The Ninth Circuit yesterday addressed the question: “whether an award of statutory damages for trademark counterfeiting under 15 U.S.C. § 1117(c) precludes an award of attorney’s fees under 15 U.S.C. § 1117(b).” Reversing the Central District of California in the case of K and N Engineering, Inc. v. Bulat, the Ninth Circuit found that it does. . . .
This seems like a strange result. Injured trademark owners opt for statutory damages because counterfeiters don’t keep records needed for the injured owners to prove damages or the counterfeiters’ profits. If a counterfeiter keeps good records, Section 1117(b) generally enables the injured trademark owner to obtain a judgment for “three times such profits or damages, whichever is greater, together with a reasonable attorney’s fee….” But if a counterfeiter doesn’t keep good records, the injured owner only gets statutory damages? I suppose the statute says what it says, but from a policy standpoint, this conclusion makes no sense.
Michael is right on. This ridiculous holding is contrary to many cases, including one I was involved in, Louis Vuitton Malletier v. Veit. What are these guys thinking?!
UPDATE: For what they’re thinking, read the insightful comments below from Ryan Fountain, the successful attorney for the appellants.
Originally posted 2007-12-21 11:32:26. Republished by Blog Post Promoter
Actually, the result is perfectly correct in the facts of this case and proably not contrary to many prior cases at all when you compare facts. There was no bone fide question about the accuracy of records. The number of accused units sold and revenues received was precisley known. In my opinion, the real issue was about the appropriateness of a litigious party spending a ton of money to collect peanuts against two nearly indigent defendants, and then wanting to get paid for its excesses. The statute does not support that kind of gamesmanship, nor should it. [posted by counsel for the appellants]
Hmm, now I’m interested in that, Ryan! But what does that have to do with the juxtaposition of statutory damages and attorneys’ fees? Why not just deny the attorneys’ fees on the grounds of the broad language of the Lanham Act and the degree of discretion given courts to award fees under that statute?
There is no question but that attorneys fees can be awarded if the statutory criterion are met, but, if I understand your question correctly, when you elect statutory damages, the expenses of litigation are one of the factors that the Court considers in deciding upon the amount of statutory damages to award. If you get statutory damages and then get attorneys fees on top of that, are you not double counting? Certainly K&N could have sought actual damages (about $287) and then gone for attorney fees if it could show wilfulness or counterfeiting, but it intentionally chose not to do so early in the case (apparently because it did not want to turn over certain discovery documents to the defendants) and in fact, the district court specifically found that the defendants were not wilful infringers.