FILED U.S. COURT OF AP P E A LS E LE V EN T HC IRC U IT JANUARY 15, 2008 THOMAS K. KAH

N CLERK [ 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

________________________ N o. 06- 11344

________________________ D . C. D o c k e tN o . 0 4 - 6 0 7 5 0 - CV - W PD J A C K L . A R O N O W I T Z , H E A L T H - C H E M D I A G N O S T I C S , L L C , a F lo r id a C o rp o r a tio n , L E O N S E R V I C E S , L L C , a F lo r id a C o rp o r a tio n , P l ai nt i ff s- C ou nt er D e f e n d a n ts - A p p e lla n ts , v ersu s H E A L T H - C H E M C O R P O R A T I O N , a D e la w a r e C o rp o r a tio n , D ef endant -C ou nt er C la im a n t- A p p e lle e .

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f orthe S outhe r n D i s tr i c tof F l or i da

_________________________ ( Jan u ar y 15, 2008)Ho no ra bleRic ha rd D. Cudahy, Unit e d St ate s Circuit Judg efo r t

heSe venth

Circ uit , * sitti ngby designation. L eon Servic es LL C was Aronow itz ’s business entity prior to the 2003 contract. He alth- 1 Chem D iagno sti c s LL C w a s th ediagno sti c re se arch f a c ili ty that hee sta

bli sh e d und e r t

heterm s of the20 03 c ontra c t. 2 B efo re B IR C H , F A Y an d C U D A H Y , C i rcu i tJu d g es. * P E R C U R I A M: P l ai nt i ff s- coun t erdefe nd ant s- appel l ant s, Ja ck A rono w i t z, H ea l th-C hem D i agno st i cs L L C , and L eon S ervi ce s L L C (c ol l ec t i vel y “ A rono w i t z” ), appeal an 1

“ O m ni bus O r de r ” by the di s tr i c tc our tf orthe S outhe r n D i s tr i c tof F l or i da addres si ng a num ber of post -tri al m ot i on s. T he order (1) s etas i de the j ury ver di ct th a t h a d b e e n r e n d e r e d in A r o n o w itz ’s f a v o ra s to h is f

ir s t b r e a c h o f

c o n tr a c t c la im a ga i ns tde f

e nda nt - c ount e rc l a i m a nt - appe l l e e H e a l th- C he m C orpor a t i on ( “ H e a l thC he m ” ) ; ( 2) r e duc e d the da m a ge s a w a r de d w i th r e s pe c tt o the s e c ond br e a c h of c ontr a c tc l a i m a ga i ns tH e a l th- C he m f r om $2. 6 m i l l i on t o nom i na l da m a ge s of $1; ( 3) uphe l d the j ur y ’ s ve r di c ta ga i ns tA r onow i t z on H e a l th- C he m ’ s c ount e r c l a i m f or tra dem ark i nfri ng em ent ; and (4) cond i t i on al l y gra nt ed a new tri al t o H ea l th-C hem in th e e v e n t th e c o u r t’s p r im a r y ru lin g s w e r e r e v e r s e d . W e A F F I R M in p a r t, R E V E R S E i n pa r t , a nd R E M A N D f ora ne w tr i a l a s t o da m a ge s f orbr e a c h of

the 2 0 0 3 c o n tr a c t.This fac ility was located in Florida

rather than in Pennsylvania (wherethe re st of 2 He a lth -C hem w a s lo c ate d) be c a us eHe a lth -C hem had ac quire d it out of ba nk ru ptcy proc e e ding s. 3 I . B AC KG RO UN D T h is ap p e a l a r is e s o u t o f a b u s in e s s d is p u te b e tw e e n H e a lth - C h e m , a com pany thatm anufactures tra nsderm al ph arm ac eut i ca l pat ches , and A rono w i t z, an i nv ent or of di agno st i c m edi ca l prod uct s. In 20 02 , the part i es si gn ed three a gr e e m e nt s , a M a s t e rA gr e e m e nt , a L i c e ns e A gr e e m e nt , a nd a S e c ur i ty A gr e e m e nt (c ol l ec t i vel y “ 20 02 C on tra ct ”) , by w hi ch they a gree d t o ent eri nt o a j oi ntventure f o rth e ma r k e t i n g a n d d e v e l o p me n to f o n e o f Ar o n o wi t z ’ s i n v e n t i o n s , th e “ TD G l uc os e ” pa t c h, a tr a ns de r m a l pa t c h tha tt a ke s a di a be t i c ’ s gl uc os e r e a di ng w i thout ha vi ng t o dr a w bl ood. U nde rthe 2002 C ontr a c t , H e a l th- C he m a gr e e d t o pr ovi de $10, 000 pe rm onth i n f

undi ng t o A r onow i t z t o he l p de ve l op the pa t c h a tH e a l thC he m ’ s D i a gnos t i c D i vi s i on r e s e a r c h f a c i l i ty a nd t o e m pl oy hi m the r e a s a di r e c t or a nd c ons ul t a nt . H e a l th- C he m a l s o a gr e e d t o pa y a l i c e ns i ng f e e t o A r onow i t z f

or 2 r i ght s i n hi s di a gnos t i c pr oduc t s , i nc l udi ng a n up- f r ontl i c e ns i ng f

e e of appr oxi m a t e l y $233, 000 f orthe f i r s tthr e e m onths . T he 2002 C ontr a c ta l s o ga ve H e a lth - C h e m a n o p tio n e v e n tu a lly to b u y th e r ig h ts to th e T D G lu c o s e p a tc h . A f t e ra s e r i e s of

di s put e s ove rm one y ow e d unde rthe 2002 C ontr a c t , a nd se nsi ng thatthe venture w as no tw orki ng ou t , the part i es m etand n egot i at ed a new a r r a nge m e nti n 2003 “ i n or de rtha t[ H e a l th- C he m c oul d] c e a s e f ur the rf undi ng of4

its D ia g n o s tic D iv is io n a n d th a t [ A r o n o w itz c o u ld ] a s s u m e f in a n c ia l r e s p o n s ib ility a n d m a n a g e m e n t d ir e c tio n o f [ th e T D G lu c o s e d e v e lo p m e n t b u s in e s s ], w ith m i ni m um i nt errupt i on t o t he op er at i on s. ” R 1-31 , E xh . G at1. U nd erthe new arra ng em ent , the part i es agre ed thatA rono w i t z’ s e m pl oym entw i th H ea l th-C hem wo u l d c e a s e a n d th a th e wo u l d c r e a t e a n e w b u s i n e s s e n t i ty t o d e v e l o p th e TD G lu c o s e p a tc h . T h e p a r tie s a ls o a g r e e d to th e a s s ig n m e n t o f th e 2 0 0 2 C o n tr a c t to the ne w e nt i ty s uc h a s t o “ t e r m i na t e a l l obl i ga t i ons a nd s t i pul a t i ons of [ the 2002 c ontr a c t s ] be tw e e n A r onow i t z a nd H e a l th- C he m C orpor a t i on, ” a s of the da t e of

the agre em entand t o h ave the new ent i ty a ss um e them . Id. at2. T he cont ra ctfurther p r o v id e d th a t I f the a s s i gnm e ntof

the [ 2002] C ontr a c t , a s de s c r i be d a bove , i s not perf orm ed, neverthel es s the part i es agre e t o t erm i nat e a l l fi nanci al o b lig a tio n s o f

[ H e a lth - C h e m C o rp o r a tio n ] to [ A r o n o w itz a n d h is b u s in e s s e n titie s ] a s o f

th e a b o v e d a te o f

th is A g r e e m e n t, in c lu d in g . . . s pe c i f i c a l l y , butnote xc l us i ve l y , c e a s i ng a l l f i na nc i a l obl i ga t i ons of H e a l th- C he m C orpor a t i on w i th r e ga r d t o the D i a gnos t i c D i vi s i on. I d. A l though the ne w a gr e e m e ntt e r m i na t e d H e a l th- C he m ’ s obl i ga t i on t o pr ovi de m o n th ly f

u n d in g f o rth e d e v e lo p m e n t o f

th e T D G lu c o s e p a tc h , H e a lth - C h e m d id a g r e e to p r o v id e c e r ta in s u p p lie s a n d e q u ip m e n t to A r o n o w itz – m o s t n o ta b ly

“ W e i s s w a nds , ” w hi c h w e r e ne c e s s a r y t o pe r f or m the c l i ni c a l tr i a l s . I d. a t4. T he part i es al so agre ed t o a “ C ut -off P ay m ent s a nd E xp ense s” prov i si on w hi ch a l l oc a t e d c e r t a i n s pe c i f

i c e xpe ns e s a nd pr ovi de d tha t“ [ a ] ny e xpe ns e s not5

[ s pe c i f i c a l l y l i s t e d w oul d] be c om e the r e s pons i bi l i ty of the pa rty t o w hom the go od s or s ervi ce s w er e del i vere d b as ed on the dat e of del i very . ” I d. at3. U nd er thi s provi si on , H ea l th-C hem w as re spon si bl e f or any goo ds or se rvi ce s del i vere d pr i ort o e xe c ut i on of

the 2003 c ontr a c ta nd A r onow i t z w a s r e s pons i bl e f ora ny u n lis te d g o o d s o rs e r v ic e s d e liv e r e d th e r e a f te r . T h e 2 0 0 3 c o n tr a c t a ls o g r a n te d A r o n o w itz ’s n e w e n tity a lim ite d lic e n s e to u se th e trad em ark “ H eal th -C h em D i ag n o st i cs” i n co n n ect i o n w i th i t s T D G l u co se pa t c h de ve l opm e nt . S uc h us e w a s t o be l i m i t e d t o the ne w e nt i ty ’ s c om pa ny

