Astoria Industries of Iowa, Inc. v. Brand FX Body Company

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH

NO. 2-08-144-CV

ASTORIA INDUSTRIES OF IOWA, INC. APPELLANT

V.

BRAND FX BODY COMPANY APPELLEE

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FROM THE 17TH DISTRICT COURT OF TARRANT COUNTY

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MEMORANDUM OPINION 1

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In six issues, appellant Astoria Industries of Iowa, Inc. (Astoria) complains

of the trial court’s judgment awarding appellee Brand FX Body Company (Brand

FX) damages in the amount of $705,000 for trade dress infringement and

common law misappropriation, $682,200 for false advertising, and $400,000

in attorney’s fees on appellee’s trade dress infringement and false advertising

1
 See Tex. R. App. P. 47.4.
claims, in addition to $150,000 for attorney’s fees on appeal. We affirm the

judgment as modified.

I. BACKGROUND AND JURISDICTIONAL FACTS

Astoria and Brand FX are business competitors. They manufacture and

sell fiberglass utility bodies and work toppers 2 for commercial vehicles. Brand

FX’s work topper uses a stair-step roof line that it claims is unique and

brand-distinguishing. Initially, Astoria’s topper had a rounded or domed roof

line. In late 2002, however, Astoria developed a topper with a stair-step roof

design virtually identical to Brand FX’s topper.

Astoria engineer Randy Thole acknowledged that Astoria developed its

stair-step topper to be as similar to Brand FX’s design as possible. Astoria

obtained from one of its customers, Cook’s Pest Control (Cook’s), the

engineering drawings of Brand FX’s predecessor, Fibre Body, and used a Fibre

Body topper from Cook’s as a “plug” 3 to make a mold to manufacture its look-

2
 “Utility bodies” are covered cabinets that mount on the back portion
of a commercial truck frame, and “work toppers” are covered cabinets placed
on top of a pickup truck bed. Brand FX’s utility bodies are the subject of its
false advertising claim, and the stair-step roof design of its work topper is the
subject of its trade dress infringement claim. Trade dress refers to the design
or packaging of a product that serves to identify the product’s manufacturer or
source. TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 28, 121 S.
Ct. 1255, 1259 (2001).
3
 A plug is typically a wooden part that is supposed to look identical to
the finished product and used to build a mold. The mold is then used to

2
alike topper. Astoria then sold its stair-step toppers to Cook’s for

approximately one-half of the price charged by Brand FX.

Thereafter, in February 2003, Astoria began running a “DARE TO

COMPARE” advertisement for its utility bodies in an industry trade journal. The

advertisement ran ten times over the course of fourteen months. The

advertisement begins by stating, “When choosing fiberglass utility bodies,

Astoria Industries of Iowa should be your supplier!” The advertisement

compares “High Quality Astoria Bodies vs. Low Quality Brand X Bodies.”

Regarding the latter, the advertisement states: (1) “[B]uilt with sub-standard

materials”; (2) “Short term cost with long term expenses”; (3) “Built to their

standard”; and (4) “1-year warranty.”

In late May 2003, Brand FX notified Astoria of Brand FX’s belief that the

“DARE TO COMPARE” advertisement was false and disparaging and asked

Astoria to stop running it. Brand FX contended that Astoria’s reference to

“Brand X Bodies” was a poorly-disguised reference to Brand FX and that the

advertisement’s first three statements about Brand FX are demonstrably false.

Astoria continued to run the advertisement for another eleven months.

produce the finished product to the dimensions of the plug.

3
 As a result of Astoria’s conduct, Brand FX sued Astoria under the Lanham

Act 4 for infringement of its trade dress topper design and false advertising of

utility bodies. Brand FX also brought claims of business disparagement,

defamation per se, common law and trade secret misappropriation, and tortious

interference with prospective relations. Astoria obtained summary judgment

dismissing Brand FX’s business disparagement claim, 5 and the remaining claims

were presented to the jury.

4
 15 U.S.C.A. § 1125(a) (West 2009). The Lanham Act provides civil
remedies for trade dress infringement and false advertising of trademarks or
trade dress. See id. Section 1125(a) specifically provides:

Any person who . . .

(A) is likely to cause confusion, or to cause mistake, or to
deceive as to the affiliation, connection, or association of
such person with another person, or as to the origin,
sponsorship, or approval of his or her goods, services, or
commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the
nature, characteristics, qualities, or geographic origin of his
or her or another person’s goods, services, or commercial
activities, shall be liable in a civil action by any person who
believes that he or she is or is likely to be damaged by such
act.

Id.
5
 Astoria Indus. of Iowa, Inc. v. SNF, Inc., 223 S.W.3d 616, 639 (Tex.
App.—Fort Worth 2007, pet. denied) (op. on reh’g) (reversing, on interlocutory
appeal, trial court’s order denying Astoria’s requested summary judgment and
rendering take nothing judgment on Brand FX’s business disparagement claim).

4
 The jury found Astoria liable for trade dress infringement and common

law misappropriation and determined that Astoria gained $705,000 in profits

on sales of its toppers as a result. The jury also found that Astoria committed

false advertising of its utility bodies and that Brand FX’s corrective advertising

damages totaled $52,200, but they determined that the false advertising

resulted in no profits for Astoria. Brand FX moved for judgment

notwithstanding the verdict (JNOV) on the jury’s finding that Astoria gained no

profits from its false advertising and asked for an award of $4,200,000 in

profits on the false advertising claim. The trial court granted Brand FX’s motion

in part, awarding it $630,000 in Astoria’s profits for false advertising, in

addition to the award on the jury verdict of $705,000 in profits on the trade

dress infringement claim. The judgment also awarded Brand FX $400,000 in

attorney’s fees on the trade dress and false advertising claims and $150,000

in additional attorney’s fees on appeal. This appeal followed.

II. ISSUES

In its first two issues, Astoria contends that the evidence is not legally

and factually sufficient to support two necessary elements of Brand FX’s trade

dress claim: that the stair-step topper design at issue is not functional and that

5
the design has acquired a secondary meaning. 6 Third, Astoria contends that

Brand FX’s state law design misappropriation claim is preempted by federal

patent law. Fourth, Astoria challenges the legal and factual sufficiency of

evidence supporting the award of its profits on Brand FX’s false advertising

claim. Fifth, Astoria contends that the trial court erroneously admitted hearsay

testimony without qualification and that this testimony is the only evidence

supporting the award of corrective advertising costs on the false advertising

claim. Sixth, Astoria complains that the award of attorney’s fees is not

authorized and, alternatively, that the appellate attorney’s fee award is not

properly conditioned on a successful appeal.

6
 See 15 U.S.C.A. § 1125(a)(3) (“In a civil action for trade dress
infringement under this chapter for trade dress not registered on the principal
register, the person who asserts trade dress protection has the burden of
proving that the matter sought to be protected is not functional.”); Wal-Mart
Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 210–11, 215, 120 S. Ct.
1342–43, 1346 (2000) (holding trade dress is included under Lanham Act’s
trademark protections if it is inherently distinctive or distinctiveness is acquired
by developing secondary meaning, which denotes that, “in the minds of the
public, the primary significance of a [mark] is to identify the source of the
product rather than the product itself”).

