Court Opinion

ID: 9556727
Source: CourtListenerOpinion
Date Created: 2023-08-18 14:00:40.530001+00
Date Added: 2024-06-11T09:01:10.585535
License: Public Domain

21-519(L)
Kirby v. LaserPerformance (Europe) Ltd.
                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                   SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS
PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A
SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE
(WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A
SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT
REPRESENTED BY COUNSEL.

       At a stated term of The United States Court of Appeals for the Second Circuit,
held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of
New York, on the 18th day of August, two thousand twenty-three.

PRESENT:
            RAYMOND J. LOHIER, JR.,
            STEVEN J. MENASHI,
            BETH ROBINSON,
                         Circuit Judges.
_________________________________________

ESTATE OF BRUCE R.W. KIRBY, EXECUTOR MARGO A. KIRBY,

             Plaintiff-Appellee-Cross-Appellant,

BRUCE KIRBY, INC.,

             Plaintiff-Appellee,

GLOBAL SAILING LIMITED,

             Plaintiff,

                     v.                                            No. 21-519 (L)
                                                                      21-591 (XAP)

LASERPERFORMANCE (EUROPE) LIMITED, QUARTER MOON, INCORPORATED,
            Defendants-Appellants-Cross-Appellees,

KARAYA (JERSEY) LIMITED, INTERNATIONAL SAILING FEDERATION LIMITED, INTERNATIONAL
LASER CLASS ASSOCIATION, FARZAD RASTEGAR, VELUM LIMITED ITM SA (ANTIGUA AND
BARBUDA), AN ANTIGUA AND BARBUDA COMPANY, LASERPERFORMANCE LLC, DORY
VENTURES, LLC,

            Defendants.
_________________________________________

FOR DEFENDANTS-APPELLANTS-CROSS-APPELLEES: PETER T. FAY (Douglas S.
                                 Skalka, on the brief), Neubert, Pepe &
                                 Monteith, P.C., New Haven, CT.

FOR PLAINTIFF-APPELLEES:                       ROBERT KEELER (Wesley W. Whitmyer,
                                               Jr., on the brief), Whitmyer IP Group
                                               LLC, Stamford, CT.

      Appeal from a judgment of the United States District Court for the District

of Connecticut (Jeffrey Alker Meyer, Judge).

      UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment entered on February 2, 2021, is

AFFIRMED in part and VACATED in part, and the case is REMANDED for

further proceedings consistent with this order.

      Defendants-Appellants-Cross-Appellees LaserPerformance (Europe) Ltd.

(“LPE”) and Quarter Moon, Inc. (“QMI”) (collectively, “Defendants”) appeal

from a judgment of the United States District Court for the District of

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Connecticut (Meyer, J.) denying their motion to dismiss and motion for a new

trial, and granting entry of judgment in part in favor of Plaintiffs-Appellees the

Estate of Bruce Kirby (“Kirby”) and Bruce Kirby’s namesake company Bruce

Kirby, Inc. (“BKI”) (collectively, “Plaintiffs”). 1 We assume the parties’ familiarity

with the underlying facts, procedural history, and arguments on appeal, to

which we refer only as necessary to explain our decision. 2

       Bruce Kirby designed the Laser sailboat. Plaintiffs licensed the design

rights of the Laser sailboat to builders. LPE is subject to the rights and

obligations of a 1983 Builder Agreement between Plaintiffs and LPE’s

predecessor in interest, and QMI is the successor in interest to a builder that

entered into a 1989 Builder Agreement with Plaintiffs.

       The Builder Agreements required Defendants to pay Plaintiffs royalties for

the right to build and sell the sailboats, and also required Defendants to affix two

plaques (bearing, among other information, Kirby’s name) on their Laser

1  Following Bruce Kirby’s death while this case was on appeal, we granted a motion to
substitute his Estate as a party. In this order references to “Kirby” may include Bruce Kirby
individually or the Estate of Bruce Kirby; “Plaintiffs” refers to BKI and Bruce Kirby or the
Estate.

2 We draw these facts from the parties’ stipulations, the district court’s findings of fact, and
undisputed documents in the record.

                                                 3
sailboats. One of these plaques is issued by the International Laser Class

Association (“ILCA”), the governing body of the International Sailing Federation

(“ISAF”), and was required for a Laser to compete in certain racing events. By

separate agreement, BKI gave ILCA authority to issue the ISAF Plaques on BKI’s

behalf. The other plaque gave design credit to Kirby.

      In 2008, Plaintiffs sold their rights to the laser boat design to Global Sailing

Limited (“GSL”) and transferred to GSL their rights and obligations under

Builder Agreements with third parties (such as LPE and QMI). But on

November 11, 2008, BKI registered a trademark for the “Bruce Kirby” name; BKI

remained the owner of the mark and did not sell it to GSL.

