[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
AUG 22, 2007
No. 06-13677 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 04-01082-CV-TWT-1
OPTIMUM TECHNOLOGIES, INC.,
Plaintiff-Appellant,
versus
HENKEL CONSUMER ADHESIVES, INC.,
HENKEL CORPORATION,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(August 22, 2007)
Before EDMONDSON, Chief Judge, and BIRCH and WILSON, Circuit Judges.
BIRCH, Circuit Judge:
In this appeal, plaintiff Optimum Technologies, Inc. (“Optimum”) raises a
number of challenges to the district court’s disposition of its action against
defendant-appellee Henkel Consumer Adhesives, Inc. (“HCA”).1 Specifically,
Optimum argues that: (1) the district court erred in granting partial summary
judgment in favor of HCA on Optimum’s claims of trademark infringement and
unfair competition; (2) the district court erred in granting summary judgment in
favor of HCA on Optimum’s claims of breach of confidential relationship, breach
of fiduciary duty, fraudulent concealment, fraud, and negligent misrepresentation;
and (3) the district court erred in granting --- following a jury trial that resulted in a
mistrial --- HCA’s renewed motion for judgment as a matter of law on Optimum’s
trademark and unfair competition claims, due to a lack of evidence establishing
Optimum’s damages. Following a careful review of the record and the arguments
on appeal, we discern no reversible error by the district court, and, therefore, we
AFFIRM.
I. BACKGROUND
A. Facts
1
Henkel Corporation, the parent company of HCA, was also named as a defendant in this
action and appears as a party in the caption of this appeal. The district court, however,
determined that Henkel Corporation had no involvement in any of the facts alleged in
Optimum’s complaint. Accordingly, the court granted summary judgment in favor of Henkel
Corporation on all counts that had been lodged against it. That decision is not challenged by
Optimum on appeal, and is therefore deemed waived. See AT&T Broadband v. Tech
Commc’ns, Inc., 381 F.3d 1309, 1320 n.14 (11th Cir. 2004) (“Issues not raised on appeal are
considered abandoned.”) (citation omitted).
2
Optimum is a closely-held family business based in Cartersville, Georgia.
The company sells a number of flooring and carpeting-type products in both the
commercial and home consumer markets. Its best selling home consumer product
is the “Lok-Lift Rug Gripper,” a two-sided adhesive product that can be applied in
strips to the backs of rugs and mats to secure them in place and prevent slippage on
various surfaces. Beginning in the 1980s, Optimum began selling the Lok-Lift
product to home improvement retailers like Home Depot, Lowe’s, and Ace
Hardware. Since 1981, Optimum has had a federally registered trademark in the
mark “Lok-Lift,” when used in connection with the sale of a “Serim Material to Be
Interposed Between Carpet and Surface to Anchor Carpet in Place.” R1-1, Exh. 1.2
HCA distributes a number of consumer goods, including adhesive tapes, to
large home improvement retailers. In some cases, HCA manufactures its own
home improvement products; in other cases its products are supplied by outside
manufacturers. In the latter scenario, HCA typically obtains its products from third
party manufacturers, and then sells and distributes them directly to those retailers
with whom HCA has existing relationships.
2
Optimum’s product is known as the “Lok-Lift Rug Gripper,” but its registered mark is
limited to the phrase “Lok-Lift.” For purposes of this opinion, we will refer to Optimum’s
product as “the Lok-Lift product,” but in discussing the registered trademark we will use the
registered mark, “Lok-Lift.”
3
In 1993, HCA approached Optimum 3 and expressed an interest in entering
into a distributor relationship with Optimum, one centered on Optimum’s flagship
Lok-Lift product. The relationship with Optimum would permit HCA to establish
a greater presence in the floor and rug departments of retailers such as Home Depot
and Lowe’s --- retailers with whom Optimum already had pre-existing accounts.
In turn, the distributorship would allow Optimum to leverage HCA’s existing
relationships with some larger retailers that Optimum had been seeking to sell the
Lok-Lift product to, such as Wal-Mart and K-Mart. Under the terms of the parties’
arrangement --- which was based on a “handshake” and was not reduced to writing
--- Optimum would manufacture and supply the Lok-Lift product to HCA, and
HCA would assume responsibility for marketing and distributing the Lok-Lift
product to retailers.
Pursuant to this arrangement, Optimum turned over a number of its large
retail accounts to HCA, including the contact information for those retailers,
product pricing information, customer information, and sales figures. As to these
accounts, which included Home Depot and Lowe’s, HCA obtained the exclusive
right, going forward, to sell and distribute the Lok-Lift product. Lewis P.
3
Optimum’s initial business dealings were with HCA’s predecessor corporation, Manco,
Inc. (“Manco”). In 1997, however, Henkel Corporation, HCA’s parent company, purchased a
majority interest in Manco, and in 2002 Manco formally changed its name to “HCA.” For ease
of reference, throughout this opinion we refer to the defendant-appellee as “HCA.”
4
McDermott, Chief Executive Officer of Optimum, testified that the accounts it
assigned to HCA constituted the vast majority of Optimum’s major retail accounts.
Prior to selling the Lok-Lift product, Optimum and HCA worked together in
designing the product’s external packaging. This packaging consisted of a green
box, a photo of a hand lifting a rug, a picture of a roll of tape, the phrase “Lok-Lift
Rug Gripper,” and, in the corner of the packaging, the corporate logo of HCA’s
predecessor corporation. It is undisputed that HCA was permitted to use the “Lok-
Lift” trademark during the term of the parties’ distributor relationship.
HCA began distributing the Lok-Lift product to retailers in early 1994.
HCA would place orders for the Lok-Lift product with Optimum by filing a
purchase order. Optimum would ship the product to HCA --- in the packaging
agreed to by the parties --- and HCA would then sell and distribute the product to
retailers. The early years of this business relationship were, by all accounts,
uneventful.
Within a few years, however, HCA had begun internally developing its own
adhesive carpet tape product, which it hoped would eventually replace Optimum’s
Lok-Lift product. HCA began internally marketing and testing a foam-backed
latex rug product --- which was eventually named “Hold-It For Rugs”--- as early as
5
1998.4 From the period 1998 to 2002, however, while this change was being
contemplated internally at HCA, HCA continued to purchase the Lok-Lift product
from Optimum and to distribute the Lok-Lift product to retailers.
Optimum was not made aware of HCA’s plans to change products.
Commencing in 2001, HCA advised Optimum that it was contemplating a
“packaging change” to the Lok-Lift product’s box. R-88 at 142-43; R-127 at 201-
202. In early 2002, as HCA was preparing to roll out the Hold-It product to retail
stores, HCA informed Optimum that it would be “mak[ing] changes in the Lok-
Lift Rug Gripper packaging,” and that, as a result, Optimum was “not to order
more [Lok-Lift product] packaging without [HCA’s] okay.” R1-1, Exh 10.
In the fall of 2002, HCA sent a memorandum --- to which Optimum was not
privy --- to all of its large retailers, including Home Depot, Lowe’s, and Ace
Hardware. The HCA memorandum stated that HCA was preparing to introduce a
new “rug gripper product” to its retailers, and that it would no longer be selling the
“old version.” Br. of Appellee at 18-19; R-128 at 209. It did not mention the
Hold-It product by name, mentioning only a new “rug gripper product.” Id. The
memorandum also advised its retailers that HCA’s new rug gripper product would
4
HCA later obtained a trademark in the mark “Hold-It.” For purposes of this opinion,
HCA’s product, “Hold-It For Rugs,” is referred to throughout the opinion as “the Hold-It
product,” whereas HCA’s trademark is referred to by the federally registered mark, “Hold-It.”
