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govinfo:USCOURTS-njd-1_12-cv-02999-5
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
NEWBORN BROS. CO., INC.,
Plaintiff,
v.
ALBION ENGINEERING COMPANY,
Defendant.
Civil No. 12-2999 (NLH/AMD)
MEMORANDUM
OPINION
APPEARANCES:
JOHN-PAUL MADDEN
TIMOTHY R. BIEG
MADDEN & MADDEN
108 KINGS HIGHWAY EAST, SUITE 200
P.O. BOX 210
HADDONFIELD, N.J. 08033-0389
Attorneys Plaintiff Newborn Bros. Co., Inc.
JEFFREY M. SCOTT
KERRI E. CHEWNING
ARCHER & GREINER, PC
ONE CENTENNIAL SQUARE
P.O. BOX 3000
HADDONFIELD, N.J. 08033-0968
Attorneys for Defendant Albion Engineering Company.
HILLMAN, District Judge
This matter comes before the Court upon Defendant Albion
Engineering Company’s (“Albion”) motion for judgment as a matter
of law pursuant to Federal Rule of Civil Procedure 52(c) and
post-trial briefing on Albion’s affirmative defense of unclean
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hands.
The underlying action was brought against Albion by Newborn
Bros. Co., Inc. (“Newborn”), which alleged false advertising and
unfair competition under the Lanham Act, 15 U.S.C. § 1125(a),
and New Jersey common law. Central to Newborn’s claims were
representations made by Albion that overseas products were
manufactured in the United States. On August 22, 2020, the
Court issued a bench trial opinion pursuant to Federal Rule of
Civil Procedure 52(a)(1), (ECF 363), holding that Albion had
violated both the Lanham Act and New Jersey common law.
Albion raised five affirmative defenses in its Amended
Answer: (1) failure to state a claim upon which relief may be
granted, (2) laches, estoppel, and/or waiver, (3) time bar, (4)
unclean hands, and (5) lack of standing. (ECF 31 at 16).
Following the Court’s opinion on liability, the parties were
permitted to make submissions as to Albion’s affirmative
defenses. On February 26, 2021, the Court entered an order
finding unclean hands to be the only viable affirmative defense
for which the record was incomplete and granting Albion’s
request to present supporting evidence. (ECF 371). A related
opinion followed. (ECF 372).
A bench trial was conducted on the issue of unclean hands
from July 19, 2021 through July 21, 2021 and the parties were
instructed to submit post-trial briefing on the defense. Most
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recently, on August 29, 2022, following a status hearing, the
Court ordered the parties to submit supplemental letters limited
to identifying the most recent date or dates in which Newborn
engaged in conduct similar to that which the Court found
unlawful with respect to Albion. (ECF 407).
The Court now issues the following memorandum opinion and
order. For the reasons set forth below, and for other good
cause shown, the Court finds that Albion has demonstrated the
affirmative defense of unclean hands and its motion is therefore
granted in part.
I. Background
The Court’s bench trial opinion lays out the facts of this
matter in greater detail. (ECF 363). Relevant here, Albion
began producing dispensing caulk guns in Taiwan in late 2001 and
thereafter manufactured an increasing number of its products
overseas. (Id. at 16-18). The Court found actionable under the
Lanham Act the statements “All Albion Products are Made in
America,” found in advertising materials including catalogs, and
“All our dispensing products and accessories are designed and
manufactured in the USA, from our location in Philadelphia,
Pennsylvania,” which appeared on Albion’s website. (Id. at 65).
In finding against Albion, the Court held that Newborn had
established its entitlement to injunctive and monetary relief in
the form of disgorgement. (Id. at 102, 107-08).
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Albion, in its briefing, asserts that “[t]he affirmative
defense of unclean hands is applicable to Newborn’s disgorgement
claim and serves as a bar to the entirety of the relief Newborn
seeks.” (ECF 387 at 11). In support of its unclean hands
defense, Albion has submitted multiple proposed findings of
fact, including:
(1) Newborn dispensing guns have been exclusively
manufactured overseas from 1990 to the present, (ECF
396 at ¶¶ 1301-04);
(2) Newborn has utilized a U.S.A. logo
1 in
advertisements, including one published in the late
1990s or early 2000s, (id. ¶¶ 1305-40), and the
company’s former controller found the logo to be
misleading, (id. at ¶¶ 1360-62);
(3) The same logo has been used on Newborn letterhead,
(id. ¶¶ 1341-53), and on products with advertisements
as recently as December 2001, (id. at ¶¶ 1357-59);
1 The logo, as can be seen below, places Newborn’s name with
“U.S.A.” in an outline of a map of the United States.
