Material Supply International, Inc. v. Sunmatch Industrial Co.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 23, 1998 Decided July 10, 1998

No. 97-7092

Material Supply International, Inc.,

Appellant/Cross-Appellee

v.

Sunmatch Industrial Co., Ltd.,

Appellee/Cross-Appellant

Consolidated with

No. 97-7093

Appeals from the United States District Court

for the District of Columbia

(No. 94cv01184)

Larry Klayman argued the cause for appellant/cross-
appellee, with whom Paul J. Orfanedes was on the briefs.

Louis S. Mastriani argued the cause for appellee/cross-
appellant, with whom Michael L. Doane was on the briefs.

Before: Edwards, Chief Judge; Ginsburg and Sentelle,
Circuit Judges.

Opinion for the Court filed by Circuit Judge Ginsburg.

Ginsburg, Circuit Judge: Material Supply International,
Inc., an Oregon corporation, sells pneumatic power tools.
Sunmatch Industrial Co., Ltd., a Taiwanese company, manu-
factures and exports pneumatic tools. Both claim ownership
of the SUNTECH trademark for pneumatic tools. The
Trademark Trial and Appeal Board (TTAB) ruled in favor of
Sunmatch. The district court held a bench trial on MSI's
challenge to the ruling of the TTAB and submitted the other
issues to a jury. Both parties appeal from various of the
district court's decisions.

I. Background

The key issue in the case is which party first used the
SUNTECH trademark. Daniel L.S. Chen, president and
general manager of Sunmatch, testified that he created the
SUNTECH mark in March 1985. In April of that year
Sunmatch applied to register the SUNTECH mark in Tai-
wan; its application was granted in November. Between
April and August Sunmatch used the mark in advertisements,
in catalogues, on letterhead, on sample tools, at a display at
the National Hardware Show in Chicago, and in meetings
after the show with potential distributors, including MSI. In
August Chen traveled to Oregon to meet with Chuck Minnick,
then the president of MSI, and they began negotiations
regarding Sunmatch's sale of pneumatic tools to MSI. In
November 1985 the parties entered into an Exclusive Sales
Agreement under which Sunmatch would manufacture pneu-
matic tools and MSI would "represent and sell [the tools] on
an exclusive basis for the entire North American continent
and the State of Hawaii." The Agreement states that

[t]he Supplier [Sunmatch] agrees to give the Agent
[MSI] exclusive rights to sales of all Suntech Pneumatic

Tools and accessories for the period of this contract with
the exception of special tools now being supplied to AIM
Corporation.

(Emphases in original.)

In October 1985 MSI began importing, advertising, and
selling SUNTECH tools to various customers. In 1990 the
relationship between MSI and Sunmatch began to deterio-
rate. MSI discovered that Sunmatch was advertising SUN-
TECH tools in the United States and became concerned
about Sunmatch's sales of private label tools in the U.S.,
which MSI contends caused it to lose sales and distributors.

In January 1990, without Sunmatch's knowledge, MSI ap-
plied to the Patent and Trademark Office to register the
SUNTECH trademark, and in October 1991 the PTO issued
the registration. Sunmatch petitioned the TTAB for cancella-
tion of MSI's mark. In 1994 the TTAB granted summary
judgment in favor of Sunmatch and canceled MSI's registra-
tion; the only affidavit MSI submitted did not raise a dispute
over any material fact because it was not based upon the
affiant's personal knowledge of the events surrounding the
beginning of the relationship between the two companies.
See Sunmatch Indus. Co. v. Material Supply Int'l, Inc.,
Cancellation No. 20,482, at 16-17 (T.T.A.B. 1994) (citing Fed-
eral Rule of Civil Procedure 56(e)).

In May 1994 MSI sued Sunmatch and Mr. Chen pursuant
to 15 U.S.C. s 1071(b)(1), which authorizes a party "dissatis-
fied" by a decision of the TTAB to bring a civil action in
district court. In addition, MSI sought a declaratory judg-
ment that it owned, and an injunction against Sunmatch
using, the SUNTECH mark. MSI also sought damages from
Sunmatch for trademark infringement and unfair competition
under the Lanham Act, unfair competition under state law,
breach of contract, breach of fiduciary duty, fraud upon the
TTAB, and fraud upon MSI. Sunmatch counterclaimed for
trademark infringement and unfair competition under the
Lanham Act, fraud upon the PTO, unfair competition under
state law, and breach of contract.

