Date: 07-20-2001

Case Style: Estate of Bishop v. Equinox Internation Corporation

Case Number: 99-5215

Judge: Ebel

Court: United States Court of Appeals for the Tenth Circuit

Plaintiff's Attorney: William S. Dorman of Dorman & Gilbert, Tulsa, Oklahoma

Defendant's Attorney: Mark J. Morgan, III and Kent Meyers of Crowe & Dunlevy, Oklahoma City, Oklahoma

Description: This case arises from a trademark dispute between plaintiff-appellant, the Estate of James S. Bishop ("the Estate"), and defendant-appellee, Equinox International Corporation ("Equinox"), over Equinox's infringing use of the federally registered trademark "Essence of Life." We resolved a prior appeal in this case in Bishop v. Equinox International Corp., 154 F.3d 1220 (10th Cir. 1998) ("Bishop I"), in which we remanded to the district court to determine whether the Estate was entitled to a portion of Equinox's profits during the infringing period. Here, the Estate argues that the district court abused its discretion when it failed on remand to award the Estate a portion of Equinox's profits. The Estate further argues that the district court abused its discretion in failing to grant the Estate's motion for disqualification of the district court judge. Because we find that the district court was acting within its discretionary authority on both issues, we AFFIRM the decision of the district court.

BACKGROUND

In October 1985, the original plaintiff-appellant, James Bishop ("Bishop"), began making and selling a dietary supplement composed of a mineral electrolyte solution ("liquid mineral complex") in both liquid and capsule form. Bishop affixed the trademark "Essence of Life" to the products' containers and received a Certificate of Federal Trademark Registration, No. 1,504, 568, on September 20, 1988. Bishop then filed and received acceptance of a "Section 8 and 15" Affidavit of Continuing Use under 15 U.S.C. §§ 1058 and 1065.

In approximately January 1995, Bishop became aware that Equinox was marketing a product using the phrase "Essence of Life," which was further described as a "liquid mineral complex." In a letter dated February 22, 1995, Bishop's then-attorney notified Equinox that Bishop considered Equinox's use of the phrase "Essence of Life" an infringement on his trademark and requested that Equinox cease and desist in further infringement. Equinox's attorney responded with a letter dated June 1, 1995, advising Bishop's attorney that Equinox would stop using the phrase "Essence of Life" on its products. Equinox did not, however, stop using the trademark.

Bishop filed suit on January 3, 1996, and the district court conducted a three-day bench trial in 1997. The district court held that Equinox had deliberately or willfully infringed Bishop's trademark and enjoined Equinox from further use of the trademark. The district court also found: (1) Equinox's use of the phrase "Essence of Life" created a likelihood of confusion due to the identical language being used to sell a nearly identical product; (2) Equinox did not cease using the mark as promised by its attorney in the June 1, 1995, letter, at least in part because it perceived Bishop to be without the resources to sue Equinox; and (3) the case was exceptional enough to warrant an award of $100,000 in attorney's fees to Bishop. The district court nevertheless denied Bishop an award of any portion of Equinox's profits on the theory that a plaintiff must demonstrate actual damages before he is entitled to receive a portion of a defendant's profits under 15 U.S.C. § 1117.

Bishop appealed that decision to this court.(1) We held in Bishop I that the district court erred in requiring Bishop to show actual damages to receive a portion of Equinox's profits. See 154 F.3d at 1222-23. We noted that a number of circuit courts of appeals had upheld awards of defendant's profits pursuant to 15 U.S.C. § 1117, even absent proof of actual damage to the plaintiff, under the alternative theories of preventing unjust enrichment or deterring willful infringement. Id. at 1223. We thus remanded the case to the district court to determine whether Bishop should be awarded a portion of Equinox's profits as part of the overall damage award in the case, with an instruction that the district court should "fashion a remedy that 'will satisfy the equities of the case.'" Id. at 1224 (quoting Champion Spark Plug Co. v. Sanders, 331 U.S. 125, 131 (1947)).

