Friday, February 25, 2005

3d Circuit holds "willfulness" no longer prerequisite for accounting of trademark infringer's profits

The 3d Circuit recently joined the 5th Circuit in holding that the 1999 amendment to section 35(a) of the Lanham Act, 15 USC § 1117(a) -- which added language allowing monetary awards for a "willful violation" of the anti-dilution statute but not adding the word "willful" as to § 43(a) violations -- means that willfulness is now NOT a prerequisite for disgorgement of the infringer's profits. In Banjo Buddies, Inc. v. Renofsky, No. 03-2038 (Feb. 22, 2005), the court held that Congress's failure to add the word willful was, in a word, willful, given that it is charged with knowing that the courts had pretty much, at that time, uniformly been interpreting section 35(a) to require willfulness before ordering disgorgement. The court listed several nonexhaustive factors that a court should consider in deciding whether to award disgorgement of profits, including (1) willfulness, (2) lost sales, (3) adequacy of other remedies, (4) any unreasonable delay in asserting rights, (5) public interest in making the misconduct unprofitable, and (6) whether it's a case of "palming off." In discussing the district court's award of the infringer's profits, the court also noted that "there is no requirement that the defendant's profits approximate the plaintiff's damages" and that an award of the infringer's profits is available if the infringer was unjustly enriched, if the plaintiff sustained damages, OR if the award is necessary for deterrence. (Slip op. at 18.)

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