All-Am. Ice LLC v. Am. Arena, LLC

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All-American Ice L.L.C., d/b/a All-American Arena Products, Respondent, v. American Arena, L.L.C., Appellant.

No. A22-1394

Court of Appeals of Minnesota

April 17, 2023

This Opinion is Nonprecedential except as provided by Minn. R Civ. App. P. 136.01, subd. 1(c).

Dakota County District Court File No. 19HA-CV-20-3431

Timothy C. Matson, Michael T. Burke, Fox Rothschild LLP Minneapolis, Minnesota (for respondent)

Mark R. Bradford, Kevin P. Hickey, J. Scott Andresen, Peggah Navab, Bassford Remele, P.A., Minneapolis, Minnesota (for appellant)

Considered and decided by Bjorkman, Presiding Judge; Jesson, Judge; and Frisch, Judge.

JESSON, JUDGE.

In May 2020, appellant American Arena, L.L.C. (American Arena) adopted its current name, replacing its former name of Minnesota Ice, to reflect its foray into selling ice-arena accessories along with its original line of business in ice-rink construction. Already existing ice-arena accessories vendor and respondent All-American Ice L.L.C., d/b/a All-American Arena Products (All-American Arena) sued, alleging trademark infringement under Minnesota law. After a jury trial and verdict for All-American Arena, American Arena requested judgment as a matter of law, or in the alternative, a new trial. And after the district court denied its motion, American Arena appealed, arguing, in part, that because All-American Arena's trademark was merely a descriptive mark-not distinctive-it could not be registered as a trademark. As a result, it could not be infringed as a matter of law.

Because American Arena did not challenge the descriptiveness of All-American Arena's mark before submission to the jury and sufficient evidence supported the likelihood-of-confusion prong of All-American Arena's trademark-infringement claim, the district court did not err by denying American Arena's motion for judgment as a matter of law or, in the alternative, for a new trial. We also affirm the start date of the prejudgment-interest award because American Arena could have determined its potential liability from All-American Arena's cease-and-desist letter. And since American Arena did not carry its burden to refute profit damages, we affirm the district court's decision on profit damages.^[1] But given the lack of evidence to support the jury's award for actual damages, we reverse this damages award and remand for further consideration of attorney fees and treble damages in light of the reduced damages. Finally, given the lack of findings supporting the district court's grant of an injunction, we remand for additional findings but do not reverse the injunction. Accordingly, we affirm in part, reverse in part, and remand.

FACTS

All-American Arena is a Minnesota-based company, founded in 2012, that sells ice-arena accessories, such as goal frames, netting and rubber flooring for ice-skating rinks.^[2] American Arena is the new name of a Minnesota-based company-formerly known as Minnesota Ice-that builds ice rinks across the United States, offers design services, and sells ice-arena accessories. Minnesota Ice was founded in October 2013. In May 2020, American Arena emailed over 1,400 ice-arena operators announcing its name change and that it was expanding its business to include the sale of ice-rink accessories.

One month later, after receiving multiple emails from customers confused between the two companies due to the name change, All-American Arena sent a cease-and-desist letter to American Arena, alleging trademark infringement and unfair competition. The letter demanded that American Arena cease any further use of the mark American Arena.^[3]And the letter demanded that American Arena fully account to All-American Arena with regard to its use of the mark "American Arena" and stated that, once it had, All-American Arena would "determine if any settlement remuneration is in order." When American Arena did not acquiesce to these demands, All-American Arena filed a complaint in October 2020, alleging trademark infringement under Minnesota law.^[4]

In November 2021, All-American Arena filed a motion for partial summary judgment, requesting judgment in its favor on liability and a permanent injunction, but reserving the issue of damages for trial. The district court denied All-American Arena's motion. It stated that because a genuine issue of material fact existed as to the third requirement of trademark infringement-likelihood of confusion-it would grant neither summary judgment nor injunctive relief.

