Reply Brief — Super Duper, Inc. v. Mattel, Inc.

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rREDERAL CASES

Duncan v. Walker,

533 U.S. 167 (2001)

George Basch Co. v. Blue Coral, In

968 F.2d 15382 (2d Cir. 1992)

Henry v. Pro 10 Originals, LLC,

698 F. Supp. 2d 1279 (D. Wyo. 2010)..

Inmates of Allegheny County Jail v. Wecht

93 F.3d 1124 (3d Cir. 1996)

Kassbaum v. Steppenwolf Prods., Inc

236 F.3d 487 (9th Cir. 2000)

Lebron v. Natl R.R. Passenger Corp

513 U.S. 374 (1995)

Malletier v. Dooney & Bourke, Inc.,

500 F. Supp. 2d 276 (S.D.N.Y. 2007)

Mr. Water Heater Enters., Inc. v. 1-800-Hot

Water Heater, LLC,

648 F. Supp. 2d 576 (S.D.N.Y. 2009)

Nike, Inc. v. Top Brand Co.

No. 00-civ-8179, 2005 WL 1654859

(S.D.N.Y. July 13, 2005)

Pedinol Pharmacal, Inc. v. Rising Pharms

Inc.,

570 F. Supp. 2d 498 (f.D.N.Y. 2008)

Pennsylvania Dep't Corrs. v. Yeskey,

924 U.S. 206 (1998)

Reed v. Ross,

468 U.S. 1 (1984). 12

Stevens v. Dep't of Treasury,

500 U.S. 1 (1991)......... 1]

Synergistic Intl, LLC v. Korman,

470 F.3d 162 (4th Cir. 2006) ...... Z

Super Duper, Inc. v. Mattel, Inc., No. 6:05-CV

01700-HFF (D.S.C. Sept. 18, 2007) .. 1Q

Super Duper, Inc. v. Mattel, Inc., No. 09-1397

(4th Cir. Oct. 27, 2009) yeaa 3)

Tamko Roofing Prods., Inc. v. Ideal Roofing

Co :

282 F.3d 23 (1st Cir. 2002) o

United States v. Williams,

504 U.S. 36 (1992) . 12

Venture Tape Corp. v. McGills Glass

Warehouse,

540 F.3d 56 (1st Cir. 2008).. O

W. Diversified Servs., Inc. v. Hyundai Motor

Am., Inc.,

127 F.3d 1269 (10th Cir. 2005)

STATUTES

15 U.S.C. § 1117(a) ep

> 1125(a)

S.

sam

LI.

15 U.S.C. § 1125(c)

28 U.S.C. § 2244(d))

MISCELLANEOUS

J. THOMAS MCCARTHY, MCCARTHY ON

TRADEMARK AND UNFAIR COMPETITION

§ 30 (4th ed. Supp. 2010)..

REPLY IN SUPPORT OF PETITION

FOR WRIT OF CERTIORARI

There are several key areas of agreement

between Super Duper and Mattel. Mattel never

disputes that the question presented - the criteria

for awarding “profits” for trademark infringement

is a question of enormous practical significance. As

the petition explains without comment from Mattel,

virtually every one of the thousands of trademark

actions filed each year seeks to recover the

defendant's profits from the infringement. Pet. 24-

26. Mattel also agrees that for many years there

was a “circuit spht” on the criteria for awarding

trademark profits. Resp. 17, 18, 21. Although

Mattel incorrectly argues that an amendment to the

profits provision governing trademark dilution

resolved the long-standing split on the criteria for

profits from trademark infringement, the leading

treatise on trademark law expressly declares that

description of Congressional intent “inaccurate.”

Mattel’s principal arguments against review rely

on inaccurate characterizations of this lhtigation.

Only by resort to the most permissive criteria for

awarding profits, criteria that require proof of

neither willful infringement nor actual customer

confusion, could the Fourth Circuit affirm the

district court’s million dollar profits award in this

infringement case.

*)

—~

THE CIRCUITS ARE DIVIDED OVER

THE CRITERIA FOR AWARDING

PROFITS UNDER THE LANHAM ACT

Mattel tellingly devotes only belated attention to

the circuit split, electing to begin its discussion on

page 17. Mattel’s hesitancy is well-founded.

The linchpin of Mattel’s circuit discussion is the

suggestion that a 1999 amendment to the trademark

dilution profits statute rendered all the case law

regarding trademark infringement profits magically

uniform in lght of Congress’s “clear” (Resp. 17)

directive.