“ nam e a nd l i t er ature. ” I d. F i nal l y, un der the 20 03 cont ra ct , H ea l th-C hem re t ai ned an op t i on t o p urchas e the ri gh t s t o the T D G l ucose pat ch, and A rono w i t z w as g u aran t eed fi v e p ercen to f n etsal es. W i thi n t w o w ee ks of i t s e xecut i on , di sput es ar ose betw ee n the part i es ov er the prov i si on s of the 20 03 cont ra ct . A rono w i t z a l l eged thatH ea l th-C hem had fa i l ed t o p ay the el ec tri ci ty bi l l atthe no w tra nsfe rr ed D i agno st i c D i vi si on re se ar ch f a c i l i ty a nd tha tthe pow e rw a s goi ng t o be c utof f ; he a l s o a l l e ge d tha tH e a l thC hem had fai l ed t o p rovi de hi m w i th the W ei ss w ands. A rono w i t z a ss ert ed that H e a l th- C he m ’ s c onduc te nt i t l e d hi m t o c a nc e l i t s opt i on on the T D G l uc os e pa t c h. In June 20 04 , A rono w i t z f i l ed sui tagai nstH ea l th-C hem . In an am ended c om pl a i nt , he a l l e ge d tw o s e pa r a t e c ount s of br e a c h of

c ontr a c t : one f

orthe 2002Th edis tric t c ourt had p revio us ly

touc he d o n this i ssu emuch e arl ier in th ec a sein i ts 3 denial of H ealth-Chem’ s motion t o strike Aronow itz ’s demand f or a jury trial. The c ourt had rule d th at “ Th eOc tob e r 3 1, 20 03 Agre e ment p ro vide d f or an a ssi gnment o f t

he[200 2 Co ntra c t] and that the ‘ eff

ects of this assignment will be to terminate all obligations and stipulations’ of [that agreement] . . . For [that] rea son, the [2002 C ontrac t] provision of a waiver of jur y trial was terminated by

the October 31, 2003 agreement.” R1-40 at 2. 6 C o n tractan d o n e fo r th e 2 0 0 3 co n tract . H eal th -C h em rai sed , i n t er al i a, th e d efen se of nova t i on w i th r e s pe c tt o the 2002 C ontr a c t , a r gui ng tha tthe 2003 a gr e e m e nt s u p e r s e d e d th e 2 0 0 2 a g r e e m e n t a n d n u llif ie d a n y p o s s ib le c la im f o rb r e a c h . H ea l th-C hem al so i ni t i at ed a c ou nt er cl ai m agai nstA rono w i t z f or tra dem ark i nfri ng em ent , al l egi ng thatA rono w i t z had used the m ore genera l tw o-w ord m ark

“ He a l th - C h e m ” wi th o u ti t s p e r m i s s i o n . A j u r y tr i a l wa s h e l d i n Oc t o b e r2 0 0 5 . At the c l os e of

A r onow i t z ’ s c a s e , H e a l th- C he m m ove d f orj udgm e nta s a m a tt e rof l a w on tw o gr ounds : f

i r s t , tha tthe 2003 c ontr a c te f f e c tua t e d a nova t i on of

the 2002 C ontr a c t , the r e by e l i m i na t i ng a ny c l a i m f orbr e a c h of

the 2002 C ontr a c t ; a nd, se cond , thatA rono w i t z’ s c l ai m ed dam ages for l ostprofi t s und erthe 20 03 cont ra ct w e r e to o s p e c u la tiv e . T h e tr ia l c o u r t “g ru d g in g ly ” d e n ie d th e m o tio n . R 1 0 a t 4 5 . 3 H ea l th-C hem re new ed i t s m ot i on atthe cl ose of a l l of the evi dence. T he court agai n d eni ed the m ot i on , thi s t i m e s t at i ng thati tw as “ concerned about the ef fe ct tha tthe 2003 a gr e e m e ntha d on the 2002 a gr e e m e nt , but[ w a s ] notgoi ng t o pr e ve nt the j ur y a tthi s poi ntf

r om c ons i de r i ng i t . ” R 17 a t175. A r onow i t z m ove d f or j u d g m en tas a m att er o f l aw o n th e trad em ark i n fri n g em en tcl ai m ; th e co u rtal so7

de ni e d tha tm ot i on. J us tpr i ort o c l os i ng a r gum e nt s a nd j ur y i ns truc t i on, H e a l th- C he m pr opos e d tw o a l t e r na t i ve a m e nde d ve r di c tf or m s . T he f

i r s t , w hi c h om i tt e d a ny m e nt i on of brea ch as t o t he 20 02 C on tra ct , w ou l d h ave been appl i cabl e had the courtgrant ed j udgm e nta s a m a tt e rof l a w on the i s s ue of

nova t i on. T he s e c ond be ga n by a s ki ng the j ur y t o de c i de w he the rthe 2002 C ontr a c tha d be e n s upe r s e de d by the 2003 c o n tr a c t. T h e c o u r t ru le d a g a in s t u s e o f e ith e ro f th e p r o p o s e d f

o r m s . T he j ur y r e tur ne d a ve r di c ti n f a vorof A r onow i t z a s t o e a c h br e a c h of c ontr a c tc l a i m . S pe c i f

i c a l l y , i ta w a r de d da m a ge s of $331, 000 a s t o br e a c h of the 2 0 0 2 C o n tractan d $ 2 . 6 m i l l i o n as t o b reach o f th e 2 0 0 3 co n tract . T h e j u ry, h o w e v e r , r e tu r n e d a v e r d i c ta g a i n s tA r o n o w i t z o n H e a l th - Ch e m’ s c o u n t e r c l a i m, fi nd i ng thatA rono w i t z had i nfri ng ed on the “ H ea l th-C hem ” tra dem ark. O n that c la im , it a w a r d e d $ 2 5 ,0 0 0 in d a m a g e s to H e a lth - C h e m . T h e p a rtie s r e n e w e d th e ir re spec t i ve m ot i on s f

or j ud gm entas a m att erof l aw , w hi ch the di stri ctcourt a d d r e s s e d to g e th e rin its F e b ru a r y 2 0 0 6 “O m n ib u s O r d e r .” W i th resp ectt o H eal th -C h em ’ s ren ew ed m o t i o n , th e d i stri ctco u rtfi rst ob se rved thatthe “ on l y f ai r c on struct i on ” of the pl ai n t erm s of the 20 03 cont ra ct w a s tha tthe “ pa r t i e s i nt e nde d t o e xt i ngui s h the i rc ontr a c tua l obl i ga t i ons ” unde rthe 2 0 0 2 C o n trac t, ef

fe ctin g a n o v atio n as a m atter o f law an d m ak in g “[t] h e ju ry ’s8

f i ndi ng t o the c ontr a r y [ ] l e ga l l y unr e a s ona bl e . ” R 4- 154 a t16. T he c our tw e nton to f in d th a t e v e n if

th a t c o n s tru c tio n w e r e in c o r r e c t, “th e o n ly r e a s o n a b le concl usi on base d u po n t he evi dence pres ent ed attri al [w as ] thatthe part i es i nt ended t he 20 03 A gree m entt o ext i ng ui sh” the 20 02 C on tra ct . Id. T he court c o n c lu d e d th a t A r o n o w itz ’s c o n te n tio n th a t th e 2 0 0 3 A g r e e m e n t “ap p lie [ d ] o n ly prospect i vel y [ fe l l ] shortof cr ea t i ng a s ub st ant i al confl i cti n the evi dence” a nd that H ea l th-C hem w as ent i t l ed t o j ud gm entas a m att erof l aw i n i t s f avor as t o b re ac h o f th e 2 0 0 2 C o n tr a c t. I d . A s to th e ju r y ’s $ 2 .6 m illio n v e r d ic t f o rb r e a c h o f

th e 2 0 0 3 c o n tr a c t, ope r a t i ng unde rthe a s s um pt i on tha tthe a w a r d ha d be e n ba s e d s ol e l y on A r o n o w itz ’s a lle g e d lo s t p r o f its , th e c o u r t o b s e r v e d th a t “th e r e c o r d f a ils to c o n ta in suff i ci ent l y ‘ com pet entand sub st ant i al ’ evi dence [t o d em on stra t e] a c ausa l conn ec t i on betw ee n [H ea l th-C hem ’ s] brea ch and [A rono w i t z’ s] l ostfuture profi t s. ” I d. a t12. T he c our tr e a s one d tha tt oo m a ny obs t a c l e s s t ood be tw e e n H e a l thC h em ’s fu lfil led o b li g atio n s u n d erth e 2 0 0 3 co n trac t an d th e T D G lu co se p atch ’s ge ne r a t i on of

