*The HONORABLE JOHN B. JONES, United States District

Judge for the District of South Dakota, sitting by

designation.

___________

No. 95-2877

___________

Anheuser-Busch, Inc., *

*

Appellee, *

* Appeals from the United States

v. * District Court for the

* Eastern District of Missouri.

John Labatt Limited; Labatt *

Brewing Company Limited; *

Labatt's USA, Inc.; Labatt *

Importers, Inc., *

*

Appellants. *

___________

No. 95-2879

___________

Anheuser-Busch, Inc., *

*

Appellant, *

*

v. *

*

John Labatt Limited; Labatt *

Brewing Company Limited; *

Labatt's USA, Inc.; Labatt *

Importers, Inc., *

*

Appellees. *

___________

 Submitted: January 10, 1996

 Filed: July 8, 1996

___________

Before RICHARD S. ARNOLD, Chief Judge, BOWMAN, Circuit Judge, and JONES,*

District Judge.

___________
-2-

BOWMAN, Circuit Judge.

John Labatt Limited and its associated companies (Labatt) are brewers

and distributors of beer, including Labatt Ice Beer, in Canada and the

United States. Anheuser-Busch (A-B), headquartered in St. Louis, also

brews and distributes beer, including an ice beer of its own. The

principal issue in this appeal is whether terms such as "ice beer" and "ice

brewed" are trademarks owned by Labatt. A jury decided that the "ice"

terms at issue in this case are not trademarks owned by Labatt. We affirm,

modifying the judgment entered on the jury's verdict to include the

declaratory relief to which A-B is entitled.

I.

The factual summary that follows reflects the record in the light

most favorable to the jury's verdict. In 1993, consumers in Canada and the

United States had their first opportunity to purchase beers with names such

as "Ice Beer" or "Ice Draft." Until 1993 no beer marketed in either Canada

or the United States had the term "ice" in its name. In March 1993 Molson,

a Canadian brewing company, announced that it would market a new beer in

Canada by the name of Molson Canadian Ice. Days later Labatt began

marketing a beer in Canada called Labatt Ice. Labatt Ice was initially

successful in Canada. Labatt then decided that it wanted to market Labatt

Ice in the United States through a United States brewing company, and

Labatt contacted A-B to negotiate a licensing agreement for its new

product. During the course of the negotiations, Labatt disclosed marketing

research on its new product as well as details about its ice brewing

process. A-B and Labatt entered into two agreements regarding the

confidentiality and future use of the information that Labatt disclosed.

In mid-June 1993, Labatt President Hugo Powell attended a meeting at

which A-B's Thomas Sharbaugh explained that A-B was
-3-

considering either licensing Labatt's brewing process or developing its own

ice-brewing process. On numerous occasions between June and August, A-B

officials informed Powell that A-B was attempting to develop its own icebeer process. A-B proceeded along both paths until late July when it

produced a prototype beer from its own brewing process.

On August 4, 1993, A-B informed Labatt that it would market its own

ice beer. The final decision was motivated in part by the unavailability

of the equipment required to duplicate Labatt's patented brewing process

in A-B's breweries. Such equipment may not have been available for six

months to a full year. By brewing its own ice beer in a process

substantially different from Labatt's brewing process, A-B could market an

ice beer within a matter of months. In August 1993, Molson Ice became

available in the United States. A-B began selling Ice Draft from Budweiser

in the United States in October 1993. Shortly thereafter Labatt started

to market Labatt Ice Beer in the United States.

On November 30, 1993, Labatt sent a letter to A-B in which Labatt

accused A-B of infringing Labatt trademarks by using terms such as ice, ice

brewing, ice brewed, and ice beer. In response to Labatt's letter, A-B

filed a complaint in the District Court alleging that Labatt was attempting

to trademark the ice terms, which A-B contends are generic. In Count I of

its amended complaint, A-B sought a declaratory judgment that Labatt had

no protected rights in the ice terms, and that A-B had not "infringed or

unfairly competed, by false advertising or otherwise, with respect to any

such rights." Amended Complaint at 6. A-B also alleged that Labatt was

engaging in a false advertising campaign in violation of the Lanham Act,

15 U.S.C. § 1125(a) (1994) (Count II), and publishing injurious falsehoods

in violation of Missouri common law (Count III). A-B sought both

injunctive relief and damages. 
-4-

Labatt answered A-B's amended complaint and filed a counterclaim.

