IP Law Daily Infringement verdict against Florida marketing company reinstated, cancellation order reversed
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Tuesday, August 3, 2021

Infringement verdict against Florida marketing company reinstated, cancellation order reversed

By Cheryl Beise, J.D.

On remand, district court must consider whether injunctive relief would protect the public from confusion.

The federal district court in Miami erred by misapplying the presumption of validity afforded registered marks when it ordered cancellation of an Illinois marketing firm’s PINNACLE marks for lack of distinctiveness in contravention of a jury’s determination that the marks were distinctive and protectable, the U.S. Court of Appeals in Atlanta has ruled. Accordingly, the court’s cancellation order was vacated. Further, while the district court properly found that the Illinois firm’s claims for monetary damages against a Florida marketing firm using identical PINNACLE mark were barred by laches, the case was remanded for the district court to consider "whether to grant Pinnacle Illinois injunctive relief to protect the public’s interest in avoiding confusion" between the parties’ marks (Pinnacle Advertising and Marketing Group, Inc. v. Pinnacle Advertising and Marketing Group, LLC, August 2, 2021, Branch, E.).

This trademark dispute arose between two advertising and marketing companies operating under the name Pinnacle Advertising and Marketing Group. The Illinois-based Pinnacle, which has provided advertising services under the mark PINNACLE since 1998, owned two federal trademark registrations for "PINNACLE" in standard character and stylized form. In 2018, Pinnacle Illinois sued the Florida-based Pinnacle for trademark infringement and unfair competition under the Lanham Act. Pinnacle Florida filed a counterclaim seeking to cancel Pinnacle Illinois’s trademark registrations under 15 U.S.C. § 1119. Pinnacle Florida, which had used the mark PINNACLE since 2010, also alleged that Pinnacle Illinois’s claims were barred by the doctrine of laches.

A jury eventually rendered a verdict in favor of Pinnacle Illinois on its infringement and unfair competition claims and awarded $550,000 in damages—$500,000 on its infringement claim and $50,000 on its unfair competition claim. Pinnacle Florida filed a post-trial motion for judgment as a matter of law. The district court granted the motion, setting aside the jury’s infringement verdict and damages award. The district court determined that the "ubiquitous" term PINNACLE was descriptive, and the Illinois company failed to present sufficient evidence to establish that the mark had acquired distinctiveness. The court ordered cancellation of the registrations under § 1119. The district court also found that Pinnacle Illinois’s Lanham Act claims were barred by laches, which the parties had stipulated would be decided by the court rather than the jury. Pinnacle Illinois appealed.

Counterclaim amendment. Pinnacle Illinois first contended that the district court erred when it allowed Pinnacle Florida to amend its cancellation counterclaim 10 days before trial even though Pinnacle Florida never formally moved to amend under Rule 15 of the Federal Rules of Civil Procedure, which allegedly prejudiced Pinnacle Illinois’s ability to prepare its case. The Eleventh Circuit was not persuaded. The court noted that Rule 15 allows amendment with the "court’s leave," but does not impose a formal requirement that a party seek leave. In addition, Pinnacle Illinois was not prejudiced by the amended cancellation counterclaim. Pinnacle Illinois was on notice of the contents of Pinnacle Florida’s proposed amendment almost three months before trial.

Deference to jury findings. Pinnacle next argued that the district court erred by ordering cancellation of Pinnacle Illinois’s registrations without regard to the jury’s findings of distinctiveness. The Eleventh Circuit agreed.