6
 III. SUFFICIENCY OF THE EVIDENCE SUPPORTING BRAND FX’S
TRADE DRESS INFRINGEMENT CLAIM

A. Standard of Review

We may sustain a legal sufficiency challenge only when (1) the record

discloses a complete absence of evidence of a vital fact, (2) the court is barred

by rules of law or of evidence from giving weight to the only evidence offered

to prove a vital fact, (3) the evidence offered to prove a vital fact is no more

than a mere scintilla, or (4) the evidence establishes conclusively the opposite

of a vital fact. 7 In determining whether there is legally sufficient evidence to

support the finding under review, we must consider evidence favorable to the

finding if a reasonable factfinder could and disregard evidence contrary to the

finding unless a reasonable factfinder could not. 8

Anything more than a scintilla of evidence is legally sufficient to support

the finding. 9 When the evidence offered to prove a vital fact is so weak as to

do no more than create a mere surmise or suspicion of its existence, the

7
 Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex.
1998) (op. on reh’g), cert. denied, 526 U.S. 1040 (1999); Robert W. Calvert,
"No Evidence" and "Insufficient Evidence" Points of Error, 38 Tex. L. Rev. 361,
362–63 (1960).
8
 Cent. Ready Mix Concrete Co. v. Islas, 228 S.W.3d 649, 651 (Tex.
2007); City of Keller v. Wilson, 168 S.W.3d 802, 807, 827 (Tex. 2005).
9
 Cont’l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex.
1996); Leitch v. Hornsby, 935 S.W.2d 114, 118 (Tex. 1996).

7
evidence is no more than a scintilla and, in legal effect, is no evidence. 10 More

than a scintilla of evidence exists if the evidence furnishes some reasonable

basis for differing conclusions by reasonable minds about the existence of a

vital fact.11

When reviewing an assertion that the evidence is factually insufficient to

support a finding, we set aside the finding only if, after considering and

weighing all of the evidence in the record pertinent to that finding, we

determine that the evidence supporting the finding is so weak, or so contrary

to the overwhelming weight of all the evidence, that the answer should be set

aside and a new trial ordered. 12

B. Trade Dress Infringement—Functionality

To prevail on a claim of trade dress infringement under the Lanham Act,

a plaintiff must prove three elements: (1) the packaging or design is not

primarily functional, (2) it has acquired a “secondary meaning” by which the

public identifies it with the source of the product rather than merely the product

10
 Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983).
11
 Rocor Int’l, Inc. v. Nat’l Union Fire Ins. Co., 77 S.W.3d 253, 262
(Tex. 2002).
12
 Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986) (op. on
reh’g); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965); In re King’s Estate,
150 Tex. 662, 244 S.W.2d 660, 661 (1951).

8
itself, and (3) the alleged infringement creates a likelihood of confusion. 13 The

burden of proof is on the person who asserts trade dress protection. 14 All three

elements are questions of fact for the jury. 15

Generally, a product is functional if it (1) is essential to the use or purpose

of the article, or (2) affects the cost or quality of the article. 16 If the asserted

trade dress is not functional under this initial test, courts may also consider the

“competitive necessity” test of whether the exclusive use of the feature or

design “would put competitors at a significant non-reputation-related

disadvantage.” 17

13
 See 15 U.S.C.A. § 1125(a); TrafFix, 532 U.S. at 28, 121 S. Ct. at
1257; Samara Bros., 529 U.S. at 210–11, 215, 120 S. Ct. at 1342–43, 1346.
14
 See 15 U.S.C.A. § 1125(a)(3) (providing that burden is on person
asserting protection to prove trade dress is not functional when trade dress is
unregistered); Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 766 n.4,
112 S. Ct. 2753, 2756 n.4 (1992) (holding burden is on manufacturer to
establish secondary meaning when trade dress is not inherently distinctive).
15
 See Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526, 537 (5th Cir.
1998), abrogation on other grounds recognized by Eppendorf-Netheler-Hinz
GMBH v. Ritter GMBH, 289 F.3d 351, 356 (5th Cir.), cert. denied, 537 U.S.
1071 (2002).
16
 TrafFix, 532 U.S. at 32–33, 121 S. Ct. at 1261–62. Without
objection, the jury was instructed that “[a] product feature is considered
functional if it is essential to the use or purpose of the product or if it affects
the cost or quality of the product.”
17
 Id.; see also Eppendorf-Netheler-Hinz GMBH, 289 F.3d at 356.

9
 The jury in this case found that the asserted trade dress, Brand FX’s stair-

step topper design, is “primarily non-functional.” Astoria contends that the

evidence is not legally sufficient to support this finding.

To establish that the stair-step design is primarily nonfunctional, Brand FX

offered the testimony of its owner and operator, Alfred Finley. Finley has been

in the industry since 1969. He formed and ran Fibre Body from 1984 until

1999. He started Brand FX in 2001 and has run the company ever since.

Finley testified that the stair-step topper design is not essential to the use or

purpose of the work topper and does not affect the work topper’s cost or

quality. Finley also testified that his competitors primarily sold dome-shaped

toppers, and that the dome shape is not functional or essential to the use of the

work topper.

The jury also heard testimony regarding the stair-step design’s lack of

functionality from Sam Alfano, the Cook’s employee in charge of purchasing its

work toppers and overseeing its truck fleet. Alfano purchased approximately

ninety to one hundred toppers per year on behalf of Cook’s. He testified that,

to his knowledge, the stair-step design is not essential to the use or purpose of

the work topper, nor does it affect the topper’s cost or quality. Cook’s

purchased stair-step toppers from Astoria for the same price as Astoria’s dome-

shaped toppers.

10
 Testimony from three Astoria witnesses—Robert Wolf, Randy Thole, and

Jack Brannan—also relates to the stair-step design’s lack of functionality. Wolf,

Astoria’s president and owner, testified that the stair-step design is not

essential to a topper, that he preferred the dome-shaped roof design, and that

the stair-step design was not good for manufacturing. Wolf stated that the

stair-step design was only “essential” to Cook’s in order to match its existing

fleet:

Q: Is [the stair-step topper design] essential or not essential?

....

A: It is essential for what Mr. Cook’s designed [sic] is.

Q: . . . You didn’t tell me that in your deposition. You said it
wasn’t essential.

A: It’s not if you allow me to design the topper. I don’t need
the stair step. But if you’re going to use that design, it’s
very essential. [Emphasis added.]

Thole, Astoria’s engineer who developed its version of the stair-step

topper, also testified that the stair-step design is not essential to the use or

purpose of a work topper. Brannan, Astoria’s former chief engineer, likewise

testified that the stair-step design is not essential to strengthen the roof of a

topper because the dome shape gives the roof enough strength for the topper’s

intended use.

11
 Based on our consideration of evidence favorable to the challenged

finding if a reasonable factfinder could, and disregarding evidence contrary to

the finding unless a reasonable factfinder could not, we hold that there is legally

sufficient evidence to support the finding that Brand FX’s stair-step topper

design is primarily nonfunctional.

