Evoqua Water Technologies, LLC v. M.W. WATERMARK, LLC; MICHAEL GETHIN, Individually

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 19a0257p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
EVOQUA WATER TECHNOLOGIES, LLC,
Plaintiff-Appellant/Cross-Appellee,
v.
M.W. WATERMARK, LLC; MICHAEL GETHIN,
Individually,
Defendants-Appellees/Cross-Appellants.
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Nos. 18-2397/2398
Appeal from the United States District Court
for the Western District of Michigan at Grand Rapids.
No. 1:16-cv-00014—Robert J. Jonker, District Judge.
Argued: June 27, 2019
Decided and Filed: October 7, 2019
Before: WHITE, BUSH, and LARSEN, Circuit Judges.
_________________
COUNSEL
ARGUED: Craig R. Smith, LANDO & ANASTASI, LLP, Cambridge, Massachusetts, for
Appellant/Cross-Appellee. G. Thomas Williams, MCGARRY BAIR PC, Grand Rapids,
Michigan, for Appellees/Cross-Appellants. ON BRIEF: Craig R. Smith, Eric P. Carnevale,
LANDO & ANASTASI, LLP, Cambridge, Massachusetts, for Appellant/Cross-Appellee. G.
Thomas Williams, MCGARRY BAIR PC, Grand Rapids, Michigan, for Appellees/Cross-
Appellants.
WHITE, J., delivered the opinion of the court in which BUSH and LARSEN, JJ., joined.
BUSH, J. (pp. 19–35), delivered a separate concurring opinion.
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_________________
OPINION
_________________
HELENE N. WHITE, Circuit Judge. In 2016, Plaintiff Evoqua Water Technologies,
LLC (“Evoqua”) filed this action against Defendants M.W. Watermark, LLC (“Watermark”) and
Michael Gethin, asserting copyright, trademark, and false-advertising claims and seeking to
enforce a 2003 consent judgment obtained by Evoqua’s alleged predecessor against Watermark
and Gethin. The district court dismissed Evoqua’s claim that Watermark and Gethin were in
contempt for violating the consent judgment, holding that the consent judgment was not
assignable and therefore Evoqua lacked standing to enforce it. The district court also granted
Watermark and Gethin summary judgment on Evoqua’s copyright claim after concluding that the
agreement selling assets to Evoqua unambiguously did not transfer copyrights. A jury later
returned a verdict for Watermark and Gethin on Evoqua’s false-advertising claim and for Evoqua
on its trademark-infringement claim against Watermark but found that Gethin was not personally
liable. Following trial, the district court denied Watermark’s and Gethin’s requests for attorney’s
fees on Evoqua’s copyright and false-advertising claims. We conclude that the consent judgment
is assignable, that the agreement transferring assets to Evoqua is ambiguous regarding
copyrights, and that the district court did not abuse its discretion in declining to award
Watermark and Gethin attorney’s fees on the false-advertising claim. Accordingly, we
VACATE the district court’s dismissal of Evoqua’s claim seeking to hold defendants in
contempt of the consent judgment; VACATE the district court’s grant of summary judgment on
the copyright claim; AFFIRM the district court’s denial of defendants’ request for attorney’s fees
on the false-advertising claim; and REMAND for further proceedings.
I. BACKGROUND
A. The Parties
Evoqua and Watermark manufacture and sell equipment, such as sludge dryers and filter
presses, that removes water from industrial waste. Both companies also sell replacement parts
for used de-watering equipment originally manufactured by them or by other companies.

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Evoqua’s business can be traced back to a corporation called JWI, Inc. JWI was
incorporated in the late 1970s and was acquired by U.S. Filter Corporation in 1997 to form a
business called U.S. Filter/JWI Inc. (“U.S. Filter/JWI”). In 2006, U.S. Filter/JWI merged into
Siemens Water Technologies Corp. and dissolved. In 2011, Siemens Water Technologies Corp.
merged into Siemens Water Technologies Holding Corp., which then merged into Siemens
Industry, Inc. (“Siemens”). On March 28, 2013, Siemens sold its water technologies business to
Siemens Water Technologies LLC (“SWT”). SWT changed its name to Evoqua Water
Technologies LLC in 2014.
M.W. Watermark LLC was formerly named J-Parts LLC. J-Parts was founded by Gethin
in 2003 after he left his position at U.S. Filter/JWI. J-Parts initially sold only replacement parts
for filter presses manufactured by other companies.
B. 2003 Action and Consent Judgment
Shortly after Gethin formed J-Parts LLC, U.S. Filter/JWI filed an action against Gethin
and J-Parts, LLC in Gethin I (Case No. 03-00127) in the Western District of Michigan for false
designation of origin, trademark dilution, trademark infringement, unfair competition, unjust
enrichment, misappropriation of trade secrets, breach of fiduciary duties, breach of contract, and
conversion. U.S. Filter/JWI alleged, among other things, that Gethin had downloaded a large
quantity of U.S. Filter/JWI’s proprietary and trade-secret information before leaving his position
and that the defendants were infringing on its J-PRESS® (the brand for its filter presses) and J-
MATE® (the brand for its sludge dryers) trademarks by using the “J-Parts” name.
The parties settled the case and reached a final settlement agreement. As part of the
settlement agreement, the parties agreed to stipulate to the entry of a final judgment, and the
district court entered the “Final Judgment Including Permanent Injunction.”1 (R. 1-7.) The
injunction permanently enjoined “M.W. Watermark LLC, and Michael Gethin and its, his or
their principals, agents, servants, employees, attorneys, successors and assigns” from using U.S.
1The “Final Judgment Including Permanent Injunction” will hereinafter be referred to as the “Consent
Judgment” or “Permanent Injunction.”

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Filter/JWI’s trademarks and from “using, disclosing, or disseminating any” of U.S. Filter/JWI’s
proprietary information. (Id. at PID 358.)
C. Sale to SWT
The business unit comprising U.S. Filter/JWI’s business was sold to SWT pursuant to a
Carve-Out Agreement between Siemens and SWT. Under the Carve-Out Agreement, SWT
acquired “all Seller’s books and records, files and other documents and data (including written
and electronic training materials utilized to train the employees of the [water-technologies unit],
including those related to regulatory and compliance matters), including all purchase and sold
ledgers, purchase and sales day books and purchase and sales invoices.” (R. 48-1, PID 780.)
SWT also acquired the business unit’s “Know-how,” defined as:
all information and data (irrespective as to whether such information and data is
available by way of documentation, orally or in electronic format and irrespective
as to whether they are protected by copyrights or not), including business and
trade secrets, technical and business information and data, inventions, experience
and expertise, all to the extent that such information and data are not Software . . .
and/or not a Patent . . . .
(Id. at PID 783.)
SWT further acquired the business unit’s rights and obligations under its contracts, its
trademarks, and its interest in litigation.
D. Siemens/SWT’s Market Exit and Watermark’s Entrance
Before selling the water-technologies unit to SWT in 2013, Siemens had prepared a
multi-year plan to discontinue certain product lines, including J-MATE® sludge dryers.
Following the sale, in early 2014, Evoqua notified its sales representatives that it was
discontinuing the J-MATE® product line. In response to Evoqua’s planned exit, Watermark
decided to enter the sludge-dryer market. On March 23, 2014, Watermark announced that it was
releasing a sludge dryer product called “DryMate.”

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E. Evoqua’s Re-entrance into the Sludge-Dryer Market
On July 9, 2015, Evoqua began plans to reintroduce the J-MATE® sludge dryer to the
market. Around that same time, Evoqua’s in-house counsel wrote to Watermark regarding,
among other things, Evoqua’s concerns that Watermark was violating the Consent Judgment,
improperly using Evoqua’s trademarks, and falsely advertising that it provided “OEM Parts” for
a variety of manufacturers, including JWI.
II. PROCEDURAL HISTORY
A. Evoqua’s Claims
On January 8, 2016, Evoqua filed this action against M.W. Watermark, LLC,
Watermark’s President Gethin, and current and former employees of Watermark. Evoqua
alleged that Watermark and its employees violated the Consent Judgment by using Evoqua’s
proprietary information and infringing on its trademarks. Evoqua further alleged that Watermark
infringed on its copyrights by adopting Evoqua’s copyrighted brochures and presentations for its
own use. Evoqua also asserted that Watermark impermissibly used its J-MATE® trademark on
its website and adopted a confusingly similar name of “DryMate” for its own product. Evoqua
finally alleged that Watermark falsely advertised itself as an original equipment manufacturer for
Evoqua’s products.
B. The District Court’s Contempt Order
Evoqua filed a motion for sanctions and/or an order holding Watermark and Gethin in
contempt of court for allegedly violating the Permanent Injunction. On September 12, 2016, the
district court granted that motion and held Gethin and Watermark in contempt for violating the
Permanent Injunction. The court found that Watermark violated the injunction by (1) using
Evoqua’s proprietary information and (2) using Evoqua’s trademarks on its website. The district
court ordered Watermark and Gethin to pay sanctions and requested briefing on the amount.
However, before the award was issued, the case was reassigned to another judge.

