Intellectual Property Law

Adidas-Payless Court Finds No Juror Misconduct, Reduces Damages to $65M

By Michael Atkins

On Sept. 12, the District of Oregon explained the mysterious “juror letter” in the Adidas America, Inc. v. Payless Shoesource, Inc., trademark infringement case and found that it did not contain sufficient grounds for a new trial. (For background see STL post from June 25).

The court’s 29-page decision on Payless’ motions for a new trial also reduced Adidas’ $305 million award — said to be the largest ever in a trademark infringement case — to $65 million. (For additional background see STL post from May 6.)

The court confirmed the jury’s finding of $30,610,179 as damages in the form of a reasonable royalty and used its discretion under the Lanham Act to reduce the award based on disgorgement of profits to $19.7 million. It also denied Payless’ motion for a new trial if Adidas accepted a remittitur of the punitive damages award to $15 million.

Court’s cryptic docket entry three weeks after jury’s $305M verdict

While these decisions are noteworthy, the “juror letter” is what intrigued me. Ending three months of cryptic docket entries, emergency hearings, and sealed records, the court explained the situation as follows:

“Approximately three weeks after the jury returned its verdict, the court received a letter from Juror X requesting clarification of the ‘definition of the trial being over,’ because she ‘understood from [the court’s] instructions that we weren’t to actively engage on the Internet … in regard to the case until the trial was over.’ Juror X wanted to know, ‘[w]as that on Thursday, when everyone rested, or was it on Monday, after the verdict was read and we were excused as jurors?’

“On May 27, 2008, the court held a telephone conference to read Juror X’s letter to the parties. During the telephone conference, Payless’ counsel revealed that Juror X had contacted him by email on May 20, 2008 to ask if Payless was appealing the verdict. Payless’ counsel indicated that he also spoke with Juror X by phone for about twenty minutes. He answered some very general questions Juror X had about the appeal. Payless’ counsel asked if any outside influences or extraneous information found its way into the deliberations. Juror X was quite certain everybody followed the rules.”

Juror X nonetheless told the court in an evidentiary hearing the next day that she was concerned another juror may have violated the court’s instructions regarding out-of-court investigation by conducting research on the Internet.

On June 4, the court interviewed Juror Y, the juror who allegedly had done the research. Juror Y explained that he (or she — the court did not identify the juror’s sex) merely discussed prior knowledge from searching the Internet years before “about appeals and jury judgments and awards.” Juror Y denied looking up any material during the trial.

The juror said:

“I remember people were talking about award judgments, awarding — that [sic] wanted large amounts. They were getting real large, 7, 800 million. And I just said, from looking this up, from what I’ve seen before, if you get a real excessive amount, you’re just going to be shoved out.” 

Judge Garr M. King found that such comments “simply do not constitute the type of extrinsic information the Federal Rules of Evidence seek to prohibit.”

The court concluded: “[t]here is no reasonable possibility that Juror Y’s general statements about the likelihood of appeal and the reversal of excessive verdicts could have affected the jury verdict. The testimony of Juror Y and Juror X indicate that only a few members of the jury heard the comments. Any discussion that followed took less than one minute. Further Jurors Y and X indicated that Juror Y made the comments at the very beginning of the jury’s two-day deliberation. There is no indication that anyone discussed the issue again. Finally, the possibility of appeal was peripheral to the issues that were before the jury and did not relate to any material fact or substantive law applicable to the case.”

Mystery solved.

The case cite is Adidas America, Inc. v. Payless Shoesource, Inc., No. 01-1655 (King, J.).

Full post as published by Seattle Trademark Lawyer on September 15, 2008 (boomark / email).