pr of i t . T he c our tpa r t i c ul a r l y poi nt e d t o the ne e d t o r a i s e a tl e a s t$10 m i l l i on m ore f

or re se ar ch and d evel op m ent , the com pl et i on of succ es sf ul cl i ni ca l tr ia ls , o b ta in in g F D A ap p r o v a l, a n d p r o v in g s u c c e s s in th e m a r k e t. T he courtw enton t o o bserve thateven i f acausal conn ec t i on had b ee n9

s h o w n , “in s u f

f ic ie n t e v id e n c e w a s p r e s e n te d to m e a s u r e th e d a m a g e s w ith r e a s ona bl e c e r t a i nty . ” I d. a t13. H ow e ve r , be c a us e the c our ta l s o f ound tha tthe r e c or d c ont a i ne d s uf

f i c i e nte vi de nc e t o s uppor tthe j ur y ’ s c onc l us i on tha tH e a l thC he m di d br e a c h the 2003 c ontr a c t , the c our te nt e r e d j udgm e nti n f a vorof A r onow i t z , buti n the a m ountof onl y $1 i n nom i na l da m a ge s ( a s r e qui r e d by F l ori da l aw ). A s t o the tr a de m a r k i nf

r i nge m e ntc l a i m , A r onow i t z ha d a r gue d f orj udgm e nt a s a m a tt e rof

l a w on the gr ounds tha the ha d notus e d the m a r k w i thoutpe r m i s s i on and, even i f he had, thatthe use w as no tl i kel y t o cause confusi on . T he di stri ct c o u r t r e je c te d th e s e a r g u m e n ts , o b s e r v in g th a t th e lic e n s e g iv e n in c o n n e c tio n w ith A r onow i t z ’ s r e s e a r c h a nd de ve l opm e nte f f or t s ha d be e n l i m i t e d t o the us e of the nam e “ H ea l th-C hem D i agno st i cs , ” butthatA rono w i t z had go ne further a nd used th e m o r e g e n e r a l ( a n d s e p a r a te ly r e g is te r e d ) tw o - w o r d m a r k “H e a lth - C h e m ” o n h is ent i ty’ s w ebsi t e. B ec ause the m ark u se d w as no tequi val entt o “ H ea l th-C hem D ia g n o s tic s ,” th e c o u r t f o u n d th a t th e r e h a d b e e n a n illic it a n d u n a u th o r iz e d u s e . T he courtthen p oi nt ed t o evi dence i n the re cord thatbo th cust om er s a nd po t ent i al em p lo ye es h ad b ee n co n fu se d b y th e u se : cu sto m er s h ad m istak en A ro n o w it z’s w ebsi t e f or H ea th-C hem ’ s a nd a pot ent i al em pl oyee had m i st akenl y bel i eved that H ea l th-C hem w as l ocat ed i n P om pano B ea ch, F l ori da. A cc ordi ng l y, the court10

f ound tha te nough e vi de nc e ha d be e n pr e s e nt e d a s t o e a c h e l e m e ntof the tr a d e m a r k in f

r in g e m e n t c la im “to c r e a te a s u b s ta n tia l c o n f lic t in th e e v id e n c e ,” the r e by m a ki ng j udgm e nta s a m a tt e rof l a w “ i nappr opr i a t e . ” I d. a t8, 10. T he courtal so up hel d t he j ury ver di cti m po si ng $2 5, 00 0 i n d am ages , expl ai ni ng that

“ c our t s ha ve w i de di s c r e t i on i n de t e r m i ni ng the j us ta m ountof r e c ove r y on a tr a de m a r k i nf

r i nge m e ntc l a i m ” a nd tha tH e a l th- C he m ha d pr e s e nt e d s uf f i c i e nt e vi de nc e “ t o s uppor tthe a w a r d of pr os pe c t i ve c or r e c t i ve da m a ge s . ” I d. a t10. F i na l l y , the c our tm a de a c ondi t i ona l rul i ng on H e a l th- C he m ’ s a l t e r na t i ve m o tio n f o ra n e w tr ia l. T h e c o u r t f o u n d , f o rth e s a m e r e a s o n s c o v e r e d in its di s c us s i ons of

br e a c h, tha tthe j ur y ’ s ve r di c t s a s t o br e a c h of the 2002 a nd 2003 cont ra ct s had been agai nstthe greatw ei gh tof the evi dence pres ent ed. T he court a l s o f ound i tha d e r r e d i n r e f

us i ng t o s ubm i ttw o s pe c i a l i nt e r r oga t or i e s H e a l thC he m ha d r e que s t e d be a dde d t o the ve r di c tf or m r e ga r di ng: ( 1) w he the rthe 2002 A gree m ent s w er e t erm i nat ed by the 20 03 A gree m ent s, and (2) w hether [ A r onow i t z ] ha d f

r a udul e nt l y i nduc e d [ H e a l th- C he m ] t o e nt e ri nt o the 2002 C on tra ct , despi t e the fa ctthat“ bo th n ov at i on and fraud ul enti nd ucem entw er e m a te r ia l is s u e s r a is e d b y th e p le a d in g s a n d e v id e n c e p r e s e n te d a t tr ia l.” I d . a t 2 1 . I n lig h t o f

th e s e e r r o r s , th e c o u r t g r a n te d H e a lth - C h e m ’s m o tio n f o ra n e w tr ia l in the a l t e r na t i ve , i n c a s e the c our t ’ s j udgm e nt s a s a m a tt e rof l a w w e r e r e ve r s e d on11

ap p e a l. O n ap p eal , A ro n o w i t z arg u es th atth e d i stri ctco u rterred i n (1 ) fi n d i n g , as a m a tt e rof l a w , tha tthe 2003 c ontr a c tc ons t i tut e d nova t i on of the 2002 c ontr a c t ; ( 2) re du ci ng the $2 . 6 m i l l i on verdi ctt o $ 1 i n n om i nal dam ages on the grou nd that th ere w as i n su ffi ci en tev i d en ce t o su p p o rtth e j u ry’ s aw ard o n th e b asi s o f l o st pr of i t s ; ( 3) de ny i ng A r onow i t z ’ s m ot i on f orj udgm e nta s a m a tt e rof l a w on the tra dem ark i nfri ng em entcoun t er cl ai m ; and (4) cond i t i on al l y gra nt i ng H ea l th-C hem a n ew tri al i n th e al t ern at i v e. A ro n o w i t z al so arg u es th at , i n th e ev en tw e rev erse e ith e rju d g m e n t a s a m a tte ro f la w b u t d o n o t r e in s ta te th e ju r y v e r d ic ts , h e is en t i t l ed t o a n ew tri al as t o d am ag es o n l y. I I . DI S CUS S I ON A . Judg em ent s a s aM att erof L aw W e rev i ew d e n o v o a d i stri ctco u rt ’ s ru l i n g o n a m o t i o n fo r j u d g m en tas a m a tte ro f la w p u r s u a n t to F e d e r a l R u le o f C iv il P r o c e d u r e 5 0 . D o e v . C e le b r ity C rui s e s , I nc . , 394 F . 3d 891, 902 ( 11th C i r . 2004) ( c i t a t i on om i tt e d) . I n s o doi ng, w e appl y the s a m e s t a nda r d a s the di s tr i c tc our t . R a nki n v. E va ns , 133 F . 3d 1425, 14 35 (11t h C i r. 19 98 ). T he di stri ctcourtm ay grantj ud gm entas a m att erof l aw “ at the cl ose of e vi dence or, i f t i m el y r enew ed, af t erthe j ury has re turned i t s ver di ct , as lo n g a s ‘th e r e is n o le g a lly s u f f ic ie n t e v id e n tia r y b a s is f o ra r e a s o n a b le ju r y toAppa rently , th ehe art

of thedis a gre e ment b e tw e e n th ema jority and pa rtial di ssent in this 4 c a sec on c e rn s th ebre a dth of thee ff e c t of a no va tio n u po n e xistingc ontra c tual ob lig atio ns . 12 f i nd’ ” f orthe non- m ovi ng pa r ty . L i ppha r dtv. D ur a ngo S t e a khous e of B r a ndon, Inc. , 26 7 F . 3d 11 83 , 11 86 (11t h C i r. 20 01 ) ( qu ot i ng F ed. R . C i v. P . 50 ). In unde r t a ki ng thi s a na l y s i s w e e xa m i ne a l l e vi de nc e i n a l i ghtm os tf a vor a bl e t o the no n-m ov i ng party. C el ebri ty C rui se s, 39 4 F . 3d at90 2 (ci t at i on om i tt ed). 1 . B re ach o

f 20 02 C on tract A r onow i t z f

i r s tc ha l l e nge s the c our t ’ s j udgm e nta s a m a tt e rof l a w i n f a vor o f H e a lth - C h e m a s to b r e a c h o f th e 2 0 0 2 C o n tr a c t, c itin g th e f o llo w in g p o in ts in s uppor tof

hi s a r gum e nttha tthe r e w a s no nova t i on: 1) the pa r t i e s m odi f i e d the f in a l w o r d in g s u c h th a t it te r m in a te d a ll “f in a n c ia l o b lig a tio n s ” r a th e rth a n a ll

“ c ontr a c tua l obl i ga t i ons ; ” 2) the a s s i gnm e ntof the 2002 C ontr a c tpr ovi de d f orby the 2003 c ontr a c tne ve ra c tua l l y oc c ur r e d; a nd 3) the 2003 c ontr a c ti nc l ude d a

“ sc hedu l e of e xp ense s” w hi ch spec i fi ca l l y a l l ocat ed re spon si bi l i ty f or expenses g o in g f o r w a r d , b u t d id n o t m e n tio n d e b ts s till o w e d u n d e rth e 2 0 0 2 c o n tr a c t.

