A Deeper Dive on Trademark Infringement Damages

"Judge banging a gavel awarding trademark infringement damages"

The phrase “trademark infringement” is nothing anyone wants to hear because it is often followed by the phrase “trademark infringement damages.” In other words, how much are you going to have to pay.

A big problem with any litigation including trademark infringement cases is how damages are calculated and what damages are available is generally a misunderstood concept. And when two parties have drastically different views on their respective potential liabilities, a big roadblock to settlement is created and a final court decision is often necessary to decide the issue. Parties do themselves so much good by early in a case honestly assessing their trademark infringement damages exposure. Only then can you make intelligent and sensible moves in settlement negotiations to resolve a dispute.

Monetary damages under the Trademark Act primarily come in two flavors:  (1) actual damages; and (2) an accounting of the defendant’s profits. An award of actual damages is a legal remedy, whereas an accounting of the defendant’s profits is an equitable remedy. Equitable relief is available only when a plaintiff’s legal remedies are inadequate. In other words, is a plaintiff’s actual trademark infringement damages are $200, but the defendant earned $100,000 in profits, then the plaintiff would be entitled to an accounting fo the defendant’s profits because it would be inequitable to allow the defendant to retain $100,000 in profits at a $200 expense to the plaintiff. But it is important to note that a plaintiff cannot recover twice both actual damages and an accounting of profits. Therefore, the cap in our example would be $100,000 to the plaintiff.

Because an accounting of profits is an equitable remedy, it is not automatic. In some cases, if an injunction forbidding future infringing acts satisfies the equities in the case, then an accounting of profits will be denied. Although a denial of profits under these circumstances has occurred, it is in the minority of cases.

If the case warrants because of the intentional nature of the defendant’s actions, the disparity in the merits between the parties in the case, or the manner in which one party conducts its self in the litigation, any monetary damage award may be increased by 3 times and an award of attorneys’ fees may be made as well.