Opinion ID: 166617
Heading Depth: 2
Heading Rank: 1

Heading: Damages under the Lanham Act generally

Text: 11 The Lanham Act explicitly prescribes the range of monetary remedies available to a plaintiff who has successfully proven a trademark violation: 12 When a violation of any right of the registrant of a mark. . . shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled, . . . subject to the principles of equity, to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. . . . The court in exceptional cases may award reasonable attorney fees to the prevailing party. 13 15 U.S.C. § 1117(a). In the instant case, Western seeks an award of the profits Hyundai earned from use of Western's mark and reasonable attorneys' fees. As demonstrated below, the critical requirement of both remedies is a showing that the defendant willfully infringed the plaintiff's mark.
14 An accounting of profits is not automatically granted upon a showing of infringement. See Champion Spark Plug Co. v. Sanders, 331 U.S. 125, 131, 67 S.Ct. 1136, 91 L.Ed. 1386 (1947). As the statute makes clear, any award of profits is subject to the principles of equity. 15 U.S.C. § 1117(a). However, it is not required that the plaintiff demonstrate actual damages to sustain a profit award. Bishop v. Equinox Int'l Corp., 154 F.3d 1220, 1222 (10th Cir.1998) ( Bishop I ). 15 An award of profits in the absence of actual damages is usually predicated on one of two theories: (1) unjust enrichment; or (2) deterrence. See id. at 1222-1223. The unjust enrichment theory is based on the idea that trademarks are protected property rights. Id. at 1223. The misappropriation of that right, thus, results in an unjust enrichment even if the two parties are not in direct competition with each other. Id.; see also Blue Bell Co. v. Frontier Refining Co., 213 F.2d 354, 362-63 (10th Cir.1954) (noting the well-settled theory that a trademark infringer holds his profits in trust for the benefit of the other party). Similarly, the deterrence theory recognizes that an award of profits may be proper as a means to prevent willful trademark infringement. Bishop I, 154 F.3d at 1223. 16 Whatever the theory that motivates the rule, a finding of actual damage remains an important factor in determining whether an award of profits is appropriate. Id. Thus, while the existence of the plaintiff's actual damages is not a prerequisite to an award of the defendant's profits, this issue remains relevant to our inquiry. Given the punitive nature of the remedy and the possible windfall to the plaintiff, the potential for inequity is necessarily heightened when a party seeks a profit award in the absence of actual damages. To that end, we require a showing that Defendant's actions were willful to support an award of profits under 15 U.S.C. § 1117(a). Id. 1 17 Even with a finding of willfulness, a court may still exercise its discretion to reduce or even eliminate a profit award in the name of fashioning an equitable remedy to meet the needs of each case. See, e.g., Estate of Bishop v. Equinox Int'l Corp., 256 F.3d 1050, 1055-56 (10th Cir.2001) ( Bishop II ). This is accomplished by carefully weighing the equities on both sides of the scale to determine whether, in [the] district court's judgment and within its wide discretion, the plaintiff may receive a portion of the infringing defendant's profits. Id. Thus, an award of profits involves a two-step process: (1) a finding of willfulness or bad faith; and (2) a weighing of the equities. 18 However, when considering a summary judgment motion, a court does not weigh the evidence except, of course, for the very unusual situation when all the equities are indisputably on one side. As a result, a court evaluating an award of profits claim at the summary judgment stage must confine its analysis to the first step: whether a genuine factual issue exists as to willful infringement.
19 Under the Lanham Act, attorneys' fees may be awarded to the prevailing party only in exceptional cases. 15 U.S.C. § 1117(a). While the Lanham Act provides no definition for the term, we have long held that an exceptional case is one in which the trademark infringement is malicious, fraudulent, deliberate, or willful. VIP Foods, Inc. v. Vulcan Pet, Inc., 675 F.2d 1106, 1107 (10th Cir.1982); see generally Robin C. Larner, Annotation, Award of Attorneys Fees Under § 35(A) of Lanham Act (15 U.S.C. § 1117(a)) Authorizing Award in Exceptional Cases, 82 A.L.R. Fed. 143 § 2(a) (1987). 20 Therefore, if Western raises a genuine factual issue with regard to willful infringement, it should survive summary judgment not only on the award-of profits-claim, but also on the request for attorneys' fees.