PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

____________

Nos. 22-1417 & 22-1484

___________

LONTEX CORPORATION

 v.

NIKE, INC.

 Lontex Corp.,

 Appellant in No. 22-1484

 Nike, Inc.,

 Appellant in No. 22-1417

____________

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. No. 2-18-cv-05623)

Honorable Michael M. Baylson

____________

Argued on January 17, 2024

Before: HARDIMAN, MATEY, and PHIPPS, Circuit Judges.

(Filed: July 10, 2024)
2

Ilana H. Eisenstein

Ben C. Fabens-Lassen

DLA Piper LLP

1650 Market Street

One Liberty Place, Suite 5000

Philadelphia, PA 19103

Michael D. Hynes

Marc E. Miller

DLA Piper LLP

1251 Avenue of the Americas

New York, NY 10020

Stanley J. Panikowski [Argued]

DLA Piper LLP

4365 Executive Drive

Suite 1100

San Diego, California 92121

Gina L. Durham

DLA Piper LLP

555 Mission Street, Suite 2400

San Francisco, California 94105

Counsel for Appellant

Craig C. Crockett

Troutman Pepper Hamilton Sanders LLP

3 Embarcadero Center, Suite 800

San Francisco, CA 94111

Michael A. Schwartz

Troutman Pepper Hamilton Sanders LLP
3

3000 Two Logan Square

Eighteenth & Arch Streets

Philadelphia, PA 19103

Misha Tseytlin [Argued]

Troutman Pepper Hamilton Sanders LLP

227 W. Monroe St., Suite 3900

Chicago, Illinois 60606

Ben L. Wagner

Troutman Pepper Hamilton Sanders LLP

11682 El Camino Real, Suite 400 

San Diego, CA 92130

Counsel for Appellee

___________

OPINION OF THE COURT

____________

HARDIMAN, Circuit Judge.

This dispute involves a registered trademark for “Cool 

Compression.” The holder of the mark, Lontex Corporation, is 

a small Pennsylvania business that manufactures and sells 

compression apparel to professional athletes and the sporting 

public. Lontex sued Nike, Inc. for trademark infringement.

After a trial on the merits, the jury awarded Lontex 

$142,000 in compensatory damages and $365,000 in punitive 

damages. Both parties appeal multiple issues involving the 
4

jury’s findings and the District Court’s pre-trial and post-trial 

orders. We will affirm the District Court on all issues except

for its orders awarding attorney’s fees to Lontex, which we will 

vacate and remand for further proceedings consistent with this 

opinion.

I

A

In 2008, the United States Patent and Trademark Office 

approved Lontex’s application and registered the “Cool 

Compression” trademark. The mark consisted of “standard 

characters without claim to any particular font, style, size or 

color” when used in connection with athletic compression 

clothing. App. 2597 (capitalization removed). Lontex initially

used the phrase “Cool Compression” at in-person product 

presentations. But after obtaining the trademark, the company

started displaying the phrase on its website and printing it on 

some of its product labels. It sold Cool Compression apparel 

under the “Sweat it Out” brand to many professional sports 

teams and the public alike. 

In 2015, Nike rebranded a line of its base-layer athletic 

clothing as “Nike Pro.” The rebranding included a category of 

“Cool” products designed to absorb sweat and reduce body 

temperature. Nike Pro clothing also came in various fits such 

as “compression” and “fitted.” App. 1151–52, 2366. That same 

year, Nike started using the words “Cool” and “Compression”

together in the names of Nike Pro products that were sold online

and in Nike catalogs. “Cool Compression” also appeared in 

product names on Nike’s tech sheets (internal documents used 

to explain Nike products to Nike employees and some third-
5

party retail partners). The phrase “Cool Compression” did not 

appear on Nike’s physical products or product tags. 

B

After discovering Nike’s use of “Cool Compression,”

Lontex sent Nike a cease-and-desist letter in April 2016, 

demanding that it stop using the phrase on nike.com and with 

its distributors. Based on communications with Nike, Lontex’s 

owner believed that Nike might stop using the phrase on 

nike.com, but the parties did not discuss whether Nike would 

ask its third-party retailers to remove the phrase from their 

online listings as well. While third-party retailers often write 

their own product descriptions for their websites, Nike 

typically names the products, as retailers are “not expected to

come up with their own product name[s].” App. 1211.

After receiving the cease-and-desist letter, Nike’s 

lawyers directed the company to stop using the phrase “Cool 

Compression” in product names “as soon as possible.” App. 

2346. Nike’s lawyers also assumed that the issue would be 

resolved in the course of the company’s efforts to streamline

its naming conventions because Nike planned to start using 

“tight” instead of “compression.” App. 2346, 2402–03.

