FI LED U. S . COURT OF AP PE ALS E L E V E N T H C IR C U IT Febr uar y 14, 2007 T HOM AS K. KAHN CL E RK [ DO NO T P UB L I S H] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

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________________________ D . C . D ocketN o. 04 -032 60 -C V -T W T -1 O P T I M U M T E C H N O L O G I E S , I N C ., P la in tif f - A p p e lla n t, v ersu s H O M E D E P O T U .S .A ., I N C ., A C E H A R D W A R E C O R P O R A T I O N , D e f e n d a n ts - A p p e lle e s .

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_________________________ ( F e b r u ar y 14, 2007) B efo re B L A C K , M A R C U S an d W IL S O N , C i rcu i tJu d g es. P E R C U R I A M:2

O p tim u m T e c h n o lo g ie s , I n c . ( “O p tim u m ” ) f ile d s u it a g a in s t H o m e D e p o t, I nc . ( “ H om e D e pot ” ) a l l e gi ng tha tH om e D e potc om m i tt e d tr a de m a rk i nf r i nge m e nt i n vi ol a t i on of

the L a nha m A c t , 15 U . S . C . § 1114, a nd f a l s e a dve r t i s i ng i n vi ol a t i on o f 1 5 U .S .C . § 1 1 2 5 ( a ) . H o m e D e p o t s o u g h t p a r tia l s u m m a ry ju d g m e n t a s to O p ti m u m ’s claim fo r m o n etar y d am ag es u n d erth e L an h am A ct an d fo r O p ti m u m ’s c l a i m of f a l s e a dve r t i s i ng. T he di s tr i c tc our tgr a nt e d H om e D e pot ’ s m ot i on. T he di stri ctcourtfoun d thatO pt i m um ’ s c l ai m for m on et ary dam ages , w hi ch consi st ed of H om e D e pot ’ s pr of

i t s , a tt orne y f

e e s , a nd e nha nc e d da m a ge s , w e r e not ap p ro p riate u n d erth e f

ac ts o f th is ca se . O p ti m u m ap p ea ls th e d istrict co u rt’s de c i s i on c onc e rni ng O pt i m um ’ s c l a i m f orm one t a ry da m a ge s . O pt i m um doe s not ap p e a l th e c o u r t’s o r d e rd is m is s in g th e f a ls e a d v e r tin g c la im . B AC KG R OU ND O pt i m um i s afa m i l y ow ned com pany thatse l l s avari ety of f l oo r r el at ed p r o d u c ts . O p tim u m ’s b e s t s e llin g p r o d u c t is th e L o k - L if t G r ip p e r( “L o k - L if

t” ) . T h is p r o d u c t is ap p lie d in s tr ip s to th e b a c k o f ru g s a n d m a ts to s e c u r e th e m in pl ac e a nd preventsl i pp age on h ar d fl oo rs and carpet s. O pt i m um i s the re gi st er ed o w n e ro f th e L o k - L if

t m a rk . Fr o m 1 9 9 4 u n t i l J a n u a ry 2 0 0 3 , O p t i mu m s o l d th e Lo k - Li f tp r o d u c tt o H o me D epotthrou gh a j oi ntventure partners hi p b etw ee n O pt i m um and H enkel C on sum er3

A dhe s i ve s , I nc . ( “ H e nkl e ” ) . P ur s ua ntt o thi s pa r tne r s hi p, H e nkl e pur c ha s e d the L ok- L i f tpr oduc tf

r om O pt i m um the n di s tr i but e d i tt o va r i ous r e t a i l e r s , i nc l udi ng H om e D e pot . I n 1998, H e nkl e be ga n de ve l opi ng i t s ow n m a t e r i a l tha tc oul d be used t o h ol d carpet s a nd m at s i n p l ac e on fl oo rs . H enkl e’ s produ ct , w hi ch w as l at ernam ed H ol d-Itfor R ug s ( “ H ol d-It ”) , i s s i m i l art o O pt i m um ’ s L ok -L i ft p r o d u c t; h o w e v e r , th e H o ld - I t p r o d u c t is n o t in te n d e d to b e u s e d to h o ld ru g s in p la c e o n c a rp e ts , o n ly f

