Betterbox Comm Ltd v. BB Tech Inc ( 2002 )

Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit
8-14-2002
Betterbox Comm Ltd v. BB Tech Inc
Precedential or Non-Precedential: Precedential
Docket No. 01-2456
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PRECEDENTIAL
Filed August 13, 2002
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 01-2456
BETTERBOX COMMUNICATIONS LTD
v.
BB TECHNOLOGIES, INC.;
BLACK BOX CORPORATION,
Appellants
ON APPEAL FROM THE
UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF PENNSYLVANIA
(Dist. Court No. 98-CV-702)
District Court Judge: Honorable Donetta W. Ambrose
Argued: May 7, 2002
Before: NYGAARD, ALITO, and ROSENN, Circuit Ju dges.
(Opinion Filed: August 13, 2002)
ANTOINETTE R. STONE (Argued)
ELLEN E. FARINA
Buchanan Ingersoll, P.C.
11 Penn Center, 14th Floor
1835 Market Street
Philadelphia, PA 19103-2985
MICHAEL L. DEVER
BRYAN H. OPALKO
Buchanan Ingersoll, P.C.
One Oxford Center, 20th Floor
301 Grant Street
Pittsburgh, PA 15219-1410
Counsel for Appellants
MARK SCHONFELD (Argued)
HILLEL I. PARNESS
Brown Raysman Millstein Felder
& Steiner, LLP
900 Third Avenue
New York, NY 10022
Counsel for Appellee
OPINION OF THE COURT
ALITO, Circuit Judge:
This is an appeal in a declaratory judgment action
commenced by Betterbox Communications, Ltd.
("Betterbox"), against Black Box Corporation ("Black Box")
and a wholly owned subsidiary. Betterbox and Black Box
sell competing computer-related products through catalog
marketing. In 1995, Betterbox, a British company, applied
to the United States Patent and Trademark Office ("PTO")
for trademark registration based on its intended use of the
Betterbox name and box design in the United States. Black
Box objected that Betterbox’s name and box design
infringed on its trademarks. Betterbox then brought this
action in federal court seeking a declaration of no
infringement, and Black Box counterclaimed for trademark
infringement, unfair competition, and trademark dilution.
After a trial, the jury returned a verdict for Betterbox, and
the District Court entered judgment accordingly on
November 16, 2000. In post-trial orders, the District Court
denied Black Box’s motions for a new trial under Fed. R.
Civ. P. 59(a) and for relief from judgment under Fed. R. Civ.
P. 60(b). This appeal followed.
2
On appeal, Black Box argues that the District Court
erred in admitting the testimony of Betterbox’s expert
witness, in admitting evidence of Betterbox’s trademark
registrations in foreign countries, and in refusing to grant
relief from the judgment based on newly discovered
evidence. We review these rulings for an abuse of
discretion. See In re Cendant Corp. Prides Litig., 234 F.3d
166, 170 (3d Cir. 2000); Abrams v. Lightolier Inc., 50 F.3d
1204, 1213 (3d Cir. 1995). We affirm.
I.
Betterbox and Black Box each sought to introduce the
testimony of an expert witness on the following question:
whether there was a likelihood that consumers would be
confused by the Betterbox and Black Box marks. Each side
also filed a pre-trial motion in limine to exclude the other’s
expert, but the District Court permitted both experts to
testify.
A.
Black Box argues that the District Court erred because
Betterbox’s expert, John Schulte, lacked the qualifications
needed by an expert. The admissibility of expert testimony
is governed by Federal Rule of Evidence 702, which
requires an expert witness to have "specialized knowledge"
regarding the area of testimony. "The basis of this
specialized knowledge ‘can be practical experience as well
as academic training and credentials,’ " and"[w]e have
interpreted the specialized knowledge requirement
liberally." Waldorf v. Shuta, 142 F.3d 601, 625 (3d Cir.
1998) (citation omitted). However, " ‘at a minimum, a
proffered expert witness . . . must possess skill or
knowledge greater than the average layman . . . .’ " Id.(citation omitted). See also, e.g., Elcock v. Kmart Corp., 233
F.3d 734, 741 (3d Cir. 2000).
In the present case, the District Court did not abuse its
discretion in ruling that Schulte’s practical experience
sufficed under this liberal test. Schulte had worked actively
for 20 years in the field of direct marketing and mail-order
catalogs. He had extensive experience in "marketing and
3
the use of logos and how they are used in the marketplace
as far as advertising." Appendix at 317. As the chairman of
the National Mail Order Association, he had consulted with
the Association’s members on how to market through
catalogs, had edited the Association’s publication Mail
Order Digest, and had reviewed and analyzed about 10,000
catalogs in the previous five years. He had published a
variety of articles on direct marketing, had taken courses in
graphic design, and had designed corporate logos. Schulte
even had about four years’ experience as the owner of a
business involved in the direct marketing of computer
products.
