By Eric Pellenbarg
Under the Lanham Act, an infringer can be forced to disgorge profits made on sales of infringing goods. However, the issue of whether the equitable remedy of disgorgement should be decided by the court or by a jury is unsettled in the Eleventh Circuit and should be something practitioners plan for in preparing their case for trial.
An accounting for a trademark infringer’s profits is based on the equitable theory of unjust enrichment. See 15 U.S.C. § 1117(a) (providing that “the plaintiff shall be entitled … subject to the principles of equity, to recover … defendant’s profits”); Babbit Electronics, Inc. v. Dynascan Corp., 38 F.3d 1161, 1182 (11th Cir. 1994) (citing Maltina Corp. v. Cawy Bottling Co., Inc., 613 F.2d 582, 585 (5th Cir. 1980)). Claims that are purely equitable in nature should be decided by a court, not by a jury. Kovelesky v. First Data Corp., 534 Fed. Appx. 811, 815 (11th Cir. 2013) (citing Ford v. Citizens & S. Nat'l Bank, Cartersville, 928 F.2d 1118, 1122 (11th Cir. 1991)). Notwithstanding the statutory pronouncement that disgorgement of profits is an equitable remedy, the Eleventh Circuit’s civil pattern jury instructions include questions asking the jury to determine the proper amount of disgorgement. See Eleventh Cir. Civil Pattern Jury Instructions (2013) at 643. Interestingly, the comments to the pattern instructions recognize a split in authority outside the circuit exists on the issue of whether the question of disgorgement should be submitted to the jury and acknowledge that there is no Eleventh Circuit precedent on point. Id. at 653. The comments indicate that the pattern instructions do not seek to resolve the issue, only to provide guidance “to the extent that the accounting remedy is referred to a jury.” Id.
Courts in the Middle District are divided on whether to submit the issue of disgorgement of profits to a jury. See, e.g., Gen. Motors Corp. v. Phat Cat Carts, Inc., 504 F. Supp. 2d 1278, 1291 (M.D. Fla. 2006) (holding non-jury evidentiary hearing to determine damages under 15 U.S.C. § 1117); but see Health & Sun Research, Inc. v. Australian Gold, LLC, 2014 WL 2801257, at *1, (M.D. Fla. Jun. 19, 2014) (disgorgement of profits submitted to jury).
Given this backdrop, practitioners should be sure to consider who they want to consider their request for disgorgement of profits, as well as how they will try to persuade the court to decide the issue in their favor. One downside to submitting the issue to the jury is the lack of depth in the pattern jury instruction when it comes to disgorgement of profits. Judges are often hesitant to stray from the pattern jury instructions, making it difficult to customize the instruction to a particular case. Submission to the court, on the other hand, provides the opportunity for full briefing of the issue and the ability to further support your arguments through the introduction of testimony and relevant evidence, which likely will result in a more comprehensive presentation and, hopefully, a better result.