lo o r s . In O ct ob er20 02 , H enkl e provi ded H om e D epotw i th n ot i ce thati ti nt ended t o sub st i tut e i t s H ol d-Itprod ucti n the pl ac e of the L ok -L i ftprod uct . H enkl e began the anno un ce d p rodu ctchange som et i m e betw ee n D ec em ber 200 2 and Ja nu ary 2 0 0 3 . A s th e p r o d u c t c h a n g e o v e ro c c u rr e d , H e n k le s e n t H o m e D e p o t H o ld - I t w ith th e s a m e p r o d u c t n u m b e ra n d tr a c k in g in f o rm a tio n a s th e L o k - L if t p r o d u c t. T here fore , H om e D epot ’ s c om pu t ersy st em di d n otre fl ec tthatthe prod uct s had changed. A cc ordi ng l y, H om e D epotdi d n otup dat e i t s s hel f t ags, w hi ch st i l l bo re the nam e L ok -L i ft , and H om e D epot ’ s c as h regi st erre ce i pt s r ef l ec t ed thatL ok -L i ft ha d be e n pur c ha s e d e ve n i f H ol d- I tha d a c tua l l y be e n pur c ha s e d. H ow e ve r , the H ol d- I tpr oduc ttha tw a s s ol d a tH om e D e potw a s pa c ka ge d a nd m a rke d w i th the n a m e H o ld - I t a n d h a d n o r e f e r e n c e to L o k - L if

t o rO p tim u m . I n A pr i l 2004, O pt i m um s e ntH om e D e pota c our t e s y c opy of the c om pl a i ntOn Augus t 5, 20 04 , Optimum alsoissue d a

su bp oena de cus te cum to H omeDepo t in 1 connec tion with Optimum’s lawsuit ag ainst Henkle. 4 tha ti tha d f

i l e d a ga i ns tH e nkl e f

orbr e a c h of

c onf i de nt i a l r e l a t i ons hi p, br e a c h of f i duc i a ry duty , f

r a ud, f r audul e ntc onc e a l m e nt , ne gl i ge ntm i s r e pr e s e nt a t i on, a nd tra dem ark and tra de dres s i nfri ng em ent . (D oc. N o. 69 , exhi bi t8). T he l ett er i n f o rme d H o me D e p o tth a to n e i s s u e i n th e s u i tc o n c e rn e d th e p r o d u c t s H o me D epotsol d throu gh H enkl e. T he l ett eral so no t ed thatH om e D epotw as no tnam ed a s a de f e nda nti n the l i t i ga t i on a nd di d notr e que s ttha tH om e D e pott a ke a ny a c tio n . O p tim u m c la im s th a t w h e n it v is ite d H o m e D e p o t s to r e s , it p o in te d o u t to

1 H om e D epotst ore pers on nel thatH om e D epotw as i m prop er l y usi ng the L ok -L i ft m a rk . I n S e p te m b e r2 0 0 4 , c o u n s e l f o rO p tim u m s e n t H o m e D e p o t a n o th e rle tte r . I n thi s l e tt e r , O pt i m um s t a t e d tha tH om e D e potw a s c ont i nui ng t o i nf r i nge upon O pt i m um ’ s L ok- L i f

tm a rk by ha vi ng s he l f

t a gs tha tbor e the L ok- L i f tna m e a nd c a s h r e gi s t e rr e c e i pt s r e f l e c t i ng a pur c ha s e of

