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OTR Wheel Engineering, Inc. v. West Worldwide Services, Inc.

United States Court of Appeals, Ninth Circuit

July 24, 2018

OTR Wheel Engineering, Inc.; Blackstone/OTR, LLC; F.B.T. Enterprises, Inc., Plaintiffs-Appellees/ Cross-Appellants,
v.
West Worldwide Services, Inc.; Samuel J. West, individually, and his marital community; SSL China, LLC; Qingdao STW Tire Co. Ltd.; SSL Holdings, Inc., Defendants-Appellants/ Cross-Appellees.

          Argued and Submitted March 7, 2018 Seattle, Washington

          Appeal from the United States District Court for the Eastern District No. 2:14-cv-00085-LRS of Washington Lonny R. Suko, District Judge, Presiding

          Christine Marie Lebrón-Dykeman (argued), R. Scott Johnson, and Jonathan L. Kennedy, McKee Voorhees & Sease P.L.C., Des Moines, Iowa; John J. White Jr. and Kevin B. Hansen, Livengood Alskog PLLC, Kirkland, Washington; for Defendants-Appellants/Cross-Appellees.

          Joel David Bertocchi (argued), Kimberly A. Jansen, and Jeffrey S. Dixon, Hinshaw & Culbertson LLP, Chicago, Illinois; Robert J. Carlson, Lee & Hayes PLLC, Seattle, Washington; for Plaintiffs-Appellees/Cross-Appellants.

          Before: Johnnie B. Rawlinson, Richard R. Clifton, and Morgan Christen, Circuit Judges.

         SUMMARY[*]

         Lanham Act

         The panel affirmed the district court's judgment after a jury trial, holding defendants liable for reverse passing off under the Lanham Act.

         The parties were competitors in the business of selling industrial tires. Defendant West asked a supplier of plaintiff OTR to provide him with sample tires from OTR's molds, and he asked the supplier to remove OTR's identifying information from the tires so that he could use the tires to obtain business from one of OTR's customers.

         The panel held that West could be found liable for reverse passing off because he did not simply copy OTR's intellectual property, but rather passed off genuine OTR products as his own.

         The panel affirmed the district court's conclusion that West did not establish that OTR committed fraud on the United States Patent and Trademark Office. The panel confirmed that fraud on the PTO must be established by clear and convincing evidence.

         The panel affirmed the district court's order denying a new trial on the issue of trade dress validity.

         The panel affirmed the district court's rejection of a proposed jury instruction asserting a claim for infringement of an unregistered trade dress. The panel explained that a registered claim converts to an unregistered claim if the registration is invalidated; thus, a plaintiff does not need to separately plead the identical unregistered claim. But where the unregistered claim would cover something more than the registered claim, a plaintiff must put a defendant on notice of such through the pleadings.

         The panel addressed additional issues in a concurrently filed memorandum disposition.

          OPINION

          CLIFTON, Circuit Judge.

         OTR Wheel and Samuel West are competitors in the business of selling industrial tires.[1] West asked one of OTR's suppliers to provide him with sample tires from OTR's molds, and he asked the supplier to remove OTR's identifying information from the tires. West wanted to use the tires to obtain business from one of OTR's customers. OTR sued West, asserting various claims under the Lanham Act and state law.

         The primary issue before us is whether West can be found liable for reverse passing off under the Lanham Act. Pursuant to the Supreme Court's opinion in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), a claim for reverse passing off cannot be brought to prevent the copying of intellectual property. We conclude that West did not simply copy OTR's intellectual property but passed off genuine OTR products as his own, so we affirm the judgment holding him liable for reverse passing off.

         In this opinion, we also address other issues raised regarding the Lanham Act. In particular, we affirm the district court's conclusion that West did not establish that OTR had committed fraud on the United States Patent and Trademark Office (PTO). In doing so, we confirm that fraud on the PTO must be established by clear and convincing evidence. We also affirm the district court's order denying a new trial on the issue of trade dress validity, giving us cause to explain how a finding of fraud on the PTO affects a plaintiff's burdens in establishing a trademark claim. Finally, we affirm the district court's rejection of a proposed jury instruction asserting a claim for infringement of an unregistered trade dress. We explain that a registered claim converts to an unregistered claim if the registration is invalidated. Thus, a plaintiff does not need to separately plead the identical unregistered claim. But where the unregistered claim would cover something more than the registered claim, a plaintiff must put a defendant on notice of such through the pleadings.

