NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ____________
No. 23-1185 ___________
ARTOSS, INC.
v.
ARTOSS GMBH; THOMAS GERBER; WALTER GERIKE,
ARTOSS GMBH, Appellant ____________
On Appeal from the United States District Court for the District of Delaware (D.C. No. 1-20-cv-00741) District Judge: Honorable Robert T. Dawson ____________
Submitted Under Third Circuit LAR 34.1(a) June 3, 2024
Before: HARDIMAN, PORTER, and AMBRO, Circuit Judges.
(Filed: June 4, 2024)
____________
OPINION* ____________
* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. HARDIMAN, Circuit Judge.
Artoss GmbH (GmbH) appeals a post-trial judgment on a claim for breach of
contract and counterclaims for breach of contract and trademark infringement. GmbH
challenges the sufficiency of the evidence for a specific jury finding and also claims the
District Court made procedural and evidentiary errors. We will affirm.
I
This appeal arises out of a dispute between GmbH, a German medical device
company, and Artoss, Inc. (Artoss), its North American distributor of an implantable
synthetic bone-grafting product called NanoBone. Under the parties’ Distribution
Agreement, all “trademarks,” “trade names,” and other “proprietary rights . . . associated”
with NanoBone products belonged exclusively to GmbH, which was allowed to terminate
the agreement if it “reasonably determine[d] that [Artoss] . . . negligently or intentionally
acted in a manner which adversely affect[ed]” GmbH’s “trademark rights.” App. 645,
647. Meanwhile, the Distribution Agreement specified that GmbH was not permitted to
increase its prices except “upon mutual agreement,” and it was entitled to payment for
products it supplied to Artoss only after those products were sold. App. 644.
In June 2020, Artoss sued GmbH for breaching the Distribution Agreement after
GmbH refused to ship new NanoBone products to Artoss without advance payment.
Nevertheless, Artoss conditionally pre-paid for inventory pending resolution of its
lawsuit. A few months later, GmbH unilaterally raised prices on all NanoBone products.
Finally, GmbH purported to terminate the Distribution Agreement in April 2021, alleging
that Artoss had “registered certain trademarks on material associated with” NanoBone
2 products and “commenced an attempt to rebrand . . . GmbH’s products as products . . . of
Artoss.” App. 770. Artoss filed an amended complaint based on GmbH’s price increases
and its termination of the Distribution Agreement.
In pre-trial motions, Artoss sought to exclude evidence intended to show it had
failed to sell NanoBone products on a first-in-first-out basis, a standard industry practice
in which older inventory is sold before newer inventory to minimize waste for medical
products with a limited shelf life. GmbH asserted that this evidence was necessary to
rebut Artoss’s claim that GmbH’s demand for advance payment breached the
Distribution Agreement. The District Court ruled in favor of Artoss, concluding that
“[w]hy [Artoss] may have allegedly built up excess inventory or allowed product to
expire [wa]s not at issue.” App. 17. Also prior to trial, GmbH objected to instructing the
jury on nominative fair use, arguing that even if Artoss had timely pleaded this
affirmative defense to GmbH’s trademark infringement counterclaims, it was “legally
inapplicable” to the facts of the case. App. 527. The Court overruled this objection and
instructed the jury accordingly.
The jury found that: (1) GmbH breached the Distribution Agreement and acted
wrongfully when it terminated the Agreement; and (2) Artoss did not breach the
Agreement or violate any of GmbH’s trademark rights. Following the damages phase of
the trial, the jury awarded $1,260,821 to Artoss. The District Court then denied GmbH’s
renewed motion for judgment as a matter of law as well as its motion to amend the
judgment and transfer ownership of NanoBone-related trademark registrations and
3 applications from Artoss to GmbH. After the District Court entered final judgment,
GmbH timely appealed.1
II
GmbH urges us to reverse the District Court’s order denying its renewed motion
for judgment as a matter of law “because the undisputed evidence at trial [provided] a
sound contractual basis for termination.” GmbH Br. 18. Exercising plenary review, we
may grant such a motion “only if, viewing the evidence in the light most favorable to the
nonmovant and giving it the advantage of every fair and reasonable inference, there is
insufficient evidence from which a jury reasonably could find liability.” Ambrose v.
