### *The H ONORABLE JOHN B. JONES, United States Distric t

Judge for the District of South Dakota, sitting b y 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 RIC HARD S. ARNOLD, Chief Judge, BOWMAN, Circuit Judge, and JONES, * District Judge.

___________

### -2-

BOWMAN, Circuit Judge.
John Labatt Limited and its associated companies (Labatt) are b rewers and d istributors of beer, including Labatt Ice Beer, in Canada and th e United States. Anheuser-Busch (A-B), headquartered in St. Louis, als o brews and distributes beer, including an ice beer of its own. Th e principal issue in this appeal is whether terms such as "ice beer" and "ic e 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 th e declaratory relief to which A-B is entitled.

I.

The f actual summary that follows reflects the record in the ligh t most favorable to the jury's verdict. In 1993, consumers in Canada and th e United States had their first opportunity to purchase beers with names suc h
as "Ice Beer" or "Ice Draft." Until 1993 no beer marketed in either Canad a
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 bega n marketing a beer in Canada called Labatt Ice. Labatt Ice was initiall y successful in Canada. Labatt then decided that it wanted to market Labatt Ice in the United States through a United States brewing company, an d Labatt contacted A-B to negotiate a licensing agreement for its ne w product. During the course of the negotiations, Labatt disclosed marketin g
resear ch on its new product as well as details about its ice brewin g process. A-B and Labatt entered into two agreements regarding th e confidentiality and future use of the information that Labatt disclosed.

In mid-June 1993, Labatt President H ugo 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 ow n ice-brewing process. On numerous occasions between June and August, A-B officials informed Po well that A-B was attempting to develop its own icebee r process. A-B proceeded along both paths until late July when i t 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 si x months to a full year. By brewing its own ice beer in a proces s substantially different from Labatt's brewing pr ocess, A-B could market an ice beer within a matter of months. In August 1993, Molson Ice becam e available in the United States. A-B began selling Ice Draft from Budweise r in the United States in October 1993. Shortly thereafter Labatt started to market Labatt Ice Beer in the United States.

On Novemb er 30, 1993, Labatt sent a letter to A-B in which Labat t accused A-B of infringing Labatt trademarks by using terms such as ice, ic e 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 attemptin g to trademark the ice terms, which A-B contends a re 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 publi shing injurious falsehoods in viola tion of Missouri common law (Count III). A-B sought bot h injunctive relief and damages.

### -4- Labat t answered A-B's amended complaint and filed a counterclaim

. Labatt 's second amended counterclaim included eight counts: (I) fals e designation of origin in violation of § 43(a)(1) of the Lanham Act, 1 5 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 i n 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) tortiou s in terference 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, 199 3 confidentiality agreement between Labatt and A-B. Labatt sought injunctiv e relief, an accounting of profits, damages, punit ive damages, and costs and attorney fees.
After a nineteen-day trial, the jury found that the ice terms a re 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 al l of the remaining counts in Labatt's counterclaim that the court ha d sub mitted to the jury: false advertising (Count II), common-law unfai r comp etition (Count VI), injurious falsehood (Count V), tortiou s 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 punitiv e damages in the amount of five million dollars. A flurry of post-tria l motions followed the jury's verdicts.

Labatt's motions for a new trial andfor judgment as a matter of law
were de nied by the District Court. Labatt also moved for judgment as a matter of law on Count III of Labatt's countercl aim (unfair competition in violation of the Lanham Act and the Paris Conven tion) because the District Court had refused to submit Count

### -5-

III to the jury. The District Court denied the motion. At the same time, the District Court en tered judgment in favor of A-B on Labatt's state-law dilution claim (Count VII). On Labatt's motion, the District Court se t aside the jury's award of punitive damages. The court held that A-B faile d to give ad equate notice that it sought punitive damages and failed t o alle ge facts in its amended complaint that would support an award o f punitive damages. Thus the result of the nineteen-day battle between thes e 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 interes t
acc ruing at a rate of 7.03% per annum) for Labatt's publication o f injurious falsehoods. As noted above, both sides appeal the judgment.

