Opinion ID: 28599
Heading Depth: 3
Heading Rank: 2

Heading: Denial of Permanent Injunctive Relief

Text: Southwest next contends that the district court abused its discretion in denying its post-trial motion for permanent injunctive relief. Southwest proffered thirteen specific statements that FieldTurf should be enjoined from making and eleven statements that FieldTurf must affirmatively post on its website and distribute to customers to correct the false impression created by its false advertising. “An order granting or denying a preliminary injunction will be reversed only upon a showing that the district court abused its discretion.”41 “The district court abuses its discretion if it (1) relies on clearly erroneous factual findings when deciding to grant or deny the permanent injunction, (2) relies on erroneous conclusions of law when deciding to grant or deny the permanent injunction, or (3) misapplies the factual or legal conclusions when fashioning its injunction relief.”42 The district court’s statements imply that a permanent injunction prohibiting FieldTurf employees from making certain statements and requiring them to make other statements would be difficult or impossible to 41 Martin’s Herend Imports, Inc. v. Diamond & Gem Trading United States of Am. Co., 195 F.3d 765, 772 (5th Cir. 1999). 42 Causeway Med. Suite v. Ieyoub, 109 F.3d 1096, 1102 (5th Cir. 1977). -17- enforce. The court also noted that there was no evidence that FieldTurf continued to engage in false advertising after trial. Based on these reasonable conclusions, we cannot say that the district court clearly abused its discretion in denying Southwest’s request for permanent injunctive relief.43 C. Refusal to Award an Accounting of FieldTurf’s Profits Southwest also contends that the district court abused its discretion in denying it recovery of the profits that FieldTurf earned as a result of its false advertising campaign. Section 1117(a) of the Lanham Act entitles a markholder to recover the defendant’s profits, subject to the principles of equity. An award of the defendant’s profits is not automatic, and is committed to the discretion of the district court, whose decision we review for an abuse of discretion. While this court has not required a particular factor to be present, relevant factors to the court’s determination of whether an award of profits is appropriate include, but are not limited to, (1) whether the defendant had the intent to confuse or deceive, (2) whether sales have been diverted, (3) t he adequacy of other remedies, (4) any unreasonable delay by the plaintiff in asserting his rights, (5) the public interest in making the misconduct unprofitable, and (6) whether it is a case of palming off.44 In this case, we cannot say that the district court abused its discretion in denying an accounting of profits. Although there is some evidence that FieldTurf intended to mislead customers and there is certainly an interest in making this conduct unprofitable, the other factors could reasonably be seen to weigh against an accounting of profits. First, the $1.04 million dollars in lost profits that the jury awarded to Southwest could certainly be seen as an adequate remedy in this case. Second, because of the way that Southwest presented its damage evidence in this case, it is impossible to tell which 43 See, e.g., Complete Auto Transit, Inc. v. Reis, 451 U.S. 401, 420 (1981) (acknowledging that courts are reluctant to grant injunctions that would be difficult to enforce); Moto-Sports, Inc. v. Gulf States Toyota, Inc., 324 F. Supp. 653, 656 (S.D. Tex. 1971) (stating that injunctive relief is appropriately denied if it involves the “impossible task of supervising continuous performance”). 44 Pebble Beach, 155 F.3d at 554 (citations omitted). -18- sales were diverted as a result of FieldTurf’s breach of the Kentucky settlement and which sales were diverted as result of FieldTurf’s false or misleading advertising. Finally, there is no evidence that FieldTurf palmed its product off as one of Southwest’s products. D. Denial of Prejudgment Interest Southwest next contends that the district court abused its discretion in denying prejudgment interest on Southwest’s breach of contract claims. With regard to Southwest’s request for prejudgment interest, the district court held that “there is no way in the record of this case the Court can determine applicable dates when damages occurred, therefore, the Court declines to award the same.” This reasoning for denying prejudgment interest was erroneous because prejudgment interest under Texas law begins to accrue on the earlier of 180 days after the date a defendant receives written notice of a claim or the date the suit is filed.45 Notwithstanding this error, the district court did not abuse its discretion in denying Southwest’s request for prejudgment interest.46 As the district court cautioned on several occasions, Southwest’s submission of a general damage question made it impossible for the court to determine which portion of the award was attributable to its breach of contract claims and which portion was attributable to its false advertising claims. Because Southwest is seeking prejudgment interest only on its breach of contract claim, there is no way for the district court to determine which portion of the damage award is chargeable with interest. The denial of 45 Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 530–31 (Tex. 1998). 46 Cf. Coxson v. Commonwealth Mortgage Co. of Amer., 43 F.3d 189, 192–93 (5th Cir. 1995) (holding that the district court did not abuse its discretion in denying prejudgment interest where there was a legitimate reason to do so, notwithstanding that the court failed to justify its decision). -19- prejudgment interest therefore did not constitute an abuse of discretion.47 E. Denial of Attorneys’ Fees Under 15 U.S.C. § 1117(a) Finally, Southwest argues that the district court abused its discretion in declining to award attorneys’ fees under 15 U.S.C. § 1117(a). The Lanham Act provides that a court may award the prevailing party reasonable attorneys’ fees in “exceptional cases.”48 As we explained in Seven-Up Co. v. Coca-Cola Co., the prevailing party bears the heavy burden of establishing that a case is exceptional, and the district court has broad discretion to determine whether a case qualifies as such: The prevailing party has the burden to demonstrate the exceptional nature of a case by clear and co nvincing evidence. The determination as to whether a case is except ional is left to the sound discretion of the trial court. An exceptional case is one where the violative acts can be characterized as “malicious,” “fraudulent,” “deliberate,” or “willful.” We have recognized that the statutory provision has been interpreted by the courts “to require a showing of a high degree of culpability on the part of the infringer, for example, bad faith or fraud,” and a few cases have gone as far as to require “very egregious conduct” to constitute an “exceptional” case.49 We agree with the district court that whether this qualifies as an “exceptional case” under the Lanham Act is a close question. But mindful that “the district court heard the evidence, saw the witnesses, 47 See Daniels v. Pipefit ters’ Ass’n Local Union, 945 F.2d 906, 925 (7th Cir. 1991) (denying prejudgment interest “[b]ecause the jury awarded a general verdict . . . [and] the district judge had no way of reading the minds of the deliberating jurors to determine how they arrived at the final, comprehensive amount”); Landes Constr. Co. v. Royal Bank of Canada, 833 F.2d 1365, 1375 (9th Cir. 1987) (holding that the district court did not err in denying prejudgement interest on a general verdict even though it may have considered some irrelevant factors in its determination); Wojtkowski v. Cade, 725 F.2d 127, 129 (1st Cir. 1983) (holding that the district court did not abuse its discretion in denying prejudgment interest on a general verdict with mixed federal and state claims because the court could not determine to what extent the award was based on state claims); cf. Arleth v. FreeportMcMoran Oil & Gas Co., 2 F.3d 630, 636 (5th Cir. 1993) (recognizing the holding in Wojtkowski, but distinguishing it in the case where the same damages flow from each of the causes of action constituting the general verdict). 48 15 U.S.C. § 1117(a). 49 86 F.3d 1379, 1390 (5th Cir. 1996) (citations omitted). -20- and appraised their motives,”50 we cannot say that the district court abused its discretion in denying the recovery of attorneys’ fees in this case.