Otr Wheel Engineering v. West Worldwide Services , 897 F.3d 1008 ( 2018 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
OTR WHEEL ENGINEERING, INC.; Nos. 16-35897
BLACKSTONE/OTR, LLC; F.B.T. 16-35936
ENTERPRISES, INC.,
Plaintiffs-Appellees/ D.C. No.
Cross-Appellants, 2:14-cv-00085-
LRS
v.
WEST WORLDWIDE SERVICES, INC.; OPINION
SAMUEL J. WEST, individually, and
his marital community; SSL CHINA,
LLC; QINGDAO STW TIRE CO. LTD.;
SSL HOLDINGS, INC.,
Defendants-Appellants/
Cross-Appellees.
Appeal from the United States District Court
for the Eastern District of Washington
Lonny R. Suko, District Judge, Presiding
Argued and Submitted March 7, 2018
Seattle, Washington
Filed July 24, 2018
Before: Johnnie B. Rawlinson, Richard R. Clifton,
and Morgan Christen, Circuit Judges.
Opinion by Judge Clifton
2 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
SUMMARY*
Lanham Act
The panel affirmed the district court’s judgment after a
jury trial, holding defendants liable for reverse passing off
under the Lanham Act.
The parties were competitors in the business of selling
industrial tires. Defendant West asked a supplier of plaintiff
OTR to provide him with sample tires from OTR’s molds,
and he asked the supplier to remove OTR’s identifying
information from the tires so that he could use the tires to
obtain business from one of OTR’s customers.
The panel held that West could be found liable for reverse
passing off because he did not simply copy OTR’s
intellectual property, but rather passed off genuine OTR
products as his own.
The panel affirmed the district court’s conclusion that
West did not establish that OTR committed fraud on the
United States Patent and Trademark Office. The panel
confirmed that fraud on the PTO must be established by clear
and convincing evidence.
The panel affirmed the district court’s order denying a
new trial on the issue of trade dress validity.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 3
The panel affirmed the district court’s rejection of a
proposed jury instruction asserting a claim for infringement
of an unregistered trade dress. The panel explained that a
registered claim converts to an unregistered claim if the
registration is invalidated; thus, a plaintiff does not need to
separately plead the identical unregistered claim. But where
the unregistered claim would cover something more than the
registered claim, a plaintiff must put a defendant on notice of
such through the pleadings.
The panel addressed additional issues in a concurrently
filed memorandum disposition.
COUNSEL
Christine Marie Lebrón-Dykeman (argued), R. Scott Johnson,
and Jonathan L. Kennedy, McKee Voorhees & Sease P.L.C.,
Des Moines, Iowa; John J. White Jr. and Kevin B. Hansen,
Livengood Alskog PLLC, Kirkland, Washington; for
Defendants-Appellants/Cross-Appellees.
Joel David Bertocchi (argued), Kimberly A. Jansen, and
Jeffrey S. Dixon, Hinshaw & Culbertson LLP, Chicago,
Illinois; Robert J. Carlson, Lee & Hayes PLLC, Seattle,
Washington; for Plaintiffs-Appellees/Cross-Appellants.
4 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
OPINION
CLIFTON, Circuit Judge:
OTR Wheel and Samuel West are competitors in the
business of selling industrial tires.1 West asked one of OTR’s
suppliers to provide him with sample tires from OTR’s
molds, and he asked the supplier to remove OTR’s
identifying information from the tires. West wanted to use
the tires to obtain business from one of OTR’s customers.
OTR sued West, asserting various claims under the Lanham
Act and state law.
The primary issue before us is whether West can be found
liable for reverse passing off under the Lanham Act.
Pursuant to the Supreme Court’s opinion in Dastar Corp. v.
Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), a
claim for reverse passing off cannot be brought to prevent the
copying of intellectual property. We conclude that West did
not simply copy OTR’s intellectual property but passed off
genuine OTR products as his own, so we affirm the judgment
holding him liable for reverse passing off.
1
This case involves multiple plaintiffs and multiple defendants.
Plaintiffs are OTR Wheel Engineering, Inc.; Blackstone/OTR, LLC; and
F.B.T. Enterprises, Inc. Defendants are West Worldwide Services, Inc.;
Samuel J. West, individually, and his marital community; SSL China,
LLC; Qingdao STW Tire Co. Ltd.; and SSL Holdings, Inc. In briefing,
the parties refer to each side generally as “OTR” for the
Plaintiffs/Appellees/Cross-Appellants and “West” for the
Defendants/Appellants/Cross-Appellees. Where Plaintiffs prevailed, the
judgment was for all Plaintiffs against all Defendants. Likewise, where
Defendants prevailed, the judgment was for all Defendants against all
Plaintiffs. There is no need to draw any distinctions among plaintiffs or
among defendants. We therefore follow the parties in referring to each
side simply as OTR and West.
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 5
In this opinion, we also address other issues raised
regarding the Lanham Act. In particular, we affirm the
district court’s conclusion that West did not establish that
OTR had committed fraud on the United States Patent and
Trademark Office (PTO). In doing so, we confirm that fraud
on the PTO must be established by clear and convincing
evidence. We also affirm the district court’s order denying a
new trial on the issue of trade dress validity, giving us cause
to explain how a finding of fraud on the PTO affects a
plaintiff’s burdens in establishing a trademark claim. Finally,
we affirm the district court’s rejection of a proposed jury
instruction asserting a claim for infringement of an
unregistered trade dress. We explain that a registered claim
converts to an unregistered claim if the registration is
invalidated. Thus, a plaintiff does not need to separately
plead the identical unregistered claim. But where the
unregistered claim would cover something more than the
registered claim, a plaintiff must put a defendant on notice of
such through the pleadings.
