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The Black & Decker Corp. v. Positec USA Inc.

United States District Court, N.D. Illinois, Eastern Division

September 11, 2017

THE BLACK & DECKER CORPORATION, BLACK & DECKER INC. and BLACK & DECKER (U.S.) INC., Plaintiffs,
v.
POSITEC USA INC. and RW DIRECT INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBERT M. DOW, JR. UNITED STATES DISTRICT JUDGE.

         Plaintiffs Black & Decker Corporation, Black & Decker Inc., and Black & Decker (U.S.) Inc. (collectively, “Plaintiffs”) tried to a jury claims against Defendants Positec USA Inc. and RW Direct Inc. (collectively, “Defendants”) for trademark infringement under 15 U.S.C. § 1114 (Count II) and trade dress infringement under 15 U.S.C. § 1125(a) (Count IV). Following a jury verdict in Plaintiffs' favor, the parties filed post-trial motions. Before this Court are Plaintiffs' motion for permanent injunction [219]; Plaintiffs' motion for prejudgment interest [220]; Plaintiffs' motion for attorneys' fees [224]; Plaintiffs' motion for increased damages under 15 U.S.C. § 1117(a) [225]; Plaintiffs' motion for supplemental damages pursuant to the parties' pretrial stipulation [226]; Defendants' motion to set profits award under the Lanham Act and alternative motion for remitter [227]; Defendants' motion for a new trial [228]; Defendants' renewed motion to strike Plaintiffs' jury demand [229]; and Defendants' motion for judgment notwithstanding the verdict [230].

         For the reasons stated below, Defendants' motion for a new trial [228] is granted; Defendants' motion for judgment notwithstanding the verdict [230] is denied; Defendants' motion to strike jury demand [229] is denied as premature; and Plaintiffs' post-trial motions relating to remedies and damages [220], [224], [225], [226], and Defendants' motion to set profits award [227] are denied as moot. This case is set for status hearing on September 26, 2017 at 10:00 a.m.

         I. Background

         The background of this trademark case, knowledge of which is assumed, is set forth in the Court's Memorandum Opinion and Order [93] granting in part and denying in part Defendants' motion for summary judgment. Briefly summarized, Plaintiffs allege that Defendants infringed their registered trademarks and trade dress by selling power tools and power tool accessories that used Plaintiffs' “family” of yellow and black registered trademarks and trade dress.

         Beginning on September 28, 2015 and concluding on October 5, 2015, Plaintiffs' federal claims for trademark infringement and trade dress infringement were tried before a jury. The jury returned a verdict for Plaintiffs and against Defendants on both claims. The jury awarded Plaintiffs $53, 960, 014.00 on its claims against Positec and $114, 801.00 on its claims against RW Direct. The jury also concluded that Defendants' infringement of Plaintiffs' trademarks and trade dress was willful.

         The parties filed numerous post-trial motions, which are discussed below. The Court delayed consideration of these motions while the parties attempted, unsuccessfully, to resolve their dispute through meditation.[1] The Court now turns to the parties' motions.

         II. Motion for New Trial

         A. Legal Standard

         Rule 59(a)(1)(A) authorizes the Court to order a new trial as to some or all issues that were tried to a jury. See Fed.R.Civ.P. 59(a)(1)(A). “A new trial is appropriate if the jury's verdict is against the manifest weight of the evidence or if the trial was in some way unfair to the moving party.” Venson v. Altamirano, 749 F.3d 641, 656 (7th Cir. 2014). “The ruling on a motion for a new trial is a matter committed to the district court's discretion.” Galvan v. Norberg, 678 F.3d 581, 588 (7th Cir. 2012). In determining whether a new trial is warranted, the Court “view[s] the evidence in the light most favorable to the prevailing party, leaving issues of credibility and weight of evidence to the jury.” Lewis v. City of Chicago Police Dep't, 590 F.3d 427, 444-45 (7th Cir. 2009). The appellate court reviews the district court's decision to grant or deny a new trial for an abuse of discretion, unless the district court's decision is based on a question of law, in which case it is reviewed de novo. See Wright v. Illinois Dep't of Children and Family Services, 798 F.3d 513, 527 (7th Cir. 2015).

         B. Analysis

         In their timely motion for a new trial, Defendants argue that a new trial is warranted because the jury's damages award was excessive, the verdict was against the weight of the evidence, and the trial was fundamentally unfair due to the admission of unreliable and prejudicial expert testimony and other inadmissible evidence. The Court finds it unnecessary to consider Defendants' first two categories of arguments, because it agrees that fundamental unfairness was injected into the trial through the admission of James Berger's expert survey concerning likelihood of confusion.

