[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
JANUARY 15, 2008
THOMAS K. KAHN
No. 06-11344
CLERK
________________________
D. C. Docket No. 04-60750-CV-WPD
JACK L. ARONOWITZ,
HEALTH-CHEM DIAGNOSTICS, LLC,
a Florida Corporation,
LEON SERVICES, LLC,
a Florida Corporation,
Plaintiffs-Counter
Defendants-Appellants,
versus
HEALTH-CHEM CORPORATION,
a Delaware Corporation,
Defendant-Counter
Claimant-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(January 15, 2008)
Before BIRCH, FAY and CUDAHY,* Circuit Judges.
PER CURIAM:
Plaintiffs-counter defendants-appellants, Jack Aronowitz, Health-Chem
Diagnostics LLC, and Leon Services LLC (collectively “Aronowitz”),1 appeal an
“Omnibus Order” by the district court for the Southern District of Florida
addressing a number of post-trial motions. The order (1) set aside the jury verdict
that had been rendered in Aronowitz’s favor as to his first breach of contract claim
against defendant-counter claimant-appellee Health-Chem Corporation (“Health-
Chem”); (2) reduced the damages awarded with respect to the second breach of
contract claim against Health-Chem from $2.6 million to nominal damages of $1;
(3) upheld the jury’s verdict against Aronowitz on Health-Chem’s counterclaim for
trademark infringement; and (4) conditionally granted a new trial to Health-Chem
in the event the court’s primary rulings were reversed. We AFFIRM in part,
REVERSE in part, and REMAND for a new trial as to damages for breach of the
2003 contract.
*
Honorable Richard D. Cudahy, United States Circuit Judge for the Seventh Circuit,
sitting by designation.
1
Leon Services LLC was Aronowitz’s business entity prior to the 2003 contract. Health-
Chem Diagnostics LLC was the diagnostic research facility that he established under the terms
of the 2003 contract.
2
I. BACKGROUND
This appeal arises out of a business dispute between Health-Chem, a
company that manufactures transdermal pharmaceutical patches, and Aronowitz,
an inventor of diagnostic medical products. In 2002, the parties signed three
agreements, a Master Agreement, a License Agreement, and a Security Agreement
(collectively “2002 Contract”), by which they agreed to enter into a joint venture
for the marketing and development of one of Aronowitz’s inventions, the “TD
Glucose” patch, a transdermal patch that takes a diabetic’s glucose reading without
having to draw blood. Under the 2002 Contract, Health-Chem agreed to provide
$10,000 per month in funding to Aronowitz to help develop the patch at Health-
Chem’s Diagnostic Division research facility and to employ him there as a director
and consultant.2 Health-Chem also agreed to pay a licensing fee to Aronowitz for
rights in his diagnostic products, including an up-front licensing fee of
approximately $233,000 for the first three months. The 2002 Contract also gave
Health-Chem an option eventually to buy the rights to the TD Glucose patch.
After a series of disputes over money owed under the 2002 Contract, and
sensing that the venture was not working out, the parties met and negotiated a new
arrangement in 2003 “in order that [Health-Chem could] cease further funding of
2
This facility was located in Florida rather than in Pennsylvania (where the rest of
Health-Chem was located) because Health-Chem had acquired it out of bankruptcy proceedings.
3
its Diagnostic Division and that [Aronowitz could] assume financial responsibility
and management direction of [the TD Glucose development business], with
minimum interruption to the operations.” R1-31, Exh. G at 1. Under the new
arrangement, the parties agreed that Aronowitz’s employment with Health-Chem
would cease and that he would create a new business entity to develop the TD
Glucose patch. The parties also agreed to the assignment of the 2002 Contract to
the new entity such as to “terminate all obligations and stipulations of [the 2002
contracts] between Aronowitz and Health-Chem Corporation,” as of the date of the
agreement and to have the new entity assume them. Id. at 2. The contract further
provided that
If the assignment of the [2002] Contract, as described above, is not
performed, nevertheless the parties agree to terminate all financial
obligations of [Health-Chem Corporation] to [Aronowitz and his
business entities] as of the above date of this Agreement, including . . .
specifically, but not exclusively, ceasing all financial obligations of
Health-Chem Corporation with regard to the Diagnostic Division.
Id. Although the new agreement terminated Health-Chem’s obligation to provide
monthly funding for the development of the TD Glucose patch, Health-Chem did
agree to provide certain supplies and equipment to Aronowitz – most notably
“Weiss wands,” which were necessary to perform the clinical trials. Id. at 4. The
parties also agreed to a “Cut-off Payments and Expenses” provision which
allocated certain specific expenses and provided that “[a]ny expenses not
4
[specifically listed would] become the responsibility of the party to whom the
goods or services were delivered based on the date of delivery.” Id. at 3. Under
this provision, Health-Chem was responsible for any goods or services delivered
prior to execution of the 2003 contract and Aronowitz was responsible for any
unlisted goods or services delivered thereafter.