the L ok- L i f

tpr oduc tw he n the H ol dI tp r o d u c tw a s th e p r o d u c ta c tu a l l y p u r c h a s e d . I n r e s p o n s e t o th i s l e tt e r , H o me D e p o t s e n t o u t a n e m e r g e n c y m a in te n a n c e r e q u e s t to try a n d r e c tif y th e s e c o n c e rn s . ( D o c . 6 9 , e x h ib it 1 6 ) . H o m e D e p o t a ls o r e q u e s te d th a t H e n k le c o o r d in a te v is its to e a c h H o m e D e p o t s to r e to m a k e s u r e th a t th e H o ld - I t p r o d u c t w a s b e in g p r o p e r ly d i s p l a y e d . O n N o v e mb e r5 , 2 0 0 4 , O p t i mu m f i l e d th i s l a w s u i ta g a i n s tH o me D e p o t.On July 26, 2006, parties stipulated to the dismissal with prejudice of Optimum’s 2 prayer f or injunctive re lief. On July 27, 2006, the district court dire cted that f inal judgment be entered in favor of HomeDepot. Op timum did not s e e k tore c ov er ac tual da mag e s. 3 5 I n its p a r tia l m o tio n f

o rs u m m a ry ju d g m e n t, H o m e D e p o t a r g u e d th a t e v e n if i thad i nfri ng ed up on O pt i m um ’ s m ark, H om e D epot ’ s a ct i on s di d n otj ust i fyan aw ar d o f i t s profi t s, att orney f ee s, or enhanced dam ages . T he di stri ctcourtagre ed a nd gr a nt e d H om e D e pot ’ s m ot i on. 2 ST AN DA RD OF RE VI EW W e r e v ie w a d is tr ic t c o u r t’s g r a n t o f s u m m a ry ju d g m e n t de no vo . V ason v. C i t y of Mont gom e r y, A la. , 240 F . 3d 905, 906 ( 11th C i r . 2001) ( pe rc ur i a m ) . T he L a nha m A c tc onf

e r s br oa d di s c r e t i on upon the di s tr i c tc our tt o f a s hi on a r e m e dy a n d d e te rm in e th e p r o p e rr e lie f d u e a n in

ju r e d p a r ty . See 15 U . S . C . § 1 11 7(a) ; B urger Ki ngv. W

eave r , 16 9 F . 3d 13 10 , 13 15 (11th C i r. 19 99 ). W e r evi ew the tri al c o u r t’s e x e r c is e o f

its d is c r e tio n f

o ra n ab u s e o f

d is c r e tio n . Id . DI S C US S I ON U n d e rits c la im f

o rtr a d e m a rk in f

r in g e m e n t, O p tim u m s o u g h t, in a d d itio n to i nj unc t i ve r e l i e f

, m one t a ry r e l i e f

i n the f or m of pr of i t s , a tt orne y f

e e s a nd c os t s , a nd e nha nc e d da m a ge s . T he L a nha m A c tpr ovi de s tha t , s ubj e c tt o the pr i nc i pl e s of 3 equi ty, a s ucce ss ful pl ai nt i ff m ayre cover: (1) def

endant ’ s profi t s, (2) a ny dam agesOptimum also brought a claim for tradema

rk infring ement under

Georg ia common law. 4 The district cour

t did not separate ly

analy ze the state law c laim in its order grantingsummary judgment. Ho wever, thi s Cour t ha s n ote d th at a

tra demark

inf ring e ment c laim under G e org ia law is reviewed under the samestandards a s a claim under the L anham Ac t. See U niversity of Ge or giaAt hle ticAss’n v. La ite , 756 F.2d 1535, 1539 n.11 ( 11th Cir. 1985). 6 sust ai ned b y the pl ai nt i ff , and (3) cost s of the ac t i on . 15 U . S . C . § 1 11 7(a) . In an 4 e x c e p tio n a l c a s e , th e d is tr ic t c o u r t m a y a w a r d a tto rn e y f e e s to th e p r e v a ilin g p a r ty . G ui de d by pr i nc i pl e s of e qui ty , the di s tr i c tc our tf ound tha te ve n i f