6
be superior in terms of quality.
HCA used the same UPC code, bar code, and item number as the Lok-Lift
product on the new Hold-It product. HCA also used a similar packaging design for
its Hold-It product. Specifically, the new Hold-It product consisted of a green box,
a photo of a hand lifting a rug, a picture of a roll of tape, and the phrase “Hold-It
For Rugs.” The Hold-It product packaging was the same size as the Lok-Lift
product, and the products’ packages contained the same quantities of adhesive
tape. Unbeknownst to Optimum, HCA began shipping its Hold-It product to retail
stores sometime in late December 2002.
On 17 January 2003, Sean McDermott, who is a vice president of sales in
the commercial division at Optimum discovered the Hold-It product on the shelf at
a Lowe’s store while on a personal errand. Subsequently, HCA’s strategic
sourcing manager, Mike Jupina, informed Optimum that the company had
“decided to take a new direction with [its] business” and that it would no longer be
ordering the Lok-Lift product from Optimum. R1-1, Exh. 11. HCA confirmed this
decision in a written letter to Optimum, which was written by Jupina. The
relationship between the companies was terminated shortly thereafter. The Hold-It
For Rugs product is now sold at a number of the retailers that were once selling the
Lok-Lift product, including Home Depot, Lowe’s, and Ace Hardware.
7
Pertinent to the present action, in the wake of the termination of the parties’
relationship --- and HCA’s decision to replace the Lok-Lift product with Hold-It at
all of its retail accounts --- some co-mingling of the two products occurred on the
shelves of HCA’s retailers. For example, Ronald Matheny, a Home Depot
representative who was responsible for liaising with vendor representatives at
Home Depot stores throughout the Southeast, testified that he had received
complaints that the new Hold-It product was being sold on Home Depot’s shelves
“with the ‘Lok-Lift’ name on the tag underneath.” R-312 at 71-72; see also
Optimum Techs., Inc. v. The Home Depot USA, Inc., No. 1:04 CV 3260, 2005 WL
3307508, at *1 (N.D. Ga. Dec. 5, 2005) (stating that “Home Depot displayed Hold-
It For Rugs on shelves labeled Lok-Lift Rug Gripper”). Optimum’s Sean
McDermott testified that he personally saw the Hold-It product on a store shelf at a
Home Depot on Sidney Marcus Boulevard in Atlanta, Georgia, with signage for
the Lok-Lift product sitting underneath the product.5 There have also been reports
that Hold-It product sat in “Lok-Lift”-labeled display cases on retail store shelves.
Randolph Lear, vice president of HCA’s Do-It-Yourself business division, has
stated that when product substitutions like these are effectuated by HCA, there is
5
See also R-88 at 34-35 (testimony of Stephen Davis, vice president for sales and
marketing at Optimum, stating that he had received reports that some Home Depot stores in the
Georgia area continued selling Hold-It with Lok-Lift signage underneath the product).
8
some potential for the old product to be co-mingled with the new product on the
retailers’ shelves. HCA has effectively conceded that, in some instances, “the
‘Lok-Lift Rug Gripper’ name remained on shelf tags . . . for some time after sales
of the Hold-It For Rugs product began.” Br. of Appellee at 24. In addition, it is
alleged that, for a period after the Hold-It product had replaced the Lok-Lift
product, a person purchasing Hold-It at some Home Depot stores would have the
purchase indicated on the printed Home Depot store receipt as “Lok-Lift.”
Some of HCA’s retailers were allegedly unaware of HCA’s product change;
Optimum has asserted that some store representatives stated that they thought they
were still ordering the Lok-Lift product, when in actuality they were ordering the
Hold-It product. A representative of Home Depot in Denver, Colorado stated to
Sean McDermott that she had been under the impression that the products were
essentially the same. Lewis J. McDermott, the company’s founder, testified that,
in his discussions with his buyer-contacts at a number of retailers, many of them
had made clear that they thought the two rug products were identical.
In addition, even after the parties’ relationship had been terminated, some of
HCA’s own websites apparently continued to contain references to the Lok-Lift
product. Evidence was presented that HCA’s websites contained pictures of the
Hold-It product next to a product description of the Lok-Lift product. On some of
9
HCA’s websites, if a customer were to search for a local retailer who was selling
the Lok-Lift product, they might be directed to a retailer who was actually selling
the Hold-It product.
In April 2004 Optimum filed the present action in the Northern District of
Georgia, alleging nine counts against HCA, including: trademark infringement, in
violation 15 U.S.C. § 1114(1); unfair competition and trade dress infringement, in
violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); unfair trade
practices, in violation of the Georgia Uniform Deceptive Trade Practices Act,
O.C.G.A. § 10-1-372(a); breach of confidential relationship; breach of fiduciary
duty; fraudulent concealment; fraud; and negligent misrepresentation.
B. The District Court Proceedings
1. District Court’s Summary Judgment Order
In January 2005, HCA moved for summary judgment on all counts. The
district court disposed of HCA’s motion in a detailed Opinion and Order. First,
with respect to Optimum’s action for federal trademark infringement under 15
U.S.C. § 1114(1), the district court evaluated Optimum’s claim that HCA had
infringed its registered mark “Lok-Lift” via its alleged conduct. The court
determined that, even if Optimum had a colorable claim of trademark infringement
based on the co-mingling and mislabeling of the Lok-Lift mark and the Hold-It
10
product on retail store shelves, those “alleged infringing uses [were] only
attributable to the retailers, not HCA.” R-170 at 7. Specifically, the court found
that there was “no evidence that HCA was responsible for generating the Home
Depot pricing stickers or shelving labels, which referred to the Hold-It For Rugs
product as Lok-Lift Rug Gripper, or for placing the allegedly infringing stickers on
the shelves.” Id. at 8. Because there was no evidence that the alleged
infringements at the retail level were attributable to HCA, the court concluded that
Optimum’s action for trademark infringement–based on the alleged mislabeling
and co-mingling of the Lok-Lift mark and the Hold-It product in retail
stores–would not lie.
The court found, however, that there was some evidence that HCA had
continued to use the “Lok-Lift” mark on the company’s website, even after the
parties’ distribution relationship had terminated. Specifically, the court found that
HCA’s website had continued to “feature[] a picture of the Hold-It For Rugs
product” with a description of the Lok-Lift product, and that the website had used
the product search feature to guide potential purchasers of the Lok-Lift product to
retailers of the Hold-It product. Id. at 9. Finding this to be evidence of an
unauthorized “use” of the mark on HCA’s website for trademark law purposes, the
court then turned to the question of whether that use was “likely to cause
11
confusion, or to cause mistake or to deceive.” See Burger King Corp. v. Mason,
710 F.2d 1480, 1491 (11th Cir. 1983). The court concluded that the “Lok-Lift”
mark was strong; that the products were similar and served similar functions; and
that HCA’s use of the mark on the website could arguably result in customer
confusion. In light of these determinations, the court concluded that Optimum had
presented “sufficient evidence to create a genuine issue of fact as to whether
HCA’s use of the Lok-Lift mark on its web sites created a likelihood of
confusion.” R-170 at 17.
The district court found, however, that HCA’s alleged unauthorized “use” of
the “Lok-Lift” mark --- if any --- had only occurred on the Internet sites. As a
result, the court held that there was insufficient evidence to support a broader
trademark infringement action against HCA based upon allegations of confusion at
the retail level. It thus granted partial summary judgment to HCA on Optimum’s
trademark infringement claim. The court’s order made clear that, at trial,
Optimum’s trademark action would be limited to the issue of “HCA’s use of the
Lok-Lift mark on its web sites.” Id. at 29.
