Opinion ID: 3011202
Heading Depth: 2
Heading Rank: 2

Heading: Defendant's Profits3

Text: Securacom New Jersey argues that the District Court abused its discretion when it awarded a portion of Securacom New Jersey's profits to SecuraComm Pennsylvania and then trebled this award.4 The District Court concluded that an award of 10% of Securacom New Jersey's profits for the years in question was appropriate to deter a willful infringer such as Securacom New Jersey from such acts in the future. 984 F. Supp. at 303. The District Court then trebled the damages because of the egregious circumstances of this case. Id. Since the evidence does not support a finding that Securacom New Jersey willfully infringed Libengood's trademark rights, we conclude that the award of profits was not appropriate in the present case. The Lanham Act permits courts to award monetary damages to trademark owners as compensation where it is equitable to do so regardless of the willfulness of the defendant's _________________________________________________________________ 3. When we refer to the District Court's award of profits in this case, we refer to its award of the defendant corporation's profits, in distinction to an award of plaintiff's lost profits. The District Court awarded defendant's profits not plaintiff's profits. See 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition S 30.57 at 30-95 (noting semantic confusion in opinions discussing monetary recovery under S 1117: the word profits is often used without revealing whose profits -- plaintiff's or infringer's -- are being discussed). 4. The District Court, at one time, described this award as a royalty without engaging in the analysis required to grant such an award. See A&H Sportswear Co. v. Victoria's Secret Stores, Inc., 967 F. Supp. 1457, 1479 (E.D. Pa. 1997). Both parties agree that the District Court's use of the word royalty was likely a shorthand description of Securacom New Jersey's profits. See Securacom New Jersey's Br. at 37; SecuraComm Pennsylvania's Br. at 30 n.10. 14 infringement. See 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition S 30.75 at 30-128 (4th Ed. 1996) (Unlike recovery of defendant's profits, attorney fees and treble damages, no wrongful intent or state of mind is needed for the recovery of actual damages [under 15 U.S.C. S 1117(a).]). In this case, however, the District Court awarded profits to deter defendant's assertedly egregious misconduct; a plaintiff must prove that an infringer acted willfully before the infringer's profits are recoverable. George Basch Co. v. Blue Corral, Inc., 968 F.2d 1532, 1537 (2d Cir.), cert. denied, 506 U.S. 991 (1992); see also, 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition S 30:62, at 30-102 (4th ed. 1996). Once monetary damages have been awarded, the Lanham Act permits courts, under certain circumstances, to enhance the damages. 15 U.S.C. S 1117(a) (1994); see also 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, S 30:90 at 30-146 (4th Ed. 1996) Since the evidence at trial did not support a finding of willful infringement, the award of profits was not warranted, and trebling the damages was likewise inappropriate. See Caesar's World, Inc. v. Venus Lounge, Inc., 520 F.2d 269, 273 (3d Cir. 1995) (holding that enhanced damages award was inappropriate where no evidence of actual damages was adduced; [t]hree times zero is zero.). We therefore reverse the award of profits and treble profits.5