In the subsequent months, Nike removed the phrase 

“Cool Compression” from product names on its website and 

took steps to remove it from its catalogs, though the phrase still 

appeared in Nike catalogs over a year later. There is no 

evidence that Nike removed “Cool Compression” from its tech 

sheets.

About two years after the cease-and-desist letter issued, 

Nike reached out to all third-party retailers authorized to sell 
6

Nike products online and asked them to stop using 

“Compression” in product names. In doing so, Nike made no 

mention of Lontex’s cease-and-desist letter and simply 

presented the change as an update to Nike’s product naming 

convention. At the time, multiple retailers were still marketing 

products with “Cool Compression” in their names. 

As relevant here, Lontex sued Nike for: (1) trademark 

infringement based on its use of “Cool Compression”; 

(2) contributory trademark infringement based on Nike’s 

continued supply of “Cool Compression” products to thirdparty retailers; and (3) counterfeiting. See Lontex Corp. v. 

Nike, Inc., 384 F. Supp. 3d 546, 551–52 (E.D. Pa. 2019). The 

District Court dismissed Lontex’s counterfeiting allegation

under Rule 12(b)(6) of the Federal Rules of Civil Procedure, 

holding that Nike’s use of “Cool Compression” was not 

“substantially indistinguishable” from Lontex’s use of the 

phrase. Id. at 558 (citation omitted).

C

At trial, multiple Nike employees testified that they had 

never heard of Lontex—much less its trademark—before the 

company received the cease-and-desist letter. Although it was

Nike’s policy to submit its product names through a trademark 

search tool, the company did not conduct a trademark search 

on “Cool Compression” because employees viewed the phrase 

as merely a descriptive term for the product style and fit. Nike’s 

Product Line Manager for the Nike Pro line, whose 

responsibilities included ensuring “compl[iance] with . . . 

direction from Legal,” App. 2323, explained that Nike’s 

lawyers had instructed his team to “separate” the words “Cool” 

and “Compression” from each other, App. 2322–23. And he 

viewed compliance with this directive as mandatory.
7

Lontex customers testified that they associated the 

phrase “Cool Compression” with Lontex. But some had also 

seen the phrase used with Nike products. Two customers saw 

a sign for Nike “Cool Compression” products in a Dick’s 

Sporting Goods store, and two others saw the phrase in Nike 

catalogs. These four customers wondered whether there was an 

association between Lontex and Nike, but there is no evidence 

they ever asked about, or actually bought, a Nike product under 

the mistaken belief it was a Lontex product. 

The jury returned a verdict for Lontex, finding Nike 

liable for willful infringement and for contributory 

infringement based on Nike’s sales to third-party retailers. As 

for damages, the parties’ testimony varied dramatically. 

Lontex’s expert estimated that the company lost $40 million,

while Nike’s expert testified that Lontex lost at most $800,000. 

The jury awarded Lontex $142,000 in compensatory damages 

for lost royalties and $365,000 in punitive damages, but it 

declined to award Lontex disgorgement of Nike’s profits. 

D

Extensive post-trial motions practice followed the 

verdict. Nike renewed motions it made at trial for judgment as 

a matter of law on fair use, trademark infringement, 

contributory trademark infringement, willfulness, and punitive 

damages. Lontex moved, among other things, for 

disgorgement of profits and trebling of damages awarded by 

the jury. The District Court granted Lontex’s request for treble 

damages and increased the compensatory award to $426,000

but denied the parties’ other motions. Separately, the District 

Court awarded Lontex attorney’s fees of almost $5 million 

after finding the case was “exceptional” under the Lanham Act. 
8

Nike appeals the District Court’s orders denying its 

post-trial motions, trebling the damages, and awarding Lontex 

attorney’s fees. Lontex cross-appeals the order denying its 

post-trial motion for profit disgorgement and the pre-trial order 

dismissing its counterfeiting allegation. 

II1

We exercise plenary review over the District Court’s 

order denying Nike’s requests for judgment as a matter of law

and its order dismissing Lontex’s counterfeiting allegation 

under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

Jaasma v. Shell Oil Co., 412 F.3d 501, 503 (3d Cir. 2005); 

Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153, 154 n.1 

(3d Cir. 2014). For judgment as a matter of law, “[t]he question 

is not whether there is literally no evidence supporting”

Lontex, Jaasma, 412 F.3d at 503 (cleaned up), but whether “a 

reasonable jury would . . . have a legally sufficient evidentiary 

basis to find” for Lontex, Fed. R. Civ. P. 50(a). We view the 

evidence in the light most favorable to the verdict winner 

(Lontex) and give it the benefit of every reasonable inference. 