III.
Labatt has raised a plethora of substantive issues on appeal, s eeking either judgment as a matter of law or a new tria l. We review the District Court's denial of mot ions 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 a lso has raised one procedural issue, which we will dispos e of before considering the substantive issues. Labatt contends that th e District Court erred when it refused to grant Labatt's motion to set the order of proof at trial and to realign the parti es. Labatt argues that it should hav e been allowed to present its case first, as the plaintiff , because it carried th e burden of proof in the trademark action (A-B Count I) even though A-B initiated this lawsuit as a declaratory judgment action

. Adistrict 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 trademar k count i n A-B's complaint, A-B bore the burden of proof on the other tw o counts. Moreover, A- B was required to prove that Labatt did not have any protected interest in the ice terms, which is th e essence of the trademark count, in order to pr evail on Counts II and III of its complaint. In the circumstan ces of this case, we do not believe that the District Cour t abused its discretion by denying Labatt's motionto set the order of proof and realign the parti es. Both Labatt and A-B bore the burden of proof on distin ct counts of their causes of action. The District Cour t understandablychose to allow the actual plaintiff, the party that filed the lawsuit, to proceed first.

A. Trademark Issues
The principal issue in this appeal i s whether terms such as ice beer and ice brewed are trademarks owned by Labatt. The jury found that the ic e terms are not trademarks. On appeal, Labatt argues that the District Cour t abused its discretion by (1) admitting irrelevant evidence and (2 ) improperlyinstructing the jury on the burden of proof. Labatt contends that, but for these e rrors, there is insufficient evidence to support the jury's verdict and thus the District Court should have granted eithe r Labat t's motion for judgment as a matter of law or its motion for a ne w trial. While we revi ew 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 l ightly." Nicks v. Missouri , 67 F.3d 699, 704 (8th Cir. 1995)

. Our r eview is limited to assessing whether the evidence, viewed in th e light most favorable to the nonmoving party, supports the jury's verdict. Id. B ecause we do not believe that the District Court committed an y 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 d etermine whether a mark is distinctive, courts ofte n 1 

### classifymarks "in categories of generally increasin g 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 t o ide ntifya particular source of a product, are deemed inherentl y distinctive and are entitled to protection." Id. ; see also First Bank v. First Bank Sys., Inc. , No. 95-2238, slip op. at 7 (8 th 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 not e that a court of appea ls reviews a district court's jury instructions only for abuses of discretion. Hoselton v. Metz Baki ng Co. , 48 F.3d 1056, 1062 (8t h Cir. 1995). While "[l]itigants are entitled to have the jur y 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 manne r," id. at 1063, the court has wide discretion i n 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, take n as a whole, they "fairly and adequately present the issues in the case to the jury." Id.

Labatt fi rst 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 IC E MARKS ceased functioning
as trademar ks by" the time of trial. Appellant's Brief at 20. Th e Distri ct Court, however, properly instructed the jury that arbitrary o r suggestive marks are "entitled to t rademark protection from the date that 1 they are first used in an arbitrary or . . . sug gestive way on the product
as marketed." Instruction 11. Had the jury believed that the ice terms were trademarks that since had become generic, these

### Labat t argued that if the ice terms had become generic, i t 2 

### was be cause of A-B's infringement and mass-marketing campaign t o dilute the alleged trademarks.
-8- instructions and the format of the special verdi ct 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 re quire a negative answer on the infri ngement question if the jury found that the marks were no t trade marks 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 tha t the jury did not believe that the ice terms had bee n 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 shifte d to A- B to prove that the ice terms had since become generic. While th e District Court refused to give the instruction proposed by Labatt, th e court instructed the jury that "[t]he burden of proving a fact is upon the party whose claim or defense depends upon that f act." Instruction 3. The verdict form clearly states that the issue of whether the marks are generi c is "Anheuser-Busch's claim." Verdict Form at 1. We thus conclude that th e court did not abuse its discretion when instructing the jury because the instructions, taken as a whole, fairly and adequ ately presented the issues in the case to the jury.

