stethoscope and gavel

Nevada Law Library

Damages For Trademark Infringement

Actual Or Statutory Notice (15 U.S.C. 1111)

In order for plaintiff to recover damages, the plaintiff has the burden of proving by a preponderance of the evidence that defendant had either statutory or actual notice that the plaintiff's the trademark was registered.

Defendant had statutory notice if:

1. plaintiff displayed with the trademark the words "Registered in U.S. Patent and Trademark Office";

2. plaintiff displayed with the trademark the words "Reg. U.S. Pat. & Tm. Off."; or

3. plaintiff displayed the trademark with the letter R enclosed within a circle, thus .

Although elements of a claim in trademark may overlap with a claim in copyright, the acts do not preempt each other. See Polar Bear Productions, Inc. v. Timex Corp., 384 F.3d 700, 721 & n. 18 (9th Cir. 2004) ("Copyright and trademark are related but distinct property rights, evidenced by different federal statutes governing their protection" so that "[a]lthough there is a general bar to double recovery, we caution that damages arising from a copyright violation do not necessarily overlap wholly with damages from a trademark violation, even though there might be only one underlying action."); Nintendo of America, Inc. v. Dragon Pacific International, 40 F.3d 1007, 1011 (9th Cir. 1994) (upholding award for statutory damages under Copyright Act and actual damages under trademark statute).

Plaintiff's Actual Damages (5 U.S.C. 1117(A))

The plaintiff must prove both the fact and the amount of damages. See Intel Corp. v. TerabyteInt'l, Inc., 6 F.3d 614, 621 (9th Cir. 1993); Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1407 (9th Cir. 1993). The plaintiff's actual damages are measured by any direct injury that plaintiff proves and any lost profits plaintiff would have earned but for the infringement. See Lindy Pen Co, 982 F.2d at 1407 (where proof of actual damage is difficult, a court may base damage award on defendant's profits, on a theory of unjust enrichment). However, the fact that the infringer did not profit from the infringement does not preclude an awardof damages. See Intel Corp., 6 F.3d at 621 (court determination of damages for mislabeling computer chips as those of faster manufacturer properly calculated by multiplying infringer's sales by plaintiff's lost profits and taking 95% of the product, based on inference that great majority of chips were counterfeit).

For a general discussion of plaintiff's actual damages, See 5 J. Thomas McCarthy, Trademarks And Unfair Competition 30:72 (4th ed. 2001). See also 1a Jerome Gilson, Trademark Protection and Practice 8.08(2) (1996) (listing examples of recoverable damages). To avoid the risk of overcompensation in the award of prospective costs, damage instructions should inform the jury that the award of prospective costs should not exceed the damage to the value of the infringed mark. See Adray v. Adry-Mart, Inc., 76 F.3d 984, 989 (9th Cir. 1995).

Disgorgement of Defendant's Profits (15 U.S.C. 1117(A))

"[Disgorgement of profits is a traditional trademark remedy," Jerry's Famous Deli, Inc. v. Papanicolaou, 383 F.3d 998, 1004-05 (9th Cir. 2004) (enforcement of trademark injunction case, but describing remedy as "akin to an award of the infringer's profits under trademark law" and noting "Under established law, once gross profits related to the infringement are established, [infringer] has the burden of documenting any legitimate offsets"). "Recovery of both plaintiff's lost profits and disgorgement of defendant's profits is generally considered a double recovery under the Lanham Act." Nintendo of America, Inc. v. Dragon Pacific Int'l, 40 F.3d 1007, 1010 (9th Cir. 1994).

Regarding establishing and calculating defendant's profits, See Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1405-1408 (9th Cir. 1993) ("The intent of the infringer is relevant evidence on the issue of awarding profits and damages and the amount;" determining that in order to establish damages under the lost profits method, plaintiff must make prima facie showing of reasonably forecast profits.); Louis Vuitton S.A. v. Spencer Handbags Corp., 765 F.2d 966, 973 (2d Cir. 1985) (defendant's own statements as to profits provided sufficient basis for calculation of defendant's profits under 15 U.S.C. 1117(a)). See also American Honda Motor Co. v. Two Wheel Corp., 918 F.2d 1060, 1063 (2d Cir. 1990) (plaintiff entitled to amount of gross sales unless defendant adequately proves amount of costs to be deducted from it); Polo Fashions, Inc. v. Dick Bruhn, Inc., 793 F.2d 1132, 1135 (9th Cir. 1986) (court awarded receipts from sales pursuant to 15 U.S.C. 1117(a)); 5 J. Thomas McCarthy, Trademarks and Unfair Competition 30.65 (4tli ed. 2001) (discussing computation of defendant's profits from infringing sales).

