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Jama Corp. v. Gupta

January 2, 2008

JAMA CORPORATION ET AL., PLAINTIFFS,
v.
DR. GIRIWARLAL GUPTA, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Caputo

MEMORANDUM

Presently before the Court are several post-trial motions brought by the Defendants. The motions include a motion for temporary partial relief of judgment, or alteration of judgment under Rules 59 and 60 pending the resolution of all post-trial and other motions (Doc. 213); a motion under Rule 50 for judgment as a matter of law (Doc. 218); and a combined motion for a new trial, and/or to amend, alter or modify the judgment, and/or for relief from judgment. (Doc. 209.) The Court will also consider the numerous motions to stay pursuant to Federal Rule of Civil Procedure 62(b). (Docs. 210, 243, 248, 250, 252.) These motions raise six different issues. First, the Defendants argue that the Plaintiff failed to properly demonstrate first use in their trademark infringement claim, and therefore the Defendants should be granted either a new trial or judgment as a matter of law. The motions for a new trial or for judgment as a matter of law will be denied on this argument, as the Plaintiff properly demonstrated first use for purposes of trademark infringement. Second, the Defendants argue that the Court improperly failed to instruct the jury as to secondary meaning in a trademark infringement case. However, the motion for a new trial will be denied on these grounds as well, as the Plaintiff's mark is a suggestive mark not requiring secondary meaning. Third, the Defendants argue that the jury's finding of willfulness in the trademark infringement claim was against the weight of the evidence. The Court will deny the motion for a new trial and for judgment as a matter of law on these grounds, as the jury's verdict was based upon substantial evidence. Fourth, the Defendants argue in three motions that the jury verdict of $510,000 for trademark infringement was improper. The Court will deny the motions on these grounds, as the verdict was not against the weight of the evidence, would not result in manifest injustice, and does not otherwise justify relief. Fifth, the Defendants argue that the Court improperly trebled the Plaintiff's damages on the trademark infringement claim. This motion will be granted, as the trebling of damages resulted in an unjustly high remedy for the Plaintiff. Finally, the Court will deny the Defendants' five (5) motions to stay as moot, as the Court has decided the pending Rule 59 and Rule 60 motions.

BACKGROUND

On August 31, 1999, the Jalans filed a civil action against the Guptas alleging claims including breach of contract, ownership of real estate in Pennsylvania, and ownership of the mark "Old West." (Doc. 1, 3:99-CV-1574) The Guptas filed an Answer on November 3, 1999, alleging various affirmative defenses. (Doc. 8, 3:99-CV-1574.) On August 6, 2001, the Jalans moved for partial summary judgment on the breach of contract claim. (Doc. 35, 3:99-CV-1574.) The same day, the Guptas then moved for summary judgment on all claims by the Jalans. (Doc. 40, 3:99-CV-1574.)

On September 8, 1999, Jama Corporation field a Complaint against the Guptas and Old West Cowboy Boots, alleging breach of contract, violations of the Lanham Act, 15 U.S.C. § 1125(a), common law unfair competition, interference with contractual relations and defamation. (Doc. 1, 3:99-CV-1624.) The Defendants filed an answer and counterclaim against Jama Corporation on November 4, 1999. (Doc. 3, 3:99-CV-1624.) The affirmative defenses and counterclaims were amended on February 11, 2000. (Doc. 22, 3:99-CV-1624.) Jama Corporation moved for partial summary judgment on its breach of contract claim, and for summary judgment on all counts of Defendants' counterclaims on August 6, 2001. (Doc. 48, 3:99-CV-1574.)

On March 27, 2001, actions 3:99-CV-1574 and 3:99-CV-1624 were consolidated into civil action number 3:99-CV-1574 for pre-trial and discovery purposes. (Doc. 12, 3:99-CV-1574.) On December 19, 2001, the motions for summary judgment on both actions were granted in part and denied in part. (Doc. 84.)

The remaining counts in both actions went to trial on March 4, 2003. The remaining counts in action 3:99-CV-1574 were claims and counterclaims for tortious interference, breach of contract, and trademark infringement pursuant to the Lanham Act. The only count remaining in 3:99-CV-1624 was the question of ownership of stock in the Old West Cowboy Boots Corporation. The jury returned a verdict in action 3:99-CV-1574 on March 14, 2003, in favor of the Plaintiff, and awarded damages of $315,000 for breach of contract and $510,000 for trademark infringement. (Doc. 205.) The Court trebled the jury verdict on trademark damages, and judgment was entered against the Defendants in the amount of $1,530,000. (Doc. 208.) The remaining issues in action 3:99-CV-1624 were equitable issues, and therefore were for the Court. On June 18, 2003, the Court held that a constructive trust was not imposed in favor of the Plaintiffs, and therefore, the ownership of the stock in Old West Cowboy Boots remained with the Defendants. (Doc. 234.)

