Court Opinion

ID: 4094850
Source: CourtListenerOpinion
Date Created: 2016-11-02 17:01:06.311795+00
Date Added: 2024-06-11T14:37:06.976291
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                          File Name: 16a0590n.06

                                       Case No. 14-1611

                         UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT
                                                                                    FILED
                                                                              Nov 02, 2016
BAR’S PRODUCTS INC.                               )                       DEBORAH S. HUNT, Clerk
                                                  )
       Plaintiff-Appellant,                       )
                                                  )       ON APPEAL FROM THE UNITED
v.                                                )       STATES DISTRICT COURT FOR
                                                  )       THE EASTERN DISTRICT OF
BARS PRODUCTS INTERNATIONAL                       )       MICHIGAN
INC.; BAR’S PRODUCT INTERNATIONAL                 )
LTD.; BARS, INCORPORATED, California              )
Corporation,                                      )
                                                  )
       Defendants-Appellees.

       BEFORE: SILER, GIBBONS, and COOK, Circuit Judges.

       COOK, Circuit Judge. For over 30 years, Bar’s Products (Bars) and Bars Products

International (BPI) shared the worldwide market for “Bar’s Leaks” brand automotive supplies.

Bars sold in the United States and Canada; BPI sold internationally. This relationship soured in

2007 when Bars started selling products abroad under a different brand name, and BPI responded

by promoting its products at a Las Vegas trade show. Bars sued BPI, alleging trademark

infringement and unfair competition; BPI countered with breach-of-contract and unfair-

competition claims. The district court dismissed all of Bars’s claims but allowed a jury to

consider BPI’s counterclaims. The jury awarded BPI $1,560,195 for breach of contract and

$974,849 for unfair competition. On appeal, Bars argues that the district court erred in denying
Case No. 14-1611
Bar’s Products Inc. v. Bars Products International Inc., et al.

its motion for judgment as a matter of law on both of BPI’s counterclaims and by refusing to

grant Bars leave to amend its trademark claim. We AFFIRM in part and REVERSE in part.

                                                 I.

       In 1947, Fred Barton developed a radiator stop-leak product and later established Bars to

market it. Barton protected his invention through patents and trademarks, holding some in his

individual capacity and others through Bars or Barton’s wholly-owned company, Huki Lau.

Over the next two decades, Barton built an international distribution chain by selling raw

materials to companies licensed to produce and sell Bars’s signature brand of “Bar’s Leaks”

products.

       BPI began as one of Bars’s foreign licensees. In 1973, Barton, Huki Lau, and Bars

executed a series of agreements to “sell, assign and transfer” to BPI “all foreign business in any

and all countries foreign to the United States except Canada including all right, title and interest

in any and all . . . foreign inventions, patents, trademarks . . . together with the good will of the

foreign business.” Bars was a party to only one of those agreements; Barton or Huki Lau

executed the rest in their own names.

       Through these agreements, BPI gained control over the foreign distribution of Bar’s

Leaks products outside of Canada. For the next 30 years Bars and BPI maintained a harmonious

business relationship. Bars sold BPI the raw ingredients to make Bar’s Leaks products and

neither party encroached on the other’s territory. The two companies also shared a booth for

many years at the Automotive Aftermarket Products Expo (AAPEX) in Las Vegas, with BPI

attending as Bars’s guest. At these conventions, Bars referred international buyers to BPI.

       This relationship deteriorated in the early 2000s when Bars increased the price of raw

materials and proposed to purchase back all of BPI’s assets and goodwill. When BPI refused,

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Bars demanded a two-month lead time on all orders, which, when combined with the price

increase, prompted BPI to open its own plant to manufacture the ingredients necessary to

produce Bar’s Leaks products. Bars later purchased the rights to the “Rislone” brand and began

selling automotive products internationally under that label in 2007. At trial, Bars’s President

admitted that some Rislone products it sold abroad were the “same thing” as what Bars sold

domestically. Moreover, some of those products referenced “Bar’s Leaks” or “Bar’s Products”

on their labels. This marked the first time Bars sold products outside the United States without

BPI’s blessing.

       BPI attended the Las Vegas products expo with its own independent booth for the first

time in 2010. Displeased, Bars filed the present lawsuit, asserting trademark infringement and

unfair competition.     BPI counterclaimed for breach of contract and unfair competition,

maintaining that Bars breached the 1973 agreements by selling automotive products abroad.

       The district court dismissed Bars’s trademark claim and refused leave to amend.

Following three-and-a-half years of motion practice, Bars and BPI finally tried the case before a

jury. At the close of evidence, BPI moved under Federal Rule of Civil Procedure 50 for

judgment as a matter of law on Bars’s remaining claims, which the court granted, and Bars does

not appeal. The district court denied Bars’s Rule 50 motion on BPI’s breach-of-contract and

unfair-competition counterclaims.      The jury then returned a verdict for BPI on both

counterclaims and awarded it $1,560,195 in breach-of-contract damages and $974,849 as

damages for unfair competition. After the verdict, Bars renewed its motion for judgment as a

matter of law, or in the alternative for a new trial or remittitur, which the district court denied.

Bars appeals, taking issue with the district court’s denial of its Rule 50 motions and the court’s

refusal to grant it leave to amend its trademark claim.

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                                                II.

A. Breach of Contract

       Bars first argues that the district court should have granted its renewed motion for

judgment as a matter of law on BPI’s breach-of-contract counterclaim. We review this decision

de novo. Barnes v. City of Cincinnati, 401 F.3d 729, 736 (6th Cir. 2005). Judgment as a matter

of law is appropriate only when, construing the evidence in the light most favorable to the non-

moving party, “there is a complete absence of fact to support the verdict, so that no reasonable

juror could have found for the nonmoving party.” Kiphart v. Saturn Corp., 251 F.3d 573, 581

(6th Cir. 2001) (quoting Moore v. KUKA Welding Sys. & Robot Corp., 171 F.3d 1073, 1078 (6th

Cir. 1999)). Michigan law governs the substance of BPI’s breach-of-contract claim. See Wells

v. 10-X Mfg. Co., 609 F.2d 248, 253 (6th Cir. 1979).