Labatt's second amended counterclaim included eight counts: (I) false

designation of origin in violation of § 43(a)(1) of the Lanham Act, 15

U.S.C. § 1125(a)(1); (II) false advertising in violation of § 43(a)(2) of

the Lanham Act, 15 U.S.C. § 1125(a)(2); (III) unfair competition in

violation of § 44(b) and (h) of the Lanham Act, 15 U.S.C. § 1126(b), (h),

and the Convention for the Protection of Industrial Property, June 2, 1934,

art. 10 bis, 53 Stat. 1748, 1780 (Paris Convention); (IV) tortious

interference with business expectancy; (V) injurious falsehood; (VI)

common-law unfair competition; (VII) dilution of trademarks in violation

of Mo. Rev. Stat. § 417.061 (1994); and (VIII) breach of the March 30, 1993

confidentiality agreement between Labatt and A-B. Labatt sought injunctive

relief, an accounting of profits, damages, punitive damages, and costs and

attorney fees.

After a nineteen-day trial, the jury found that the ice terms are not

trademarks (A-B Count I) and that Labatt had not proven any infringement

of trademarks (Labatt Count I). The jury also found in favor of A-B on all

of the remaining counts in Labatt's counterclaim that the court had

submitted to the jury: false advertising (Count II), common-law unfair

competition (Count VI), injurious falsehood (Count V), tortious

interference (Counts IV), and breach of contract (Count VIII). The jury

found in favor of Labatt on A-B's false advertising claim (A-B Count II)

but in A-B's favor on its injurious falsehood claim (A-B Count III),

awarding compensatory damages in the amount of one dollar and punitive

damages in the amount of five million dollars. A flurry of post-trial

motions followed the jury's verdicts.

Labatt's motions for a new trial and for judgment as a matter of law

were denied by the District Court. Labatt also moved for judgment as a

matter of law on Count III of Labatt's counterclaim (unfair competition in

violation of the Lanham Act and the Paris Convention) because the District

Court had refused to submit Count
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III to the jury. The District Court denied the motion. At the same time,

the District Court entered judgment in favor of A-B on Labatt's state-law

dilution claim (Count VII). On Labatt's motion, the District Court set

aside the jury's award of punitive damages. The court held that A-B failed

to give adequate notice that it sought punitive damages and failed to

allege facts in its amended complaint that would support an award of

punitive damages. Thus the result of the nineteen-day battle between these

beer-garden goliaths is this: Labatt has no trademarks in the ice terms,

and A-B recovered, in addition to its costs, one dollar (with interest

accruing at a rate of 7.03% per annum) for Labatt's publication of

injurious falsehoods. As noted above, both sides appeal the judgment.

III.

Labatt has raised a plethora of substantive issues on appeal, seeking

either judgment as a matter of law or a new trial. We review the District

Court's denial of motions for judgment as a matter of law de novo but its

denial of new trial motions only for an abuse of discretion. Butler v.

French, 83 F.3d 942, 943, 944 (8th Cir. 1996).

Labatt also has raised one procedural issue, which we will dispose

of before considering the substantive issues. Labatt contends that the

District Court erred when it refused to grant Labatt's motion to set the

order of proof at trial and to realign the parties. Labatt argues that it

should have been allowed to present its case first, as the plaintiff,

because it carried the burden of proof in the trademark action (A-B Count

I) even though A-B initiated this lawsuit as a declaratory judgment action.

A district court has wide discretion to set the order of proof at trial.

Skogen v. Dow Chemical Co., 375 F.2d 692, 704, 706 (8th Cir. 1967).

