Max Rack, Inc. v. Core Health & Fitness, LLC

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 22a0156p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
┐
MAX RACK, INC.,
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Plaintiff-Appellee/Cross-Appellant, │
> Nos. 20-3598/3600
│
v. │
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CORE HEALTH & FITNESS, LLC, │
Defendant-Appellant/Cross-Appellee. │
│
┘
Appeal from the United States District Court for the Southern District of Ohio at Columbus.
No. 2:16-cv-01015—Algenon L. Marbley, District Judge.
Argued: July 28, 2021
Decided and Filed: July 14, 2022
Before: COLE, ROGERS, and MURPHY, Circuit Judges.
_________________
COUNSEL
ARGUED: Robert Collings Little, BUCHALTER, Los Angeles, California, for
Appellant/Cross-Appellee. Matthew J. Schonauer, SCHONAUER LAW LLC, Columbus, Ohio,
for Appellee/Cross-Appellant. ON BRIEF: Robert Collings Little, C. Dennis Loomis,
BUCHALTER, Los Angeles, California, for Appellant/Cross-Appellee. Matthew J. Schonauer,
SCHONAUER LAW LLC, Columbus, Ohio, for Appellee/Cross-Appellant.
MURPHY, J., delivered the opinion of the court in which ROGERS, J., joined, and
COLE, J., joined in part. COLE, J. (pp. 35–37), delivered a separate opinion concurring in part
and dissenting in part.
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 2
_________________
OPINION
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MURPHY, Circuit Judge. Trademarks allow consumers to distinguish one product from
another quickly and cheaply. But they could not perform this signaling function if a trademark
owner’s competitors could freely use the owner’s mark to sell their (potentially inferior) goods.
So the Lanham Act has long prohibited trademark infringement and given trademark owners a
variety of remedies to combat it. See 15 U.S.C. §§ 1114(1), 1117(a), 1125(a)(1)(A). This case
raises several challenging questions under the Lanham Act.
Steve Skilken, the owner of Max Rack, Inc., invented a piece of gym equipment that he
named the “Max Rack.” For years, his company sold Max Racks through a licensing agreement
with Core Health & Fitness, LLC. When Max Rack’s last patent expired, however, Core Health
decided to compete against Max Rack by selling an identical machine under a new name—the
“Freedom Rack.” Max Rack alleged that Core Health committed two types of infringement
during its transition to the Freedom Rack: it continued to sell “Max Racks” without
authorization, and it attempted to sell Freedom Racks by free riding off the “Max Rack” name.
A jury agreed, awarding Max Rack $1 million in damages and $250,000 in Core Health’s profits.
The district court upheld the jury’s liability finding, doubled its profits award to $500,000, and
granted attorney’s fees to Max Rack. But the court overturned Max Rack’s damages award.
Both sides have appealed, and we must address several liability and remedy issues. All told, we
affirm in part and reverse in part.
I
A
Many avid weightlifters prefer to use free weights (think of a bench press with a standard
barbell) over weightlifting machines (think of a chest-press machine) because free weights allow
for more natural motions and help weightlifters develop better balance. Yet free weights also
pose greater dangers. Weightlifting machines are designed to ensure that weights will come
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safely to rest when lifters can no longer hold them. If, by contrast, lifters without a “spotter” can
no longer hold free weights, the weights can come crashing down and cause serious injury.
Inventors thus have long sought to develop equipment that combines the freedom of free
weights with the safety of weightlifting machines. Take a classic “Smith Machine”:
Article, R.40-10, PageID 695. It attaches the ends of an Olympic-size barbell to two vertical
“guide rods.” Skilken Tr., R.99, Page ID 2202. The guide rods are themselves connected to two
sturdy vertical posts that stand eight or so feet in height and six or so feet apart. The barbell
moves up and down along the guide rods. Safety latches on both sides of this barbell can
connect to any in a series of paired hooks (or catches, depending on the model) placed from top
to bottom on the vertical posts. The posts hold the barbell on these hooks when it is not in use.
Weightlifters can perform exercises like squats with this machine by lifting the barbell off the
posts and twisting it with their wrists to separate the barbell’s safety latches from the hooks.
When they complete a set (or can no longer hold the weight), they need only twist the barbell
until its latches reconnect with the closest pair of hooks. The vertical posts will again hold the
barbell’s weight.
Steve Skilken thought that he could make a machine with similar safety features but that
better simulated the use of free weights. Born and raised in Columbus, Skilken was an athlete at
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The Ohio State University and continued to exercise after his graduation. While lifting at a local
gym, a friend introduced him to a Smith Machine. Skilken soon came up with an idea to
improve on its design. A Smith Machine allows the barbell to move only vertically (up and
down), not horizontally (forward or backward). But when lifters use free weights to do exercises
like lunges, the barbell will often move both up and down and forward and backward.
In the late 1980s and early 1990s, Skilken spent significant time designing a machine that
allowed a barbell to move both ways. His efforts resulted in the “Max Rack.” The patent for
this machine contained a picture of its design:
Patent, R.93-5, PageID 1522. In later years after significant product development, a
commercially available “Max Rack” looked like this:
Website, R.93-3, PageID 1519.
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Like the Smith Machine, Skilken’s design connects each side of a standard barbell to two
vertical guide rods. Unlike the Smith Machine, the Max Rack has two sets of vertical posts, one
in the front and the other a few feet behind. The Max Rack connects the vertical guide rods
attached to the barbell to horizontal guide rods that run along the top and bottom of the front and
back posts. The vertical rods can move forward and backward along these horizontal rods. This
design permits the barbell that holds the weights to move not just up and down along the vertical
rods, but also forward and backward along the horizontal ones. The Max Rack thus allows lifters
to perform more exercises with the barbell and creates a closer feel to traditional free weights.
In 1997, Skilken’s company (which he also named “Max Rack”) received its first patent
on the machine and registered the “Max Rack” trademark. By 2002, however, the Max Rack
remained a relatively unknown piece of gym equipment. Kirt Moritz joined the company to take
over marketing efforts. Four years later, the company had spent over $1 million developing and
promoting the product. Among its promotional efforts, Max Rack advertised the machine on the
internet, in magazines and trade journals, through late-night infomercials, and at trade shows.
These efforts began to pay off. Professional sports teams (like the Green Bay Packers)
and universities (like Ohio State) added Max Racks to their weight rooms. The sales of Max
Racks also continued to increase from year to year. The company sold only 25 Max Racks in
1999. By 2005, its annual sales had increased to 84. During these years, it sold a total of 365
Max Racks.
In 2005, Star Trac Strength, Inc., approached Skilken about teaming up to grow Max
Rack sales. Early the next year, Max Rack and Star Trac entered into a licensing agreement.
Star Trac received the exclusive right to make and distribute the Max Rack. In exchange, it
agreed to pay Max Rack a royalty of $120 per unit sold and to take over marketing efforts. The
agreement would continue until the expiration of the last Max Rack patent, at which point either
party could opt out.
Financial troubles hit Star Trac four years later. These troubles led the two companies to
sign an “addendum” to their agreement in 2010. Max Rack agreed to accept a several-month
delay in the payment of some $44,000 in royalties. Star Trac agreed to pay the $120 royalty in
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perpetuity (not just until the last patent’s expiration). Soon thereafter, Core Health bought Star
Trac’s assets, including its licensing agreements. As part of its due diligence, Core Health
reviewed this addendum. It did not believe that courts would enforce the requirement to pay
royalties forever because of caselaw barring patent holders from seeking royalties after their
patent’s expiration. Core Health did not inform Max Rack of this belief.
Max Rack’s relationship with Core Health prospered for several years. From 2006 to
2015, Star Trac and Core Health sold over 5,300 Max Racks under the licensing agreement.
Max Rack received over $640,000 in royalties.
Things changed in October 2015. Core Health sent Max Rack a letter stating its intent to
get out of the agreement. The last patent on the machine would expire on November 21. Core
Health did not plan to use the “Max Rack” mark on, or pay royalties for, machines made after
that date. The agreement did, however, include a six-month window for Core Health to sell off
remaining “Max Rack” machines that Core Health had started manufacturing before the
agreement’s expiration (as long as it paid royalties to Max Rack).
B
Going forward, Core Health planned to make an identical machine using a new
trademark: the “Freedom Rack.” Max Rack challenged the way in which Core Health executed
this change. Max Rack had concerns both with Core Health’s marketing and with its
manufacturing.
1. Max Rack contended that Core Health did not stop using the Max Rack trademark in
its marketing quickly enough. Core Health’s former vice president of marketing could not
remember taking any action between July and December 2015 to change to the Freedom Rack
mark, even though switching a brand name can take up to two months. Emails suggest that Core
Health waited until over a month after the agreement’s expiration to update its website and other
marketing materials. In January 2016, a marketing team attempted to scrub all marketing
materials of the old mark. This review took two weeks.
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But the employees did not catch everything. Max Rack’s Kirt Moritz claimed that, for
years, he would search Google for “Max Rack” and get back “hits” in which this mark was used
with the Freedom Rack. He kept a record of one search from mid-2016. This search returned a
link to Core Health’s website with a caption underneath the link that used the “Max Rack” name.
Core Health’s former vice president of marketing suggested that this link sent viewers to a sales
page (but Max Rack did not introduce a copy of the page). He also noted that Core Health’s
sales page for the Freedom Rack at one point contained an outdated picture of a machine with a
partially covered “Max Rack” logo on the bottom bar.
