United States District Court, E.D. Wisconsin
S.C. JOHNSON & SON, INC., Plaintiff,
NUTRACEUTICAL CORPORATION, and NUTRAMARKS, INC., Defendants.
ORDER GRANTING MOTION FOR JUDGMENT CONSISTENT WITH
SEVENTH CIRCUIT'S OPINION (DKT. NO. 119), GRANTING
DEFENDANTS' MOTION FOR ATTORNEY'S FEES (DKT. NO. 130)
AND GRANTING PLAINTIFF'S MOTION TO RESTRICT DOCUMENT
(DKT. NO. 148)
PAMELA PEPPER UNITED STATES DISTRICT JUDGE
case has stuck around much longer than the pesky mosquitos
the parties' products sought to repel; plaintiff S.C.
Johnson & Son, Inc. filed its complaint seven and a half
years ago. Dkt. No. 1. Judge Rudolph T. Randa presided over a
February 2014 bench trial and, after post-trial briefing,
entered judgment in favor of the plaintiff. Dkt. No. 89. On
appeal, the Seventh Circuit reversed, finding that the
plaintiff had pulled a “bait-and-switch” on the
defendants. Dkt. No. 117; S.C. Johnson & Son, Inc. v.
Nutraceutical Corporation, 835 F.3d 660, 667 (7th Cir.
2016). After remand, the defendants filed a motion for a
judgment consistent with the Seventh Circuit's opinion.
Dkt. No. 119. On February 21, 2017, this court issued an
order finding for the defendants on their first and second
counterclaims. Dkt. No. 127. The court held oral argument on
the amount of profits to be disgorged, and gave the
defendants time to submit their motion for attorney's
fees and costs. Dkt. No. 128. They did so on April 7, 2017.
Dkt. No. 130.
17, 2018, the court issued an order asking the plaintiff to
provide briefing on the proper amount of disgorgement, and
asking the parties to explain whether the Supreme Court's
holding in Octane Fitness, LLC v. Icon Health &
Fitness, Inc., 572 U.S. 545 (2014) applied to the
defendants' motion for attorney's fees. Dkt. No. 143.
The parties provided their responses on August 17, 2018. Dkt.
Nos. 145-150. The court now awards the defendants $232, 000
in disgorged profits, grants the defendants' motion for
attorney's fees and grants the plaintiff's motion to
complaint alleged that defendants Nutraceutical Corp. and
Nutramarks, Inc. had engaged in trademark counterfeiting,
trademark infringement, false designation of origin, and
unfair competition regarding a “BUG OFF” mark.
Dkt. No. 1. The defendants answered and counterclaimed on
January 23, 2012, alleging that they were the senior
users of the BUG OFF mark by virtue of their
predecessor's-Sunfeather Natural Soap Company, Inc.
(“Sunfeather”)-nationwide use of the mark since
1992. Dkt. No. 5 at 7. The parties proceeded through
discovery and on August 15, 2013, the plaintiff filed a
motion for summary judgment. Dkt. No. 29.
reasons that will become clear later in this decision, the
court recounts here only the plaintiff's
arguments at summary judgment.
opening brief, the plaintiff asserted that it had acquired a
federal registration for the BUG OFF mark with a first use
date of 1998. Dkt. No. 30-1 at 3. It argued that because it
had shown a valid registration, the defendants had the burden
of demonstrating a “prior use” defense-in other
words, that they had established common law trademark rights
in the BUG OFF mark prior to the plaintiff's first use
date in 1998. Id. at 9. The plaintiff contended that
the defendants could not show this because (a) they could not
identify the specific geographic territories where the prior
good faith use had occurred and (b) they could not
demonstrate that the prior good faith use was both continuous
and substantial. Dkt. No. 30-1 at 1. The plaintiff urged the
court to apply the “market penetration” test to
analyze whether the defendants' prior use had established
nationwide common law rights to the mark. Id. at 11
(citing Brandt Industries, Ltd. v. Pitonyak Machinery
Corp., No. 1:10-cv-0857-TWP-DML, 2012 WL 3777145 (S.D.
