Damages

Subscribe to Damages via RSS

American Taxi Dispatch, Inc. v. American Metro Tax & Limo Co., __ F. Supp.2d __, 2008 WL 4616855 (N.D. Ill. Oct. 20, 2008) (St. Eve, J.).
Judge St. Eve permanently enjoined defendants’ (collectively “Metro”) use of trademarks infringing plaintiff American Taxi’s American Taxi marks, and awarded American Taxi damages in the amount of Metro’s gross sales as well as attorney’s fees. American Taxi began using its marks in 1975. Metro incorporated and began using their American Metro Taxi marks in early 2007. American Taxi filed the instant suit for trademark infringement, Lanham Act unfair competition and related state law claims. Metro initially defended itself, but after repeatedly missing deadlines th Court entered a default judgment and allowed American Taxi to submit proofs, which led to this opinion.
Pursuant to Fed. R. Civ. P. 54(c), the award could not exceed in form or amount what was demanded in the pleadings. The Court held that the complaint justified a permanent injunction. American Taxi alleged that Metro’s infringing acts harmed American Taxi’s goodwill, and the Seventh Circuit has held that damage to goodwill can constitute irreparable harm. And American Taxi backed up its complaint with an affidavit detailing actual confusion between the marks. Furthermore, a tailored injunction would not put Metro out of business. In fact, Metro’s owner claimed that Metro had been dissolved. So, the balance of harms weighed in American Taxi’s favor. And finally, there is a public interest in knowing whom they conduct business with, which favored an injunction. The Court, therefore, permanently enjoined Metro and its affiliates, successors and assigns from using its marks or any others that were confusingly similar to the American Taxi marks.
The Court then awarded damages in the amount of Metro’s provable gross sales. The Court focused its analysis on the Seventh Circuit’s recent WMS Gaming, Inc. v. WPC Prods. Ltd. decision in which the Seventh Circuit held that plaintiff need only prove gross sales and then the burden shifts to defendant to prove its costs — click here to read the Blog’s post about that decision. As a result, where defendant is in default, plaintiff’s may be awarded defendant’s gross profits.
Finally, the Court held that the case was exceptional, warranting an award of attorney’s fees. But the Court limited the amount of fees because the request was “less than a model of clarity” and it was not clear from the submission which of the time entries were appropriate.
…
Continue Reading Default Ends in Injunction & Award of Defendants’ Gross Sales

Hyundai Construc. Equip. U.S.A., Inc. v. Chris Johnson Equip., Inc., No. 06 C 3238, Slip Op. (N.D. Ill. Oct 21, 2008) (Leinenweber, Sen. J.).
Judge Leinenweber, having previously granted plaintiff summary judgment of Lanham Act unfair competition and deceptive trade practices,* enjoined defendant’s continued sale of gray market goods and use of plaintiffs’ trademarks and awarded plaintiffs damages and costs. The Court awarded plaintiffs defendant’s profits from sales of gray market construction equipment (equipment made abroad for sale abroad that was imported to the United States without authority for resale), but the Court held that awarding plaintiffs a multiple of defendant’s actual damages would be inappropriately punitive. Additionally, the Court gave defendant an opportunity to prove its costs before entering a final damages amount.
The Court also entered a permanent injunction. The Court, however, denied plaintiffs’ request that defendant have to provide plaintiffs and the Court a report proving defendants’ compliance with the injunction. Such a requirement was unduly burdensome.
Finally, the Court awarded plaintiffs their costs, but held attorney’s fees were not appropriate because the case was not exceptional. Among other reasons the case was not exceptional, the Court noted evidence that defendants “apparent pains” to warn customers that defendants’ products lacked a warranty and came from overseas. And the Court held that no actual confusion had yet been proven.
* Click here for the prior decision in the Blog’s archives.
…
Continue Reading Court Awards Injunction, Actual Damages and Costs, Not Attorney’s Fees