The other issues raised by the parties—those that do not
touch on the Lanham Act—do not warrant discussion in a
precedential opinion. We address those remaining issues in
a concurrently filed memorandum disposition.
I. Background
A. Statutory Framework
The Lanham Act prohibits conduct that would confuse
consumers as to the origin, sponsorship, or approval of goods
or services. See Slep-Tone Entm’t Corp. v. Wired for Sound
Karaoke & DJ Servs., LLC, 845 F.3d 1246, 1249 (9th Cir.
2017); see also TrafFix Devices, Inc. v. Mktg. Displays, Inc.,
6 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
532 U.S. 23, 28 (2001). To prevent consumer confusion, the
Act allows the producers of goods and services to enforce
trademark rights. 15 U.S.C. §§ 1114, 1125(a); see also Wal-
Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 209–10
(2000). A trademark is “any word, name, symbol, or device
. . . [used or intended to be used] to identify and distinguish
[goods] from those manufactured or sold by others and to
indicate the source of the goods.” 15 U.S.C. § 1127. In
addition, the Lanham Act protects more than words and
symbols. It also protects a product’s “trade dress,” which
includes the packaging, dressing, and design of a product.
TrafFix Devices, 532 U.S. at 28; Wal-Mart, 529 U.S. at 209.
B. Factual History
OTR sells tires for industrial use. One of OTR’s products
is a tire called the “Outrigger.” OTR obtained a registered
trademark on the Outrigger name and a registered trade dress
on the Outrigger tire tread design. OTR partnered with a
company called Solideal to make size “355” Outrigger
branded tires for the Chinese market. The 355-size tires are
commonly used for aerial work platforms, which are mobile
platforms sometimes referred to as “cherry pickers.” In order
to produce the 355-size tires in China, Solideal contracted
with a plant operated by a Chinese company called
Superhawk.
West is in the same business as OTR, and he wanted to
sell tires to one of OTR’s customers, Genie. In December of
2011, West began discussions with Superhawk, the Chinese
manufacturer, about making a 355-size tire for West to sell to
Genie. In the spring of 2012, West asked Superhawk for 16
of the 355-size tires for testing by the potential customer.
Superhawk advised West that it would take 50 days to make
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 7
a mold for West’s tires. West responded, in writing, “I really
need it much sooner. . . . Don’t you make this size for
Solideal [OTR’s partner]? . . . Could you buff off the Solideal
name on the sidewall or just remove the plate and let me get
the tire tested?”
Superhawk initially refused, saying that it would be
“dangerous” to use Solideal’s mold because Superhawk had
an agreement with Solideal. West responded by asking,
“Will your mold be the same as the [S]olideal mold? If we
take out the nameplate and all the sidewall information,
nobody will know.” West then asked Superhawk to make
50 tires for Solideal even though no Solideal order had been
placed. Superhawk stated that it would make the 355-type
tires “shortly.”
In May of 2012, Superhawk confirmed to West that
Superhawk’s 355-size tires were OTR Outrigger tires made
for Solideal. In the summer of 2013, Genie stopped buying
the 355-size tires from OTR and began buying them from
West.
C. Procedural Background
OTR brought Lanham Act claims against West for trade
dress infringement, trade dress counterfeiting, and reverse
passing off. OTR also asserted state law claims under the
Washington Consumer Protection Act (WCPA), for trade
secret misappropriation, and for tortious interference with
various contracts and business relationships.
The case went to trial, with mixed results. The jury found
West liable for reverse passing off in violation of the Lanham
Act. The jury also found West liable for violating the WCPA
8 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
and for tortiously interfering with a contract between Solideal
and Superhawk, as well as with business relationships
involving OTR, Genie, Solideal, and Superhawk. West was
not found liable for trade dress infringement, trade dress
counterfeiting, trade secret misappropriation, or tortious
interference with a contract between OTR and Genie.
The jury also found that OTR’s claim for protected trade
dress on its tire tread was invalid and that the trade dress
registration had been obtained through fraud on the PTO. On
a post-trial motion, the district court set aside the jury’s
determination that OTR had obtained its trade dress
registration through fraud. The court otherwise entered
judgment based on the jury’s findings, including the finding
that the protected trade dress claim was invalid. The court
directed the PTO to cancel OTR’s trade dress registration.
For the claims on which OTR prevailed, the jury
determined that OTR should be awarded actual damages in
the amount of $967,015. In addition to those damages, the
judgment entered by the district court awarded prejudgment
interest to OTR under state law and post-judgment interest at
the rate authorized by 28 U.S.C. § 1961(a). The court
maintained a preliminary injunction against West pending the
outcome of this appeal.
In a separately filed memorandum disposition, we reverse
the district court on the issue of prejudgment interest, vacate
the preliminary injunction, and affirm as to all the remaining
issues.
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 9
II. Discussion
The parties raise four issues concerning the Lanham Act.
First, West challenges the jury’s finding that West is liable
for reverse passing off OTR’s tires as his own. West argues
that the verdict is precluded by Dastar, in which the Supreme
Court held that a reverse passing off claim cannot be brought
to prevent the copying of intellectual property. Thus, we
must determine whether West’s conduct amounted to mere
copying. We conclude that, instead of simply copying OTR’s
design, West used tires from an anticipated OTR order and
passed those tires off as his own. We also address the parties’
arguments regarding waiver and whether the jury’s verdict
was supported by substantial evidence.