H om e D e pot ha d i nf r i nge d upon O pt i m um ’ s L ok- L i f tm a rk, O pt i m um w a s note nt i t l e d t o a ny of these form s of m on et ary r el i ef . F or the re as on s s t at ed herei n, w e a gree . A . P r o f

its T h is C o u r t h a s d e te rm in e d th a t a n a c c o u n tin g o f a d e f e n d a n t’s p r o f

its is appr opr i a t e w he r e : ( 1) the de f e nda nt ’ s c onduc tw a s w i l l f ul a nd de l i be r a t e , ( 2) the d e f e n d a n t w a s u n

ju s tly e n r ic h e d , o r( 3 ) it is n e c e s s a ry to d e te rf u tu r e c o n d u c t. See H ow ar d J ohns on C o. , I

nc . v . Khi m ani , 8 9 2 F .2 d 1 5 1 2 , 1 5 2 1 ( 1 1 th C ir . 1 9 9 0 ) . T h er e is s ca n t ev id en ce in th e r ec o rd th at w o u ldsu g g es t th at H o m e D ep o t’ s cond uctw as w i l l ful . W e have desc ri bed a w i l l ful vi ol at i on of a tra dem ark oc c urr i ng w he r e the i nf r i nge rw a s “ know i ngl y a nd de l i be r a t e l y c a s hi ng i n upon the g o o d w il l o f [ th e in fr in g ed ]. ’” B ur ge rKi ng v . M

as on , 85 5 F . 2d 77 9, 78 1 (11 th C i r. 1988) ( pe rc ur i a m ) ( quot i ng W ol f v . N at i on L e ad C o. , 27 2 F . 2d 86 7, 87 1 (9th C i r. 1 9 5 9 ) . H o m e D e p o t’s a c tio n c o n s is te d o f h a v in g o u td a te d s h e lf

ta g s w ith7

O pt i m um ’ s L ok -L i ftm ark and st ore r ec ei pt s e rr on eousl y r ef l ec t i ng thata c ust om er h a d p u r c h a s e d L o k - L if

t w h e n th a t c u s to m e ra c tu a lly p u r c h a s e d H e n k le ’s H o ld - I t. O p t i mu m a r g u e s th a tH o me D e p o t ’ s a c t i o n s w e r e w i l l f u l b e c a u s e a f

t e rH o me D e potw a s puton not i c e tha ti tw a s i nf r i ngi ng upon O pt i m um ’ s m a rk, H om e D e pot i n i t i a l l y t o o k n o s t e p s t o r e c t i f y th e s i tu a t i o n . O p t i mu m a r g u e s th a tw h e n H o me D e p o t d id ta k e s te p s to r e c tif y th e s itu a tio n , th o s e s te p s c a m e ab o u t to o s lo w ly . H ow ever , the re cord show s thatH om e D epotbegan t o chang e i t s out dat ed st ore ta g s a n d c a s h r e g is te rr e c e ip ts a f te rO p tim u m s e n t H o m e D e p o t ale tte rd ir e c tly a c c us i ng i tof

i nf r i ngi ng upon the L ok- L i f tm a rk. H om e D e potbe ga n t o r e c t i f y the si tuat i on before thi s l aw sui tw as fi l ed and con t i nu ed the process un t i l al l ou t dat ed st ore t ags w er e c hang ed and the ca sh re gi st erre ce i pt s r ef l ec t ed the prop eri t em bei ng sol d. W hi l e O pt i m um m ayhave w ant ed thi s proce ss t o p rogres s a ta m ore rapi d p ac e, thi s i s notevi dence thatH om e D epot ’ s a l l eged i nfri ng em entw as w i l l f ul . F ur the rm or e , the r e i s no e vi de nc e tha tthe e xi s t e nc e of out da t e d s t or e t a gs a n d in a c c u r a te s to r e r e c e ip ts w a s b a s e d o n H o m e D e p o t’s a tte m p t to d e lib e r a te ly ca sh i n o n O pt i m um ’ s goo d w i l l . T here fore , H om e D epot ’ s a ct i on s of a l l eged in f r in g e m e n t w e r e n o t w illf u l. W e al so ag ree w i th th e d i stri ctco u rtth atth ere i s n o ev i d en ce o f u n j u st enri chm ent . U nj ustenri chm entoccurs w hen an i nfri ng erhas “ enri ched them se l vesOptimum claims that itis worried a bout the company

g oing into bankr

uptcy . However, 5 thereis no evidencethat any of Optimum’s financial troubles were attributableto Home Depot’ s use of outdate d shelf tag s and inac curate ca shier re ceipts. 8 by t appi ng the re pu t at i on and g oo d w i l l of [the i nfri ng ed] . ” Khi m ani , 89 2 F . 2d at 15 21 n. 9. T here i s no evi dence thatany of H om e D epot ’ s s al es of H ol d-Itar e a ttr i but abl e t o i t s a l l e ge d i nf r i nge m e ntof

