Opinion ID: 6500058
Heading Depth: 3
Heading Rank: 1

Heading: Graminex’s Foreign Sales

Text: The district court concluded that Graminex’s sales to foreign distributors violated the court’s Permanent Injunction because Graminex and May used Cernelle’s names and trademarks on foreign shipping documents and invoices. Graminex and May argue that this decision was an abuse of discretion because the plain language of the Permanent Injunction did not prohibit their conduct. The Permanent Injunction, on their read, lacks “a clear and unequivocal command,” Gascho, 875 F.3d at 800, prohibiting them from putting “CERNILTON” and “CERNITIN” on shipping and invoice documents sent to foreign distributors. This debate over the meaning of the Permanent Injunction boils down to the interpretation of two sentences within that Order: [T]he defendants Graminex, L.L.C. and Cynthia May, and each of them, their agents, servants, and employees, and all persons in active concert with them, are RESTRAINED AND ENJOINED from pledging or alienating the trademarks in dispute . . . . This injunction is intended to prevent the negotiation and execution of contracts, agreements, options to purchase, deeds, memoranda of agreements, assignments, licenses, and plans that employ or relate in any manner to the registered trademarks and trademark applications, except as required by the parties’ settlement of this litigation. (R. 85, PageID 2036) According to Graminex and May, only the first sentence of this paragraph directly constrains their actions. They interpret the Injunction to prohibit only the “pledging or alienating of the trademarks in dispute,” because only those terms directly follow the command that the defendants are “RESTRAINED AND ENJOINED.” The second sentence, they argue, is not its own command but merely a clarification of the scope of the first sentence’s prohibition on pledging or alienating the trademarks. -12- Nos. 21-1579/2649, A. B. Cernelle v. Graminex, L.L.C. Graminex and May’s interpretation would constrain the injunction’s reach. The “distinct and determinative legal meaning” of the word “pledge” is the “bailment of goods to a creditor as security for some debt or engagement.” United States v. Wright, 60 F.3d 240, 241 & n.1 (6th Cir. 1995) (quoting Pledge, Black’s Law Dictionary (4th ed. 1951)). To “alienate,” in turn, is “[t]o transfer or convey (property or a property right) to another.” Alienate, Black’s Law Dictionary (11th ed. 2019). Applied to the second sentence, therefore, the injunction would prohibit only specific types of “agreements,” “plans,” or other actions related to the trademarks. For example, Graminex and May could not partially alienate a trademark through a licensing agreement. See Justin Hughes, The Philosophy of Intellectual Property, 77 Geo. L.J. 287, 346–47 (1988). Similarly, because a “plan” may be “a method for achieving an end,” Plan, Merriam-Webster OnLine Dictionary, https://www.merriam-webster.com/dictionary/plan, Graminex and May would be enjoined from taking nascent steps to pledge or alienate the trademarks. Not covered, though, would be Graminex and May’s agreements and plans using the disputed trademarks that do not pledge or alienate the trademarks themselves. This reading would give scant force to the parties’ stated intent in implementing a permanent injunction. Specifically, the injunction seeks “to prevent the negotiation and execution of contracts, agreements, options to purchase, deeds, memoranda of agreements, assignments, licenses, and plans that employ or relate in any manner to the registered trademarks” with only minor exceptions. Graminex and May’s test of whether the sentence has “command language” overlooks that stated intent and would come close to instituting a punctuation rule: only if the language appears after the clear words “restrained and enjoined” and before a period could that language have force. Because “[h]onor[ing] the intent of the parties” is the central goal of contract -13- Nos. 21-1579/2649, A. B. Cernelle v. Graminex, L.L.C. interpretation under Michigan law, we cannot write the second sentence out of the contract or hobble its effect so profoundly. The rule for a clear command to hold a party in contempt is not as strict as Graminex and May would have it. While “[c]ontempt cannot be based on ‘a decree too vague to be understood,’” Gascho, 875 F.3d at 800 (quoting Int’l Longshoremen’s Ass’n, Loc. 1291 v. Phila. Marine Trade Ass’n, 389 U.S. 64, 76 (1967)), court orders need not delineate every possible violation to serve as the basis for a contempt order, see McComb v. Jacksonville Paper Co., 336 U.S. 187, 192 (1949). The question is whether the party allegedly in contempt “fully understands [the order’s] meaning but chooses to ignore its mandate.” Int’l Longshoremen’s Ass’n, 389 U.S. at 76. Where appellate courts have concluded that an order was too vague to support a contempt finding, the underlying orders were “unintelligible,” id., uncertain to even exist, Reed v. Cleveland Bd. of Educ., 607 F.2d 749, 752 (6th Cir. 1979), or would have required a party to “gauge their conduct” according to related agreements such that they would “be forced to test their interpretation of that agreement through contempt proceedings,” S. Ohio Coal Co. v. United Mine Workers