      At some point following this 2008 sale, QMI and LPE generally stopped

paying royalties pursuant to the Builder Agreements, but continued

manufacturing and selling Laser sailboats. In March 2010, Kirby sent a letter to

ILCA, requesting that it stop issuing plaques to Defendants due to their failure to

make royalty payments. In May 2010, the Builder Agreement with LPE was

terminated. At the end of January 2011, QMI made its last royalty payment.

Both LPE and QMI continued to sell Lasers with the plaques.

                                          4
       In October 2012 and November 2012, Kirby sent letters to QMI and LPE,

respectively, in which he wrote, “You are no longer entitled to obtain plaques or

in any manner whatsoever take any action regarding the licensed design (Kirby

Sailboat).” Bruce Kirby, Inc. v. Laserperformance (Eur.) Ltd., No. 13-cv-00297, 2021

WL 328632, at *3 (D. Conn. Feb. 1, 2021). 3 On April 23, 2013, when an ILCA rule

change went into effect pursuant to which the previously required ILCA plaque

was no longer required in order to compete in Laser competitions, both QMI and

LPE ceased using the plaques on their Laser boats.

       In the meantime, in March 2013 Plaintiffs filed this lawsuit. As relevant

here, BKI alleged that QMI committed trademark infringement under the

Lanham Act, 15 U.S.C. § 1051 et seq., while Kirby alleged that QMI and LPE both

misappropriated his name in violation of Connecticut common law.

       The district court entered a judgment for compensatory damages against

QMI for $2,056,736.33 in connection with BKI’s Lanham Act claim. The court

treated as advisory the jury’s assessment of damages, and awarded damages

based on gross revenues from U.S. sales of Lasers less allowable costs from

3 In quotations from caselaw and the parties’ briefing, this order omits all internal quotation
marks, alterations, footnotes, and citations, unless otherwise noted.

                                                5
February 2011, when QMI completely stopped paying any royalties, to April 23,

2013, when QMI stopped using the plaques.

      In connection with Kirby’s common law misappropriation claims, the

court awarded compensatory damages against LPE in the amount of

$2,520,578.81, consistent with the jury’s award of damages. This award

corresponded to LPE’s total revenues from sales of Lasers from October 2012

through April 23, 2013. The court did not reduce the sum to account for any

costs of production because no evidence of such costs was introduced at trial. In

light of the damages already assessed against QMI under the Lanham Act, it

awarded Kirby only $1 in nominal damages for QMI’s misappropriation.

      On appeal Defendants argue that Plaintiffs lack standing, the damage

award against BKI was clearly excessive, and the district court erred in finding

that QMI willfully infringed Plaintiff’s trademark. Kirby cross-appeals arguing

that the district court improperly denied their request for an award of pre-

judgment interest. We address each argument in turn.

I.    Plaintiffs’ Article III Standing

      “We begin with standing because it is a jurisdictional requirement and

must be assessed before reaching the merits.” Vitagliano v. Cnty. of Westchester, 71

                                         6
F.4th 130, 136 (2d Cir. 2023). “To establish Article III standing, a plaintiff must

show (1) an injury in fact, (2) a sufficient causal connection between the injury

and the conduct complained of, and (3) a likelihood that the injury will be

redressed by a favorable decision.” Id. The district court’s refusal to dismiss a

complaint for lack of standing presents a legal question that we review without

deference to the district court. Id.

      On appeal, QMI argues that Plaintiffs have “failed to submit proof of

injury at trial sufficient to establish standing.” Appellants’ Br. at 46. It claims

that both Kirby and BKI lack standing because they assigned their rights to a

third party—GSL. We disagree.

      BKI’s standing arises from its ownership of the Bruce Kirby mark. See Yale

Elec. Corp. v. Robertson, 26 F.2d 972, 974 (2d Cir. 1928) (holding that the

unauthorized use of a trademark constitutes an injury to the owner of the

trademark). And Kirby has Article III standing to pursue a claim for

misappropriating his name because misappropriation of an individual’s name—

a longstanding tort at common law, see Restatement (Second) of Torts § 652C—is

a cognizable injury under Article III. See Spokeo, Inc. v. Robins, 578 U.S. 330, 341

(2016) (explaining that, in considering whether an injury can support standing,

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“it is instructive to consider whether an alleged intangible harm has a close

relationship to a harm that has traditionally been regarded as providing a basis

for a lawsuit in English or American courts”).