The district court simultaneously held a bench trial of
MSI's challenge to the decision of the TTAB and a jury trial
of all the other claims in the case. After the close of evidence
but before charging the jury the court upheld the decision of
the TTAB. The court determined that Sunmatch owned the
SUNTECH mark principally because it was the first to use it.
Based upon this ruling, the court also dismissed, pursuant to
Rule 50(a) (judgment as a matter of law), MSI's claims for
trademark infringement and unfair competition. The court
informed the jury that Sunmatch owned the mark and sub-
mitted the remaining claims for the jury's consideration.

The jury upheld MSI's claim against Sunmatch for breach
of fiduciary duty, for which it awarded MSI $50,000 in
compensatory and $100,000 in punitive damages, but it reject-
ed MSI's claims against Sunmatch for breach of contract and
for fraud. The jury upheld Sunmatch's counterclaims against
MSI for trademark infringement, fraud upon the PTO, and
breach of contract, for which it awarded Sunmatch $908,500,
but it rejected Sunmatch's claim of unfair competition under
both the Lanham Act and state law. Both parties appealed.

II. Analysis

On appeal MSI argues that the district court (1) violated its
Seventh Amendment right to a jury trial when the court itself
decided that Sunmatch owns the SUNTECH mark and so
informed the jury; and (2) erred in the course of rejecting
MSI's challenge to the TTAB decision that Sunmatch owned
the SUNTECH mark, by (a) placing upon MSI the burden of
proof, (b) admitting into evidence various documents showing
Sunmatch's first use of the mark, (c) deciding that there was
"clear and convincing" proof of the date Sunmatch first used
the SUNTECH mark, and (d) giving insufficient weight to
MSI's evidence regarding customer perception. MSI also
challenges the district court's rulings (3) denying MSI's post-
trial motion for judgment upon, or for a new trial of, Sun-
match's counterclaims for trademark infringement, breach of
contract, and fraud upon the PTO; (4) declining to eliminate
or reduce the jury's award of MSI's profits to Sunmatch; (5)

granting Sunmatch's motion to amend its answer in order to
assert a statute-of-limitations defense while denying MSI's
motion to amend its answer in order to assert assignment as
a defense; (6) instructing the jury regarding Sunmatch's
statute-of-limitations defense; and (7) denying MSI's motion
to compel discovery.

For its part Sunmatch argues that the district court erred
in denying Sunmatch's motions (1) for judgment as a matter
of law upon MSI's claim for breach of fiduciary duty; (2) to
vacate or reduce the jury's award of damages to MSI; and (3)
to award Sunmatch (a) enhanced damages, (b) costs, and (c)
attorney's fees under the Lanham Act; and (4) for prejudg-
ment interest.

A. MSI's Right to a Jury Trial

As noted above, the district court itself resolved MSI's
challenge to the decision of the TTAB. At the close of
evidence but before the case was submitted to the jury, the
court upheld the TTAB's decision that Sunmatch owned the
SUNTECH mark and informed the jury of its decision as
follows:

I have decided the appeal affirming the decision of the
TTAB ... which found in favor of the defendant in this
case. From my decision two facts flow. One, Sunmatch
is the owner of the trademark and, two, MSI, the plain-
tiff in this action, did not own the trademark at the time
it filed its application for registration for the Suntech
trademark.

While the jury was deliberating the court placed on the
record its findings of fact and conclusions of law relevant to
its decision affirming the TTAB. The court indicated that it
found many of the witnesses for both sides to be less than
truthful and that it "closely scrutinized the manner and
content of the testimony and applied what all jurors are
required to use and that is common sense." The court found
that Sunmatch was the first to use the SUNTECH mark and
therefore it held that Sunmatch owned the mark. The court
then outlined the "consequences" of that decision:

The factual issue[s] of ownership and first use have a
presence of [sic] other aspects of this case as it proceeds
to the jury in that the parties have brought jury triable
claims that implicate this issue. But as in any case in
which a decision for the court [has an] impact on what
remains for the jury to decide, this court recognizes that
pursuant to Rule 50, the determination of an issue
against a party may re-configure what remains for the
jury to decide.