Under Rule 50, a district court can overturn a jury’s finding on an issue if the court finds that "a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue[.]" Fed. R. Civ. P. 50(a)(1). In this case, the district court made clear that it did not use the Rule 50 standard to evaluate the cancellation counterclaim; rather, it applied a preponderance of the evidence standard, considered the evidence anew, and determined that Pinnacle Illinois’s marks were not distinctive, and thus not protectable, and cancelled the registrations under § 1119. The district court said that it could not discern whether the jury made any specific finding that the marks were distinctive and further said that the parties had "agreed" that the district court would determine the claim. The record, however, belied these assertions. In considering Pinnacle Illinois’s claims for trademark infringement and unfair competition, the jury made a specific finding that Pinnacle Illinois’s marks were distinctive and thus trademark protectable. The verdict form expressly asked the jury whether Pinnacle Illinois’s marks were distinctive and thus protectable. The so-called "agreement" the district court referred to took place at a pre-trial calendar call proceeding. According to the Eleventh Circuit, that colloquy did not suggest that the parties agreed to vacate the jury’s findings; it only suggested that the parties agreed that the court would decide the proper remedy under § 1119. Thus, the district court erred in concluding that Pinnacle Illinois agreed that the jury would have no part in determining the factual issues underlying the cancellation counterclaim.

Because the district court did not give the jury’s findings on protectability deference, the appeals court vacated the district court’s order granting Pinnacle Florida’s motion for a judgment as a matter of law and remanded the case for the district court to determine "whether a reasonable jury could have decided that [Pinnacle Florida] was not entitled to to cancellation of the [Pinnacle registrations]."

Presumption of distinctiveness. Pinnacle Illinois additionally argued that the district court failed to hold Pinnacle Florida to its burden to rebut the presumption that Pinnacle Illinois’s marks were inherently distinctive. The appeals court again agreed.

Federally registered trademarks are presumed to be distinctive. This presumption can be overcome only by a preponderance of the evidence showing that the mark is not distinctive. The Eleventh Circuit explained that when the PTO does not require proof of secondary meaning, as in this case, the presumption is that the mark is inherentlydistinctive. On the other hand, when the PTO requires an applicant to provide proof of secondary meaning, the mark is presumed to have acquired distinctiveness.

The district court in this case misapplied the distinctiveness standard when it analyzed Pinnacle Florida’s cancellation counterclaim. Accordingly, on remand, the appellate court directed the district court to hold Pinnacle Florida to its "double burden" to (1) demonstrate that "no reasonable jury" could have found Pinnacle Illinois’s marks to be distinctive, and (2) rebut the presumption that Pinnacle Illinois’s marks are inherently distinctive.

Laches defense. Lastly, Pinnacle Illinois maintained that the district court erred in finding that its claims for money damages for trademark infringement and unfair competition under the Lanham Act were barred by the doctrine of laches. The district court found that Pinnacle Illinois knew or should have known there was a likelihood of confusion between the two marks as of January 2014, which was more than four years before Pinnacle Illinois initially filed suit. The district court also found that Pinnacle Illinois had no excuse for delaying four years to sue to enforce its marks. The Eleventh Circuit determined that these findings were supported by the record evidence.

Even though the appellate court affirmed district court’s conclusion that the doctrine of laches barred Pinnacle Illinois’s claims for monetary damages for trademark infringement and unfair competition, it nevertheless remanded the case for the district court to consider Pinnacle Illinois’s request for injunctive relief to protect the public’s interest in avoiding confusion. The Eleventh Circuit previously has held that even where laches bars a claim for money damages, "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." Kason Indus., Inc. v. Component Hardware Grp., Inc., 120 F.3d 1199, 1207 (11th Cir. 1997).

In this case, Pinnacle Illinois sought both monetary and injunctive relief for its trademark infringement and unfair competition claims, yet the district court did not address whether Pinnacle Illinois was entitled to injunctive relief to protect the public’s interest in avoiding confusion. The case was remanded for the district court in the first instance to "weigh the equities of the case and the strength of [Pinnacle Illinois’s] case" to determine whether injunctive relief is appropriate.

The Case is No. 19-15167.

Attorneys: Edward L. Bishop (Bishop Diehl & Lee, Ltd.) for Pinnacle Advertising and Marketing Group, Inc. Joe M. Grant (Marshall Grant, PLLC) for Pinnacle Advertising and Marketing Group, LLC.

Companies: Pinnacle Advertising and Marketing Group, Inc.; Pinnacle Advertising and Marketing Group, LLC

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