No Damages, Big Problem: Infringement Claims Lacking Cognizable Injury

No Damages, Big Problem: Infringement Claims Lacking Cognizable Injury

What’s in this article…

In a highly competitive marketplace, established companies sometimes use a variety of means to suppress emerging companies and its branding that may or may not threaten their own market share. Often, lawsuits for trademark infringement end upon enjoining the defendant infringer. However, companies always press for monetary damages as well, but a prevailing plaintiff is not automatically entitled to such an award. See 15 U.S.C. § 1117(a). As an accused infringer, it is important to be aware of options that may be useful in defending yourself and your brand. One possible route for an accused infringer is highlighting the fact that the opposing party cannot prove they suffered any cognizable damages.

No Damages, No Case?

In Edge Games, LLC v. Houghton Mifflin Harcourt Publishing Co. (2015 WL 3498607), a 9th Circuit case, the plaintiff who produced a game based on the periodic table filed a trademark infringement suit against a defendant who published a line of science textbooks. The defendant textbook company was successful in its partial summary judgment that plaintiff was not entitled to monetary relief because the plaintiff was not able to provide any evidence of lost profit. This was sufficient to meet the defendant’s burden as the party moving for summary judgment and therefore, the court held that summary adjudication that the plaintiff had suffered no lost profits as a result of the infringement was appropriate. Furthermore, the plaintiff game producer failed to proffer evidence of the value of any alleged lost goodwill which resulted in another summary adjudication in this respect.

As evidenced in Edge Games, LLC, a plaintiff bringing a trademark suit will unlikely prevail in his or her case if there is a lack in evidence of damages. A prevailing plaintiff in a trademark case is entitled to recover damages actually sustained by the plaintiff as well as the defendant’s profits. See 15 U.S.C. § 1117(a). When seeking damages, a plaintiff must prove both the fact of damages and the amount of damages.

Proving Loss of Profits As Damages

Generally, actual damages in an action for trademark infringement are measured by any direct injury which a plaintiff can prove, as well as any lost profits which the plaintiff would have earned if the infringement did not take place. Actual damages can often be difficult to prove because it typically requires evidence that consumers were actually confused by the allegedly infringing trademark and that this confusion caused the plaintiff an economic loss. Damages can be shown through lost profits in which the plaintiff would have to demonstrate that it would have received certain revenue but for the alleged infringer’s conduct. Another way of proving damages is evidence of loss of goodwill which is determined by proof of consumer confusion and comparing the value of the trademark before and after the infringement and showing that the value decreased. Trademarks are valuable in this respect because the public associates certain qualities with the mark, such as reliability and durability. Another kind of damages involves the disgorgement of profits, which essentially is an accounting to the plaintiff of the infringing party’s profits obtained as a result of the infringement.

What Are Damages?

Damages in an action for trademark infringement are measured by any direct injury which a plaintiff can prove, as well as any lost profits which the plaintiff would have earned if the infringement did not take place

Loss of Goodwill Can Also Qualify as Damages

Although there are several ways for trademark plaintiffs to show damages, it can be difficult to do so successfully. In Minnesota Pet-Breeders, Inc. v. Schell & Kampeter, Inc., plaintiff Pet-Breeders, in proving loss of goodwill, provided two instances to exhibit consumer confusion, one of which involved a Japanese broker who asked if the plaintiff’s company was affiliated with the defendant’s company. Minnesota Pet-Breeders, Inc. v. Schell & Kampeter, Inc. (1993) 843 F.Supp 506. The Court concluded that although such incidents may have caused consumers to be confused or misled, it was not clear that such confusion were related to or caused a loss to the plaintiff’s goodwill. The Court held that the plaintiff Pet-Breeders had to have come up with more specific facts which established genuine issues of material fact as to loss of goodwill and evidence suggesting that it lost its goodwill in a way that was subject to measurement.

Challenging a damages claim is, unfortunately, something usually reserved for summary judgment or the late stages of litigation. However, you should consider this defense early on, as it can help in resolving the conflict early if your business finds itself in a situation with a threatened suit. Obviously, all cases are unique in the different sets of facts and circumstances involved, but an attorney will be able to assist you in going about it the right way. We are your Orange County trademarks, copyright, and business litigation attorneys here to help.