Citations
- 747 F. Supp. 2d 568
Full opinion text
MEMORANDUM OF DECISION AND ORDER
MARTIN REIDINGER, District Judge.
THIS MATTER is before the Court on the following motions:
(1) Defendants’ Motion for Judgment as a Matter of Law or for New Trial [Doc. 306];
(2) BernzOmatic’s Motion for Entry of a Permanent Injunction [Doc. 299];
(3) BernzOmatic’s Motion to Set Amount of Prejudgment Interest and Amend the Judgment Accordingly [Doc. 301]; and
(4) BernzOmatic’s Rule 54(d) Motion for Attorneys’ Fees [Doc. 303].
I. PROCEDURAL BACKGROUND
This action arises out of a Supply Agreement between the Plaintiff Irwin Industrial Tool Company d/b/a BernzOmatic (“BernzOmatic”) and the Defendant Worthington Cylinders Wisconsin, LLC (“Worthington”) for the supply of fuel cylinders. In its Complaint, BernzOmatic alleged various claims arising from Worthington’s purported breach of the parties’ contract, as well as claims for violations of the Lanham Act, 15 U.S.C. §§ 1051, et seq.; unfair and deceptive trade practices, in violation of N.C. Gen. Stat. §§ 75-1.1, et seq. (“Chapter 75”); and tortious interference with prospective business relations in violation of North Carolina law. [Complaint, Doc. 1], Worthington, in turn, asserted counterclaims for fraudulent inducement and breach of contract. [Amended Counterclaim, Doc. 35].
On February 12, 2010, 2010 WL 565251, the Court granted Worthington summary judgment as to BernzOmatic’s claim for tortious interference with contract and for unfair and deceptive trade practices under Chapter 75, as related to the allegations of tortious interference and price discrimination. The Court further granted BernzOmatic summary judgment with respect to Worthington’s fraudulent inducement counterclaim. [Order, Doc. 242],
This case proceeded to a trial by jury on February 16, 2010. On February 26, 2010, the jury returned a verdict finding that Worthington had breached the Supply Agreement and awarding BernzOmatic $1,284,003 for the breach of contract arising from Worthington’s unauthorized use of BernzOmatic’s trade name, trademarks, and logos in violation of § 4.3 of the Supply Agreement and $11,718,242 for other breaches of contract. The jury further found that Worthington had engaged in willful trade dress infringement and false advertising in violation of the Lanham Act and Chapter 75 and awarded BernzOmatic damages in the amount of $1.00 on these claims. [Verdict Sheet, Doc. 293]. The Court entered a Judgment in accordance with the jury’s verdict on April 14, 2010. [Judgment, Doc. 294]. Thereafter, the parties filed the motions which are presently pending before the Court. A hearing was held on these motions on August 30, 2010.
II. DEFENDANTS’ MOTION FOR JUDGMENT AS A MATTER OF LAW OR FOR NEW TRIAL
Worthington moves for a new trial pursuant to Federal Rule of Civil Procedure 59(a)(1)(A) on the “other” contract damages awarded to BernzOmatic and for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b) on BernzOmatic’s claims for breach of § 4.3 of the Supply Agreement and for violations of the Lanham Act and Chapter 75. [Doc. 306].
A. Motion for Judgment as a Matter of Law
1. Standard of Review
A jury verdict will withstand a Rule 50(b) motion unless the nonmovant has presented no substantial evidence to support the jury verdict. Stamathis v. Flying J, Inc., 389 F.3d 429, 436 (4th Cir.2004). A Rule 50 motion for judgment as a matter of law is reviewed under the same standard as that applied in reviewing a motion for summary judgment. Thus, in considering Worthington’s motion, the Court must view the evidence in the light most favorable to BernzOmatic and draw all reasonable inferences in its favor. See Dennis v. Columbia Colleton Med. Ctr., Inc., 290 F.3d 639, 644 45 (4th Cir.2002). A verdict may not be set aside unless the Court “determines that the only conclusion a reasonable trier of fact could draw from the evidence is in favor of the moving party.” Tools USA and Equip. Co. v. Champ Frame Straightening Equip., Inc., 87 F.3d 654, 656-57 (4th Cir.1996) (quoting Winant v. Bostic, 5 F.3d 767, 774 (4th Cir.1993)).
2. Analysis
a. Unauthorized Use of Trade Names
The jury found that Worthington had breached § 4.3 of the Supply Agreement by using BernzOmatic’s trade names, logos, and trademarks without authorization and awarded BernzOmatie $1,284,003 in damages. [Doc. 293 at 2]. Worthington argues that it is entitled to judgment as a matter of law with respect to this breach of contract claim for three reasons. First, Worthington argues that the jury’s award is not supported by the evidence. Second, Worthington contends that a contractual limitation on damages within the Supply Agreement precludes recovery by BernzOmatic for lost profits. Third, Worthington argues that BernzOmatie cannot recover for the unauthorized use of the trade names, logos, and trademarks at issue because it failed to prove ownership of such marks. [Doc. 307 at 4-9].
Worthington failed to assert the first two of these arguments in its Rule 50(a) pre-verdict motion. In arguing for judgment as a matter of law on this claim, Worthington raised only the issue of the ownership of the trade names, trademarks or logos at issue. [See Doc. 290, Feb. 24, 2010 Trial Transcript (“Trial Tr.”) at 2038-39]. To raise an issue in a post-verdict motion for judgment as a matter of law, a party must preserve that right by first making an appropriate motion under Rule 50(a). Vanwyk Textile Sys., B.V. v. Zimmer Mach. Am., Inc., 994 F.Supp. 350, 376 (W.D.N.C.1997). Having failed to raise these issues in its pre-verdict motion, Worthington is precluded from raising them post-verdict. See id.
Even if Worthington had preserved these arguments, the Court finds that there is substantial evidence to support the jury’s damage award for this breach of contract claim. Specifically, BernzOmatie presented evidence of Worthington’s use of the three-panel “peel away” ad, which impermissibly used BernzOmatic’s cylinder and label, including the black “Circle of Trust” logo. BernzOmatie also introduced substantial evidence showing that beginning in March 2007, Worthington discarded its existing label it had been using for its cylinders and switched to a new label that copied the “Circle of Trust” logo and was virtually identical to BernzOmatic’s label. [Plaintiffs’ Trial Exs. 36 and 208; Doc. 268, Feb. 18, 2010 Trial Tr. at 621-23 (McClintock Video); Doc. 286, Feb. 23, 2010 Trial Tr. at 1739-41 (Shakley) ]. The evidence further showed that Worthington aggressively used the packaging incorporating the “Circle of Trust” logo in marketing and selling its hand torch cylinders. For example, Worthington photographed Worthington’s new infringing “black circle” cylinder on shelves next to BernzOmatic’s with the labels juxtaposed, and sent those photographs to retail store customers like Ace, True Value, and Canadian Tire. [Plaintiffs’ Trial Exs. 38, 39 & 40], Worthington told those potential customers that “Worthington cylinders are replacing BernzOmatie labels as a rolling change” and directed them to “notice our cylinders next to the BernzOmatie label.” [Id.; Doc. 266, Feb. 17, 2010 Trial Tr. at 226-31 (Morrisroe) ]. Based on this evidence, the jury reasonably found that Worthington breached § 4.3 of the Supply Agreement.
