ninety thousand dollars and on appeal s and mine challenges both liability findings and damage findings and i'd like to start with the initial issue of the protect the protect ability of the mark the court should reverse the liability finding because streamline production systems the market issue is descriptive an s p s i failed to establish secondary meaning as this court knows the fundamental difference between a suit suggestive mark in a descriptive more is that he suggests a mark is inherently distinctive and the party suing for infringement does not have to establish a secondary need a descriptive mark on the other hand is not inherently  a descriptive mark is that it describes some sort of a characteristic a quality a function of purpose something about the product at issue that's been the most important aspect of a descriptive more now in categorizing categorizing the marks courts look to the overall context in which the mark is used you don't just look at the name itself you look at how the party he's trying to enforce the mark uses the mark and you do so in connection with the intended market or their customers who are there actually serving them work to here streamline production systems the market issue is used by s p s on in all of their web material brochures except for a as branded over images or pictures of highly sophisticated natural gas processing equipment there is no question that streamline is is a word that is used to describe a characteristic or function of these products namely that they are a fish and that's what streamline means the testimony at trial was that streamline which notably is the only word that is in common with my client's name streamlined manufacture streamline means efficient and that's a record of record aside at twenty seven that's the testimony the only testimony as to what streamline means in its course it comports with the natural definition of streamline streamlined means of fission branded over natural gas processing equipment it describes the function of their product undeniable and moreover the testimony in the record as to who are the consumers of these products shows without question that they are highly sophisticated natural gas plant operators and these pieces of equipment or does it actually do the natural gas the equipment that they've got they process my understanding is that is there as they're drilling for natural gas it helps to bring the gas out of the ground that process and it makes the it makes  the gas flow into the into the system that's out there on the at the suck and these or pieces of equipment that are highly sophisticated they're very expensive and they take sometimes months to manufacture so clearly the consumer here is when the gas fire without that i mean i'm very ignorant about this and i have and i don't know that it was fully developed to try to be honest on that but what's clear is that the the equipment is to process natural gas so the idea of of streamline used over that it can be nothing else but you describe some sense of the fission see which is what the testimony was are you talking about process it or get it out of the ground you know i don't know that that that it was i don't know that the testimony was entirely clear on that but that would be quite different wouldn't well i don't think i don't think so that the product itself these these equipment is clearly used in connection with the natural gas refining process and whether it's out of the ground or or otherwise i believe that every i'm not production out of the ground your honor i'm not sure that the record is entirely clear and it may be that these pieces of equipment bearing can be used in both capacities but what's clear is that it is used in connection with the natural gas and so they were streamlined which means fission it clearly describes an aspect of the product and therefore it specially in conjunction with with the type of sophisticated consumer that we're dealing with here so that the determination or the conclusion that streamline is descriptive and not suggesti not only borne out in the record it's borne out through case law and other decisive authority that we've sudden in our brief that goes back is as far as nine hundred thirty seven where it was initially i'm sorry the the patent and trademark office initially looked at the word streamline and it squarely addressed the issue of whether this word streamlined is suggestive or descriptive they held not surprisingly that it is descriptive we've cited many other  decisions that looked at either streamline or something very comparable such as easy flow slimline slow flow high slow a simplified all of these are or similar types systems mark is therefore descriptive it was their burden to show in order to advance their infringement up at auction it was their burden to show that their mark has acquired secondary meaning that's where this court's decision in the test master test measures case comes and is so important in that case this court described as a secondary meaning arises when the mark has in the mind of the public come to stand for a name or identification for that product or  but is this court described in order to prove secondary meaning it's the burden of the plaintiffs to offer evidence some sort of of empirical inquiry and to show that a significant significant quantity of the consuming public understands the mark to be associated with their name survey evidence things like that all that was described in the test master's case here there is zero evidence  evidence survey evidence evidence from consumers in the field that would somehow support the notion that the consumers of these products understand or associate the word streamlined as being associated with therefore their the record is devoid of any evidence of secondary meaning so we submit that as that as an initial matter that this court should reverse and render judgment in favor of s m i because they failed to establish secondary meaning and these marks  descriptive i'd like to switch gears now and talk about the actual liability finding on