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C. The District Court’s Order Vacating the Contempt Order and Ruling that
Evoqua Lacks Standing
On April 7, 2017, Watermark and Gethin moved for an order dissolving or modifying the
Permanent Injunction, arguing that the Permanent Injunction’s requirements had either been
satisfied or had become unworkable. Noting that the parties disputed whether Evoqua was a
successor-in-interest, the district court entered an order declining to rule on the motion until
resolving that issue and asked for briefing.
At the hearing on Watermark’s and Gethin’s motion for relief from the permanent
injunction and on the successor-in-interest issue, the district court raised the question whether the
Permanent Injunction could be enforced by successors to U.S. Filter/JWI and asked for briefing.
After the parties briefed the question, the district court issued an opinion and order vacating the
contempt order and dismissing Evoqua’s claim for contempt. The district court held that Evoqua
did not have standing to seek enforcement of the Permanent Injunction because “[t]he consent
judgment in this case does not provide for enforcement by an assignee of U.S. Filter.” (R. 154,
PID 6976.)
D. The District Court’s Grant of Summary Judgment to Defendants on
Evoqua’s Copyright Claim
On October 23, 2017, Watermark and Gethin moved for summary judgment on Evoqua’s
three remaining claims: trademark infringement, false advertising, and copyright infringement.
The district court granted Watermark’s and Gethin’s motion for summary judgment on the
copyright-infringement claim on the basis that the Carve-Out Agreement between Siemens and
SWT/Evoqua unambiguously did not transfer copyrights to SWT/Evoqua. The district court
rejected Evoqua’s argument that the agreement’s transfer of “Know-how” transferred copyrights.
E. Jury Verdict in Favor of Watermark and Gethin on the False-Advertising
Claim and for Evoqua on the Trademark Claim
Evoqua’s remaining claims for trademark infringement and false advertising were tried
before a jury. The jury returned a verdict for Watermark and Gethin on the false-advertising
claim and for Evoqua on its trademark-infringement claim, but awarded $0 in damages, found no
willful infringement, and found that Gethin was not personally liable.

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After trial, Watermark and Gethin filed a motion for attorney’s fees, requesting attorney’s
fees as the prevailing party on the copyright-infringement claim and attorney’s fees on the false-
advertising claim because Evoqua’s conduct with respect to that claim was exceptional. The
district court denied both requests. The district court declined to award attorney’s fees for false
advertising under the Lanham Act, finding that the parties presented conflicting evidence about
the meaning of “OEM [original equipment manufacturer] parts” and that Evoqua pursued the
claim in good faith. (R. 274, PID 10306 (quoting 15 U.S.C. § 1117(a)).)
Evoqua appeals (1) the district court’s order vacating the contempt order and dismissing
Evoqua’s contempt claim, and (2) the district court’s grant of summary judgment to Watermark
and Gethin on the copyright claim. Watermark and Gethin appeal the district court’s denial of
their requests for attorney’s fees on the copyright and false-advertising claims.
III. THE ASSIGNABILITY OF THE CONSENT JUDGMENT
A. Standard of Review and Legal Standard
“A district court’s interpretation of a consent decree or judgment is a matter of law
subject to de novo review, and the underlying findings of fact are reviewed for clear error.”
Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 371 (6th Cir. 1998). This
court reviews a district court’s decision on standing de novo. See United States v. Real Prop.,
All Furnishings Known as Bridwell’s Grocery, 195 F.3d 819, 821 (6th Cir. 1999).
“A consent decree has attributes of both a contract and of a judicial act.” Williams v.
Vukovich, 720 F.2d 909, 920 (6th Cir. 1983). “Consent decrees are entered into by parties to a
case after careful negotiation has produced agreement on their precise terms.” United States v.
Armour & Co., 402 U.S. 673, 681 (1971). “[T]he scope of a consent decree must be discerned
within its four corners, and not by reference to what might satisfy the purposes of one of the
parties to it.” Id. at 682. The consent decree is a judicial act because it “places the power and
prestige of the court behind the compromise struck by the parties.” Williams, 720 F.2d at 920. A
court must “protect the integrity of the decree with its contempt powers.” Id.

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A consent decree “is not enforceable directly or in collateral proceedings by those who
are not parties to it.” Blue Chips Stamps v. Manor Drug Stores, 421 U.S. 723, 750 (1975).
“[E]ven intended third-party beneficiaries of a consent decree lack standing to enforce its terms.”
Aiken v. City of Memphis, 37 F.3d 1155, 1168 (6th Cir. 1994).
In the absence of controlling federal law, contractual interpretation of the Consent
Judgment is governed by Michigan law. See Sault St. Marie, 146 F.3d at 372. Under Michigan
law, “[t]he primary goal in the construction or interpretation of any contract is to honor the intent
of the parties.” Rasheed v. Chrysler Corp., 517 N.W.2d 19, 29 n.28 (Mich. 1994). A court
“must look for the intent of the parties in the words used in the instrument.” Mich. Chandelier
Co. v. Morse, 297 N.W. 64, 67 (Mich. 1941).
Of particular relevance here, the Supreme Court addressed the scope of a consent decree
in Armour. There, Greyhound Corporation sought to acquire the majority of stock in Armour &
Co. The government had previously entered into a consent decree with Armour, barring it from
“dealing directly or indirectly in certain specified commodities.” Armour, 402 U.S. at 673-74.
The government sought to enforce the consent decree against Greyhound, arguing Greyhound
engaged in business that would violate the decree. Id. at 677. The Court reasoned that the
consent-decree prohibitions ran “only against the named stockholders [of Armour] and not
against their successors and assigns.” Id. at 680. Noting that a “‘successors and assigns’ clause”
would have made the Government’s argument more persuasive and that the consent judgment
explicitly bound Armour’s successors and assigns in other respects, the Supreme Court held that
the consent decree did not bar Armour’s successors from dealing in the specified commodities.
Id. at 683.
B. The Consent Judgment is Assignable.
Under Michigan contract law, “rights can be assigned unless the assignment is clearly
restricted.” Jawad A. Shah, M.D., PC v. State Farm Mut. Auto. Ins. Co., 920 N.W.2d 148, 158
(Mich. Ct. App. 2018) (internal quotation marks omitted). The Consent Decree is silent on the
question of assignability—neither allowing it nor barring it. Due to the absence of a “clear
restrict[ion],” the Consent Decree was assignable to Evoqua.

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Relying on Thatcher v. Kohl’s Department Stores, Inc., 397 F.3d 1370, 1372 (Fed. Cir.
2005), the district court came to the opposite conclusion. In Thatcher, a consent decree enjoined
Kohl’s Department Stores, and its successors-in-interest, from infringing on Mark Thatcher’s
patent rights. 397 F.3d at 1372. The consent decree did not expressly extend the right of
enforcement to anyone other than Mark Thatcher. Id. Thatcher sold his patent rights to a third
party, Deckers Outdoor Corporation, and Deckers later tried to enforce the consent judgment
against Kohls. Id. at 1372-73. Relying on the “underlying policy” of Armour and its
interpretation of “the contract as a whole,” the court rejected Decker’s argument that the absence
of an anti-assignment clause meant that the consent judgment was freely assignable. Id. at 1374.
Analyzing Armour, Thatcher (1) noted that Armour “promotes the underlying policy that consent
judgments must be construed in a manner that preserves the position for which the parties
bargained” and (2) stated that “Armour makes clear that . . . [consent judgments] are
fundamentally different from contracts in not only reflecting an agreement on terms but also a
resolution and compromise of contested legal positions in matters that are the subject of
litigation.” Id. In light of its interpretation of Armour, the court found the consent decree’s
silence on extending the right of enforcement to third parties was “the functional equivalent of
the parties’ express intent to exclude language of assignment.” Id. at 1375. The district court
found this case similar to Thatcher, and interpreted the absence of any reference to U.S.
Filter/JWI’s successors and assigns, coupled with the language binding Watermark’s successors
and assigns, as preventing assignment of the Consent Judgment.
We reject this reasoning. The Consent Decree’s mere silence on the question of
assignability does not evince an intent to prohibit assignment. Michigan law allows for the
assignment of a contract unless clearly restricted. Shah, M.D., PC, 920 N.W.2d at 158. Further,
that the Consent Judgment explicitly binds Watermark’s successors and assigns but does not
address U.S. Filter/JWI’s successors and assigns makes sense in light of the fact that the Consent
Judgment addresses only Watermark’s future actions and obligations—that it may not infringe
on certain trademarks or use U.S. Filter/JWI’s proprietary information—and does not address
U.S. Filter/JWI’s. Thatcher had a much stronger basis for concluding that the consent judgment
could not be assigned. The consent judgment there explicitly provided Thatcher the right to
enforce the consent judgment without providing his assigns that right. See Thatcher, 397 F.3d at

