What is the Lanham Act?
The Lanham Trademark Act is a federal statute that governs all aspects related to trademarks. This includes the rules for applying for trademarks and modifying trademarks, as well as what constitutes trademark infringement and the remedies for infringement. The Lanham Act is primarily used to protect the owner of a trademark from theft or use of its mark by an unauthorized person. The Act protects trademark owners by outlining the procedures for a court to award damages based on trademark infringement or counterfeit production of the mark.
How Does the Court Determine Damages for Trademark Infringement?
If a court determines that there has been trademark infringement, the Lanham Act provides a remedy for the individual or business whose trademark was used. The Act permits the injured party to recover (1) any profits the defendant made off the use of the trademark, (2) any damages sustained by rightful owner of the trademark through the unlawful use by the defendant, and (3) the costs of the court action. The court gives a benefit to the injured party by requiring them to simply provide that the defendant made a profit off the use of the trademark, and then requires the defendant to refute the stated amount. If the trademark infringement is particularly shocking or offensive, then the court can award the injured party three times the actual amount of damages. For example, if the injured party incurred a loss of revenue of $1,000,000 and the trademark infringement was so blatant then the court could order the guilty party to pay $3,000,000. In exceptional cases, the court may also award reasonable attorney fees to the prevailing party.
Additional Treble Damages for Use of a Counterfeit Mark
The Lanham Act allows courts to award additional damages if the offending party is found to have created a mark that is identical with, or substantially indistinguishable from the damaged party’s trademark. In these instances, the court will automatically award three times the amount of damages or profits as well as reasonable attorney fees.
Statutory Damages for Use of a Counterfeit Mark
At any time during the proceedings, the injured party may choose to take a set amount of damages for the violation, rather than wait for the court to calculate an amount. Typically, an injured party will elect to do this when the amount of damages is difficult to calculate. In these instances, the Lanham Act outlines the amount the injured party will be awarded. If the offending party is found to have used a counterfeit mark to sell goods or services, he will be required to pay the injured party “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.” Additionally, the Act gives the court the ability to award more statutory damages if the use of the mark was blatant and malicious, and permits the court to award “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 court has discretion to decide an amount within that range and typically does so based on the circumstances surrounding the misuse. Particularly the court will look to whether the use was accidental, the value of the trademark, the amount the injured party lost, and the amount the offending party gained. While the act does not specify whether the injured party is entitled to attorney’s fees on top of statutory damages, courts across the country have set a reasonable precedent that attorney fees are also awarded in cases involving bad faith by the offending party.