Georgia-Pacific Consumer Products v. Von Drehle Corporation

• Court: Court of Appeals for the Fourth Circuit
• Decided: April 15, 2015
• Docket: 13-2003
• Status: Published

Opinion

PUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 13-2003

GEORGIA-PACIFIC CONSUMER PRODUCTS LP,

Plaintiff - Appellee,

and

GEORGIA-PACIFIC CORPORATION,

Plaintiff,

v.

VON DREHLE CORPORATION, a North Carolina corporation,

Defendant - Appellant,

CAROLINA JANITORIAL & MAINTENANCE SUPPLY, a North Carolina corporation,

Defendant,

MYERS SUPPLY, INCORPORATED,

Intervenor/Defendant.

Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. Terrence W. Boyle, District Judge. (5:05-cv-00478-BO)

Argued: December 11, 2014 Decided: March 30, 2015

Amended: April 15, 2015 Before NIEMEYER, SHEDD, and KEENAN, Circuit Judges.

Vacated, reversed in part, and remanded in part, with instructions, by published opinion. Judge Niemeyer wrote the opinion, in which Judge Shedd concurred as to Parts I, III, IV, and V and Judge Keenan concurred in full. Judge Shedd wrote a separate opinion, concurring in part and dissenting in part.

ARGUED: Carter Glasgow Phillips, SIDLEY AUSTIN LLP, Washington, D.C., for Appellant. Miguel A. Estrada, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for Appellee. ON BRIEF: Michael P. Thomas, PATRICK HARPER & DIXON, LLP, Hickory, North Carolina; Richard Klingler, Jacqueline G. Cooper, Nicolas W. Thompson, John Paul Schnapper-Casteras, SIDLEY AUSTIN LLP, Washington, D.C., for Appellant. Stephen P. Demm, John Gary Maynard, III, HUNTON & WILLIAMS LLP, Richmond, Virginia; Jonathan C. Bond, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C.; W. Kyle Carpenter, WOOLF, MCCLANE, BRIGHT, ALLEN & CARPENTER, PLLC, Knoxville, Tennessee, for Appellee.

2 NIEMEYER, Circuit Judge:

This trademark infringement case presents several issues

regarding the appropriate relief that may be granted under the

Lanham Act, 15 U.S.C. §§ 1051-1141n, 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. Georgia-Pacific designed its enMotion dispenser to

dispense only ten-inch paper towels that it manufactured.

von Drehle Corporation, a North Carolina corporation that

competes with Georgia-Pacific in the sale of paper towels,

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,

Georgia-Pacific commenced three separate actions against von

Drehle or its distributors. Each action alleged that the

“stuffing” practice constituted contributory trademark

infringement of Georgia-Pacific’s enMotion mark, in violation of

the Lanham Act, 15 U.S.C. § 1114(1)(a). Specifically, in this

action, Georgia-Pacific claimed that von Drehle “knowingly and

3 intentionally” manufactured the 810-B paper towel “specifically

and solely for use” in Georgia-Pacific’s enMotion towel

dispensers and that the practice of stuffing enMotion dispensers

with the 810-B paper towel was “likely to cause confusion and

. . . deceive End-User Customers.” 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. After the jury returned

its verdict, the district court entered a permanent, nationwide

injunction prohibiting von Drehle from directly or indirectly

infringing Georgia-Pacific’s trademark rights. In addition,

because the court found that von Drehle’s infringement was

“willful and intentional,” it (1) trebled the jury’s award from

$791,431 to $2,374,293; (2) awarded Georgia-Pacific attorneys

fees in the amount of $2,225,782; and (3) awarded it prejudgment

interest in the amount of $204,450. Finally, the court awarded

Georgia-Pacific $82,758 in court costs.

In a parallel action that Georgia-Pacific commenced in the

Western District of Arkansas against one of von Drehle’s

distributors, the district court had, by the time of the trial

in this action, already ruled against Georgia-Pacific,

concluding that the practice of stuffing von Drehle’s 810-B

4 paper towel into Georgia-Pacific’s enMotion dispensers “did not

create a likelihood of confusion,” Georgia-Pacific Consumer

Prod. LP v. Myers Supply, Inc., No. 6:08-cv-6086, 2009 WL

2192721, at *8 (W.D. Ark. July 23, 2009), and the Eighth Circuit

affirmed, 621 F.3d 771, 777 (8th Cir. 2010) (holding that the

district court did not “clearly err in finding that the

trademark on a dispenser does not indicate the source of the

paper towels inside, and concluding that there was no likelihood

of confusion, and thus no trademark infringement”).

In the second parallel action, which Georgia-Pacific

commenced against one of von Drehle’s distributors in the

Northern District of Ohio, the district court had, by the time

of the trial in this action, also ruled against Georgia-Pacific.

The court held that the Arkansas judgment precluded Georgia-

Pacific from relitigating its trademark infringement claim, see

Georgia-Pacific Consumer Prods. LP v. Four-U-Packaging, Inc.,

821 F. Supp. 2d 948 (N.D. Ohio 2011), and the Sixth Circuit

affirmed, 701 F.3d 1093, 1103 (6th Cir. 2012).

On appeal from the remedies award in this case, von Drehle

challenges the geographical scope of the district court’s

injunction, arguing that the Eighth and Sixth 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

5 legal standards for trebling the jury award and for awarding

attorneys 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

Fourth Circuit. As to the monetary awards, (1) we reverse the

treble damages award and instruct the district court to

reinstate the jury’s award of $791,431; (2) we vacate the award

of attorneys fees and remand for application of the appropriate

standard; and (3) we reverse the award of prejudgment interest.

I

In 2005, after learning of von Drehle’s practice of

“stuffing” or “causing to be stuffed” Georgia-Pacific enMotion

towel dispensers with von Drehle 810-B paper towels, Georgia-

Pacific sent von Drehle a letter “[d]emand[ing] . . . that von

Drehle immediately cease and desist marketing, selling and

distributing the 810 towel.” von Drehle rejected Georgia-

Pacific’s demand, stating that it considered its conduct to be

legitimate competition that did not infringe Georgia-Pacific’s

enMotion trademark.

Georgia-Pacific thereafter commenced this action, alleging

that von Drehle’s stuffing practices constituted contributory

6 trademark infringement, in violation of the Lanham Act,

15 U.S.C. § 1114(1)(a). It alleged that von Drehle “knowingly

and intentionally manufactured -- or directed the manufacture --

and sold -- or directed the sale of -- finished paper towel

rolls designed specifically and solely for use in enMotion

dispensers,” and that this practice was “likely to cause

confusion and . . . to deceive End-User Customers . . . .”

Georgia-Pacific sought injunctive relief, an accounting of von

Drehle’s profits, and damages.

The district court granted von Drehle’s motion for summary

judgment, concluding that Georgia-Pacific had “failed to show

that von Drehle’s sale of its 810-B paper towel roll to

distributors for use in enMotion dispensers caused consumer

confusion.” Georgia-Pacific Consumer, Prods. LP v. von Drehle

Corp., 645 F. Supp. 2d 532, 536 (E.D.N.C. 2009). The court

considered the end-users in this context to be “those business

owners who purchase[d] paper towel rolls from distributors for

the enMotion dispensers installed in their premises,” a class of

consumers who “kn[e]w exactly from which company they [were]

purchasing the paper towel rolls.” Id. at 537. By order dated

August 10, 2010, we reversed and remanded, holding that the

district court “erred in limiting its likelihood of confusion

inquiry to distributors who purchased 810-B Toweling and their

respective end-user customers,” such as hotels. Georgia-Pacific

7 Consumer Prods., LP v. von Drehle Corp., 618 F.3d 441, 453 (4th

Cir. 2010). We pointed out that “Fourth Circuit case law makes

room for the factfinder to consider confusion among the non-

purchasing public in the likelihood-of-confusion inquiry.” Id.

On remand, von Drehle filed a motion seeking judgment as a

matter of law, arguing that the decision of the Western District

of Arkansas, which rejected Georgia-Pacific’s infringement

claims, should preclude Georgia-Pacific from advancing those

same claims in this case. The district court, however, denied

von Drehle’s motion and set the matter for trial, explaining

that von Drehle had inordinately delayed raising its preclusion

argument.