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1373 (“No one other than Thatcher was expressly given the right to proceed with a contempt
action to enforce the judgment under the terms of the consent judgment.”). Here, the Consent
Judgment is silent on enforcement.
Moreover, we do not read Armour to require explicit language allowing for assignment.
Armour’s statement that the interpretation of a consent decree must preserve the parties’
bargained-for terms does not suggest that an assignment clause is needed. Armour’s statement
simply mirrors the general contract-interpretation command to “honor the intent of the parties,”
Rasheed, 517 N.W.2d at 29 n.28, by looking to “the words used in the instrument,” Mich.
Chandelier Co., 297 N.W. at 67. Nor does Armour suggest that the judicial nature of the
Consent Judgment requires an explicit assignment clause in this circumstance. Armour simply
noted that a “successors and assigns” clause would have made the government’s argument for
successor liability more persuasive. The Armour Court also relied on the fact that the consent
judgment elsewhere had bound Armour’s successors and assigns, which is not the case here.
Because the Consent Judgment does not contain an anti-assignment clause or some other
clear prohibition on assignment, the Consent Judgment could be assigned. The district court
erred by concluding to the contrary.
Watermark and Gethin raised other issues before the district court, including whether the
Consent Judgment was actually assigned to Evoqua. Because the district court addressed only
the assignability of the Consent Judgment, we vacate the dismissal of Count I and remand to
allow the district court to address the arguments in the first instance.
IV. EVOQUA’S OWNERSHIP OF THE COPYRIGHTS
A. Standard of Review and Legal Standard
We review the district court’s decision granting summary judgment de novo. See
Johnson v. Memphis Light Gas & Water Div., 777 F.3d 838, 842 (6th Cir. 2015). Summary
judgment is appropriate if “the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
“In reviewing the district court’s decision to grant summary judgment, we must view all

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evidence in the light most favorable to the nonmoving party.” Cincinnati Ins. Co. v. Zen Design
Grp., Ltd., 329 F.3d 546, 552 (6th Cir. 2003) (citation omitted).
“To succeed in a copyright infringement action, a plaintiff must establish that he or she
owns the copyrighted creation, and that the defendant copied it.” Kohus v. Mariol, 328 F.3d 848,
853 (6th Cir. 2003) (citation omitted). The Copyright Act provides that “the ownership of a
copyright may be transferred in whole or in part by any means of conveyance or by operation of
law.” 17 U.S.C. § 201(d)(1). However, the assignment of a copyright must be made in writing.
17 U.S.C. § 204(a). “[S]o long as the parties’ intent is clear, a transfer of copyright need not
include any particular language.” Roger Miller Music, Inc. v. Sony/ATV Publ’g, LLC, 477 F.3d
383, 391 (6th Cir. 2007) (internal quotation marks omitted).
Under the choice-of-law provision in the Carve-Out Agreement, Delaware law governs
interpretation of the agreement. “[W]hether a contract is unambiguous is a question of law.”
Sunline Commercial Carriers, Inc. v. CITGO Petroleum Corp., 206 A.3d 836, 847 n.68 (Del.
2019).
“Unless there is ambiguity, Delaware courts interpret contract terms according to their
plain, ordinary meaning.” Alta Berkeley VI C.V. v. Omneon, Inc., 41 A.3d 381, 385 (Del. 2012).
“[A]n ambiguity exists when the provisions in controversy are fairly susceptible of different
interpretations or may have two or more different meanings.” GMG Capital Invs., LLC v.
Athenian Venture Partners I, L.P., 36 A.3d 776, 780 (Del. 2012) (alterations and internal
quotation marks omitted). “Where a contract is ambiguous, the interpreting court must look
beyond the language of the contract to ascertain the parties’ intentions.” Id. (internal quotation
marks omitted).
B. The Carve-Out Agreement is Ambiguous.
The district court concluded that the Carve-Out Agreement unambiguously did not
transfer any copyrights to SWT/Evoqua, and held that Evoqua did not establish actual ownership
of the copyrights. We disagree.

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Section 1.1 of the agreement provides that Siemens “sells and transfers . . . all of
[Siemens’s] right, title and/or interest . . . in, and to, all assets . . . exclusively pertaining to the
[water-technology business].” (R. 48-1, PID 779.) Section 1.1 expressly excludes from this
transfer “[intellectual property (IP)] . . . , trademarks and their applications, domains and any
other intellectual property rights.” (Id.)
Section 2 of the agreement sells and assigns IP. Evoqua contends that Section 2.2
addressing the sale of “Know-how” transferred copyrights to it. Section 2.2 provides:
Sale and Assignment of Know-how: . . . . Seller hereby sells and assigns to
Purchaser all information and data (irrespective as to whether such information
and data is available by way of documentation, orally or in electronic format and
irrespective as to whether they are protected by copyrights or not), including
business and trade secrets, technical and business information and data,
inventions, experience and expertise, all to the extent that such information and
data are not Software (as defined in Section 2.3 below) and/or not a Patent
(collectively herein “Know-how”) which (i) is exclusively used by the Business
in the Business Field on the Effective Date, and (ii) which Seller has the exclusive
authority to dispose of on the Effective Date (herein “Transferred
Know-how”). . . . The Parties agree that the documentation in which the
Transferred Know-how is embodied is already available in the Business and a
separate handover of such documentation is therefore not necessary. Should
Purchaser within twenty-four (24) months after the Effective Date and on a case-
by-case basis nevertheless need a copy of a part of the Transferred Know-how for
the operation of the Business, Seller shall, upon written request of Purchaser,
provide Purchaser with such copy to the extent available at Seller.
(Id. at PID 783-84.)
Section 2.2 of the Carve-Out Agreement is fairly susceptible of two different
interpretations and therefore ambiguous. The plain meaning of “all information and data” is
fairly broad and could encompass a wide variety of assets, including copyrights. Further,
“information and data” lacks a qualifier or limiter, thus is susceptible to the interpretation that
any copyrights on the information and data are also included. The word “assign” could be
construed broadly. The Carve-Out Agreement was signed in 2013. The Ninth Edition of
Black’s Law Dictionary (2009) defines assign as “[t]o convey; to transfer rights or property.”
Assign, Black’s Law Dictionary 135 (9th ed. 2009). The Tenth Edition is more specific,
defining assign as “[t]o convey in full; to transfer (rights or property).” Assign, Black’s Law

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Dictionary 142 (10th ed. 2014) (emphasis added). These definitions suggest that all rights
encompassed in or underlying the information and data were also transferred. Cf. SCO Grp., Inc.
v. Novell, Inc., 578 F.3d 1201, 1213 (10th Cir. 2009) (“[W]hen a party acquires ‘[a]ll rights and
ownership’ in a set of items, as was the case here, courts have generally found such language
sufficient to satisfy Section 204(a) in the absence of language excepting copyrights or other
special circumstances.” (collecting cases)).
Further, a reasonable interpretation of the provision that “information and data” are
transferred “irrespective as to whether they are protected by copyrights or not” is that copyrights
are included in the “information and data” transferred. In other words, both non-copyrighted
information as well as information with attendant copyrights were assigned to SWT. Finally, the
illustrative list of “information and data”—“business and trade secrets, technical and business
information and data, inventions, experience and expertise”—comprises broad and diverse types
of assets. In light of the plain language, one could reasonably interpret the language to include
the assignment of copyrights.
The district court’s reasons for concluding that the agreement unambiguously did not
assign copyrights do not bar this other reasonable interpretation.2
The district court first reasoned that the words “information and data” are an “odd
container” for copyrights because copyrights only protect the manner in which the information or
data is expressly used. (R. 217, PID 8171.) The district court’s second reason is related: it
2Watermark and Gethin argue that copyrights can be transferred only if the language of the agreement
unambiguously so provides. The sole authority Watermark and Gethin rely on for this proposition is Shugrue v.
Continental Airlines, Inc., 977 F. Supp. 280, 285 (S.D.N.Y. 1997). In Shugrue, the court held that 17 U.S.C. § 202
requires that an agreement unambiguously transfer copyrights. Section 202 provides in relevant part that
“[o]wnership of a copyright . . . is distinct from ownership of any material object in which the work is embodied,” so
“[t]ransfer of ownership of any material object . . . does not of itself convey any rights to the copyrighted work
embodied in the object.” The Shugrue court interpreted this to mean that “if the language of the transfer is
ambiguous, the contract will be read to transfer only the material object, not ownership of the copyright itself.” 977
F. Supp. at 285. However, the statutory language does not suggest that requirement. Moreover, this court has
previously found that a contract that was ambiguous on its face nonetheless transferred copyrights. See Gilleland v.
Schanhals, 55 F. App’x 257, 260 (6th Cir. 2003); see also Kendall Holdings, Ltd. v. Eden Cryogenics, LLC, 521 F.
App’x 453, 460 (6th Cir. 2013) (holding that a material issue of fact existed as to whether party was owner of
copyrights where party’s consulting agreement gave the other party “ownership of his ‘ideas, inventions,
improvements, and developments,’ as well as signing shop drawings bearing the ‘sole property of [the other party]’
legend”); Johnson v. Storix, Inc., 716 F. App’x 628, 631 (9th Cir. 2017) (holding that whether the transfer of “all
assets” included copyrights was an issue properly for the jury to decide).

