Trademark Infringement and Jury Trials in Federal Courts

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When plaintiffs assert trademark infringement and related actions under the Lanham Act (or state law counterparts), more often than not the complaint will include a demand for a jury trial on all issues so triable, as is standard practice. However, if discovery ultimately reveals, or dispositive motion practice confirms, that a plaintiff has suffered no actual, compensatory damages, but rather is only able to seek “damages” in the form of an injunction or a defendant’s allegedly ill-gotten profits (disgorgement), then a defending party may have a strong argument that the plaintiff’s claims carry no right to a jury trial under the Seventh Amendment. The goal of this post is therefore to quickly remind litigants (and their counsel) of the critical relationship between the types of damages sought and their impact on who ultimately will decide the case – judge or jury.

Begin with the Seventh Amendment, which confers a right to a trial by jury only for suits “which are not of equity.” Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S. 558, 564-65 (1990).[1] In other words, to get a jury trial, there needs to be a claim for legal (monetary) damages. It is well established that injunctive relief and the granting of attorneys’ fees are equitable, not legal, remedies. And the same is true for a disgorgement, or recovery, of profits under the Lanham Act. Courts reason that disgorgement does not seek to compensate for a loss, but rather deprives a wrongdoer of any ill-gotten gains. As recognized by the First Circuit: “[T]he Lanham Act itself does not create a right to a jury trial whenever the remedy of an accounting of defendant’s profits is sought.” Visible Sys. Corp. v. Unisys Corp., 551 F.3d 65, 78 (2008).[2]

As best summarized by the court in American Cyanamid Co. v. Sterling Drug, Inc:[3]

The distinction between [plaintiff’s] claims for damages and profits is not simply semantic. What does [plaintiff] give up by abandoning its claim for damages—the right to prove an injury for which, if infringement is proved, the law allows recovery of damages. Although [plaintiff] seeks money, it does not seek money for its injury; rather, it seeks the amount by which [defendant] was enriched from infringing on [plaintiff’s] trademark. In substance, [plaintiff] seeks a determination whether [defendant] was enriched because of an infringement and, if so, an order requiring restitution of such money from [defendant] to [plaintiff]. These demands are equitable in nature. Accordingly, the determination of whether there is a right to a jury trial in this case is not decided merely on the choice of the words or phrasing used in the pleadings.

As such, litigants must be cognizant of how a plaintiff’s evidence on damages shakes out as the case proceeds. Without proof of actual, compensatory damages, a plaintiff is subject to a Rule 39(a)(2) motion to strike its jury demand and have the case proceed as a bench trial. See Vynamic LLC v. Diebold Nixdorf, Inc., No. 2:18-cv-00577, ECF Nos. 47, 50 (E.D. Pa. 2018).

Of course, the underlying issue of when a plaintiff’s evidence reveals it is entitled to legal (monetary) damages versus solely equitable damages (e.g., disgorgement, injection, attorneys’ fees, etc.) is the subject of considerable case law under the Lanham Act, and the details of every case must be scrutinized on an individual basis depending on which circuit the case is filed in. Also, non-trademark claims in the case, state law claims, and defendant’s counterclaims may all themselves involve the potential for legal damages, which will maintain a party’s right to a jury trial.

Given these interconnected issues, litigants must always remain focused on who they ultimately want to decide the merits of a case (judge or jury), and ensure that their prosecution or defense of trademark claims is guided by the distinction between the available equitable vs. legal remedies in federal courts.

[1] Billing v. Ravin, Greenberg & Zackin, P.A., 22 F.3d 1242, 1245 (3d Cir. 1994) (“The Supreme Court interprets ‘suits at common law’ [in the Seventh Amendment] to mean cases involving legal rights; no jury right attaches to equitable claims.”).
[2] See also Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc., 778 F.3d 1059, 1074-75 (9th Cir. 2015) (“A claim for disgorgement of profits under § 1117(a) is equitable, not legal” and “current law recognizes that actions for disgorgement of improper profits are equitable in nature.”)
[3] Am. Cyanamid Co. v. Sterling Drug, Inc., 649 F. Supp. 784 (D.N.J. 1986).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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