Worthington also claims there was no proof of damages causation. Worthington’s causation argument, however, is premised on the theory that the “peel away” ad was the only way in which Worthington breached § 4.3. As noted above, however, there was substantial evidence presented at trial to show that not only did Worthington use BernzOmatic’s logo in its “peel away” ad, but that following the termination of the Supply Agreement, Worthington specifically and intentionally used BernzOmatic’s “Circle of Trust” logo design on its cylinders. [Doc. 266, Feb. 17, 2010 Trial Tr. at 225 (Morrisroe) ].
Worthington’s second argument is that the $1,284,003 damages award is barred by a contractual limitation in § 4.8 of the Supply Agreement. That section precludes the recovery of consequential or incidental damages “in connection with design, manuf[a]cture, or sale of covered cylinders under [the] agreement, whether for breach of warranty or other contract breach, negligence or other tort, or any strict liability theory.” [Supply Agreement § 4.8, Plaintiffs’ Trial Ex. 1]. As the Court previously has recognized and ruled, § 4.8 applies only to awards of incidental or consequential damages. The $1,284,003 in lost profits are direct damages resulting from Worthington’s breach of § 4.3 and are therefore not precluded by this contractual provision. Additionally, § 4.8 applies only “in connection with design, manufacture or sale of covered cylinders,” not with respect to Worthington’s unauthorized use of BernzOmatic’s trade names, logos, and trademarks in its sale of competing cylinders. Accordingly, this contractual provision does not preclude the recovery of these damages in this case.
Worthington further contends that it is entitled to judgment as a matter of law on this claim because BernzOmatic failed to prove that it owns the trade names, logos, and trademarks under § 4.3 of the Supply Agreement. Contrary to Worthington’s contentions, however, there was sufficient evidence presented from which the jury reasonably could conclude that BernzOmatic in fact developed, used, and owned “trade names, logos, and trademarks,” particularly the black “Circle of Trust” logo, within the meaning of § 4.3 of the Supply Agreement. Contrary to Worthington’s contention, BernzOmatic was not required to formally register its claim to any BernzOmatic trade name, logo or trademark in order to seek redress for any unauthorized use of the same by Worthington under § 4.3 of the Supply Agreement. Further, while Worthington contends that Newell Operating Company in fact owned the intellectual property at issue, no evidence of this was adduced at trial. Worthington’s motion for judgment as a matter of law with respect to this breach of contract claim is therefore denied.
b. Trade Dress Infringement and False Advertising
Next, Worthington contends that it is entitled to judgment as a matter of law regarding the jury’s findings that it willfully violated the Lanham Act and Chapter 75 because the evidence at trial did not show a violation of either statute, let alone willful violations. [Doc. 307 at 19-26].
In order to prove a claim for trade dress infringement under the Lanham Act, a plaintiff must show that: “(1) its trade dress is primarily non-functional; (2) the alleged infringement creates a likelihood of confusion; and, (3) the trade dress either (a) is inherently distinctive, or (b) has acquired a secondary meaning.” Ashley Furniture Industries, Inc. v. SanGiacomo N.A. Ltd., 187 F.3d 363, 368 (4th Cir.1999). Here, Worthington contends that BernzOmatic failed to provide at trial any evidence of non-functionality or secondary meaning of the BernzOmatic trade dress.
Generally speaking, trade dress is considered non-functional if it is not essential to the use or purpose of the product or if it does not affect the cost or quality of the product. See Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 165, 115 S.Ct. 1300, 131 L.Ed.2d 248 (1995). In the present case, BernzOmatic submitted substantial evidence to show that its trade dress— including the color, size, and shape of the cylinder and the color, font, and placement of words and symbols on the cylinder label — was non-functional. [See Doc. 274, Feb. 19, 2010 Trial Tr. at 936 (McClintock) (Magna propane sold in red cylinder); Doc. 264, Feb. 17, 2010 Trial Tr. at 331 (Morrisroe) (“Coleman uses green to designate their propane cylinders.”); Id. at 359-60 (Ridley); Doc. 280, Feb. 22, 2010 Trial Tr. at 1353 (Raboin); Plaintiffs’ Trial Exs. 43, 80, 81, 162 (Compressed Gas Association: “Color shall not be used to identify container content.”); Doc. 266, Feb. 17, 2010 Trial Tr. at 209 (Morrisroe) (discussing shape of camping propane gas cylinder); Doc. 264, Feb. 17, 2010 Trial Tr. at 480 (Read) (discussing shape of Fat Boy cylinder); Doc. 274, Feb. 19, 2010 Trial Tr. at 902 (McClintock) (discussing shape of PowerCell cylinder); Plaintiffs’ Trial Exs. 187,188].
Worthington argues that BernzOmatic abandoned any trade dress packaging claim it had been asserting and proceeded to trial solely on a claim based on product configuration. As such, Worthington contends, BernzOmatic was required under Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 120 S.Ct. 1339, 146 L.Ed.2d 182 (2000) to produce evidence of secondary meaning in order to prevail on its trade dress infringement claim but failed to do so. First and foremost, Worthington’s argument that BernzOmatic abandoned any “packaging” trade dress claim is without merit. While it is true that BernzOmatic withdrew any claim it had based on the infringement of the trade dress embodied in its kit packaging, BernzOmatic continued to maintain throughout trial that the cylinder itself, along with the cylinder label, was packaging trade dress. [See Doc. 286, Feb. 23, 2010 Trial Tr. at 1831]. In any event, whether BernzOmatic in fact asserted a product configuration claim or a product packaging claim is a moot point, as BernzOmatic presented substantial evidence at trial that its trade dress had acquired distinctiveness through secondary meaning. The Fourth Circuit has held that “evidence of intentional, direct copying establishes a prima facie case of secondary meaning....” M. Kramer Mfg. Co. v. Andrews, 783 F.2d 421, 448 (4th Cir.1986). At trial, BernzOmatic presented evidence to show that the Worthington intentionally copied BernzOmatic’s trade dress. Worthington’s cylinder was nearly identical to the BernzOmatic cylinder in shape, size, and color. Furthermore, the label used on the Worthington incorporated nearly identical colors and font, as well as the black “Circle of Trust” design, rendering the label virtually indistinguishable from the BernzOmatic label.
In light of the substantial evidence submitted to show that the Worthington cylinder was an intentional copy of the BernzOmatic cylinder, the Court further finds that there was substantial evidence to establish a likelihood of confusion between the two products. “[C]ourts have almost unanimously presumed a likelihood of confusion upon a showing that the defendant intentionally copied the plaintiffs trademark or trade dress.” Larsen v. Terk Technologies Corp., 151 F.3d 140, 149 (4th Cir.1998). For these reasons, the Court concludes that there is substantial evidence to support the jury’s finding of willful trade dress infringement in violation of the Lanham Act and Chapter 75.