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fairly pointed out that “there is a difference between assigning information and data and
assigning ownership in the work embodying that information and data.” (Id.) Thus, according to
the district court, the transfer could include only free-floating data and information, unaffixed to
a document. However, “information and data” could be interpreted to include the information
and data as it is found in documents. That interpretation is supported by Section 2.2’s provision
that if within 24 months after the sale, SWT/Evoqua needed “a copy of a part of the Transferred
Know-how for the operation of the Business,” Siemens would provide “such copy.” (Id. at PID
784 (emphasis added).) That provision suggests that the transfer includes information and data
in physical mediums. Further, although transferring ownership in a copy of work is not
tantamount to transferring ownership in the copyright to that work, here the agreement could be
reasonably interpreted as transferring the copyright as well. The language that Siemens
“assign[s]” the “information and data” is susceptible of the interpretation that information and
data are transferred in full, including all rights associated with that information and data.
The district court next interpreted the words “irrespective as to whether they are protected
by copyrights or not” in Section 2.2 to suggest that the copyrights were not the object of the
assignment. To be sure, that language could be read to suggest that the “information and data”
are separate from any copyrights covering them. But it is also susceptible of another reading:
the Carve-Out Agreement transfers both information that is copyrighted (and those copyrights)
and information that is not copyrighted.
The district court next focused on the illustrative list of “Know-how”—“business and
trade secrets, technical and business information and data, inventions, experience and expertise.”
(R. 48-1, PID 783.) The district court concluded that those items “may each be a form of
intangible property, but they are not copyrights.” (R. 217, PID 8173.) However, one could
reasonably view those terms as illustrating the broad scope of “Know-how.” Each term is fairly
broad and general, and the list does not necessarily suggest that copyrights to information as it is
presented in mediums such as product manuals are not included in know-how.
Contrasting the different transfer language used in Section 2.2 (“assigns”) with the
language used in Section 1.1 (“transfers . . . all of Seller’s right, title, and interest” in non-IP
assets), the district court perceived that the “transfer of all right, title and interest” in Section 1.1

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is broader than the “assign[ment]” of know-how in Section 2.2. But because both sections use
the word “sells,” and “assign” could mean to convey in full, the mere difference in language
between Section 1.1 and Section 2.2 does not necessarily mean that fewer ownership rights were
conveyed in the latter section. The district court also pointed out that Section 1.1.4, transferring
“Seller’s books and records, files and other documents and data (including written and electronic
training materials utilized to train the employees of the Business),” explicitly excludes “any other
intellectual property rights.” (R. 48-1, PID 780.) The district court considered Section 1.1.4 a
“natural place to transfer the copyrights in the manuals and presentations by earlier entities.”
(R. 217, PID 8173.) However, the agreement clearly contemplates separate sections for
transferring non-intellectual-property assets (Section 1) and intellectual-property (Section 2), so
it makes sense that copyrights would not be transferred in the section selling assets other than
intellectual property.
Finally, the district court noted that Section 2.3 assigned software, a copyrightable asset,
and reasoned that it undercut Evoqua’s contention that Section 2.2 assigned all copyrights.
However, the separate section for Software does not render Evoqua’s construction unreasonable.
Section 2.2 explicitly excludes “Software” from the definition of “Know-how,” and one could
reasonably construe Section 2.2 as transferring all copyrights in the “Know-how,” and Section
2.3 transferring copyrights to “Software.”
In sum, even taking all the reasons together, the Carve-Out Agreement does not
unambiguously exclude the transfer of copyrights. Rather, the language of the Carve-Out
Agreement is ambiguous. Accordingly, we may look outside the four corners of the contract to
determine the parties’ intent. GMG Capital Invs., 36 A.3d at 780. Evoqua presented affidavits
from representatives of SWT/Evoqua and Siemens in which both assert that it was the parties’
intent to sell the copyrights. Because the intent of the parties is a disputed issue of a material
fact, the district court improperly granted summary judgment on that basis.3
3Because we conclude that summary judgment to Watermark and Gethin was improper on the copyright
claim, we do not reach whether the district court properly denied Watermark’s and Gethin’s request for attorney’s
fees on this claim.

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In their motion for summary judgment, Watermark and Gethin raised other arguments
concerning the alleged deficiencies in the copyright registrations and the chain of title in the
copyrights before the sale to SWT. Because the district court decided only that the Carve-Out
Agreement did not transfer copyrights, we vacate the grant of summary judgment and remand to
allow the district court to consider the parties’ remaining arguments.
V. ATTORNEY’S FEES ON THE FALSE-ADVERTISING CLAIM
We review a district court’s decision whether to award attorney’s fees under the Lanham
Act for an abuse of discretion. See Johnson v. Jones, 149 F.3d 494, 503 (6th Cir. 1998). The
Lanham Act permits a court to award attorney’s fees to the prevailing party in “exceptional
cases.” 15 U.S.C. § 1117(a). “[A]n ‘exceptional’ case is simply one that stands out from others
with respect to the substantive strength of a party’s litigating position (considering both the
governing law and the facts of the case) or the unreasonable manner in which the case was
litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014).4
District courts “determine whether a case is exceptional in the case-by-case exercise of their
discretion, considering the totality of the circumstances.” Id. (citation omitted)
The district court did not abuse its discretion in denying Watermark and Gethin attorney’s
fees on the false-advertising claim.
Evoqua’s copyright claim is not so weak as to be exceptional. A claim for false
advertising under the Lanham Act has the following elements:
1) the defendant has made false or misleading statements of fact concerning his
own product or another’s; 2) the statement actually or tends to deceive a
substantial portion of the intended audience; 3) the statement is material in that it
will likely influence the deceived consumer’s purchasing decisions; 4) the
advertisements were introduced into interstate commerce; and 5) there is some
causal link between the challenged statements and harm to the plaintiff.
Am. Council of Certified Podiatric Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, Inc.,
185 F.3d 606, 613 (6th Cir. 1999) (citations omitted). Here, as the district court noted, both
4The Court in Octane Fitness was interpreting the Patent Act’s fee-shifting provision, but noted that the
Lanham Act’s fee-shifting provision was “identical.” 572 U.S. at 554.

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parties presented evidence on whether Watermark’s advertisement that it offered “OEM parts”
for Evoqua’s filter presses was deceptive, and the success of the claim at trial came down to a
credibility contest between the parties’ respective witnesses.
Watermark’s and Gethin’s arguments otherwise are unavailing. Watermark and Gethin
argue that Evoqua pursued the false-advertising claim even after the allegedly false advertising
had been removed. However, as the district court noted, Evoqua could still reasonably pursue
the claim if the false advertising had caused it damage or if it believed Watermark would falsely
advertise in this way again. Watermark and Gethin also argue that Evoqua pursued the claim to
trial knowing that it could not present evidence of damages and offered no evidence of damages
at trial. Yet, Evoqua presented evidence that Watermark’s use of “OEM” could tend to deceive
consumers and that the misrepresentation harmed Evoqua’s goodwill and reputation. See
Herman Miller, Inc. v. Palazzetti Imps. & Exps., Inc., 270 F.3d 298, 323 (6th Cir. 2001)
(“A plaintiff seeking injunctive relief for false advertising faces a lower standard of showing
only that the defendant’s representations about its product have a tendency to deceive
consumers.” (emphasis omitted) (internal quotation marks omitted)). Moreover, Evoqua could
pursue an injunction even if damages were hard to quantify. See Lexmark Int’l, Inc. v. Static
Control Components, Inc., 572 U.S. 118, 135 (2014); see also Am. Council, 185 F.3d at 618
(recognizing that a plaintiff could pursue injunctive relief on false-advertising claim).
The district court was also within its discretion to conclude that Evoqua’s litigation tactics
did not warrant a shift of fees. Watermark and Gethin argue that Evoqua’s discovery requests
were overbroad, but the district court reasonably found that those requests did not increase
Watermark’s and Gethin’s fees because they simply refused to comply with those requests. The
district court further did not err in concluding that although there was evidence that Evoqua
thought it could gain a competitive advantage by litigating against Watermark, Evoqua still
pursued its claims in good faith. Watermark and Gethin interpret some of Evoqua’s materials in
the most negative light, yet those materials could also indicate that Evoqua noticed that
Watermark was falsely advertising a relationship with Evoqua, and reasonably sought to enjoin
those acts and obtain damages.

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In sum, the district court did not abuse its discretion in denying Watermark’s and Gethin’s
request for attorney’s fees on Evoqua’s false-advertising claim.
VI. CONCLUSION
For the above reasons, we VACATE the district court’s dismissal of Count I of the
complaint; VACATE the district court’s grant of summary judgment on Evoqua’s copyright
claim; AFFIRM the district court’s denial of Watermark’s and Gethin’s request for attorney fees
on Evoqua’s false-advertising claim; and REMAND for further proceedings.

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_________________
CONCURRENCE
_________________
JOHN K. BUSH, Circuit Judge, concurring. I join the Majority Opinion in full as it
faithfully applies the case law of our circuit. However, I write separately to address one discrete
issue where I believe our precedents are wrong: specifically, the jurisdictional source of the law
governing interpretation of a consent decree entered by a federal court. As the Majority
explains, “[i]n the absence of controlling federal law, contractual interpretation of the Consent
Judgment is governed by Michigan Law”—i.e., state law. Majority Op. at 8 (citing Sault Ste.
Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 371 (6th Cir. 1998)). Because a
consent decree is viewed as a “contract,” our circuit interprets it using the state law from where it
was entered. See John B. v. Emkes, 710 F.3d 394, 407 (6th Cir. 2013) (“[W]e interpret the
consent decree as a contract. And under Tennessee law, which guides our interpretation of the
decree here, our primary goal is to give effect to the parties’ intent as expressed in the decree
itself.” (citations omitted)).
But, we should not forget that the consent decree here was entered by a federal court, and
that fact makes all the difference, for reasons I will explain. True, the Supreme Court has
described a consent decree as a “contract,” but it has never expressly held that state law controls
interpretation when the consent decree is from a federal court. See, e.g., United States v. ITT
Cont’l Baking Co., 420 U.S. 223, 236–37 (1975). I believe a federal rule of decision is
appropriate in these circumstances because a judicial decree is an integral component of the
Article III power to decide cases and controversies. Most significantly, applying federal law to
this case would warrant a change in its disposition: because the parties expressly contemplated
who was subject to the consent decree, federal law (unlike Michigan law) would allow only
those expressly identified entities to enforce this particular decree and would not imply that right
of enforcement to others, such as Evoqua Water Technologies, LLC (“Evoqua”), not identified
by name or description in the decree. In light of the above, this court would be wise to revisit its
precedents on whether to apply state or federal law to federal consent decree interpretation
issues.

