No Disgorgement When Injunction is Sufficient Remedy

By on April 23, 2020
Posted In Trademarks

Addressing issues related to the disgorgement of profits and attorneys’ fees in a trademark infringement lawsuit, the US Court of Appeals for the Eighth Circuit affirmed a denial of such fees and profits. Safeway Transit LLC and Aleksey Silenko v. Discount Party Bus, Inc., Party Bus MN LLC, and Adam Fernandez, Case No. 18-2990 (8th Cir. Apr. 6, 2020) (Smith, J.).

In 2000, Alex Fernandez started Party Bus MN, which was the first party-bus company in the Twin Cities region. In 2004, Fernandez formed Discount Party Bus Co., LLC (DPB).  Fernandez also used the names “Rent My Party Bus” and “952 Limo Bus” in print advertising before 2008.

In September 2008, Aleksey Silenko formed Party Bus MN LLC and registered the domain name partybusmn.com. A month later, Silenko changed the name of the company to Safeway Transit LLC and registered the domain name rentmypartybus.com. From 2008 to 2015, Safeway displayed decals reading “Rent My Party Bus,” “952 Limo Bus” and “Party Bus MN” and registered the domain names discountpartybus.com, discountpartybuses.com and discountpartybusesmn.com. Safeway was also operating a website at partybusmn.com that forwarded visitors to the rentmypartybus.com site. In 2011, Safeway began using the phone number 952-LIMO-BUS to market its “952 Limo Bus” brand. Also, by 2011, Safeway was using “Party Bus MN” and “Rent My Party Bus” for online advertising with Facebook and using the term “952 Limo Bus” for online advertising with Facebook and Google AdWords. In May 2011, Safeway registered the domain name 952limobus.com.

In 2009, DPB stopped using the terms “Rent My Party Bus,” “952 Limo Bus” and “Party Bus MN” because Safeway had begun using them. That same year, DPB sent Safeway a cease-and-desist letter regarding the discountpartybus.com, discountpartybuses.com and discountpartybusesmn.com domain names. Between 2009 and 2014, DPB sent a total of four letters to Safeway about these domain names. In 2014, DPB sued Safeway over the three domain names and the parties settled, agreeing that Safeway would transfer the DPB-related domain names to DPB.

Following the settlement, DPB filed for two federal trademarks, “Rent My Party Bus” and “952 Limo Bus.” DPB asserted that the business had been using the marks since 2002 and 2004 respectively. According to Fernandez, he did not register the marks to use them; instead, he registered the marks to stop Safeway from using them. DPB next hired Internet Local Listings to improve its presence online and filed complaints with the Internet Corporation for Assigned Names and Numbers, alleging that Fernandez was the rightful owner of 952limobus.com and rentmypartybus.com.

In September 2015, Safeway sued DPB, alleging federal trademark infringement under the Lanham Act, among other claims. Following a bench trial, the judge ruled that DPB was permanently enjoined from using or contributing to the use of the “Rent My Party Bus” and “952 Limo Bus” trademarks, related domain names, keywords or hashtags in connection with the advertisement, marketing or sale of transportation services. The court denied Safeway’s request for disgorgement of profits and attorneys’ fees. Safeway appealed.

On appeal, Safeway argued that the district court erroneously denied its request for disgorgement of profits under the Lanham Act. The Eighth Circuit noted that although the Lanham Act contemplates that a disgorgement or accounting of profits may be appropriate to remedy unfair competition or trademark infringement, punitive remedies will be denied where an injunction satisfies the equities of the case. The Court highlighted that in its precedents, an injunction is the preferred Lanham Act remedy and that the district court awarded Safeway the “preferred remedy.”

Safeway argued that the district court erred in its analysis of Safeway’s unjust enrichment claim.  The Eighth Circuit disagreed, finding that the district court’s determination of no actual confusion between the marks was not clearly erroneous. Further, the Court noted that Safeway pointed to no evidence of actual confusion to undermine the district court’s unjust enrichment finding.

Safeway also argued that DPB’s infringement was willful, and therefore, disgorgement of profits was appropriate. The district court, however, found that Fernandez genuinely thought the marks were his and that he was entitled to resume use of the marks. The district court further determined that DPB held a good faith belief in its rights to use the trademarks and could not conclude that Fernandez acted unlawfully. The Eighth Circuit agreed that the totality of the district court findings support the conclusion that Safeway was not entitled to disgorgement of profits.

Addressing the issue of attorneys’ fees, the Eighth Circuit determined that the district court, having presided over the bench trial, was best suited to determine whether the case was “exceptional,” warranting an award of attorneys’ fees, and found no abuse of discretion by the lower court.

Jodi BenassiJodi Benassi
Jodi Benassi focuses her practice on litigation and investigations. Jodi has experience in federal court district actions in California, Texas, Florida and Michigan and actions before the US Trademark Trial and Appeal Board (TTAB) of the US Patent and Trademark Office (USPTO). She has also conducted internal investigations on behalf of audit committees from high profile Fortune 500 organizations to Silicon Valley start-ups. Jodi Benassi's full bio.

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