At the three-day trial, Georgia-Pacific presented its case

to the jury for contributory trademark infringement and

requested injunctive relief and disgorgement of von Drehle’s

profits. At closing argument to the jury, counsel for Georgia-

Pacific stated:

So what we want is for [von Drehle] to quit doing it, and we want damages. The damages we want and I think from the Judge’s instructions you will find if we prevail we are entitled to this -- [is] for them to give up the profits that they made selling knock-off paper to put into our trademarked dispenser. And the only number in the record on that is in Plaintiff’s Exhibit 266 [summarizing von Drehle’s annual gross profits from the sale of 810-B paper towels from 2004 through 2011]. They made a profit of $794,000 from the time that they put it on the market in 2004 through 2011. And that’s what we’re asking you for, the profits, give us the profits that you made trading

8 on our name and our trademark. So I submit to you when you get back there and you go through all these packages, get to the verdict form, the first question is, have we proven trademark infringement? Yes. The second question is, what are the damages? $794,000.

(Emphasis added). Just as Georgia-Pacific’s counsel requested,

the jury returned a verdict answering “yes” to the question

whether von Drehle infringed Georgia-Pacific’s trademark and

awarding Georgia-Pacific: “$791,431 when the cease [and desist]

letter came out Jan 05.” Because Exhibit 266, to which counsel

referred at closing argument, included profit for 2004 in the

amount of $2,569, which was earned before the cease and desist

letter was sent, the jury apparently subtracted that sum from

the $794,000 amount requested to arrive at its award of

$791,431. The jury thus awarded Georgia-Pacific 100% of the

profits that it requested for the period beginning with its

cease-and-desist letter in January 2005 and ending in December

2011.

Following trial, von Drehle renewed its motion for judgment

as a matter of law based on claim and issue preclusion, and the

district court granted it, vacating the jury verdict and

entering judgment for von Drehle. Georgia-Pacific Consumer

Prods. LP v. von Drehle Corp., 856 F. Supp. 2d 750, 757

(E.D.N.C. 2012). The court explained:

The question submitted to the jury in this case was whether “plaintiff established by a preponderance of the evidence that the defendant infringed on

9 plaintiff’s valid trademark.” The jury responded to this question in the affirmative. However, because another court had previously decided this same question in the negative, this Court now holds that Defendant should be permitted to raise the affirmative defense of claim and issue preclusion and that judgment as a matter of law is appropriate.

Id. at 753 (citation omitted). On appeal, we again reversed,

concluding that “von Drehle [had] waived its preclusion

defenses” and that “the district court abused its discretion by

allowing von Drehle to assert its preclusion defenses 16 months

after the substantive basis for those defenses was known to von

Drehle.” Georgia-Pacific Consumer Prods., LP v. von Drehle

Corp., 710 F.3d 527, 536 (4th Cir.), cert. denied, 134 S. Ct.

393 (2013). We remanded the case with instructions to reinstate

the jury verdict and to consider the other relief that Georgia-

Pacific had requested. Id.

On remand, the district court granted Georgia-Pacific the

injunctive relief it requested and, finding von Drehle’s

infringement to have been willful and intentional, trebled the

jury verdict, awarded attorneys fees, and awarded prejudgment

interest. Including court costs, the total monetary award

amounted to $4,887,283.51.

From the judgment entered on July 28, 2013, von Drehle

filed this appeal, challenging the geographical scope of the

injunction and each monetary award except court costs.

10 II

As part of the post-verdict relief granted, the district

court entered a permanent, nationwide injunction prohibiting von

Drehle “from interfering directly or indirectly with [Georgia-

Pacific’s] trademark rights,” which, the court stated, included

“the right of [Georgia-Pacific] to enforce the use of only their

paper towel products in their enMotion dispensers.” Georgia-

Pacific Consumer Prods. LP v. von Drehle Corp, No. 5:05-cv-478-

BO, 2013 WL 3923984, at *2 (E.D.N.C. July 29, 2013). von Drehle

contends that the district court should not have issued a

nationwide injunction that “conflict[s] with the decisions of

other circuits” and that “undermine[s] the prerogatives of

courts of appeals that have yet to address the relevant legal

issues.” As noted, both the Eighth and the Sixth Circuits have

concluded that Georgia-Pacific may not enforce its enMotion mark

to prohibit the practice of stuffing von Drehle’s 810-B paper

towels into enMotion towel dispensers. See Myers Supply, 621

F.3d at 777; Four-U-Packaging, 701 F.3d at 1103.

We review the scope of a permanent injunction for abuse of

discretion. See Tuttle v. Arlington Cnty. Sch. Bd., 195 F.3d

698, 703 (4th Cir. 1999).

Neither party contends that a district court, as a general

matter, lacks authority to issue a nationwide injunction

prohibiting trademark infringement. See 15 U.S.C. § 1116(a);

11 see also Va. Soc’y for Human Life, Inc. v. FEC, 263 F.3d 379,

393 (4th Cir. 2001) (“Nationwide injunctions are appropriate if

necessary to afford relief to the prevailing party”), abrogation

on other grounds recognized in Real Truth About Abortion, Inc.

v. FEC, 681 F.3d 544, 550 n.2 (4th Cir. 2012); Richmond Tenants

Org., Inc. v. Kemp, 956 F.2d 1300, 1302, 1309 (4th Cir. 1992)

(holding that a nationwide injunction was “appropriately

tailored to prevent irreparable injury” where the various

plaintiffs resided in different parts of the country); see also

United States v. AMC Entm’t, Inc., 549 F.3d 760, 770 (9th Cir.

2008) (“[T]he court has the power to enforce the terms of the

injunction outside the territorial jurisdiction of the court,

including issuing a nationwide injunction”). Nonetheless,

equity requires that injunctions be carefully tailored,

especially where, as here, questions of inter-circuit comity are

involved. See Va. Soc’y, 263 F.3d at 393-94; AMC Entm’t, 549

F.3d at 773 (“Principles of comity require that, once a sister

circuit has spoken to an issue, that pronouncement is the law of

that geographical area”); id. at 770 (“Courts ordinarily should

not award injunctive relief that would cause substantial

interference with another court’s sovereignty”).

Within the 11 States comprising the Eighth and Sixth

Circuits, courts of appeals have held that Georgia-Pacific may

not enforce its enMotion mark to prohibit the stuffing of von

12 Drehle 810-B paper towels into enMotion towel dispensers. For

us to now countenance an injunction that would give Georgia-

Pacific the right to enforce its mark in those States would

amount to a direct and unseemly affront to those courts. And

such an affront would only be exacerbated in light of our

earlier ruling, where we refused to recognize their decisions

due to von Drehle’s tardiness. In addition, upholding the

nationwide injunction would, as a practical matter, create a

direct and perhaps irreconcilable conflict as to Georgia-

Pacific’s trademark rights in the Eighth and Sixth Circuits,

leaving litigants and others in those States confused. As a

matter of comity, therefore, we conclude that the district court

abused its discretion in extending the injunction to those

jurisdictions, and accordingly we will not authorize its

enforcement within the Eighth and Sixth Circuits.

The question remains whether we should nonetheless

authorize the injunction to operate within those circuits that

have not yet had occasion to consider these issues. Courts in

circuits other than the Eighth and Sixth now face a significant

split of authority regarding the enforceability of Georgia-

Pacific’s enMotion trademark in the context of von Drehle’s

stuffing practices. Were Georgia-Pacific to commence identical

litigation against von Drehle or one of its distributors in the

First Circuit, for example, that court would be faced with the

13 question of whether to follow the Fourth Circuit on the one hand

or the Eighth and Sixth Circuits on the other. Because the

forum court should be free to resolve this question, comity also

requires that we not allow the injunction to extend to the

remaining circuits. Cf. Va. Soc’y, 263 F.3d at 393-94 (refusing

to issue an injunction that would have “encroache[d] on the

ability of other circuits to consider” an important legal

question and “impos[ed] our view of the law on all the other

circuits”).