Having determined the fact de novo that first use
renders the defendant [Sunmatch] the owner and rightful
registrant of the trademark in this case as a matter of
law, this issue cannot be redetermined by the jury and
consequently the plaintiff's claims are affected as we
have already discussed on the record, dropping certain
things out and eliminating certain things for the jury's
decision-making.

MSI contends that the district court violated its right to a
jury trial when the court decided that Sunmatch owned the
trademark before submitting the parties' other claims to the
jury. We agree. The Seventh Amendment to the Constitu-
tion of the United States provides:

In Suits at common law, where the value in controversy
shall exceed twenty dollars, the right of trial by jury
shall be preserved, and no fact tried by a jury, shall be
otherwise reexamined in any Court of the United States,
than according to the rules of the common law.

As a general matter the Seventh Amendment affords the
right to a jury trial "in those actions that are analogous to
'Suits at common law' "--that is, "suits brought in the English
law courts"--and not in actions "analogous to 18th-century
cases tried in courts of equity or admiralty." Tull v. United
States, 481 U.S. 412, 417 (1987) (emphasis in original).

Most important for this case, the Supreme Court has held
that "[w]hen legal and equitable claims are joined in the same
action, 'the right to jury trial on the legal claim, including all
issues common to both claims, remains intact.' " Lytle v.

Household Mfg., Inc., 494 U.S. 545, 550 (1990) (quoting Curtis
v. Loether, 415 U.S. 189, 196 n.11 (1974)); see Dairy Queen,
Inc. v. Wood, 369 U.S. 469, 472-73 (1962); Beacon Theatres,
Inc. v. Westover, 359 U.S. 500, 510-11 (1959). In such a case
the jury first must resolve any common issue of fact; the
district court then can resolve those claims that are for it to
determine. See Lytle, 494 U.S. at 556 n.4; Dairy Queen, 369
U.S. at 472-73.

In this case the parties do not dispute that the district
court was correct in itself trying MSI's challenge to the
decision of the TTAB and in submitting all of MSI's other
claims and Sunmatch's counterclaims to the jury. See Dairy
Queen, 369 U.S. at 476-77 (claims for damages based upon
breach of contract and trademark infringement sound in law).
The dispute is over the sequence in which the court and the
jury should have proceeded, considering that MSI's challenge
to the decision of the TTAB and all of Sunmatch's claims
against MSI involved the common legal issue of which party
owned the SUNTECH trademark, resolution of which in turn
depended upon the common factual issue of which party first
used the mark. The teaching of the Supreme Court cases
cited in the preceding paragraph is that the district court
should have let the jury first decide this common question of
fact and then itself decided the TTAB appeal based upon the
jury's resolution of that question.

Sunmatch contends nonetheless that because, in the event,
the district court resolved MSI's challenge to the TTAB
decision before submitting the case to the jury, MSI was
barred by the doctrine of issue preclusion from re-litigating
the factual question of first use. The Supreme Court reject-
ed a similar contention in Lytle, stating that "in cases involv-
ing a wrongful denial of a petitioner's right to a jury trial" the
Court has "never accorded collateral-estoppel effect to the
trial court's factual determinations." 494 U.S. at 552-53. As
the Court explained:

[T]he purposes served by collateral estoppel do not justi-
fy applying the doctrine in this case. Collateral estoppel
protects parties from multiple lawsuits and the possibility

of inconsistent decisions, and it conserves judicial re-
sources. Application of collateral estoppel is unneces-
sary here to prevent multiple lawsuits because this case
involves one suit in which the plaintiff properly joined his
legal and equitable claims.

Id. at 553 (citation omitted).

Next Sunmatch asserts that the district court's action must
not violate the Seventh Amendment because otherwise courts
could never dismiss claims based upon Rules 12, 50, or 56.
Sunmatch misses the point. Of course the trial court may
dismiss claims based upon those rules--but only if it can do
so as a matter of law. In this case the court, acting as the
finder of fact, evaluated the demeanor and determined the
credibility of witnesses, balanced the evidence, and found that
Sunmatch first used the mark. By resolving this factual issue
common to the claims tried to the court and those tried to the
jury, the court violated MSI's right to a jury trial.

