Trademark Litigation: Monetary Relief

Statutory Limitation on Monetary Recovery in Dilution Cases

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A Practice Note discussing damages and other monetary remedies available to parties prevailing in federal trademark litigation under the

Lanham Act. It addresses damage awards, disgorgement of the defendant's profits, statutory damages, and recovery of attorneys' fees,

costs, and prejudgment interest on monetary awards.

The Lanham Act authorizes courts to grant monetary relief to prevailing parties in trademark cases. However, monetary relief is not

automatic. The Lanham Act limits certain forms of monetary relief to cases involving willful or exceptional conduct. It also states that all

monetary awards are subject to the equitable discretion of the court. While plaintiffs routinely request monetary relief in trademark cases,

courts often deny these requests and grant only injunctive relief.

This Note discusses:

 General principles affecting monetary relief under the Lanham Act.

 The forms of monetary relief that a prevailing party may seek under the Lanham Act.

 The requirements for a prevailing party to recover each form of monetary relief.

For a discussion of injunctions in trademark cases, see Practice Note, Trademark Litigation: Injunctive Relief.

For a discussion of monetary relief available under state law, see Trademark Laws: State Q&A Tool.

General Principles Affecting Entitlement to Monetary Relief

The Lanham Act sets out the forms of monetary relief that may be available in trademark claims under the Act. Depending on the

circumstances of the case, a party that prevails on claims under the Lanham Act may be entitled to recover from the losing party:

 The defendant's profits (see Defendant's Profits).

 Damages (see Plaintiff's Damages).

 Costs (see Costs).

 Attorneys' fees (see Attorneys' Fees).

 Prejudgment interest (see Prejudgment Interest).

(15 U.S.C. § 1117(a), (b).)

A prevailing party may recover these monetary remedies for any violations of the Lanham Act, including:

 Registered trademark infringement and counterfeiting under Section 32(1) (15 U.S.C. § 1114(1)).

 Unregistered trademark infringement under Section 43(a).

 Unfair competition under Section 43(a).

 False designation of origin under Section 43(a).

 False advertising under Section 43(a).

(15 U.S.C. § 1125(a).)

 Dilution under Section 43(c) (15 U.S.C. § 1125(c); but see Statutory Limitation on Monetary Recovery in Dilution Cases).

 Cybersquatting under Section 43(d), the Anticybersquatting Consumer Protection Act (ACPA) (15 U.S.C. § 1125(d)).

(15 U.S.C. § 1117(a).)
In counterfeiting and cybersquatting cases, a prevailing party may elect statutory damages instead of damage or profits awards (15 U.S.C.

§ 1117(c), (d); see Statutory Damages).

Court Discretion

Monetary relief to a prevailing plaintiff in a trademark case is not automatic (Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1404-05 (9th Cir.

1993), abrogated on other grounds by Sun Earth, Inc. v. Sun Earth Solar Power Co. , 839 F.3d 1179 (9th Cir. 2016)). Judges have broad

discretion to determine:

 Whether a monetary award is appropriate or an injunction is sufficient.

 The amount of any monetary award.

(15 U.S.C. § 1117(a); see Quick Techs., Inc. v. Sage Grp. PLC, 313 F.3d 338, 350 (5th Cir. 2002); Tamko Roofing Prods., Inc. v. Ideal

Roofing Co., 282 F.3d 23, 39 (1st Cir. 2002); Shell Oil Co. v. Commercial Petroleum, Inc., 928 F.2d 104, 108 (4th Cir. 1991).)

When assessing monetary awards, courts must exercise their discretion in accordance with equity (see Monetary Remedies Are Subject to

Equity) and within certain rules set out in each jurisdiction. For example, many jurisdictions require:

 Actual confusion for a damages award.

 Willful misconduct for an award of the defendant's profits.

For more information about the requirements for damages and profit awards, see Plaintiff's Damages and Defendant's Profits. For the

specific requirements in each circuit for damage and profit awards, see Trademark Infringement Profit and Damage Awards Standards by

Circuit Chart.

In most trademark cases, courts grant only injunctive relief. Counsel should advise clients before litigation that monetary recovery is unlikely

except in cases involving willful conduct or demonstrable harm to the plaintiff. For a discussion of injunctive relief in trademark cases,

see Practice Note, Trademark Litigation: Injunctive Relief.

Monetary Remedies Are Subject to Equity

The Lanham Act requires all courts to consider the equities of the case when assessing whether to award monetary relief (15 U.S.C. §

1117(a)). Courts generally evaluate whether and to what extent one or more of the following three equitable principles justify monetary relief:

 Compensation for a plaintiff's loss.

 Preventing a defendant's unjust enrichment.

 Deterring a defendant's willful conduct.

Monetary relief may not be punitive (15 U.S.C. § 1117(a); ALPO Petfoods, Inc. v. Ralston Purina Co., 913 F.2d 958, 970 (D.C. Cir. 1990)).

When arguing for or against a request for monetary relief, counsel should highlight the equitable principles that support the client's position.

For example, if an unintentional infringement has resulted in harm to the plaintiff and gain to the defendant, plaintiff's counsel should argue

that monetary relief is supported by both compensation and unjust enrichment principles.

The need to compensate a plaintiff for a proven loss is generally a sufficient equitable ground for a damage award (see Equity of Damage

Awards). However, courts differ on the appropriate equitable basis for an award of a defendant's profits. Many courts require willful
infringement for a profit award (under unjust enrichment and deterrence principles) (see Willful Infringement). Some courts award the

defendant's profits as a measure of the plaintiff's lost profits damages (under the compensation principle) when the parties are direct

competitors (see Lost Profit Damages).

Notice of Registration Required

A plaintiff cannot recover monetary relief for infringement of a mark registered with the US Patent and Trademark Office (USPTO) unless

either:

 The plaintiff has used the ® symbol in connection with the mark, putting the defendant on constructive notice of the plaintiff's rights

(see 15 U.S.C. § 1072).

 The defendant has actual notice of the plaintiff's rights.

(15 U.S.C. § 1111.)

Defendant's counsel should review the plaintiff's use of its trademark to determine whether the plaintiff uses the ® symbol. Assuming the

defendant did not have actual notice of the plaintiff's rights at the time of the alleged infringement, the defendant may contest the request for

monetary relief on the grounds that the plaintiff failed to use the symbol.

No notice requirement applies to claims for infringement of unregistered marks under Section 43(a) in cases where the plaintiff does not also

assert claim under Section 32(1). However, if a plaintiff that has not used the ® symbol in connection with its registered mark asserts claims

under both Sections 32(1) and 43(a), it is barred from monetary recovery under either section for any violation that occurs after the plaintiff's

registration date and before the defendant has actual notice of the plaintiff's rights (GTFM, Inc. v. Solid Clothing, Inc., 215 F. Supp. 2d 273,

306 (S.D.N.Y. 2002)).

State law may permit monetary recovery even with a lack of notice (see Belk, Inc. v. Meyer Corp., U.S., 679 F.3d 146, 165 (4th Cir.

2012); Audemars Piguet Holding S.A. v. Swiss Watch Int'l, Inc. , 46 F. Supp. 3d 255, 290-91 (S.D.N.Y. 2014) , rev'd in part on reconsideration

on other grounds, 2015 WL 150756 (S.D.N.Y. Jan. 12, 2015).

Recovery of Multiple Monetary Awards

Although the Lanham Act allows a plaintiff to recover both its damages and the defendant's profits, courts usually reject an award of both

remedies as an impermissible double recovery (see United Phosphorus, Ltd. v. Midland Fumigant, Inc. , 205 F.3d 1219, 1227-28 (10th Cir.

2000)).

