The Biggies – Damages
Two important reasons to register your trademark with the United States Patent and Trademark Office is the recourse it provides registrants. In addition to providing for an injunction to stop the infringer from further use of the registered trademark, the federal trademark law (also known as the Lanham Act) provides for the recovery of damages, as measured by one of the following:
1. Defendant’s profits
2. Plaintiff’s actual damages and losses
3. Plaintiff’s lost profits
Additionally, if the infringer is found to have acted knowingly and willfully, the Lanham Act allows the trial allows the judge to award the following additional damages:
1. Up to three times the actual damages shown above; and
2. An increase or decrease of the award of profits if the court determines the award is either inadequate or excessive.
While the Lanham Act does not specifically provide for punitive damages, punitive damages are often recoverable under the state law torts of trademark infringement and/or unfair competition.
Under the United States legal system you are very rarely able to recover your attorney fees. As such, competitors are often willing to risk minor infringements on your intellectual property, knowing it is unlikely you will spend fifty thousand dollars in attorney fees to recoup five thousand in damages. The specific provision in the Lanham Act for the recovery of attorney fees makes federal trademark registration a very powerful tool.
While most trademark cases get resolved early on with a preliminary injunction and therefore never make it to the damages phase, the availability of triple damages and attorney fees makes infringers much less eager to take on a federal trademark registrant, as opposed to a state trademark registrant or a common law trademark holder. Faced with the possibility of not only paying their attorney fifty thousand dollars or more and then having to pay your attorney the same amount, most infringers avoid encroaching on federally registered trademarks altogether, or back down very quickly when confronted.
The key to winning any fight is to convince the other side they will lose. Federal trademark registration provides a huge arsenal of benefits to registrants against infringers. Contrary to popular belief, would be trademark infringers are not dumb. They will pick the most vulnerable prey, while keeping them insulated from damages. Accordingly, very few willful infringers fight in the face of a federal trademark registration. Most recognize the danger and avoid infringing a federally registered trademark altogether. Probably the greatest benefit of federal trademark registration is the dozens of lawsuits you never had to fight.