Black Box argues that Schulte’s experience with respect
to the marketing of computers was insufficient because he
had worked in that specific field for only four years and
because that experience had preceded the time of the trial
by eight years. See Appellant’s Br. at 17. This argument is
not persuasive. Four years of experience at the helm of a
company is substantial, and Black Box has not explained
why the passage of eight years between that period and the
commencement of the trial diminished Schulte’s
qualifications. If Schulte had been called to testify as an
expert regarding a field of knowledge that had changed
greatly during the past few years, Black Box’s argument
might have force, but Black Box has not called to our
attention any such changes regarding the question whether
the competing marks in this case created a likelihood of
confusion.
Black Box also faults Schulte’s experience because it did
not concern "the catalog marketing of electronic data
communications and computer connectivity products." Id.
at 18. As noted, however, Schulte had extensive experience
in catalog marketing, as well as four years of experience
marketing computer products. Black Box has not pointed
out anything that is fundamentally different about the
catalog marketing of "data communications and computer
connectivity products" as opposed to other computer
products. Id. Thus, Schulte’s lack of experience in
marketing the precise type of computer components sold by
these companies does not establish that the District Court
abused its discretion in ruling that his qualifications met
the standard of Rule 702.
4
Black Box argues, finally, that Schulte did not have
experience in evaluating the so-called Lapp factors that we
have found to be useful in determining whether there is a
likelihood of confusion between marks. See Interspace Corp.
v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir. 1983); A & H
Sportswear, Inc. v. Victoria’s Secret Stores, Inc. , 237 F.3d
198, 210-15 (3d Cir. 2000). These factors, however, are not
mandatory; they "are meant to be tools, not hurdles."
A & H Sportswear, 237 F.3d at 214. Schulte’s experience
plainly related to a number of the Lapp factors, namely,
factors (1), (3), (7), (8), and (9). For all these reasons, we see
no basis for disturbing the District Court’s determination
regarding Schulte’s qualifications.
B.
Black Box also argues that Schulte should not have been
allowed to testify as an expert because his methodology was
deficient. In Daubert v. Merrell Dow Pharms., Inc., 509 U.S.
579, 592-93 (1993), the Supreme Court held that under
Rule 702 the trial judge must make "a preliminary
assessment of whether the reasoning or methodology
underlying the [expert’s] testimony is scientifically valid."
The Court noted factors relating to the reliability of an
expert’s scientific methodology, including whether the
theory or technique "can be (and has been) tested," whether
it "has been subjected to peer review and publication,"
whether the known or potential error rate is acceptable,
and whether it is generally accepted within a relevant
scientific community. Id. at 593-94. But the Court stressed
that "[t]he inquiry envisioned by Rule 702 is. . . a flexible
one." Id. at 594.
In Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149-50
(1999), the Court held that the basic gatekeeping function
described in Daubert applies to all expert testimony, not
just "scientific" testimony. But the Court added that in
cases not involving scientific testimony, " ‘[t]he factors
identified in Daubert may or may not be pertinent in
assessing reliability, depending on the nature of the issue,
the expert’s particular expertise, and the subject of his
testimony.’ " Id. at 150 (citation omitted). In such cases, the
Court said, "the relevant reliability concerns may focus
5
upon personal knowledge or experience." Id . In addition,
the Court made it clear that a court of appeals is to apply
an abuse-of-discretion standard, not only to a trial court’s
ultimate decision to admit or exclude expert testimony, but
to "the trial court’s decision about how to determine
reliability." Id. at 152.
In the present case, Schulte’s testimony was based on his
"personal knowledge or experience," Kumho Tire, 526 U.S.
at 150, rather than a methodology that satisfies the
Daubert factors. Schulte testified that he examined the
companies’s catalogs, that he informally surveyed
colleagues, and that he evaluated the catalogs’ target
market. In his report, he stated that he focused on the
following factors: "[t]he perception of the names," "[t]he
sophistication of the target audience/market,"[t]he
graphic logo design," and "[t]he presence in the market
place and the look and feel of the catalogs." Appendix at 86.
Although he did not consider all of the factors that we
noted in A & H Sportswear, his analysis tracked many of
them.
In order to hold that the District Court erred in admitting
Schulte’s testimony, we would have to conclude that the
District Court abused the considerable discretion that it
enjoyed to determine the criteria for judging reliability
under the particular circumstances present here. We find it
unnecessary, however, to decide this question because we
are convinced that even if the District Court erred, the error
was harmless.
In a civil case, an error is harmless if it is highly probable
that it did not affect the complaining party’s substantial
rights. See McQueeny v. Wilmington Trust Co., 779 F.2d
916, 924, 926 (3d Cir. 1985). Under this standard, the
admission of Schulte’s testimony, even if erroneous, was
harmless. Our reading of the record reveals that Betterbox
did not rely heavily on that testimony. For example, in his
closing, Betterbox’s attorney made only a passing reference
to Schulte, suggesting that the jury consider that testimony
in conjunction with its own common sense. See Appendix
at 792. In addition, the simplicity of Schulte’s methodology
diminished the likelihood that it unduly swayed the
members of the jury. The jurors were able to examine the
6
marks themselves and consider whether, under the
instructions given by the court, they were confusingly
similar. The testimony of Black Box’s expert, William Dean,
must also be considered. Dean testified for Black Box on
likelihood of confusion, and his qualifications and
methodology were nearly indistinguishable from Schulte’s.