(ECF 387 at 1).
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(4) A product brochure included the statement "Newborn
Brothers Company is the largest caulking gun
manufacturer/distributor in the United States and
today distributes product in over 20 different
countries,” for about a year and a half beginning in
2003, (id. at ¶¶ 1354-56);
(5) Newborn trademarked its U.S.A. logo and, in a
February 2007 renewal application, stated that the
mark continued to be used in interstate commerce, (id.
at ¶¶ 1363-73);
(6) Some Newborn accessory products lacked country-of-
origin markings, including offset spatulas at the time
the instant action was filed,
(id. at ¶¶ 1380-81; see
also ECF 385 at 4877:10-18); and
(7) Albion was harmed by Newborn’s conduct based on
testimony of lost sales, (ECF 396 at ¶¶ 1388-89).
In response to Albion’s proposed findings of fact, Newborn
admits that it does not operate a manufacturing facility in the
United States, but rather relies on exclusive relationships with
Taiwanese and Chinese manufacturers. (ECF 401 at 3-4). It also
counters, in relevant part, that use of its “Newborn U.S.A.”
logo on sell sheets predated Albion’s relevant conduct and that
the use of the logo on letterhead did not relate to any
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competition with Albion. (Id. at 4-5, 7). Newborn adds that the
former controller’s testimony constituted “Monday morning
quarterback[ing]” that fails to establish that a consumer was
actually misled by the trademark, (id. at 9), and that the 2007
renewal was a mistake that fails to evidence actual use or “an
act equivalent to Albion’s intentional blanket false origin
claims over a decade,” (id. at 10-11).
Unmarked offset spatulas were sold in containers with
country-of-origin markings and corrective action was later taken
to individually mark the products. (Id. at 14). Finally,
Newborn explains that its “largest caulking gun
manufacturer/distributor in the United States” statement was
made in good faith and believed to be accurate based on the
company’s then-vice president’s understanding of the term
“manufacturer” and competitor’s sales. (Id. at 8).
II. Legal Standard
a. Jurisdiction
The Court has jurisdiction of this matter pursuant to the
Lanham Act, 15 U.S.C. § 1125, and 28 U.S.C. § 1367, which gives
the Court jurisdiction over Newborn’s state-law claim.
b. Rule 52(c)
A court conducting a nonjury trial may enter judgment on a
claim or defense after a party has been fully heard on the
issue. Fed. R. Civ. P. 52(c). “In considering whether to grant
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judgment under Rule 52(c), the district court applies the same
standard of proof and weighs the evidence as it would at the
conclusion of the trial.” EBC, Inc. v. Clark Bldg. Sys., Inc.,
618 F.3d 253, 272 (3d Cir. 2010). In so doing, courts do not
“view the evidence through a particular lens or draw inferences
favorable to either party.” Id.2
c. Unclean Hands Doctrine
Unclean hands is an equitable doctrine applicable to Lanham
Act actions3 that “applies when a party seeking relief has
committed an unconscionable act immediately related to the
equity the party seeks in respect to the litigation.” Highmark,
Inc. v. UPMC Health Plan, Inc., 276 F.3d 160, 174 (3d Cir.
2001). Though courts in this District have added injury to the
2 A court must further make findings of fact and conclusions of
law pursuant to Rule 52(a) when it enters judgment pursuant to
Rule 52(c). EBC, Inc., 618 F.3d at 273. This opinion
constitutes the Court’s findings of fact and conclusions of law
pursuant to Rule 52(a). See Ciolino v. Ameriquest Transp.
Servs., Inc., 751 F. Supp. 2d 776, 778 (D.N.J. Nov. 22, 2010)
(citing Pierre v. Hess Oil V.I. Corp., 624 F.2d 445, 450 (3d
Cir. 1980)).
3 The Court has previously noted that the parties’ briefing does
not make any distinctions between the Lanham Act and New Jersey
common law. (ECF 363 at 58 n.11). The Court further recognizes
that “the elements of unfair competition under . . . New Jersey
common law are the same as those required under the Lanham Act.”
G&W Lab’ys, Inc. v. Laser Pharms., LLC, No. 3:17–cv–3974, 2018
WL 3031943, at *7 (D.N.J. June 19, 2018). The Court will
therefore conduct its analysis of unclean hands as to the Lanham
Act and New Jersey common law violations as one.
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defendant as part of the doctrine’s analysis, see Pharmacia
Corp. v. GlaxoSmithKline Consumer Healthcare, L.P., 292 F. Supp.