The 2003 contract also granted Aronowitz’s new entity a limited license to
use the trademark “Health-Chem Diagnostics” in connection with its TD Glucose
patch development. Such use was to be limited to the new entity’s company
“name and literature.” Id. Finally, under the 2003 contract, Health-Chem retained
an option to purchase the rights to the TD Glucose patch, and Aronowitz was
guaranteed five percent of net sales.
Within two weeks of its execution, disputes arose between the parties over
the provisions of the 2003 contract. Aronowitz alleged that Health-Chem had
failed to pay the electricity bill at the now transferred Diagnostic Division research
facility and that the power was going to be cut off; he also alleged that Health-
Chem had failed to provide him with the Weiss wands. Aronowitz asserted that
Health-Chem’s conduct entitled him to cancel its option on the TD Glucose patch.
In June 2004, Aronowitz filed suit against Health-Chem. In an amended
complaint, he alleged two separate counts of breach of contract: one for the 2002
5
Contract and one for the 2003 contract. Health-Chem raised, inter alia, the defense
of novation with respect to the 2002 Contract, arguing that the 2003 agreement
superseded the 2002 agreement and nullified any possible claim for breach.
Health-Chem also initiated a counterclaim against Aronowitz for trademark
infringement, alleging that Aronowitz had used the more general two-word mark
“Health-Chem” without its permission. A jury trial was held in October 2005. At
the close of Aronowitz’s case, Health-Chem moved for judgment as a matter of
law on two grounds: first, that the 2003 contract effectuated a novation of the 2002
Contract, thereby eliminating any claim for breach of the 2002 Contract; and,
second, that Aronowitz’s claimed damages for lost profits under the 2003 contract
were too speculative. The trial court “grudgingly” denied the motion.3 R10 at 45.
Health-Chem renewed its motion at the close of all of the evidence. The court
again denied the motion, this time stating that it was “concerned about the effect
that the 2003 agreement had on the 2002 agreement, but [was] not going to prevent
the jury at this point from considering it.” R17 at 175. Aronowitz moved for
judgment as a matter of law on the trademark infringement claim; the court also
3
The district court had previously touched on this issue much earlier in the case in its
denial of Health-Chem’s motion to strike Aronowitz’s demand for a jury trial. The court had
ruled that “The October 31, 2003 Agreement provided for an assignment of the [2002 Contract]
and that the ‘effects of this assignment will be to terminate all obligations and stipulations’ of
[that agreement] . . . For [that] reason, the [2002 Contract] provision of a waiver of jury trial was
terminated by the October 31, 2003 agreement.” R1-40 at 2.
6
denied that motion.
Just prior to closing arguments and jury instruction, Health-Chem proposed
two alternative amended verdict forms. The first, which omitted any mention of
breach as to the 2002 Contract, would have been applicable had the court granted
judgment as a matter of law on the issue of novation. The second began by asking
the jury to decide whether the 2002 Contract had been superseded by the 2003
contract. The court ruled against use of either of the proposed forms.
The jury returned a verdict in favor of Aronowitz as to each breach of
contract claim. Specifically, it awarded damages of $331,000 as to breach of the
2002 Contract and $2.6 million as to breach of the 2003 contract. The jury,
however, returned a verdict against Aronowitz on Health-Chem’s counterclaim,
finding that Aronowitz had infringed on the “Health-Chem” trademark. On that
claim, it awarded $25,000 in damages to Health-Chem. The parties renewed their
respective motions for judgment as a matter of law, which the district court
addressed together in its February 2006 “Omnibus Order.”
With respect to Health-Chem’s renewed motion, the district court first
observed that the “only fair construction” of the plain terms of the 2003 contract
was that the “parties intended to extinguish their contractual obligations” under the
2002 Contract, effecting a novation as a matter of law and making “[t]he jury’s
7
finding to the contrary [] legally unreasonable.” R4-154 at 16. The court went on
to find that even if that construction were incorrect, “the only reasonable
conclusion based upon the evidence presented at trial [was] that the parties
intended the 2003 Agreement to extinguish” the 2002 Contract. Id. The court
concluded that Aronowitz’s contention that the 2003 Agreement “applie[d] only
prospectively [fell] short of creating a substantial conflict in the evidence” and that
Health-Chem was entitled to judgment as a matter of law in its favor as to breach
of the 2002 Contract. Id.
As to the jury’s $2.6 million verdict for breach of the 2003 contract,
operating under the assumption that the award had been based solely on
Aronowitz’s alleged lost profits, the court observed that “the record fails to contain
sufficiently ‘competent and substantial’ evidence [to demonstrate] a causal
connection between [Health-Chem’s] breach and [Aronowitz’s] lost future profits.”
