ITT INDUSTRIES, INC., v. WASTECORP. INC; Wastecorp International Investments Inc., Appellants.
No. 03-1309.
United States Court of Appeals, Third Circuit.
Argued Nov. 20, 2003. Decided Feb. 6, 2004.
289-298
Before RENDELL, BARRY, and MAGILL, Circuit Judges.
Wray‘s claim does not even meet the first condition of this test, because there was no error. The District Court properly ascertained the basis of the juror‘s concern, and properly reassured her. The juror indicated that she was no longer concerned. In response to defense counsel‘s request, the Court delivered a carefully worded cautionary instruction to the jury.
The situation did not require the Court to do more. Since thе presence of the observer did not have anything to do with the case, the juror had not been exposed to “prejudicial extra-record information,” and a more thorough examination of her knowledge was not required. See Government of the V.I. v. Dowling, 814 F.2d 134, 137 (3d Cir.1987) (expressing preference for a thorough, in camera examination of a juror who has been exposed to prejudicial extra-record information about a case). In fact, the juror here had not been exposed to any extra-record information about the case, prejudicial or otherwise. In such a situation, considerable deferеnce must be given to the trial judge to determine if there is a danger of prejudice. Id. With this deference in mind, we do not see any error in how the District Court handled the juror‘s concerns.
Wray also contends that the Court erroneously allowed a prosecution witness to testify to information that was not based on his first-hand knowledge. This claim is meritless. Senior Immigration Inspector Frank Teran testified that the customs procedures at the airport were the same on March 22, 2002, the date in question, as they were when Wray was admitted through the airport six weeks earlier. As a senior inspector who had been working in the St. Thomas airport for more than three years, Teran was able to testify to this information from direct personal knowledge, and such testimony was not speculation or an improper expression of his opinion. See
III.
For the above reasons, we will affirm Wray‘s conviction.
Norman H. Zivin, (Argued), Wendy E. Miller, Cooper & Dunham, New York, NY, for Appellee.
OPINION
BARRY, Circuit Judge.
This is a tale of one company‘s efforts to extend the terms of its contract with another company. Wastecorp Inc. (“Wastecorp“) obtained a license from ITT Industries, Inc. (“ITT“) to use the MARLOW trademаrk for a term of four years. There is no question that the integrated contract between the parties stipulated a four-year term. Nor is there any question that Wastecorp, despite the protestations of ITT, continued to use the MARLOW mark after the expiration of the four-year term. Intuitively, this case is easily resolved: Wastecorp, it appears, willfully breached its contract with ITT. Despite this intuitive clarity, however, a number of issues relating to trademark law muddy the waters. Following our examination of those issues, we are convinced that our intuition was correct and that the District Court‘s orders should be affirmed.
I. BACKGROUND
ITT is a multi-billion dollar, diversified, international conglomerate providing products and services in numerous industries, including Defense, Electronics, and Fluid Technologies. This case involves the MARLOW trademark, which ITT and its predecessors have used in association with industrial pumps since 1935. In the 1990s, ITT reorganized its industrial pumps division and divested some lines of pumps, including the plunger pumps division of MARLOW.*
After the Agreement expired in April 1997, Wastecorp continued to use the MARLOW mark. ITT sent Wastecorp cease and desist letters in June and December of 1997, and again in February and March of 1999.2 On April 5, 1999, ITT filed a complaint asserting claims for trademark infringement, unfair competition, trademark dilution, and breach of contract. Wastecorp answered, asserting affirmative defenses including promissory estoppel and fraud in the inducement in response to the contract claims, and counterclaimed for breach of contract based on ITT‘s alleged failure to support Wastecorp against third-party infringers.
Wastecorp, relying on the statements of its CEO, Walter Soja, alleged that ITT had promised to renew the Agreement and that had it not been for that promise, Wastecorp would not have entered into the Agreement. Wastecorp‘s own evidence, however, cuts against this allegation: its 1994 prospectus stated that licensing rights to the MARLOW mark expired after a four-year term, and that this time frame would allow the company to transition from selling “Marlow Plunger Pumps” to “Wastecorp Plunger Pumps.” Further, Mr. Soja stated that the issue of renewability was “purposely omitted” from the written contract.