These issues were not limited to Core Health. Moritz’s Google searches revealed that
some third-party resellers, including OC Fitness Source, advertised the Freedom Rack using the
Max Rack name. When Moritz visited OC Fitness’s site, he saw that it used a picture of the Max
Rack.
Core Health’s former vice president of marketing admitted that someone in marketing
should have done the types of Google searches that Moritz undertook. But the employee in
charge of the changeover could not remember doing so. Max Rack’s counsel confronted this
employee with some remaining “Max Rack” references on Core Health’s website during her
deposition. She later testified that she fixed all references that she learned of and explained that
they had resulted from “[h]uman error.” O’Brien Tr., R.101, PageID 2573.
Other errors remained. As late as trial, Moritz testified, the owner’s manual for the
Freedom Rack, which could be found on Core Health’s website, included a reference to “Max
Rack.” One line in the manual’s installation instructions read: “UNPACK THE MAX RACK
and ASSEMBLE UPPER WELDMENTS.” Manual, R.95-1, PageID 1813. The manual used
the “Freedom Rack” mark in many other places, however, including on its title page.
2. Max Rack also had production complaints. Kevin Corbalis, Core Health’s vice
president of product development, testified that, by December 2015, the overseas manufacturer
had finished all remaining Max Racks and begun to make Freedom Racks.
Yet company emails undermine this claim. They show Core Health scrambling to change
its production from Max Racks to Freedom Racks into 2016. A December 23, 2015 email, for
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example, suggests that the company still needed to size the new “Freedom Rack” artwork to fit
the machine. Email, R.94-11, PageID 1752. Five days later, another email reiterates: “Need
name change, logo, MaxRack removed from placard ASAP so no more are produce[d].” Email,
R.94-12, PageID 1754.
Correspondence in 2016 muddies things further. Emails from January suggest that Core
Health had still not assigned the “Freedom Rack” a product number or sent engineering changes
to the manufacturer. By February, the company was still trying to figure out the Freedom Rack’s
standard cost and to ensure that the “next production runs” were of Freedom Racks. Emails,
R.95-5, PageID 1833–1834; R.94-18, PageID 1771. A year after the agreement’s expiration,
Corbalis asked employees for the “last manufacture date of the Max Rack[.]” Email, R.95-4,
PageID 1832. An employee responded that Core Health had not authorized the manufacturer to
“scrap all remaining Max Rack labels” until May 2016. Id., PageID 1831.
Core Health’s records show that, after the agreement expired in 2015, it sold 271
machines made as Max Racks. The agreement gave Core Health six months to sell off any units
that it had started making before the expiration date. It sold 238 within that window. But it sold
another 24 later in violation of the agreement. Core Health placed the remaining 9 units in a
unique category because Core Health’s records suggested that it changed their labels to
“Freedom Rack” before shipping them. Until this litigation, Core Health did not pay Max Rack
for any of these 271 sales.
Today, the Freedom Rack is the only machine on the market like the Max Rack. Skilken
has not tried to enter into another licensing agreement to make “Max Racks.” And no
competitors sell a similar product.
C
Max Rack sued Core Health (and two other parties that do not matter now). As relevant
here, Max Rack alleged two claims under the federal Lanham Act: for infringing its Max Rack
trademark and engaging in unfair competition. See 15 U.S.C. §§ 1114(1)(a), 1125(a)(1)(A). It
also alleged three claims under Ohio’s Deceptive Trade Practices Act: for passing off the Max
Rack machine as its own, causing a likelihood of confusion as to the source of Core Health’s
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machines, and causing a likelihood of confusion as to Core Health’s affiliation with the Max
Rack mark. See Ohio Rev. Code § 4165.02(A)(1)–(3).
These claims proceeded to trial. The week before trial started, Core Health sent Max
Rack a belated check for the 262 units that it sold and shipped as Max Racks after the
agreement’s expiration. For the 238 that it sold within the six-month window allowed by the
agreement, Core Health paid the royalty plus interest. For the 24 that it sold in breach of the
agreement, it paid its profits plus interest.
After trial, the jury ruled for Max Rack on all counts. It awarded Max Rack $1 million in
damages and $250,000 in Core Health’s profits. It also found that Core Health’s infringement
had been intentional.
The parties filed competing post-trial motions. The district court ruled for each side in
part. Max Rack, Inc. v. Core Health & Fitness, LLC, 2020 WL 2128614, at *12 (S.D. Ohio May
5, 2020). The court ruled for Max Rack on most issues. It denied Core Health’s motion for
judgment as a matter of law or for a new trial as to its liability. Id. at *2–5. The court also
upheld Max Rack’s $250,000 award tied to Core Health’s profits. Id. at *5. It even enhanced
this award to $500,000 because of Core Health’s conduct during discovery. Id. at *6–7. The
court next awarded Max Rack attorney’s fees. Id. at *7–8. It lastly enjoined Core Health from
using the Max Rack mark without acknowledging that it is registered to Max Rack, Inc. Id. at
*11.
At the same time, the district court ruled for Core Health regarding Max Rack’s award of
$1 million in damages. The court overturned this award because Max Rack presented no
evidence that Core Health’s use of the Max Rack mark had actually confused any consumers. Id.at *4–5. It later rejected Max Rack’s motion for reconsideration on this damages question. Max
Rack, Inc. v. Core Health & Fitness, LLC, 2020 WL 4933920, at *5 (S.D. Ohio Aug. 24, 2020).
II
Both parties appealed. Their combined appeals require us to consider six questions:
(1) Did Max Rack present sufficient evidence that Core Health violated the law? (2) Is Core
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Health entitled to a new trial? (3) Should the district court have vacated the jury’s profits award?
(4) Did the court properly double that profits award? (5) Did the district court mistakenly vacate
the jury’s damages award? (6) And did it wrongly grant attorney’s fees to Max Rack?
Question 1: Did Max Rack present sufficient evidence that Core Health violated the law?
Core Health begins by arguing that the district court should have granted it judgment as a
matter of law under Federal Rule of Civil Procedure 50 because no reasonable jury could have
found for Max Rack. Recall that Max Rack presented to the jury two federal claims under the
Lanham Act (for trademark infringement and unfair competition) and three state claims under
Ohio’s Deceptive Trade Practices Act (for passing off goods, causing likelihood of confusion as
to source, and causing likelihood of confusion as to affiliation). See 15 U.S.C. §§ 1114(1)(a),
1125(a)(1)(A); Ohio Rev. Code § 4165.02(A)(1)–(3). Whether the jury could have reasonably
found for Max Rack on any one of these claims turns on that claim’s specific legal elements.
After all, Core Health would be entitled to a judgment in its favor on a claim if Max Rack failed
to produce enough evidence on even a single element, whether or not it proved the other
elements. See Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986); Anchor v. O’Toole, 94
F.3d 1014, 1023 (6th Cir. 1996).
But the parties do not cite the statutory text for any of the five claims, identify their legal
elements, or otherwise distinguish between them. To seek judgment as a matter of law, Core
Health argues generically that its use of the Max Rack mark was not likely to cause confusion as
a matter of law, impliedly suggesting that all five claims contain an identical “likelihood of
confusion” element. And Max Rack’s response does not challenge Core Health’s (implied)
suggestion that the five claims share this identical element.
Do the parties rightly assume that the claims follow the same likelihood-of-confusion
test? Perhaps so for the federal claims. The two federal statutes use similar “likely to
cause confusion” language. Compare 15 U.S.C. § 1114(1)(a), with id. § 1125(a)(1)(A);
see 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 23:1 (5th ed.),
Westlaw (database updated Mar. 2022). And an oft-cited treatise identifies as their primary
difference that § 1114(1)(a) permits only owners of federally registered marks to bring
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 11
infringement claims, whereas § 1125(a) allows owners of unregistered marks to assert these
claims under the “unfair competition” label. 1 McCarthy, supra, § 4:6; 5 id. §§ 27:12, 27:14; cf.
Daddy’s Junky Music Stores, Inc. v. Big Daddy’s Fam. Music Ctr., 109 F.3d 275, 280, 288 (6th
Cir. 1997). (The treatise cautions that, when an owner of a registered mark asserts a trademark-
infringement claim, the court should not present to the jury duplicative trademark-infringement
claims under § 1114(1)(a) and § 1125(a) because it might confuse jurors. 5 McCarthy, supra,
§ 27:14.)
Things are more complicated for the state claims. A recent Ohio Supreme Court decision
has told courts not to follow federal precedent reflexively if Ohio’s Deceptive Trade Practices
Act uses language different from the Lanham Act. See Wooster Floral & Gifts, L.L.C. v. Green
Thumb Floral & Garden Ctr., Inc., 172 N.E.3d 60, 66–69 (Ohio 2020). But again, the parties do
not even cite the statutory language governing these state claims. Ultimately, therefore, we will
not identify the elements for any of the claims in this case. The parties’ briefing choices allow us
simply to assume that all five of Max Rack’s claims required it to prove the same likelihood-of-
confusion element that governs an infringement claim under § 1114(1)(a). Their briefing choices
likewise allow us to assume that Max Rack proved all other (unspecified) elements.