Before the jury trial, the parties disagreed over a few of the proposed jury instructions and the admissibility of an email from the United States Patent and Trademark Office (USPTO) to American Arena. American Arena proposed two jury instructions that asked the jury to consider the descriptiveness of its own mark. This request relied upon an email from the USPTO stating that, when American Arena attempted to federally trademark its logo, it had to disclaim the words "American Arena" because they were descriptive, and thus not protectable.^[5] But American Arena did not request a jury instruction with regard to the descriptiveness of All-American Arena's mark. The district court did not include American Arena's requested descriptiveness instruction in the final jury instructions. Nor did the district court admit the USPTO email, ruling that it did not constitute a final decision.

At the outset of the three-day jury trial, the district court offered preliminary instructions about trademark law. One instruction explained that to obtain a trademark, the trademark owner registers the trademark with the Minnesota Secretary of State, and after registration, it may exclude others from using that trademark by bringing an action for infringement. The district court stated:

[T]he owner [of a trademark] may obtain a Certificate of Registration issued by the Minnesota Secretary of State. Thereafter, when the owner brings an action for infringement the owner may rely solely on the registration certificate to prove that the owner has the right to exclude others from using the trademark or a similar mark that is likely to cause confusion in the marketplace[.]

(Emphasis added.) American Arena did not object to the form or substance of this jury instruction.

At trial, All-American Arena's CEO, Sean Passingham, testified about the origin of his company, its growth in sales, the importance of the name of his brand, and his business's reputation. Through his testimony, All-American Arena introduced evidence of customer confusion, including emails from customers asking if All-American Arena and American Arena were the same company, an invoice for American Arena that was accidentally sent to All-American Arena, and a quote for a product that All-American Arena did not ask for, but presumably American Arena had. Passingham also testified about a business deal in Mason City, Iowa, that All-American Arena lost because the potential customer had been told by a representative of American Arena that the timing for the project would not work, and the customer thought the representative worked for All-American Arena. And Passingham testified that the company spends an average of $33,700 on advertising per year.

All-American Arena also called five witnesses to testify about All-American Arena's reputation in the ice-arena-accessories field and their confusion between All-American Arena and American Arena after American Arena changed its name and began sending out newsletters and cold-calling ice-arena managers using the new name. Each admitted on cross-examination that they had never purchased anything from the wrong company by mistake. All-American Arena also elicited testimony from American Arena's CEO Michael McDevitt, who testified that the total revenue American Arena made from ice-arena accessories in 2021 and the first quarter of 2022 was $415,414. And further testimony from an American Arena sales associate revealed that American Arena sold one set of dasher boards^[6] over the past two years-an approximately $200,000 sale.

After All-American Arena rested its case, American Arena-without moving for a directed verdict-called three of its sales representatives and its CEO to discuss the type of work American Arena does, the lack of confusion between its company and All-American Arena, and the nature of its ice-arena-accessory sales. American Arena never asserted during testimony, nor before the verdict, that All-American Arena's mark was descriptive.

In its closing argument, All-American Arena asked the jury to award both actual damages and profit damages for the harm it suffered. The actual damages requested included damages for injury to All-American Arena's reputation and goodwill, along with the profits All-American Arena would have earned but for American Arena's infringement. All-American Arena asked for damages equal to at least three years of its advertising budget to deal with the confusion created by American Arena's infringement. For the other forms of actual damage, All-American Arena stated: "I leave it to the jury to decide . . . what measure of actual damages" it wants to award. To support profit damages, All-American Arena pointed to the revenue American Arena made in ice-arena-accessory sales in 2021 and the first quarter of 2022-$615,414-and asked to be awarded that amount because American Arena did not prove that this revenue was due to factors other than the trademark infringement.

The jury returned a verdict for All-American Arena. Through a special-verdict form, the jury found that (1) All-American Arena owns a protectable interest in the registered mark "All-American Arena Products," (2) American Arena's use of the trademark American Arena created a likelihood of confusion or mistake on...