What are Trademark Infringement Damages and Remedies?
What are Trademark Infringement Damages?
Trademark infringement damages are those monetary recoveries available to a trademark owner whose mark is used in an unauthorized manner in association with goods or services.
Simply, a trademark is a word, phrase, and/or design that serves to identify the source of a product or service in the eyes of consumers. Trademarks are infringed through the unauthorized use of the mark on or in connection with goods and/or services in a manner that is likely to cause confusion, deception, or mistake about the source of the goods and/or services.
When such improper use occurs, certain damages—infringement damages—are appropriate. See our post on Trademark Counterfeiting Damages for a discussion of additional damages available where trademark counterfeiting has occurred.
Trademark Infringement Damages Under the Lanham Act?
Under Section 1117(a) of the Lanham Act (the federal trademark statute), a trademark owner may recover the following categories of monetary damages for infringement: (1) disgorgement of the defendant’s profits; (2) actual damages; (3) reasonable royalty; (4) attorneys’ fees in exceptional cases; and (5) costs. See 15 U.S.C. § 1117(a). However, the prevailing plaintiff in a trademark infringement suit is not automatically entitled to an award of monetary damages; in fact, such awards typically require evidence of actual confusion or unjust enrichment.
The text of the Lanham Act provides little guidance on when monetary damages are available, but grants wide discretion to the courts to determine an appropriate remedy. In practice, trademark infringement lawsuits typical result in injunctive relief to stop the infringement rather than an award of monetary damages.
Disgorgement of Profits as Alternative to Infringement Damages
One potential measure of damages under the Lanham Act is the disgorgement of the infringer’s profits. This can be achieved through (1) disgorgement of unjustly obtained profits; or (2) using the infringer’s profits as a measure of the plaintiff’s own loss (proxy theory). While the Circuit Courts are divided on whether disgorgement of any unjustly obtained profits requires a showing of willful infringement (i.e., actual knowledge of the infringing activity or willful ignorance of potential infringement), recovery of a defendant’s profits as a proxy for plaintiff’s actual damages typically requires no such showing.
Actual Damages for Trademark Infringement
Under Section 1117(a), a successful plaintiff can recover not only a defendant’s ill-gotten profits, but also the plaintiff’s actual damages. 15 U.S.C. §1117(a). This typically requires proof of actual confusion that caused an economic loss, which can be presented through evidence of diverted sales or consumer survey evidence. Economic loss must be demonstrated through lost profits (i.e., revenue the owner would have earned but for the infringement), or loss of goodwill (determined by comparing the value of goodwill before and after the infringement). If a plaintiff can demonstrate that it competes with the infringer in the same market, it may also show loss by way of corrective advertising costs (incurred to correct public confusion caused by the infringement but not exceeding the value of the mark).
A business seeking to protect the hard-earned goodwill associated with its products or services should be vigilant in finding qualified counsel to assist in the protection of its intellectual property rights through proper trademark enforcement and maintenance.
For more information on trademarks and intellectual property in general, see our trademark services page.
Klemchuk PLLC is a leading IP law firm based in Dallas, Texas, focusing on litigation, anti-counterfeiting, trademarks, patents, and business law. Our experienced attorneys assist clients in safeguarding innovation and expanding market share through strategic investments in intellectual property.
This article is provided for informational purposes only and does not constitute legal advice. For guidance on specific legal matters under federal, state, or local laws, please consult with our IP Lawyers.
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