Ordinarily, the trial court extends the privilege of opening and closing

the case to the party that has the burden of
-6-

proof. Martin v. Chesebrough-Pond's, Inc., 614 F.2d 498, 501 (5th Cir.

1980) (per curiam). While Labatt bore the burden of proof on the trademark

count in A-B's complaint, A-B bore the burden of proof on the other two

counts. Moreover, A-B was required to prove that Labatt did not have any

protected interest in the ice terms, which is the essence of the trademark

count, in order to prevail on Counts II and III of its complaint. In the

circumstances of this case, we do not believe that the District Court

abused its discretion by denying Labatt's motion to set the order of proof

and realign the parties. Both Labatt and A-B bore the burden of proof on

distinct counts of their causes of action. The District Court

understandably chose to allow the actual plaintiff, the party that filed

the lawsuit, to proceed first.

A. Trademark Issues

The principal issue in this appeal is whether terms such as ice beer

and ice brewed are trademarks owned by Labatt. The jury found that the ice

terms are not trademarks. On appeal, Labatt argues that the District Court

abused its discretion by (1) admitting irrelevant evidence and (2)

improperly instructing the jury on the burden of proof. Labatt contends

that, but for these errors, there is insufficient evidence to support the

jury's verdict and thus the District Court should have granted either

Labatt's motion for judgment as a matter of law or its motion for a new

trial. While we review de novo a District Court's denial of a motion for

judgment as a matter of law, "[a] court should not set aside a jury's

verdict lightly." Nicks v. Missouri, 67 F.3d 699, 704 (8th Cir. 1995).

Our review is limited to assessing whether the evidence, viewed in the

light most favorable to the nonmoving party, supports the jury's verdict.

Id. Because we do not believe that the District Court committed any

instructional or evidentiary errors, we hold that Labatt is not entitled

to judgment as a matter of law or a new trial on the trademark issue. 
 To determine whether a mark is distinctive, courts often

1

classify marks "in categories of generally increasing

distinctiveness; . . . they may be (1) generic; (2) descriptive;

(3) suggestive; (4) arbitrary; or (5) fanciful." Two Pesos, Inc.

v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992). "The latter three

categories of marks, because their intrinsic nature serves to

identify a particular source of a product, are deemed inherently

distinctive and are entitled to protection." Id.; see also First

Bank v. First Bank Sys., Inc., No. 95-2238, slip op. at 7 (8th Cir.

May 29, 1996); Restatement (Third) of Unfair Competition § 9

(1995).

-7-

1. Jury Instructions

Turning to Labatt's arguments on the instructional issues, we note

that a court of appeals reviews a district court's jury instructions only

for abuses of discretion. Hoselton v. Metz Baking Co., 48 F.3d 1056, 1062

(8th Cir. 1995). While "[l]itigants are entitled to have the jury

instructed on their claims and theories if the proposed instructions are

correct statements of the law, supported by the evidence, and brought to

the district court's attention in a timely manner," id. at 1063, the court

has wide discretion in formulating the instructions actually given to the

jury, Hose v. Chicago Northwestern Transp. Co., 70 F.3d 968, 977 (8th Cir.

1995). The instructions will be upheld if, taken as a whole, they "fairly

and adequately present the issues in the case to the jury." Id. 

Labatt first argues that the District Court's instructions "misled"

the jury "into believing that even if the ICE MARKS were once trademarks

. . . . A-B's infringement was excused if the ICE MARKS ceased functioning

as trademarks by" the time of trial. Appellant's Brief at 20. The

District Court, however, properly instructed the jury that arbitrary or

suggestive marks are "entitled to trademark protection from the date that 1

they are first used in an arbitrary or . . . suggestive way on the product

as marketed." Instruction 11. Had the jury believed that the ice terms

were trademarks that since had become generic, these
 Labatt argued that if the ice terms had become generic, it

2

was because of A-B's infringement and mass-marketing campaign to

dilute the alleged trademarks.

