 EMERGENCY ONE, INCORPORATED, d/b/a American Eagle Fire Apparatus Company, Incorporated v. American 2 EMERGENCY ONE v. AMERICAN FIRE EAGLE -- 2 of 15 -- FireEagle, Ltd., 228…

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 EMERGENCY ONE, INCORPORATED,
d/b/a American Eagle Fire
Apparatus Company, Incorporated,
Plaintiff-Appellant,
No. 02-1483 v.
AMERICAN FIRE EAGLE ENGINE
COMPANY, INCORPORATED,
Defendant-Appellee. 
Appeal from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
W. Earl Britt, Senior District Judge.
(CA-96-831-5-BR)
Argued: January 21, 2003
Decided: June 16, 2003
Before WILKINS, Chief Judge, and MICHAEL and
TRAXLER, Circuit Judges.
Vacated and remanded by published opinion. Judge Traxler wrote the
opinion, in which Chief Judge Wilkins and Judge Michael joined.
COUNSEL
ARGUED: Brendan Joseph O’Rourke, PROSKAUER ROSE, L.L.P.,
New York, New York, for Appellant. L. Lawton Rogers, III, DUANE
MORRIS, L.L.P., Washington, D.C., for Appellee. ON BRIEF:

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Hugh Stevens, EVERETT, GASKINS, HANCOCK & STEVENS,
L.L.P., Raleigh, North Carolina, for Appellant. Patrick D. McPherson,
Mark C. Comtois, Donald J. English, DUANE MORRIS, L.L.P.,
Washington, D.C.; Mark A. Finkelstein, HERRING, MCBENNETT,
MILLS & FINKELSTEIN, Raleigh, North Carolina, for Appellee.
OPINION
TRAXLER, Circuit Judge:
Emergency One, Inc. ("E-One") appeals from a nationwide injunc-
tion entered by the district court prohibiting E-One from using its
AMERICAN EAGLE mark in connection with the sale of its fire
trucks or from otherwise infringing upon the trademark rights of
American FireEagle, Ltd. ("AFE"). We vacate the injunction and
remand the case for further proceedings.
I.
E-One, a manufacturer of fire trucks and rescue vehicles, sued AFE
for trademark infringement. The parties agree that AFE’s AMERI-
CAN FIREEAGLE mark, which depicts a bald eagle superimposed
over an American flag, and E-One’s AMERICAN EAGLE mark "are
sufficiently similar as to create a likelihood of confusion among
potential purchasers of fire trucks." J.A. 129. AFE counterclaimed on
the grounds that E-One had abandoned its mark, that AFE had then
acquired ownership through use of the mark, and that E-One’s subse-
quent renewed use of the mark infringed on AFE’s common-law
trademark rights. A jury initially determined that E-One had not aban-
doned the AMERICAN EAGLE mark and, therefore, AFE was
infringing on E-One’s mark. Based on the verdict, the district court
entered an injunction against AFE’s continued use of its AMERICAN
FIREEAGLE mark. The injunction was unlimited in its geographical
scope.
AFE appealed. This court concluded that there was sufficient evi-
dence for a jury to find "that E-One had discontinued use of the
AMERICAN EAGLE mark." Emergency One, Inc. v. American
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FireEagle, Ltd., 228 F.3d 531, 537 (4th Cir. 2000) ("American
FireEagle I"). We explained, however, that "the case does not end
there because E-One did produce evidence that it intended to resume
use of the mark on fire trucks." Id.; see 15 U.S.C.A. § 1127 (West
Supp. 2002) (providing that a trademark is abandoned when "its use
has been discontinued with intent not to resume such use"). On the
issue of E-One’s intent to resume use of the mark, we held that the
jury instructions "fail[ed] to instruct the jury . . . that in order to avoid
abandonment a trademark owner who discontinues use of the mark
must have an intent to resume use in the reasonably foreseeable
future." American FireEagle I, 228 F.3d at 540 (emphasis added). We
also concluded that the jury instructions failed to advise the jury that
"the type of use that is relevant to determining whether a trademark
owner has discontinued use is use in the course of trade in a particu-
lar good." Id. (emphasis added). We vacated the judgment and the
injunction and remanded for a new trial.