On August 28, 2003, Defendant Old West Cowboy Boots Corporation filed a notice of bankruptcy with the Court. (Doc. 255.) On September 10, 2003, the Court stayed the case until further Order of the Bankruptcy Court. (Doc. 257.) On June 23, 2005, the Court lifted the stay and reinstated the case. (Doc. 282.) Following the trial, Defendants filed various post-trial motions, including a motion for temporary partial relief of judgment, or alteration of judgment under Rules 59 and 60 pending the resolution of all post-trial and other motions (Doc. 213); a motion under Rule 50 for judgment as a matter of law (Doc. 218); and a combined motion for a new trial, and/or to amend, alter or modify the judgment, and/or for relief from judgment. (Doc. 209.) Defendants also made several motions to stay pursuant to Federal Rule of Civil Procedure 62(b). (Docs. 210, 243, 248, 250, 252.)

These motions are fully briefed and ripe for disposition.

LEGAL STANDARDS

I. Rule 50(b)

Under Rule 50(b), a party may renew its request for a motion for judgment as a matter of law by filing a motion no more than ten (10) days after judgment is entered. SeeFED. R. CIV. P. 50(b). In the present case, Defendants' Rule 50(b) motion was timely filed. (Doc. 218.) Judgment notwithstanding the verdict should be granted sparingly. See Walter v. Holiday Inns, Inc., 985 F.2d 1232, 1238 (3d Cir. 1993). In deciding whether to grant a Rule 50(b) motion:

the trial court must view the evidence in the light most favorable to the non-moving party, and determine whether the record contains "the minimum quantum of evidence from which a jury might reasonably afford relief." The court may not weigh evidence, determine the credibility of witnesses or substitute its version of the facts for that of the jury. The court may, however, enter judgment notwithstanding the verdict if upon review of the record, it can be said as a matter of law that the verdict is not supported by legally sufficient evidence.

Parkway Garage, Inc. v. City of Philadelphia, 5 F.3d 685, 691-92 (3d Cir. 1993), abrogation on other grounds recognized by United Artists Theatre Circuit, Inc. v. Twp. of Warrington, Pa., 316 F.3d 392 (3d Cir. 2003) (citations omitted). The question is not whether there is literally no evidence supporting the non-moving party, but whether there is evidence upon which the jury could properly find for the non-moving party. See Walter, 985 F.2d at 1238(citing Patzig v. O'Neil, 577 F.2d 841, 846 (3d Cir. 1978)).

II. Rule 59(a)

Under Rule 59(a), motions for a new trial must be filed within ten (10) days of the date the judgment was entered. SeeFED. R. CIV. P. 59. Defendants' motion for a new trial was timely filed. (Doc. 209.) The decision to grant a new trial is left to the sound discretion of the trial judge. See Blackiston v. Johnson, No. 91-5111, 1995 WL 563834, at *1 (E.D. Pa. 1995), aff'd 91 F.3d 122 (3d Cir. 1996), cert. denied 519 U.S. 953 (1996). Courts have granted motions for a new trial where: (1) there is a significant error of law, to the prejudice of the moving party; (2) the verdict is against the weight of the evidence; (3) the size of the verdict is against the weight of the evidence; or (4) counsel engaged in improper conduct that had a prejudicial effect on the jury. See Maylie v. Nat'l R. R. Passenger Corp., 791 F. Supp. 477, 480 (E.D. Pa.), aff'd 983 F.2d 1051 (3d Cir. 1992). Where the evidence is in conflict, and subject to two (2) or more interpretations, the trial judge should be reluctant to grant a new trial. See Klein v. Hollings, 992 F.2d 1285, 1295 (3d Cir. 1993).

III. Rule 59(e)

Under Rule 59(e), motions to alter or amend the judgment must be filed within ten (10) days of the date the judgment was entered. SeeFED. R. CIV. P. 59. Defendants' motion to alter or amend the judgment was timely filed. (Doc. 209.) In order to prevail on a motion to alter or amend the judgment, the movant must show: (1) an intervening change in the controlling law; (2) the availability of new evidence not available previously; or (3) the need to prevent a clear error of law or manifest injustice. See Max's Seafood Café ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999) (citing North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995)).

IV. Rule 60

Rule 60(b) states that "the court may relieve a party from a final judgment" for a number of reasons, including "mistake, inadvertence, surprise, or excusable neglect," because the judgment is "void," and "any other reason that justifies relief." FED. R. CIV. P. 60(b)(1-6). However, a motion under Rule 60(b) must be made within a reasonable time, and for parts (1), (2), and (3), no more than a year after the entry of judgment. FED. R. CIV. P. 60(c)(1).

DISCUSSION

I. First Use in Trademark Infringement

In their Rule 50 and Rule 59 motions, Defendants argue that judgment should have been granted for the Defendants on the issue of trademark infringement due to the Plaintiff's inability to tack on to the prior use of an abandoned mark. In determining whether trademark infringement has occurred, the party claiming infringement must demonstrate ownership, determined by prior use of the trademark. Gen. Bus. Serv., Inc. v. Rouse, 495 F. Supp. 526, 532-33 (E.D. Pa. 1980). Ownership is established through the first use of the trademark in commerce. Id.

