Court: District Court, S.D. Illinois; June 10, 2018; Federal District Court
Plaintiff Can't Live Without It, LLC (S'well) filed two post-trial motions after a jury found defendant ETS Express, Inc. not liable for claims of trade dress infringement and unfair competition related to the Force Bottle, which resembles S'well's S'well Bottle. S'well's claims included violations of the Lanham Act for trade dress infringement and New York common law unfair competition due to ETS's alleged misrepresentation of Force Bottles as S'well products. Following a seven-day trial, the court entered judgment in favor of ETS.
S'well moved for judgment as a matter of law under Federal Rule of Civil Procedure 50(b) regarding its unfair competition claim and for a new trial on its trade dress claims under Rule 59(a)(1). The court denied both motions. In evaluating the Rule 50 motion, the court explained that it could only overturn the jury's verdict if there was a complete absence of evidence supporting it or if the evidence overwhelmingly favored S'well.
S'well presented two primary arguments for its unfair competition claim: first, that ETS sold Force Bottles to customers who requested S'well Bottles without disclosing the true nature of the products; second, that ETS misled customers to believe that Force Bottles were associated with S'well. New York law requires that defendants act in bad faith for an unfair competition claim to succeed, meaning that mere negligence is insufficient. S'well cited substantial trial evidence showing that customers often requested "S'well" bottles, and ETS fulfilled those orders with Force Bottles without clarification. Testimony from ETS employees supported S'well's claims that they received such orders but failed to inform customers they were purchasing a different product.
ETS employees indicated that customers were aware they were ordering Force Bottles and used the term "S'well" to refer to a similar product they recognized. CEO Sharon Eyal noted that distributors understood they were purchasing H2GO Force products, not S'well bottles. Employees testified that they would clarify any misconceptions with customers about the products they carried. S'well contends that this employee testimony is inadequate for establishing customer intent, as employees cannot truly know customer thoughts. They reference a case where the Ninth Circuit rejected similar claims regarding customer intent with a well-known brand. Nonetheless, even if the testimony is inadmissible for customer mindset, it reflects the ETS employees' belief that customers requesting "S'well" actually wanted Force Bottles, which could negate allegations of bad faith if believed by a jury.
Additionally, evidence shows ETS primarily sells competitively-priced drinkware similar to popular brands, with many customers being repeat buyers familiar with ETS's offerings. Orders of Force Bottles arrive in clearly labeled boxes, making it apparent if a customer received the wrong product. Given this context, a jury could reasonably conclude that ETS salespeople did not intentionally misrepresent Force Bottles as S'well, as the error would be easily recognizable.
S'well presented limited evidence of bad faith regarding ETS's actions. While ETS employees did not correct customer inquiries, this could be considered innocent if they believed customers were requesting the Force Bottles. ETS’s decision to have its factory produce the Force Bottle to resemble the S'well Bottle indicates an understanding of customer preferences rather than intent to mislead. Consequently, S'well's motion for judgment on these grounds is denied.
S'well also claimed that ETS intentionally marketed the Force Bottle as affiliated with the S'well brand. However, S'well failed to provide any new evidence beyond what was already submitted in its summary judgment motion, leading to the denial of this motion as well. Emails cited by S'well do not explicitly claim a formal affiliation and can be interpreted as merely indicating similarity between the two products. Testimony from an ETS employee clarified that there was no intention to mislead customers about a formal relationship. A jury could reasonably accept this testimony, suggesting that the emails were simply attempts to convey that the two bottles are comparable.
Regarding S'well's motion for a new trial under Rule 59(a), it asserted three points: (1) the admission of third-party bottles that mimic the S'well Bottle’s shape was erroneous and prejudicial; (2) ETS improperly introduced testimony about the S'well Bottle's shape being used internationally prior to S'well's U.S. marketing, despite a court order against such testimony; and (3) the verdict contradicted the evidence's weight. The trial court admitted 113 bottles resembling the S'well Bottle, obtained from various sources, which S'well argues should have been excluded under Federal Rule of Evidence 403 due to their potential prejudicial impact without evidence of customer awareness. S'well contends that it was ETS's responsibility to demonstrate this awareness for the bottles' admissibility.