Wastecorp also proffered two defenses to the infringement claims raised by ITT, and renews them on appeal. First, Wastecorp alleges that ITT abandoned its rights in the MARLOW mark with regard to industrial pumps. Second, it alleges that ITT fraudulently obtained its April 1998 renewal of the MARLOW trademark registration. Both of these defenses rest on an assertion that no use of the MARLOW mark on industrial or plunger pumps can be attributed to ITT between the expiration of the Agreement in April of 1997 and the renewal of the MARLOW registration in April of 1998.
On July 12, 2001, the District Court denied Wastecorp‘s
In addressing Wastecorp‘s abandonment defense, the District Court noted that ITT had sent a letter to its distributors in January 1998 regarding the transfer of certain MARLOW pumps to a different manufacturing facility. The Court also noted advertisements in trade magazines for pumps bearing the MARLOW mark in June and September 1998 in addition to a print advertisement in June 1999. Trade publications from trade shows in September 2000, December 2000, April 2001, and May 2001 also include ITT advertisements bearing the MARLOW mark on industrial pumps.
The parties then engaged in discovery concerning damages. Wastecorp again sought information regarding ITT‘s use of the MARLOW mark, asserting that ITT‘s non-use constituted an equitable factor that the District Court was obligated to consider. ITT objected and moved for summary judgment, seeking Wastecorp‘s profits as damages. See
II. DISCUSSION
The District Court had jurisdiction over ITT‘s Lanham Act claims based upon
All of the issues decided by the District Court were on motions for summary judgment. Review of the District Court‘s various grant of summary judgment is de novo. Goosby v. Johnson & Johnson Med., Inc., 228 F.3d 313, 318 (3d Cir.2000). In deciding a motion for summary judgment, the “test is whether there is a genuine issue of material fact and, if not, whether the moving party is entitled to judgment as a matter of law.” Medical Protective Co. v. Watkins, 198 F.3d 100, 103 (3d Cir.1999). Facts must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). To avoid summary judgment, the nonmoving party must produce more than a “mere scintilla” of evidence to demonstrate a genuine issue of material fact. Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir.1992). Merely showing “that there is some metaphysical doubt as to the material fact” is insufficient. Matsushita, 475 U.S. at 586.
A. Contract Dispute
We exercise plenary review over the District Court‘s application of contract law. Coltec Indus. v. Hobgood, 280 F.3d 262, 269 (3d Cir.2002).
The Agreement between ITT and Wastecorp set forth explicit terms regarding its expiration. There is no dispute, and the terms are surely clear, that the license was for a term of four years. There is also no dispute that Wastecorp continued to use the MARLOW trademark after the four-year term expired. It would seеm that there could be little dispute that Wastecorp knowingly breached its contract with ITT. Wastecorp, however, alleges an oral agreement at the time of contract
The Agreement included a merger clause. Under New York law, which the parties agree governs this matter, “if a contract recites that all of the parties’ agreements are merged in the written document, parol evidence is not admissible to vary, or permit escape from, the terms of the integrated contract.” Mfrs. Hanover Trust Co. v. Yanakas, 7 F.3d 310, 315 (2d Cir.1993) (citing Fogelson v. Rackfay Construction Co., 300 N.Y. 334, 340, 90 N.E.2d 881, 884 (1950)). Thus, absent any affirmative defenses by Wastecorp, contract liability is clear.
Wastecorp, however, alleges that ITT fraudulently induced it to enter into the Agreement by promising to renew the license upon expiration of the contractual four-year term. Because “fraud vitiates every transaction,” parol evidence may be admitted to show fraud, even where the contract contains a merger clause. Bridger v. Goldsmith, 143 N.Y. 424, 428, 38 N.E. 458, 459 (1894). See also Mfrs. Hanover Trust Co., 7 F.3d at 315 (citing Sabo v. Delman, 3 N.Y.2d 155, 161-62, 164 N.Y.S.2d 714, 143 N.E.2d 906, 908-09 (1957) and Bridger v. Goldsmith, 143 N.Y. at 428, 38 N.E. at 459).
“When, however, the contract states that a contracting party disclaims the existence of or reliance upon specified representations, that party will not be allowed to claim that he was defrauded into entering the contract in reliance on those representations.” Mfrs. Hanover Trust Co., 7 F.3d at 315 (citing Citibank, N.A. v. Plapinger, 66 N.Y.2d 90, 94-95, 495 N.Y.S.2d 309, 485 N.E.2d 974, 976 (1985) and Danann Realty Corp. v. Harris, 5 N.Y.2d 317, 320, 184 N.Y.S.2d 599, 157 N.E.2d 597, 598-99 (1959)). The Agreement between ITT and Wastecorp explicitly and unambiguously states that the license to use the MARLOW trademark expired after a four-year term.
