the definite and firm conviction that a mistake has been committed” by the jury. Landes Const. Co., Inc. v. Royal Bank of Canada, 833 F.2d 1365, 1371-72 (9th Cir. 1987) (citations omitted). In ruling on a motion for new trial, “the judge can weigh the evidence and assess the credibility of witnesses, and need not view the evidence from the perspective most favorable to the prevailing party.” Air-Sea Forwarders, Inc. v. Air Asia Co., 880 F.2d 176, 190 (9th Cir. 1989) (citations and quotation marks omitted). However, a court should not upset the verdict “merely because it might have come to a different result from that reached by the jury.” Roy v. Volkswagen of Am., Inc., 896 F.2d 1174, 1176 (9th Cir. 1990) (quotation marks and citation omitted).

         ANALYSIS

         1. IGPI's Motion for Judgment as a Matter of Law under Rule 50(b)

         At the close of TimberStone Management's case in chief, IGPI made a Rule 50(a) motion for judgment as a matter of law. The Court denied the motion and the case was submitted to the jury. IGPI now renews its motion for judgment as a matter of law pursuant to Rule 50(b), asserting that there was insufficient evidence as to: (1) TimberStone Management's trademark dilution claim; (2) TimberStone Management's unfair competition claim; (3) the jury's finding that IGPI infringed TimberStone Management's marks maliciously, fraudulently, or willfully; (4) actual damages.

         A. Procedural Default

         As a threshold matter, TimberStone Management argues that IGPI is procedurally barred from asserting the first three grounds for its Rule 50(b) motion because IGPI failed to preserve these arguments. The Court agrees.

         Under Rule 50(a), a pre-verdict motion for judgment as a matter of law must “specify . . . the law and facts that entitle the movant to the judgment.” Fed.R.Civ.P. 50(a)(2). “Because it is a renewed motion, a proper post-verdict Rule 50(b) motion is limited to the grounds asserted in the pre-deliberation Rule 50(a) motion. Thus, a party cannot properly raise arguments in its post-trial motion for judgment as a matter of law under Rule 50(b) that it did not raise in its pre-verdict Rule 50(a) motion.” See E.E.O.C. v. Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir. 2009); see also Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008); Fed.R.Civ.P. 50(b) Adv. Comm. Notes 2006.[1]

         The Ninth Circuit strictly construes this limitation. See Freund v. Nycomed Amersham, 347 F.3d 752, 761 (9th Cir. 2003) (district court erred in granting JMOL on punitive damages where defendant failed to raise the argument in its Rule 50(a) motion). In fact, courts generally require sufficiency-of-the-evidence arguments to be made at the level of a claim's specific elements or sub-elements. See id.; accord Gierlinger v. Gleason, 160 F.3d 858 (2d Cir. 1998) (“The JMOL motion must at least identify the specific element that the defendant contends is insufficiently supported. A generalized challenge is inadequate.”) (internal quotations and citations omitted).

         Applying this standard here, the Court determines that IGPI failed to preserve the sufficiency of the evidence challenges on the trademark dilution and unfair competition claims. Counsel for IGPI made the following oral motion under Rule 50(a) for judgment as a matter of law at the conclusion of TimberStone Management's case-in-chief:

I don't believe TimberStone Management has satisfied its prima facie showing on the myriad of claims, trademark, infringement, both under the Lanham Act and common law.
Particularly, though, I guess I would like to talk about two issues, and that is the cybersquatting. I don't think there has been any evidence of bad faith in connection with that. There has been a lot of talk about should have, would have, could have, mistakes, but nothing that would rise to the level of bad faith.
The other issue is with respect to the intentional interference claim, there is no evidence of actual damages. And that intentional interference claim is a state-law claim, and it's separate and apart from the Lanham Act and statutory damages, and disgorgement of profits, those sorts of things. There is simply no evidence of actual damages being presented to the court that would warrant submitting any claim with reference to actual damages but particularly that intentional interference claim, Your Honor. And that's all. I understand the court's position.

Partial Transcript for Sept. 30, 2016, at 5:2-21, Dkt. 127. IGPI did not file a brief in support of its motion. The Court denied the motion and the case was submitted to the jury.