“ A no vat i on i s am utual agre em entbetw ee n the part i es for the di sc harge of a va l i d e xi s t i ng obl i ga t i on by the s ubs t i tut i on of a ne w va l i d obl i ga t i on. ” J a kobi v. K i ngs C r e e k V i l l . T ow nhous e A s s ’ n, 665 S o. 2d 325, 327 ( F l a . D i s t . C t . A pp. 1995) . U nde rF l or i da l a w , f oure l e m e nt s a r e r e qui r e d t o e f f e c tua t e the nova t i on of 4 a b in d in g c o n tr a c t: ( 1 ) a p r e v io u s ly v a lid c o n tr a c t; ( 2 ) a g r e e m e n t o f th e p a r tie s to13

c a nc e l tha tc ontr a c t ; ( 3) a ne w va l i d a nd bi ndi ng c ontr a c t ; ( 4) a gr e e m e ntof the pa r t i e s tha tthe ne w c ontr a c tw i l l r e pl a c e a nd e xt i ngui s h the ol d one . T hom ps on v. J a r e d K a ne C o. , 872 S o. 2d 356, 361 ( F l a . D i s t . C t . A pp. 2004) ; J a kobi , 665 S o. 2d a t327. T he pa r t i e s c onc e de tha tthe onl y e l e m e nta ti s s ue he r e i s the i nt e nt i on of th e p a r tie s a s to th e 2 0 0 2 C o n tr a c t. I nt e ntm a y be i nf

e r r e d f r om the t ot a l i ty of

the c i r c um s t a nc e s s ur r oundi ng the tran sact i o n . T h o m p so n , 8 7 2 S o . 2 d at3 6 1 . T h e q u est i o n o f i n t en t“ i s g en eral l y a qu es t i on of fa ct ” f

or a j ury. W ol ow i t z v. T ho roug hb re d M ot ors I nc . , 765 S o. 2d 92 0, 92 3 (F l a. D i st . C t . A pp . 20 00 ). H ow ever , “ [w ] here the t erm s of aw ri tt en a gr e e m e nta r e noti n doubt , the que s t i on of w he the ri te f

f e c t s a nova t i on i s one of la w f o rth e c o u r t.” S .N .W . C o rp . v . H a u s e r , 4 6 1 S o . 2 d 1 8 8 , 1 8 9 ( F la . D is t. C t. A p p . 1 9 8 4 ); see al so S i nk v. A bi t i bi P ri ce S al es C orp. , 60 2 S o. 2d 13 13 , 13 16 (F l a. D i st . C t . A pp . 19 92 ) ( fi nd i ng no vat i on as a m att erof l aw w here the part i es ent er ed i nt o “ a n e nt i r e l y ne w a nd una m bi guous a gr e e m e ntof e qua l orgr e a t e rdi gni ty t o the a gr e e m e ntf

i r s tm a de w i th r e s pe c tt o the s a m e s ubj e c t ” ) ( quot i ng E va ns v. B orko w ski , 13 9 S o. 2d 47 2, 47 4 (F l a. D i st . C t . A pp . 19 62 ). H er e, the l angu age of the 20 03 cont ra ctst at es thatthe as si gn m entfor w hi ch i tprov i des “ t erm i nat e[ s] al l ob l i gat i on s a nd st i pu l at i on s of the [pri or 20 02 ] cont ra ct b etw ee n A ro n o w it z a n d H ea lth -C h em C o rp o ra ti o n ,” as o f th e d ate o f th e c o n trac t’ s14

exec ut i on . R 1-31 , E xh . G at2. F urther, the cont ra ctprov i des thateven absentthat a s s i gnm e nt , “ the pa r t i e s a gr e e t o t e r m i na t e a l l f i na nc i a l obl i ga t i ons of

[ H e a l thC hem t o A rono w i t z] un der the [200 2 C on tra ct ] . ” I d. W e a gree w i th the di stri ct courtthatthe on l y r ea sonabl e c on cl usi on base d o n thi s l angu age i s thatthe part i es in te n d e d to e x tin g u is h th e 2 0 0 2 C o n tr a c t. E ve n i f the c ontr a c t ’ s l a ngua ge w e r e s uf f i c i e nt l y a m bi guous a s t o i nt e nt r e ga r di ng the 2002 C ontr a c tt o a l l ow us t o c ons i de rpa r ol e vi de nc e , w e f i nd tha tthe on l y r ea sonabl e c on cl usi on t o b e dra w n from the evi dence attri al i s thatthe part i es i nt e nde d nova t i on. F i r s t , A r onow i t z poi nt s outtha t , be f or e e xe c ut i on of

the c o n tr a c t, th e d r a f

t p r o v is io n w h ic h s ta te d th e p a r tie s a g r e e d to “c e a s [ e ] a ll cont ra ctual ob l i gat i on s” betw ee n H ea l th-C hem and A rono w i t z, w as al t er ed t o say

“ c e a s [ e ] a l l f

i na nc i a l obl i ga t i ons . ” S e e A ppe l l a nt ’ s B r . a t33 ( r e f e r r i ng t o R 1- 31, E xh . G at2). A rono w i t z a ss ert s thatthi s c hang e s ug gest s thatthe part i es i nt ended onl y t o c utof

f H e a l th- C he m ’ s obl i ga t i on t o f und the T D G l uc os e pa t c h di vi s i on, n o t to e x tin g u is h a ll o b lig a tio n s u n d e rth e 2 0 0 2 C o n tr a c t. W e a r e n o t c o n v in c e d . T he cont extof the paragraph i n w hi ch the change w as m ade s ug gest s i nst ea d that the change w as m ade f

or the sa ke of consi st ency i n t erm s w i thi n the se nt ence ra ther than o utof concern over si gn i fi ca ntdi ff er ence i n m ea ni ng . T he ent i re s e nt e nc e r e a ds , i n pe r t i ne ntpa r t : “ I f the a s s i gnm e nt. . . i s notpe r f or m e d,15

ne ve r the l e s s the pa r t i e s a gr e e t o t e r m i na t e a l l f i na nc i a l obl i ga t i ons of

[ H e a l thC he m ] t o [ A r onow i t z ] . . . i nc l udi ng the t e r m i na t i on of a l l e m pl oy e e s of

H e a l thC h e m a t th e D ia g n o s tic D iv is io n , a n d s p e c if ic a lly b u t n o t e x c lu s iv e ly c e a s in g a ll f in a n c ia l [ o r ig in a lly c o n tr a c tu a l] o b lig a tio n s o f H e a lth C h e m C o rp w ith r e g a r d to th e D ia g n o s tic D iv is io n a n d its v e n d o r s a n d o b lig e e s , e x c e p t a s s e t f o r th in th is a gr e e m e nt . ” R 1- 31, E xh. G a t2 ( e m pha s i s a dde d) . A c c or di ngl y , w e do notf i nd th e r e p la c e m e n t o f

th e te r m “c o n tr a c tu a l” w ith th e te r m “f in a n c ia l,” in th a t c o n te x t, t o h a v e c r e a t e d a n y a mb i g u i ty , p a r t i c u l a r l y s i n c e w h a tA r o n o w i t z a s s e r t s , i n t e r ms of br e a c h, i s a l i nge r i ng f

i na nc i a l obl i ga t i on. F ur the r , the f

a i l ur e of the pa r t i e s t o c om pl e t e the a s s i gnm e ntof the 2002 C o n tr a c t is irr e le v a n t in th e f a c e o f th e 2 0 0 3 c o n tr a c t p r o v is io n th a t th e p a r tie s w ill “t er m in ate” an d “cea s[ e]” a ll fin an cial o b li g atio n s b etw ee n th e p ar ti es ev en “[i] f th e a s s i g n m e n to f

th e [ 2 0 0 2 ] c o n tr a c t. . . i s n o tp e r f o r m e d . ” I d . Ad d i t i o n a l l y , we f in d th a t th e “C u t- O f

f P a y m e n t a n d E x p e n s e s ” p r o v is io n in th e 2 0 0 3 c o n tr a c t, a s s i gni ng r e s pons i bi l i ty f orpa y m e nt s a nd e xpe ns e s ove rthe pe r i od of tr a ns i t i on doe s note s t a bl i s h tha tthe pa r t i e s i nt e nde d the 2002 C ontr a c tt o r e m a i n bi ndi ng a nd i n f ul l e f f e c t . A ny f

i na nc i a l obl i ga t i ons nots pe c i f i c a l l y m e nt i one d w e r e , by the pl a i n l a ngua ge of

the c ontr a c t , t o be “ t e r m i na t e d. ” I n f a c t , i ts e e m s t o us tha tthe pres ence of a s uch a cut -off paym entprov i si on i n the 20 03 cont ra ctbo l st er s16