Second, the jury found that OTR had obtained its tire
tread trade dress registration through fraud on the PTO, but
the district court set that finding aside as a matter of law.
West challenges the district court’s order. In considering
West’s challenge, we confirm that fraud on the PTO must be
established by clear and convincing evidence. We agree with
the district court that West did not establish fraud by clear
and convincing evidence.
Third, the jury determined that OTR’s protected trade
dress claim was invalid. OTR challenges that verdict,
arguing that it was driven by the jury’s finding of fraud on the
PTO. Given that the court set aside the fraud finding, OTR
argues that the court should have also set aside the invalidity
finding. In addressing OTR’s arguments, we explain how a
finding of fraud on the PTO affects a plaintiff’s burdens in
establishing a trademark claim. We conclude that the jury’s
finding of invalidity was supported by substantial evidence.
10 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
Fourth, in addition to a claim based on its registered trade
dress, OTR submitted a proposed jury instruction asserting a
claim for infringement of unregistered trade dress. The trial
court rejected the proposed instruction on the grounds that
OTR had not pled an unregistered trade dress claim. OTR
challenges the court’s order, arguing that it had pled an
unregistered claim that encompassed “something more” than
what was covered by the registered claim. We hold that the
trial court did not abuse its discretion in rejecting the jury
instruction. In the process, we note that the unregistered
claim was only precluded because it asserted “something
more” than the registered claim and OTR had not made clear
in its pleadings that it asserted something more. A claim does
not need to be registered to be enforceable, and if a
registration is defeated it merely shifts the parties’ burdens at
trial.
A. False Designation of Origin: Reverse Passing Off
The jury found West liable for “reverse passing off” an
Outrigger tire as his own development tire. West challenges
that verdict.
1. Standard of Review
A jury’s verdict must be upheld if supported by
substantial evidence. Unicolors, Inc. v. Urban Outfitters,
Inc., 853 F.3d 980, 984 (9th Cir. 2017). Substantial evidence
is evidence adequate to support the jury’s conclusion, even if
it is possible to draw a contrary conclusion from the same
evidence. Id. The credibility of the witnesses and the weight
of the evidence are issues for the jury and are generally not
subject to appellate review. Watec Co., Ltd. v. Liu, 403 F.3d
645, 651 n.5 (9th Cir. 2005). We have a duty under the
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 11
Seventh Amendment to harmonize a jury’s answers on a
special verdict form if a fair reading allows for it. Bains LLC
v. Arco Prod. Co., Div. of Atl. Richfield Co., 405 F.3d 764,
771 (9th Cir. 2005).
2. Waiver
In challenging the verdict for reverse passing off, West
argues: 1) the claim was precluded by the Supreme Court’s
holding in Dastar; 2) there was not substantial evidence that
he removed the identifying information from an Outrigger
tire; and 3) OTR did not establish a likelihood of confusion.
OTR responds in part by arguing that West waived his
arguments regarding Dastar and the likelihood of confusion
by failing to raise them in a motion for judgment as a matter
of law before the case went to the jury.
Rule 50 governs the timing of a motion for judgment as
a matter of law. Pursuant to Rule 50(a), a “motion for
judgment as a matter of law may be made at any time before
the case is submitted to the jury.” Fed. R. Civ. P. 50(a)(2).
If the court does not grant the motion, Rule 50(b) allows a
party to file a renewed motion for judgment as a matter of law
after the judgment is entered. Fed. R. Civ. P. 50(b). But
“[f]ailing to make a Rule 50(a) motion before the case is
submitted to the jury forecloses the possibility of considering
a Rule 50(b) motion.” Tortu v. Las Vegas Metro. Police
Dep’t, 556 F.3d 1075, 1083 (9th Cir. 2009).
Likewise, a “party cannot 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.” Freund
v. Nycomed Amersham, 347 F.3d 752, 761 (9th Cir. 2003).
Such arguments are also waived for purposes of appeal. See
12 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
Farley Transp. Co. v. Santa Fe Trail Transp. Co., 786 F.2d
1342, 1345 (9th Cir. 1985). In his Rule 50(a) motion, West
argued that OTR had failed to prove that West removed the
Outrigger mark from tires in commerce. West did not
mention Dastar or the likelihood of confusion. Thus, these
arguments would normally be waived.
But if a party fails to object to a Rule 50(b) motion on the
basis of waiver, then the party waives its waiver defense.
Graves v. City of Coeur D’Alene, 339 F.3d 828, 838–39 (9th
Cir. 2003) (“[W]here a defendant does not object to an
improperly-filed Rule 50(b) motion, and does not raise the
issue of default for failure to abide Rule 50(a) before the trial
court, then the procedural flaw in the Rule 50(b) motion is
waived . . . .”), abrogation on other grounds recognized in
Thomas v. Dillard, 818 F.3d 864, 885 (9th Cir. 2016); see
also Williams v. Runyon, 130 F.3d 568, 572 (3d Cir. 1997)
(citing six other circuits for the same holding). When West
presented his Dastar and likelihood-of-confusion arguments
to the district court in his post-trial Rule 50(b) motion, OTR
did not raise waiver in its opposition. Thus, OTR has waived
its waiver defense, and we will consider all three of West’s
arguments.