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I.
To understand why federal law should govern interpretation of a consent decree entered
in a federal court, it is first important to understand what federal consent decrees are. They are
final judgments entered by federal courts. Though typically drafted by the parties, consent
decrees are judicially enforceable orders that draw upon the district court’s authority to provide
the parties with both equitable and legal remedies. See Rufo v. Inmates of Suffolk Cnty. Jail,
502 U.S. 367, 378 (1992); United States v. Swift & Co., 286 U.S. 106, 120 (1932); see also
Carson v. Am. Brands, Inc., 450 U.S. 79, 86–87 (1981). Indeed, to enter a proposed consent
decree, the “decree must spring from and serve to resolve a dispute within the court’s subject
matter jurisdiction . . . . [It] must come within the general scope of the case made by the
pleadings, and must further the objectives of the law upon which the complaint was based.”
Local No. 93 Int’l Ass’n of Firefighters, AFL-CIO C.L.C. v. City of Cleveland, 478 U.S. 501, 525
(1986) (citations omitted) (internal quotation marks omitted).
In this respect, a consent decree is dissimilar to an agreement to settle litigation, in which
only the litigants have a say and need not meet all the criteria for entry of a court judgment. Cf.
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 381–82 (1994) (observing that
“automatic jurisdiction over [settlement agreement] contracts is in no way essential to the
conduct of federal-court business”). Unlike a settlement agreement, a consent decree entered in
federal district court draws upon the Article III power, and the decree invokes the court’s
continuing jurisdiction to ensure compliance with its order until the parties have fulfilled their
obligations. See Williams v. Vukovich, 720 F.2d 909, 920 (6th Cir. 1983); see also Bergman v.
Mich. State Transp. Comm’n, 665 F.3d 681, 683–84 (6th Cir. 2011). A settlement agreement
lacks these features because it is only a contract between parties made in consideration of the
dismissal of the federal lawsuit. See Kokkonen, 511 U.S. at 381. Moreover, unless the parties
agree to embody the settlement agreement in the district court’s order, “enforcement of the
settlement agreement is for state courts” as a matter of state contract law. Id. at 382.
Federal consent decrees, by their nature, are therefore more than just contractual
arrangements between litigants: they are also acts of Article III power. Swift & Co., 286 U.S. at
115 (“We reject the argument for the intervenors that a decree entered upon consent is to be

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treated as a contract and not as a judicial act.”). It is true that the parties’ bargained-for
agreement “serves as the source of the court’s authority” to enter the decree,1 but a consent
decree is more than just an entry of an order acknowledging the parties’ settlement. See Local
No. 93 Int’l Ass’n of Firefighters, 478 U.S. at 522 (citing United States v. Ward Baking Co., 376
U.S. 327 (1964)); United States v. Armour & Co., 402 U.S. 673, 681 (1971). It is a judicial act
that results in a final judgment in the case, which in turn, requires the district court to participate
as an additional actor, along with the parties, to resolve the case. See Buckhannon Bd. & Care
Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 604 n.7 (2001) (“Private
settlements do not entail the judicial approval and oversight involved in consent decrees.”).
By entering the consent decree as a final order, the “[j]udicial approval of a settlement
agreement places the power and prestige of the court behind the compromise struck by the
parties.” Williams, 720 F.2d at 920. In light of this, the district court has an “independent,
juridical interest[]” in entering consent decrees “beyond the remedial ‘contractual’ terms agreed
upon by the parties.” EEOC v. Local 580, Int’l Ass’n of Bridge, Structural & Ornamental
Ironworkers, Joint Apprentice-Journeyman Educ. Fund, 925 F.2d 588, 593 (2d Cir. 1991).
As this court has explained, a consent decree may not be entered if the agreement “is
illegal, a product of collusion, or contrary to the public interest.” Williams, 720 F.2d at 920
(citations omitted). In other words, the district court “is more than ‘a recorder of contracts’ from
whom parties can purchase injunctions; it is an organ of government constituted to make judicial
decisions.” Local No. 93, Int’l Ass’n of Firefighters, 478 U.S. at 525 (internal quotation
omitted); see also In re Pearson, 990 F.2d 653, 658 (1st Cir. 1993) (“Put bluntly, ‘parties cannot,
by giving each other consideration, purchase from a court of equity a continuing injunction.’”
(quoting Sys. Fed’n No. 91, Ry. Emps.’ Dep’t v. Wright, 364 U.S. 642, 651 (1961))). Thus, the
judicial character of the district court’s consent decree must not be overlooked, even if the
underlying issue involves a matter of the consent decree’s interpretation.
1This court has described the nature of the bargain underlying a consent decree as follows: “The defendant
has given up the possibility of prevailing on the merits in exchange for granting certain limited affirmative relief to
plaintiffs” and the “[p]laintiffs have exchanged their right to obtain adjudicatory relief.” Williams v. Vukovich, 720
F.2d 909, 920 (6th Cir. 1983).

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II.
Following the district court’s entry of the consent decree, parties may sometimes dispute
the nature of their obligations under the consent decree. Should the dispute require interpreting a
consent decree’s language, the Supreme Court has provided lower courts with interpretive rules
to guide their analysis of that language. See Blue Chip Stamps v. Manor Drugs Stores, 421 U.S.
723, 750 (1975); ITT Cont’l Baking Co., 420 U.S. at 236; Armour, 402 U.S. at 682.
As explained below, the reasoning of this Supreme Court precedent strongly points towards
application of federal law to interpret questions concerning federal consent decrees.
A.
Per the Supreme Court’s instruction, we are to interpret the text of the document and
nothing further: “[T]he scope of a consent decree must be discerned within its four corners, and
not by reference to what might satisfy the purposes of one of the parties to it. Because the
defendant has, by the decree, waived his right to litigate the issues raised, a right guaranteed to
him by the Due Process Clause, the conditions upon which he has given that waiver must be
respected, and the instrument must be construed as it is written, and not as it might have been
written had the plaintiff established his factual claims and legal theories in litigation.” Armour,
402 U.S. at 682; accord ITT Cont’l Baking Co., 420 U.S. at 236 n.10.
In fashioning this interpretative rule, the Court holds that lower courts must be interpreted
with the following understanding of consent decrees in mind:
Consent decrees are entered into by parties to the case after careful
negotiation has produced agreement on their precise terms. The parties waive
their right to litigate the issues involved in the case and thus save themselves the
time, expense, and inevitable risk of litigation. Naturally, the agreement reached
normally embodies a compromise; in exchange for the saving of cost and
elimination of risk, the parties each give up something they might have won had
they proceeded with the ligation. Thus the decree itself cannot be said to have a
purpose; rather the parties have purposes, generally opposed to each other, and the
resultant decree embodies as much of those opposing purposes as the respective
parties have the bargaining power and skill to achieve.
Armour, 402 U.S. at 681–82.

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Therefore, it is the actual text of the consent decree, not what one party argues is its
purpose after the fact, that governs. Id. And that text, the Supreme Court has stated, is to be
interpreted employing certain “aids to construction” used in contract law. ITT Cont’l Baking
Co., 420 U.S. at 238. “Such aids include the circumstances surrounding the formation of the
consent order, any technical meaning words used may have had to the parties, and any other
documents expressly incorporated in the decree.” Id. Also, any construction of the consent
decree, including any proposed modification of the consent, must be supported by the text of the
instrument. See United States v. Atl. Ref. Co., 360 U.S. 19, 23 (1959); Hughes v. United States,
342 U.S. 353, 357 (1952).
Lastly—and this is a point particularly important to this case—there is “well-settled line
of authority from [the] Court establish[ing] that a consent decree is not enforceable directly or in
collateral proceedings by those who are not parties to it even though they were intended to be
benefited by it.” Blue Chip Stamps, 421 U.S. at 750 (citing Armour, 402 U.S. at 673; Buckeye
Coal & Ry. Co. v. Hocking Valley Ry. Co., 269 U.S. 42 (1925)). The corollary to this rule of
federal law is that a federal consent decree may only be enforced by the parties who are
explicitly identified or described in the decree. Cf. id.; see also Armour, 402 U.S. at 673.
B.
The above-stated rules of federal consent-decree interpretation have been stated by the
Supreme Court as principles of federal common law.2 The Supreme Court’s directive in this
regard is wholly consistent with, if not compelled by, our nation’s constitutional structure. This
is because interpreting federal judgments is a matter beyond the State legislatures’ competence
and is a matter incidental to the judiciary’s core constitutional function as set forth in Article III
of the Constitution: to issue judgments in all cases and controversies in matters within its limited
subject-matter jurisdiction.
2By “federal common law,” I refer to “federal rules of decision whose content cannot be traced directly by
traditional methods of interpretation to federal statutory or constitutional commands,” Hart & Wechsler’s: The
Federal Courts and the Federal System 635 (Richard H. Fallon, Jr., et al., 7th ed. 2015), which has the force and
effect of positive federal law. Boyle v. United Techs. Corp., 487 U.S. 500, 504 (1988); see also Atherton v. FDIC,
519 U.S. 213, 218 (1997).

