CHAPTER 12 - § 12.06

• Jurisdiction: United States

§ 12.06 THE FUTURE OF MONETARY DAMAGES

As discussed in Chapter 10, the Supreme Court resolved a circuit split as to whether willfulness was a prerequisite to the recovery of monetary damages in Romag Fasteners. Prior to that decision, the Second, Sixth, Tenth, and D.C. Circuits all held that willfulness was necessary.⁶² In contrast, the Third, Fourth, and Fifth Circuits held that willfulness was not a requirement.⁶³ The Third Circuit's decision in Banjo Buddies was often cited for its recitation of the six-factor equitable test for determining an award of monetary damages, which did not specifically require a showing of willfulness.⁶⁴ The Eleventh Circuit had a similar test, permitting an accounting for profits where "(1) the defendant's conduct is a deliberate and willful violation; (2) the infringer is unjustly enriched; or (3) the sanction is necessary for future deterrence."⁶⁵ The Ninth Circuit vacillated on the issue over time, but more recent district court decisions indicate that willfulness is but one factor to be considered.⁶⁶ Prior to the decision in Romag Fasteners, the Eighth Circuit remarked:

A circuit split exists concerning whether a Lanham Act plaintiff must prove willful infringement, rather than mere infringement, to be eligible for monetary damages under 15 U.S.C. § 1125(a). The question turns on the effect of amendments to the Lanham Act Congress made in 1999 [citations comparing cases omitted]. For purposes of adjudicating this appeal, we assume, without deciding, that willful infringement is a prerequisite of monetary relief.⁶⁷

In 2005, the Supreme Court had an opportunity to address this circuit split in Contessa Premium Foods v. Berdex, but declined.⁶⁸

A pre-Romag Fasteners trade dress case within the Sixth Circuit even acknowledged the conflicting authorities within the circuit with regard to the willfulness requirement, and seemed to indicate a willingness to move away from such a requirement toward a factor-based equitable test (such as in Banjo Buddies).⁶⁹ There Maker's Mark brought suit against Diageo (manufacturers of Jose Cuervo brand tequila products) for trade dress infringement arising from Diageo's use of a dripping wax seal on its tequila bottles. Below are images of both the Maker's Mark bottle standing alone, and a comparison of the two bottles next to each other.

After a bench trial, the Court issued an injunction preventing Diageo from any further use of the dripping wax seal on its tequila bottles.⁷⁰ What made the Maker's Mark case interesting was that Diageo agreed to stop making the tequila product at the inception of the litigation, and there was no other evidence of bad faith.⁷¹ In most cases of trade dress infringement, the defendant will continue to sell product, putting the issue of willfulness more in play. Still, Maker's Mark sought damages for past sales of the tequila.⁷² The district court denied such relief, noting the following:

Maker's Mark offered no proof that Cuervo's use of the red dripping wax seal caused it to lose actual sales or goodwill. Cuervo's proof suggested that it did not profit from the use of the dripping wax seal because sales of Reserva grew proportionately, before, during and after Cuervo used the dripping wax. As noted above, Maker's Mark offered no significant evidence of actual confusion. Moreover, Cuervo ceased use of the mark voluntarily at the start of this litigation, indicating that it will not willfully infringe Maker's Mark's trademark in the future. Finally, no evidence proved intentional copying or bad faith.⁷³

Based on the...