Turning to Optimum’s claims for unfair competition under both section
43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and the Georgia Uniform Deceptive
Trade Practices Act, O.C.G.A. § 10-1-372(a), the district court concluded that the
12
same analysis would apply as that which was used in limiting Optimum’s
trademark infringement claim. Because the same analysis that governs a trademark
infringement also applies to claims brought under 15 U.S.C. § 1125(a) and
O.C.G.A. § 10-1-372(a), the court concluded that genuine issues of material fact
remained as to HCA’s conduct vis-à-vis its website. The court reiterated, however,
that there was insufficient record evidence to support claims of unfair competition
against HCA at the level of the retail stores. Thus it granted partial summary
judgment to HCA on these claims.6
Turning to Optimum’s remaining claims, the district court concluded that
HCA was entitled to summary judgment on Optimum’s claims of breach of
confidential relationship, breach of fiduciary duty, and fraudulent concealment.
The court concluded that there was neither a confidential relationship nor a
fiduciary relationship between the parties, but that the arrangement had been a
typical manufacturer-distributor relationship, one that was terminable at will by
either party. In addition, because there was no legally cognizable confidential
relationship between the parties, the court concluded that HCA had no duty to
6
The court also dismissed Optimum’s count for trade dress infringement under §
1125(a), based on the court’s finding that the overall packaging of the Lok-Lift product was
neither inherently distinctive, nor did it have secondary meaning. That aspect of the district
court’s holding is not challenged on appeal, and therefore, we do not address it. See AT&T, 381
F.3d at 1320 n.14 (citation omitted).
13
disclose its plans to replace the Lok-Lift product with the Hold-It product, and,
accordingly, a claim for fraudulent concealment would not lie.
As to the claims for fraud and negligent misrepresentation, the district court
found that both causes of action required a showing that the defendant had made a
false representation, but that Optimum had failed to demonstrate how HCA’s
alleged representation --- namely, the statement to Optimum that it would be
making a “packaging change” to the Lok-Lift product’s package --- was false. Id.
at 40. Moreover, the court found that, even assuming the statement was false, there
was no showing that Optimum had proximately suffered damage in reliance on the
statement–in fact, the court concluded that Optimum had arguably avoided
unnecessary cost by reducing its packaging inventory for the Lok-Lift product as
instructed. Thus, the court granted summary judgment in favor of Optimum on
these claims.
2. Post-Trial Judgment as a Matter of Law in Favor of HCA
In the wake of the summary judgment order, Optimum proceeded to a jury
trial on its remaining claims of trademark infringement and unfair competition. In
accordance with the district court’s summary judgment order, Optimum’s case at
trial was limited to the issue of HCA’s conduct on its websites, and whether that
conduct constituted either a trademark infringement or unfair competition.
14
Optimum was precluded from introducing any evidence as to confusion at the level
of the retailers; as the court explained to the jury in an early limiting instruction,
“[t]he one single claim that I have allowed to go forward in this case is the alleged
trademark infringement that arose as a result of the defendant’s use of the Lok-Lift
mark on its website. That is the only claim that you will be allowed to consider in
this case.” R-12 at 116-117.
Optimum’s witnesses at trial were likewise limited in their testimony as to
whether HCA misused the Lok-Lift mark in the context of its website; they were
not permitted to mention any allegations of misconduct at the retail level. See,
e.g., id. at 132, 134, 135 (testimony of Lewis P. McDermott limited to allegations
of HCA misconduct with respect to the website); see also id. at 154 (limiting
witness testimony to the question of “whether or not the use of the Lok-Lift
trademark on the defendant’s website in the year 2003 was likely to cause
consumer confusion”); id. at 163-64 (testimony of Steven Davis limited to use of
the Lok-Lift mark on HCA’s website); R-13 at 239 (testimony of Ronald Matheny
of Home Depot, same); id. at 296 (testimony of Sean McDermott, same).
In addition, the trial testimony of Optimum’s damages expert was limited to
the question of how much of his damage estimate --- a figure of $7.6 million,
which had been set forth in his pre-trial report --- was actually attributable to
15
HCA’s conduct on the website. During his cross-examination, Optimum’s expert
was questioned about why his damages report failed to specifically mention HCA’s
website, or to discuss the use of the Lok-Lift mark in the context of the Internet.
The expert eventually conceded that his damage report had been general in nature,
that it had been prepared prior to the court’s summary judgment ruling, and that,
consequently, it had failed to “separate out” those damages that were attributable to
HCA’s conduct on the website. R-14 at 581.
Optimum’s jury trial lasted four days. After a period of deliberations, the
jury indicated in a note to the court that it was “unable to reach a unanimous
verdict regarding damages.” R-16 at 678. Consequently, the court declared a
mistrial. Post-trial, HCA made a renewed motion for judgment as a matter of law,
pursuant to Rule 50(b) of the Federal Rules of Civil Procedure, having moved for it
previously at the close of Optimum’s case-in-chief and again at the close of all of
the evidence.
The district court granted HCA’s renewed motion for judgment as a matter
of law, and dismissed Optimum’s remaining claims for trademark infringement
and unfair competition. Specifically, the court found that Optimum’s expert
testimony should not have been admitted in the first place, as the evidence had
failed to establish a connection between the conduct at issue (HCA’s use of the
16
mark on the website) and the claimed damages ($7.6 million). The court found
that there was “no legally sufficient evidentiary basis for a reasonable jury to find
for Optimum on the issue of damages,” and awarded judgment as a matter of law
to HCA. R-287 at 13. Optimum appeals, challenging both the court’s summary
judgment order as well as its post-trial order granting HCA judgment as a matter of
law.
II. DISCUSSION
A. Appeal of the District Court’s Summary Judgment Order
We first address the district court’s summary judgment order. We review a
district court’s grant of summary judgment de novo, applying the same legal
standard used by the district court. See Johnson v. Bd. of Regents, 263 F.3d 1234,
1242 (11th Cir. 2001) (citation omitted). Under that standard, summary judgment
is appropriate where “there is no genuine issue as to any material fact and . . . the
moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). In
making this assessment, we review all facts and inferences in a light most
favorable to the nonmoving party --- in this case, Optimum. Farley v. Nationwide
Mut. Ins. Co., 197 F.3d 1322, 1336 (11th Cir. 1999) (citation omitted). We have
held that “the plain language of Rule 56(c) mandates the entry of summary
judgment . . . against a party who fails to make a showing sufficient to establish the
17
existence of an element essential to that party’s case, and on which that party will
bear the burden of proof at trial.” Johnson, 263 F.3d at 1243 (quotations and
citation omitted).
1. Optimum’s Count of Trademark Infringement
Optimum first appeals the district court’s grant of partial summary judgment
in favor of HCA on its trademark infringement claim. On appeal, Optimum
contends that the court’s decision was in error. Specifically, it argues that it
presented sufficient evidence to withstand summary judgment on this claim based
on the misconduct in the retail stores.
Trademark infringement is proscribed by 15 U.S.C. § 1114(1)(a), which
prohibits any person from the “use in commerce [of] any reproduction, counterfeit,
copy, or colorable imitation of a registered mark in connection with the sale,
offering for sale, distribution, or advertising of any goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake, or
to deceive.” In order to prevail on a trademark infringement claim based on a
federally registered mark, “the registrant must show that (1) its mark was used in
commerce by the defendant without the registrant’s consent and (2) the
unauthorized use was likely to cause confusion, or to cause mistake or to deceive.”