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As the Supreme Court made clear in Erie Railroad Co. v. Tompkins, “[t]here is no federal
general common law.” 304 U.S. 64, 78 (1938). Nonetheless, the Court has recognized
“enclaves of federal judge-made law which bind the States.” Banco Nacional de Cuba v.
Sabbatino, 376 U.S. 398, 426 (1964). As the Court explained, “federal common law exists only
in such narrow areas as those concerned with the rights and obligations of the United States,
interstate and international disputes implicating the conflicting rights of States or our relations
with foreign nations, and admiralty cases.” Tex. Indus. v. Radcliff Materials, Inc., 451 U.S. 630,
641 (1981) (footnotes omitted).
Admittedly, the boundaries of federal common law enclaves are sometimes less than
clear. The Court has instructed that federal common law applies to a dispute involving “uniquely
federal interests,” between two private parties because “the interests of the United States will be
directly affected.” Boyle v. United Techs. Corp., 487 U.S. 500, 504, 507 (1988). When an area
of law presents a uniquely federal interest, the creation of federal common law is “limited to
situations where there is a ‘significant conflict between some federal policy or interest and the
use of state law.’” O’Melveny & Myers v. FDIC, 512 U.S. 79, 88 (1994) (quoting Wallis v. Pan
Am. Petroleum Corp., 384 U.S. 63, 68 (1966)); see also Kamen v. Kemper Fin. Servs. Inc.,
500 U.S. 90, 98 (1991) (holding that there is a presumption to apply state law “in areas in which
private parties have entered legal relationships with the expectation that their rights and
obligations would be governed by state-law standards”).
The Court’s heeding to limit the application of “judge-made” federal rules derives from
the constitutional concerns raised in Erie. See Bradford R. Clark, Federal Common Law:
A Structural Reinterpretation, 144 U. Pa. L. Rev. 1245, 1265 (1996). Erie’s holding rests on two
fundamental constitutional principles: federalism and separation of powers. See Lindenberg v.
Jackson Nat’l Life Ins. Co., 919 F.3d 992, 996 n.4 (6th Cir. 2019) (Bush, J., dissenting from the
denial of rehearing en banc). As a matter of federalism, federal courts “unconstitutionally invade
‘the autonomy and independence of the States’ whenever they unilaterally apply a rule of their
own choosing in lieu of substantive state law—that is, in the absence of a controlling federal
constitutional, statutory, or treaty provision requiring application of that rule.” Clark, supra, at
1259 (quoting Erie, 304 U.S. at 78). And as for the second constitutional principle presented in

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Erie, the “[o]pen-ended federal common lawmaking by courts enables the judiciary to evade the
safeguards inherent in” the Constitution’s procedural scheme for fashioning positive federal law.
Id. at 1269; Nw. Airlines, Inc. v. Transp. Workers Union of Am. AFL-CIO, 451 U.S. 77, 95
(1981) (“[F]ederal courts, unlike their state counterparts, are courts of limited jurisdiction that
have not been vested with open-ended lawmaking powers.”).
Assuming an area of law warrants a uniform federal law, these above-mentioned
constitutional concerns are addressed if “the rule in question . . . concern[s] matters that fall
beyond the legislative competence of the states” and must “be necessary to further some aspect
of the constitutional scheme.” Clark, supra, at 1271; see generally id. at 1271–75. The first step
is rather intuitive: any rule fashioned by a federal authority involving a matter beyond the
legislative competence of the States does not offend the federalism concerns expressed in Erie.
Id. at 1274. And the second inquiry asks, “whether judicial application of the rule in question
constitutes either the application of rules implied directly from the constitutional structure, or
adherence to customary rules of decision necessary to implement a basic feature of the
constitutional scheme.” Id.
The power of Article III courts to issue judgments and issue their interpretation of other
federal courts’ judgments is without question a matter involving unique federal interests. See
Atherton v. FDIC, 519 U.S. 213, 218–19 (1997); cf. Semtek Int’l Inc. v. Lockheed Martin Corp.,
531 U.S. 497, 508 (2001). Moreover, the interpretation of a federal court’s consent decree is a
matter beyond the State legislatures’ competence. Cf. Fortin v. Comm’r of Mass. Dep’t of Pub.
Welfare, 692 F.2d 790, 798 (1st Cir. 1982) (explaining that “[t]here is no state court to which the
question of interpreting the decree could be certified or to whose authority and expertise the
federal court could defer by abstaining”).
A fundamental aspect of our system of government is the federal judicial department
established under Article III with its power to decide cases and controversies. Importantly, at the
irreducible core of Article III authority, is the power to enter final judgments. See Gordon v.
United States, 117 U.S. 697, 702 (decided 1864, Opinion printed in Appendix 1885); see also
Young v. United States ex rel. Vuitton et Fils S.A., 481 U.S. 787, 816 (1987) (Scalia, J.,
concurring in the judgment) (observing that the role of a federal judge is “to decide, in

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accordance with law, who should prevail in a case or controversy”). This constitutional power
and core function leave no room for state law to interpret the judgments entered by federal
courts.
“Article III of the Constitution establishes an independent Judiciary, a Third Branch of
Government with the ‘province and duty . . . to say what the law is’ in particular cases and
controversies.” Bank Markazi v. Peterson, 136 S. Ct. 1310, 1322 (2016) (quoting Marbury v.
Madison, 5 U.S. (1 Cranch) 137, 177 (1803)). Incident to that power, Congress “may not usurp a
court’s power to interpret and apply the law to the circumstances before it.” Id. (cleaned up);
accord City of Arlington v. FCC, 569 U.S. 290, 297 (2013). States lack the power to usurp a
federal court’s Article III power as well. Cf. Hanna v. Plumer, 380 U.S. 460, 472–73 (1965);
Sibbach v. Wilson & Co., 312 U.S. 1, 13–14 (1941). “[T]he Framers crafted this charter of the
judicial department with an expressed understanding that it gives the Federal Judiciary the
power, not merely to rule on cases, but to decide them, subject to review only by superior courts
in the Article III hierarchy.” Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 218–19 (1995).
Given that the federal judiciary department’s inherent function is to issue final judgments, it
follows that federal judges have the power to interpret their judgments using the law of the
jurisdiction from which they derive their power. This federal judicial power includes the
authority to determine who or what is bound to the court’s judgments.3 Cf. Restatement (second)
of Judgments § 87 cmt. a (“The source of the federal courts’ authority is in Articles I and III of
the Constitution. It is therefore appropriate to hold that, at least in the absence of some other
provision by Congress, the effects of a federal judgment are a legal implication of those
provisions.”).
Applying state law to the interpretation of federal consent decrees sharply conflicts with
this Article III power of a federal court over its judgments. Cf. Cincom Sys., Inc. v. Novelis
Corp., 581 F.3d 431, 436 (6th Cir. 2009). The unflinching and mechanical use of state law
to interpret consent decrees results in the quintessential act of a federal government
3This inherent function is analogous to the federal judiciary’s “inherent power, governed not by rule or
statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and
expeditious disposition of cases.” Link v. Wabash R.R. Co., 370 U.S. 626, 630–31 (1962) (internal quotation marks
omitted); see also In re Univ. of Mich., 936 F.3d 460 (6th Cir. 2019).

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department—a federal court’s final judgment—being governed by the vagaries of the law of a
different jurisdiction altogether, namely, that of a state government.4 In contrast, application of
federal law ensures that this chief function of a federal court is governed by the law of the
jurisdiction from which that court derives its authority.
Moreover, applying federal common law to this area is consistent with the Supreme
Court’s conclusion in Semtek, which was that the effect of a federal court’s judgment in
subsequent cases is a matter for the courts “to determine the appropriate federal rule.” 531 U.S.
at 508. Indeed, as a matter of equity, it would only be appropriate for a consent judgment that
draws upon the court’s equitable powers, to be governed by the federal common law. See Burrill
v. Locomobile Co., 258 U.S. 34, 38 (1922) (recognizing that “the laws of the States are the rules
of decision” in common law actions, but the court’s equity “follows its own rules”); see also
Guar. Tr. Co. of N.Y. v. York, 326 U.S. 99, 105 (1945); Restatement (second) of Judgments § 87
cmt. a (“The few cases in which the federal adjudication was a decree in equity, as distinct from
a judgment at law, elicited no special notice of the problem of governing law.”).
Although consent decree interpretation should be a matter of federal common law, that
does not mean that state law cannot inform the appropriate rule. Given that the States
predominate in matters relating to contract law, it would be natural to resort to their principles of
contract law should a need arise for a new interpretive rule. Cf. John Wiley & Sons, Inc. v.
Livingston, 376 U.S. 543, 548 (1964) (“State law may be utilized so far as it is of aid in the
development of correct principles of their application in a particular case, but the law which
ultimately results is federal.” (citations omitted)); Semtek, 531 U.S. at 508 (“This is . . . a classic
case for adopting, as the federal prescribed rule of decision, the law that would be applied by
state courts in the State in which the federal diversity court sits.”). But, reliance on state
4For an illustrative, historic example of the negative implications that could stem from the “mechanical
application” of state law in an area where federal common law would be more appropriate, see Hanna v. Plumer,
380 U.S. 460, 472–73 (1965) (“One of the shaping purposes of the Federal Rules is to bring about uniformity in the
federal courts by getting away from local rules. This is especially true of matters which relate to the administration
of legal proceedings, an area in which federal courts have traditionally exerted strong inherent power, completely
aside from the powers Congress expressly conferred in the Rules. The purpose of the Erie doctrine . . . was never to
bottle up federal courts with ‘outcome-determinative’ and ‘integral-relations’ stoppers—when there are ‘affirmative
countervailing (federal) considerations’ and where there is a Congressional mandate . . . supported by constitutional
authority.’” (citation omitted)).

