Summary
This Seventh Circuit opinion addresses whether a trademark plaintiff must prove actual profits or can recover gross sales as profits under the Lanham Act following a default judgment. The appellate court reversed the district court’s refusal to award profits based solely on evidence of infringing sales revenue, holding that the Lanham Act places the burden on the defendant to prove deductible costs once the plaintiff establishes sales. Because the defendants failed to meet this burden, the court ruled that gross sales equate to profits, remanding the case for further proceedings consistent with this statutory interpretation.
Topics
Practice areas
Questions Presented
- Whether the district court erred in refusing to award profits under the Lanham Act when the plaintiff presented evidence of revenue and the defendant failed to prove deductions
- What standard of review applies to the district court’s interpretation of the Lanham Act profit‑recovery provision
Holdings
- The district court erred; a trademark plaintiff who offers evidence of infringing sales and the infringer fails to carry its statutory burden is entitled to recover the infringer’s profits, which are deemed equal to the infringer’s gross sales.
- Statutory interpretation questions are reviewed de novo.
Key quotations
“The Lanham Act states that a prevailing plaintiff is entitled to the defendant’s profits, and the defendant bears the burden of establishing the amount of profits.” (at 526)
“The district court contravened the Lanham Act’s plain language when it found Dyson’s evidence of revenue as opposed to profits insufficient and declined to assume that revenue equals profits.” (at 526)
Factual background
Dyson, a UK‑based manufacturer, alleged that several e‑commerce stores sold counterfeit Dyson products. The stores failed to appear, resulting in a default judgment. Dyson proved the revenue generated by the infringing sales but offered no direct profit calculations. The district court awarded statutory damages but denied profit recovery, reasoning that revenue is not profit.
Procedural history
Dyson Technology Ltd. sued multiple e‑commerce stores for trademark infringement under the Lanham Act. The district court entered a default judgment for Dyson but limited the award to statutory damages, refusing to award the infringers' profits because Dyson presented revenue evidence, not profit calculations. Dyson appealed the district court's interpretation of the profit‑recovery provision.
Remand instructions
On remand, the district court shall award Dyson the infringer’s profits, which are deemed equal to the infringer’s gross sales, unless the court makes a factual finding that a different amount is just and equitable under 15 U.S.C. § 1117(a).