In a typical trademark-infringement case, a company using one mark (say, “5-hour
ENERGY”) alleges that another company has chosen a deceptively similar mark (say, “6 Hour
POWER”) that will lead consumers to believe goods or services bearing the marks are affiliated
with each other. Innovation Ventures, LLC v. N.V.E., Inc., 694 F.3d 723, 731 (6th Cir. 2012);
see also, e.g., AWGI, LLC v. Atlas Trucking Co., 998 F.3d 258, 268 (6th Cir. 2021) (“Atlas”
versus “Atlas Trucking” and “Atlas Logistics”); Daddy’s, 109 F.3d at 278–79 (“Daddy’s Junky
Music Stores” and “Daddy’s” versus “Big Daddy’s Family Music Center”). In that context, we
have evaluated the totality of the circumstances to decide whether a new mark would generate a
“likelihood of confusion” as to its affiliation with the established mark. See Homeowners Grp.,
Inc. v. Home Mktg. Specialists, Inc., 931 F.2d 1100, 1106–07 (6th Cir. 1991). We have also
asked eight recurring questions to help ensure consistent results across cases under this consider-
everything approach: How well-known is the plaintiff’s mark? How related are the parties’
goods? How similar are the marks? Have consumers actually been confused? Do the parties
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use similar marketing channels? How much care do consumers exercise when buying these
products? Did the defendant intentionally choose its mark because of the plaintiff’s? And are
the companies’ product lines likely to expand? See Frisch’s Rests., Inc. v. Elby’s Big Boy of
Steubenville, Inc., 670 F.2d 642, 648 (6th Cir. 1982).
But this case is not a typical one. Max Rack does not allege that Core Health’s “Freedom
Rack” mark is deceptively similar to its “Max Rack” mark. It has no objection to that new mark.
Rather, Max Rack alleges that Core Health continued to use the “Max Rack” mark after the
expiration of the agreement that gave it the right to do so.
A separate body of law has developed for this distinct claim that a holdover licensee has
continued to use a licensor’s mark after their agreement expired. See 4 McCarthy, supra,
§ 25:31 (citing cases). In this context, courts have jettisoned the usual totality-of-the-
circumstances test in favor of a more categorical rule: “proof of continued, unauthorized use of
an original trademark by one whose license to use the trademark had been terminated is
sufficient to establish ‘likelihood of confusion.’” U.S. Structures, Inc. v. J.P. Structures, Inc.,
130 F.3d 1185, 1190 (6th Cir. 1997); ITT Indus., Inc. v. Wastecorp. Inc., 87 F. App’x 287, 293
(3d Cir. 2004); Gorenstein Enters., Inc. v. Quality Care-USA, Inc., 874 F.2d 431, 435 (7th Cir.
1989); Burger King Corp. v. Mason, 710 F.2d 1480, 1492–93 (11th Cir. 1983); Pro. Golfers
Ass’n of Am. v. Bankers Life & Cas. Co., 514 F.2d 665, 670 (5th Cir. 1975); L & L Wings, Inc. v.
Marco-Destin, Inc., 676 F. Supp. 2d 179, 188 (S.D.N.Y. 2009). This rule makes good sense
when a holdover licensee blatantly infringes the licensor’s mark by using that mark in the same
way as it did before the agreement expired. Without any need to tick through factors, it should
be obvious that consumers will believe, for example, that a pizza restaurant remains affiliated
with the “Little Caesars” chain when a terminated franchisee continues to operate the pizzeria as
a Little Caesars. See Little Caesars Enters., Inc. v. Miramar Quick Serv. Rest. Corp., 2020 WL
4516289, at *3 (6th Cir. 2020) (order).
How do these principles play out here? Before applying them to Max Rack’s claims, we
must begin with uncertainty over our standard for evaluating the jury’s verdict. Circuit courts
have disagreed over the proper standard of review for the ultimate question whether a likelihood
of confusion exists. See 4 McCarthy, supra, §§ 23:71, 23:73. Traditionally, we have viewed this
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question as one of law that we have considered de novo. Progressive Distrib. Servs., Inc. v.
United Parcel Serv., Inc., 856 F.3d 416, 427 (6th Cir. 2017); Homeowners Grp., 931 F.2d at
1107; Frisch’s, 670 F.2d at 651. But a recent Supreme Court case suggests that the question
could at least sometimes raise a fact question for the jury that we would review deferentially.
See Hana Fin., Inc. v. Hana Bank, 574 U.S. 418, 422 (2015). Regardless, Max Rack produced
enough evidence to establish a likelihood of confusion even under our traditional standard. See
Homeowners Grp., 931 F.2d at 1107.
Max Rack presented two theories to the jury: (1) that Core Health sold some Max Racks
without authorization, and (2) that Core Health used the Max Rack mark when selling Freedom
Racks to confuse consumers into thinking that the Freedom Rack was affiliated with the Max
Rack brand. The district court relied on the second theory, but we think it easier to start with the
first.
Theory One: Continued Sales of Max Racks. The jury reasonably could have found that
Core Health violated the licensing agreement by selling Max Racks after that agreement expired.
This violation would trigger our rule that trademark infringement exists if a holdover licensee
continues to use a licensor’s mark on its goods without authorization. See U.S. Structures,
130 F.3d at 1190. Most notably, Core Health admits that it sold 24 Max Racks outside the six-
month window that the agreement gave it to liquidate inventory. These unauthorized sales alone
supported the jury’s finding that Core Health intentionally infringed the Max Rack mark by
leading the public “to think that the continuing user [Core Health] is still connected with the
trademark owner [Max Rack].” 4 McCarthy, supra, § 25:31; see also Bill Blass, Ltd. v. SAZ
Corp., 751 F.2d 152, 154–55 (3d Cir. 1984). In fact, Core Health paid Max Rack its profits on
these units before trial. That decision may have reduced its monetary liability, but it did not
erase its violation.
In addition, the jury reasonably (if just barely) could have found that Core Health began
to manufacture Max Racks after the agreement expired in November 2015. Core Health agrees
that it sold 238 Max Racks after the expiration date (but before the end of the six-month
window). Although the agreement allowed Core Health to sell those units if they were in
production as of the expiration date, the jury could have found that Core Health started making
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them only after the agreement’s termination. Core Health presented no records identifying the
dates that its manufacturer started producing the units sold after the agreement expired. And
Max Rack presented plenty of circumstantial evidence that the units were placed in production
too late. Among other things, emails from over a month after the expiration suggested that Core
Health’s manufacturer needed “MaxRack removed from placard ASAP so no more are
produce[d].” Email, R.94-12, PageID 1754. In February 2016, moreover, Core Health was still
trying to ensure that the “next production runs” would be of Freedom Racks. Emails, R.95-5,
PageID 1833–1834. And Core Health did not authorize its manufacturer to “scrap” the Max
Rack labels for a few more months. Emails, R.95-4, PageID 1831. Yet any sales of later-
produced Max Racks would have violated the agreement and so likewise infringed Max Rack’s
trademark. See U.S. Structures, 130 F.3d at 1190.
Lastly, Max Rack cites the testimony of Core Health’s finance director regarding 9 more
units sold after the agreement expired. The director testified that those units “were purchased as
Max Rack[s]” but that Core Health changed the logos to “Freedom Rack” before shipping the
units to customers. Winegardner Tr., R.100, PageID 2461. As Max Rack notes, if those
customers were sold a “Max Rack,” they surely would have been confused when opening the
box and finding a “Freedom Rack” inside. Core Health responds that Max Rack misconstrued
this testimony. According to Core Health, the finance director suggested that Core Health
bought the units as “Max Racks” from the manufacturer and rebranded them as “Freedom
Racks” before selling them. To support this claim, however, Core Health points to only more
opaque testimony: the director later testified that the units “were purchased as Max Rack and
sold as Freedom Rack.” Id., PageID 2564. Purchased by whom? His testimony shows the perils
of the passive voice. Because Core Health failed to clear up the factual ambiguity at trial, the
jury could have treated these sales as infringing. All told, then, the jury reasonably could have
found that Core Health infringed the Max Rack mark by selling up to 271 Max Racks without
authorization.
Theory Two: Use of “Max Rack” Name to Sell Freedom Racks. The district court did not
rely on this evidence of continuing Max Rack sales. It instead held that the jury could have
found that Core Health, when selling Freedom Racks, continued to use the name “Max Rack” so
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 15
as to lead consumers to believe that the machines were affiliated with the Max Rack brand. Yet
the court cited three pieces of relatively insubstantial evidence for this conclusion: OC Fitness, a
third-party reseller, used the Max Rack mark when selling Freedom Racks on its website; Kirt
Moritz conducted a Google search for “Max Rack” and got a “hit” to an unidentified page on
Core Health’s website; and a stray “Max Rack” reference remained in the Freedom Rack
owner’s manual. See Max Rack, 2020 WL 2128614, at *2–3.
Did this evidence suffice? The district court committed legal error by relying on the first
piece: that a downstream reseller (OC Fitness) used the Max Rack mark when advertising
Freedom Racks. Max Rack does not identify any basis for imputing this separate entity’s
conduct to Core Health. We can think of one possibility: the Supreme Court has held that a
trademark owner can hold a competing manufacturer liable for “contributory infringement” if the
competitor intentionally convinces a third-party distributor to infringe the owner’s mark or if the
competitor continues to sell to the distributor after learning of the infringing conduct. See
Inwood Lab’ys., Inc. v. Ives Lab’ys., Inc., 456 U.S. 844, 853–54, 854 n.13 (1982); 4 McCarthy,
supra, § 25:18. Here, however, Core Health warned its regular resellers of the pending name
change. And Max Rack points to no evidence that Core Health knew of OC Fitness’s use of the
Max Rack mark. So Max Rack does not even present a contributory-infringement theory on
appeal, and the district court erred by relying on OC Fitness’s alleged misconduct to hold Core
Health liable.