Bobak Sausage Co. v. Bobak Orland Park, Inc., No. 06 C 4747, Slip Op. (N.D. Ill. Nov. 3, 2008) (Kennelly, J.).*
Judge Kennelly denied without prejudice plaintiff Bobak Sausage Co.’s (“Bobak”) motion to compel defendant’s interest in Bobak Fifty Third Street LLC (“Bobak 53”). Bobak makes and sells meat products and operates a related restaurant in Chicago. Bobak’s founder, Frank Bobak, transferred ownership of Bobak’s to his sons. In early 2006, Bobak’s reorganized, leaving two of the sons owning Bobak’s and a third, defendant, owning a grocery store that Bobak’s had been building. All of the brothers maintained as interest in Bobak 53. As part of the reorganization, Bobak’s granted two entities rights to use Bobak’s trademarks at retail locations for a six month period. After the six month period ended, Bobak’s filed suit against defendants (including the third son and the licensed retail locations) for, among other things, trademark infringement based upon the continued use of the Bobak’s marks. The parties settled that dispute based at least in part upon a stipulated permanent injunction, which the Court entered, setting various limits on what marks each defendant could use, requirements that the defendants remove and change their signage and requirements that defendants use disclaimers that they were not affiliated with Bobak’s. The Court later held certain defendants in contempt for violating the permanent injunction and entered a remedial fine of $150,000. When defendants failed to pay the fine, the Court added interest to it.
Because defendants continue not to pay the fine, Bobak moved the Court for an order compelling the transfer of defendant’s interest in Bobak 53 pursuant to Fed. R. Civ. P. 69(a) and 70. The Court, however, held that Rule 70 only allows for enforcement of money judgment in very narrow circumstances, circumstances that were not yet met in this case.
Rule 69(a) allows for a writ of execution in accord with the rules of the state where the court is located, Illinois in this case. Illinois law says that the debtor’s property delivered for repayment is to be sold by the sheriff at public auction. But because defendant’s interest in Bobak 53 is relatively non-liquid – plaintiffs, the other owners of Bobak 53, retain substantial sale over any sale or subsequent sale. The restrictions on ownership and sale of Bobak 53 make a public sale impractical. But the Court could order that any distributions be paid to plaintiff. The Court, therefore, denied plaintiff’s motion without prejudice. But the Court also ordered defendant to show cause why the Court should not appoint a receiver for defendant’s interest in Bobak 53 and enjoin the state court proceedings regarding Bobak 53.
* Click here for more on this case in the Blog’s archives.
…
Continue Reading Court Does Not Order Sale of LLC to Satisfy Judgment, But May Appoint Receiver

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.
…
Continue Reading Trademark Plaintiff Entitled to All Defendants’ Revenue

Mike Atkins at the Seattle Trademark Lawyer has an interesting post — click here for the post — about a pending Chinese trademark infringement suit, in which plaintiff seeks monetary damages and a public apology to be published in newspapers. IP Dragon follows up Atkins’s post, explaining that an apology is a Chinese trademark remedy and that an apology is a punishment in a “face saving culture,” as IP Dragon describes China and Japan, the nationalities of the two entities involved in the suit. Click here for IP Dragon’s post.
But punishment or not, this raises an interesting question for US trademark law. It seems to me that a public apology (or acknowledgement of the infringement) would be a more powerful tool for the consumers that trademark law intends to protect than just monetary damages and an injunction. An acknowledgement of the infringement would warn consumers who might still unwittingly purchase items based upon the infringing marks after the injunction is in place. Maybe it is time to amend the Lanham Act.
…
Continue Reading Should Apologies be Added to Trademark Damages?

Lorillard v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 4844, 2008 WL 1775512 (N.D. Ill. Apr. 17, 2008) (Aspen, J.).
Judge Aspen adopted Magistrate Judge Cole’s Report and Recommendation, denying defendants’ Fed. R. Civ. P. 59(e) motion to alter the Court’s judgment against defendants – click here to read more about that Report and click here to read more about this case in the Blog’s archives. The Court awarded plaintiff Lorillard $2.5M in statutory damages for defendants’ sales of counterfeit cigarettes using Lorillard’s trademarks. Defendants objected to, among other things, a statutory damages award in excess of $1M. Defendants argued that 15 U.S.C. § 1117(c)(2) only allowed $1M in statutory damages per type of goods sold. Because this case only involved one type of goods, cigarettes, defendants argued statutory damages could not exceed $1M. But the Court held that the limitation was $1M per counterfeit mark per type of good. Because Lorillard alleged five counterfeit marks were used, the statutory damages limit was $5M.
…
Continue Reading Counterfeiting Statutory Damages are up to $1M/Trademark

Brian Higgins at the Maryland IP Law Blog posted an analysis of significant willfulness decisions post-In re Seagate, 497 F.3d 1360 (Fed. Cir. 2007) — click here for the post and click here for a subsequent post discussing Se-Kure Controls, Inc. v. Diam USA, Inc., No. 06 C 4857, 2008 WL 169029 (N.D. Ill. Jan. 17, 2008) (Cox, Mag. J.). Of the eleven decisions Higgins identified, three were Northern District decisions and one was a Federal Circuit decision analyzing a Northern District case. Here are my posts on the Northern District decisions:
Abbott Labs. v. Sandoz, Inc., No. 05 C 5373, 2007 WL 4287503 (N.D. Ill. Dec. 4, 2007) (Coar, J.).
Se-Kure Controls, Inc v. Diam USA, Inc.
Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. Jan. 3, 2007) (Moran, Sen. J.).
As you can infer from the relatively small number of cases identified by Higgins, there remains a lot of law to be written about Seagate before the standard is well settled. I suspect that within 18-24 months there will be a relatively large body of law, including numerous Federal Circuit decisions exploring the new standard’s outlines. Until then, patent litigants will face a degree of uncertainty regarding willfulness. Of course, defendants will generally be glad to have some uncertainty in exchange for plaintiffs’s higher willfulness hurdle.
…
Continue Reading Willfulness Post-Seagate

Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. Feb. 5, 2008) (Moran, Sen. J.).*
Judge Moran denied defendants’ Fed. R. Civ. P. 59 motion for a new trial of damages on the condition that plaintiff Trading Technologies (“TT”) accepted a remittitur of defendant eSpeed’s portion of the damages. After a trial, the jury returned a verdict for TT and awarded $3.5M in compensatory damages, split $2M against defendant Ecco and $1.5M against defendant eSpeed. At trial, TT’s damages model was based upon a proposed reasonable royalty of between $.15 and $.25 per trade and a total of approximately 18M to 23M trades for a damages range of about $3.5M to $4.6M. TT argued that the apportionment of damages was irrelevant because the total award was within the argued range and because eSpeed purchased Ecco and, therefore, would be paying the full amount. But the Court noted that Ecco’s award would be paid from an escrow account set up for because of TT’s patent claims when eSpeed purchased Ecco. Additionally, eSpeed’s $1.5M judgment was well beyond the highest award that could be supported by TT’s evidence. The evidence showed that during the relevant time, eSpeed completed approximately 2.1M trades. Even at $.25 per trade, TT’s highest proposed royalty, the possible damages were only $539,468. The Court, therefore, offered TT a remittitur of $539,468 or a new trial on damages.
The Court also awarded TT prejudgment interest set at the average prime rate for the period compounded monthly, because TT collected license fees monthly.
* Click here to read much more about this case in the Blog’s archives and click here for a copy of this opinion.
…
Continue Reading Trading Technologies v. eSpeed: Damages Remittitur

In a recent post on the University of Houston Law Center Faculty Blog (another LexBlog site), Ray Nimmer asks whether the Supreme Court’s recent eBay v. MercExchange permanent injunction decision will lead to compulsory licensing. Nimmer discusses two alternatives when a permanent injunction is not granted after a patent infringement finding:
One response is simply to assess damages as to past infringement, leaving any future use of the patent for a voluntary agreement of the parties (a license) or a subsequent infringement suit for the subsequent infringements. That is clearly the preferable option, although it does raise limited issues of judicial economy.
A second alternative is to permit subsequent use by the defendant subject to the payment of a reasonable royalty imposed by the court. This is a form of compulsory licensing that rewards the wrongdoer, unless the remedy has been requested by the patent owner. Nevertheless, a panel of the Federal Circuit indicated that such a remedy may be appropriate. One wonders why.
Nimmer concludes that courts should not impose compulsory licensing for future infringement absent substantial public policy reasons:
The preconditions should be both an opportunity to negotiate a license and, failing a bargain, a request by both parties for the court to impose a royalty as part of the remedy for infringement. A patent creates a right to exclude and, where the patent owner prefers to exercise that right, it should not be forced into a licensing arrangement resulting from a case in which it prevailed on the infringement claim. There may be some cases in which vital public policy interests justify this result, but those cannot be grounded simply in the fact that the court denied a permanent injunction or the parties have not agreed to license terms. A remedy should not penalize the person to whom the remedy is awarded.
…
Continue Reading Will eBay v. MercExchange Lead to Compulsory Licensing?

RRK Holding Co. v. Sears, Roebuck & Co., No. 04 C 3944, Min. Order (N.D. Ill. Sep. 10, 2007) (Coar, J.).*
Judge Coar denied the parties’ damages motions in limine.* First, the Court held that defendant Sears, Roebuck & Co. (“Sears”) could have its damages expert Catherine Lawton testify regarding her analysis of a hypothetical September 2001 negotiation between the parties. Plaintiff RRK Holding (“RRK”) argued that the misappropriation began in March 2000, not when Sears began selling its product in September 2001. As a result, Sears contended that Lawton’s September 2001 hypothetical negotiation should not be allowed into evidence. But the Court held that the timing of the misappropriation was a question of fact for the jury and, therefore, allowed Lawton’s testimony.
Second, the Court held that Sears could introduce the 2003 sale of some of RRK’s assets for $17M as part of Sears’s damages case. The Court held that the value of the sale was relevant to RRK’s alleged injury based upon the alleged misappropriation.
Third, the Court held that RRK could introduce damages calculations including periods beyond the “head start” period (the time it would have taken for Sears to reverse engineer RRK’s combination tool). The head start period was disputed, preventing the Court from fixing a time for the period, and any alleged harm would be resolved by a jury instruction explaining how the jury should calculate damages relative to the head start period.
Finally, the Court denied RRK’s motion for sanctions pursuant to 28 U.S.C. § 1927. RRK argued that Sears’s March 2007 production, two years after fact discovery closed, of documents dated 1999 was “unreasonable and vexatious” and should be sanctioned. But the Court held that Sears’s explanation that the documents were found when it replaced its litigation counsel and new counsel ran additional searches rendered the delay “negligen[t] and reckless[],” but not in bad faith. The Court, therefore, did not impose sanctions.
* Click here for a copy of the opinion and click here for more about this case in the Blog’s archives.
…
Continue Reading “Negligence and Recklessness” Does Not Warrant Discovery Sanctions