2. Evidentiary Rulings

Labat t has challenged several evidentiary rulings of the Distric t Court. The admissibility of evidence is an issu e that is committed to the sound discretion of the trial court, and "we will not disturb a district
cou rt's evidentiary ruling absent a clear and prejudicial abuse of tha t discretion." Laubach v. Otis

### -9-

Elevator Co. , 37 F.3d 427, 428-29 (8th Cir. 1994). Having reviewed th e releva nt portions of the record, we conclude that Labatt's evidentiar y arguments are without merit. For example, Labat t 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 t he court should have given an instruction limiti ng the jury's consideration of the evidence. Before trial, however, the D istrict Court ruled the evidence inadmissible unless Labatt claimed that i t invented the term ice beer. When Labatt made that claim i n its opening statement, all of the hitherto excluded evidenc e became relevant to rebut that claim. The Distri ct Court did not abuse its discretion by admitting the evidence of other us es after Labatt opened the door, and no limiting instruction was warranted.

The Dist rict Court instructed the jury in a manner consistent wit h the law, see Instruction 11, and the jury found that the ice terms were no t 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 wer e not distinctive in any way. A-B introduced evidence of generic uses of th e term "ice beer" that antedate Labatt's uses of t he ice terms. None of the consumer survey evide nce 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 percen t of the respondents (eighty-five percent in areas bordering Canada ) understood the term i ce to be the name of a beer category. Additionally, Labatt's own June 1994 consumer survey "showed t hat 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 conclud e tha t the ice terms were not suggestive and never served to identify a particular source or a product in the minds of consumers.

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Moreover, a jury coul d conclude that ice was and always had been the name of a beer category. The ice terms "convey meaning too directly to b e 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 20t h CenturyWear, Inc. v. Sanmark-Stardust Inc. , 747 F.2d 81, 87-88 (2d Cir. 19 84) (holding that "Cozy Warm ENERGY-SAVERS" is descriptive), cert
. denied , 470 U.S. 1052 (1985). Because the District Court did not abuse it s discre tion when giving the instructions or admitting the evidence tha t 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 Cour t 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 th e LanhamAct 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 legitimat e business justification for failing to notify Lab att until August 1993 that it would not distribute Labatt Ice in the United States. Labat t charac terizes this delay as a "devious manipulation of the licensin g negotiations" through which A-B was "stringing L abatt along." Appellant's Brief at 43-44. According to Labatt, A-B's delay satisfies th e intentional-interfere nce 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 t he 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 determinat ions of a jury, Fox v. T-H Continental Ltd. Partnership , 78 F.3d 409, 413 (8th Cir. 1996), and th e jury in t his case chose to believe the witnesses who testified that A- B considered either licensing Labatt's process or developing its ow n through out June and July 1993, that on several occasions A-B informe d Labatt 's president that A-B was considering developing its own brewin g 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 thi s 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 Cour t properly denied Labatt's motion for judgment as a matter of law and did no t abuse its discretion when it refused to grant a new trial on these claims.

C. Injurious Falsehoods Published By Labatt

Labat t argues that the jury's verdict in favor of A-B on A-B' s inju rious falsehood claim should be set aside because (1) the jury' s verdict is inconsistent with its verdict for Labatt on A-B's fals e advertising claim; and (2) there is insufficient evidence to support the jury's verdict because there is no evidence that Labatt's advertisin g misrep resented anything, misled any consumers, or caused A-B any actua l pecuniary loss.