The Agreement does not preclude renewal of the license, or even address that possibility, which is what Wastecorp alleges was promised. Such a promise, however, even if it was made, is of the same character and substance as the terms of the license‘s expiration, about which the Agreement is clear. Indeed, Mr. Soja admitted that a renewal term was “purposely omitted” from the Agreement. Both parties signed onto an integrated agreement specifying a four year licensing term; renewal terms are part and parcel of such an agreement, and their absence from a valid, integrated writing is telling. Wastecorp cannot after formation collaterally attack the Agreement‘s explicit terms.
Even if ITT promised to renew the license, but refused to put it in writing, Wastecorp‘s defense fails. As the New York Court of Appeals long ago explained:
It may be assumed that promises of future action that are a part of the contract between the parties, to be binding upon them, must be stated in thе contract. An oral restrictive covenant, or any oral promise to do or refrain from doing something affecting the property about which a written contract is made and executed between the parties, will not be enforced, not because the parties should not fulfill their promises and their legal and moral obligations, but because the covenants and agreements being promissory and contractual in their nature and a part of, or collateral to a principal contract, the entire agreement between the parties must be deemed to have been merged in the writing. The value of a writing would be very seriously impaired if the rule mentioned in regard to including the entire agreement in such writing is not enforced.
B. Lanham Act
“We exercise plenary review over the District Court‘s legal conclusions concerning the Lanham Act.” Checkpoint Sys. v. Check Point Software Techs., Inc., 269 F.3d 270, 279 (3d Cir.2001). To prove trademark infringement and unfair competition under the Lanham Act, ITT must prove that: (1) it owns the MARLOW mark; (2) the mark is valid and legally protectable; and (3) Wastecorp‘s unauthorized use of the mark is likely to create confusion.
Typically, the third prong-likelihood of confusion-is the disputed element in an infringement claim. Here, however, the third prong may well be established simply because we are confronted with the use of an identical mark by a former licensee. “The unauthorized use of a mark by a former licensee presents a particular danger of confusion to the public. It has been described as ‘a fraud on the public, since they are led to think that the ex-licensee is still connected with the licensor.‘”3 Villanova Univ. v. Villanova Alumni Educ. Found., 123 F.Supp.2d 293, 309 (E.D.Pa.2000) (quoting J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 25:31 (“McCarthy“)). “It is axiomatic that use of a licensed mark by an ex-licensee after termination of the license creates a likelihood of confusion, infringing and unfairly competing with the rights of the trademark owner.” Ford Motor Co. v. A.C. Car Group Ltd., 2002 WL 1072258, *6 (E.D.Mi. March 4, 2002). “[M]any courts [including the Third Circuit] have held that continued trademark use by one whose trademark license has been canceled satisfies the likelihood of confusion test and constitutes trademark infringement.” Burger King Corp. v. Mason, 710 F.2d 1480 (11th Cir.1983). See, e.g., U.S. Structures, Inc. v. J.P. Structures, Inc., 130 F.3d 1185, 1190 (6th Cir. 1997) (“proof of continued, unauthorized use of an original trademark by one whose license to use the mаrk has been terminated is sufficient to establish ‘likelihood of confusion‘“); United States Jaycees v. Philadelphia Jaycees, 639 F.2d 134, 143 (3d Cir.1981) (“We perceive that there is great likelihood of confusion when an infringer uses the exact trademark [of its former licensor].“).
Rather than emphasize the third prong of the infringement test, Wastecorp challenges the ownership and validity of the MARLOW mark. ITT, on the other hand, asserts that its rights in the MARLOW mark are incontestible.4 If ITT is correct,
Wastecorp seeks to undermine ITT‘s claim to the MARLOW mark alleging first, that ITT abandoned the mark and, second, that ITT‘s failure to use the mark in connection with plunger pumps renders ITT‘s trademark renewal registration invalid because fraudulently obtained. See
(1) Abandonment6
As the Supreme Court long ago explained:
To establish the defence [sic] of abandonment it is necessary to show not only acts indicating a practical abandonment, but an actual intent to abandon. Acts which unexplained would be sufficient to establish an abandonment may be answered by showing that there never was an intention to give up and relinquish the right claimed.
