Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-04-01282/USCOURTS-ca8-04-01282-0/pdf.json

Parties Involved:
Everest Capital Limited
Appellant
Everest Funds
Appellee
Everest Funds Management
Appellee
Everest Investment Management
Appellee
Vinod Gupta
Appellee

Document Text:

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 04-1282

___________

Everest Capital Limited, *

*

Plaintiff - Appellant, *

*

v. * Appeal from the United States

* District Court for the

Everest Funds Management, L.L.C.; * District of Nebraska.

Everest Funds; Vinod Gupta; Everest *

Investment Management, L.L.C., *

*

Defendants - Appellees. *

___________

Submitted: August 26, 2004

Filed: January 4, 2005

___________

Before LOKEN, Chief Judge, WOLLMAN and BEAM, Circuit Judges.

___________

LOKEN, Chief Judge.

Everest Capital Limited is a Bermuda-based investment advisor that began

managing off-shore “hedge funds” in 1990, using the trademark “Everest Capital” in

the names of its funds, in letters to investors, and in marketing materials. Some years

later, entrepreneur Vinod Gupta formed Everest Investment Management to manage

his personal wealth through a collection of limited partnerships in which his family,

close friends, and senior employees of his company have participated. Gupta later

formed Everest Funds Management, an Omaha-based investment advisor that

manages Everest Funds, an entity consisting of two small mutual funds. 

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The HONORABLE THOMAS D. THALKEN, United States Magistrate Judge

for the District of Nebraska, who presided by consent of the parties. 

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In this action, Everest Capital sued Everest Investment Management, Everest

Funds Management, Everest Funds, and Gupta (collectively, the “Everest

Defendants”) asserting federal Lanham Act claims for trademark infringement,

trademark dilution, and commercial misrepresentation. 15 U.S.C. §§ 1125(a)(1)(A),

(a)(1)(B), and (c). Everest Capital also asserted state-law claims under the Nebraska

Consumer Protection Act, NEB.REV.STAT. § 59-1601 et seq.; the Nebraska Uniform

Deceptive Trade Practices Act, NEB. REV. STAT. § 87-301 et seq.; and Nebraska

common law. After a jury returned a verdict against Everest Capital on all claims, the

district court1

 denied a post-verdict motion for judgment as a matter of law. Everest

Capital appeals, arguing insufficient evidence to support the jury’s verdict and

instructional and evidentiary errors by the court. We affirm. 

I. Background.

Everest Capital is an investment advisor whose hedge funds pursue

sophisticated strategies that frequently involve emerging foreign markets and

distressed and high-yield foreign securities. Since its formation in 1990, Everest

Capital has used a mark consisting of the underlined words “Everest Capital,” with

the underlining forming a stylized mountain peak between the two words. As an

unregulated off-shore entity, Everest Capital is prohibited from advertising or

marketing its funds or services in the United States. It attracts new United States

customers through word of mouth. 

At the time of trial, Everest Capital managed three quarters of a billion dollars

in assets on behalf of some two hundred wealthy individuals, universities, and

foundations. Everest Capital investors must have a net worth of at least one million

dollars and usually invest at least a million dollars in an Everest Capital fund. For

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example, Everest Capital’s founder testified that financier George Soros invested half

a billion dollars in Everest Capital funds. Everest Capital’s promotional materials

warn that its investments are intended for “experienced and sophisticated persons”

who are able to bear the risk of impairment or loss of their investments. Its brief on

appeal admits that “the potential market [for Everest Capital funds] consists of a small

proportion of the investment community, namely sophisticated and accredited

investors such as universities and foundations.” 

The Everest Defendants. Everest Investment Management, like Everest

Capital, manages private investment partnerships that may invest in a variety of

financial instruments. However, except for a brief, unsuccessful marketing campaign

aimed at institutional investors, to date Everest Investment Management’s

partnerships have served almost exclusively as investment vehicles for Mr. Gupta, his

family, and close friends and associates. The partnerships have invested in domestic

Internet companies, not in risky foreign assets of the type favored by Everest Capital.

