Opinion ID: 681080
Heading Depth: 4
Heading Rank: 4

Heading: Unfair Competition, False Designation & Dilution

Text: 152 Dynascan also presents an allegation of false designation of origin under Section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a), state law causes of action for dilution, pursuant to Fla.Stat. Sec. 495.151, and unfair and deceptive trade practices, pursuant to Fla.Stat. Sec. 501.204(1), and a common law cause of action for unfair competition. The same set of facts enabling Dynascan to prevail under Section 1114(a)(1) will result in recovery pursuant to Section 1125. Marathon Mfg. Co. v. Enerlite Products Corp., 767 F.2d 214, 217 (5th Cir.1985). This is because Section 1125(a) is broader than Section 1114 in that it covers false advertising or description whether or not it involves trademark infringement. Silverstar Enterprise, Inc. v. Aday [537 F.Supp. 236], 218 U.S.P.Q. 142, 146 (S.D.N.Y.1982). In addition, the analysis is the same for Dynascan's unfair competition cause of action. Chanel, Inc. v. Italian Activewear of Florida, Inc., 931 F.2d 1472, 1476 (11th Cir.1991); Clairol, Inc. v. Save-Way Industries, Inc., 210 U.S.P.Q. 459, 470 (S.D.Fla.1980). This Court's analysis is therefore equally conclusive of these issues. 153 Finally, Dynascan is entitled to relief under the state cause of action for dilution. See Jaguar Cars Ltd. v. Skandrani, 771 F.Supp. 1178, 1185 (S.D.Fla.1991). Section 495.151 provides that any person using a mark is entitled to an injunction enjoining: 154 Subsequent use by another of the same or similar mark if it appears to the court that there exists a likelihood of injury to business reputation or of dilution of the distinctive quality of the mark, notwithstanding the absence of competition between the parties or of confusion as to the source of goods or services. 155 Fla.Stat. Sec. 495.151. There is a strong likelihood of dilution in the present case because purchasers may associate Babbit's telephones with Dynascan telephones. 7 C. DAMAGES AND INJUNCTIVE RELIEF 156 Dynascan argues that it is entitled to a plethora of damages pursuant to the Lanham Act, including a permanent injunction, treble damages, attorney's fees and costs, and prejudgment interest. 8 The Lanham Act provides for recovery by a successful plaintiff of: (1) defendants profits; (2) any damages sustained by the plaintiff; and (3) the costs of this action. 15 U.S.C. Sec. 1117. This recovery is cumulative, that is, the Court may award Dynascan both its damages and Babbit's profits. Playboy Enterprises, 546 F.Supp. at 997. There are, however, different standards for the awarding of each measure of damages. 1. Babbit's Profits 157 Where the defendant's infringement is deliberate and willful, as in this case, an accounting for profits is proper under a theory of unjust enrichment. Maltina Corp. v. Cawy Bottling Co. Inc., 613 F.2d 582, 585 (5th Cir.1980). This accounting serves to deter future infringement, and is thus appropriate even where the plaintiff is not in direct competition with the defendant. Id. In this instance, Babbit has demonstrated and the Court has found that Babbit's profits averaged 25% on all sales of Cobra products. Babbit's sales of infringing products to South America amounted to a total sum of $561,868.30. Babbit's profits on these sales, calculated consistent with Babbit's 25% profit margin, totaled $140,467.08. 2. Dynascan's Damages 158 In order to recover damages (apart from Babbit's profits), Dynascan must demonstrate that it suffered actual damages. Id. at 587. The mark owners royalties are normally used as the measure of damages, but the plaintiff must prove both lost sales and that the loss was caused by defendants' actions. Playboy Enterprises, 546 F.Supp. at 998. Dynascan has not demonstrated that it would have made any of the sales that Babbit has made, but the Court concludes that it has demonstrated that Babbit would have purchased authentic Cobra telephones had they not acquired the counterfeit telephones. The Court draws this conclusion because Babbit was unable to sell its MCE labelled telephones, and the sales of Cobra telephones were still highly profitable, as demonstrated by the sale of the counterfeit telephones. Thus, Dynascan is entitled to an award of damages for Babbit's failure to pay the required five percent royalty on cordless telephone sales of $561,868.30. Consequently, Dynascan is entitled to damages totalling $28,093.42. 9 3. Trebling of Damages 159 The Court may, in its discretion, reduce or enhance the resulting award up to three times the amount of profits or damages, whichever is greater, as justice shall require. 15 U.S.C. Sec. 1117(a). Such an award is discretionary, but it may not be punitive, and must be based on a showing of actual harm. Donsco, Inc. v. Casper Corp., 587 F.2d 602 (3rd Cir.1978). If the infringement is intentional, however, and the use of a counterfeit trademark has been proven, then Sec. 1117(b) governs, and the Court is required to treble damages and award attorney's fees unless the Court finds extenuating circumstances. Chanel, Inc., 931 F.2d at 1476. See also Louis Vuitton S.A. v. Lee, 875 F.2d 584, 588 (7th Cir.1989). 160 Dynascan has demonstrated and this Court has found that Babbit intentionally infringed the Cobra trademark and used a counterfeit Cobra trademark. Consequently, the Court finds that a trebling of damages is required. Pursuant to this conclusion, Dynascan is entitled to a trebling of Lanham Act damages from Babbit for lost profits in the amount of $421,401.24. 4. Costs 161 Dynascan is entitled to recover its costs. 15 U.S.C. Sec. 1117; Fed.R.Civ.P. 54(d). Dynascan is directed to submit a bill of costs to the Court within fifteen (15) calendar days of the date of this Order.