Saxlehner v. Eisner & Mendelson Co., 179 U.S. 19, 31, 21 S.Ct. 7, 45 L.Ed. 60 (1900). As we have more recently noted, “abandonment, being in the nature of a forfeiture, must be strictly proved.” Philadelphia Jaycees, 639 F.2d at 139. See also Saratoga Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1044 (2d Cir.1980) (recognizing that because it constitutes the forfeiture of a property right, abandonment must be proven by clear and convincing evidence).
Consideration of the evidence, drawing all inferences in favor of Wastecorp, supports the District Court‘s conclusion that Wastecorp failed to produce evidence giving rise to a disputed material fact regarding whether ITT abandoned the MARLOW mark. Wastecorp‘s production and sale of plunger pumps bearing the MARLOW mark through April 1997 (the close of the licensing period) inheres to ITT. To establish presumptive abandonment by ITT, Wastecorp must raise a question of material fact regarding ITT‘s “nonuse [of the MARLOW mark] for three consecutive years.”
Wastecorp contends that ITT has consolidated its industrial pump operations, abandoned the MARLOW mark, and now sells industrial pumps under the GOULDS mark. It relies on a January 1998 letter from ITT to its distributors, informing them that production of MARLOW industrial pumps was being transferred to the GOULDS pump manufacturing facility, and the fact that ITT now sells pumps under the GOULDS mark that were formerly sold only under the MARLOW mark. Wastecorp also relies on ITT‘s response to an interrogatory that “ITT Industries has not directly sold any MARLOW brand plunger pumps since April 1993.”
Wastecorp‘s evidence, however, is ambiguous at best. ITT, in its interrogatory response, admitted to no direct sales of plunger pumps, but nothing more than that.7 ITT asserts that the sales during the four-year licensing term of its licensee, Wastecorp, inhered to it, and Wastecorp does not dispute this undoubtedly correct assertion.8 ITT‘s admission of no direct sales of one type of industrial pump does not necessarily, or in fact, indicate nonuse of the MARLOW mark.
As for the January 1998 letter, that letter is addressed to distributors of MARLOW products, including distributors of industrial pumps, and references industrial pumps by way of a MARLOW catalog number, designating a MARLOW product contact person. The letter is, at the very least, strong circumstantial evidence of ITT‘s “bona fide use of [the MARLOW mark] made in the ordinary course of trade.”
Because ITT‘s rights in the mark are incontestable, valid ownership is presumed; the burden is on Wastecorp to raise an issue of material fact. It has not done so.10 Merely showing that there may be “some metaphysical doubt” as to a material fact is not enough for Wastecorp to survive summary judgment on its abandonment claim. Matsushita, 475 U.S. at 586.
(2) Fraudulent Renewal
In response to ITT‘s assertion of incontestable rights in the MARLOW
(a) April 1997 to September 1998
ITT‘s MARLOW registration expired on September 8, 1998. The Agreement between Wastecorp and ITT, however, expired in April 1997. There are no allegations thаt the original MARLOW registration or the renewals prior to 1998 were fraudulently obtained. Accordingly, the alleged fraudulent renewal in 1998 cannot serve as a defense for Wastecorp‘s use of the MARLOW mark preceding the expiration of the registration in September 1998. Through September 1998, ITT‘s interest in the MARLOW mark was incontestable. Because, as discussed above, Wastecorp‘s abandonment defense fails, and because Wastecorp has not alleged fraudulent renewal regarding the registrations prior to September 1998, Wastecorp has no defense to its infringement between April 1997 and September 1998.
(b) September 1998 to Present
Because ITT‘s interest in the MARLOW mark has become incontestible, we begin with the presumptions that ITT owns the mark, and that use of the mark has been continuous. Commerce Nat‘l Ins. Servs., Inc., 214 F.3d at 438. These presumptions may of course be rebutted. The burden is on Wastecorp to create at the very least an issue of material fact, a burden it has not carried. Wastecorp cannot merely assert that ITT‘s renewal registration was fraudulent and thereby escape summary judgment.