Township of Robinson, 303 F.3d 488, 492 (3d Cir. 2002) (cleaned up). GmbH claims it
was permitted to terminate the Distribution Agreement because Artoss “engaged in a
deliberate campaign to misuse . . . GmbH’s marks and misappropriate them as its own.”
GmbH Br. 25. We disagree.
GmbH’s sole trademark at issue here is the word “NanoBone,” “consist[ing] of
standard characters without claim to any particular font, style, size, or color.” App. 725
(capitalization omitted). There was substantial evidence at trial demonstrating that Artoss
never attempted to register “NanoBone,” never challenged the ownership or validity of
the trademark, nor deprived GmbH of its right to use or exercise control over it.2 Rather,
1 The District Court had jurisdiction under 28 U.S.C. § 1332. We have jurisdiction under 28 U.S.C. § 1291. 2 S & R Corp. v. Jiffy Lube Int’l, Inc. is inapposite because, unlike in this case, the franchisee was using “the same legally protectable trademark[] owned by Jiffy Lube.” 968 F.2d 371, 375 (3d Cir. 1992). 4 Artoss used the word only to promote and sell NanoBone products. So it was reasonable
for the jury to conclude that Artoss never “adversely affected” GmbH’s “trademark
rights.”3 App. 647. And because this was the only applicable basis for GmbH to terminate
the Distribution Agreement, its arguments on appeal that Artoss violated other provisions
of the Distribution Agreement are unavailing.
GmbH also emphasizes that Artoss “created and released an unauthorized
stylization of the NanoBone[] mark and sought to obtain protection in its own name for
elements of that stylization.” GmbH Br. 27 (emphasis added). But this argument fails
because GmbH’s trademark encompasses only the word itself. The logos that Artoss
created incorporating the original stylized NanoBone mark or generic scientific terms like
“nanobiology,” “ossification,” and “osteogenesis” are thus distinct from the NanoBone
trademark.
Because it was not unreasonable for the jury to conclude that GmbH wrongfully
terminated the Distribution Agreement, we cannot disturb its finding.
III
GmbH also argues that the District Court erred when it instructed the jury on
nominative fair use, a purportedly “inapplicable [affirmative] defense that [Artoss] did
not plead and did not mention until the eve of trial.” GmbH Br. 20. Because the Court did
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ____________
No. 23-1185 ___________
ARTOSS, INC.
v.
ARTOSS GMBH; THOMAS GERBER; WALTER GERIKE,
ARTOSS GMBH, Appellant ____________
On Appeal from the United States District Court for the District of Delaware (D.C. No. 1-20-cv-00741) District Judge: Honorable Robert T. Dawson ____________
Submitted Under Third Circuit LAR 34.1(a) June 3, 2024
Before: HARDIMAN, PORTER, and AMBRO, Circuit Judges.
(Filed: June 4, 2024)
____________
OPINION* ____________
* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. HARDIMAN, Circuit Judge.
Artoss GmbH (GmbH) appeals a post-trial judgment on a claim for breach of
contract and counterclaims for breach of contract and trademark infringement. GmbH
challenges the sufficiency of the evidence for a specific jury finding and also claims the
District Court made procedural and evidentiary errors. We will affirm.
I
This appeal arises out of a dispute between GmbH, a German medical device
company, and Artoss, Inc. (Artoss), its North American distributor of an implantable
synthetic bone-grafting product called NanoBone. Under the parties’ Distribution
Agreement, all “trademarks,” “trade names,” and other “proprietary rights . . . associated”
with NanoBone products belonged exclusively to GmbH, which was allowed to terminate
the agreement if it “reasonably determine[d] that [Artoss] . . . negligently or intentionally
acted in a manner which adversely affect[ed]” GmbH’s “trademark rights.” App. 645,
647. Meanwhile, the Distribution Agreement specified that GmbH was not permitted to
increase its prices except “upon mutual agreement,” and it was entitled to payment for
products it supplied to Artoss only after those products were sold. App. 644.
In June 2020, Artoss sued GmbH for breaching the Distribution Agreement after
GmbH refused to ship new NanoBone products to Artoss without advance payment.
Nevertheless, Artoss conditionally pre-paid for inventory pending resolution of its
lawsuit. A few months later, GmbH unilaterally raised prices on all NanoBone products.
