Court Opinion

ID: 65546
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:00:00+00
Date Added: 2024-06-11T17:20:39.119941
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                   FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                   Fifth Circuit

                                                FILED
                                                                             April 2, 2009

                                       No. 08-20303                    Charles R. Fulbruge III
                                                                               Clerk

KIVA KITCHEN & BATH INC

                                           Plaintiff - Appellee
v.

CAPITAL DISTRIBUTING INC; JOHN MICHAEL DAVIS also known as,
John Davis also known as, Michael Davis

                                           Defendants - Appellants

                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:06-CV-2562

Before SMITH, GARZA, and CLEMENT, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge:*
       Kiva Kitchen & Bath Inc. (“Kiva”) sued Capital Distributing Inc.
(“Capital”) and Capital’s owner, John Michael Davis (“Davis,” and together with
Capital, the “Capital Defendants”), for various violations of trademark laws.
Kiva was awarded statutory damages and attorneys’ fees following a jury trial,
and the Capital Defendants appeal.

       *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
                                      No. 08-20303

                          FACTS AND PROCEEDINGS
       Kiva owns four stores that sell high-end kitchen and bath appliances in
various Texas cities: AABC Appliance Gallery in Houston, Jarrell Appliance
Gallery in Dallas, Stone Appliance Gallery in San Antonio, and McNairs
Appliance Gallery in Austin. Capital operates a retail appliance store in Dallas
and is thus a direct competitor of Kiva through its Jarrell store. In December
2005, Davis, on behalf of Capital, began registering internet domain names that
incorporated the trade names (or similar spellings thereof) of numerous Texas
appliance stores, including Kiva’s.1 Further, the domain names of Capital’s
competitors in Dallas, including Kiva’s Jarrell store, were forwarded to Capital’s
website—so that an internet user who typed one of the Jarrell domain names in
her browser would be redirected to Capital’s website.
       Kiva discovered the registration of its trade names and the use of this
forwarding feature in the summer of 2006. In August 2006, Kiva filed this suit
against the Capital Defendants 2 in Texas federal court, seeking damages and
injunctive relief.    It brought claims for trademark infringement under the
Lanham Act, 15 U.S.C. § 1125(a), and violation of the Anti-Cybersquatting
Consumer Protection Act (“ACPA”), 15 U.S.C. § 1125(d), as well as several state
law claims.       The Capital Defendants filed third-party claims against
BringMeBiz, Inc. (“BMB”)—the company hired by Capital in 2005 to optimize its

       1
         With respect to Kiva’s stores, Capital registered the following eight domain names:
jarrellappliancegallery.com, jarrellappliance.com, and jarrellgallery.com (collectively, the
“Jarrell domain names”); and aabcappliancegallery.com, stoneappliancegallery.com,
mcnairappliance.com, mcnairsappliance.com, and mcnairappliancegallery.com (collectively,
the “non-Jarrell domain names”).
       2
       The initial complaint also named Jennifer Tyrrell—Davis’s daughter and Capital’s
marketing manager—as a defendant, but Kiva later dismissed its claims against her.

                                             2
                                 No. 08-20303

website—and BMB’s owner, Todd McCally (“McCally), for breach of contract,
negligence, and fraud.
      The district court conducted a six-day jury trial in January-February 2008.
The jury found the Capital Defendants liable for trademark infringement with
respect to the Jarrell mark and violation of the ACPA with respect to all Kiva
domain names, and awarded Kiva compensatory damages in the amount of
$257,232. The jury also found that the case was “exceptional” because the
Capital Defendants had acted “willfully, maliciously, fraudulently, or
deliberately.” It awarded Kiva punitive damages in the amount of $200,000.
Finally, the jury found that BMB and McCally were not liable to the Capital
Defendants.
      In its post-trial briefing, Kiva sought an enhancement of the jury’s
damages award, and requested that the district court award the greater of these
enhanced damages or the statutory damages provided under the ACPA.
Ultimately, the district court issued a final judgment enjoining the Capital
Defendants from registering or otherwise infringing on Kiva’s trade names, and
awarding Kiva $500,000 in statutory damages. Relying on the jury’s finding
that the case was “exceptional,” the district court also awarded Kiva $500,960
in attorneys’ fees under the Lanham Act. The Capital Defendants appeal the
award of damages and attorneys’ fees, and also contend that a portion of Davis’s
testimony at trial was erroneously admitted.