Everest Funds Management manages the “Everest Cubed” fund, an index fund

that attempts to duplicate the performance of the American securities markets, and the

Everest America fund, a conservatively-managed mutual fund that invests primarily

in “blue chip” American companies. Both funds are open to investors regardless of

net worth and require an initial investment of only $2,000. At the time of trial, each

fund managed just three million dollars in assets. Gupta’s family owned 98 percent

of those assets, and each fund had less than ten investors outside of his family. 

The Everest Defendants consistently use the words “Everest Investment

Management,” “Everest Funds Management,” and “Everest Funds” printed in capital

letters in a font distinct from Everest Capital’s font, and accompanied by a rather

fuzzy drawing of Mount Everest in a square border, either above or to the side of the

corporate names. 

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Our sister circuits apply similar multi-factor tests. See, e.g., A&H Sportswear,

Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 211 (3rd Cir. 2000).

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II. Trademark Infringement.

Neither Everest Capital nor any Everest Defendant has been granted federal

registration of its mark. See 15 U.S.C. §§ 1051, 1057, 1115. However, section 43

of the Lanham Act grants to qualifying unregistered marks comparable protection

from infringement and unfair competition. See Two Pesos, Inc. v. Taco Cabana, Inc.,

505 U.S. 763, 767-68 (1992). To prevail on its claim of trademark infringement,

Everest Capital must prove that the Everest Defendants’ use of their marks was

“likely to cause confusion” as to the origin of their products and services, or whether

they are affiliated with Everest Capital. 15 U.S.C. § 1125(a)(1)(A). “The ultimate

inquiry always is whether, considering all the circumstances, a likelihood exists that

consumers will be confused about the source of the allegedly infringing product.”

Hubbard Feeds, Inc. v. Animal Feed Supp., Inc., 182 F.3d 598, 602 (8th Cir. 1999).

Most trademark infringement cases come to this court for review of a summary

judgment or for review of the grant or denial of injunctive relief. When the

likelihood-of-confusion issue is decided by a court, the inquiry is framed by six nonexclusive factors -- “(1) the strength of the owner’s mark; (2) the similarity of the

owner's mark and the alleged infringer's mark; (3) the degree of competition between

the products; (4) the alleged infringer's intent to ‘pass off’ its goods as the trademark

owner’s; (5) incidents of actual confusion; and, (6) the type of product, its cost, and

conditions of purchase.” Luigino’s, Inc. v. Stouffer Corp., 170 F.3d 827, 830 (8th

Cir. 1999); see SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir. 1980).2

 

In this case, Everest Capital requested a jury trial, and the district court

submitted the trademark infringement claims to the jury, without objection.

Instruction No. 17 told the jury that, in deciding the likelihood of confusion issue, it

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“should consider” the above six factors. The district court further instructed,

consistent with our prior decisions, that “[t]he presence or absence of any particular

factor should not necessarily resolve whether there was a likelihood of confusion,

because you must consider all relevant evidence in determining this.” See General

Mills, Inc. v. Kellogg Co., 824 F.2d 622, 626 (8th Cir. 1987). The verdict form

simply asked whether any Everest Defendant “infringed Everest Capital’s trademark

rights, pursuant to Jury Instruction No. 17.” The jury answered, “No.” 

A. Sufficiency of the Evidence. Everest Capital is entitled to judgment as a

matter of law only if “there is no legally sufficient evidentiary basis for a reasonable

jury to find” the Everest Defendants not liable for trademark infringement. FED. R.

CIV. P. 50(a)(1). In reviewing a post-verdict motion for judgment as a matter of law,

the district court “should review the record as a whole [but] disregard all evidence

favorable to the moving party that the jury is not required to believe.” Reeves v.

