CFE Racing Prods., Inc. v. BMF Wheels, Inc.

793 F.3d 571

115 U.S.P.Q.2d 1505

CFE RACING PRODUCTS, INC., Plaintiff–Appellant/Cross–Appellee (14–1357 & 14–1608), Plaintiff–Appellee (14–1939)

v.BMF WHEELS, INC.; Brock Weld, Defendants–Appellees/Cross–Appellants (14–1357 & 14–1608), Defendants–Appellants (14–1939).

Nos. 14–1357

14–1608

14–1939.

United States Court of Appeals, Sixth Circuit.

Argued: March 5, 2015.

Decided and Filed: July 13, 2015.

Rehearing En Banc Denied Aug. 13, 2015.

ARGUED:Brian B. Brown, Carlson, Gaskey & Olds, P.C., Birmingham, Michigan, for Appellant/Cross–Appellee in 14–1357 and 14–1608 and for Appellee in 14–1939. Mark A. Cantor, Brooks Kushman P.C., Southfield, Michigan, for Appellee/Cross–Appellant in 141357 and 14–1608 and for Appellant in 14–1939.ON BRIEF:Brian B. Brown, Steven Susser, Carlson, Gaskey & Olds, P.C., Birmingham, Michigan, for Appellant/Cross–Appellee in 14–1357 and 14–1608 and for Appellee in 14–1939. Mark A. Cantor, Marc Lorelli, Linda D. Mettes, Brooks Kushman P.C., Southfield, Michigan, for Appellee/Cross–Appellant in 141357 and 14–1608 and for Appellant in 14–1939.

Before: COLE, Chief Judge; MOORE and CLAY, Circuit Judges.

OPINION

CLAY, Circuit Judge.

Plaintiff CFE Racing Products, Inc. (“Plaintiff”) appeals from the order of the district court entering a narrow permanent injunction against BMF Wheels, Inc. and BMF Wheels owner Brock Weld (“Defendants”) on February 24, 2014 following a jury trial that resulted in a verdict for Plaintiff. Plaintiff argues that the injunction crafted by the district court is inadequate, and that the district court erred in declining to cancel Defendants' trademark registration and in refusing to award attorneys' fees. Defendants also appeal from the judgment and from the district court's subsequent orders denying their post-trial motions. Defendants contend that the evidence was inadequate to sustain the jury verdict for Plaintiff, or in the alternative that a number of evidentiary rulings merit reversal and remand for a new trial. Defendants also appeal from the June 24, 2014 order partially granting Plaintiff's motion to hold Defendants in contempt for failure to comply with the permanent injunction.

For the reasons set forth below, we REMAND to the district court for the award of attorneys' fees, modification of the injunction to prohibit Defendants from using the infringing mark “BMF Wheels,” and for cancellation of their registered “BMF Wheels” trademark. We AFFIRM the judgment of the district court in all other respects.

STATEMENT OF FACTS

Procedural History

The present litigation arises from the Defendants' use of a mark reading “BMF Wheels” on its products and advertising; a mark that is strikingly similar to the logo and registered trademark “BMF” that Plaintiff places on its high-performance cylinder heads. Plaintiff filed a complaint against Defendants in August 2011 alleging violations of the Lanham Act, 15 U.S.C. §§ 1114(1)(a), 1125(a), and the Michigan Consumer Protection Act (“MCPA”), Mich. Comp. Laws Ann. §§ 445.901 et seq. An amended complaint filed several months later added a claim seeking cancellation of Defendants' registration of the trademark “BMF Wheels” under 15 U.S.C. § 1119.

After a three-day trial, the jury made the following findings by special verdict form: (1) that “[D]efendants' use of its mark in connection with the sale of its products creates a likelihood of confusion with the plaintiff's registered BMF trademark;” (2) that “[P]laintiff's unregistered BMF logo trademark is a valid trademark owned by the plaintiff;” and (3) that, as to each of the five BMF Wheels logos submitted to the jury, “[D]efendants' use of its mark in connection with the sale of its products creates a likelihood of confusion with the plaintiff's unregistered BMF logo trademark.” (R. 100, Special Verdict Form, PageID 2037–38.) The jury also found (4) that Plaintiff had not proven by a preponderance of the evidence that “at the time of the defendants' initial use of BMF, the defendants intended to derive a benefit from the plaintiff's goodwill or reputation,” and (5) that Plaintiff failed to prove that it “suffered actual damages.” (Id. at 2038.)