the infringement which is a separate issue that we've also addressed it is s p s i's burden to prove some sort of a reproduction counterfeit copy or colorable imitation of their trademark and in addition they must establish that the use of the mark or the alleged infringement was likely to cause confusion and i'd like to address those two issues before and i address the damages with respect to the likelihood of confusion no i'm sorry but their specs of the colorable imitation it's important for this court to remember that the mark that they're trying to protect is not the word stream they don't own stream  systems they've never gone by the word streamline product or streamline products or anything that can be fairly characterized as a colorable imitation of their mark s and i goes by the name s and i or as they pointed out occasionally they would answer the phone streamline but there's no evidence that we've ever used anything that is close to streamline production systems which is their mark with respect to the likelihood of confusion there are many  many aspects and many elements of that and we've addressed all of those in the brain but as this court has pointed out in other courts have as well the most important element is the element of actual confusion and here the jury was instructed that there must be a significant number of reasonable people that are likely to be confused or deceived by the more s p s i has conceded in their briefs at page twenty three that the relevant inquiry is whether there is confusion in the minds of potential customers single solitary sale from some customer who intended to do business with their customer with their company but confused our company for their there is no evidence which explains precisely why the jury awarded zero damages when it comes down to profitability i want to in my in my remaining time before i reserve five minutes for a vote on want to address the damage aspect as i just mentioned zero war lost profits that's extremely telling here so how do we get to a six hundred ninety thousand dollars judgment with the theory that they advance first was this idea of a royalty the problem with the theory is that even though some courts have recognized a royalty recovery in a lanham act trademark infringement case those cases almost all of them deal with situations where you have two companies that had negotiated a potential use of a license where the plaintiff part of their income stream part of what they do is they license their product out for other people to use and where the defendant may have entered into negotiations but those negotiations shut down but they use the marquee anyway that's the situation where royalties have been allowed here there's no evidence of that and certainly backing up a little bit there's no evidence that we ever used streamlined production systems so certainly we never would have entered into a license to use streamlined production systems that's not our name we're streamlined manufacturing so they want to try to to substitute the lack of proof here for a hypothetical negotiation we've cited several cases including cases from the fifth circuit that indicate that any sort of loyalty has to be based on a prior negotiation and that's most tellingly of the boston professional hockey season case but moreover even in cases where you've had prior negotiations which don't exist here they have to establish in order to be entitled to a royalty award they have to show like the amount of the award to some correlation of the rights that we appropriated now in other words that we would have benefited something by paying them a royalty amount of money that we would have gotten something for and that here's where leathers testimony is so important he says that what we got was the ability to charge a premium prices well there's no evidence that we ever charged a premium price because we name them ourselves streamline manufacture no evidence they say that we gained the ability to better compete against start up companies what start up companies and how did we gain ability to better compete the evidence in the record as mr morale is the entire customer base of s and mine is derived from mr morales has prior business relationships not any capitalization on a name or anything other than his prior relationships that's it that's why they didn't advertise they didn't need to it's all a preexisting client base that they've continuously served see theory doesn't work and we would ask the court to throw it to vacate that that or more and specifically reject the idea that it can be based on some sort of a hypothetical negotiation where there's no evidence that the parties have ever entertained the idea or notion of bargaining for the right to use what they say is they're protected more if you know anything by way of what other companies in the business do in terms of royalties you end that's that they did not they base it on this hypothetical negotiation and they tried to justify the three to five percent figure with the the supposed benefits that i just went through such as the ability to compete that's when there's no evidence of that but the judge king no there's no evidence that yours another manufacturer of natural gas processing equipment to order their businesses to license out their name and here's what other companies in that business would charge for the use of that there's no evidence of that would have to be the same business i think so i think so and i think that the cases that they cite for a royalty award show that they're the one with  the sports drink it shows that it has to be in this the same line of business and there's no evidence here quickly the unjust enrichment i want to address because what's telling here even though there's euro damage is in terms of profits derived because we have our own customer base and we've never capitalized off their customers the jury awarded the identical royalty thing your t thirty or thirty thousand for under unjust enrichment award and here your point is that there's no evidence of unjust enrichment but i