June 4, 2009

Plaintiff in Counterfeiting Case Cannot Receive Both Statutory Damages and Attorney’s Fees

In K & N Engineering, Inc. v. Bulat, 510 F.3d 1079 (9th Cir. Dec. 18, 2007), a case involving alleged counterfeiting, the Ninth Circuit Court of Appeals reversed the district court’s grant of both statutory damages and attorney’s fees.

Plaintiff-Appellee K&N Engineering, Inc. (K&N) manufactures and sells aftermarket automotive air filters under its registered K&N logo trademarks. Defendants-Appellants created and sold on eBay unauthorized vinyl decals bearing the K&N logo.

K&N filed suit in the Central District of California alleging, inter alia, trademark infringement under 15 U.S.C. Sections 1114(1) and 1125(a); counterfeiting under 15 U.S.C. Section 1114(1)(1); dilution under 15 U.S.C. Section 1125(c); and seeking statutory damages under 15 U.S.C. Section 1117(c). The district court granted summary judgment for K&N on all claims and awarded K&N statutory damages under 15 U.S.C. Section 1117(c)(1) and attorney’s fees under 15 U.S.C. Section 1117(b). Defendants appealed both the grant of summary judgment and attorney’s fees, and in a separate memorandum, the Ninth Circuit Court of Appeals affirmed the lower court’s grant of summary judgment.

With respect to attorney’s fees, in a brief opinion the Ninth Circuit reversed the district court’s decision, holding that electing statutory damages under Section 1117(c) precludes recouping attorney’s fees under Section 1117(b). “Reading [Section] 1117 as a whole, the statute lays out an integrated scheme for plaintiffs in trademark infringement actions,” explained by the court as follows:

  • Subsection (a) provides that a plaintiff seeking actual damages may receive attorney’s fees in “exceptional cases”;
  • Subsection (b) provides increased damages for a plaintiff in a counterfeiting case, allowing treble damages and attorney’s fees except when there are “extenuating circumstances”; and
  • Subsection (c) provides that a plaintiff may seek statutory damages instead of actual damages and profits under Subsection (a).

Using only a textual analysis, the court reasoned that according to the plain language of the Trademark Act, attorney’s fees under Section 1117(b) are only available in cases with actual damages under Section 1117(a).

Reprinted with permission from INTA Bulletin, Vol. 63, No. 5 –  March 1, 2008, Copyright © 2008 the International Trademark Association.