McDaniels v. Flick, 59 F.3d 446, 453 (3d Cir. 1995). We thus 

do not “weigh the evidence, determine the credibility of 

witnesses, or substitute [our] version of the facts for the jury’s 

version.” Id. (cleaned up).

We review for abuse of discretion the District Court’s 

orders: trebling damages, Kars 4 Kids Inc. v. America Can!, 8 

F.4th 209, 223 n.20 (3d Cir. 2021); declining to grant profit 

disgorgement, see id. n.15; and awarding attorney’s fees, see

SecuraComm Consulting Inc. v. Securacom Inc., 166 F.3d 182, 

1 The District Court had jurisdiction under 28 U.S.C. §§ 1331 

and 1338(a). We have jurisdiction under 28 U.S.C. § 1291. 
9

190 n.6 (3d Cir. 1999), abrogation on other grounds 

recognized by Banjo Buddies, Inc. v. Renosky, 399 F.3d 168, 

171 (3d Cir. 2005).

III

A

Nike appeals the jury’s finding that its infringement was 

“willful,” arguing that the jury was improperly allowed to infer 

willfulness solely from Nike’s continued use of Lontex’s 

trademark after it received the cease-and-desist letter. Nike is 

incorrect.2

Though “defendants have every right to decline prelitigation requests without adverse consequences, . . . they must 

do so in good faith—that is, believing that they have a 

colorable claim of right to engage in the challenged behavior.”

Green v. Fornario, 486 F.3d 100, 104 (3d Cir. 2007). So 

continued use of a trademark contrary to a cease-and-desist 

2 Nike also argues it was inaccurate to instruct jurors that 

willfulness “encompasses . . . reckless infringement.” Nike Br. 

48 (quoting App. 1574–75). Several courts of appeals have 

recognized willfulness as extending to reckless infringement. 

See Fishman Transducers, Inc. v. Paul, 684 F.3d 187, 191 (1st 

Cir. 2012); 4 Pillar Dynasty LLC v. N.Y. & Co., Inc., 933 F.3d 

202, 209–10 (2d Cir. 2019); Zazú Designs v. L’Oréal, S.A., 979 

F.2d 499, 507 (7th Cir. 1992). We need not reach this question 

because Nike challenges the willfulness finding only as a 

matter of law without appealing the jury instructions

themselves or requesting a new trial on that basis. For the same 

reason, we do not reach Nike’s challenge to a reverse confusion

instruction.
10

letter can establish willfulness if done in bad faith. See id. at 

104–05. A defendant’s subjective belief is often discerned 

through circumstantial, rather than direct, evidence. See id. at 

104. “When there is no evidence of bad faith in the adoption of 

the mark, all post-notification conduct must be analyzed to 

determine if the defendant’s continuing actions were 

unreasonable and amounted to bad faith.” Moore Bus. Forms, 

Inc. v. Ryu, 960 F.2d 486, 492 (5th Cir. 1992).

Even assuming that Nike had no improper motive in 

adopting the phrase “Cool Compression” without conducting a 

trademark search, a jury could still find willfulness from

Nike’s continued use after it learned of Lontex’s trademark. 

After reviewing the cease-and-desist letter, Nike’s legal 

department instructed the company to stop using “Cool 

Compression” “as soon as possible.” App. 2346. That advice

might have been precautionary guidance designed to avoid 

litigation notwithstanding Nike’s belief that it had a colorable 

legal basis to use the phrase. Or perhaps Nike needed to stop 

“as soon as possible” because the company knew it was 

infringing Lontex’s trademark rights. The evidence does not 

compel one inference over the other, so a reasonable jury could

have found that Nike did not subjectively believe it had a right 

to use “Cool Compression” in view of its counsel’s legal 

advice.

Despite that advice, Nike kept using the mark for at least

a year in its catalogs. And there is no evidence that Nike

removed the phrase from the tech sheets viewed by sales 

associates and some retailers. Nor is there any evidence that 

the company alerted third-party retailers of the trademark issue 

as Nike continued to sell them “Cool Compression” products 

for two years. Taken together, this circumstantial evidence 

supports a jury inference that Nike, despite knowing of 
11 

Lontex’s trademark and being advised by its own lawyers to 

stop using the mark, intentionally continued using Lontex’s 

trademark. Because a reasonable jury could find that Nike’s 

continued use of Lontex’s trademark shows willful 

infringement, the District Court did not err, and Nike is not 

entitled to judgment as a matter of law. 

B

Nike next argues that its incorporation of “Cool 

Compression” in product names was fair use, meaning that 

Nike used the words “fairly and in good faith only to describe” 

its products without presenting the phrase as a trademark. 15 

U.S.C. § 1115(b)(4). This argument fails for the same reasons 

that a jury could find Nike’s continued use of the phrase against 

the advice of its own lawyers was willful and not in good faith. 

