Optimum Technologies, Inc. v. Home Depot U.S.A., Inc.

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
February 14, 2007
No. 06-14432 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 04-03260-CV-TWT-1
OPTIMUM TECHNOLOGIES, INC.,
Plaintiff-Appellant,
versus
HOME DEPOT U.S.A., INC.,
ACE HARDWARE CORPORATION,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(February 14, 2007)
Before BLACK, MARCUS and WILSON, Circuit Judges.
PER CURIAM:
Optimum Technologies, Inc. (“Optimum”) filed suit against Home Depot,
Inc. (“Home Depot”) alleging that Home Depot committed trademark infringement
in violation of the Lanham Act, 15 U.S.C. § 1114, and false advertising in violation
of 15 U.S.C. § 1125(a). Home Depot sought partial summary judgment as to
Optimum’s claim for monetary damages under the Lanham Act and for Optimum’s
claim of false advertising. The district court granted Home Depot’s motion. The
district court found that Optimum’s claim for monetary damages, which consisted
of Home Depot’s profits, attorney fees, and enhanced damages, were not
appropriate under the facts of this case. Optimum appeals the district court’s
decision concerning Optimum’s claim for monetary damages. Optimum does not
appeal the court’s order dismissing the false adverting claim.
BACKGROUND
Optimum is a family owned company that sells a variety of floor related
products. Optimum’s best selling product is the Lok-Lift Gripper (“Lok-Lift”).
This product is applied in strips to the back of rugs and mats to secure them in
place and prevent slippage on hard floors and carpets. Optimum is the registered
owner of the Lok-Lift mark.
From 1994 until January 2003, Optimum sold the Lok-Lift product to Home
Depot through a joint venture partnership between Optimum and Henkel Consumer
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Adhesives, Inc. (“Henkle”). Pursuant to this partnership, Henkle purchased the
Lok-Lift product from Optimum then distributed it to various retailers, including
Home Depot. In 1998, Henkle began developing its own material that could be
used to hold carpets and mats in place on floors. Henkle’s product, which was
later named Hold-It for Rugs (“Hold-It”), is similar to Optimum’s Lok-Lift
product; however, the Hold-It product is not intended to be used to hold rugs in
place on carpets, only floors.
In October 2002, Henkle provided Home Depot with notice that it intended
to substitute its Hold-It product in the place of the Lok-Lift product. Henkle began
the announced product change sometime between December 2002 and January
2003. As the product change over occurred, Henkle sent Home Depot Hold-It with
the same product number and tracking information as the Lok-Lift product.
Therefore, Home Depot’s computer system did not reflect that the products had
changed. Accordingly, Home Depot did not update its shelf tags, which still bore
the name Lok-Lift, and Home Depot’s cash register receipts reflected that Lok-Lift
had been purchased even if Hold-It had actually been purchased. However, the
Hold-It product that was sold at Home Depot was packaged and marked with the
name Hold-It and had no reference to Lok-Lift or Optimum.
In April 2004, Optimum sent Home Depot a courtesy copy of the complaint
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that it had filed against Henkle for breach of confidential relationship, breach of
fiduciary duty, fraud, fraudulent concealment, negligent misrepresentation, and
trademark and trade dress infringement. (Doc. No. 69, exhibit 8). The letter
informed Home Depot that one issue in the suit concerned the products Home
Depot sold through Henkle. The letter also noted that Home Depot was not named
as a defendant in the litigation and did not request that Home Depot take any
action.1 Optimum claims that when it visited Home Depot stores, it pointed out to
Home Depot store personnel that Home Depot was improperly using the Lok-Lift
mark. In September 2004, counsel for Optimum sent Home Depot another letter.
In this letter, Optimum stated that Home Depot was continuing to infringe upon
Optimum’s Lok-Lift mark by having shelf tags that bore the Lok-Lift name and
cash register receipts reflecting a purchase of the Lok-Lift product when the Hold-
It product was the product actually purchased. In response to this letter, Home
Depot sent out an emergency maintenance request to try and rectify these concerns.
(Doc. 69, exhibit 16). Home Depot also requested that Henkle coordinate visits to
each Home Depot store to make sure that the Hold-It product was being properly
displayed. On November 5, 2004, Optimum filed this lawsuit against Home
Depot.
1
On August 5, 2004, Optimum also issued a subpoena decus tecum to Home Depot in
connection with Optimum’s lawsuit against Henkle.
4
In its partial motion for summary judgment, Home Depot argued that even if
it had infringed upon Optimum’s mark, Home Depot’s actions did not justify an
award of its profits, attorney fees, or enhanced damages. The district court agreed
and granted Home Depot’s motion.2
STANDARD OF REVIEW
We review a district court’s grant of summary judgment de novo. Vason v.
City of Montgomery, Ala., 240 F.3d 905, 906 (11th Cir. 2001) (per curiam). The
Lanham Act confers broad discretion upon the district court to fashion a remedy
and determine the proper relief due an injured party. See 15 U.S.C. § 1117(a);
Burger King v. Weaver, 169 F.3d 1310, 1315 (11th Cir. 1999). We review the trial
court’s exercise of its discretion for an abuse of discretion. Id.
DISCUSSION
Under its claim for trademark infringement, Optimum sought, in addition to
injunctive relief, monetary relief in the form of profits, attorney fees and costs, and
enhanced damages.3 The Lanham Act provides that, subject to the principles of
equity, a successful plaintiff may recover: (1) defendant’s profits, (2) any damages
2
On July 26, 2006, parties stipulated to the dismissal with prejudice of Optimum’s
prayer for injunctive relief. On July 27, 2006, the district court directed that final judgment be
entered in favor of Home Depot.