Sanderson Plumbing Prods., Inc., 530 U.S. 133, 151 (2000). We review the district

court’s denial of a motion for judgment as a matter of law de novo, giving equal

deference to the jury’s verdict. See R.M. Taylor, Inc. v. Gen. Motors Corp., 187 F.3d

809, 812 (8th Cir. 1999), cert. denied, 528 U.S. 1159 (2000); Anheuser-Busch, Inc.

v. John Labatt Ltd., 89 F.3d 1339, 1344 (8th Cir. 1996) (a trademark case). 

On appeal, Everest Capital reviews the evidence it submitted regarding each

of the six SquirtCo factors and argues that these factors “weigh overwhelmingly in

its favor.” Perhaps this argument would be sound in the Second Circuit, where

likelihood of confusion is an issue of law reviewed de novo by the appellate court.

See Plus Prods. v. Plus Discount Foods, Inc. 722 F.2d 999, 1004-05 (2d Cir. 1983).

But in this circuit, “[l]ikelihood of confusion is a finding of fact.” SquirtCo, 628 F.2d

at 1091. And properly so, in our view. Though the question is not free from doubt,

we agree with the Fourth Circuit that “[t]his pivotal trademark issue is particularly

amenable to resolution by a jury . . . . which represents a cross-section of consumers

[and] is well-suited to evaluating whether an ‘ordinary consumer’ would likely be

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confused.” Anheuser-Busch, Inc. v. L & L Wings, Inc., 962 F.2d 316, 318 (4th Cir.

1992). Therefore, because the jury returned what amounts to a general verdict of no

trademark infringement, the only issue on appeal is whether the record as a whole,

viewed in the light most favorable to the jury’s verdict, contains sufficient evidence

supporting that verdict. Detailed analysis of each SquirtCo factor is unnecessary.

Viewing the trial record in this light, it is clear that the district court properly

denied Everest Capital’s motion for judgment as a matter of law. Though each mark

uses the dominant word “Everest,” that word is part of longer product names that

employ different fonts and graphics. See General Mills, 824 F.2d at 627 (fact-finder

“must look to the overall impression created by the marks and not merely compare

individual features”); Lane Capital Mgmt. v. Lane Capital Mgmt., 15 F. Supp. 2d 389,

395 (S.D.N.Y. 1998) (relevant mark was “Lane Capital Management,” not “Lane”).

The jury heard evidence that a substantial number of companies, including financial

services companies and a hedge fund manager, use marks containing “Everest” in

various forms. Compare Sun Banks of Florida, Inc. v. Sun Fed. Sav. & Loan Ass’n.,

651 F.2d 311, 316 (5th Cir. July 1981). The jury also heard substantial evidence that

Everest Capital and the Everest Defendants do not directly compete and that Everest

Capital’s prospective investors are financially sophisticated and therefore unlikely to

invest in Everest Capital’s hedge funds without exercising substantial care. 

At trial, Everest Capital offered no evidence of actual investor confusion,

which is not surprising given its inability to advertise in the United States. Everest

Capital did present the results of a Florida survey purporting to demonstrate that

potential small investors in one of the Everest Funds would mistakenly assume that

the fund is associated with Everest Capital. But defendants vigorously attacked the

survey’s methodology, and the jury was free to discount its evidentiary weight, or to

disregard it entirely. See Calvin Klein Cosmetics Corp. v. Parfums de Coeur, 824

F.2d 665, 669 n.4 (8th Cir. 1987). Finally, though Everest Capital presented some

evidence that Gupta was aware of Everest Capital when he founded Everest

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This objection is based upon the Everest Defendants’ failure to produce

documents supporting Gupta’s testimony that in 1996 he conducted a computer

search of the “Everest” name that did not turn up any financial services companies.

Defendants submitted evidence that Gupta discarded the results of this search several

years before this lawsuit commenced. The adverse inference rule applies only “when

a party has relevant evidence within its control which it fails to produce.”