See Burger King, 710 F.2d at 1491. The parties do not dispute that Optimum’s
18
“Lok-Lift” mark is a federally registered mark that is entitled to protection. Thus
we must address: (1) whether Optimum presented sufficient evidence of an
unauthorized “use” of the mark by HCA at the retail level; and (2) if so, whether
the evidence was sufficient to create a genuine issue of material fact as to a
likelihood of confusion at the retail level.
The first step of a trademark infringement action is to demonstrate an
unauthorized “use” of the plaintiff’s mark in commerce. Id.; see also SunAmerica
Corp. v. Sun Life Assurance Co. of Canada, 77 F.3d 1325, 1343-44 (11th Cir.
1996) (stating that the “starting point” of a Lanham Act claim is that the plaintiff
had enforceable rights in the mark and that the defendants engaged in a “use” of
the mark). In order for a mark to be “use[d] in commerce” the mark must be
“placed in any manner on the goods or their containers or the displays associated
therewith or on the tags or labels affixed thereto.” See 15 U.S.C. § 1127. If such
an unauthorized “use” is shown by the plaintiff, the first prong of a trademark
infringement action has been satisfied. See 15 U.S.C. § 1114(1)(a); Burger King,
710 F.2d at 1491.
In addressing Optimum’s trademark infringement claim, the district court
concluded that, even if the co-mingling of the Lok-Lift mark with Hold-It product
on the retailer shelves constituted an unauthorized “use,” the evidence was not
19
sufficient to allege a claim for trademark infringement directly against HCA based
on these “uses,” because “the[] alleged infringing uses [were] only attributable to
the retailers, not [to] HCA.” R-170 at 7. The court did not assess whether the
incidents of confusion at the retail level were sufficient to create an issue of fact as
to a “likelihood of confusion” for purposes of a trademark action. Rather, it stated
that, even assuming there was evidence of a likelihood of confusion, there was “no
evidence that HCA was responsible” for the alleged misuse of Optimum’s
registered mark, that is, “generating the Home Depot pricing stickers or shelving
labels” or “placing the allegedly infringing stickers on the shelves.” Id. at 8.; id. at
16 (finding no evidence that “HCA used the Lok-Lift mark in its in-store
advertising,” and finding that “the only allegation of an infringing use of the mark
attributable to HCA occurred on the Internet”). Since, the court found, HCA had
not been responsible for any of the allegedly unlawful “uses” of the mark at the
retail level, the court granted partial summary judgment to HCA with respect to the
alleged misconduct at the retail stores.7
Our review of the record demonstrates that Optimum presented evidence that
7
As noted, the court did find that Optimum had presented “sufficient evidence to create a
genuine issue of fact as to whether HCA’s use of the Lok-Lift mark on its web sites created a
likelihood of confusion.” R-170 at 17. Accordingly, the court denied summary judgment to
HCA on Optimum’s trademark claim with respect to HCA’s uses of the mark --- after the
parties’ relationship had ended --- on its website. That aspect of the court’s summary judgment
order is not before us on appeal.
20
some of the retail outlets engaged in unauthorized “uses” of the Lok-Lift mark, in
that the Lok-Lift mark continued to appear on retail shelf tags and shelf crates
containing the Hold-It product. Additionally, some retail store receipts allegedly
indicated that the product the customer had received was the Lok-Lift product,
when, in fact, the customer had bought the Hold-It product. Once the Hold-It
product replaced the Lok-Lift product in the retail outlets, any continued
“place[ment]” of the Lok-Lift mark on “goods” or “displays” at the level of the
retail stores --- in connection with the sale of any product other than Optimum’s
Lok-Lift product --- arguably constituted an unauthorized “use in commerce” of
Optimum’s Lok-Lift mark. See 15 U.S.C. § 1127; see Coca-Cola Co. v. Overland,
Inc., 692 F.2d 1250, 1252 (9th Cir. 1982) (stating, where a defendant-restaurant
gave store customers Coca-Cola when they asked for Pepsi, and indicated on store
receipts that its customers were getting “Coke” when they were in fact getting
“Pepsi,” that “[t]aken alone, such conduct . . . appears to present a clear-cut case of
trademark infringement”). Thus the parties’ dispute does not center on whether the
mark “Lok-Lift” was “used” in commerce, at the level of the retail stores, without
Optimum’s permission.
Rather, the pivotal question for us on appeal is whether these alleged
unauthorized “uses” of the mark at the retail level should be attributable to
21
defendant-appellee HCA, as the distributor of both the Lok-Lift and Hold-It
products. Optimum argues that it has presented sufficient evidence to establish
that HCA “used” its Lok-Lift mark at the retail level, without its consent, and that
it should be held liable for trademark infringement. 15 U.S.C. § 1114(1)(a). It
contends that, taken together, there was sufficient evidence from which a jury
could conclude that HCA was responsible for the “place[ment]” of the Lok-Lift
mark on “goods” or “displays” at the retail level, and that it can be held liable as a
result. See 15 U.S.C. § 1127. Specifically, Optimum argues that HCA designed
the Hold-It product, including its UPC code and its product identification number
(both of which were identical to Lok-Lift’s); that HCA distributed the Hold-It
product to retailers, such as Home Depot, without sufficiently advising them that it
was a different product; that HCA provided the underlying product information
that these retailers relied upon to generate the shelf tags, product descriptions, and
product labels inside their stores; and that HCA was responsible for ensuring that
its products were properly labeled and identified, and were not erroneously
intermingled, on the retail store shelves.
In response, HCA argues that the district court was correct in concluding
that the infringements at the retail level --- if any --- were not attributable to HCA.
It contends that “[HCA] did not have control over retailers’ databases, such as at
22
Home Depot, and [] could not itself print a shelf tag to apply in Home Depot retail
stores.” Br. of Appellee at 24; see also id. at 37. HCA refers us to the court’s
finding, in its summary judgment order, that “there is no evidence that HCA was
responsible for generating the Home Depot pricing stickers or shelving labels . . .
or for placing the allegedly infringing stickers on the shelves.” R-170 at 8.
In this case, we find, as the district court did, that the evidence produced by
Optimum was insufficient to establish that HCA “used” its Lok-Lift mark at the
level of the retailers, such that it could be held directly liable for a trademark
infringement. While there is some evidence that the replacement of the Lok-Lift
product with the Hold-It product at retail stores may have resulted in confusion, in
at least some retail stores, and while that confusion may have resulted in the
unintentional co-mingling and mislabeling of the Hold-It product with the Lok-Lift
mark on some store shelves, there is no evidence that HCA itself “misused” the
Lok-Lift mark, that is, that it “placed” the Lok-Lift mark on “goods” or “displays”
at the level of the retail stores. See 15 U.S.C. § 1127.
On the contrary, the evidence makes clear that HCA ceased its “use in
commerce” of the Lok-Lift mark when it made the switch over to the Hold-It
product and began selling the Hold-It product to retail stores. There is no evidence
that HCA ever sold its Hold-It product with the Lok-Lift mark affixed to it, or that
23
HCA identified its product as anything other than Hold-It at the retail level. See,
e.g., R-86 at 66 (testimony of Sean McDermott that he had no evidence that the
Hold-It product was sold with the Lok-Lift mark on it); R-87 at 197-98 (testimony
of Vickie McDermott that she never saw the Hold-It product being sold with the
Lok-Lift mark on it); R-95 at 136-37 (testimony of Lewis J. McDermott, same).