As a matter of legislative interpretation, Mattel’s

position is meritless. The petition explains (Pet. 19-

20) that in 1999 Congress amended 15 U.S.C.

§ 1117(a) to permit a monetary award only for

“willful” dilution under 15 U.S.C. § 1125(c) (“1999

Dilution Amendment”). This amendment did not

touch the standard for an award of profits for

infringement under 15 U.S.C. § 1125(a). Congress

did not need to make the willfulness requirement

explicit in section 1117(a) because “it is not only

appropriate but also realistic to presume. that

Congress was thoroughly familiar with

precedents from this and other federal courts and

that it expected its enactment to be interpreted in

conformity with them.” Cannon v. Univ. of Chicago,

441 U.S. 677, 699 (1979). See Pet. 18-19.

Mattel gets no support from Duncan v. Walker,

533 U.S. 167 (2001). See Resp. 19. In Duncan, at

issue was the meaning of a_ tolling provision

3

triggered by an “application for State post-conviction

or other collateral review” pursuant to 28 U.S.C.

§ 2244(d)(2). 533 U.S. at 169. Because the text in

nearby provisions specified “Federal” review while

the tolling provision did not so specify, the Court

construed the tolling provision not to provide for

federal review. Jd. at 173. Here, the relevant text

on infringement profits codified the preexisting

judicial understanding of the criteria for awarding

infringement profits. Nothing in Duncan suggests

that such a codification is displaced when Congress

subsequently enacts a separate provision.

In any event, Mattel’s suggestion that the 1999

Dilution Amendment has resolved the split is not an

accurate description of the circuit case law. The

petition describes how the Third, Sixth and Seventh

Circuits have rejected both intentional infringement

and actual confusion as prerequisites for an award of

profits. Pet. 11-13. On the other side of the split,

the petition describes how the First, Second, Ninth,

Tenth, District of Columbia and Federal Circuits all

require either intentional infringement or actual

confusion or both before awarding the defendant’s

profits. Pet. 13-16.

Mattel makes no comment on the Sixth, Seventh

and Tenth Circuit case law cited by the petition. See

Pet. 11-12.! Mattel notes that the Fourth and Fifth

1 See also W. Diversified Servs., Inc. v. Hyundai Motor Am..,

Inc., 427 F.3d 1269, 1273 (10th Cir. 2005) (“[WJe require a

showing that Defendant’s actions were willful to support an

award of profits under 15 U.S.C. § 1117(a)”); Henry v. Pro 10

Originals, LLC, 698 F. Supp. 2d 1279, 1300-01 (D. Wyo. 2010)

(“[T]his circuit holds that an award of a defendant’s profits

4

Circuits’ referred to the 1999 Dilution Amendment.

Resp. 20. But to the extent these circuit courts have

used the dilution amendment to justify their views,

the split has merely become more, not less,

entrenched. Mattel says little regarding the D.C.

Circuit, noting only (Resp. 23) that the D.C. Circunt

had not specifically ruled that actual confusion was

required but not refuting that the D.C. Circuit has

held that it would not award profits in the absence of

a causal link between profits and infringement, a

holding that necessarily requires proof of actual

confusion.2 And, as to the Federal Circuit, Mattel’s

response emphasizes that the Federal Circuit was

applying Eighth Circuit Jaw and did so incorrectly.

Resp. 23. But even if accurate, that would merely

confirm that the circuit courts are in disagreement

about the proper criteria for awarding infringement

profits.

Mattel highlights that the Third Circuit used to

hold that willfulness was a requirement, but pegged

its change of heart to the 1999 Dilution Amendment.

Resp. 19 (discussing Banjo Buddies, Inc. v. Renosky,

399 F.3d 168 (38d Cir. 2005)). In doing so, however,

the Third Circuit expressly recognized the “wealth of

‘requires a showing that defendant's actions were willful or in

bad faith”) (citing Bishop v. Equinox Intl Corp., 154 F.3d 1220,

1223 (10th Cir. 1998)); Cache La Poudre Feeds, LLC v. Land O’

Lakes, Inc., No. 04-cev-329, 2007 WL 2521116 (D. Colo. Aug. 31,

2007) (“The Tenth Circuit further stated that a finding of

willfulness ts required to support an award of profits.”).