Rockingham Machine-Lunex Co. v. NLRB, 665 F.2d 303, 304 (8th Cir. 1981), cert.

denied 457 U.S. 1107 (1982) (emphasis added). 

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Investment Management, knowledge of a competitor does not prove an intent to

mislead consumers as to product origins. See Luigino’s, Inc., 170 F.3d at 831. 

Having reviewed the trial record as a whole, we agree with the district court

that it contains sufficient evidence supporting a finding of no likelihood of confusion.

B. Jury Instruction Issues. Though Instruction No. 17 properly summarized

the six SquirtCo factors, Everest Capital argues that the district court abused its

discretion by refusing to add additional language proposed by Everest Capital -- that

inherently distinctive marks carry a presumption of strength; that similarity should

not be assessed by placing the marks side by side; that intent to infringe may be

proved by the infringer’s conduct after being told to cease and desist; that survey

evidence may substitute for actual confusion; that the relevant purchaser is the

“ordinary consumer,” not the sophisticated investor; that post-sale and pre-sale

confusion should be considered in determining likelihood of confusion; that an

adverse inference may be drawn from the Everest Defendants’ failure to produce

certain records;3

 and that the United States Patent and Trademark Office is the “sole

government agency having authority over the registration of trademarks.” The

district court has broad discretion in instructing the jury. Our review is limited to

determining “whether the instructions, taken as a whole and viewed in the light of the

evidence and applicable law, fairly and adequately submitted the issues in the case

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to the jury.” Mems v. City of St. Paul, 327 F.3d 771, 781 (8th Cir. 2003) (quotation

omitted), cert. denied, 124 S. Ct. 1052 (2004).

After reviewing the transcript of the lengthy instructions conference, we are

inclined to agree with the Everest Defendants that Everest Capital did not preserve

most of these instruction issues for appeal. But in any event, we conclude that

Instruction No. 17 fairly and adequately informed the jury of the law relating to its

determination of likelihood of confusion. The district court did not abuse its

discretion by rejecting the additional language proposed by Everest Capital as either

adequately covered by the instructions given, non-essential, potentially confusing, or

of dubious validity.

III. Trademark Dilution.

Everest Capital next argues that it is entitled to judgment as a matter of law on

its claim that the Everest Defendants’ use of Everest Capital’s famous trademark

“causes dilution of the distinctive quality of the mark.” 15 U.S.C. § 1125(c).

Prohibiting trademark infringement protects trademark owners and consumers from

likely confusion. Prohibiting trademark dilution, on the other hand, protects the

holder of a famous trademark from misappropriation of its investment in the mark.

See Luigino's, 170 F.3d at 832. Thus, a claim of dilution by “blurring” does not

require proof of competition or likelihood of confusion. 

The district court instructed the jury that, to succeed on its claim of trademark

dilution, Everest Capital “must show by a preponderance of the evidence . . . (3) That

the EVEREST CAPITAL designation is famous in the relevant consumer market;

and (4) That there has been an actual lessening of the capacity of the EVEREST

CAPITAL trademark to identify and distinguish the Everest Plaintiff’s investment

management services.” Neither party objected to the court submitting this claim to

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The statute provides that “the owner of the famous mark shall be entitled only

to injunctive relief...unless the person against whom the injunction is sought willfully

intended to trade on the owner’s reputation or to cause dilution of the famous mark.”

15 U.S.C. § 1125(c)(2). Damages may be awarded for willful dilution “subject to the

principles of equity.” 15 U.S.C. § 1117(a). Courts have rejected demands for jury

trials when there is insufficient evidence of willful intent or actual damages. See

Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev.,

170 F.3d 449, 465 (4th Cir. 1999); Emmpresa Cubana del Tabaco v. Culbro Corp.,

123 F. Supp. 2d 203, 209-10 (S.D.N.Y. 2000). We need not consider the issue in this

case. Moreover, even when there is no right to a jury trial, if a dilution claim is tried

with other claims that must be submitted to the jury, the court has discretion to submit

the dilution claim to the jury on an advisory basis. See FED. R. CIV. P. 39(c).