Upon remand, the district court granted E-One’s request for bifur-
cation of the trial. The only issue submitted to the jury was whether
E-One had abandoned its rights in the AMERICAN EAGLE mark
prior to the time that AFE began using its similar mark. Specifically,
the second jury was asked to decide if E-One "intend[ed] to resume
use of the American Eagle trademark on fire trucks in the reasonably
foreseeable future." J.A. 205. The jury determined that E-One had not
intended to resume use of the mark. Following the verdict, AFE
requested that the district court impose an unlimited injunction, virtu-
ally identical to the one imposed against AFE after the first trial,
against E-One’s continued use of its mark. E-One objected, however,
arguing that a nationwide injunction was inappropriate and that an
evidentiary hearing was necessary to establish the proper geographi-
cal scope of the injunction. The district court concluded that E-One
had waived the right to challenge the geographical scope of the
injunction, that E-One was therefore not entitled to an evidentiary
hearing on the issue, and that a nationwide injunction was appropri-
ate. The district court noted that jury issues still remained with respect
to whether AFE was entitled to monetary relief from E-One on AFE’s
trademark infringement claim or its claims under the North Carolina
Unfair and Deceptive Trade Practices Act, see N.C. Gen. Stat. § 75-
1.1, and North Carolina common law. E-One immediately appealed
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the district court’s entry of the injunction. See 28 U.S.C.A.
§ 1292(a)(1) (West 1993).
II.
We review the entry of an injunction by the district court for abuse
of discretion. See Wilson v. CHAMPUS, 65 F.3d 361, 363-64 (4th Cir.
1995). E-One argues that because common law trademark rights
extend only to the geographical areas in which AFE has made bona
fide use of the mark, AFE is not entitled to injunctive relief in any
market where it has not established such use. E-One asserts that the
district court therefore abused its discretion by entering a blanket,
nationwide injunction against E-One without any evidence of the
localities in which AFE used the mark.
A.
Before considering the scope of the injunction entered against
E-One, a brief review of the governing principles of trademark law
is in order. AFE and E-One both asserted trademark rights in an
unregistered mark. Common law determines who enjoys the exclusive
right to use an unregistered trademark, the extent of such rights, and
the proper geographical scope of any injunctive relief necessary to
protect against the infringement of such rights. See Spartan Food
Sys., Inc. v. HFS Corp., 813 F.2d 1279, 1282 (4th Cir. 1987) (explain-
ing that the "geographical extent" of an injunction against infringe-
ment of an unregistered mark is "governed by common law as
expounded by the Supreme Court").
At common law, trademark ownership is acquired by actual use of
the mark in a given market. See United Drug Co. v. Theodore Rec-
tanus Co., 248 U.S. 90, 97-98 (1918). "To acquire ownership of a
trademark it is not enough to have invented the mark first or even to
have registered it first; the party claiming ownership must have been
the first to actually use the mark in the sale of goods or services." Sen-
goku Works Ltd. v. RMC Int’l, Ltd., 96 F.3d 1217, 1219 (9th Cir.
1996); see Homeowners Group, Inc. v. Home Mktg. Specialists, Inc.,
931 F.2d 1100, 1105 (6th Cir. 1991) ("[O]wnership rights flow only
from prior appropriation and actual use in the market."); see generally
2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Compe-
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tition, §§ 16:1, 16.18 (4th ed. 2003). The owner of a mark acquires
"both the right to use a particular mark and the right to prevent others
from using the same or a confusingly similar mark." Homeowners
Group, 931 F.2d at 1106. Accordingly, trademark ownership confers
an exclusive right to use the mark. See United Drug, 248 U.S. at 98.1
When more than one user claims the exclusive right to use an
unregistered trademark, priority is determined by "the first actual use
of [the] mark in a genuine commercial transaction." Allard Enters.,
Inc. v. Advanced Programming Res., Inc., 146 F.3d 350, 358 (6th Cir.
1998); see United Drug, 248 U.S. at 100 ("[T]he general rule is that,
as between conflicting claimants to the right to use the same mark,
priority of appropriation determines the question."); see also Blue
Bell, Inc. v. Farah Mfg. Co., 508 F.2d 1260, 1265 (5th Cir. 1975)
("The exclusive right to a trademark belongs to one who first uses it
in connection with specified goods."); SweeTarts v. Sunline, Inc., 380
F.2d 923, 926 (8th Cir. 1967) (same). The first user, then, to appropri-
ate and use a particular mark — the "senior" user — generally has pri-
ority to use the mark to the exclusion of any subsequent — or junior
— users. See Lucent Info. Mgmt., Inc. v. Lucent Techs., Inc., 186 F.3d
311, 316 (3d Cir. 1999); see also 4 McCarthy, supra, § 26.5 at 11-12.