       The district court denied Bars’s renewed motion because it concluded that sufficient

evidence supported: (1) the existence of an enforceable contract; and (2) that Bars breached that

contract. We agree.

       1. Scope of the 1973 Agreements

       Bars argues that the district court erred by allowing the jury to consider all the 1973

transferring assignments as part of the “contract” that obligated Bars, even though Barton and

Huki Lau, not Bars, signed many of those assignments. At trial and on appeal, Bars maintains it

should be bound only by the single agreement it signed.

       The parol evidence rule forbids the introduction of evidence of prior or contemporaneous

agreements to vary the terms of a written instrument that purports to be the “final expression of

[the parties’] agreement.” Mich. Comp. Laws § 440.2202; United Precision Prods. Co. v. Avco

Corp., 540 F. App’x 489, 493 (6th Cir. 2013) (applying Michigan law). But absent a finding that

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the parties intended the document to represent the complete and final embodiment of their

agreement, courts admit extrinsic evidence to explain the parties’ intent. See NAG Enters., Inc.

v. All State Indus., Inc., 285 N.W.2d 770, 771 (Mich. 1979) (per curiam). And “[e]xtrinsic

evidence of prior or contemporaneous agreements or negotiations is admissible as it bears on this

threshold question of whether the written instrument is [the complete agreement between the

parties].” Id.

       Nothing in the single agreement Bars signed identifies the writing as the “final

expression” of the parties’ agreement. All the extrinsic evidence points in the other direction.

Barton founded Bars and served as its president and majority shareholder for over 20 years until

just before he made the assignments at issue. Barton also owned Huki Lau, which shared an

address with Bars in 1973. And during the period leading up to the 1973 agreements, Bars,

Barton, and Huki Lau operated as a single entity: Bars sold product through license agreements

that Barton held in his individual capacity, using intellectual property that Barton or Huki Lau

owned. A 1973 letter from Bars’s counsel to BPI—written after Barton sold his shares in Bars—

acknowledges this reality. The letter references “proper Assignments from Frederic D. Barton,

Huki Lau Inc. and [Bars] to [BPI],” and confirms that “[t]hese assignments are perfect and

everything now appears to be in order for commencing transfer of all rights to [BPI].”

       Despite all this, Bars claims that “BPI failed to submit any evidence that Barton had the

authority to enter into agreements on behalf of Bars.” Yet, as the district court noted, none of the

signatories testified at trial, meaning that BPI needed to rely on circumstantial evidence to show

that Bars intended to be bound by the Barton and Huki Lau assignments. That evidence strongly

suggests that the 1973 agreements were a package deal.

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       2. Breach

       Bars argues that even considering all the agreements as a single contract, BPI produced

no evidence of breach. At trial, BPI argued that Bars breached the contract by: (1) applying for

foreign trademark registrations in countries where BPI owned the relevant trademarks; (2) selling

products with the “Bar’s Leaks” trademark outside the U.S. and Canada; and (3) selling products

under the “Rislone” brand to customers outside the U.S. and Canada.

       The jury awarded BPI $1,537,659 in damages for “sales of items other than Bar’s Leaks

outside the United States and Canada.” This could only mean Rislone and the raw materials

used to make Rislone, because those are the only products “other than Bar’s Leaks” that Bars

sells. Yet Bars reasons that because it did not own Rislone in 1973, selling Rislone could only

constitute breach if the 1973 agreements include a non-compete provision or non-solicitation

covenant. Bars insists that BPI failed to establish either.

       BPI disclaims ever arguing that the 1973 agreements contain a non-compete provision or

implied non-solicitation covenant. BPI maintains that it purchased “the exclusive rights to sell

the Bars’ product line in all countries (outside of the U.S. and Canada),” and Bars breached by

selling automotive products abroad, whether labeled as “Bar’s Leaks” or “Rislone,” and

regardless of whether those products existed in 1973.

       The district court instructed the jury that it could construe the contract as including either

an agreement that limits competition or an implied non-solicitation covenant. The general

verdict form, however, asked only whether “Bars breached an enforceable contract.”

       “When one of several claims submitted to the jury should not have been submitted,

‘a general verdict . . . cannot stand.’” Doherty v. Am. Motors Corp., 728 F.2d 334, 344 (6th Cir.

1984) (quoting Morrissey v. Nat’l Maritime Union of Am., 544 F.2d 19, 26 (2d Cir. 1976)).

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Otherwise “[t]here is no way to know that the invalid claim . . . was not the sole basis for the

verdict.” Id. (quoting United Pilots Ass’n v. Halecki, 358 U.S. 613, 619 (1959)). Accordingly,

Bars is correct that if the district court erred in submitting to the jury either a non-competition or

non-solicitation theory of liability, a new trial is warranted.        See, e.g., Loesel v. City of

Frankenmuth, 692 F.3d 452, 467–68 (6th Cir. 2012) (ordering a new trial where the jury

instructions presented alternative theories of liability, one of which was not properly submitted,

and the jury returned a general verdict in favor of plaintiff); Virtual Maint., Inc. v. Prime

Comput., Inc., 11 F.3d 660, 667 (6th Cir. 1993) (same). We consider each theory in turn and

conclude that the district court committed no error.

               a. Non-Competition Theory

       Bars argues that in the absence of a non-compete provision in the 1973 agreements, BPI

could have no tenable claim. According to Bars, non-compete agreements must be “expressly

reserved in a contract,” and because the 1973 assignments did not do so, the district court ought

to have ruled in favor of Bars on BPI’s non-competition theory of breach.