In fact, HCA advised its retailers, prior to the implementation of the new
Hold-It product that it would be switching over to a new “rug gripper product” to
its retailers, and that it would no longer be selling the “old version.” Br. of
Appellee at 18-19; R-128 at 209. HCA’s Randolph Lear testified that he made it
clear to HCA’s sales force that the Lok-Lift product would no longer be available
after HCA transitioned to the Hold-It product, and that they were to advise their
customers of this fact. A letter written by HCA to Home Depot informed the
company that HCA would be rolling out a “new technology for rugs and mats”
known as the Hold-It product, and that this product would be “replacing our
current Rug Gripper” product. R-310 at 65.
In short, Optimum has failed to present sufficient evidence that HCA was
responsible for the alleged “misuses” of the Lok-Lift mark at the level of the retail
stores, evidence that it was required to submit in order to withstand summary
24
judgment on its trademark infringement claim.8 The district court acted properly in
concluding that there was insufficient evidence of a “use” of the Lok-Lift mark at
the retail level that would support a claim for direct trademark infringement against
HCA.
Optimum suggests in its appeal that the district court should have permitted
it to proceed to trial on a claim of contributory trademark infringement, as an
alternative grounds for liability. We have long recognized that a distributor in the
chain of commerce, such as HCA, may be held contributorily liable for a direct
trademark infringement by a merchant to whom it distributes a product, where
there is evidence that the distributor “intentionally induce[d] [the merchant] to
infringe another’s trademark or . . . knowingly participated in a scheme of
trademark infringement.” See Mini Maid Servs. Co. v. Maid Brigade Sys., Inc.,
967 F.2d 1516, 1522 (11th Cir. 1992) (adopting the contributory trademark
liability standard of Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 853-54,
102 S. Ct. 2182, 2188 (1982)); see also Bauer Lamp Co., Inc. v. Shaffer, 941 F.2d
8
While Optimum does present evidence that the Hold-It product appeared in stores above
tags bearing the Lok-Lift mark, and that Hold-It products sat on retail shelves in display cases
erroneously denoted with the Lok-Lift mark, it fails to present any evidence that HCA either
placed the Lok-Lift mark on the store shelving, or that it placed the Hold-It product in Lok-Lift
display cases. As the district court found, “there is no evidence that HCA was responsible for
generating the Home Depot pricing stickers or shelving labels . . . or for placing the allegedly
infringing stickers on the shelves.” R-170 at 8. The alleged misuses of the Lok-Lift mark, if
any, are attributable to the retail stores, but not to HCA.
25
1165, 1171 (11th Cir. 1991) (“A person who knowingly participates in furthering
the [] infringement is liable as a contributing party.”). Optimum contends that it
presented evidence that its mark was directly infringed at the level of the retail
stores–a contention, as we noted earlier, that does not appear to be disputed by the
parties here–and that it presented evidence that HCA “knowingly participated” in
that infringement by its conduct. See Mini Maid, 967 F.2d at 1522. Optimum
suggests that HCA’s conduct --- in using the same UPC code and product
identification number as the Lok-Lift product, in providing all of the relevant
product information to the retailers, in failing to advise retail stores to update their
systems to reflect the new Hold-It product, and in visiting stores to observe product
displays --- establishes that HCA was a “knowing participant” in the infringement
at the level of the retail stores, such that it should be held contributorily liable for
the trademark infringements of the retailers. Under this theory, HCA knowingly
contributed to the co-mingling at the retail level --- in which Hold-It products
appeared above shelf tags bearing the Lok-Lift mark, and Hold-It products sat on
retail store shelves in display cases denoted with the Lok-Lift mark --- and, as a
result, it should be held secondarily responsible for those acts.
There are problems with this theory in this case, however. First, as the
district court noted, Optimum failed to properly plead a claim for contributory
26
trademark infringement; its complaint is devoid of any mention of holding HCA
contributorily --- as opposed to directly --- liable for the alleged infringements of
Optimum’s Lok-Lift mark. In fact, Optimum’s complaint makes clear that its
trademark infringement claim is based on HCA’s alleged “misuse” of the mark, not
the retailers’. See R-1 at 34 (“Henkel has used Optimum’s trademarks without
authorization . . . . ”); id. (“Henkel has used the Lok-Lift Rug Gripper trademarks
without the authorization of Optimum. . . . Henkel’s activities constitute trademark
infringement . . . .”); id. (“Henkel’s infringement is wilful . . . .”). Optimum’s
complaint does not allege that HCA was a “knowing participant” in the separate,
direct infringements at the retail level; rather, the complaint clearly is based on
alleged direct infringements, by HCA, of the Lok-Lift mark. Thus, to permit
Optimum to now pursue a trademark infringement claim based on a contributory
liability theory would require us to convert what is plainly a direct trademark
infringement claim into one for contributory infringement. This is a step we are
loath to take, and one for which there appears to be no authority in our circuit.
Indeed, Optimum can refer us only to a district court opinion, from a different
circuit, in support of the proposition that a court may alternatively construe a claim
alleging a “violat[ion of] § 1114(1)” as a claim for contributory trademark
infringement --- and address that claim on the merits --- when such a claim has not
27
been explicitly pled. See Nat’l Fed’n of the Blind, Inc. v. Loompanics Enters.,
Inc., 936 F. Supp. 1232, 1243-44 (D. Md. 1996).
Moreover, although there is no separate statutory provision for contributory
trademark infringement, and although both actions stem from the general
prohibitory language of 15 U.S.C. § 1114(1), the case law suggests that a
contributory infringement claim requires, at a minimum, both an allegation of a
direct infringement by a third party, and an allegation of an intentional or knowing
contribution to that infringement by the defendant. See, e.g., Inwood, 456 U.S. at
850, 102 S. Ct. at 2186 (stating that Ives “allege[d] that the [manufacturers]
contributed to the infringing activities of pharmacists who mislabeled [generic
drugs]”) (emphasis added); Ciba-Geigy Corp. v. Bolar Pharm. Co., Inc., 747 F.2d
844, 849 (3d Cir. 1984) (stating that the alleged violation “derived from allegations
that [the defendants] manufacture and distribution of [] capsules identical to [the
plaintiff’s] capsules, with reasonable anticipation or the intent that they would be
illegally substituted for [the plaintiff’s] capsules, would constitute contributory
trademark infringement”) (emphasis added). To be sure, a number of Lanham Act
cases suggest that contributory trademark infringement is typically alleged as a
separate count. See, e.g., Lockheed Martin Corp. v. Network Solutions, Inc., 194
F.3d 980, 983 (9th Cir. 1999) (where plaintiff alleged one claim for contributory
28
infringement and a separate claim for direct infringement); Fonovisa, Inc. v.
Cherry Auction, Inc., 76 F.3d 259, 261 (9th Cir. 1996) (where the count for
contributory trademark infringement was specifically alleged).
