No Appellate Jurisdiction to Review Post-Verdict Appeal of Previously Denied SJ Motion

By on January 21, 2021
Posted In Trademarks

In a closely watched trademark/counterfeiting case, the US Court of Appeals for the Second Circuit affirmed a judgment for contributory infringement, award of permanent injunction and monetary damage award against a commercial landlord found to have been willfully blind to trademark infringement and counterfeiting occurring on its leased property. Omega SA v. 375 Canal, LLC, Case No. 19-969 (2d Cir. Jan. 6, 2021) (Menashi, J.) (Lohier, J., concurring in part, dissenting in part). The Court also concluded that it could not consider a post-verdict appeal on a legal issue raised in a denied summary judgment motion (i.e., whether the landlord needed to know of a specific vendor involved in the counterfeiting) when the appellant failed to file a timely notice of appeal and did not seek an interlocutory appeal or file a Rule 50 motion for judgment as a matter of law on the issue.

375 Canal LLC is a commercial landlord with properties in Manhattan, including 375 Canal Street. Omega SA is a watch company. Omega sued Canal for contributory trademark infringement, alleging that Canal had continued to lease space at 375 Canal Street to vendors despite knowing that the vendors were selling counterfeit Omega goods. After discovery, Canal moved for summary judgment, contending that Omega did not identify a specific vendor to which Canal continued to lease property despite knowing or having reason to know that the specific vendor was selling counterfeit goods. Omega argued that its primary theory of willful blindness did not require identification of a specific vendor. The district court denied Canal’s motion, agreeing that Omega was not required to identify a specific vendor.

The jury found that Canal had contributorily and willfully infringed Omega’s trademarks, and awarded $1.1 million in statutory damages. The district court amended the final judgment to include a permanent injunction prohibiting Canal from infringing and taking other actions with respect to Omega’s marks, even outside of 375 Canal Street. Canal appealed, arguing that the district court erred by not requiring Omega to identify a specific vendor that Canal knew or should have known was infringing Omega’s trademarks. Canal raised this argument by appealing the pre-trial order denying Canal’s motion for summary judgment and the jury instructions.

The Second Circuit dismissed Canal’s appeal of the summary judgment denial and affirmed the jury instructions on the merits. On Canal’s challenge to the summary judgment denial, the Court began with the premise that a party generally cannot appeal an order denying summary judgment after a full trial on the merits because of its interlocutory character, which is not within appellate jurisdiction. The denial of Canal’s summary judgment motion did not qualify for an exception allowing review, such as situations where Congress has provided for review of certain interlocutory decisions, or where the Supreme Court has construed certain denials of summary judgment, such as those on the basis of qualified immunity, as final decisions permitting review. But even if it had qualified, Canal would have been required to file a notice of appeal within 30 days after the denial of summary judgment. Canal did not meet this deadline, instead filing a notice of appeal more than two year after the denial of summary judgment. The Court concluded that this appeal deadline was jurisdictional and independently required dismissal of Canal’s challenge.

The Court also found that a motion for summary judgment does not preserve an issue for appellate review of a final judgment entered after trial because the full record developed in court supersedes the record existing at the time of the summary judgment motion. Although there is an exception where the purported error is purely legal, the Court explained it would not consider post-verdict appeals on an issue raised in a denied summary judgment motion when two alternative paths to review, including interlocutory appeals and a Rule 50 motion for judgment as a matter of law, were available but not pursued by the challenging party. Because Canal could have but did not pursue either of these two paths, the Court dismissed.

The Second Circuit still reached the merits of Canal’s trademark infringement arguments by addressing Canal’s appeal of the jury instructions on contributory infringement. The Court rejected Canal’s argument that the district court erred by not instructing the jury that Omega had to prove that Canal continued to lease space to a specific, identified vendor that it knew or should have known was selling counterfeit Omega goods. Actual knowledge of a specific infringer is not always required. Evidence of willful blindness, either to particular transactions or to the identities of infringers, can also suffice to impose liability for contributory trademark infringement. At trial, Omega pursued a willful blindness theory and introduced evidence that Canal had a history of turning a blind eye toward counterfeiting at 375 Canal Street and had taken insufficient steps to root out counterfeiting it knew or should have known was occurring. Omega was therefore not required to identify a specific vendor. The Court accordingly rejected Canal’s challenges to the jury instructions.

The Second Circuit also rejected several other challenges by Canal, including to evidentiary decisions made by the district court during trial and the scope of the permanent injunction imposed on Canal. The Court found that the district court did not abuse its discretion in fashioning a permanent injunction without any geographic limitation that applied not only to the property triggering the trademark infringement claims, but also to Canal’s other properties because of the continued risk of trademark infringement. Accordingly, the Court affirmed the district court’s judgment for contributory infringement and award of permanent injunction, and the jury verdict of $1.1 million in favor of Omega.

In dissent from the panel majority’s refusal to review the denial of summary judgment, Judge Lohier argued that the summary judgment denial presented a purely legal issue, and since Canal’s notice of appeal was filed within 30 days of the final judgment, the issue was reviewable. Judge Lohier did not confine the review of an appeal from a denial of summary judgment concerning a purely legal issue after a full trial on the merits to cases where interlocutory appeal and a Rule 50 motion are pursued or unavailable, as the majority required. Judge Lohier also disagreed that Canal was required to file a notice of appeal within 30 days of the entry of the denial of summary judgment, an issue that was not raised by the parties. Judge Lohier otherwise concurred with the majority’s opinion.

Practice Note: A party seeking to appeal an issue raised in a previously denied motion for summary judgment after a full trial on the merits faces several hurdles. To preserve any rights to an appeal on a legal issue, the party should exhaust its recourses for interlocutory appeal pursuant to 28 USC § 1292(b) and judgment as a matter of law under Rule 50. As an additional protective measure, the party should also consider filing a notice of appeal within 30 days after entry of the summary judgment denial.

Paul Devinsky
Paul Devinsky advises clients on patent, trademark and trademark litigation and counseling, as well as copyright counseling. He is also active in intellectual property (IP) licensing, transactions and due diligence, as well as post-issuance US Patent and Trademark Office (USPTO) proceedings such as reissues and inter partes review, covered business method patent review and post grant review, and appellate (Federal Circuit) advocacy. Read Paul Devinsky's full bio.

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