Because a reasonable jury could reject Nike’s fair use defense, 

the District Court did not err, and Nike is not entitled to

judgment as a matter of law. See Inst. for Sci. Info., Inc. v. 

Gordon & Breach, Sci. Publishers, Inc., 931 F.2d 1002, 1008 

(3d Cir. 1991). 

C

Nike also claims entitlement to judgment as a matter of 

law on the likelihood of consumer confusion. We assess that 

issue by balancing the ten Lapp factors, none of which is 

dispositive. Checkpoint Sys., Inc. v. Check Point Software 

Techs., Inc., 269 F.3d 270, 280 (3d Cir. 2001); see also 

Interpace Corp. v. Lapp, Inc., 721 F.2d 460 (3d Cir. 1983). 
12

1. Factor One: Degree of Similarity Between Marks 

Assessing the degree of similarity requires us to 

determine whether two marks “create the same overall 

impression when viewed separately.” Checkpoint, 269 F.3d at 

281 (cleaned up). We consider whether the “average consumer, 

on encountering one mark in isolated circumstances of [the] 

marketplace and having only a general recollection of the 

other, would likely confuse or associate the two.” Id. (cleaned 

up). Lontex used “Cool Compression” as a standalone mark,

while Nike used it only as part of longer product names 

containing additional Nike branding. Even so, both companies 

used the same alliterative phrase, which would likely create a 

similar “overall impression” for a consumer with “only a 

general recollection” of the marks. Id. (cleaned up). So we 

conclude that a jury could find that this similarity increased the 

likelihood of confusion.

2. Factor Two: Strength of the Owner’s Mark

“The strength of a mark is determined by (1) the

distinctiveness or conceptual strength of the mark and (2) its 

commercialstrength or marketplace recognition.” Id. at 282. 

“Cool Compression” is conceptually weak because both 

words are at least partially descriptive of the products, see 

id., and Lontex has no trademark rights over the word 

“compression.” But Lontex presented evidence that its 

customers associated “Cool Compression” with Lontex

products, so a jury could find that this constituted

marketplace recognition and increased the likelihood of 

confusion.
13

3. Factor Three: Price and Purchaser Care and 

Attention

“When consumers exercise heightened care in 

evaluating the relevant products before making purchas[es]” it 

tends to reduce the likelihood of confusion. Id. at 284. The 

more expensive and “more important the use of a product,” the 

more care consumers exercise. Versa Prods. Co. v. Bifold Co. 

(Mfg.), 50 F.3d 189, 204 (3d Cir. 1995). Similarly, professional 

purchasers tend to exercise more care than ordinary consumers. 

See Checkpoint, 269 F.3d at 285. Although Nike and Lontex

sold products to professional sports teams, which likely 

exercised heightened care, they also sold athletic apparel to 

ordinary customers. And because ordinary customers tend to 

exercise limited care and attention, a jury could find that this

factor increased the likelihood of confusion.

4. Factors Four and Six: Length of Nike’s Use Without 

Evidence of Actual Confusion; and Evidence of 

Actual Confusion

Actual consumer confusion is strong evidence of a 

likelihood of confusion. Fisons Horticulture, Inc. v. Vigoro 

Indus., Inc., 30 F.3d 466, 476 (3d Cir. 1994). Confusion is not 

limited solely to mistaken purchasing decisions, see 

Checkpoint, 269 F.3d at 294–95, but “[w]here confusion has 

little or no meaningful effect in the marketplace [itself], it is of 

little or no consequence in our analysis,” id. at 297. In 

Checkpoint, for instance, we noted that “anecdotal evidence of 

mistaken consumer inquiries” constituted only “de minimis”

evidence of confusion. Id. at 298–99. This case exemplifies 

that point. A few Lontex customers expressed uncertainty over 

a possible association between Nike and Lontex, but that 

uncertainty had no appreciable effect on their interactions with 
14 

the companies. And without actual confusion, the length of 

Nike’s use does not weigh in Lontex’s favor either. So a jury 

could not reasonably find that these two factors increased the 

likelihood of confusion. 

5. Factor Five: Nike’s Intent in Adopting the Mark 

Confusion is more likely where “the defendant chose 

the mark to intentionally confuse consumers,” as 

“demonstrated via purposeful manipulation of [the 

defendant’s] mark to resemble the [plaintiff’s].” Sabinsa Corp. 

v. Creative Compounds, LLC, 609 F.3d 175, 187 (3d Cir. 2010) 

(cleaned up). “The adequacy and care with which a defendant 

investigates and evaluates its proposed mark, and its 

knowledge of similar marks” are also “highly relevant.” Kos 

Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 721 (3d Cir. 2004)

(citations omitted). When assessing the defendant’s behavior, 

we look for evidence of deliberate intent, not mere 

carelessness. See A & H Sportswear, Inc. v. Victoria’s Secret

Stores, Inc., 237 F.3d 198, 232–33 (3d Cir. 2000).