Finally, GmbH purported to terminate the Distribution Agreement in April 2021, alleging
that Artoss had “registered certain trademarks on material associated with” NanoBone
2 products and “commenced an attempt to rebrand . . . GmbH’s products as products . . . of
Artoss.” App. 770. Artoss filed an amended complaint based on GmbH’s price increases
and its termination of the Distribution Agreement.
In pre-trial motions, Artoss sought to exclude evidence intended to show it had
failed to sell NanoBone products on a first-in-first-out basis, a standard industry practice
in which older inventory is sold before newer inventory to minimize waste for medical
products with a limited shelf life. GmbH asserted that this evidence was necessary to
rebut Artoss’s claim that GmbH’s demand for advance payment breached the
Distribution Agreement. The District Court ruled in favor of Artoss, concluding that
“[w]hy [Artoss] may have allegedly built up excess inventory or allowed product to
expire [wa]s not at issue.” App. 17. Also prior to trial, GmbH objected to instructing the
jury on nominative fair use, arguing that even if Artoss had timely pleaded this
affirmative defense to GmbH’s trademark infringement counterclaims, it was “legally
inapplicable” to the facts of the case. App. 527. The Court overruled this objection and
instructed the jury accordingly.
The jury found that: (1) GmbH breached the Distribution Agreement and acted
wrongfully when it terminated the Agreement; and (2) Artoss did not breach the
Agreement or violate any of GmbH’s trademark rights. Following the damages phase of
the trial, the jury awarded $1,260,821 to Artoss. The District Court then denied GmbH’s
renewed motion for judgment as a matter of law as well as its motion to amend the
judgment and transfer ownership of NanoBone-related trademark registrations and
3 applications from Artoss to GmbH. After the District Court entered final judgment,
GmbH timely appealed.1
II
GmbH urges us to reverse the District Court’s order denying its renewed motion
for judgment as a matter of law “because the undisputed evidence at trial [provided] a
sound contractual basis for termination.” GmbH Br. 18. Exercising plenary review, we
may grant such a motion “only if, viewing the evidence in the light most favorable to the
nonmovant and giving it the advantage of every fair and reasonable inference, there is
insufficient evidence from which a jury reasonably could find liability.” Ambrose v.
Township of Robinson, 303 F.3d 488, 492 (3d Cir. 2002) (cleaned up). GmbH claims it
was permitted to terminate the Distribution Agreement because Artoss “engaged in a
deliberate campaign to misuse . . . GmbH’s marks and misappropriate them as its own.”
GmbH Br. 25. We disagree.
GmbH’s sole trademark at issue here is the word “NanoBone,” “consist[ing] of
standard characters without claim to any particular font, style, size, or color.” App. 725
(capitalization omitted). There was substantial evidence at trial demonstrating that Artoss
never attempted to register “NanoBone,” never challenged the ownership or validity of
the trademark, nor deprived GmbH of its right to use or exercise control over it.2 Rather,
1 The District Court had jurisdiction under 28 U.S.C. § 1332. We have jurisdiction under 28 U.S.C. § 1291. 2 S & R Corp. v. Jiffy Lube Int’l, Inc. is inapposite because, unlike in this case, the franchisee was using “the same legally protectable trademark[] owned by Jiffy Lube.” 968 F.2d 371, 375 (3d Cir. 1992). 4 Artoss used the word only to promote and sell NanoBone products. So it was reasonable
for the jury to conclude that Artoss never “adversely affected” GmbH’s “trademark
rights.”3 App. 647. And because this was the only applicable basis for GmbH to terminate
the Distribution Agreement, its arguments on appeal that Artoss violated other provisions
of the Distribution Agreement are unavailing.
GmbH also emphasizes that Artoss “created and released an unauthorized
stylization of the NanoBone[] mark and sought to obtain protection in its own name for
elements of that stylization.” GmbH Br. 27 (emphasis added). But this argument fails
because GmbH’s trademark encompasses only the word itself. The logos that Artoss
created incorporating the original stylized NanoBone mark or generic scientific terms like
“nanobiology,” “ossification,” and “osteogenesis” are thus distinct from the NanoBone
trademark.
Because it was not unreasonable for the jury to conclude that GmbH wrongfully
terminated the Distribution Agreement, we cannot disturb its finding.
