(CN) - A federal judge improperly nixed the $790,000 jury verdict in a long-running trademark infringement suit over "touchless" paper towel dispensers, the 4th Circuit ruled.
In a 2005 complaint, Georgia-Pacific Consumer Products accused von Drehle Corp. of trademark infringement related to a line of lower-quality paper towels designed for Georgia-Pacific's enMotion electronic dispenser. In the paper-goods industry, this practice is known as "stuffing." The case marked one of three that Georgia-Pacific had filed around that time.
Over a year after he refused to grant either party summary judgment, U.S. District Judge Terrence Boyle granted von Drehle summary judgment on the claim of contributory trademark infringement in late 2009.
The Raleigh, N.C., judge said Georgia-Pacific had failed to show that consumers would confuse the inferior towels with those it manufactured specifically for use in the enMotion dispenser.
Considering the case for the first time in August 2010, the 4th Circuit threw out the judgment and remanded the case. It held that the District Court erred by limiting the likelihood of confusion inquiry to distributors who purchased the von Drehle paper towels, and failed to consider the potential for confusion among other users of the product, namely people who use restrooms.
According to a description of its earlier ruling in the latest opinion, the 4th Circuit further held Georgia-Pacific offered sufficient evidence for a reasonable jury to find a likelihood of confusion among restroom visitors.
In the meantime, an Arkansas federal judge ruled on one of Georgia-Pacific's other trademark infringement cases. This case accused Myers Supply of having distributed von Drehle's paper towels, but the Arkansas court cleared Myers of trademark infringement.
In November 2010 - 16 months after the Arkansas decision - von Drehle told the North Carolina court that the Myers ruling precluded Georgia-Pacific's infringement claims. Boyle initially denied the request and the dispute went to trial on Jan. 4, 2012. Three days later, the jury found in favor of Georgia-Pacific and awarded it $791,431.
Von Drehle filed a post-trial motion for judgment as a matter of law, and an additional motion seeking to supplement its answer to include the preclusion defenses. In a reversal of his previous orders addressing the same issue, Boyle allowed von Drehle to assert claim preclusion and issue preclusion as affirmative defenses. He then entered judgment in von Drehle's favor, vacating the jury award.
The 4th Circuit reversed Thursday, saying von Drehle should have introduced its preclusion defenses "at the first reasonable opportunity."
BY waiting so long before doing so, it gave up its right to assert them after the trial, according to the ruling, which slams the trial court for acting arbitrarily and having "abused its discretion."
The District Court similarly acted improperly in considering the preclusion defenses sua sponte, the court found.
"This case was particularly ill-suited for sua sponte consideration of preclusion defenses that were known long before trial, given that the issue of trademark infringement already had been decided by the jury," Judge Barbara Milano Keenan wrote for a three-member panel. "Thus, the district court's sua sponte consideration of the preclusion defenses actually wasted judicial resources, rather than sparing them."
On remand, the District Court must reinstate the jury verdict and consider Georgia-Pacific's requests for injunctive and other appropriate relief.
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