The District Court concluded that “a reasonable jury 

might find that Nike acted with reckless indifference” by 

failing to conduct a trademark search and continuing to use the 

phrase after learning of Lontex’s trademark. Lontex Corp. v. 

Nike, Inc., 2022 WL 622321, at *9 (E.D. Pa. Mar. 3, 2022). We 

see it differently. On this record, it is hard to see how a jury 

could find deliberate intent. 

Failure to conduct a trademark search can demonstrate

intent in some situations, such as where the defendant has 

preexisting knowledge of the plaintiff’s mark or disregards 

counsel’s advice to conduct a trademark search. See 

SecuraComm, 166 F.3d at 188–89 (citations omitted). But 
15 

failure to conduct a trademark search out of mere “carelessness 

is not the same as deliberate indifference with respect to 

another’s rights in a mark or a calculated attempt to benefit 

from another's goodwill.” Id. at 189. 

We find it significant that Lontex did not challenge the 

testimony from Nike employees that they were unaware of 

Lontex and its trademark prior to this dispute. And though Nike 

had a general policy requiring trademark searches, the record 

contains no evidence that Nike’s lawyers advised it to run a 

trademark search on “Cool Compression” prior to using the 

phrase. So while Nike may have been careless in failing to 

conduct a trademark search, its carelessness does not reveal a 

deliberate intent to capitalize on Lontex’s trademark. See id. at 

189. 

Finally, to state the obvious, if Nike was unaware of 

Lontex, it could not have adopted “Cool Compression” with 

the deliberate intent to imitate Lontex and confuse consumers. 

And Nike’s continued use after adopting the phrase and 

learning of Lontex’s trademark does not shed light on the 

company’s initial intent. A jury would thus have insufficient 

evidence to find that Nike adopted the mark with the intention 

of confusing consumers. 

6. Factors Seven, Eight, and Ten: Similarity of 

Marketing Channels; Target Markets; and Actual 

Sales Markets 

 “[S]imilarity in advertising and marketing campaigns” 

directed at “the same consumers” increases the likelihood of 

confusion. Checkpoint, 269 F.3d at 288–89 (citation omitted). 

But “[g]oods may fall under the same general product category 

[yet] operate in distinct niches.” Id. at 288. Nike seeks to 
16

differentiate its sales market and advertising by pointing to

Lontex’s focus on sports medicine. But as the District Court 

found, both companies advertised their products as improving

athletic performance, so their marketing strategies overlapped 

in at least some areas. And the companies marketed and sold 

to the same professional sports teams, creating overlap in their 

target and actual sales markets. Though both also marketed and 

sold their products to ordinary consumers, they did so through 

separate channels. Unlike Nike, Lontex advertised to 

consumers primarily through its owner’s presentations at inperson events. And unlike Lontex, Nike sold products to 

regular consumers through brick-and-mortar stores and 

independent retailers. So while the parties’ sales and marketing 

to ordinary consumers bore little similarity, a jury could find 

that the overlap in marketing and sales to professional sports 

teams increased the likelihood of confusion.

7. Factor Nine: Relationship of the Goods in the

Minds of Consumers

Confusion is more likely when “goods are similar

enough that a customer would assume they were offered by

the same source” or shared a “common source affiliation or 

sponsorship.” Id. at 286. The products here are similar because 

both companies made and sold compression apparel. This is 

considerably more similar than other products we have 

regarded as such. See, e.g., Fisons, 30 F.3d at 481 (listing cases 

in which courts found similarities between products including 

“pipe tobacco and bar accessories with scotch whisky” and 

“women’s scarves and apparel with women’s cosmetics and 

fragrances”). Because both companies sold athletic 

compression apparel, a jury could find the relationship of the 

goods in the minds of consumers increased the likelihood of 

confusion.
17 

* * * 

Our review of the Lapp factors leads us to conclude that 

they do not strongly support either party. But reviewing the 

evidence in the light most favorable to the verdict winner—

here, Lontex—we hold that a reasonable jury could find that 

seven out of the ten factors increased the likelihood of 

confusion. This suffices to establish a likelihood of confusion, 

so Nike is not entitled to judgment as a matter of law. 3

D

A company can be liable for trademark infringement by 

an independent retailer if the company “continues to supply its 

product to one whom it knows or has reason to know is 

engaging in trademark infringement.” Inwood Labs, Inc. v. Ives 

Labs, Inc., 456 U.S. 844, 854 (1982); see also AT&T Co. v.

