940 F.3d 222
6th Cir.2019Background
- Evoqua (successor through multiple mergers to U.S. Filter/JWI) sued M.W. Watermark, LLC and Michael Gethin for contempt of a 2003 federal consent judgment, trademark and copyright infringement, and false advertising.
- A 2003 consent judgment permanently enjoined Watermark/Gethin from using U.S. Filter/JWI’s trademarks and proprietary information; the injunction referenced defendants’ "successors and assigns" but said nothing about the plaintiff’s successors/assignees.
- Siemens sold the water-technology business to SWT (later Evoqua) under a 2013 Carve-Out Agreement that transferred various business assets and "Know-how," while expressly excluding certain IP in other sections and separately addressing software.
- The district court initially found Watermark/Gethin in contempt, then vacated that contempt order and dismissed Evoqua’s contempt claim for lack of standing, holding the consent judgment was not assignable to Evoqua. It also granted summary judgment to defendants on copyright ownership, holding the Carve-Out Agreement unambiguously did not transfer copyrights.
- A jury later found for Evoqua on trademark infringement (no damages) and for defendants on false advertising; the district court denied defendants’ motions for attorney’s fees under the Lanham Act.
- On appeal the Sixth Circuit: held the consent judgment was assignable (vacating dismissal and remanding), held the Carve-Out Agreement is ambiguous as to copyright transfer (vacating summary judgment), and affirmed denial of Lanham Act fees.
Issues
| Issue | Evoqua's Argument | Watermark/Gethin's Argument | Held |
|---|---|---|---|
| Assignability/standing to enforce 2003 consent judgment | Consent judgment is assignable and Evoqua (as successor) may enforce it | Consent judgment was not assignable; silence implies no enforcement by successors (Thatcher-style) | Consent judgment not barred from assignment under Michigan law; district court erred — remanded to decide assignment actually occurred |
| Copyright ownership (Carve-Out Agreement) | Section 2.2’s sale of “Know-how” ("all information and data, irrespective as to whether ... protected by copyrights or not") reasonably includes copyrights | Agreement unambiguously excluded copyrights; copyrights weren’t transferred | Agreement is ambiguous on whether copyrights were transferred; summary judgment for defendants vacated and remanded for factual development |
| Attorney’s fees under Lanham Act (false advertising) | Evoqua pursued claim in good faith; evidentiary dispute on whether “OEM parts” was deceptive; claim not exceptional | Evoqua’s claim was baseless or pursued unreasonably; fees warranted as prevailing party | District court did not abuse discretion in denying fees; case not "exceptional" under Octane Fitness |
| Standard of law for interpreting federal consent decrees (concurrence) | (implicit) State-law contract rules appropriate per Sixth Circuit precedent | Federal common law should govern interpretation of federal consent decrees (Article III concerns) | Majority applied Michigan law (per Sault Ste. Marie); concurring opinion urged reconsideration in favor of federal-law approach |
Key Cases Cited
- United States v. Armour & Co., 402 U.S. 673 (1971) (consent decree scope must be discerned within four corners; preserves parties’ bargain)
- Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975) (consent decrees are not enforceable by nonparties even if intended beneficiaries)
- Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367 (6th Cir. 1998) (Sixth Circuit applies state contract law to interpret federal consent decrees)
- Thatcher v. Kohl’s Dep’t Stores, Inc., 397 F.3d 1370 (Fed. Cir. 2005) (absence of enforcement language can preclude assignment/enforcement by assignees)
- Roger Miller Music, Inc. v. Sony/ATV Publ’g, LLC, 477 F.3d 383 (6th Cir. 2007) (copyright transfer need not use particular language so long as intent is clear)
- Kohus v. Mariol, 328 F.3d 848 (6th Cir. 2003) (plaintiff must own copyright and prove copying for infringement)
- Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014) ("exceptional" standard for fee awards under patent statute, applied analogously to Lanham Act)
- ITT Continental Baking Co. v. United States, 420 U.S. 223 (1975) (aids to construction for consent decrees include surrounding circumstances and documents)