Id. at 12. The court reasoned that too many obstacles stood between Health-
Chem’s fulfilled obligations under the 2003 contract and the TD Glucose patch’s
generation of profit. The court particularly pointed to the need to raise at least $10
million more for research and development, the completion of successful clinical
trials, obtaining FDA approval, and proving success in the market.
The court went on to observe that even if a causal connection had been
8
shown, “insufficient evidence was presented to measure the damages with
reasonable certainty.” Id. at 13. However, because the court also found that the
record contained sufficient evidence to support the jury’s conclusion that Health-
Chem did breach the 2003 contract, the court entered judgment in favor of
Aronowitz, but in the amount of only $1 in nominal damages (as required by
Florida law).
As to the trademark infringement claim, Aronowitz had argued for judgment
as a matter of law on the grounds that he had not used the mark without permission
and, even if he had, that the use was not likely to cause confusion. The district
court rejected these arguments, observing that the license given in connection with
Aronowitz’s research and development efforts had been limited to the use of the
name “Health-Chem Diagnostics,” but that Aronowitz had gone further and used
the more general (and separately registered) two-word mark “Health-Chem” on his
entity’s website. Because the mark used was not equivalent to “Health-Chem
Diagnostics,” the court found that there had been an illicit and unauthorized use.
The court then pointed to evidence in the record that both customers and potential
employees had been confused by the use: customers had mistaken Aronowitz’s
website for Heath-Chem’s and a potential employee had mistakenly believed that
Health-Chem was located in Pompano Beach, Florida. Accordingly, the court
9
found that enough evidence had been presented as to each element of the
trademark infringement claim “to create a substantial conflict in the evidence,”
thereby making judgment as a matter of law “inappropriate.” Id. at 8, 10. The
court also upheld the jury verdict imposing $25,000 in damages, explaining that
“courts have wide discretion in determining the just amount of recovery on a
trademark infringement claim” and that Health-Chem had presented sufficient
evidence “to support the award of prospective corrective damages.” Id. at 10.
Finally, the court made a conditional ruling on Health-Chem’s alternative
motion for a new trial. The court found, for the same reasons covered in its
discussions of breach, that the jury’s verdicts as to breach of the 2002 and 2003
contracts had been against the great weight of the evidence presented. The court
also found it had erred in refusing to submit two special interrogatories Health-
Chem had requested be added to the verdict form regarding: (1) whether the 2002
Agreements were terminated by the 2003 Agreements, and (2) whether
[Aronowitz] had fraudulently induced [Health-Chem] to enter into the 2002
Contract, despite the fact that “both novation and fraudulent inducement were
material issues raised by the pleadings and evidence presented at trial.” Id. at 21.
In light of these errors, the court granted Health-Chem’s motion for a new trial in
the alternative, in case the court’s judgments as a matter of law were reversed on
10
appeal.
On appeal, Aronowitz argues that the district court erred in (1) finding, as a
matter of law, that the 2003 contract constituted novation of the 2002 contract; (2)
reducing the $2.6 million verdict to $1 in nominal damages on the ground that
there was insufficient evidence to support the jury’s award on the basis of lost
profits; (3) denying Aronowitz’s motion for judgment as a matter of law on the
trademark infringement counterclaim; and (4) conditionally granting Health-Chem
a new trial in the alternative. Aronowitz also argues that, in the event we reverse
either judgment as a matter of law but do not reinstate the jury verdicts, he is
entitled to a new trial as to damages only.
II. DISCUSSION
A. Judgements as a Matter of Law
We review de novo a district court’s ruling on a motion for judgment as a
matter of law pursuant to Federal Rule of Civil Procedure 50. Doe v. Celebrity
Cruises, Inc., 394 F.3d 891, 902 (11th Cir. 2004) (citation omitted). In so doing,
we apply the same standard as the district court. Rankin v. Evans, 133 F.3d 1425,
1435 (11th Cir. 1998). The district court may grant judgment as a matter of law “at
the close of evidence or, if timely renewed, after the jury has returned its verdict, as
long as ‘there is no legally sufficient evidentiary basis for a reasonable jury to
11
find’” for the non-moving party. Lipphardt v. Durango Steakhouse of Brandon,
Inc., 267 F.3d 1183, 1186 (11th Cir. 2001) (quoting Fed. R. Civ. P. 50). In
undertaking this analysis we examine all evidence in a light most favorable to the
non-moving party. Celebrity Cruises, 394 F.3d at 902 (citation omitted).