2 See also Breaking the Chain Found., Inc. v. Capitol Educ.

Support, Inc., 625 F. Supp. 2d 1, 2 (D.D.C. 2009) (“To recover a

defendant’s profits under the Lanham Act, the plaintiff must

show the defendant acted ‘willfully or in bad faith.”) (internal

citations omitted)

contrary authority” in other circuits. Banjo Buddies,

399 F.3d at 174.

Moreover, the leading scholar in trademark law

has expressly rejected the reasoning of the Banjo

Buddies’ decision, concluding that the 1999

Amendment did not “removie] willfulness as a

requirement for an award of profits in a classic

infringement case.” 5 od. THOMAS MCCARTHY,

MCCARTHY ON TRADEMARK AND UNFAIR COMPETITION

§ 30:62 (4th ed. Supp. 2010) (“courts have leveraged

this statutory change beyond its intended scope to

adjust the equities in ordinary infringement cases in

order to make it easier for a trademark owner to

recover profits.”). Mattel asserts that this is

Professor McCarthy’s “personal view” (Resp. 21 n.5),

but McCarthy writes: “By 2005, a split of authority

developed such that while most circuits required

some showing of wuilfulness, the Third and Fifth

(and perhaps the Seventh and Eleventh) held that

while relevant, willfulness was not essential or

indispensable to a recovery of profits.” Jd.

As to the First Circuit's decision in Venture Tape

Corp. v. McGills Glass Warehouse, 540 F.3d 56 (1st

Cir. 2008), cited by Mattel, that decision did not

disturb the wilfulness requirement stated in Jamko

Roofing Prods., Inc. v. Ideal Roofing Co., 282 F.3d

23, 36 n.11 (1st Cir. 2002)

As to the Second Circuit, Mattel cites a single

district court decision, Nike, Inc. v. Top Brand Co.,

No. 00-civ-8179, 2005 WL 1654859 (S.D.N.Y. July

13, 2005), that 1s demonstrably out of step with

Second Circuit law. Since Nike, numerous district

6

courts in the Second Circuit have continued to follow

George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532

(2d Cir. 1992), see Pet. 14, while expressly rejecting

Nike. See, e.g., Pedinol Pharmacal, Inc. v. Rising

Pharms., Inc., 570 F. Supp. 2d 498, 503 (E.D.NLY.

2008) (“court holds, therefore, that the Second

Cireuit’s interpretation of Section 1117(a) in Basch,

which construed the same statutory language that

existed prior to the 1999 Amendment of the statute,

remains good law”); Malletier v. Dooney & Bourke,

Inc., 500 F. Supp. 2d 276, 281 (S.D.N.Y. 2007)

(“addition of ‘willful violation under section 1125(c),’

does not indicate that 1t was Congress’s intention to

simultaneously sub silentio overturn the weight of

authority with respect to section 1125(a)”) Gnternal

citation omitted); Mr. Water Heater Enters., Inc. v. ]-

800-Hot Water Heater, LLC, 648 F. Supp. 2d 576,

590 (S.D.N.Y. 2009).

As to the Ninth Circuit, Mattel again highlights a

one-off district court opinion. Resp. 20. But, since

1999, the Ninth Circuit has restated its requirement

of willfulness on at least two occasions. See Contessa

Food Prods. Inc v. Lockpur Fish Processing Co., 123

Fed. Appx. 747, 751 (9th Cir. 2005) (“[Wle deny

Contessa’s request for disgorgement of profits

because of an absence of any evidence supporting a

reasonable inference that any of the Defendants

wilfully infringed its alleged trademark”);

Kassbaum v. Steppenwolf Prods., Inc., 236 F.3d 487,

492 (9th Cir. 2000) (“Actual consumer confusion is

not required for profit recovery; it is sufficient to

show a likelihood of confusion combined with willful

infringement.”). Consequently, district courts in the

Ninth Circuit have continued to require willful

‘

infringement for an award of profits. See also

Bellagio Jewelry, Inc. v. Croton Watch Co., No. CV

06-6672, 2008 WL 3905895, at *12 (C.D. Cal. Aug.

20, 2008) (“Generally, a plaintiff must establish that

the defendant engaged in willful misconduct to

obtain a defendant’s profits.”).