      We reject QMI’s argument that Kirby and BKI assigned all of their rights to

the Bruce Kirby name and mark to GSL and thus lack standing because the

district court’s finding that BKI owns the Bruce Kirby mark and that Kirby could

enforce his right to protect his name is well supported in the record. First, the

parties stipulated that BKI owns the Bruce Kirby trademark, and that the mark

was registered to BKI on November 11, 2008. Second, the 2008 agreement

acknowledges that BKI shall retain its trademark rights and grants GSL only a

nonexclusive, perpetual, royalty-free license. And whether QMI was privileged

to use the mark based on its agreement with GSL may affect the merits of

Plaintiffs’ claims but does not undermine their standing.

II.   Common Law Misappropriation Damages Against LPE

      On appeal from a district court’s denial of a motion for a new trial under

Rule 59 of the Federal Rules of Civil Procedure, we review for abuse of

discretion. Restivo v. Hessemann, 846 F.3d 547, 569 (2d Cir. 2017).

                                         8
      LPE argues that the district court erred in denying its motion for a new

trial because the jury’s compensatory damages award of $2,520,578.81 for Kirby’s

misappropriation claim was excessive. Specifically, LPE contends that Kirby did

not present evidence that any purchaser—let alone every purchaser—bought a

Laser because Kirby’s name appeared on a plaque. It argues that Kirby thus

failed to introduce sufficient evidence to show that LPE derived any commercial

benefit from Kirby’s name, or to allow the jury to calculate damages with

reasonable certainty.

      Kirby testified at trial that if a boat did not have the required plaques

bearing his name it would not be eligible to race in Laser races. He explained

that the plaques were always affixed in the same place because people would

look for them there. He said, “[A]nyone who knew much about the boat and

who wanted to race it looked for the plaque. Because the plaque made the boat

authentic, it made it a legal Laser.” Jt. App’x 108. Therefore, customers would

look for the plaques to know whether the sailboat was an authentic and legal

Laser, capable of participating in the Laser-specific races. Id. at 108.

      This evidence is sufficient to support the district court’s conclusion that a

jury could rationally infer “that a customer would not have purchased a non-

                                          9
compliant Laser—that is, a Laser that did not bear the Builder Plaque with the

Bruce Kirby name”—and thus “that any time LPE sold a Laser, LPE

commercially benefitted through the use of Kirby’s name.” Kirby, 2021 WL

328632, at *10.

III.   Lanham Act Damages Against QMI

       QMI challenges the district court’s conclusion that QMI willfully infringed

the Bruce Kirby mark, arguing that QMI was authorized to use the mark. QMI

contends that the evidence does not support the district court’s conclusion that it

began willfully infringing the mark in February 2011, when it stopped paying

royalties, and it argues that the district court failed to make findings on various

factors relevant to the damage calculation.

       Although willfulness is not a necessary condition to an award of an

infringer’s profits under the Lanham Act, it “is a highly important consideration

in determining whether an award of profits is appropriate.” Romag Fasteners, Inc.

v. Fossil, Inc., 140 S. Ct. 1492, 1497 (2020). In this case, the district court made it

clear that its damage award against QMI rested on its conclusion that QMI

engaged in a willful trademark violation. Kirby, 2021 WL 328632 at *12. Thus, if

the district court’s findings as to whether and when QMI began willfully

                                            10
infringing BKI’s mark are clearly erroneous, we cannot uphold the damages

award. See Zervos v. Verizon N.Y., Inc., 252 F.3d 163, 169 (2d Cir. 2001) (explaining

that a court exceeds its discretion when it exercises discretion based on a clearly

erroneous factual finding).

      In evaluating whether and when QMI willfully infringed BKI’s mark, we

are mindful of the undisputed evidence that beginning at the time it succeeded

to the rights and obligations under the 1983 Builder Agreement, QMI was

licensed to use the Bruce Kirby mark, and was, in fact, required to do so. So the

question is whether BKI presented evidence that could support the district

court’s conclusion that QMI was on notice that BKI no longer consented to QMI’s

use of the mark. Neither of the items of evidence relied upon by the district

court—a March 2010 letter from Kirby to ILCA and QMI’s February 2011

nonpayment of royalties—supports the court’s conclusion that QMI was on

notice of BKI’s non-consent as early as February 2011.

      First, the district court relied in part on Kirby’s testimony that in March

2010 he wrote ILCA to ask the organization to stop issuing plaques to QMI due

to QMI’s nonpayment of royalties. But Kirby testified that he sent this letter to

ILCA. He did not testify that he sent a copy to QMI. Moreover, even if the jury

                                         11
could conclude on a non-speculative basis that QMI at some point learned about

Kirby’s letter, the fact that Kirby did not direct the communication to QMI

eliminates any reasonable inference that QMI could have understood the letter as

communicating that it was no longer authorized to use the mark. Finally, the

letter says nothing about QMI’s use of Kirby’s name, or Kirby’s objection thereto.