of Am., 551 F.2d 695, 711 (6th Cir. 1977). Both the Permanent Injunction itself and the record support that Graminex and May should have known and did know that use of Cernelle’s marks would violate the court’s order. The stated intent to “prevent . . . agreements . . . and plans that employ or relate in any manner to the registered trademarks and trademark applications,” is not unintelligible or vague. Here, Graminex and May made “plans” and “agreements” that relied on the use of Cernelle’s marks. Using the district court’s own interpretation as another tool for construing the Permanent Injunction—as is required under the deferential de novo standard—there is further reason to read the second sentence as offering its own command. The text supports that the second sentence adds -14- Nos. 21-1579/2649, A. B. Cernelle v. Graminex, L.L.C. breadth to the entire Injunction, as the prohibition on the “negotiation and execution of contracts, agreements . . . licenses, and plans” sweeps in all such actions “that employ or relate in any manner to the registered trademarks.” If only pledging and alienating were proscribed, the thrust of the second sentence would be difficult to understand because “in any manner” necessarily suggests broadening the scope of the existing language. To make the contract achieve the purpose described in the second sentence, it is therefore proper to read both sentences as having independent force. Evidence of the Permanent Injunction’s reach is also found in the procedural history. The district court’s interlocutory preliminary injunction closely resembles the Permanent Injunction, except that the prohibition on pledging or alienating marks is separate from the paragraph stating the scope of the injunction. Rather than stating an intent for the injunction as a whole, the interlocutory preliminary injunction instead states that “the injunction described above encompasses” contracts, agreements, and the like. The preliminary injunction, in contrast, combines those sentences into a single paragraph and rewords the second sentence to state that “[t]his injunction is intended to prevent the negotiation and execution of contracts, agreements, options to purchase, deeds, memoranda of agreements, assignments, licenses, and plans that employ or relate in any manner to the registered trademarks and trademark applications.” Based on this progression, it is reasonable to conclude that the district court intended to expand the second sentence’s scope from a narrow reference to a statement about the entire injunction. We are also wary of embracing Graminex and May’s narrow interpretation given the Supreme Court’s admonition against allowing parties to defy court orders through technicalities. See McComb, 336 U.S. at 192–93. A rule that a party has “immunity from civil contempt because the plan or scheme which they adopted was not specifically enjoined . . . . would give tremendous impetus to the program of experimentation with disobedience of the law.” Id. at 192. Graminex -15- Nos. 21-1579/2649, A. B. Cernelle v. Graminex, L.L.C. and May’s view of the Permanent Injunction would have us impose a clear language rule so strict that it would leave our district courts compelled to issue orders full of hypotheticals for fear that enforceable contempt orders would otherwise be impossible. Our case law rejects such narrow constructions of consent decrees and stipulated injunctions. Cf., e.g., Brown, 644 F.2d at 558. That the Russian company Graminex Pharma owns the Russian trademark for Cernilton does not change this conclusion even with respect to the Russian sales. Graminex and May used the Cernilton trademark in the United States when preparing the shipping labels and documentation. Courts have concluded in trademark infringement cases under the Lanham Act that a merchant labeling goods in the United States with an infringing mark and then shipping those goods for sale only in a foreign nation still may be committing trademark infringement because of the nexus to the United States. See, e.g., Am. Rice, Inc. v. Ark. Rice Growers Coop. Ass’n, 701 F.2d 408, 414–16 (5th Cir. 1983); Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 327–28 (5th Cir. 2008); McBee v. Delica Co., 417 F.3d 107, 111 (1st Cir. 2005). Graminex’s actions in the United States are relevant. The record shows, moreover, that the use of that trademark was not necessarily meant for end consumers in Russia but rather to get the Graminex products past customs requirements. The Russian Federation had authorized the import of Cernilton, and the record supports the inference that Graminex lacked similar authorization. Cynthia May and Heather May testified that the use of Cernelle’s marks on the shipping documentation was necessary according to their buyers. The district court did not commit a clear error in reaching its factual conclusion that Graminex planned to use the trademarks and negotiated and executed agreements related to those trademarks, namely by using the Cernelle trademarks at the behest of customers to secure sales. The district court did not abuse its discretion in concluding -16- Nos. 21-1579/2649, A. B. Cernelle v. Graminex, L.L.C. that Graminex’s use of the Cernelle trademarks for foreign sales was contempt of the Permanent Injunction.