-8-

instructions and the format of the special verdict form would have allowed

the jury to find an infringement by A-B (Verdict Form 1(B)) even though it

found that the ice terms were not trademarks at the time of trial (Verdict

Form 1(A)). The special verdict form did not require a negative answer on

the infringement question if the jury found that the marks were not

trademarks at the time of trial. Moreover, the jury rejected Labatt's

genericide theory, the basis for its unfair competition claim, thus making 2

it clear that the jury did not believe that the ice terms had been

trademarks at any time.

Labatt also proposed to instruct the jury that if Labatt proved that

the ice terms were trademarks at one time, the burden of proof then shifted

to A-B to prove that the ice terms had since become generic. While the

District Court refused to give the instruction proposed by Labatt, the

court instructed the jury that "[t]he burden of proving a fact is upon the

party whose claim or defense depends upon that fact." Instruction 3. The

verdict form clearly states that the issue of whether the marks are generic

is "Anheuser-Busch's claim." Verdict Form at 1. We thus conclude that the

court did not abuse its discretion when instructing the jury because the

instructions, taken as a whole, fairly and adequately presented the issues

in the case to the jury.

2. Evidentiary Rulings

Labatt has challenged several evidentiary rulings of the District

Court. The admissibility of evidence is an issue that is committed to the

sound discretion of the trial court, and "we will not disturb a district

court's evidentiary ruling absent a clear and prejudicial abuse of that

discretion." Laubach v. Otis
-9-

Elevator Co., 37 F.3d 427, 428-29 (8th Cir. 1994). Having reviewed the

relevant portions of the record, we conclude that Labatt's evidentiary

arguments are without merit. For example, Labatt argues that the District

Court should not have admitted evidence relating to foreign use, trade use,

and Labatt's use of the ice terms, or at least the court should have given

an instruction limiting the jury's consideration of the evidence. Before

trial, however, the District Court ruled the evidence inadmissible unless

Labatt claimed that it invented the term ice beer. When Labatt made that

claim in its opening statement, all of the hitherto excluded evidence

became relevant to rebut that claim. The District Court did not abuse its

discretion by admitting the evidence of other uses after Labatt opened the

door, and no limiting instruction was warranted.

The District Court instructed the jury in a manner consistent with

the law, see Instruction 11, and the jury found that the ice terms were not

trademarks. The jury's verdict is supported by the record. In addition

to a glaring lack of evidence that would tend to prove that the ice terms

were inherently distinctive (i.e., arbitrary, fanciful, or suggestive),

there was a great deal of evidence tending to prove that the ice terms were

not distinctive in any way. A-B introduced evidence of generic uses of the

term "ice beer" that antedate Labatt's uses of the ice terms. None of the

consumer survey evidence indicated that the ice terms were functioning as

trademarks, and some of it indicated that by October 1994 -- just a year

after Labatt introduced Labatt Ice into the United States -- eighty percent

of the respondents (eighty-five percent in areas bordering Canada)

understood the term ice to be the name of a beer category. Additionally,

Labatt's own June 1994 consumer survey "showed that consumers had no clear

understanding of ICE BEER's meaning or of its source." Appellant's Brief

at 12. In these circumstances, a reasonable jury easily could conclude

that the ice terms were not suggestive and never served to identify a

particular source or a product in the minds of consumers. 
-10-

Moreover, a jury could conclude that ice was and always had been the name

of a beer category. The ice terms "convey meaning too directly to be

suggestive," but, giving Labatt the benefit of every doubt, are arguably

"too specific to be generic," Duluth News-Tribune v. Mesabi Publishing Co.,

No. 95-2912, slip op. at 4-5 (8th Cir. June 3, 1996). See also 20th

Century Wear, Inc. v. Sanmark-Stardust Inc., 747 F.2d 81, 87-88 (2d Cir.