That said, although we find the question close, we agree that Core Health’s own
continued uses of the Max Rack mark could have created this likelihood of confusion when
considered collectively. At the outset, keep in mind a critical distinction in the Lanham Act
between proving a violation and proving a proper remedy. See Web Printing Controls Co., v.
Oxy-Dry Corp., 906 F.2d 1202, 1204–05 (7th Cir. 1990). To prove a violation, Max Rack
needed to show only that Core Health’s use of the Max Rack name would likely confuse
consumers over whether the Freedom Rack was affiliated with the owner of the Max Rack mark
in some way. Max Rack did not need to show actual confusion or past injury. See id.; see also
Balance Dynamics Corp. v. Schmitt Indus., Inc., 204 F.3d 683, 689 (6th Cir. 2000). We should
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 16
not conflate the minimum showing required to prove a violation with the more rigorous showing
required to obtain damages. See 4 McCarthy, supra, § 23:12.
In addition, there is no dispute that Core Health did continue to use the Max Rack name,
even if accidentally, in association with its Freedom Rack sales. As one example, the employee
who oversaw the change to the Freedom Rack in Core Health’s marketing materials conceded
that some parts of the website mistakenly referred to the Max Rack up through the time of her
deposition. O’Brien Tr., R.101, PageID 2572–73. As another example, Core Health’s former
vice president of marketing suggested that the company’s ads of the Freedom Rack on its
website used an outdated photo of a Max Rack with a partially concealed “Max Rack” logo on a
black bar:
Website, R.93-7, PageID 1542; Dilts Tr., R.101, PageID 2496. Kirt Moritz at Max Rack
similarly testified that his 2016 search for “Max Rack” on Google returned a “hit” to Core
Health’s Star Trac website referencing “Max Rack” in a snippet under the web address:
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 17
Ex. 112, R.94-2, PageID 1584. Core Health’s former vice president of marketing suggested that
this link directed viewers to a sales page. Lastly, at the time of trial, Moritz identified an
extraneous “Max Rack” reference still in the Freedom Rack owner’s manual on Core Health’s
website. Manual, R.95-1, PageID 1813.
Core Health rightly responds that these examples show minor uses of the Max Rack mark
and perhaps prove only that it implemented the change carelessly. But this response—that Core
Health’s uses of the Max Rack mark were harmless—goes more to whether Max Rack
established damages than to whether it established a violation. See Web Printing, 906 F.2d at
1204. Core Health needed to ensure that its materials did not perpetuate the “perception that” its
Freedom Racks were affiliated with the Max Rack brand. Frisch’s Rest., Inc. v. Shoney’s Inc.,
759 F.2d 1261, 1270 (6th Cir. 1985) (citation omitted). These references could create that
perception—whether we consider the question under our likelihood-of-confusion factors (for
similar marks) or our categorical rule (for holdover licensees). The goods were the same, the
companies were potential competitors, and the mark (Max Rack) was identical. And Core
Health (a former licensee) continued to use the Max Rack mark after the expiration of the
licensing agreement. Indeed, if we accepted Core Health’s argument that these uses of “Max
Rack” did not violate the Lanham Act because they were trivial, Core Health could continue with
them indefinitely. Max Rack would remain powerless to stop Core Health from, say, using the
picture of a Max Rack to sell its Freedom Racks.
Important, too, is Core Health’s failure to identify a procompetitive justification for its
“Max Rack” references. Such a justification often exists when a competitor uses another’s mark
to give consumers truthful information about competing goods. That information allows
consumers to identify their preferred product with lower search costs. See August Storck K.G. v.
Nabisco, Inc., 59 F.3d 616, 618 (7th Cir. 1995); 4 McCarthy, supra, §§ 23:11, 25:52; William
McGeveran & Mark P. McKenna, Confusion Isn’t Everything, 89 Notre Dame L. Rev. 253, 284
(2013). Suppose, for example, that a new entrant decides to reproduce a well-known type of
mineral water. The new entrant may truthfully tell consumers that it sells water similar to the
well-known brand at a lower price. See Saxlehner v. Wagner, 216 U.S. 375, 379–81 (1910); cf.
Conopco, Inc. v. May Dep’t Stores Co., 46 F.3d 1556, 1565 (Fed. Cir. 1994). As Justice Holmes
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 18
explained, the new entrant is “not trying to get the good will of the name, but the good will of the
goods.” Saxlehner, 216 U.S. at 380–81. This type of “fair use” of a mark seeks to enlighten
rather than confuse. See 4 McCarthy, supra, § 25:52. And we should not apply trademark law in
a way that effectively gives owners of established products monopoly power over those products
(something within patent law’s domain). See Saxlehner, 216 U.S. at 380.
In this case, then, Max Rack could not rely on trademark law to prevent Core Health from
truthfully telling consumers that the Freedom Rack is identical to the Max Rack or that Core
Health used to make the Max Rack for Max Rack, Inc. Yet Core Health did not assert at trial
that its challenged uses of the Max Rack mark served any information-supplying purpose. That
is for good reason. A consumer who saw the references would come away thinking that the
Freedom Rack’s producer was affiliated with the Max Rack’s owner, not that they were
potentially competing against each other. Core Health instead asserted that the references were
“accidents.” Whether innocent or not, however, the references still could have created a
likelihood of confusion. Cf. Louis Vuitton S.A. v. Lee, 875 F.2d 584, 589 (7th Cir. 1989).
Question 2: Is Core Health entitled to a new trial?
Even if Core Health cannot obtain judgment as a matter of law under Rule 50, it next
argues that the district court at least should have granted it a new trial under Rule 59. But the
district court properly exercised its discretion by denying Core Health’s new-trial request.
A district court may grant a new trial “for any reason for which a new trial has heretofore
been granted in an action at law in federal court[.]” Fed. R. Civ. P. 59(a)(1)(A). We have
interpreted this rule to permit a new trial on many grounds. See Mosby-Meachem v. Memphis
Light, Gas & Water Div., 883 F.3d 595, 606 (6th Cir. 2018); see also 11 Charles Alan Wright
et al., Federal Practice & Procedure § 2805, at 68–73 (3d ed. 2012). The jury’s verdict might
conflict with the weight of the evidence presented at trial. Compare Innovation Ventures, LLC v.
N2G Distrib., Inc., 763 F.3d 524, 534–38 (6th Cir. 2014), with Strickland v. Owens Corning,
142 F.3d 353, 357–58 (6th Cir. 1998). Or improper arguments might have caused the verdict to
rest more on prejudice against the losing party than on the merits of the winning party’s case.
Compare Tompkins v. Crown Corr, Inc., 726 F.3d 830, 835–36 (6th Cir. 2013), with City of
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 19
Cleveland v. Peter Kiewit Sons’ Co., 624 F.2d 749, 755–60 (6th Cir. 1980). The excessive
nature of a monetary award might also justify a new trial (or at least a remittitur) if it shows that
the verdict arose out of passion or mistake. Compare Roush v. KFC Nat’l Mgmt. Co., 10 F.3d
392, 397–400 (6th Cir. 1993), with Farber v. Massillon Bd. of Educ., 917 F.2d 1391, 1395–96
(6th Cir. 1990).
Core Health relied on several of these grounds here. It claimed that the weight of the
evidence did not support the verdict, and that the verdict instead resulted from Max Rack’s
efforts to bias the jury against Core Health with irrelevant evidence. To support this bias claim,
Core Health relied on references at trial to the “addendum” to the licensing agreement that Max
Rack entered into with Star Trac in 2010. Under this addendum, Max Rack allowed Star Trac to
make belated royalty payments in exchange for a right to a perpetual royalty. When Core Health
took over Star Trac’s contracts, it decided that a court would not enforce the requirement to pay
royalties forever because of caselaw that barred patent holders from seeking royalties after their
patent’s expiration. See Kimble v. Marvel Ent., LLC, 576 U.S. 446, 449 (2015). Max Rack does
not dispute Core Health’s understanding of the law. In fact, Max Rack did not even assert a
breach-of-contract claim based on Core Health’s decision to violate the addendum and stop
paying royalties.
According to Core Health, however, Max Rack’s witnesses repeatedly inflamed the jury
with claims that Core Health unfairly broke its promise in the addendum. Steve Skilken’s
testimony offers a good example. When counsel asked him if he considered the licensing
agreement to have been “successful,” he volunteered: “There’s an addendum that supersedes
this.” Skilken Tr., R.99, PageID 2220. He proceeded to describe the addendum’s origins. When
Star Trac “ran out of money,” Skilken explained, Max Rack could have licensed its machine to
other parties. Id., PageID 2221. But Skilken would “hate to do that to anybody,” so he kindly
deferred Star Trac’s payments in exchange for the perpetual royalty. Id. When the patent neared
its expiration six years later, Skilken complained, Core Health refused even to have a
“discussion” about abiding by its end of the bargain. Id., PageID 2234–36. His testimony was
littered with similar remarks. See, e.g., id., PageID 2249–50.
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 20
Max Rack also invoked the addendum during the cross-examination of Core Health’s
general counsel. The general counsel admitted that he had concluded that a court would not
enforce the addendum when he first reviewed it in 2010. Brown Tr., R.101, PageID 2592–93.
Max Rack’s counsel then characterized the general counsel’s failure to inform Max Rack of this
view as “fraudulent.” Id., PageID 2593, 2602.
To top it off, Core Health identifies objective factors indicating that this largely irrelevant
testimony had its intended effect. During deliberations, the jury submitted questions about the
addendum: “Is [the addendum] a lawful agreement to take into account given that there was no
lawyer present?” and “Is there any law that prevents royalties to be collected on an expired
patent, federal or state law?” Tr., R.102, PageID 2687. Core Health also notes that, as the
district court found, Max Rack’s $1 million damages award had no basis in the evidence.
