Facts:
Kiva owns four stores that sell high-end kitchen and bath appliances in Texas: AABC Appliance Gallery in Houston, Jarrell Appliance Gallery in Dallas, Stone Appliance Gallery in San Antonio, and McNairs Appliance Gallery in Austin. Capital operates a retail appliance store in Dallas and is a direct competitor of Kiva through its Jarrell store. In December 2005, an employee of Capital began registering internet domain names that incorporated the trade names (or similar spellings thereof) of numerous Texas appliance stores including Kiva’s. The employee also forwarded the domain names of Capital competitors in Dallas, including Kiva’s Jarrell store, to Capital’s website. The employee registered eight domain names: three domain names were strikingly similar to the Jarrell store and five domain names were similar to Kiva’s other stores.
Procedural History:
After Kiva noticed Capital’s actions, it brought claims for trademark infringement under the Lanham Act, 15 U.S.C. § 1125(a), and violation of the Anti-Cybersquatting Consumer Protection Act (“ACPAâ€), 15 U.S.C. § 1125(d), as well as several state law claims. The jury found that Capital was liable for trademark infringement with respect to the Jarrell mark and in violation of the ACPA with respect to all of the Kiva domain names. The jury awarded Kiva compensatory damages in the amount of $257,232. The jury also determined that Kiva was owed punitive damages because Capital had acted “willfully, maliciously, fraudulently, or deliberately.†Kiva received $200,000 in punitive damages from the jury. However, in Kiva’s post-trial briefing, Kiva sought statutory damages under the ACPA rather than the jury damages award. The district court held that Kiva was entitled to $500,000 in statutory damages under the ACPA and $500,960 in attorney’s fees under the Lanham Act because the case was “exceptional.â€
Issue:
1. Whether the district court’s award of statutory damages based on Kiva’s post trial briefing was a proper award of statutory damages under the ACPA?
2. Whether the amount of statutory damages awarded to Kiva was excessive?
3. Whether the district court’s award of attorney fees was proper under the Lanham Act?
Holding:
1. Yes. A plaintiff may elect between jury damages or statutory damages, with knowledge of both.
2. No. The maximum statutory award for the Jarrell domain names was warranted in light of Davis’s bad faith intent to divert potential customers to Capital’s website and because Jarrell is a direct competitor of Capital in Dallas.
3. Yes. The district court did not error in awarding Kiva attorneys’ fees because Kiva was the prevailing party in the district court where it was proven that Capital acted with malicious intent.
Critical Analysis:
1. A plaintiff is authorized to make an informed election of remedy even after the jury has rendered a verdict, with knowledge of the amount of both awards. 15 U.S.C. § 1117(d); See Feltner v. Columbia Pictures Television, Inc, 523 U.S. 340, 347 n. 5 (1998). Here, Kiva requested in its post-trial briefing that the court impose statutory, rather than actual damages. Because the district court had not rendered a final opinion, Kiva “elected†a remedy within its proper discretion.
2. The statutory damages provisions in the ACPA are designed not only to “compel restitution of profit and reparation for injury†but also “to discourage wrongful conduct.†15 U.S.C. § 1117(d); F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 233 (1952). Here, the jury in the district court determined that actual damages were equal to $257,232, but the court imposed statutory damages equal to $500,000. Typically, a deviation of this amount would not be warranted. Because Capital acted maliciously, and the ACPA’s statutory damages serve a compensatory and deterrence function; the deviation between the actual damages and statutory damages was warranted.
3. The prevailing party in a trademark infringement action may be awarded reasonable attorneys’ fees only “in exceptional cases,†15 U.S.C. § 1117(a), and such party bears the burden of demonstrating the exceptional nature of the case. See Schlotzsky’s Ltd. V. Sterling Purchasing & Nat’l Distrib. Co., Inc., 520 F.3d 393, 402 (5th Cir. 2008). Here, the jury determined that the case was “exceptional†because of the malicious intent of Capital’s employee. Thus, an award of attorneys’ fees under the Lanham Act is warranted.