       Before addressing the merits, BPI suggests that Bars waived this argument by failing to

object to the jury instructions. But because Bars argued that the agreements lack a non-compete

agreement in multiple motions before the district court—including in its motion for judgment as

a matter of law before the court gave the pertinent instructions—Bars preserved this argument

for appeal. See K&T Enters., Inc. v. Zurich Ins. Co., 97 F.3d 171, 174–75 (6th Cir. 1996).

       By framing our interpretative task narrowly—does the contract include an express non-

competition provision—Bars invites the answer: clearly not. That, says BPI, is not the right

question: The jury was not asked to find an express non-competition provision in the contract.

The district court instructed the jury that it could find the parties to have “entered into an

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agreement that limit[s] competition.” The question then becomes: could the jury have construed

the contract in a way that “limits competition.”

       Contract interpretation is generally a question of law but becomes a question of fact if the

contract language is ambiguous. Klapp v. United Ins. Grp. Agency, 663 N.W.2d 447, 453–54

(Mich. 2003) (citing Hewett Grocery Co. v. Biddle Purchasing Co., 286 N.W. 221 (Mich.

1939)). The initial ambiguity determination is a question of law that we review de novo. Id. at

451 (citing Farm Bureau Mut. Ins. Co. v. Nikkel, 596 N.W.2d 915 (Mich. 1999)). A contract is

ambiguous “if the language is susceptible to two or more reasonable interpretations.” City of

Wyandotte v. Consol. Rail Corp., 262 F.3d 581, 585 (6th Cir. 2001) (quoting D’Avanzo v. Wise

& Marsac, P.C., 565 N.W.2d 915, 918 (Mich. Ct. App. 1997)). Only if the trial court finds

textual ambiguity should it allow the fact-finder to consider extrinsic evidence such as the “the

parties’ conduct, the statements of its representatives, and past practice.” Klapp, 663 N.W.2d at

454 (quoting Penzien v. Dielectric Prods. Eng’g Co., 132 N.W.2d 130, 132 (Mich. 1965)).

       At the outset, Bars faults the district court for allowing course-of-conduct evidence

before finding the agreements ambiguous. The district court did err in this regard: the court

instructed the jury that it could “consider the conduct of the parties” only if it “find[s] the

contract is ambiguous.” Although the court’s instruction correctly states the trigger for allowing

extrinsic evidence, it gets the actor wrong: the judge, not the jury, should make a finding of

ambiguity. See, e.g., Klapp, 663 N.W.2d at 451, 454. Nonetheless, “we will not set aside a jury

verdict on the basis of a technically faulty jury instruction when the error is harmless.”

Bridgeport Music, Inc. v. UMG Recordings, Inc., 585 F.3d 267, 274 (6th Cir. 2009) (citing

Barnes v. Owens-Corning Fiberglas Corp., 201 F.3d 815, 822 (6th Cir. 2000)).

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       The 1973 agreements are “susceptible to two or more reasonable interpretations,” and

therefore ambiguous. City of Wyandotte, 262 F.3d at 585 (quoting D’Avanzo, 565 N.W.2d at

918). The 1973 agreements all include similar language transferring to BPI “all foreign business

in any and all countries foreign to the United States except Canada, including all right . . . in any

and all such [intellectual property] . . . including but not being limited to” specified foreign

trademarks, as “fully and entirely as the same would have been held by [Bars] had this

assignment and sale not been made.” The agreements describe the business sold as “radiator and

cooling system products.”

       This language could reasonably be read to transfer not only the foreign rights in Bars’s

automotive and radiator cooling products circa 1973, but also the right to market Bars’s future

product line of radiator and cooling products. The words “including but not being limited to”

and “any and all foreign countries” clearly contemplate the transfer of intellectual property other

than what is described in the contract, making the transfer of associated future business a

reasonable contract interpretation.

       Bars resists a finding of ambiguity by focusing on the way the contracts describe the

“foreign business” BPI sought to buy. All the 1973 agreements explain that Bars “is doing

business pertaining to radiator and cooling system products” and specify that BPI “is desirous of

acquiring such business in all countries foreign to the United States except Canada.” According

to Bars, the use of the present-tense verb “is” makes clear that the parties intended to transfer

only Bars’s foreign business and intellectual property as of 1973.

       Bars’s argument has force, but the use of the present-tense verb does not bear the

controlling weight that Bars assigns to it. “[L]egal drafters frequently use the present tense to

cover the present and the future.” Multimatic, Inc. v. Faurecia Int. Sys. USA, Inc., 358 F. App’x

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643, 647 (6th Cir. 2009); see also In re Stratford of Tex., Inc., 635 F.2d 365, 369 (5th Cir. 1981)

(“[T]he present tense of a verb may sometimes refer to the past and to the future as well as to the

present . . . [,] [f]urthermore, the present tense may be used when the time is actually indefinite.”

(internal citation omitted)). And here, the use of the present-tense does little to resolve the

ambiguity present in the contract as a whole. First, that Bars would describe the nature of its

business in the present tense is unremarkable. Second, while one of the 1973 agreements

transfers “such foreign business,” clearly referencing the preamble, the others transfer “all

foreign business,” without referring to the business that Bars “is doing.” Third, the contracts

transfer “all foreign business in any and all countries foreign to the United States . . . including

but not being limited to” the business associated with Bars’s existing intellectual property. Had

the parties intended to transfer only the business associated with Bars’s intellectual property

circa 1973, the language “any and all” and “including but not being limited to” would be

redundant.