Georgia-Pacific challenges this conclusion on two grounds.

First, it contends that von Drehle waived any challenge to the

scope of the injunction because it failed to present the

argument to the district court. The record, however, belies

this contention. In response to Georgia-Pacific’s motion for a

permanent injunction, von Drehle argued to the district court

that the judgment against it “has created a significant split

with the Sixth and Eighth Circuits” and that the district court

“cannot and should not enter any injunction which impacts . . .

the Sixth and Eighth Circuit decisions.” In addition, at the

hearing before the district court on the motion, von Drehle

pointed out that “the Eighth Circuit and the Sixth Circuit have

found [that] this conduct is not infringement” and accordingly

maintained that, “to the extent [the court] is going to grant an

injunction, . . . the injunction needs to take . . . into

14 account [those] rulings.” Finally, it is clear that the

district court was fully aware of von Drehle’s argument, as

indicated by its remark to Georgia-Pacific’s attorney during the

same hearing that “this injunction can’t go into Ohio and

Tennessee where you’ve lost. It can only hold water where

you’ve won.”

Second, Georgia-Pacific argues that “there is no basis for

von Drehle’s claim that the injunction . . . interferes with the

Myers or Four-U rulings” because “[n]either decision determined

the rights of von Drehle, which was not a party to either case.”

But such an argument takes a far too technical view of this

case, especially when considering the inter-circuit comity

issues involved. Even though there was not a precise identity

of parties, the fact remains that Georgia-Pacific has been given

the right to enforce its trademark against von Drehle’s stuffing

practices in the Fourth Circuit and has been denied that right

in the Eighth and Sixth Circuits.

Accordingly, for the sake of comity, we require, under the

unique circumstances of this case, that the injunction be

limited geographically to the States in this circuit. We

therefore vacate the injunction granted by the district court

and remand with instructions to modify it in accordance with

this opinion.

15 III

In response to Georgia-Pacific’s request for treble

damages, the district court observed that an award of treble

damages “is appropriate when there has been a finding of willful

or intentional infringement.” Georgia-Pacific, 2013 WL 3923984,

at *2 (citing Larsen v. Terk Techs. Corp., 151 F.3d 140, 150

(4th Cir. 1998)). After noting that von Drehle’s president had

testified that von Drehle’s 810-B towels were specifically

designed to fit the Georgia-Pacific enMotion dispensers and that

he knew that they would be stuffed into enMotion dispensers, the

court concluded that von Drehle’s infringement was “willful and

intentional.” Relying on Larsen, it accordingly trebled the

jury’s award of $791,431 to $2,374,293.

von Drehle contends that the district court erred in

applying the “willful and intentional” standard from Larsen

because Larsen applied to a recovery under § 1117(b), which

requires a court to treble damages for a knowing and intentional

use of a counterfeit mark. This case, however, involves a

recovery of profits under § 1117(a), and therefore, von Drehle

argues, the court is authorized to adjust the jury’s award only

if it deems the recovery to be “inadequate or excessive,” and

then only to compensate the plaintiff, not to punish the

defendant.

16 Georgia-Pacific argues that although Larsen interprets

§ 1117(b), it is hardly irrelevant in this case because the

“counterfeiting claims addressed by [§ 1117(b)] provide a close

parallel to the claims at issue here.” And it contends that

“whatever the basis of the plaintiff’s proven injury -- profits,

damages, or both -- the statute expressly permits the court to

award a greater sum.”

We agree with von Drehle that, by relying on Larsen and

awarding treble damages for willful and intentional

infringement, the district court erroneously conflated § 1117(a)

and § 1117(b).

Monetary relief for trademark infringement is provided for

in 15 U.S.C. § 1117, and each type of monetary award is

categorized with particularity and separately addressed.

Section 1117(a), which applies generally to trademark

infringement cases (and which the parties agree applies in this

case), authorizes a plaintiff to recover (1) the defendant’s

profits based simply on proof of the defendant’s sales; (2) the

plaintiff’s damages; (3) court costs; and (4) in exceptional

cases, attorneys fees. The section also sets forth the criteria

and standards for awarding each type of recovery. As to a

recovery based on the defendant’s profits, § 1117(a) provides:

In assessing profits the plaintiff shall be required to prove defendant’s sales only; defendant must prove all elements of cost or deduction claimed. . . . If

17 the court shall find that the amount of the recovery based on profits is either inadequate or excessive[,] the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case. Such sum . . . shall constitute compensation and not a penalty.

And as to a recovery based on the plaintiff’s damages, which the

statute distinguishes from an award based on the defendant’s

profits, § 1117(a) provides:

In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. . . . Such sum . . . shall constitute compensation and not a penalty.

Section 1117(b), on the other hand, mandates the award of

treble profits or treble damages for a defendant’s “use of [a]

counterfeit mark” if the infringement consists of (1)

“intentionally using a mark or designation, knowing such mark or

designation is a counterfeit mark,” or (2) “providing goods or

services [using such mark], with the intent that the recipient

of the goods or services would put the goods or services to use

in committing the violation.” 15 U.S.C. § 1117(b) (emphasis

added). This section also authorizes a court to award

prejudgment interest for such a violation. Thus, § 1117(b), by

providing for heightened monetary awards, reflects the fact that

use of a counterfeit mark is “the most blatant and egregious

form of ‘passing off.’” J. Thomas McCarthy, McCarthy on

Trademarks and Unfair Competition § 25:10 (4th ed. 2012).

18 Section 1117 provides vastly different legal standards,

based on the egregiousness of the offense, for determining when

a district court can modify an award -- distinguishing an award

for knowingly and intentionally using a counterfeit mark from an

award for using a noncounterfeit mark. The district court

therefore erred in relying on Larsen, a case involving a

counterfeit mark, to award treble damages here.

Nor can Georgia-Pacific seek to justify the award of treble

damages under the plain language of § 1117(a). Under that

section, when a plaintiff seeks recovery based on a defendant’s

profits, the court may adjust the jury’s verdict up or down, but

only if it finds the amount of recovery to be either “inadequate

or excessive,” and then only insofar as the adjustment is

determined to be just and compensatory, not punitive. Accord

Thompson v. Haynes, 305 F.3d 1369, 1380 (Fed. Cir. 2002) (“By

the terms of the statute, ‘damages’ are to be treated separately

from ‘profits.’ As for damages, the court may award up to three

times actual damages, depending on the circumstances of the

case. As for profits, however, the court is not authorized to

award up to three times the amount proved. For profits, the

court is constrained to award the amount proved, subject only to

an adjustment, up or down, where the recovery would be otherwise

unjust”); Badger Meter, Inc. v. Grinnell Corp., 13 F.3d 1145,

1157 (7th Cir. 1994) (“[S]ection 1117(a) provides two methods

19 which the district court can utilize separately or in

combination to approximate a fair recovery for the plaintiff.

The first discretionary method is to award up to three times the

damages plaintiff can actually prove. . . . The second

discretionary method allows the court to award the plaintiff

‘such sum as the court shall find to be just, according to the

circumstances of the case,’ and is premised on the finding that

‘recovery based on [defendant’s] profits is either inadequate or

excessive’” (alteration in original) (quoting 15 U.S.C.

§ 1117(a))).

In this case, Georgia-Pacific requested a recovery

consisting only of von Drehle’s profits, and the jury granted

that request. As counsel for Georgia-Pacific told the jury,

“[t]he damages we want . . . is for them to give up the profits

that they made selling knock off paper to put into our

trademarked dispenser. . . . [T]hat’s what we’re asking you

for, the profits, give us the profits that you made trading on

our name and our trademarks.” Indeed, it is uncontroverted that

Georgia-Pacific’s only claim for monetary relief in this case

was based on von Drehle’s profits. And, as noted, when a

recovery is based on the defendant’s profits, § 1117(a) gives

the district court the limited discretion to increase the award

only when and to the extent it deems the award to be inadequate

to compensate the plaintiff for the defendant’s profits. Here,

20 there would be no basis for the district court to conclude that

the jury’s award was inadequate to compensate Georgia-Pacific

because the jury gave Georgia-Pacific virtually all that it

sought. Moreover, Georgia-Pacific has never argued that the

jury’s award of profits was inadequate. Since enhancement of a

profits recovery is the only avenue through which Georgia-

Pacific could have obtained additional monetary relief under

§ 1117(a), the district court erred in awarding treble damages,

which are punitive and are not authorized by § 1117(a) for a

recovery based on profits.