We decline Optimum’s invitation to construe its case as one for contributory
trademark infringement, where the elements in support of such a claim have not
been pled. The Tenth Circuit declined a similar opportunity. See Procter &
Gamble Co. v. Haugen, 317 F.3d 1121, 1128-29 (10th Cir. 2003) (where the
plaintiff never used the phrase “contributory infringement,” and where the plaintiff
only stated that the defendant “implied[ly] approv[ed]” of the infringing acts,
stating that the court was “reluctant to adopt [such a] broad definition of notice
pleading so as to include a claim for contributory infringement”). Similar to the
Tenth Circuit, we conclude that, absent some allegation of a “contribution” to a
direct trademark infringement or of a “knowing participation” in a direct trademark
infringement, Mini Maid, 967 F.2d at 1522, we will not construe a claim for direct
trademark infringement under 15 U.S.C. § 1114(1) as being one for contributory
trademark infringement.9
9
Moreover, even were we to permit Optimum to proceed on a contributory trademark
infringement claim against HCA, based on the incidents at the retail stores, such a claim would
still be highly problematic. This is so because a claim of contributory infringement against HCA
would require a preliminary finding of a direct infringement, presumably by the retailers who
mislabeled the Hold-It product with the Lok-Lift mark. See, e.g., Procter & Gamble, 317 F.3d at
1128 (a contributory trademark infringement action requires the defendant’s knowledge of a
direct infringement); AT&T Co. v. Winback & Conserve Program, Inc., 42 F.3d 1421, 1432 (3d
29
Finally, we note that there is no evidence in the record of Optimum’s
“knowing participation” in the alleged direct infringements of the Lok-Lift mark at
the retail level–evidence that would be necessary to sustain a claim based on a
theory of contributory trademark infringement. On the contrary, as we observed
earlier, HCA warned its retail partners in advance that it would be replacing the
Lok-Lift product with the Hold-It Product and that it would be discontinuing its
sale of the former. R-128 at 209; R-310 at 65. Moreover, when there were
occasional instances of co-mingling at the level of the retail stores, HCA worked to
ensure that the problem was rectified and that Hold-It was no longer labeled on
store shelves with the Lok-Lift mark. See R-312 at 85, 91 (testimony of Home
Depot’s Eric Demaree that HCA worked to ensure that any labeling problems were
fixed at its 1,500 retail stores). The record is devoid of evidence of a “knowing
Cir. 1994) (same). Here, however, Optimum would have us simultaneously find that the retail
stores, such as Home Depot, directly infringed (and that HCA contributed to those
infringements), while also finding that it was the retail stores that suffered confusion for
purposes of a trademark infringement analysis. See Br. of Appellant at 29-30 (stating, as
evidence of actual confusion, that sales associates in retail stores expressed confusion about the
products; that retail stores used the Lok-Lift mark to identify the Hold-It product at the point of
sale, suggesting that they were confused; and that the retailers “use[d] ‘Lok-Lift’ on shelf tags
and receipts . . . in retail stores,” thereby evincing actual confusion). Optimum cites to no
authority --- from this or any other circuit --- suggesting that an entity can be both a direct
infringer of a trademark and the party that suffers the injury of confusion from that infringement.
In other words, we fail to see how the retail stores could simultaneously have directly infringed
on the Lok-Lift mark (which would perforce be a requirement of a contributory infringement
claim against HCA) while also being the ones who suffered actual confusion from the alleged
infringement. This internal inconsistency further militates against permitting Optimum’s claim
of contributory infringement to go forward.
30
participation” on the part of HCA in the alleged direct infringements at the retail
level, evidence that would be necessary for Optimum to withstand summary
judgment on a claim of contributory trademark infringement.
For these reasons, we conclude that the district court acted properly in
declining to address a separate claim of contributory trademark infringement
against HCA. Because such a claim was not pled by Optimum, the district court
was not required to address such a claim in ruling on HCA’s summary judgment
motion.
In summary, in reviewing Optimum’s trademark infringement action against
HCA based on the incidents in the retail stores, we conclude that Optimum failed
to satisfy the first prong of a trademark infringement claim --- that is, an
unauthorized “use” of the mark by HCA at the retail level. Because Optimum
failed to present sufficient evidence to support the “use” requirement of a
trademark infringement action, we need not address the second step of the analysis,
that is, whether the alleged misconduct at the retail stores (if any) was “likely to
cause confusion, or to cause mistake or to deceive.” See Burger King, 710 F.2d at
1491; cf. Alliance Metals, Inc. of Atlanta v. Hinely Indus., Inc., 222 F.3d 895, 907
(11th Cir. 2000) (applying the likelihood of confusion analysis); Frehling Enters.,
Inc. v. Int’l Select Group, Inc., 192 F.3d 1330, 1335 (11th Cir. 1999) (same). Any
31
alleged confusion in this case, even if present, was not directly attributable to
HCA, the alleged infringer. Since Optimum’s claim for trademark infringement ---
predicated on the co-mingling on retail shelves --- fails on the “use” prong, we do
not undertake the “likelihood of confusion” analysis. We agree with the district
court that HCA was entitled to partial summary judgment on Optimum’s trademark
infringement claim, based on the incidents at the retail stores.
2. Optimum’s Count of Unfair Competition
Optimum also appeals the district court’s grant of partial summary judgment
on its claims of unfair competition and unfair trade practices. Optimum brought an
unfair competition claim against HCA under section 43(a) of the Lanham Act, 15
U.S.C. § 1125(a). Optimum also lodged a claim under Georgia’s analogous state
law, the Georgia Uniform Deceptive Trade Practices Act, O.C.G.A. § 10-1-372(a).
The district court granted summary judgment in favor of HCA on both of these
counts, at least with respect to the alleged incidents of confusion at the level of the
retail stores.10 Optimum contends that this was in error.
Section 43(a) of the Lanham Act creates a “federal cause of action for unfair
competition.” Univ. of Fla. v. KPB, Inc., 89 F.3d 773, 775 (11th Cir. 1996) (per
10
As with the trademark claim, the court permitted Optimum to proceed on its claims of
unfair competition based on HCA’s alleged conduct on its websites, but it otherwise granted
partial summary judgment for HCA.
32
curiam) (citation omitted). The pertinent statutory provision prohibits the “use[] in
commerce [of] any word, term, name, symbol, or device, or any combination
thereof, or any false designation of origin, false or misleading description of fact,
or false or misleading representation of fact” that 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.” 15 U.S.C. § 1125(a)(1)(A). Section 43(a)’s general purpose is to
“protect persons engaged in commerce against unfair competition.” See Dastar
Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 28, 123 S. Ct. 2041,
2045 (2003) (citing 15 U.S.C. § 1127) (alterations omitted). More germane to the
present action, however, section 43(a)’s language --- which prohibits a “false
designation of origin”--- has been construed by the courts as creating a federal
action for “passing off,” which occurs “when a producer misrepresents his own
goods or services as someone else’s.” Id. at 28 n.1, 123 S. Ct. at 2045 n.1;
Thompkins v. Lil’ Joe Records, Inc., 476 F.3d 1294, 1310 (11th Cir. 2007).
In this case, Optimum contends that HCA “pass[ed] off its Hold-It Product
as if it were Optimum’s Lok-Lift Product or associated with Optimum,” that is,
that it “substitut[ed] its product for that of another while misrepresenting the
source of that product to the buyer.” Br. of Appellant at 40. Consequently,
33
Optimum argues that it has a viable section 43(a) claim against HCA based on the
product substitution at the level of the retail stores, and that the district court erred
in granting partial summary judgement for HCA on this claim.
We disagree. The Supreme Court has made clear that, in the context of a
“passing off” / “false designation of origin” claim under section 43(a), the use of
the word “origin” refers to a false or misleading suggestion as to “the producer of
the tangible goods that are offered for sale.” Dastar, 539 U.S. at 37, 123 S. Ct. at
2050. In other words, a passing off claim requires a showing that the defendant
falsely represented that the plaintiff was the “source” of the goods when it was not,
that is, that it falsely suggested that the plaintiff was “the producer of the tangible
product sold in the marketplace.” Id. at 31, 123 S. Ct. at 2047.
