You’ve run the gauntlet. Your trademark application to register 3D-printed, children’s toy soldier sets under your “Guerilla Play” brand has been filed. The trademark examiner, after a bit of push back, allows the mark the register. (See my first article in this series.) A third party challenged the prospective registration, saying it was too close to their “Gorilla Ball Play” mark for youth baseball items. It filed a Notice of Opposition at the Trademark Office, but you quickly negotiated a resolution, allowing you to proceed. (See my second article in this series.) Registration issued.
But six months later, a potential infringer emerges, selling “Gorilla Playsets” for children’s swings and attachable “monkey bars”. Your lawyer’s letters to stop go unheeded. The only way to stop the trademark infringement is by suing in federal court. What happens then?
Suing an infringer can yield two things. First, a court may issue an injunction, barring the infringer from using the mark any further. Second, you may be entitled to out-of-pocket or lost profit damages, or you may instead reap an award of the infringer’s wrongful profits. An award of the attorneys’ fees you incurred is possible as well.
Why Most Trademark Cases Settle Early
Ninety-five percent (95%) of trademark cases settle before trial. The legal fees in proceeding all the way through, as well as any impending outcome from a trial, weigh heavily on both parties throughout the case. Realistically, each side’s ability to finance the litigation expense will be based largely on how long and how intensely the case will proceed before that settlement is reached. Maybe the case can be settled in the first month after suing for trademark infringement, if your case is strong. Maybe your attorney and opposing counsel will agree to early mediation within the first three or four months of litigation. If so, you may avoid the heavier expense of formal discovery and other later-stage litigation work. If no settlement is forthcoming early on, discussions will surely reemerge as the date of trial approaches.
If your case is strong, the likely outcome will be an agreement that the defendant stop all further use of their mark. Potentially, there will be a compromise on payment as part of the settlement, in an amount less than the damages you claim but more than the infringer argues is fair.
The strength of your case depends first on your proof of likelihood of confusion caused by the infringer’s use. How close is the defendant’s mark to yours, and how similar are the goods or services? How distinctive is your mark? In our example above, you would argue likelihood of confusion, because “Gorilla” in their mark and “Guerilla” in yours seem phonetically the same. Both also use the term “Play” in the respective marks, and both are for goods with which children play. However, the defendant will stress the significantly different meanings of the terms “Gorilla” vs. “Guerilla” and how dissimilar the goods are. A jungle gym, defendant notes, is an apparatus for physical play, often sold in a different channel of trade from toy figurines involving imaginative play. Perhaps the fonts or designs incorporated into the respective marks also distinguish them.
If the case does not settle early, each side will interact with the court and between counsel, setting schedules for both completion of certain tasks, such as completion of discovery (depositions, document production, etc.). There may be motions for pretrial orders, to compel discovery responses, for example. As the case nears trial, the pressure to settle grows and the legal fees ramp up with trial preparation. Legal theories on infringement and defenses are developed, such as argument that “play” in each mark is merely descriptive and a non-dominant portion of the marks. At trial, each side presents testimony, documents and argument, leading to a court decision or jury verdict.
Understanding Trademark Damages and Profits
Damages – or lack of them — may play an important role in all of this. Did defendant just begin using the offending mark? If so, defendant’s gain (and your lost sales) may be minimal. In any case, can you prove a given sale by the defendant is a sale you lost? Regardless, how about the infringer’s wrongful profits? Courts have discretion to grant such awards, but it’s purely in their discretion. Can you argue for enhanced damages, beyond your actual loss or defendant’s gain and the attorneys’ fees you spent? The trademark statute gives the courts discretion there as well.
More importantly perhaps, if a significant damage award is not in the cards, it will be easier to settle at an early stage when suing for trademark infringement. The fight focuses on continuing or discontinuing infringing use. If adoption of the offending mark began only recently, many cases resolve themselves in a matter of weeks or a couple of months. But if the mark is important to defendant or if defendant is well-financed, that may not be the case. It all depends.
Robert Payne is the author is founder of Payne IP Law, www.bobpayne.com, which has a national trademark prosecution and litigation practice. See also his prior two articles published in Home Business Magazine (“Non-Final Office Actions” and “Third-Party Disputes at the Trademark Office”).
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