For several reasons, though, the district court did not commit reversible error in denying
Core Health’s new-trial motion. Those reasons begin with our standard of review. We review
the court’s decision under a deferential abuse-of-discretion standard. See Mosby-Meachem, 883
F.3d at 602; Bach v. First Union Nat’l Bank, 149 F. App’x 354, 367–68 (6th Cir. 2005). Absent
a legal error, this standard generally bars us from overturning a court’s discretionary denial of a
new-trial motion unless the record leaves us with a “definite and firm conviction” that the court
“committed a clear error of judgment[.]” Holmes v. City of Massillon, 78 F.3d 1041, 1045 (6th
Cir. 1996) (citation omitted); see also CFE Racing Prods., Inc. v. BMF Wheels, Inc., 793 F.3d
571, 584 (6th Cir. 2015). We owe special deference to the district court for claims (like Core
Health’s) that improper arguments tainted the jury’s decisionmaking. See CFE Racing, 793 F.3d
at 590. Unlike us, that court had the ability to evaluate the allegedly improper conduct (and its
prejudicial impact) by witnessing the conduct firsthand, not by reviewing a transcript of it
secondhand. See Balsley v. LFP, Inc., 691 F.3d 747, 762 (6th Cir. 2012) (citing Peter Kiewit
Sons’, 624 F.2d at 756).
We have no definite and firm conviction of an error. As an initial matter, our caselaw
recognizes that a district court’s instructions can fix potential harm caused by prejudicial
arguments or evidence. See Holmes, 78 F.3d at 1046–47; see also, e.g., CFE Racing, 793 F.3d at
589; Troyer v. T.John.E. Prods., Inc., 526 F. App’x 522, 525–26 (6th Cir. 2013). The court’s
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 21
instructions in this case served that purpose. Its responses to the questions that the jury posed
during deliberations explained that the jurors need not consider the addendum’s legality and that
Core Health had correctly interpreted the law. The court indicated that “[t]he lawfulness of [the
addendum] is not relevant to the decision that you have to make” and that “there is state and
federal law that prohibits any agreement to extend royalties to a patent past the patent
expiration.” Tr., R.102, PageID 2693–94. At one point in Skilken’s testimony about the
addendum, moreover, the court instructed the jury to disregard his statements. See Skilken Tr.,
R.99, PageID 2227–28. We presume that the jury followed these instructions when reaching its
verdict. See Troyer, 526 F. App’x at 525.
In addition, the jury’s liability finding (that Core Health engaged in conduct that created a
likelihood of confusion) does not conflict with the weight of the evidence. Although Rule 59’s
weight-of-the-evidence standard differs from Rule 50’s sufficiency-of-the-evidence standard, we
reach this result based on the same evidence and reasoning on which we relied when affirming
the denial of judgment as a matter of law. See, e.g., Mosby-Meachem, 883 F.3d at 606–07; J.C.
Wyckoff & Assocs. v. Standard Fire Ins. Co., 936 F.2d 1474, 1488 (6th Cir. 1991). Furthermore,
since our court treats the ultimate likelihood-of-confusion question as a legal one that we review
de novo, see Homeowners Grp., 931 F.2d at 1107, a new trial on that question would make even
less sense. That is especially so because Core Health does not dispute that at least some of its
actions (the sale of 24 Max Racks outside the six-month window) amounted to infringement.
See U.S. Structures, 130 F.3d at 1190. It instead challenges the scope of its liability and the size
of the awards. Yet why should these claims entail a complete redo?
Lastly, the jury’s $1 million damages award provides no basis for a new trial either. To
be sure, the district court agreed that the evidence did not support this award when overturning it.
See Max Rack, 2020 WL 2128614, at *4–5. And a court may find an entirely new trial proper if
prejudicial arguments on one issue so inflamed the jury as to have “spillover” effects on other
issues. Peter Kiewit Sons’, 624 F.2d at 759; see Dossett v. First State Bank, 399 F.3d 940, 946–
47 (8th Cir. 2005). But the district court could reasonably conclude that the award did not prove
these spillover effects. The award could have been based just as much on a legal mistake as on
undue prejudice. As Core Health notes, Max Rack’s witnesses testified that Max Rack spent $1
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 22
million bringing the product to market, and Max Rack’s counsel referred to those efforts in
closing argument. Max Rack does not now claim to be entitled to recover for the efforts. Yet
this mistake would not prove a vindictive verdict, and courts have routinely granted new trials
solely on damages (or remittiturs) for similar mistakes. See 11 Wright et al., supra, § 2814, at
198, § 2815, at 208; see, e.g., Skalka v. Fernald Env’t Restoration Mgmt. Corp., 178 F.3d 414,
425 (6th Cir. 1999). The district court did not abuse its discretion by holding that its decision to
vacate the award sufficed to correct the error.
Question 3: Did the district court commit error by failing to vacate the jury’s profits award?
Unable to rebut the jury’s liability findings, Core Health turns to challenging its monetary
remedies. Core Health initially argues that the district court wrongly refused to overturn the
jury’s $250,000 award to Max Rack for Core Health’s profits. But this sum had a reasonable
basis in the evidence when read against the Lanham Act’s burden-shifting approach to proving
profits.
If a defendant infringes a trademark in violation of §§ 1114(1)(a) or 1125(a)(1)(A), the
Lanham Act offers several remedies. See Romag Fasteners, Inc. v. Fossil, Inc., 140 S. Ct. 1492,
1494–95 (2020). (The parties do not suggest that Ohio law follows different rules for any of the
remedial issues that they raise, so we need not consider that law separately.) The Act indicates
that “the plaintiff shall be entitled, . . . subject to the principles of equity, to recover (1)
defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.”
15 U.S.C. § 1117(a). When deciding whether a plaintiff can recover a “defendant’s profits,”
courts have looked to the “principles of equity” because an accounting of profits has traditionally
been viewed as an equitable remedy. 5 McCarthy, supra, § 30:61. Courts have identified
several equitable factors to help guide the inquiry, including whether the defendant acted
willfully and whether other remedies would suffice. See Romag, 140 S. Ct. at 1497; Kars 4 Kids
Inc. v. Am. Can!, 8 F.4th 209, 223 (3d Cir. 2021); Quick Techs., Inc. v. Sage Grp. PLC, 313 F.3d
338, 349 (5th Cir. 2002).
Here, however, Core Health does not challenge the district court’s abstract conclusion
that equity allowed for a profits award. It instead challenges the court’s conclusion that the
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 23
evidence sufficed to show that it earned any money through infringing conduct. The Act adopts
a burden-shifting approach to proving a defendant’s profits: “In assessing profits the plaintiff
shall be required to prove defendant’s sales only; defendant must prove all elements of cost or
deduction claimed.” 15 U.S.C. § 1117(a). This text placed a modest burden on Max Rack to
prove Core Health’s “sales.” It then flipped the burden to Core Health to identify any deductions
from this number for such things as production costs. See Wynn Oil Co. v. Am. Way Serv. Corp.,
943 F.2d 595, 606 (6th Cir. 1991); 5 McCarthy, supra, § 30:65; see also Mishawaka Rubber &
Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 206–07 (1942).
Core Health argues that Max Rack did not meet its initial burden to prove Core Health’s
“sales.” At the outset, though, the parties debate the standard of review. Core Health all but asks
us to grant it judgment as a matter of law under Rule 50, suggesting that we should apply a
sufficiency-of-the-evidence test and review the district court’s denial of relief de novo.
See Mosby-Meachem, 883 F.3d at 602. Max Rack responds that we should review the district
court’s denial of relief for an abuse of discretion because Core Health’s post-trial motion referred
to the profits award only when seeking a new trial under Rule 59. See id. To make matters more
complex, it is not clear that the jury should have had the final say on this equitable remedy
because several cases have noted that parties lack a right to a jury trial for an accounting of
profits. See Ferrari S.P.A. v. Roberts, 944 F.2d 1235, 1248 (6th Cir. 1991); 6 McCarthy, supra,
§ 32:124. And when a trademark owner seeks both legal and equitable relief, some courts have
tasked the jury with making only an “advisory” profits finding. Cf. Variety Stores, Inc. v.
Walmart Inc., 852 F. App’x 711, 722 & n.5 (4th Cir. 2021); Fed. R. Civ. P. 39(c). This fact, too,
could affect our standard of review. See Visible Sys. Corp. v. Unisys Corp., 551 F.3d 65, 79 n.10
(1st Cir. 2008).
Rather than resolve any standard-of-review questions, we will simply accept Core
Health’s framing that we should review the district court’s refusal to overturn the profits award
de novo using a sufficiency-of-the-evidence test. Even under that test, enough evidence justified
the award.
Turning to the merits, Core Health argues that the district court wrongly held that the
stray references to “Max Rack” on its website could have tainted its Freedom Rack sales. See
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 24
Max Rack, 2020 WL 2128614, at *5. Core Health has a point. What does the Act mean when it
provides that a plaintiff must prove a “defendant’s sales”? 15 U.S.C. § 1117(a). Which sales?