Astoria also contends that the evidence is factually insufficient to support

the finding of nonfunctionality. As evidence contrary to the finding, Astoria

cites the testimony of Finley, Brannan, and Wolf that the molded shape of the

design increases the strength of the topper’s roof without added materials, or

increases the topper’s “sectional modulus.” 18 Finley testified on “sectional

modulus” as follows:

Q: Tell us what [sectional modulus] is.

A: Basically, the higher the sectional modulus, the higher the
stiffness . . . of the laminate.

Q: It gives you a stronger design without having to use
additional materials; isn’t that correct?

A: Correct.

Q: All right. Functionality; isn’t that correct?

18
 See, e.g., Epic Metals Corp. v. Souliere, 99 F.3d 1034, 1038 (11th
Cir. 1996) (holding that a steel deck’s corrugated dovetail profile impacts the
sectional modulus of the deck, determining how much stress the product will
tolerate and ultimately affecting the product’s strength).

12
 A: I have been told that the definition of functional is essential,
and that the top can be built without the stair-step design
and still be functional. Does it serve a function? Yes.

Brannan also testified about the functionality of Brand FX’s stair-step

design:

Q: [Y]ou don’t necessarily need the stair-step design to have the
proper strength for the intended use of that, true?

A: If you wanted to minimize the cost and eliminate the need for
additional materials, then a stair-step design is really the way
to go.

....

Q: Your opinion is that the stair step design is functional in that
it increases the strength of the topper, true?

A: That’s correct.

The jury also heard evidence from Wolf that the stair-step design allows

the topper to carry heavier loads on its roof without added material costs.

Photographs and drawings were introduced showing the placement of a load-

carrying rack on the roof of the topper.

However, the jury also heard evidence showing that it is not essential for

a topper to have added roof strength or the ability to carry heavier loads on the

roof: Brand FX’s advertisements did not promote the topper’s added strength

13
due to the stair-step design, 19 and some introduced photographs of the topper

showing no roof rack and no load on the top. Additionally, Brannan testified

that he was asked to look at ways to strengthen the roof design of another of

Astoria’s products, a flat-topped full utility body cover, and that he did not even

consider using a stair-step design to strengthen the roof of that product.

Astoria also challenges evidence of nonfunctionality presented by Brand

FX. Astoria contends that Finley provides the sole testimony supporting

nonfunctionality and that his testimony is conclusory.20 However, testimony

from Alfano, Thole, Brannan, and Wolf also provides evidence of

nonfunctionality. And Finley’s testimony was supported by his years of

experience as a fiberglass manufacturer and designer and was based on his

specific knowledge of the stair-step design and its manufacture beginning in

1996 when he bought the company that had owned the design, Northwest

19
 Astoria points to a Brand FX advertisement stating that “[w]ith a
BRAND FX topper, you’re assured of outstanding strength and durability in a
product weighing substantially less than steel or aluminum.” But that
advertisement promotes the advantages of Brand FX’s fiberglass product over
metal toppers, not any advantages of the stair-step design over toppers with
other roof shapes.
20
 See City of San Antonio v. Pollock, 284 S.W.3d 809, 818 (Tex.
2009) (holding that a scientific opinion is conclusory and cannot be considered
probative evidence “if no basis for the opinion is offered, or the basis offered
provides no support”).

14
Body, and decided to incorporate it into the product line of his own company,

Fibre Body.

Astoria also argues that Alfano’s testimony of nonfunctionality is

conclusory and is not probative because he was a fact witness and an

accountant by training. However, Alfano testified based on his first-hand

experience as the person who purchases and manages Cook’s fleet of toppers

and utility bodies, including toppers with stair-step and dome-shaped roofs.

Alfano’s experience thus involved the use, purpose, cost, and quality of toppers

purchased and used by Cook’s, all factors relating to the stair-step roof design’s

functionality. 21

Considering and weighing all of the evidence in the record pertinent to the

finding of nonfunctionality, we determine that the evidence supporting the

finding is not so weak, or so contrary to the overwhelming weight of all the

evidence, that the answer should be set aside and a new trial ordered. 22

Accordingly, we hold that there is factually sufficient evidence to support the

jury’s finding that Brand FX’s stair-step topper design is primarily nonfunctional.

We overrule Astoria’s first issue.

21
 See TrafFix, 532 U.S. at 32–33, 121 S. Ct. at 1261–62 (holding that
a product is generally functional if it is essential to the use or purpose of the
article or affects the cost or quality of the article).
22
 See Pool, 715 S.W.2d at 635; Garza, 395 S.W.2d at 823.

15
C. Trade Dress Infringement—Secondary Meaning

To prevail on its trade dress infringement claim, Brand FX also bore the

burden at trial of proving that the topper’s stair-step design has acquired a

secondary meaning. 23 Trade dress acquires secondary meaning when, “in the

minds of the public, the primary significance of [the design] is to identify the

source of the product rather than the product itself.” 24 The existence of

secondary meaning is a question for the trier of fact, and a trier of fact’s finding

on this issue will not be disturbed unless clearly erroneous. 25

Secondary meaning may be established through a combination of the

following nonexhaustive list of evidentiary factors: (1) length and manner of

use of the trade dress, (2) volume of sales, (3) amount and manner of

advertising, (4) nature of use of the trade dress in newspapers and magazines,

(5) consumer-survey evidence, (6) direct consumer testimony, and (7) the

23
 15 U.S.C.A. § 1125(a); Samara Bros., 529 U.S. at 210, 215, 120
S. Ct. at 1343, 1346.
24
 Samara Bros., 529 U.S. at 211, 215, 120 S. Ct. at 1343, 1346; see
15 U.S.C.A. § 1125(a). The jury was instructed without objection that trade
dress “acquires ‘secondary meaning’ if it is uniquely associated with a specific
source and identifies the source of the product rather than the product itself.”
25
 Sunbeam Prods. Inc. v. W. Bend Co., 123 F.3d 246, 253 (5th Cir.
1997), cert. denied, 523 U.S. 1118 (1998), abrogation on other grounds
recognized by Eppendorf-Netheler-Hinz GMBH, 289 F.3d at 356.

16
defendant’s intent in copying the trade dress. 26 The ultimate determination of

whether trade dress has acquired secondary meaning remains a question of

consumer association. 27

The jury found that the stair-step topper roof design had acquired

secondary meaning. Astoria contends that the evidence is not legally sufficient

to support this finding.