Dean’s methodology was even simpler than Schulte’s. He
did not conduct any survey but instead, relying on his
experience, he examined the competing catalogs and
rendered an opinion of likely confusion.
The District Court, as noted, admitted the testimony of
both experts. If the District Court had agreed with Black
Box’s arguments regarding Schulte’s testimony, it would
have been compelled to exclude Dean’s testimony as well.
We see no reason to believe that Schulte’s testimony was
any more convincing than Dean’s, and Black Box has not
offered any such reason. Taking all these factors into
account, we are convinced that any error in admitting
Schulte’s testimony was harmless.
II.
At trial, Betterbox introduced evidence of its existing
trademark registrations in Canada, the United Kingdom,
and the European Union. Black Box argues that this
evidence was irrelevant and highly prejudicial and therefore
should not have been admitted. First, Black Box contends
that because trademark law is territorial in nature,
evidence about Betterbox’s trademarks in countries other
than the United States was irrelevant. Second, Black Box
maintains that this evidence prejudiced the jury by creating
"a false impression that Betterbox had obtained rights in
and to the Betterbox name and box design in the United
States by virtue of having used and registered its
trademarks outside the United States." Appellant’s Br. at 24
(emphases added).
We are not persuaded by Black Box’s arguments. Below,
Black Box had asserted that Betterbox was attempting
intentionally and in bad faith to trade off Black Box’s name.
Black Box also had alleged actual trademark confusion
among consumers in Europe. See Appendix at 41, 384,
7
470, 761. In response, Betterbox sought to introduce
evidence that it was using its trademarks in Europe
lawfully. This evidence was relevant, i.e., it had a tendency
to prove good faith. The District Court ruled this evidence
admissible because it was "precisely this type of evidence
which is relevant to [Black Box’s] allegations of willful or
intentional conduct." Appendix at 74.1 We agree. We also
see no basis for disturbing the District Court’s refusal to
exclude this evidence under Federal Rule of Evidence 403.
The District Court had broad discretion in ruling on the
Rule 403 request, see e.g., United States v. Lopez, 271 F.3d
472, 482 (3d Cir. 2001), and we note that the Court gave
a limiting instruction regarding this evidence. See Appendix
at 754.
III.
Black Box’s final argument is that the PTO’s cancellation
of Betterbox’s trademark registration a few weeks after trial
constitutes "newly discovered evidence" that entitled Black
Box to relief from the judgment under Fed. R. Civ. P. 60(b).
Betterbox’s application for registration succeeded shortly
after Black Box apparently ceased to oppose the
application. The PTO issued to Betterbox Registration No.
2,288,337 on October 26, 1999. According to counsel for
Black Box, an employee of counsel’s firm spoke by
telephone to a PTO official shortly before the trial began on
November 13, 2000. The official reportedly stated orally
that the Betterbox registration had been inadvertently
issued and would be canceled but that the PTO could not
locate the Betterbox file at that time.2
_________________________________________________________________
1. This evidence could reasonably be admitted to show that Betterbox’s
intent in entering the United States was not to poach on Black Box’s
established mark but rather to build on Betterbox’s own goodwill,
already accumulated in other countries.
2. Several weeks after the conclusion of the trial, the PTO finally found
the file of Black Box’s opposition, which the PTO had been unable to
locate throughout the trial. In the cancellation notice, dated December 8,
2000, the PTO offered a chronology of the proceedings concerning
Betterbox’s trademark. See Appendix at 162-64.
8
Black Box moved in limine to exclude the Betterbox
certificate of registration. The District Court stated that it
was inclined to exclude the certificate if it received "some
sort of official writing from the Patent Office-- that this
registration is going to be recalled or revoked." Appendix at
379. However, without such a writing, the Court stated, the
registration certificate would be admissible. See id. No such
writing was produced, and the Court admitted the
certificate. On December 8, 2000, about three weeks after
trial, the PTO issued a notice that Betterbox’s application
would be forwarded to the Commissioner of Trademarks
"for cancellation of inadvertently issued Registration . . .
and [for] restoration to pending application status."
Appendix at 164.
Under Rule 60(b), newly discovered evidence must be
evidence that "by due diligence could not have been
discovered in time to move for a new trial under[Fed. R.
Civ. P. 59(b)]." In addition, the evidence must be "evidence
of facts in existence at the time of trial." Bohus v. Beloff,
_________________________________________________________________
In July 1997, Black Box filed with the PTO a notice of opposition
(Opposition No. 107,801) against Betterbox’s application for trademark
registration (Serial No. 75/011,373). Betterbox timely filed its answer. In
June 1999, the PTO ordered Black Box to show cause why it had failed
to file its brief. Then the alleged rupture in communication occurred.
Black Box claims it sent a response to the PTO on July 7, 1999. "For
reasons unknown to the [PTO’s Trademark Trial and Appeal] Board," this
response was not "associated with the file" at the PTO until after the
trial. Appendix at 164. Apparently unaware of any response from Black
Box, the PTO ordered dismissal with prejudice of Black Box’s opposition.
Six days later, on August 26, Black Box allegedly sent the PTO a
response to the dismissal order, but this response was likewise
inexplicably "not associated with the file." Appendix at 164.