       Because we find the 1973 agreements ambiguous, only harmless error resulted from

letting the jury determine ambiguity. And given this ambiguity, the jury could properly consider

extrinsic evidence to discern the parties’ intent. At trial, BPI found support for its reading of the

1973 agreements in the parties’ course of conduct. First, Bars sent BPI a letter shortly after all

the agreements were executed stating that “[t]hese assignments are perfect and everything now

appears to be in order for commencing transfer of all rights to [BPI].” Second, Bars sold no

products outside the United States, Canada, or Mexico for over thirty years between 1973 and

2007, and instead treated BPI as its exclusive international partner even as BPI’s presence

expanded beyond the markets that Bars serviced in 1973. Third, when Bars wanted to sell

products in Mexico in 1998, it sought and obtained a license from BPI in exchange for the

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payment of licensing fees. From this conduct a reasonable juror could find that Bars granted BPI

the exclusive right to sell its current and future products abroad.

               b. Implied Non-Solicitation Theory

       Bars next argues that no reasonable juror could have found a breach of the implied non-

solicitation covenant.     “[U]nder Michigan law, the sale of a business along with its

accompanying good will gives rise to a covenant precluding the seller from soliciting back to

himself that which he has sold.” Worgess Agency, Inc. v. Lane, 239 N.W.2d 417, 421 (Mich. Ct.

App. 1976).     Bars maintains that Michigan law requires proving solicitation of a “former

customer,” and asserts that its only international customers in 1973 were the eight foreign

distributors to whom it sold raw materials. Because the jury heard no evidence that it solicited

one of those customers, Bars concludes that it could not have breached the implied covenant.

       Bars’s argument is flawed in several respects. To begin, Bars cites no case that would

require the district court (or this court) to find that Bars’s only customers as of 1973 were its

foreign distributors. That Bars only sold through distributors does not mean that end-users are

not its customers as a matter of law. Many companies make products intended for mass

consumption but choose to sell through distributors. The implied covenant would be toothless if

such a company could sell its entire business and goodwill, and then turn around and set up an

identical business so long as it reaches consumers through a different distribution chain. See

Getter v. Levine, 24 N.W.2d 149, 152 (Mich. 1946) (noting seller of a business and its goodwill

may not start a new business and “represent the new business as a continuation of the old”);

Colton v. Duvall, 237 N.W. 48, 50 (Mich. 1931) (explaining that seller is “not at liberty to

destroy what he transferred or depreciate what he sold”).

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        Bars’s argument that BPI was required to show solicitation of one of the 1973 distributors

also assumes that the 1973 agreements transferred only Bars’s then-existing foreign business.

As discussed above, however, the jury could construe the contract to transfer to BPI all foreign

business in radiator and cooling products, not just the business Bars was doing in 1973. And

because the core of a Worgess claim is “soliciting back . . . that which [is] sold,” Worgess,
239 N.W.2d at 421, this distinction matters. As the jury heard, Bars sold automotive products

abroad under the Rislone brand, many of which were similar to or the same as products that BPI

sold as “Bar’s Leaks.” The jury also heard evidence that, in some cases, Bars simply placed a

Rislone sticker over “Bar’s Leaks” products and displayed them at international trade shows.

Moreover, some of the Rislone products sold abroad referenced “Bar’s Leaks” or “Bar’s

Products” on their labels. A reasonable juror could conclude that Bars “solicited back” the

foreign business that it sold by selling substantially the same products under the Rislone brand

name.

               c. Alleged Scope and Duration Errors

        Bars presents two final arguments—both flawed—for why the district court erred in

denying its motion for judgment as a matter of law on BPI’s breach-of-contract counterclaim.

Bars argues that even if the district court properly submitted the non-compete theory to the jury,

the court “erred by failing to impose a reasonable scope and duration on the alleged” agreements.

And to the extent the jury found breach of a non-solicitation covenant, Bars maintains that any

covenant lasting decades is not supported by Worgess.

        Bars’s first argument—that a perpetual worldwide non-compete is unreasonable—seems

at first, well, reasonable. No one disputes that “[n]ever is a long time.” Wolverine Sign Works v.

Powers, 227 N.W. 669, 670 (Mich. 1929). But Bars relies heavily on cases analyzing the

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reasonableness of express non-compete clauses in employment or business-sale contracts. In

such cases, the duration and geographic scope are specified, and the court analyzes the express

terms to determine whether they are reasonable in light of any legitimate business interests.

See, e.g., St. Clair Med., P.C. v. Borgiel, 715 N.W.2d 914, 918–19 (Mich. Ct. App. 2006). BPI’s

argument to the jury, however, was not that the 1973 agreements include an express non-

compete clause, but rather that Bars sold BPI the exclusive right to sell Bars’s radiator and

cooling products abroad. Cases involving express non-compete clauses therefore provide little

instruction.

       Even if we entertain Bars’s argument and analyze the 1973 agreements as we would an

express non-compete, we would still not fault the district court for denying judgment as a matter

of law. “Agreements not to compete are permissible under Michigan law as long as they are

reasonable.”   Thermatool Corp. v. Borzym, 575 N.W.2d 334, 336 (Mich. Ct. App. 1998).

Though such inquiry is “inherently fact-specific . . . [t]he reasonableness of a noncompete

provision is a question of law where relevant facts are undisputed.” Certified Restoration Dry

Cleaning Network, L.L.C. v. Tenke Corp., 511 F.3d 535, 547 (6th Cir. 2007) (internal citations

and quotation marks omitted) (alteration in original). In the business-sale context, “the restraint

may be as broad as the business covered by the agreement and of sufficient scope to prevent

competition therewith.”     Owens v. Hatler, 129 N.W.2d 404, 406 (Mich. 1964); see also

Woodward v. Cadillac Overall Supply Co., 240 N.W.2d 710, 714 (Mich. 1976) (noting that the

reasonableness of non-competition agreements in the employer-employee context is “generally

scrutinized more rigorously than the reasonableness of the covenant not to compete incident to

the sale of a business”).