Upon remand MSI is entitled to a jury trial of all causes of
action that entail the question which party owned the
SUNTECH trademark, namely, MSI's challenge to the TTAB
decision, and its claims for trademark infringement and unfair
competition under the Lanham Act and unfair competition
under state law; and Sunmatch's claims for trademark in-
fringement and unfair competition under the Lanham Act,
fraud upon the PTO, and unfair competition under state law.
Sunmatch's claim for breach of contract also must be retried
because it too implicates the question of ownership. Sun-
match has offered two theories in support of this claim, both
of which depend upon ownership of the mark: First, in its
complaint Sunmatch alleged that "[b]y claiming ownership of
Sunmatch's trademark SUNTECH and filing a U.S. applica-
tion therefor, [MSI] breached its duty under the sales agree-
ment." Second, in its brief Sunmatch contends that "when
MSI began to purchase pneumatic tools from other suppliers
and place the SUNTECH trademark on those products, it
was clearly violating the Agreement." The issue of who
owned the mark is relevant under either theory, and there-
fore the claim must be retried.

Finally, we note that MSI does not seek retrial based upon
the Seventh Amendment for its claims for breach of fiduciary
duty, breach of contract, and fraud upon MSI, the latter two
of which the jury rejected. (During the trial MSI withdrew
its claim of fraud upon the TTAB.) Accordingly, these claims
will not be retried upon remand, and we need not consider
whether they implicate the issue of ownership. We turn now
to the arguments that the parties need to have resolved in
order to retry the claims that we remand to the district court.

B.Burden of Proof in MSI's Challenge to the TTAB
Decision

MSI argues that the district court incorrectly placed upon
it the burden of proof in its challenge to the decision of the
TTAB. A party to a cancellation proceeding who is dissatis-
fied with a decision of the TTAB has two options: First, the
party may appeal to the United States Court of Appeals for
the Federal Circuit. 15 U.S.C. s 1071(a)(1). Second, the
party may "have remedy by a civil action" in district court.
Id. s 1071(b)(1). With respect to these two options, a leading
treatise states:

Congress gave such alternate remedies of review because
each possessed its own unique advantages. If appeal is
made to the Federal Circuit, the case proceeds on a
closed record and no new evidence is permitted. But if
review is sought in a federal [district] court, review is a
form of "de novo" scrutiny and new evidence is permit-
ted.

3 J. Thomas McCarthy, McCarthy on Trademarks & Unfair
Competition s 21:20, at 21-24 (4th ed. 1997); see also 15
U.S.C. s 1071(b)(3) (in district court the record before the
TTAB "shall be admitted on motion of any party ... without
prejudice to the right of any party to take further
testimony"). Although courts sometimes refer to the district
court's review of the TTAB's decision as a "de novo" proceed-
ing, see, e.g., Spraying Sys. Co. v. Delavan, Inc., 975 F.2d
387, 391 (7th Cir. 1992); Wilson Jones Co. v. Gilbert &
Bennett Mfg. Co., 332 F.2d 216, 218 (2d Cir. 1964), that is
something of a misnomer:

While district court review is called "de novo" because
new evidence may be introduced, it is a unique procedure
because unlike a true de novo proceeding, findings of fact
made by the [TTAB] are given great weight and not
upset unless new evidence is introduced which carries
thorough conviction.

3 McCarthy, supra, s 21:21, at 21-26; see Esso Standard Oil
Co. v. Sun Oil Co., 229 F.2d 37, 40 (D.C. Cir. 1956) (adopting
standard of review for decisions of Patent Office set forth in
Morgan v. Daniels, 153 U.S. 120, 125 (1894), i.e., finding of
fact made by TTAB "must be accepted as controlling, unless
the contrary is established by evidence 'which, in character
and amount carries thorough conviction' "); accord, Spraying
Sys., 975 F.2d at 391; Coach House Restaurant, Inc. v. Coach
& Six Restaurants, Inc., 934 F.2d 1551, 1557 (11th Cir. 1991);
Wells Fargo & Co. v. Stagecoach Properties, Inc., 685 F.2d
302, 306 (9th Cir. 1982); Aloe Creme Laboratories, Inc. v.
Texas Pharmacal Co., 335 F.2d 72, 74 (5th Cir. 1964); Wilson
Jones Co., 332 F.2d at 218; Century Distilling Co. v. Conti-
nental Distilling Co., 106 F.2d 486, 489 (3d Cir. 1939); see
also 3 McCarthy, supra, s 21:22, at 21-27 ("vast majority of
courts" apply the thorough conviction standard); 1 Jerome
Gilson & Jeffrey M. Samuels, Trademark Protection & Prac-
tice s 3.05[4](b)(ii), at 3-200 (1997) (same).

