(CN) – A Phoenix federal judge should not have doubled the award of damages for one of the world’s largest skydiving centers in a trademark-infringement, false-advertising and cybersquatting case, the 9th Circuit ruled.
The federal appeals court in San Francisco found that the U.S. District Court had improperly sought to punish booking agent 1-800-Sky-Ride by increasing how much it should pay Skydive Arizona.
A jury awarded Skydive Arizona more than $6 million in 2010 after finding that Skyride had misled consumers with online advertisements that falsely suggesting that it owned facilities in Arizona and worked with Skydive Arizona. Skyride “neither owned nor operated skydiving facilities in Arizona, but made a strategic business decision to represent ownership because they thought it would attract more customers,” the ruling states.
In the wake of the relatively expensive verdict, Skyride filed motions to reduce the jury verdict, for judgment notwithstanding the verdict, for remittitur and for a new trial. While denying all of the motions, U.S. District Judge Mary Murguia doubled Skydive Arizona’s $1 million actual damages award for false advertising and its $2.5 million award for trademark infringement, raising the total damages in the case to beyond $10 million.
That was a mistake, a three-judge panel of 9th Circuit judges ruled Monday, finding that the move had an improper “punitive motivation.”
The panel reduced the award by half and otherwise affirmed the verdict and upheld a permanent injunction against Skyride’s operations in Arizona. Skydive Arizona cross-appealed, arguing that the injunction should apply nationwide.
“Although the District Court may have considered a secondary deterrent rationale when it briefly discussed Skyride’s knowing refusal to cease its infringing acts, we hold that such possible considerations do not overcome the District Court’s apparent intent to punish,” Judge Milan Smith wrote for the court. “The broader context of the court’s enhancement discussion reveals its punitive motivation. Accordingly, because the district court’s decision to enhance the damages award hinged upon punishing the willful conduct of Skyride, we reverse the District Court’s actual damages enhancement.”
Judge John Noonan questioned a portion of the damages in a partial dissent, arguing that Skydive Arizona’s “own figures showed no dimunition in dives sold” as a result of Skyride’s activities.
“Nothing in fact in the record supports the jury’s assessment of these damages as amounting to $2,500,000,” he wrote.
One of the largest skydiving companies in the world, Eloy-based Skydive Arizona “hosts between 145,000 and 160,000 skydives each year,” the ruling states.
Headquartered in Kennesaw, Ga., Skyride was sued along several affiliates, including Atlanta Skydiving Center, CASC Inc., USSO LLC and IGOVincent Inc.