And, priority must be established before an injunction can be entered
against an infringing trademark user. See Scott Paper Co. v. Scott’s
Liquid Gold, Inc., 589 F.2d 1225, 1231 (3d Cir. 1978) ("[R]elief is
only available if the plaintiff establishes priority."). The priority to
use a mark, however, can be lost through abandonment. See American
FireEagle I, 228 F.3d at 535-36. "Once abandoned, a mark may be
seized immediately and the person . . . doing so may" establish "prior-
ity of use and ownership under the basic rules of trademark priority."
2 McCarthy, supra, § 17:2 at 3.
The territorial extent of ownership rights in an unregistered mark
is not unlimited. See Spartan Food, 813 F.2d at 1282. In Hanover
Star Milling Co. v. Metcalf, 240 U.S. 403 (1916), the Supreme Court
explained the limited scope of common law trademark rights:
1Federal registration of a mark does not establish ownership rights in
the mark; rights in a registered mark are acquired through actual use, just
as for unregistered marks. See Homeowners Group, 931 F.2d at 1105.
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Into whatever markets the use of a trademark has extended,
or its meaning has become known, there will the manufac-
turer or trader whose trade is pirated by an infringing use be
entitled to protection and redress. But this is not to say that
the proprietor of a trademark . . . can monopolize markets
that his trade has never reached . . . . [S]ince it is the trade,
and not the mark, that is to be protected, a trademark . . .
extends to every market where the trader’s goods have
become known and identified by his use of the mark. But
the mark, of itself, cannot travel to markets where there is
no article to wear the badge and no trader to offer the article.
Id. at 415-16 (internal quotation marks omitted); see also United
Drug, 277 U.S. at 98. At common law, therefore, the exclusive right
to use a mark is "limited to areas where [the mark] had been used and
the claimant of the mark had carried on business." Armand’s Subway,
Inc. v. Doctor’s Assocs., Inc., 604 F.2d 849, 849 (4th Cir. 1979); see
Spartan Food, 813 F.2d at 1282 ("The common law rights are
restricted to the locality where the mark is used and to the area of
probable expansion.").2
Although federal registration of a mark does not itself confer own-
ership rights, registration constitutes "prima facie evidence of the
validity of the registered mark . . . , of the registrant’s ownership of
the mark, and of the registrant’s exclusive right to use the registered
mark . . . ." 15 U.S.C.A. § 1057(b) (West 1997). Moreover, the pre-
sumption of priority enjoyed by the registrant of a mark is "nation-
wide in effect." 15 U.S.C.A. § 1057(c). Thus, registration of a
trademark under the Lanham Act "creates a presumption that the reg-
istrant is entitled to use the registered mark throughout the nation."
Draeger Oil Co. v. Uno-Ven Co., 314 F.3d 299, 302 (7th Cir. 2002).
2This court has recognized that the area of "use" for purposes of estab-
lishing common-law trademark rights may include not only the locality
where the mark is actually being used but also areas where use of the
mark is likely to expand but has not yet done so. See, e.g., Spartan Food,
813 F.2d at 1283 (explaining that "common law rights are restricted to
the locality where the mark is used and to the area of probable expan-
sion" as determined by the application of the "zone of natural expansion"
or "market penetration" theories).
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By contrast, a user claiming ownership of a mark under common-law
principles does not enjoy the benefit of the presumptions conferred by
registration and must "establish his right to exclusive use"; in effect,
registration "shift[s] the burden of proof from the plaintiff . . . to the
defendant, who must introduce sufficient evidence to rebut the pre-
sumption of plaintiff’s right to such [exclusive] use." Pizzeria Uno
Corp. v. Temple, 747 F.2d 1522, 1529 (4th Cir. 1984) (internal quota-
tion marks omitted). Accordingly, a plaintiff asserting a claim of
infringement against common-law trademark ownership rights bears
the burden of establishing its exclusive right to use the mark by actual
use in a given territory.
