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$2M award for trademark infringement stands

Where the jury awarded the plaintiff $2 million in damages on its trademark infringement claim, the defendants’ post-trial attack on that award failed. Although the award constituted a significant portion of defendants’ profits, and it was not perfectly clear how much of defendants’ profits could be reasonably attributed to their infringement of plaintiff’s mark, the defendants failed to adequately rebut the claimed damages, which were not excessive and did not constitute a penalty under the Lanham Act.

Background

Emerson Creek Pottery operates a pottery manufacturing facility and retail outlet in Bedford County, Virginia. It sued defendants for trademark infringement and other claims. 

After a four-day trial, the jury returned a verdict in plaintiff’s favor on each claim. The jury found that defendants breached the licensing agreement and found defendants liable in the amount of $5,119.51 for the breach. For the trademark infringement claim, the jury found defendants liable for $2,000,000 in damages. The jury also found in plaintiff’s favor on defendants’ affirmative defenses of naked licensing and acquiescence. Defendants have now filed a renewed motion for judgment as a matter of law, or, alternatively, for a new trial or amended judgment.

Renewed motion for judgment

Courts reviewing a jury’s verdict must construe all of the facts — including all inferences drawn from the evidence — in support of the verdict. Accordingly, the court must affirm if a “rational trier of fact” could have reached the jury’s conclusion. In this case, a rational trier of fact could have reached each of the jury’s conclusions. The court will deny defendants’ renewed motion for judgment as a matter of law.

Motion for new trial

Defendants move for a new trial in general as an alternative to their renewed motion for judgment as a matter of law, and specifically move for a new trial on the issue of the existence of an implied license. For the same reasons as stated above, the court holds that the jury had a legally sufficient basis for each of its findings and will deny a new trial based on the sufficiency of the evidence.

The court will also deny a new trial on the issue of an implied license because the jury simply did not need to find whether an implied license existed once the jury found that an express license existed. The court also notes that in defendants’ proposed jury instructions, defendants proposed that the jury did not need to find whether an implied license existed if the jury found that an express license existed.

Motion for amended judgment on damages

In the alternative, defendants move for an amended judgment on damages. District courts must consider the following factors when evaluating an award of damages under the Lanham Act: (1) whether the defendant had the intent to confuse or deceive, (2) whether sales have been diverted, (3) the adequacy of other remedies, (4) any unreasonable delay by the plaintiff in asserting his rights, (5) the public interest in making the misconduct unprofitable and (6) whether it is a case of palming off. A weighing of these factors shows that a monetary award is appropriate in this case.

But the court finds itself caught between two competing circumstances. On one hand, the $2,000,000 jury award constitutes a significant portion of defendants’ profits, and it is not perfectly clear how much of defendants’ profits could be reasonably attributed to their infringement of plaintiff’s mark. On the other hand, defendants made little effort at trial to establish their costs or to argue which portions of their profits might or might not be attributable to their use of plaintiff’s mark. Nor have defendants done so in their pleadings on this motion.

At trial, plaintiff introduced evidence of defendants’ profits for one of the years in which defendants infringed: $1,129,530 in 2018. Plaintiff adduced evidence about defendants’ business during the subsequent years, and based on that evidence, estimated defendants’ total profits during the years of infringement, very roughly, to about 3.8 million dollars. Defendants have not contested that figure, instead choosing to argue that the only appropriate amount of damages is none.

Taking the 3.8 million number, the jury award constituted 52.6% of defendants’ profits for the years in which defendants infringed plaintiff’s mark. The jury, after hearing all the evidence, decided that was the amount of defendants’ profits attributable to the infringement. The court will not second-guess the jury. At the very least, the jury’s award is not excessive and does not constitute a penalty under the Lanham Act. Therefore, the court will affirm the jury’s damages award and deny defendants’ motion to reduce damages.

Defendants’ renewed motion for judgment as a matter of law, motion for new trial and motion for amended judgment denied.

Emerson Creek Pottery v. Emerson Creek Events, Case No. 6:20-cv-54, Aug. 26, 2022. WDVA at Lynchburg (Moon). VLW 022-3-376. 12 pp.

VLW 022-3-376