         After a careful review of the transcript, the Court concludes that IGPI's oral Rule 50(a) motion challenged the sufficiency of the evidence on only two issues: (1) “bad faith, ” an element of TimberStone Management's cybersquatting claim, and (2) actual damages. In contrast, IGPI's Rule 50(b) motion asserts that there was insufficient evidence on the following issues: (1) “famousness” of TimberStone Management's mark, an element of the trademark dilution claim; (2) “likelihood of confusion, ” an element of the unfair competition claim; (3) fraud, malice, and willfulness; and (4) actual damages. Of these, the only argument expressly raised in the pre-verdict motion was evidence of actual damages.

         IGPI contends that the remaining arguments were adequately preserved for three reasons. First, the opening line of its oral pre-verdict motion presented a comprehensive sufficiency-of-the-evidence challenge to the “myriad of [Defendant's] claims.” Second, IGPI notes that the Court had previously stated its intention to deny the motion. Finally, TimberStone Management and Court were aware of IGPI's more specific grounds for the Rule 50 motion, due to off-the-record discussions and the fact that “Plaintiff has consistently and repeatedly, throughout this litigation raised the same exact arguments as to the sufficiency of Defendant's evidence.”

         The Court is not persuaded by these arguments. First, the opening line of IGPI's motion-“I don't believe TimberStone Management has satisfied its prima facie showing on the myriad of claims”-falls far short of the specificity required by Rule 50. See Fed. R. Civ. P. 50(a)(2) (a Rule 50(a) motion “must specify . . . the law and facts that entitle the movant to the judgment.”). Courts have stressed that a pre-verdict motion must bring into focus the precise claims that a movant contends are insufficiently supported; a generalized challenge as to “the myriad of claims” fails to do so. Permitting this sort of all-encompassing motion would eviscerate the preservation requirement.

         As for the second argument, the failure to comply with Rule 50(b) has on occasion been excused where a district court prevents or discourages a party from fully presenting its pre-verdict motion. For example, in Reeves v. Teuscher, 881 F.2d 1495 (9th Cir. 1989), the Ninth Circuit excused technical noncompliance with Rule 50, where the district court interrupted defense counsel's attempt to move for a directed verdict at the close of evidence and instructed counsel to move after the verdict-which he did. Similarly, in Motorola, Inc. v. Interdigital Tech. Corp., 930 F.Supp. 952, 961 (D. Del. 1996), rev'd in part on other grounds, 121 F.3d 1461 (Fed. Cir. 1997), the district court had “made clear that it did not require or desire additional argument at the time the [Rule 50(a)] motion was made” and therefore concluded that “it would be unfair to penalize ITC for acceding to the Court's wishes.” In contrast here, the Court prompted IGPI to make its Rule 50(a) motion on the record before the case was submitted to the jury. It did not request or encourage a merely perfunctory argument. See Partial Transcript for Sept. 30, 2016, at 4:8. Counsel's knowledge that the motion would likely be denied did not excuse his obligation to carefully preserve IGPI's arguments.

         Finally, the Court finds no support for the notion that off-the-record discussions may fulfill the preservation obligations under Rule 50. Ultimately, “[a] lawyer has a duty to preserve issues on the record for his client.” Belk, Inc. v. Meyer Corp., U.S., 679 F.3d 146, 159-60 (4th Cir. 2012). Counsel for IGPI failed to do so here. The Court also advised counsel for IGPI that any arguments made at the jury instruction conference should be restated on the record in a proper Rule 50(a) motion, and provided time for IGPI to do so. Counsel took this opportunity to challenge the sufficiency of the evidence on two specific claims, giving the impression that IGPI did not intend to pursue arguments about unproven elements of other claims. Even if IGPI had previously maintained that evidence of fame, likelihood of confusion, and fraud, malice, and willfulness was lacking, these arguments were abandoned.

         Accordingly, the Court concludes that IGPI is procedurally barred from obtaining judgment as a matter of law, except on the sufficiency of the evidence of damages. The Court takes up this argument below in the comprehensive discussion on damages.

         2. IGPI's Motion for New Trial under Rule 59

         As an alternative to its request for judgment as a matter of law, IGPI requests a new trial on grounds that the jury verdict was against the weight of the evidence. The Court will grant the motion for a new trial as to the trademark dilution claim and otherwise deny the motion.

