WMS Gaming Inc. v. WPC Gaming Prods. Ltd., No. 07-3585, Slip Op. (7th Cir. Sep. 8, 2008) (Wood, J.).*

Judge Wood delivered the Seventh Circuit’s opinion reversing and revealing Judge Manning’s damages award. Plaintiff-Appellant WMS Gaming (“WMS”) alleged that defendants (collectively “PartyGaming”) infringed its JACKPOT PARTY and SUPER JACKPOT PARTY marks. Defendants chose not to participate in the suit. The Northern District, therefore, entered a default judgment for WMS and a permanent injunction. WMS sought $287M in damages, an amount equal to PartyGaming’s reported U.S. revenues during the relevant period. The Court, however, held that WMS was entitled to damages, not an equitable accounting of all of defendants revenues and awarded approximately $900K per year, or $2.7M total. As an initial matter, the Seventh Circuit held that Fed. R. Civ. P. 54(c) requires that in the case of a default judgment the award cannot differ from or exceed the type and amount of requested damages. Because WMS’s complaint and its subsequent pleadings all requested both an equitable accounting and actual damages, either were an allowable damages award.

Having determined that an equitable accounting was an appropriate remedy, the Court explained that WMS was entitled to an award of PartyGaming’s revenues attributable to PartyGaming’s trademark infringement. Further, WMS’s burden was only to prove PartyGaming’s revenue. WMS did that by proving PartyGaming’s $287M of U.S. revenues during the relevant period. The burden then shifted to PartyGaming to prove which portions of its revenue were not attributable to its infringement. The Seventh Circuit, therefore, reversed and remanded to the Northern District.

Click here for the opinion and click here for a podcast of the oral argument.