TechShop, Inc. v. Rasure

Background

TechShop, Inc. owned two federally registered service marks for “TECHSHOP,” used for makerspace facilities, training, and networking related to manufacturing and fabrication. After TechShop experienced financial difficulties and closed its U.S. locations, Dan Rasure approached the company about a possible purchase. The parties signed a nonbinding memorandum of understanding under which TechShop 2.0 LLC would potentially acquire TechShop’s assets and assume specified obligations, but the details still needed to be finalized in later documents.

TechShop terminated the memorandum on December 12, 2017, citing Rasure’s failure to provide necessary information or funding. The parties did not reach a final deal. Nevertheless, Defendants announced that TechShop 2.0 would reopen the former San Francisco facility, solicited memberships, and used the “TechShop 2.0” name. After TechShop filed this action, Defendants began changing their name to “TheShop.build,” but continued using “TechShop 2.0” in some communications and agreements for a period of time.

At trial, the jury found that the TECHSHOP marks were valid, belonged to TechShop, and had not been abandoned. It also found that Defendants intentionally and willfully used “TechShop 2.0” and “TheShop.build” without consent in a way likely to confuse consumers. The jury found no actual damages from lost licensing revenue and rejected Defendants’ fraud counterclaim. The court entered judgment for TechShop on June 26, 2019.

Renewed motion for judgment as a matter of law

Defendants asked the court to overturn the jury’s infringement findings under Federal Rule of Civil Procedure 50. This type of motion may be granted only when, viewing the evidence favorably to the opposing party, the record permits only one reasonable conclusion and that conclusion contradicts the jury’s verdict.

The court denied the motion. It found substantial evidence that TechShop did not consent to Defendants’ use of “TechShop 2.0” to operate a makerspace. The court explained that TechShop’s failure to object during negotiations did not equal consent, particularly because the parties’ communications contemplated that Defendants would acquire the marks only through a completed deal. The court also rejected Defendants’ argument that their use of “TechShop 2.0” was too limited to support liability, explaining that the length of use could affect damages but did not eliminate infringement.

The court likewise found substantial evidence supporting the jury’s finding that “TheShop.build” was likely to cause confusion. Relevant evidence included the similarity of the names and logos, the close relationship between the parties’ makerspace services, actual customer confusion, and Rasure’s knowledge of the TECHSHOP marks and negotiations to acquire them. The court therefore denied Defendants’ renewed motion for judgment as a matter of law.

Equitable defenses

Defendants asked the court to vacate or modify the judgment based on acquiescence, equitable estoppel, and laches. Acquiescence concerns consent inferred from conduct; equitable estoppel can prevent a party from taking a position after another party reasonably relied on its conduct; and laches concerns unreasonable delay.

The court denied the request. It concluded that TechShop’s references to “TechShop 2.0” during negotiations were best understood as references to a proposed entity that would acquire the service marks through a completed transaction. The court also found that TechShop acted quickly after learning that Defendants intended to operate a makerspace using the marks. It found no basis for any of the three equitable defenses and denied Defendants’ request to vacate or modify the final judgment.

Permanent injunction

TechShop sought a permanent injunction barring Defendants from using “TechShop 2.0,” “TheShop.build,” or similarly confusing names. The court denied the motion. To obtain a permanent injunction, TechShop had to show actual irreparable harm, inadequate monetary damages, a favorable balance of hardships, and consistency with the public interest.

The court found that TechShop offered only conclusory assertions about harm to its goodwill and loss of control over its marks, without specific evidence that its goodwill had actually been damaged. It also found no evidence that Rasure’s alleged conduct affected TechShop’s customers or the broader market. In addition, Defendants had stopped operating makerspaces under the challenged names, had closed the San Francisco location, had changed their name to “Bay Area Makerspace,” and had closed their other location. The court concluded that TechShop had not met its burden to show that a permanent injunction was warranted.

Motion for a new trial

TechShop sought a new trial limited to damages, arguing that the court wrongly admitted defense evidence and expert testimony and that the jury’s zero-damages verdict was against the weight of the evidence.

The court denied the motion. It upheld the admission of Defendants’ damages expert, Mark Bünger, finding that TechShop had not shown a substantially prejudicial evidentiary error. It also rejected TechShop’s challenge to financial documents because TechShop’s own expert had relied on those documents and TechShop had not shown that they were improperly admitted.

The court further held that TechShop had waived any claim that the verdict was inconsistent because it did not object before the jury was dismissed. In any event, the court found that the zero-damages verdict was permissible. The jury could reasonably conclude that TechShop suffered no actual damages, including based on evidence that the company’s closures and bankruptcy had left its brand with “negative equity.”

Attorneys’ fees and review of taxed costs

Both sides sought attorneys’ fees under the Lanham Act, which permits fee awards in “exceptional” cases. The court found that TechShop—not Defendants—was the prevailing party because TechShop obtained a judicially sanctioned change in the parties’ legal relationship: the jury found that TechShop owned valid marks and that Defendants infringed them willfully, while also rejecting Defendants’ fraud counterclaim.

The court nevertheless denied both motions for attorneys’ fees. It found that the case was not exceptional. Although Defendants were found liable, the jury awarded no damages, and the court did not find that Defendants’ litigation position was exceptionally weak or that either side’s conduct made the case exceptional. The court also relied on TechShop’s failure to make a substantive showing of irreparable harm in its injunction motion.

The court also denied Defendants’ motion to review costs taxed against them, continuing to find that Defendants were not the prevailing party.

Disposition

The court denied the motions in their entirety: Defendants’ renewed motion for judgment as a matter of law; Defendants’ request to vacate or modify the judgment based on equitable defenses; TechShop’s motion for a permanent injunction; TechShop’s motion for a new trial on damages; both parties’ motions for attorneys’ fees; and Defendants’ motion for review of taxed costs.