Absent evidence of the scope of a common law trademark holder’s use, the U.S. Court of Appeals for the Fourth Circuit vacated a district court’s entry of a nationwide injunction. The court also held that failure to plead the affirmative defense of "good faith remote user" did not preclude a later challenge to the scope of the injunction. Emergency One, Inc. v. American Fire Eagle Engine Co., Inc., Case No. 02-1483 (4th Cir. 2003).
Emergency One (E-One) and American Fire Eagle (AFE) manufacture fire and rescue vehicles. E-One sued AFE for trademark infringement for use of a mark depicting a bald eagle superimposed over an American flag. AFE counterclaimed, alleging E-One had abandoned any rights it may have had in the mark so its later resumed use of the mark constituted infringement of rights established by AFE in the interim. The parties agreed their respective marks were sufficiently similar to create a likelihood of confusion among potential customers.
Following a trial, an appeal and a re-trial, the district court entered judgment in favor AFE, based on the jury’s findings that E-One had abandoned the mark without an intent to resume use. Over E-One’s objection that the court should conduct an evidentiary hearing to establish the proper geographical scope of an injunction, the district court imposed a nationwide injunction against the use of the mark by E-One.
The Fourth Circuit vacated and remanded, noting that the Lanham Act’s presumption that the registered user of a trademark is entitled to use the registered mark throughout the United States does not extend it to users of unregistered, common law marks. Such users bear the burden of establishing the territory within which they have an exclusive right to use. Absent any evidence showing AFE’s use of the American Fire Eagle mark in the United States, it was an abuse of the district court’s discretion to issue a nationwide injunction.
The Fourth Circuit rejected AFE’s argument that E-One had waived any objection to a nationwide injunction by failing to raise the good faith remote user doctrine as an affirmative defense. The court held that although the good faith remote user defense is one that should be pled affirmatively, E-One’s objection was not a defense to liability, but went to the scope of the remedy and, therefore, need not be set forth affirmatively in the pleadings.
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