Core Health, for example, makes many weightlifting machines. It would seem dubious to claim
that Max Rack could satisfy its initial burden merely by introducing Core Health’s total
companywide sales data and thereby shift to Core Health the burden to disprove that its
infringement affected every dollar of revenue. As Judge Posner explained, a plaintiff likely
cannot place an infringer’s “corporate income tax return in the record and rest [its] case for an
award of infringer’s profits.” Taylor v. Meirick, 712 F.2d 1112, 1122 (7th Cir. 1983). Instead, a
plaintiff likely must show some connection between the identified “sales” and the alleged
infringement. For example, in the related copyright context (which uses a similar burden-
shifting approach), we have held that a plaintiff’s proposed “gross revenue number” (i.e., the
defendant’s sales figure) “must have a reasonable relationship to the infringing activity.”
Balsley, 691 F.3d at 768–69.
We need not decide, however, whether the stray references to “Max Rack” on Core
Health’s website tainted all Freedom Rack sales and allowed Max Rack to seek Core Health’s
profits for the sales. Core Health does not dispute that the sale of any unit “bearing the
infringing mark” would have a sufficient connection between the infringement and the sale.
Wynn, 943 F.2d at 606 (quoting Mishawaka, 316 U.S. at 206). And Core Health ignores that the
profits award could have been tied to Max Rack’s alternative infringement theory: that Core
Health sold over 200 Max Racks without authorization. If the jury accepted this theory, an
obvious connection existed between sales and infringement. Core Health’s own figures
suggested that it earned $486,088 in revenue and $188,787 in profits on the 218 Max Racks sold
in 2016. Spreadsheet, R.94-16, PageID 1767. Max Rack also poked holes in the validity of Core
Health’s cost figures, suggesting that its inflated numbers hid its true profits. The jury’s
$250,000 profits award thus could have rested on a distinct infringement theory that Core Health
overlooks. That fact suffices to reject Core Health’s challenge to the award.
Question 4: Did the district court properly double the jury’s profits award?
Even if we reject its challenge to the profits award, Core Health next contends, the
district court still erred by doubling that award to $500,000. This time, we agree. We review the
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 25
court’s enhancement under the deferential abuse-of-discretion standard. Cf. La Quinta Corp. v.
Heartland Props. LLC, 603 F.3d 327, 342 (6th Cir. 2010); Kars 4 Kids, 8 F.4th at 223–24. But
the court abused its discretion because its justification for this enhancement rested on a
misunderstanding of the governing burden-shifting law. Cf. Skydive Ariz., Inc. v. Quattrocchi,
673 F.3d 1105, 1114–15 (9th Cir. 2012).
Recognizing that a fact finder might sometimes have trouble identifying the precise
amount of profits generated by a defendant’s infringement, Congress gave district courts the
discretionary power to adjust a profits award up or down. The Lanham Act provides: “If the
court shall find that the amount of the recovery based on profits is either inadequate or excessive
the court may in its discretion enter judgment for such sum as the court shall find to be just,
according to the circumstances of the case.” 15 U.S.C. § 1117(a). Yet the Act imposes a clear
limit on this discretionary power: “Such sum . . . shall constitute compensation and not a
penalty.” Id.This language distinguishes between two types of adjustments. See La Quinta, 603 F.3d
at 342–43; 5 McCarthy, supra, § 30:91; see also, e.g., Kars 4 Kids, 8 F.4th at 224–25; Ga.-Pac.
Consumer Prods. LP v. von Drehle Corp., 781 F.3d 710, 717–19 (4th Cir. 2015); Getty
Petroleum Corp. v. Bartco Petroleum Corp., 858 F.2d 103, 109–13 (2d Cir. 1988). On the one
hand, the court may increase a profits award for a compensatory reason, such as a concern that
the award does not encompass the defendant’s full profits. See La Quinta, 603 F.3d at 343.
Perhaps the defendant received intangible benefits as a result of its infringing conduct. See
Merck Eprova AG v. Gnosis S.p.A., 760 F.3d 247, 262–63 (2d Cir. 2014). Or perhaps the
defendant engaged in discovery “stonewalling” that prevented the plaintiff from identifying its
total infringing sales. Cf. Bos. Pro. Hockey Ass’n, Inc. v. Dallas Cap & Emblem Mfg., Inc., 597
F.2d 71, 77 (5th Cir. 1979).
On the other hand, the court may not increase a jury’s profits award for a punitive reason.
The record might show such an improper purpose, for example, if the court highlighted the
defendant’s bad faith as the basis for the increase. Cf. Skydive Ariz., 673 F.3d at 1115; Jurgens v.
McKasy, 927 F.2d 1552, 1564 (Fed. Cir. 1991). Or such an improper purpose might exist if the
court increased the profits to penalize the defendant for discovery violations, something that
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 26
other laws and court rules are better equipped to handle. Cf. Bos. Pro. Hockey Ass’n, 597 F.2d at
77.
In this case, the district court got off to the right start by noting that the Act bars a
punitive enhancement and by basing its increase on Core Health’s evasive discovery conduct.
See Max Rack, 2020 WL 2128614, at *6–7. Max Rack had asked Core Health to provide all
documents that would show the costs that Core Health incurred in making the machines. But
Core Health allegedly failed to provide sufficient cost data, which led Max Rack to move to
exclude any nondisclosed evidence from trial as a sanction. The court granted this motion in
limine. After the trial, the court then relied on Core Health’s failure to disclose its cost data a
second time by using it to enhance Max Rack’s profits award. Id. It reasoned that Core Health’s
cost-related discovery failures “could have undoubtedly hindered [Max Rack’s] ability to
calculate accurately [Core Health’s] infringing profits.” Id. at *7.
This logic got things backward under the Lanham Act. Given the Act’s burden-shifting
approach, the district court’s first order granting Max Rack’s motion in limine increased the
chances of overcompensation (not undercompensation) to Max Rack. The Act required Max
Rack “to prove [Core Health’s] sales only[.]” 15 U.S.C. § 1117(a). Max Rack had no difficulty
doing so. It established this sales figure with a report from Core Health’s finance director
summarizing Core Health’s revenue from its sales. During closing argument, Max Rack
conceded that it was “willing to accept [Core Health’s] numbers for revenue.” Tr., R.102,
PageID 2627. It did not suggest that Core Health had hidden sales.
At this point, the Act flipped the burden to Core Health to prove “all elements of cost or
deduction claimed.” 15 U.S.C. § 1117(a). What would happen if Core Health did nothing to
prove its costs? Core Health’s total sales (the amount that Max Rack agreed on) would become
the “profits” that Max Rack could recover. Id. But this sales figure would greatly exceed Core
Health’s real-world profits (revenue minus expenses) because it would not account for its real-
world expenses. The district court’s order on the motion in limine thus made it more likely that
the jury would treat an inflated sales figure as Core Health’s profits, because the order hindered
Core Health’s ability to prove its costs. As other courts have recognized when discussing this
type of discovery sanction, the order punished Core Health by barring it from introducing
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 27
relevant evidence to reduce its liability. Cf. Update Art, Inc. v. Modiin Publ’g, Ltd., 843 F.2d 67,
70, 72 (2d Cir. 1988); Blackman v. Hustler Mag., Inc., 800 F.2d 1160, 1163–64 (D.C. Cir. 1986).
Under this legal regime, we can see no compensation-based rationale in the district
court’s decision to rely on Core Health’s discovery conduct a second time by using it to increase
Max Rack’s profits award. Core Health’s conduct did not make it more difficult for Max Rack
to satisfy its burden to prove Core Health’s sales. Given the first discovery sanction, Core
Health’s conduct instead made it more difficult for Core Health to prove its own costs—and so
more likely that the jury would treat Core Health’s sales figure as its “profits” figure. Max Rack,
moreover, cannot now complain that more cost evidence from Core Health would have revealed
a lower cost figure (so a higher profits figure) because Max Rack itself moved to exclude any
further cost evidence. The award was likely already inflated, so the decision to double it cannot
be described as remedial. That decision effectively amounted to a second sanction for Core
Health’s failure to produce its cost evidence. But such a “penalty” runs afoul of § 1117(a). See
Skydive Ariz., 673 F.3d at 1115.
That the missing discovery concerned Core Health’s costs also distinguishes the lone
Fifth Circuit case on which the district court relied. See Bos. Pro. Hockey Ass’n, 597 F.2d at 77.
In that case (which overturned an enhanced award), the court discussed a hypothetical defendant
that refused to turn over sales data. See id. Such stonewalling very well could prevent a plaintiff
from proving the defendant’s total sales (and thus allow the defendant to hide its profits). But
Max Rack had no problem identifying Core Health’s sales, and any stonewalling on costs would
have harmed Core Health. So the district court abused its discretion by granting enhanced profits
when its first sanction sufficed to remedy Core Health’s discovery shortcomings.
Question 5: Did the district court mistakenly vacate the jury’s $1 million damages award?
Max Rack argues that the district court erred in the other direction—by overturning the
jury’s $1 million damages award. Although we review the court’s decision de novo, Balance
Dynamics, 204 F.3d at 688, we agree that Max Rack failed to establish any recoverable damages.
Apart from a “defendant’s profits,” the Lanham Act permits recovery of “any damages
sustained by the plaintiff” from the infringement. 15 U.S.C. § 1117(a). That is, a plaintiff may
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 28
seek “pecuniary compensation” for the “loss, detriment, or injury” caused by the defendant’s
infringing use of the plaintiff’s mark (or a deceptively similar one). Black’s Law Dictionary 466
(4th ed. 1951); Webster’s New International Dictionary 664 (2d ed. 1934). To obtain damages,
then, the plaintiff must do more than prove the “likelihood of confusion” that suffices to establish
a defendant’s liability (and authorize an injunction). See Audi AG v. D’Amato, 469 F.3d 534,
542 (6th Cir. 2006). Such a likelihood may (or may not) generate the type of “injury” that the
plaintiff must prove to receive this type of monetary relief. See id.; 5 McCarthy, supra,
§§ 30:2.50, 30:74.
