(April 15, 2016, 10:28 AM EDT) -- ATLANTA — In an appeal over a denied motion to modifyan injunction, an owner of a trademark for devices to treat back problems tells the 11thCircuit U.S. Court of Appeals in an on April 6 brief that the defendants waived the defenseof trademark abandonment and are barred from relying on events that occurred prior tothe injunction ruling (Axiom Worldwide, Inc. v. Excite Medical Corp. and Saleem N.Musallam, No. 15-15428, 11th Cir.).
(Appellee brief available. Document #78-160418-011B.)
On July 1, 2011, Axiom Worldwide Inc. sued HTRD Group Hong Kong Ltd., Excite MedicalCorp. and Saleem N. Musallam, alleging that it was the owner of trademarks used inconnection with the sale of devices used to treat back and neck ailments, sometimesreferred to as “spinal decompression” devices. Axiom alleged that the devices were soldglobally to medical professionals. Axiom claimed that the defendants infringed upon its trademarks.
Axiom sought injunctive, declaratory and monetary relief for alleged trademarkinfringement and unfair competition under 15 U.S. Code Sections 1114, 1116, 1120, 1121and 1125. Specifically, Axiom alleged that Musallam acted as an agent for HTRD in theUnited States, in concert with Excite, and was accused of participating in the unlawful conduct attributed to HTRD, particularly within the regions of Russia, South Korea and thePeople’s Republic of China.
The defendants said that in 2006, Axiom had transferred its assets, including the trademarks and intellectual property, to another related entity, Axiom Worldwide LLC. HTRD claimed to have obtained and acquired the same assets by way of Progress Bank in July2010, after Progress Bank took title to Axiom’s intellectual property and trademarks through a proceeding initiated in state court and in satisfaction of a judgment obtained directly against Axiom Worldwide LLC.
Trademark Infringement
On Dec. 1, 2012, Axiom moved for summary judgment on its claims, including its claimseeking to definitively establish ownership of the trademarks and intellectual property. TheU.S. District Court for the Middle District of Florida granted Axiom’s motion, finding that thedefendants infringed Axiom’s trademarks. The District Court held that “HTRD subjectively believed that the asset purchase from Progress Bank did include the relevant trademarks.”
On June 13, 2013, the case proceeded to a nonjury trial on the remaining issues ofmonetary and equitable relief. On July 31, 2013, the District Court found that, “the Court cannot conclude that the defendants’ use of Axiom’s trademarks caused Axiom to sufferany lost revenue. Indeed, [Axiom’s president] admitted at trial that Axiom has not manufactured, exported, or sold any machines for the past few years . . . and consequently, did not have any revenue in 2011 or 2012.”
On Aug. 1, 2013, the District Court, entered a final judgment, together with an injunction,which enjoined the defendants from “using any of Axiom’s marks, trademarks, tradenames, or logos” in commerce, such as they were identified in the Court’s prior order. TheDistrict Court awarded damages against Excite and Musallam in the amounts of $1.3 millionand $85,000. The defendants appealed to the 11th Circuit, which affirmed.
On May 22, 2015, Excite and Musallam filed a motion for modification of the injunction,citing the cancellation of most of the subject trademark registrations by the U.S. Patent andTrademark Office. On Dec. 7, the District Court denied the motion, finding that while thetrademarks were not being used, they were potentially capable of being used by anunspecified nonparty. The defendants appealed the denial of the motion for modification of the injunction.
Trademark Abandonment
In its appellee brief, Axiom argues that the defendants’ motion to modify injunction was animproper attempt to relitigate the claims resolved in the August 2013 ruling. Axiom assertsthat the defendants’ affirmative defense of trademark abandonment was properly disposedof when their pleadings were stricken as a result of “repeated, willful and severe discoveryabuses.” Axiom also notes that HTRD raised the issue of trademark abandonment but that argument was rejected by the District Court and then was never appealed.
“The time for filing an appeal with respect to the issues raised in the Amended Complaintand Affirmative Defenses and resolved by the District Court have long since expired. Thecourt issued a Judgment on August 1, 2013 in favor of Axiom finding that Axiom owns thetrademarks and intellectual property at issue, and that those property rights should beprotected with an injunction. Appellants appealed various portions of the Judgment, but did not raise any of the issues they now seek to raise years later,” Axiom says.
Rather, than focus on the alleged significant legal or factual changes that arose subsequentto the injunction, Axiom argues that the defendants inappropriately raised argumentsbased on facts predating the injunction by several years. Axiom further asserts that thealleged nonuse of trademarks during the pendency of litigation constitutes excusablenonuse sufficient to overcome an inference of abandonment. The defendants improperly interfered with Axiom’s use of its intellectual property rights both prior to the lawsuit being filed and post-injunction, Axiom says.
Injunction
In a Feb. 16 brief, the defendants argue that the District Court erred when it found intentto resume use of the trademarks by relying upon evidence outside the three-year period ofnonuse. Specifically, the defendants contend that Axiom’s former trademarks all relate toevents and occurrences in 2015. However, they explain that Axiom’s three-year period ofnon-use began in March or April 2010, and ended in March or April 2013. By considering evidence of alleged events only occurring in 2015, and occurring only after the trademark registrations had largely been cancelled, the defendants argue that the District Court considered irrelevant evidence.
(Appellants brief available. Document #78-160418-012B.)
The defendants also argue that the District Court erred when it ruled that the evidencepresented established intent to resume use in commerce. They explain that Axiom’sexamples of a nonparty entity potentially offering repair and maintenance services are notuse of the trademarks in commerce. The defendants assert that repair and maintenance services are a different offering than sale of the actual goods identified in the subject trademark registrations.
“The District Court erred in failing to deem the dramatic passage of time and resulting lossof trademark rights to amount to a significant change in circumstances. Prolonged non-useof trademarks, and the resulting abandonment of trademarks, is most certainly a factuallysignificant change in circumstances, at least due to its sweeping and unequivocal legalramifications. ‘If a trademark holder ceases using a mark with an intent not to resume itsuse, the mark is deemed abandoned and falls into the public domain and is free for all touse. . . . Abandonment paves the way for future possession and property in any otherperson,’” the defendants say, citing Natural Answers, Inc. v. SmithKline Beecham Corp.(529 F.3d 1325, 1329 [11th Cir. 2008]).
Kenneth S. Siegel of Tampa, Fla., represents the defendants. Mitchell Robiner of Brooks &Brooks Law Firm in Tampa represent Axiom.
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