The monetary remedies available in trademark infringement actions vary depending on the specifics of the case, but in general, are based on the actual damages suffered by a trademark owner. One consideration in evaluating damages includes whether the Mark has been registered and whether proper notice has been provided. The damages may include profits lost to the infringing activity and may be trebled where the infringement was intentional.
Ways to Measure Monetary Recovery
There are at least five ways of measuring monetary recovery in trademark infringement cases. They include the following:
An award measured by the defendant’s profits, either as a way of measuring the plaintiff’s loss or under an unjust enrichment theory;
An award measured by actual business damages and losses caused by the wrong;
An award measured by the plaintiff’s own loss of profits caused by the wrong;
An award of punitive damages for the purpose of punishing the defendant; and
An award of reasonable attorney’s fees incurred in the prosecution of the action.
Balancing of Factors to Determine Recovery
In any given case, a court may award one or more, or none, of the five types of recovery to the plaintiff. In deciding what type, if any, of monetary damages to award, courts have balanced several factors, such as whether defendant was willful, negligent, or innocent; whether plaintiff suffered losses in any provable amount; whether there is proof of actual confusion of some customers; and whether defendant realized profits from its infringing actions.
In general, injunctive relief is generally granted upon a showing of a likelihood of confusion. To obtain a preliminary injunction, the trademark owner must make the usual showing for such relief: a likelihood of success on the merits and the irreparable injury that the owner would incur absent an injunction. In addition, courts compare the hardships imposed on the parties by or without an injunction as well as any public interest involved.
To obtain an accounting of profits, the courts usually require that the defendant’s infringement imply “intent” or a knowing act denoting an intent to infringe or reap the harvest of another’s mark and advertising. However, the advice of counsel may sometimes assist the defendant in showing that it acted in good faith. Conversely, the failure to follow the advice of counsel may weigh as evidence of bad faith.
While proof of actual confusion is not needed to obtain an injunction, some courts have said that proof of some actual confusion is required for an accounting of profits. Under the federal Lanham Act, as well as the common law, it is the infringer’s burden to prove any proportion of his or her total profits which may not have been due to use of the infringing mark.
In some cases a plaintiff may be awarded damages in addition to the defendant’s profits. But damages and profits cannot be awarded simultaneously if it would result in overcompensation. Courts require that recovery of damages requires proof that some consumers were actually confused or deceived, which may be proven with testimony of buyers or customer surveys.
Monetary relief is denied where an injunction will satisfy the equities of the case and where there has been no showing of fraud or palming off.
The Lanham Act gives a court the discretionary power to increase damages up to treble damages and increase or decrease an award of profits by any amount if the court finds the profit recovery is “either inadequate or excessive.”
While the Lanham Act does not authorize an additional award of punitive damages for willful infringement of a registered trademark, punitive damages are still available for accompanying state,causes of action for trademark infringement.
In most jurisdictions, punitive damages are awarded only where the defendant’s conduct has been egregious. Evidence of the financial status of the defendant is relevant evidence from which the amount of punitive damages may be set. In most jurisdictions, punitive damages cannot be awarded unless there are some actual damages awarded, no matter how small.
The Lanham Act allows for an award of reasonable attorney fees to the prevailing party in exceptional cases. Exceptional cases are infringement cases where acts of infringement can be characterized as malicious, fraudulent, deliberate, or willful. Where there is proof of intentional infringement, as in a counterfeiting case, it is an abuse of discretion not to award attorney fees.
Most state jurisdictions do not generally allow for the recovery of attorney fees. Attorney fees may be awarded to prevailing plaintiff under a state law even in the absence of a finding that the case is “exceptional” under the federal Lanham Act. A state law permitting the recovery of attorney fees is not preempted by the Lanham Act.
Costs are not attorney fees as is usual in countries outside of the United States. Rather, they are for necessary expenses such as filing fees and court reporter fees. Courts must exercise their discretion sparingly in taxing as costs any expenses not specifically allowed in the statute. “Taxable costs” recoverable as of right are only those listed in the Federal Rules of Civil Procedure. Other expenses are allowable only in the discretion of the court where there is “aggravated” conduct such as “fraud.”
The Lanham Act provides for special monetary remedies for counterfeiting cases. Unless the court finds extenuating circumstances, treble damages or profits and a reasonable attorney fee award must be awarded to an infringed trademark owner if the defendant counterfeiter knew that the goods were counterfeit and intended to offer them for sale.