A-B h as not directly responded to Labatt's argument that the jur y verdicts are inconsistent. In the context of its reply-brief argumen t reg arding the jury's award of punitive damages, however, A-B does argu e 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 ordere d the motion to be

### -12-

taken with the case. Concluding that the portio n of the brief in question is a r esponse 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 th e parties to submit four briefs: (1) the appellant's brief (Labatt's openin g brief); (2) the appel lee/cross-appellant's brief (filed as one brief) (AB's opening brief); (3) the appellant's reply br ief/cross-appellee's brief (fil ed as one brief); (4) the cross-appellant's reply brief. In it s opening brief, Labatt raised the issue of an inconsistency between th e jury's verdicts on A-B's claims of false advertising and injuriou s falsehood. Labatt claims that any response to its arguments should have been made in A-B's op ening brief. The issue is first discussed by A-B in its reply brief. A-B's arguments on this point, however, appear in th e context of its argument in support of its appeal of the punitive damages issue, see infra pp. 17-19, an issue that A-B ra ised in its opening brief. Labatt responded to A-B's argument regarding pun itive damages in its reply brief in part by arguing that the verdict underl ying the award of punitive damages i s "fatally inconsistent." Labatt's Reply Brief at 23. A-B i s 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 tha t the portion of A-B's reply brief at issue does not constitute a n attemp t "to sandbag Labatt," Labatt's Motion to Strike at 2. Out o f fairness to Labatt, however, we will not consider A-B's assertion tha t Labatt waived this is sue by failing to raise it before the District Court becau se 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 make s 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 cla ims have different elements. In these circumstances, the jury coul d have found that A-B p roved all of the elements of the injurious falsehood claim whi le failing to prove one of the separate elements of the false

advertisi ng claim. For example, the jury might not have found tha t La batt's false or misleading "description or representation actuall y deceived or had a tendency to deceive a substantial portion of the intende d audience," Instruction 13 (emphasis added), but still found that "it was
reason ablyforeseeable that others would rely on the statement, " Instruction 14 (emphasis added).

Contraryto Labatt's assertions, there is sufficient evidence t o support the jury's verdict on A-B's injurious falsehood claim. Labat t 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 a t oth er brewers of ice beer, including A-B. It was not only reasonabl y 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 thi s false statement. Thu s 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 ar gues 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 ter m "ice beer." In relevant part, the confidentiality agreement between the parties provided as follows:

### -14- Anheuser-Busch confirms that the marketing information an d market ing proposals described in the attached papers wer e com municated by Labatt to Bob Gunther and Bill Campbell i n confidence, and are not to be used by them or by An heuser-Busch for any purpose other than the intended purpose. Anheuser

Busch's duty of confiden ce shall not apply to any information: (a) disclosed ina patent, copyright registration, or in the public domain through no fault of Anheuser-Busch; (b) obtained by Anheuser-Busch from a thirdparty lawfully in posses sion of it and under no secrecy obligation to it ; or (c) in Anheuser-Busch's knowledge or possession prior t o March 24, 1993 and not acquired by Anhe user-Busch, either directly or indirectly, from Labatt.

March 30, 1993 Letter Agreement at 1-2. Labatt reads this agreement t o 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 A nheuser-Busch believes that the exceptions apply to both it s agreement to keep the information confidential and its agreement not to us e the confidential information.

The Dis trict Court submitted the issue to the jury with proper an d unchallenged instructions, and the jury found fo r 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 th e ambiguity is a question of fact to be determined by the jury." Joh n Morrell & Co. v. Local Union 304A of United Food & Commercial Workers, AFL

CIO , 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 publishe d 3 

### inj urious falsehoods about Labatt is also dependent on a findin g 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 demonstrat ed 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 th e interpretation of the confidentiality agreement to the jury.

E. Other Issues

Labatt ha s also appealed from the jury's adverse verdict on it s
common -law unfair competition claim (Labatt Count VI). As Labat t recognizes, the unfair-competition theory requir ed 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 conclu ded that Labatt failed to prove that any of the ice terms wer e trade marks, it necessarily follows that the jury correctly rejecte d Labatt's common-law unfair competition claim.
Similarly, Labatt's false advertising (Labatt Count II) and sta te-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 'ic e beer' and 'ice brewed' its beer, A-B both diverted sales to itself an d diluted the ICE MARKS." Appellant's Brief at 42. With respect to Count VII, Labatt recognizes that an element of the di lution claim is proof that the ice terms are or were trademarks. Appellant's Brief at 45. Havin g held that Labatt failed to prove its alleged common-law trademark rights in th e ice terms, we also conclude that Labatt's false advertising an d dilution claims must fail. 3