In this case, however, the TTAB did not resolve any
disputed issue of fact. Rather, it entered summary judgment
in favor of Sunmatch because MSI failed to raise a material
issue of fact by submitting an affidavit based upon the
affiant's personal knowledge. As the Seventh Circuit pointed
out in Spraying Systems Co. v. Delavan, Inc., 975 F.2d at
391, "the thorough conviction standard cannot apply to the
TTAB's grant of summary judgment." When the TTAB
grants summary judgment it does not make findings of fact;
rather, it applies Federal Rule of Evidence 56 and concludes
as a matter of law that there are no material issues of fact in
dispute. See id. at 391-92; see also Sunmatch Indus. Co. v.
Material Supply Int'l, Inc., Cancellation No. 20,482, at 4-5
(T.T.A.B. 1994) (applying Rule 56 in this case); cf. 37 C.F.R.
s 2.116(a) ("Except as otherwise provided, and wherever

applicable and appropriate, procedure and practice in inter
partes proceedings shall be governed by the Federal Rules of
Civil Procedure"). Moreover, courts apply the thorough con-
viction standard to the TTAB's findings of fact largely in
deference to the TTAB's expertise in handling trademark
cases. There is no reason, however, for the district court to
defer to the TTAB when that body grants summary judg-
ment; the district court is just as able as the TTAB to
determine an issue of law. We conclude that because the
TTAB granted summary judgment to Sunmatch on the issue
of who owned the SUNTECH trademark, the district court
upon remand should review the decision of the TTAB based
upon a true de novo standard, as it would any question of law.

As the petitioner seeking cancellation before the TTAB,
Sunmatch had the burden of proving by a preponderance of
the evidence that it owned the SUNTECH mark. See, e.g.,
Cerveceria Centroamericana, S.A. v. Cerveceria India, Inc.,
892 F.2d 1021, 1023 (Fed. Cir. 1989); Massey Junior College,
Inc. v. Fashion Inst. of Tech., 492 F.2d 1399, 1402-04
(C.C.P.A. 1974); see also 3 McCarthy, supra, s 20:64, at 20-
106 (petitioner to cancel must rebut presumption of validity
by preponderance of evidence). Because the TTAB decided
against MSI and MSI sought review of that decision in
district court, we think MSI had the burden of going forward,
that is, of submitting to the court evidence or argument to
counter the decision of the TTAB. Nevertheless, because
Sunmatch had the burden of proof before the TTAB and
because the district court must review the TTAB's decision de
novo, Sunmatch must bear the burden of persuasion in dis-
trict court.

C. Motions to Amend

MSI argues that the district court abused its discretion by
(1) a few weeks before trial granting Sunmatch's motion to
amend its answer to include a statute-of-limitations defense to
MSI's claim for breach of contract; and (2) at the close of
evidence denying MSI's motion to amend its answer to in-
clude a defense of assignment. We need not reach the
second issue, however, because upon remand MSI will have

another opportunity to seek leave to amend its answer prior
to the retrial of Sunmatch's claims against MSI. See Harris
v. Secretary, U.S. Dep't of Veterans Affairs, 126 F.3d 339, 345
(D.C. Cir. 1997) (stating that upon remand Department may
petition to amend); 6 Charles A. Wright, et al., Federal
Practice & Procedure s 1488, at 655-57 (2d ed. 1990).

Federal Rule of Civil Procedure 15(a) provides that leave to
amend a pleading "shall be freely given when justice so
requires." See Foman v. Davis, 371 U.S. 178, 182 (1962)
(absent "any apparent or declared reason--such as undue
delay, bad faith or ... undue prejudice to the opposing party"
leave should be freely given). We review for an abuse of
discretion the district court's decision to grant or deny a
motion to amend. See, e.g., Atchinson v. District of Colum-
bia, 73 F.3d 418, 426 (D.C. Cir. 1996).

We do not see how MSI can maintain that the district court
abused its discretion in permitting Sunmatch to amend its
answer to add the statute-of-limitations defense. MSI conclu-
sorily claims it was prejudiced by the delay, but it does not
say how and no prejudice is apparent. MSI had plenty of
notice: the court granted Sunmatch's motion on January 19
and the trial did not begin until February 5; moreover,
Sunmatch had mentioned the statute-of-limitations defense
the previous November in a filed memorandum regarding
choice of law. Although MSI points out that discovery was
closed it does not identify any discovery it required in order
to meet the statute-of-limitations defense.

