“Pinnacle” Trademark Dispute Offers Lessons in Trademark Trial Procedure

The court vacated a $550,000 jury verdict in a trademark dispute teeming with procedural issues, Pinnacle Advertising & Marketing Group, Inc. v. Pinnacle Advertising & Marketing Group, LLC, 2021 U.S. App. LEXIS 22770 (11th Cir. Aug. 2, 2021), but kept alive the possibility of injunctive relief for the plaintiff on remand.  The case is a primer on the intersection of judge and jury in trademark infringement cases.

Pinnacle Illinois obtained trademark registrations for the word mark “Pinnacle” and a stylized form of the word “PINNACLE” on September 12, 2017.  Pinnacle Illinois then sued Pinnacle Florida, a Florida limited liability company with the similar name “Pinnacle Advertising and Marketing Group, ” for trademark infringement, unfair competition, and cybersquatting.  Pinnacle Florida then brought counterclaims against Pinnacle Illinois, including a claim for cancellation of one of Pinnacle Illinois’s marks that was not at issue in this case, and asserted that Pinnacle Illinois’s claims were barred by the equitable doctrine of laches.  The plaintiff’s trademark infringement, unfair competition, and cybersquatting claims were tried during a three-day jury trial in the United States District Court for the Southern District of Florida. 

After Pinnacle Illinois had presented its case-in-chief, the court granted Pinnacle Florida’s motion for judgment as a matter of law on the cybersquatting claim, and the jury awarded Pinnacle Illinois $550,000 in damages for the trademark infringement and unfair competition claims.  Following the verdict, the district court granted Pinnacle Florida’s motion for judgment as a matter of law on the laches defense and the amended cancellation counterclaim, which was granted by the district court. The effect of that ruling was to set aside the jury verdict and cancel Pinnacle Illinois’s registered trademarks in issue.

Pinnacle Illinois appealed, arguing that the district court erred in four ways: (1) by allowing Pinnacle Florida to amend its cancellation counterclaim ten days before trial despite failing to formally move to amend under Fed. R. Civ. P. 15; (2) by cancelling Pinnacle Illinois’s trademark registrations without considering the jury’s findings on distinctiveness and protectability or the presumption afforded to registered marks; (3) by abusing its discretion in finding that Pinnacle Illinois’s claims were barred by laches; and (4) by failing to consider whether injunctive relief was proper to protect the public’s interest in avoiding confusion, should the laches defense bar a claim for monetary damages.

In an opinion authored by Judge Lisa Branch, the Eleventh Circuit began by rejecting Pinnacle Illinois’s arguments that the cancellation counterclaim should not have been considered in the first place because of Pinnacle Florida’s failure to follow Fed. R. Civ. P. 15’s requirements and because of its prejudicial effect on Pinnacle Illinois’s ability to prepare its case.  Noting that leave to amend should be freely given when justice so requires, with the exception of undue prejudice to the opposing party, and that leave to amend can be given sua sponte, the court refused to implement a categorical requirement for parties to formally move for leave to amend their pleadings.  Further, where Pinnacle Illinois had previously argued that its defenses to the cancellation counterclaim were similar to its defenses to trademark infringement, and where Pinnacle Illinois had notice of the contents of the amended cancellation counterclaim, there was no undue prejudice, especially in light of the fact that Pinnacle Illinois sought summary judgment instead of moving to delay the trial or to re-open discovery.

On its second issue, however, Pinnacle Illinois had better luck. The court agreed that the district court erred in failing to apply the Rule 50 standard to evaluate Pinnacle Florida’s cancellation counterclaim.  Because the jury made a specific finding that Pinnacle Illinois’s marks were distinctive and therefore protectable under trademark law, the jury necessarily made a finding that Pinnacle Illinois owned a trademark that is entitled to protection.  Further, because the record demonstrated that the parties and the court intended to give deference to the jury’s findings on distinctiveness and protectability, the district court erred in disregarding the jury’s findings.  Pinnacle Illinois also argued that the district court did not require Pinnacle Florida to meet its burden in rebutting the presumption that Pinnacle Illinois’s marks are inherently distinctive.  Emphasizing that the United States Patent and Trademark Office did not require Pinnacle Illinois to provide proof of secondary meaning during the registration process, the court concluded that Pinnacle Illinois should be entitled to the presumption that its marks are inherently distinctive.  The district court erred in failing to explain or apply this presumption properly.

Third, the Eleventh Circuit found that Pinnacle Illinois had failed to show abuse of discretion by the district court when it applied the doctrine of laches to bar Pinnacle Illinois from bringing its trademark infringement and unfair competition claims for monetary damages.  As an initial inquiry, the district court relied on multiple pieces of evidence in finding that Pinnacle Illinois knew or should have known of its claim as of January 2014, which was over four years before it filed suit.  Since the statute of limitations for the applicable claims in Florida is four years, and the district court did not clearly err in its calculation of Pinnacle Illinois’s delay from January 2014, the first element of the defense of laches was met.  Further, because Pinnacle Illinois had no adequate excuse for waiting to institute action, the second element of the defense of laches was met.  Finally, despite a circuit split on the applicable standard for showing economic prejudice, the Eleventh Circuit held that Pinnacle Illinois failed to show that the district court clearly erred in finding Pinnacle Florida to be prejudiced by Pinnacle Illinois’s delay in bringing suit, because Pinnacle Florida could have redirected its resources into using a different name during the previous four years.

Although the Eleventh Circuit affirmed the district court’s conclusion that the doctrine of laches barred Pinnacle Illinois’s claims for money damages for the trademark infringement and unfair competition claims, it remanded the case to the district court for a decision as to Pinnacle Illinois’s request for injunctive relief to protect the public’s interest in avoiding confusion.

Posted by Vivian Chew.

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