An Overview of Recovering Trademark Infringement Damages

In an infringement action, "[d]amages are typically measured by any direct injury which a plaintiff can prove, as well as any lost profits which the plaintiff would have earned but for the infringement." Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1407 (9th Cir. 1993), abrogated on other grounds by SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179 (9th Cir. 2016). In trademark cases, plaintiffs can seek: 1) the defendant's profits; 2) an award of actual damages sustained by the plaintiff; 3) recovery of costs of the action; 4) an award of reasonable attorney's fees (in exceptional cases); and 5) statutory damages. Int'l Star Class Yacht Racing Ass'n. v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749,752-53 (2d Cir. 1996). An award of actual damages can take the form of: a) lost sales or revenue; b) corrective advertising or the cost to prevent, correct or mitigate consumer confusion; and c) harm to market reputation/loss of goodwill. A plaintiff may also seek reasonable royalties and lost franchise fees. N.Y. Racing Ass'n v. Stroup News Agency Corp., 920 F.Supp. 295, 302 (N.D.N.Y. 1996); Hair Assoc. v. Nat'l Hair Replacement Servs., Inc., 987 F. Supp. 569, 596 (W.D. Mich. 1997).

The Lanham Act provides minimal guidance on the recovery of damages. It instead provides courts with wide discretion to determine the appropriate monetary remedy. BASF Corp. v. Old World Trading Co., 41 F.3d 1081, 1092 (7th Cir. 1994). This results in courts reaching different conclusions based on different interpretations of the Lanham Act.

Defendant's Profits

Under Section 1117(a) of the Lanham Act, a plaintiff may seek disgorgement of the defendant-infringer's profits. 15 U.S.C. §1117(a). To obtain disgorgement, a plaintiff does not need to establish actual damages. See Marshak v. Treadwell, 595 F.3d 478, 495 (3d Cir. 2009) ("[Plaintiff] did not need to establish actual damages to justify the imposition of an accounting of profits …"); Prof'l Bull Riders, Inc. v. Autozone, Inc., 144 Fed. Appx. 735, 739 (10th Cir. 2005). A plaintiff may disgorge an infringer's profits by: 1) seeking disgorgement of unjustly obtained profits; or 2) by using the infringer's profits as a measure of its own damages (proxy theory). Spin Master, Ltd. v. Zobmondo Entm't, LLC, 944 F. Supp. 2d 830, 839 (C.D. Cal. 2012).

Disgorgement Under an Unjust Enrichment Theory

To obtain disgorgement of profits under an unjust enrichment theory, a plaintiff may be required to prove that the infringement was committed willfully, but the courts are divided on this. E.g., Stone Creek, Inc. v. Omnia Italian Design, Inc., 875 F.3d 426, 441 (9th Cir. 2017), cert. denied, 138 S. Ct. 1984 (2018); M2 Software Inc. v. Viacom Inc., 223 Fed. Appx. 653, 655 (9th Cir. 2007) (denying plaintiff's request for an accounting of profits where plaintiff could not establish willful infringement). But see, Roulo v. Russ Berrie & Co., Inc., 886 F.2d 931, 941 (7th Cir. 1989) (no express requirement that the infringer willfully infringe to justify an award of profits).