1. Breach of 2002 Contract
Aronowitz first challenges the court’s judgment as a matter of law in favor
of Health-Chem as to breach of the 2002 Contract, citing the following points in
support of his argument that there was no novation: 1) the parties modified the
final wording such that it terminated all “financial obligations” rather than all
“contractual obligations;” 2) the assignment of the 2002 Contract provided for by
the 2003 contract never actually occurred; and 3) the 2003 contract included a
“schedule of expenses” which specifically allocated responsibility for expenses
going forward, but did not mention debts still owed under the 2002 contract.
“A novation is a mutual agreement between the parties for the discharge of a
valid existing obligation by the substitution of a new valid obligation.” Jakobi v.
Kings Creek Vill. Townhouse Ass’n, 665 So. 2d 325, 327 (Fla. Dist. Ct. App.
1995).4 Under Florida law, four elements are required to effectuate the novation of
a binding contract: (1) a previously valid contract; (2) agreement of the parties to
4
Apparently, the heart of the disagreement between the majority and partial dissent in this
case concerns the breadth of the effect of a novation upon existing contractual obligations.
12
cancel that contract; (3) a new valid and binding contract; (4) agreement of the
parties that the new contract will replace and extinguish the old one. Thompson v.
Jared Kane Co., 872 So. 2d 356, 361 (Fla. Dist. Ct. App. 2004); Jakobi, 665 So. 2d
at 327. The parties concede that the only element at issue here is the intention of
the parties as to the 2002 Contract.
Intent may be inferred from the totality of the circumstances surrounding the
transaction. Thompson, 872 So. 2d at 361. The question of intent “is generally a
question of fact” for a jury. Wolowitz v. Thoroughbred Motors Inc., 765 So. 2d
920, 923 (Fla. Dist. Ct. App. 2000). However, “[w]here the terms of a written
agreement are not in doubt, the question of whether it effects a novation is one of
law for the court.” S.N.W. Corp. v. Hauser, 461 So. 2d 188, 189 (Fla. Dist. Ct.
App. 1984); see also Sink v. Abitibi Price Sales Corp., 602 So. 2d 1313, 1316 (Fla.
Dist. Ct. App. 1992) (finding novation as a matter of law where the parties entered
into “an entirely new and unambiguous agreement of equal or greater dignity to the
agreement first made with respect to the same subject”) (quoting Evans v.
Borkowski, 139 So. 2d 472, 474 (Fla. Dist. Ct. App. 1962).
Here, the language of the 2003 contract states that the assignment for which
it provides “terminate[s] all obligations and stipulations of the [prior 2002] contract
between Aronowitz and Health-Chem Corporation,” as of the date of the contract’s
13
execution. R1-31, Exh. G at 2. Further, the contract provides that even absent that
assignment, “the parties agree to terminate all financial obligations of [Health-
Chem to Aronowitz] under the [2002 Contract].” Id. We agree with the district
court that the only reasonable conclusion based on this language is that the parties
intended to extinguish the 2002 Contract.
Even if the contract’s language were sufficiently ambiguous as to intent
regarding the 2002 Contract to allow us to consider parol evidence, we find that the
only reasonable conclusion to be drawn from the evidence at trial is that the parties
intended novation. First, Aronowitz points out that, before execution of the
contract, the draft provision which stated the parties agreed to “ceas[e] all
contractual obligations” between Health-Chem and Aronowitz, was altered to say
“ceas[e] all financial obligations.” See Appellant’s Br. at 33 (referring to R1-31,
Exh. G at 2). Aronowitz asserts that this change suggests that the parties intended
only to cut off Health-Chem’s obligation to fund the TD Glucose patch division,
not to extinguish all obligations under the 2002 Contract. We are not convinced.
The context of the paragraph in which the change was made suggests instead that
the change was made for the sake of consistency in terms within the sentence
rather than out of concern over significant difference in meaning. The entire
sentence reads, in pertinent part: “If the assignment . . . is not performed,
14
nevertheless the parties agree to terminate all financial obligations of [Health-
Chem] to [Aronowitz] . . . including the termination of all employees of Health-
Chem at the Diagnostic Division, and specifically but not exclusively ceasing all
financial [originally contractual] obligations of Health Chem Corp with regard to
the Diagnostic Division and its vendors and obligees, except as set forth in this
agreement.” R1-31, Exh. G at 2 (emphasis added). Accordingly, we do not find
the replacement of the term “contractual” with the term “financial,” in that context,
to have created any ambiguity, particularly since what Aronowitz asserts, in terms
of breach, is a lingering financial obligation.