The district court entered judgment for Plaintiff in February 2014 following briefing on the issue of remedy. The district court also entered a permanent injunction that restrained Defendants from using current or future logos that approximated the visual appearance of Plaintiff's logo, but permitted them to continue using the phrase “BMF Wheels” so long as it was accompanied by a disclaimer; imposed restrictions on Defendants' use of the letters “BMF” on products and advertising; and required Defendants to withdraw all media advertising bearing the BMF logos by April 30, 2014 and to dispose of stock bearing the logos five months later, on September 30, 2014. Plaintiff, dissatisfied with this limited relief, filed a timely notice of appeal.

In April 2014, the district court entered an opinion and order denying Defendants' motions to approve a new proposed logo, modify the injunction, and extend compliance deadlines and to stay the injunction pending appeal. The district court also denied Defendants' motion for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b), together with their alternative motion for a new trial pursuant to Federal Rule of Civil Procedure 59, and Plaintiff's motion to amend or correct the judgment. Defendants filed a timely notice of appeal from these orders.

On June 20, 2014, the court considered Defendants' request for approval of its redesigned logo and held that the new logo did not comply with the injunction. On June 24, 2014, the district court granted Plaintiffs' motion for contempt based on Defendants' failure to withdraw advertising bearing the challenged logos, ordered Defendants to comply with the injunction, and imposed sanctions. Defendants filed a timely notice of appeal of these orders, initiating the third of these consolidated appeals.

Factual Background

A. Plaintiff's BMF Line

Plaintiff CFE Racing Products is a company founded in 1983 by Carl Foltz to manufacture and sell high-end cylinder heads in the automotive parts “aftermarket.”¹ Initially, Plaintiff sold exclusively to professional racers under the brand name “CFE.” Plaintiff eventually expanded its business to include a new “BMF” line of cylinder heads targeted to the consumer market. The choice of “BMF” was apparently inspired by a wallet bearing a certain indelicate phrase of those initials that was featured in the movie Pulp Fiction. Foltz and employees in his shop would use the shorthand “BMF” to describe cylinder heads that had a particularly impressive flow. Over the years, people frequently asked him what “BMF” stood for, putting forward hypotheses like “[b]ig monster flow,” “big massive” flow, and “by Mr. Foltz.” (R. 107, Foltz Tr. Testimony, PageID 2245.).

When Plaintiff launched the BMF line, it hired a company in Florida to design the logo, with instructions to create a logo similar in appearance to its existing CFE logo. The result was a simple setting of the three capitalized letters in a bold, san-serif font, italicized to evoke speed. In color print, the logo uses a color scheme of black, red and white—the letters themselves are black, with red and white outlines around each letter. In several iterations of the logo, “Racing Heads” is set in smaller typeface immediately under “BMF.” Plaintiff's first use of the new BMF logo was in a November 2003 advertisement. The company has used the logo in essentially the same form from November 1, 2003 until the present. Plaintiff applied for a trademark registration for the letters “BMF,” without any specification as to font, style, size, or color, in March 2005. The trademark was registered on January 23, 2007.

The record contains anecdotal evidence of brand recognition for Plaintiff's BMF logo. BMF decals are popular with the company's customers. Plaintiff has used BMF logos on banners for race sponsorships, trade shows, and other events since 2006—these banners proved so popular that more than once they were appropriated by enthusiastic members of the audience following the race.

As of trial, Plaintiff's BMF line included cylinder heads, valve covers, and apparel bearing the BMF logo. Foltz testified that the company had plans for expansion: they wanted to “fill in” the product line of cylinder heads, and they were in discussions with potential manufacturers to develop lubricants and mufflers that would carry the BMF brand. Plaintiff's sales, however, were declining rather than expanding. After reaching a high of $600,000 in annual revenue before the recession, total sales for the BMF line dropped to approximately $80,000 in 2012 (the last full year before the trial). Foltz attributed some of the tail end of the decline to his decision to pull BMF advertising after discovering Defendants' BMF brand in 2011.

B. Defendant's Infringing Use of “BMF ”

Defendant BMF Wheels is a company founded in 2007 by Defendant Brock Weld. Defendants sell aftermarket wheels to customers, with an emphasis on trucks. Defendants' first use of the term “BMF Wheels” in commerce was October 1, 2007.

Weld testified at trial that he came up with the name “BMF Wheels” in the summer of 2006 as he was discussing plans for the new company with a colleague. They took inspiration from Weld's wallet, which bore the same indelicate phrase as the wallet from Pulp Fiction. According to his testimony, Weld had never seen Plaintiff's BMF mark and was not aware of its existence. Weld considered and rejected a number of mock-ups before settling on a final logo. The one he chose bears a striking similarity to Plaintiff's BMF logo. As with Plaintiff's logo, the three letters “BMF” are set in capitalized, san-serif typeface, with the same forward slant and sharply contrasting outlines in the color scheme of black, white and red. In some iterations of the logo, “Wheels” is set in smaller typeface immediately under “BMF.”

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