New Guidance on How to Calculate Statutory Damages Awards in Counterfeiting Cases

Judge Koeltl of the United States District Court for the Southern District of New York recently adopted a recommended statutory damages award of $6.6 million dollars in a case involving trademark counterfeiting. Richemont Int’l S.A. et. al. v. Montesol Ou, et. al., 2014 WL 3732919, at *1 (S.D.N.Y. July 28, 2014). The plaintiff sellers of luxury goods had initially sought $78 million or $2 million per counterfeit mark per type of good counterfeited in connection with 88 domain names operated by the defendants. Richemont Int’l S.A. et. al. v. Montesol Ou, et. al., 2014 WL 3732887, at *4 (S.D.N.Y. May 13, 2014). But Magistrate Judge Pitman recommended instead an award of $6.6 million, including $6.3 million under the Trademark Act and $300,000 under the Anticybersquatting Consumer Protection Act.

Judge Koeltl found the recommended damages award reasonable. But, he did not approve of an attempt to estimate relevant sales and profits when such information was not in the record. He noted that courts regularly examine the factors discussed in Fitzgerald Pub. Co. v. Baylor Pub. Co., 807 F.2d 1110 (2d Cir. 1986), a case interpreting the Copyright Act’s analogous statutory damages provision, 15 U.S.C. 504(c), and suggested that three important factors in this context are the size of the operation, the willfulness of the infringement, and the need for deterrence.

Lawyers and judges alike have struggled with statutory damages calculations under 15 U.S.C. § 1117 because the provision fails to specify any substantive factors for courts to consider when devising a statutory damages award.

Gibbons will continue to monitor statutory damages awards in counterfeiting cases.