Worthington further argues that BernzOmatic’s false advertising claim fails as a matter of law because BernzOmatic did not produce any evidence that Worthington’s three-panel ad actually deceived or had the tendency to deceive consumers. This argument must be rejected. In order to sustain a claim for false advertising, a plaintiff must prove that “the contested statement or representation [is] either false on its face or, although literally true, likely to mislead and to confuse consumers given the merchandising context.” Scotts Co. v. United Industries Corp., 315 F.3d 264, 273 (4th Cir.2002) (citation and internal quotation marks omitted). In the present case, BernzOmatic presented sufficient evidence from which the jury could find that the statements in Worthington’s three-panel ad were literally false. “Where the advertisement is literally false, a violation may be established without evidence of consumer deception.” Id. (citation and internal quotation marks omitted). Thus, the lack of evidence regarding any consumer deception is not fatal to BernzOmatic’s claim. For these reasons, Worthington’s motion for judgment as a matter of law regarding BernzOmatic’s false advertising claim under the Lanham Act and Chapter 75 must be denied.
B. Motion for New Trial
1. Standard of Review
Pursuant to Rule 59 of the Federal Rules of Civil Procedure, the Court may grant a new trial to any party on all or some of the issues if: “(1) the verdict is against the clear weight of the evidence, or (2) is based upon evidence which is false, or (3) will result in a miscarriage of justice, even though there may be substantial evidence which would prevent the direction of a verdict.” Cline v. Wal-Mart Stores, Inc., 144 F.3d 294, 301 (4th Cir.1998) (quoting Atlas Food Sys. & Servs., Inc. v. Crane Nat’l Vendors, Inc., 99 F.3d 587, 594 (4th Cir.1996)). In reviewing a motion for a new trial, the Court may not “retry factual findings or credibility determinations reached by the jury.” Cline, 144 F.3d at 301. Instead, the Court must “assume that testimony in favor of the non-moving party is credible, unless totally incredible on its face, and ignore the substantive weight of any evidence supporting the moving party.” Id. (internal quotation marks and citation omitted). The decision to grant or deny a motion for a new trial is a matter within the Court’s discretion. Atlas, 99 F.3d at 594.
2. Analysis
a. Award of Cover Damages
Worthington first argues that the jury’s award of cover damages is contrary to the evidence and warrants a new trial. Specifically, Worthington argues that BernzOmatic was not entitled to seek cover damages because Worthington never failed to make delivery or refused to sell cylinders to BernzOmatic. Additionally, Worthington contends that BernzOmatic began purchasing Coleman cylinders not as cover but as a competitive strategy to convert the market from the Worthingtonmanufactured cylinder to a Coleman-manufactured cylinder. For these reasons, Worthington argues, BernzOmatic was not entitled to recover cover damages. [Doc. 307 at 10-13].
First, it must be noted that it is unclear whether cover damages were even awarded, as only a general contract damages issue was submitted to the jury. BernzOmatic argued that it was entitled to cover damages of $1,283,428, but there is no basis for Worthington to assert that this was, in fact, awarded. The Court, therefore, takes Worthington’s argument to mean that it is entitled to a new trial because BernzOmatic advocated to be awarded cover damages and that such request was improper.
Under Ohio law, which governs the contract in this case, a buyer may seek cover damages “[w]here the seller fails to make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance then with respect to any goods involved.” Ohio Rev. Code Ann. § 1302.85(A). Here, Worthington clearly repudiated the Supply Agreement by terminating it on January 27, 2007, and by refusing to sell Covered Cylinders to BernzOmatic in accordance with its terms. Because no other manufacturer could supply the volume of tall, skinny cylinders required of BernzOmatic at the time that Worthington terminated the Supply Agreement [Doc. 269, Feb. 18, 2010 Trial Tr. at 662 (Torres) ], BernzOmatic was forced to buy cylinders from Worthington at the prevailing market prices in substitution for the cylinders that Worthington refused to sell at the Supply Agreement prices. [Doc. 266, Feb. 17, 2010 Trial Tr. at 208-09 (Morrisroe) ]. In light of this price increase, as well as Worthington’s decision to cut off BernzOmatic’s supply of camping gas cylinders, BernzOmatic began a worldwide search for a new cylinder supplier, and it eventually determined that Coleman’s “Fat Boy” cylinder was the best available substitute. [Doc. 269, Feb. 18, 2010 Trial Tr. at 662-67 (Torres) ].
Worthington argues that given its shape, size and price, the Coleman cylinder was not a reasonable substitute for the Worthington cylinder. Substitute goods obtained as cover need not be identical but rather must be “commercially usable as reasonable substitutes under the circumstances of the particular case.” Ohio Rev. Code Ann. § 1302.86, Official Comments, n. 2. “The test of proper cover is whether at the time and place the buyer acted in good faith and in a reasonable manner, and it is immaterial that hindsight may later prove that the method of cover used was not the cheapest or most effective.” Id. “Whether cover provides a reasonable substitute under the circumstances is a question of fact.” Hughes Communications Galaxy, Inc. v. United States, 271 F.3d 1060, 1066 (Fed.Cir.2001). Here, BernzOmatic presented substantial evidence from which the jury could find that the Coleman cylinder was commercially usable as a reasonable substitute for the Worthington cylinder under the circumstances. There is substantial evidence to support BernzOmatic having made the argument that it was entitled to cover damages and to the extent that the jury’s award may have included such cover damages, it is proper. The Court will therefore deny Worthington’s motion for a new trial on this issue,
b. “Pass Through” of Price Increase
Next, Worthington argues that the award of contract damages created a windfall to BernzOmatic because the jury failed to exclude the price increases that BernzOmatic passed on to its customers. Specifically, Worthington contends that Ohio Rev. Code Ann. § 1301.06, which states that UCC remedies should be “liberally administered” so that the aggrieved party is only “put in as good a position as if the other party had fully performed,” requires the reduction of BernzOmatic’s cover damages to account for the amount that BernzOmatic “passed through” to its customers through increased resale prices. [Doc. 307 at 13-18]. This argument must be rejected.
Under Ohio law, “[t]he buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages ... but less expenses saved in consequence of the seller’s breach.” Ohio Rev. Code Ann. § 1302.86(B). Section 1302.86 does not limit the buyer’s recovery for any price increase that the buyer may “pass through” to its customers. “If the buyer, after covering, makes a gain or sustains a loss on resale, it does not affect the measure of damages which the buyer may recover from the seller, which remains basically fixed at the difference between the contract price and the cover price.” 4A Lawrence’s Anderson on the Uniform Commercial Code § 2-712:62 (3d ed.). Therefore, damages for cover are “not to be reduced by U.C.C. § 1-106 to the actual loss of the buyer and, therefore, is not to be reduced because the buyer’s resale contract passes on some of the buyer’s costs to the subpurchaser.” Id.
