Progressive Emu, Inc. v. Nutrition & Fitness, Inc.
655 F. App'x 785
| 11th Cir. | 2016Background
- Plaintiff (Alabama emu-oil producer) and Defendant (North Carolina health-products distributor) entered a 2003 Agreement (with later amendments) under which Defendant bought emu oil from Plaintiff, paid per-gallon prices, and paid monthly royalties (8% on Blue Emu, later only Blue Emu after 2008 amendment).
- A Letter of Intent earlier promised joint ownership of trademarks, but the 2003 Agreement was silent on ownership and limited other IP uses; Defendant filed a federal trademark application for “Blue Emu” on May 3, 2002 and later obtained registration.
- Relations broke down in 2011–2012: disputes over supply and resale of oil; Defendant suspended royalty payments in March 2012 and began sourcing third-party oil in April 2012; Plaintiff sold oil to third parties in July–August 2012.
- Plaintiff sued seeking royalties and cancellation of Defendant’s trademark registration (alleging fraud in the application); Defendant counterclaimed for overpayments (April 2007–March 2008) based on barrel-size disputes.
- The district court granted summary judgment on multiple claims; the Eleventh Circuit affirmed some rulings, reversed others, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Agreement was abandoned in March 2012 so royalties ceased | Agreement remained in force; royalties due through term (Dec. 31, 2015) or at least through July/Aug. 2012 | Parties abandoned contract in Mar. 2012 (royalties suspended; no further performance) | Reversed district court: triable fact whether abandonment occurred; royalties may be owed after Mar. 2012 (remanded) |
| Whether royalties were conditioned on Plaintiff actually supplying oil | Royalties are contractual monthly payments "during the term" regardless of supply failures | Royalties are compensation for exclusive supply; if Plaintiff didn’t supply, no royalties owed | Court: Agreement’s plain language requires monthly royalties during term; Defendant cannot withhold royalties as additional remedy; jury may decide if Plaintiff used "best efforts" to supply |
| Whether Defendant made off-the-books (concealed) Blue Emu sales | Defendant underreported sales; quantity of oil purchased implies many unreported units → unpaid royalties | Defendant produced sales records and an accounting expert; claimed waste and samples explain discrepancies | Reversed district court: disputed factual issues (unaccounted-for oil) preclude summary judgment; remanded |
| Overpayment claim re: barrel-size (Apr 2007–Mar 2008) | Defendant: Plaintiff supplied 52.63-gallon barrels but billed as 55 gallons → overpayments | Plaintiff: change caused by third-party processor; parties’ later e-mail fixed future pricing and settled issues | Reversed district court: genuine dispute about past shortages; August 2008 emails modified pricing only prospectively; remanded |
| Cancellation of Blue Emu registration for fraud / licensee estoppel | Plaintiff: Defendant’s chairman falsely stated no one else had right to mark; Plaintiff had prior rights and disclosed mark under confidentiality | Defendant: Plaintiff lacked contract or common-law rights at filing; no fraud; laches/statute of limitations | Affirmed district court: Plaintiff lacked prior use or contractual right at filing; cannot meet clear-and-convincing standard for fraud; licensee-estoppel argument waived |
Key Cases Cited
- Bank of Brewton v. Travelers Cos., 777 F.3d 1339 (11th Cir. 2015) (summary-judgment standard and view of evidence)
- Angel Flight of Ga., Inc. v. Angel Flight Am., Inc., 522 F.3d 1200 (11th Cir. 2008) (elements for fraud in trademark application)
- Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes & of Malta v. Fla. Priory of the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem, Knights of Malta, Ecumenical Order, 702 F.3d 1279 (11th Cir. 2012) (clear-and-convincing burden for trademark fraud)
- Crystal Ent’t & Filmworks, Inc. v. Jurado, 643 F.3d 1313 (11th Cir. 2011) (two-part prior-use test for common-law trademark rights)
- Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188 (11th Cir. 2001) (prior-use and public-use requirements for common-law rights)
- Blue Bell, Inc. v. Farah Mfg. Co., Inc., 508 F.2d 1260 (5th Cir.) (internal or secret shipments to a distributor generally insufficient for common-law "use")
- Depree v. Thomas, 946 F.2d 784 (11th Cir. 1993) (arguments not raised below are forfeited on appeal)
- Main Station, Inc. v. Atel I, Inc., 378 S.E.2d 393 (Ga. App. 1989) (courts may not rewrite contracts)