MSI also argues that Sunmatch waived its statute-of-
limitations defense by failing to raise the defense in its
original answer. This argument confuses "waiver" and "for-
feiture."

A Rule 15 amendment, if allowed by the trial court, will
cure any problem of timeliness associated with forfeiture
[of a statute-of-limitations defense]. However, if a party
"waives," i.e., intentionally relinquishes or abandons an
affirmative defense, no cure is available under Rule 15.

Harris, 126 F.3d at 343 n.2. There is no indication that
Sunmatch ever intentionally relinquished the defense; there-
fore its request for an amendment cured its failure to include
the defense in its original answer. We conclude that the
court properly granted Sunmatch's motion.

D.Jury Instruction Regarding Statute of Limitations

MSI next argues that the district court incorrectly instruct-
ed the jury regarding when the statute of limitations began to
run on its breach of contract claim. In its initial charge to
the jury the district court stated:

For purposes of the parties' breach of contract ...
claims, you must rule against either party if you find that
it waited more than three years after any breach of
contract ... before it raised the claim.

During deliberations the jury sent the court a note that
stated in part:

At what point in time does the clock start ticking for the
statute of limitations on the breach of contract? I.e. a)
At the time the breach occurred? b) At the time a party
became aware of the breach? c) At the time damages
were incurred?

The court answered that the statute of limitations begins to
run at the time a party discovers the breach.

District of Columbia law governs the issue of the proper
statute of limitations in this case. See A.I. Trade Fin., Inc. v.
Petra Int'l Banking Corp., 62 F.3d 1454, 1458 (D.C. Cir. 1995)
(in diversity case federal court looks to forum state's choice-
of-law rules; D.C. treats statute of limitations as procedural
and applies its own rule); cf. Sun Oil Co. v. Wortman, 486
U.S. 717, 726 (1988) (Supreme Court has "reject[ed] the
notion that there is an equivalence between what is substan-
tive under the Erie doctrine and what is substantive for
purposes of conflict of laws"). The general rule in the
District is that a claim for breach of contract accrues "when
the contract is first breached." Capitol Place I Assoc. L.P. v.
George Hyman Constr. Co., 673 A.2d 194, 198 (D.C. 1996).

MSI asserts that the district court should have instructed
the jury that "the statute of limitations begins to run from
[the] date of the breach, or [the] date of the termination of
the contract, whichever is later." For this proposition it
provides a case citation ungarnished by any reasoning. See
Computer Data Sys., Inc. v. Kleinberg, 759 F. Supp. 10
(D.D.C. 1990). The District of Columbia Court of Appeals
does recognize that there may be situations in which the
breach occurs only upon the completion of the contract. For
example, where the claim is based upon the breach of an
implied warranty that equipment the defendant installed
would operate properly, the breach does not occur until the
installation (and hence performance of the contract) was
completed and the equipment did not, in fact, work. See
Sears, Roebuck & Co. v. Goudie, 290 A.2d 826, 830 & n.2
(D.C. 1972). Applying such a rule, however, requires an
analysis of the facts of the particular case in order to deter-
mine whether the breach occurred at the time of completion
of the contract or at some other time. MSI suggests no
reason, however, why it is entitled to an instruction that
Sunmatch's breach occurred at termination of the Agreement
and we do not see any analogy here to the cases involving the
breach of an implied warranty. Therefore, we adhere to the
general rule that the cause of action accrues and the statute
of limitations begins to run when the defendant breaches the
contract.

Whether the district court erred by instructing the jury
that the cause of action accrued at the time of discovery
rather than at the time of breach, we need not decide because
any error was certainly harmless. See Fed. R. Civ. P. 61.
Running the statute of limitations from discovery could not
have given MSI less time to file because obviously a party can
discover a breach only when it occurs or later. Not surpris-
ingly, therefore, MSI does not identify any prejudice it suf-
fered from the instruction--other than to say that it must
have been prejudiced because the jury rejected its claim,
which is circular.