         To state a claim for trademark or trade dress infringement, “a plaintiff must establish that: (1) the mark at issue is protectable, and (2) the defendant's use of the mark is likely to cause confusion among consumers.” Top Tobacco v. Fantasia Distribution Inc., 101 F.Supp.3d 783, 788 (N.D. Ill. 2015). Plaintiffs often employ surveys to show that the defendant's use of a mark causes consumer confusion. See, e.g., Simon Property Group, L.P. v. mySimon, Inc., 104 F.Supp.2d 1033, 1038 (S.D. Ind. 2000). Consumer likelihood of confusion surveys are opinion evidence based on scientific methods or specialized knowledge, and therefore must be presented through expert witnesses. See Fed.R.Evid. 702; Simon Property Group, 104 F.Supp.2d at 1039; Bobak Sausage Co. v. A & J Seven Bridges, Inc., 2010 WL 1687883, at *2 (N.D. Ill. Apr. 26, 2010). “No survey model is suitable for every case.” Simon Property Group, 104 F.Supp.2d at 1038. “At bottom, however, a survey to test likelihood of confusion should attempt to replicate the thought processes of consumers encountering the disputed mark or marks as they would in the marketplace.” Id.; see also Bobak Sausage, 2010 WL 1687883, at *5; Georgia-Pacific Consumer Products LP v. Kimberly-Clark Corp., 2010 WL 1334714, at *2 (N.D. Ill. Mar. 31, 2010) (“Surveys testing consumer confusion should mimic market conditions, including the context in which purchases are made.”); 5 McCarthy on Trademarks § 32:163 (4th ed. 1999) (“the closer the survey methods mirror the situation in which the ordinary person would encounter the trademark, the greater the evidentiary weight of the survey results”).

         In Mr. Berger's likelihood of confusion survey [103-2], Respondents were shown a photograph of two rows of boxed power tools, which according to Plaintiffs was taken in a retail Home Depot store. All of the products depicted in the photo were Plaintiffs' DeWalt products, except one, which was a Rockwell product sold by Defendants. Id. at 30. Respondents were asked if they believed that all the products were put out by the same company, and, if so, why. Id. at 31. Forty-seven percent of respondents said they believed that all the products pictured were put out by the same company. Id. at 43. In his report, Berger stated that the survey was designed to test whether Defendants' use of trade dress that is similar to Plaintiffs' caused consumers to mistake the source of Defendants' goods. Id. at 7.

         Prior to trial, Defendants moved to exclude Mr. Berger's survey based on Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Rule 702 permits the admission of expert testimony if “scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue.” Fed.R.Evid. 702. Rule 702 requires that the district court act as a “‘gatekeeper' who determines whether proffered expert testimony is reliable and relevant before accepting a witness as an expert.” Winters v. Fru-Con Inc., 498 F.3d 734, 741 (7th Cir. 2007) (quoting Autotech Tech. Ltd. P'ship v. Automationdirect.com, 471 F.3d 745, 749 (7th Cir. 2006)); see also Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 147-49 (1999); Daubert, 509 U.S. at 589. The Court denied Defendants' Daubert motion, concluding that Defendants' criticisms of Mr. Berger's expert opinions went to their weight rather than their admissibility.

         At trial, the jury was required to decide, among other things, whether “Defendants have used power tool products and packaging in a manner that is likely to cause confusion as to the source, origin, sponsorship and/or affiliation of Defendants' products and associated packaging.” [216] at 26. Despite offering the survey as evidence that Defendants' trade dress caused customer confusion, however, Mr. Berger testified at trial that his survey did not test causation, but instead was merely “observational.” See Tr. Day 3, pp. 496-497, 519; see also Id. at 528 (Mr. Berger testifying that he was “not admitting . . . that this is a causal survey” and that he “d[id]n't believe it's a causal survey”). According to Mr. Berger, the survey was not concerned with whether Defendants' trade dress caused the consumers' confusion, but instead showed “[t]he confusion [that] was caused by the tendency to overlook the obvious”-in other words, the “idea of putting the same packages together and somebody just thinking that they're the same without looking carefully at them.” Tr. Day 3, p. 497.

         After considering Mr. Berger's pre-trial submissions, his trial testimony, and the parties' post-trial briefing, the Court concludes that this is one of those unusual instances in which a proffered consumer survey was “so informally designed and conducted that it fails key tests of professionalism and reliability” and therefore should have been excluded from trial. 6 McCarthy on Trademarks and Unfair Competition § 32:158 (4th ed. 1999).

         Under Rule 702 and Daubert, “[t]he proponent of the expert bears the burden of demonstrating that the expert's testimony would satisfy the Daubert standard.” Lewis v. CITGO Petroleum Corp., 561 F.3d 698, 705 (7th Cir. 2009). “To meet Rule 702 and Daubert's standard of reliability, a survey offered to establish the likelihood of consumer confusion must ‘have been fairly prepared and its results directed to the relevant issues.'” LG Electronics U.S.A., Inc. v. Whirlpool Corp., 661 F.Supp.2d 940, 951-52 (N.D. Ill. 2009) (quoting Weight Watchers Int'l, Inc. v. Stouffer Corp., 744 F.Supp. 1259, 1272 (S.D.N.Y. 1990)) (citations omitted). “The criteria for the trustworthiness of survey evidence are that: (1) the ‘universe' was properly defined; (2) a representative sample of that universe was selected; (3) the questions to be asked of interviewees were framed in a clear, precise, and non-leading manner; (4) sound interview procedures were followed by competent interviewers who had no knowledge of the litigation or the purpose for which the survey was conducted; (5) the data gathered was accurately reported; (6) the data was analyzed in accordance with accepted statistical principles[;] and (7) objectivity of the entire process was assured.” Weight Watchers, 744 F.Supp. at 1272 (collecting cases). Although these criteria generally address the weight that a fact finder should give the survey, a survey ...


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