III
GmbH also argues that the District Court erred when it instructed the jury on
nominative fair use, a purportedly “inapplicable [affirmative] defense that [Artoss] did
not plead and did not mention until the eve of trial.” GmbH Br. 20. Because the Court did
3 GmbH contends that Artoss violated its trademark rights by claiming ownership of the word “NanoBone” on both its website’s “Terms of Use” page and in its brand manual. But evidence at trial showed that no members of the general public saw either the webpage or the manual. So it was reasonable for the jury to conclude that these actions by Artoss did not adversely affect the “NanoBone” trademark. 5 not misstate the legal standard for liability, we review for abuse of discretion. See
Griffiths v. CIGNA Corp., 988 F.2d 457, 462 (3d Cir. 1993), overruled on other grounds,
Miller v. CIGNA Corp., 47 F.3d 586 (3d Cir. 1995) (en banc). “If, looking at the charge
as a whole, the instructions were capable of confusing and thereby misleading the jury,
we must reverse.” Mosley v. Wilson, 102 F.3d 85, 94 (3d Cir. 1996) (emphasis added)
(cleaned up).
Artoss did not waive (or forfeit) its nominative fair use defense, as GmbH claims.
“[A]ffirmative defenses may be raised at any time, even after trial, so long as [the
opposing party] suffers no prejudice.” Clews v. County of Schuylkill, 12 F.4th 353, 358
(3d Cir. 2021) (citation omitted). Artoss unequivocally raised this defense in its pre-trial
motion, and GmbH fails to establish prejudice, offering only a broad reference to “the
nuance and complexity” of a nominative fair use defense. Reply Br. 16.
GmbH’s insistence that the nominative fair use defense does not apply is largely a
challenge to the jury’s application of the facts to the law, and it offers no compelling
basis upon which to discard the relevant factual findings. Regardless, GmbH offers no
pertinent caselaw to support its proposition that a new trial is required when the jury
receives an instruction on an extraneous defense that accurately states the law. See GmbH
Br. 42–43 (citing Mosley, 102 F.3d at 95 (instruction that “added an element of subjective
intent” to the plaintiff’s civil rights claims was reversible error); Faulman v. Sec. Mut.
Fin. Life Ins. Co., 353 F. App’x 699, 705 (3d Cir. 2009) (not instructing on an
6 indemnification clause that “was not even being relied on” by the defendant was not
error) (emphasis added)).
For these reasons, GmbH fails to show the District Court abused its discretion in
instructing the jury on nominative fair use.
IV
GmbH next argues that the District Court erred by excluding evidence on Artoss’s
disregard for first-in-first-out practices, which it describes as “highly relevant evidence
establishing a good faith basis for its refusal to accept new purchase orders without
prepayment.” GmbH Br. 21. We need not decide whether the Court erred in excluding
this evidence because any error would have been harmless. See Great Am. Ins. Co. v.
Norwin Sch. Dist., 544 F.3d 229, 251 (3d Cir. 2008). The Court permitted GmbH to
present substantial evidence concerning Artoss’s inventory practices and the resulting
financial consequences. GmbH does not explain, in light of the evidence it did present,
how the particular evidence excluded by the District Court was “critical” for GmbH to
defend against Artoss’s claims for breach of contract, McQueeney v. Wilmington Tr. Co.,
779 F.2d 916, 928 (3d Cir. 1985), or why Artoss’s specific failure to follow first-in-first-
out practices constituted a “central issue,” Renda v. King, 347 F.3d 550, 556 (3d Cir.
2003). We thus reject GmbH’s evidentiary argument.
V
GmbH makes one final argument, alleging that the District Court erred in refusing
to transfer ownership of the registered trademarks “relating to NanoBone” that Artoss had
filed with the Patent and Trademark Office. GmbH Br. 52. This argument fails for the
7 same reasons the Court did not err in denying judgment as a matter of law. Because the
jury reasonably found that Artoss did not infringe GmbH’s NanoBone trademark rights
when it sought to trademark unrelated logos and slogans, the relief sought by GmbH
would have directly conflicted with the jury’s verdict.
* * *
The jury had sufficient evidence to conclude that GmbH wrongfully terminated
the Distribution Agreement, and none of GmbH’s arguments for a new trial or equitable
relief is persuasive. We will affirm.