In support of secondary meaning, Brand FX introduced evidence regarding

length and manner of its use of the stair-step topper design. Brand FX and its

predecessors Northwest Body and Fibre Body have continuously used the

design since at least the mid-1990s, and had done so exclusively until Astoria

copied the design in late 2002. As further support of secondary meaning,

Brand FX also introduced evidence of Astoria’s intent in copying the design;

Thole and Wolf testified that Astoria intentionally copied Brand FX’s stair-step

design with the intent of having Astoria’s design be as close as possible to

Brand FX’s design. Additionally, Brand FX presented direct testimony from two

customers—one end user and one distributor—supporting a finding of secondary

meaning because they uniquely identified or associated the stair-step roof

26
 Pebble Beach Co., 155 F.3d at 541; Sunbeam Prods, 123 F.3d at
254.
27
 Sunbeam Prods., 123 F.3d at 254.

17
design with Brand FX. The customers also testified to actual confusion by

Astoria’s use of the trade dress by incorrectly identifying a picture of Astoria’s

topper as Brand FX’s based on its stair-step roof design. Accordingly, Brand

FX introduced evidence supporting three of the factors relevant to consumer

association indicative of secondary meaning. 28

Based on our consideration of evidence favorable to the challenged

finding if a reasonable factfinder could, and disregarding evidence contrary to

the finding unless a reasonable factfinder could not, we hold that there is legally

sufficient evidence to support the finding that Brand FX’s stair-step topper

design has acquired secondary meaning.

Astoria contends that the evidence is factually insufficient to support the

finding of secondary meaning because there is purportedly no evidence

regarding other factors that traditionally indicate secondary meaning has been

acquired. For instance, consumer-survey evidence of identification of the trade

dress with its source is the most direct and persuasive evidence to establish

secondary meaning. 29 Here, Brand FX performed no consumer surveys.

Moreover, there is no evidence of two other factors traditionally indicative of

28
 See id.
29
 See id. at 254–55.

18
secondary meaning: media coverage and advertising expenditures by Brand FX

promoting its stair-step design. 30

With regard to length and exclusivity of use, Astoria contends that the

evidence offered by Brand FX actually contradicts a finding of secondary

meaning because Brand FX did not begin selling its stair-step toppers until

2002. However, evidence of a predecessor’s use may establish the length and

exclusivity of a plaintiff’s use. 31 Brand FX introduced evidence that Northwest

Body developed the stair-step topper design before it was acquired by Fibre

Body Industries in approximately 1996, and Brand FX subsequently acquired

Fibre Body’s intellectual property rights in 2002. The evidence shows that only

Brand FX and the prior owners of the design used it, to the exclusion of all

others, from at least 1996 until Astoria developed its look-alike topper in 2002.

Thus, the length and exclusivity of use by Brand FX and the prior owners of the

design support a finding of secondary meaning.

30
 See Pebble Beach Co., 155 F.3d at 541; Sunbeam Prods., 123 F.3d
at 254.
31
 See, e.g., Zatarain’s, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d
786, 791 (5th Cir. 1983) (holding that plaintiff established secondary meaning
through predecessor’s prior continued use of the mark and other factors),
overruled on other grounds by KP Permanent Make-Up, Inc. v. Lasting
Impression I, Inc., 543 U.S. 111, 116, 124, 125 S. Ct. 542, 547, 551 (2004).

19
 Regarding direct customer testimony, Astoria contends that the testimony

introduced by Brand FX was insufficient because it came from only two

witnesses—one distributor and one end user—and their past association with

Brand FX makes their testimony of little weight. However, cases Astoria cites

in support of these contentions are distinguishable. For example, Astoria relies

on a case in which the direct testimony of seven witnesses was outweighed by

evidence of a consumer survey establishing a lack of customer identification, 32

but Astoria introduced at trial no evidence establishing a lack of customer

identification. Astoria also cites a case in which six customers’ testimony of

confusion was insufficient in comparison to the number of potential customers,

consisting of all buyers of telephone and network installation services in the

Southern California area. 33 Here, the number of customers who testified, two,

must be weighed against the number of potential customers, which in this case

are businesses that purchase utility bodies and work toppers. 34

32
 Vision Ctr. v. Opticks, Inc., 596 F.2d 111, 115 (5th Cir. 1979), cert.
denied, 444 U.S. 1016 (1980).
33
 Japan Telecom, Inc. v. Japan Telecom Am. Inc., 287 F.3d 866, 875
(9th Cir. 2002).
34
 As circumstantial evidence of the relevant number of potential
purchasers of utility bodies and work toppers, the trade journal in which Astoria
ran its “DARE TO COMPARE” advertising campaign had a monthly circulation
of approximately 18,000.

20
 Astoria also contends that its intent in copying the design does not

support secondary meaning because it did not intend to fool Cook’s as to the

topper’s source. Astoria argues that it was merely responding to Cook’s own

request that Astoria offer a look-alike topper. However, Astoria concedes that

it developed its stair-step topper with the intent that it look as similar to Brand

FX’s design as possible. Thus, Astoria intended to confuse those looking at its

topper into assuming that it had the same source as the Brand FX toppers in

Cook’s existing fleet.

Considering and weighing all of the evidence in the record pertinent to the

finding of secondary meaning, we determine that the evidence supporting the

finding is not so weak, or so contrary to the overwhelming weight of all the

evidence, that the answer should be set aside and a new trial ordered. 35

Accordingly, we hold that there is factually sufficient evidence to support the

jury’s finding that Brand FX’s stair-step topper design has acquired secondary

meaning. We overrule Astoria’s second issue.

35
 See Pool, 715 S.W.2d at 635; Garza, 395 S.W.2d at 823.

21
 IV. FEDERAL PATENT LAW DOES NOT PREEMPT BRAND FX’S
MISAPPROPRIATION CLAIM

In its third issue, Astoria contends that Brand FX’s common law design

misappropriation claim conflicts with, and is thus preempted by, federal patent

law.

A common law misappropriation claim alleges a form of unfair

competition under Texas law. 36 “The law of unfair competition is the umbrella

for all statutory and nonstatutory causes of action arising out of business

conduct which is contrary to honest practice in industrial or commercial

matters.” 37 To prevail on a claim of common law misappropriation, the plaintiff

has the burden of establishing: (1) the creation of its product through extensive

time, labor, skill and money, (2) the defendant’s use of that product in

competition with the plaintiff, thereby gaining a special advantage in that

competition (i.e., a “free ride”) because the defendant is burdened with little or

none of the expense incurred by the plaintiff, and (3) commercial damage to the

36
 U.S. Sporting Prods., Inc. v. Johnny Stewart Game Calls, Inc., 865
S.W.2d 214, 218 (Tex. App.—Waco 1993, writ denied).
37
 Id. at 217. Other unfair competition claims include theft of trade-
secrets and “palming off” one’s product as that of another. Id.

22
plaintiff.38 Here, Brand FX claims that Astoria misappropriated the stair-step

roof design of its toppers.

There is a presumption against federal preemption of state actions. 39

However, state laws are preempted if they conflict with valid federal law by

creating an “obstacle to the accomplishment and execution of the full purposes

and objectives of Congress.” 40 Astoria asserts that Brand FX’s misappropriation

claim conflicts with Astoria’s right, created under federal patent law, to copy

and use product features that are in the public domain. 41

The Supreme Court has held that state regulation of intellectual property

“must yield to the extent that it clashes with” federal patent law. 42 The Court

determined that “the efficient operation of the federal patent system depends

upon substantially free trade in publicly known, unpatented design and

38
 Id. at 218.
39
 Wyeth v. Levine, 129 S. Ct. 1187, 1194–95 & 1195 n.3 (2009)
(quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 485, 116 S. Ct. 2240, 2250
(1996)).
40
 Id. at 1193 (quoting Hines v. Davidowitz, 312 U.S. 52, 67, 61 S. Ct.
399, 404 (1941)); see BIC Pen Corp. v. Carter, 251 S.W.3d 500, 504 (Tex.
2008).
41
 See Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141,
152, 109 S. Ct. 971, 978 (1989).
42
 Id. at 152, 109 S. Ct. at 978.