H ea l th-C hem ’ s c on t ent i on thatthe 20 03 cont ra ctw as i nt ended t o eff ec tuat e a s e ve r a nc e of

the pa r t i e s ’ bus i ne s s r e l a t i ons hi p. A c c or di ngl y , w e f i nd tha tthe 2003 c ontr a c tc ons t i tut e d “ a n e nt i r e l y ne w a nd una m bi guous a gr e e m e ntof e qua l or grea t erdi gn i ty t o t he agree m entfi rs tm ade w i th res pectt o the sa m e s ubj ec t . ” S ee S in k , 6 0 2 S o . 2 d a t 1 3 1 6 . A s s u c h , w e a g r e e w ith th e d is tr ic t c o u r t th a t th e o n ly re as on abl e c on cl usi on t o b e dra w n from the evi dence i s thatthe 20 03 cont ra ct c o n s titu te d a n o v a tio n o f th e 2 0 0 2 C o n tr a c t. 2 . B re ach o

f 20 03 C on tract A rono w i t z nextchal l enges the court ’ s gra ntof j ud gm entas a m att erof l aw de c l a r i ng the $2. 6 m i l l i on i n da m a ge s a w a r de d by the j ur y f orbr e a c h of

the 2003 cont ra ctt o b e i m perm i ss i bl y s pecul at i ve and aw ar di ng A rono w i t z $1 n om i nal da m a ge s i ns t e a d. I n m a ki ng thi s rul i ng, the di s tr i c tc our tappa r e nt l y a s s um e d the j u ry aw ard ed d am ag es so l el y i n co m p en sat i o n fo r l o stp ro fi t s. U nd erF l ori da l aw , an aw ar d for expect at i on dam ages w i l l no tbe perm i tt ed u n le s s th e e x p e c te d a m o u n t c a n b e e s ta b lis h e d w ith r e a s o n a b le c e r ta in ty . L e v ittA ns c a T ow ne P a r k P ’ s hi p v. S m i th & C o. , 873 S o. 2d 392, 396 ( F l a . D i s t . C t . A pp. 2004) ; L i ps c he rv. L R P P ubl ’ ns , I nc . , 266 F . 3d 1305, 1317 ( 11th C i r . 2001) ( ap p ly in g F lo r id a la w ) . A lth o u g h a b u s in e s s c la im in g lo s t p r o f its is n o t r e q u ir e d to s h o w as u c c e s s f

u l o p e r a tio n a l “tr a c k r e c o r d ,” a t a m in im u m , th e lo s t p r o f it17

d a m a g e s a m o u n t m u s t b e d e te r m in e d b y s o m e r e a s o n a b le s ta n d a r d o ry a r d s tic k . W . W . G a y M e c h. C ontr a c t or , I nc . v. W ha r f s i de T w o, L t d. , 545 S o. 2d 1348, 1351 ( F l a . D i s t . C t . A pp. 1989) ( pe rc ur i a m ) . W e obs e r ve tha ta n e xpe c t a t i on of roya l t i es on future netsa l es i s m er el y asubsetof l ostfuture profi t s a nd there fore subj ec tt o t he sa m e burden o f proof for dam ages as l ostprofi t s w ou l d b e. A l tho ug h w e a gree w i th t he di stri ctcourtthatthe evi dence pres ent ed w as i ns uf f i c i e ntt o pr ovi de a ny r e a s ona bl e c e r t a i nty by w hi c h t o c a l c ul a t e da m a ge s due t o l ostroya l t i es , w e do n otse e thatthe dam ages aw ar d m ade by the j ury w as ne c e s s a r i l y ba s e d s ol e l y upon l os tr oy a l t i e s . D ur i ng A r onow i t z ’ s c l os i ng arg u m en t , h e ask ed sp eci fi cal l y n o to n l y fo r $ 5 m i l l i o n i n l o stro yal t i es, b u tal so f or$94, 000 f

orthe W e i s s w a nds ne ve rpur c ha s e d by H e a l th- C he m a nd ap p r o x im a te ly $ 1 5 ,0 0 0 in c o n n e c tio n w ith a p a y m e n t f r o m a th ir d p a r ty e r r one ous l y m a de t o a nd r e t a i ne d by H e a l th- C he m a f t e re xe c ut i on of

the 2003 c o n tr a c t. T est i m o n y p resen t ed b y A ro n o w i t z d u ri n g th e co u rse o f th e tri al al so r a is e d o th e rp o s s ib le s m a lle rb a s e s f o rc o m p e n s a to r y d a m a g e s . B e c a u s e it is im p o s s ib le , in th e a b s e n c e o f in te r r o g a to r ie s o n th e v e r d ic t f o r m , f o ru s to d e te r m in e w h a t f

a c to r s th e ju r y m ig h t h a v e c o n s id e r e d in c a lc u la tin g its $ 2 .6 m i l l i on verdi ct , w e a re un abl e t o say thatthe ent i re ty of thatverdi ctw asAronowitz also argues that he introduc ed evidence that $2.5 mill ion would be re quired 5 to complete re search, deve lopment, and FD A approval of the TD Glucose patch and that the jur y might h aveba se d it s awa rd on thi s amou

nt d ueto H e a lth -C hem’ s f

ailure“ to c ooperatefully

to secure funding , distribution, and FDA a pproval.”Appellant’s B r. at 41 (quotingR1-31, Exh. G at 4]). However, this particular argument was not raised before the trial court. F urther, the rec ord does not re flec t Aronowitz having presente d this amount to the jury as a dire ct basis for damag es. 18 un supp ort ed. H ow ever , abse ntthe i m perm i ss i bl y s pecul at i ve dam ages cl ai m ed

5 f o rl o s tr o y a l t i e s , th e a wa r d c o u l d n o th a v e r e a c h e d $ 2 . 6 m i l l i o n . Ac c o r d i n g l y , we r e v e r s e th e c o u r t ’ s j u d g m e n ta s a m a tt e ro f l a w r e d u c i n g th e d a m a g e s t o $ 1 , b u twe d e c lin e to r e in s ta te th e ju r y ’s v e r d ic t. 3 . T r ade m ark

I nf r i nge m e nt A r onow i t z a l s o appe a l s the di s tr i c tc our t ’ s de ni a l of hi s m ot i on f

orj udgm e nt as a m att er o f l aw o n th e trad em ark i n fri n g em en tco u n t ercl ai m . A su ccessfu l cau se of a c t i on f ortr a de m a r k i nf

r i nge m e ntr e qui r e s the e vi de nc e t o e s t a bl i s h tha tthe i nfri ng er1) used the m ark i n com m er ce , w i tho utconsent ; and 2 ) thatthe use w as l i ke l y t o c a us e c onf

us i on. J ohn H . H a r l a nd C o. v. C l a r ke C he c ks , I nc . , 711 F . 2d 9 6 6 , 9 7 2 ( 1 1 th C ir . 1 9 8 3 ) . A rono w i t z does notcont es tthe al l egat i on thathe used the short erm ark

“ H e a l th- C he m ” on hi s c om pa ny ’ s w e bs i t e , buta r gue s tha tH e a l th- C he m “ di d not a nd c a nnots how a l i ke l i hood of c onf us i on. ” A ppe l l a nt ’ s B r . a t51. W e ha ve r e c ogni z e d s e ve n f

a c t or s t o be c ons i de r e d a s t o the l i ke l i hood of c onf us i on: ( 1) ty pe of m a r k; ( 2) s i m i l a r i ty of

m a r k; ( 3) s i m i l a r i ty of

the pr oduc t s the m a r ks19

r e pr e s e nt ; ( 4) s i m i l a r i ty of the pa r t i e s ’ r e t a i l out l e t s a nd c us t om e r s ; ( 5) s i m i l a r i ty of a dve r t i s i ng m e di a ; ( 6) de f e nda nt ’ s i nt e nt ; a nd ( 7) a c tua l c onf us i on. F r e hl i ng E n t e r s . v . I n t ’ l S e l e c tGr o u p , I n c . , 1 9 2 F . 3 d 1 3 3 0 , 1 3 3 5 ( 1 1 th C i r . 1 9 9 9 ) . “ Of th ese, th e typ e o f m ark an d th e ev i d en ce o f actu al co n fu si o n are th e m o st im p o r ta n t.” I d . T h e r e a r e f

o u rr e c o g n iz e d ty p e s o f m a r k , r a n g in g f

r o m w e a k e s t to s tr o n g e s t: ge ne r i c , de s c r i pt i ve , s ugge s t i ve a nd a rbi tr a r y . I d. “ T he s tr onge rthe m a r k, the grea t erthe sc op e of prot ec t i on ac corded i t . ” I d. A m ark’ s s tre ng th i s e nh ance d w h e r e th e r e is little o rn o th ir d - p a r ty u s e o f th a t m a r k . I d . a t 1 3 3 6 . W ith r e g a r d to ac tual confusi on , w e have s peci fi ca l l y a cc orded “ subst ant i al w ei gh t ” t o evi dence thatac tual cust om er s w er e c on fuse d b y the use of am ark as opp osed t o o ther c a t e gor i e s of