also want to direct the court to the record at twenty four twenty six and the record at twenty seven twenty four because those two excerpts explain why the jury nevertheless awarded the identical figure for an unjust enrichment their expert witness testified it's an unjust enrichment that they were able to use the trademark for for free basically it's the royalty calculation so they duplicate it and they convince the jury to do it that's it that's a double recovery counsel in their closing argument said the same thing  the quote there was during the closing argument is p r as counsel described unjust enrichment by commenting again this is the quote again that's the royalty so we're that figure as the royalty it's plainly a double recover i see confusion that i'm going to go through first and then we'll talk about damages which frankly i think is the real sticky part of this appeal the first digit it will to answer your question judge kate we're not a production company if we were a production company then streamline production systems might be descriptive but we're actually not in that business to get to that in just a moment the first digit is the strength of the market now you've heard a lot of argument here that the markets really descriptive they had a a product called better and better better hyphen in butter better and better is an oil based butter substitute con agra came up with better and better but it was better i think in butter and so the lawsuit was filed and the court applied his adamant test in the first test is the dictionary test and the court found in blinko that butter and butter is not a standard dictionary term so that th ir test doesn't apply i would suggest that streamline production systems is not a standard dictionary term although you can't find a definition of streamline you can find a definition of production and system but none of those definitions say natural gas processing and oilfield services so the dictionary test i would suggest falls in favor of finding not descriptive the second test is the imagination test and that is if the mark requires imagination thought or perception to conclude the nature of the goods now in center and they were trying to get a trademark on fish from and that was found to be not detectable because you don't have to use any imagination when you see first fry to understand what it is but the court found that better and better you did have to use imagination because you don't automatically think oil based but are substituted when you hear that i would suggest that when you when you hear streamline production systems you don't think pressure vessels heat exchangers the gassers gas separators you don't think about that so you have to use imagination to understand what the market means and who it is the third test is the likelihood that a competitor would need the term and its market to describe their product obviously everybody who sells fish fry is going to have five fish with this on their product you need that on there to tell people what it is well the court and blanco said that you did not need the competitor did not need to have better and better on its product to describe what its product is now since there is we don't sell a streamline we don't sell a production you don't need streamline in your name to define to describe what your goods or services are in our case so that show that it's not really descriptive you don't need that made you don't need streamline in your name and the fourth test is the extent others have used it the name marketing their product will lots of people have fish fry on their products marketing the fish fries that's why fish fry was not protective all there just blinco and con agra had better and better on their products so there was a very small extent almost no extent that any other companies were using better and better and same situation here there are a lot of there was no evidence of any other companies in the natural gas processing equipment business we streamlined their name it's just us two so all four of the this court's test and sat around as applied in lingo fall in favor of finding a streamlined production system is not merely descriptive the second digit is the similarity the marks this court found in marathon manufacturing versus inner light that the more closely the products are the less similar the marks need to be defined infringement the marks and marathon were very different in fact marathon had a the corporate logo of the phoenix rising from the ashes and the word marathon and the infringer just had marathon ten they were nickel cadmium batteries but nonetheless the court found that there was infringement and likelihood of confusion even though the marks were not identical in our case their blue and white strain line manufacturing streamline production it's on their name plate on their claim and out in the field it's on their websites  the third day so i would suggest to you that that digit also falls in favor of finding that the mark is at least suggestive the third digit is similarity or products well there's no dispute that we sell the same products does do a lot of advertising on notepads they hand out calendars and pins they advertise on a race car they have brochures so they advertise a lot see my manufacturing claims they did here's probably the most important digit actual confusion we don't have to show actual confusion to prove the likelihood of confusion but there were instances after instances that showed that the first one pioneering west texas pioneer called us and wanted to buy some more pressure vessels from us well we never saw a pioneer pressure vessel i saw that and there's a name actual confusion from a come customer that was in two thousand and twelve vendors were confused we had on more than one occasion the vendors who we ordered equipment from ship it to our core don't quote houston office we were denied credit in corpus christi by a vendor because they said we were way behind on our bill and when we finally got to the bottom of it it was the infringers that were behind on their