E. MSI's Motion to Compel

MSI asserts that the district court abused its discretion by
denying as untimely MSI's motion to compel Sunmatch to
produce evidence regarding Sunmatch's private label sales.
MSI contends that if it had had this information for trial it
could have proven additional damages arising from Sun-
match's breach of fiduciary duty.

The scheduling order governing pretrial procedures provid-
ed that discovery had to be completed by April 1, 1995,
dispositive motions were due by May 1, and "[a]ll other
motions" were due by September 11. MSI filed its motion to
compel on September 11 and the court held it untimely
because that was after the close of discovery. We think the
court was well within its discretion to interpret its order as
requiring a motion to compel discovery to be made within the
discovery period.

F. Breach of Fiduciary Duty

Sunmatch argues that the district court erred in denying
its motion for judgment as a matter of law, or in the alterna-
tive for a new trial, on MSI's claim for breach of fiduciary
duty. Our review is de novo; we ask "whether the evidence
was sufficient for a reasonable jury to have reached the
verdict." Kirkland v. District of Columbia, 70 F.3d 629, 635
(D.C. Cir. 1995).

Sunmatch mounts four attacks upon the decision of the
district court not to grant the motion. Sunmatch's first
argument is that under the relevant law (namely, that of
Oregon) a manufacturer does not have a fiduciary duty to its
dealer(s) unless they had a "special relationship," and it
claims that MSI did not present sufficient evidence of such a
"special relationship." MSI's response is that Sunmatch is
bound by the jury instruction the parties jointly submitted to
the district court, which did not mention the need for a
special relationship. In its reply brief, Sunmatch makes no
attempt to respond to MSI's point. In these circumstances,
although we may doubt that there is a special relationship
and therefore a fiduciary duty here, we can hardly conclude
that Sunmatch has carried its burden of demonstrating that
the judgment of the district court is in error, and hence we

proceed upon the assumption that Sunmatch owed a fiduciary
duty to MSI.

Sunmatch's other arguments are all closely related: Sun-
match argues that as a principal it had the right to compete
with its agent MSI by selling private label tools unless the
Agreement expressly stated otherwise; that assuming it had
a duty not to interfere with MSI's sales of SUNTECH tools
the evidence fails to support the conclusion that it breached
that duty; and that the jury's verdict that Sunmatch breach-
ed a fiduciary duty it owed to MSI is inconsistent with its
verdict that Sunmatch did not breach the Agreement because
both claims were based upon Sunmatch's sales of private label
tools.

Sunmatch's reasoning misses the point of MSI's claim for
breach of fiduciary duty. According to MSI's theory, even if
under the Agreement Sunmatch could legitimately sell pri-
vate label tools in North America and Hawaii, the Agreement
clearly gave MSI the exclusive right "to represent and sell
[SUNTECH tools]" for a specific period of time in that
territory, and Sunmatch interfered with that exclusive right
by using the SUNTECH mark to solicit private label sales,
thereby diverting to it sales that would have gone to MSI. In
other words, although Sunmatch might have had the right to
compete with MSI by selling private label tools, the Agree-
ment is express that Sunmatch did not have the right to
exploit the SUNTECH mark in North America in order to
make those sales.

Moreover, contrary to Sunmatch's argument, there is suffi-
cient evidence to support MSI's theory: Sunmatch used the
SUNTECH name in advertisements, catalogues, business
cards, and sample tools which it circulated in the United
States in order to solicit sales of private label tools. Although
there is, as Sunmatch points out, countervailing evidence,
there is sufficient evidence in the record for a reasonable jury
to conclude that Sunmatch used the SUNTECH mark to
attract customers in North America to whom it would sell
private label tools.

Finally, the jury's verdicts with respect to breach of con-
tract and breach of fiduciary duty were not inconsistent
because, assuming Sunmatch had a right to sell private label
tools, the jury could find that Sunmatch breached its putative
fiduciary duty by using the SUNTECH logo to divert to itself
private label sales that should have gone to MSI. According-
ly, we hold that Sunmatch was not entitled to judgment as a
matter of law, or in the alternative, to a new trial.

G. Sunmatch's Challenge to the Award of Damages

The jury awarded MSI $50,000 in compensatory damages
and $100,000 in punitive damages for Sunmatch's breach of
fiduciary duty. Sunmatch argues that the district court
should have granted it judgment as a matter of law with
respect to the award of damages. In the alternative, Sun-
match contends that the district court abused its discretion in
failing to grant remittitur of the damages.

