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Case Law - save on Lexis / WestLaw. IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _______________ m 00-30537 _______________ DIAL ONE OF THE MID-SOUTH, INC.; HELP SERVICE COMPANY, INC., DOING BUSINESS AS DIAL ONE HELP SERVICE COMPANY; AND CAMPBELL'S PLUMBING AND HEATING, INC., DOING BUSINESS AS DIAL ONE CAMPBELL'S PLUMBING AND HEATING, Plaintiffs-Appellees- Cross Appellants, VERSUS BELLSOUTH TELECOMMUNICATIONS, INC.; BELLSOUTH ADVERTISING & PUBLISHING CORPORATION; AND L.M. BERRY AND COMPANY, Defendants-Appellants- Cross-Appellees. _________________________ Appeals from the United States District Court for the Eastern District of Louisiana _________________________ October 18, 2001 Before JOLLY, SMITH, and WIENER, awards and the sufficiency of the evidence Circuit Judges. supporting them. Plaintiffs cross appeal the refusal to consider goodwill damages. JERRY E. SMITH, Circuit Judge: II. In this case brought under the Lanham Act Defendants' first issue is the proper stan- for infringement of the Dial One trademark in dard in applying the innocent infringer defense New Orleans, judgment was for plaintiffs with in § 1114(2) of the Lanham Act, which limits an award of actual damages. Defendants persons bringing actions under §§ 1114(1) and challenge the standard used in applying the 1125(a) to injunctive relief if the defendant is innocent infringer defense and the award of an "innocent infringer." See 15 U.S.C. damages. Plaintiffs cross appeal the decision § 1114(2). Specifically, defendants contend to exclude evidence of loss of goodwill to the the district court erred in refusing to apply an Dial One mark. We find no reversible error actual-malice standard to defendants' conduct and affirm. to determine their status as innocent infringers. Instead, the court used a standard of objective I. reasonableness, under which a defendant is an Dial One of the Mid-South, Inc. ("Dial innocent infringer only if, regardless of state of One"), is the franchise holder, and Help Ser- mind, its conduct is reasonable. The court vice Company, Inc. ("Help"), and Campbell's then rejected defendants' innocent infringer Plumbing and Heating, Inc. ("Campbell's"), defenseSSfinding not objectively reasonable are franchisees. U.A. Durr was once a Dial the conduct of failing to remove the incorrect One franchisee but lost his franchise in January listing. 1998 when Dial One terminated the relation- ship. Defendants BellSouth Telecommunica- Statutory interpretation is a process we re- tions, Inc., BellSouth Advertising & Publishing view de novo. See Kemp v. G.D. Searl & Co., Corporation, and L.M. Berry and Company 103 F.3d 405, 407 (5th Cir. 1997). Our start- are responsible for some part of the production ing point in divining the meaning of a statute is and publication of the Yellow Pages and White the intent of Congress. See Castillo v. Cam- Pages for southeastern Louisiana. In the May eron County, 238 F.3d 339 (5th Cir. 2001). Yellow and October White pages for 1998, The best evidence of this intent is the language Durr was listed as a Dial One franchisee in the of the statute. See Negonsott v. Samuels, 507 alphabetical section under Dial One, when in U.S. 99, 104 (1993). fact he had lost his franchise. On its face, "innocent infringer" suggests a Dial One, Help, and Campbell's sued for party who is without blame, but also may con- damages, treble damages, and fees. The dis- note one who is without knowledge of a trict court awarded the following damages: wrong or who has no improper motive. The Dial One: $10,000 in lost franchise fees; latter interpretation suggests an unremarkable Campbell's: $45,000 in lost profits; and Help: legal scheme whereunder any "infringer" will $100,000 in lost profits. Defendants appeal, be held accountable, but an "innocent infring- challenging the construction of the innocent er" will not be subject to as stiff a penalty. owner defense and the propriety of the damage Our task is to determine the legal significance 2 of the term "innocent." presses the intent of only a single member of Congress. The risk in giving conclusive On this issue of first impression in this weight to a statement of only one member of circuit, we