No Post-Trial “Bait-and-Switch” on Legal Theory in Trademark Infringement
In a trademark infringement dispute, the US Court of Appeals for the Seventh Circuit found that a district court abused its discretion in allowing the plaintiff to argue that the defendant failed to prove continuous of use of its trademark after a date well past the time period in dispute. S.C. Johnson & Son, Inc. v. Nutraceutical Corporation, et. al., Case No. 11-C-861 (7th Cir, Aug. 25, 2016) (Wood, J).
In the early 1990s, Sandy Maine began selling an all-natural bug repellant under the name BUG OFF through her company SunFeather. Despite growing sales of the BUG OFF products, which reached over $1 million per year by 1998, SunFeather did not file any US federal trademark applications for the BUG OFF mark until 2002. The US Patent and Trademark Office (PTO) refused SunFeather’s trademark applications for BUG OFF because, unbeknownst to SunFeather, in 1998 two other competing applications for BUG OFF had been filed by Melvin Chervitz and Kaz, Inc., respectively.
In 2003, S.C. Johnson & Son, Inc., filed its own BUG OFF trademark application for use in connection with its OFF! brand of insect repellant, but the PTO refused the application in view of the 1998 Chervitz and Kaz applications. After fighting over their BUG OFF marks, Chervitz and Kaz eventually settled in 2004. In 2005, after a series of disputes and negotiations, S.C. Johnson acquired the Chervitz and Kaz BUG OFF registrations that were filed in 1998.
During this time, SunFeather was still selling its BUG OFF products, and in February 2011 Nutraceutical Corporation acquired the company’s assets. Shortly thereafter, in September 2011, S.C. Johnson sued Nutraceutical for trademark infringement and unfair competition. Nutraceutical defended on the grounds that it was the prior, senior user of the BUG OFF mark. According to the pretrial report, at all times Nutraceutical relied on its prior and continuous use defense, while S.C. Johnson claimed that Nutraceutical could not establish prior good faith use of the BUG OFF mark before 1998.
When the district court requested post-trial briefing rather than closing arguments, however, S.C. Johnson shifted its position and argued that Nutraceutical had failed to prove continuous use of the mark after 2012. Finding this assertion to be true, the district court ruled in favor of S.C. Johnson and issued a permanent injunction against Nutraceutical’s use of BUG OFF. Nutraceutical appealed.
The Seventh Circuit examined whether the district court abused its discretion by allowing S.C. Johnson to “shift its focus at the eleventh hour to question whether Nutraceutical proved continuous use of BUG OFF products after 2012.” Stating that S.C. Johnson pulled a “bait-and-switch maneuver,” the Court explained that S.C. Johnson’s issues for trial expressly stated that they were limited to the pre-1998 period of use of the BUG OFF trademark, and because issues for trial are generally limited to those issues disputed at summary judgment, “any reasonable litigant would have assumed that it was not required to prove post-2012 continuity at trial.” However, the court also went on to explain that even though post-2012 use of the BUG OFF mark was not at issue in trial, both S.C. Johnson and Nutraceutical had admitted at various points in the trial record that Nutraceutical had been selling the BUG OFF products “online and at retail shops around the country” at the time of the 2011 complaint and through the subsequent trial.
Therefore, the Seventh Circuit determined that under either the theory of waiver or estoppel, S.C. Johnson had raised its argument about post-2012 continuity of use too late, and that the district court abused its discretion in allowing S.C. Johnson to lodge the post-2012 non-use argument: “S.C. Johnson affirmatively misled Nutraceutical about the scope of trial, and then struck only after Nutraceutical could no longer present relevant evidence.” The Court also found that Nutraceutical maintained continuous use of the BUG OFF mark prior to 2012, thus establishing prior common law rights in the mark, and vacated the injunction against Nutraceutical.