Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-00688/USCOURTS-azd-2_13-cv-00688-2/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1121 Trademark Infringement

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WO

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Stone Creek Incorporated, 

Plaintiff, 

v. 

Omnia Italian Design Incorporated, et al., 

Defendants. 

No. CV-13-00688-PHX-DLR 

ORDER 

 

 Plaintiff Stone Creek Incorporated (“Stone Creek”), an Arizona furniture 

manufacturer, accused Defendant Omnia Italian Design Incorporated (“Omnia”) of 

infringing its trademark by selling furniture labeled with Stone Creek’s mark to The BonTon Stores Incorporated (“Bon Ton”), which in turn sold them to customers in Bon Ton’s 

trading territory (“BTTT” or “Territory”).1

 In October 2015, the Court presided over a 

four-day bench trial. At its conclusion, the Court issued its findings of fact and 

concluded that Omnia did not infringe Stone Creek’s mark because its use of the mark 

was unlikely to cause confusion. (Doc. 175.) Stone Creek appealed. 

 On appeal, the Ninth Circuit explicitly credited this Court’s factual findings, but 

determined that the Court erred in its application of the law—specifically, the Sleekcraft 

factors, which guide the likelihood of confusion inquiry. Stone Creek, Inc. v. Omnia 

 1

 The BTTT consists of all areas within 200 miles of a Bon Ton furniture gallery. (Doc. 175 ¶ 17). The Territory includes portions of Iowa, Indiana, Ohio, Wisconsin, 

Pennsylvania, Illinois, and Michigan. (Id.) 

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Italian Design, Inc., 875 F.3d 426, 436 (9th Cir. 2017); AMF Inc. v. Sleekcraft Boats, 599 

F.2d 341, 348-49 (9th Cir. 1979). The Ninth Circuit determined that this Court’s factual 

findings compelled the conclusion that Omnia’s use of the Stone Creek mark is likely to 

cause confusion and, therefore, that Omnia is liable for trademark infringement. Stone 

Creek, 875 F.3d at 436, 444. Accordingly, the Ninth Circuit remanded the matter to this 

Court for the purpose of determining what remedies, if any, Stone Creek is entitled to 

given Omnia’s liability for infringement. More specifically, the Ninth Circuit directed 

the Court to determine “whether Omnia had the requisite intent” to justify disgorgement 

of profits. Id. at 444. 

 Where, as here, a defendant is found liable for trademark infringement, a court 

may award the prevailing plaintiff (1) the defendant’s profits, (2) the damages sustained 

by the plaintiff, (3) the costs of the action, and/or (4) injunctive relief. 15 U.S.C. § 

1117(a); La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., 762 F.3d 867, 879 (9th 

Cir. 2014). Stone Creek seeks only disgorgement of profits and a permanent injunction. 

The Court therefore confines its analysis to those two remedies. Moreover, because the 

Ninth Circuit explicitly credited the Court’s factual findings and remanded solely for the 

purpose of determining whether those facts justify the remedies Stone Creek seeks, the 

Court’s legal analysis is based on those undisturbed facts. (Doc. 175 ¶¶ 1-85); see

Mendez-Gutierrez v. Gonzales, 444 F.3d 1168, 1172 (9th Cir. 2006) (explaining that the 

district court is limited by the appellate court’s remand in situations where the scope of 

the remand is clear). 

I. Omnia Did Not Willfully Infringe 

 Disgorgement of profits is permitted “only in those cases where the infringement 

is willfully calculated to exploit the advantage of an established mark” or “where the 

defendant is attempting to gain the value of an established name of another.” Lindy Pen 

Co. v. Bic Pen Corp., 982 F.2d 1400, 1405-06 (9th Cir. 1993) (internal quotation and 

citations omitted). “Willful infringement carries a connotation of deliberate intent to 

deceive,” and “requires a connection between a defendant’s awareness of its competitors 

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and its actions at those competitors’ expense.” Fifty-Six Hope Rd. Music, Ltd. v. 

A.V.E.L.A., Inc., 778 F.3d 1059, 1074 (9th Cir. 2015) (internal quotations and citations 

omitted). These circumstances must be proven by a preponderance of the evidence.2

 

 Omnia did not willfully infringe on Stone Creek’s mark because “Omnia did not 

choose the mark with the intent of trading of Stone Creek’s goodwill.” (Doc. 175 ¶ 57.) 