Georgia-Pacific argues that von Drehle has waived any

argument that treble damages were illegally awarded, contending

that von Drehle did not present the issue to the district court.

Again, the record belies this contention. In response to

Georgia-Pacific’s request for treble damages, von Drehle pointed

out to the district court that enhanced damages were not

appropriate because “[t]his case was submitted to the jury on

Georgia-Pacific’s request for an award of von Drehle’s profits”

and Georgia-Pacific had presented no evidence that “the verdict

amount [was] insufficient to compensate [it],” and it referred

the court directly to § 1117(a). While von Drehle may not have

presented this argument in as detailed a fashion as it has to us

on appeal, it nonetheless preserved its point for appeal.

21 Accordingly, we reverse the district court’s order awarding

treble damages and direct the court to enter judgment in the

amount awarded by the jury, $791,431, which constitutes von

Drehle’s profits from the sale of its 810-B paper towels from

January 7, 2005, through the end of 2011.

IV

The district court also awarded Georgia-Pacific attorneys

fees of $2,225,782.35, finding that von Drehle’s “willful and

intentional” infringement rendered this case “exceptional,” as

that term is used in 15 U.S.C. § 1117(a). Georgia-Pacific, 2013

WL 3923984, at *2. Section 1117(a) provides, “The court in

exceptional cases may award reasonable attorney fees to the

prevailing party.” (Emphasis added). The court based its

willful-and-intentional finding on the fact that von Drehle

specifically designed its 810-B paper towels for use in Georgia-

Pacific’s enMotion dispenser and knew that they would be stuffed

in those dispensers.

von Drehle contends that this case is not “exceptional,” as

that term is used in § 1117(a), and that the district court

erroneously relied on its purposeful conduct in distributing

towels for use in Georgia-Pacific’s enMotion machines,

conflating willful and intentional conduct with willful and

22 intentional infringement. We agree, especially since von Drehle

reasonably believed that its conduct was lawful.

We have defined the “exceptional” case for purposes of

§ 1117(a) “as one in which ‘the defendant’s conduct was

malicious, fraudulent, willful or deliberate in nature.’”

Retail Servs., Inc. v. Freebies Publ’g, 364 F.3d 535, 550 (4th

Cir. 2004) (quoting PETA v. Doughney, 263 F.3d 359, 370 (4th

Cir. 2001)). But, in this context, the word “willful” does not

mean that the defendant’s actions were merely volitional, but

rather that the defendant acted with the intent to infringe the

plaintiff’s protected mark. See, e.g., In re Outsidewall Tire

Litig., 748 F. Supp. 2d 557, 562 (E.D. Va. 2010)

(“‘[W]illfulness’ means more than simply that the act of

infringement was done voluntarily and intentionally and not

because of accident or other innocent reason” (internal

quotation marks and citation omitted)); Vanwyk Textile Sys.,

B.V. v. Zimmer Mach. Am., Inc., 994 F. Supp. 350, 381 (W.D.N.C.

1997) (“Willfulness in performing the act . . . does not

necessarily mean willfulness in violating the law. Willfulness

in violating the law may qualify the case as exceptional”

(citation omitted)); accord Badger Meter, 13 F.3d at 1159 (“We

do not agree that intentionally copying a competitor’s product,

even if this is later determined to involve trade dress

infringement, by itself constitutes ‘willful’ infringement

23 . . .”); Tex. Pig Stands, Inc. v. Hard Rock Cafe Int’l, Inc.,

951 F.2d 684, 696-97 (5th Cir. 1992) (noting that the attorneys

fees provision in § 1117(a) “has been interpreted by courts to

require a showing of a high degree of culpability on the part of

the infringer”). To affirm the district court’s application of

its volitional standard would mean that every Lanham Act case

would qualify as “exceptional” unless the defendant could show

that it unintentionally or mistakenly performed the actions

later found to be a violation of the Act.

More importantly, after the court had received the parties’

briefs in this case, the Supreme Court handed down its decision

in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.

Ct. 1749 (2014). While Octane Fitness did not construe

§ 1117(a), it did construe a parallel and identical provision in

the Patent Act, which provides, “The court in exceptional cases

may award reasonable attorney fees to the prevailing party.”

35 U.S.C. § 285. The Federal Circuit had previously given § 285

a narrow interpretation, concluding:

A case may be deemed exceptional when there has been some material inappropriate conduct related to the matter in litigation, such as willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates Fed. R. Civ. P. 11, or like infractions. Absent misconduct in conduct of the litigation or in securing the patent, sanctions may be imposed against the patentee only if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless.

24 Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d

1378, 1381 (Fed. Cir. 2005) (citation omitted). But the Supreme

Court rejected the Federal Circuit’s interpretation of

“exceptional,” describing the Federal Circuit’s test as “unduly

rigid.” Octane Fitness, 134 S. Ct. at 1755. Relying on the

statute’s simple text and dictionary definitions of

“exceptional,” the Court concluded:

[A]n ‘exceptional’ case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is ‘exceptional’ in the case-by-case exercise of their discretion, considering the totality of the circumstances.

Id. at 1756. The Court then pointed the district courts to the

same nonexclusive list of factors that it had previously

identified as relevant for use in determining whether to award

attorneys fees under a similar provision of the Copyright Act, a

list that included “frivolousness, motivation, objective

unreasonableness (both in the factual and legal components of

the case) and the need in particular circumstances to advance

considerations of compensation and deterrence.” Id. at 1756 n.6

(quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19

(1994)) (internal quotation marks omitted).

To be sure, the Octane Fitness Court did not interpret the

attorneys fees provision of § 1117(a). But the language of

25 § 1117(a) and § 285 is identical, and we conclude that there is

no reason not to apply the Octane Fitness standard when

considering the award of attorneys fees under § 1117(a). See

Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303, 314-15 (3d

Cir. 2014) (“While Octane Fitness directly concerns the scope of

a district court’s discretion to award fees for [an]

‘exceptional’ case under § 285 of the Patent Act, the case

controls our interpretation of [§ 1117(a)]. Not only is § 285

identical to [§ 1117(a)], but Congress referenced § 285 in

passing [§ 1117(a)]”).

Thus, we conclude that a district court may find a case

“exceptional” and therefore award attorneys fees to the

prevailing party under § 1117(a) when it determines, in light of

the totality of the circumstances, that (1) “there is an unusual

discrepancy in the merits of the positions taken by the

parties,” Fair Wind Sailing, 764 F.3d at 315, based on the non-

prevailing party’s position as either frivolous or objectively

unreasonable, see Octane Fitness, 134 S. Ct. at 1756 n.6; (2)

the non-prevailing party “has litigated the case in an

‘unreasonable manner,’” Fair Wind Sailing, 764 F.3d at 315

(quoting Octane Fitness, 134 S. Ct. at 1756); or (3) there is

otherwise “the need in particular circumstances to advance

considerations of compensation and deterrence,” Octane Fitness,

26 134 S. Ct. at 1756 n.6 (quoting Fogerty, 510 U.S. at 534 n.19)

(internal quotation marks omitted).

Because the district court did not have the benefit of the

Octane Fitness standard when considering whether Georgia-Pacific

was entitled to attorneys fees under § 1117(a), we vacate the

court’s award of attorneys fees and remand the question for

further consideration in light of this standard.

V

Finally, the district court awarded Georgia-Pacific

prejudgment interest in the amount of $204,450, based on its

conclusion that this was an “exceptional” case. Georgia-

Pacific, 2013 WL 3923984, at *3.

awarding prejudgment interest because (1) prejudgment interest

is not an available remedy under 15 U.S.C. § 1117(a), and (2) in

any event, this is not an “exceptional” case.