Il. THIS CASE IS AN IDEAL VEHICLE TO

CLARIFY THE CRITERIA FOR

AWARDING PROFITS UNDER THE

LANHAM ACT

Mattel saves most of its effort for a rambunctious

attempt to show that the question presented is not

suitably presented. Resp. 11-17. By any objective

analysis, however, the criteria for awarding

trademark profits is squarely presented in this case

where the jury’ found neither intentional!

infringement nor actual confusion yet the district

court awarded $1 mullion in trademark protits and

the Fourth Circuit summarily affirmed based solely

on the trademark infringement finding. Matte’

notes (Resp. 11) the numerous issues that Super

Duper is “not challenging,” inadvertently confirming

that this is suitable vehicle for considering the

important questions presented.

a. Mattel’s reading of the jury verdict form is

refuted by the form itself. Mattel denies that the

jury found Super Duper’s infringement not

intentional. Resp. 13-14. But the jury answered

“no” to the question “Do you find that Super Duper’s

infringement and unfair competition was

intentional?” App. 43a. Mattel argues that, given

the jury’s answer of “no” to Question 2 (which asked

re

whether Super Duper committed unfair

competition), the jury's answer of “no” to Question 3

was inevitable given the conjunctive phrasing of

Question 3. Resp. 13. But Question 2 of the verdict

form instructs the jury that “If you answer NO,

proceed to Question 5.” App. 43a. The jury,

therefore, would not have answered Question 3 if it

had answered “no” to Question 2. Only because the

jury had answered “yes” to Question 1 (which asked

whether Super Duper committed infringement) did

the jury answer Question 3 (regarding intent) in the

negative. App. 42a.

Similarly, Mattel’s belated suggestion that the

jury found actual confusion is wrong. Even a cursory

review of the record leaves no doubt as to the

absence of any evidence of actual confusion. See,

e.g., J.A. 514, 763 (“I haven’t been confused”); 733 (in

twenty years had “never seen any sign of confusion”);

983 (Super Duper’s unrebutted expert testimony

3 Mattel selectively quotes from the record in an

unpersuasive post-hoc effort to establish willful infringement

The opinion of counsel that Mattel highlights (Resp. 4)

approved Super Duper’s mark. J.A. 1542-43 (“[I]t is our

opinion that your proposed mark SEE IT! SAY IT! is available

for your use and registration.”). Although Super Duper

“engaged different outside counsel” the following year (Resp. 4),

this was because the trademark attorney had died. J.A. 823

(“Ralph got suddenly terminally il] and he passed away

sometime in 2002, 2001, and we had to go to a new trademark

attorney.”). Mr. Webber’s “numerous sworn statements,” which

concerned his familiarity with the SEE ‘N SAY marks

specifically, were not shown to be false by any later admission

See J.A. 869 (“I didn’t realize that the SEE ‘N SAY was that

little pull toy. . . It just didn’t mean anything to me in 1997 in

connection with the name being a pull toy.”)

that “since 1987 they have been in the marketplace

together, and you don’t have any evidence of

confusion”). For this reason, Mattel did not claim

lost sales at trial. J.A. 1278-79 (“[Wle are saying we

are only claiming defendant’s profits. We are not

claiming actual damages through lost sales of

Mattel. We are not claiming that.”). The district

court expressly ruled actual confusion not relevant

App. 27a (“Factor two, whether sales been diverted

is Inapplhicable.”). Mattel agreed. Brief of Appellee

Mattel, Inc. at 56, Super Duper, Inc. v. Mattel,

Inc., No. 09-1397 (4th Cir. Oct. 27, 2009), ECF

No. 33. (“The district court correctly determined

that the second factor whether sales have been

diverted — was inapplicable"). The Fourth Circuit’:

opinion also assumes no actual confusion finding

App. 5a (“inference to be drawn from Mattel’s lack

of evidence of actual confusion”) (emphasi;

added)

Tellingly, Mattel ignores the photograph:

depicting Super Duper's educational product next to

Mattel’s toy. See Pet. 5-6. By its silence, Mattel

concedes what leaps off the page: the products look

nothing alike. As the amicus brief filed in support of

Super Duper’s petition confirms, Super Duper is

known and loved among the_ special needs

community, not because it peddles knocks-offs of

pull-toys — in fact, it does not sell a single pull-toy

but because its products are innovative and the state

of their art, having helped many children overcome

challenges that range from simple stuttering to

severe apraxia. See J.A. 532-34, 551-63. Moreover,

as Mattel argued during the course of this litigation,

“other trademarks have no bearing upon any fact

that 1s pertinent to the ultimate resolution of thi

action.” Defendant and Counterclaimant's Motion in

Limine No. 6 at 4, Super Duper, Inc. v. Mattel

Inc., No. 6:05-CV-01700-HFF (D.8.C. Sept. 18, 2007)