Instead, “Omnia selected the STONE CREEK mark for Bon Ton’s private label, in part, 

because it sounded American and because marketing material and a logo were already 

prepared.” (¶ 56.) Moreover, Omnia did not intend to trade on Stone Creek’s goodwill 

in Bon Ton’s trading territory because Stone Creek had no goodwill in that territory, and 

Omnia did not research where Stone Creek sold its furniture prior to using the mark. (¶¶ 

2, 11-14, 23, 24, 29, 32, 35, 39, 61.) Although Stone Creek operated a website, it neither 

sold furniture through that website nor delivered furniture out of state, and the website 

did not create awareness of the brand in the BTTT. (¶¶ 13, 29.) 

 Relying on Fleishmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 157 

(9th Cir. 1963), Stone Creek argues that Omnia’s deliberate adoption of an identical mark 

with knowledge of Stone Creek’s senior use compels the conclusion that Omnia willfully 

infringed. (Doc. 197 at 6-8.) Fleishmann, however, is distinguishable. In that case, it 

was undisputed that the senior user’s mark was well-known in the relevant market. 

Fleishmann, 314 F.2d at 156-57. In fact, the infringing junior user conceded that it 

“knew [the senior user] was one of the most popular brands on the market.” Id. Given 

the senior user’s popularity, the court concluded that the “only possible purpose” of the 

 2

 Circuit courts are divided on the appropriate evidentiary standard. Compare Versa Prods. Co. v. Bifold Co. (Mfg.) Ltd., 50 F.3d 189, 207-08 (3d Cir. 1995) (applying clear and convincing standard), with Fishman Transducers, Inc. v. Paul, 684 F.3d 187, 

193 (1st Cir. 2012) (applying preponderance of the evidence standard); Harrods Ltd. v. 

Sixty Internet Domain Names, 302 F.3d 214, 226-27 (4th Cir. 2002) (same). The First 

Circuit in Fishman makes a compelling case for applying the preponderance of the evidence standard: “Fraud, a cousin of willfulness, has an historical association with the 

clear and convincing standard but the modern tendency in the Supreme Court is to reserve the clear and convincing burden, unless dictated by statute, for matters with 

constitutional implications like civil commitment.” Fishman, 684 F.3d at 192. Because 

§ 1117 of the Lanham Act does not prescribe a different, higher burden of proof, the Court will apply the preponderance of the evidence standard. Cf. Collegenet, Inc. v. XAP 

Corp., 483 F. Supp. 2d 1058, 1065 (D. Or. 2007) (adopting the clear and convincing standard without analysis). 

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infringer’s use of the mark would “have been to capitalize on the name.” Id. The court 

added that the infringing user “must have known, [the senior user’s popularity] would 

extend to their product because the public would associate the name” with the senior 

user’s established quality and reputation. Id. 

 Here, however, the Court found that “[c]onsumers in the BTTT were not aware of 

Stone Creek furniture.” (Doc. 175 ¶ 32.) For example, a brand awareness survey 

conducted by Dr. Cowan, an expert in statistics and economics, revealed that “99.75% of 

the respondents . . . are not familiar with Stone Creek in Arizona and Stone Creek has no 

brand awareness in the BTTT.” (¶¶ 34-35.) Additionally, “[t]he vast majority of Google 

searches for Stone Creek Furniture originate in Arizona,” and “[t]he number of Google 

searches for the Stone Creek website from the BTTT is negligible.” (¶¶ 30-31.) 

Moreover, Omnia did not “research where Stone Creek sold its furniture” before adopting 

the mark, and offered motives for adopting it other than to capitalize on Stone Creek’s 

reputation; namely, that Stone Creek sounded “American” and it was convenient to use 

the mark because the marketing materials and logo were already prepared. (¶¶ 56, 61.) 

Thus, the inference drawn by the Ninth Circuit in Fleishmann is not compelled by the 

Court’s credited factual findings in this case.3

 Stone Creek next argues that Omnia’s failure to exercise due care to determine 

whether its use of the mark constituted infringement is conclusive evidence of 

willfulness. Many courts, however, have held that failure to conduct a trademark search 

does not necessarily compel such an inference. For example, the Fourth Circuit remarked 

that carelessness is quite different from an intent to confuse: “[T]he failure to conduct a 

trademark search or contact counsel shows carelessness at most, but is in any event 

 3

 Stone Creek also argues that Omnia’s intentional appropriation of the mark compels the application of a presumption that Omnia intended to deceive customers. 

(Doc. 197 at 8.) Stone Creek’s argument, however, conflates the intent factor under the 

Sleekcraft analysis with the willfulness inquiry. Although under Sleekcraft the knowing use of another’s mark creates a presumption that the junior user had an intent to deceive, 

this presumption does not extend to the willfulness analysis for disgorgement of profits. Hotko Kinoko Co. v. Concord Farms, Inc., 738 F.3d 1085, 1096 (9th Cir. 2013); 5 J. 

Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 30:62 (5th ed. 2018) (noting that there is a presumption of willfulness only when the infringer provided false contact information to a domain name registrar). 

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irrelevant because knowledge of another’s goods is not the same as an intent to mislead 

and to cause consumer confusion.” George & Co. LLC v. Imagination Entm’t Ltd., 575 

F.3d 383, 398 (4th Cir. 2009) (internal quotation and citation omitted). The Second, 

Third, and Tenth Circuits share a similar understanding. See SecuraComm Consulting 

Inc. v. Securacom Inc., 166 F.3d 182, 189 (3d Cir. 1999), superseded on other grounds 

by statute, 15 U.S.C. § 1117(a), as recognized in Banjo Buddies, Inc. v. Renosky, 399 

F.3d 168, 173-76 (3d Cir. 2005); King of the Mountain Sports, Inc. v. Chrysler Corp., 

185 F.3d 1084, 1091-92 (10th Cir. 1999); Savin Corp. v. Savin Group, 391 F.3d 439, 460 

(2d Cir. 2004). Accordingly, although the Court’s factual findings might indicate that 

Omnia was careless in its adoption of Stone Creek’s mark, these findings do not compel 

the conclusion that Omnia willfully infringed. 

II. Stone Creek Is Not Entitled to Disgorgement of Omnia’s Profits 

 Even assuming that Omnia willfully infringed on Stone Creek’s mark, Stone 

Creek is not entitled to disgorgement of Omnia’s profits because the profits are not 

attributable to Omnia’s infringement. Under the Lanham Act, if the defendant is found 

liable for willful trademark infringement, then the plaintiff is entitled to recover 

defendant’s profits. 15 U.S.C. § 1117(a). In assessing the amount of profits, the plaintiff 

has the burden to prove the defendant’s gross revenue from the infringement. The burden 

then shifts to the defendant to “prove that sales were demonstrably not attributable to the 

infringing mark,” or that certain expenses “should be deducted from the gross revenue to 

arrive at the . . . lost profits.” Nintendo Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 1007, 

1012 (9th Cir. 1994) (internal quotation and citation omitted); Fifty-Six Hope Rd., Inc., 

778 F.3d at 1076. If the defendant does not carry this burden, all of the profits from the 

infringing products belong to the mark owner. Mishawaka Rubber & Woolen Mfg. Co. v. 

S.S. Kresge Co., 316 U.S. 203, 206-07 (1942). 

 The parties stipulated that Omnia’s gross sales of the infringing products were 

$4,455,352. (Doc. 175 ¶ 85.) The burden therefore shifted to Omnia to demonstrate that 

the sales were not attributable to its infringement. Omnia met its burden by 

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demonstrating that the infringing products were purchased for reasons unrelated to 

consumer perception of an affiliation between Stone Creek and the infringing products. 

For instance, Omnia established that consumers in the BTTT were unaware of the Stone 

Creek brand and experienced no actual confusion between Stone Creek and Omnia when 

purchasing Omnia’s Stone Creek furniture. (¶¶ 32, 35, 46-51, 81, 82.) Moreover, Omnia 

demonstrated that Bon-Ton did not contract with Omnia to sell its furniture because of 

the Stone Creek mark. Accordingly, even assuming that Omnia willfully infringed, none 

of its profits are attributable to the infringing mark. 

III. Stone Creek is Entitled to a Permanent Injunction 

 Stone Creek also asks the Court to permanently enjoin Omnia from using the 

Stone Creek mark. For its part, Omnia argues that “there is no need for a permanent 

injunction as there is no likelihood of future harm” because it “ceased using the Stone 

Creek mark in 2013 and no evidence suggests that [it] would ever use the mark again.” 

(Doc. 196 at 30.) On appeal, the Ninth Circuit did not consider or make any conclusions 

regarding the propriety of a permanent injunction. Where, as here, “a court is confronted 

with issues that the remanding court never considered, the mandate requires respect for 

what the higher court decided, not for what it did not decide.” Hall v. City of L.A., 697 

F.3d 1059, 1067 (9th Cir. 2012) (internal quotation and citation omitted) (emphasis 

original). Stated differently, a lower court is permitted to “decide anything not foreclosed 

by the mandate” of an appellate court. Id. Because this issue was not foreclosed by the 

Ninth Circuit’s mandate, the Court concludes for the following reasons that Stone Creek 

is entitled to a permanent injunction. 

 Trademark law gives federal courts the “power to grant injunctions, according to 

the principles of equity and upon such terms as the court may deem reasonable, to 

prevent the violation of any right of the registrant of a mark.” 15 U.S.C. § 1116. 