3
Optimum did not seek to recover actual damages.
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sustained by the plaintiff, and (3) costs of the action. 15 U.S.C. § 1117(a).4 In an
exceptional case, the district court may award attorney fees to the prevailing party.
Guided by principles of equity, the district court found that even if Home Depot
had infringed upon Optimum’s Lok-Lift mark, Optimum was not entitled to any of
these forms of monetary relief. For the reasons stated herein, we agree.
A. Profits
This Court has determined that an accounting of a defendant’s profits is
appropriate where: (1) the defendant’s conduct was willful and deliberate, (2) the
defendant was unjustly enriched, or (3) it is necessary to deter future conduct. See
Howard Johnson Co., Inc. v. Khimani, 892 F.2d 1512, 1521 (11th Cir. 1990).
There is scant evidence in the record that would suggest that Home Depot’s
conduct was willful. We have described a willful violation of a trademark
occurring where the infringer was “knowingly and deliberately cashing in upon the
good will of [the infringed].’” Burger King v. Mason, 855 F.2d 779, 781 (11th Cir.
1988) (per curiam)(quoting Wolf v. Nation Lead Co., 272 F.2d 867, 871 (9th Cir.
1959). Home Depot’s action consisted of having outdated shelf tags with
4
Optimum also brought a claim for trademark infringement under Georgia common law.
The district court did not separately analyze the state law claim in its order granting summary
judgment. However, this Court has noted that a trademark infringement claim under Georgia
law is reviewed under the same standards as a claim under the Lanham Act. See University of
Georgia Athletic Ass’n v. Laite, 756 F.2d 1535, 1539 n.11 (11th Cir. 1985).
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Optimum’s Lok-Lift mark and store receipts erroneously reflecting that a customer
had purchased Lok-Lift when that customer actually purchased Henkle’s Hold-It.
Optimum argues that Home Depot’s actions were willful because after Home
Depot was put on notice that it was infringing upon Optimum’s mark, Home Depot
initially took no steps to rectify the situation. Optimum argues that when Home
Depot did take steps to rectify the situation, those steps came about too slowly.
However, the record shows that Home Depot began to change its outdated store
tags and cash register receipts after Optimum sent Home Depot a letter directly
accusing it of infringing upon the Lok-Lift mark. Home Depot began to rectify the
situation before this lawsuit was filed and continued the process until all outdated
store tags were changed and the cash register receipts reflected the proper item
being sold. While Optimum may have wanted this process to progress at a more
rapid pace, this is not evidence that Home Depot’s alleged infringement was
willful. Furthermore, there is no evidence that the existence of outdated store tags
and inaccurate store receipts was based on Home Depot’s attempt to deliberately
cash in on Optimum’s good will. Therefore, Home Depot’s actions of alleged
infringement were not willful.
We also agree with the district court that there is no evidence of unjust
enrichment. Unjust enrichment occurs when an infringer has “enriched themselves
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by tapping the reputation and good will of [the infringed].” Khimani, 892 F.2d at
1521 n.9. There is no evidence that any of Home Depot’s sales of Hold-It are
attributable to its alleged infringement of Optimum’s Lok-Lift mark.5
Furthermore, the facts of this case do not present a situation where there is a need
to deter future conduct. There is no evidence that Home Depot was improperly
using the Lok-Lift mark to its financial advantage, and Home Depot has rectified
the allegedly infringing conduct in all of it stores. Based on the specific facts of
this case, the district court did not abuse its discretion in finding that an accounting
of Home Depot’s profits was not an appropriate remedy.
B. Attorney Fees
In “exceptional cases,” the district court has the discretion to “award
reasonable attorney fees to the prevailing party.” 15 U.S.C. § 1117(a). An
exceptional case is “where the infringing party acts in a malicious, fraudulent,
deliberate, or willful manner.” Burger King v. Pilgrim’s Pride Corp., 15 F.3d 166,
168 (11th Cir. 1994) (internal quotation marks omitted). There is no evidence to
suggest that this is an exceptional case. Therefore, the district court did not abuse
5
Optimum claims that it is worried about the company going into bankruptcy. However,
there is no evidence that any of Optimum’s financial troubles were attributable to Home Depot’s
use of outdated shelf tags and inaccurate cashier receipts.
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its discretion in finding that attorney fees was not an appropriate remedy.6
C. Enhanced Damages
The district court may, in its discretion, reduce or enhance the resulting
award up to three times the amount of profits or damages, whichever is greater, as
justice shall require. 15 U.S.C. § 1117(a). “Such an award is discretionary, but it
may not be punitive, and must be based on a showing of actual harm.” Babbit
Electronics. Inc. v. Dynascan Corp., 38 F.3d 1161, 1183 (11th Cir. 1994) (per
curiam). Since Optimum is not entitled to Home Depot’s profits and has not
shown any actual harm, it is not entitled to any enhanced damages.
Accordingly, upon review of the parties’ briefs and the record, we discern no
reversible error and affirm the decision of the district court.
AFFIRM.
6
The district court also found that Optimum was not entitled to costs. An award of costs
is also within the discretion of the district court, and we find no abuse of this discretion in
finding that an award of costs was not an appropriate remedy. See Planetary Motion, Inc. v.
Techsplosion, Inc., 261 F.3d 1188, 1205 (11th Cir. 2001).
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