Counsel generally does not know what the evidence will show when drafting the complaint. Therefore, plaintiff's counsel should reserve the

right to pursue all available monetary remedies by requesting them in the prayer for relief. Plaintiffs typically request recovery of all possible

monetary remedies available under the Lanham Act. For a sample complaint and prayer for relief in a trademark action, see Standard

Document, Trademark Litigation: Complaint (Federal).

Courts have allowed multiple damage awards when each award remedies a distinct wrong, for example:

 Damages under both the Lanham Act and the Copyright Act (Nintendo of Am., Inc. v. Dragon Pac. Int'l , 40 F.3d 1007, 1011 (9th

Cir. 1994); but see Aero Prods. Int'l, Inc. v. Intex Recreation Corp. , 466 F.3d 1000, 1019 (Fed. Cir. 2006) (denying dual recovery
 under the Lanham Act and the Patent Act); see also Cards Against Humanity, LLC v. Skkye Enters., 2017 WL 3671020, at *5 (E.D.

Mo. Aug. 9, 2017)(discussing cases and allowing dual recovery of statutory damages under the Copyright Act and the Lanham Act,

provided the damage amounts factor in the dual recovery)).

 Damages under Section 43(a) (infringement) of the Lanham Act and statutory damages under Section 43(d) (cyberpiracy) of the

Lanham Act (St. Luke's Cataract & Laser Inst., P.A. v. Sanderson , 573 F.3d 1186, 1203-04 (11th Cir. 2009)).

Courts often award both injunctive and monetary relief, including when affirmative injunctive relief costs the defendant, for example when the

court orders a defendant to place advertisements to correct its false advertising (see Merck Eprova AG v. Gnosis S.p.A., 760 F.3d 247, 264-

65 (2d Cir. 2014)).

Defendant's Profits
Plaintiffs most commonly seek awards of the defendant's profits under the Lanham Act (Fishman Transducers, Inc. v. Paul, 684 F.3d 187,

194 (1st Cir. 2012)). However, profit awards are not automatic. If injunctive relief is adequate, a court may deny all monetary relief

(Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc. , 851 F.3d 440, 459 (5th Cir. 2017); Martinizing Int'l, LLC v. BC Cleaners, LLC, 855 F.3d

847, 852 (8th Cir. 2017)).

Courts may award the defendant's profits as:

 A measure of damages to compensate a plaintiff for its lost profits on the theory that a sale gained by the infringer is a sale lost by

the plaintiff.

 An equitable remedy to:

 prevent the defendant's unjust enrichment;

 deter future misconduct; and

 compensate the plaintiff, regardless of proof of loss.

In earlier cases, courts ordered disgorgement of an infringer's profits primarily as a measure of a plaintiff's damages (see, for example, Maier

Brewing Co. v. Fleischmann Distilling Corp., 390 F.2d 117, 121 (9th Cir. 1968)). Some courts today still grant a defendant's profits as a

measure of plaintiff's damages when the parties are competitors and the plaintiff proves actual injury (see Lost Profit Damages). However,

most profit awards are equitable and do not depend on the plaintiff's proof of injury.

Because profits disgorgement is an equitable remedy, courts generally do not recognize a right to a jury trial when a plaintiff seeks

disgorgement without seeking damages (see, for example, Hard Candy, LLC v. Anastasia Beverly Hills, Inc., 2019 WL 1771292, at *9 (11th

Cir. Apr., 23, 2019); Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc. , 778 F.3d 1059, 1074-76 (9th Cir. 2015)).

When assessing a request for equitable disgorgement of a defendant's profits, courts weigh the relevant equitable interests of compensation,

deterrence, and preventing unjust enrichment (see Monetary Remedies Are Subject to Equity). Courts generally focus on whether the

plaintiff can show:

 Willful infringement (see Willful Infringement).

 Actual confusion (see Actual Confusion).

The circuit courts of appeals disagree (and the district courts within some circuits disagree) on whether a profit award requires willful

infringement and actual confusion or whether they are merely factors in the equitable analysis. For a chart setting out how the courts in each

circuit consider willful infringement and actual confusion in their profit award analyses, see Trademark Infringement Profit and Damage

Awards Standards By Circuit Chart.

When a plaintiff satisfies the court that it should receive an award of the defendant's profits, the plaintiff then must prove the profits that are

attributable to the infringement (see Calculating Defendant's Profits).

Willful Infringement

Until Congress amended the Lanham Act in 1999, most courts required willful infringement for an award of a defendant's profits

(see Trademark Infringement Profit and Damage Awards Standards By Circuit Chart: Box, The 1999 Amendments to Section 35(a) of the

Lanham Act). Today, courts divide on the significance of the defendant's intent, but generally hold that either:

 Willful infringement is required for any profit award (see, for example, Stone Creek, Inc. v. Omnia Italian Des., Inc., 875 F.3d 426,

441-42 (9th Cir, 2017); W. Diversified Servs., Inc. v. Hyundai Motor Am., Inc. , 427 F.3d 1269, 1273-74 (10th Cir. 2005)).

 Willful infringement is required for a profit award unless:

 the parties are competitors; and

 the award is a reasonable measure of the plaintiff's lost profit damages.

(See Lost Profit Damages.)

 Willful infringement is not required for a profit award that is premised on remedying a defendant's unjust enrichment or deterring

future misconduct (see, for example, Optimum Techs., Inc. v. Home Depot U.S.A., Inc., 217 F. App'x 899, 902 (11th Cir.

2007); Burger King Corp. v. Mason, 855 F.2d 779, 781 (11th Cir. 1988)).

 Willful infringement is not required for a profit award, but the defendant's intent is one of six factors courts consider in the analysis

of a profit award (see Defendant's Intent and Actual Confusion as Factors).

For a chart setting out each circuit's law on the willfulness requirement for profit awards, see Trademark Infringement Profit and Damage

Awards Standards By Circuit Chart.

Determining Willful Infringement

Counsel for plaintiffs who are seeking profit awards should note that the willful infringement threshold can be high. Courts usually find willful

infringement only if the defendant intended to deceive consumers or benefit from the goodwill in the plaintiff's mark (see, for example, Lindy

Pen, 982 F.2d at 1406 (finding infringement non-willful because the defendant's awareness of the plaintiff's mark was attenuated at

best); George Basch Co., Inc. v. Blue Coral, Inc. , 968 F.2d 1532, 1540-41 (2d Cir. 1992) (vacating profits award because jury concluded that

the defendant did not act with deliberate intent to deceive)).

However, courts have held:

 Objectively reckless conduct satisfies the willfulness requirement (Fishman, 684 F.3d at 191-92).
  Willful blindness satisfies the willfulness requirement (Nat'l Prods., Inc. v. Arkon Resources, Inc., 294 F. Supp. 3d 1042, 1056

(W.D. Wa. 2018)).

 Adopting a confusingly similar mark with knowledge of the plaintiff's mark permits an inference of willfulness (Klein-Becker USA,

LLC v. Englert, 711 F.3d 1153, 1162 (10th Cir. 2013); Am. Ass'n for Justice v. Am. Trial Lawyers Ass'n , 698 F. Supp. 2d 1129, 1147

(D. Minn. 2010)).

Several courts have held that a defendant's reasonable reliance on advice of counsel when adopting its mark is grounds for finding

infringement non-willful (see, for example, Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 962 (7th Cir. 1992); Adidas-

America, Inc. v. Payless Shoesource, Inc., 546 F. Supp. 2d 1029, 1047 (D. Or. 2008); Cuisinarts, Inc. v. Robot-Coupe Int'l Corp., 580 F.

Supp. 634, 637-38 (S.D.N.Y. 1984)).

Courts have held a defendant's failure to conduct a trademark search, without more, insufficient to support a finding of willful infringement

(George & Co. LLC v. Imagination Entm't. Ltd., 575 F.3d 383, 398 (4th Cir. 2009); SecuraComm Consulting Inc. v. Securacom Inc., 166 F.3d

182, 188-89 (3d Cir. 1999)). However, failure to follow counsel's advice to perform a trademark search may show willful infringement

(International Star Class Yacht Racing Ass'n v. Tommy Hilfiger, U.S.A., Inc. , 80 F.3d 749, 754 (2d Cir. 1996)).

