Optimum Technologies, Inc. v. Henkel Consumer Adhesives, Inc.

496 F.3d 1231, 83 U.S.P.Q. 2d (BNA) 1769, 2007 U.S. App. LEXIS 19918, 2007 WL 2377455
CourtCourt of Appeals for the Eleventh Circuit
DecidedAugust 22, 2007
Docket06-13677
StatusPublished
Cited by86 cases

This text of 496 F.3d 1231 (Optimum Technologies, Inc. v. Henkel Consumer Adhesives, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Optimum Technologies, Inc. v. Henkel Consumer Adhesives, Inc., 496 F.3d 1231, 83 U.S.P.Q. 2d (BNA) 1769, 2007 U.S. App. LEXIS 19918, 2007 WL 2377455 (11th Cir. 2007).

Opinion

BIRCH, Circuit Judge:

In this appeal, plaintiff Optimum Technologies, Inc. (“Optimum”) raises a number of challenges to the district court’s disposition of its action against defendant-appellee Henkel Consumer Adhesives, Inc. (“HCA”). 1 Specifically, Optimum argues that: (1) the district court erred in granting partial summary judgment in favor of HCA on Optimum’s claims of trademark infringement and unfair competition; (2) the district court erred in granting summary judgment in favor of HCA on Optimum’s claims of breach of confidential relationship, breach of fiduciary duty, fraudulent concealment, fraud, and negligent misrepresentation; and (3) the district court erred in granting — following a jury trial that resulted in a mistrial— HCA’s renewed motion for judgment as a matter of law on Optimum’s trademark and unfair competition claims, due to a lack of evidence establishing Optimum’s damages. Following a careful review of the record and the arguments on appeal, we discern no reversible error by the district court, and, therefore, we AFFIRM.

I. BACKGROUND

A. Facts

Optimum is a closely-held family business based in Cartersville, Georgia. The company sells a number of flooring and carpeting-type products in both the commercial and home consumer markets. Its best selling home consumer product is the “Lok-Lift Rug Gripper,” a two-sided adhesive product that can be applied in strips to the backs of rugs and mats to secure them in place and prevent slippage on various surfaces. Beginning in the 1980s, Optimum began selling the Lok-Lift product to home improvement retailers like Home Depot, Lowe’s, and Ace Hardware. Since 1981, Optimum has had a federally registered trademark in the mark “Lok-Lift,” when used in connection with the sale of a “Serim Material to Be Interposed Between Carpet and Surface to Anchor Carpet in Place.” Rl-1, Exh. I. 2

HCA distributes a number of consumer goods, including adhesive tapes, to large home improvement retailers. In some cases, HCA manufactures its own home improvement products; in other cases its products are supplied by outside manufacturers. In the latter scenario, HCA typically obtains its products from third party manufacturers, and then sells and distributes them directly to those retailers with whom HCA has existing relationships.

In 1993, HCA approached Optimum 3 and expressed an interest in entering into a *1236 distributor relationship with Optimum, one centered on Optimum’s flagship Lok-Lift product. The relationship with Optimum would permit HCA to establish a greater presence in the floor and rug departments of retailers such as Home Depot and Lowe’s — retailers with whom Optimum already had pre-existing accounts. In turn, the distributorship would allow Optimum to leverage HCA’s existing relationships with some larger retailers that Optimum had been seeking to sell the Lok-Lift product to, such as Wal-Mart and K-Mart. Under the terms of the parties’ arrangement — which was based on a “handshake” and was not reduced to writing — -Optimum would manufacture -and supply the Lok-Lift product to HCA, and HCA would assume responsibility for marketing and distributing the Lok-Lift product to retailers.

Pursuant to this arrangement, Optimum turned over a number of its large retail accounts to HCA, including the contact information for those retailers, product pricing information, customer information, and sales figures. As to these accounts, which included Home Depot and Lowe’s, HCA obtained the exclusive right, going forward, to sell and distribute the Lok-Lift product. Lewis P. McDermott, Chief Executive Officer of Optimum, testified that the accounts it assigned to HCA constituted the vast majority of Optimum’s major retail accounts.

Prior to selling the Lok-Lift product, Optimum and HCA worked together in designing the product’s external packaging. This packaging consisted of a green box, a photo of a hand lifting a rug, a picture of a roll of tape, the phrase “Lok-Lift Rug Gripper,” and, in the corner of the packaging, the corporate logo of HCA’s predecessor corporation. It is undisputed that HCA was permitted to use the “Lok-Lift” trademark during the term of the parties’ distributor relationship.

HCA began distributing the Lok-Lift product to retailers in early 1994. HCA would place orders for the Lok-Lift product with Optimum by filing a purchase order. Optimum would ship the product to HCA — in the packaging agreed to by the parties — and HCA would then sell and distribute the product to retailers. The early years of this business relationship were, by all accounts, uneventful.

Within a few years, however, HCA had begun internally developing its own adhesive carpet tape product, which it hoped would eventually replace Optimum’s Lok-Lift product. HCA began internally marketing and testing a foam-backed latex rug product — which was eventually named “Hold-It For Rugs”— as early as 1998. 4 From the period 1998 to 2002, however, while this change was being contemplated internally at HCA, HCA continued to purchase the Lok-Lift product from Optimum and to distribute the Lok-Lift product to retailers.

Optimum was not made aware of HCA’s plans to change products. Commencing in 2001, HCA advised Optimum that it was contemplating a “packaging change” to the Lok-Lift product’s box. R-88 at 142-43; R-127 at 201-202. In early 2002, as HCA was preparing to roll out the Hold-It product to retail stores, HCA informed Opti *1237 mum that it would be “mak[ing] changes in the Lok-Lift Rug Gripper packaging,” and that, as a result, Optimum was “not to order more [Lok-Lift product] packaging without [HCA’s] okay.” Rl-1, Exh 10.

In the fall of 2002, HCA sent a memorandum — to which Optimum was not privy- — -to all of its large retailers, including Home Depot, Lowe’s, and Ace Hardware. The HCA memorandum stated that HCA was preparing to introduce a new “rug gripper product” to its retailers, and that it would no longer be selling the “old version.” Br. of Appellee at 18-19; R-128 at 209. It did not mention the Hold-It product by name, mentioning only a new “rug gripper product.” Id. The memorandum also advised its retailers that HCA’s new rug gripper product would be superior in terms of quality.

HCA used the same UPC code, bar code, and item number as the Lok-Lift product on the new Hold-It product. HCA also used a similar packaging design for its Hold-It product. Specifically, the new Hold-It product consisted of a green box, a photo of a hand lifting a rug, a picture of a roll of tape, and the phrase “Hold-It For Rugs.” The Hold-It product packaging was the same size as the Lok-Lift product, and the products’ packages contained the same quantities of adhesive tape. Unbeknownst to Optimum, HCA began shipping its Hold-It product to retail stores sometime in late December 2002.

On 17 January 2003, Sean McDermott, who is a vice president of sales in the commercial division at Optimum discovered the Hold-It product on the shelf at a Lowe’s store while on a personal errand.

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496 F.3d 1231, 83 U.S.P.Q. 2d (BNA) 1769, 2007 U.S. App. LEXIS 19918, 2007 WL 2377455, Counsel Stack Legal Research, https://law.counselstack.com/opinion/optimum-technologies-inc-v-henkel-consumer-adhesives-inc-ca11-2007.