The nature of common-law trademark rights in large measure
determines the appropriate scope of any injunctive relief. Thus, the
owner of common-law trademark rights in an unregistered mark is not
entitled to injunctive relief in those localities where it has failed to
establish actual use of the mark. See Spartan Food, 813 F.2d at 1282-
84. By limiting injunctive relief to the territory where the mark is
being used, courts ensure that a trademark does not precede its owner
into "markets that [the owner’s] trade has never reached." Hanover
Milling, 240 U.S. at 416. For this reason, even the owner of a feder-
ally registered mark — who enjoys the presumption of nationwide
priority — is not "entitled to injunctive relief except in the area actu-
ally penetrated" through use of the mark. Lone Star Steakhouse &
Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 932 (4th Cir.
1995) (internal quotation marks omitted).3 Accordingly, even though
the senior user of an unregistered mark has established priority over
a junior user through prior appropriation, injunctive relief is appropri-
ate only in those areas where the senior user can show sufficient
actual use. See Spartan Food, 813 F.2d at 1283-84 (reversing the
award of injunctive relief to the extent that it covered territory beyond
the area in which the senior user established actual use); cf. Armand’s
Subway, 604 F.2d at 849-50 (explaining that even though the owner
3The owner of a registered mark "has a nationwide right, but the
injunctive remedy does not ripen until the registrant shows a likelihood
of entry into the disputed territory . . . . [The junior user’s] use of the
mark can continue only so long as the federal registrant remains outside
the market area." Lone Star, 43 F.3d at 932 (internal quotation marks
omitted).
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of a registered trademark has an exclusive right of use that enjoys
nationwide protection, "the protection is only potential in areas where
the registrant in fact does not do business" and "[a] competing user
could use the mark there until the registrant extended its business to
the area").
B.
AFE established its priority in the mark when the jury on remand
determined that, after discontinuing use of the mark, E-One had not
intended to resume use of the mark in the reasonably foreseeable
future. See 2 McCarthy, supra, § 17:2 at 3. For all practical purposes,
the abandonment determination also settled the issue of liability, i.e.,
who had priority in the mark. E-One conceded to the district court
that AFE was "the prevailing party on the issue of the ownership of
the trademark." J.A. 159. Because the mark was not registered, how-
ever, the common law rights of AFE in the abandoned mark were "re-
stricted to the locality where the mark [was] used and to the area of
probable expansion." Spartan Food, 813 F.2d at 1282. Thus, any
injunctive relief to which AFE was entitled was also limited to the
areas where AFE used the mark. The parties stipulated that "[b]oth
E-One and AFE market and sell certain types of fire trucks in the
Eastern District of North Carolina." J.A. 129. Although AFE claimed
that it was entitled to injunctive relief much broader in scope than the
Eastern District of North Carolina, AFE has not directed us to any
facts it presented to the district court to establish the extent of its use
of the mark. Actually, the only facts regarding the extent of AFE’s
use that were presented to the court were presented by E-One, which
suggested AFE might be entitled, at most, to injunctive relief covering
North Carolina, South Carolina, West Virginia and Michigan, based
on sales volume. In any event, there was no factual basis in the record
from which the court could conclude that a nationwide injunction was
appropriate. See Spartan Food, 813 F.2d at 1283-84 (vacating injunc-
tion to the extent it covered an area for which the senior user failed
to prove sufficient use of the mark). We conclude that there is an
insufficient factual basis to support the nationwide scope of the
injunction and, therefore, that the district court abused its discretion.
See, e.g., Allard, 146 F.3d at 361 (vacating "an injunction of national
scale" where the court failed to "set[ ] forth the geographic scope of
defendants’ trade territory"); Natural Footwear Ltd. v. Hart, Schaff-
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ner & Marx, 760 F.2d 1383, 1397 (3rd Cir. 1985) (vacating nation-
wide injunction where the district court failed "to scrutinize the extent
of [the senior user’s] sales, advertising, and reputation on either a
state-by-state or region-by-region basis").
III.
AFE argues that the district court correctly determined that E-One
"waived its right to contest the geographic scope of [the] injunction."
J.A. 292. The district court did not elaborate on the basis for its con-
clusion that E-One waived its right to challenge the injunction. How-
ever, AFE presented to the district court the same waiver argument
it makes on appeal — that E-One’s challenge to the territorial scope
of the injunction is effectively an affirmative defense that E-One
failed to raise and thus waived. Specifically, AFE argues that in chal-
lenging the scope of the injunction, E-One was in fact claiming to be
an "innocent" or "good-faith remote user" of the mark. AFE asserts
that this is an affirmative defense which is subject to waiver. See
Brinkley v. Harbour Recreation Club, 180 F.3d 598, 612 (4th Cir.