Following the perceived cessation of opposition, the PTO issued
Betterbox its registration in October 26, 1999. Exactly a year later, in
preparation for trial, Black Box faxed copies of its two responses (dated
July 7 and August 26) to the PTO. Unfortunately, the PTO was unable
to locate Black Box’s opposition file in its warehouse until several weeks
after trial. On December 8, 2000, the PTO ordered Betterbox’s
registration canceled as "inadvertently issued" and restored the
application to "pending" status. Appendix at 164.
9
950 F.2d 919, 930 (3d Cir. 1991); see also United States v.
Jasin, 280 F.3d 355, 362 (3d Cir. 2002) (criminal case).
Because newly discovered evidence must concern facts in
existence at the time of trial, the notice of cancellation of
the Betterbox registration cannot qualify as newly
discovered insofar as it simply shows that the Betterbox
registration was canceled. This is so because the fact of
cancellation was not in existence at the time of trial.
Recognizing this, Black Box suggests that the post-trial
cancellation shows that, at the time of trial, the PTO had
already decided to cancel the Betterbox registration but
had simply not yet done so due to administrative delay.
However, the December 8 notice of cancellation does not
reveal that a decision to cancel had been made at the time
of trial.3
Furthermore, even if such an internal decision had been
made, Black Box has not shown that it exercised due
diligence in attempting to obtain evidence of such a
_________________________________________________________________
3. We note the future tense of the December 8 notice, stating that
Betterbox’s file "will be forwarded . . . for cancellation." Appendix at 164.
Moreover, we cannot infer that the mere filing of Black Box’s opposition
prior to trial rendered cancellation a fact in existence during the trial.
A party that disputes the right of another to register its mark can
resist at two stages of the administrative process: (1) after the
application (by filing an opposition) or (2) after registration occurs (by
filing a petition to cancel). Filing an opposition, as Black Box did here,
does not automatically nullify a trademark application. Instead, the filing
initiates an adversarial process that is adjudicated by the PTO’s
Trademark Trial and Appeal Board.
To successfully prosecute an opposition, the opposer has the burden
of proving two elements: (1) standing, i.e., the opposer will likely be
damaged by the registration, and (2) valid grounds why the applicant is
not entitled to register the mark it claims. See J. Thomas McCarthy,
McCarthy on Trademarks and Unfair CompetitionS 20:1 et seq. (4th ed.
2001); Siegrun D. Kane, Trademark Law: A Practitioner’s Guide S 18 (3rd
ed. 2000). Similarly, filing a petition to cancel does not automatically
cancel a trademark’s registration; the opposer has the same burden of
proving analogous elements. See id. Even if the proceeding results in a
cancellation, the cancellation does not typically have retroactive effect.
Absent contrary direction from the PTO, the registration was valid until
canceled.
10
decision. Black Box did not attempt to depose or subpoena
anyone from the PTO. We suspect, as Black Box argues,
that the PTO would have refused to provide any evidence
about an internal decision that had not been officially
released, but the fact remains that Black Box did not take
the obvious steps that would have demonstrated this.
Black Box also did not ask for a trial continuance for the
purpose of obtaining evidence that cancellation was
imminent. We would view this appeal differently if the
District Court had denied a continuance and admitted the
Betterbox registration despite a credible proffer that the
PTO was in the process of canceling that registration. But
that is not what occurred.
We review the denial of Black Box’s Rule 60(b) motion for
abuse of discretion. See In re Cendant Corporation Prides
Litigation, 234 F.3d 166, 170 (3d Cir. 2000)." ‘[W]e will not
interfere with the [D]istrict [C]ourt’s exercise of discretion
unless there is a definite and firm conviction that the court
. . . committed a clear error of judgment.’ " Id. (citation
omitted). Under this standard, we cannot overturn the
District Court’s ruling.
IV.
For the foregoing reasons, we affirm the judgment of the
District Court.
11
ROSENN, Circuit Judge, dissenting:
I believe the District Court committed reversible error in
admitting the testimony of Betterbox’s sole expert witness,
John D. Schulte, and in refusing to grant relief from the
judgment based on newly discovered evidence. I, therefore,
respectfully dissent.
I.
A brief statement of the background of this declaratory
judgment action may provide perspective. Black Box
Corporation (Black Box) is a corporation organized under
Delaware law with its principal place of business in
Pittsburgh, Pennsylvania. It has been in the business of
selling computer-related products and services throughout
the United States and in foreign countries, primarily
through its catalogs. Since commencement of its operations
in 1976, it has utilized the Black Box name and its Black
Box design in marketing its products, catalogs, vehicles and
marketing materials. Between 1978 and 1985, the United
States Patent and Trademark Office (USPTO) issued it
registrations for the Black Box name and box design. As of
the end of the fiscal year 2000, it posted $500 million in
revenues.
Betterbox Communications, Ltd. (Betterbox) is a
corporation organized under the laws of the United
Kingdom with its principal place of business in Keynes,
England. Founded in 1988 by Horacio Baioes, a former
Black Box manager, the company obtained a trademark
registration for the mark "Betterbox" in the United
Kingdom. In 1995, Betterbox decided to enter the American
market and applied for trademark registration with the
USPTO based on its intended use of the Betterbox name
and box design in the United States. Betterbox and Black
Box sell competing products in the same channels of trade,
marketing them through the use of catalogs. Sensing that
Black Box would oppose its entry into the American
market, Betterbox organized a corporation known as
Performance Communications, Inc. This corporation, also
with headquarters in Pittsburgh, Pennsylvania, sells the
same products as the parties to this litigation.