23
utilitarian conceptions.” 43 In the same opinion, the Court held that state unfair

competition laws, in contrast, generally serve a different purpose by providing

“protection against copying of nonfunctional aspects of consumer products.” 44

Thus, the Court determined that state unfair competition laws typically are not

preempted 45 unless they conflict with federal patent law by protecting or

regulating the “functional aspects” of a product. 46

Turning to the facts of our case, we already have held that the record

contains legally and factually sufficient evidence supporting the jury’s finding

that Brand FX’s stair-step topper design is not functional. 47 This holding is fatal

to Astoria’s preemption argument, because federal patent law does not preempt

43
 Id. at 156, 109 S. Ct. at 980 (emphasis added).
44
 Id. at 158, 109 S. Ct. at 981 (emphasis added).
45
 Id. at 164, 109 S. Ct. at 985 (holding in part that “the law of unfair
competition . . . [has] coexisted harmoniously with federal patent protection for
almost 200 years, and Congress has given no indication that [its] operation is
inconsistent with the operation of the federal patent laws”).
46
 Id. at 156, 159, 109 S. Ct. at 980, 982 (emphasis added) (holding
Florida statute is preempted because it is “aimed directly at preventing the
exploitation of the design and utilitarian conceptions embodied in the product
itself” and “constrict[s] the spectrum of useful public knowledge” (emphasis
added)).
47
 See 15 U.S.C.A. § 1125(a); Samara Bros., 529 U.S. at 210, 215,
120 S. Ct. at 1343, 1346.

24
state unfair competition laws that protect against the copying of product’s

nonfunctional aspects.48 Accordingly, we overrule Astoria’s third issue.

V. AWARD OF PROFITS ON BRAND FX’S FALSE ADVERTISING CLAIM

In its fourth issue, Astoria contends that the evidence is not legally or

factually sufficient to support an award of Astoria’s utility body profits on Brand

FX’s false advertising claim and that the award amounts to an impermissible

penalty. 49 The jury found that Astoria’s profits on its sale of utility bodies

during the relevant time period was zero. Brand FX filed a motion for JNOV

contending that no evidence supported the jury’s zero profits finding and

requesting an award of Astoria’s utility bodies profits. After an evidentiary

hearing, the trial court granted Brand FX’s JNOV motion and awarded it

$630,000 as the amount of Astoria’s profits related to sales of its advertised

utility bodies during the period of time the “DARE TO COMPARE” advertisement

ran. 50

48
 See Bonito Boats, 489 U.S. at 158, 109 S. Ct. at 981.
49
 On appeal, Astoria does not challenge the jury’s finding that it is
liable for false advertising or that Brand FX “has been or is likely to be injured”
as a result; it only challenges lost profits awarded on the claim.
50
 Alternative to its JNOV motion, Brand FX requested that the trial
court disregard the jury’s zero lost profits finding. As the following dated and
initialed docket entry states, the court granted JNOV rather than the alternative
relief Brand FX requested: “1/24/08 – P motion JNOV is granted awarded
$630,000 FWD [the Honorable Fred W. Davis].”

25
A. JNOV Standard of Review

A trial court may disregard a jury verdict and render a JNOV if no

evidence supports the jury finding on an issue necessary to liability or if a

directed verdict would have been proper. 51 A directed verdict is proper only

under limited circumstances: (1) when the evidence conclusively establishes the

right of the movant to judgment or negates the right of the opponent; or (2)

when the evidence is insufficient to raise a material fact issue. 52

To determine whether the trial court erred by rendering a JNOV, we view

the evidence in the light most favorable to the verdict under the well-settled

standards that govern legal sufficiency review. 53 We must credit evidence

favoring the jury verdict if reasonable jurors could and disregard contrary

evidence unless reasonable jurors could not. 54

51
 See Tex. R. Civ. P. 301; Tiller v. McLure, 121 S.W.3d 709, 713 (Tex.
2003); Fort Bend County Drainage Dist. v. Sbrusch, 818 S.W.2d 392, 394
(Tex. 1991).
52
 Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74,
77 (Tex. 2000); Farlow v. Harris Methodist Fort Worth Hosp., 284 S.W.3d
903, 919 (Tex. App.—Fort Worth 2009, pet. denied).
53
 See Wal-Mart Stores, Inc. v. Miller, 102 S.W.3d 706, 709 (Tex.
2003).
54
 Cent. Ready Mix Concrete Co., 228 S.W.3d at 651; see Tanner v.
Nationwide Mut. Fire Ins. Co., 289 S.W.3d 828, 830 (Tex. 2009).

26
B. False Advertising Under the Lanham Act and Available Remedies

To establish a prima facie case of liability for false advertising under the

Lanham Act, the plaintiff must show that (1) the defendant made a false

statement of fact about its product in a commercial advertisement, (2) the

statement actually deceived or has a tendency to deceive a substantial segment

of its audience, (3) the deception is likely to influence a purchasing decision, (4)

the defendant caused the false statement to enter interstate commerce, and (5)

the plaintiff has been or is likely to be injured as a result. 55

Remedies available to a plaintiff on a Lanham Act false advertising claim

include the defendant’s profits on the falsely advertised product:

[T]he plaintiff shall be entitled . . . subject to the principles of
equity, to recover . . . defendant’s profits . . . . The court shall
assess such profits and damages or cause the same to be assessed
under its direction. In assessing profits the plaintiff shall be
required to prove defendant’s sales only; defendant must prove all
elements of cost or deduction claimed. . . . 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. Such sum in either of the above
circumstances shall constitute compensation and not a penalty. 56

55
 Logan v. Burgers Ozark Country Cured Hams Inc., 263 F.3d 447, 462
(5th Cir. 2001).
56
 15 U.S.C.A. § 1117(a) (West 2009) (emphasis added).

27
These remedies are designed to compensate the plaintiff for any injury suffered,

prevent unjust enrichment, or deter unlawful conduct. 57 In determining whether

an award of the defendant’s profits is appropriate, a trial court is afforded

“great latitude” and “wide discretion,” 58 and we review the trial court’s decision

for an abuse of discretion. 59

Evidentiary factors relevant to the determination of whether an award of

profits is appropriate on a Lanham Act false advertising claim include but are

not limited to:

(1) whether the defendant had the intent to confuse or deceive, (2)
whether sales have been diverted, (3) the adequacy of other
remedies, (4) any unreasonable delay by the plaintiff in asserting
his rights, (5) the public interest in making the misconduct
unprofitable, and (6) whether it is a case of palming off. 60

57
 See Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 340
(5th Cir. 2008); Qaddura v. Indo-European Foods, Inc., 141 S.W.3d 882, 889
(Tex. App.—Dallas 2004, no pet.).
58
 Martin’s Herend Imports, Inc. v. Diamond & Gem Trading USA, Co.,
112 F.3d 1296, 1304 (5th Cir. 1997).
59
 Pebble Beach Co., 155 F.3d at 554.
60
 Am. Rice, 518 F.3d at 338; Quick Techs., Inc. v. Sage Group PLC,
313 F.3d 338, 349 (5th Cir. 2002), cert. denied, 540 U.S. 814 (2003).