1999) ("[A] party’s failure to raise an affirmative defense in the
appropriate pleading" generally "results in waiver"). E-One responds
that its challenge went to the scope of the remedy imposed by the dis-
trict court as opposed to liability.
In order to accept AFE’s argument, we must determine that a good-
faith remote user claim qualifies as an affirmative defense; that E-One
is actually raising such a defense; but that E-One waived its ability
to do so by not alleging in its pleadings that it was a good-faith
remote user of the mark. We conclude that although a good-faith
remote user claim can be categorized as an affirmative defense,
E-One is not technically raising this claim and, therefore, has not
waived its ability to challenge the injunction.
A.
As previously explained, the senior user of a mark acquires priority
over a subsequent user and thereby enjoys the exclusive right to use
the mark within the "areas where [the mark] had been used and the
claimant of the mark had carried on business." Armand’s Subway, 604
F.2d at 849; see Hanover Star Milling, 240 U.S. at 415-16. The "inno-
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cent" or "good-faith remote user" defense stands as an exception to
the general rule that the senior user, by virtue of its prior appropria-
tion, has superior rights in the mark over a party that subsequently
begins using the mark. The legal foundation that underlies this
defense derives from the Tea Rose/Rectanus doctrine, which blends
several common law trademark principles established by the Supreme
Court in Hanover Star Milling Company v. Metcalf and United Drug
Company v. Theodore Rectanus Company. Under the Tea
Rose/Rectanus doctrine, "the first user of a common law trademark
may not oust a later user’s good faith use of an infringing mark in a
market where the first user’s products or services are not sold." Nat’l
Ass’n for Healthcare Communications, Inc. v. Cent. Ark. Area Agency
on Aging, Inc., 257 F.3d 732, 735 (8th Cir. 2001). In other words, "a
junior user, who in good faith adopted a mark for use at a place
remote from the place of senior use of a similar mark, has a right to
continue its use of the mark superior to the right of the senior user."
Spartan Food, 813 F.2d at 1282. Thus, even though a junior user is,
by definition, not the first to ever use a mark, it may assert the exclu-
sive right to use a mark in a particular area (1) if the area was "geo-
graphically remote" from the senior user’s market at the time that the
junior user appropriated the mark and (2) if the junior user was acting
in good faith at the time.
A use is geographically remote if the mark was used in an area
"where the senior user’s mark was not known such that there could
be confusion as to source." Best Cellars, Inc. v. Wine Made Simple,
Inc., No. 01 Civ. 11780, 2003 WL 1212815, *19 (S.D.N.Y. March 14,
2003) (citing Rectanus, 248 U.S. at 100). With respect to the good-
faith requirement, courts are divided on whether the junior user must
establish a lack of actual knowledge that the mark was already in use,
see 4 J. McCarthy, supra, § 26:9 (majority view), or merely that there
was no intent to infringe, see id. at § 26:10 (minority view). Compare
Money Store v. Harriscorp Finance, Inc., 689 F.2d 666, 674 (7th Cir.
1982) ("A good faith junior user is one who begins using a mark with
no knowledge that someone else is already using it."), with C.P. Inter-
ests, Inc. v. California Pools, Inc., 238 F.3d 690, 700 (5th Cir. 2001)
("The Fifth Circuit, however, has not expressly joined this majority
view, and our past precedent implies a test to the contrary — specifi-
cally, that knowledge of use is but one factor in a good faith
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inquiry."). Because resolution of this issue is not necessary to our
decision, we leave it for another day.
Whether a good-faith remote user claim must be pled affirmatively
under the Federal Rules of Civil Procedure depends upon whether it
raises "matter constituting an avoidance or affirmative defense." Fed.
R. Civ. P. 8(c). An affirmative defense is the "‘defendant’s assertion
raising new facts and arguments that, if true, will defeat the plaintiff’s
or prosecution’s claim, even if all allegations in the complaint are
true.’" Saks v. Franklin Covey Co., 316 F.3d 337, 350 (2nd Cir. 2003)
(quoting Black’s Law Dictionary 430 (7th ed. 1999)). Generally
speaking, affirmative defenses "share[ ] the common characteristic of
a bar to the right of recovery even if the general complaint were more
or less admitted to." Wolf v. Reliance Standard Life Ins. Co., 71 F.3d
444, 449 (1st Cir. 1995) (internal quotation marks omitted).