2d 594, 610 (D.N.J. Nov. 24, 2003), “[u]nder [Third Circuit]
jurisprudence, proof of injury is not required,” Scherer Design
Grp., LLC v. Ahead Eng’g LLC, 764 F. App’x 147, 150 n.5 (3d Cir.
2019). Rather, “[unclean hands] has nothing to do with the
rights or liabilities of the parties” and more so derives from
courts’ unwillingness to grant relief to parties whose conduct
“shock[s] the moral sensibilities of the judge.” Gaudiosi v.
Mellon, 269 F.2d 873, 882 (3d Cir. 1959) (quoting Art Metal
Works v. Abraham & Straus, 70 F.2d 641, 646 (2d Cir. 1934)
(Hand, J., dissenting)).
The first element of an unclean hands defense requires a
showing of fraud, unconscionability, or bad faith. See Scherer
Design Grp., LLC, 764 F. App’x at 150 n.6 (citing S&R Corp. v.
Jiffy Lube Int’l, Inc., 967 F.2d 371, 377 n.7 (3d Cir. 1992)).
More than mere negligence is required, see Saudi Basic Indus.
Corp. v. ExxonMobil Corp., 401 F. Supp. 2d 383, 393 (D.N.J. Nov.
14, 2005) (interpreting S&R Corp., 967 F.2d at 377 n.7), though
“actions taken recklessly or in blatant disregard can amount to
unclean hands,” id. at 396. The plaintiff’s conduct further
need not itself rise to a level warranting legal action – “[a]ny
willful act concerning the cause of action which rightfully can
be said to transgress equitable standards of conduct is
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sufficient.” Id. at 393 (quoting Monsanto Co. v. Rohm & Haas
Co., 456 F.2d 592, 598 (3d Cir. 1972)).
Further, with respect to the second element – relatedness,
the connection between the plaintiff’s conduct and the
underlying claim must be close. In re New Valley Corp., 181
F.3d 517, 525 (3d Cir. 1999). The plaintiff’s conduct must
impact the equity between the parties as to a matter being
adjudicated. Highmark, Inc., 276 F.3d at 174 (citing Keystone
Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 245 (1933)).
“Because a central concern in an unfair competition case is
protection of the public from confusion, courts require clear,
convincing evidence of ‘egregious’ misconduct before invoking
the doctrine of unclean hands.” Citizens Fin. Grp., Inc. v.
Citizens Nat’l Bank of Evans City, 383 F.3d 110, 129 (3d Cir.
2004) (quoting Ciba–Geigy Corp. v. Bolar Pharm. Co., Inc., 747
F.2d 844, 855 (3d Cir. 1984)).4 District courts may exercise
4 The Court notes that the parties’ briefing was divided on the
applicable standard of proof. Albion, though claiming to
satisfy the clear and convincing standard, has advanced
preponderance of evidence as the appropriate standard. (ECF 394
at 13 (citing Kelley Blue Book v. Car-Smarts, Inc., 802 F. Supp.
278, 292 (C.D. Cal. Aug. 27, 1992) and MDO Dev. Corp. v. Kelly,
735 F. Supp. 591, 592 (S.D.N.Y. May 1, 1990)). Newborn,
meanwhile, has asserted that “[a] defendant raising unclean
hands as a defense must introduce clear and convincing evidence
of egregious misconduct.” (ECF 388 at 5 (citing Merisant Co. v.
McNeil Nutritionals, LLC, 515 F. Supp. 2d 509, 531 (E.D. Pa.
Mar. 2, 2007)). The Court is persuaded by both the plain
language provided by the Third Circuit, see Citizens Fin. Grp.,
Inc., 383 F.3d at 129, and its citation within the District, see
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their discretion in recognizing unclean hands defenses,
including limiting its reach to certain claims. See In re New
Valley Corp., 181 F.3d at 525.
III. Analysis
Based on the evidence presented, the Court holds that
Albion has sufficiently supported its unclean hands defense
through clear and convincing evidence of unconscionable or bad
faith conduct that shares a nexus with the instant underlying
action, namely representations indicating that foreign-
manufactured products were made in the United States.
First, the Court finds persuasive Newborn’s use and
trademark of its U.S.A. logo, which places the company name
within an outline of a map of the United States and lists
United-States-based office and warehouse locations without
mention of products’ exclusively overseas manufacture. This
includes, in particular, a declaration made in Newborn’s
February 2007 renewal application that the mark was still used
in interstate commerce at that time. (ECF 385 at 4834:22 to
4837:2). Newborn asserts that this renewal fails to evidence
actual use, (ECF 401 at 11), and while this argument may have
Katiroll Co., Inc. v. Kati Roll and Platters, Inc., No. 10–3620,
2011 WL 2294260, at *2 (D.N.J. June 8, 2011), that clear and
convincing is the appropriate standard.