O pt i m um ’ s L ok- L i f

tm a rk. 5 F urtherm ore, the fa ct s of thi s c as e do n otpres enta s i tuat i on w here there i s aneed to d e te rf u tu r e c o n d u c t. T h e r e is n o e v id e n c e th a t H o m e D e p o t w a s im p r o p e r ly usi ng the L ok -L i ftm ark t o i t s f i nanci al advant age, and H om e D epothas r ec t i fi ed the a l l e ge dl y i nf

r i ngi ng c onduc ti n a l l of i ts t or e s . B a s e d on the s pe c i f i c f a c t s of thi s c a s e , the di s tr i c tc our tdi d notabus e i t s di s c r e t i on i n f i ndi ng tha ta n a c c ount i ng o f H o m e D e p o t’s p r o f

its w a s n o t a n ap p r o p r ia te r e m e d y . B . A tt orney F ee s In “ exce pt i on al ca se s, ” the di stri ctcourthas the di sc re t i on t o “ aw ar d r e a s o n ab l e a tt o rn e y f

e e s t o th e p r e v a i l i n g p a r ty . ” 1 5 U. S . C . § 1 1 1 7 ( a ) . An e x c e p tio n a l c a s e is “w h e r e th e in f r in g in g p a r ty a c ts in a m a lic io u s , f r a u d u le n t, del i bera t e, or w i l l ful m anner. ” B ur ge rKi ng v . P i l

gr i m ’s P r i de C or

p. , 15 F . 3d 166, 1 6 8 ( 1 1 th C ir . 1 9 9 4 ) ( in te rn a l q u o ta tio n m a rk s o m itte d ) . T h e r e is n o e v id e n c e to su g g estth atth i s i s an ex cep t i o n al case. T h erefo re, th e d i stri ctco u rtd i d n o tab u seTh edis tric t c ourt alsofoun d th at Optimum wa s n ot entitle d toc os ts. An awa rd of c os ts 6 is alsowithin th edis c retio n o f t hedis tric t c ourt , a

nd wefind noa bu seof thi s discretio n in findingthat an aw ard of

costs was not an a

ppropriatereme dy . See Planetary Motion, Inc . v. Techsplosion, Inc. , 261 F.3d 1188, 1205 ( 11th Cir. 2001). 9 i t s d i scret i o n i n fi n d i n g th atatt o rn ey fees w as n o tan ap p ro p ri at e rem ed y. 6 C . E nh ance d D am ages T he di s tr i c tc our tm a y , i n i t s di s c r e t i on, r e duc e ore nha nc e the r e s ul t i ng aw ar d u p t o three t i m es the am ou ntof profi t s or dam ages , w hi chever i s gre at er , as ju s tic e s h a ll r e q u ir e . 1 5 U .S .C . § 1 1 1 7 ( a ) . “S u c h a n a w a r d is d is c r e tio n a ry , b u t it m a y n o t b e p u n itiv e , a n d m u s t b e b a s e d o n a s h o w in g o f a c tu a l h a rm .” B a b b it E l e c tr oni c s . I

nc . v . D y nas c an C or

p. , 38 F . 3d 11 61 , 11 83 (11th C i r. 19 94 ) ( per c ur i a m ) . S i nc e O pt i m um i s note nt i t l e d t o H om e D e pot ’ s pr of i t s a nd ha s not s h o w n a n y a c tu a l h a rm , it is n o t e n title d to a n ye n h a n c e d d a m a g e s . A c c or di ngl y , upon r e vi e w of the pa r t i e s ’ br i e f

s a nd the r e c or d, w e di s c e rn no r e v e r s ib le e rr o ra n d a f

f irm th e d e c is io n o f

th e d is tr ic t c o u r t. AF F I RM .