A good-faith remote user claim qualifies as an affirmative defense.
The plaintiff in an action for infringement of an unregistered mark
must prove "the validity and its ownership of the mark as part of its
larger burden in a trademark infringement action . . . to prove that it
has a valid, protectable trademark and that the defendant is infringing
its mark." America Online, Inc. v. AT & T Corp., 243 F.3d 812, 819
(4th Cir.), cert. dismissed, 534 U.S. 946 (2001). Arguably, a defen-
dant who asserts a good-faith remote user defense in a given territory
can concede the essential elements of an infringement claim — that
plaintiff is the owner and senior user of a valid trademark and that the
defendant’s competing mark is confusingly similar or likely to create
confusion — and nevertheless defeat the plaintiff’s claim of infringe-
ment in the defendant’s territory by demonstrating good faith and
remote use. In that respect, a good-faith remote user claim is typical
of an affirmative defense because it "shares the common characteris-
tic of . . . bar[ring] . . . the right [to relief] even if the general com-
plaint were more or less admitted to." Wolf, 71 F.3d at 449 (internal
quotation marks omitted). In alleging that the defendant’s use of the
mark in the disputed territory was remote and in good faith, a defen-
dant is raising matters that are distinct from, and not merely in
response to, the elements of an infringement claim. Cf. Lonestar, 43
F.3d at 930 & n.11 (classifying the defense set forth in 15 U.S.C.A.
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§ 1115(b)(5), a statutory analogue to the common-law good-faith user
defense, as an affirmative defense).4
B.
Even if the good-faith remote user defense is technically one that
should be pled affirmatively, we conclude that E-One is not, in fact,
asserting this defense. Rather, E-One’s objection goes to the scope of
the remedy — specifically, the lack of a factual basis to support a
nationwide injunction. The good-faith remote user defense applies
when there is a priority dispute between two parties that have been
using the mark in the same territory. The junior user of the mark uses
this doctrine to argue that it cannot be ousted from its territory by the
owner and senior user of the mark:
[T]he national senior user of a mark cannot oust a geograph-
ically remote good-faith user who has used the mark first in
a remote trade area. When the national senior user tries to
enter the remote area, its rights must give way to the rights
built up in good faith by a local user.
4 McCarthy, supra, § 26:4 at 9. In fact, a junior user who successfully
defends against an infringement action by asserting this defense may
itself be entitled to injunctive relief against the senior user. See Spar-
tan Food, 813 F.2d at 1282-84. A defendant asserting good faith
remote use is necessarily claiming priority over the plaintiff and the
exclusive right to use the mark in a given territory where the plaintiff
also claims priority.
By contrast, in objecting to the scope of the injunction below,
E-One contended simply that "far more limited injunctive relief" was
warranted. J.A. 227. E-One, as we understand its argument, does not
deny that AFE, as a result of the jury verdict, has priority and the
4The statutory version of the good-faith remote user doctrine, incorpo-
rated by the Lanham Act as a defense to an infringement claim by the
owner of a registered mark that has become incontestable, is not identical
to the common law version. For example, the Lanham Act appears to
have eliminated "remoteness" as a requirement for the defense. See 15
U.S.C.A. § 1115(b)(5) (West 1998 & Supp. 2003).
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exclusive right to use the mark in those areas where AFE is able to
establish actual use sufficient to confer common law trademark rights.
In fact, E-One even acknowledged to the district court that there
might be four such markets — Michigan, West Virginia, North Caro-
lina, and South Carolina. Thus, E-One does not contend that AFE is
not entitled to injunctive relief where AFE used the mark, but only
that the injunctive relief awarded was too broad. We are satisfied that,
viewed in its entirety, E-One’s challenge to the extent of AFE’s terri-
torial rights is not an affirmative defense to liability but an objection
to the extent of the remedy imposed by the district court. Unlike an
affirmative defense, a mere challenge to the scope of injunctive relief
need not be set forth affirmatively in the pleadings, and the failure to
do so does not amount to a waiver of the argument. See Westchester
Media v. PRL USA Holdings, Inc., 214 F.3d 658, 674 (5th Cir. 2000)
("[C]ourts in trademark cases have a responsibility to tailor the relief
to the violation" and "[a]ppellate courts have a similar responsibility
and have reviewed the breadth of injunctive relief in the face of . . .
waiver arguments."); Allard Enters., 146 F.3d at 360 (permitting
appellant, after the notice of appeal had been filed, to raise its initial
challenge to the nationwide scope of the injunction.).