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                                  No. 08-20303

                                 DISCUSSION
A. Award of Statutory Damages
      “A district court’s damages award is a finding of fact, which this court
reviews for clear error.” Jauch v. Nautical Servs., Inc., 470 F.3d 207, 213 (5th
Cir. 2006).   However, “[t]he conclusions of law underlying the award are
reviewed de novo.” Id. See also Ford Motor Co. v. Catalanotte, 342 F.3d 543,
545–46 (6th Cir. 2003) (“In reviewing the district court’s award of statutory
damages [under the ACPA], we will not disturb the district court’s findings of
fact unless they are clearly erroneous, but we review any issues of law de novo.”).
      Under the ACPA, the prevailing “plaintiff may elect, at any time before
final judgment is rendered by the trial court, to recover, instead of actual
damages and profits, an award of statutory damages in the amount of not less
than $1,000 and not more than $100,000 per domain name, as the court
considers just.” 15 U.S.C. § 1117(d). The Capital Defendants first argue that
the district court’s award of statutory damages is invalid because Kiva did not
specifically “elect” to recover statutory damages in the proceedings below. In
support of their argument, they rely on case law relating to 17 U.S.C. § 504(c)(1),
which contains a similar statutory damages provision for copyright infringement
cases. See E. & J. Gallo Winery v. Spider Webs Ltd., 286 F.3d 270, 278 (5th Cir.
2002) (noting that “[t]he statutory damages provisions in the ACPA . . . are akin
to the statutory damages provisions of the copyright laws”). However, the
copyright cases cited by the Capital Defendants are inapposite.
       In Jordan v. Time, Inc., the plaintiff in a copyright infringement action
obtained a jury verdict awarding actual damages and elected instead to recover
statutory damages assessed by the district court. 111 F.3d 102, 104 (11th Cir.

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                                   No. 08-20303

1997). The plaintiff appealed the jury’s award of actual damages, challenging
a jury instruction on damage calculations. Id. The court held that the plaintiff’s
timely election to receive statutory damages mooted all questions regarding
actual damages, and the plaintiff was therefore precluded from appealing the
jury’s award. Id. Similarly, the plaintiff in Twin Peaks Productions, Inc. v.
Publications International, Ltd. had also opted for a statutory award. 996 F.2d
1366, 1380 (2d Cir. 1993). When the defendants appealed both awards, the
plaintiff cross-appealed, seeking an increase in the amount of actual damages.
Id. The court refused to address the arguments on cross-appeal, holding that the
plaintiff had “given up the right to seek actual damages and [could] not renew
that right on appeal by cross-appealing to seek an increase in the actual
damages.” Id.
         These two cases are not pertinent to the present situation; they merely
stand for the proposition that, once a plaintiff elects to recover statutory
damages, an appeal to obtain an increase in the actual damages award is not
permitted. Clearly, this is not what happened here—Kiva is not appealing the
jury award of actual damages, and the Capital Defendants are in fact arguing
that Kiva did not properly elect statutory damages. While Jordan and Twin
Peaks prevent a plaintiff from pursuing both remedies on appeal, the Capital
Defendants have cited no authority limiting a plaintiff’s ability to select the
desired remedy at any time before final judgment is rendered by the district
court.
         On the contrary, our review of the case law suggests that a plaintiff is
authorized to make an informed election of remedy even after the jury has
rendered a verdict, with knowledge of the amount of both awards. See Feltner

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                                 No. 08-20303

v. Columbia Pictures Television, Inc., 523 U.S. 340, 347 n.5 (1998) (stating that
“[t]he parties agree, and we have found no indication to the contrary, that
election [of remedies for copyright infringement] may occur even after a jury has
returned a verdict on liability and an award of actual damages”); Twin Peaks,
996 F.2d at 1380 (noting that the plaintiff elected a statutory damages award
knowing that its amount was lower than the amount of actual damages awarded
by the jury because it believed statutory damages were more likely to be
sustained on appeal). Further, we see no reason to limit the manner in which
a plaintiff may elect statutory damages; in particular, nothing indicates that a
request by a plaintiff that the court award the greater of the two remedies is an
invalid election.
      The Capital Defendants’ challenge to the amount of statutory damages is
equally without merit.    The district court awarded $500,000 in statutory
damages, including $100,000 for each of the three Jarrell domain names and
$40,000 for each of the five non-Jarrell domain names. This satisfies the ACPA
requirement that the amount of statutory damages be “not less than $1,000 and
not more than $100,000 per domain name.” 15 U.S.C. § 1117(d). However, the
Capital Defendants contend that this award was not “just” under Section 1117(d)
because there is insufficient evidence that Kiva suffered damages as a result of
the improper registrations and forwarding. We disagree.
      The alleged lack of damages suffered by Kiva is controverted by the sales
data and expert testimony presented by Kiva at trial, which resulted in a jury
award of $257,232 in actual damages.         Further, the statutory damages
provisions in the ACPA are designed not only to “compel[] restitution of profit
and reparation for injury” but also “to discourage wrongful conduct.” E. & J.