Ind. Aug. 29, 2012)). This test would require the court to
analyze four factors on a state-by-state or region-by-region
basis to determine the scope of the defendants' alleged
common law rights to the mark. Id. at 11-17 (citing
Natural Footwear, Ltd. v. Hart, Schaffner &
Marx, 760 F.2d 1383, 1397 (3d. Cir. 1985)).
plaintiff also argued that the defendants could not show
substantial and continuous use of the mark. Id. at
18. This argument focused on how the defendants' product
appeared only in nationwide catalogs and not specific
territories. Id. at 20. The plaintiff did not argue
(or mention) that the defendants' post-2012 sales (or
lack thereof) would render their defense and counterclaims
reply brief, the plaintiff re-iterated its focus on the
pre-1998 time period. Dkt. No. 47. It conceded that the
defendants had used the mark prior to 1998, but maintained
that this “use” was not sufficient to establish
common law trademark rights. Dkt. No. 47 at 7 (“[The
plaintiff does not dispute that Defendants'
‘use' of BUG OFF occurred prior to [the
plaintiff's] priority date of June 22, 1998.”). The
plaintiff again advocated for the district court to apply a
market-by-market market penetration test to determine whether
the defendant could establish nationwide common law rights to
the mark. Id. It said:
A common law trademark is only protected in identified
geographic areas where customers would associate the mark
with the senior user's product. Hanover Star Milling
Co. v. Metcalf, 240 U.S. 403, 415-16 (1916). Federal
courts therefore apply the ‘market penetration'
test to determine in what markets, if any, the senior
user's mark is used and known. Based on the lack of
evidence regarding specific markets where
Defendants' product was sold, no reasonably jury could
find that defendants are entitled to a common law trademark
in any market.
Dkt. No. 47 at 7. As in its opening brief, the
plaintiff's reply brief did not raise the defendants'
alleged (lack of) post-2012 use as a ground for granting
Randa's January 14, 2014 decision recounted both the
plaintiff's and the defendants' histories using the
BUG OFF mark. Dkt. No. 65. He neither adopted nor rejected
the plaintiff's recommendation that he apply the
“market penetration” test, instead finding (after
reviewing Sunfeather's use of the BUG OFF mark prior to
[v]iewed in the light most favorable to Sunfeather, it has
presented sufficient evidence upon which a reasonably jury
could find that it was the senior user of the mark and was
distributing its BUG OFF product nationally prior to January
26, 1998, the date of first use in commerce claimed by the
Chervitz registration that [the plaintiff] eventually
purchased and now owns. Therefore, [the plaintiff's]
motion for summary judgment on the issue of trademark
ownership is denied.
Dkt. No. 65 at 26. Notably, Judge Randa also observed that
“[t]he Defendants' sales records demonstrate
continued sale of Sunfeather BUG OFF, from the time of
acquisition through present.” Id. at 20.
February 4, 2014 Bench Trial
parties filed their final pre-trial reports on January 6,
2014 (dkt. nos. 58, 61)-before Judge Randa issued the summary
judgment decision on January 14, 2014. Neither party's
“Statement of Issues” mentioned the
defendants' post-2012 sales as an issue for trial. The
plaintiff framed the issues with a focus on the years prior
Determining who owns superior rights in the BUG OFF mark is a
major issue in this case, and turns on whether Nutraceutical
can prove prior good faith use of its mark by establishing
substantial mark penetration in any specific geographical
market prior to June, 1998. . . . [The plaintiff] does not
believe [the defendants] can meet [their] burden of proof
because the evidence reveals only sporadic and insubstantial
sales by SunFeather prior to June of 1998.
