Can a trademark owner get punitive damages, if they suffered no actual damages? Monster v. ISN

Can a trademark owner get punitive damages, if they suffered no actual damages? Monster v. ISN

Trademark law is a consumer protection law.  To ensure that consumers are not tricked into buying inferior quality goods, trademark owners are given certain exclusive rights to their trademark.  A trademark is a word, phrase, symbol or other method that a manufacturer uses to signal to consumers that they are the source of a product. If someone other than the trademark owner brands products in a way that that causes consumers to be confused about who produced the goods, than that can be considered trademark infringement.  

The key to trademark infringement is consumer confusion.  To determine if consumer confusion exists a court will review several factors.  Those factors general are: (1) Strength of the senior user’s trademark, (2) Similarity of the trademarks, (3) Similarity of the products or services, (4) Likelihood that the senior user will sell similar products as the junior user, (5) The junior user’s intent in adopting the mark, (6) Evidence of actual confusion, (7) Sophistication of the buyers, (8) Quality of the junior user’s products or services and (9) the relationship of the products.

Even after a plaintiff in a trademark infringement case demonstrates consumer confusion, they must still prove damages.  Actual damages are factors like, lost sales or damage to the reputation of the plaintiff’s trademark.  Punitive damages are awarded to punish the defendant for willful misconduct.  The Lanham Act does not include punitive damages as a remedy for infringement of federally registered marks, but punitive damages are available based on state trademark laws.

The question then becomes, can a plaintiff in a trademark infringement case be awarded punitive damages if there are no actual damages?

A case which deals with this question is MONSTER ENERGY COMPANY v. INTEGRATED SUPPLY NETWORK, LLC, 5:17-cv-00548 (C.D.CA 2017).  This case focuses on a tool company selling products which are branded in a similar fashion to a sports drink.  The plaintiff, Monster, sells caffeinated beverages with a distinctive green and black trade dress.  The plaintiff’s trademark Monster is prominently displayed on the beverage cans it sells.  The plaintiff has also licensed its trademarks for use on snack foods and apparel.  The defendant is a company which sells various different products like screw drivers, gloves, t-shirts and mugs.  The defendant also uses Monster to brand its products, with a green and black theme.  In 2014 the defendant attempted to register several trademarks which the plaintiff opposed at the United States Patent and Trademark Office.  In 2017 the plaintiff sued the defendant for trademark infringement.

The jury found that the defendant infringed on the plaintiff’s trademark and trade dress. The jury awarded the plaintiff a verdict of $5 million in punitive damages and $0 in actual damages.  Both the plaintiff and the defendant claim victory.  The plaintiff has moved for a permanent injunction barring the defendant from using the Monster trademark with the green and black trade dress.  The defendant says that by awarding no actual damages, it shows that there was no actual trademark infringement and therefore a permanent injunction cannot be granted.

The trial court has not issued a decision on whether a permanent injunction is available yet.  Whether the trial court finds for the plaintiff or the defendant it is likely this case will be appealed.

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