Trademark Infringement Lawsuit: Everything You Need to Know
A trademark infringement lawsuit can arise when an individual or company uses another company's trademark in a way that could cause market confusion. 7 min read
A trademark infringement lawsuit can arise when an individual or company uses another company's trademark in a way that could cause market confusion. An organization can be sued if they use words, phrases, or images that are likely to result in being mistaken for another business. While trademarks were once regional, global commerce via the internet has increased the likelihood that market confusion will occur.
Trademark lawsuits typically cost between $120,000 and $750,000. The cost of trademark lawsuits depends on a variety of factors. These lawsuits can also take several years to be resolved. Small and large businesses alike are harmed by this significant drain on resources. In addition, large businesses run the risk of damage to their reputation if they are sued for trademark infringement and the infringement case is reported in the media.
Is it Really Trademark Infringement?
Registering your trademark provides national protection for your trademark within your specific industry. Having your trademark federally registered creates a stronger infringement case if another company in the same industry is using a similar trademark. Even without a federally registered trademark, however, you are protected from infringement within your own state and industry.
Thoughts Before Bringing a Trademark Infringement Lawsuit
You have several enforcement options if you believe another company is infringing on your trademark. While a cease-and-desist letter is inexpensive and can be effective, more serious cases of trademark infringement may require a lawsuit for resolution. These are the considerations to keep in mind before suing another company for trademark infringement:
- Understand your intellectual property rights and business model. In your lawsuit, you will need to prove that your trademark is registered and you have a record of the date when it was first used in the marketplace. You'll need to make sure that you were using the trademark in commerce before the other party and that your registration has not lapsed. You should also note whether you have ever assigned the rights to your trademark or been assigned these rights by another party. Understand how much you spend on trademark-related marketing and note any instances of marketplace confusion that have occurred.
- Consider whether it will be worth your time, energy, and resources to sue. Weigh the financial cost of another business using your trademark against the cost of a lawsuit. You'll have to pay monthly attorney bills for the duration of the lawsuit, which could stretch to several months or years. Sometimes attorney fees can be recouped from the infringer, but this only occurs after you win the case. Lawsuits make the most sense for high-end companies who rely on the substantial value of their brand.
- Learn whether you'll be able to recover attorney fees. Most states do not require the defendant to pay the attorney fees of a plaintiff who wins an infringement case. Exceptions include North Carolina, Wisconsin, Colorado, and Puerto Rico. In several other states, judges can award attorney fees at their discretion. Even if you are victorious, the defendant may be insolvent and thus unable to pay for your attorney fees. Think about what your goals are for the lawsuit. Are you willing to settle for a certain dollar amount, or do you simply want the use of your trademark to be discontinued?
- Learn whether you'll be able to recoup your attorney fees in federal court. Your trademark infringement case will be tried in federal court if the infringement occurred in several states, territories, or in another country. Federal court awards attorney fees to the plaintiff who wins only when the trademark infringement in question was obviously committed with intent. In most courts and most situations, each side is responsible for its own attorney fees.
An experienced trademark attorney can help you consider these questions and provide guidance if you decide to move forward with a lawsuit.
Litigation Short of Trial
Since trademark attorneys are aware of this, they may be willing to take on willful infringement cases and allow their clients to pay their fees after the cases are settled or judgments are obtained. The fees are not contingency fees because they are not based on the outcomes of the cases. The purpose of using this method is to defer legal fees until the plaintiffs are more capable of paying them.
How to Calculate Trademark Infringement Damages
There are several different kinds of remedies for resolving trademark infringement, including:
- Actual or statutory damages
- Defendant's profits
- Attorney's fees
Statutory damages are estimated based on the kind of infringement that has occurred. When statutory damages are awarded, the court will award a judgment and demand the infringing party to pay for it.
Actual damages, on the other hand, refer to the actual amount of financial damage the infringing party has caused. They may also enable you to recover attorney's fees and defendant's profits. The payment of actual damages can range from a court judgment to expenses incurred in hiring a forensic accountant to evaluate the plaintiff and defendant's financial records.
This costly process can have a significant impact on both parties. As a result of this, many intellectual property cases are settled out of court. Although a court may decide to award attorney's fees in some cases, it has to award triple damages and demand the defendant to give up any profits that result from the infringement in the event that the infringement has been proven to be willful.