Other circumstances where the court did not find willfulness include:

 The defendant placing an advertisement that lacks solid empirical support, without further proof of knowledge or intent (ALPO

Petfoods, 913 F.2d at 968).

 The defendant reasonably believing a plaintiff's registered mark is descriptive and that confusion is unlikely (Sands, 978 F.2d at

962).

Counsel should note that, even when infringement is willful, a court may deny or reduce a profit award to better serve the aims of equity. For

example, if a full award would result in a windfall to the plaintiff or the plaintiff unreasonably delayed seeking relief, the court may deny or

reduce the profit award (see Sands, 978 F.2d at 963; Int'l Star, 146 F.3d at 72; George Basch, 968 F.2d at 1540-41).

Actual Confusion

Most courts do not require proof of actual harm or actual confusion for a profit award (Hyundai, 427 F.3d at 1272; Burger King, 855 F.2d at

781; Bishop v. Equinox Int'l Corp., 154 F.3d 1220, 1223 (10th Cir. 1998)). However, some courts do find actual confusion relevant or require

it in certain circumstances, including:

 The district courts under the US Courts of Appeals for the Third, Fourth, and Fifth Circuits, which have held that actual confusion

is a factor in the equitable analysis of whether to award the defendant's profits (see Defendant's Intent and Actual Confusion as

Factors).

 The courts under the US Court of Appeals for the Second Circuit, which have been inconsistent on whether actual confusion is

required, but generally:

 require actual confusion if the profit award is premised on the defendant's unjust enrichment (George Basch, 968 F.2d

at 1539-40);
  do not require actual confusion if the profit award is premised on deterring the defendant (Int'l Star, 146 F.3d at 72);

and

 presume actual confusion if the plaintiff proves the defendant's deceptive intent (Merck, 760 F.3d at 261).

For a chart setting out each circuit's law on whether actual confusion or injury is required for a profit award, see Trademark Infringement

Profit and Damage Awards Standards By Circuit Chart.

Defendant's Intent and Actual Confusion as Factors

The Third, Fourth, and Fifth Circuits each have rejected a willful infringement or actual confusion requirement. Instead, the courts in those

circuits recognize the defendant's intent and sales diversion as two of six non-exclusive factors in the equitable analysis of a profit award.

Courts in these circuits must consider:

 Whether the defendant intended to confuse or deceive.

 Whether actual confusion caused diversion of sales to the defendant.

 The adequacy of other remedies.

 Any unreasonable delay by the plaintiff in asserting its rights.

 The public interest in making the misconduct unprofitable.

 Whether it is a case of palming off.

(Banjo Buddies, Inc. v. Renosky, 399 F.3d 168, 175 (3d Cir. 2005); Synergistic Int'l, LLC v. Korman, 470 F.3d 162, 175 (4th Cir. 2006); Quick

Techs., 313 F.3d at 349.)

Calculating Defendant's Profits

When determining a defendant's profits, the plaintiff must only prove the defendant's gross sales and the defendant must prove any

deductions for costs and expenses (15 U.S.C. § 1117(a); Banjo Buddies, 399 F.3d at 176).

Although the Lanham Act states that the plaintiff's only burden is proving the defendant's sales, courts are divided on which party has the

burden of proving which sales are attributable to the defendant's infringing conduct (apportionment). Courts have held that:

 The defendant has the burden of proving which sales should be excluded because they are not attributable to the infringement

(see, for example, Lindy Pen, 982 F.2d at 1408; Venture Tape Corp. v. McGills Glass Warehouse , 540 F.3d 56, 64 (1st Cir.

2008); Marketquest Grp, Inc. v. BIC Corp., 316 F. Supp. 3d 1234, 1299 (S.D. Cal. 2018) ).

 The plaintiff has the burden of showing sales attributable to the infringing conduct when proving gross sales (see, for

example, Gucci Am., Inc. v. Daffy's Inc., 354 F.3d 228, 242 (3d Cir. 2003); Larry Pitt & Assocs. V. Lundy Law LLP, 294 F. Supp. 3d

329, 342 (E.D. Pa. 2018)).

Courts are relatively lenient regarding a plaintiff's calculation of a defendant's profits. When calculating a defendant's profits, the courts:

 Permit imprecise profit calculations (Axiom Worldwide, Inc. v. Excite Med. Corp., 591 F. App'x 767, 776-77 (11th Cir. 2014) ).

 Permit estimation, especially if any uncertainty is due to the defendant's poor record keeping (Klein-Becker, 711 F. 3d at 1163).
  Resolve any doubts about the amount of a defendant's profits against the defendant (Adray v. Adry-Mart, Inc., 76 F.3d 984, 989

(9th Cir. 1989)).

Plaintiff's Proof of Sales

The plaintiff must show the defendant's gross sales of the infringing good or service (Banjo Buddies, 399 F.3d at 176). Although courts are

generally lenient concerning the plaintiff's burden, the plaintiff's proof of sales attributable to the infringement must be based on evidence in

the record of sales of the infringing good or service. A court may not speculate based on general data, for example, an arbitrary fraction of

the defendant's industry-wide sales. (Covertech Fabricating, Inc. v. TVM Bldg. Prods., Inc. , 855 F.3d 163, 176-7 (3d Cir. 2017).)

During discovery, the plaintiff should request evidence of the defendant's gross sales. The parties can obtain the records through:

 The defendant's financial records.

 The defendant's tax returns.

 Testimony from the defendant's witnesses.

The plaintiff should include the defendant's sales and profits as a testimony topic in its Federal Rule of Civil Procedure (FRCP) 30(b)

(6) deposition notice to the defendant. During the defendant's deposition, plaintiff's counsel should ask the witness to:

 Identify the total sales that the defendant claims are attributable to the alleged infringement.

 Identify where those sales are reflected in its financial records produced in the case.

 Identify any sales of the allegedly infringing goods or services not reflected in the defendant's financial records.

 Explain when and how the defendant created and maintained its financial records to determine whether they reflect the

defendant's actual sales for the applicable period.

For more information on FRCP 30(b)(6) depositions in trademark litigation, see Practice Note, Trademark Litigation: Deposing a Rule 30(b)

(6) Witness.

When an infringer fails to provide evidence of its own sales, the court may rely on indirect and circumstantial evidence to determine sales

(Cartier, Inc. v. Sardell Jewelry, Inc., 294 F. App'x 615, 622 (2d Cir. 2008)). For example, in a case involving a counterfeiter that refused to

produce sales records, the Second Circuit affirmed a district court's calculation of sales based on the counterfeiter's secretly videotaped

estimate of weekly sales multiplied by the number of weeks the defendants were in business (Louis Vuitton S.A. v. Spencer Handbags Corp.,

765 F.2d 966, 972-73 (2d Cir. 1985)).

Defendant's Proof of Deductible Expenses

The defendant may deduct from gross sales its expenses attributable to the infringement. If the defendant completely fails to prove any

expenses, courts generally allow the plaintiff to recover the defendant's total gross sales (WMS Gaming Inc. v. WPC Prods. Ltd., 542 F.3d

601, 609 (7th Cir. 2008)).

If the defendant submits evidence of its expenses, but the evidence is insufficient to accurately calculate expenses attributable to the

infringement, a court may either:

 Disallow the deductions (see Fifty-Six, 778 F.3d at 1076).

  Use alternative methods to estimate profits (see Banjo Buddies, 399 F.3d at 176-77).

A defendant may only deduct expenses that it proves are attributable to the infringing product or service. Courts apply various rules for

dealing with expense items and have allowed deductions for:

 Cost of goods (see, for example, Manhattan Indus., Inc. v. Sweater Bee by Banff, Ltd. , 885 F.2d 1, 7 (2d Cir. 1989)).