Section 1117, authorizing monetary relief for trademark

infringement, particularizes in considerable detail the types of

monetary relief available for trademark infringement and defines

the criteria for awarding each type. It thus authorizes, in

specified circumstances, awards of (1) the defendant’s profits;

(2) the plaintiff’s damages; (3) court costs; (4) attorneys

fees; (5) treble profits or treble damages; (6) prejudgment

27 interest; and (7) statutory damages. Because Congress

legislated with great precision in providing when each

particular type of monetary relief is available, it is

appropriate to conclude that if Congress provided for a certain

type of monetary relief only in a given specified circumstance,

that type of relief is not available in other circumstances.

For example, in § 1117(a), a plaintiff may be awarded the

defendant’s profits based only on proof of the defendant’s

sales, subject to a specific adjustment when necessary to

compensate for an inadequate or an excessive award of profits.

Yet in § 1117(b), a plaintiff may be awarded three times the

defendant’s profits when the specific criteria of § 1117(b) are

satisfied. Similarly, as relevant here, § 1117(b) authorizes an

award of prejudgment interest in cases involving the knowing and

intentional use of a counterfeit mark, but § 1117 makes no

express provision for prejudgment interest in other

circumstances.

To be sure, as a general matter, prejudgment interest may

be awarded at the district court’s discretion unless the

applicable statute provides otherwise. See Quesinberry v. Life

Ins. Co. of N. Am., 987 F.2d 1017, 1030 (4th Cir. 1993) (en

banc). But when, as here, a statute provides particularized

forms of monetary relief and explicitly authorizes prejudgment

interest in some circumstances but not others, we conclude that

28 prejudgment interest is not intended to be awarded except as

provided in the statute. See Moscow Distillery Cristall v.

Pepsico, Inc., Nos. 96-36217, 96-36249, 96-36250, 1998 WL

101696, at *3 (9th Cir. Mar. 9, 1998) (“Prejudgment interest is

available under the Lanham Act only for counterfeiting . . .”

(citing 15 U.S.C. § 1117(b))). As relevant here, § 1117(a)

makes no specific provision for prejudgment interest in cases

involving a recovery of a defendant’s profits, nor does

prejudgment interest itself constitute a profit, as that term is

generally used.

We recognize that at least one court has authorized

prejudgment interest under § 1117(a) in an “exceptional” case.

See Am. Honda Motor Co. v. Two Wheel Corp., 918 F.2d 1060, 1064

(2d Cir. 1990). But we can find no support for its conclusion

in the text of the statute. Indeed, § 1117(a) employs the

“exceptional case” standard only for an award of attorneys fees,

not prejudgment interest.

That said, we do not categorically foreclose an award of

prejudgment interest under § 1117(a) as an element of a damages

award in a trademark infringement case. To be sure, one’s loss

of the use of a particular sum of money over a period of time

causes damage, for which the law generally allows an award of

prejudgment interest. See generally Monessen Sw. Ry. Co. v.

Morgan, 486 U.S. 330, 335 (1988) (“Prejudgment interest is

29 normally designed to make the plaintiff whole and is part of the

actual damages sought to be recovered”); Johnson v. Cont’l

Airlines Corp., 964 F.2d 1059, 1063 (10th Cir. 1992)

(“[P]rejudgment interest is an integral element of compensatory

damages . . .”). But, in this case, Georgia-Pacific did not

undertake to prove its own damages, claiming instead only a

disgorgement of von Drehle’s gross profits.

For these reasons, we reverse the district court’s award of

prejudgment interest to Georgia-Pacific.

VI

In sum, we vacate the district court’s injunction and its

award of attorneys fees and remand for further proceedings

consistent with this opinion. We reverse its awards of treble

damages (leaving in place the jury’s award of profits) and

prejudgment interest.

IT IS SO ORDERED.

30 SHEDD, Circuit Judge, concurring in part and dissenting in part:

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. 1

In 2013, we affirmed a jury verdict in favor of Georgia-Pacific

Consumer Products, LP on its contributory infringement claim

against von Drehle, and we remanded the case for further

proceedings, including consideration of Georgia-Pacific’s

request for injunctive relief. Despite the fact that Georgia-

Pacific had by that time lost similar litigation in the Eighth

and Sixth Circuits, we rejected von Drehle’s belated attempt to

assert claim and issue preclusion as affirmative defenses, and

we also found that there were no “special circumstances”

(including comity) permitting the district court to raise the

preclusion defenses sua sponte. On remand, the district court

permanently enjoined von Drehle from interfering with Georgia-

Pacific’s trademark rights. The parties agree that the scope of

the injunction is nationwide.

Viewing this appeal under our normal standard of review,

the district court did not abuse its broad equitable discretion

by entering a nationwide injunction. The majority’s contrary

1 Despite my partial concurrence, I do not agree with the majority’s assertion that “von Drehle reasonably believed that its [infringing] conduct was lawful.” Majority Op., at 23.

31 decision, limiting the scope of the injunction to the states

within this circuit, is based on misapplication of the

discretionary doctrine of comity; fails to accord proper respect

to our 2013 opinion; and runs counter to a fundamental purpose

of the Lanham Act, which is “to provide national protection for

trademarks used in interstate and foreign commerce.” Park ’N

Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 193

(1985). The result of the majority’s opinion is that Georgia-

Pacific will be deprived of the complete and effective relief to

which it is entitled, and von Drehle, relying on that opinion,

will believe that it is permitted to continue interfering with

Georgia-Pacific’s trademarks in 45 states. The Lanham Act

authorizes federal courts to issue injunctive relief “according

to the principles of equity and upon such terms as the court may

deem reasonable,” 15 U.S.C. § 1116(a), but there is nothing

equitable or reasonable about this result, and its peculiarity

is self-evident, see, e.g., United States Jaycees v.

Philadelphia Jaycees, 639 F.2d 134, 142 (3rd Cir. 1981)

(“Protection of infringers is not a purpose of the Lanham Act.

On the contrary, the Act’s objective is the protection of the

trademark and the public.”).

We have previously detailed the history of this and related

litigation. See Georgia-Pacific Consumer Prods., LP v. von

32 Drehle Corp., 618 F.3d 441 (4th Cir. 2010) (“Georgia-Pacific

I”); Georgia-Pacific Consumer Prods., LP v. von Drehle Corp.,

710 F.3d 527 (4th Cir.) (“Georgia-Pacific II”), cert. denied,

134 S.Ct. 393 (2013). I will highlight certain aspects of this

litigation history to better explain my disagreement with the

majority’s decision.

Since the early 2000s, Georgia–Pacific has manufactured and

marketed throughout the country a touchless paper towel

dispenser under the “enMotion” product line. The dispenser is

designed for use in the “away-from-home” restroom market, and

Georgia-Pacific owns several federally registered trademarks

associated with the enMotion line. The Georgia-Pacific dispenser

was different in size and dimensions from competing dispensers,

and Georgia–Pacific developed high-quality paper towels that

were designed specifically for use in the Georgia-Pacific

dispensers. Georgia-Pacific leased its dispensers to

distributors. The leases between Georgia–Pacific and its

distributors, and the subleases that the distributors were

required to enter into with end-user customers such as hotels

and restaurants, stipulated that only Georgia-Pacific paper

towels were to be used in the dispensers.

In July 2005, Georgia-Pacific filed this lawsuit against

von Drehle in the Eastern District of North Carolina asserting

several claims for relief, including one for contributory

33 trademark infringement in violation of 15 U.S.C. § 1114(1). 2 The

gist of the contributory infringement claim is that von Drehle,

a North Carolina corporation with its principal place of

business in Hickory, North Carolina, manufactured and marketed

nationally a line of paper towels (sometimes referred to as “the

810-B paper towels”) that were designed for use in Georgia-

Pacific’s paper towel dispensers. “The von Drehle paper towels

were inferior in quality to the [Georgia-Pacific] paper towels,

but von Drehle and its distributors marketed the von Drehle

paper towels as a cheaper alternative for use in the [Georgia-

Pacific] dispensers, a practice known in the industry as

‘stuffing.’” Georgia-Pacific II, 710 F.3d at 529.