         A. Trademark Dilution

         To prevail on a claim for trademark dilution under the Trademark Dilution Revision Act (“TDRA”) of 2006, 15 U.S.C. § 1125(c), a party must show that its mark is “famous, ” meaning that “it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark's owner.” 15 U.S.C. § 1125(c)(2)(A). “It is well-established that dilution fame is difficult to prove.” Coach Services, Inc. v. Triumph Learning LLC, 668 F.3d 1356, 1373 (Fed. Cir. 2012). Protection from dilution, as opposed to trademark infringement, is “reserved for a select class of marks- . . . only those whose mark is a ‘household name.'” Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002, 1011 (9th Cir. 2004) (quoting Thane Int'l., Inc. v. Trek Bicycle Corp., 305 F.3d 894, 911 (9th Cir. 2002) (“[T]he mark must be a household name.”); see also H.R. Rep. No. 104-374, at 3 (1995) (listing Dupont, Buick, and Kodak as examples of eligible “famous marks”).

         To determine the requisite degree of fame, the court may consider all relevant factors, including those four enumerated by statute: (i) the duration, extent, and geographic reach of advertising and publicity of the mark; (ii) the amount, volume, and geographic extent of sales of goods or services offered under the mark; (iii) the extent of actual recognition of the mark; and (iv) whether the mark was registered. 15 U.S.C. § 1125(c).

         (1) Application of Statutory Factors

         Applying this standard here, the Court concludes that TimberStone Management presented insufficient evidence to support the jury's finding that the TIMBERSTONE mark is “famous” within the meaning of the TDRA. As for the first statutory factor, TimberStone Management's advertising and promotional efforts were limited in scope. The company's own Director of Marketing, Tyler Swanson, described his marketing budget as “extremely low.” The company's efforts appear limited to passively maintaining its website and social media accounts, fairly ubiquitous marketing in today's economy. TimberStone Management presented no evidence that it has purchased advertisements or otherwise promoted its brand. These modest efforts pale in comparison to the dollars spent advertising truly famous marks, and even those held not famous. See, e.g., Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002, 1013 (9th Cir. 2004) (upholding lower court's finding that a material dispute of fact existed regarding whether NISSAN was a famous mark, despite evidence of more than $898 million in advertising expenditures); Jada Toys v. Mattel, Inc., 518 F.3d 628 (9th Cir. 2007) (concluding that HOT WHEELS was sufficiently famous, where $350 million was spent advertising the mark); Nike, Inc. v. Nikepal Int'l, Inc., No. 2:05-CV-1468-GEB-JFM, 2007 WL 2782030, at *5-6 (E.D. Cal. Sept. 18, 2007) (NIKE mark was sufficiently famous, where the company spent in excess of $1 billion on promotion); Bd. of Regents, Univ. of Texas Sys., 550 F.Supp.2d at 677-78 (W.D. Tex. 2008) (University of Texas longhorn logo was not famous, despite its promotion at nationally televised football games on ABC and ESPN, on the cover of Sports Illustrated, on cereal boxes, and on $400 million in UT retail products).

         As for publicity, the Michigan course has received accolades in publications with nationwide distribution, such as GolfDigest and Golfweek. It was also featured on multiple “best of” lists and enjoyed a five-star rating from GolfDigest in 2004 and 2008. However, these articles were too few to have transformed TIMBERSTONE into a household name. “Many products receive broad incidental media coverage. Such promotion does not lead to the conclusion that their trademarks have become a part of the collective national consciousness.” Thane Int'l Inc. v. Trek Bicycle Corp., 305 F.3d 894, 912 (9th Cir.2002). The impact of such publications is also lessened by the fact that the TimberStone course of Michigan was almost always listed alongside dozens or even hundreds of other golf courses achieving similar reviews. See, e.g., Coach Services, Inc. v. Triumph Learning LLC, 668 F.3d 1356, 1375 (Fed. Cir. 2012) (substantial media references failed to show widespread recognition of COACH brand where “many of the references are limited to mentioning one of CSI's COACH products among other brands.”).

         The amount, volume, and geographic extent of sales provide similarly weak support for a finding of fame. While TimberStone Management has sold rounds of golf to customers from almost every state, most came from Michigan and adjacent states. Joe Rizzo, former Director of Golf at TimberStone Management, testified that these states are the golf course's “target area” and that 90-95% of customers drive to the course. Moreover, TimberStone Management's sales number only in the tens of thousands, and golf is the type of activity that is likely to draw a significant number of repeat customers. TimberStone Management provided no evidence of the number of unique customers that had purchased a round of golf from its course. ...


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