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common law for guidance in fashioning the federal common law of consent decrees should not
be mistaken for an abdication of federal law as the governing law for the interpretation of a
federal court’s consent decree.
III.
A.
In recognizing consent decree interpretation rules, the Supreme Court has never
instructed the lower federal courts to apply state law. Rather, as explained above, the Supreme
Court impliedly reserved federal common law for the interpretation of district court consent
decrees. See supra, Part II.A. The Sixth Circuit’s precedent reflected this understanding by
resorting to general principles of federal law to interpret consent decrees until this court’s
decision in Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367 (6th Cir. 1998).
At no point prior to the Sault Ste. Marie decision did our circuit rely on the underlying state law
to supply the rule of decision to interpret a federal consent decree. Instead, we cited to United
States Supreme Court decisions applying federal law. See, e.g., Huguley v. Gen. Motors Corp.,
67 F.3d 129, 134–35 (6th Cir. 1995); United States v. Louisville & Jefferson Cty. Metro. Sewer
Dist., 983 F.2d 1070, 1993 WL 7516, at *3 (6th Cir. 1993) (unpublished table opinion); Lorain
NAACP v. Lorain Bd. of Educ., 979 F.2d 1141, 1148 (6th Cir. 1992); Thompson v.
Commonwealth of Ky. Dep’t of Corr., 780 F.2d 1023, 1985 WL 13958, at *1 (6th Cir. 1985)
(unpublished table opinion).
Sault Ste. Marie changed all that. After Sault Ste. Marie, the generalized principles of
federal contract law no longer provide the rule of decision in matters relating to a federal consent
decree’s interpretation in our circuit. 146 F.3d at 372. At issue in Sault Ste. Marie was whether
the Native American tribes subject to a consent decree were required to make payments to the
State of Michigan under the terms of a consent decree, that required the tribes to make payments
if they held the “exclusive right to operate” electronic games of chances in Michigan. Id. at 369.
At the invitation of the parties’ briefing, the Sault Ste. Marie court held that “[b]ecause this
contract was formed in the State of Michigan, it is interpreted under Michigan law.” Id. at 372.
The Sault St. Marie court did not follow the Court’s interpretative guidelines set forth in Armour

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and ITT Continental Baking Co. and offered no explanation for ignoring the applicable Supreme
Court precedent.
Given the Sault Ste. Marie court’s observation that “[c]onsent decrees and judgments are
binding contracts,” the court concluded that state law should govern the interpretation of a
federal consent judgment because state law is used to interpret contracts. 146 F.3d at 372
(citation omitted). The court therefore resorted to principles of Michigan contract law to
determine whether the district court erred in concluding that the consent decree was
unambiguous and did not need to consider extrinsic evidence to interpret the ambiguous wording
in the consent decree. See id. at 373–74.
Based on this precedent, this court must now resort to state contract law to interpret
federal consent decrees. See e.g., John B., 710 F.3d at 407; G.G. Marck & Assocs., Inc. v. Peng,
309 F. App’x 928, 934 (6th Cir. 2009) (“A consent judgment is treated as a contract formed and
interpreted under the law of the state in which it was formed.” (citation omitted)); Waste Mgmt.
of Ohio, Inc. v. City of Dayton, 169 F. App’x 976, 988–89 (6th Cir. 2006).5 However, neither
Sault Ste. Marie, nor subsequent cases applying that decision, have ever addressed the tension
between application of state law to federal consent decree interpretation and the Supreme Court’s
reasoning in Armour and ITT Continental Baking Co. Given this court’s abrupt departure from
the Supreme Court’s interpretative rules for consent decrees, and this court’s inconsistent
approach post-Sault Ste. Marie, I question whether Sault Ste. Marie was rightly decided.6
I respectfully submit that the better course for our court would be to return to the reasoning
offered by this court’s decisions pre-Sault Ste. Marie. In doing so, we would reconcile our
precedent with the Supreme Court’s approach to interpreting federal consent decrees, and we
would discontinue applying state law within an area it should not govern.
5I would also note that at least in one instance, this court has not applied state law to interpret the
underlying consent decree as Sault Ste. Marie requires. See Nat’l Ecological Found. v. Alexander, 496 F.3d 466,
477–81 (6th Cir. 2007).
6I do not question whether the Sault Ste. Marie court interpreted the consent decree in the underlying case
correctly. I only question its underlying conclusion that state law governs the interpretation of consent decrees.

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B.
I would also note that our court’s attention to this issue is warranted because there is a
divide among the majority of our sister circuits. Compare Doe v. Pataki, 481 F.3d 69, 76–77
(2d Cir. 2007) (no resort to state law); Pure Country, Inc. v. Sigma Chi Fraternity, 312 F.3d 952,
958–59 (8th Cir. 2002) (same); Sierra Club v. Meiburg, 296 F.3d 1021, 1029–32 (11th Cir.
2002) (same); United States v. W. Elec. Co., 12 F.3d 225, 230–31 (D.C. Cir. 1993) (same);
Fortin, 692 F.2d at 798–99 (same);7 Fox v. U.S. Dep’t of Hous. & Urban Dev., 680 F.2d 315,
319–20 (3d Cir. 1982) (same), with Frew v. Janek, 780 F.3d 320, 327–28 n.28 (5th Cir. 2015)8
(applying state contract law to resolve consent decree interpretation); Collins v. Thompson,
8 F.3d 657, 659 (9th Cir. 1993) (same); Sinclair Oil Corp. v. Scherer, 7 F.3d 191, 194 (10th Cir.
1993) (same); United States v. City of Northlake, 942 F.2d 1164, 1167 (7th Cir. 1991) (same).
Those circuits that apply state law to resolve an interpretative issue relating to consent
decrees have reasoned, like our court in Sault Ste. Marie, that state law applies because a
“judicially approved consent decree, like a settlement agreement, is essentially a contract for
purposes of construction.” City of Northlake, 942 F.2d at 1167 (citation omitted); see also Frew,
780 F.3d at 328 n.28. While that proposition might be true at its most basic level, these circuits
have not satisfactorily explained why state law supplies the rule of decision for a quintessential
act of the federal government—an Article III court’s final judgment—especially considering the
7It is important to highlight one aspect of the First Circuit’s reasoning in Fortin. There, the appellant
argued that the district court erred in failing to certify a question to the Massachusetts Supreme Court to address
whether the district court’s remedy was appropriate under the consent decree in light of state law. 692 F.2d at 798.
The First Circuit rejected the appellant’s argument, reasoning that “[i]t makes no difference if state law was unclear,
because the court was interpreting the consent decree, not the underlying law,” and “[t]here is no state court to
which the question of interpreting the decree could be certified or to whose authority and expertise the federal court
could defer by abstaining.” Id. In other words, state law did not supply a rule of decision regarding the district
court’s interpretation of its own consent decree. Considering this observation, it follows that the federal law of
interpretation, using the interpretive principles established by the Supreme Court, should apply.
8The Fifth Circuit has only recently joined those circuits that apply state law to interpret consent decrees.
Prior to its decision in Frew, there is no indication that the Fifth Circuit relied upon state-law contract principles to
interpret consent decrees. See, e.g., Dean v. City of Shreveport, 438 F.3d 448, 460–61 (5th Cir. 2006); United States
v. Chromalloy Am. Corp., 158 F.3d 345, 349 (5th Cir. 1998); N. Shore Labs. Corp. v. Cohen, 721 F.2d 514, 519–20
(5th Cir. 1983), overruled on other grounds as recognized by Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526, 549
n.17 (5th Cir. 1998).