12
Black Box objected to Betterbox’s application,
complaining that the Betterbox name and box design
infringed on Black Box’s trademarks and demanded of
Betterbox that it refrain from the use of the Betterbox name
and box design. Betterbox filed this action for a declaratory
judgment, which is now on appeal.
II.
Prior to trial, Black Box moved to exclude the testimony
of John Schulte, Betterbox’s expert, pursuant to Daubert v.
Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). The
District Court denied Black Box’s motion to exclude
Schulte’s testimony, finding him qualified to testify as an
expert on the issue of whether there was a likelihood that
customers would be confused by the Black Box and
Betterbox names and box designs and that his opinion was
sufficiently reliable to meet Daubert standards. The majority
concludes that the District Court did not abuse its
discretion in admitting Schulte’s testimony primarily
because of his practical experience "in the field of direct
marketing and mail-order catalogs," and in the marketing
and use of logos and their use as advertising. (Maj. op. at
3).
The undisputed issue before the District Court was
whether there was a likelihood of confusion for customers
in the same market served by these potential competitors
using the Black Box and Betterbox names and box designs
in the same channels of trade and advertising through the
same media.
Infringement of a federally registered trademark is
determined by the test of whether the use of the mark is
"likely to cause confusion, or to cause mistake, or to
deceive." J. Thomas McCarthy, McCarthy on Trademarks
and Unfair Competition, S 23.1 (4th ed. 2001) (internal
quotations omitted).
The likelihood of confusion analysis requires the
evaluation of a number of factors, ten of which were
considered by this court in Scott Paper Co. v. Scott’s Liquid
Gold, Inc., 589 F.2d 1225, 1229 (3d Cir. 1978), and
reaffirmed in A & H Sportswear, Inc. v. Victoria’s Secret
13
Stores, Inc., 237 F.3d 198, 215 (3d Cir. 2000). See also Ford
Motor Co. v. Summit Motor Products, Inc., 930 F.2d 277, 293
(3d Cir. 1991). Among the factors considered in the analysis
are the degree of similarity between the owner’s mark and
the alleged infringing mark, the strength of the owner’s
mark, the price of the goods and other factors indicative of
the care and attention expected of consumers when making
the purchase, the defendant’s intent in adopting the mark,
and the extent to which the targets of the parties’ sales
efforts are the same. Ford Motor, 930 F.2d at 293. The most
important of these factors is the degree of similarity
between the two names. See id.. Moreover,"[i]t is well-
established that likelihood of confusion should be
determined by viewing the two marks from the perspective
of an ordinary consumer of the goods or services." Id.(internal quotations omitted).
Schulte, Betterbox’s witness, was not qualified to testify
as an expert in this case. He did not describe whether or
how he considered any of the above factors. He could not
articulate the methodology he used to arrive at his
conclusions, every one of which was predicated upon his
personal, unsupported, subjective belief. His testimony on
cross-examination strikingly illuminates his lack of
expertise on the issue of consumer likelihood of confusion.
He testified:
Q: Have you done any test mailings to determine the
target market for either Black Box or Betterbox?
A: No, I have not conducted any mailings for them.
. . . .
Q: But you haven’t done any investigation to
determine who Black Box’s customers are, have
you?
A: Other than examining the products in their
catalog, no.
Q: So you don’t even know who their customers are
specifically?
A: If I was to name them -- I couldn’t name their
customers. I could name the type of customers
they are.
14
Q: And you would name the type of customers based
solely on the fact that you’ve looked at the
products in the catalog, correct?
A: Well, I have to use my common sense.
Q: Well, is there any other basis for your statement
that you know who the customers are?
A: Besides what they are selling?
Q: Yes.
A: No.
Q: Are you an expert in trademark infringement?
A: No, I’m not.
Q: Are you an expert in determining likelihood of
confusion?
A: I would say I’m not an expert in that, no.
Although the District Court held that Schulte’s
methodology exhibited a sufficient "degree of rigor," neither
the Court nor Schulte explained what that methodology
entailed. His cross-examination plainly shows that he had
no methodology. Therefore, closer scrutiny than is
customarily afforded under abuse of discretion review is
appropriate here. United States v. Mathis, 264 F.3d 321,
338 (3d Cir. 2001) ("We find it difficult to accord the
customary degree of deference to the District Court’s
discretion . . . because the District Court explained its
ruling with little more than a series of conclusions.").
Although the standard for qualifying an expert witness is
generally liberal, we pragmatically have recognized that the
standard has some limits. To qualify as an expert,"Rule
702 requires the witness to have ‘specialized knowledge’
regarding the area of testimony." Waldorf v. Shuta, 142
F.3d 601, 625 (3d Cir. 1998). Although we have applied
Rule 702 liberally, we have not permitted every proffered
witness to qualify as an expert. Id.The issue before the jury did not concern catalog
marketing or even more specifically catalog marketing of
electronic communications and computer connectivity
15
products. The specific question before the court and jury
concerned trademark infringement and, in the words of
Betterbox’s counsel, "the issue of likelihood of consumer
confusion." Furthermore, as counsel for Betterbox observed
in their motion in limine argument to exclude Black Box’s
expert: "Market analysts exploring the question of
consumer confusion in a specific market commonly
conduct consumer confusion surveys. Even when they do
not conduct a full scale survey, they define and research
the demographics of consumers in the relevant market."