bill and that's why credit would be extended to customers we've got the secretary of state of texas contacted the defendant saying you're you need to pay your franchise taxes and it was really us that secretary of state was confused about work at their plant and he saw a streamlined plate on a pressure vessel and so he goes to his contact chris evans and says why don't you let us bid on your processing equipment and chris says we're already buying from you equipment on it and streamlined manufacturing same line production systems there was an authorized vessel inspector that went to the defendants and said you know there's another company that has your names got streamline here's a guy in the industry that goes around everywhere inspecting people's equipment and said you got somebody else with your name and it finally union gas was a customer of ours that we did work for they sent to pay their payment to the defendant as i'm going through all this and i finish up all these instances of actual confusion i ask the defendant on the stand on you know don't we have a right to protect our name up talking about that right and what did you do to when you when you heard all this what steps would you that's very important for intent right after that i start talking to the defendant about how they set their business up and it was a competing business with a former employer and i said and you got all your customers by poaching your former employer he said what does that mean i said stealing he said yes so now the jury has heard of all these instances of actual confusion with a deep nothing to try to remedy it took no steps to alleviate confusion and how they set up their business and the stealing and dishonesty was their business model it's a very very important to note when you're talking about confusion of customers that the defendants sold in large part to resellers superiors not to the end user that's at page twenty two fifty three streamline production systems sells to the an user so it's very very difficult in this case to figure out who ended up with a heat exchanger or a gas separator or reheat or thinking they got it from streamline production systems when they bought it from a distributor who may or may not have known who they're buying from but certainly in order for streamline production systems to show we lost this sale to this customer because they were confused it's a diverted sale we would have to depose or find out from every one of our customers the products they bought and if they were confused and every one of the end users sold to buy the distributor that the defend depose all the distributors and oppose all of the companies they sold to that's not reasonable that's not even that's probably not even duple and i say all that any fish up the ante i say all of that to point out as we're going to get to the damages here in a minute this actual confusion and the poaching and the fact that they sell to resellers and middlemen  know there was another mark that you that you adopted once you find out about actual confusion you have to stay here to take reasonable steps to alleviate it or you do become actively infringing that shows your intent if you know about it and you don't do anything to alleviate the confusion they took no steps to alleviate it they intentionally and willfully were blind to it and the jury found that there was a cease and desist letter sent to the and we're not going to stop we have to file a lawsuit to make them stop this is the first lawsuit the owner of streamline productions of ever found his life and he was willing to just let it go if they would just stop and change her name but they refused he sent a letter they refuse we found lost and we're going to have stipulated injunction when they agreed to change her name and they still don't change her name they had a deadline they let it pass because they didn't want to waste  s and what have you they didn't even comply with the injunction they agreed to this all go through their intent reach allison purchasers we don't so retell and we just talked about the purchaser they sell to resellers we sell to end users so it's it's just a monumental task to figure out the person they ended up with this component if they were confused or not with all these layers in blink of the customer list of con agra all the overlap the judge said the court said for each and every customer that blinco ever sold to irrespective of actual confusion you your lost profits blanco said i should get it on all their cells the court said con agra is nationwide you're in seven states that's a windfall so no it is true and i hope that this case hypothetical negotiation or if you if the rule is wrong damages are not available to trademark infringement cases where there is not a written license agreement that's expired or an offer of license agreement that was denied or rejected if that's the role say it will be damages not available unless a written agreement exists that reflects a previous party's agreement if that's the rule say it because i as i read the the cases particularly the burning vs dicky brain case i mean the court says hypothetical royalties may be awarded in trademark cases is specially if there's a licensing agreement fifteen u s c a lemon seventeen says the court has broad discretion and this court found in blinco the court has unusually broad discretion to fashion a remedy trademark infringement case if that's the case if the court has broad discretion subject to the principles of equity why is the court hamstring when damages in a particular case are difficult if not impossible if lost profit are not difficult if not impossible to prove royalties based on hypothetical negotiations are allowed in patent infringement cases they're allowed in copyright cases to not allow that and i trademark a seems to me to be a against the equities because distal company for example could afford to depose all those people nobody could but exxon or b p and even exxon or b p doesn't want to get their customers every single customer they have involved their litigation