The cases cited by Worthington in support of its argument are inapposite to the case at bar. These cases involve situations where, unlike here, the plaintiff had contractually guaranteed itself a fixed amount of profit upon resale of the products. See Diversified Energy, Inc. v. Tennessee Valley Auth., 339 F.3d 437, 446-47 (6th Cir.2003); Union Carbide Corp. v. Consumers Power Co., 636 F.Supp. 1498, 1503 (E.D.Mich.1986); Allied Canners & Packers, Inc. v. Victor Packing Co., 162 Cal.App.3d 905, 907, 912, 209 Cal.Rptr. 60 (1984). By contrast, BernzOmatic did not have contracts with its customers establishing a fixed selling price, nor did it have a “locked in” profit. BernzOmatic was free to sell cylinders at any price it chose, and thus was in a position to reap the reward of extra profits resulting from higher prices or bear the risk of losing sales when its prices increased beyond what the market would bear.
For these reasons, the Court rejects Worthington’s “pass through” argument.
c. Reasonable Amount of Damages
Finally, Worthington argues that a new trial is warranted because the award of damages awarded for “other” breaches of contract is inconsistent with any calculation of damages presented to the jury. Specifically, Worthington contends that the amount awarded by the jury on these claims, $11,718,242, “cannot be squared” with the $12,516,944 in damages originally sought by BernzOmatic. [Doc. 307 at 18-19],
Worthington’s argument is specious and must be rejected. Juries are allowed to award damages in any amount that is supported by the evidence, even if that amount is less than the full amount that a plaintiff requests. See, e.g., First Union Commercial Corp. v. GATX Capital Corp., 411 F.3d 551, 557-58 (4th Cir.2005). If Worthington’s argument were correct, a defendant would be entitled to a new trial anytime that a jury awarded anything less than the total amount sought by the plaintiff. This is not, and cannot be, the law.
In the present case, BernzOmatic presented substantial evidence to support its claims for breach of contract. The jury found in favor of BernzOmatic and awarded damages in an amount that it found was supported by that evidence. The fact that the jury did not award BernzOmatic every dollar it asked for does not mean that the award is not supported by the evidence. Worthington’s motion for a new trial must be denied.
III. BERNZOMATIC’S MOTION FOR PERMANENT INJUNCTION
BernzOmatic moves for entry of a permanent injunction pursuant to the Lanham Act and the UDTPA which would (1) require Worthington to recall all infringing cylinders remaining on retailers’ shelves; (2) require Worthington and BernzOmatic to draft and send a joint letter to major retailers correcting Worthington’s false advertisements as to its hand torch cylinder manufacturing and sales history; and (3) bar Worthington from copying BernzOmatic’s “Circle of Trust” logo on any product or running false advertisements about its hand torch cylinder manufacturing and sales history. [Doc. 299 at 1-2]. Worthington opposes BernzOmatic’s motion, arguing that the proposed injunction is unnecessary, unduly burdensome, and unsupported by the facts or the law. [Doc. 313 at 1-3].
The Supreme Court has established a four-factor test that a plaintiff must satisfy before a court may grant permanent injunctive relief. Specifically, a plaintiff must show:
(I) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). The decision to grant or deny permanent injunctive relief is a matter within the Court’s discretion. Id.
In the present case, BernzOmatic introduced evidence at trial that Worthington intentionally copied BernzOmatic’s trade dress, thereby giving rise to a presumption of a likelihood of confusion. Based upon the evidence presented, the jury found that Worthington had engaged in trade dress infringement and that Worthington’s infringement was willful. [Jury Verdict, Doc. 293 at 3-4], “[0]nce the plaintiff establishes a likelihood of confusion, it is ordinarily presumed that the plaintiff will suffer irreparable harm if injunctive relief is not granted.” Vision Sports, Inc. v. Melville Corp., 888 F.2d 609, 612 n. 3 (9th Cir.1989); see also Logan Graphic Products, Inc. v. Textus USA Inc., No. 02 C 1823, 2003 WL 21011746, at *6 (N.D.Ill. May 5, 2003) (‘When dealing with trade dress infringement, an inadequate remedy at law and irreparable harm are nearly always presumed.”).
A similar presumption of irreparable harm also may arise in false advertising cases under the Lanham Act, although, as the Fourth Circuit has noted, “there seems to be some disagreement among the courts as to when the presumption should be applied.” Scotts Co. v. United Indus. Corp., 315 F.3d 264, 273 (4th Cir.2002). The Eighth Circuit has suggested that the presumption applies in all Lanham Act cases where the plaintiff has established a tendency to deceive. See United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1183 (8th Cir.1998). The Second Circuit, on the other hand, has limited the presumption only to cases involving false comparative advertising. See Ortho Pharm. Corp. v. Cosprophar, Inc., 32 F.3d 690, 696 (2d Cir.1994). While the Fourth Circuit has not weighed in on the issue, district courts within the Fourth Circuit have applied the presumption of irreparable harm to non-comparative false advertisements. See Sanderson Farms, Inc. v. Tyson Foods, Inc., 547 F.Supp.2d 491, 503-04 (D.Md. 2008) (finding irreparable harm in non-comparative advertisement based on literal falsity and customer confusion); JTH Tax Inc. v. H & R Block E. Tax Servs., Inc., 128 F.Supp.2d 926, 948 (E.D.Va.2001) (vacated in part on other grounds) (finding irreparable harm based on non-comparative advertisement’s tendency to deceive); Black & Decker (U.S.) Inc. v. Pro-Tech Power Inc., 26 F.Supp.2d 834, 862 (E.D.Va.1998) (finding advertisement’s tendency to mislead satisfied irreparable harm requirement).
In the present case, BernzOmatic introduced evidence at trial to show that Worthington’s advertisement was literally false. Based upon the evidence presented, the jury determined that Worthington willfully engaged in false advertising. [Jury Verdict, Doc. 293 at 3-4], This determination necessarily involved a finding that Worthington’s advertisements “actually deceived or had the tendency to deceive a substantial segment, of Worthington’s audience.” [See Doc. 288, Feb. 25, 2010 Trial Tr. at 2185]. As such, a presumption arises that BernzOmatic has suffered irreparable harm as a result of Worthington’s false advertising.
Worthington contends that because it has discontinued using the infringing trade dress and false advertisements, there is no evidence on which to base a presumption of irreparable harm in the future. This argument, however, does not foreclose the possibility of injunctive relief. As the Fourth Circuit has recognized, a defendant’s “voluntary discontinuance of challenged activities” does not necessarily moot a request for injunctive relief unless “there is no reasonable expectation that the wrong will be repeated.” Lyons P’ship, L.P. v. Moms Costumes, Inc., 243 F.3d 789, 800 (4th Cir.2001) (citation and internal quotation marks omitted). A defendant has “a heavy burden to establish mootness in such cases because otherwise they would simply be free to return to their old ways after the threat of a lawsuit has passed.” Id. (citation and internal quotation marks omitted).