1984) (holding that "Cozy Warm ENERGY-SAVERS" is descriptive), cert.

denied, 470 U.S. 1052 (1985). Because the District Court did not abuse its

discretion when giving the instructions or admitting the evidence that

Labatt has challenged, we have no reason to displace the jury's decision

that the ice terms were not trademarks and hold that the District Court

properly denied Labatt's motions for judgment as a matter or law and a new

trial on the trademark issue.

B. Unfair Competition and Tortious Interference

With respect to Labatt's claim for unfair competition under the

Lanham Act and the Paris Convention (Labatt Count III) and its claim for

tortious interference with business expectancy (Labatt Count IV), Labatt

argues that the District Court should have granted its motions for a new

trial or judgment as a matter of law because A-B offered no legitimate

business justification for failing to notify Labatt until August 1993 that

it would not distribute Labatt Ice in the United States. Labatt

characterizes this delay as a "devious manipulation of the licensing

negotiations" through which A-B was "stringing Labatt along." Appellant's

Brief at 43-44. According to Labatt, A-B's delay satisfies the

intentional-interference element of Labatt's tortious interference claim,

see Killian Constr. Co. v. Jack D. Ball & Assocs., 865 S.W.2d 889, 891 (Mo.

Ct. App. 1993), and the dishonest-business-practice element of its Lanham

Act, 15 U.S.C. § 1126, and Paris Convention claims.
-11-

The jury rejected Labatt's characterization of the facts. This Court

will not second guess the credibility determinations of a jury, Fox v. T-H

Continental Ltd. Partnership, 78 F.3d 409, 413 (8th Cir. 1996), and the

jury in this case chose to believe the witnesses who testified that A-B

considered either licensing Labatt's process or developing its own

throughout June and July 1993, that on several occasions A-B informed

Labatt's president that A-B was considering developing its own brewing

process, and that the final decision was not made until late July when a

prototype beer resulted from A-B's development efforts. Based on this

testimony, a jury could reasonably conclude that A-B did not intentionally

interfere with Labatt's business expectancies and that A-B did not engage

in any acts contrary to honest business practices. Thus the District Court

properly denied Labatt's motion for judgment as a matter of law and did not

abuse its discretion when it refused to grant a new trial on these claims.

C. Injurious Falsehoods Published By Labatt

Labatt argues that the jury's verdict in favor of A-B on A-B's

injurious falsehood claim should be set aside because (1) the jury's

verdict is inconsistent with its verdict for Labatt on A-B's false

advertising claim; and (2) there is insufficient evidence to support the

jury's verdict because there is no evidence that Labatt's advertising

misrepresented anything, misled any consumers, or caused A-B any actual

pecuniary loss. 

A-B has not directly responded to Labatt's argument that the jury

verdicts are inconsistent. In the context of its reply-brief argument

regarding the jury's award of punitive damages, however, A-B does argue

that the verdicts are consistent. Labatt moved to strike these portions

of A-B's reply brief because, in Labatt's opinion, they address an issue

that A-B should have addressed in its opening brief. Labatt argues that

the inconsistent-verdict issue was raised in its opening brief. We ordered

the motion to be
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taken with the case. Concluding that the portion of the brief in question

is a response to Labatt's response to an issue first raised in A-B's

opening brief, we deny Labatt's motion.

Pursuant to Eighth Circuit Rule 28A(f), this Court ordered the

parties to submit four briefs: (1) the appellant's brief (Labatt's opening

brief); (2) the appellee/cross-appellant's brief (filed as one brief) (AB's opening brief); (3) the appellant's reply brief/cross-appellee's brief

(filed as one brief); (4) the cross-appellant's reply brief. In its

opening brief, Labatt raised the issue of an inconsistency between the

jury's verdicts on A-B's claims of false advertising and injurious

falsehood. Labatt claims that any response to its arguments should have

been made in A-B's opening brief. The issue is first discussed by A-B in

its reply brief. A-B's arguments on this point, however, appear in the

context of its argument in support of its appeal of the punitive damages

issue, see infra pp. 17-19, an issue that A-B raised in its opening brief.