Further, the failure of the parties to complete the assignment of the 2002
Contract is irrelevant in the face of the 2003 contract provision that the parties will
“terminate” and “ceas[e]” all financial obligations between the parties even “[i]f
the assignment of the [2002] contract . . . is not performed.” Id. Additionally, we
find that the “Cut-Off Payment and Expenses” provision in the 2003 contract,
assigning responsibility for payments and expenses over the period of transition
does not establish that the parties intended the 2002 Contract to remain binding and
in full effect. Any financial obligations not specifically mentioned were, by the
plain language of the contract, to be “terminated.” In fact, it seems to us that the
presence of a such a cut-off payment provision in the 2003 contract bolsters
15
Health-Chem’s contention that the 2003 contract was intended to effectuate a
severance of the parties’ business relationship. Accordingly, we find that the 2003
contract constituted “an entirely new and unambiguous agreement of equal or
greater dignity to the agreement first made with respect to the same subject.” See
Sink, 602 So. 2d at 1316. As such, we agree with the district court that the only
reasonable conclusion to be drawn from the evidence is that the 2003 contract
constituted a novation of the 2002 Contract.
2. Breach of 2003 Contract
Aronowitz next challenges the court’s grant of judgment as a matter of law
declaring the $2.6 million in damages awarded by the jury for breach of the 2003
contract to be impermissibly speculative and awarding Aronowitz $1 nominal
damages instead. In making this ruling, the district court apparently assumed the
jury awarded damages solely in compensation for lost profits.
Under Florida law, an award for expectation damages will not be permitted
unless the expected amount can be established with reasonable certainty. Levitt-
Ansca Towne Park P’ship v. Smith & Co., 873 So. 2d 392, 396 (Fla. Dist. Ct. App.
2004); Lipscher v. LRP Publ’ns, Inc., 266 F.3d 1305, 1317 (11th Cir. 2001)
(applying Florida law). Although a business claiming lost profits is not required to
show a successful operational “track record,” at a minimum, the lost profit
16
damages amount must be determined by some reasonable standard or yardstick.
W.W. Gay Mech. Contractor, Inc. v. Wharfside Two, Ltd., 545 So. 2d 1348, 1351
(Fla. Dist. Ct. App. 1989) (per curiam). We observe that an expectation of
royalties on future net sales is merely a subset of lost future profits and therefore
subject to the same burden of proof for damages as lost profits would be.
Although we agree with the district court that the evidence presented was
insufficient to provide any reasonable certainty by which to calculate damages due
to lost royalties, we do not see that the damages award made by the jury was
necessarily based solely upon lost royalties. During Aronowitz’s closing
argument, he asked specifically not only for $5 million in lost royalties, but also
for $94,000 for the Weiss wands never purchased by Health-Chem and
approximately $15,000 in connection with a payment from a third party
erroneously made to and retained by Health-Chem after execution of the 2003
contract. Testimony presented by Aronowitz during the course of the trial also
raised other possible smaller bases for compensatory damages. Because it is
impossible, in the absence of interrogatories on the verdict form, for us to
determine what factors the jury might have considered in calculating its $2.6
million verdict, we are unable to say that the entirety of that verdict was
17
unsupported.5 However, absent the impermissibly speculative damages claimed
for lost royalties, the award could not have reached $2.6 million. Accordingly, we
reverse the court’s judgment as a matter of law reducing the damages to $1, but we
decline to reinstate the jury’s verdict.
3. Trademark Infringement
Aronowitz also appeals the district court’s denial of his motion for judgment
as a matter of law on the trademark infringement counterclaim. A successful cause
of action for trademark infringement requires the evidence to establish that the
infringer 1) used the mark in commerce, without consent; and 2) that the use was
likely to cause confusion. John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d
966, 972 (11th Cir. 1983).
Aronowitz does not contest the allegation that he used the shorter mark
“Health-Chem” on his company’s website, but argues that Health-Chem “did not
and cannot show a likelihood of confusion.” Appellant’s Br. at 51. We have
recognized seven factors to be considered as to the likelihood of confusion: (1)
type of mark; (2) similarity of mark; (3) similarity of the products the marks
5
Aronowitz also argues that he introduced evidence that $2.5 million would be required
to complete research, development, and FDA approval of the TD Glucose patch and that the jury
might have based its award on this amount due to Health-Chem’s failure “to cooperate fully to
secure funding, distribution, and FDA approval.” Appellant’s Br. at 41 (quoting R1-31, Exh. G
at 4]). However, this particular argument was not raised before the trial court. Further, the
record does not reflect Aronowitz having presented this amount to the jury as a direct basis for
damages.
18
represent; (4) similarity of the parties’ retail outlets and customers; (5) similarity of
advertising media; (6) defendant’s intent; and (7) actual confusion. Frehling
Enters. v. Int’l Select Group, Inc., 192 F.3d 1330, 1335 (11th Cir. 1999). “Of
these, the type of mark and the evidence of actual confusion are the most
important.” Id.