pe opl e . S a f

e w a y S t or e s , I nc . v. S a f e w a y D i s c . D rugs , 675 F . 2d 1160, 11 67 (11t h C i r. 19 82 ). H e r e , the pa r t i e s appa r e nt l y a gr e e tha tthe H e a l th- C he m m a r k i s a s ugge s t i ve m a r k, thus putt i ng i ti n the s e c ond s tr onge s tc a t e gor y , m e r i t i ng a hi ghe rl e ve l of pr ot e c t i on tha n i f

i tw e r e c a t e gor i z e d a s ge ne r i c orde s c r i pt i ve . S e e F r e hl i ng, 192 F . 3d a t1335- 36. A ddi t i ona l l y , the onl y m e nt i on of a ny thi r d- pa r ty us a ge of the H ea l th-C hem m ark i s c on t ai ned i n a qu es t i on A rono w i t z’ s a tt orney a sked K en B rody, H ea l th-C hem ’ s c hi ef fi nanci al offi ce r, abou ta c om pany i n C al i forni a that20

m i ghtbe us i ng the s a m e na m e . B r ody di d notc onf i r m i t . T hus , the r e i s no pos i t i ve t e s t i m ony orothe re vi de nc e tha ta ny thi r d pa r ty us e s the m a r k, the r e by a c c or di ng i te ve n m or e s tr e ngth a nd m e r i t i ng f ur the rpr ot e c t i on. S e e F r e hl i ng, 192 F . 3d a t1336. F i nal l y, the re cord cont ai ns evi dence of ac tual confusi on . F i rs t , there w as t es t i m on y thatpo t ent i al H ea l th-C hem cust om er s w ho had b ee n t o the H ea l th-C hem D i agno st i cs w ebsi t e l oo ki ng for H ea l th-C hem ’ s tra nsderm al ph arm ac eut i ca l pat ches expres se d con fusi on abou tw hether H ea l th-C hem had a fac i l i ty i n F l ori da, a boutw he the rH e a l th- C he m s t i l l m a de the pa t c he s the y w e r e l ooki ng f or , a nd a boutw he the rA r onow i t z – w ho w a s a s s oc i a t e d w i th the f a i l ur e of a pr e vi ous c o m p a n y – w a s a s s o c ia te d w ith H e a lth - C h e m . T h e r e w a s a ls o te s tim o n y th a t a pot e nt i a l e m pl oy e e of

H e a l th- C he m w a s c onc e r ne d, a f t e rl ooki ng a tthe H e a l thC he m D i a gnos t i c s w e bs i t e , a boutha vi ng t o r e l oc a t e t o F l or i da , a nd tha ta m a j or c us t om e rw a s c onc e r ne d a boutthe di s c r e pa nc y be tw e e n the pr oduc t s de s c r i be d on th e w e b s ite a n d th o s e H e a lth - C h e m c la im e d to p r o d u c e . O n the othe rha nd, a n i nt e r r oga t or y on the ve r di c tf or m i ndi c a t e s tha tthe ju r y f o u n d th a t A r o n o w itz d id n o t in te n d to in f r in g e o n H e a lth - C h e m ’s m a r k . W e f i nd no e vi de nc e i n the r e c or d t o c ontr ove r tthi s f i ndi ng. A c c or di ngl y thi s f a c t or w e i ghs i n f

a vorof A r onow i t z . W e a gr e e w i th the di s tr i c tc our ttha tthe r e m a i ni ngNo neof theoth e r f

our f a c tor s w a s e xten siv e ly

dis c us se d b y

e ith e r p art

y : ( 1) Th eiss ueis 6 Aro n o w i tz ’ s u s eo f

th eH e a l th - C h e mm ar

k a s i te x i s t s , s o th e r ei s n o i s s u eo f s i m i l ari ty . ( 2 ) It c ould b eargue d th at an averag ec on sumer o f m e dic a l su pp lie s mi ght b e lievethat th esame manufacturer produc ed both transdermal phar maceutical patche s and home-useand other medical diagnostic tests. See E. Remy Martin &Co., S.A. v. S haw- Ross Int’l Imports, Inc., 756 F .2 d 1 52 5, 15 30 (1 1th

Cir . 1 98 5) . O n th eoth e r h and , it is n ot H e a lth -C hem it se lf , b ut a su bs idi ary of a su bs idi ary, H e rc on

L a bo ratorie s, that a c tually

manu fac ture s th eprod

uc ts. (3 ) It is not clear from the record what similarities or differenc es might exi st between customers or sales presentations of the two companie s. (4) Therec ord also lac ks substantial evidenceof advertising media. Aron ow itz also a ssert s th at any c on fu sio n c a

us e d b y his webs itewa s mo relike ly du eto 7 thesim ila ri ty be tw e e n th ename s, “ He a lth -C hem D iagno sti c s”and “ He a lth -C hem,”tha

n tohis us eof thesh or ter “ He a lth -C hem”mark . Aro no wi tz, h ow e ver, make s n o le g a l argument in c onne c tio n w iththi s a ssertion , a nd it doe s n ot cha

ng ethefac t th at hi s li c e ns ewa s limit e d tous e of thelong e r m ark

“ He a lth -C hem D iagno sti c s”and thejur y fo un d, ba se d o n ampl ee vide nc ein the re cord, a

likelihood of confusion re sulting from his use of the shorter mark. 21 f o u rf a c t o r s f a v o rn e i th e rs i d e . I n c o n s i d e r a t i o n o f a l l r e l e v a n tf

a c t o r s , we 6 c onc l ude tha tbe c a us e the tw o m os ti m por t a ntf a c t or s i n de t e r m i ni ng the l i ke l i hood of c onf us i on – ty pe of

m a r k a nd a c tua l c onf

us i on – w e i ghe d i n f

a vorof f i ndi ng s uc h c onf

us i on, the r e w a s s uf

f i c i e nte vi de nc e t o s uppor ta r e a s ona bl e j ur y ’ s f i ndi ng o f in fr in g em en t. A cc o rd in g ly, th e d istrict co u rt d id n o t errin d en yin g A ro n o w it z’s m o t i o n f o rj u d g m e n ta s a m a tt e ro f l a w. 7 4 . D am age s f

orI nf r i nge m e nt A r o n o w itz h a s a ls o c h a lle n g e d th e ju r y ’s $ 2 5 ,0 0 0 d a m a g e s a w a r d a s to tr a de m a r k i nf

r i nge m e nton the gr ound tha tH e a l th- C he m ha s notde m ons tr a t e d the va l ue of i t s m a r k, m a de us e of

i t s m a r k, ors pe nta ny m one y on c or r e c t i ve advert i si ng . “ U nd erthe L anham A ct , dam ages for tra dem ark i nfri ng em entm ay22

i nc l ude ( 1) the de f

e nda nt ’ s pr of

i t s , ( 2) a ny da m a ge s s us t a i ne d by the pl a i nt i f f , a nd ( 3) the c os tof

the a c t i on. ” R a m a da I nns , I nc . v. G a ds de n M ot e l C o. , 804 F . 2d 15 62 , 15 64 (11t h C i r. 19 86 ) ( ci t i ng 15 U . S . C . § 1 11 7). F urther, the L anham A ct c onf e r s upon di s tr i c tc our t s “ w i de di s c r e t i on i n de t e r m i ni ng a j us ta m ountof re covery for tra dem ark i nfri ng em ent . ” I d. at15 64 -65. U nl i ke i n the ca se of future l ostprofi t s c ause d b y bre ac h o f c on tra ct , “ L anham A ctdam ages m ay be aw ar ded ev en w h en th ey are n o tsu scep t i b l e t o p reci se cal cu l at i o n s. ” Id . at1 5 6 5 . F i n al l y, a s th e ju r y w a s in s tru c te d , “d a m a g e s s u s ta in e d b y th e p la in tif f ” in c lu d e “a ll e l e m e nt s of

i nj ur y t o the bus i ne s s of the tr a de m a r k ow ne rpr oxi m a t e l y r e s ul t i ng f r om the i nf

r i nge r ’ s w r ongf

ul a c t s ” s uc h a s the c os t s of c or r e c t i ve a dve r t i s i ng or i nj ur y t o bus i ne s s r e put a t i on orgoodw i l l . I d. a t1564- 65. B r ody t e s t i f

i e d tha tc onf

us i on e nge nde r e d by A r onow i t z ’ s w e bs i t e a m ong H eal th -C h em ’ s cu st o m ers an d p o t en t i al em p l o yees cau sed co n cern , w h i ch co st He a l th - C h e m b o th t i m e a n d m o n e y t o e x p l a i n a wa y o n a n i n d i v i d u a l b a s i s . He e xpl a i ne d s e ve r a l s pe c i f i c c or r e c t i ve a c t i ons tha tc oul d be us e d t o a ddr e s s the pr obl e m ge ne r a l l y . B a s e d on hi s pe r s ona l e xpe r i e nc e w i th H e a l th- C he m a nd H er con L aborat ori es , on e of H ea l th-C hem ’ s m anufacturi ng subsi di ar i es , he offe re d e s tim a te s o f

th e c o s t o f

e a c h s u c h a c tio n : ( 1 ) d e v e lo p in g a c o r r e c tiv e w e b s ite w o u ld c o s t b e tw e e n $ 1 0 ,0 0 0 a n d $ 2 5 ,0 0 0 ; ru n n in g a d s in tr a d e p u b lic a tio n s w o u ld23

