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Trademark Infringement Plaintiffs Seeking Statutory Damages Cannot Also Recover Attorney?s Fees

By Stephanie Robinson

A recent decision by the Ninth Circuit will affect the ability of companies seeking to recover for trademark infringement and counterfeiting to also be awarded their attorney?s fees. In K&N Engineering, Inc. v. Bulat, 2007 WL 4394416 (9th Cir. 2007), the court held that when a business chooses an award of statutory damages under the federal trademark laws instead of seeking actual damages, attorney?s fees cannot be recovered. This decision will certainly impact strategy decisions that will be made by parties involved in trademark litigation. K&N Engineering designs, manufactures, and distributes aftermarket automotive air filters and related products. The company?s stylized logo, which is the basis for two of K&N?s registered trademarks, appears on decals included with many of K&N?s products. K&N also separately distributes such decals to enthusiasts through an internet promotion. K&N became aware that Bulat was selling unauthorized decals bearing the K&N logo on eBay. K&N filed suit in federal court alleging trademark infringement, counterfeiting, and dilution, as well as related state-law claims. In addition, K&N sought statutory damages under 15 U.S.C. § 1117(c). The district court granted K&N?s motion for summary judgment and awarded $20,000.00 in statutory damages and $100,000.00 in attorney?s fees. Bulat appealed and argued, inter alia, that K&N?s election to receive statutory damages under 15 U.S.C. § 1117(c) precluded an award of attorney?s fees. The Ninth Circuit agreed. The court concluded that section 1117 as a whole ?lays out an integrated scheme for plaintiffs in trademark infringement actions to recover damages and attorney?s fees.? Fees are available under section 1117(a) only in ?exceptional cases,? where the court finds that the defendant acted maliciously, fraudulently, deliberately, or willfully. Section 1117(b), in contrast, provides for treble damages plus attorney?s fees in every case involving counterfeiting, absent extenuating circumstances. A plaintiff may also choose to forego actual damages and seek statutory damages under section 1117(c), which makes no provision for attorney?s fees. The court held that by electing to recover statutory damages, K&N gave up any right to seek an award of attorney?s fees because there was no statutory basis for making such an award. Full opinion text: http://www.ca9.uscourts.gov/ca9/newopinions.nsf/B738956BCCBADFC7882573B4008114C6/$file/0655393.pdf?openelement

Full post as published by Business and Technology Law on January 04, 2008 (boomark / email).