3. Merits
Section 43(a) of the Lanham Act prohibits a person from
using “in commerce any word, term, name, symbol, or device
. . . which . . . is likely to cause confusion . . . as to the origin
. . . of his or her goods.” 15 U.S.C. § 1125(a). The term
“origin” in section 43(a) lends itself to two causes of action
for “passing off” based on false designation of origin: passing
off and reverse passing off. “Passing off . . . occurs when a
producer misrepresents his own goods or services as someone
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 13
else’s. ‘Reverse passing off,’ as its name implies, is the
opposite: The producer misrepresents someone else’s goods
or services as his own.” Dastar, 539 U.S. at 27 n.1 (citation
omitted).
a. Effect of the Supreme Court’s holding in Dastar
West argues that the claim for reverse passing off was
precluded by Dastar. In Dastar, the Supreme Court
explained that the term “origin” in section 43 “refers to the
producer of the tangible goods that are offered for sale, and
not to the author of any idea, concept, or communication
embodied in those goods.” Id. at 37. Thus, a reverse passing
off claim cannot be brought to prevent the copying of
intellectual property. Copying is dealt with through the
copyright and patent laws, not through trademark law. Id. at
33–34.
West argues that, at worst, by using OTR’s mold, he
copied OTR’s tire instead of passing off a genuine Outrigger
as his own. We do not need to determine, however, whether
use of the OTR mold would create a mere copy or a genuine
OTR product. There was evidence that West did pass off
actual OTR tires. West asked Superhawk to make tires to fill
an anticipated order for Solideal, OTR’s partner, in advance
and to hold most of the tires until Solideal placed the order.
West wanted to take ten of these OTR tires to provide to
Genie as his own development tires.2 The jury could
therefore conclude that the development tires were taken from
part of an anticipated OTR (Solideal) order and were genuine
OTR products, not just copies.
2
In his email, West wrote: “Any chance you can risk making the 50
pcs and then sit on the 40 tires until they ask?”
14 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
To support his argument that he only copied OTR’s tire,
West cites the Sixth Circuit’s opinion in Kehoe Component
Sales Inc. v. Best Lighting Products, Inc., 796 F.3d 576 (6th
Cir. 2015). In Kehoe, a manufacturer produced goods for a
customer. After filling the customer’s order, the
manufacturer continued to use the same molds to manufacture
additional units that it could sell in competition with the
customer. Id. at 580. The Sixth Circuit determined that the
manufacturer’s conduct constituted copying and that a reverse
passing off claim was therefore precluded by Dastar. Id. at
587. In Kehoe, though, the manufacturer did not pass off
products that had been produced as part of the customer’s
order. West did. “The right question, Dastar holds, is
whether the consumer knows who has produced the finished
product.” Bretford Mfg., Inc. v. Smith Sys. Mfg. Corp.,
419 F.3d 576, 581 (7th Cir. 2005). Here, the product was
produced for OTR, and West attributed it to himself.3
b. Removal of the Outrigger’s identifying
information
West argues that there was not substantial evidence to
support the jury’s conclusion that he removed the Outrigger
identifying information from the sidewall of the development
tire. We disagree.
West asked Superhawk for some tires for testing.
Superhawk told West that it would take 50 days to make a
mold for West’s purposes. West responded, “I really need it
much sooner. . . . Don’t you make this size for Solideal? . . .
3
Accordingly, we do not need to determine whether we agree with
the holding in Kehoe.
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 15
Could you buff off the Solideal name on the sidewall or just
remove the plate and let me get the tire tested?”
Superhawk told West that it would be “dangerous” to use
Solideal’s mold because Superhawk had an agreement with
Solideal. West persevered in his request, however. He asked,
“Will your mold be the same as the [S]olideal mold? If we
take out the nameplate and all the sidewall information,
nobody will know.” He asked Superhawk to make
50 Solideal tires even though an order for those tires had not
been placed yet by Solideal. Superhawk responded that the
tires would be made “shortly.”
At trial, West’s expert identified a number of areas where
spring plates had been used in the mold for West’s
development tire. Spring plates are put into molds for the
purpose of imprinting information onto tires. OTR’s expert
testified that the spring plate indentations corresponded to the
location of information that would, if it appeared on the tire,
identify the tire as an OTR tire.
These emails and this testimony constituted substantial
evidence that West used an Outrigger mold for his
development tire and added blank spring plates over areas
that would have imprinted the Outrigger’s identifying
information onto the tires. West argues that he did not know
that the tires were Outriggers when he asked Superhawk to
remove the identifying information. But before West used
the development tire, he had an email exchange with
Superhawk confirming that the 355-size tire was “Solideal
branded the OTR Outrigger.”
West also argues that the evidence did not support a
conclusion that a plate had been placed in the mold over the
16 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
Outrigger identifying information. West contends that such
a plate would leave obvious marks on the mold but that OTR
did not produce the actual mold for trial. OTR responds that
the molds were with Superhawk (the Chinese manufacturer),
not with OTR or Solideal. Thus, OTR did not control the
mold, and West provided no definitive evidence to the
contrary. West raised this same argument with the jury, but
the jury apparently was not persuaded. There was sufficient
evidence to support the jury’s finding.
West next points to his expert’s testimony, arguing that a
blank spring plate would have left deeper imprints on the tire.
The jury was not required to believe that testimony, however.
It was up to the jury to weigh witness testimony and compare
it to the rest of the evidence. Watec Co., 403 F.3d at 651 n.5.
West also cites an internal Solideal email in which one
individual related a discussion with Superhawk. Superhawk
told Solideal that it did not use Solideal’s mold. The jury
could have discounted this self-serving statement by
Superhawk, especially since the jury saw Superhawk’s email
to West stating that it would be “dangerous” to use Solideal’s
mold due to Superhawk’s agreement with Solideal. The jury
could rationally conclude that Superhawk was not candid in
telling Solideal what it had done for West out of fear of losing
business or of legal liability.
