Wednesday, August 8, 2012, 5:59 PM

Defendants File Appeal with 11th Circuit of $1.79M+ Judgment in Trademark and Cyberpiracy Case

On July 25, 2012, defendants in a case with multiple claims, including trademark infringement and cyberpiracy under the Lanham Act, filed an appeal with the U.S. Court of Appeals for the Eleventh Circuit.  The defendants are appealing a final judgment rendered on July 10, 2012 by Senior Judge Hugh Lawson of the U.S. District Court for the Middle District of Georgia, Valdosta Division, awarding the plaintiff $1,791,591.61 in damages, attorneys' fees, and miscellaneous costs.

The plaintiff in the appealed case, B&F System, Inc. ("B&F"), based in Dallas, Texas, describes itself on its website as "one of America's leading direct importers and product designers."  B&F is the named registrant in several federal registrations for the trademark Maxam®, for a variety of products, such as cutlery and flatware, steel cookware, and china dinnerware.  Additionally, B&F registered on the federal "Supplemental Register" the shape of a knob used on pot and pan lids, pictured below ("the Lid Knob Trademark").  Under certain conditions, one may claim the shape of a product as a trademark.
Excerpt from U.S Trademark Reg. No. 3,266,496

The U.S. Patent and Trademark Office ("USPTO") describes the Supplemental Register as:
[a] secondary trademark register for the USPTO. It allows for registration of certain marks that are not eligible for registration on the Principal Register, but are capable of distinguishing an applicant’s goods or services.  Marks registered on the Supplemental Register receive protection from conflicting marks and other protections, but are excluded from receiving the advantages of certain sections of the Trademark Act of 1946.
The dispute arose out of a pair of November 1986 agreements between B&F and named defendant Lloyd LeBlanc, Jr.  One agreement ("the Distributor Agreement") defined the terms under which Mr. LeBlanc was to serve as an independent distributor for B&F, with operations to be based in Tifton, Georgia.  In the other agreement ("License Agreement"), B&F granted a license to Mr. LeBlanc of rights to the "MAXAM" service mark.  According to findings by the jury in the trial of the case, these agreements were terminated on May 31, 2007 and November 12, 2007, respectively.

B&F's amended complaint alleged that following termination of those agreements, the defendants continued to use the "MAXAM" marks, registered the domain names "www.maxamwholesale.com" and "www.maxamwholesale.net," and continued to use B&F's customer list.  B&F asserted several causes of action against the defendants, including infringement of registered marks under the federal Lanham Act (regarding certain defendants' use of the registered "MAXAM" mark and of the Lid Knob Trademark), common law trademark infringement (regarding certain defendants' use of the unregistered mark "MAXAM WHOLESALE"), and cyberpiracy under the Lanham Act (a claim added to the Lanham Act by the Anticybersquatting Consumer Protection Act ("ACPA")) arising from the registration of the domain names.  B&F's amended complaint also asserted state law claims, including a claim against Mr. LeBlanc for breach of contract and against certain other defendants for tortious interference with the contractual relationship between B&F and Mr. LeBlanc.

The defendants counterclaimed against B&F, and those that were ultimately adjudicated were Mr. LeBlanc's counterclaims for breach of contract and for breach of the implied covenant of good faith and fair dealing, and and all defendants' counterclaim against B&F for cancellation of the supplemental registration for the Lid Knob Trademark.

The Middle District of Georgia conducted a three-week trial of the case in three phases: 
·         In Phase I, the jury decided the issues of: (i) whether a partnership existed between defendants Lloyd Leblanc, Jr., Lloyd J. ("Jody") LeBlanc III, and Arthur Jeffrey LeBlanc for purposes of assigning potential liability on B&F's breach-of-contract claim; (ii) whether two individual defendants were aware of the License Agreement prior to November 12, 2007; and (iii) when the agreements were terminated;
·         Phase II dealt with liability issues on B&F's remaining claims and defendants' remaining counterclaims; and
·         Phase III involved the issue of whether, if B&F proved that certain defendants were liable for tortious interference, B&F was entitled to punitive damages.