Dkt. No. 58 at 3.
its opening argument at trial, the plaintiff again advocated
for the court to analyze whether the defendants had
established their common law trademark rights on a
market-by-market, state-by-state basis. Dkt. No. 76 at 10
(“Courts uniformly require parties to establish their
common law rights on a market-by-market, state-by-state
basis.”). The plaintiff's argument did not mention
the defendants' post-2012 use (or alleged lack of use) of
the BUG OFF mark as a basis for Judge Randa to find in favor
of the plaintiff. See Dkt. No. 76 at 6-20.
bench trial started on February 3, 2014 and concluded the
next day. Dkt. Nos. 75, 76. Instead of closing arguments, the
parties asked Judge Randa to allow them to submit post-trial
briefs, and he agreed. Dkt. No. 75 at 111. On February 25,
2014, the parties submitted proposed findings of fact and
proposed conclusions of law. Dkt. No. 77-79. They filed their
responses to each other's proposed findings of fact and
conclusions of law on March 11, 2014. Dkt Nos. 84-86.
court will touch on two relevant aspects of the post-trial
submissions. First, the plaintiff's proposed findings of
fact offered no facts about the defendants' post-2012 use
of the BUG OFF mark. Dkt. No. 78. In its conclusions of law
submission, the plaintiff said,
The evidence further does not support the broad conclusion
that any use of the BUG OFF mark in particular geographic
markets was continuous from prior to S.C. Johnson's
earliest registrations through the
present. Indeed, the evidence establishes that
sales decreased over time, and that from one year to the
next, sales in any given market were inconsistent and
Dkt. No. 79 at 11 (emphasis added). The plaintiff clarified
its position in its opposition to the defendants'
post-trial submissions; in response to the defendants'
proposed finding of fact eighty-five, the defendant wrote:
Incomplete. [The defendants] submitted documentary evidence
of sales of the SunFeather Bug OFF products only for 2011 and
2012, not for 2013 and 2014 (Trial Ex. 1108.) This document
demonstrates that a BUG OFF product was sold in approximately
twenty-two states, which is far from nationwide. (Trial Ex.
1108.) The sales that do exist are too small to demonstrate
continued use for purposes of establishing prior common law
rights. (Tr. Ex. 1108.) There is no testimonial evidence
supporting continued use either. The testimony cited by
Nutraceutical does not indicate that SunFeather BUG OFF
products are available in retail stores or where these
purported retail stores are located. (Tr. Tran. 2, pp.
103:18-104:2.) Instead, the testimony merely states that
SunFeather products are manufactured by Nutraceutical
subsidiaries. (Tr. Tran. 2, pp. 103:18-104:2).
Dkt. No. 85 at 35. In its response brief to the
defendants' conclusions of law, the plaintiff asserted
that “[the defendants] ha[ve] not presented any
evidence of sales from 2013 through the present. It simply
failed to provide evidence that any market penetration was
continuous from first use through the present day.”
Dkt. No. 86 at 7.
Judge Randa's August 29, 2014 Verdict
Randa issued his decision on August 29, 2014. After
recounting the histories of the parties' use of BUG OFF,
he analyzed whether the defendants had established common law
rights to BUG OFF. Id. at 22. He observed that the
parties disagreed on “the proper test for establishing
a common law interest in a trademark and whether a party may
prove a nationwide common law trademark.” Id.
at 25. He recounted that the plaintiff advocated using the
“market penetration test” to determine whether a
party had established common law trademark rights and cited
Natural Footwear, 760 F.2d at 1395, in support of
its proposition. Id. at 25. Judge Randa commented
that the defendants objected to the market penetration test,
citing Buzz Off Insect Shield, LLC v. S.C.
Johnson & Son, Inc., 606 F.Supp.2d 571 (M.D. N.C.
2009) as case from-at the time-five years earlier, in which
the plaintiff itself had argued for a
totality-of-the-circumstances test (rather than a market
penetration test) when it suited the plaintiff's
interests. Id. at 25.
