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15.25 Trademark Damages—Plaintiff's Actual Damages

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15.25 TRADEMARK DAMAGES—PLAINTIFF’S ACTUAL DAMAGES (5 U.S.C. § 1117(a))

If you find for the plaintiff on the plaintiff’s [infringement] [unfair competition] claim [and find that the defendant had statutory notice or actual notice of the plaintiff’s registered trademark], you must determine the plaintiff’s actual damages.

The plaintiff has the burden of proving actual damages by a preponderance of the evidence. Damages means the amount of money which will reasonably and fairly compensate the plaintiff for any [injury] [and] [or] [property damage] you find was caused by the defendant’s infringement of the plaintiff’s registered trademark.

You should consider the following:

1. [The [injury to] [loss of] the plaintiff’s reputation][;]

2. [The [injury to] [loss of] plaintiff’s goodwill, including injury to the plaintiff’s general business reputation][;]

3. [The lost profits that the plaintiff would have earned but for the defendant’s infringement. Profit is determined by deducting all expenses from gross revenue][;]

4. [The expense of preventing customers from being deceived][;]

5. [The cost of future corrective advertising reasonably required to correct any public confusion caused by the infringement][;] [and]

6. [Insert any other factors that bear on plaintiff’s actual damages].

When considering prospective costs (e.g., cost of future advertising, expense of preventing customers from being deceived), you must not overcompensate. Accordingly, your award of such future costs should not exceed the actual damage to the value of the plaintiff’s mark at the time of the infringement by the defendant.

Comment

The plaintiff must prove both the fact and the amount of damages. See Intel Corp. v. Terabyte Int’l, Inc., 6 F.3d 614, 621 (9th Cir.1993); Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1407 (9th Cir.1993).

The plaintiff’s actual damages are measured by any direct injury that plaintiff proves and any lost profits plaintiff would have earned but for the infringement. See Lindy Pen Co, 982 F.2d at 1407 (where proof of actual damage is difficult, a court may base damage award on defendant’s profits, on a theory of unjust enrichment). However, the fact that the infringer did not profit from the infringement does not preclude an award of damages. See Intel Corp., 6 F.3d at 621 (court determination of damages for mislabeling computer chips as those of faster manufacturer properly calculated by multiplying infringer’s sales by plaintiff’s lost profits and taking 95% of the product, based on inference that great majority of chips were counterfeit.)

For a general discussion of plaintiff’s actual damages, see 5 J. Thomas McCarthy, Trademarks And Unfair Competition § 30:72 (4th ed. 2001). See also 1a Jerome Gilson, Trademark Protection and Practice § 8.08(2) (1996) (listing examples of recoverable damages).

To avoid the risk of overcompensation in the award of prospective costs, damage instructions should inform the jury that the award of prospective costs should not exceed the damage to the value of the infringed mark. See Adray v. Adry-Mart, Inc., 76 F.3d 984, 989 (9th Cir.1995).

Defendant may argue that plaintiff’s loss in sales may be caused by other market factors and not as a result of defendant’s infringement. If defendant makes such an argument, an appropriate instruction should be drafted.

See Instructions 5.2 (Measure of Types of Damages), 5.3 (Damages–Mitigation), and 5.4 (Damages Arising in the Future–Discount to Present Cash Value).