Partially due to an erroneous summary judgment ruling in

von Drehle’s favor, which we vacated in our 2010 Georgia-Pacific

I decision, over six years elapsed before Georgia-Pacific was

able to present its contributory trademark infringement claim to

a jury. During a January 2012 trial, the jury found in Georgia–

Pacific’s favor and awarded damages in the amount of $791,431,

which represent “all of the profits that von Drehle earned from

2 See Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 854 (1982) (“[I]f a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, the manufacturer or distributor is [contributorily] responsible for any harm done as a result of the deceit.” (emphasis added)).

34 the sale of its 810-B paper towels from 2005 to the date of

trial.” Majority Op., at 4. In the damages award, no distinction

has ever been made between the profits earned from von Drehle’s

sales within or outside the Fourth Circuit.

Initially, Georgia-Pacific’s victory was short-lived. Two

months after trial, the North Carolina district court (acting on

von Drehle’s motion and sua sponte) set aside the jury verdict

and granted judgment as a matter of law to von Drehle based on

grounds of claim and issue preclusion. See Georgia-Pacific

Consumer Prods., LP v. von Drehle Corp., 856 F.Supp.2d 750

(E.D.N.C. 2012). The court’s decision stemmed from the judgments

in two related cases filed by Georgia-Pacific against von Drehle

distributors. In both cases, Georgia-Pacific asserted, among

other things, a claim for contributory trademark infringement

based on these distributors’ marketing of the von Drehle paper

towels for use in Georgia-Pacific’s dispensers. 3

3 Von Drehle has criticized Georgia-Pacific’s “multi-front litigation” strategy, but “[e]ffective enforcement of trademark rights is left to the trademark owners and they should, in the interest of preventing purchaser confusion, be encouraged to enforce trademark rights.” Scotch Whisky Ass’n v. Majestic Distilling Co., 958 F.2d 594, 599 (4th Cir. 1992) (internal punctuation and citation omitted). Moreover, under the majority’s view that the nationwide injunction is inappropriate, Georgia-Pacific will be required to engage in a multi-front strategy in the future to protect its trademark rights.

35 Georgia-Pacific filed the first of these cases in September

2008 - more than three years after it filed this action - in the

Western District of Arkansas against Myers Supply, Inc. In July

2009, while the original case against von Drehle was pending in

the North Carolina district court, the Arkansas district court

conducted a bench trial and ruled against Georgia-Pacific.

Applying a different legal analysis than the one we set forth in

Georgia-Pacific I, see Georgia-Pacific II, 710 F.3d at 531 n.5,

the Arkansas district court determined that Myers Supply was

aware that its customers were “stuffing” von Drehle paper towels

into Georgia-Pacific’s dispensers, but the stuffing did not

create a likelihood of confusion as to the origin of the paper

towels and, therefore, did not constitute trademark

infringement. The Eighth Circuit subsequently affirmed the

Arkansas district court decision. See Georgia-Pacific Consumer

Prods. LP v. Myers Supply, Inc., 621 F.3d 771 (8th Cir. 2010).

Georgia-Pacific filed the second action in May 2009 against

Four-U-Packaging, Inc. in the Northern District of Ohio. In

November 2011, shortly before trial in the North Carolina

district court, the Ohio district court granted summary judgment

against Georgia-Pacific, holding that the action was barred by

the judgment in the Myers Supply case. See Georgia-Pacific

Consumer Prods. LP v. Four-U-Packaging, Inc., 821 F.Supp.2d 948

(N.D. Ohio 2011). In December 2012, while Georgia-Pacific’s

36 appeal of the North Carolina district court’s decision to grant

judgment as a matter of law to von Drehle was pending in this

Court, the Sixth Circuit affirmed the Ohio district court

decision. See Georgia-Pacific Consumer Prods. LP v. Four-U-

Packaging, Inc., 701 F.3d 1093 (6th Cir. 2012). The Sixth

Circuit based its ruling in part on the fact that the North

Carolina district court had set aside the jury verdict against

von Drehle and dismissed the case. The Sixth Circuit explained

that a primary goal of issue preclusion “is to ‘foster[]

reliance on judicial action by minimizing the possibility of

inconsistent decisions,’” and it concluded that “[b]ecause

judgment in Georgia–Pacific’s favor was set aside, application

of issue preclusion in this case poses no risk of creating

inconsistent rulings.” Id. at 1103 (quoting Montana v. United

States, 440 U.S. 147, 153–54 (1979)).

At the time, the Sixth Circuit’s observation about the

status of the North Carolina district court case was accurate.

However, four months after the Sixth Circuit’s decision, we held

in Georgia-Pacific II that the North Carolina district court

erred in setting aside the jury verdict and awarding judgment in

favor of von Drehle. We first concluded that von Drehle waived

the preclusion defenses by not asserting them in a timely manner

and, therefore, the district court abused its discretion by

considering them. As we explained, von Drehle’s counsel had been

37 immediately notified of the 2009 Arkansas district court

decision in Myers Supply, but von Drehle waited approximately

480 days before attempting to amend its answer to assert

preclusion as an affirmative defense.

More pertinent to the comity issue on which the majority

relies, we also held that the North Carolina district court

erred by considering the preclusion defenses sua sponte.

Notably, von Drehle specifically argued to us that the district

court was empowered to act sua sponte “where, as here, all

relevant data and legal records are before the court and the

demands of comity, continuity in the law, and essential justice

mandate judicial invocation of the principles of res judicata.”

Brief of Appellee, No. 12-1444, at 30 (4th Cir. Sept. 6, 2012)

(emphasis added) (internal punctuation and citation omitted).

Further, von Drehle argued that “[i]n raising preclusion on its

own motion as an independent ground for dismissal, the trial

court was protecting not just itself, but also the entire

judiciary. . . .” Id. at 31.

We recognized that sua sponte consideration of a preclusion

defense may be appropriate in “‘special circumstances,’” such as

when a court is on notice that it has previously decided the

issue in another case and raises the defense to avoid

“‘unnecessary judicial waste.’” Georgia-Pacific II, 710 F.3d at

535 (quoting Ariz. v. Calif., 530 U.S. 392, 412 (2000)).

38 However, despite von Drehle’s invocation of the doctrine of

comity and the need to protect “the entire judiciary,” we found

that “von Drehle [had] not identified [any] ‘special

circumstance’ justifying the district court’s unusual action.”

Georgia-Pacific II, 710 F.3d at 535. We explained that “this

case was particularly ill-suited for sua sponte consideration of

preclusion defenses that were known long before trial, given

that the issue of trademark infringement already had been

decided by the jury. Thus, the district court’s sua sponte

consideration of the preclusion defenses actually wasted

judicial resources, rather than sparing them.” Id.

Finally, we also observed that by relying on Myers Supply

as grounds for setting aside the jury verdict, the district

court violated the mandate rule because it failed to “implement

both the letter and spirit” of the mandate of Georgia-Pacific I.

Georgia-Pacific II, 710 F.3d at 536 n.13. For all of these

reasons, we remanded this case “with the specific instruction

that the district court reinstate the jury verdict in favor of

Georgia–Pacific and consider Georgia–Pacific’s requests for

injunctive and other appropriate relief.” Id. at 536.

Von Drehle petitioned for panel rehearing or rehearing en

banc arguing, among other things, that “[a]voiding conflict with

sister circuits is especially important,” and the panel’s waiver

analysis “violates principles of comity, fairness, and justice.”

39 Pet. for Reh’g or Reh’g En Banc, No. 12-1444, at 10 (4th Cir.

Mar. 28, 2013) (emphasis added). Further, von Drehle again

invoked “the demands of comity” in seeking to justify the

district court’s sua sponte consideration of the preclusion

defenses, and it noted that “[u]nder the panel’s holding, there

will now be years of litigation as [Georgia-Pacific] invokes the

result here and seeks to apply it to new and pending cases,

seeking to undo the decisions in Myers, Four-U, and the two

Courts of Appeals that have affirmed those decisions.” Id. at

15. Von Drehle concluded that it “is difficult to imagine a

result less conducive to judicial efficiency or less respectful

of the decisions of coordinate courts that have previously

addressed the identical dispute.” Id. The rehearing petition was

denied. Von Drehle subsequently asserted comity as a ground

warranting review in its unsuccessful petition for certiorari

review of the Georgia-Pacific II decision. See Pet. for Writ of

Cert., No. 13-41, at 22-25 (U.S. July 8, 2013).