 Shipping costs (see, for example, Fendi Adele S.R.L. v. Burlington Coat Factory Warehouse Corp. , 642 F. Supp. 2d 276, 294

(S.D.N.Y. 2009)).

 Advertising expenses (see, for example, Nutrivida, Inc. v. Immuno Vital, Inc., 46 F. Supp. 2d 1310, 1316 (S.D. Fla. 1998) ).

 Retailer discounts (see, for example, Fifty-Six, 778 F.3d at 1077).

 Overhead costs attributable to the infringement (see, for example, Manhattan Indus., 885 F.2d at 7-8).

 Sales demonstrably not attributable to the infringing mark (see, for example, Minn. Pet-Breeders, Inc. v. Schell & Kampeter, Inc. ,

843 F. Supp. 506, 516 (D. Minn. 1993)).

Courts have rejected deductions for:

 Fixed costs (see, for example, Roulo v. Russ Berrie & Co., 886 F.2d 931, 941 (7th Cir. 1989)).

 Overhead costs that would have been incurred even without the infringement (see, for example, Maltina Corp. v. Cawy Bottling

Co., 613 F.2d 582, 586 (5th Cir. 1980).

 Income taxes, if the infringement is willful (see, for example, L.P. Larson, Jr., Co. v. Wm. Wrigley, Jr., Co. , 277 U.S. 97, 99-100

(1928); Mary Kay, Inc. v. Weber, 661 F. Supp. 2d 632, 639 (N.D. Tex. 2009)).

 An apportionment for sales attributable to the infringer's well-known brand, if the infringement is egregious (see, for

example, Truck Equip. Serv. Co. v. Fruehauf Corp., 536 F.2d 1210, 1222-23 (8th Cir. 1976)).

 An apportionment when the infringing and non-infringing elements are inseparable (see, for example, Nintendo, 40 F.3d at 1012).

 Royalties paid to related companies (see, for example, Fifty-Six, 778 F.3d at 1076).

When a defendant makes no profit due to its own inefficiencies, a court may nevertheless grant a percentage of sales to compensate the

plaintiff (Otis Clapp & Son, Inc. v. Filmore Vitamin Co. , 754 F.2d 738, 744-45 (7th Cir. 1985)).

During discovery, the plaintiff should request evidence of the defendant's expenses attributable to the infringement. The plaintiff can obtain

those records through:

 The defendant's financial records.

 The defendant's tax returns.

 Testimony from the defendant's witnesses.

The plaintiff should include the defendant's expenses and profits as a testimony topic in its FRCP 30(b)(6)deposition notice to the defendant.

During the defendant's deposition, the plaintiff's counsel should ask the witness to:

 Identify the expenses that the defendant claims are attributable to the alleged infringement.

 Identify where the expenses are reflected in its financial records produced in the case.

 Explain how the defendant attributes each expense to the alleged infringement to determine if:
  the expense amount includes any expenses not attributable to the alleged infringement;

 the expense includes any fixed costs, overhead costs, or other costs not typically deductible from sales to calculate

profits; and

 there are grounds to argue that the expense does not bear a sufficient nexus to the infringement to be deductible.

For more information on FRCP 30(b)(6) depositions in trademark litigation, see Practice Note, Trademark Litigation: Deposing a Rule 30(b)

(6) Witness.

Plaintiff's Damages
The Lanham Act allows recovery of any damages sustained by the plaintiff (15 U.S.C. § 1117(a)). However, because they are difficult to

prove, damage awards are rare in trademark cases (Fishman, 684 F.3d at 194).

To recover damages under the Lanham Act, a plaintiff must show:

 Actual damage caused by the defendant's conduct (see Proving That Defendant Harmed Plaintiff).

 The amount of the damage (see Proving the Amount of Damage).

 That equity justifies a damages award (see Equity of Damage Awards).

(Lindy Pen, 982 F.2d at 1404-07.)

For discussion of the most common measures of damages, see Measures of Damages.

Proving That Defendant Harmed Plaintiff

The same principles that apply to proving damages in tort actions apply to proving damages in trademark cases. A plaintiff must generally

show that:

 It suffered actual harm.

 The harm was caused by the defendant's wrongful act.

 The harm is not remote or speculative.

(See, for example, La Quinta Corp. v. Heartland Props. LLC , 603 F.3d 327, 342 (6th Cir. 2010).)

The plaintiff must prove that it has been injured with reasonable certainty (Lindy Pen, 982 F.2d at 1407). The mere possibility of an injury is

insufficient to obtain a damages award (Road Dawgs Motorcycle Club of the U.S., Inc. v. Cuse Road Dawgs, Inc. , 679 F. Supp. 2d 259, 293

(N.D.N.Y. 2009)).

Exception in False Advertising Cases

In false advertising cases under Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)), courts have not required the plaintiff to prove actual

harm to recover corrective advertising costs (see, for example, Balance Dynamics Corp. v. Schmitt Indus., Inc., 204 F.3d 683, 692-93 (6th

Cir. 2000); see Corrective Advertising Damages). Other courts have held that a defendant's deliberate deceptive advertising gives rise to a

rebuttable presumption of injury and causation (Porous Media Corp. v. Pall Corp., 110 F.3d 1329, 1336-37 (8th Cir. 1997); U-Haul Int'l, Inc.

v. Jartran, Inc., 793 F.2d 1034, 1040-41 (9th Cir. 1986)).

Actual Confusion Requirement for Damage Awards

Injury from trademark infringement generally is the harm a trademark owner suffers when consumers are actually confused. Some courts

require proof of actual confusion for a damages award for this reason (see, for example, Zelinski v. Columbia 300, Inc., 335 F.3d 633, 639

(7th Cir. 2003); Int'l Star, 80 F.3d at 753).

Courts have adopted different positions regarding actual confusion, including:

 Rejecting an actual confusion requirement and awarding damages without actual confusion evidence (see, for example, Bd. of

Supervisors for La. State Univ. Agric. & Mech. Coll. v. Smack Apparel Co. , 550 F.3d 465, 490 (5th Cir. 2008); Lindy Pen, 982 F.2d at

1410-11).

 Applying a general rule that actual confusion is required, but recognizing presumptions or exceptions, including that:

 intentionally deceptive conduct gives rise to a rebuttable presumption of confusion (Boosey & Hawkes Music

Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481, 493 (2d Cir. 1998));

 actual confusion is not required for a corrective advertising award in a false advertising case (Balance Dynamics, 204

F.3d at 691-92); and

 actual confusion is not required in a reverse confusion case (Buzz Off Insect Shield, LLC v. S.C. Johnson & Son, Inc. ,

606 F. Supp. 2d 571, 585 (M.D.N.C. 2009)).

For a chart showing how courts in each circuit have addressed the actual confusion requirement for damage awards, see Trademark

Infringement Profit and Damage Awards Standards By Circuit Chart.

In jurisdictions requiring proof of actual confusion, a plaintiff generally may prove actual confusion by survey (Southland Sod Farms v. Stover

Seed Co., 108 F.3d 1134, 1146 (9th Cir. 1997); Woodsmith Publ'g Co. v. Meredith Corp., 904 F.2d 1244, 1249 (8th Cir. 1990)). For

information about surveys in trademark cases, see Practice Note, Trademark Litigation: Online Consumer Surveys.

Proving the Amount of Damage

A court awards damages if:

 The plaintiff shows that the defendant's conduct caused harm to the plaintiff.

 The plaintiff provides sufficient evidence for the trier of fact to make a fair and reasonable assessment of the amount of the

plaintiff's damages.

(Skydive Arizona, Inc. v. Quattrocchi, 673 F.3d 1105, 1112 (9th Cir. 2012); La Quinta, 603 F.3d at 342.)