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the jury.4

 Nor does Everest Capital challenge the court’s instruction on appeal. The

jury verdict stated that no Everest Defendant “diluted Everest Capital’s trademark

rights.” Thus, the verdict must be upheld if a reasonable jury could find on this

record either (A) that the Everest Capital mark is not famous, or (B) that the Everest

Defendants did not cause an actual lessening of the mark’s capacity to identify and

distinguish Everest Capital’s services.

A. Courts and commentators have struggled to define when a trademark is

“famous” for purposes of the Federal Trademark Dilution Act of 1995. See generally

4 MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 24:92 (Dec. 2003). The

Act lists eight non-exclusive factors “a court may consider” in determining whether

a mark is famous. 15 U.S.C. § 1125(c)(1). The judicial consensus is that “famous”

is a rigorous standard. “Dilution is a cause of action invented and reserved for a

select class of marks -- those marks with such powerful consumer associations that

even non-competing uses can impinge their value.” Avery Dennison Corp. v.

Sumpton, 189 F.3d 868, 875 (9th Cir. 1999). One controversial issue is whether a

mark’s fame in a limited or “niche” market is sufficient to prove a claim under

§ 1125(c)(1). See Thane Int'l v. Trek Bicycle Corp., 305 F.3d 894, 908-11 (9th Cir.

2002); Syndicate Sales, Inc. v. Hampshire Paper Corp., 192 F.3d 633, 640-41 (7th

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Cir. 1999). We need not decide that issue here. The district court instructed the jury

to determine whether Everest Capital’s mark “is famous in the relevant consumer

market.” The jury, by its adverse verdict, found that it is not.

Everest Capital argues that its mark is famous “within its niche field of

investment management” because many news stories in the financial press have

ranked Everest Capital’s founder as a “top hedge fund manager.” This argument

borders on the frivolous because it ignores our standard of review. The question is

whether a reasonable jury could find that the mark is not famous. The jury was free

to disregard Everest Capital’s selective evidence of its founder’s personal renown.

Moreover, the record includes evidence that Everest Capital may not advertise in the

United States and has a total of only two hundred wealthy clients. On this record, a

reasonable jury could clearly find that the Everest Capital mark is not famous in a

relevant consumer market. Indeed, the defendants may have been entitled to

judgment as a matter of law on this issue.

B. The Supreme Court recently confirmed that a claim under 15 U.S.C.

§ 1125(c)(1) requires proof of actual dilution. The Court went on to hold that, “at

least where the marks at issue are not identical, the mere fact that consumers mentally

associate the junior user’s mark with a famous mark is not sufficient to establish

actionable dilution.” Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 433 (U.S.

2003). Consistent with Moseley, the district court instructed the jury that Everest

Capital must prove “an actual lessening of the capacity of [its] trademark to identify

and distinguish [Everest Capital’s] services.” The jury by its adverse verdict found

no actual dilution. On appeal, Everest Capital argues that it proved actual dilution as

a matter of law because “the names and marks at issue are identical for purposes of

trademark law.” Based upon our visual examination of the marks, this contention is

frivolous. See Savin Corp. v. Savin Group, --- F.3d ---, ---, 2004 U.S. App. LEXIS

25479 at * 25 (2d Cir. 2004) (“a mere similarity in the marks -- even a close similarity

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-- will not suffice to establish per se evidence of actual dilution”). The jury

reasonably found no proof of actual dilution.

IV. Commercial Misrepresentation.

Section 43 of the Lanham Act protects a trademark owner from “commercial

advertising or promotion [that] misrepresents the nature, characteristics, qualities, or

geographic origin of . . . goods, services, or commercial activities.” 15 U.S.C.