It is certainly true that ITT admitted to no direct sales of plunger pumps. But it is also true that ITT denied Wastecorp‘s allegation that it was not using the MARLOW mark within the meaning of the Lanham Act. ITT сontends, and we agree, that there are other legitimate uses of the mark; indeed, even without more, the license granted to Wastecorp proves as much.12 Wastecorp‘s reliance solely on the
The District Court noted ITT‘s admission that it had made no direct sales of plunger pumps bearing the MARLOW mark since 1993. Based on this admission, the Court concluded that ITT‘s claim in the renewal registration that the MARLOW mark was in use on plunger pumps “does appear to be in error.” ITT Indus., Inc. v. Wastecorp Inc., No. 99-1548 at 11. We cannot, however, conclude that the District Court intended this equivocal statement to mean any more than that ITT had not made any direct sales, and that direct sales were the only method sufficient to satisfy the “use” requirements within the meaning of the Lanham Act. As we have already explained, however, there are other activities-licensing, to name only one-that constitute use.
The District Court concluded that Wastecorp had “failed to establish that plaintiff‘s representation in the 1998 registration renewal application was fraudulent, so as to warrant cancellation of the entire registration.” Id. 11-12. Becаuse we conclude that Wastecorp has not overcome the presumption that ITT‘s use of the mark has been continuous, we need not reach the issue of whether ITT‘s statement in the renewal registration, if false, constituted fraud; Wastecorp has not produced sufficient evidence to overcome the presumption that ITT‘s statement was true. Where, as here, the nonmoving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
C. Discovery Issues
The District Court denied Wastecorp‘s
ITT filed this action in April 1999. When ITT sought summary judgment on March 27, 2001, Wastecorp had not taken a single deposition. Wastecorp attempted to justify its dilatory discovery practice by pointing to settlement negotiations with ITT (that temporarily suspended discovery) and to the heart attack of its attorney in February 2001. But even most generously construing the time constraints imposed by these obstacles, there was a loss of only five or six months out of the two years of open discovery.
We have explained that “where the facts are in possession of the moving party a continuance of a motion for summary judgment for purposes of discovery should be granted almost as a matter of course.” Costlow v. United States, 552 F.2d 560, 564 (3d Cir.1977) (citing Ward v. United States, 471 F.2d 667, 670-71 (3d Cir.1973)). Even in Costlow, however, we premised our conclusion on an assumption that “discovery ... was being diligently pursued[.]” Costlow, 552 F.2d at 564.
The District Court did not abuse its discretion in refusing to excuse Wastecorp‘s lengthy delays and lack of diligence in conducting discovery. See, e.g., Lunderstadt v. Colafella, 885 F.2d 66, 71-72 (3d
D. Damages
After finding Wastecorp liable for infringement, the District Court granted ITT‘s motion for summary judgment for damages under the Lanham Act. “We review a trial court‘s award of statutory damages for abuse of discretion.” Shields v. Zuccarini, 254 F.3d 476, 481 (3d Cir. 2001).
The Lanham Act authorizes a court to award the defendant‘s profits. ITT proved Wastecorp‘s net sales of $3,625,552. The District Court considered the deductions allowed under the Lanham Act and proved by Wastecorp, and arrived at a damage award of $365,789, approximately ten percent of net sales. There were no issues of material fact which precluded the District Court‘s calculation of damages on summary judgment, and the Court did not abuse its discretion in calculating those damages.
E. Injunction
The District Court permanently enjoined Wastecorp‘s use of the MARLOW mark except for narrow allowances to sell parts for MARLOW plunger pumps, and to indicate the history of MARLOW plunger pumps. “An injunction is an exercise of equitable power. For an appellate court to modify or vacate an injunction there must be a showing of abuse of discretion.” Philadelphia Jaycees, 639 F.2d at 141 (citing Tennessee Valley Auth. v. Hill, 437 U.S. 153, 193-95, 98 S.Ct. 2279, 57 L.Ed.2d 117 (1978)).
The District Court did not abuse its discretion. It recognized, and the injunction accommodates, the right of Wastecorp tо explain its purchase of the MARLOW plunger pump division from ITT. The injunction also accommodates Wastecorp‘s right to sell replacement parts for MARLOW pumps. Wastecorp has no other claim to the MARLOW mark; the injunction entered by the District Court merely limits Wastecorp to the valid exercise of its rights.
III. CONCLUSION
For the reasons explained above, the order of the District Court will be affirmed.