that's not reasonable that's not a quibble in this case it was we cannot prove we lost a sale that's true but that also happens in patent cases and copyright cases and to say it's not a lot of trademark cases seems to me to be frankly arbitrary there are other circuits that allow a recovery of royalties based on a hypothetical negotiation seven circuit third circuit lost profits and costs well the profits were twenty one million that's what the court heard the court also heard that a reasonable world is three to five percent the court could have awarded twenty one million but we couldn't prove a nickel of the damage direct damage and so that would have been a windfall the court didn't do that instead the court if took a three percent to twenty one million just six hundred thirty thousand amount of time but in one soon what do you say about his unjust enrichment the number is the same because they don't basically that number is almost impossible to calculate but what it's for the reason the infringement you know just richmond is or what's going forward they got they got an accelerated market entry there their equipment is going to be out the feel now for the next twenty years of their name plate they get not out there that that goes on for the next twenty years that that way but in a war dead fits within what the jury found when you put it in context of the reason walty and all the the question about whether that's even allowed or not the court has discretion to fashion a remedy and the court found that that number was an accurate number for their accelerated market entry and the fact that their friends think they're friends but it's ongoing and i don't think that you can want to address several points and you know response firstly that the idea of the descriptive mark what he said is that it's a suggestive markets not to strip descriptive because when you look at the definition of streamline it doesn't say natural gas process that's not the test a descriptive mark describes a function here streamline means efficient it's describing their equipment it is a descriptive mark next your honor judge stuart you asked about the website and i want to address that because i think that this is so important in this in this appeal the timeline of the website i set forth in my brief in two thousand and one just before admittedly before my company came into existence two thousand and one they they got the rights to use streamline t x dot com in their pleadings they say that they used it for about six or seven years they forfeited that website by two thousand and sixty thousand and seven time for a fourth and now by two thousand nine or two thousand and ten my guys are they're not even really interested in doing in getting a website they've got a preexisting customer base but their even probably need to get of web site would be helpful to us so they go on go daddy dot com and they look for a name and it of course is available streamline t x dot com nobody else has it now when they had that website for those six or seven years before we legally acquired the web domain the testimony in the record is that what their web site looked fight was a generic picture of an oil derrick that's it and they said they don't even generate sales from we give them our or the trademark or the i'm sorry the domain name in the two thousand and nine two thousand and ten time frame and they develop a nice website that describes their products and services and what they do in two thousand and eleven these guys s p s on they say they find out about them and they're mad about it apparently two thousand and eleven they then search for and get the rights to streamline t e x dot com a website now that looks strikingly similar to the website that we have legally acquired they changed the of the looking appearance of that website to now make it look like our w honor asked about where the website similar there they are they were similar that's the testimony by they're doing now they knew of our company by two thousand and eleven they don't send a letter until two thousand and fourteen most of the argument that i heard was well there's all this confusion going on and us m i should have should have researched him and done something about this in contacted us and address the problem they knew about our company by two thousand and eleven when this whole issue with the website came up and they kept quiet they not only kept quiet they did develop their own similar web site they then registered mr rennick register the mark for the first time in his own name not in the company's name to the whole idea of of intent here the question for the court is when we came up with our name streamlined manufacturing did we do it with some sort of been tend to take something from them the only evidence in the record on this point is that my clients had no clue that there's a company one hundred miles away that serves an entirely different customer base that calls themselves streamline production no clue and in fact the testimony is that they properly retained a lawyer who did a search on the secretary of state website for a name and they found this name that was available open and not in use streamline infection the intent element has to go to when we set up the name the name of the company there is zero evidence of intent and on this issue of intent i think the court has to question and six should certainly wonder why is it did they keep quiet for so many years alter the website to make it look like ours now on this issue of confusion that they talk about the court will note that the only two examples that they cited that actually involve consumers of the product is century in pioneer both of those examples involve situations where a company is out there and sees a product that s and mine in fact should and the cold there they benefited from what they say is the alleged confusion they can't find of all of their three hundred plus customers on their list they can't find anybody and nobody testified that anybody that they serve confused them for us and reached out to us it's non