Trademark infringement penalties are levied when the rights of a trademark holder have been violated.

What Are Trademark Infringement Penalties?

Phrases, symbols, or words used to identify a business or person providing a good or service are considered trademarks. Businesses value trademarks because they can help a product stand out in a busy marketplace. When a trademark is violated, it can reduce the value of a business's brand, which often has an impact on their sales and reputation. The owner of a trademark can protect their rights by filing a civil lawsuit after their mark has been violated.

What Is Infringement?

Intellectual property (IP) infringement occurs when a mark is used, reproduced, or sold without the permission of the IP rights holder. Trademarks, copyrights, and patents are all materials that are protected by intellectual property laws. Laws against infringement are vital because they help IP creators prevent others from using their IP without permission.

Although there are some exceptions, proving infringement requires showing that:

  • The copyright, patent, or trademark is owned by the victim in the case.
  • The person accused of infringement had access to the intellectual property.
  • The accused infringer was able to take advantage of their access to the intellectual property to use it without the owner's permission.
  • There are no existing exceptions that allow unapproved use of the intellectual property.

There are several penalties available for copyright infringement, including:

  • Damages and lost profits that can be as much as $150,000 per infringement
  • An injunction that will stop the unauthorized use of the copyrighted material
  • Prison time for the infringer
  • Recovery of attorney and court fees that must be paid by the defendant

There may be very similar penalties for cases of patent or trademark infringement. However, several factors can influence the exact penalties, including:

  • Federal and state laws related to patents and trademarks
  • The exact nature of the infringement
  • The level of harm experienced by the plaintiff

What Is the Penalty for Violating a Trademark?

Depending on how extensively a trademark was violated, trademark infringement penalties can vary from case to case.

The most common penalty for trademark infringement is an injunction or a cease and desist letter directing the infringer to stop using the trademarked material. It's also possible for criminal or civil penalties to result from an intentional violation of trademark law, although this is rare. The USPTO (United States Patent and Trademark Office) does not enforce trademarks, and unfortunately, these marks also aren't self-enforcing.

A trademark owner who wants to protect their rights must continuously monitor their mark to make sure it is not being used by third parties. If a trademark owner is not diligent about defending their intellectual property, the originality of their mark may be diluted, and they may lose exclusive rights to their mark.

When a trademark owner detects an unlawful usage of their trademark, they can respond by sending a cease and desist letter. These letters can be the first step toward negotiating an end of the unapproved usage of your trademark, which is preferable to litigation. After receiving the cease and desist letter, the infringer may agree to alter their marketing materials to avoid a lawsuit.

If you have registered your trademark with the USPTO, you can bring a civil lawsuit against the person violating your mark and request that the court grant an injunction, which is a type of court order that commands the defendant to stop using your mark. Once an injunction has been ordered, the violator must either alter their trademark or stop doing business altogether.

When the owner of a registered trademark sues the person infringing on their mark, it's possible that the court may award monetary damages. These civil damages are determined based on the losses suffered by the trademark holder. When it is ruled that the violation of the trademark was intentional, the court may award damages that greatly exceed the actual amount of profits lost.

Trademark lawsuits are often very expensive, both in terms of attorney's fees and court costs. If the decision favors the plaintiff, the court may require the defendant to pay for the plaintiff's attorney and court costs. To avoid paying these costs, most defendants will attempt to negotiate a settlement instead of going to trial.

There are also several severe criminal and civil penalties that can result from a trademark violation, particularly if the infringer was using the mark to sell counterfeit items.

Is Infringement a Criminal Charge?

While most infringement cases are handled in civil courts, some cases can lead to federal criminal charges. This can result in numerous criminal penalties, such as probation and even jail time.

Do I Need a Lawyer for Help with Infringement Penalties?

Since infringement offenses can often be serious and give rise to possible criminal and civil offenses that involve large amounts of punitive damages, it is advised to hire an attorney in the event you are facing a legal case of infringement. Your attorney will not only be able to research the laws and find information important to the defense of your case but also be able to advise you of your rights under the law. Additionally, if you need to file a countersuit or attend court hearings or trials, your lawyer will be able to provide you with legal representation at those events.

The Lanham Act allows for monetary damages in the event of:

  • Trademark infringement
  • Unfair competition
  • Willful dilution

The monetary damages allowed under this act include:

  • Defendant's profits from the infringement
  • Damages that the plaintiff sustained as a result of the infringement
  • The plaintiff's legal fees in special situations

The Act defines a "counterfeit mark" as a mark that is registered with the USPTO for use in selling, offering, or distributing a product or service that is the same as one already registered. A mark can be deemed counterfeit whether or not the party using it knew it was registered or not.

A plaintiff has the right to file for actual damages, though these may be hard to determine. They may also seek statutory damages of between $1,000 and $200,000 per mark that has been counterfeited. In the event that the court determines that the counterfeiting was willful, it may allow for statutory damages as high as $2,000,000.

Someone who registers a mark with the Patent Office may give public notice of their registration by adding the words “Registered in U. S. Patent and Trademark Office” or use the registered trademark symbol. If the registrant fails to provide this notice, the court may rule that no damages may be awarded since the defendant was not properly notified of the registration.

This can be a problem for a plaintiff because there may be instances when they are unable to provide the defendant with advance notice. An example of this is where the plaintiff is unaware of who the counterfeiters are and would therefore be unable or not know how to file a notice.

Once a plaintiff has found a counterfeiter using their trademark, they may be able to seek out an ex parte seizure order and provide advance notice before sending a summons. They are not likely to seek damages for the unauthorized advertising or use of the marks. Unfortunately, counterfeiters are aware of this difficulty and often use protected trademarks to trade off the goodwill of the trademark owner.

How Do Courts Determine Appropriate Statutory Damage Awards?

Since the Lanham Act provides little guidance on how courts should arrive at the figure for damage awards, the court will often order damages in the amount that it considers just for the offense. Considering that the range the judge can award is between $1,000 and $2,000,000, it leaves plaintiffs unsure of the outcome of their case. Under the Copyright Act, the court can award compensation for:

  • The amount of money the defendant saved
  • The profits the defendant earned
  • The revenue the plaintiff lost
  • The value placed on the trademark
  • An amount to create a deterrent

Much of the court's determination will be based on whether or not the defendant's conduct was determined to be willful or innocent and whether or not the defendant cooperated in providing records. This can still pose a challenge for courts because it may be hard to translate all of these factors into a monetary amount.

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