Meyer makes Anolon Advanced cookware and formerly sold to Belk, a retailer that began selling its own private-label cookware in 2007 under the Biltmore House brand. (Design patents were also involved in the case.) Analon Advanced:
Biltmore:
Meyer sued Belk for trade dress infringement and
unfair/deceptive trade practices in the high-end cookware market. After a 9-day trial, the jury found in
Meyer’s favor, including a finding that Belk sold cookware that was
“deceptively similar” to Meyer’s knowing of Meyer’s designs as well as a
finding that Belk caused Meyer damage.
The court trebled the $420,000 in damages found by the jury to
$1,260,000 under North Carolina law.
Belk appealed.
The court found that Belk had waived a number of its
arguments, including the sufficiency of the evidence of infringement along with
challenges to jury instructions. (For
what it’s worth, the designs look a lot alike to me, but they also look like
nice pots and pans.)
In addition, Belk’s challenge to Meyer’s expert was properly
rejected. He’d testified as an expert
witness in consumer behavior and marketing in a number of cases, and had
analyzed and designed consumer research studies in a variety of settings. Even though he hadn’t previously conducted
trade dress or trademark surveys specifically, he could qualify as an
expert. Cross-examination addressed some
of Belk’s concerns; he testified that he’d prepared to address trade dress and
infringement issues by consulting “academic and professional sources” and
“attorneys and legal practices who practice trade dress/trademark law.” The court of appeals didn’t consider it
dispositive that he failed to consult any survey questionnaires that had been
offered and accepted in court in trade dress litigation. Belk argued that his secondary meaning/likely
confusion survey excluded relevant consumers, had an inadequate sample size,
was not geographically representative, had leading questions and wrongly used
side-by-side exposure. But this wasn’t
the rare case when a survey was so flawed as to be inadmissible; these
objections were properly addressed by the trier of fact.
Belk then argued that the district court wrongly sent the
state-law UDTPA claims to the jury.
North Carolina’s UDTPA requires conduct that was unfair or had the
capacity/tendency to deceive and that proximately causes actual injury. Whether the conduct was unfair or deceptive
is a legal issue, and “a somewhat nebulous concept, … but only practices
involving “some type of egregious or aggravating circumstances are sufficient
to violate the UDTPA” (citation omitted).
Generally, trade practices can only be unfair when they offend
established public policy and are “immoral, unethical, oppressive,
unscrupulous, or substantially injurious to consumers.” An act need not be both unfair and deceptive
to be covered. The actor’s intent or
good faith is irrelevant.
Treble damages are assessed automatically. The statute doesn’t provide the measure of
damages, but North Carolina courts have explained that the measure should
further the purpose of damages awards, which is to put the victim back in its
original condition. The 4th
Circuit had previously held that disgorgement of profits could be trebled under
state law (in a case where the plaintiff didn’t provide notice of its
registration and defendant had no actual knowledge of it and thus where 15
U.S.C. § 1111 precluded Lanham Act damages for infringement of a registered
mark).
The court of appeals found that, given the jury’s factual
findings, Belk engaged in unfair and deceptive trade practices as a matter of
law. Belk sold a cookware line that was
deceptively similar to Anolon Advanced; it did so after receiving product,
sales, and market information, along with images and samples of Anolon
Advanced; and it bought the deceptively similar designs from a third party even
after learning that Meyer was selling the third party’s proposed designs. This “possesses the tendency or capacity to
mislead or creates the likelihood of deception” sufficiently to trigger the
law.
Belk argued that the legislature didn’t intend the law to
cover “unintentional” unregistered trademark infringement claims already
addressed by the Lanham Act. An earlier
district court case had so held, reasoning that the law was designed to protect
consumers, not mark owners, and that, given that the penalty for infringement
of registered marks was $200-$1000
plus actual profits or damages, the legislature wouldn’t have intended
mandatory treble damages for innocent infringement of unregistered marks.
The court of appeals disagreed. Intent is irrelevant, and state and federal
claims are often brought together.
Moreover, the N.C. legislature later amended the law to make
infringement of a registered trademark a per se violation of the law and thus
subject to treble damages. In addition,
the evidence didn’t support Belk’s claim of innocent or unintentional
infringement. Sadly but unsurprisingly
(perhaps based on the welter of arguments that weren’t preserved for appeal),
the court said that “the inference of an intent to deceive could hardly be
stronger on this record,” without considering whether a reasonable seller could
have thought that the design of the product was freely copyable, whether
because of functionality or lack of secondary meaning.
Finally, the court of appeals held that the award of profits
was properly treated as a damage award subject to trebling. Belk’s profits constituted a proper rough
measure of damages.
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