Schulte admits he did not conduct any surveys. He
acknowledged that "I’m not an expert" in determining the
likelihood of confusion. His testimony was precisely the
type of "subjective belief or unsupported speculation"
disapproved by Daubert. 509 U.S. at 590. The District
Court abused its discretion in allowing it.
In Aloe Coal Co. v. Clark Equipment Co., 816 F.2d 110,
114 (3d Cir. 1987), we held that a District Court abused its
discretion in allowing a tractor sales representative to
testify as an expert regarding the cause of a tractor fire.
Although we have not regarded academic training as a
prerequisite for qualifying an expert witness, in order to
qualify as an expert, he or she must possess skill or
knowledge greater than the average layman. Id. at 114. A
pediatrician is not an expert in orthopedics merely because
both are doctors in medicine; a pulmonologist cannot claim
to be an expert as a pharmacologist and a toxicologist as
well as a physician. See Diaz v. Johnson Matthey, Inc., 893
F. Supp. 358, 373 (D.N.J. 1995).
In Waldorf, we cited several Third Circuit district court
cases in which witnesses were disqualified from providing
expert testimony. 142 F.3d at 625-26. Although academic
training is not essential, and practical experience may
qualify a person as an expert witness, an expert in this
case must have "specialized knowledge" in the area of
likelihood of confusion in trademarks. Schulte
acknowledges he had none. At the Daubert hearing, he
testified that his experience was limited to the catalog
marketing industry and his expertise was in knowing how
people shop in catalogs. As for experience in the computer
industry, he owned a company that for four years sold
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computers and computer components. Schulte, however,
points to nothing in that experience that provided him with
expertise in determining the likelihood of consumer
confusion in the purchase of similarly named computer
products that are similarly marketed.
The majority concludes that even if the court erred in
admitting Schulte’s testimony, the error was harmless
because Betterbox did not rely heavily on that testimony. It
reasoned that, in addition, "the simplicity of Schulte’s
methodology diminished the likelihood that it unduly
swayed the members of the jury." However, Schulte’s
methodology not only was not simple, but, as he concedes,
there was no methodology. Furthermore, whether Betterbox
relied heavily on his testimony is speculative, as is the
conclusion that his lack of methodology likely did not
influence the jury. We have no way of calibrating the degree
of jury reliance on Schulte’s testimony. The weight afforded
Schulte’s testimony can be calculated only by the jurors,
not by the judges. As Betterbox’s only expert witness on an
esoteric question regarding the likelihood of consumer
confusion in trademark infringement, Schulte’s testimony
was crucial. Therefore, allowing an unqualified witness to
testify as an expert in this case cannot be dismissed as
harmless error.
Nor is the "harmless error" rationale fortified by the
majority’s observation that Black Box’s expert’s
qualifications and methodology were nearly
indistinguishable from Schulte’s. If that were true, and
there is no evidence that it is, it only compounds the error,
because the jury then would have been beset by two
unqualified witnesses portrayed as experts. The District
Court’s original error in permitting Schulte to testify as an
expert is not dissipated by allowing an allegedly unqualified
expert to testify for Black Box. Moreover, the burden of
proof was on Betterbox, who brought the suit, and the
District Court erred in the standard it first set for qualifying
Betterbox’s expert witness. The error was not harmless.1
_________________________________________________________________
1. I concur with the majority’s conclusion that the admission of
Betterbox’s evidence of its existing foreign trademark registrations was
not error because this ruling is premised on the evidence’s relevance in
17
II.
I also believe the District Court erred in not granting
Black Box’s motion for relief from the judgment under
Federal Rule of Civil Procedure (F.R.C.P.) 60(b) on the basis
of newly discovered evidence. A major pillar of Betterbox’s
case to the jury consisted of proof of the certification of
registration by the USPTO of the Betterbox and design
mark. However, Black Box was not informed until a few
days before trial that Betterbox intended to add the
Certificate of Registration to its exhibit list. Black Box
promptly filed a motion in limine to exclude it on the
ground that it had been inadvertently issued. The motion
was denied because Black Box could not prove the
cancellation of the Certificate of Registration. Equally, if not
more important, it could not prove that the certificate had
been issued erroneously.
Betterbox presented the certificate to the jury during the
trial and focused on it during its opening and closing
arguments to the jury. Counsel for Betterbox specifically
argued in his summation that in analyzing the likelihood of
confusion, he wanted the jury to consider "that the United
States Government has given its opinion on this issue. As
I showed you yesterday, the United States of America has
issued a certificate of registration." Horacio Baioes testified
that the Certificate of Registration issued to Betterbox in
1999 by the United States Patent Office "authorized me to
use my logo and trademark wherever it was registered."
