Masters v. UHS of Delaware, Inc.
631 F.3d 464
| 8th Cir. | 2011Background
- Masters licensed the MASTERS AND JOHNSON service mark to UHS in 1991 and again in 1995 for use in inpatient psychiatric treatment programs.
- License term ended in 2005; after failed negotiations, Masters and UHS parted ways, leading to a 2006 lawsuit by Masters alleging breach, Lanham Act infringement, and Missouri unfair competition.
- Masters presented evidence that UHS used the mark to promote programs unrelated to sexual dysfunction/trauma and to promote methods like yoga and dance in promotions and seminars.
- UHS argued equitable defenses (laches, acquiescence, estoppel) and that use stayed within the license; it produced evidence of payments and alleged lack of complaint during term.
- A nine-day jury trial resulted in a verdict for Masters on breach and infringement, with disgorgement of profits of $2.4 million and no damages found, and the court denied prejudgment interest to Masters.
- The district court affirmed the disgorgement award and denied prejudgment interest; on appeal, UHS challenged the remedies and the verdict structure, while Masters cross-appealed on prejudgment interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether equitable defenses bar Masters' claims | Masters argues defenses are fact-bound and should not bar liability. | UHS contends laches, acquiescence, and estoppel preclude relief. | District court properly submitted defenses to the jury; substantial evidence supports the defenses. |
| Scope of use under the licensing agreement | Masters contends use beyond treatment scope violated the license and infringed the mark. | UHS claims only treatment within the license; promo uses are not 'use in commerce'. | Use in promotional materials and seminars constituted use in commerce under the Lanham Act; liability upheld. |
| Propriety of the damages award (injunction vs profits; willfulness; actual confusion) | Masters seeks disgorgement of profits for willful infringement as appropriate relief. | Disagrees with monetary relief, argues need for actual confusion and proper willfulness standard. | Monetary relief via disgorgement is permissible for willful infringement; lack of actual confusion does not bar profits award. |
| Whether the verdict is internally inconsistent and must be harmonized | Masters argues no conflict in the verdicts. | UHS asserts inconsistency between no actual damages and profits award. | The verdict is harmonizable; the panel upheld the $2.4 million award by reconciling the findings. |
| Whether prejudgment interest should have been awarded to Masters | Masters seeks prejudgment interest as part of damages. | District court acted within discretion to deny interest. | District court did not abuse discretion; no prejudgment interest awarded. |
Key Cases Cited
- Hubbard Feeds, Inc. v. Animal Feed Supplement, Inc., 182 F.3d 598 (8th Cir.1999) (laches framework for trademark actions)
- Minn. Pet Breeders, Inc. v. Schell & Kampeter, Inc., 41 F.3d 1242 (8th Cir.1994) (disgorgement and equity in Lanham Act remedies)
- Co-Rect Prods., Inc. v. Marvy Advertising Photography, Inc., 780 F.2d 1324 (8th Cir.1985) (actual confusion and damages; remedial scope)
- Woodsmith Publ’g Co. v. Meredith Corp., 904 F.2d 1244 (8th Cir.1990) (actual confusion requirement discussed)
- Passmore v. Astrue, 533 F.3d 658 (8th Cir.2008) (non-binding dicta on confusion doctrine federal appellate)
- International Star Class Yacht Racing Ass’n v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749 (2d Cir.1996) (likelihood of confusion and remedies under Lanham Act)
- Wynn Oil Co. v. Am. Way Serv. Corp., 943 F.2d 595 (6th Cir.1991) (willful infringement and profits remedies)
- Gracie v. Gracie, 217 F.3d 1060 (9th Cir.2000) (monetary relief possibilities under Lanham Act without actual confusion)
- Conopco, Inc. v. May Department Stores Co., 46 F.3d 1556 (Fed.Cir.1994) (actual confusion as proof method and damages framework)