Dial One Mid-South, et al v. Bellsouth Telecom, et

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
m 00-30537
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DIAL ONE OF THE MID-SOUTH, INC.;
HELP SERVICE COMPANY, INC.,
DOING BUSINESS AS DIAL ONE HELP SERVICE COMPANY;
AND
CAMPBELL’S PLUMBING AND HEATING, INC.,
DOING BUSINESS AS DIAL ONE CAMPBELL’S PLUMBING AND HEATING,
Plaintiffs-Appellees-
Cross Appellants,
VERSUS
BELLSOUTH TELECOMMUNICATIONS, INC.;
BELLSOUTH ADVERTISING & PUBLISHING CORPORATION;
AND
L.M. BERRY AND COMPANY,
Defendants-Appellants-
Cross-Appellees.
_________________________
Appeals from the United States District Court
for the Eastern District of Louisiana
_________________________
October 18, 2001

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Before JOLLY, SMITH, and WIENER,
Circuit Judges.
JERRY E. SMITH, Circuit Judge:
In this case brought under the Lanham Act
for infringement of the Dial One trademark in
New Orleans, judgment was for plaintiffs with
an award of actual damages. Defendants
challenge the standard used in applying the
innocent infringer defense and the award of
damages. Plaintiffs cross appeal the decision
to exclude evidence of loss of goodwill to the
Dial One mark. We find no reversible error
and affirm.
I.
Dial One of the Mid-South, Inc. (“Dial
One”), is the franchise holder, and Help Ser-
vice Company, Inc. (“Help”), and Campbell’s
Plumbing and Heating, Inc. (“Campbell’s”),
are franchisees. U.A. Durr was once a Dial
One franchisee but lost his franchise in January
1998 when Dial One terminated the relation-
ship. Defendants BellSouth Telecommunica-
tions, Inc., BellSouth Advertising & Publishing
Corporation, and L.M. Berry and Company
are responsible for some part of the production
and publication of the Yellow Pages and White
Pages for southeastern Louisiana. In the May
Yellow and October White pages for 1998,
Durr was listed as a Dial One franchisee in the
alphabetical section under Dial One, when in
fact he had lost his franchise.
Dial One, Help, and Campbell’s sued for
damages, treble damages, and fees. The dis-
trict court awarded the following damages:
Dial One: $10,000 in lost franchise fees;
Campbell’s: $45,000 in lost profits; and Help:
$100,000 in lost profits. Defendants appeal,
challenging the construction of the innocent
owner defense and the propriety of the damage
awards and the sufficiency of the evidence
supporting them. Plaintiffs cross appeal the
refusal to consider goodwill damages.
II.
Defendants’ first issue is the proper stan-
dard in applying the innocent infringer defense
in § 1114(2) of the Lanham Act, which limits
persons bringing actions under §§ 1114(1) and
1125(a) to injunctive relief if the defendant is
an “innocent infringer.” See 15 U.S.C.
§ 1114(2). Specifically, defendants contend
the district court erred in refusing to apply an
actual-malice standard to defendants’ conduct
to determine their status as innocent infringers.
Instead, the court used a standard of objective
reasonableness, under which a defendant is an
innocent infringer only if, regardless of state of
mind, its conduct is reasonable. The court
then rejected defendants’ innocent infringer
defenseSSfinding not objectively reasonable
the conduct of failing to remove the incorrect
listing.
Statutory interpretation is a process we re-
view de novo. See Kemp v. G.D. Searl & Co.,
103 F.3d 405, 407 (5th Cir. 1997). Our start-
ing point in divining the meaning of a statute is
the intent of Congress. See Castillo v. Cam-
eron County, 238 F.3d 339 (5th Cir. 2001).
The best evidence of this intent is the language
of the statute. See Negonsott v. Samuels, 507
U.S. 99, 104 (1993).
On its face, “innocent infringer” suggests a
party who is without blame, but also may con-
note one who is without knowledge of a
wrong or who has no improper motive. The
latter interpretation suggests an unremarkable
legal scheme whereunder any “infringer” will
be held accountable, but an “innocent infring-
er” will not be subject to as stiff a penalty.
Our task is to determine the legal significance