Counsel for Betterbox further informed the jury that the
Certificate of Registration says "that the application . . . for
_________________________________________________________________
rebutting Black Box’s contention that Betterbox, by entering the United
States market, intended to trade on Black Box’s goodwill. In ordinary
trademark litigation, however, evidence of foreign registrations is
irrelevant. See, e.g., Fuji Photo Film Co. v. Shinohara Shoji Kabushiki
Kaisha, 754 F.2d 591, 599-600 (5th Cir. 1985) (holding general
principles of trademark law compelled conclusion that admission into
evidence of foreign trademark practices was error); Double J of Broward
Inc. v. Skalony Sportswear GmbH, 21 U.S.P.Q.2d 1609, 1612 (1991)
("Information concerning applicant’s foreign activities, including foreign
trademark applications and/or registrations, is not relevant to the issues
in an opposition proceeding.").
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the trademark . . . was examined and determined to be in
compliance with the requirements of the law and with the
regulations prescribed by the director of the United States
Patent and Trademark Office." He further reminded the jury
of the Court’s instructions concerning "a presumption
arising from . . . Betterbox’s mark, and here is Betterbox’s
registered trademark from Washington, D.C. So that’s
another indicator . . . you have the United States
Government as well issuing a certificate of registration."
The Trial Court instructed the jury that it should
consider the registration of the trademark "in determining
whether Betterbox has a protectable trademark right in the
Betterbox and design mark." It further informed the jury:
"Because Betterbox’s trademark has been registered, there
is a presumption that Betterbox has a protectable
trademark right and that [Betterbox] . . . is entitled to use
the Betterbox and design mark exclusively on its data
communications products."
The prejudicial effect on the jury of the instructions and
the foregoing argument to the jury is demonstrated by one
of the first questions from the jury. The jury inquired
whether "the trademark depicted in the U.S. certificate of
registration [is] the trademark that Betterbox will use [in]
the shaded box on the catalog?" Black Box asserts that the
jury’s question demonstrates that it accepted Betterbox’s
closing argument to reach the erroneous conclusion that
the United States Patent Office had already declared that
the Black Box and Betterbox marks were not confusingly
similar "and that Betterbox was authorized by the
Trademark Office to use the design shown in the . . .
registration."
Betterbox’s argument, the instructions to the jury, and
Baioes’s testimony were boldly predicated upon a valid
trademark registration by the United States Patent Office of
Betterbox’s name and logo design. However, there was no
valid trademark registration. On December 8, 2000, more
than ten days after the verdict, the USPTO officially
acknowledged that the registration to Betterbox had been
issued erroneously. The series of mistakes that led to the
improvident issuance of the registration are described by
the majority in its third footnote and in the Order vacating
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the judgment authorizing the registration. Thus, Betterbox
had no right whatsoever in the name and logo at the time
of trial or since. It was not entitled to any presumptive
protectable trademark right; it was not "entitled to use the
Betterbox and design mark exclusively on its . . . products."
Under Rule 60(b), a court may relieve a party from a final
judgment because of newly discovered evidence that could
not have been discovered in time to move for a new trial
under Rule 59(b). The Rule requires that the evidence be
discovered after trial and the failure to learn of it must not
have been caused by a lack of diligence. Stridiron v.
Stridiron, 698 F.2d 204, 207 (3d Cir. 1983). The evidence
must be material to the issues involved, not merely
cumulative, and of such a nature that it probably would
change the outcome of the litigation. Id. The majority
rejects the Certificate of Cancellation as newly discovered
evidence "because the fact of cancellation was not in
existence at the time of trial." (Maj. op. at 10).
The requirement that the newly discovered evidence be in
existence at the time of trial does not mandate that"the
fact of cancellation" exist at the time of trial. A critical issue
at the trial was whether Betterbox possessed a valid
Certificate of Registration from the USPTO. The newly
discovered evidence relating to this fact is the USPTO Order
of December 8, 2000, vacating its default judgment. The
actual notice of cancellation, although not in existence at
the time of trial, was simply ministerial. Thus,"the crucial
question should not be when the evidence was created, but
whether the evidence was of facts that were in existence at
the time of trial. Evidence should meet the newly-discovered
evidence test even if it did not come into existence until
after the trial, so long as the evidence is of facts that were
in existence at the time of trial." 12 JAMES WM. MOORE ET AL.,
MOORE’S FEDERAL PRACTICE S 60.42[3][a] (3d ed. 2000); accord
Nat’l Anti-Hunger Coalition v. Executive Comm. Etc. , 711
F.2d 1071, 1075 n.3 (D.C. Cir. 1983).
However, Black Box maintained at trial that this
Certificate of Registration was inadvertently issued on the
basis of an erroneous default judgment entered by the
USPTO. Counsel for Black Box informed the Court that the
USPTO could not provide any information concerning the
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status of the Betterbox registration because it could not
locate the file.