Finally, West argues that his development tire was
structurally different than an Outrigger, and therefore the
development tire was not a genuine Outrigger. This argument
fails because, as noted above, the jury saw enough evidence
to conclude that the development tires were taken from an
order that was intended for OTR and Solideal. The argument
also fails because the structural evidence came in through an
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 17
OTR expert witness who testified that he compared the
structure of West’s development tire, which was made in
China by Superhawk, with the structure of an Outrigger made
in Thailand by someone else. The expert testified that the
structural differences could have been explained by
differences in manufacturing between countries and between
manufacturers. He also testified that the difference in the
internal structure of the tires did not affect the tire tread
pattern.
c. Likelihood of consumer confusion
To prove a claim under section 43(a), a plaintiff must
establish a likelihood of consumer confusion. Two Pesos,
Inc. v. Taco Cabana, Inc., 505 U.S. 763, 780 (1992). Thus,
in order to prevail on its claim for reverse passing off, OTR
was required to prove that consumers would likely be
confused as to the origin of Outrigger tires that had their
identifying information removed. The likelihood-of-
confusion inquiry “generally considers whether a reasonably
prudent consumer in the marketplace is likely to be confused
as to the origin or source of the goods or services.” Rearden
LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1209 (9th
Cir.2012). Thus, the jury had to determine whether a
hypothetical consumer would likely be confused. Evidence
of actual confusion was not required. Network Automation,
Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1151
(9th Cir. 2011). The jury was shown pictures of an OTR
production tire and the West development tire. Comparing
the two tires, a reasonable jury could conclude that consumers
would be confused by tires that lack the identifying
information.
18 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
West argues that Genie, the customer, was not actually
confused. West’s argument fails for two reasons: First, in his
briefing for us, West argues that the development tire was not
an Outrigger and that Genie “knew” the tire was not an
Outrigger. Thus, West concedes that Genie thought the tire
was not a genuine Outrigger. Given that the jury concluded
that the tire was an Outrigger, West effectively concedes
actual confusion. Second, the only evidence cited by West in
support of this argument was proposed evidence that was not
actually admitted at trial. It was, instead, excluded by the
district court, and the exclusion was not erroneous. As it was
never before the jury, the jury cannot be faulted for not being
persuaded by it. That evidence cannot support an argument
that the jury’s verdict was not supported by substantial
evidence.
B. Fraud on the U.S. Patent and Trademark Office
OTR obtained a trade dress registration for the tread
design of its Outrigger tire. OTR brought a claim against
West for infringing its trade dress. West argued that the
registration was invalid because it was obtained through fraud
on the PTO. The jury agreed. On a post-trial motion,
however, the district court granted OTR’s motion to set aside
the jury’s finding as a matter of law. Specifically, the district
court concluded that, applying the clear and convincing
evidence standard, there was not substantial evidence to
support the verdict on that issue. On appeal, West argues that
the jury’s verdict should be reinstated.
1. Standard of Review
A grant of a motion for judgment as a matter of law is
reviewed de novo. Spencer v. Peters, 857 F.3d 789, 797 (9th
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 19
Cir. 2017). “In reviewing a grant of judgment as a matter of
law, we apply the same standard used by the district court in
evaluating the jury’s verdict. A jury’s verdict must be upheld
if it is supported by substantial evidence.” Wallace v. City of
San Diego, 479 F.3d 616, 624 (9th Cir. 2007) (internal
citations omitted). Substantial evidence is evidence adequate
to support the jury’s conclusion, even if it is possible to draw
a contrary conclusion from the same evidence. Unicolors,
853 F.3d at 984. The evidence must be viewed in the light
most favorable to the nonmoving party, in this instance West,
and all reasonable inferences must be drawn in favor of that
party. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S.
133, 149–50 (2000). If conflicting inferences may be drawn
from the facts, the question must be left to the jury. Torres v.
City of Los Angeles, 548 F.3d 1197, 1206 (9th Cir. 2008).
2. Standards for fraud on the PTO
A party harmed by a trademark’s registration can seek to
cancel the mark on certain specified grounds, including that
the trademark was obtained through fraud on the PTO. Hokto
Kinoko Co. v. Concord Farms, Inc., 738 F.3d 1085, 1097 (9th
Cir. 2013) (citing 15 U.S.C. §§ 1064, 1119). To succeed on
a claim for cancellation based on fraud, a claimant must
establish the following elements: 1) a false representation
regarding a material fact; 2) the registrant’s knowledge or
belief that the representation is false; 3) the registrant’s intent
to induce reliance upon the misrepresentation; 4) actual,
reasonable reliance on the misrepresentation; and 5) damages
proximately caused by that reliance. Id.In a civil case, fraud must normally be established by
clear and convincing evidence. United States v. U.S. Dist.
Court for Cent. Dist. of Cal., 858 F.2d 534, 543 n.5 (9th Cir.
20 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
1988). The Federal Circuit explicitly applies the clear and
convincing standard to petitions to cancel trademarks for
fraud on the PTO. In re Bose Corp., 580 F.3d 1240, 1243
(Fed. Cir. 2009). The district court concluded that the clear
and convincing standard should apply here to West’s claim
that OTR had committed fraud on the PTO, and it so
instructed the jury in this case. We agree and join the Federal
Circuit in requiring clear and convincing evidence for the
elements of fraud on the PTO.