Labatt responded to A-B's argument regarding punitive damages in its reply

brief in part by arguing that the verdict underlying the award of punitive

damages is "fatally inconsistent." Labatt's Reply Brief at 23. A-B is

entitled to reply to this argument in its reply brief because the issue of

punitive damages is an issue that was raised in its appeal. We conclude

that the portion of A-B's reply brief at issue does not constitute an

attempt "to sandbag Labatt," Labatt's Motion to Strike at 2. Out of

fairness to Labatt, however, we will not consider A-B's assertion that

Labatt waived this issue by failing to raise it before the District Court

because Labatt has not had an opportunity to respond to that argument.

Labatt, however, was first to raise the issue of inconsistent verdicts, so

we do consider A-B's counterarguments on inconsistency.

We recognize that it is our duty to harmonize inconsistent verdicts,

viewing the case in any reasonable way that makes the verdicts consistent.

Gallick v. Baltimore & Ohio R.R. Co., 372
-13-

U.S. 108, 119 (1963); First State Bank v. Jubie, No. 95-2112, slip op. at

5 (8th Cir. June 7, 1996). The verdicts in this case are reconcilable.

As the unchallenged instructions of the District Court make clear, the two

claims have different elements. In these circumstances, the jury could

have found that A-B proved all of the elements of the injurious falsehood

claim while failing to prove one of the separate elements of the falseadvertising claim. For example, the jury might not have found that

Labatt's false or misleading "description or representation actually

deceived or had a tendency to deceive a substantial portion of the intended

audience," Instruction 13 (emphasis added), but still found that "it was

reasonably foreseeable that others would rely on the statement,"

Instruction 14 (emphasis added). 

Contrary to Labatt's assertions, there is sufficient evidence to

support the jury's verdict on A-B's injurious falsehood claim. Labatt

engaged in extensive advertising claiming that "If It's Not Labatt's, It's

Not Ice Beer." The jury had sufficient evidence to find that Labatt's

slogan was injurious to and understood by the public to be directed at

other brewers of ice beer, including A-B. It was not only reasonably

foreseeable but Labatt's hope that others would rely on the statement.

Finally, based on the evidence the jury was entitled to infer that A-B

suffered a loss from Labatt's consistent and continuous publication of this

false statement. Thus the District Court properly denied Labatt's motion

for judgment as a matter of law and did not abuse its discretion when it

refused to grant a new trial on A-B's injurious falsehood claim.

D. Breach of Contract

Labatt argues that it is entitled to judgment as a matter of law on

its breach-of-contract claim because A-B, among other things, used the term

"ice beer." In relevant part, the confidentiality agreement between the

parties provided as follows:
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Anheuser-Busch confirms that the marketing information and

marketing proposals described in the attached papers were

communicated by Labatt to Bob Gunther and Bill Campbell in

confidence, and are not to be used by them or by Anheuser-Busch

for any purpose other than the intended purpose. AnheuserBusch's duty of confidence shall not apply to any information:

(a) disclosed in a patent, copyright registration, or in the

public domain through no fault of Anheuser-Busch;

(b) obtained by Anheuser-Busch from a third party lawfully in

possession of it and under no secrecy obligation to it;

or

(c) in Anheuser-Busch's knowledge or possession prior to

March 24, 1993 and not acquired by Anheuser-Busch, either

directly or indirectly, from Labatt.

March 30, 1993 Letter Agreement at 1-2. Labatt reads this agreement to

create two duties, a non-use duty and confidentiality duty. According to

Labatt, the exceptions apply only to the duty of confidentiality.

Anheuser-Busch reads the agreement as imposing one duty of confidentiality,

part of which is its agreement not to use the confidential information.

Thus Anheuser-Busch believes that the exceptions apply to both its

agreement to keep the information confidential and its agreement not to use

the confidential information. 

The District Court submitted the issue to the jury with proper and

unchallenged instructions, and the jury found for A-B. Labatt claims that

the issue should have been resolved by the District Court in its favor as

a matter of law. We disagree. The District Court concluded in the first

instance that the agreement was ambiguous as a matter of law, and we agree.