On remand to the North Carolina district court, the parties

briefed and argued whether Georgia-Pacific is entitled to

injunctive relief and, if so, what the scope of that relief

should be. Regarding the scope, von Drehle argued (among other

things) that any injunction “should be narrowly tailored to

protect the legitimate rights of von Drehle and its

distributors” and “must account for the rulings of the Eighth

40 and Sixth Circuits and for [Georgia-Pacific’s] position that

each distributor and each state are different.” von Drehle

Corp.’s Response in Opp. to Georgia-Pacific’s Renewed Mot. for

Perm. Inj., No. 5:05cv478-BO(1), at 16 (E.D.N.C. May 24, 2013).

However, despite specifically arguing in the Georgia-Pacific II

appeal and petition for certiorari review that the doctrine of

comity factors in this case, von Drehle does not appear to have

specifically invoked comity as a basis for denying or limiting

injunctive relief. 4

Following full briefing and a hearing, the North Carolina

district court granted Georgia-Pacific’s motion for injunctive

relief. Applying the proper legal test, which it gleaned from

eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006), the court

found: (1) Georgia-Pacific “suffered irreparable injury to its

trademark and the reputation of its enMotion brand” by von

Drehle’s infringing activities, which prevented Georgia-Pacific

“from controlling the quality of paper towels dispensed from its

enMotion dispensers and further confused and deceived

customers;” (2) the jury award is inadequate as it would not

4 In addition to not arguing comity per se before the North Carolina district court, von Drehle did not cite to any authority holding that comity warranted denial or limitation of injunctive relief. This fact stands in contrast to von Drehle’s argument to us. See Appellant’s Opening Brief, at 50-56 (citing Va. Soc’y for Human Life, Inc. v. FEC, 263 F.3d 379 (4th Cir. 2001), and arguing that the injunction “violates this Court’s precedent and basic principles of comity”).

41 prevent von Drehle “from continu[ing] to infringe in the future,

policing [von Drehle’s] sales of its paper towels would be

onerous, and [von Drehle] has asserted throughout that its

actions did not constitute trademark infringement;” (3) the

balance of hardship favors Georgia-Pacific as von Drehle’s

“activities have been found to have infringed [Georgia-

Pacific’s] trademarks and [von Drehle] has no equitable interest

in perpetrating trademark infringement;” and (4) “the public

interest is best served by a permanent injunction that would

prevent further trademark infringement.” J.A. 854 (internal

punctuation and citations omitted). Based on these findings, the

court enjoined von Drehle “from interfering directly or

indirectly” with Georgia-Pacific’s trademark rights and

specified that “any deliberate or purposeful placement” of von

Drehle’s paper towels in Georgia-Pacific’s enMotion dispensers

“shall constitute a violation of this permanent injunction.”

J.A. 855.

II

“A federal court has broad power to restrain acts which are

of the same type or class as unlawful acts which the court has

found to have been committed or whose commission in the future

unless enjoined, may fairly be anticipated from the defendant’s

conduct in the past.” NLRB v. Express Pub. Co., 312 U.S. 426,

435 (1941). As a general rule, a federal court’s injunctive

42 order “operate[s] continuously and perpetually upon the [party]

in relation to the prohibited conduct,” and it extends

“throughout the United States.” Leman v. Krentler-Arnold Hinge

Last Co., 284 U.S. 448, 451 (1932).

The Lanham Act reflects this broad power, authorizing

federal courts to issue injunctive relief to a prevailing

plaintiff “according to the principles of equity and upon such

terms as the court may deem reasonable.” 15 U.S.C. § 1116(a).

When trademark infringement has been proven, “an injunction is

the preferred remedy to insure that future violations will not

occur,” Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va.,

Inc., 43 F.3d 922, 939 (4th Cir. 1995) (internal punctuation and

citation omitted), and it should be crafted to provide complete

relief to the plaintiff, PBM Prods, LLC v. Mead Johnson & Co.,

639 F.3d 111, 128 (4th Cir. 2011). The “scope of injunctive

relief is dictated by the extent of the violation established,”

Califano v. Yamasaki, 442 U.S. 682, 702 (1979), and the Lanham

Act authorizes a district court to enter a nationwide injunction

prohibiting trademark infringement, see Majority Op., at 11.

A trademark plaintiff who is entitled to injunctive relief

“is entitled to effective relief; and any doubt in respect of

the extent thereof must be resolved in its favor as the innocent

producer and against the [defendant], which has shown by its

conduct that it is not to be trusted.” William R. Warner & Co.

43 v. Eli Lilly & Co., 265 U.S. 526, 532 (1924). “The decision to

grant or deny permanent injunctive relief is an act of equitable

discretion by the district court, reviewable on appeal for abuse

of discretion.” eBay, Inc., 547 U.S. at 391. Under this

standard, we are not at liberty to disturb an injunction simply

because we would have decided the matter differently in the

first instance. Centro Tepeyac v. Montgomery County, 722 F.3d

184, 188 (4th Cir. 2013) (en banc). Instead, we may find an

abuse of discretion only if the court applied an incorrect

injunction standard, rested its decision on a clearly erroneous

finding of a material fact, or misapprehended the law with

respect to underlying issues in litigation. Id.

Viewing this appeal properly and under this standard, the

district court did not abuse its discretion. The court applied

the correct injunction standard, did not rely on a clearly

erroneous finding of material fact, and did not misapprehend the

law with respect to the underlying issues of this case. Notably,

the majority does not challenge the court’s determination that

injunctive relief is necessary to provide complete relief to

Georgia-Pacific for von Drehle’s infringing activities; does not

quarrel with the language of the injunction order prohibiting

von Drehle “from interfering directly or indirectly” with

Georgia-Pacific’s trademark rights and specifying that “any

deliberate or purposeful placement” of von Drehle’s paper towels

44 in Georgia-Pacific’s enMotion dispensers “shall constitute a

violation of this permanent injunction;” and does not assert

that the evidence presented below fails to support the court’s

determination that a nationwide injunction is warranted.

Instead, relying on the doctrine of comity, the majority

holds that the nationwide scope of the injunction is overbroad

under the circumstances of this case. In the majority’s view,

the injunction should not extend to the Eighth and Sixth

Circuits, which (respectively) decided Myers Supply and Four-U-

Packaging, because that “would amount to a direct and unseemly

affront to those courts” and would “create a direct and perhaps

irreconcilable conflict as to Georgia-Pacific’s trademark rights

[in those circuits], leaving litigants and others in those

States confused.” Majority Op., at 13. The majority extends its

limitation on the injunction to the remainder of the federal

circuits (other than the Fourth Circuit) because courts in those

circuits – when presented with litigation involving Georgia-

Pacific’s trademarks – “would be faced with the question of

whether to follow the Fourth Circuit on the one hand or the

Eighth and Sixth Circuits on the other.” Id. at 13-14.

The doctrine of comity is “not a rule of law, but one of

practice, convenience, and expediency.” Mast, Foos, & Co. v.

Stover Mfg. Co., 177 U.S. 485, 488 (1900). “It is something more

than mere courtesy, which implies only deference to the opinion

45 of others, since it has a substantial value in securing

uniformity of decision, and discouraging repeated litigation of

the same question. But its obligation is not imperative.” Id.

(emphasis added). Although “comity governs relations between

courts of the same sovereign,” Ulmet v. United States, 888 F.2d

1028, 1031 (4th Cir. 1989), the rule is rarely applied in this

context, and only when it is essential to avoid “an unnecessary

burden on the federal judiciary” and to prevent “the

embarrassment of conflicting judgments.” In re Naranjo, 768 F.3d

332, 348 (4th Cir. 2014) (internal punctuation and citation

omitted).