Indeed, in litigating BuzzOff outside this Circuit,
[the plaintiff] advocated and prevailed with its contention
that “[e]stablishment of common law rights is
determined ‘on a case by case basis, considering the
totality of the circumstances.' Johnny Blastoff, Inc.
v. L.A. Rams Football Co., 188 F.3d 427, 433 (7th Cir.
1999) (affirming determination of prior established common
law rights as basis for infringement and injunctive
relief.” (Ex. A, Def's Reply (SCJ's Mem.
Support Permanent Nationwide Inj.) 8.) (ECF No. 84-1) [The
plaintiff] now argues for a market penetration test and does
not mention Johnny Blastoff-a decision which is
binding on this Court. At best, SCJ's position regarding
the proper test for establishing nationwide common law rights
in chameleonic, and its contradictory behavior concerns the
Id. at 26. Judge Randa used the totality of the
circumstances test to determine that the defendants had
established protectable rights in the mark. Id. at
26-30. He concluded that
[t]he totality of the circumstances indicate that Sunfeather
has established a national presence based on the promotion
and sales of its product in Frontier and Smith &
Hawken's catalogs, its availability in Smith &
Hawken's stores, its internet presence, its own national
catalog circulation, and its marketing and sales at craft and
trade shows. Thus, Sunfeather has presented sufficient
evidence that it was the senior user of the BUG OFF mark and
it was using the mark nationally from the cancellation of
SCJ's mark until June 22, 1998. See Johnny Blastoff,
Inc., 188 F.3d at 433-34.
Dkt. No. 89 at 29-30.
this criticism of the plaintiff, Judge Randa found that the
defendants “ha[d] not presented evidence that they have
continuously used the BUG OFF mark.” Id. at
30. He noted that while the defendants' sales records
demonstrated continued sale of Sunfeather BUG OFF from the
time of acquisition through 2012, “they do not
demonstrate continued sales after 2012. This constitutes
non-use for more than one year. Therefore, the Defendants
have not demonstrated continuous use of the BUG OFF
mark.” Id. He then found that the plaintiff
had not abandoned its use of the BUG OFF mark. Id.
Randa concluded that because “[t]he Defendants ha[d]
not established their prior common law continuous use of the
BUG OFF mark, SCJ's abandonment of the mark, or the
invalidity of the mark, ” Judge Randa found that the
plaintiff had established the elements of its federal
trademark infringement claim and that the defendants could
not establish the elements of their counterclaims.
Id. at 36-37. He issued a permanent injunction
against the defendants and ordered them to turn over all
infringing product to the plaintiff. Id. at 39.
defendants filed a motion under Fed.R.Civ.P. 59(e) and 60(b),
asking Judge Randa to reconsider that decision. Dkt. No. 98.
They argued that “in finding that the Defendants failed
to present evidence of continuous use from 2012 to the time
of trial . . . the Court seemingly overlooked both [the
plaintiff's] repeated admissions and representations on
this issue, as well as the Court's own earlier
recognition that this fact was undisputed.”
Id. at 4. Judge Randa denied the motion on September
22, 2015, finding that the defendants had not established a
manifest error of fact or law regarding the court's
determination that the defendants had not established
continuous use of the mark post-2012. Dkt. No. 107.
defendants appealed. Dkt. No. 109. On August 25, 2016, the
Seventh Circuit reversed the judgment in favor of the
plaintiff and remanded the case to this court for further
proceedings. Dkt. No. 117; see also Nutraceutical,
835 F.3d 660 (7th Cir. 2016).
Seventh Circuit recounted that
[the defendants] defended on the ground of prior and
continuous use. From the time the pleadings were filed
through the trial, the parties all agreed that the period in
dispute was before 1998. But the earth under [the defendants]
shifted after the district court requested post-trial
briefing in lieu of closing argument. For the first time,
[the plaintiff] argued that [the defendants] had failed to
prove continuous use of the mark aft ...