K AND N ENGINEERING, INC. v. Bulat

Citations: 510 F.3d 1079; 85 U.S.P.Q. 2d (BNA) 1372; 2007 U.S. App. LEXIS 29220; 2007 WL 4394416Docket: 06-55393

Court: Court of Appeals for the Ninth Circuit; December 18, 2007; Federal Appellate Court

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K and N Engineering, Inc. (K.N.), a California corporation, filed a lawsuit against Sarah Bulat and Steven Dale Wandel for trademark infringement and counterfeiting after they sold unauthorized decals featuring K.N.'s logo on eBay. K.N. sought statutory damages under 15 U.S.C. § 1117(c) and attorney's fees under § 1117(b). The district court granted K.N.'s motion for summary judgment, awarding $20,000 in statutory damages and $100,000 in attorney's fees. The appellants contested the attorney's fees, arguing that K.N.'s decision to pursue statutory damages precluded the award of attorney's fees under § 1117(b). The Ninth Circuit reviewed the attorney's fees award for abuse of discretion and the legal interpretation de novo. The court emphasized that statutory interpretation begins with the statute's plain language. It noted that § 1117 establishes a framework for recovering damages and attorney's fees in trademark cases, allowing fees only in "exceptional cases" under § 1117(a). In cases involving counterfeit marks, however, § 1117(b) permits recovery of three times the actual damages and reasonable attorney's fees, barring "extenuating circumstances." The court's decision hinges on interpreting these statutory provisions in conjunction.

A plaintiff can choose to forgo actual damages under 15 U.S.C. 1117(a) and opt for statutory damages under 15 U.S.C. 1117(c) in cases involving counterfeit marks. Section 1117(c) allows for statutory damages ranging from $500 to $100,000 per counterfeit mark, or up to $1,000,000 if the counterfeit use is deemed willful, as determined by the court. Importantly, Section 1117(c) does not provide for attorney's fees, and 15 U.S.C. 1117(b) only permits such fees when actual damages are awarded under 15 U.S.C. 1117(a). In this case, K. N chose statutory damages, resulting in no actual damages or profits being awarded, and therefore no basis for attorney's fees under 15 U.S.C. 1117(b). K. N's assertion that the case Intel Corp. v. Terabyte International, Inc. allows for attorney's fees under 15 U.S.C. 1117(b) despite opting for statutory damages is incorrect, as Intel addressed attorney's fees in the context of actual damages awarded under 15 U.S.C. 1117(a). Since K. N's choice of statutory damages excludes the possibility of attorney's fees, the district court's award of $100,000 in attorney's fees is deemed an abuse of discretion and has been reversed. The court does not consider other arguments regarding the fee award.

The district court's summary judgment and award of statutory damages in favor of K. N. is affirmed. The appellants did not present a specific argument to the district court; however, the court chooses to review the issue due to its legal nature concerning statutory interpretation and the completeness of the record. Under 15 U.S.C. 1117(a), a plaintiff in a trademark violation case can recover defendant's profits, actual damages, and litigation costs, with the possibility of reasonable attorney fees in exceptional cases. Additionally, 15 U.S.C. 1117(b) mandates that, barring extenuating circumstances, damages must be triple the profits or damages, along with reasonable attorney fees, in cases of trademark infringement involving counterfeit marks. Since the attorney fee award in this case was based on 15 U.S.C. 1117(b), the court does not address whether opting for statutory damages under 15 U.S.C. 1117(c) would prevent an attorney fee award for exceptional cases under 15 U.S.C. 1117(a).