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                                  No. 08-20303

Gallo, 286 F.3d at 278 (quoting F.W. Woolworth Co. v. Contemporary Arts, Inc.,
344 U.S. 228, 233 (1952)). In the copyright context, appellate courts have noted
that “[i]f statutory damages are elected, the [trial] court has wide discretion in
determining the amount of statutory damages to be awarded, constrained only
by the specified maxima and minima.” Columbia Pictures Television, Inc. v.
Krypton Broad. of Birmingham, Inc., 259 F.3d 1186, 1194 (9th Cir. 2001)
(quotation omitted). See also Broad. Music, Inc. v. Xanthas, Inc., 855 F.2d 233,
237 (5th Cir. 1988).
      We agree with the district court that the maximum statutory award for
the Jarrell domain names was warranted in light of Davis’s bad faith intent to
divert potential customers to Capital’s website and because Jarrell is a direct
competitor of Capital in Dallas. See, e.g., Citigroup, Inc. v. Shui, No. 08-0727,
2009 WL 483145, at *4 (E.D. Va. Feb. 24, 2009) (finding that the defendant’s
violation of the ACPA “ha[d] been established as sufficiently willful, deliberate,
and performed in bad faith to merit the maximum statutory award of $100,000
and an award of attorneys’ fees”); Aztar Corp. v. MGM Casino, No. 00-833-A,
2001 WL 939070, at *4–6 (E.D. Va. April 9, 2001) (awarding maximum statutory
award of $100,000 when “Defendant’s web site used Plaintiff’s mark in its
entirety in connection with the identical services provided by Plaintiff” in a “bad
faith attempt to deceive Internet consumers”). Further, the Capital Defendants
had refused to stop forwarding the infringing domain names or to transfer them
to Kiva until just a few weeks before trial. See Bellagio v. Denhammer, No.
CV-S-00-1475, 2001 WL 34036599, at *4 (D. Nev. July 10, 2001) (considering the
defendants’ refusal to transfer the infringing domain name to the plaintiff as one
of the factors justifying the imposition of a $100,000 award).

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                                       No. 08-20303

       With respect to the non-Jarrell domain names, the district court declined
to impose the maximum statutory award, noting that the other stores—which
are not located in the Dallas area—do not directly compete with Capital.
Instead, it awarded Kiva $40,000 for each non-Jarrell domain name, which is
well within the range of statutory damages award for such bad faith violations
of the Lanham Act. See PetMed Express, Inc. v. MedPets.Com, Inc., 336 F. Supp.
2d 1213, 1221–22 (S.D. Fla. 2004) (awarding $50,000 per domain name in
statutory damages); E. & J. Gallo, 286 F.3d at 278 (holding that an award of
$25,000 per domain name in statutory damages was not clearly erroneous, even
though the plaintiff “did not present evidence that it actually lost any business
due to [the defendant’s] actions”).
       Accordingly, we hold that the district court properly awarded statutory
damages, and that the amount of the award—$500,000—was “just” under the
circumstances.3
B. Award of Attorneys’ Fees
       This court “review[s] the award of attorneys’ fees under the Lanham Act
for abuse of discretion, and the court’s finding as to whether the case is
exceptional for clear error.” Procter & Gamble Co. v. Amway Corp., 280 F.3d
519, 528 (5th Cir. 2002).
       The prevailing party in a trademark infringement action may be awarded
reasonable attorneys’ fees only “in exceptional cases,” 15 U.S.C. § 1117(a), and

       3
         Because we affirm the award of statutory damages, we do not address the Capital
Defendants’ challenge to the jury instruction given by the district court concerning the
assessment of actual damages. See BUC Int’l Corp. v. Int’l Yacht Council Ltd., 489 F.3d 1129,
1139 n.22 (11th Cir. 2007) (noting that “[a]ny error the court may have committed in charging
the jury [with respect to statutory damages] was rendered moot because [the plaintiff] elected
to accept actual damages”).