### -16- In sum, we conclude that the Distric t Court properly denied Labatt's motion for judgment as a matter of law on the va rious claims that the jury decided in A-B's favo r. 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 Distric t Court. A-B contends that the District Court abu sed its discretion when it deni ed A-B's motion to amend the judgment to include declaratory an d 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 Am ended Complaint, A-B sought a declaration that Labatt does not hav e "any protectable state, federal, international convention o r treatyrights in 'ice,' 'ice beer,' 'ice brewing' or similar terms, an d that A nheuser-Busch has not infringed or unfairly competed, by fals e adve rtising or otherwise, with respect to any such rights." Amende d Com plaint at 8. A-B also sought broad injunctions that would hav e 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 judgm ent to include declaratory and injunctive relief. The District Court twice denied A-B's motio n without any explanation. We review a District Court's decision on a motio n to alter or amend the judgment under the deferential abuse-of-discretion standard. United Food & Commercial Workers Int'l Union, Local 751 v. Brow n Group, Inc. , 50 F.3d 1426, 1432 (8th Cir. 1995), rev'd on other grounds , 116 S. Ct. 1529 (1996). "[T]raditional equitabl e principles requiring the

### -17-

balancing of public and private interests contro l the grant of declaratory
or injunctive relief in the federal courts." Webster v. Doe , 486 U.S. 592 , 604-05 (1988).

A-B argue s that it is entitled to declaratory and injunctive relief based on the jury's verdicts in its favor. With respect to declarator y 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 term s and failed to prove that A-B infringed any rights, unfairly competed, or falsely advertised. No equities weigh against issuing the declaration, an d therefore the District Court abused its discreti on by denying A-B's motion to amend the judgment to include such a declaration.
Injun ctive relief, however, is a different matter. While A-B wa s successful on its injurious falsehood claim, the jury awarded only on e dollar in compensatory damages and Labatt prevailed on A-B's fals e advertising claim. Moreover, evidence in the re cord 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 cause d significant injury to A-B. As A-B recognizes, "[t]he basis of injunctive relie f in the federal courts has always been irreparable harm an d inadequacyof legal remedies." Appellee's Brief at 33 (quoting Beaco n Theatres, Inc. v. Westover , 359 U.S. 500, 506-07 (1959)). In thes e circumstances, a district court might reasonably conclude that the equitie s are fairly balanced and refuse to issue an injunction against Labatt.

B. Punitive Damages
Finding that Labatt had published injurious falsehoods, the jur y awarded one dollar in compensatory damages and five million dollars i n punitive damages to A-B. The District Court, however,

### -18-

granted Labatt's moti on to set aside the jury's award of punitive damages for lack of notice. A-B appeals the District Co urt'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 publicatio n of injurious falsehoo ds 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). W e therefore review the District Court's decision to set aside the jury' s award of punitive damages for an abuse of discretion. A district cour t abuses its discretion when it bases a decision on an erroneou s 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 damage s for Labatt's publication of injurious falsehoods is not clearl y
erroneous. A-B never mentioned punitive damages in its pleadings or in it s answers to Labatt's interrogatories. A-B first mentioned punitive damages
one we ek before trial when it submitted supplemental jury instructions

. Federal Rule of Civil Procedure 15(b), relied upon by A-B, is no t applicable in these c ircumstances. The rule provides that "[w]hen issues not raised by the pleadings are tried by express or implied consent of the parties, they shall b e treated in all respects as if they had been raised in the pleadings." Fed. R. Civ. P. 15(b). In this case, the issue o f punitive damages was tried to the jury despite the express resistance of Labatt. The District Court stated that Labatt filed written objections an d preser ved its objections orally on February 8, 1996, before th e 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 i s affir med except insofar as that judgment fails to provide for th e declar atoryrelief to which Anheuser-Busch is entitled. We therefor e
rem and the case so that the judgment can be amended to include a n appropriate declaration.

A true copy.

Attest:

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