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Supreme Court’s interpretation rules in Armour and ITT Continental Baking Co. that seem to
favor applying federal law in these circumstances. See supra, Part II.A.
IV.
If this court were to apply federal law to interpret the consent decree in this case, the
outcome would likely be different. Based upon the four corners of the consent decree before us,
it does not appear that the parties intended for U.S. Filter/JWI Inc.’s successors-in-interest and
assigns to enforce the consent decree.
Under Michigan contract law, a third-party beneficiary may sue under a breach-of-
contract theory “when the promisor undertakes an obligation ‘directly’ to or for the person.”
Koenig v. City of South Haven, 597 N.W.2d 99, 104 (Mich. 1999); accord Kammer Asphalt
Paving Co. v. E. China Twp. Schs., 504 N.W.2d 635, 642 (Mich. 1993); see also Ragnone v.
Charter Twp. of Fenton, No. 267530, 2006 WL 3103043, at *2 (Mich. Ct. App. Nov. 2, 2006)
(per curiam) (applying contract law’s third-party beneficiary doctrine to consent decrees issued
by Michigan trial courts). In essence, Michigan contract law authorizes third parties (i.e., those
lacking privity in contract), in limited circumstances, to enforce a contract between the original
bargaining parties (or their assignees), even if those beneficiaries are not explicitly referenced in
the contract (or, in the present case, the consent decree). In the context of federal consent
decrees, however, the Supreme Court, as noted, does not permit this. See Blue Chip Stamps,
421 U.S. at 750 (“[A] consent decree is not enforceable directly or in collateral proceedings by
those who are not parties to it even though they were intended to benefit by it.”); accord Vogel v.
City of Cincinnati, 959 F.2d 594, 598 (6th Cir. 1992).
Given the Supreme Court’s holding that the third-party beneficiary doctrine is
inapplicable to federal consent decrees, and the contrary rule that applies under Michigan
contract law, a critical choice must be made: does the Supreme Court’s precedent in Blue Chip
Stamps apply or does Michigan contract law apply? Because state law currently governs the
interpretation of federal consent decrees in our circuit, we must defer to state law (here,
Michigan’s law) in matters relating to the third-party beneficiary doctrine. This means that at
most, the Supreme Court’s decision in Blue Chip Stamps is persuasive authority. But as the

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Majority Opinion recognizes, the Supreme Court’s decision in Blue Chip Stamps is binding
authority. See Majority Op. at 8. As such, it is key evidence that federal district courts’
interpretation of consent decrees should be governed by federal common law and that the Blue
Chip Stamps rule—allowing enforcement of a consent decree by only a beneficiary that is
expressly identified—should apply here. See 421 U.S. at 750.
There also is a conflict between Michigan law and federal law regarding assignment of
contracts. Under Michigan law, contracts are freely assignable unless clearly restricted by the
language of the instrument. See Jawad A. Shah, M.D., PC v. State Farm Mut. Auto. Ins. Co.,
920 N.W.2d 148, 158 (Mich. Ct. App. 2018). Under federal law, consent decrees are not. See
Blue Chip Stamps, 421 U.S. at 750; Armour, 402 U.S. at 673. Similar to Michigan’s third-party
beneficiary doctrine, Michigan’s doctrine of assignability requires courts to construe the parties’
agreement beyond the four corners of the consent. As I explain above, the Supreme Court’s
interpretative rules do not permit this. See supra, Part II.A.
Both parties contemplated that M.W. Watermark LLC & Michael Gethin as well as their
successors-in-interest and assigns would be bound by the consent decree: the consent decree
permanently enjoined “M.W. Watermark LLC, and Michael Gethin and its, his or their
principals, agents, servants, employees, attorneys, successors and assigns” from using U.S.
Filter/JWI’s trademarks and other proprietary information. R. 1-7, PageID 358. However, there
is no such language regarding successors-in-interest and assigns regarding the enforcement rights
of U.S. Filter/JWI. Applying the federal common law rule of Blue Chip Stamps, the absence of
such language regarding U.S. Filter/JWI suggests that the parties did not intend for any
successors-in-interest or assigns of U.S. Filter/JWI, such as Evoqua, to enforce the consent
decree. This is because the question of “who” is subject to the consent decree is a term that is
expressly contemplated by the parties. See Armour, 402 U.S. at 680 (noting that a “successors
and assigns’ clause” would have aided the government’s argument that the company’s successors
and assigns were bound by the consent decree); see also Thatcher v. Kohl’s Dep’t Stores, Inc.,
397 F.3d 1370, 1375 (Fed. Cir. 2005) (holding that the absence of successors-in-interest or
assigns clause “is the functional equivalent of the parties’ express intent to exclude language of

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assignment” and “[e]qually as telling is that the consent judgment specifies successors and
assigns when listing” the defendant’s obligations).
Equally, the language used to describe M.W. Watermark LLC and Mark Gethin’s
obligations under the decree, further support the conclusion that, if federal common law applies,
the consent decree does not apply to U.S. Filter/JWI’s successors-in-interests or assigns. For
example, the decree states: “Defendants are ENJOINED, permanently, from using Plaintiff U.S.
Filter/JWI, Inc.’s (‘USF/JWI’s’) trademarks . . . and colorable imitations thereof and any other
designs, designations or indicia in a manner that is likely to cause confusion, mistake or
deception with respect to USF/JWI’s trademark rights.” R. 1-7. Even Evoqua concedes in its
reply brief: “The clear intention of the parties, evidenced by the fact that the consent decree was
characterized by the parties and the court as a Permanent Injunction, was to permanently and
forever enjoin Watermark from misusing the proprietary information, and infringing the
trademarks, of Evoqua’s predecessor.” Third Br. at 16 (emphasis added). In other words, the
obligations of M.W. Watermark, LLC and Mark Gethin are owed to U.S. Filter/JWI and not to
Evoqua.9
This reading of the consent decree—to limit the power of its enforcement to only the
entities that obtained and are explicitly identified or described in the decree—is not a far-fetched
reading in light of practical business considerations. M.W. Watermark LLC and Michael Gethin
may have agreed to the consent decree, in part, because they wanted it worded to ensure that
only the present parties against which they were litigating, U.S. Filter/JWI, had the power of
decree enforcement. As a practical, ex ante matter, there is a significant transactional reason for
a party subject to a consent decree to limit the scope of persons or entities that may enforce it.
As rightly observed by the district court:
9As indicated by the Majority Opinion, U.S. Filter/JWI has a long history of corporate mergers. See
Majority Op. at 2. For purposes of my analysis, I assume that the obligations of M.W. Watermark LLC and Mark
Gethin to U.S. Filter/JWI continue to its successors who originate by operation of a corporate merger: here, Siemens
Water Technologies Holding Corporation and Siemens Industry, Inc. Because Siemens Industry, Inc. sold its water
technologies business to Siemens Water Technologies LLC and Siemens Water Technologies was not a product
corporate merger, I do not consider the obligations of M.W. Watermark LLC and Mark Gethin under the consent to
decree to pass on to Siemens Water Technologies LLC.

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The party restrained by the injunction would likely be more inclined to impose
limits on who can enforce the injunction, and might try to negotiate a judgment
that limited enforcement to the original plaintiff. After all, a restrained party has
no control over who the original party selects as an assignee, and the restrained
party may be substantially more burdened by enforcement by an assignee than by
the original plaintiff.
R. 154, PageID 6979 n.7.
Therefore, for the purpose of avoiding the chilling of future parties’ willingness to enter
into transactions at the front-end, and in light of the importance of strongly favoring the
settlement of disputes with limited, or without, litigation at the back end, see Ford Motor Co. v.
Mustangs Unlimited, Inc., 487 F.3d 465, 469 (6th Cir. 2007), we should honor any parties’
bargain that sets a limit to the entities subject to the consent decree.
On the other hand, if there is a possibility that parties remain uncertain as to the precise
scope of the consent decree because of the underlying state contract law, as our current doctrine
compels, there is a risk that parties may avoid settlement activities out of fear that unknown
parties could arise out of the woodwork later to make claims under the consent decree. A certain
way to avoid this risk, and to promote uniformity in this area, would be through a consistently
applied federal rule. The consistent use of a federal rule of decision to interpret consent decrees
issued by federal courts would be the most pragmatic means in which to avoid this risk, and to
promote uniformity in this field of law. Thus, according to the Supreme Court’s interpretative
rules, we must look to the parties’ express language as used in the consent decree at issue to
settle the underlying controversy here: whether U.S. Filter/JWI’s successors-in-interest or
assignees may enforce this consent decree. This language seems to preclude enforcement by
such successors-in-interest and assigns because language giving them the right of enforcement
was not included in the consent decree.
Therefore, applying federal common law, the agreement would not be read to tether the
defendants’ obligations to the specific intellectual property regardless of who owns it. Instead,
the agreement, as written, reflects the parties’ intent to bind the defendants to the intellectual
property at issue when it is owned by U.S. Filter/JWI. To hold otherwise, would depart from the
parties’ intended arrangement. See Huguley, 67 F.3d at 133 (“A consent decree is a contractual

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agreement and, if the parties have agreed not to impose [enforcement by successors-in-interest or
assigns], the district court is not free to reform the contract to compensate one party for making a
bad bargain.”).
But, because we are bound by Sault Ste. Marie to apply state law to the consent decree
interpretation issues here, I agree with the Majority that Evoqua, as a successor-in-interest or an
assign of U.S. Filter/JWI, may enforce the consent decree, despite that there is no express
language in the decree giving Evoqua this right.
V.
This is a case whose outcome in part hinges on whether state law or federal law applies.
And although I would have applied federal law to resolve it, as that is the appropriate source of
law to supply the rule of decision for this case, our precedent requires us to apply state contract
law. Thus, I respectfully concur and further note that it may be prudent for the full court to
revisit this issue.

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