Although Worthington has used a non-infringing trade dress on its hand torch cylinders since early 2008, Worthington could revert to the use of its infringing packaging at any time. Moreover, Worthington continues to sell to the retailers to whom it targeted its false advertising and could redistribute its false advertisements to these retailers at any time, thereby causing further irreparable injury to BernzOmatic’s reputation and goodwill. Having been found by a jury to have committed willful trade dress infringement and false advertising, Worthington has failed to meet its heavy burden of showing that there is “no reasonable expectation” that it will not repeat these wrongs in the future.
For these reasons, the Court concludes that BernzOmatic has satisfied the requisite showing of irreparable harm. Money damages alone would not suffice to remedy the harm to BernzOmatic’s reputation and goodwill as a result of Worthington’s conduct. Accordingly, the Court concludes that BernzOmatic has satisfied the first two eBay factors.
Next, the Court must consider whether the balance of hardships weighs in favor of an injunction. The Court finds that BernzOmatic’s request for a mandatory recall of all infringing cylinders remaining on retailers’ shelves would place a substantial burden on Worthington and its customers, due to the fact that a recall would be highly unlikely to result in the recovery of any infringing cylinders. First, Worthington has presented evidence to show that it sold comparatively few of the infringing cylinders. [Declaration of Dustan McClintock (“McClintock Deck”), Doe. 313-6 at ¶ 2 (noting that only 1.6 million of the infringing cylinders were sold) ]. Additionally, in the period of time since early 2008 when Worthington replaced the infringing cylinder with the ProGrade brand, Worthington’s customers have turned over their inventories at least seven to fifteen times. [Id at ¶ 3]. It is therefore highly unlikely that there are currently any Worthington cylinders with infringing trade dress left to be recalled from Worthington’s customers. [Id at ¶ 3]. A mandatory recall would impose an undue burden upon Worthington’s mass market retail customers to make what is likely to be a futile search of every store and distribution center for infringing cylinders. For these reasons, the Court concludes that the hardship placed on Worthington and its customers outweighs any harm that BernzOmatic may suffer in the absence of a mandatory recall of any infringing cylinders.
Similarly, the Court finds that the balance of hardships would not weigh in favor of requiring Worthington to issue a joint letter with BernzOmatic to major retailers correcting its false advertisements. Corrective advertising is typically used in cases where the advertisement at issue involved statements that create a danger to the general public. See Wildlife Research Center, Inc. v. Robinson Outdoors, Inc., 409 F.Supp.2d 1131, 1138 (D.Minn. 2005) (“Injunctive relief in the form of corrective advertising is often granted in cases involving public health or welfare.”) (collecting cases). No such danger to the public health or welfare is implicated here. Additionally, “[cjorreetive advertising is a remedy designed to ‘counteract the public confusion’ resulting from trademark infringement.” Lurzer GMBH v. American Showcase, Inc., 75 F.Supp.2d 98, 101 (S.D.N.Y.1998). In the present case, however, BernzOmatic failed to produce any material evidence of actual confusion by the public and instead submitted its ease to the jury on a the theory of intentional deception (i.e., that the advertisements were literally false). Under these circumstances, corrective advertising would not be appropriate. See id. (denying corrective advertising remedy when plaintiff presented no material evidence of actual confusion and submitted its infringement claims to jury on theory of intentional deception).
Even if corrective advertising were appropriate in these circumstances, the Court finds that the proposed joint letter would be of little benefit to BernzOmatic at this point. The false advertisements at issue ran a total of four times in one professional publication over two years ago. While BernzOmatic took no action to challenge or correct the false statements in the advertisements at the time, since the conclusion of the trial, BernzOmatic has issued its own corrective advertising in the form of multiple press releases and letters to retail customers describing the outcome of the lawsuit. [See, e.g., Doc. 313-8, March 15, 2010 correspondence to McMaster Carr Supply; Doc. 313-9, March 4, 2010 press release]. BernzOmatic has failed to show that there is any harm that has not already been addressed by its own communications to customers that the proposed joint letter could remedy.
The Court does find, however, that the threatened injury to BernzOmatic’s reputation and goodwill outweighs the harm, if any, caused to Worthington as a result of an injunction prohibiting Worthington from illegally infringing BernzOmatic’s trade dress or engaging in false advertising in the future. The Court further finds that the public interest would be served by such a prohibitory injunction. See Lone Star Steakhouse & Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 939 (4th Cir.1995) (holding that an injunction in a trademark infringement ease “would serve the public interest by preventing future consumers from being misled”). As all four eBay factors favor entry of an injunction, the Court will enjoin Worthington from infringing BernzOmatic’s trade dress and from engaging in false advertising in the future.
IY. BERNZOMATIC’S MOTION FOR PREJUDGMENT INTEREST
BernzOmatic moves the Court to amend its Judgment and award prejudgment interest in the amount of $1,827,820 through April 14, 2010, plus $1,425 per day thereafter until an amended judgment is entered. [Doc. 301].
The parties agree that the award of prejudgment interest in this diversity case is governed by Ohio law. [Doc. 302 at 2; Doc. 316 at 2]. Under Ohio law, prejudgment interest on contract damages is automatic and non-discretionary. Knott v. Revolution Software, Inc., 181 Ohio App.3d 519, 530, 909 N.E.2d 702, 711 (2009) (“Once a plaintiff receives judgment on a contract claim, the trial court has no discretion but to award prejudgment interest under R.C. § 1343.03(A).”) (citation and internal quotation marks omitted). Section 1343.03(A) of the Ohio Revised Code provides, in pertinent part, as follows:
[W]hen money becomes due and payable upon any ... instrument of writing ... and upon all judgments ... of any judicial tribunal for the payment of money arising out of ... a contract or other transaction, the creditor is entitled to interest at the rate per annum determined pursuant to section 5703.47 of the Revised Code....
Ohio Rev. Code Ann. § 1343.03(A). With respect to the applicable interest rates pursuant to Ohio Rev. Code § 5703.47, the parties are in agreement that the relevant annual interest rates are 8% for 2007, 8% for 2008, 5% for 2009, and 4% for 2010. [Doc. 302 at 6; Doc. 316 at 2],
Prejudgment interest “serves ultimately to make the aggrieved party whole” by compensating “for the lapse of time between accrual of the claim and judgment.” Royal Elec. Constr. Corp. v. Ohio State Univ., 73 Ohio St.3d 110, 117, 652 N.E.2d 687, 692 (1995). Accordingly, the amount of prejudgment interest to be awarded is calculated from the time the plaintiff would have obtained or retained the money to the time when judgment is entered. See Local Marketing Corp. v. Prudential Ins. Co., 159 Ohio App.3d 410, 416, 824 N.E.2d 122, 126 (2004). Thus, prejudgment interest may be calculated using multiple accrual dates. See id. (holding that “the accrual of the claim ... occurred with each overpayment” under the lease and “interest should therefore be calculated on a monthly basis”).
