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Vetter v. McAtee

United States Court of Appeals, Fifth Circuit

March 1, 2017

STACEY VETTER, Plaintiff - Appellant
CHRISTINE MCATEE, Defendant-Appellee INSIGNIA MARKETING, INCORPORATED, Plaintiff - Counter Defendant-Appellee Cross-Appellant CHRISTINE MCATEE, Counter Defendant-Appellee
STACEY VETTER, Defendant - Counter Plaintiff - Appellant Cross-Appellee LARRY TAYLOR; NANCY SHEPPARD; DAVID RAPPE; THE PROMO AGENCY COMPANY; DAVID FECHTMAN; AIA-LOGO PROMOTIONS, L.L.C., Defendants-Appellants Cross-Appellees

         Appeals from the United States District Court for the Southern District of Texas

          Before JOLLY, HIGGINBOTHAM, and PRADO, Circuit Judges.

          PATRICK E. HIGGINBOTHAM, Circuit Judge:

         A jury trial on several claims and counter-claims, including trademark infringement and breach of partnership agreement, resulted in judgments adverse to both parties. They have now appealed and cross-appealed citing several errors that they believe the trial court committed. We affirm.


         Plaintiff-Appellant Stacey Vetter ("Vetter") is an individual who lives and works in Anchorage, Alaska. She owns AIA-LOGO! Promotions, LLC ("Logo Promotions"). Defendant-Appellee Christine McAtee is an individual who lives and works in Houston, Texas. She owns Insignia Marketing, Inc. ("Insignia"). Those two individuals and the entities they own are the primary parties to this dispute. They met because they were both franchisees of Adventures in Advertising ("AIA"), a franchisor of promotional products.

         In 2011, Vetter and McAtee briefly entered into a partnership to market to hospitals a new kind of whiteboard that improved hospital staff's ability to communicate with patients. They dispute who came up with the idea for the product and when. No written partnership agreement was created. The whiteboard product that the partnership marketed came to be known as "Communicat-R."

         The partnership operated with the support of AIA. When the partnership received an order for a Communicat-R, the partnership would request that AIA fulfill the order through a pre-selected vendor that had been provided with the design. Upon construction of the ordered Communicat-R, the vendor would ship the board to the customer, AIA would invoice the customer, and then AIA would cut the vendor and the partnership a commission from the proceeds. The partnership hired Vetter's nephew, a web designer, to control the partnership's web domains.

         In December of 2011, the relationship between Vetter and McAtee soured. They both allege that the other engaged in self-dealing, misappropriated partnership property, and refused to reimburse for partnership expenses. Vetter allegedly instructed her nephew to hijack control of the Communicat-R website. After the termination of the partnership, Vetter and McAtee both continued selling the whiteboards. They were unable to resolve many differences between them, including who owned the Communicat-R trademark and who was entitled to about $80, 000 held by AIA and owed to the partnership. After Vetter had already filed the initial complaint of this lawsuit, McAtee's company Insignia applied to the United States Patent & Trademark Office ("USPTO") for registration of the trademark "Communicat-R" in connection with the whiteboard product.

         Vetter initiated this lawsuit in the Southern District of Texas, claiming breach of the partnership agreement by McAtee. McAtee counter-claimed for breach of the same partnership agreement. Then McAtee's corporation Insignia initiated a separate lawsuit against Vetter and Vetter's company Logo Promotions for trademark infringement, copyright infringement, cyber piracy, false advertising, and civil conspiracy. The two suits were consolidated. Various claims, plaintiffs, and defendants were dismissed from the suit for various reasons, none of which comes to us on appeal. AIA intervened in the case for the sole purpose of interpleading $80, 851.59 that it held in connection with the partnership's sale of whiteboards. It deposited the money into the registry of the court, then was dismissed from the suit.

          At trial, the jury considered Vetter's and McAtee's breach-of-partnership-agreement claims against each other, as well as Insignia's trademark-infringement, cyber-piracy, false-advertising, and civil-conspiracy claims against Vetter and Logo Promotions. The jury found that Vetter, but not McAtee, had breached the partnership agreement, and awarded $60, 000 in damages. However, it found that neither Vetter nor Logo Promotions had infringed Insignia's trademark. In fact, it found that Insignia had obtained registration of the "Communicat-R" trademark through fraud, that the mark was not in use on the day it was registered, and that Insignia had abandoned the mark after registration, all supporting cancellation of the registration. The jury found Vetter and Logo Promotions liable for false advertising, but not cyber piracy or civil conspiracy. However, it awarded $0 in false-advertising damages.

         The trial court entered judgment on the jury's verdict. It also ordered that Insignia's registration of the Communicat-R mark be cancelled and that the interpleaded funds be divided equally between Vetter and McAtee. Finally, it noted that both parties had waived any claim to attorneys' fees by failing to request them in the Joint Pretrial Order. Notwithstanding the trial court's finding of waiver, Vetter (as the prevailing party on the trademark claims) moved for statutory attorneys' fees under the Lanham Act, arguing that there had been no waiver because the issue of attorneys' fees is properly raised in a post-judgment motion rather than in a pre-trial order. The trial court again denied attorneys' fees, reaffirming its finding of waiver and finding in the alternative that the case was not "exceptional" enough to warrant such an award under the Lanham Act. McAtee moved for a partial new trial and Vetter moved for renewed judgment as a matter of law. The trial court denied both motions.

         Vetter timely appealed, and McAtee timely cross-appealed. McAtee seeks a new trial and a larger proportion of the interpleaded funds. Vetter asks us to reverse the $60, 000 judgment entered against her and find that she is entitled to attorneys' fees.


         We begin with McAtee's request for a new trial. That request is founded on two distinct grounds, each requiring a distinct analysis: first, that trial errors warrant a new trial; and second, that the jury's verdict was against the great weight of the evidence. We address these contentions in turn.


         First, McAtee argues that various errors in the admission of evidence, remarks of counsel, and jury instructions warrant a new trial. She admittedly failed to preserve all but one of these errors in the trial court. We first consider all of McAtee's unpreserved objections, then consider her sole preserved objection.

         Unpreserved Objections

         McAtee faults the trial court for the following errors that she admits are unpreserved: prejudicial arguments of counsel, admission of evidence in violation of Fed.R.Evid. 408, [1] lack of a jury instruction on subjective intent in connection with fraud on the USPTO, lack of an instruction on common law trademark rights, lack of an instruction on a presumption of trademark abandonment, an erroneous instruction on trademark abandonment, and an ...

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