The 11th Circuit Court of Appeals affirmed a $1.32 million judgment in favor of a medical device company in its suit against a Chinese company for making counterfeit devices and attempting to steal its trademarks.

Background

Axiom, Inc. is a Florida company that makes medical products, including the DRX9000, used to treat back pain, and a similar device to treat neck pain. From 2003 to 2005, Axiom registered five trademarks for its devices with the US Patent and Trademark Office. Axiom sued a Hong Kong company, HTRD, for selling devices that were functionally identical to Axiom’s, used the same trademarks, and were sold into some of the same markets.Axiom claimed that a former vice chairman of Axiom’s Chinese distributor created HTRD and related companies in order to use Axiom’s confidential information to produce competing generic products.

Axiom alleged that the former vice chairman forged the signature of Axiom’s president on a document stating that he had the rights to use Axiom’s intellectual property rights in China. Axiom’s causes of action included trademark and copyright infringement, unfair competition, and theft of trade secrets.

In 2013, a Florida federal judge that HTRD had not been granted ownership of Axiom’s intellectual property (including its trademarks) when it bought an asset holding company spun off by Axiom. The court then awarded statutory damages for Axiom’s trademark, copyright, and unfair competition claims.  The defendants’ devices earned a profit of $25,000 to $85,000 each, and the defendants sold 24 of them.  Using the mid-point of the profit range, the court awarded damages of $1.32 million.

The Appeal


The defendants argued that the district court erred in awarding profits as damages because the court found that the defendants did not willfully infringe Axiom’s trademarks. However, the 11th Circuit found that the law in that Circuit “does not require a showing of willfulness before awarding profits as actual damages under the Lanham Act.”

Takeaway

This case illustrates that a defendant can be liable for trademark infringement — and for damages based on its profits — even if it has the good faith belief that its use of another party’s trademarks was proper.

Questions?

If you have questions about trademark law, or if you anticipate being engaged in trademark litigation, please contact our office at 626-796-4000 or toll-free at 855-UR-IDEAS (855-874-3327) for a free initial consultation with one of our intellectual property attorneys. Please also visit our website at http://leechtishman.com/practices/intellectual-property/ for more information about us.

Photo Attribution:  Anders Sandberg, Creative Commons Attribution 2.0 License

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