The court previously determined that the presence of other water bottles does not establish that S'well's trade dress lacks secondary meaning. The defendant failed to provide evidence demonstrating that third parties effectively used or promoted these trademarks or that consumers recognized them. Previous cases affirm that third-party usage alone does not make a mark generic. Despite this, the existence of many similarly shaped bottles suggests that consumers may not associate that specific shape with any singular brand. Testimony indicated that at a trade show, about 4,000 distributors observed a clear separation between promotional displays of various brands and S'well's dedicated section. Additionally, shopping on Amazon for similar bottles facilitates brand comparison, further indicating that consumers might associate the S'well shape with multiple brands. While this evidence does not prove that S'well's trade dress lacks secondary meaning, it is significant enough to be admitted as evidence. S'well argues that the jury might misinterpret the relevance of these bottles without stronger evidence of consumer awareness, potentially leading to bias against S'well's claims. However, ETS had disclosed the existence of 46 similar bottles before the trial, allowing S'well ample opportunity to investigate and present arguments regarding their market presence and advertising. ETS had previously filed a motion for a preliminary injunction, stating there were numerous suppliers of similar bottles, strengthening its position.
S'well's failure to pursue easily obtainable evidence precludes it from claiming prejudice due to the absence of that information. The company cross-examined ETS witnesses about their market knowledge, establishing their ignorance regarding other purchases and brand awareness. S'well's closing arguments suggested that the presence of competing bottles was merely a distraction and reflected market entry rather than evidence of S'well being generic. Consequently, any prejudice perceived by S'well was a result of its own choices and was mitigated by its own cross-examination and arguments. Therefore, S'well's motion for a new trial on these grounds is denied.
Regarding testimony about foreign use of the S'well shape, S'well argued that this misled the jury into believing it had to prove originality for its trade dress claim. Although the court had previously excluded such evidence, limited references to preexisting similarly shaped bottles were made, relevant to ETS's good faith concerning potential willful damages. Even if this testimony violated the court's order, S'well did not demonstrate prejudice, as the references were minimal and not included in closing arguments. The jury was instructed that proving invention of the shape was unnecessary for establishing secondary meaning. Thus, S'well's motion for a new trial on this basis is also denied.
Finally, S'well asserted that the jury's verdict was against the weight of the evidence. A verdict is considered against the weight of the evidence if it is seriously erroneous or a miscarriage of justice. Unlike a directed verdict motion, a motion for a new trial allows the court to weigh evidence and witness credibility without favoring the verdict winner. Consequently, S'well's motion for a new trial based on the weight of the evidence is likewise denied.
To succeed in a trademark infringement claim under the Lanham Act, a plaintiff must demonstrate that their mark is protectable and that the defendant's use of its mark is likely to cause confusion. In this case, the court found strong evidence favoring S'well, except regarding whether the S'well Bottle's trade dress had acquired secondary meaning prior to ETS's marketing of the Force Bottle in mid-2014. A descriptive mark must show secondary meaning before a competitor's use; thus, S'well had the burden to prove this before 2014, despite having registered its trade dress in January 2017.
S'well presented significant evidence, including media coverage and sales data, indicating its brand's growth, with sales increasing from $1.9 million in 2013 to $100 million in 2016. However, most evidence of secondary meaning pertained to post-2014. S'well's expert could not substantiate secondary meaning specifically for 2014. Additionally, ETS introduced evidence of other manufacturers with similar bottles prior to 2014, although they failed to prove customer awareness of those brands. This made the determination of secondary meaning in 2014 a close issue.
The court concluded that the jury's verdict was not a miscarriage of justice, denying S'well's motions for judgment as a matter of law and for a new trial. The court ordered the closure of all open motions in the case. It noted that a guide distributed by ETS employees would not confuse distributors regarding the relationship between the Force Bottle and the S'well Bottle, distinguishing this case from a precedent involving a simple list of businesses. S'well's limited discovery opportunity regarding other bottles was acknowledged, but the admission of that evidence was deemed harmless.