c os tbe tw e e n $15, 000 a nd $20, 000; a nd a tt e ndi ng tw o orthr e e i ndus tr y tr a de show s t o ree st abl i sh H ea l th-C hem ’ s i dent i ty i n the m arketw ou l d costbetw ee n $50, 000 a nd $75, 000. A l t oge the r , thi s r e s ul t s i n a r a nge of the c os tof

c or r e c t i ve advert i si ng of betw ee n $ 75 , 00 0 and $1 20 , 00 0. W e there fore concl ud e thatthere w a s m or e tha n s uf

f i c i e nte vi de nc e i n the r e c or d f ora j ur y t o f

i nd tha tc or r e c t i ve ad v ert i si n g w as n ecessary an d t o aw ard atl east$ 2 5 , 0 0 0 o n th atb asi s. E ve n i f thi s w e r e notthe c a s e , a s w i th the $2. 6 m i l l i on ve r di c tf orbr e a c h of cont ra ct , the verdi ctform cont ai ned n o i nt errogat ori es t o i nd i ca t e how the j ury c a l c ul a t e d i t s da m a ge s a w a r d f ortr a de m a r k i nf

r i nge m e nt . H ow e ve r , ourr e vi e w of the re cord revea l s e vi dence of al t ernat i ve base s f or an aw ar d. In addi t i on t o the ev i d en ce an d est i m at es p ro v i d ed fo r co rrect i v e ad v ert i si n g , th ere w as al so t e s t i m ony r e ga r di ng da m a ge t o H e a l th- C he m ’ s r e put a t i on a nd goodw i l l . B r ody t e s t i f i e d tha ts om e of

H e a l th- C he m ’ s l a r ge rc us t om e r s ha d e xpr e s s e d tr e pi da t i on a boutthe pos s i bi l i ty of

a c ont i nue d r e l a t i ons hi p be tw e e n H e a l th- C he m a nd A r o n o w itz b e c a u s e o f

h is a s s o c ia tio n w ith a f a ile d b u s in e s s . T h is te s tim o n y c o u ld have fi gu re d i nt o t he j ury’ s c on si dera t i on of the dam ages i nstruct i on i tw as gi ven w hi c h c a l l e d f

ora s s e s s m e ntof

a ny i nj ur y orl os s t o H e a l th- C he m ’ s r e put a t i on, go od w i l l , general bu si ness re pu t at i on , sa l es , or decept i on of cust om er s, as w el l as c o r r e c tiv e a d v e r tis in g .24

T he j ur y i n thi s c a s e a w a r de d onl y a s m a l l pe r c e nt a ge of the up t o $120, 000 r e q u e s te d b y H e a lth - C h e m in c o n n e c tio n w ith its tr a d e m a r kin f r in g e m e n t c la im . W e f i nd s uf f i c i e nte vi de nc e i n the r e c or d t o s uppor tthi s a w a r d f orc or r e c t i ve ad v ert i si n g o r o th er d am ag es. B . P e r m a ne ntI nj unc t i on A ga i ns tU s e of “ H e a l th- C he m ” M a r k F in a lly , in c o n n e c tio n w ith th e tr a d e m a r k in f r in g e m e n t c la im , A r o n o w itz chal l enges the breadth o f the perm anenti nj un ct i on i m po se d b y the di stri ctcourtas p a r t o f its A m e n d e d F in a l J u d g m e n t. W e r e vi e w the i s s ua nc e of pe r m a ne nt in ju n c tio n s f

o ra b u s e o f

d is c r e tio n . S im m o n s v . C o n g e r , 8 6 F .3 d 1 0 8 0 , 1 0 8 5 ( 1 1 th C ir . 1 9 9 6 ) . F e d e r a l c o u r ts m a y g r a n t p e r m a n e n t in ju n c tio n s w h e r e in f

r in g e m e n t is f ound t o ha ve oc c ur r e d i n or de rt o pr e ve ntf ur the ri nf

r i ngi ng us e of

a m a r k, a nd such i nj un ct i on s s ho ul d b e des i gn ed t o k ee p the form eri nfri ng er s “ a s af e di st ance a w a y ” f r om the pr ot e c t e d m a r k. S e e H ow a r d J ohns on C o. v. K hi m a ni , 892 F . 2d 15 12 , 15 17 (11t h C i r. 19 90 ). H e r e , h o w e v e r , w e h a v e a n u n u s u a l s itu a tio n in w h ic h th e m a r k a t is s u e is partof a m ark w hi ch A rono w i t z has a l i ce nse t o u se . C on se qu ent l y, w e f i nd that th e f am il iar b o il erp late lan g u ag e “o r a n y o th erm ar k s s im il arto D ef en d an t’ s tr a d e m a r k ” u s e d b y th e d is tr ic t c o u r t m a k e s th e in ju n c tio n in ap p r o p r ia te ly b r o a d in thi s c a s e . R 4- 155 a t2. A c c or di ngl y , w e va c a t e the pe r m a ne nti nj unc t i on a s i s s ue d.25

C . C on di t i on al G ra ntof a N ew T ri al N ow , be c a us e w e r e ve r s e the di s tr i c tc our t ’ s gr a ntof j udgm e nta s a m a tt e rof la w r e p la c in g th e ju r y ’s $ 2 .6 m illio n v e r d ic t w ith $ 1 in n o m in a l d a m a g e s , b u t s till f i n d th e $ 2 . 6 m i l l i o n v e r d i c ti n s u f f i c i e n t l y l e g a l l y s u p p o r t e d t o b e r e i n s t a t e d , we c om e t o the i s s ue of

how the c l a i m f

orbr e a c h of

the 2003 c ontr a c toughtt o be re sol ved u po n rem and. T he di stri ctcourtgrant ed H ea l th-C hem ’ s m ot i on for anew tr ia l in th e a lte r n a tiv e in c a s e w e r e v e r s e d e ith e ro f its ju d g m e n ts a s a m a tte ro f la w . A ro n o w i t z ch al l en g es th i s g ran tb u treq u est s a n ew tri al as t o d am ag es o n l y. F e d e r a l R u le o f

C iv il P r o c e d u r e 5 9 p r o v id e s th a t a d is tr ic t c o u r t m a y g r a n t a new tri al “ on al l or partof the i ss ues. ” F ed. R . C i v. P roc. 59 (a ). R ul e 50 p rovi des thata new tri al grant ed i n t he al t ernat i ve “ shal l proceed unl es s the appel l at e c ou rt has otherw i se ordered. ” F ed. R . C i v. P roc. 50 (c )( 1). W e r evi ew the grantof a new tr i a l pur s ua ntt o R ul e 59 f ora bus e of

di s c r e t i on. W i l l i a m s v. C i ty of V a l dos t a , 689 F . 2d 96 4, 97 4 (11 th C i r. 19 82 ). O ur re vi ew for abu se of di sc re t i on i s “ m ore r i gor ous w he n the ba s i s ” of the gr a ntw a s the w e i ghtof the e vi de nc e . I d. A s w e di sc usse d i n t he cont extof j ud gm ent s a s am att erof l aw , court s a re g e n e r a lly “n o t f

r e e to r e w e ig h th e e v id e n c e a n d s e t a s id e th e ju r y v e r d ic t m e r e ly b ecau se th e j u ry co u l d h av e d raw n d i fferen ti n feren ces o r co n cl u si o n s o r b ecau se ju d g e s f e e l th a t o th e rr e s u lts a r e m o r e r e a s o n a b le .” N a r c is s e v . I llin o is C e n t. G u lf26

R .R ., 6 2 0 F .2 d 5 4 4 , 5 4 8 ( 5 th C ir . 1 9 8 0 ) . A c c o r d in g ly , w h e n th e r e is e r r o ra s to d a m a g e s , b u t th e ju r y h a s r e n d e r e d a p r o p e rru lin g a s to liab ility , th e ap p r o p r ia te r e m e dy i s t o r e m a nd the c a s e t o the di s tr i c tc our tf ore i the rr e m i tt i tur , s e e , e . g. G ol ds t e i n v. M a nha tt a n I ndus tr i e s , I nc . , 758 F . 2d 1435, 1448 ( 11th C i r . 1985) , or for anew tri al excl usi vel y a s t o t he am ou ntof dam ages , se e e . g. P arker v. S cr ap M e t a l P r oc e s s or s , I nc . , 386 F . 3d 993, 1018 ( 11th C i r . 2004) ( r e ve r s i ng e xc e s s i ve j ury a w ar d and re m andi ng for new tri al sol el y a s t o d am ages ). S ee al so O vers ea s P r i va t e I nv. C orp. v. M e tr o. D a de C ounty , 47 F . 3d 1111, 1116 ( 11th C i r . 1995) ( “ B e c a us e the l i a bi l i ty i s s ue s w e r e pr ope r l y a nd c l e a r l y de c i de d by the j ur y , the r e m e dy i n thi s i ns t a nc e i s t o r e m a nd the c a s e t o the di s tr i c tc our tf ora ne w tr i a l on th e a m o u n t o f