[A] plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A 

plaintiff must demonstrate: (1) that it has suffered an 

irreparable injury; (2) that remedies available at law, such as 

monetary damages, are inadequate to compensate for that 

injury; (3) that, considering the balance of hardships between 

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the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. 

eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006); see Herb Reed Enters., 

LLC v. Florida Entm’t Mgmt., Inc., 736 F.3d 1239, 1248-50 (9th Cir. 2013) (applying 

eBay factors to trademark law). Although “[t]he decision to grant or deny permanent 

injunctive relief is an act of equitable discretion by the district court,” the “traditional 

principles of equity” demand a fair weighing of the factors listed above, taking into 

account the unique circumstances of each case. eBay, 547 U.S. at 391, 394. 

 Stone Creek has carried its burden on all four prongs. First, evidence of an 

intangible injury, such as a loss of customers, damage to a party’s goodwill, or loss of 

control over one’s business reputation can constitute irreparable harm. Rent–A–Ctr., Inc. 

v. Canyon Television & Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991); Herb 

Reed, 736 F.3d at 1250; see also Polo Fashions, Inc. v. Dick Bruhn, Inc., 793 F.2d 1132, 

1135-36 (9th Cir. 1986) (finding the district court erred in denying a permanent 

injunction simply because the plaintiff failed to offer evidence suggesting the defendant 

would infringe in the future). For instance, “[i]f it is likely that confused persons will 

mistakenly attribute to [the] plaintiff defects or negative impressions they have of [the] 

defendant’s goods or services, then the plaintiff’s reputation (and its signifying 

trademark) is at risk because it is in the hands of a stranger.” 5 McCarthy on Trademarks 

and Unfair Competition § 30:2. Here, “Stone Creek’s president [] fielded a telephone call 

into its office regarding a customer concerned about a warranty issue on a leather sofa” 

that he purchased “from a Bon-Ton store in Chicago,” which is indicative of such 

mistaken attribution. (Doc. 175 ¶¶ 74-75.) 

 Second, Stone Creek’s irreparable harm indicates that damages at law are 

inadequate to remedy Omnia’s infringement. “The terms ‘inadequate remedy at law’ and 

‘irreparable harm’ describe two sides of the same coin. If the harm being suffered by 

plaintiff . . . is ‘irreparable,’ then the remedy at law (monetary damages) is 

‘inadequate.’” 5 McCarthy § 30:2. Indeed, Stone Creek is not entitled to disgorgement 

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of profits and therefore is without a monetary remedy for Omnia’s infringement. 

Moreover, permanent injunctions are “the usual and normal remedy” for trademark 

infringement. See 5 McCarthy § 30:1. 

Third, the balance of the equities favors Stone Creek. If the Court issues an 

injunction, Omnia merely would be required to refrain from infringing on Stone Creek’s 

mark—something it already has done. See Audi AG v. D’ Amato, 469 F.3d 534, 550 (6th 

Cir. 2006) (noting that a defendant suffers no hardship in merely “refraining from willful 

trademark infringement”). In contrast, without an injunction Stone Creek would be left 

with little protection against potential future infringement, despite its success in this 

litigation. Under the circumstances, the balance of hardships weighs in Stone Creek’s 

favor. 

 Finally, an injunction serves the public interest in being free from deception and 

confusion. See Internet Specialties W., Inc. v. Milon–DiGiorgio Enters., Inc., 559 F.3d 

985, 993 n.5 (9th Cir. 2009) (“The public has an interest in avoiding confusion between 

two companies’ products.”). Accordingly, the Court will permanently enjoin Omnia 

from infringing Stone Creek’s mark. 

IV. Conclusion 

 On remand for consideration of remedies, the Court concludes that Stone Creek is 

not entitled to disgorgement of profits because Omnia did not willfully infringe Stone 

Creek’s mark and, even if it did, Omnia’s profits were not attributable to its infringement. 

Stone Creek, however, is entitled to a permanent injunction. 

IT IS ORDERED as follows: 

 1. In accordance with the Ninth Circuit’s mandate, the Court finds in favor of 

Stone Creek and against Omnia on Stone Creek’s trademark infringement claim. 

 2. Stone Creek is not entitled to disgorgement of profits. 

 3. Stone Creek is entitled to a permanent injunction. The parties are directed to 

meet and confer and, within fourteen days of the date of this order, submit a joint 

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proposed preliminary injunction order and form of judgment for the Court’s review and 

approval. 

 Dated this 12th day of April, 2018. 

Douglas L. Rayes 

United States District Judge 

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