Courts cannot award arbitrary or speculative damage awards (Broan Mfg. Co. v. Associated Distribs., Inc., 923 F.2d 1232, 1236 (6th Cir.

1991)). However, the plaintiff does not need to show a precise calculation of its damages (Aronowitz v. Health-Chem Corp., 513 F.3d 1229,

1241 (11th Cir. 2008)). The defendant bears the burden of any uncertainty about the amount of a damage award (Otis Clapp, 754 F.2d at

745).

In cases of intentional infringement, courts can award up to three times the amount of the plaintiff's proven damages (see Enhanced

Monetary Awards).
Equity of Damage Awards

Although courts must exercise equitable discretion when assessing all forms of monetary relief, the equitable analysis of a damages award is

straightforward because:

 A plaintiff must prove that it suffered injury to obtain damages.

 The need to compensate the plaintiff for a proven injury is sufficient equitable justification for a damages award.

Some courts have nevertheless considered the defendant's conduct when assessing the equity of a damages award (see, for

example, Aktiebolaget Electrolux v. Armatron Int'l, Inc. , 999 F.2d 1, 5-6 (1st Cir. 1993)).

A court can take equity into account when determining whether to treble a damage award (see Enhanced Monetary Awards).

Equity plays a much greater role in the analysis of an award of the defendant's profits (see Defendant's Profits).

Measures of Damages

The Lanham Act allows recovery of any damages sustained by the plaintiff (15 U.S.C. § 1117(a)). Courts award monetary relief to

compensate plaintiffs for a variety of financial harms. Courts most often award monetary relief for:

 Lost profits (see Lost Profit Damages).

 Lost royalties (see Lost Royalty Damages).

 Loss of goodwill or damage to reputation (Loss of Goodwill Damages).

 Costs of corrective advertising (see Corrective Advertising Damages).

The plaintiff and its counsel should discuss the injuries that they think they may be able to prove towards the beginning of the case. The

provable damages should guide discovery requests, discovery responses, and the selection of expert witnesses in the case.

Lost Profit Damages

A plaintiff must prove lost profits with reasonable certainty and must provide a reasonable basis for their computation (Lindy Pen Co., 982

F.2d at 1407-08). Courts often deny lost profit awards as overly speculative when the plaintiff cannot prove it actually lost sales. However,

courts generally grant an award if only the amount, and not the fact, of lost sales is uncertain (see, for example, Broan, 923 F.2d at 1235).

If a plaintiff intends to pursue a lost profits award, counsel should discuss with the party what it needs to show to prove with reasonable

certainty that it lost profits. A plaintiff generally proves lost sales either:

 Directly through testimony from customers that refrained from purchasing the plaintiff's goods or services due to the defendant's

conduct.

 Indirectly by showing:

 a decline in its own sales during the period of the defendant's conduct;

 that the parties are competitors; and

 an increase in the defendant's sales during the period of defendant's conduct.

Proving lost profits with reasonable certainty can be difficult. Some courts allow recovery of the defendant's profits as a measure of the

plaintiff's lost profits when the parties are in direct competition, on the theory that the defendant's profits would have gone to the defendant
but for the infringement (see Maier, 390 F.2d at 121). Courts often refer to this measure of damages as a proxy theory of lost profits (see, for

example, Spin Master, Ltd. v. Zobmondo Entm't, LLC, 944 F. Supp. 2d 830, 839 (C.D. Cal. 2012) ). However, other courts have denied such

a recovery when the plaintiff provides no actual evidence of its own loss (see, for example, Toyo Tire & Rubber Co. v. Hong Kong Tri-Ace

Tire Co., 281 F. Supp. 3d 867, 989-90 (C.D. Cal. 2017) (denying request for portion of defendant's profits based only on plaintiff's gut feeling

that defendant's sales would have gone to plaintiff)).

Courts may deny this measure of damages when:

 The parties' target markets differ (see Hansen Beverage Co. v. Vital Pharm., Inc., 2010 WL 3069690, at *7 (S.D. Cal. Aug 3,

2010); but see Tamko, 282 F.3d at 37 (putting the burden on the defendant to show an appropriate deduction to account for

competitive differences)).

 The plaintiff could not have achieved the level of the defendant's sales, such as in cases of reverse confusion (see, for

example, Visible Sys. Corp. v. Unisys Corp., 551 F.3d 65, 80-81 (1st Cir. 2008); but see Spin Master, 944 F. Supp. 2d at 840-

45 (accepting expert testimony on the portion of the defendant's profits that the plaintiff could have achieved)).

An award of a defendant's profits as a proxy for a plaintiff's lost profits is distinct from an equitable disgorgement of the defendant's profits.

Courts can award an equitable disgorgement without direct competition and without regard to any financial harm to the plaintiff. For more

about equitable awards of the defendant's profits, see Defendant's Profits.

Lost Royalty Damages

In cases where the plaintiff could have licensed its mark to the defendant, a court may award damages in an amount calculated by applying

a reasonable royalty either:

 To the number of goods sold under the infringing mark.

 For the period of time the defendant provided services under the infringing mark.

Many courts have indicated a willingness to grant a reasonable royalty if there is any reliable basis for calculating the royalty (see Bauer

Bros, LLC v. Nike, Inc., 159 F. Supp. 3d 1202, 1213-14 (S.D. Cal. 2016) ; Gucci Am., Inc. v. Guess?, Inc., 858 F. Supp. 2d 250, 253

(S.D.N.Y. 2012)). However, in practice, courts usually deny a reasonable royalty as speculative unless the parties have a pre-existing

business relationship establishing the royalty (A & H Sportswear, 166 F.3d at 208-09; see also Juicy Couture, Inc. v. L'Oreal USA, Inc., 2006

WL 1359955, at *4 (S.D.N.Y. May 18, 2006) (precluding witness testimony on subject of reasonable royalty)). Courts also have denied a

royalty measure of damages if there is no evidence of past or prospective licenses involving the plaintiff's mark (see, for

example, Marketquest, 316 F. Supp. 3d at 1300-01).

Courts also require a royalty award to be rationally related to the scope of the infringing use and deny a royalty when the defendant's use

was less than the use it could have made if it obtained a license (Streamline Prod. Sys., Inc. v. Streamline Mfrg., Inc. , 851 F.3d 440, 461 (5th

Cir. 2017) (denying relief because the defendant did not use the plaintiff's identical mark)).

Courts have awarded a reasonable royalty when:

 The defendant was a former licensee or franchisee who used the plaintiff's mark beyond the term of the license (La Quinta, 603

F.3d at 342-45; Century 21 Real Estate LLC v. RealtyComp.com , 2015 WL 1009660, at *7 (N.D. Cal. March 6, 2015) ).
  The plaintiff had licensed its mark in the past and expert testimony confirmed the propriety of the royalty rate (see Sands, Taylor &

Wood v. Quaker Oats Co., 34 F.3d 1340, 1344-45 (7th Cir. 1994), modified in part on reh'g on other grounds, 44 F.3d 579 (7th Cir.

1995) (mem.)).

 The defendant had proposed (and the plaintiff rejected) a royalty-based license before the infringement (Boston Prof'l Hockey

Ass'n, Inc. v. Dallas Cap & Emblem Mfg., Inc. , 597 F.2d 71, 75-76 (5th Cir. 1979)).

A court may not impose a license and permit a defendant to continue its infringement by paying a royalty determined by the court (A & H

Sportswear, 166 F.3d at 208).

Loss of Goodwill Damages

Courts rarely grant damages for harm to a plaintiff's goodwill or reputation because it is difficult to prove actual injury to goodwill or

reputation. However, courts have awarded reputation damages based on:

 Evidence of the value of goodwill and declarations and testimony of angry customers (Skydive Ariz., 673 F.3d at 1112-13).