There are four recognized types of mark, ranging from weakest to strongest:
generic, descriptive, suggestive and arbitrary. Id. “The stronger the mark, the
greater the scope of protection accorded it.” Id. A mark’s strength is enhanced
where there is little or no third-party use of that mark. Id. at 1336. With regard to
actual confusion, we have specifically accorded “substantial weight” to evidence
that actual customers were confused by the use of a mark as opposed to other
categories of people. Safeway Stores, Inc. v. Safeway Disc. Drugs, 675 F.2d 1160,
1167 (11th Cir. 1982).
Here, the parties apparently agree that the Health-Chem mark is a suggestive
mark, thus putting it in the second strongest category, meriting a higher level of
protection than if it were categorized as generic or descriptive. See Frehling, 192
F.3d at 1335-36. Additionally, the only mention of any third-party usage of the
Health-Chem mark is contained in a question Aronowitz’s attorney asked Ken
Brody, Health-Chem’s chief financial officer, about a company in California that
19
might be using the same name. Brody did not confirm it. Thus, there is no
positive testimony or other evidence that any third party uses the mark, thereby
according it even more strength and meriting further protection. See Frehling, 192
F.3d at 1336.
Finally, the record contains evidence of actual confusion. First, there was
testimony that potential Health-Chem customers who had been to the Health-Chem
Diagnostics website looking for Health-Chem’s transdermal pharmaceutical
patches expressed confusion about whether Health-Chem had a facility in Florida,
about whether Health-Chem still made the patches they were looking for, and
about whether Aronowitz – who was associated with the failure of a previous
company – was associated with Health-Chem. There was also testimony that a
potential employee of Health-Chem was concerned, after looking at the Health-
Chem Diagnostics website, about having to relocate to Florida, and that a major
customer was concerned about the discrepancy between the products described on
the website and those Health-Chem claimed to produce.
On the other hand, an interrogatory on the verdict form indicates that the
jury found that Aronowitz did not intend to infringe on Health-Chem’s mark. We
find no evidence in the record to controvert this finding. Accordingly this factor
weighs in favor of Aronowitz. We agree with the district court that the remaining
20
four factors favor neither side.6 In consideration of all relevant factors, we
conclude that because the two most important factors in determining the likelihood
of confusion – type of mark and actual confusion – weighed in favor of finding
such confusion, there was sufficient evidence to support a reasonable jury’s finding
of infringement. Accordingly, the district court did not err in denying Aronowitz’s
motion for judgment as a matter of law.7
4. Damages for Infringement
Aronowitz has also challenged the jury’s $25,000 damages award as to
trademark infringement on the ground that Health-Chem has not demonstrated the
value of its mark, made use of its mark, or spent any money on corrective
advertising. “Under the Lanham Act, damages for trademark infringement may
6
None of the other four factors was extensively discussed by either party: (1) The issue is
Aronowitz’s use of the Health-Chem mark as it exists, so there is no issue of similarity. (2) It
could be argued that an average consumer of medical supplies might believe that the same
manufacturer produced both transdermal pharmaceutical patches and home-use and other
medical diagnostic tests. See E. Remy Martin & Co., S.A. v. Shaw-Ross Int’l Imports, Inc., 756
F.2d 1525, 1530 (11th Cir. 1985). On the other hand, it is not Health-Chem itself, but a
subsidiary of a subsidiary, Hercon Laboratories, that actually manufactures the products. (3) It is
not clear from the record what similarities or differences might exist between customers or sales
presentations of the two companies. (4) The record also lacks substantial evidence of advertising
media.
7
Aronowitz also asserts that any confusion caused by his website was more likely due to
the similarity between the names, “Health-Chem Diagnostics” and “Health-Chem,” than to his
use of the shorter “Health-Chem” mark. Aronowitz, however, makes no legal argument in
connection with this assertion, and it does not change the fact that his license was limited to use
of the longer mark “Health-Chem Diagnostics” and the jury found, based on ample evidence in
the record, a likelihood of confusion resulting from his use of the shorter mark.
21
include (1) the defendant’s profits, (2) any damages sustained by the plaintiff, and
(3) the cost of the action.” Ramada Inns, Inc. v. Gadsden Motel Co., 804 F.2d
1562, 1564 (11th Cir. 1986) (citing 15 U.S.C. § 1117). Further, the Lanham Act
confers upon district courts “wide discretion in determining a just amount of
recovery for trademark infringement.” Id. at 1564-65. Unlike in the case of future
lost profits caused by breach of contract, “Lanham Act damages may be awarded
even when they are not susceptible to precise calculations.” Id. at 1565. Finally,
as the jury was instructed, “damages sustained by the plaintiff” include “all
elements of injury to the business of the trademark owner proximately resulting
from the infringer’s wrongful acts” such as the costs of corrective advertising or
injury to business reputation or goodwill. Id. at 1564-65.