Accordingly, drawing all inferences in favor of West, we
review whether there was substantial evidence whereby a
reasonable jury could have found fraud on the PTO,
recognizing that fraud must be proved by clear and
convincing evidence. See Nakamoto v. Ashcroft, 363 F.3d
874, 882 (9th Cir. 2004); see also Verizon Servs. Corp. v. Cox
Fibernet Va., Inc., 602 F.3d 1325, 1337–38 (Fed. Cir. 2010)
(“[W]e review whether . . . there was substantial evidence
whereby a reasonable jury could have reached its verdict . . .,
recognizing that [the question of fact] must be proved by
clear and convincing evidence.”). “Clear and convincing
evidence requires greater proof than preponderance of the
evidence. To meet this higher standard, a party must present
sufficient evidence to produce ‘in the ultimate factfinder an
abiding conviction that [the asserted factual contentions are]
highly probable.’” Sophanthavong v. Palmateer, 378 F.3d
859, 866–67 (9th Cir. 2004) (quoting Colorado v. New
Mexico, 467 U.S. 310, 316 (1984)).
In granting OTR’s motion to set aside the jury’s finding
of fraud, the district court concluded that there had not been
clear and convincing evidence to support the fraud claim.
The court addressed two pieces of evidence that remain
relevant to this appeal. First, the court considered an email
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 21
written by a consultant noting that the Outrigger tread design
contributed to the tire’s self-cleaning ability. The same
consultant also submitted a declaration to the PTO without
mentioning the self-cleaning function of the tread design.
The court determined that OTR did not omit a potentially
material fact because the self-cleaning nature of the Outrigger
had already been disclosed to the PTO on a prior occasion.
Second, the court considered a declaration written by an OTR
manager claiming that the Outrigger is immediately
identifiable based on its tire tread design. The court
concluded that this was a sincerely held subjective opinion,
not a false statement of fact.
3. Patrick Smith Declaration
We first address the declaration claiming that the
Outrigger is immediately identifiably based on the tread
design. The declaration was provided to the PTO by Patrick
Smith, an OTR manager. Smith provided the declaration in
response to a decision by the PTO examiner. In that decision,
the PTO examiner had denied the application for trade dress
registration because she found the tread design to be
functional and non-distinctive. Smith responded to the non-
distinctiveness finding by declaring that the “design of OTR’s
Outrigger tire is so distinctive that R-4 tire manufacturers,
distributors and customers can immediately identify the
Outrigger tire solely by seeing its tread design.” West argues
that this statement was fraudulent because it was made
without gathering any data from manufacturers, distributors
or customers.
As an initial matter, Smith did not purport to convey the
results of any survey of customers, manufacturers, or
distributors. Thus, the statement, by itself, did not constitute
22 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
clear and convincing evidence of a false representation
regarding a material fact. Furthermore, even if the statement
was false, West did not provide any evidence that Smith
knew the statement to be false.
West also failed to establish actual, reasonable reliance on
the purported misrepresentation. Smith submitted his
declaration on September 27, 2011. The examiner responded
on October 30, 2011, again denying the application. The
examiner rejected OTR’s September 27 arguments regarding
functionality and distinctiveness. She explained that OTR
had not presented evidence of acquired distinctiveness under
“Section 2(f).” Section 2(f) provides that an applicant may
establish acquired distinctiveness by proving substantial,
exclusive, and continuous use of a mark in commerce for five
years. 15 U.S.C. § 1052(f).
On April 30, 2012, OTR submitted another amendment to
its application, this time seeking to establish substantial,
exclusive, and continuous use of the trade dress in commerce.
The amendment contained another declaration from Smith in
which he related that OTR had sold $48 million worth of
Outrigger tires over a period of 14 years. The examiner
amended her opinion on May 31, 2012, finding that the
Outrigger tread design had acquired distinctiveness under
section 2(f).
Smith’s initial declaration regarding distinctiveness
appears to have been irrelevant to the examiner’s decision.
In that first declaration, Smith stated that the design was
distinctive because it was immediately recognizable, but the
examiner was not convinced. The examiner appears to have
found distinctiveness solely because of Smith’s second
declaration establishing acquired distinctiveness through
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 23
continuous use in commerce. Accordingly, there was not
clear and convincing evidence that the examiner relied on
Smith’s first declaration in reaching her conclusion on
acquired distinctiveness.
4. Ray Evans Email
We next address the email discussing the functionality of
the Outrigger design. The email was written by Ray Evans,
a tire engineering consultant for OTR. In the email, Evans
described four ways that the Outrigger tires were unique. He
then went on to write that “[a]ll of these design elements
contribute to the tire’s self cleaning ability that is needed to
operate in adverse muddy conditions and also make it readily
recognizable.” West argues that this statement demonstrates
that all four design elements were functional. Functional
features are not eligible for trade dress protection. West
argues that Evans committed fraud on the PTO by omitting
this information on functionality from a declaration he later
sent to the PTO in support of OTR’s application for trade
dress registration.
The PTO examiner had already been informed by Patrick
Smith that the tread design made the tires self-cleaning,
however. He told the examiner that “[a]ll R-4 tires . . . are
self-cleaning.” Smith went on to argue that the distinctive
angle of the Outrigger tread did not affect the self-cleaning
function of the tires. It was the angle of the tread that OTR
sought to protect with its registration.
Given that OTR had already acknowledged that the tread
design made the tires self-cleaning, there was no omission of
a material fact. Accordingly, we agree with the district court
24 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
that West failed to establish by clear and convincing evidence
that OTR committed fraud on the PTO.
