Opinion ID: 482097
Heading Depth: 1
Heading Rank: 3

Heading: Oral-B's Appeal

Text: 24 A. Award of an Accounting. On its cross-appeal, Oral-B apparently requests an accounting of Mi-Lor's profits from its sale of toothbrushes packaged in the enjoined trade dresses. This request, however, includes two separate accountings: one for Mi-Lor's profits on the sales of Payless and K & B toothbrushes, found to be in contempt of the injunction, and the other for Mi-Lor's profits on the sale of other toothbrushes whose trade dresses, although violative of the injunction, were not grounds for holding Mi-Lor in contempt. We hold that the district court properly denied the latter award, but erred in denying an accounting of Mi-Lor's profits on the packages held to be in contempt. 25 The denial of an accounting for the packages that were not in contempt need occupy us only briefly. It is not settled in this circuit whether relief under section 35 of the Lanham Act, 15 U.S.C. § 1117, which provides for an award of profits derived from the infringement of registered marks, is also available for trade dress infringement in violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). See Burndy Corp. v. Teledyne Industries, 748 F.2d 767, 771-72 (2d Cir.1984). Even if such relief is available, however, it would be appropriate only following a resolution on the merits of the trade dress infringement issue. The award of preliminary relief does not settle this question; it remains for the ultimate trier of fact. If trade dress infringement is established following a trial, then (assuming, without deciding, that section 1117 relief is authorized) the district court might award any profits on the sale of infringing toothbrush boxes, provided that Oral-B has proven the requisite sales. Burndy Corp., 748 F.2d at 771-72. We decline to decide any of the questions presented by such an award, however, until they are squarely before us. The district court was correct in denying such relief at this time. 26 As to an accounting for Mi-Lor's profits on the packages for which it was held in contempt, the question is a closer one. There is no doubt that an accounting of profits may be had by the complaining party in a contempt case to deter future infringements. See W.E. Bassett Co. v. Revlon, Inc., 435 F.2d 656, 664-65 (2d Cir.1970). Nonetheless, [t]he discretionary award of either damages or profits assumes an evidentiary basis on which to rest such an award. Without such a basis there can be no recovery. Vuitton Et Fils, S.A. v. Crown Handbags, 492 F.Supp. 1071, 1077 (S.D.N.Y.1979), aff'd mem., 622 F.2d 577 (2d Cir.1980). 27 In this case, Judge Sweet had in the record before him the stipulated facts of contracts for the sale of 200,000 of the K & B brushes and 200,000 of the Payless brushes, as well as a stipulation that some shipments under these contracts had occurred. There was no evidence, however, of how many sales actually occurred or of the prices of the packages sold. Judge Sweet stated: 28 [T]here was no proof of any damages, that is to say, any evidence as to the profits received by Mi-Lor as a consequence of any of the contracts for private labels involved. 29 .... 30 In terms of the relief, finding that the K & B and Payless packaging is contemptuous of the order, I conclude that the costs of this proceeding should be assessed against Mi-Lor. There being nothing further, no other evidence of damages or expenses or profits, I decline to enter any further relief. 31 We think, however, that there was sufficient evidence to require an accounting. While the amount of profits was not established at the contempt hearing (even the value of the gross sales was unproven), offending sales, and presumably profits from those sales, clearly existed. Indeed, Mi-Lor's attorney conceded at the original preliminary injunction hearing that damages will be readily determinable based on Mi-Lor's actual sales of this product, which are accounted for by computer. Thus, had an accounting been awarded, the profits, if any, on these sales could have been determined by a special master, see W.E. Bassett Co., 435 F.2d at 665. Accordingly, we reverse the denial of an accounting of the profits from the contempt and remand for a determination of their extent. The burden will be on Mi-Lor to prove any deductions for its costs from the gross revenues attributable to its contempt. See Mishawaka Rubber & Woolen Mfg. v. S.S. Kresge Co., 316 U.S. 203, 206-07, 62 S.Ct. 1022, 1024-25, 86 L.Ed.2d 1381 (1942); W.E. Bassett Co., 435 F.2d at 665. 32 B. Shipping of Inventory Otherwise Enjoined. The district court, following the contempt hearing, modified the April 12 injunction to allow Mi-Lor to ship toothbrush packages found not to be in contempt but that did violate the injunction, provided that Mi-Lor had already contracted to sell the brushes and that the packaging was already made. Mi-Lor was not allowed, however, to ship the K & B and Payless packages, which were the basis of the contempt order. Oral-B argues that the district court erred in allowing any shipments of otherwise enjoinable packages. We hold that the district court was acting within its broad discretion in fashioning preliminary relief. 33 It is settled that [t]he framing of an injunctive decree responsive to the particular facts in a trademark infringement and unfair competition suit is ordinarily within the domain of the trial court. Levitt Corp. v. Levitt, 593 F.2d 463, 469 n. 10 (2d Cir.1979). In the preliminary injunction context, this court has allowed shipment of infringing articles in balancing the equities of the particular case. See W.E. Bassett Co. v. Revlon, Inc., 354 F.2d 868 (2d Cir.1966). In framing such an injunction, the district court has an obligation to weigh the relative hardship to the parties, Ideal Industries v. Gardner Bender, Inc., 612 F.2d 1018, 1026 (7th Cir.1979), cert. denied, 447 U.S. 924, 100 S.Ct. 3016, 65 L.Ed.2d 1116 (1980) (modifying preliminary injunction to allow sale of existing inventory). Here, as in Bassett, 354 F.2d at 872, the packages the district court permitted to be shipped were not likely to tarnish the plaintiff's reputation. Although the record is thin as to what the cost to Mi-Lor would have been if it had not been allowed to fill existing contracts with the toothbrush packages on hand, we think the district court could balance the hardships on this specific issue as it did, in favor of Mi-Lor. 34 Accordingly, the judgment of the district court is affirmed in part, and modified in part.