What are trademark counterfeiting damages under the Lanham Act?
In addition to the standard damages provided under the federal Lanham Act, 15 U.S.C. § 1051, et seq., a party found to be liable for trademark counterfeiting, may be liable for treble damages where an exceptional case is proved as well as statutory damages to remedy trademark counterfeiting. See our posts Trademark Infringement Damages for a discussion of trademark infringement damages as well as Trademark Counterfeiting Enforcement and Stop Trademark Counterfeiting - Damages and Prevention for a discussion of trademark counterfeiting in general.
Trademark Counterfeiting Damages — Treble Damages
The Lanham Act has a specific provision for treble damages in instances where a counterfeit mark has been used. Specifically, in determining damages under subsection (a) of Section 1117 of the Lanham Act for any violation of Section 1114(1)(a), in a case involving use of a counterfeit mark, the court shall (unless there are extenuating circumstances) enter judgment “for three times such profits or damages, whichever amount is greater, together with a reasonable attorney’s fee” if the violation consists of the one of the following circumstances. 15 U.S.C. § 1117 (b).
1) Intentionally using a mark with knowledge that the mark is a counterfeit mark in connection with the sale, offering for sale, or distribution of goods or services; or
2) Providing goods or services “necessary to the commission of a violation…with the intent that the receipt of the goods or services would put the goods or services to use in committing the violation.”
15 U.S.C. § 1117(b)(1)-(2). If the case meets the circumstances as described, the court can award prejudgment interest on such amount at an annual interest rate.
Trademark Counterfeiting Damages — Statutory Damages
The Lanham Act also provides statutory damages for use of counterfeit marks. According to subsection (c) of Section 1117, a plaintiff may choose, at any time prior to final judgment rendered by the trial court, to recover an award of statutory damages for any use of the counterfeit mark rather than recovering actual damages and profits under subsection (a). See 15 U.S.C. § 1117(c). Statutory damages may consist of the following amounts:
(1) [N]ot less than $1,000 or more than $200,000 per counterfeit mark per type of goods or servicessold, offered for sale, or distributed, as the court considers just; or
(2) if the court finds that the use of the counterfeit mark was willful, not more than $2,000,000 per counterfeit mark per type of goods or servicessold, offered for sale, or distributed, as the court considers just.
Therefore, a plaintiff could recover a statutory damage award of at a minimum $1,000 per counterfeit mark per type of good or service to a maximum of $200,000 for the same. This number dramatically increases to a maximum of $2,000,000 per counterfeit mark per type of goods or services if use of the counterfeit mark was willful.
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