Opinion ID: 399824
Heading Depth: 2
Heading Rank: 2

Heading: Monetary Award

Text: 10 Under section 35 of the Lanham Act, 8 a plaintiff can recover the defendant's profits and his own damages. The trial court may award up to treble the actual damages, and adjust the award of profits as he deems just, depending upon the circumstances of the case. However, the Act specifically forbids the award of a penalty. Further, a plaintiff who succeeds in obtaining injunctive relief is not automatically entitled to a monetary remedy. Carl Zeiss Stiftung, 433 F.2d at 706-07. 11 Although the Lanham Act appears to give the trial court broad leeway in awarding monetary relief, courts have generally required proof that certain factors are present before approving a monetary award. These factors vary according to the measure of relief used. Here we do not know what factors were behind the trial judge's finding that the evidence would sustain a judgment in favor of the plaintiff in the amount of $75,000. J.A. 48. We therefore agree with appellant's invocation of Rule 52(a) to argue that more precise factfinding and elaboration of judicial reasoning was necessary to support the award. 12 First, we believe the trial judge should state whether the award is based on defendant's profits, plaintiff's actual damages or both, since each measure depends on different factors. Before making an award on the basis of defendant's profits, courts customarily require a plaintiff to show bad faith or willful infringement by the defendant. 9 See, e.g., Carl Zeiss Stiftung, 433 F.2d at 707 (deliberate intent to cause confusion necessary to recover defendant's profits); Borg-Warner Corp. v. York-Shipley, Inc., 293 F.2d 88, 95 (7th Cir.), cert. denied, 368 U.S. 939, 82 S.Ct. 381, 7 L.Ed.2d 338 (1961) (A finding of infringement does not, as a matter of right, entitle owner to recover profits under § 1117.). In fact, courts have insisted on a relatively egregious display of bad faith, e.g., an  'aura of indifference to plaintiff's rights and a smug willingness that the good will plaintiff sought to foster could safely be treated as a nullity.'  W. E. Bassett Co. v. Revlon, Inc., 435 F.2d 656, 662 (2d Cir. 1970); see also Stuart v. Collins, 489 F.Supp. 827, 831 (S.D.N.Y.1980) (infringing done knowingly and with callous disregard of mark holder's rights). Although the record in this case may indeed contain enough evidence to support a finding of bad faith or willfulness, 10 that evidence is certainly not so overwhelming that we may assume that the district court did in fact make such a finding. In addition, the circumstance that such a finding must be based largely on witness testimony and demeanor makes it crucial that the district judge set it out on the record, if he is measuring the award by the defendant's profits. 13 Second, any award based on plaintiff's damages requires some showing of actual loss. See, e. g., Caesar's World, Inc. v. Venus Lounge, 520 F.2d 269, 274 (3d Cir. 1975); Bowman Instrument Corp. v. Continental Micro, 497 F.Supp. 947, 961 (S.D.N.Y.1980). If the district court's award was to compensate plaintiff for its losses, there is no adequate record support for the dollar amount. Although appellee here alleged that appellant's infringement inhibited its membership sales in Philadelphia and liquor sales in Washington, D. C., it failed to carry its burden of proof as to any such losses. Appellee showed only one mail solicitation in 1975, before appellant was founded, directed at Philadelphia members. Nevertheless, appellee's Philadelphia membership has remained constant over the five years since its entry into that area. Although appellee spoke of failing to meet its projections (of membership), it offered no proof when challenged about any valid basis for such projections. J.A. 45-46. Furthermore, appellee testified that in making its calculations of possible losses based on these projections, it did not consider the impact of gasoline's breathtaking price increases since 1975, surely a factor that must be accounted for in a business largely dependent on auto travel. J.A. 43. Cf. Borg-Warner Corp., 293 F.2d at 95 (claimant's calculations failed to take into account changing market conditions). In short, if actual damages were the basis for the award, it must fail for inadequate evidentiary support. 14 Finally, the Lanham Act states that a monetary recovery is subject to the principles of equity and is to be measured according to the circumstances of the case. 15 U.S.C. § 1117 (1976). The statute thus requires careful tailoring, 11 yet we have no indication that the district judge took the parties' relative circumstances into account to determine, e.g., whether the award amounted to a windfall to appellee or a penalty to appellant.