C. The validity of OTR’s claim for protectable trade dress
As discussed above, the jury found that OTR’s trade dress
registration had been obtained through fraud, but the district
court set that finding aside. The jury also found that the trade
dress claim was invalid, and the district court sustained that
finding, denying OTR’s motion for a new trial on the issue of
validity and the claims based on the asserted trade dress.
OTR appeals that denial. A district court’s ruling on a motion
for new trial is reviewed for an abuse of discretion. Flores v.
City of Westminster, 873 F.3d 739, 755–56 (9th Cir. 2017).
The validity question was posed as Question No. 1 on the
special verdict form. Question No. 1 asked the jury whether
it found “by a preponderance of the evidence that OTR’s
registered trade dress is valid (is non-functional and has
secondary meaning).” The jury answered “No.”
Question No. 1 went to the elements required to prevail
on an infringement claim in a trademark case. To prevail on
such a claim, a plaintiff must show that: 1) it has a valid,
protectable mark, and 2) the defendant’s use of the mark is
likely to cause consumer confusion. Applied Info. Scis. Corp.
v. eBAY, Inc., 511 F.3d 966, 969 (9th Cir. 2007). To be valid
and protectable, a mark must be distinctive and non-
functional. Zobmondo Entm’t, LLC v. Falls Media, LLC,
602 F.3d 1108, 1113 (9th Cir. 2010) (distinctiveness); Tie
Tech, Inc. v. Kinedyne Corp., 296 F.3d 778, 783 (9th Cir.
2002) (functionality). The jury was instructed on those
requirements, and Question No. 1 highlighted them by noting
that to be valid the trade dress had to be “non-functional” and
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 25
have “secondary meaning.” Secondary meaning is required
to establish the distinctiveness element of a design trade dress
claim. Wal-Mart, 529 U.S. at 215–16.
The fraud question was posed as Question No. 2, which
asked whether the jury found “by clear and convincing
evidence that OTR’s certification of registration regarding its
trade dress was procured by fraud.” The jury answered
“Yes.”
If a defendant can establish that a registered mark was
obtained through fraud on the PTO, then the registration will
be cancelled. See Hokto Kinoko, 738 F.3d at 1097. But the
fate of a registration does not automatically determine a
trademark’s validity. Registration merely provides a
presumption of validity. Talking Rain Beverage Co. Inc. v.
S. Beach Beverage Co., 349 F.3d 601, 603 (9th Cir. 2003).
At trial, a registered mark is presumptively valid and
therefore distinctive and non-functional, and the burden is on
the defendant to prove otherwise. Tie Tech, 296 F.3d at782–83.
If a trademark is not registered, then a plaintiff may still
assert a claim for infringement of its protectable trade dress
right, but that plaintiff bears the burden to establish
distinctiveness and non-functionality. Talking Rain, 349 F.3d
at 603. Thus, if a mark is cancelled, a claim for infringement
may still be pursued based on an unregistered mark. Dep’t of
Parks & Recreation for State of Cal. v. Bazaar Del Mundo
Inc., 448 F.3d 1118, 1131 (9th Cir. 2006) (citing Far Out
Prods., Inc. v. Oskar, 247 F.3d 986, 997 (9th Cir.2001)). In
other words, fraud on the PTO “does not affect the mark’s
validity, because a trademark need not be registered to be
enforceable.” Specialized Seating, Inc. v. Greenwich
26 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
Industries, LP, 616 F.3d 722, 728 (7th Cir. 2010) (emphasis
omitted); cf. J. Thomas McCarthy, 6 McCarthy on
Trademarks and Unfair Competition § 31:60 (5th ed. 2018).
Thus, if a defendant establishes that a mark was obtained
through fraud on the PTO, the burden shifts back to the
plaintiff to establish distinctiveness and non-functionality.
See Tie Tech, 296 F.3d at 783; see also Talking Rain,
349 F.3d at 603. The plaintiff always maintains the burden
to establish consumer confusion.
Given that the answer to Question No. 2 on fraud would
have established the parties’ burdens as to Question No. 1 on
validity, the fraud question might logically have been posed
before the validity question. Nobody objected to the special
verdict form, however, and that specific defect has not been
cited as a basis for appeal.
OTR argues that the jury found the trade dress invalid
only because it had already found that the registration was
fraudulently obtained. In other words, OTR argues that the
jury’s answer to Question No. 2 on fraud dictated its answer
to Question No. 1 on validity. In support of its argument,
OTR points to a jury instruction directing the jury to find the
registration invalid if it was found to be fraudulently
obtained.4 But OTR’s argument amounts to speculation. It
does not seem to us especially likely that the jury skipped
Question No. 1 on validity, answered Question No. 2 on
4
This instruction could have been clearer, but it has no practical
impact in this case. As noted above, a finding of fraud would negate the
registration, but it would not necessarily mean that OTR could not have
a valid trade dress claim. It would shift the burden back to OTR to
establish non-functionality and secondary meaning because that burden is
on a plaintiff pursuing a claim for trade dress infringement in the absence
of a valid registration.
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 27
fraud, and then went back to answer Question No. 1 based on
that jury instruction. The special verdict form itself provided
the jury with directions to the contrary. Rather than being
told to start with Question No. 2, the form listed the validity
question as Question No. 1, and then provided the direction:
“If your answer is ‘Yes,” DO NOT answer Question No. 2
and proceed to Question No. 3. If your answer is ‘No,’ please
answer Question No. 2.” The sequence of the questions on
the special verdict form may have been in tension with the
jury instruction, but the jury did not indicate any confusion or
ask the court for any clarification. It seems to us more likely
that the jury simply followed the special verdict form.