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       Because the parties disputed almost every material fact regarding what the 1973

agreements conveyed, the district court properly allowed the jury to decide the reasonableness of

the contract’s competition-limiting effect. See Certified Restoration, 511 F.3d at 547. Bars sold

BPI “all foreign business in any and all countries foreign to the United States.” Given that a

restraint in the business-sale context may be “as broad as the business covered by the agreement

and of sufficient scope to prevent competition therewith,” Bars has not convinced us that a

restraint extending to all foreign countries is unreasonable in these particular circumstances.

Owens, 129 N.W.2d at 406; see also New World Sys. Corp. v. Jones, No. 06-11603, 2009 WL
996954, at *11 (E.D. Mich. Apr. 14, 2009) (a non-competition agreement without any

geographic limitations “can be reasonable if the employer actually has legitimate business

interests throughout the world”); ACS Consultant Co. v. Williams, No. 06-11301, 2006 WL
897559, at *7 (E.D. Mich. Apr. 6, 2006) (upholding agreement prohibiting competition in all

50 states because plaintiff serviced all 50 states); Capaldi v. LiftAid Transp., L.L.C., No. 267981,

2006 WL 3019799, at *4 (Mich. Ct. App. Oct. 24, 2006) (per curiam) (“A restriction that is not

limited in its geographic scope is not necessarily unreasonable.”).

       Bars’s objection to the lack of a time limitation on the implied non-solicitation covenant

is equally unconvincing. Bars latches onto language in Worgess stating that the covenant only

lasts “for a sufficient length of time in order to allow [the buyer] to attract to itself and make its

own that which [the seller] sold.” Worgess, 239 N.W.2d at 422. Bars accuses the district court

of “punt[ing]” on the time-limit issue because it allowed the jury to “basically pick whatever

time limit it found reasonable.” But Worgess makes clear that the covenant “exists for no set

length of time,” and “is a question of fact to be determined by the trier of fact.” Id. at 422

(emphasis added). The Michigan Court of Appeals emphasized this point repeatedly. Id.

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       Of course, just because an issue is a question of fact does not mean the district court must

accept anything the jury finds. Were we the factfinder, we might agree with Bars that an implied

covenant expired before Bars began selling Rislone. But respect for Worgess and respect for the

jury’s role prevents us from entering judgment as a matter of law unless “no reasonable juror”

could have found the implied covenant to still be in effect. Kiphart, 251 F.3d at 581 (quoting

Moore, 171 F.3d at 1078). That is a high bar and one that Bars fails to clear.

       Viewing the evidence in the light most favorable to BPI, both the non-compete and non-

solicitation theories submitted to the jury enjoy legal and evidentiary support. We accordingly

affirm the district court’s judgment with respect to BPI’s breach-of-contract counterclaim.

B. Unfair Competition

       Bars next argues that it is entitled to judgment as a matter of law on BPI’s unfair-

competition counterclaim because the claim relies on the same conduct underlying BPI’s breach-

of-contract counterclaim. In the alternative, Bars asserts that BPI failed to prove damages

causally connected to any unfair conduct, thereby warranting reversal, remittitur, or a new trial

on damages.

       Michigan law prohibits “any conduct that is fraudulent or deceptive and tends to mislead

the public.” ATCO Indus., Inc. v. Sentek Corp., Nos. 232055, 235398, 2003 WL 21582962, at *3

(Mich. Ct. App. July 10, 2003) (per curiam) (citing Clairol, Inc. v Boston Discount Ctr. of

Berkley, Inc., 608 F.2d 1114, 1120 (6th Cir. 1979)). As a tort, unfair competition requires breach

of a “duty separate and distinct from breach of contract.” Haas v. Montgomery Ward & Co.,

812 F.2d 1015, 1016 (6th Cir. 1987). A plaintiff that establishes unfair competition can recover

only for the “loss actually sustained by plaintiff as the direct and natural consequence of

[defendant’s unfair] acts.” Liberty Oil Corp. v. Crowley, Milner & Co., 258 N.W. 241, 244

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(Mich. 1935). “[D]amages which are uncertain or speculative cannot form the basis of recovery.”

Id.; see also Socony-Vacuum Oil Co. v. Rosen, 108 F.2d 632, 636 (6th Cir. 1940) (applying

Liberty Oil); Veteran Med. Prods., Inc. v. Bionix Dev. Corp., No. 1:05-cv-655, 2009 WL
891724, at *10–14 (W.D. Mich. Mar. 31, 2009) (applying Liberty Oil and reversing verdict

where defendant presented “no evidence from which a reasonable jury could begin to determine

any amount of actual damages with reasonable certainty”).

       The jury awarded BPI $974,849 in damages for unfair competition. In opposing Bars’s

renewed motion for judgment as a matter of law, BPI cited three acts that arguably show breach

of a duty “separate and distinct” from breach of contract. The district court relied on these acts

in denying Bars’s motion. First, the court credited testimony suggesting that Bars registered

trademarks in foreign countries where BPI owned the relevant marks. Second, the court cited

evidence that Bars attempted to sell raw materials to Sonax—one of BPI’s European licensees—

for use in “Bar’s Leaks” products, and “conspired with others to sell products [in] countries

where BPI held the trademarks of the products.” Third, the court concluded that Bars “may have

attempted to deceive the public or those purchasing the products that [it] had the authority to sell

such products outside the United States and Canada.”

       Assuming, without deciding, that these acts constitute unfair competition under Michigan

law, BPI failed to prove damages causally connected to that conduct. The district court properly

instructed the jury that BPI must prove damages “sustained . . . as a result of Bar’s unfair

competition.” At trial, however, BPI failed to distinguish between breach-of-contract and unfair-

competition damages at all. In fact, BPI did not even attempt to calculate its losses from the

conduct that it claims was unfair. BPI’s damages model calculated lost profits due to Bars’s

international sales of Bar’s Leaks, Rislone, and raw materials, but BPI’s position at trial and on

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Case No. 14-1611
Bar’s Products Inc. v. Bars Products International Inc., et al.

appeal is that these sales constitute breach of contract. Indeed, BPI’s damages expert testified

that his model assumed that Bars’s sale of Bar’s Leaks, Rislone, and raw materials outside the

United States or Canada would “violate[] the contract” between BPI and Bars. At oral argument

BPI’s counsel conceded that its expert made no attempt to distinguish between breach-of-

contract and unfair-competition damages.