In the present case, the jury awarded BernzOmatic contract damages totaling $13,002,245 — $1,284,003 for Worthington’s unauthorized use of BernzOmatic’s trade name, trademarks, and logos, and $11,718,242 for “any other breach of contract.” [Jury Verdict, Doc. 293 at 2]. Comparing the amount of damages awarded for “any other breach” to the damages evidence BernzOmatic presented to the jury, BernzOmatic contends that it appears that the jury categorized these contract damages as follows:
Damages Category Amount
Prices Charged Above Contract
Level $ 9,266,366
Failure to Honor Prompt Pay
Discount 280,967
Unpaid Rothenberger Royalties
(MAPP, MAPP TUV, Propane
TUV) 887,481
Additional Cost of Substitute
Cylinders 1,283,428
Total Damages for “Other”
Breaches $11,718,242
[Doc. 302 at 8].
BernzOmatic’s expert economist, Dr. Addanki, has submitted a declaration calculating the amount of prejudgment interest to be awarded on each subset of breach of contract damages awarded. For the award of contract damages arising from the unauthorized use of BernzOmatic’s trade name, trademarks and logos (a damages figure which reflects the amount of lost profits claimed by BernzOmatic), Dr. Addanki calculated BernzOmatic’s lost profits for the relevant time period on a monthly basis and applied the applicable annual interest rates to those amounts using a mid-month convention plus 33 days (to account for the period between invoicing and payment). [Addanki Deck, Doc. 302-6 at ¶ 8]. Dr. Addanki also used a mid-month convention plus 33 days in calculating the interest to be awarded for the monthly damage calculations for the Prices Charged Above the Contract Level and the Failure to Honor Prompt Pay Discount. [Id. at ¶¶ 4-5]. In calculating the interest to be awarded for the Unpaid Rothenberger Royalties, Dr. Addanki calculated the amount of each of the royalty payments owed and then applied the applicable annual interest rate, with interest accruing as of the date the payment was due. [Id. at ¶ 6]. With respect to damages for the Additional Cost of Substitute Coleman Cylinders, Dr. Addanki used a mid-quarter convention plus 33 days. [Id. at ¶7]. Using these methodologies, Dr. Addanki calculates the award of prejudgment interest through April 14, 2010 as follows:
Damages Category Interest
Prices Charged Above Contract
Level $1,445,513
Failure to Honor Prompt Pay
Discount 43,083
Unpaid Rothenberger Royalties
(MAPP, MAPP TUV, Propane
TUV) 99,673
Additional Cost of Substitute
Cylinders 102,272
Unauthorized Use of Trademarks,
Logos 137,278
Total Prejudgment Interest
(through April 14,2010) $1,827,820
[Id. at ¶¶ 4^9], Dr. Addanki further opines that prejudgment interest will continue to accrue after April 14, 2010 until the entry of an amended judgment at the rate of $1,425 per day. [Id. at ¶ 10].
Worthington objects to several aspects of BernzOmatic’s request for prejudgment interest. It first contends that BernzOmatic’s calculation rests upon assumptions regarding the accrual dates that are not supported by any actual data. [Doc. 316 at 2]. While criticizing Dr. Addanki’s approach, Worthington has offered no evidence or legal authority to show that his use of 33-day midpoint conventions was unreasonable. Nor has Worthington offered any alternative calculation for this award.
While BernzOmatic advocates the adoption of the multiple-accrual-date approach, it contends that the Court alternatively could calculate the award of prejudgment interest using solely the date of the initial breach of the Supply Agreement by Worthington. See Royal Elec., 73 Ohio St.3d at 117, 652 N.E.2d at 692 (awarding prejudgment interest as of the date that the breach of contract claim accrued). Using that accrual date, the amount of prejudgment interest to be awarded would be $2,699,124, a figure that is significantly higher than the amount sought by BernzOmatic in its motion. Thus, while Worthington objects to the use of multiple accrual dates in calculating prejudgment interest, this approach is more beneficial to Worthington than the alternative of using the date of the original breach. For the reasons set forth above, the Court finds that these multiple accrual dates are based on the evidence and provide a fair and reasonable basis for calculating the award of prejudgment in this case.
Worthington next argues that BernzOmatic is not entitled to prejudgment interest on the $1,284,003 awarded to BernzOmatic as “lost profits” because such damages were not monies “due and payable” under the contract. In support of this argument, Worthington cites an unpublished decision of the Ohio Court of Appeals, RPM, Inc. v. Oatey Co., No. 3282-M, 3289-M, 2005 WL 663057 (Ohio Ct.App. Mar. 23, 2005), in which a divided court held that prejudgment interest may be awarded only for “those contracts that provide for a payment of money that the breaching party failed to pay.” Id. at *13. The Sixth Circuit has held that the majority opinion in RPM is based on an erroneous interpretation of the Ohio Supreme Court’s controlling decision in Royal Electric Construction Corp. v. Ohio State University, 73 Ohio St.3d 110, 652 N.E.2d 687 (1995). See Tharo Sys., Inc. v. cab Produkttechnik GmbH & Co., 196 Fed.Appx. 366 (6th Cir.2006). As the Sixth Circuit noted in Tharo, “the net effect of the Royal Electric ruling is that prejudgment interest is appropriate in contract claims ... [t]hat is, money damages become due and payable on a contract at the time of the breach.” Id. at 377-78. Thus, the fact that Section 4.3 of the Supply Agreement does not identify a specific amount “due and payable” is of no consequence. “The award of prejudgment interest is compensation to the plaintiff for the period of time between accrual of the claim and judgment, regardless of whether the judgment is based on a claim which was liquidated or unliquidated and even if the sum due was not capable of ascertainment until determined by the court.” See Royal Elec., 73 Ohio St.3d at 117, 652 N.E.2d at 692. Accordingly, the Court concludes that an award of prejudgment interest on the $1,284,003 damages award is proper.
BernzOmatic contends that it is also entitled to prejudgment interest past the date of the entry of the original judgment in this case. [Doc. 302 at 2]. This argument must be rejected. BernzOmatic is entitled to prejudgment interest only to the date of entry of the original judgment. Upon entry of that judgment, post-judgment interest began to accrue. See 28 U.S.C. § 1961(a) (calculating postjudgment interest in federal civil case “from the date of the entry of the judgment”); Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 885, 110 S.Ct. 1570, 108 L.Ed.2d 842 (1990) (holding that post-judgment interest runs from the date of entry of judgment). In a case where multiple judgments are entered, postjudgment interest begins to accrue with the entry of the first judgment which “ascertained [damages] in a meaningful way.” Skalka v. Fernald Envtl. Restoration Mgmt. Corp., 178 F.3d 414, 429 (6th Cir.1999) (quoting Kaiser, 494 U.S. at 886, 110 S.Ct. 1570) (internal quotation marks and alterations omitted); see also AT & T Co. v. United Computer Sys., Inc., 98 F.3d 1206, 1211 (9th Cir.1996) (calculating post-judgment interest from date of second judgment on remand where first judgment awarding damages had been vacated). Because BernzOmatic’s damages were sufficiently ascertained in the Court’s April 14, 2010 Judgment, BernzOmatic is entitled to prejudgment interest only to the date of entry of that Judgment.