Winback & Conserve Program, Inc., 42 F.3d 1421, 1432 (3d 

Cir. 1994). While its third-party retailers often crafted their 

3 Lontex and Nike also discuss reverse confusion, which is 

another way to establish a likelihood of confusion. See 

Freedom Card, Inc. v. JPMorgan Chase & Co., 432 F.3d 463, 

470 (3d Cir. 2005). “Reverse confusion is the misimpression 

that the junior user is the source of the senior user’s goods.”

Banff, Ltd. v. Federated Dep’t. Stores, Inc., 841 F.2d 486, 490 

(2d Cir. 1988). Reverse confusion implicates the Lapp factors, 

but requires modified consideration of factors two, five, and 

six. See Freedom Card, 432 F.3d at 472. Lontex had to show 

either direct confusion orreverse confusion to prevail. Because 

the jury had enough evidence to find for Lontex based on direct 

confusion, Nike was not entitled to judgment as a matter of law 

and we need not reach reverse confusion. 
18 

own product descriptions, Nike knew that they typically copied 

Nike’s product names when selling its apparel. Yet Nike kept 

selling to these retailers for two years after Lontex put Nike on 

notice of a possible trademark violation and Nike’s own 

lawyers advised the company to stop using “Cool 

Compression.” And Nike did not inform its retailers about 

Lontex’s cease-and-desist letter or the potential legal 

ramifications of using the phrase. This evidence is sufficient 

for a jury to find Nike liable for contributory infringement, so 

the District Court did not err in so holding. 

E

Nike challenges the availability of punitive damages 

under Pennsylvania law. Pennsylvania follows the Restatement 

(Second) of Torts, allowing punitive damages only “for 

conduct that is outrageous, because of the defendant’s evil 

motive or his reckless indifference to the rights of others.” Feld 

v. Merriam, 485 A.2d 742, 747 (Pa. 1984) (cleaned up). Both 

“willful” and “reckless” conduct qualify as outrageous. Id. at 

747–48. As the District Court correctly concluded, the 

evidence that supports a jury finding of willfulness under the 

Lanham Act also supports a jury finding that Nike acted with 

reckless indifference under Pennsylvania law. Specifically, 

Nike kept using “Cool Compression” after its own lawyers

reviewed Lontex’s cease-and-desist letter and instructed Nike 

to stop using Lontex’s trademark. Thus, Nike is not entitled to 

judgment as a matter of law and the District Court did not err. 

F

The Lanham Act allows a court to enter an award of up 

to three times “the amount found as actual damages” if such 

enhancement is warranted “according to the circumstances of 
19 

the case.” 15 U.S.C. § 1117(a). Willfulness plays a “central” 

role in enhancing damages, Kars 4 Kids, 8 F.4th at 224 n.22, 

but enhancements must be awarded for compensatory, not 

punitive, reasons, see id. at 225. 

Nike argues the District Court relied solely on 

impermissible punitive justifications to treble the jury’s 

compensatory damages award from $142,000 to $426,000. The 

record shows otherwise. The District Court explained it was 

trebling damages “principally because of the [jury’s] finding 

of willfulness.” Lontex, 2022 WL 622321, at *5. The Court 

also considered its separate decision to reject Lontex’s request 

for profit disgorgement, which would have significantly 

increased Lontex’s compensation because Nike’s estimated 

profits “greatly exceed[ed] the compensatory damages.” Id.

Instead, the District Court exercised its discretion to “provide 

adequate compensation” to Lontex through a damages 

enhancement. Id.

It is true, as Nike argues, that the District Court 

discussed the “David and Goliath” nature of the case, the fact 

that “Nike substantially profited from the sale of trademark 

infringing products,” and the importance of “‘making 

infringement unprofitable.’” Id. (quoting Banjo Buddies, 399 

F.3d at 178). But even assuming these considerations were

impermissible, the District Court’s principal reasons were 

proper and independently sufficient to support the damages 

enhancement. See Gen. Motors Corp. v. New A.C. Chevrolet, 

Inc., 263 F.3d 296, 329 (3d Cir. 2001). So we hold the District 

Court did not abuse its discretion in trebling damages. 
20 

G 

Nike also appeals the District Court’s award of 

attorney’s fees to Lontex. Fees should be awarded in the 

trademark infringement context only if the case is

“exceptional,” Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 

303, 314–15 (3d Cir. 2014), meaning it “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). “There is no precise rule or 

formula for making these determinations,” and courts should 

“consider[] the totality of the circumstances.” Id. (cleaned up).

The District Court stated three reasons for finding this 

case exceptional, each of which is rooted in broad policy 

considerations rather than facts specific to this case. 