      Second, in rejecting QMI’s arguments on this issue, the district court relied

on Kirby’s trial testimony that “[w]hen [QMI] stopped paying royalties, they had

to stop building boats.” Jt. App’x 112. The court essentially concluded that

QMI’s authorization to use the Bruce Kirby mark ended when QMI stopped

paying royalties.

      To the extent that Kirby’s testimony is intended to suggest that under the

Builder Agreement QMI’s license to use Kirby’s name disappeared at the

moment QMI stopped paying royalties, the assertion is contradicted by the terms

of the contract. Failure to pay royalties is an event of default under the Builder

Agreement, but a default does not automatically terminate the contract and the

accompanying rights and obligations. The contract provides that upon a default

for failure to pay royalties when due, BKI “may at its option give written notice

to Licensee of such event of default, and if Licensee does not cure such default

                                         12
within 30 days of the giving of said notice, this Agreement shall terminate upon

[BKI] giving to Licensee written notice of termination on the expiry of such 30

day period.” Jt. App’x 179. Even if Kirby or BKI had the authority to enforce the

terms of the Builder Agreement in February 2011, they did not give QMI written

notice of its default, and they did not purport to exercise an option to terminate

the license agreement until October 2012. GSL did not give such notice at all.

For that reason, the terms of the Builder Agreement did not themselves put QMI

on notice that if it failed to pay royalties its authorization to use the Bruce Kirby

mark would immediately expire without any notice or actions by Kirby or GSL.

      In sum, BKI presented no evidence that could support the district court’s

conclusion that QMI was on notice that BKI did not consent to its use of the

Bruce Kirby mark as early as February 2011. The earliest a reasonable factfinder

could potentially conclude that QMI began willfully infringing on BKI’s mark

was October 11, 2012, when Kirby sent a letter to QMI stating that its right to

build the licensed design was terminated. For the above reasons, we vacate the

damages award under the Lanham Act for BKI against QMI, and remand to the

district court to reconsider its judgment on the Lanham Act claim consistent with

the above analysis.

                                          13
IV.   Prejudgment Interest

      Under Connecticut law, “the allowance of prejudgment interest as an

element of damages is an equitable determination and a matter lying within the

discretion of the trial court.” W. Haven Sound Dev. Corp. v. City of W. Haven, 207

Conn. 308, 321 (1988). However, when there is a challenge to “the applicability

of [Connecticut General Statutes] § 37–3a,” the statute providing for prejudgment

interest, “our review is plenary.” Chapman Lumber, Inc. v. Tager, 288 Conn. 69,

100 (2008).

      The Connecticut Supreme Court has explained that an award for

prejudgment interest under § 37-3a applies only to certain claims such as “where

there is a written contract for the payment of money on a day certain” or where

there is “tortious injury to property when the damages were capable of being

ascertained on the date of the injury.” DiLieto v. Cnty. Obstetrics & Gynecology

Grp., P.C., 310 Conn. 38, 49 n.11 (2013). “The purpose of the statute is to

compensate the prevailing party for the delay in obtaining money that rightfully

belongs to [the prevailing party].” Gilmore v. Bergin, No. 95-cv-01838, 1998 WL

1632526, at *12 (D. Conn. Sept. 22, 1998) (citing Neiditz v. Morton S. Fine & Assocs.,

Inc., 199 Conn. 683, 691 (1986)).

                                          14
      Kirby cross-appeals, arguing that the district court improperly denied the

request for an award of pre-judgment interest on Kirby’s judgment for

misappropriation under Connecticut Law. Kirby contends that “[t]he right in

one’s name or likeness is a property right” and “that the damages were

equivalent to LPE’s sales, a figure well known at the time of the

misappropriation.” Appellees’ Br. at 57.

      We agree with the district court that the misappropriation of a name in this

case is more akin to a personal injury claim than a tortious injury to property;

here damages were uncertain until after the jury trial “and were not already

payable or being wrongly withheld.” Nelson v. Tradewind Aviation, LLC, 155

Conn. App. 519, 548 (2015); see also Gionfriddo v. Avis Rent A Car Sys., Inc., 192

Conn. 301, 308 (1984) (noting that “a personal injury claim would not ordinarily

constitute a claim for the wrongful detention of money before the rendering of

judgment”).

                                            * * *

      Accordingly, we AFFIRM the district court’s judgment for Kirby in

connection with his common law claim against LPE for misappropriation of

name and VACATE the district court’s judgment awarding BKI damages in

                                          15
connection with its Lanham Act claim against QMI and REMAND for further

proceedings consistent with this order.

                                     FOR THE COURT:
                                     Catherine O’Hagan Wolfe, Clerk of Court

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