Kiva owns four stores that sell high-end kitchen and bath appliances in Texas: AABC Appliance Gallery in Houston, Jarrell Appliance Gallery in Dallas, Stone Appliance Gallery in San Antonio, and McNairs Appliance Gallery in Austin. Capital operates a retail appliance store in Dallas and is a direct competitor of Kiva through its Jarrell store. In December 2005, an employee of Capital began registering internet domain names that incorporated the trade names (or similar spellings thereof) of numerous Texas appliance stores including Kiva’s. The employee also forwarded the domain names of Capital competitors in Dallas, including Kiva’s Jarrell store, to Capital’s website. The employee registered eight domain names: three domain names were strikingly similar to the Jarrell store and five domain names were similar to Kiva’s other stores.
Procedural History:
After Kiva noticed Capital’s actions, it brought claims for trademark infringement under the Lanham Act, 15 U.S.C. § 1125(a), and violation of the Anti-Cybersquatting Consumer Protection Act (“ACPAâ€), 15 U.S.C. § 1125(d), as well as several state law claims. The jury found that Capital was liable for trademark infringement with respect to the Jarrell mark and in violation of the ACPA with respect to all of the Kiva domain names. The jury awarded Kiva compensatory damages in the amount of $257,232. The jury also determined that Kiva was owed punitive damages because Capital had acted “willfully, maliciously, fraudulently, or deliberately.†Kiva received $200,000 in punitive damages from the jury. However, in Kiva’s post-trial briefing, Kiva sought statutory damages under the ACPA rather than the jury damages award. The district court held that Kiva was entitled to $500,000 in statutory damages under the ACPA and $500,960 in attorney’s fees under the Lanham Act because the case was “exceptional.â€
Issue:
1. Whether the district court’s award of statutory damages based on Kiva’s post trial briefing was a proper award of statutory damages under the ACPA?
2. Whether the amount of statutory damages awarded to Kiva was excessive?
3. Whether the district court’s award of attorney fees was proper under the Lanham Act?
Holding:
1. Yes. A plaintiff may elect between jury damages or statutory damages, with knowledge of both.
2. No. The maximum statutory award for the Jarrell domain names was warranted in light of Davis’s bad faith intent to divert potential customers to Capital’s website and because Jarrell is a direct competitor of Capital in Dallas.
3. Yes. The district court did not error in awarding Kiva attorneys’ fees because Kiva was the prevailing party in the district court where it was proven that Capital acted with malicious intent.
Critical Analysis:
1. A plaintiff is authorized to make an informed election of remedy even after the jury has rendered a verdict, with knowledge of the amount of both awards. 15 U.S.C. § 1117(d); See Feltner v. Columbia Pictures Television, Inc, 523 U.S. 340, 347 n. 5 (1998). Here, Kiva requested in its post-trial briefing that the court impose statutory, rather than actual damages. Because the district court had not rendered a final opinion, Kiva “elected†a remedy within its proper discretion.
2. The statutory damages provisions in the ACPA are designed not only to “compel restitution of profit and reparation for injury†but also “to discourage wrongful conduct.†15 U.S.C. § 1117(d); F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 233 (1952). Here, the jury in the district court determined that actual damages were equal to $257,232, but the court imposed statutory damages equal to $500,000. Typically, a deviation of this amount would not be warranted. Because Capital acted maliciously, and the ACPA’s statutory damages serve a compensatory and deterrence function; the deviation between the actual damages and statutory damages was warranted.
3. The prevailing party in a trademark infringement action may be awarded reasonable attorneys’ fees only “in exceptional cases,†15 U.S.C. § 1117(a), and such party bears the burden of demonstrating the exceptional nature of the case. See Schlotzsky’s Ltd. V. Sterling Purchasing & Nat’l Distrib. Co., Inc., 520 F.3d 393, 402 (5th Cir. 2008). Here, the jury determined that the case was “exceptional†because of the malicious intent of Capital’s employee. Thus, an award of attorneys’ fees under the Lanham Act is warranted.