Companies go to great lengths to protect their trademark. An action for trademark infringement under the Lanham Act also includes claims that a party is selling counterfeit goods using another party’s trademark. Those are serious claims and if found liable can result in severe statutory penalties.
“To prevail on its claims under the Lanham Act for trademark infringement, counterfeiting and false designation of origin, plaintiff must demonstrate that, ‘(1) it owns a valid and protectable trademark, and (2) the defendant used in commerce a similar mark without authorization in a manner likely to cause consumer confusion, deception, or mistake.'”
The Lanham Act authorizes recovery of statutory damages for use of counterfeit marks, and provides, in relevant part, as follows:
In a case involving the use of a counterfeit mark . . . in connection with the sale, offering for sale, or distribution of goods or services, the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits under subsection (a), an award of statutory damages for any such use in connection with the sale, offering for sale, or distribution of goods or services in the amount of—
(1) not less than $1,000 or more than $200,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just; or
(2) if the court finds that the use of the counterfeit mark was willful, not more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just.
The Lanham does not provide guidelines for courts to determine an appropriate award of statutory damages. However, the Ninth Circuit has directed that damage awards should make “deliberate acts of trade-mark infringement unprofitable.” Maier Brewing Co. v. Fleischmann Distilling Corp., 390 F.2d 117, 123 (9th Cir. 1968.)
Statutory damage awards by courts vary widely. In Otter Products LLC v. Ace Colors Fashion, Inc., awarding $35,000 upon evidence of the sale of eleven counterfeit items after the plaintiff requested $100,000. In another case the court declined to issue statutory maximum award because the plaintiff presented no evidence regarding the extent of sales by the defendant, but awarding $25,000 per product based on evidence of 21 products bearing the plaintiff’s marks.
Because of the uncertainty of damages the court can award if it finds a party sold counterfeit goods it is important to take these actions seriously when mounting a defense.
Source Sream, Inc. v. Singh