Here, there is no evidence that HCA substituted its Hold-It product on store
shelves while suggesting that Hold-It’s source was Optimum (the manufacturer of
the Lok-Lift product). In fact, the record is bereft of any evidence that HCA ever
represented Hold-It as being manufactured by anyone other than HCA. Because
HCA did not “misrepresent[] [its] own goods or services as [being] someone
else’s,” i.e. Optimum’s, and because HCA did not falsely suggest that Optimum
was “the producer of the [Hold-It product] sold in the marketplace,” Optimum has
failed to allege evidence to support a claim of “passing off” at the level of the retail
34
stores. See id. at 28 n.1, 31, 123 S. Ct. at 2045 n.1, 2047. As a result, the district
court acted properly in granting partial summary judgment on Optimum’s section
43(a) claim.11
3. Optimum’s Counts of Breach of Confidentiality, Breach of Fiduciary
Duty, and Fraudulent Concealment
Optimum also appeals the district court’s grant of summary judgment on its
claims of breach of confidentiality and breach of fiduciary duty, and fraudulent
concealment. The district court granted summary judgment in favor of HCA on
these three counts, based on its conclusion that the parties were not in a
confidential or a fiduciary relationship, and, therefore (failing a contractual
requirement) there was no legally imposed duty that HCA disclose to Optimum the
fact that it was replacing the Lok-Lift product with the Hold-It product.
Where two parties enter into a confidential relationship, Georgia law will
impose a duty on the parties to disclose material facts to one another. See
Williams v. Dresser Indus., Inc., 120 F.3d 1163, 1167 (11th Cir. 1997) (one can be
liable for suppression of material facts under Georgia law only if it is first shown
that there is a relationship creating the duty to disclose). The burden is on the
11
Because the analysis of a Georgia unfair competition claim is “co-extensive” with the
analysis of a Lanham Act claim, see Step Co. v. Consumer Direct, Inc., 936 F. Supp. 960, 967
(N.D. Ga. 1994), HCA was entitled to partial summary judgment on Optimum’s Georgia unfair
competition claim as well.
35
plaintiff to establish that a confidential relationship existed between the parties to
the agreement. Bogle v. Bragg, 548 S.E.2d 396, 402 (Ga. Ct. App. 2001) (citation
omitted). Generally speaking, “business relationships are not confidential
relationships,” nor is “[t]he mere fact that one [party] reposes trust and confidence
in another’s integrity.” Williams, 120 F.3d at 1168. Rather, in order for a business
arrangement between two parties to rise to the level of a confidential relationship,
it must be shown either that the parties have a long history with each other, or that
the arrangement was not at “arm’s length,” but was in the nature of a legal
partnership or a joint venture. See id. A confidential relationship does not arise,
however, where the business transaction is merely an arrangement in which each
party is “attempting to further [its] own separate business objectives,” rather than
entering into some sort of joint venture. Id.
Mindful of these limitations, Optimum argues that the manufacturer-
distributor relationship between Optimum and HCA was in the nature of a “joint
venture,” or a legal partnership, and, therefore, that the parties stood in both a
confidential and a fiduciary relationship to one another–such that HCA had a legal
obligation to disclose its plans with respect to replacing Lok-Lift with Hold-It. We
disagree. Indeed, there is no evidence that the relationship was anything more than
an informal business agreement between a manufacturer and a distributor, one
36
which was terminable at will by the parties. As HCA points out, merely calling the
relationship a joint venture or a partnership does not make it so. “Nomenclature is
not dispositive,” and “whether a partner in a joint venture is a party to a legal
partnership depends on the rights and responsibilities assumed by the joint
venturers, i.e., a sharing of the fruits and losses with an equal right, expressed or
implied, to direct and control the conduct of the enterprise.” Jerry Dickerson
Presents, Inc. v. Concert / S. Chastain Promotions, 579 S.E.2d 761, 768 (Ga.
Ct. App. 2003) (alterations, citations, and internal quotations omitted).
Here, Optimum has not presented any evidence that the parties split the
profits of their business endeavor, nor has it established that the parties had an
equal right to “control” the putative business enterprise. Rather, the record makes
clear that these two parties entered into a standard distributor relationship --- one in
which Optimum manufactured and supplied its product and HCA distributed it to
retailers. Optimum has not presented sufficient evidence to create a triable issue of
fact as to whether the relationship with HCA was in the nature of either a legal
partnership or a joint venture, nor is there sufficient evidence to suggest a
confidential or fiduciary relationship. “[W]hen the facts do not authorize a finding
of a confidential relationship, the trial court does not err in deciding the issue as a
matter of law.” Williams, 120 F.3d at 1168. Accordingly, the district court acted
37
properly in granting summary judgment in favor of HCA on Optimum’s claims for
breach of confidentiality and breach of fiduciary duty. And because one’s duty to
disclose material facts is only imposed when the parties stand in such a relationship
to one another, Bogle, 548 S.E.2d at 401, the district court also acted properly in
granting summary judgment for HCA on Optimum’s claim of fraudulent
concealment.
4. Optimum’s Counts of Fraud and Negligent Misrepresentation
Optimum also appeals the district court’s grant of summary judgment in
favor of HCA on Optimum’s claims of fraud and negligent misrepresentation. In
order to establish these two claims, a plaintiff must show five elements: (1) that
false representations were made; (2) that the defendant knew they were false; (3)
that the representations were made either intentionally or negligently; (4) that the
plaintiff reasonably relied upon the representations; and (5) that harm proximately
resulted from that reliance. Williams, 120 F.3d at 1167 (fraud); MacIntyre &
Edwards, Inc. v. Rich, 599 S.E.2d 15, 19 n.14 (Ga. Ct. App. 2004) (negligent
misrepresentation).
The district court found that summary judgment was appropriate for HCA on
both counts, because Optimum had failed to present any evidence of a false
statement on the part of HCA. The court further found that, even assuming that
38
HCA’s statement that it was preparing for a packaging change was false, summary
judgment would still be appropriate, because there was no evidence that Optimum
suffered actual damages as a result its reliance on that statement. See, e.g., Stiefel
v. Schick, 398 S.E.2d 194, 196 (Ga. 1990) (stating that a party “must show that
actual damages, not simply nominal damages, flowed from the fraud alleged”)
(quotations and citation omitted).
We agree that HCA was entitled to summary judgment on Optimum’s
claims for fraud and negligent misrepresentation, because Optimum has failed to
provide evidence that HCA made a false representation to Optimum. Optimum
contends that HCA’s statement, in late 2001, that it was contemplating a
“packaging change” with respect to the Lok-Lift product --- and that therefore
Optimum should abstain from ordering additional packaging inventory --- was
materially false. See R-1, Exh. 10 (stating that HCA would be “planning a
packaging change” to the Lok-Lift Rug Gripper packaging, and that, as a result,
Optimum was “not to order more [Lok-Lift] packaging without [HCA’s] okay”);
see also R-88 at 142-43; R-127 at 202. Optimum asserts that this statement was
false because, at the time the statement was made, HCA was in reality
contemplating a full-blown substitution of Hold-It for Lok-Lift product, rather than
merely a packaging change.
39
As the district court found, however, Optimum has failed to demonstrate
how --- if at all --- the statement that HCA would be making a “packaging change”
to the Lok-Lift product was false. In fact, HCA maintains that this statement was
actually true; it points out that, in the wake of the Henkel-Manco merger and the
name change from Manco to Henkel Consumer Adhesives in 2002, HCA’s parent
company, Henkel Corporation, was redesigning the packaging for a number of its
product lines, including carpet tape. Even if this were not so, HCA’s statement to
Optimum that it would be changing the packaging of the Lok-Lift product was not
false, because HCA did, in fact, change the packaging, tweaking both the design
and appearance of the package when it switched to the Hold-It product in late
2002. While Optimum contends that HCA was contemplating more than a mere
packaging change --- indeed, it was an outright product replacement --- the factual
statement that HCA would, in the future, be changing the design and appearance of
the Lok-Lift product’s packaging was not false. Because Optimum has failed to
present evidence that HCA made a statement that was false,12 the district court
acted properly in concluding that HCA was entitled to summary judgment on
Optimum’s claims of fraud and negligent misrepresentation.