For the foregoing reasons, BernzOmatic’s motion for prejudgment interest will be granted to the extent that the Judgment will be amended to include an award of prejudgment interest to BernzOmatic in the amount of $1,827,820. BernzOmatic’s request for prejudgment interest past the date of the entry of the original judgment is denied.
Y. BERNZOMATIC’S MOTION FOR ATTORNEYS’ FEES
BernzOmatic moves for an award of attorneys’ fees as a prevailing plaintiff under both the Lanham Act and Chapter 75. BernzOmatic seeks a total award of $1,241,605 for attorney and paralegal fees and related online research expenses related to its Lanham and Chapter 75 claims. [Doc. 303 at 1],
A. Prevailing Party
In order to be eligible for an award of attorneys’ fees under the Lanham Act or Chapter 75, BernzOmatic must be the “prevailing party.” For the purposes of 15 U.S.C. § 1117(a), a party is “prevailing” where that party “succeed[s] on a significant litigated issue that achieves some of the benefits sought by that party in initiating the suit.” Montgomery v. Noga, 168 F.3d 1282, 1304-05 (11th Cir.1999) (affirming award of attorneys’ fees to plaintiff who obtained injunction and nominal damages on Lanham Act claim); see also Audi AG v. D'Amato, 469 F.3d 534, 550-51 (6th Cir.2006) (holding that plaintiff awarded only injunctive relief was prevailing party under Lanham Act).
In order to be considered “prevailing” under Chapter 75, a plaintiff must prove not only that the defendant violated the Act, but also that the plaintiff suffered “an actual injury” as a result of the violation. See Llera v. Sec. Credit Sys., Inc., 93 F.Supp.2d 674, 677-78 (W.D.N.C.2000); Mayton v. Hiatt’s Used Cars, Inc., 45 N.C.App. 206, 212, 262 S.E.2d 860, 864 (1980). An award of $1.00 in damages is sufficient to establish an “actual injury.” See Pinehurst, Inc. v. O’Leary Bros. Realty, Inc., 79 N.C.App. 51, 64, 338 S.E.2d 918, 926 (awarding attorneys’ fees under Chapter 75 to plaintiff awarded $1.00 in actual damages where evidence showed “defendants’ wrongful conduct caused a disruption of their business, loss of administrative time, and injury to their business reputation”), disc. rev. denied, 316 N.C. 378, 342 S.E.2d 896 (1986).
In the present case, the jury was instructed that if it found that BernzOmatic had suffered damages as a result of Worthington’s trade dress infringement and/or false advertising, but that BernzOmatic had failed to prove by a preponderance of the evidence the amount of those damages, the jury could award a nominal sum of damages. [Doc. 288, Feb. 27, 2010 Trial Tr. at 2194]. The jury found that Worthington willfully infringed BernzOmatic’s trade dress and willfully engaged in false advertising, thereby proximately causing an injury to BernzOmatic, and awarded damages in the amount of $1.00. [Jury Verdict, Doc. 293 at 3-4]. The Court subsequently trebled this award. [Judgment, Doc. 294 at 4]. Although nominal, this award establishes that BernzOmatic suffered an actual injury as a result of Worthington’s Lanham Act/Chapter 75 violations. Additionally, the Court has awarded BernzOmatic permanent injunctive relief under the Lanham Act prohibiting Worthington from engaging in any further trade dress infringement or false advertising regarding its manufacturing history of BernzOmatic’s hand torch cylinders. Based on the jury’s award of nominal damages and the award of injunctive relief, the Court concludes that BernzOmatic is a “prevailing party” for the purposes of both the Lanham Act and North Carolina’s Chapter 75.
B. Recovery of Fees Under the Lanham Act
The Lanham Act permits the award of reasonable attorneys’ fees to a prevailing party “in exceptional cases.” 15 U.S.C. § 1117(a). An “exceptional case” warranting attorneys’ fees is one in which “the defendant’s conduct was malicious, fraudulent, willful or deliberate in nature.” Retail Services, Inc. v. Freebies Publishing, 364 F.3d 535, 550 (4th Cir.2004) (quoting People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359, 370 (4th Cir.2001)). In the Fourth Circuit, a prevailing plaintiff additionally “must show that the defendant acted in bad faith” before attorneys’ fees can be awarded. Scotch Whisky Ass’n v. Majestic Distilling Co., 958 F.2d 594, 599 (4th Cir.1992). Once the Court has determined that a case is “exceptional,” the decision to award fees is a matter within the Court’s discretion. See Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473, 1480 (Fed.Cir.1998); Vanwyk Textile Sys., B.V. v. Zimmer Mach. Am., Inc., 994 F.Supp. 350, 381 (W.D.N.C. 1997).
In the present case, the jury was instructed on the “malicious, fraudulent, willful or deliberate” standard for willfulness [Doc. 288, Feb. 25, 2010 Trial Tr. at 2194-95], and based on the evidence presented, the jury found that Worthington’s trade dress infringement and false advertising were willful. The jury’s finding in this regard supports the conclusion that BernzOmatic has satisfied the exceptional case requirement. See Gracie v. Gracie, 217 F.3d 1060, 1068 (9th Cir.2000) (“Here the jury explicitly found that [defendant] engaged in ‘willful’ infringement of [plaintiffs] logo. The district court’s decision to make a fee award to [plaintiff] thus flows quite naturally from the jury’s finding of willful infringement and the legal standard for ‘exceptional cases’ under § 1117.”).
Additionally, the evidence presented at trial supports a finding that Worthington acted in bad faith. Specifically, BernzOmatic presented evidence to show that when Worthington wrongfully terminated the Supply Agreement and decided to sell hand torch cylinders directly to retailers, Worthington abandoned its existing packaging. The new cylinder Worthington introduced to the market looked virtually identical to BernzOmatic’s existing cylinder in size, shape, color, and appearance, including a label using the same large black circle (the “Circle of Trust”) and font colors and placement as the BernzOmatic label. [Doc. 266, Feb. 17, 2010 Trial Tr. at 223-24 (Morrisroe); Doc. 274, Feb. 19, 2010 Trial Tr. at 930 (McClintock); Plaintiffs’ Trial Ex. 93]. Worthington’s Vice President of Sales and Marketing, Dustan McClintock, made the decision to change Worthington’s label over the objections of his Marketing Manager, Natalie Broad-bent, and an outside consultant on branding strategy, Dave Schwantes of b4 Branding. Broadbent and Schwantes advised McClintock to keep the existing label. [Plaintiffs’ Trial Ex. 36; Doc. 286, Feb. 23, 2010 Trial Tr. at 1741 (Shakley) ].