ECF No. 212 Accord App. 27a (district court

“considered only” conduct “that is the subject of thi

ult)

b. Mattel mischaracterizes the decision below in

arguing that the Fourth Circuit's affirmance of the

profits award was also “based on Super Duper

waiver of any challenge to basing the profits award

on dilution.” Resp. 16 n.3

Contrary to Mattel’s suggestion, the sole reason

the Fourth Circuit affirmed the profits award below

was its (mistaken) view of the infringement profit:

provision As the petition explains (Pet. 9), the

Fourth Circuit found the dilution error waived and

thus reviewed “this issue only for plain error.” App

13a. The Court declined to “exercise [its] discretion

to correct the [dilution] error,” solely because the

“award of profits and attorneys fees and costs in thi:

case was independently justified by the jury’s

“infringement” finding App. l13a-l4a (emphasi

added). Because the district court was permitted, in

the Fourth Circuit's view, to award profits based on

infringement, it would not correct the legal error

Super Duper has simply failed to establish that the

district court's award of lost profits would have

differed had it not considered the jury’s finding of

trademark dilution.” App. 14a. Thus, only because

the infringement profits were found proper did the

court decline to use its plain error authority to

correct the error on dilution

vViattel al misinvoke tn) _ourt Walvel

rule Mattel cite Walver case whnere tne } ue

presented to this Court was never ruled on by th

court of appeal and did not constitute well-settl

law in the circuit. See Adickes vu. S.H. Kress & Co

98 U.S. 144 (1970) (declining to consider overruling

the Civil Right (Case where circuit had not

addre ed question) Pennsylvania Dep't (Lor?

Yeskey, 524 U.S. 206, 212 (1998) (declining to reviev

whether the Amencan Disabiliti Act applicati n

LO tate prison } a constitutional exerciss oO]

Congre power under either the Commerce Claus

or the 14th Amendment; circuit authority had not

ruled on the question ee Inmates of Allegheny

County Jail Wecht 93 F.3d 1124 (3d Cu

1996)) Here tne } ue wa pa eda on bot! U!

ise and i prior circult irt dec i(

he district court awarded the infringem«:

protit (App 25a-26a) and the Ourt of appeal

iffirmed the award (App. 14a) The question

whether the infringement profits award 1s proper

thu quarely pre ented. See, e.g., Stevens t Dep't yf

’

freasury, 500 U.S. 1. & (1991) (The Distmect Cour

heard the case on the merit The Court

Appeals in its turn specifically referred [to the

timeline question We thu ar¢ itishied that

the ue is properly befor

Moreover. the Fourth Cuircult posit the

question presented | lear As the petition ¢ xplain

ind as Mattel does not deny, the Fourth Circuit ha

clearly decided that intentional infringement and

actual confusion are not required lor an award

niringvement rotit Pet 1d ee Synerevistic /nt

| )

LLC v. Korman, 470 F.3d 162, 175 (4th Cir. 2006)

Here, the Fourth Circuit apphed that settled and

binding circuit law in an unpubhshed disposition

Add. 15a n.8 (discussing Syneryistic). Thus, it

matters not that Super Duper did not previously

press the proper criteria for trademark

infringement. The court of appeals had ruled on the

issue previously and applied that ruling 1n this case

See Lebron v. Natl R.R. Passenger Corp., 513 U.S

374, 379 (1995) (“Our practice ‘permit[]s review of an

issue not pressed so long as 1t has been passed upon

(citations omitted); United States v. Williams,

504 U.S. 36, 41 (1992) (“permitting review of an

issue not pressed so long as it has been passed

upon”). Any effort by Super Duper to raise these

issues below would have been futile. See Reed

Ross, 468 U.S. 1, 16-20 (1984)

13

CONCLUSION

lhe petition for review should be granted

Respectfully submitted

THOMAS ZELLERBACH KH. JOSHUA ROSENKRANZ

KHAI LEQUANG Counsel of Record

ORRICK, HERRINGTON MARK DAVIES

& SUTCLIFFE LLP ORRICK, HERRINGTON

1000 Marsh Road & SUTCLIFFE LLP

Menlo Park, CA 9402! 51 West 52nd Street

(650) 614-7400 New York, NY 10103

rosenkranz@orrick.com

(212) 506-5000

December ous