Brody testified that confusion engendered by Aronowitz’s website among
Health-Chem’s customers and potential employees caused concern, which cost
Health-Chem both time and money to explain away on an individual basis. He
explained several specific corrective actions that could be used to address the
problem generally. Based on his personal experience with Health-Chem and
Hercon Laboratories, one of Health-Chem’s manufacturing subsidiaries, he offered
estimates of the cost of each such action: (1) developing a corrective website
would cost between $10,000 and $25,000; running ads in trade publications would
22
cost between $15,000 and $20,000; and attending two or three industry trade
shows to reestablish Health-Chem’s identity in the market would cost between
$50,000 and $75,000. Altogether, this results in a range of the cost of corrective
advertising of between $75,000 and $120,000. We therefore conclude that there
was more than sufficient evidence in the record for a jury to find that corrective
advertising was necessary and to award at least $25,000 on that basis.
Even if this were not the case, as with the $2.6 million verdict for breach of
contract, the verdict form contained no interrogatories to indicate how the jury
calculated its damages award for trademark infringement. However, our review of
the record reveals evidence of alternative bases for an award. In addition to the
evidence and estimates provided for corrective advertising, there was also
testimony regarding damage to Health-Chem’s reputation and goodwill. Brody
testified that some of Health-Chem’s larger customers had expressed trepidation
about the possibility of a continued relationship between Health-Chem and
Aronowitz because of his association with a failed business. This testimony could
have figured into the jury’s consideration of the damages instruction it was given
which called for assessment of any injury or loss to Health-Chem’s reputation,
goodwill, general business reputation, sales, or deception of customers, as well as
corrective advertising.
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The jury in this case awarded only a small percentage of the up to $120,000
requested by Health-Chem in connection with its trademark infringement claim.
We find sufficient evidence in the record to support this award for corrective
advertising or other damages.
B. Permanent Injunction Against Use of “Health-Chem” Mark
Finally, in connection with the trademark infringement claim, Aronowitz
challenges the breadth of the permanent injunction imposed by the district court as
part of its Amended Final Judgment. We review the issuance of permanent
injunctions for abuse of discretion. Simmons v. Conger, 86 F.3d 1080, 1085 (11th
Cir. 1996). Federal courts may grant permanent injunctions where infringement is
found to have occurred in order to prevent further infringing use of a mark, and
such injunctions should be designed to keep the former infringers “a safe distance
away” from the protected mark. See Howard Johnson Co. v. Khimani, 892 F.2d
1512, 1517 (11th Cir. 1990).
Here, however, we have an unusual situation in which the mark at issue is
part of a mark which Aronowitz has a license to use. Consequently, we find that
the familiar boilerplate language “or any other marks similar to Defendant’s
trademark” used by the district court makes the injunction inappropriately broad in
this case. R4-155 at 2. Accordingly, we vacate the permanent injunction as issued.
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C. Conditional Grant of a New Trial
Now, because we reverse the district court’s grant of judgment as a matter of
law replacing the jury’s $2.6 million verdict with $1 in nominal damages, but still
find the $2.6 million verdict insufficiently legally supported to be reinstated, we
come to the issue of how the claim for breach of the 2003 contract ought to be
resolved upon remand. The district court granted Health-Chem’s motion for a new
trial in the alternative in case we reversed either of its judgments as a matter of law.
Aronowitz challenges this grant but requests a new trial as to damages only.
Federal Rule of Civil Procedure 59 provides that a district court may grant a
new trial “on all or part of the issues.” Fed. R. Civ. Proc. 59(a). Rule 50 provides
that a new trial granted in the alternative “shall proceed unless the appellate court
has otherwise ordered.” Fed. R. Civ. Proc. 50(c)(1). We review the grant of a new
trial pursuant to Rule 59 for abuse of discretion. Williams v. City of Valdosta, 689
F.2d 964, 974 (11th Cir. 1982). Our review for abuse of discretion is “more
rigorous when the basis” of the grant was the weight of the evidence. Id.
As we discussed in the context of judgments as a matter of law, courts are
generally “not free to reweigh the evidence and set aside the jury verdict merely
because the jury could have drawn different inferences or conclusions or because
judges feel that other results are more reasonable.” Narcisse v. Illinois Cent. Gulf
25
R.R., 620 F.2d 544, 548 (5th Cir. 1980). Accordingly, when there is error as to
damages, but the jury has rendered a proper ruling as to liability, the appropriate
remedy is to remand the case to the district court for either remittitur, see, e.g.