In most cases, the main goal is to prevent infringing use, which will occur if the court has ascertained that infringement has taken place. In this situation, the owner of the trademark will be able to use the damages to pay the legal expenses incurred.
Examples of Trademark Infringement Cases
3M v. 3N (China)
3M Company in China filed a lawsuit against Huawei Advanced Material Co. Ltd. for using 3N, which resulted in significant damages awarded to 3M. Although there were dissimilarities in the products and their prices, the popularity of the 3M mark and the effectiveness of 3N in acquiring market share and clients through the use of the similar mark amounted to infringement.
D2 Holdings v. House of Cards (U.S.)
D2 Holdings took legal action against MRC II Distribution Company, the distributor for the popular Netflix political thriller “House of Cards.” The trademark for “House of Cards” under the “entertainment goods and services” category has been held by D2 since 2009. The company licensed the trademark to a radio show that is distributed by Granary Media.
The defendant reportedly tried to obtain a trademark for the “House of Cards” show multiple times. D2 filed the lawsuit to prevent several different types of infringement, including gaming machines and fan merchandise.
MRC was likely aware that the trademark was held by D2 because of its repeated failure to secure a trademark through the United States Patent and Trademark Office (USPTO). The failure can be in the company's decision to change the title of the show, based on its inability to get a trademark.
Academy Awards v. GoDaddy (U.S.)
The Academy Awards and GoDaddy were engaged in a five-year legal dispute over “cybersquatting” issues. In the lawsuit, which was first filed in 2010, the Academy Awards alleged that the domain retailer's decision to allow its customers to purchase domain names that are “confusingly” similar, such as 2011Oscars.com, enabled it to profit from individuals who parked on those domains and collect revenue.
The Academy showed the court that GoDaddy sold 57 domains that were potentially confusing. In the end, the judge decided that GoDaddy had no intention to profit from the sale of the domain names.
Louis Vuitton v. Louis Vuiton Dak (South Korea)
In an astonishing example of global trademark infringement, designer Louis Vuitton won a trademark battle against a South Korean fried chicken restaurant called Louis Vuiton Dak. The court decided that the restaurant's name was too similar to Louis Vuitton and ruled in favor of the designer. Besides name infringement, Louis Vuiton Dak's logo and packaging were a close imitation of the designer's famous imagery.
Adidas v. Forever 21 (U.S.)
Adidas took clothing retailer Forever 21 to court for allegedly selling “counterfeit products” that featured its “three stripes” design. The famous sports brand said that it has invested substantially to develop and protect its iconic design and owns many patents.
American Eagle v. Pantaloons (India)
Retail Royalty Company, the parent company of popular clothing retailer American Eagle, filed a lawsuit against Pantaloons Fashion & Retail in the Delhi High Court. The lawsuit alleges that Pantaloons' brand and logo are deceptively similar to those of American Eagle Outfitters.
Lucky 13 v. Taylor Swift (U.S.)
Famous singer Taylor Swift settled a lawsuit filed by Blue Sphere, an apparel company that holds the “Lucky 13” trademark. The company sued the singer for using the term “Lucky 13” on her fan merchandise, launching a “Lucky 13” sweepstakes, and other allegedly infringing activities.
Starbucks v. Freddoccino (U.S.)
Starbucks brought a lawsuit against New York-based Coffee Culture Cafe's parent company for selling a drink called “Freddoccino.” The global coffee retailer alleged that Freddoccino appears similar to its Frappuccino and the structure of its name is similar enough to cause confusion and diminish its brand equity. Starbucks has trademarked the term “Frappuccino” and also alleged that the defendant created deceptive packaging that wrongly suggested that “Freddoccino” is a trademarked term.
Art Basel v. Adidas (U.S.)
Art Basel filed a lawsuit against sportswear giant Adidas for creating a series of sneakers that bore the name of the art fair without permission. The legal dispute began after white Adidas sneakers bearing the term “ART BASEL” on their tongues were seen at events that were related to the 2016 Art Basel Miami Beach.
The art event organizer said that the sneakers intentionally misrepresented an affiliation with the art fair. The court ordered Adidas to pay damages for diluting the Art Basel trademark and to destroy all its remaining Art Basel-related shoes.
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