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weight in another context,5 the issue here is whether Newborn
engaged in the same conduct for which it faults Albion. Clearly
it did.
First, merely characterizing the 2007 application as a
mistake begs the question of why Newborn would bother to
undertake the effort and expense of renewal of a U.S.-themed
mark except to perpetuate a false image as an American
manufacturing company, precisely Albion’s conduct that the Court
found so disturbing as it clung for years to the same false
narrative in the marketplace. Equally significant is the nature
of the statement, made to a government agency under penalty of
perjury reminiscent if not identical, while not in number but at
least in kind, to Albion’s false certificates of origin used to
pass off its foreign-made goods as American-made. (ECF 363 at
29-31, 73). At its heart, Newborn’s admittedly false 2007
5 In the somewhat analogous context of priority of use of
trademarks, “[t]he allegation of a date of first use in a use-
based application for registration is not evidence of a date of
first use on behalf of an applicant or registrant.” J. Thomas
McCarthy, 3 McCarthy on Trademarks and Unfair Competition §
20:17 (5th ed. 2022) (citing 37 C.F.R. § 2.122(b)(2)); see also
MPC Franchise, LLC v. Tarntino, 19 F. Supp. 3d 456, 483
(W.D.N.Y. May 14, 2014) (citing the fourth edition). The
application may nonetheless be instructive when considered with
other evidence. See Tzu Wei Chen Food Co. v. Chia-Chi Enters.,
No. 94–1527, 1995 WL 714589, at *2 (Fed. Cir. 1995) (“[T]he
rejected trademark application could be instructive, but only if
consistent with other reliable evidence pointing in the same
direction.”).
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renewal, as a matter of equity, cabins its claims against
Albion.
Additional conduct that the Court finds relevant includes
Newborn’s 2003 catalog statement describing itself as “the
largest caulking gun manufacturer/distributor in the United
States,” a statement the Court finds to be obviously false as
Newborn did not at the time, and does not now, manufacture any
products in the United States and has rather relied on
relationships with manufacturers in China and Taiwan. Newborn
concedes to as much in its response. (ECF 401 at 3-4).
Testimony has also been elicited that some Newborn products did
not bear origin markings, including offset spatulas that were
not marked at the time this action was filed in 2012. (ECF 385
at 4877:10-18).
The Court holds that these actions by Newborn at the very
least constitute a blatant disregard for their potential to
mislead consumers into believing that products were manufactured
in the United States.
See Saudi Basic Indus. Corp., 401 F.
Supp. 2d at 396. This conduct, in the Court’s view, both
overlaps in time with Albion’s violations and impacts the
“equitable relations between the parties,” see Highmark, Inc.,
276 F.3d at 174 (quoting Keystone Driller Co., 290 U.S. at 245),
in this matter as this action has centered on representations of
domestic manufacture of foreign-made products, creating a
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sufficiently close nexus between the actions of Albion and
Newborn. Newborn’s comparisons between its conduct and Albion’s
violative actions are unavailing. The unclean hands doctrine is
an instrument of courts, see Gaudiosi, 269 F.2d at 882, and the
offending conduct need not itself be worthy of a lawsuit similar
to the one brought by Newborn against Albion, see Monsanto Co.,
456 F.2d at 598.
Exercising the Court’s discretion in applying and tailoring
the doctrine, see In re New Valley Corp., 181 F.3d at 525, the
Court identifies February 7, 2007, the date of the declaration
signed as part of Newborn’s trademark renewal application, as an
appropriate dividing line before which relief will not be
granted. Any relief Newborn may be awarded based on the Court’s
prior rulings must be limited, based on evidence to be produced,
to actions made by Albion after February 7, 2007.6
IV. Conclusion
For the reasons stated above, Defendant Albion’s motion for
judgment as a matter of law pursuant to Federal Rule of Civil
6 The Court will further limit any disgorgement to competing
caulk guns only, not - to the extent Newborn seeks such relief -
caulk gun related products and accessories. Newborn’s failure
to mark spatulas through the date of the filing of this action,
while insufficient to completely bar disgorgement related to the
core product of caulk guns, is sufficient as a matter of equity
to preclude completely any recovery for accessories and related
products.
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Procedure 52(c) will be granted in part.
An Order consistent with this Opinion will be entered.
Date: May 24, 2023 s/ Noel L. Hillman
At Camden, New Jersey NOEL L. HILLMAN, U.S.D.J.
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