Posts Tagged: "disgorgement"

Evidence of Bad Faith Leads Fourth Circuit to Affirm Disgorgement and Attorneys’ Fees in Trademark Case

On August 9, the U.S. Court of Appeals for the Fourth Circuit issued a ruling in Dewberry Engineers Inc. v. Dewberry Group, Inc. in which the appellate court affirmed a series of district court orders, including a $43 million profit disgorgement award for trademark infringement. The Fourth Circuit also affirmed an attorneys’ fees award for pervasive breaches of a previous agreement settling trademark claims between the commercial real estate firms in the case.

Ninth Circuit Confirms Willfulness is Required to Award Profits in Trademark Cases

As Stone Creek deepens the divide among circuits, the issue of whether willfulness is required for disgorgement of a defendant’s profits in trademark cases is ripe for Supreme Court review… The Stone Creek decision solidifies the Ninth Circuit’s position that willfulness is required for a recovery of profits in trademark cases. This approach is consistent with equitable principles because disgorgement is generally used to deter culpable behavior and deterrence would not be necessary, and would not work, for an innocent infringer. Depending on the facts of a case, trademark law provides sufficient remedies to prevent a likelihood of confusion and compensate a plaintiff for its losses—beyond a defendant’s profits—like an injunction, actual damages and/or corrective advertising. An award of profits can be reserved for willful infringers, without depriving a plaintiff of remedies for non-willful infringement.

Federal Circuit rules willfulness a prerequisite for disgorgement of trademark infringer’s profits

The Federal Circuit affirmed. Undertaking an extensive analysis of the legislative history of Lanham Act damages, the Court attempted to explain a 1999 amendment inserting language regarding willfulness. Because the “willful violation” language appears to modify violations of § 1125(c) regarding dilution, Romag argued that the amendment negated any preexisting willfulness requirement for causes of action other than dilution. Relying heavily on Second Circuit precedent, which governed the district court decision, the Court disagreed.