What kinds of injuries may a plaintiff recover for? Because the Lanham Act uses a
common-law term (“damages”), we have looked to the common law of torts to help answer this
question. See La Quinta, 603 F.3d at 342; Broan Mfg. Co., Inc. v. Associated Distribs., Inc., 923
F.2d 1232, 1235 (6th Cir. 1991). Compensatory damages at common law generally sought to
place plaintiffs in the “substantially equivalent” position that they would have been in if no tort
had occurred. Restatement (Second) of Torts § 903 cmt. a (Am. L. Inst. 1979). A recoverable
“loss” thus can take a variety of forms. A trademark owner might seek to recover profits that it
has lost because a competitor used an infringing mark to poach sales to customers. See Balance
Dynamics, 204 F.3d at 690–91; 5 McCarthy, supra, § 30:79. If a holdover licensee continues to
use a mark, the trademark owner might also seek the royalties that it would have earned on the
licensee’s illicit sales under the licensing agreement. See La Quinta, 603 F.3d at 341 & n.10;
5 McCarthy, supra, § 30:86. Apart from these “lost profits,” a trademark owner might further
seek to recover for the “lost goodwill” that arose when consumers bought the infringer’s inferior
product and soured on the owner’s brand as a result. Balance Dynamics, 204 F.3d at 690–91. Or
a trademark owner might seek to recover the “damage control costs” that it incurred to reduce the
harm from the infringer’s conduct—say, by spending money on advertisements clarifying that
the owner has no affiliation with the infringer. See id. at 691–92.
To recover for these different losses, a plaintiff might need to prove different things.
Before awarding “marketplace” damages like lost profits, for example, courts generally require a
plaintiff to show that an infringing mark has actually confused some consumers about the mark’s
affiliation with the plaintiff’s good (not just that it is likely to do so). See id. at 691; 5 McCarthy,
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supra, § 30:74 (citing cases). Because juries might have trouble quantifying these losses, this
actual-confusion evidence helps ensure that they at least exist. See Balance Dynamics, 204 F.3d
at 691. But other losses do not require this showing. Damage-control costs, for example, seek to
ensure that actual confusion does not arise. So it would make little sense to require proof of
actual confusion to recover these costs. See id. Nor have we referred to an actual-confusion
element when requiring a holdover licensee to pay the royalty (an objective measure) on
infringing sales. See La Quinta, 603 F.3d at 341–45. Lastly, if a plaintiff has obtained an award
of the defendant’s profits (which is a proxy for what the plaintiff would have earned on the
sales), the plaintiff must tie separate damages to a distinct harm and cannot seek a double
recovery. See Nintendo of Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 1007, 1011 (9th Cir. 1994); 5
McCarthy, supra, § 30:73; cf. La Quinta, 603 F.3d at 345.
These rules show that Max Rack failed to present enough evidence to recover damages
under either of its infringement theories. Under Max Rack’s first theory, Core Health sold some
271 Max Racks without authorization. Admittedly, the jury could have found that Max Rack
suffered marketplace losses—for example, the royalty that it would have earned—if it believed
that Core Health violated the agreement by selling those units. Before trial, however, Core
Health paid Max Rack the profits Core Health earned on 24 of the units and its standard royalty
for 238 more (all with interest). Max Rack does not claim that this payment failed to adequately
remedy any marketplace injury. That leaves only the 9 machines that the jury could have found
were sold to consumers as “Max Racks” but shipped as “Freedom Racks.” Although Core
Health did not pay Max Rack for these sales, Max Rack’s profits award would have remedied
any harm from them. A further award would have amounted to a double recovery. See
Nintendo, 40 F.3d at 1010.
Max Rack’s damages claim fares no better when we turn to its second infringement
theory: that Core Health sold an unknown number of Freedom Racks by keeping “Max Rack”
references on its website. Max Rack all but concedes that it lacks evidence of actual consumer
confusion from Core Health’s minor uses of the Max Rack name, which our cases suggest it
needed to show. See Balance Dynamics, 204 F.3d at 691. Besides, Max Rack also fails to point
us to any other evidence that these stray uses of its name caused it harm. Max Rack had not even
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 30
created a new “Max Rack” product by the time of trial, so it lost no sales from Core Health’s
uses. Max Rack would have made no sales regardless of Core Health’s conduct. The Freedom
Rack was also identical to the Max Rack and made by the same manufacturer. So Max Rack
identifies no “goodwill” injury that could have resulted from an inferior product’s use of its
name. Contra Broan Mfg., 923 F.2d at 1238–39.
Max Rack counters that the district court overturned its award solely on the ground that
the company failed to prove actual confusion. Max Rack, 2020 WL 2128614, at *4–5. It argues
that we should do away with any categorical actual-confusion requirement for proving
marketplace damages because the Supreme Court in Romag recently did away with a similar
categorical rule. See 140 S. Ct. at 1494–97. In the past, we had suggested that a plaintiff must
prove that a defendant willfully infringed the plaintiff’s mark to obtain the defendant’s profits
under § 1117(a). See Frisch’s Rests., Inc. v. Elby’s Big Boy of Steubenville, 849 F.2d 1012,
1015–16 (6th Cir. 1988). Romag rejected this categorical requirement as inconsistent with
§ 1117(a)’s text. 140 S. Ct. at 1494–95. The Court instead treated a defendant’s intent as only a
“highly important” factor for a profits award. Id. at 1497. Max Rack asks us to treat actual
confusion in the same way because § 1117(a) does not list actual confusion in the text either.
But we need not decide how Romag affects the traditional actual-confusion prerequisite for
marketplace damages. Even if we treated actual confusion as an “important” factor, id., Max
Rack identifies nothing to show that Core Health’s stray references to “Max Rack” caused it
harm. No matter the governing legal standard, Max Rack’s speculation of harm would not
suffice to justify a damages award. See La Quinta, 603 F.3d at 342.
Max Rack notes, however, that even our existing caselaw did not require it to prove
actual confusion for some damages, such as the damage-control costs that we have mentioned.
Balance Dynamics, 204 F.3d at 689–91. But Max Rack makes no claim that it spent even a
dollar seeking to mitigate the damages caused by Core Health’s conduct. And Max Rack does
not claim that it suffered any other type of loss for which actual consumer confusion is
irrelevant.
Max Rack thus turns to out-of-circuit precedent. It argues that some courts have
presumed actual confusion (and shifted the burden to a defendant to disprove it) when the
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defendant has intentionally deceived the public by using a deceptive mark or comparative false
advertising. See Porous Media Corp. v. Pall Corp., 110 F.3d 1329, 1336 (8th Cir. 1997); Res.
Devs., Inc. v. Statue of Liberty-Ellis Island Found., Inc., 926 F.2d 134, 140 (2d Cir. 1991).
Highlighting the jury’s intentional-infringement finding in this case, Max Rack claims that the
presumption of actual confusion should apply here. But the jury’s intent finding rests most
reasonably on Core Health’s continued sales of Max Racks in violation of the licensing
agreement, and Max Rack already received full compensation for those sales. No reasonable
jury, by contrast, could have found that Core Health’s few extraneous references to the Max
Rack mark in its Freedom Rack advertisements were intentional (rather than accidental). See
Res. Devs., 926 F.2d at 140–41. So we need not consider how this intent element should affect
damage awards.
Max Rack ends with a procedural claim. It criticizes the district court for granting Core
Health judgment as a matter of law on the damages award because Core Health had only sought
a new trial under Rule 59. True, a court that finds a verdict excessive under Rule 59 generally
must give the plaintiff a choice between a remittitur and a new trial. See Farber, 917 F.2d at1395–96; 11 Wright et al., supra, § 2815, at 208–10. Max Rack did not receive that choice: the
court effectively granted a remittitur (down to zero) without a new-trial option. But courts have
also held that they may reduce or eliminate a monetary award without permitting a new trial
when the award rests on a legal error (not on the discretionary ground that the verdict was
excessive). See Roush, 10 F.3d at 400; Westchester Fire Ins. Co. v. Hanley, 284 F.2d 409, 418
(6th Cir. 1960); Niagara Fire Ins. Co. v. Bryan & Hewgley, Inc., 195 F.2d 154, 157 (6th Cir.
1952); see also Saccameno v. U.S. Bank Nat’l Ass’n, 943 F.3d 1071, 1091–92 (7th Cir. 2019);
Johansen v. Combustion Eng’g, Inc., 170 F.3d 1320, 1330–31 (11th Cir. 1999). Here, the district
court found a legal error—that no evidence undergirded Max Rack’s claimed injury. So it could
grant judgment outright.
Question 6: Did the district court wrongly grant Max Rack an award of attorney’s fees?
That leaves Core Health’s challenge to Max Rack’s award of some $381,808.32 in
attorney’s fees. We review this award—like the district court’s award of double profits—under a
deferential abuse-of-discretion standard. See Eagles, Ltd. v. Am. Eagle Found., 356 F.3d 724,
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 32
728 (6th Cir. 2004); see also Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 572 U.S. 559,
563 (2014). We again conclude that the court abused its discretion.
The Lanham Act gives a district court discretion to compel the losing party to pay the
winning party’s attorney’s fees, but only in certain cases. It provides: “The court in exceptional
cases may award reasonable attorney fees to the prevailing party.” 15 U.S.C. § 1117(a). The use
of the word “exceptional” limits the district court’s discretion by reserving attorney’s fees for
“rare” or “unusual” cases. Webster’s, supra, at 889; 5 Oxford English Dictionary 498–99 (2d ed.