The jury returned verdicts resolving the Phase I issues (including a finding of no partnership); finding in Phase II that all but one of the defendants were liable on B&F's claims (detailed below) and that B&F was not liable on counterclaims for breach of contract or for breach of the implied covenant of good faith and fair dealing; and finding in Phase III that B&F was not entitled to punitive damages.  More particularly regarding Phase II, the jury imposed monetary liability against certain defendants as follows:
·            $72,114 against Lloyd LeBlanc, Jr. for breach of the Distributor Agreement;
·            $35,665 against Lloyd LeBlanc, Jr. for breach of the License Agreement;
·            $7,500 against defendants Arthur Jeffrey LeBlanc, Lloyd LeBlanc III, Direct Source Imports, Inc. ("DSI"), and Productos Mexicanos Don Jose, Inc. ("PMDI"), jointly and severally, for tortious interference with the Distributor Agreement;
·            Damages for tortious interference with the License Agreement, namely:
$35,665 against defendants Arthur Jeffrey LeBlanc, Lloyd LeBlanc III, Lloyd J. LeBlanc Jr., and Edna LeBlanc for Arthur Jeffrey Leblanc's tortious interference;
$35,665 against defendants Lloyd LeBlanc III, Arthur Jeffrey LeBlanc, Lloyd J. LeBlanc Jr., and Edna LeBlanc, jointly and severally, for Lloyd LeBlanc III's tortious interference;
$35,665 against defendants PMDI, DSI, Arthur Jeffrey LeBlanc, and Lloyd LeBlanc III, jointly and severally, for PMDI's tortious interference; and
$57,066 against defendants DSI, PMDI, Arthur Jeffrey LeBlanc, and Lloyd LeBlanc III, jointly and severally, for DSI's tortious interference;
·            Monetary awards against all defendants (except defendant LeBlanc's LLC) on B&F's federal (Lanham Act) trademark infringement claims, namely:
o          $600,000 in actual damages; and
o          $357,040 in profits; and
·              Monetary awards against Arthur Jeffrey LeBlanc on B&F's Lanham Act cyberpiracy claim, namely:
o   $96,000 in actual damages; and
o   $96,000 in profits.

Additionally, the jury found against certain defendants on B&F's claim for violation of the Georgia Uniform Deceptive Trade Practices Act, and that the charged defendants knew their trade practice was deceptive.  The jury also found that the conduct concerning all Lanham Act claims was "malicious, fraudulent, deliberate, or willful."

In a post-trial order entered on June 29, 2012, the Middle District of Georgia:
·     Denied defendants' motion for a judgment as a matter of law or, in the alternative, for a new trial or remittitur;
·     Granted in part B&F's motion for statutory damages on the cyberpiracy claim, allowing B&F to elect between the jury's monetary award on that claim and a total of $180,000 in statutory damages;
·     Granted in part B&F's motion for attorney's fees under the Lanham Act, adding an award of $372,857.50 in attorney's fees and $2,354.11 in "non-taxable costs";
·     Granted in part B&F's motion for a permanent injunction; and
·     Dismissed the counterclaim for cancellation of the supplemental registration for Lid Knob Trademark.

Loosely stated, the permanent injunction ordered defendants to cease sale, advertising, and promotional activities regarding the marks "MAXAM," "MAXAM WHOLESALE," and the Lid Knob Trademark, and to destroy all advertising and promotional materials regarding the two "MAXAM" marks.

In the July 10 final judgment, the Middle District of Georgia entered judgment on the jury's monetary awards (except for the cyberpiracy award, which the court modified to reflect the $180K statutory damages award), imposed an award of post-judgment interest on all monetary awards, except for the attorney's fees and non taxable costs, and otherwise reiterated the post-trial rulings made in the June 29 order.

The Eleventh Circuit appeal now pending is The B&F System v. Lloyd LeBlanc, et al., No. 12-13946, docketed July 31, 2012.

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