1. Judgment as a matter of law

As noted above, we review de novo an order denying
judgment as a matter of law; thus, we ask here whether
there was sufficient evidence for a reasonable jury to have
awarded compensatory or punitive damages. With respect to
the latter, Sunmatch argues that no reasonable jury could
conclude that Sunmatch's actions were wanton, malicious, or
criminally indifferent because it reasonably believed that
under the Agreement it could make private label sales. As
we have seen, however, under MSI's theory of breach of
fiduciary duty it does not matter whether the Agreement
allowed Sunmatch to sell private label tools. The Agreement
gave MSI the exclusive right "to represent and sell
[SUNTECH tools]" in North America and Hawaii. A reason-
able jury could have concluded based upon the evidence
presented at trial that MSI maliciously used the SUNTECH
trademark in that territory--which it must have known it had
no right to do--specifically in order to divert sales from MSI
to itself. Accordingly, Sunmatch was not entitled as a matter

of law to a judgment vacating the jury's award of punitive
damages.

With respect to the compensatory damages, Sunmatch
argues that the $50,000 award must derive from MSI's claim
that it spent $46,000 to replace eight sales representatives,
that most of that sum went to pay salaried MSI employees to
find replacement representatives, and that MSI would have
incurred this expense in any event. There is no reason,
however, to tie the $50,000 figure to MSI's claim for time
spent replacing sales representatives just because the
amounts are similar. MSI claimed and put on evidence of
other damages as well--for interest charges incurred to carry
excess inventory, and for lost profits and goodwill. Because a
reasonable jury surely could have awarded MSI $50,000 in
compensatory damages we reject Sunmatch's argument for
judgment as a matter of law.

2. Remittitur

In the alternative, Sunmatch argues that the district court
abused its discretion in declining to remit the jury's award of
compensatory and punitive damages. See, e.g., Hooks v.
Washington Sheraton Corp., 578 F.2d 313, 316 (D.C. Cir.
1977). Sunmatch's claim for remittitur of the compensatory
damages appears to be the same as its claim for judgment as
a matter of law, which we have already rejected. Sunmatch
argues that the punitive damages should be reduced because
they are "excessive." On the contrary, precedent establishes
that the punitive damages are not excessive in relation to the
harm to MSI. See Pacific Mut. Life Ins. Co. v. Haslip, 499
U.S. 1, 23-24 (1991) (upholding award of punitive damages
which were four times the amount of compensatory damages);
cf. BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 582, 585-86
(1996) (finding punitive damages of 500 times amount of
actual harm to be constitutionally excessive). Therefore, we
will not set aside or reduce the award.

III. Conclusion

We hold as follows: (1) The district court violated MSI's
Seventh Amendment right to a jury trial when it decided on

the merits MSI's challenge to the TTAB decision before
submitting the remainder of the case to the jury. (2) Upon
remand the district court must review de novo the TTAB's
grant of summary judgment to Sunmatch, which bears the
burden of persuasion with respect to the issue of ownership of
the SUNTECH mark. (3) The district court did not abuse its
discretion when it granted Sunmatch's motion to amend its
answer in order to assert a statute-of-limitations defense to
MSI's claim for breach of contract. (4) Any error the district
court may have made in instructing the jury about the statute
of limitations for breach of contract was harmless. (5) The
district court did not abuse its discretion in denying MSI's
motion to compel discovery. (6) Sunmatch is not entitled to
judgment as a matter of law or to a new trial on MSI's claim
for breach of fiduciary duty. (7) Sunmatch is not entitled to
judgment as a matter of law or to remittitur of the jury's
award of compensatory and punitive damages. The judgment
of the district court is affirmed with respect to MSI's claims
for breach of contract, breach of fiduciary duty, fraud upon
the TTAB, and fraud upon MSI.

Because of the Seventh Amendment violation, the following
claims are remanded for a new trial: MSI's challenge to the
decision of the TTAB, its claims for trademark infringement
and unfair competition under the Lanham Act, and its claim
for unfair competition under state law; Sunmatch's claims for
trademark infringement and unfair competition under the
Lanham Act, fraud upon the PTO, unfair competition under
state law, and breach of contract.

The case is remanded to the district court for further
proceedings consistent with this opinion.

So ordered.