In this context, comity is closely akin to the doctrines of

issue and claim preclusion, see Allen v. McCurry, 449 U.S. 90,

95-96 (1980) (explaining that “res judicata and collateral

estoppel not only reduce unnecessary litigation and foster

reliance on adjudication, but also promote the comity between

state and federal courts that has been recognized as a bulwark

of the federal system”). Like those doctrines, “[c]omity works

most efficiently where previously filed litigation is brought

promptly to the attention of the district court, and the court

defers,” Church of Scientology of Cal. v. U.S. Dept. of Army,

611 F.2d 738, 750 (9th Cir. 1980).

46 III

The majority’s limitation of the scope of the injunction to

the five states within this circuit deprives Georgia-Pacific of

the complete and effective relief to which it is entitled. I

have concerns generally about utilizing the doctrine of comity

in this manner. See United States v. Gillock, 445 U.S. 360, 373

(1980) (noting that “where important federal interests are at

stake, . . . comity yields”); Nelson v. Berry, 59 F.2d 351, 353

(Ct. Cust. and Pat. App. 1932) (noting that when applying the

doctrine of comity, “courts are not at liberty to disregard

rights which the law assures to litigants”). However, I will

limit my discussion to two specific reasons why I believe the

majority has erred.

First, in Georgia-Pacific II, we rejected application of

the comity doctrine in this litigation. As noted, by the time we

decided Georgia-Pacific II, both the Eighth and Sixth Circuits

had resolved the Myers Supply and Four-U-Packaging cases, and we

were presented squarely with the question of whether “special

circumstances” existed to warrant the district court’s sua

sponte consideration of von Drehle’s preclusion defenses based

on those cases. Despite von Drehle’s invocation of the comity

doctrine, we held that no “special circumstances” justified the

district court’s action. In other words, in what some could

consider to have been the creation of an “embarrassment of

47 conflicting judgments,” see In re Naranjo, 768 F.3d at 348, and

“a direct and unseemly affront” to the Sixth and Eighth

Circuits, Majority Op., at 13, we rejected “the demands of

comity,” Brief of Appellee, No. 12-1444, at 30 (4th Cir. Sept.

6, 2012), allowed the jury verdict in favor of Georgia-Pacific

to stand, and remanded the case for the district court to

consider Georgia-Pacific’s request for injunctive and other

relief.

Of course, the injunction per se was not then before us,

but the same comity concerns now raised by von Drehle and the

majority were. Given that we had previously admonished the

district court of its obligation to “implement both the letter

and spirit” of our mandate, Georgia-Pacific II, 710 F.3d at 536

n.13, it is hardly surprising that the court determined that the

comity doctrine had no bearing on the scope of injunctive relief

to which Georgia-Pacific is entitled. Indeed, our rejection of

the comity doctrine arguably had become – and remains - the law

of the case. See Winston v. Pearson, 683 F.3d 489, 498 (4th Cir.

2012) (explaining law of the case doctrine). Under these

circumstances, where von Drehle barely argued (if at all) comity

in opposition to the injunction request and the court’s

injunction order is entirely consistent with our mandate, the

court did not abuse its discretion.

48 Second, and in any event, the comity doctrine applied by

the majority simply has no bearing in this case. Georgia-Pacific

proved at trial that von Drehle infringed on its trademark

rights on a national scale, we affirmed that judgment in

Georgia-Pacific II, and the nationwide injunction prohibits von

Drehle – and no one else – from further infringement. Like all

injunction cases, the district court retains the power to

enforce its injunction against von Drehle by contempt

proceedings, but it has no authority under the injunction to

command any other party (or any court) with respect to Georgia-

Pacific’s trademarks. 5

Nothing about this rather ordinary process undermines the

law in any other circuit, where any party other than von Drehle

is currently permitted (at their own risk) to “stuff” Georgia-

Pacific’s dispensers. If Georgia-Pacific chooses to litigate its

trademark rights against other parties in other circuits, the

nationwide injunction will not preclude courts in those circuits

from deciding all pertinent issues, including trademark and

5 Under the majority’s rationale, I cannot help but wonder when my colleagues would ever uphold a nationwide injunction. Anytime such an injunction is entered, the argument could be made that the injunction interferes with other courts’ ability to decide the matter at issue.

49 preclusion issues. 6 Of course, those courts will be presented

with the so-called “embarrassment” of the conflicting circuit

court judgments, but that circumstance arose when we filed

Georgia-Pacific II, not when the district court enjoined von

Drehle, and it remains in existence regardless of whether the

injunction is limited or not. 7

The facts and circumstances of this case differ from

Virginia Society for Human Life, a case in which we vacated a

nationwide injunction based on the comity doctrine. There, an

issue advocacy group sued the Federal Election Commission

(“FEC”) seeking a declaration that a particular regulation was

unconstitutional. The district court held that the regulation

was unconstitutional and issued a nationwide injunction

preventing the FEC from enforcing the regulation. We found the

injunction to be overbroad for two reasons. First, we concluded

6 In that event, under the generally prevailing “last in time” rule, the later judgment – i.e., Georgia-Pacific II - would likely be accorded preclusive effect. See, e.g., Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330, 1347 n.14 (Fed. Cir. 2013) (noting that where final judgments conflict, “the settled rule is that the later judgment, not the earlier, has preclusive force going forward”). 7 Contrary to the majority’s concern, the “conflict” between the various judgments is not necessarily unseemly. As the Supreme Court has explained: “Although the application of a federal statute such as the Lanham Act by judges and juries in courts throughout the country may give rise to some variation in outcome, this is the means Congress chose to enforce a national policy to ensure fair competition.” POM Wonderful, LLC v. Coca- Cola Co., 134 S.Ct. 2228, 2239 (2014).

50 that the injunction was “broader than necessary to afford full

relief” to the advocacy group because a limited injunction

adequately protected the group. 263 F.3d at 393. Second, we

concluded that the injunction had “the effect of precluding

other circuits from ruling on the constitutionality” of the

regulation because it prohibited the FEC from attempting to

enforce it. Id. Unlike Virginia Society for Human Life, the

nationwide injunction before us is necessary to provide complete

relief to Georgia-Pacific, and as I have explained, the

injunction does not preclude other courts from ruling on the

propriety of the “stuffing” practice of parties other than von

Drehle in relation to Georgia-Pacific’s trademarks.

One final observation is in order. Even though I believe

that it is unfair to deny Georgia-Pacific the nationwide

injunctive relief to which it is entitled, I question whether

the limitation of injunctive relief to the states within this

circuit ultimately will protect von Drehle from liability in

future litigation.

As noted, von Drehle is a North Carolina corporation that

operates out of Hickory, North Carolina. Georgia-Pacific has

proven in this case that von Drehle’s manufacturing and

marketing activities, that emanated from North Carolina but

caused infringement nationally, constitute contributory

51 trademark infringement. Presumably, if von Drehle is freed from

the nationwide constraints of the injunction, it will resume its

North Carolina-based activities of manufacturing paper towels

and marketing them to distributors with knowledge that the

towels will be stuffed into Georgia-Pacific’s dispensers.

Although von Drehle may limit its distribution of paper towels

to entities outside of the Fourth Circuit in an effort to comply

with a limited injunction, it will nonetheless be engaging in

the very conduct (i.e., manufacturing and marketing) that gave

rise to its liability in this case, and it will be doing so

within the Fourth Circuit, where such conduct is prohibited.

Therefore, unless von Drehle relocates its manufacturing

and marketing activities outside of this circuit, it seems

reasonable to believe that any future distribution of paper

towels for the purpose of stuffing Georgia-Pacific’s dispensers

anywhere would violate even the limited injunction called for by

the majority, and Georgia-Pacific would be entitled to seek

contempt relief. Moreover, even assuming that such conduct would

not violate a limited injunction, there seems to be no reason

that Georgia-Pacific could not file another lawsuit similar to

this one seeking damages, and the lack of a nationwide

injunction would not preclude Georgia-Pacific from recovering

all of the profits von Drehle earned anywhere in the nation as a

result of its infringing activities.

52 V

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

Georgia-Pacific II, we should affirm the injunction.

Accordingly, I concur in part and dissent in part.