National Presto Industries, Inc. v. U.S. Merchants Financial Group, Inc.

Background

Presto sells the HeatDish parabolic electric heater. U.S. Merchants manufactures and distributes consumer products and also does business under the Greenmade trademark. Presto alleged that U.S. Merchants copied portions of the 1995 instruction manual for the HeatDish when developing the instruction manual for U.S. Merchants’ Heat Machine heater.

The lawsuit originally included claims under the Lanham Act, the federal trademark statute, for trade dress, trademark infringement, and unfair competition; a copyright claim involving packaging and instruction manuals; tortious interference; common-law unfair competition; and Minnesota consumer-protection claims. The court previously entered judgment for U.S. Merchants on the claims tried to the court. Presto dismissed its claim concerning the 2016 manual, and the court had already granted U.S. Merchants summary judgment on the packaging copyright claim.

A jury tried Presto’s remaining copyright claim concerning the 1995 manual in February 2023. It found for Presto, found that U.S. Merchants’ infringement was willful, and awarded $150,000 in statutory damages. The opinion states that the parties agreed Presto suffered no actual damages.

U.S. Merchants’ post-trial motion

U.S. Merchants moved for judgment as a matter of law, or alternatively for a new trial or remittitur, which is a reduction of an allegedly excessive damages award. It argued that the evidence did not show that U.S. Merchants itself copied the manual, that the evidence did not support willfulness, and that the statutory-damages award should be overturned or reduced.

The court denied the motion. It held that a reasonable jury could find that U.S. Merchants had access to the 1995 manual and copied it based on the striking similarities between the manuals. The court also held that U.S. Merchants engaged in the required voluntary conduct because it edited the draft manual, changed its formatting and language, added its own creative elements, and issued the manual under the Greenmade brand. The court rejected the argument that U.S. Merchants could not be liable unless it personally drafted all of the copied text.

The court also upheld the finding of willfulness. It cited the identical or nearly identical language, U.S. Merchants’ changes to reduce similarities in some places, inaccurate product language that appeared to come from another source, and U.S. Merchants’ continued shipments after learning of the alleged copying. The court concluded that the jury could reasonably find that U.S. Merchants knowingly continued infringing.

The court further held that Presto could seek statutory damages even though it had no actual damages and had not presented a separate calculation of actual losses. The evidence used to decide infringement and willfulness also allowed the jury to determine statutory damages. The court found that the $150,000 award did not create a miscarriage of justice and was not so excessive as to justify remittitur.

Permanent injunction

The court denied Presto’s motion for a permanent injunction. U.S. Merchants stated that it had stopped distributing the challenged manual several years earlier and had used revised manuals since 2019. Presto had not alleged that the newer manuals infringed its copyright. The court therefore found any future harm too speculative. It also found that the parties’ agreement and the jury’s finding of no actual damages made future irreparable harm speculative, and that the balance of hardships favored U.S. Merchants.

Attorney fees

The court denied U.S. Merchants’ request to designate the case as exceptional under the Lanham Act and to award attorney fees. Although the court described some of Presto’s litigation tactics as aggressive and unnecessary and found the Lanham Act claims relatively weak, it did not find sufficient evidence that the case was frivolous, objectively unreasonable, or otherwise exceptional.

The court also denied both parties’ requests for copyright-related attorney fees. As to the 1995 manual, the court found that U.S. Merchants had made colorable, objectively reasonable arguments even though it lost at trial. The court also found that willfulness alone did not require awarding Presto fees and that the circumstances did not support an award. As to the 2016 manual and 2018 packaging, the court found that Presto’s positions were colorable and not baseless, even though those claims did not proceed to judgment in Presto’s favor.

Costs and final order

The court exercised its discretion to reduce overlapping deposition costs because Presto prevailed on the jury claim while U.S. Merchants prevailed on the bulk of the claims tried to the court. It awarded Presto $18,204.06 in costs and U.S. Merchants $44,463.63 in costs.

Judge Susan Richard Nelson ordered that: Presto’s motion for a permanent injunction and attorney fees was denied; U.S. Merchants’ motion for judgment as a matter of law, a new trial, or remittitur was denied; U.S. Merchants’ attorney-fee motion was denied; and the stated costs were awarded to each party.