§ 1125(a)(1)(B). The district court correctly instructed the jury that, to prevail on its

commercial misrepresentation claim, Everest Capital must prove that the Everest

Defendants made a false statement of fact about their investment management

services that deceived or had a tendency to deceive a substantial segment of the

audience, that was likely to influence purchasing decisions, and that injured or was

likely to injure Everest Capital. See Blue Dane Simmental Corp. v. American

Simmental Ass'n, 178 F.3d 1035, 1042 (8th Cir. 1999). 

On appeal, Everest Capital argues that it was entitled to judgment as a matter

of law based on the undisputed evidence that Everest Funds Management falsely

claimed on its website that it provides “professional portfolio management of equity

portfolios for high net worth individuals and families, endowments, foundations, and

corporate retirement plans.” At trial, Gupta admitted that Everest Funds Management

has provided no such services; its function instead has been to manage the two small

Everest Funds. There was evidence that only 74 people had visited the Everest Funds

Management website, and no evidence that those people were eligible to invest in

Everest Capital hedge funds. Like the district court, we conclude that a reasonable

jury could find that the misstatement was inadvertent, that it did not deceive or have

a tendency to deceive a substantial segment of the website’s intended audience, that

it was unlikely to influence purchasing decisions, and that Everest Capital failed to

prove injury or likely injury as a result of the misstatement. We reject as contrary to

law Everest Capital’s further contention that the district court abused its discretion

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by refusing to instruct the jury that a “literally false” statement is presumed to be

likely to deceive. 

V. State Law Claims.

Everest Capital argues that it is entitled to judgment as a matter of law on its

claims under the Nebraska Deceptive Trade Practices Act, Nebraska common law,

and the Nebraska Consumer Protection Act for the same reasons that it has proved its

federal claims under the Lanham Act. As Everest Capital failed to prove its Lanham

Act claims, we will not disturb the jury’s verdict rejecting the state law claims.

Everest Capital further argues that the district court improperly narrowed the

prohibitions of the Nebraska Deceptive Trade Practices Act, NEB.REV. STAT. §§ 87-

302(a)(2)-(3), by instructing the jury that a deceptive trade practice is limited to one

that causes likelihood of confusion or misunderstanding “as to the source,

sponsorship, approval, or certification of services.” This technical objection was not

properly preserved for appeal. In any event, any error was clearly harmless. 

VI. Two Evidentiary Issues.

Everest Capital first argues that the district court abused its discretion by

refusing to admit evidence that the U.S. Patent and Trademark Office suspended

Everest Capital’s application for registration of its mark because there “may be a

likelihood of confusion” between “Everest Capital” and the Everest Defendants’

marks. The district court excluded this evidence as unfairly prejudicial. See FED.R.

EV. 403. We agree. The Trademark Office suspension notice had little probative

value because it stated a tentative opinion, not an administrative finding of fact based

upon an adequate record. But the agency opinion had the potential to unfairly

prejudice the defendants if the jury mistakenly viewed it as an official government

position on the critical confusion issue that the jury had to decide. Thus, excluding

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this evidence under Rule 403 was not a clear abuse of the district court’s substantial

evidentiary discretion. See Johnson v. Yellow Freight Sys., Inc., 734 F.2d 1304,

1308-10 (8th Cir.), cert. denied 469 U.S. 1041 (1984). 

Second, Everest Capital argues that the district court abused its discretion by

refusing to allow Everest Capital to call Gupta’s lawyer to testify about

“misrepresentations” he made in responding to Everest Capital’s cease-and-desist

letter. This contention, too, is without merit. The court admitted the letter response

into evidence and allowed Everest Capital to question Gupta about the significance

of the attorney’s mistake in describing the corporate relationship between Everest

Investment Management and Everest Funds Management.

For the foregoing reasons, the judgment of the district court is affirmed.

______________________________

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