Intellectual Property — Treble Damages Reversed in Paper Towel Case

Listen to this article

Georgia-Pacific Consumer Products LP v. von Drehle Corp. (Lawyers Weekly No. 15-01-0294, 53 pp.) (Niemeyer, J.) No. 13-2003, March 30, 2015; USDC at Raleigh, N.C. (Boyle, J.) 4^th Cir.

Holding: In Georgia-Pacific’s suit against defendant manufacturer of a cheaper paper towel for “stuffing” into G-P’s trademarked “enMotion” motion-activated paper towel dispenser, the 4^th Circuit reverses the damage award for G-P, saying the trial court applied the wrong legal standards for trebling the jury award for trademark infringement.

This trademark infringement case presents several issues regarding the appropriate relief that may be granted under the Lanham Act, specifically § 1116 (authorizing injunctive relief) and § 1117 (authorizing monetary relief). Georgia-Pacific Consumer Products LP owns the trademark “enMotion,” which it uses to brand a paper-towel dispenser that dispenses paper towels when a motion sensor is triggered by the user. G-P designed its dispenser to dispense only 10-inch paper towels that it manufactured. Defendant von Drehle Corporation, a competitor, designed a less expensive paper towel – the “810-B” paper towel – that it sold specifically for use in Georgia-Pacific’s enMotion towel dispensers. In response to von Drehle’s practice of selling its 810-B paper towels for “stuffing” into enMotion towel dispensers, G-P commenced three separate actions against von Drehle or its distributors alleging violations of the Lanham Act, 15 U.S.C. § 1114(1)(a). In January 2012, a jury agreed that von Drehle’s conduct constituted contributory trademark infringement and, as requested at closing argument, awarded Georgia-Pacific $791,431, which represented all of the profits that von Drehle earned from the sale of its 810-B paper towels from 2005 to the date of trial. The district court entered a permanent, nationwide injunction prohibiting von Drehle from directly or indirectly infringing G-P’s trademark rights. In addition, because the court found that von Drehle’s infringement was willful and intentional, it trebled the jury’s award from $791,431 to $2,374,293 and awarded G-P attorney’s fees of $2,225,782 and prejudgment interest of $204,450. Finally, the court awarded G-P $82,758 in court costs.

On appeal from the remedies award in this case, von Drehle challenges the geographical scope of the district court’s injunction related to the litigation in Arkansas and Ohio federal courts, arguing that the 8th and 6th Circuits’ rulings against Georgia-Pacific render the injunction entered by the district court unduly broad. It also challenges the monetary awards, contending that the district court applied the wrong  legal standards for trebling the jury award and for awarding attorney’s fees and prejudgment interest.

Because we agree with von Drehle, we reverse the district court’s judgment in part and vacate and remand in part, with instructions. As to the injunction, we instruct the district court to narrow it to cover only the geographical area of the 4^th Circuit. As to the monetary awards, we reverse the treble damages award and instruct the district court to reinstate the jury’s award of $791,431; we vacate the award of attorney’s fees and remand for application of the appropriate standard; and (3) we reverse the award of prejudgment interest.

Concurrence & Dissent

Shedd, J.: I agree with the majority except for its unnecessary restriction of the nationwide injunction entered by the district court in response to von Drehle Corporation’s unlawful actions. Georgia-Pacific is entitled to complete and effective injunctive relief to prevent von Drehle from continuing to infringe on its trademarks. The district court considered the proper factors and concluded that a nationwide injunction is necessary to provide this relief. Because the district court did not abuse its discretion in reaching this conclusion, and because we should accord proper respect to our decision in earlier related litigation, we should affirm the injunction. I concur in part and dissent in part.