Once the court decides that a contract is ambiguous, "resolution of the

ambiguity is a question of fact to be determined by the jury." John

Morrell & Co. v. Local Union 304A of United Food & Commercial Workers, AFLCIO, 913 F.2d 544, 551 (8th Cir. 1990), cert. denied, 500 U.S. 905
 From what we can gather, Labatt's claim that A-B published

3

injurious falsehoods about Labatt is also dependent on a finding

that the ice terms were Labatt trademarks. Section XV of Labatt's

brief argues only that Labatt proved the elements of an injurious

falsehood claim "as demonstrated above." Appellant's Brief at 47.

The three sections "above" relate to trademark-dependent claims.

-15-

(1991). The District Court did not err when it submitted the

interpretation of the confidentiality agreement to the jury.

E. Other Issues

Labatt has also appealed from the jury's adverse verdict on its

common-law unfair competition claim (Labatt Count VI). As Labatt

recognizes, the unfair-competition theory required it to prove that one of

the ice terms was a trademark. Appellant's Brief at 39 (citing Cornucopia,

Inc. v. Wagman, 710 S.W.2d 882, 888 (Mo. Ct. App. 1986)). Having already

concluded that Labatt failed to prove that any of the ice terms were

trademarks, it necessarily follows that the jury correctly rejected

Labatt's common-law unfair competition claim. 

Similarly, Labatt's false advertising (Labatt Count II) and state-law

dilution of trademark (Labatt Count VII) claims are dependent on a finding

that the ice terms were or are Labatt trademarks. With respect to Count

II, Labatt claims that "[b]y falsely telling consumers that A-B had an 'ice

beer' and 'ice brewed' its beer, A-B both diverted sales to itself and

diluted the ICE MARKS." Appellant's Brief at 42. With respect to Count

VII, Labatt recognizes that an element of the dilution claim is proof that

the ice terms are or were trademarks. Appellant's Brief at 45. Having

held that Labatt failed to prove its alleged common-law trademark rights

in the ice terms, we also conclude that Labatt's false advertising and

dilution claims must fail.3
-16-

In sum, we conclude that the District Court properly denied Labatt's

motion for judgment as a matter of law on the various claims that the jury

decided in A-B's favor. The court's refusal to grant Labatt's motion for

a new trial does not constitute an abuse of discretion.

IV.

Anheuser-Busch also has appealed from the judgment of the District

Court. A-B contends that the District Court abused its discretion when it

denied A-B's motion to amend the judgment to include declaratory and

injunctive relief and when it set aside the jury's punitive damages award.

We address each of these issues in turn. 

A. Declaratory and Injunctive Relief

In its Amended Complaint, A-B sought a declaration that Labatt does

not have "any protectable state, federal, international convention or

treaty rights in 'ice,' 'ice beer,' 'ice brewing' or similar terms, and

that Anheuser-Busch has not infringed or unfairly competed, by false

advertising or otherwise, with respect to any such rights." Amended

Complaint at 8. A-B also sought broad injunctions that would have

prohibited Labatt from asserting any rights in the ice terms and falsely

describing, representing, advertising, or promoting both Labatt's and A-B's

"products and processes." Id. at 8-9. After the District Court entered

its judgment, A-B twice moved to amend the judgment to include declaratory

and injunctive relief. The District Court twice denied A-B's motion

without any explanation. We review a District Court's decision on a motion

to alter or amend the judgment under the deferential abuse-of-discretion

standard. United Food & Commercial Workers Int'l Union, Local 751 v. Brown

Group, Inc., 50 F.3d 1426, 1432 (8th Cir. 1995), rev'd on other grounds,

116 S. Ct. 1529 (1996). "[T]raditional equitable principles requiring the
-17-

balancing of public and private interests control the grant of declaratory

or injunctive relief in the federal courts." Webster v. Doe, 486 U.S. 592,

604-05 (1988).