28
No one factor is fatal or controlling. 61 In any event, an award of profits is not

appropriate “unless there is some proof that plaintiff lost sales or profits, or that

defendant gained them.” 62

As the Lanham Act provides, “[i]n assessing profits the plaintiff shall be

required to prove defendant’s sales only; defendant must prove all elements of

cost or deduction claimed” against its gross sales. 63 The Supreme Court

acknowledged that this method of calculating profits may result in the plaintiff

receiving a windfall in cases “where it is impossible to isolate the profits” from

conduct that violates the Lanham Act, but the Court determined that “the

windfall should go to the plaintiff rather than the wrongdoer.” 64 And “Congress

did not put upon the despoiled the burden . . . of showing that but for the

defendant’s unlawful [activity], particular customers would have purchased the

plaintiff’s goods.” 65

61
 Quick Techs., 313 F.3d at 349. Brand FX does not contend that this
is a case of palming off, but that there is evidence of each of the other factors
supporting an award of Astoria’s profits.
62
 Logan, 263 F.3d at 464–65.
63
 15 U.S.C.A. § 1117(a).
64
 Mishawaka Rubber & Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S.
203, 207, 62 S. Ct. 1022, 1025 (1942); see also Qaddura, 141 S.W.3d at
889.
65
 Mishawaka, 316 U.S. at 206, 62 S. Ct. at 1024 (emphasis added).

29
C. JNOV Awarding Astoria’s Utility Body Profits to Brand FX

Brand FX presented evidence that utility body sales were diverted by

Astoria’s false advertising. 66 Specifically, Finley testified for Brand FX that its

utility body sales decreased 21% during Astoria’s advertising campaign and

increased 54% thereafter. This type of statistical evidence is sufficient to show

sales diversion under § 1117 because the statute does not require the plaintiff

to show that, “but for the defendant’s unlawful [activity], particular customers

would have purchased the plaintiff’s goods.” 67 In addition, Scott Metzger,

Astoria’s head of sales and marketing, testified that potential customers sought

additional information from Astoria in response to its advertising. Of those

potential customers, Astoria and Brand FX competed for sales to Altec and

Omaha Public Power District; Altec is now one of Astoria’s largest customers;

and Astoria replaced Brand FX as the supplier for Omaha Public Power

District. 68

66
 See Logan, 263 F.3d at 464–65; Pebble Beach Co., 155 F.3d at 555.
67
 Qaddura, 141 S.W.3d at 889 (emphasis added).
68
 Astoria argues that this evidence cannot support diversion of sales
because it fails to establish that any particular sale was won by Astoria or lost
by Brand FX. However, this evidence is circumstantial evidence of sales
diversion, particularly as Brand FX and Astoria comprise approximately ninety
percent of the fiberglass utility body and work topper market. Any ultimate fact
may be proved by circumstantial evidence. Russell v. Russell, 865 S.W.2d
929, 933 (Tex. 1993). A fact is established by circumstantial evidence when

30
 Regarding Astoria’s intent to confuse or deceive, Wolf, Thole, and

Metzger each testified that they knew the advertisement contained false

statements with respect to Brand FX. Astoria still continued to run the false

advertisement for approximately eleven months after Brand FX’s attorney sent

it a cease and desist letter.

Whether or not other remedies are adequate is also a factor courts

consider when determining whether an award of profits is appropriate. 69 In

cases of willful misconduct in which the defendant is unjustly enriched, other

remedies, such as injunctive relief, have been found inadequate because they

will not deter future misconduct. 70 Here, the jury was not asked to find

whether Astoria’s false advertising was willful, 71 but evidence of Astoria’s

the fact may be fairly and reasonably inferred from other facts proved in the
case. Id.
69
 See Maltina Corp. v. Cawy Bottling Co., 613 F.2d 582, 586 (5th Cir.
1980).
70
 See id.
71
 The jury was asked if they found “by clear and convincing evidence
that the harm to Brand FX resulted from malice,” and they were instructed that
“malice” means “a specific intent by Astoria to cause substantial injury or harm
to Brand FX.” The jury answered “No.” This answer is not controlling on the
issue of willful misconduct because the court’s determination of whether an
award of lost profits is appropriate on a false advertising claim does not require
“clear and convincing evidence,” and it considers the defendant’s intent to
commit the violation, not its intent “to cause substantial injury or harm.” See
15 U.S.C.A. § 1117(a); Am. Rice, 518 F.3d at 338; Quick Techs., 313 F.3d

31
willful misconduct in the record includes testimony that Astoria knew the

advertisement was false as to Brand FX and still chose to continue running it

even after receiving Brand FX’s cease and desist letter. Based on the

willfulness of Astoria’s violation, other remedies are not appropriate to

compensate Brand FX and to deter future misconduct. 72 In addition, an award

of profits serves the public interest in this case by ensuring that willful false

advertising violations are not profitable. 73

The trial court implicitly determined that an equitable award of Astoria’s

profits was appropriate and determined the amount of the award based on the

framework established in 15 U.S.C.A. § 1117(a), which requires the plaintiff

“to prove defendant’s sales only; defendant must prove all elements of cost or

deduction claimed” against sales. 74 Brand FX’s damages expert, Daniel

Jackson, testified without objection that Astoria had $4.2 million in sales

revenue on its utility bodies during the period it committed false advertising.

Jackson based his testimony on historical sales figures produced by Astoria

during the lawsuit.

at 349.
72
 See Maltina Corp., 613 F.2d at 586.
73
 See Am. Rice, 518 F.3d at 338.
74
 See 15 U.S.C.A. § 1117(a).

32
 Although § 1117 provides that the defendant must prove all elements of

cost or deduction claimed from its sales revenue, 75 Astoria did not present any

evidence of its costs or deductions. In addition, the manner in which Astoria

produced its financial figures did not allow for a determination of its profit

margin on the product. The most analogous information presented to the jury

regarding profit margin was Brand FX’s 38.5% profit margin on the sales of its

toppers.

Based on the evidence, the trial court determined that Astoria obtained

$4.2 million in utility body sales revenue during the period it falsely advertised

and that Astoria’s profit margin was fifteen percent. Accordingly, the court

awarded Brand FX $630,000 in Astoria’s profits on the false advertising claim.

Implicit in the court’s award is its determination that the amount awarded

constitutes compensation for Brand FX and not a penalty. 76 Viewing the

evidence in the light most favorable to the jury’s finding that Astoria had zero

utility body profits during the relevant time period, 77 we hold that the trial

court’s JNOV awarding Brand FX $630,000 in Astoria’s utility body profits is

75
 See id.
76
 See id.
77
 See Wal-Mart Stores, Inc. v. Miller, 102 S.W.3d 706, 709 (Tex.
2003).

33
proper because the evidence is insufficient to raise a material fact issue

regarding the costs or deductions to be applied against Astoria’s sales. 78 We

overrule Astoria’s fourth issue.

