Max Rack, Inc. v. Core Health & Fitness, LLC
40 F.4th 454
6th Cir.2022Background
- Steve Skilken (Max Rack, Inc.) invented and trademarked the "Max Rack"; he licensed manufacture/distribution to Star Trac, later acquired by Core Health.
- The last Max Rack patent expired in November 2015; Core Health switched to selling an identical product as the "Freedom Rack."
- Max Rack alleged Core Health (a) continued selling "Max Rack" units after the license expired and (b) used the Max Rack name in marketing Freedom Racks to confuse consumers.
- A jury found for Max Rack, awarding $1,000,000 in damages and $250,000 in Core Health’s profits and finding infringement intentional; Core Health paid some royalties pretrial.
- The district court sustained liability, upheld the $250,000 profits award, doubled it to $500,000 (as a sanction-related enhancement), vacated the $1,000,000 damages award for lack of evidence of actual confusion/damage, awarded attorney’s fees to Max Rack, and entered an injunction; both parties appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of evidence for liability (likelihood of confusion / holdover use) | Continued unauthorized sales and stray post-termination uses of the "Max Rack" mark created a likelihood of confusion | Uses were minor/accidental; some sales were authorized under sell-off window; no actual consumer confusion | Affirmed: jury reasonably found infringement based on unauthorized post-termination sales and continued use of the mark; holdover-license rule applies |
| New trial under Rule 59 | Not addressed separately by plaintiff | Core Health argued verdict against weight of evidence and prejudiced by addendum testimony | Denied: district court did not abuse discretion; jury instruction and corrective measures sufficed |
| Jury profits award ($250,000) — sufficiency and causal link | Profits tied to either infringing Max Rack sales or sales of units bearing the infringing mark | Award lacked connection to infringing sales and relied on website stray references | Affirmed: award reasonably supported (could rest on sales of infringing Max Racks) |
| District court’s doubling (enhancement) of profits to $500,000 | Enhancement justified by discovery misconduct that impeded accurate profit calculation | Enhancement was punitive and contrary to §1117(a) because plaintiff proved sales and burden to prove costs shifted to defendant | Reversed: doubling abused discretion — enhancement impermissibly punitive and misapplied burden-shifting framework |
| Vacatur of $1,000,000 damages award | Damages were supported by the likelihood-of-confusion harms alleged | Defendant: no evidence of actual confusion or other recoverable injury | Affirmed: vacatur proper — plaintiff failed to prove actual marketplace injury or damage tied to stray references |
| Award of attorney’s fees under 15 U.S.C. §1117(a) (exceptional case) | Fees appropriate because infringement was intentional and ongoing into trial | Case was not "exceptional" under Octane — claims were closer to thin; discovery failings largely harmed defendant | Reversed: district court abused discretion; totality of circumstances did not support exceptional-case finding |
Key Cases Cited
- U.S. Structures, Inc. v. J.P. Structures, Inc., 130 F.3d 1185 (6th Cir. 1997) (continued unauthorized post-termination use by a licensee establishes likelihood of confusion)
- Hana Fin., Inc. v. Hana Bank, 574 U.S. 418 (2015) (considerations about whether likelihood-of-confusion is a factual question for the jury)
- Frisch’s Restaurants, Inc. v. Elby’s Big Boy of Steubenville, Inc., 670 F.2d 642 (6th Cir. 1982) (multi-factor likelihood-of-confusion analysis)
- Homeowners Grp., Inc. v. Home Mktg. Specialists, Inc., 931 F.2d 1100 (6th Cir. 1991) (likelihood-of-confusion treated as legal question reviewed de novo)
- Romag Fasteners, Inc. v. Fossil, Inc., 140 S. Ct. 1492 (2020) (intent is an important but non-categorical factor in awarding defendant’s profits under §1117(a))
- La Quinta Corp. v. Heartland Properties LLC, 603 F.3d 327 (6th Cir. 2010) (courts may adjust disgorgement awards under §1117(a) for equitable reasons)
- Balance Dynamics Corp. v. Schmitt Industries, Inc., 204 F.3d 683 (6th Cir. 2000) (actual consumer confusion generally required for marketplace damages; damage-control costs differ)
- Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014) ("exceptional" standard for fee awards requires a totality-of-circumstances inquiry; no rigid rule)