Defendants argue that Jama Corporation lacks standing to bring a Lanham Act violation, as tacking is not permitted to demonstrate prior use. Essentially, Defendants argue that even if the M.K.J. Corporation owned the "Old West" trademark from 1990 to 1994, those rights did not vest in Jama Corporation, and Jama Corporation cannot "tack" the prior use established by M.K.J. Corporation.

A. Relevant Factual Background

M.K. Jalan testified as to the relationships between the various companies. Mr. Jalan stated that M.K.J. Corporation was initially a business with three (3) partners producing leather uppers for footwear. (Trial Tr. vol. 1, 33-34, Mar. 4, 2003.) Mr. Jalan stated that M.K.J. Corporation began selling completed footwear to the United States market in 1990. (Trial Tr. vol. 1, 36, Mar. 4, 2003.) M.K.J. Corporation was involved with the Dunbar Boot Company, who were the buyers of the boots and a representative of Acme Boot Company. (Trial Tr. vol. 1, 36, Mar. 4, 2003.) Dunbar Boot Company worked as an intermediary between M.K.J. Corporation in India and the Acme Boot Company. (Trial Tr. vol. 1, 36, Mar. 4, 2003.) At this time, the Acme Boot Company was having business difficulties, and Hy Muskat, the owner of the Dunbar Boot Company, suggested to Mr. Jalan that he take over the business of Acme Boot Company. (Trial Tr. vol. 1, 36, Mar. 4, 2003.) When M.K.J. Corporation began marketing cowboy boots in the United States, Hy Muskat and Mr. Jalan discussed the names for the western style boots, and coined the term "Old West." (Trial Tr. vol. 1, 37, Mar. 4, 2003.) When M.K.J. Corporation began shipping the boots in June 1990, the boots and the outside of the box had the term "Old West" imprinted on them. (Trial Tr. vol. 1, 38, Mar. 4, 2003.) The Dunbar Boot Company was to act as the distributor in the United States for the M.K.J. Corporation's boots. (Trial Tr. vol. 1, 37-39, Mar. 4, 2003.) However, Hy Muskat went through a financial crisis, and was unable to pay M.K.J. Corporation for the boots. (Trial Tr. vol. 1, 38-39, Mar. 4, 2003.) Mr. Jalan then discussed with Defendant Giriwarlal Gupta the opportunity to arrange for the sales and marketing of M.K.J. Corporation's boots. (Trial Tr. vol. 1, 39, Mar. 4, 2003.) The creation of Old West Cowboy Boots Corporation evolved from these discussions, and Ella Santiago acted as an agent of M.K.J. Corporation, incorporated Old West Cowboy Boots Corporation. (Trial Tr. vol. 1, 56-57, Mar. 4, 2003.) However, Mr. Jalan testified that M.K.J. Corporation was dissolved in February 1994. (Trial Tr. vol. 1, 89, 148, Mar. 4, 2003.) At the time, half a million dollars worth of boots were in the United States for disposal for sales. (Trial Tr. vol. 1, 89, 158, Mar. 4, 2003.) Furthermore, at the time of dissolution of M.K.J. Corporation, M.K.J. Footwear Private Limited had boots in its inventory that had the mark of "Old West" on them, and was still manufacturing boots in production with the mark "Old West." (Trial Tr. vol. 1, 158-59, Mar. 4, 2003.)

M.K. Jalan also testified as to the formation of Jama Corporation, and testified that Jama Corporation was formed between March and April of 1994. (Trial Tr. vol. 1, 149, Mar. 4, 2003.) He also testified that Jama Corporation first shipped cowboy boots in April or May of 1994, and that these shipments included the term "Old West" on the boots.

(Trial. Tr. vol. 1, 149, Mar. 4, 2003.)

B. Abandonment and Relatedness of Parties

Sufficient evidence was established at trial that M.K.J. Corporation had prior ownership of the trademark "Old West," as testified to by M.K. Jalan. For example, M.K. Jalan testified regarding a page from a catalogue printed in 1991 depicting four (4) styles of cowboy boots with the mark of "Old West," listing the company name of the M.K.J. Corporation. (Trial Tr. vol 1, 143-44, Mar. 4, 2003.)

Defendants argue that the Plaintiff cannot "tack" his prior use from M.K.J. Corporation to Jama Corporation. However, it is important to note that the term "tacking" is a term of art in trademark infringement law. "Tacking," or constructive use, permits a trademark holder to "tack" his first use date in an earlier, similar, but technically distinct mark, to a later mark, when the previous mark is the equivalent to the current mark in question. See, e.g. Brookfield Commc'n, Inc. v. West Coast Entm't, 174 F.3d 1036, 1047-48 (9th Cir. 1999). The technical ...


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