First, the Court reasoned that enforcement of trademark 

laws is important. Lontex Corp. v. Nike, Inc., 2022 WL 815800, 

at *1 (E.D. Pa. Mar. 17, 2022). We agree, but that truism does 

nothing to distinguish this case from any other trademark case. 

Second, the District Court noted that Lontex is a small 

company that took on “a major United States corporation with 

much larger resources” in a “daunting” “David and Goliath” 

matchup. Id. The size of companies may inform whether one 

party engaged in unfair litigation tactics, such as when a larger 

party seeks to “bury” a smaller opponent financially or “prevail 

by crushing” it. Securacomm Consulting, Inc. v. Securacom 

Inc., 224 F.3d 273, 282 (3d Cir. 2000) (internal quotations 

marks omitted). But the District Court found that Nike did not

“engage[] in any unfair, improper litigating strategy or . . . 
21 

litigate[] this case in a[n] ‘unreasonable manner.’” Lontex, 

2022 WL 815800, at *2. On these facts, the parties’ respective 

sizes and resources, without more, are not relevant 

considerations for exceptionality. 

Finally, the Court found that trademark cases are 

expensive to litigate and that, “as a matter of policy,” “[i]t is 

not realistic to expect a small [company] like Lontex to be able 

to pay the legal bills to a major law firm[] for this type of case.” 

Id. Here again, such costs are typical of trademark 

infringement cases. Moreover, Lontex’s privilege logs suggest 

the company may have received outside litigation funding. If 

the District Court concludes on remand that Lontex’s ability to 

pay its legal fees is relevant, the Court’s reasoning must be 

based on the facts of this case rather than broad policy 

considerations.

The District Court also found that “Lontex showed 

‘substantive strength’” in its case but did not provide any 

explanation for this conclusion. Id. Lontex’s victory on the 

merits of a hard-fought case does not, by itself, render its 

position “exceptional”—especially since the jury largely 

rejected Lontex’s damages claims. If the District Court finds 

on remand that Lontex showed substantive strength, the Court 

should explain how it reached this conclusion under “both the 

governing law and the facts of the case.” Octane Fitness, 572 

U.S. at 554. 

While discussing the “David and Goliath” aspect of the 

case, the District Court noted that willfulness was “an 

important factor” in its exceptionality determination. Lontex, 

2022 WL 815800, at *1. But willfulness was not one of the 

three reasons the Court gave for its decision, and one passing 

reference to it is insufficient for us to conclude that “it is highly 
22 

probable” the Court would have found exceptionality absent 

improper considerations. New A.C. Chevrolet, 263 F.3d at 329. 

Consequently, the District Court’s brief mention of substantive 

strength and willfulness does not render the previous 

considerations harmless error. See id. 

On remand, the District Court should apply Octane 

Fitness and Fair Wind Sailing. The District Court has broad 

discretion and may look to the totality of the circumstances

when assessing exceptionality, but the Court should not rely on

general policy considerations that apply in typical trademark 

infringement cases. And while the behavior of the parties 

during litigation may be relevant, the Court should avoid 

extralegal assessment of the parties’ sizes and financial 

resources as standalone indicators of exceptionality. 

* * * 

To sum up: Nike is not entitled to judgment as a matter 

of law on any of the jury’s findings and the District Court did 

not abuse its discretion by trebling damages. For the reasons 

stated, however, we will vacate the orders awarding Lontex 

attorney’s fees and remand for the District Court to reassess 

whether the case is exceptional. 

IV

We turn last to the cross-appeal. Lontex challenges the 

District Court’s order dismissing its counterfeiting allegation 

prior to trial and the Court’s order refusing to award 

disgorgement of Nike’s profits. 
23 

A 

The District Court properly dismissed Lontex’s 

counterfeiting allegation4 under Rule 12(b)(6) of the Federal 

Rules of Civil Procedure. For a complaint to state a claim upon 

which relief may be granted, a plaintiff must “plead[] factual 

content that allows the court to draw the reasonable inference 

that the defendant is liable for the misconduct alleged.” 

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Under the Lanham Act, a “counterfeit” is “a spurious 

mark which is identical with, or substantially indistinguishable 

from, a registered mark.” 15 U.S.C. § 1127 (emphasis added). 

This is a higher standard than other forms of trademark 

infringement, such as a “colorable imitation” which “includes 

any mark which so resembles a registered mark as to be likely 

to cause confusion or mistake or to deceive.” Id. So 

counterfeiting requires greater similarity between marks than 

other types of trademark infringement. 

As the Eighth Circuit explained, “[a] counterfeit is . . . 

far more similar to the registered mark than a mark that barely 

infringes it, and so an infringing mark is not necessarily also a 

counterfeit.” Sturgis Motorcycle Rally, Inc. v. Rushmore Photo 

& Gifts, Inc., 908 F.3d 313, 340 (8th Cir. 2018); see also 3 J. 