       Because BPI shouldered the burden of proving damages causally connected to its unfair-

competition claim, its failure to do so is fatal. See Liberty Oil Corp., 258 N.W. at 244. BPI’s

response, both in its brief and at oral argument, is to point out that the unfair-competition

damages are less than BPI’s total request for damages on both its breach-of-contract and unfair-

competition claims.    True enough.     But that does not excuse BPI’s failure to prove with

reasonable certainty damages causally connected to Bars’s unfair conduct. See Liberty Oil

Corp., 258 N.W. at 244. The damages award is thus “beyond the maximum damages that the

jury reasonably could find to be compensatory” for any harm suffered by BPI as a result of

Bars’s unfair competition. See Champion v. Outlook Nashville, Inc., 380 F.3d 893, 905 (6th Cir.

2004) (quoting Gregory v. Shelby Cty., 220 F.3d 433, 443 (6th Cir. 2000)); see also Liberty Oil

Corp., 258 N.W. at 244. We therefore reverse the district court’s denial of Bars’s renewed

motion for judgment as a matter of law on BPI’s unfair-competition counterclaim.

C. Bar’s Lanham Act Claim

       The last appealed issue is whether the district court erred in dismissing Bars’s trademark-

infringement claim and denying its motion to amend. Because the district court denied leave to

amend on futility grounds, we review that denial de novo. See Evans v. Pearson Enters., Inc.,

434 F.3d 839, 853 (6th Cir. 2006). Amendment is proper if Bars’s allegations, taken as true and

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Case No. 14-1611
Bar’s Products Inc. v. Bars Products International Inc., et al.

construed in the light most favorable to Bars, “state a claim to relief that is plausible on its face.”

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

       To state a claim for trademark infringement under the Lanham Act, Bars needed to plead

sufficient facts to establish that: (1) it owns a registered trademark; (2) the defendant used the

mark in commerce; and (3) the use was likely to cause confusion. 15 U.S.C. § 1114(1); Hensley

Mfg., Inc. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009). Bars’s proposed amended

complaint alleged that BPI displayed the “Bar’s Leaks” trademark at the AAPEX show in Las

Vegas. BPI agreed that Bars had shown the first and third factors, but disputed that its use of the

mark at the show constituted “use in commerce” in the absence of proof of sales to U.S. or

Canadian customers.

       The district court denied Bars’s motion to amend. It allowed that BPI’s display of the

Bar’s Leaks mark at AAPEX “may . . . establish[] that [BPI] used the mark in commerce.” But

given Bars’s admission that BPI attended AAPEX as Bars’s guest for many years, the court

determined that BPI “had the authority to use the mark” at AAPEX. With this authority, the

court concluded, BPI’s use of a separate booth alone could not constitute infringement. And

because Bars did not allege any additional acts of infringement, such as the “use of the mark in

any products sold within the United States and Canada,” the court deemed amendment futile.

       Before addressing the merits, we must undertake the threshold question of how to

construe the district court’s conclusion that BPI “had the authority to use the mark.” The court

cited Allard Enterprises., Inc. v. Advanced Programming Resources, Inc., 249 F.3d 564 (6th Cir.

2001), which stands for the principle that trademark rights obtained through registration are

subject to rights acquired by prior use. Id. at 572. But the prior-use doctrine has no bearing on

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Case No. 14-1611
Bar’s Products Inc. v. Bars Products International Inc., et al.

Bars’s trademark-infringement claim. Bars was both the first actual user of the “Bar’s Leaks”

trademark and the first party to register the mark.

       The court’s rationale is more properly grounded in the doctrine of “acquiescence.”

An affirmative defense to trademark infringement, acquiescence requires “a finding of conduct

on the plaintiff’s part that amounted to an assurance to the defendant, express or implied, that

plaintiff would not assert his trademark rights against the defendant.” Elvis Presley Enters., Inc.

v. Elvisly Yours, Inc., 936 F.2d 889, 894 (6th Cir. 1991) (quoting Sweetheart Plastics, Inc. v.

Detroit Forming, Inc., 743 F.2d 1039, 1046 (4th Cir. 1984)).               Acquiescence requires

unreasonable delay in enforcing trademark rights, prejudice to the defendant, and a showing, by

words or conduct, that the trademark holder “active[ly] consent[ed]” to use of the mark. What-

A-Burger of Va., Inc. v. Whataburger, Inc. of Corpus Christi, Tex., 357 F.3d 441, 452 (4th Cir.

2004) (quoting Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 462 (4th Cir. 1996)).

BPI asserted this defense in its answer and advances an acquiescence argument on appeal.

       Courts should not dismiss based on an affirmative defense unless “the undisputed facts

conclusively establish an affirmative defense as a matter of law,” Hensley Mfg., 579 F.3d at 613,

for example when “the plaintiff’s own allegations show that a defense exists that legally defeats

the claim for relief.” Marsh v. Genentech, Inc., 693 F.3d 546, 555 (6th Cir. 2012) (quoting

5B Charles Alan Wright, Arthur Miller, Mary Kay Kane & Richard Marcus, Federal Practice

& Procedure § 1357 at 713 (3d ed. 2004)). Because acquiescence is a fact-bound defense that

requires “a qualitative examination of the parties’ words and conduct and an equitable evaluation

of the length of the delay and the degree of prejudice to the defendant,” it is generally not

susceptible to resolution at the pleading stage. Hyson USA, Inc. v. Hyson 2U, Ltd., 821 F.3d 935,

941 (7th Cir. 2016).