Plaintiff has the burden of proof as to damages. See Rolex Watch, U.S.A., Inc., v. Michel Co., 179 F.3d 704, 712 (9th Cir. 1999) (plaintiff carries burden to show with "reasonable certainty" the defendant's gross sales from the infringing activity); Lindy Pen Co., 982 F.2d at 1405-1408; Nintendo of America, 40 F.3d at 1012 (where infringing and noninfringing elements of a work cannot be readily separated, all of a defendant's profits should be awarded to the plaintiff).

"[T]he trial court has wide discretion to increase or reduce the amount of profits recoverable by the plaintiff '[i]f the court shall find that the amount of recovery based on profits is either inadequate or excessive . . . according to the circumstances of the case.'" Texas Pig Stands, Inc. v. Hard Rock Cafe Int'l, 951 F.2d 684, 694 (5th Cir. 1992)) (quoting 15 U.S.C. 1117(a)).

The Ninth Circuit has not addressed, and other circuits are divided on, whether willfulness remained a prerequisite to disgorgement of a defendant's profits as a result of the Trademark Amendments Act of 1999, Pub. L. 106-43, 3(b), 113 Stat. 218, 219 (codified in relevant part at 15 U.S.C. 1117). However, even prior to the 1999 Amendments, the Ninth Circuit suggested that wilfulness was not always a requirement for the award of profits. See Adray v. A dry-Mart, Inc., 76 F.3d 984, 988 (9th Cir. 1995) ("An instruction that willful infringement is a prerequisite to an award of defendant's profits may be an error in some circumstances ([such] as when plaintiff Seeks the defendant's profits as a measure of [plaintiffs] own damage [citation omitted])").

The defendant may also raise a defense that the purchasers bought goods bearing the infringing mark for reasons other than the appeal of the mark, and that the infringement had no cash value in sales made by the defendant. Id. If such a defense is raised, an appropriate instruction should be drafted.

An award of speculative damages is inappropriate. See Mc CI a ran v. Plastic Industries, Inc., 97 F.3d 347, 361-62 (9th Cir. 1996) (jury finding of lost profits based upon theory that designer would have entered market but for the infringement was too speculative where no one had made a profit on the designed products).

 

Trademark Damages For Intentional Or Willfull Infringement (15 U.S.C. 1117(B))

"Willful infringement carries a connotation of deliberate intent to deceive. Courts generally apply forceful labels such as 'deliberate,' 'false,' 'misleading,' or 'fraudulent' to conduct that meets this standard." Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1406 (9th Cir. 1993) (also citing cases in other circuits regarding elements of a willfulness claim). See also Committee for Idaho's High Desert, Inc., v. Yost, 92 F.3d 814, 825 (9th Cir. 1996) (the term "exceptional" in 15 U.S.C. 1117(a) for purposes of imposing treble damages, generally means the infringement was "malicious, fraudulent, deliberate or willful") (citing Lindy Pen Co., 928 F.2d at 1408); Nintendo of America, Inc. v. Dragon Pacific Int'l, 40 F.3d 1007, 1010 (9th Cir. 1994) (where defendant willfully infringes trademark, trebling the damages is appropriate); VMG Enters. v. F. Quesada & Franco, Inc., 788 F. Supp. 648, 662 (D. Puerto Rico 1992) (treble damages granted when defendant's infringing actions are deemed to have been made "knowingly and willfully"); Polo Fashions v. Rabanne, 661 F. Supp. 89, 98 (S.D. Fla.1986) (in absence of extenuating circumstances, profits are to be trebled where counterfeiting is intentional and knowing).

Regarding willful blindness, See Hard Rock Cafe Licensing Corp. v. Concession Servs., 955 F.2d 1143, 1149 (7th Cir. 1992) (to be willfully blind, a person must suspect wrongdoing and deliberately fail to investigate); Chanel, Inc. v. Italian Activewear of Florida, 931 F.2d 1472, 1476 (11th Cir. 1991) (willful blindness could provide requisite intent or bad faith; determination of willful blindness depends on the circumstances and will generally be a question of fact for the factfinder after trial).

A court may enter judgment for a damage award under 15 U.S.C. 1117(a) upon a finding of willfulness as well. See Sealy, Inc. v. Easy Living, Inc., 743 F.2d 1378, 1384 (9th Cir. 1984) (district court found that conduct constituted willful and deliberate bad faith infringement of plaintiff's trademarks that was intended to and in fact did result in deception of the public); Friend v. H.A. Friend & Co., 416 F.2d 526, 534 (9th Cir. 1969) (defendant's acts must be willful and calculated to trade upon the plaintiff's goodwill). See also Horphag Research Ltd. v. Pellegrini, 337 F.3d 1036, 1042 (9th Cir. 2003) ("Exceptional cases include cases in which the infringement is malicious, fraudulent, deliberate, or willful) and Gracie v. Gracie, 217 F.3d 1060, 1068 (9th Cir. 2000).

 

Source: Ninth Circuit Manual of Model Jury Instructions (Civil)