conclude that the proper standard Congress is particularly acute here, where the for evaluating whether an infringer is innocent common-sense definition of "innocent" and the is objective reasonableness. First, there is no requirements of constitutional actual malice constitutional mandate to protect this type of are difficult to reconcile. speech under the heightened actual malice standard. Second, there is no strong evidence Finally, Congressman Kastenmeier may that, in extending the language of § 1114(2) to have had the mistaken belief that Sullivan re- § 1125(a) of the Lanham Act, Congress in- quires the meaning of "innocent" he advanced tended anything other than correction of a pre- in his remarks. He apparently was under the vious oversight in omitting that language from impression that enforcement of the Lanham § 1125(a). Third, the premise of conflicting Act by private parties trying to protect their legislative history is based on an art ificial trademarks may overstep constitutional conflict between the First Amendment and limitations on the regulation of speech. See private enforcement of the Lanham Act. Fi- 134 CONG. REC. 31,850 (1988). nally, the logic of the actual malice standard is not appropriate in this context. There is no such tension, however, for commercial speech that is false does not re- Defendants urge us to read "innocent" in ceive First Amendment protection.2 Ac- § 1114(2) to mean "without constitutional ac- cordingly, we decline to rely on this shard of tual malice." They premise this argument on legislative history to read a constitutional ac- remarks by the co-sponsor of an amendment to tual malice standard into § 1114(2).3 the Lanham Act in 1988, expressing a desire for "innocent" to incorporate the "actual mal- Moreover, Sullivan does not support defen- ice" standard from N.Y. Times v. Sullivan, 376 dants' position that the actual malice standard U.S. 254 (1964). See 134 CONG. REC. 31, 851 (1988) (statement of Congressman Kastenmeier). 1(...continued) sec. 132, § 43(a), 102 Stat. 3935, 3946 (1988). Defendants' reliance on a statement by a co-sponsor highlights the problems with using 2 See Ibanez v. Fla. Dep't of Bus. & Prof'l legislative history to determine Congressional Regulation, 512 U.S. 136, 142 (1994); Procter & intent. First, the legislation Congressman Gamble Co. v. Amway Corp., 242 F.3d 539, 557 Kastenmeier was addressing was merely a bill (5th Cir. 2001), cert. denied, 70 U.S.L.W. 3074 to extend the innocent infringer defense from (U.S. Oct. 1, 2001) (No. 01-29). one section of the Lanham Act to another; it 3 The official commentary to the bill provided made no substantive change in the words "in- by the Senate Judiciary Committee remarks only nocent infringer."1 Second, this history ex that section 32(2) corrects a "typographical error." Senate Comm. on the Judiciary, Trademark Law Revision Act 1988-Satellite Home Viewer Act of 1 See Trademark Law Revision Act of 1988, 1988, S. Rep. No. 100-515, at 38, reprinted in (continued...) 1988 U.S.C.C.A.N. 5600. 3 should apply to the speech at issue. The Su- district court's conclusion that this conduct preme Court has not held whether the actual was not objectively reasonable is not clear malice standard applies to commercial speech; error. in a suit by a product manufacturer against the author of a product review, Bose Corp. v. III. Consumers Union of the United States, Inc., Defendants appeal the damages, which are 466 U.S. 485, 515 (1984) it declined to decide premised on a calculation of lost profits.4 Our whether that standard was appropriate. The review of the sufficiency of evidence Court has held, however, that matters not of supporting an award of damages is only for public concern are not judged under the actual clear error.5 Additionally, § 1117 of the Lan- malice standard. See Dun & Bradstreet, Inc. ham Act gives the district court broad v. Greenmoss Builders, Inc., 472 U.S. 749, discretion over the amount of damages. See 760 (1989). 