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                                    No. 08-20303

such party bears the burden of demonstrating the exceptional nature of the case.
See Schlotzsky’s, Ltd. v. Sterling Purchasing & Nat’l Distrib. Co., Inc., 520 F.3d
393, 402 (5th Cir. 2008). “An exceptional case involves acts that can be called
malicious, fraudulent, deliberate, or willful.” Id. (internal quotations omitted).
Here, the jury determined, and the district court agreed, that Kiva had properly
demonstrated that its case was exceptional, in light of Davis’s bad faith intent
to divert potential Kiva customers to Capital’s website. Accordingly, the district
court awarded Kiva $500,960 in attorneys’ fees, based on its review of affidavits
presented by Kiva’s attorneys and its own adjustments and calculations.
      The Capital Defendants neither dispute that the case is exceptional nor
challenge the amount of attorneys’ fees assessed by the district court. Rather,
they argue that “[b]ecause Kiva did not properly elect statutory damages, and
because Kiva did not present evidence with respect to Capital’s sales attributed
to the infringing activity, it cannot be considered the prevailing party.” Kiva’s
contention is without merit. The district court’s alleged errors in its award or
assessment of statutory damages under § 1117(d) are irrelevant to its award of
attorneys’ fees under § 1117(a). Here, final judgment was rendered in favor of
Kiva, and Kiva was awarded $500,000 in statutory damages; Kiva is clearly the
prevailing party. See e.g., B LACK’S L AW D ICTIONARY 1145 (7th ed. 1999) (defining
a “prevailing party” as “[a] party in whose favor a judgment is rendered,
regardless of the amount of damages awarded”). See also Buckhannon Bd. &
Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 603
(2001) (quoting Black’s Law Dictionary and noting that “[t]his view that a
‘prevailing party’ is one who has been awarded some relief by the court can be
distilled from our prior cases”).

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                                       No. 08-20303

       Accordingly, we hold that the district court did not err in awarding Kiva
attorneys’ fees.
C. Evidentiary Ruling
       This court “review[s] a trial court’s evidentiary ruling under an
abuse-of-discretion standard when the party challenging the ruling makes a
timely objection.” United States v. Hawley, 516 F.3d 264, 266 (5th Cir. 2008),
cert. denied, 129 S. Ct. 994 (2009). Federal Rule of Evidence 103 requires that
this “timely objection . . . stat[e] the specific ground” on the record. Here, the
Capital Defendants failed to object on the basis of the best evidence rule, which
is the sole ground raised by them on appeal. Accordingly, our review is for plain
error only. See United States v. Thompson, 454 F.3d 459, 464 (5th Cir. 2006).
       During trial, Kiva obtained archived copies of Capital’s website proving
that Capital had been using its competitors’ names as meta tags for its website
as early as 2002 4 —but the Capital Defendants successfully objected to the
introduction of this document into evidence. However, when Davis testified that,
to his knowledge, Capital’s website had never used competitors’ names as meta
tags prior to 2005, Kiva’s attorney was authorized by the court to show Davis the
document indicating a 2002 date. Presenting the document to Davis, Kiva’s
attorney asked him if it refreshed his recollection as to what might have been on
Capital’s website at that time, and proceeded to question him on the presence of
these meta tags since 2002.

       4
         Meta tags are “hidden text,” i.e., keywords not visible on a website but that are used
by certain search engines when indexing website pages. Thus, when an internet user searched
for a Capital competitor’s name on one of those search engines, Capital’s website was listed
in the search results.

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                                  No. 08-20303

      On appeal, the Capital Defendants contend that the admission of Davis’s
testimony to prove the contents of the document violated Federal Rule of
Evidence 1002, commonly known as the best evidence rule. Under Rule 1002,
“[t]o prove the content of a writing, recording, or photograph, the original
writing, recording, or photograph is required, except as otherwise provided in
these rules or by Act of Congress.” Thus, the best evidence rule “comes into play
only when the terms of a writing are being established,” not when a witness’s
testimony is based on personal knowledge. In re Mobilift Equip. of Fla., Inc., 415
F.2d 841, 844 (5th Cir. 1969).      See also W EINSTEIN ’S F EDERAL E VIDENCE
§ 1002.04 (stating that the best evidence rule is not applicable when a “witness’s
testimony is based on first-hand knowledge of an event, as opposed to knowledge
gained from a writing, recording, or photograph depicting the event”). Here,
Kiva’s attorney was attempting to elicit testimony concerning Davis’s personal
knowledge of the meta tags on Capital’s website, not the authenticity of the
document presented. Further, the document at issue was merely presented to
Davis to refresh his recollection; the use of a document for refreshment purposes
does not trigger the best evidence rule. See W EINSTEIN’S F EDERAL E VIDENCE
§ 1002.04; Weir v. Comm’r, 283 F.2d 675, 678 (6th Cir. 1960) (holding that the
best evidence rule is not involved when a document is not offered in evidence,
but only used to refresh a witness’s recollection).
      Accordingly, the district court did not err in admitting Davis’s testimony.
                                CONCLUSION
      For the foregoing reasons, the judgment of the district court is
AFFIRMED.

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