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of the term “innocent.”
On this issue of first impression in this
circuit, we conclude that the proper standard
for evaluating whether an infringer is innocent
is objective reasonableness. First, there is no
constitutional mandate to protect this type of
speech under the heightened actual malice
standard. Second, there is no strong evidence
that, in extending the language of § 1114(2) to
§ 1125(a) of the Lanham Act, Congress in-
tended anything other than correction of a pre-
vious oversight in omitting that language from
§ 1125(a). Third, the premise of conflicting
legislative history is based on an art ificial
conflict between the First Amendment and
private enforcement of the Lanham Act. Fi-
nally, the logic of the actual malice standard is
not appropriate in this context.
Defendants urge us to read “innocent” in
§ 1114(2) to mean “without constitutional ac-
tual malice.” They premise this argument on
remarks by the co-sponsor of an amendment to
the Lanham Act in 1988, expressing a desire
for “innocent” to incorporate the “actual mal-
ice” standard from N.Y. Times v. Sullivan, 376
U.S. 254 (1964). See 134 CONG. REC. 31,
851 (1988) (statement of Congressman
Kastenmeier).
Defendants’ reliance on a statement by a
co-sponsor highlights the problems with using
legislative history to determine Congressional
intent. First, the legislation Congressman
Kastenmeier was addressing was merely a bill
to extend the innocent infringer defense from
one section of the Lanham Act to another; it
made no substantive change in the words “in-
nocent infringer.”1 Second, this history ex
presses the intent of only a single member of
Congress. The risk in giving conclusive
weight to a statement of only one member of
Congress is particularly acute here, where the
common-sense definition of “innocent” and the
requirements of constitutional actual malice
are difficult to reconcile.
Finally, Congressman Kastenmeier may
have had the mistaken belief that Sullivan re-
quires the meaning of “innocent” he advanced
in his remarks. He apparently was under the
impression that enforcement of the Lanham
Act by private parties trying to protect their
trademarks may overstep constitutional
limitations on the regulation of speech. See
134 CONG. REC. 31,850 (1988).
There is no such tension, however, for
commercial speech that is false does not re-
ceive First Amendment protection.2 Ac-
cordingly, we decline to rely on this shard of
legislative history to read a constitutional ac-
tual malice standard into § 1114(2).3
Moreover, Sullivan does not support defen-
dants’ position that the actual malice standard
1 See Trademark Law Revision Act of 1988,
(continued...)
1(...continued)
sec. 132, § 43(a), 102 Stat. 3935, 3946 (1988).
2 See Ibanez v. Fla. Dep’t of Bus. & Prof’l
Regulation, 512 U.S. 136, 142 (1994); Procter &
Gamble Co. v. Amway Corp., 242 F.3d 539, 557
(5th Cir. 2001), cert. denied, 70 U.S.L.W. 3074
(U.S. Oct. 1, 2001) (No. 01-29).
3 The official commentary to the bill provided
by the Senate Judiciary Committee remarks only
that section 32(2) corrects a “typographical error.”
Senate Comm. on the Judiciary, Trademark Law
Revision Act 1988-Satellite Home Viewer Act of
1988, S. Rep. No. 100-515, at 38, reprinted in
1988 U.S.C.C.A.N. 5600.