 Officer testimony regarding the importance and value of the company's reputation as a market leader and efforts needed to

counteract the defendant's misrepresentations (Porous Media Corp. v. Pall Corp., 173 F.3d 1109, 1122-23 (8th Cir. 1999)).

 An inference of injury based on evidence of actual confusion and publicity that the defendant's product had caused deaths

(Trovan, Ltd. v. Pfizer, Inc., 2000 WL 709149, at *11-12 (C.D. Cal. May 24, 2000) ).

Courts sometimes grant a corrective advertising award to remedy harm to a plaintiff's goodwill (see Corrective Advertising Damages).

Corrective Advertising Damages

A corrective advertising award compensates a plaintiff for the cost of advertising to dispel confusion caused by a defendant's infringement

(Adray, 76 F.3d at 988).

Courts have awarded corrective advertising damages for:

 Corrective advertising conducted by the plaintiff pre-trial (Otis Clapp, 754 F.2d at 745).

 Prospective, corrective advertising needed to remedy the harm (Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co. , 561 F.2d

1365, 1375-76 (10th Cir. 1977)).

A plaintiff must prove an economic rationale for awarding prospective corrective advertising costs. Courts have denied corrective advertising

awards where:

 The plaintiff never advertised its product and the value of the plaintiff's mark was less than the cost of corrective advertising (Zazu

Designs v. L'Oreal, S.A., 979 F.2d 499, 506-07 (7th Cir. 1992)).

 The parties' products did not compete (Juicy Couture, 2006 WL 1359955, at *3).

 Both parties discontinued sales of their products (Callaway Golf Co. v. Slazenger, 384 F. Supp. 2d 735, 741 (D. De. 2005)).

There is no definitive rule on how to calculate a prospective corrective advertising award. However, some courts have held that 25% of the

defendant's infringing advertising expenditures is an appropriate amount (see, for example, West Des Moines State Bank v. Hawkeye

Bancorporation, 722 F.2d 411, 414 (8th Cir. 1983); Big O Tire, 561 F.2d at 1375-76).
Statutory Damages
Courts only grant statutory damages in cases of:

 Counterfeiting (15 U.S.C. § 1117(c)).

 Cybersquatting (15 U.S.C. § 1117(d)).

For more information about counterfeiting claims, see Practice Note, Protecting Against Counterfeit Trademarks and Gray Market Goods. For

more information about cybersquatting claims, see Practice Note, Brand Protection Online: The Anticybersquatting Consumer Protection Act.

Statutory Damages in Counterfeiting Cases

A plaintiff in a counterfeiting case may elect statutory damages instead of actual damages or the defendant's profits. A plaintiff may prefer

statutory damages to avoid the difficult task of proving damages or the profits of a counterfeiter that does not keep organized records.

For each counterfeit mark used, courts may award statutory damages in the following amount, for each type of good or service sold, offered

for sale, or distributed:

 Between $1,000 and $200,000.

 Up to $2 million if use of the counterfeit mark was willful.

(15 U.S.C. § 1117(c).)

Calculating the Amount of Statutory Damages

When assessing the amount of an award within the statutory limits, courts may consider:

 The defendant's profits.

 The plaintiff's lost profits.

 The defendant's culpability.

 The size of the counterfeiting operation.

 The defendant's efforts to mislead and conceal.

 The defendant's conduct in the litigation.

 The need to deter the defendant and other potential infringers.

(Philip Morris USA, Inc. v. Jackson, 826 F. Supp. 2d 448, 453 (E.D.N.Y. 2011); Nike, Inc. v. Top Brand Co., 2006 WL 2946472, at *2

(S.D.N.Y. Feb. 27, 2006), report and recommendation adopted by 2006 WL 2884437 (S.D.N.Y. Oct. 06, 2006).)

Other courts have considered a similar list of factors based on the factors courts consider when assessing statutory damages in copyright

infringement cases (see, for example, UL LLC v. Space Chariot Inc., 250 F. Supp. 3d 596, 614 (C.D. Cal. 2017) ).

Courts also consider certain principles when assessing statutory damages, including that the damages:

 Should be compensatory and significant enough to discourage wrongful conduct by the defendant and others (Mun. Credit Union

v. Queens Auto Mall, Inc., 2015 WL 5089144, at *5 (E.D.N.Y. August 27, 2015) ).

 May serve a punitive function and may exceed the plaintiff's actual damages, but should not result in a windfall for the plaintiff

(Rolls-Royce PLC v. Rolls-Royce USA, Inc., 688 F. Supp. 2d 150, 157 (E.D.N.Y. 2010) ).
  Must bear a plausible relationship to the plaintiff's actual harm (Yelp Inc. v. Catron, 70 F. Supp. 3d 1082, 1102 (N.D. Cal. 2014) ).

In cases where the defendant intentionally used a counterfeit mark, the plaintiff usually is also entitled to:

 Three times its damages or the defendant's profits, whichever is greater, if the plaintiff elects damages or profits instead of

statutory damages (see Enhanced Monetary Awards in Counterfeiting Cases).

 Reasonable attorneys' fees (see Attorneys' Fee Awards in Counterfeiting Cases).

 Prejudgment interest, at the court's discretion (see Prejudgment Interest).

Different Types of Goods or Services

How a court defines a type of good or service can significantly affect the amount of a statutory damage award. The District Court for the

Southern District of New York has held that, when calculating statutory damages, a type of good includes all products having the same

functional purpose (see Coach, Inc. v. Horizon Trading USA Inc., 908 F. Supp. 2d 426, 437 (S.D.N.Y. 2012)  (citing Gucci Am., Inc. v.

MyReplicaHandbag.com, 2008 WL 512789, at *4 (S.D.N.Y. Feb. 26, 2008) )).

Courts have held the following to be different types of goods:

 Handbags, wallets, handbag and wallet sets, watches, eyeglasses, and belts (Gucci, 2008 WL 512789, at *4).

 Socks, shirts, sweatpants, and sweatshirts (see Nike Inc. v. Variety Wholesalers, Inc., 274 F. Supp. 2d 1352, 1374 (S.D. Ga.

2003).

 Cookies, crackers, and wafers (Union of Orthodox Jewish Congregations of Am. v. Am. Food & Beverage Inc. , 704 F. Supp. 2d

288, 291-92 (S.D.N.Y. 2010)).

However, two New York district courts concluded that different types of shirts (for example, athletic shirts, sweatshirts, polo shirts, rugby

shirts) counted as separate types of goods for purposes of determining statutory damages (see Rolls-Royce, 688 F. Supp. 2d at 159; Nike,

2006 WL 2946472, at *3).

Multiple Defendants

When there is more than one liable defendant, the plaintiff may not recover multiple statutory damage awards. The defendants are jointly and

severally liable for the single statutory sum calculated in accordance with the statute. (See, for example, Louis Vuitton Malletier, S.A. v.

Akanoc Solutions, Inc., 658 F.3d 936, 947 (9th Cir. 2011).)

However, at least one court has allowed a plaintiff to recover statutory damages from some defendants and actual damages from other

defendants (Innovation Ventures, LLC v. Ultimate One Dist. Corp. , 176 F. Supp. 3d 137, 159-60 (E.D.N.Y. 2016) ).

Statutory Damages in Cybersquatting Cases

For violations of the Anticybersquatting Consumer Protection Act, courts may award statutory damages between $1000 and $100,000 per

domain name (15 U.S.C. § 1117(d)). When assessing the amount of an award within the statutory limits, courts consider:

 The willfulness of the defendant's conduct.

 The defendant's use of false contact information to conceal unlawful conduct.

  The defendant's status as a serial cybersquatter.

 The defendant's conduct evidencing contempt for the proceeding.