The majority asserts that Black Box did not exercise due
diligence in attempting to obtain evidence of the USPTO
decision and thus it "did not attempt to depose or
subpoena anyone from the [US]PTO." On the contrary,
Betterbox belatedly listed the Certificate of Registration as
an exhibit in this case, several days before trial. Counsel for
Black Box promptly communicated with the USPTO to
ascertain the status of Betterbox’s application for
registration, only to learn that the file was missing and,
therefore, no information was available. The majority states
that Black Box, because it did not attempt to depose or
subpoena someone in the USPTO, did not exercise due
diligence. The majority acknowledges, however, that it
"suspect[s] . . . the the [US]PTO would have refused" to
comply with any such requests -- in other words, that such
attempts by Black Box would have been futile. Due
diligence does not require exercises in futility, but only
efforts reasonably calculated to bring about the desired
result. Cf. Aron v. United States, 291 F.3d 708, 712 (11th
Cir. 2002) ("Due diligence . . . does not require a prisoner
to undertake repeated exercises in futility or to exhaust
every imaginable option, but rather to make reasonable
efforts."); United States v. Blanco, 861 F.2d 773, 778 (2d
Cir. 1988) ("Due diligence does not require the government
to pursue goals that are futile."). Therefore, under the
circumstances, Black Box acted with due diligence in
contacting the USPTO and attempting to acquire
information regarding an internal decision that had not yet
been made official.
Rule 60(b) is intended to preserve "the delicate balance
between the sanctity of final judgment . . . and the
incessant command of a court’s conscience that justice be
done in light of all the facts." Rosebud Sioux Tribe v. A & P
Steel, Inc., 733 F.2d 509, 515 (8th Cir. 1984) (internal
quotations omitted) (alteration in original); accord Coltec
Indus., Inc. v. Hobgood, 280 F.3d 262, 271 (3d Cir. 2002)
(Rule 60(b)’s general purpose is to reach proper balance
between finality of litigation and justice). In Rosebud, the
Court of Appeals reversed the District Court’s denial of Rule
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60(b) relief. The District Court found that the newly
discovered evidence -- grand jury testimony - did not exist
at the time of trial. 733 F.2d at 516. The appellate court
found that at trial, the evidence of the witness’s
involvement in the alleged conspiracy was circumstantial.
Id. The Court held that testimony taken after the entry of
judgment revealing that perjurious deposition testimony
was read into the record amounted to newly discovered
evidence because the perjury existed at the time of trial. Id.
at 516-517; accord Kettenbach v. Demoulas, 901 F. Supp.
486 (D. Mass. 1995) (after exhaustive review of Rule 60(b)
decisions on newly discovered evidence, court held post-
judgment recording of descriptions of events occurring
before judgment is newly discovered evidence).
In this case, the trial court did not exercise discretion in
deciding whether to grant Rule 60(b) relief. See Chilson v.
Metro. Transit Auth., 796 F.2d 69, 70 (5th Cir. 1986).
Instead, it held that Black Box was not eligible for relief
under the Rule because it had not presented newly
discovered evidence. Chilson involved an internal audit
made by the defendant Transit Authority that strongly
supported the movant’s case that he had been wrongfully
discharged by the Authority. The District Court held that
the internal audit did not exist at trial and was thus not
newly discovered evidence. Id. The Court of Appeals
reversed, holding that the District Court erred as a matter
of law by ruling that the proffered evidence of the internal
audit and what it showed was not newly discovered
evidence. Id. The Court reasoned that because the
misconduct documented by the audit predated the verdict
in favor of the defendant, the audit was newly discovered
evidence. Id. The misconduct at issue was in existence at
the time of the original trial and the audit was deemed
newly discovered evidence because it consisted of facts in
existence at the time of the trial of which the movant was
excusably ignorant.
Throughout the trial, Black Box consistently maintained
that the Certificate of Registration had been issued
inadvertently. On November 7, 2000, it moved in limine to
exclude the Certificate of Registration, but it could not
supply the necessary proof because the USPTO could not
22
locate the file opposing the grant of the certificate until
early in December 2000, after the trial in this case had
ended. The USPTO stated in its December 8, 2000, Order:
For reasons unknown to the Board, the original July 7,
1999, and August 26, 1999, papers [Black Box
responses to the USPTO Rule to Show Cause Order]
have never been associated with the file. (Due to
problems at the Patent and Trademark Office
warehouse, the Board was unable to obtain the file of
Opposition [ ] until early December 2000.)
On November 14, 2000, Black Box informed the court that
the United States Patent Office still could not locate the file
and, under the circumstances, it would not provide a
statement on the status of the litigation. Until the Board
located Black Box’s opposition file, it could not vacate the
erroneous judgment granting the Certificate of Registration.
Therefore, on December 8, 2000, it ordered that"the
Board’s August 20, 1999, order entering judgment is
hereby vacated." It simultaneously directed that the file be
"forwarded to the Office of the Commission for Trademarks
for cancellation . . . and restoration to pending application
status." The cancellation of the certificate at this point was
simply ministerial, the judgment granting the registration
having been vacated.
This is a classic case calling for Rule 60(b) relief from the
judgment on the ground of newly discovered evidence. It
was discovered after trial and Black Box consistently
endeavored to uncover it before and during the trial. The
evidence that Betterbox had no valid Certificate of
Registration was highly material and of a nature that it
probably would change the outcome of the litigation.
Granting the relief would be in the interest of fairness and
justice.
Accordingly, I would reverse the judgment of the District
Court and remand the case for a new trial.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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