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should apply to the speech at issue. The Su-
preme Court has not held whether the actual
malice standard applies to commercial speech;
in a suit by a product manufacturer against the
author of a product review, Bose Corp. v.
Consumers Union of the United States, Inc.,
466 U.S. 485, 515 (1984) it declined to decide
whether that standard was appropriate. The
Court has held, however, that matters not of
public concern are not judged under the actual
malice standard. See Dun & Bradstreet, Inc.
v. Greenmoss Builders, Inc., 472 U.S. 749,
760 (1989).
Although the trademark at issue in this case
was certainly a matter of public consumption,
the improper listing of a service repair business
is hardly a matter of public concern such that
the improper listing should be protected. In
fact, the interest of the public is probably best
protected by allowing the suit to proceed with-
out an actual malice defense, so as to promote
accuracy in this type of speech. Allowing the
suit under a lesser standard will in no way
trigger the concerns of SullivanSSthat
defamation law will undercut important First
Amendment freedoms. Accordingly, we con-
clude that the district court correctly an-
nounced that the proper standard for analyzing
the innocent infringer defense under the Lan-
ham Act is objective reasonableness.
Whether defendants in fact were innocent
infringers under this test is a question of fact,
which we review only for clear error. See St.
Martin v. Mobil Exploration & Producing,
Inc., 224 F.3d 402, 405 (5th Cir. 2000).
Defendants do not contest the error in printing
the false listing for Durr, nor do they contest
knowledge of the cessation of the Durr-Dial
One franchise agreement. Defendants had
notice of the change and failed to remove the
Dial One reference in the phone books. The
district court’s conclusion that this conduct
was not objectively reasonable is not clear
error.
III.
Defendants appeal the damages, which are
premised on a calculation of lost profits.4 Our
review of the sufficiency of evidence
supporting an award of damages is only for
clear error.5 Additionally, § 1117 of the Lan-
ham Act gives the district court broad
discretion over the amount of damages. See
15 U.S.C. § 1117. The court is limited only by
principles of equity and is restricted from mak-
ing any award that is punitive instead of merely
compensatory. Id.
There is no indication the court made any
award premised on penalizing the defendants
instead of compensating the plaintiffs.
Although the sufficiency of the evidence sup-
porting the damages is not overwhelming, we
defer in large part to the district court’s
evaluation. The court took account of
possible uncertainty in the estimates of future
profits, whether evidence was corroborated,
whether the harm from the infringing listing
would continue beyond the actual period of
infringement, and possible variability of profit
margins. This demonstrates a weighing of the
4 Defendants appropriately call our attention to
this court’s recent decision in Logan v. Burgers
Ozark Country Cured Hams, Inc., No. 00-30652,
2001 U.S. App. LEXIS 20309 (5th Cir. Sept. 12,
2001). That case, however, is inapposite. It deals
with proving Lanham Act damages through de-
fendants’ profits, while the instant case concerns
damages for plaintiffs’ lost profits.
5 See FED. R. CIV. P. 52(a); Boston
Professional Hockey Ass’n, Inc. v. Dallas Cap &
Emblem Mfg., Inc., 597 F.2d 71, 75-76 (5th Cir.
1979).

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factors sufficient to support the award. There
is no clear error.
IV.
On cross-appeal, plaintiffs raise the issue of
damage to the goodwill of the Dial One
trademark. In ruling on a motion in limine,
the court refused to admit evidence of damage
to goodwill. Plaintiffs renewed their objection
at trial but did not offer specific proof
regarding loss of goodwill. We review rulings
on motions in limine for abuse of discretion.
See Buford v. Howe, 10 F.3d 1184, 1188 (5th
Cir. 1994).
The court based its decision on two
grounds. (1) that, because Dial One of the
Mid-South was not the owner of the federal
mark, it could not recover goodwill damages;
and (2) that there was a strong likelihood the
goodwill of the mark had not been harmed,
and thus no evidence on the issue was
required.
We offer no opinion on the ownership of
the mark or the feasibility of recovering good-
will damages where the plaintiff is only the li-
censee of the mark. Instead, we base our deci-
sion to affirm the ruling on the district court’s
determination that goodwill was not damaged;
we see no abuse of discretion in the finding
that the goodwill of the Dial One mark did not
suffer when a non-franchisee was erroneously
listed under the Dial One section of the phone
book. It was not unreasonable to find that the
improper listing had such a tenuous connection
to the goodwill of the Dial One mark that
there was no need for full evidentiary
treatment.
Our conclusion is reinforced by precedent
in this circuit refusing to consider the propriety
of a motion in limine where no evidence or
any suggestion of the possibility of such proof
is offered at trial. See Seatrax, Inc. v. Sonbeck
Int’l, Inc., 200 F.3d 358, 370 (5th Cir. 2000).
There is nothing to indicate that plaintiffs of-
fered any evidence of damage to the goodwill
of the Dial One mark. Although there was
evidence of consumer confusion, this evidence
was never tied, at trial, to the claim of loss of
goodwill.
AFFIRMED.

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