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Case No. 14-1611
Bar’s Products Inc. v. Bars Products International Inc., et al.

        Here, the allegations in Bars’s proposed amended complaint do not “conclusively

establish” the defense of acquiescence “as a matter of law.” Hensley Mfg., 579 F.3d at 613.

Though Bars did allow BPI to be a “guest[]” at its AAPEX booth for “many years” before BPI

attended separately, the complaint also alleged, in no uncertain terms, that BPI is “not authorized

to use Plaintiff’s BARS Marks in any manner.” The complaint further describes how Bars sent

BPI a letter prior to the AAPEX show informing BPI that “infringement” would result from

“[BPI’s] use of the BARS Marks” at the show. At the motion to dismiss stage, the district court

must accept all well-pleaded factual allegations as true. Logsdon v. Hains, 492 F.3d 334, 340

(6th Cir. 2007) (citing Gazette v. City of Pontiac, 41 F.3d 1061, 1064 (6th Cir. 1994)).

       Of course, the district court might have disregarded Bars’s statement disclaiming BPI’s

authority as conclusory or belied by other allegations in the complaint. But even if we disregard

that single averment, the complaint as a whole still fails to unambiguously establish

acquiescence. For one thing, the complaint says nothing about whether BPI actually used the

“Bar’s Leaks” trademark when BPI was a guest at Bars’s booth. The complaint states that Bars

was the “exhibitor” and that BPI was a “guest[] at the Plaintiff’s booth,” but is silent on whether

BPI actually displayed or otherwise used the marks. At most, the complaint establishes that Bars

allowed BPI to be physically present in Bars’s booth, where Bars displayed its own marks. For

another, even if Bars had affirmatively consented to BPI displaying the “Bar’s Leaks” mark,

Bars consented to such use in its own booth. It is certainly possible that to the extent inviting

BPI can be construed as consent at all, it was contingent on BPI displaying its product side-by-

side with Bars. See Just Add Water, Inc. v. Everything But Water, Inc., No. Civ. 3:04-CV-2085-

H, 2005 WL 1206874, at *3 (N.D. Tex. May 18, 2005) (denying motion to dismiss on

acquiescence grounds where plaintiff had previously agreed not to sue defendant for use outside

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Case No. 14-1611
Bar’s Products Inc. v. Bars Products International Inc., et al.

of Texas, because it was “possible that [p]laintiff’s acquiescence was contingent upon

[d]efendant not using [the] mark in Texas,” which defendant had allegedly done). Finally, Bars

informed BPI prior to the show that it could not use the “Bar’s Leaks” mark. This suggests the

question whether Bars revoked any prior consent, and if so, whether that revocation defeats

BPI’s acquiescence defense.

       In sum, the complaint allegations do not conclusively establish that Bars acquiesced to

BPI’s use of the Bar’s Leaks trademark at AAPEX. It may be that BPI ultimately succeeds in

establishing acquiescence, but such a conclusion is not dictated by the complaint. Accordingly,

we reverse the district court’s denial of Bars’s motion for leave to amend.

       One final point warrants brief discussion. Bars argues that the district court refused leave

to amend on the alternative grounds that mere promotional use of a trademark, absent proof of

infringing sales, is not trademark infringement. But the district court did no such thing. The

district court simply held that because Bars consented to BPI’s display of the mark at AAPEX,

Bars would have to allege some other infringing conduct to state a claim. Because the district

court erred in finding consent at the pleading stage, it had no occasion to address whether proof

of infringing sales is necessary to state a trademark claim. We too express no view on that issue.

                                                III.

       For these reasons we AFFIRM the district court’s judgment in favor of BPI that denied

Bars’s post-verdict renewed motion on the breach-of-contract claim.

       We agree that BPI could show no separate damages to support its unfair-competition

claim and thus REVERSE the district court’s judgment that denied Bars’s post-verdict renewed

motion on that claim.

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Case No. 14-1611
Bar’s Products Inc. v. Bars Products International Inc., et al.

       We REVERSE the district court’s denial of Bars’s motion for leave to file an amended

trademark claim and remand for further proceedings.

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Case No. 14-1611
Bar’s Products Inc. v. Bars Products International Inc., et al.

       JULIA SMITH GIBBONS, Circuit Judge, concurring. I concur in the majority opinion

but would say a bit more in connection with the remand of Bar’s infringement claim. The

majority notes that the district court had no occasion to address whether proof of infringing sales

is necessary to state a trademark claim. But the district court may well have to address on

remand whether the conduct here can constitute infringement.           Although our court has no

authority on point, the great weight of authority is that “mere advertising…standing alone, [does]

not constitute ‘use’ of the mark within the meaning of the Lahnam Act.” Buti v. Perosa, S.R.L.,

139 F.3d 98, 103 (2d. Cir. 1998); see also Couture v. Playdom, Inc., 778 F.3d 1379, 1381 (Fed.

Cir. 2015); Int’l Bancorp, LLC v. Societe des Baines de Mer et du Cercle des Estrangers a

Monaco, 329 F.3d 359, 361–66 (4th Cir. 2003); Sensient Techs. Corp. v. SensoryEffects Flavor

Co., 613 F.3d 754, 759–63 (8th Cir. 2010); Guantanamera Cigar Co. v. Corporacion Habanos,

S.A., 672 F. Supp. 2d 106, 110 (D.D.C. 2009). And it is uncertain whether noninfringing sales

abroad can constitute use of the mark in commerce. Neither party has briefed the issue, and

under these circumstances, we elect not to consider it initially on appeal. Whether this issue is

resolved at the pleading or proof stage of the litigation in the trial court, we leave it for another

day.

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Case No. 14-1611
Bar’s Products Inc. v. Bars Products International Inc., et al.

