United States District Court, M.D. Tennessee, Nashville Division
H. SHARP UNITED STATES DISTRICT JUDGE.
before the Court is a Motion to Reopen Case, to Hold
Defendants in Contempt, and for Sanctions filed by Plaintiff
Fender Musical Instruments Corporation
(“Fender”). (Docket No. 96). Defendants Kelton
Swade and Kelton Swade, LLC d/b/a Kelton Swade Guitars
(collectively “Swade”) filed a Response in
Opposition. (Docket No. 99). Fender filed a Reply. (Docket
No. 104). The Court held hearings on the matter on February 9
and March 3, 2017. Having reviewed the briefs and court
transcripts, the Court will grant Fender's motion and
will find Swade in contempt of court for violating the
previous consent order. The court will impose $50, 000 in
Swade is a guitar luthier in Nashville, Tennessee. (Docket
No. 99 at 1). Fender is a large, worldwide manufacturer of
guitars and related equipment. (Docket No. 1 at 3). The
shapes of Fender's headstocks are trademarked designs.
(Docket No. 96-1 at 3). Specifically at issue in this case
are Fender's Telecaster and Stratocaster headstock
designs. In 2013, Fender initiated the present lawsuit after
becoming aware of two of Swade's guitar headstock designs
that Fender believed infringed Fender's Telecaster and
Stratocaster headstock design trademarks: Swade's AVR-T
and AVR-S designs, respectively.
parties came to an agreement and entered into a Confidential
Settlement Agreement (“Agreement”). In the
Agreement, Swade agreed to “completely cease using . .
. any trademark, service mark, name, logo, design, source
designation, or identifying characteristic of any kind that
is a copy, reproduction, colorable imitation, or simulation
of or confusingly similar to, or in any way similar
to” Fender's Telecaster and Stratocaster
headstock designs. (Docket No. 120 at 6) (emphasis added).
This Agreement was incorporated into a Final Judgment and
Permanent Injunction on Consent Order entered by this Court.
(Docket No. 94). In the Permanent Injunction, the Court also
expressly retained jurisdiction over the matter in order to
enforce any violations of the Agreement.
signing the Agreement and having it incorporated into the
Permanent Injunction, Swade changed the headstock designs of
his AVR-T and AVR-S guitars. Swade claims his new designs
“incorporate objectively identifiable changes that make
them immediately distinguishable from [Fender's]
Telecaster or Stratocaster guitar headstocks, ” (Docket
No. 99 at 2), while Fender argues that “Swade merely
made very minor modifications to his headstock designs,
” (Docket No. 96-1 at 6). The following pictures show
Fender's headstock designs on top, Swade's
pre-Agreement headstock designs in the middle, and
Swade's post-Agreement, redesigned headstock designs on
the bottom. Fender's Telecaster and Swade's AVR-T
designs are on the left, while Fender's Stratocaster and
Swade's AVR-S designs are on the right:
argues that the designs on the bottom-Swade's new,
redesigned headstocks- violate section 2C of the Agreement:
that Swade will not use characteristics “in any way
similar to” Fender's Telecaster and Stratocaster
headstocks. (Docket No. 96; Hearing Transcript, March 3, 2017
at 14:23:00). Believing that Swade has violated the
Agreement incorporated into the Court's Permanent
Injunction, Fender filed the current motion.
decision on a motion for contempt lies within the sound
discretion of the Court. Elec. Workers Pension Trust Fund
of Local Union #58 v. Gary's Elec. Serv. Co., 340
F.3d 373, 378 (6th Cir. 2003). While the contempt power
should not be used lightly, the power “‘is a
necessary and integral part of the independence of the
judiciary, and is absolutely essential to the performance of
the duties imposed'” by law. Id. (quoting
Gompers v. Bucks Stove & Range Co., 221 U.S.
418, 450 (1911)). Contempt proceedings are used to
“enforce the message that court orders and judgments
are to be complied with in a prompt manner.”
a litigant in contempt, “the movant must produce clear
and convincing evidence that shows that ‘[the litigant]
violated a definite and specific order of the court requiring
him to perform or refrain from performing a particular act or
acts with knowledge of the court's order.'”
Id. at 379 (citing NLRB v. Cincinnati Bronze,
Inc., 829 F.2d 585, 588 (6th Cir. 1987)). Courts have
the power to enforce terms within a settlement agreement if
those terms become part of a court order “either by
separate provision (such as a provision ‘retaining
jurisdiction' over the settlement agreement) or by
incorporating the terms of the settlement agreement in the
order.” Kokkonen v. Guardian Life Ins. Co. of
Am., 511 U.S. 375, 381 (U.S. 1994); see also GMC v.
Ultra Golf Carts, Inc., 2005 U.S. Dist. LEXIS 8839, *7-8
(E.D. Mich. May 13, 2005) (addressing contempt in regards to
the court's final judgment and permanent injunction only,
and not in regards to the settlement agreement because the
settlement agreement was not incorporated into the
court's judgment and permanent injunction order).
the movant establishes his prima facie case, the burden
shifts to the contemnor who may defend by coming forward with
evidence showing that he is presently unable to
comply with the court's order.” Elec. Workers
Pension Trust Fund, 340 F.3d at 379 (emphasis in
original). To meet this burden, the non-movant must show
“‘categorically and in detail'” why he
is unable to comply with the Court's order. Id.
(quoting Rolex Watch U.S.A. v. Crowley, 74 F.3d 716,
720 (6th Cir. 1996)). The Court must consider whether he took
all reasonable steps within his power to comply with the
Court's Order. Id.
The Court has broad discretion to determine how best to
enforce its injunction. In this civil contempt proceeding,
the purpose of any such sanction . . . must be remedial
and/or coercive, not punitive. To the extent the sanction
serves a remedial function, it should compensate . . . for
damages caused by . . . noncompliance.
Stryker Corp. v. Davol, Inc., 75 F.Supp.2d 741, 743
(W.D. Mich. 1999), aff'd, 234 F.3d 1252 (Fed.
Cir. 2000) ...