         The other issues raised by the parties-those that do not touch on the Lanham Act-do not warrant discussion in a precedential opinion. We address those remaining issues in a concurrently filed memorandum disposition.

         I. Background

         A. Statutory Framework

         The Lanham Act prohibits conduct that would confuse consumers as to the origin, sponsorship, or approval of goods or services. See Slep-Tone Entm't Corp. v. Wired for Sound Karaoke & DJ Servs., LLC, 845 F.3d 1246, 1249 (9th Cir. 2017); see also TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 28 (2001). To prevent consumer confusion, the Act allows the producers of goods and services to enforce trademark rights. 15 U.S.C. §§ 1114, 1125(a); see also Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 209-10 (2000). A trademark is "any word, name, symbol, or device . . . [used or intended to be used] to identify and distinguish [goods] from those manufactured or sold by others and to indicate the source of the goods." 15 U.S.C. § 1127. In addition, the Lanham Act protects more than words and symbols. It also protects a product's "trade dress," which includes the packaging, dressing, and design of a product. TrafFix Devices, 532 U.S. at 28; Wal-Mart, 529 U.S. at 209.

         B. Factual History

         OTR sells tires for industrial use. One of OTR's products is a tire called the "Outrigger." OTR obtained a registered trademark on the Outrigger name and a registered trade dress on the Outrigger tire tread design. OTR partnered with a company called Solideal to make size "355" Outrigger branded tires for the Chinese market. The 355-size tires are commonly used for aerial work platforms, which are mobile platforms sometimes referred to as "cherry pickers." In order to produce the 355-size tires in China, Solideal contracted with a plant operated by a Chinese company called Superhawk.

         West is in the same business as OTR, and he wanted to sell tires to one of OTR's customers, Genie. In December of 2011, West began discussions with Superhawk, the Chinese manufacturer, about making a 355-size tire for West to sell to Genie. In the spring of 2012, West asked Superhawk for 16 of the 355-size tires for testing by the potential customer. Superhawk advised West that it would take 50 days to make a mold for West's tires. West responded, in writing, "I really need it much sooner. . . . Don't you make this size for Solideal [OTR's partner]? . . . Could you buff off the Solideal name on the sidewall or just remove the plate and let me get the tire tested?"

         Superhawk initially refused, saying that it would be "dangerous" to use Solideal's mold because Superhawk had an agreement with Solideal. West responded by asking, "Will your mold be the same as the [S]olideal mold? If we take out the nameplate and all the sidewall information, nobody will know." West then asked Superhawk to make 50 tires for Solideal even though no Solideal order had been placed. Superhawk stated that it would make the 355-type tires "shortly."

         In May of 2012, Superhawk confirmed to West that Superhawk's 355-size tires were OTR Outrigger tires made for Solideal. In the summer of 2013, Genie stopped buying the 355-size tires from OTR and began buying them from West.

         C. Procedural Background

         OTR brought Lanham Act claims against West for trade dress infringement, trade dress counterfeiting, and reverse passing off. OTR also asserted state law claims under the Washington Consumer Protection Act (WCPA), for trade secret misappropriation, and for tortious interference with various contracts and business relationships.

         The case went to trial, with mixed results. The jury found West liable for reverse passing off in violation of the Lanham Act. The jury also found West liable for violating the WCPA and for tortiously interfering with a contract between Solideal and Superhawk, as well as with business relationships involving OTR, Genie, Solideal, and Superhawk. West was not found liable for trade dress infringement, trade dress counterfeiting, trade secret misappropriation, or tortious interference with a contract between OTR and Genie.

         The jury also found that OTR's claim for protected trade dress on its tire tread was invalid and that the trade dress registration had been obtained through fraud on the PTO. On a post-trial motion, the district court set aside the jury's determination that OTR had obtained its trade dress registration through fraud. The court otherwise entered judgment based on the jury's findings, including the finding that the protected trade dress claim was invalid. The court directed the PTO to cancel OTR's trade dress registration.

         For the claims on which OTR prevailed, the jury determined that OTR should be awarded actual damages in the amount of $967, 015. In addition to those damages, the judgment entered by the district court awarded prejudgment interest to OTR under state law and post-judgment interest at the rate authorized by 28 U.S.C. § 1961(a). The court maintained a preliminary injunction against West pending the outcome of this appeal.

         In a separately filed memorandum disposition, we reverse the district court on the issue of prejudgment interest, vacate the preliminary injunction, and affirm as to all the remaining issues.

         II. ...


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