(See, for example, Digby Adler Grp. LLC v. Image Rent a Car, Inc., 79 F. Supp. 3d 1095, 1108 (N.D. Cal. 2015) ; CrossFit, Inc. v. Jenkins, 69

F. Supp. 3d 1088, 1101 (D. Col. 2014).)

Enhanced Monetary Awards

In the complaint, the plaintiff in a trademark case usually requests enhanced monetary relief. The Lanham Act:

 Authorizes courts to increase or decrease monetary awards in non-counterfeiting cases (15 U.S.C. § 1117(a)).

 Requires courts, absent extenuating circumstances, to increase or decrease monetary awards in counterfeiting cases when the

defendant:

 knowingly and intentionally uses a counterfeit mark; or

 knowingly and intentionally provides goods or services necessary to the commission of counterfeiting.

(15 U.S.C. § 1117(b).)

Enhanced Monetary Awards in Non-Counterfeiting Cases

In non-counterfeiting cases, courts may:

 Increase damage awards up to three times the plaintiff's proven damages.

 Increase or decrease an award of the defendant's profits as necessary to prevent an inadequate or excessive award.

(15 U.S.C. § 1117(a).)

Under the Lanham Act, an increased monetary award must:

 Have a remedial or compensatory purpose.

 Not be punitive.

(15 U.S.C. § 1117(a); Skydive Ariz., 673 F.3d at 1115; Getty Petroleum Corp. v. Bartco Petroleum Corp. , 858 F.2d 103, 113 (2d Cir. 1988).)

Enhanced monetary relief generally is limited to cases where:

 The defendant willfully infringed the plaintiff's mark.

 The damages or the defendant's profits would not adequately compensate the plaintiff because:

 not all of the plaintiff's damage is quantifiable; or

 the damages or profits cannot be calculated precisely due to the defendant's failure to provide records.

(See Sands, 34 F.3d at 1351-52; La Quinta, 603 F.3d at 345; Taco Cabana Int'l v. Two Pesos, Inc., 932 F.2d 1113, 1127 (5th Cir. 1991).)

However, some courts have enhanced monetary awards based solely on the defendant's willful infringement to deter future misconduct (see,

for example, Powerhouse Marks LLC v. Chi Hsin Impex, Inc., 463 F. Supp. 2d 733, 738 (E.D. Mich. 2006) ).

Enhanced Monetary Awards in Counterfeiting Cases

In cases where the defendant intentionally used a counterfeit mark or intentionally provided goods or services necessary to the commission

of counterfeiting, courts usually must:

 Increase damage awards up to three times the plaintiff's proven damages.

 Increase or decrease an award of the defendant's profits as necessary to prevent an inadequate or excessive award.

(15 U.S.C. § 1117(b).)

To prove intent, a plaintiff must prove that the defendant either:

 Offered for sale or sold the counterfeit goods intentionally.

 Knew of or was willfully blind to the counterfeit nature of the goods.

(15 U.S.C. § 1117(b); see Louis Vuitton S.A. v. Lee, 875 F.2d 584, 590 (7th Cir. 1989).)

A court may find willful blindness if:

 The defendant suspects wrongdoing and deliberately fails to investigate (see Hard Rock Cafe Licensing Corp. v. Concession

Servs., Inc., 955 F.2d 1143, 1149 (7th Cir. 1992)).

 The defendant buys goods lacking indicia of authenticity from an unauthorized dealer (see Chanel, Inc. v. Italian Activewear of

Fla., Inc., 931 F.2d 1472, 1476 (11th Cir. 1991)).

Courts rarely find extenuating circumstances precluding enhancement except in cases:

 Of limited infringement.

 Where the defendant lacked a deliberate intent to deceive.

(See, for example, Gucci Am., Inc. v. Rebecca Gold Enters., Inc. , 798 F. Supp. 177, 183 (S.D.N.Y. 1992).)

Attorneys' Fees
The Lanham Act authorizes courts to award the prevailing party's attorneys' fees in non-counterfeiting cases deemed exceptional (15 U.S.C.

§ 1117(a)). Absent extenuating circumstances, courts must award recovery of the plaintiff's attorneys' fees in cases of intentional

counterfeiting (15 U.S.C. § 1117(b)).

Plaintiffs generally request an award of attorneys' fees in the complaint and decide whether to file a motion requesting attorneys' fees at the

end of the case. Whether a prevailing party requests attorneys' fees generally depends on:

 The outcome of the case.

 The opponent's conduct in the case.

 Whether the judge expressed a view that the opponent's claims, defenses, or conduct was exceptional.

A party must file a motion for attorneys' fees no later than 14 days after the court's judgment (FRCP 54(d)(2)(A), (B)).

Attorneys' Fee Awards in Non-Counterfeiting Cases

The circuit courts have applied various standards for determining what qualifies as an exceptional case. However, the trend is towards

adoption of the standard set out by the US Supreme Court in the patent case Octane Fitness, LLC v. ICON Health & Fitness, Inc.  (134 S. Ct.

1749 (2014)).
The US Supreme Court Decision in Octane Fitness

In Octane Fitness, the Court construed the phrase "exceptional case" in the US Patent Act (also the standard for attorneys' fees in patent

cases), rejected the previous unduly rigid standard for attorneys' fee awards in patent cases, and set out the following test:

[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. District courts

may determine whether a case is 'exceptional' in the case-by-case exercise of their discretion, considering the totality of the circumstances.

(Octane Fitness, 134 S. Ct. at 1755-56.)

The Court also stated that, when considering the totality of the circumstances, courts should exercise equitable discretion in light of a non-

exhaustive list of factors it previously deemed relevant to assessing an attorneys' fee award in the copyright context. These factors include:

 Frivolousness.

 Motivation.

 Objective unreasonableness (both in factual and legal components of the case).

 The need to advance considerations of compensation and deterrence.

(Octane Fitness, 134 S. Ct. at 1756 n.6.)

The Octane Fitness standard has been applied as the test for assessing attorneys' fee awards in trademark cases by the:

 Second Circuit (Sleepy's LLC v. Select Comfort Wholesale Corp., 2018 WL 6174650, at *9 (2nd Cir. Nov. 27, 2018) ).

 Third Circuit (Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303, 314-15 (3d Cir. 2014)).

 Fourth Circuit (Georgia-Pacific Consumer Prod. LP v. von Drehle Corp. , 781 F.3d 710, 720-21 (4th Cir. 2015)).

 Fifth Circuit (Baker v. DeShong, 821 F.3d 620, 621-25 (5th Cir. 2016)).

 Sixth Circuit (Slep-Tone Entm't Corp. v. Karaoke Kandy Store, Inc. , 782 F.3d 313, 317-18 (6th Cir. 2015)).

 Seventh Circuit (4SEMO.com Inc. v. S. Ill. Storm Shelters, Inc. , 2019 WL 4926514, at *7 (7th Cir. Oct. 7, 2019)  (without express

reference to the totality of the circumstances language)).

 Ninth Circuit (SunEarth, Inc. v. Sun Earth Solar Power Co. , 839 F.3d 1179, 1181 (9th Cir. 2016)).

 Eleventh Circuit (Tobinick v. Novella, 884 F.3d 1110, 1113 (11th Cir. 2018)).

 Federal Circuit (Romag Fasteners, Inc. v. Fossil, Inc., 866 F.3d 1330, 1336 (Fed. Cir. 2017) (applying Second Circuit law and

concluding, before Sleepy's, that the Second Circuit would apply Octane Fitnessto trademark cases)).

No circuit court has expressly declined to apply Octane Fitness to trademark cases.

Attorneys' Fee Awards to Plaintiffs

In jurisdictions that have not applied Octane Fitness to trademark cases, when assessing an attorneys' fee award sought by a prevailing

plaintiff, courts usually consider:

 The merits of the case.

 The defendant's intent when using its mark.

 The defendant's conduct in the litigation.

  Any other factors that contribute to a fair allocation of the burdens of litigation.