Thomas McCarthy, McCarthy on Trademarks and Unfair 

Competition § 25:15.50 (5th ed.) (“The test of ‘identical with, 

or substantially indistinguishable from’ requires a much closer 

degree of similarity than is required for traditional 

infringement of a registered trademark.”) (collecting district 

4 Lontex argued before the District Court that counterfeiting 

was a basis for additional statutory damages rather than a 

standalone claim. See Lontex, 384 F. Supp. 3d at 552. 
24 

court cases). Other circuit courts have arrived at similar 

conclusions when interpreting the Lanham Act in criminal 

rather than civil contexts. See Sakar Int’l, Inc. v. United States, 

516 F.3d 1340, 1346 n.5 (Fed. Cir. 2008) (“Merchandise 

bearing a ‘counterfeit mark’ is . . . a subset of merchandise that 

merely ‘copies or simulates’ a registered mark.”); Montres 

Rolex, S.A. v. Snyder, 718 F.2d 524, 528 (2d Cir. 1983) 

(distinguishing between “mere[] infringements” and marks 

that “not only infringe but in addition are such close copies that 

they amount to counterfeits”). 

We measure the similarity of two marks by comparing 

the “overall impression” ordinary consumers would have upon 

encountering the marks. See Fisons, 30 F.3d at 477. A 

trademark, after all, derives its “commercial impression” from 

its appearance “as a whole, not from its elements separated and 

considered in detail.” Est. of P.D. Beckwith, Inc., v. Comm’r of 

Pats., 252 U.S. 538, 545–46 (1920). Put simply, if consumers 

see “the entirety of the marks,” “it is the entirety of the marks 

that must be compared.” Opryland USA Inc. v. Great Am. 

Music Show, Inc., 970 F.2d 847, 851 (Fed. Cir. 1992). 

In this case, an ordinary consumer viewing the entirety 

of the “Cool Compression” marks used by Nike and Lontex 

would not find the marks “identical” or “substantially 

indistinguishable.” 15 U.S.C. § 1127. Nike used “Cool 

Compression” as a part of longer product names, and each of 

those product names also contained a Nike brand identifier 

such as “Nike Pro” or “Air Jordan” immediately before the 

trademarked phrase. So consumers saw Nike’s use of “Cool 

Compression” in the context of Nike’s iconic brands. In 

contrast, Lontex did not include Nike branding alongside its 

trademark. This difference distinguishes the marks even more 

for counterfeiting purposes. 
25 

We hold that the marks were similar enough to 

constitute general trademark infringement but not 

“substantially indistinguishable.” So Lontex’s counterfeiting 

allegation was not plausible and the District Court correctly 

dismissed it. 

B 

Lontex next argues that the District Court failed to 

assess whether Lontex is entitled to disgorgement of Nike’s 

profits and instead simply acquiesced to an advisory jury 

verdict. This claim is unpersuasive because the District Court 

independently analyzed disgorgement and, in its discretion, 

decided against awarding that remedy. See Lontex, 2022 WL 

622321, at *3–5. 

Profit disgorgement “does not follow as a matter of 

course upon the mere showing of an infringement.” A & H 

Sportswear, 166 F.3d 197, 209 (3d Cir. 1999) (citation 

omitted). Decisions on equitable remedies “must be made on a 

case-by-case basis.” Holland v. Florida, 560 U.S. 631, 649–50 

(2010) (cleaned up). Courts decide the propriety of 

disgorgement by considering six non-exclusive factors. See 

Banjo Buddies, 399 F.3d at 175. The District Court did just that 

and we perceive no abuse of discretion in its analysis. 

The Court found that three Banjo Buddies factors 

supported disgorgement and three did not. Balancing these 

factors, it concluded that “on the whole, the Banjo Buddies

factors favor non-disgorgement,” and that Lontex’s request 

was “not supported by enough evidence or any precedent.” 

Lontex, 2022 WL 622321, at *4. 
26

Lontex disagrees with the District Court’s assessment 

and weighing of the factors. But absent a showing that the 

District Court legally erred in its analysis, “[a] discretionary 

award is just that—discretionary.” Badger Meter, Inc. v.

Grinnell Corp., 13 F.3d 1145, 1158 (7th Cir. 1994). Lontex 

identifies no legal errors and thus has not shown the District 

Court abused its discretion by declining to award profit 

disgorgement.

* * *

The parties to this trademark infringement dispute 

received a fair trial and the District Court ably decided the 

many legal issues presented to it. We will affirm all the orders 

of the District Court except its orders awarding attorney’s fees. 

We will vacate those orders and remand for further 

proceedings consistent with this opinion.