Fourth Circuit Holds Trademark Infringement Defendant Threw in the [Paper] Towel with Respect to Preclusion Defenses

Fourth Circuit Holds Trademark Infringement Defendant Threw in the [Paper] Towel with Respect to Preclusion Defenses

by Stan Hammer

In its second published opinion vacating the judgment of the district court, the Fourth Circuit recently ordered that a jury's verdict awarding Georgia-Pacific nearly $800,000 in damages for trademark infringement be reinstated. Georgia-Pacific Consumer Prods., LP v. Von Drehle Corp., No. 12-1444 (4th Cir. Mar. 14, 2013) [an enhanced version of this opinion is available to lexis.com subscribers]. The Fourth Circuit's decision is the final chapter in a long-running battle centering on the "stuffing" of Georgia-Pacific's "enMotion®" paper towel dispensers, found in an automated public restroom near you, with von Drehle's toweling. We've previously blogged about the dispute, which has been litigated across three federal circuits, here and here.

After the Fourth Circuit vacated the district court's grant of summary judgment of noninfringement, holding that there was sufficient evidence for a jury to find restroom users were likely confused regarding the source of the paper towels emerging from the enMotion® dispensers, von Drehle sought leave to amend its answer in order to assert preclusion defenses based on a Western District of Arkansas decision. That decision held that Myers Supply, Inc., a distributor that sold von Drehle's paper towels, was not liable for contributory trademark infringement. The district court denied the motion for leave to amend, reasoning that it was "unduly delayed," given that the Arkansas decision was issued 16 months prior.

Undeterred, von Drehle again sought leave to amend its answer two months before the scheduled date of the jury trial, this time based on a Northern District of Ohio ruling granting summary judgment in favor of Four-U-Packaging, Inc.-another distributor of von Drehle towels-on a similar claim of contributory trademark infringement. In that decision, the district court agreed with Four-U-Packaging that Georgia Pacific's claims were barred under a claim preclusion theory by the ruling in Myers. Relying on the Four-U-Packaging decision, von Drehle also moved for summary judgment based on its preclusion defenses. The district court never ruled on either motion prior to trial.

After the jury found von Drehle liable for trademark infringement and awarded Georgia-Pacific some $791,431 in damages, the district court decided to entertain von Drehle's preclusion defenses based on Four-U-Packaging, raised yet again in its motion for judgment as a matter of law. The district court said that Four-U-Packaging "revived" the preclusion defenses that first became available after Myers, and ultimately held Georgia-Pacific's trademark claims were barred by collateral estoppel and res judicata.

The Fourth Circuit again vacated the district court's judgment. "We conclude that the district court acted in an 'arbitrary manner,' and, thus, abused its discretion, in relying on the Four-U decision to 'revive' the preclusion defenses that substantively were based on Myers." Given that the Four-U decision did not reach the merits of Georgia-Pacific's trademark claim, it "did not have any preclusive effect independent of the Myers decision, and did not provide a separate basis for timely assertion of the preclusion defenses."

In addition to ordering the district court to reinstate the jury's verdict, the Fourth Circuit directed the district court to consider Georgia-Pacific's requests for injunctive and other appropriate relief on remand.

Read more at Virginia IP Law by Troutman Sanders LLP.

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