VI. ADMISSION OF HEARSAY EVIDENCE OF BRAND FX’S
CORRECTIVE ADVERTISING COSTS

In its fifth issue, Astoria argues that the trial court erred by admitting

Jackson’s expert testimony regarding Brand FX’s corrective advertising costs

because his testimony contained, and was merely a conduit for, hearsay

evidence Jackson obtained from advertising executive Tom Prikryl. Astoria

contends that this portion of Jackson’s testimony was, therefore, inadmissible

and, in the alternative, should only have been admitted with a proper limiting

instruction under Texas Rule of Evidence 705. 79

78
 See Prudential Ins. Co. of Am., 29 S.W.3d at 77; Farlow, 284
S.W.3d at 919. Brand FX urges us to review the trial court’s profits award for
abuse of discretion. See Pebble Beach Co., 155 F.3d at 554. Because the trial
court submitted the issue to the jury and granted JNOV, we review its decision
under the JNOV standard. See, e.g., Tex. Pig Stands, Inc. v. Hard Rock Cafe
Int’l, Inc., 951 F.2d 684, 697 (5th Cir. 1992) (reviewing under JNOV standard
trial court’s decision to overturn recovery based on jury’s § 1117(a) finding).
Astoria presented no evidence of its costs or deductions as required by
§ 1117(a) and, thus, we would reach the same result under either the JNOV
or the abuse of discretion standard. See id.
79
 Although Astoria challenges its admissibility, Astoria does not contest
the competence of Jackson’s opinion testimony regarding Brand FX’s corrective
advertising damages as unreliable, irrelevant, or otherwise. And although we
acknowledge Astoria’s post submission letter brief enclosing a copy of the slip
opinion in City of San Antonio v. Pollock, 284 S.W.3d 809 (Tex. 2009), in

34
A. Standard of Review

A trial court’s rulings in admitting evidence are reviewable under an abuse

of discretion standard. 80 An appellate court must uphold the trial court’s

evidentiary ruling if there is any legitimate basis in the record for the ruling. 81

To determine whether a trial court abused its discretion, we must decide

whether the trial court acted without reference to any guiding rules or

principles; in other words, we must decide whether the act was arbitrary or

unreasonable. 82 An appellate court cannot conclude that a trial court abused

its discretion merely because the appellate court would have ruled differently

in the same circumstances. 83

which the supreme court reaffirms that “bare baseless opinions will not support
a judgment even if there is no objection to their admission in evidence,” Astoria
does not assert that Jackson’s opinion regarding corrective advertising costs
is baseless or conclusory.
80
 In re J.P.B., 180 S.W.3d 570, 575 (Tex. 2005); Nat’l Liab. & Fire
Ins. Co. v. Allen, 15 S.W.3d 525, 527–28 (Tex. 2000) (op. on reh’g).
81
 Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex.
1998).
82
 Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007); Cire v. Cummings,
134 S.W.3d 835, 838–39 (Tex. 2004).
83
 E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 558
(Tex. 1995); see also Low, 221 S.W.3d at 620.

35
 To obtain reversal of a judgment based upon an error in the trial court, the

appellant must show that the error occurred and that it probably caused

rendition of an improper judgment or probably prevented the appellant from

properly presenting the case to this court. 84 The complaining party must usually

show that the whole case turned on the evidence at issue. 85 If erroneously

admitted evidence was crucial to a key issue, the error was likely harmful. 86 We

examine the entire record in making this determination of harm. 87 Error in

admitting evidence is generally harmless if the objecting party “open[s] the

door” by introducing the same or similar evidence, 88 the objecting party later

permits the same or similar evidence to be introduced without objection, 89 or

84
 Tex. R. App. P. 44.1(a); see Reliance Steel & Aluminum Co. v.
Sevcik, 267 S.W.3d 867, 871 (Tex. 2008); Romero v. KPH Consolidation, Inc.,
166 S.W.3d 212, 225 (Tex. 2005).
85
 Interstate Northborough P’ship v. State, 66 S.W.3d 213, 220 (Tex.
2001); City of Brownsville v. Alvarado, 897 S.W.2d 750, 753–54 (Tex. 1995).
86
 State v. Cent. Expressway Sign Assocs., 302 S.W.3d 866, 870 (Tex.
2009); Reliance Steel, 267 S.W.3d at 873.
87
 Interstate Northborough P’ship, 66 S.W.3d at 220.
88
 Bay Area Healthcare Group, Ltd. v. McShane, 239 S.W.3d 231, 234
(Tex. 2007); Sw. Elec. Power Co. v. Burlington N. R.R., 966 S.W.2d 467, 473
(Tex. 1998).
89
 Bay Area Healthcare Group, 239 S.W.3d at 235; Richardson v.
Green, 677 S.W.2d 497, 501 (Tex. 1984).

36
the contested evidence is merely cumulative of properly admitted evidence and

is not controlling on a material issue dispositive of the case. 90

B. Error Admitting the Contested Hearsay Evidence, if Any, is Harmless

Outside the presence of the jury and before Jackson testified at trial,

Astoria objected to the admission of “any evidence obtained from Tom Prikryl”

as being “third-party hearsay” and to Brand FX using Jackson as a “conduit for

hearsay.” Alternatively, Astoria sought a limiting instruction under rule 705 of

the Texas Rules of Evidence that the jury “be instructed not to accept the

information obtained from [Prikryl] for the truth of the matter asserted.” 91 The

90
 Interstate Northborough P’ship, 66 S.W.3d at 220; Gee v. Liberty
Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex. 1989).
91
 Admission of otherwise inadmissible facts or data underlying an
expert’s opinion is governed by Texas Rule of Evidence 705, which provides in
relevant part:

(a) Disclosure of Facts or Data. The expert may testify in
terms of opinion or inference and give the expert’s reasons therefor
without prior disclosure of the underlying facts or data, unless the
court requires otherwise. The expert may in any event disclose on
direct examination, or be required to disclose on cross-examination,
the underlying facts or data.
....
(d) Balancing test; limiting instructions. When the underlying
facts or data would be inadmissible in evidence, the court shall
exclude the underlying facts or data if the danger that they will be
used for a purpose other than as explanation or support for the
expert’s opinion outweighs their value as explanation or support or
are unfairly prejudicial. If otherwise inadmissible facts or data are
disclosed before the jury, a limiting instruction by the court shall be

37
court overruled the objections and denied Astoria’s motion for a limiting

instruction. Astoria did not object at trial and does not argue on appeal that

Jackson cannot rely on facts not otherwise admissible in evidence, including

hearsay evidenced from an advertising executive regarding corrective

advertising costs. 92

Jackson testified that his opinion regarding Brand FX’s corrective

advertising costs was based on information provided to him by Prikryl:

Q: Did you summarize your damages as it relates to this “Dare
to Compare” advertisement?

A: Yes, I did.

Q: And what are the summary damages that you calculated?