         SILER, Circuit Judge, concurring in part and dissenting in part. The issues raised on

appeal are narrow. For that reason, I concur with the majority opinion in Sections II.A. and II.C.,

but I respectfully dissent as to Section II.B. Bar’s Products, Inc. (“Bars”) does not challenge as

inadmissible the testimony of Bars Products International’s (“BPI”) damages expert. Bars also

does not assert on appeal—or preserve through its renewed motion for judgment as a matter of

law—any prejudicial deficiency in the jury instructions on unfair competition.1 Instead, Bars

cabins its appeal to whether the evidence overlaps between BPI’s counterclaims of breach of

contract and unfair competition. I would affirm the denial of judgment as a matter of law

because the trial record contained evidence differentiating those two counterclaims. Under our

standard of review, the majority goes too far to suggest that reasonable minds could not separate

the evidence presented at trial.

         Reversing a district court’s denial of a renewed motion for judgment as a matter of law

requires a showing that “viewing the evidence in a light most favorable to the non-moving party,

giving that party the benefit of all reasonable inferences, there is no genuine issue of material

fact for the jury, and reasonable minds could come to but one conclusion in favor of the moving

party.” Balsley v. LFP, Inc., 691 F.3d 747, 757 (6th Cir. 2012) (citation omitted). “[W]e may

not weigh the evidence, question the credibility of witnesses, or substitute our own judgment for

that of the jury.” Smith v. Rock-Tenn Servs., Inc., 813 F.3d 298, 306 (6th Cir. 2016) (citation

omitted).

         1
          Bars admitted at oral argument that it did not object to the jury instructions, suggesting that its motion
practice preserved its legal theories. Our law is clear that Bars’s conduct amounts to waiver. See, e.g., Clarksville-
Montgomery Cnty. School Sys. v. U.S. Gypsum Co., 925 F.2d 993, 1006 (6th Cir. 1991) (“We first note that
Clarksville’s failure to object to a specific charge before and after the jury charge is given constitutes waiver of the
objection.” (citation omitted)); Fed. R. Civ. P. 51(c)(1) (“A party who objects to an instruction or the failure to give
an instruction must do so on the record, stating distinctly the matter objected to and the grounds for the objection.”).

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Case No. 14-1611
Bar’s Products Inc. v. Bars Products International Inc., et al.

       The majority is correct that a plaintiff suffering damages from unfair competition can

recover only for the “loss actually sustained by plaintiff as the direct and natural consequence of

[defendant’s unfair] acts.” Liberty Oil Corp. v. Crowley, Milner & Co., 258 N.W. 241, 244

(Mich. 1935). But this court has also cited Liberty Oil for the proposition that only “some

evidence” of “measured damages or loss of profits” is required. Socony-Vacuum Oil Co. v.

Rosen, 108 F.2d 632, 636–37 (6th Cir. 1940) (applying Liberty Oil). Although Socony-Vacuum

declined to address what measure of evidence is sufficient to ascertain an exact damages amount,

it nonetheless affirmed the judgment in the trial court because record evidence was present. Id.;

see also Skimin v. Fuelgas Co., 66 N.W.2d 666, 669 (Mich. 1954) (“The fact that damages

cannot be measured easily or with mathematical certainty or absolute accuracy is no ground for

denying them.” (citation omitted)).

       The trial record demonstrates that the jury heard evidence from fact witnesses and experts

about deceptive conduct and losses attributable to such conduct. Among other things, the BPI’s

expert testified that his damages models assumed “liability is found” and parsed “which sales

attributed to the breach.” The expert provided various calculations depending on the legal theory

asserted, accounting for product similarity and dissimilarity when including and excluding units.

BPI’s counsel during oral argument characterized the damages between the counterclaims as

“cumulative,” although not “apportioned.” Still, rather than concede that the expert failed to

distinguish between the counterclaims, as the majority contends, BPI’s counsel stated that the

jury “had ample information to segregate the damages from breach of contract and the damages

from unfair competition.”

       Bars fails to persuade that the record compels the singular conclusion that more

particularized evidence is required to prove unfair competition. Neither Bars nor the majority

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Case No. 14-1611
Bar’s Products Inc. v. Bars Products International Inc., et al.

cites case law requiring a separate jury argument on damages for each cause of action, as

opposed to one lump sum request. See Pa. R.R. Co. v. McKinley, 288 F.2d 262, 267 (6th Cir.

1961) (declining to adopt a “procedural blueprint” for arguments about damages). And even if

such case law was extant in some form, Bars did not preserve the argument that the jury was

improperly instructed on how to calculate damages. On a verdict form with separate line items

for each cause of action, the jury was asked, “State the amount of damages, if any, that you find

were caused by Plaintiff Bars competing unfairly with Defendants.” The district court reminded

the jury that “[b]reach of contract does not constitute unfair competition,” and that any

consideration of unfair competition should be resolved “separately from a breach of contract

between the parties.” During deliberations, the jury took the instructions in earnest by requesting

a calculator and copies of expert trial exhibits.       Considering a request of $2,815,062 in

damages—in addition to future damages of $8,327,433—the jury awarded $974,849 in view of

evidence presented at trial, none of which Bars argues on appeal was inadmissible.

       The jury’s verdict on unfair competition should not be disturbed.           The trial court

concluded as much: “The Court finds that the jury’s damages award are within the range of

evidence presented at trial in light of testimony presented by BPI’s fact and expert witnesses.”

Bar’s Prods. v. Bar’s Prods. Int’l, No. 10-14321, 2015 U.S. Dist. LEXIS 130660, at *11 (E.D.

Mich. Sept. 29, 2015). On the record before us and standard of review to which we must adhere,

we should not reverse that conclusion. For these reasons, I respectfully dissent in part and would

affirm the district court’s denial of judgment as a matter of law on Bars’s counterclaim for unfair

competition.

                                               - 26 -