International Marketing, Inc v. Counteract Balancing Beads, Inc

NOT PRECEDENTIAL
THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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Nos. 01-3704 & 02-1900
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INTERNATIONAL MARKETING, INC.
v.
COUNTERACT BALANCING BEADS, INC.
Appellant.
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ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
(D.C. Civil No. 00-cv-00697)
Magistrate Judge: The Honorable J. Andrew Smyser
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ARGUED July 24, 2002
BEFORE: SLOVITER, NYGAARD, and BARRY, Circuit Judges.
(Filed September 11, 2002)
Kevin W. Goldstein, Esq. (Argued)
Ratner & Prestia
3411 Silverside Road
Suite 209
Wilmington, DE 19803
Counsel for Appellant
Allen C. Warshaw, Esq. (Argued)
Klett, Rooney, Lieber & Schorling
240 North Third Street
Suite 600
Harrisburg, PA 17101
Counsel for Appellee
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OPINION OF THE COURT
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NYGAARD, Circuit Judge.
This case is a Lanham Act case between two competitors that make tire
balancing agents. Appellant, Counteract Balancing Beads, Inc., tried to distinguish its
product from that of its competitor, International Marketing, Inc., by claiming that its
balancing beads remained in place, even when a tire ceased moving, by "electrostatic

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cling" and thus, its product was superior to International’s in which the beads fell to the
bottom of the tire every time it stopped.
The District Court enjoined Counteract from making any statements that
lead people to believe that Counteract’s balancing beads "cling to the inside of a tire in a
balancing position as a result of electrostatic cling." App. at 42-43. Counteract made
some revisions to its marketing materials. International protested that the changes still
violated the District Court’s order. In March 2002, the District Court found Counteract in
contempt of its order. The Court found that Counteract was still making false statements,
which would lead people to believe that its beads remain in position due to electrostatic
cling. The Court ordered Counteract to cease these violations, imposed coercive fines if
it failed to do so, and awarded International attorney’s fees and costs.
Appellant/Counteract raises five issues on appeal, arguing that the trial
court erred by: (1) changing the scope of the permanent injunction entered by the
September 2001 Order, with its March 2002 Order, thereby rendering both orders
ambiguous; (2) (a) ignoring the Federal Circuit guidelines for complaints involving the
use of a patent in commerce, and proceeded with a Lanham Act action without requiring a
specific pleading of a "bad faith" element, and (b) using the wrong standard of proof ; (3)
exceeding the permissible scope of judicial notice by sua sponte searching the internet
and drawing inferences from this evidence; (4) expanding the permissible jurisdiction and
reach of the Lanham Act by precluding Counteract from advertising to its foreign
customers on its internet web site; and (5) finding Counteract in contempt and awarding
International attorney’s fees. We will affirm.
STANDARD OF REVIEW
We conduct a plenary review of the District Court’s conclusions of law, its
findings of fact for clear error, and its decision to grant or deny an injunction for abuse of
discretion. AT&T Co. v. Winback and Conserve Program, Inc., 42 F.3d 1421, 1427 (3d
Cir. 1994). In reviewing a sanction for civil contempt, the standard is whether the district
court abused its wide discretion in fashioning a remedy. Council for Clean Air v.
Pennsylvania, 678 F.2d 470, 478 (3d Cir. 1982).
DISCUSSION
Appellant first argues that the District Court’s March 28th, 2002 Order
changed the scope of the permanent injunction it entered on September 14th, 2001,
thereby rendering both orders ambiguous. Appellant argues that the first order prohibited
statements relating to beads clinging due to electrostatic cling. It argues that in contrast,
the later order broadens the first, and further enjoins appellant from using "kinetic cling",
references to Counteract’s newly acquired patent, and statements that the beads cling due
to any forces.
These arguments fail. The first order covers any and all statements that lead
people to believe that the beads cling to the inside of a tire in a balancing position "as a
result of electrostatic cling." App. at 42-43. In the subsequent March order, the Court
reached the factual conclusion that each of the challenged statements had the effect of
leading people to believe that the beads clung because of electrostatic cling, and
therefore, violated the injunction. This finding is not clearly erroneous.
Arguments made by references to Counteract’s patent also fail because the
patent refers to the beads staying and clinging due to electrostatic forces. The fact that
the Appellant may be excessively creative in conveying the same message with different
words does not require the court to anticipate every possible way a defendant could
possibly create a prohibited impression. We conclude that the Orders were not
ambiguous and there is no clear error in the District Court’s findings.
Appellant next argues that the trial court applied the wrong standard for
pleading a prima facie case of false advertising where the advertising relates to the use of
a patent in commerce. It argues that when the use of a patent in commerce is involved in
the allegations of false advertising, bad faith must be proven. Counteract also argues that
the Court erred by using a preponderance of the evidence standard, instead of a clear and
convincing standard.
Both arguments lack merit. The Court was not asked to rule on the validity
of the patent and it did not. Unlike the cases relied upon by Counteract, patent
enforcement and infringement are not in issue here. The statements in issue statements
in support of a product can be distinguished from the Lanham Act-patent infringement
cases. The District Court is not preventing Counteract from alerting the public to its

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patent. It is enjoining Counteract from using the patent as a vehicle to misrepresent the
electrostatic qualities of its beads, and this is consistent with its Orders.
Counteract argues that the District Court erred by drawing inferences
against Counteract based on its own sua sponte search of the internet, then resolving all
ambiguities against Counteract, and directing a verdict against Counteract without ever
giving Counteract a meaningful opportunity to be heard. We need not decide whether this
was error, because even if the Court erred, given the other evidence in the case, the error
was harmless.
Counteract next argues that the District Court erroneously extended its
jurisdiction to regulate the contents of a web site of a foreign corporation directed to
foreign commerce. Relying on the fact that Counteract is a Canadian corporation, using a
Canadian web server, Counteract argues the Court impermissibly extended the reach of
the Lanham Act . We conclude that the Court did not apply the Lanham Act too broadly.
Plaintiffs sought only to stop those misrepresentations which are likely to make their way
to United States consumers. The Court is not regulating foreign sites, and thus may
properly exercise its jurisdiction over content that it has found is likely to make its way
into the United States.
Finally, Counteract argues that the two Orders were ambiguous, that it took
reasonable steps to comply with them, and thus, that the Court erred by awarding
International attorney’s fees. Counteract’s claim that it did all that it could do ignores th
finding of the District Court that "the change to the term ’kinetic’ from the term
’electrostatic’ was motivated by an objective of preserving the impression of a product
that clings by way of electrostatic forces." App. at 57. We have stated that "’willfulness
is not a necessary element of civil contempt’ and, accordingly, that ’evidence . . .
regarding . . . good faith does not bar the conclusion . . .that [the defendant] acted in
contempt.’" Robin Woods, Inc. v. Woods, 28 F.3d 396, 399-400 (3d Cir. 1994) (citation
omitted). A district court has wide discretion in fashioning a remedy for contempt and,
based on the trial court’s factual findings, it was well within that discretion here.
Delaware Valley Citizens’ Council v. Pennsylvania, 678 F.2d at 478 ("The standard for
our review of a district court sanction for civil contempt is whether the district court
abused its wide discretion in fashioning a remedy.").
CONCLUSION
In summary, we have examined the record, heard the parties’ arguments,
and conclude that the District Court’s findings are unassailable. Its decisions are well
within its considerable discretion and we will affirm.
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TO THE CLERK:
Please file the foregoing opinion.
/s/ Richard L. Nygaard
Circuit Judge

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