15 U.S.C. § 1117. The court is limited only by principles of equity and is restricted from mak- Although the trademark at issue in this case ing any award that is punitive instead of merely was certainly a matter of public consumption, compensatory. Id. the improper listing of a service repair business is hardly a matter of public concern such that There is no indication the court made any the improper listing should be protected. In award premised on penalizing the defendants fact, the interest of the public is probably best instead of compensating the plaintiffs. protected by allowing the suit to proceed with- Although the sufficiency of the evidence sup- out an actual malice defense, so as to promote porting the damages is not overwhelming, we accuracy in this type of speech. Allowing the defer in large part to the district court's suit under a lesser standard will in no way evaluation. The court took account of trigger the concerns of SullivanSSthat possible uncertainty in the estimates of future defamation law will undercut important First profits, whether evidence was corroborated, Amendment freedoms. Accordingly, we con- whether the harm from the infringing listing clude that the district court correctly an- would continue beyond the actual period of nounced that the proper standard for analyzing infringement, and possible variability of profit the innocent infringer defense under the Lan- margins. This demonstrates a weighing of the ham Act is objective reasonableness. Whether defendants in fact were innocent 4 Defendants appropriately call our attention to infringers under this test is a question of fact, this court's recent decision in Logan v. Burgers which we review only for clear error. See St. Ozark Country Cured Hams, Inc., No. 00-30652, Martin v. Mobil Exploration & Producing, 2001 U.S. App. LEXIS 20309 (5th Cir. Sept. 12, Inc., 224 F.3d 402, 405 (5th Cir. 2000). 2001). That case, however, is inapposite. It deals Defendants do not contest the error in printing with proving Lanham Act damages through de- fendants' profits, while the instant case concerns the false listing for Durr, nor do they contest damages for plaintiffs' lost profits. knowledge of the cessation of the Durr-Dial One franchise agreement. Defendants had 5 See FED. R. CIV. P. 52(a); Boston notice of the change and failed to remove the Professional Hockey Ass'n, Inc. v. Dallas Cap & Dial One reference in the phone books. The Emblem Mfg., Inc., 597 F.2d 71, 75-76 (5th Cir. 1979). 4 factors sufficient to support the award. There any suggestion of the possibility of such proof is no clear error. is offered at trial. See Seatrax, Inc. v. Sonbeck Int'l, Inc., 200 F.3d 358, 370 (5th Cir. 2000). IV. There is nothing to indicate that plaintiffs of- On cross-appeal, plaintiffs raise the issue of fered any evidence of damage to the goodwill damage to the goodwill of the Dial One of the Dial One mark. Although there was trademark. In ruling on a motion in limine, evidence of consumer confusion, this evidence the court refused to admit evidence of damage was never tied, at trial, to the claim of loss of to goodwill. Plaintiffs renewed their objection goodwill. at trial but did not offer specific proof regarding loss of goodwill. We review rulings AFFIRMED. on motions in limine for abuse of discretion. See Buford v. Howe, 10 F.3d 1184, 1188 (5th Cir. 1994). The court based its decision on two grounds. (1) that, because Dial One of the Mid-South was not the owner of the federal mark, it could not recover goodwill damages; and (2) that there was a strong likelihood the goodwill of the mark had not been harmed, and thus no evidence on the issue was required. We offer no opinion on the ownership of the mark or the feasibility of recovering good- will damages where the plaintiff is only the li- censee of the mark. Instead, we base our deci- sion to affirm the ruling on the district court's determination that goodwill was not damaged; we see no abuse of discretion in the finding that the goodwill of the Dial One mark did not suffer when a non-franchisee was erroneously listed under the Dial One section of the phone book. It was not unreasonable to find that the improper listing had such a tenuous connection to the goodwill of the Dial One mark that there was no need for full evidentiary treatment. Our conclusion is reinforced by precedent in this circuit refusing to consider the propriety of a motion in limine where no evidence or 5 |
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