A-B argues that it is entitled to declaratory and injunctive relief

based on the jury's verdicts in its favor. With respect to declaratory

relief, Labatt argues that the jury's verdict does not cover the scope of

the requested declaration. We disagree. Labatt lost on every count, save

A-B's false advertising claim, and we have affirmed that result. Labatt

therefore failed to prove that it has any protected rights in the ice terms

and failed to prove that A-B infringed any rights, unfairly competed, or

falsely advertised. No equities weigh against issuing the declaration, and

therefore the District Court abused its discretion by denying A-B's motion

to amend the judgment to include such a declaration.

Injunctive relief, however, is a different matter. While A-B was

successful on its injurious falsehood claim, the jury awarded only one

dollar in compensatory damages and Labatt prevailed on A-B's false

advertising claim. Moreover, evidence in the record tends to show that AB's ice beer products have done very well in the market, which might lead

one to conclude that Labatt's injurious falsehoods have not caused

significant injury to A-B. As A-B recognizes, "[t]he basis of injunctive

relief in the federal courts has always been irreparable harm and

inadequacy of legal remedies." Appellee's Brief at 33 (quoting Beacon

Theatres, Inc. v. Westover, 359 U.S. 500, 506-07 (1959)). In these

circumstances, a district court might reasonably conclude that the equities

are fairly balanced and refuse to issue an injunction against Labatt.

B. Punitive Damages

Finding that Labatt had published injurious falsehoods, the jury

awarded one dollar in compensatory damages and five million dollars in

punitive damages to A-B. The District Court, however,
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granted Labatt's motion to set aside the jury's award of punitive damages

for lack of notice. A-B appeals the District Court's decision. State law

governs the reduction or elimination of the award of punitive damages in

this case because the claim for damages resulting from Labatt's publication

of injurious falsehoods is based on state law. See Maristuen v. National

States Ins. Co., 57 F.3d 673, 679 (8th Cir. 1995). Under Missouri law,

punitive damages are awarded in the discretion of the trial court.

Stephenson v. First Missouri Corp., 861 S.W.2d 651, 657 (Mo. Ct. App.

1993); Propst v. Brown, 854 S.W.2d 844, 845-56 (Mo. Ct. App. 1993). We

therefore review the District Court's decision to set aside the jury's

award of punitive damages for an abuse of discretion. A district court

abuses its discretion when it bases a decision on an erroneous

interpretation of the law or a finding of fact that is clearly erroneous.

First Bank v. First Bank Sys., Inc., No. 95-2238, slip op. at 5-6 (8th Cir.

May 29, 1996).

Having reviewed the record, we conclude that the District Court's

finding that A-B failed to give adequate notice of its claims for punitive

damages for Labatt's publication of injurious falsehoods is not clearly

erroneous. A-B never mentioned punitive damages in its pleadings or in its

answers to Labatt's interrogatories. A-B first mentioned punitive damages

one week before trial when it submitted supplemental jury instructions.

Federal Rule of Civil Procedure 15(b), relied upon by A-B, is not

applicable in these circumstances. The rule provides that "[w]hen issues

not raised by the pleadings are tried by express or implied consent of the

parties, they shall be treated in all respects as if they had been raised

in the pleadings." Fed. R. Civ. P. 15(b). In this case, the issue of

punitive damages was tried to the jury despite the express resistance of

Labatt. The District Court stated that Labatt filed written objections and

preserved its objections orally on February 8, 1996, before the

instructions and verdict form were given to the jury. We agree with the

District Court that Labatt did not waive its objection to the submission

of
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the issue of punitive damages. Thus the District Court did not abuse its

discretion when it set aside the punitive damages award for lack of notice.

V.

For the reasons stated, the judgment of the District Court is

affirmed except insofar as that judgment fails to provide for the

declaratory relief to which Anheuser-Busch is entitled. We therefore

remand the case so that the judgment can be amended to include an

appropriate declaration.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.