Goldstein v. Manhattan Industries, Inc., 758 F.2d 1435, 1448 (11th Cir. 1985), or
for a new trial exclusively as to the amount of damages, see e.g. Parker v. Scrap
Metal Processors, Inc., 386 F.3d 993, 1018 (11th Cir. 2004) (reversing excessive
jury award and remanding for new trial solely as to damages). See also Overseas
Private Inv. Corp. v. Metro. Dade County, 47 F.3d 1111, 1116 (11th Cir. 1995)
(“Because the liability issues were properly and clearly decided by the jury, the
remedy in this instance is to remand the case to the district court for a new trial on
the amount of damages only.”).
Here, the district court conditionally granted a new trial in connection with
the 2003 contract breach claim because it found the amount of the jury’s verdict to
be “against the overwhelming weight of the evidence” in that (1) the evidence was
insufficient to support a causal connection between Health-Chem’s breach of the
2003 contract and Aronowitz’s lost royalties, and (2) “no yardstick was given to
the jury that could be used to determine [Aronowitz’s damages] with reasonable
certainty . . . because [Aronowitz] offered insufficient evidence of [his] potential
costs.” R4-154 at 18. However, the district court declined to disturb the jury’s
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verdict as to liability on the underlying claim for breach. Our rigorous review of
the record evidence in support of damages reveals no abuse of discretion.
Accordingly, we affirm the district court’s alternative grant of a new trial as to the
sole remaining unresolved issue of damages in connection with breach of the 2003
contract.
III. CONCLUSION
Aronowitz appeals the district court’s order granting judgment as a matter of
law in favor of Health-Chem as to breach of the 2002 contract, reducing damages
as to breach of the 2003 contract to $1, and upholding the jury’s verdict as to the
trademark infringement claim against him. Because we find no error in the district
court’s conclusion that the 2003 contract constituted a novation of the 2002
Contract, thereby eliminating any possible claim for breach, we AFFIRM the
judgment as a matter of law as to breach of 2002 contract. Because we find the
$2.6 million damages award to be, in part, insufficiently legally supported by the
evidence, we REVERSE the judgment as a matter of law reducing the award from
$2.6 million to $1, and REMAND FOR A NEW TRIAL AS TO DAMAGES as
to breach of the 2003 contract. Because we find that the record contains sufficient
evidence for a reasonable jury to conclude that Health-Chem demonstrated both
requirements for trademark infringement and to award $25,000 in damages, we
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AFFIRM the district court’s denial of Aronowitz’s motion for judgment as a
matter of law. Finally, we VACATE the permanent injunction issued by the
district court because it is inappropriately broad.
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CUDAHY, Senior Circuit Judge, concurring in part and dissenting in part:
I agree that the 2002 Contract was supplanted by the 2003 Contract and that
Health-Chem’s financial obligations under the former agreement were
“terminated” when the new agreement took effect. There is no doubt that both
parties wanted to get out of what they perceived to be a bad deal. I write
separately, however, to clarify a matter I do not believe that the panel opinion
squarely addresses: What happens to direct obligations between the contracting
parties that resulted from transactions completed while the 2002 Contract was in
effect and there was no 2003 Contract? As this question arises here, what is the
status of debts already owed to Aronowitz by Health-Chem and recorded in the
books?
The panel opinion deals clearly with this question insofar as it involves
obligations to third parties: Goods or services delivered before the date of the 2003
Contract are to be the obligation of Health-Chem, while goods or services
delivered after the 2003 Contract are to be the obligation of the recipient. But the
panel opinion may be interpreted to assume that the 2003 Contract cancels and
extinguishes even past debts between the parties not involving third parties. The
opinion leans heavily on a clause from the 2003 Contract that states that it
“terminates all financial obligations” of Health-Chem to Aronowitz, but in context
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the meaning of this language is far from self-evident. I do not believe that the
concept of “terminating” a contract necessarily implies the cancellation of debts
already on the books. It is certainly a stretch to make that language also mean that
all the royalties that Health-Chem owed Aronowitz under the 2002 contract are
forgiven and need not be paid. That is the kind of language I would expect to see
before concluding that debts, once owed, are now forgiven. The transactions in
question are history; they are not to be undone by a new deal unless there is
explicit language purporting to do so.
Contracts are generally prescriptions for the future, not the past. That is how
I would interpret the 2003 Contract. I think that the effect of the “termination”
language is to end the obligation to make further payments. In fact, this is what the
parties stipulated. They expressly specified in the opening language of the 2003
Contract that the intent of the agreement was to “cease further funding” of the
Diagnostics Division. This statement of intent should guide our interpretation of
the “termination” clause. In fact, Health-Chem actually conceded throughout the
litigation that it still owed Aronowitz money under the 2002 Contract for the prior
use of his patents. Health-Chem did not claim that this debt had been
extinguished; it simply disagreed about how much was owed. I see nothing to
suggest that such debts have been cancelled by the 2003 Contract. Accordingly, I
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would reverse the district court’s judgment with respect to the 2002 beach of
contract claims but in all other respects I join the opinion of the panel.
31