Nor is there any conflict in the jury’s answers. The first
question asked the jury to determine whether the trade dress
was non-functional and had secondary meaning. The
question did not mention fraud, and it did not direct the jury
to consider the fraud question first. Accordingly, the jury was
able to answer the question without considering fraud, and
there is no evidence the jury did otherwise.
More broadly, we have a duty under the Seventh
Amendment to harmonize a jury’s answers on a special
verdict form if a fair reading allows for it. Bains LLC,
405 F.3d at 771. Here, it is fair to assume that the jury
answered Question No. 1 as it was written, without reference
to fraud. If OTR thought that the special verdict form was
confusing, the time to object was before the form was given
to the jury. There was no objection at that time. We are not
free to discard the jury’s verdict because one of the parties
argues after the fact that the jury might have been confused.
There was substantial evidence available for the jury to
conclude that the tire tread trade dress was either functional
28 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
or non-distinctive and thus to answer “No” to Question No.
1. While OTR argued that the specific angle of the tire tread
did not affect the functionality of the tread, the jury could
have concluded otherwise. For example, in Ray Evans’
email, he wrote that “[a]ll of these design elements contribute
to the tire’s self cleaning ability that is needed to operate in
adverse muddy conditions and also make it readily
recognizable.” Likewise, in looking at the Outrigger tire, the
jury could have concluded that the tread design was too
similar to other tread designs to have acquired secondary
meaning.
OTR also argues that it should obtain a new trial on its
trade dress claim because the jury was prejudiced by West’s
claim that OTR had committed fraud on the PTO. Like the
district court, we are not persuaded that the verdict was
tainted by West’s fraud arguments. It is far from unusual for
juries to have to sort through conflicting claims. They are
capable of doing so. The district court did not abuse its
discretion in denying OTR’s motion for a new trial.
D. OTR’s unregistered trade dress claim
OTR submitted a proposed jury instruction asserting a
claim for infringement of OTR’s unregistered trade dress
pursuant to 15 U.S.C. § 1125(a)(1). The trial court rejected
the proposed instruction on the grounds that OTR had not
pled an unregistered trade dress claim.
The question here is whether OTR’s complaint contained
enough information to put the district court and West on
notice that OTR had presented an unregistered trade dress
claim. A pleading must contain “a short and plain statement
of the claim showing that the pleader is entitled to relief.”
OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS. 29
Fed. R. Civ. P. 8(a)(2). “A complaint guides the parties’
discovery, putting the defendant on notice of the evidence it
needs to adduce in order to defend against the plaintiff’s
allegations.” Coleman v. Quaker Oats Co., 232 F.3d 1271,
1292 (9th Cir. 2000).
OTR did not state in its complaint that it was pursuing a
claim for infringement of an “unregistered” trade dress.
Likewise, OTR has not cited anything in the record
demonstrating that OTR clearly asserted an unregistered trade
dress claim prior to close of discovery. A defendant suffers
prejudice if a plaintiff is allowed to proceed with a new
theory of recovery after close of discovery. Id.OTR argues that it pled an unregistered trade dress claim
by asserting a claim under section 43 of the Lanham Act,
15 U.S.C. § 1125. It was not enough to simply cite section
43, however, because that section covers both registered and
unregistered marks. GoTo.com, Inc. v. Walt Disney Co.,
202 F.3d 1199, 1204 n.3 (9th Cir. 2000) (“[T]he provision at
issue here—§ 43—protects against infringement of
unregistered marks and trade dress as well as registered
marks.” (citing Kendall-Jackson Winery, Ltd. v. E. & J. Gallo
Winery, 150 F.3d 1042, 1046 (9th Cir.1998)). OTR’s
reference to section 43 did not by itself signal an unregistered
trade dress claim.
Indeed, the references to section 43 tended to put West on
notice as to other specific claims. For example, in paragraph
75 of the complaint, OTR asserted a violation of section 43 in
reference to the registered “Outrigger” word mark. Likewise,
OTR asserted a violation of section 43 in paragraph 73, but
that paragraph referred to the claim for reverse passing off,
not to a claim for infringement of an unregistered trade dress.
30 OTR WHEEL ENG’G V. WEST WORLDWIDE SERVS.
In short, OTR appeared to rely on the validity of its
registration and did not put the court or West on notice of its
intent to proceed with an unregistered trade dress claim. Our
review of the first amended complaint, which emphasized
OTR’s registrations, confirms that impression. The district
court did not abuse its discretion by refusing to instruct the
jury on an unregistered trade dress claim when that claim had
not been properly raised.
We pause to note that OTR’s unregistered claim was only
precluded to the extent that it asserted a broader claim than
the registered claim. As noted above, registration only
provides a presumption of validity, shifting the burden to the
defendant to rebut either distinctiveness or non-functionality.
Tie Tech, 296 F.3d at 783. If a registration is cancelled, for
example, due to fraud on the PTO, then the claim survives but
becomes more difficult to prove. See Bazaar Del Mundo
Inc., 448 F.3d at 1131. Perhaps appreciating that fact, OTR
argues that its unregistered claim encompassed “something
more” than what was covered by the registered claim. OTR
describes that “something more” as the OTR tire’s “overall
appearance, including the sidewall and its relationship to the
road.” To assert this broader claim, however, OTR was
required to clearly plead the claim in the complaint, and it did
not.
III. Conclusion
We affirm the district court on all of the Lanham Act
issues before us. We address the remaining issues in a
concurrently filed memorandum disposition.
AFFIRMED.