We also reject AFE’s argument that E-One waived its challenge to
the injunction because it did not identify, for purposes of the pre-trial
order, the geographical scope of AFE’s common law trademark rights
as an issue to be resolved by the jury. Generally speaking, the pre-trial
order "controls the scope and course of the trial, and, [i]f a claim or
issue is omitted from the order, it is waived, even if it appeared in the
complaint." Sobley v. Southern Natural Gas Co., 302 F.3d 325, 333
(5th Cir. 2002) (internal quotation marks omitted). AFE points out
that the only issue for determination at trial was that of abandonment
which, in turn, determined liability. AFE argues that E-One therefore
failed to inform the district court that a determination of the geo-
graphical extent of AFE’s use of the mark was an additional prerequi-
site for resolving liability.
As before, this argument misapprehends the nature of E-One’s
appeal. Ownership of a common law mark does not necessarily afford
the owner nationwide rights, as explained in detail above. Even the
owner of a registered mark, who enjoys a presumption of nationwide
priority to which AFE is not entitled, is not automatically entitled to
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national injunctive relief. See Armand’s Subway, 604 F.2d at 849-50.
Therefore, the question of abandonment or post-abandonment owner-
ship was not determinative of appropriate injunctive relief, and
E-One’s failure to raise any issues pertaining to liability, i.e., owner-
ship of the mark, did not waive its challenge to the equitable remedy.
See Westchester Media, 214 F.3d at 674; Allard, 146 F.3d at 360. We
likewise conclude that E-One did not waive its challenge to the scope
of the injunction by failing to raise it prior to trial, and that the case
should be remanded to allow the district court to reconsider the scope
of the injunction.5
IV.
Finally, AFE contends that E-One is estopped from challenging the
geographical scope of the injunction because (1) it "conceded" in its
pleadings that AFE conducted business throughout the United States
and (2) it represented to the court during the injunction hearing that
all liability issues had been tried. We cannot agree.
AFE’s argument appears to rely on the doctrine of judicial estop-
pel, which protects against "improper manipulation of the judiciary."
Folio v. City of Clarksburg, 134 F.3d 1211, 1217 (4th Cir. 1998).
Judicial estoppel applies if the party to be estopped intentionally
asserts a position of fact that is inconsistent with a factual position
taken during previous litigation. See id. at 1217-18. For this doctrine
to apply, moreover, "the prior position must have been accepted by
the court in the first proceeding." Id. at 1218. We do not perceive any
such inconsistent positions of fact being asserted by E-One. In its
counterclaim against E-One for trademark infringement, AFE alleged
that it used the mark "in North Carolina and throughout the United
States." J.A. 75. In reply, E-One admitted only that AFE sold fire
trucks with the mark in North Carolina; E-One asserted that it was
"without sufficient information either to admit or deny the remaining
allegations" that AFE used the mark throughout the United States.
5Although AFE suggests that to allow E-One to pursue its line of
attack would be prejudicial because it would stretch AFE’s limited
resources to require a third proceeding, AFE represented to the trial court
that it was engaged in "national use and [was] prepared to show that" and
that a hearing on the issue would last "one day." J.A. 173.
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J.A. 85. Likewise, E-One made no representations at the hearing that
would support AFE’s estoppel argument. AFE claims that E-One rep-
resented to the district court that, following the trial, the only remain-
ing question of fact to be resolved was whether and to what extent
damages were appropriate — effectively an admission that liability
had been resolved at trial. This is not a factual assertion for purposes
of judicial estoppel; rather, it is a legal argument about what issues
were raised and resolved at trial. By contrast, judicial estoppel exists
to deter the use of facts from other litigation to manipulate a subse-
quent court that is unfamiliar with the prior factual positions assumed
by the litigants. Here, of course, the district court that presided over
both the trial and pre-trial proceedings is in the best position to detect
inconsistent representations by the litigants. Accordingly, we reject
AFE’s estoppel argument as well.
V.
For the foregoing reasons, we conclude that the district court
abused its discretion in entering a nationwide injunction with no fac-
tual basis from which to conclude that AFE’s use of the mark was
nationwide. We vacate the injunction and remand for the district court
to reconsider the appropriate scope of its injunction.
VACATED AND REMANDED
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