A: . . . If you look at the corrective advertising based upon Mr.
Prykel’s [sic] information and what he believed would be
necessary to accomplish it, it’s $76,200.

given upon request.

Tex. R. Evid. 705(a), (d) (emphasis added).
92
 In its briefing before the court, Astoria states that “[n]o one can
dispute that Tex[as] R[ule of] Evid[ence] 703 allows an expert to rely on facts
not otherwise admissible in evidence” and that “experts are typically allowed
to disclose otherwise inadmissible hearsay for the limited purpose of explaining
the basis of their opinions” even though such hearsay is not admissible for its
truth [citation omitted].”

38
Jackson also testified that it was “reasonable and customary” in his profession

as a certified public accountant to rely on an advertising expert to determine the

proper cost of corrective advertising.

Whether or not the trial court erred in admitting Jackson’s testimony

about information provided by Prikryl, such testimony is cumulative of other

testimony that was admitted without objection. Separately and without

reference to Prikryl, Astoria’s counsel solicited the following testimony from

Jackson:

Q: [Y]ou’re the one telling [the jury] to award $76,000 for
future corrective advertising on something that hadn’t run
since four years ago and had no impact on the two people
who came here [to testify]?

A: If they determine Astoria did falsely advertise. If they
determine [Astoria] didn’t falsely advertise, I’d say don’t
award [Brand FX] a penny. [Emphasis added.]

This testimony establishes Jackson’s opinion regarding Brand FX’s corrective

advertising costs, does not reference information provided by Prikryl, and was

admitted without objection. Any error by the trial court in admitting the

contested testimony is harmless because Astoria later permitted similar

evidence to be introduced without objection during its cross-examination of

Jackson and the contested evidence is merely cumulative of properly admitted

evidence on Jackson’s opinion regarding Brand FX’s corrective advertising

39
costs. 93 Accordingly, we hold that the trial court’s error in admitting the

contested heresay testimony, if any, did not probably cause the rendition of an

improper judgment. 94 We overrule Astoria’s fifth issue.

VII. ATTORNEY’S FEES

In its sixth and final issue, Astoria contends that the trial court erred by

awarding attorney’s fees on Brand FX’s trade dress infringement and false

advertising claims because this is not an “exceptional case” in which an award

of fees is authorized by the Lanham Act and, alternatively, because appellate

fees were not properly conditioned on a successful appeal.

The Lanham Act provides that “the court in exceptional cases may award

reasonable attorney fees to the prevailing party.” 95 The prevailing party has the

burden to demonstrate the exceptional nature of the case by clear and

convincing evidence. 96 Clear and convincing evidence is that measure or degree

93
 See Bay Area Healthcare Group, 239 S.W.3d at 235; Interstate
Northborough P’ship, 66 S.W.3d at 220; Gee, 765 S.W.2d at 396; Richardson,
677 S.W.2d at 501.
94
 See Tex. R. App. P. 44.1(a)(1); Interstate Northborough P’ship, 66
S.W.3d at 220.
95
 15 U.S.C.A. § 1117(a).
96
 Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379, 1390 (5th Cir. 1996)
(citing CJC Holdings, Inc. v. Wright & Lato, Inc., 979 F.2d 60, 65 (5th Cir.
1992)).

40
of proof that will produce in the mind of the trier of fact a firm belief or

conviction as to the truth of the allegations sought to be established. 97

Exceptional cases include when the defendant’s violation of the Lanham

Act is malicious, fraudulent, deliberate, or willful. 98 The trial court should

decide whether a case is exceptional “by examining all the facts and

circumstances.” 99 “The determination as to whether a case is exceptional is

left to the sound discretion of the trial court.” 100 We review a decision to

award attorney’s fees for an abuse of discretion and the trial court’s finding as

to whether the case is exceptional for clear error. 101

Regarding Astoria’s trade dress infringement, the evidence establishes

that Astoria knew that Brand FX owned the rights to the unique stair-step

design and that Cook’s warned Astoria not to violate Brand FX’s rights. Astoria

proceeded to copy Brand FX’s design anyway, using Brand FX’s drawings and

one of its toppers as a “plug” to produce a stair-step topper mold. Thole, the

97
 Tex. Civ. Prac. & Rem. Code Ann. § 41.001(2) (Vernon 2008);
Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 31 (Tex. 1994).
98
 Seven-Up Co., 86 F.3d at 1390.
99
 CJC Holdings, 979 F.2d at 65.
100
 Seven-Up Co., 86 F.3d at 1390.
101
 Schlotzsky’s, Ltd. v. Sterling Purchasing & Nat’l Distribution Co.,
520 F.3d 393, 402 (5th Cir. 2008).

41
Astoria engineer in charge of the project, stated at the time that he knew that

Astoria’s actions were “improper” and “wrongful.”

Regarding Astoria’s false advertising, three Astoria witnesses conceded

that the “DARE TO COMPARE” advertisement contained statements that were

false with respect to Brand FX. Astoria nonetheless ran the advertisement, and

continued to run it for eleven months after receiving Brand FX’s cease and

desist letter.

Based on the record in this case, we hold that the trial court could find

by clear and convincing evidence that Astoria deliberately and willfully

committed trade dress infringement and false advertising. The trial court’s

finding that this is an exceptional case is not clearly erroneous, and its decision

to award attorney’s fees is not an abuse of discretion. 102

A trial court may not, however, grant a party an unconditional award of

appellate attorney’s fees, because to do so could penalize the other party for

pursuing a meritorious appeal. 103 We therefore hold that the trial court erred by

102
 See, e.g. Schlotzsky’s, Ltd., 520 F.3d at 402 (affirming award of
attorney’s fees based on defendant’s bad faith misrepresentations in violation
of Lanham Act); Taco Cabana Int’l, 932 F.2d at 1127–28 (affirming award of
attorney’s fees based on defendant’s “brazen imitation” of direct competitor’s
trade dress).
103
 Weynand v. Weynand, 990 S.W.2d 843, 847 (Tex. App.—Dallas
1999, pet. denied).

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failing to condition the award of appellate fees on a successful appeal. 104

Accordingly, we modify the judgment to reflect that Brand FX is only eligible to

receive attorney’s fees upon successful appeal, and we affirm the award of

attorney’s fees as modified. 105

VIII. CONCLUSION

We modify the trial court’s judgment to reflect that Brand FX is only

eligible to receive appellate attorney’s fees if successful on appeal, and we

affirm the judgment as modified.

BOB MCCOY
JUSTICE
PANEL: LIVINGSTON and MCCOY, JJ.

DELIVERED: April 8, 2010

104
 See J.C. Penney Life Ins. Co. v. Heinrich, 32 S.W.3d 280, 290 (Tex.
App.—San Antonio 2000, pet. denied).
105
 See Tex. R. App. P. 43.2(b) (providing appellate court may modify
judgment and affirm as modified); see also Tully v. Citibank (South Dakota),
N.A., 173 S.W.3d 212, 219 (Tex. App.—Texarkana 2005, no pet.) (modifying
judgment to condition attorney’s fees on successful appeal); Heinrich, 32
S.W.3d at 290 (same).

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