What Else Can Happen to an Innocent Infringer?

Defendant in CCA Global v. Carpetmax Flooring Center (W.D. KY) must wonder where he can catch a break.  First, he buys a business with an ongoing, undisclosed infringement, and as a result, personally liability is imposed.  Then, his counsel misses the notice of appeal deadline, and the district court finds no “excusable” neglect.  And your clients thought they were having a tough quarter.
Paul Fuller believed Ken Crandall’s statement that he had a CarpetMax franchise license for part of Southern Indiana.  Together they formed a corporation, KP Investments, which operated a CarpetMax store in that locale, which Fuller ran day-to-day.  Turned out that Crandall was not a licensee, and the use of the CarpetMax trademark was unauthorized.  Once this became known, Fuller changed the store name, and bought out Crandall.  Still, the owner of the trademark sued for infringement.  Fuller relied on the defense that every businessperson thinks they have – – no liability because the infringing actions were done by the corporation.  CCA pressed for personal liability against Fuller, and won.  The Court ruled that whether Fuller “knew the use of the mark was unauthorized is of no import.”  His day-to-day operation of the CarpetMax store “were not simply actions of a corporate officer.”  Thus, Fuller was held personally liable for trademark infringement.

Then, due “to a misunderstanding between Defendants’ trial counsel and Defendants’ newly assigned appellate counsel” about the deadline for appealing, the 30-days passed without a notice being filed.  On their motion to extend under F.R. App. Proc. 4(a), the District Court refused to exercise its discretion to extend.  It found that the failure to file the notice of appeal was “undoubtedly the result of ‘inadvertence’ and/or ‘mistake’.”  Even so, that neglect was not “excusable” since it was due to an “understandable” mistake in calculating the due date, and an “understandable miscommunication” between trial and appellate counsel.  If such neglect were “excusable,” then the Court said every act of neglect would be too.

One wonders why counsel so often wait until the due date to file.  It is easier to withdraw a notice of appeal than it is to get one filed out of time.  Sure, there is gamesmanship in waiting to see if the other side will appeal, especially in patent cases with counterclaims.  Still, the worst outcome of that ‘game’ is less painful than that of forfeiting the right to appeal.