d a m a g e s o n ly .” ) . H e r e , th e d is tr ic t c o u r t c o n d itio n a lly g r a n te d a n e w tr ia l in c o n n e c tio n w ith th e 2 0 0 3 c o n tr a c t b r e a c h c la im b e c a u s e it f o u n d th e a m o u n t o f

th e ju r y ’s v e r d ic t to be “ agai nstthe ov erw hel m i ng w ei gh tof the evi dence” i n that(1) the evi dence w as i ns uf f i c i e ntt o s uppor ta c a us a l c onne c t i on be tw e e n H e a l th- C he m ’ s br e a c h of the 2 0 0 3 c o n tr a c t a n d A r o n o w itz ’s lo s t r o y a ltie s , a n d ( 2 ) “n o y a r d s tic k w a s g iv e n to th e ju r y th a t c o u ld b e u s e d to d e te r m in e [ A r o n o w itz ’s d a m a g e s ] w ith r e a s o n a b le ce rt ai nt y . . . because [ A rono w i t z] offe re d i nsuffi ci entevi dence of [hi s] po t ent i al co sts.” R 4 -1 5 4 at 1 8 . H o w ev er , th e d istrict co u rt d ec li n ed to d istu rb th e ju ry ’s27

ve r di c ta s t o l i a bi l i ty on the unde r l y i ng c l a i m f orbr e a c h. O urr i gor ous r e vi e w of th e r e c o r d e v id e n c e in s u p p o r t o f d a m a g e s r e v e a ls n o a b u s e o f d is c r e tio n . A c c or di ngl y , w e a f

f i r m the di s tr i c tc our t ’ s a l t e r na t i ve gr a ntof a ne w tr i a l a s t o the s ol e r e m a i ni ng unr e s ol ve d i s s ue of da m a ge s i n c onne c t i on w i th br e a c h of the 2003 c o n tr a c t. I I I . CONCL US I ON A r onow i t z appe a l s the di s tr i c tc our t ’ s or de rgr a nt i ng j udgm e nta s a m a tt e rof l aw i n favor of H ea l th-C hem as t o b re ac h o f the 20 02 cont ra ct , re du ci ng dam ages a s t o br e a c h of

the 2003 c ontr a c tt o $1, a nd uphol di ng the j ur y ’ s ve r di c ta s t o the tra dem ark i nfri ng em entcl ai m agai nsthi m . B ec ause w e f i nd no error i n the di stri ct c our t ’ s c onc l us i on tha tthe 2003 c ontr a c tc ons t i tut e d a nova t i on of the 2002 C on tra ct , there by el i m i nat i ng any possi bl e c l ai m for bre ac h, w e AF F I RM the j udgm e nta s a m a tt e rof l a w a s t o br e a c h of

2002 c ontr a c t . B e c a us e w e f i nd the $2. 6 m i l l i on da m a ge s a w a r d t o be , i n pa r t , i ns uf f i c i e nt l y l e ga l l y s uppor t e d by the evi dence, w e R EVER SE the j udgm e nta s a m a tt e rof l a w r e duc i ng the a w a r d f r om $2. 6 m i l l i on t o $1, a nd R EM A N D FO R A N EW TR I A L A S TO D A M A G ES as t o br e a c h of

the 2003 c ontr a c t . B e c a us e w e f i nd tha tthe r e c or d c ont a i ns s uf f i c i e nt e v id e n c e f

o ra r e a s o n a b le ju r y to c o n c lu d e th a t H e a lth - C h e m d e m o n s tr a te d b o th r e q u i r e m e n t s f

o rtr a d e m a r k i n f

r i n g e m e n ta n d t o a wa r d $ 2 5 , 0 0 0 i n d a m a g e s , we28

AF F I RM th e d i stri ctco u rt ’ s d en i al o f A ro n o w i t z’ s m o t i o n fo r j u d g m en tas a m att erof l aw . F i nal l y, w e VA C A TE the pe r m a ne nti nj unc t i on i s s ue d by the di s tr i c tc our tbe c a us e i ti s i nappr opr i a t e l y br oa d.29

C U D A H Y , S e n io rC ir c u it J u d g e , c o n c u r r in g in p a r t a n d d is s e n tin g in p a r t: I a gree thatthe 20 02 C on tra ctw as supp l ant ed by the 20 03 C on tra ctand t hat H ea l th-C hem ’ s f

i nanci al ob l i gat i on s und erthe form eragre em entw er e “te r m in a te d ” w h e n th e n e w a g r e e m e n t to o k e f f e c t. T h e r e is n o d o u b t th a t b o th p a r tie s w a n te d to g e t o u t o f w h a t th e y p e r c e iv e d to b e a b a d d e a l. I w r ite s e pa r a t e l y , how e ve r , t o c l a r i f y a m a tt e rI do notbe l i e ve tha tthe pa ne l opi ni on s qua r e l y a ddr e s s e s : W ha thappe ns t o di r e c tobl i ga t i ons be tw e e n the c ontr a c t i ng p a r tie s th a t r e s u lte d f

r o m tr a n s a c tio n s c o m p le te d w h ile th e 2 0 0 2 C o n tr a c t w a s in e f f e c ta nd the r e w a s no 2003 C ontr a c t ? A s thi s que s t i on a r i s e s he r e , w ha ti s the s t a tus of de bt s a l r e a dy ow e d t o A r onow i t z by H e a l th- C he m a nd r e c or de d i n the b o o k s? T he panel op i ni on deal s c l ea rl y w i th thi s quest i on i nsofaras i ti nv ol ves obl i ga t i ons t o thi r d pa r t i e s : G oods ors e r vi c e s de l i ve r e d be f or e the da t e of

the 2003 C on tra ctar e t o b e the ob l i gat i on of H ea l th-C hem , w hi l e goo ds or se rvi ce s de l i ve r e d a f

t e rthe 2003 C ontr a c ta r e t o be the obl i ga t i on of the r e c i pi e nt . B utthe pa ne l opi ni on m a y be i nt e rpr e t e d t o a s s um e tha tthe 2003 C ontr a c tc a nc e l s a nd e xt i ngui s he s e ve n pa s tde bt s be tw e e n the pa r t i e s noti nvol vi ng thi r d pa r t i e s . T he o p in io n le a n s h e a v ily o n a c la u s e f r o m th e 2 0 0 3 C o n tr a c t th a t s ta te s th a t it

“ t e r m i na t e s a l l f

i na nc i a l obl i ga t i ons ” of H e a l th- C he m t o A r onow i t z , buti n c ont e xt30

the m e a ni ng of

thi s l a ngua ge i s f

a rf r om s e l f - e vi de nt . I do notbe l i e ve tha tthe c o n c e p t o f

“te r m in a tin g ” a c o n tr a c t n e c e s s a r ily im p lie s th e c a n c e lla tio n o f d e b ts al re ady on t he bo ok s. Iti s c er t ai nl y astre t ch t o m ake thatl angu age a l so m ea n t hat al l the roya l t i es thatH ea l th-C hem ow ed A rono w i t z und erthe 20 02 cont ra ctar e forgi ven and need no tbe pai d. T hati s the ki nd of l angu age I w ou l d exp ec tt o see b e f o r e c o n c lu d in g th a t d e b ts , o n c e o w e d , a r e n o w f o r g iv e n . T h e tr a n s a c tio n s in q u e s tio n a r e h is to r y ; th e y a r e n o t to b e u n d o n e b y a n e w d e a l u n le s s th e r e is e x p lic it la n g u a g e p u rp o r tin g to d o s o . C ontr a c t s a r e ge ne r a l l y pr e s c r i pt i ons f orthe f utur e , notthe pa s t . T ha ti s how I w oul d i nt e rpr e tthe 2003 C ontr a c t . I thi nk tha tthe e f f e c tof the “ t e r m i na t i on” l a ngua ge i s t o e nd the obl i ga t i on t o m a ke f ur the rpa y m e nt s . I n f

a c t , thi s i s w ha tthe pa r t i e s s t i pul a t e d. T he y e xpr e s s l y s pe c i f i e d i n the ope ni ng l a ngua ge of the 2003 C ontr a c ttha tthe i nt e ntof the a gr e e m e ntw a s t o “ c e a s e f ur the rf undi ng” of

the D i a gnos t i c s D i vi s i on. T hi s s t a t e m e ntof i nt e nts houl d gui de ouri nt e rpr e t a t i on of the “ t e r m i na t i on” c l a us e . I n f a c t , H e a l th- C he m a c tua l l y c onc e de d thr oughoutthe litig a tio n th a t it s t i l l

ow e d A r onow i t z m one y unde rthe 2002 C ontr a c tf orthe pr i or use of hi s pat ent s. H ea l th-C hem di d n otcl ai m thatthi s debthad b ee n e x tin g u is h e d ; it s im p ly d is a g r e e d a b o u t h o w m u c h w a s o w e d . I s e e n o th in g to s u g g e s t th a t s u c h d e b ts h a v e b e e n c a n c e lle d b y th e 2 0 0 3 C o n tr a c t. A c c o r d in g ly , I31

w oul d r e ve r s e the di s tr i c tc our t ’ s j udgm e ntw i th r e s pe c tt o the 2002 be a c h of c o n tr a c t c la im s b u t in a ll o th e rr e s p e c ts I jo in th e o p in io n o f th e p a n e l.