While the standards vary circuit to circuit, courts typically award attorneys' fees to plaintiffs after a showing of some level of willful or

deliberate infringement or bad faith by the defendant (Patsy's Brand, Inc. v. I.O.B. Realty, Inc., 317 F.3d 209, 221 (2d Cir. 2003)). Courts

have granted attorneys' fees awards on many grounds, including:

 Continued infringement despite two cease and desist letters, direct advice from counsel, and a court order prohibiting use of the

mark (Zerorez Franchising Sys., Inc. v. Distinctive Cleaning, Inc. , 103 F. Supp. 3d 1032, 1049-50 (D. Minn. 2015) ).

 Instruction not to do a trademark search, violation of a preliminary injunction, and other evidence of willful infringement (Tamko,

282 F.3d at 33-34).

 Litigation misconduct (Patsy's, 317 F.3d at 221-22; TE-TA-MA Truth Found.-Family of URI, Inc. v. World Church of the Creator ,

392 F.3d 248, 264 (7th Cir. 2004)).

 Default (Lane Crawford LLC v. Kelex Trading (CA) Inc., 2014 WL 1338065, at *2 (S.D.N.Y. Apr. 3, 2014) ).

Attorneys' Fee Awards to Defendants

In jurisdictions that have not applied Octane Fitness to trademark cases, when assessing an attorneys' fee award sought by a prevailing

defendant, courts usually consider:

 The merit of the plaintiff's claims.

 The plaintiff's motives for bringing suit.

 The plaintiff's conduct in the litigation.

Courts disagree on whether the plaintiff's bad faith is required for a case to be exceptional under the Lanham Act. Some courts require fraud

or bad faith (see, for example, Nike, Inc. v. Already, LLC, 663 F.3d 89, 99 (2d Cir. 2011); Lipscher v. LRP Publ'ns, Inc., 266 F.3d 1305, 1320

(11th Cir. 2001)). However, this view may conflict with US Supreme Court precedent (see The US Supreme Court Decision in Octane

Fitness).

Some courts do not require bad faith and generally consider all of the circumstances of the case (see, for example, Tamko, 282 F.3d at

32; Reader's Digest Ass'n, Inc. v. Conservative Digest, Inc. , 821 F.2d 800, 808-09 (D.C. Cir. 1987), overruled on other grounds by Fogerty v.

Fantasy, Inc., 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994) ). Some courts have held that a finding that the plaintiff's claims were

objectively unreasonable is sufficient to justify an attorneys' fee award (Burford, 786 F.3d at 588).

Courts have granted an award after the plaintiff:

 Offered false evidence and showed a pattern of suing parties to extract settlements (Central Mfg. Co. v. Brett, 2005 WL 2445898,

at *13 (N.D. Ill. Sept. 30, 2005), aff'd, 492 F.3d 876, 883 (7th Cir. 2007)).

 Failed to produce evidence of rights and dilatory litigation tactics (S Indus., Inc. v. Centra 2000, Inc., 249 F.3d 625, 627-28 (7th

Cir. 2001)).

 Pursued a claim after the judge ruled the claim was precluded by precedent (Contractual Obligation Prods., LLC v. AMC

Networks, Inc., 546 F. Supp. 2d 120, 131 (S.D.N.Y. 2008)).

Courts have denied an award after the plaintiff:

  Pursued claims that were not unfounded or brought to harass (Nat'l Ass'n of Prof'l Baseball Leagues, Inc. v. Very Minor Leagues,

Inc., 223 F.3d 1143, 1149 (10th Cir. 2000)).

 Asserted objectively reasonable claims with a good faith basis (Buford, 786 F.3d at 590).

 Pursued good faith claims, despite grossly exaggerating the damages claims (Yeshiva Univ. v. New England Educ. Inst., Inc. , 631

F. Supp. 146, 148-49 (S.D.N.Y. 1986)).

Attorneys' Fee Awards in Counterfeiting Cases

In cases where the defendant intentionally used a counterfeit mark, barring extenuating circumstances, courts must award attorneys' fees to

the plaintiff (15 U.S.C. § 1117(b); Hard Rock, 955 F.2d at 1151).

For a discussion of intent and extenuating circumstances in counterfeiting cases, see Enhanced Monetary Awards in Counterfeiting Cases.

If a plaintiff elects statutory damages under Section 1117(c) instead of damages and profits under Section 1117(a), it may not recover

mandatory attorneys' fees under Section 1117(b). However, it may recover attorneys' fees under Section 1117(a) if the case is an

exceptional case. (Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83, 105-111 (2d Cir. 2012).)

Costs
Courts may award costs to the prevailing party subject to equitable principles (15 U.S.C. § 1117(a)). Courts routinely award costs to the

prevailing party. Recoverable costs are set out in 28 U.S.C. § 1920.

Some courts allow recovery of reasonable out-of-pocket expenses normally charged to a client as part of an attorneys' fee award, such as:

 Service of process.

 Travel.

 Computer research.

 Photocopying.

 Phone costs.

(FRCP 54(d)(2); Attrezzi, LLC v. Maytag Corp., 436 F.3d 32, 43 (1st Cir. 2006); Partners for Health & Home, L.P. v. Seung Wee Yang , 488

B.R. 431, 440 (C.D. Cal. 2012).)

Prejudgment Interest
In counterfeiting cases, courts generally award prejudgment interest from the date of service of the complaint (15 U.S.C. § 1117(b);

see Babbit Elecs., Inc. v. Dynascan Corp., 38 F.3d 1161, 1183 (11th Cir. 1994)).

The Lanham Act is silent on whether courts may grant prejudgment interest in non-counterfeiting cases, but courts generally grant

prejudgment interest (see Sands, 978 F.2d at 963; Gorenstein Enters., Inc. v. Quality Care-USA, Inc. , 874 F.2d 431, 436 (7th Cir.

1989); United Phosphorus,  205 F.3d at 1236-37). However, the Second Circuit normally grants prejudgment interest only in exceptional

cases (Merck, 760 F.3d at 264).

Statutory Limitation on Monetary Recovery in Dilution Cases

 Courts may grant monetary recovery for dilution claims only for willful violations. Courts may only grant profits, damages, and costs if a

defendant intended to either:

 Trade on the famous mark's recognition (dilution by blurring).

 Harm the reputation of the famous mark (dilution by tarnishment).

(15 U.S.C. §§ 1117(a) and 1125(c)(5)(B).)

For a discussion of dilution liability under the Lanham Act, see Practice Note, Trademark Infringement and Dilution Claims, Remedies, and

Defenses: Federal Trademark Dilution Claims.

A plaintiff may not recover monetary relief for a dilution claim and may only receive injunctive relief if the defendant first used its mark before

October 6, 2006, when the Trademark Dilution Revision Act of 2006was enacted (15 U.S.C. § 1125(c)(5)(A)).
END OF DOCUMENT

RESOURCE ID W-000-7254DOCUMENT TYPE Practice notes

PRODUCTS

PLC US Federal Litigation, PLC US Intellectual Property and Technology, PLC US Law Department

RESOURCE HISTORY

CHANGES MADE TO THIS RESOURCE

This resource is continually monitored and revised for any necessary changes due to legal, market, or practice developments. Any significant developments affecting this

resource will be described below.

1. Seventh Circuit Applies Octane Fitness to Fee Disputes

We have revised the section The US Supreme Court Decision in Octane Fitness to reflect the Seventh Circuit's decision in 4SEMO.com Inc. v. Southern Illinois Storm Shelters,

Inc. to apply the Octane Fitness test when assessing attorneys' fees applications in trademark cases.

2. Second Circuit Applies Octane Fitness to Fee Disputes

We have revised the section The US Supreme Court Decision in Octane Fitness to reflect the Second Circuit's decision in Sleepy's LLC v. Select Comfort Wholesale Corp to

apply the Octane Fitness test when assessing attorneys' fees applications…

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