1989); Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 553–54 (2014). The
Act thus departs from, say, the Copyright Act, which permits fee awards without any
exceptional-circumstances limit. See Kirtsaeng v. John Wiley & Sons, Inc., 579 U.S. 197, 202
(2016).
When interpreting a similar limit on attorney’s fees in the patent laws, the Supreme Court
has explained that a case might qualify as “rare” or “unusual” for different reasons. See Octane,
572 U.S. at 554. The plaintiff might have an unusually strong (or unusually weak) case on the
merits. See id. Blatant trademark infringement might justify an award for the plaintiff, whereas
a frivolous infringement claim might justify one for the defendant. See id. Or the losing party
might have litigated the case in an unreasonable manner—for example, by requesting costly
discovery to coerce a settlement despite the weakness of its claims. See id. In the end, however,
the statute leaves it for the district court to decide under the totality of the circumstances whether
the case before it has the “rare” qualities that distinguish it from a typical case. See id. Circuit
courts have followed this same approach for the Lanham Act’s similar language. See Evoqua
Water Techs., LLC v. M.W. Watermark, LLC, 940 F.3d 222, 235 (6th Cir. 2019); see also LHO
Chi. River, L.L.C. v. Perillo, 942 F.3d 384, 388 (7th Cir. 2019) (citing cases); 5 McCarthy,
supra, § 30:99 n.9 (same).
Judged under this framework, nothing about this case looks unusual. To begin with, Max
Rack did not have a noticeably stronger “litigating position.” Octane, 572 U.S. at 554. That
point is made clear by considering its two infringement theories. The evidence for its first theory
(that Core Health’s post-agreement Max Rack sales violated the agreement) could be described
as “thin.” See Visible Sys. Corp., 551 F.3d at 82. Except for the limited number of units that
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 33
Core Health sold outside the selloff window (and for which it paid compensation before trial),
Core Health’s liability rested on the claim that Core Health began to make those units after the
agreement expired. But that claim was supported only by circumstantial evidence falling close
to the hazy border dividing what a jury can (and cannot) reasonably find. Cf. Evoqua Water
Techs., 940 F.3d at 235. Core Health’s liability on Max Rack’s second theory (that Core Health
used the Max Rack mark to sell Freedom Racks) could be described as equally “thin.” See
Visible Sys. Corp., 551 F.3d at 82. This theory rested on isolated and likely accidental references
to Max Rack’s mark on Core Health’s website. As we have said, the collective references barely
established the likelihood of confusion that could support an injunction, and Core Health’s
marketing director voluntarily removed all references she learned of during her deposition. As
the district court recognized, moreover, Max Rack suffered no damages from the references,
further undermining any entitlement to fees.
Likewise, Core Health did not litigate this case in an “unreasonable manner.” Octane,
572 U.S. at 554. To be sure, the district court noted that Core Health failed to turn over its costs
data. But that shortcoming largely harmed Core Health, not Max Rack, and the district court did
not mention the discovery issue when awarding fees. See Max Rack, 2020 WL 2128614, at *7.
Max Rack also did not have unclean litigating hands. Its witnesses peppered the record with
references to the addendum and complaints about Core Health’s allegedly unfair refusal to pay
royalties in perpetuity. Yet its counsel admitted that “this lawsuit isn’t about the addendum.”
Tr., R.102, PageID 2632. In short, if this case warranted attorney’s fees, we fail to see what case
would not.
For its part, the district court relied on precedent that it read as creating a bright-line rule
permitting fees if a defendant’s intentional infringement continued after the plaintiff sued. See
Max Rack, 2020 WL 2128614, at *7. This rule applied here, the court reasoned, because the jury
found Core Health’s conduct to be intentional and because Core Health admitted that its
infringement continued even through the trial. See id. Its reasoning rested on legal error. The
district court’s rigid rule conflicts with the Supreme Court’s more flexible totality-of-the-
circumstances approach to this inquiry. See Octane, 572 U.S. at 554. Perhaps unsurprisingly,
not one of the cases that the court cited for this rule mentioned Octane. See Zeroez Franchising
Nos. 20-3598/3600 Max Rack, Inc. v. Core Health & Fitness, LLC, et al. Page 34
Sys., Inc. v. Distinctive Cleaning, Inc., 103 F. Supp. 3d 1032, 1050 (D. Minn. 2015); Ohio State
Univ. v. Skreened Ltd., 16 F. Supp. 3d 905, 921 (S.D. Ohio 2014); Ramada Franchise Sys., Inc.
v. Boychuk, 283 F. Supp. 2d 777, 787, 792–93 (N.D.N.Y. 2003). In addition, although the jury
found intentional infringement, that finding reasonably rested on Core Health’s unauthorized
sales of Max Racks. That conduct ended well before the trial. Lastly, the district court’s
conclusion partially relied on OC Fitness’s alleged infringement of the Max Rack mark. See
Max Rack, 2020 WL 2128614, at *7 n.4. As we have explained, however, that conduct cannot
be held against Core Health at all, let alone provide the grounds for an attorney’s fees award.
* * *
In sum, we affirm in part, reverse in part, and remand. We affirm the district court’s
denial of Core Health’s motion for judgment as a matter of law or for a new trial. We also affirm
the $250,000 profits award and the court’s rejection of the $1 million damages award. But we
reverse the court’s decision to double the profits award and its decision to grant Max Rack
attorney’s fees. We thus remand for the court to enter a new judgment consistent with this
opinion.
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_____________________________________________________
CONCURRING IN PART AND DISSENTING IN PART
_____________________________________________________
COLE, Circuit Judge, concurring in part and dissenting in part. I would affirm the
district court in full. Therefore, I respectfully dissent from the majority’s treatment of the district
court’s resolution of the profits award and attorney’s fees.
I.
A. Disgorged Profits Award
15 U.S.C. § 1117(a) grants district courts the power, based on principles of equity, to
award disgorged profits and to increase or decrease a jury’s monetary award. The statute “grants
a district court a great deal of discretion in fashioning an appropriate remedy in cases of
trademark infringement.” U.S. Structures, Inc. v. J.P. Structures, Inc., 130 F.3d 1185, 1191 (6th
Cir. 1997). Here, the district court did not abuse that broad discretion when it increased the
jury’s profits award.
Enhancement of profits under § 1117(a) is used to “provide proper redress to an
otherwise undercompensated plaintiff where imprecise damage calculations fail to do justice,
particularly where the imprecision results from defendant’s conduct.” La Quinta Corp. v.
Heartland Props. LLC, 603 F.3d 327, 343 (6th Cir. 2010). That’s exactly what the district court
did here. As a result of Core Health’s mismanagement and failures at the discovery stage, the
profits calculation made by the jury was imprecise. Specifically, the only evidence that Core
Health presented to prove costs was a summary spreadsheet of the “standard cost” of goods with
no information about the actual cost of the products. And the only witness that Core Health had
testify about the cost spreadsheet could not fill these gaps. The witness had not participated in
the calculation of those costs. For these reasons, the district court enhanced the profits award to
ensure that Max Rack was justly compensated, despite the imprecision resulting from Core
Health’s conduct.
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Further, Core Health argues on appeal that the district court abused its discretion by
doubling the jury’s profits award because any doubt about its costs could only decrease the
award. But it is equally possible that the jury overestimated the costs based on the limited
summaries Core Health provided. Core Health urged the court to accept its “standard cost”
evidence. But Max Rack disputed that evidence, and it would not be an abuse of discretion for
the court to accept Max Rack’s estimation of costs.
Ultimately, I would affirm the district court’s decision to enhance the profits award.
Enhancement of profits was necessary to provide proper redress to Max Rack. For much the
same reasons, I also do not consider it an abuse of discretion that the district court did not vacate
the jury’s profits award.
B. Attorney’s Fees
A district court may award attorney’s fees in “exceptional cases.” 15 U.S.C. § 1117(a).
Courts often consider a trademark infringement case exceptional when the infringing actions
were intentional, and the infringement continues until the date of trial. See, e.g., Ohio State
Univ. v. Skreened Ltd., 16 F. Supp. 3d 905, 921 (S.D. Ohio 2014); Ramada Franchise Sys., Inc.
v. Boychuk, 283 F. Supp. 2d 777, 787 (N.D.N.Y. 2003); Zeroez Franchising Sys., Inc. v.
Distinctive Cleaning, Inc., 103 F. Supp. 3d 1032, 1050 (D. Minn. 2015).
Here, the jury found that the trademark infringement was intentional. And evidence
suggested that this infringement continued for four years, up until the time of trial. Kirt Moritz
navigated to the Core Health webpage during the lunch break of the first day of trial. He found
that the assembly manual still referenced the Max Rack, over four years after the license expired.
And on the second day of trial, even after he had testified about the reference the prior afternoon,
the reference to the Max Rack was still on the Core Health website.
Core Health continued to leave lingering references to the Max Rack on its website
despite repeated warnings. Core Health should have been on notice of its infringing behavior
after Max Rack filed the lawsuit. At the very least, Core Health must have been on notice when
its marketing director was informed, during her deposition, that the website still referenced the
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Max Rack. Despite the fact it would have been a simple fix, Core Health refused to remedy the
problem for four years.
Because Core Health continued infringing on the Max Rack trademark for years, it was
not an abuse of discretion for the district court to award attorney’s fees.
II.
I would affirm the district court’s decisions in full and therefore respectfully dissent in
part from the majority opinion.