On remand, the district court ordered the parties to file simultaneous briefs "on the issue of whether, on the evidence now before the Court, and taking into consideration equity and the analyses of the Court of Appeals in this case, the Plaintiff is entitled to profits as an element of damages." On February 1, 1999, Bishop filed a brief requesting that the district court grant an accounting of Equinox's profits from January 9, 1997, through the end of 1997. Shortly thereafter Bishop filed a motion for a status conference.

Bishop soon discovered that Equinox was still advertising products on its website using the "Essence of Life" trademark.(2) Bishop responded to this discovery by filing a motion for a contempt citation on March 16, 1999. Bishop then died and the Estate was substituted as the plaintiff in this matter. Not having heard from the district court, the Estate on June 17, 1999, filed a second motion for a status conference and a motion for additional discovery on the issue of Equinox's profits. Then, on September 21, 1999, the Estate filed a motion to disqualify Senior Judge James O. Ellison, the district judge to whom the case had been assigned, based upon the delay in scheduling a status hearing and his decision not to allow additional discovery on the issue of Equinox's profits.

On September 22, 1999, Judge Ellison denied the Estate any portion of Equinox's profits, denied the Estate's motions for a status conference and for additional discovery as moot, and denied the Estate's motion for a contempt citation and for Judge Ellison's disqualification. In denying an award of profits, the district court stated:

[I]n light of the [Bishop I] Court's reliance on International Star Class Racing Ass'n v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749 (2d Cir. 1996), wherein the Court reversed and remanded for additional findings on an award of profits despite a finding of no intentional deception, this Court believes that the task before it is to consider all the equities in the case anew and make a determination on the applicability of an award of profits.

In considering all of the equities in this case, the relative weakness of the mark, the lack of customer confusion or deception, and that Equinox did not benefit from Bishop's mark, the court rejects, as it did in the original findings, the notion that prevention of unjust enrichment is a sufficient rationale for awarding profits. In particular, the Court found that Defendant did not benefit from Plaintiff's "relatively obscure" mark. Further, assuming that profits can be awarded in this circuit as a deterrence to willful infringement, the Court finds that when weighing the equities, particularly that the bad faith was found in Defendant's failure to honor the cease and desist agreement, the award of attorney fees is a sufficient deterrent under these circumstances.

Estate of Bishop v. Equinox Int'l Corp., No. 96-C-006-E, slip op. at 4 (N.D. Okla. Sept. 23, 1999) (unpublished order) ("Bishop II"). In regard to the motion to disqualify, the district court noted that his January 5, 1999, Order directed the parties to brief the issue remanded by the Court of Appeals, which belied the Estate's contention that he "was trying to avoid the ruling," and found that neither that nor the court's failure to schedule a status conference "provide a reasonable factual basis for calling the court's impartiality into question." Id., slip op. at 1 n.1.

The instant appeal followed. Subsequent to the filing of this appeal but acknowledged by the Estate at oral argument, Equinox entered into a settlement agreement in an action initiated by the Federal Trade Commission ("FTC") and several states. See Federal Trade Comm'n v. Equinox Int'l Corp., No. CV-S-99-0969-JBR-RLH (D. Nev. Apr. 20, 2000) (unpublished order). The FTC's allegations against Equinox included violations of § 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, and violations of various state statutes dealing with securities, deceptive trade practices, false advertising, pyramid schemes and licensing requirements. See id., slip op. at 2. Pursuant to the settlement agreement, Equinox is no longer in operation and a receiver has been appointed to liquidate all of Equinox's assets for distribution to its creditors. See id., slip op. at 10, 13, 15-20.

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Click the case caption above for the full text of the Court's opinion.

Outcome: Affirmed.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: The plaintiff filed an application for cert. with the United States Supreme Court.

Reported by Kent Morlan