Worthington then marketed its new hand torch cylinders by providing retailers with photographs of its cylinders standing side-by-side on retail shelves with BernzOmatic’s cylinders, and describing how the Worthington labels were “replacing” the nearly-identical BernzOmatic labels. [See, e.g., Doc. 266, Feb. 17, 2010 Trial Tr. at 226-28 (Morrisroe); Plaintiffs’ Trial Exs. 39, 40], Worthington’s National Retail Account Manager, Dave Cline, described the difference between Worthington’s new cylinder and BernzOmatic’s cylinder as “subtle to the consumer.” [Plaintiffs’ Trial Ex. 37]. In an email to Worthington’s President, McClintock described the subtleness of the label change as “Sweet!” [Doc. 290, Feb. 24, 2010 Trial Tr. at 1988 (Goussetis); Plaintiffs’ Trial Ex. 127].
The evidence presented at trial further showed that Worthington created an ad campaign that was designed to trade on the BernzOmatic name. The ads pictured a BernzOmatic cylinder with its label being torn away to reveal a Worthington-labeled cylinder underneath, with the black circles on the labels lining up in the same position. [Plaintiffs’ Trial Ex. 13]. Worthington knew that in order for the ad campaign to be effective, it had to connect Worthington’s unknown brand with BernzOmatic’s established name and reputation. [Plaintiffs’ Trial Exs. 14, 15]. With the BernzOmatic label displayed on the first panel of the ad, the ads falsely stated that Worthington — not BernzOmatic — had been the “name” that retail stores and consumers had “trusted all along.” [Plaintiffs’ Trial Ex. 13]. Worthington’s Marketing Manager, Natalie Broadbent, admitted in emails unearthed during discovery that she knew that the statement “the name you’ve always trusted” was “not accurate.” [Doc. 267, Feb. 18, 2010 Trial Tr. at 552 (Broad-bent Video); Plaintiffs’ Trial Exs. 14, 15]. Worthington also knew that BernzOmatic — not Worthington or even its predecessor, Western — had manufactured its own cylinders until the 1980’s. [Doc. 280, Feb. 22, 2010 Trial Tr. at 1337-38 (Raboin) ].
Based on this evidence, and the jury’s determination of Worthington’s willful trade dress infringement and false advertising, the Court concludes that Worthington acted in bad faith, thus warranting an award of attorneys’ fees under the Lanham Act.
C. Recovery of Fees Under Chapter 75
An award of attorneys’ fees under Chapter 75 is a matter within the Court’s discretion. Shepard v. Bonita Vista Properties, L.P., 191 N.C.App. 614, 625, 664 S.E.2d 388, 396 (2008). Under Chapter 75, a prevailing plaintiff may recover attorneys’ fees where (1) the defendant willfully engaged in the unfair or deceptive trade practice and (2) the defendant made an unwarranted refusal to settle the matter. See N.C. Gen. Stat. § 75-16.1. The Court finds that both of these requirements are satisfied here.
First, as discussed extensively above, there is ample evidence to support the jury’s determination that Worthington acted willfully in infringing BernzOmatic’s trade dress and engaging in false advertising. The jury’s finding in this regard satisfies Chapter 75’s willfulness requirement for the recovery of attorneys’ fees. See Leftwich v. Gaines, 134 N.C.App. 502, 519, 521 S.E.2d 717, 729 (finding defendants willfully engaged in deceptive acts “as found by the jury”), disc. rev. denied, 351 N.C. 357, 541 S.E.2d 713 (1999).
Second, the Court concludes that Worthington’s refusal to settle this matter fully was unwarranted. Both parties have submitted the declarations of counsel describing the course of the parties’ settlement negotiations prior to and during trial. These declarations show that the parties engaged in their first mediation on May 21, 2009. At that mediation, Worthington demanded that' BernzOmatic pay Worthington $14.5 million. [Declaration of Matthew B. Mock (“Mock Deck”), Doc. 304-18 at ¶ 5]. By contrast, BernzOmatic demanded $13 million, almost exactly the amount awarded by the jury. [Id.]. The parties concluded the first mediation far apart, and the case proceeded to discovery.
The parties conducted a second mediation on December 9, 2009, one week prior to the Court’s grant of summary judgment to BernzOmatic on Worthington’s fraudulent inducement counterclaim. At the end of that mediation, Worthington’s settlement position was an offer to pay $4 million, and BernzOmatic’s demand to resolve the entire case, including the fraudulent inducement counterclaim, was $12.25 million. [Id. at ¶ 6]. Shortly before trial, the parties engaged in informal settlement discussions. BernzOmatic stood by its December 9, 2009 demand, asking again for $12.25 million. Despite the Court’s dismissal of Worthington’s $22 million fraud counterclaim — which substantially decreased Worthington’s litigation leverage — Worthington did not even respond to BernzOmatic’s demand. [Id. at ¶8]. During trial, the parties engaged in some very informal discussions, but Worthington never made an actual offer. [Id. at ¶ 9].
While Worthington vigorously argues that it was BernzOmatic that acted unreasonably in refusing to reduce its demand in any meaningful way, it must be noted that the amount of many categories of BernzOmatic’s damages — particularly the $9.3 million in contractual overcharges, the $1 million-plus in Rothenberger Royalties, and a significant amount of prejudgment interest on both amounts — were largely undisputed. Despite this, Worthington’s best settlement offer did not approach even half of these undisputed amounts. The Court concludes that Worthington’s refusal to fully resolve these claims was unwarranted and thus justifies the award of attorneys’ fees in this case pursuant to Chapter 75 as well.
D. Calculation of a Reasonable Fee Award
The determination of a reasonable fee award is a matter of discretion with the Court. See Robinson v. Equifax Info. Services, 560 F.3d 235, 243 (4th Cir.2009). In determining the amount of reasonable attorneys’ fees to be awarded, courts typically apply the lodestar method, whereby the Court multiplies the number of reasonable hours expended by a reasonable hourly rate. Id. The party seeking an award of attorneys’ fees has the burden of demonstrating a reasonable fee. Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983).
1. Number of Hours Reasonably Expended
A party seeking an award of attorneys’ fees must “state the amount sought or provide a fair estimate of it.” Fed. R.Civ.P. 54(d)(2)(B)(iii). In the present case, BernzOmatic estimates that prior to the Court’s summary judgment ruling on December 16, 2009, approximately 25% of its attorneys’ time was spent on the Lanham Act and Chapter 75 claims, and that following the Court’s summary judgment ruling, the amount of attorney time devoted to these claims increased to approximately 50%.
Upon careful review of the record, it is evident that the time spent prosecuting BernzOmatic’s Lanham Act and Chapter 75 claims was necessarily intertwined with time spent on BernzOmatic’s other claims. For example, in discovery almost every witness had knowledge and testified at deposition about Worthington’s advertising, trade dress, or acts underlying BernzOmatic’s Chapter 75 claim. These issues also overlapped in terms of written discovery and document review. The proportion of BernzOmatic’s attorneys’ time spent on the Lanham Act and Chapter 75 claims increased after the Court’s summary judgment ruling on December 16, 2009, when the Court eliminated some of BernzOmatic’s other tort claims as well as Worthington’s fraudulent inducement counterclaim. In light of the foregoi