12
Nor does HCA’s alleged statement to a Home Depot representative that the Lok-Lift
product was manufactured by HCA in its Ohio facility support Optimum’s claim for fraud. That
statement is false, but it was not made to or relied upon by Optimum. Such a statement could
feasibly give rise to a cause of action for fraud by Home Depot, but not by Optimum.
40
B. Appeal of the District Court’s Judgment as a Matter of Law in Favor of HCA
Finally, Optimum challenges the district court’s decision to grant HCA’s
renewed motion for judgment as a matter of law, post-trial, on Optimum’s
trademark infringement and unfair competition claims. We review a district
court’s ruling on a motion for judgment as a matter of law under Rule 50 de novo,
examining the evidence in the light most favorable to the non-moving party --- in
this case, Optimum. Doe v. Celebrity Cruises, Inc., 394 F.3d 891, 902 (11th Cir.
2004) (citation omitted).
Here, as discussed above, the trial proceedings were limited to the issue of
HCA’s conduct on its websites, and whether HCA’s conduct on the websites
constituted a trademark infringement or unfair competition. Optimum was
precluded from introducing any evidence as to the alleged misuses of the Lok-Lift
mark and product at the level of the retailers; as the court explained to the jury in
an early limiting instruction, “[t]he one single claim that I have allowed to go
forward in this case is the alleged trademark infringement that arose as a result of
the defendant’s use of the Lok-Lift mark on its website. That is the only claim that
you will be allowed to consider in this case.” R-12 at 116-117. Optimum’s trial
witnesses were similarly limited in their testimony to the question of whether HCA
misused the Lok-Lift mark or the Lok-Lift product in the context of the website;
41
they were not permitted to mention allegations of misconduct at the retail level.
After the jury was unable to reach a verdict on Optimum’s trademark and
unfair competition claims based on the website conduct, the court declared a
mistrial. HCA then renewed its motion for judgment as a matter of law, pursuant
to Rule 50(b) of the Federal Rules of Civil Procedure. The district court granted
the motion, based on its determination that Optimum had failed to establish a
connection between the conduct (HCA’s use of the mark on the website) and the
expert’s damages figure ($7.6 million). Because Optimum had failed to produce
evidence of “damages caused by the use of the Lok-Lift mark on [HCA]’s web
sites,” and, accordingly, because there was “no legally sufficient evidentiary basis
for a reasonable jury to find for Optimum on the issue of damages,” the court
awarded judgment as a matter of law to HCA on Optimum’s trademark
infringement and unfair competition claims. R-287 at 13. Optimum contends that
this was in error.
Under Rule 50(b), a party may renew its motion for judgment as a matter of
law after the jury has returned its verdict, if there is no legally sufficient
evidentiary basis for a reasonable jury to find for the non-moving party. See
Lipphardt v. Durango Steakhouse of Brandon, Inc., 267 F.3d 1183, 1186 (11th Cir.
2001). “Regardless of timing, however, in deciding on a Rule 50 motion a district
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court’s proper analysis is squarely and narrowly focused on the sufficiency of
evidence.” Chaney v. City of Orlando, 483 F.3d 1221, 1227 (11th Cir. 2007).
That is, “[t]he question before the district court regarding a motion for judgment as
a matter of law remains whether the evidence is ‘legally sufficient to find for the
party on that issue,’ regardless of whether the district court’s analysis is undertaken
before or after submitting the case to the jury.” Id. (citing Fed. R. Civ. P.
50(a)(1)); see also Cleveland v. Home Shopping Network, Inc., 369 F.3d 1189,
1192 (11th Cir. 2004) (judgment as a matter of law should only be granted “when
there is no legally sufficient evidentiary basis for a reasonable jury to find for that
party on that issue”).
As part of its case-in-chief, Optimum was required to establish that HCA’s
alleged Lanham Act violations proximately caused it to suffer monetary damages.
See, e.g., Babbit Elecs., Inc. v. Dynascan Corp., 38 F.3d 1161, 1182 (11th Cir.
1994) (stating that a Lanham Act claim requires evidence that the plaintiff
“suffered actual damages,” that is, that “‘the loss was caused by defendants’
actions’”) (citation omitted); Bandag, Inc. v. Al Bolser’s Tire Stores, Inc., 750 F.2d
903, 919 (Fed. Cir. 1984) (stating that a Lanham Act claimant must show
“tangible, recoverable damages”). Here, Optimum attempted to establish its
damages by presenting an expert witness, Daniel Centampo, who testified in
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support of Optimum’s claims. However, in accordance with the court’s summary
judgment order, Centampo’s trial testimony was limited to the question of how
much of his damage estimate --- a figure of $7.6 million, which had been set forth
in his pre-trial report --- was actually attributable to HCA’s conduct on its website.
When pressed in his testimony, Centampo repeatedly stated that his damages
report had failed to mention HCA’s website, or to discuss the injury that Optimum
had suffered from HCA’s alleged use of the Lok-Lift mark in the context of the
Internet. See R13 at 340, 341, 342, 347, 355; R-14 at 388-89. Eventually,
Centampo conceded that his damage report had been general in nature, that it had
been prepared prior to the court’s summary judgment ruling, and that,
consequently, it failed to“separate out” the claimed damages that were actually
attributable to HCA’s conduct on the website. R-14 at 581. Other than this
testimony, Optimum did not present any other evidence to establish its claimed
damages.
Upon review, we discern no error in the district court’s decision to grant
judgment as a matter of law in favor of HCA. As the court observed, Optimum
introduced no evidence of the actual monetary damages that it suffered from
HCA’s alleged trademark infringements and unfair competition on the company’s
website. Consequently, Optimum failed to present “a sufficient evidentiary basis
44
for the jury to find” that it suffered monetary injury as a result of HCA’s alleged
misconduct. Cleveland, 369 F.3d at 1194. Because there was “no legally
sufficient evidentiary basis for a reasonable jury to find for Optimum on the issue
of damages,” R-287 at 13, we conclude that the court acted properly in awarding
judgment as a matter of law to HCA on Optimum’s trademark infringement and
unfair competition claims.
III. CONCLUSION
Optimum has raised a number of challenges to the district court’s disposition
of its action against HCA, including the arguments that: (1) the district court erred
in granting partial summary judgment in favor of HCA on Optimum’s claims of
trademark infringement and unfair competition; (2) the court erred in granting
summary judgment in favor of HCA on Optimum’s remaining claims of breach of
confidential relationship, breach of fiduciary duty, fraudulent concealment, fraud,
and negligent misrepresentation; and (3) the court erred in granting HCA’s motion
for judgment as a matter of law on Optimum’s trademark and unfair competition
claims, due to a dearth of evidence establishing Optimum’s damages. Having
carefully reviewed the record, we AFFIRM both the district court’s summary
judgment order and its order granting judgment as a matter of law.
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Optimum Technologies, Inc. v. Henkel Consumer Adhesives, Inc.
Court: Court of Appeals for the Eleventh Circuit
Date filed: 2007-08-22
Citations: 496 F.3d 1231
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