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Monetary Remedies in Trademark Cases Weston Anson, CONSOR Intellectual Asset Management R. Charles Henn Jr., Kilpatrick Stockton LLP  Paul C. Llewellyn, Kaye Scholer LLP May 25, 2010
Growing Interest in Monetary Remedies ,[object Object],[object Object],[object Object],[object Object]
Lanham Act Monetary Remedies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Threshold Requirements ,[object Object],[object Object],[object Object]
Value Definitions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
What is Damaged:  The Trademark Bundle ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Opposing Valuation Conclusions: Case Study Action:  Federal trademark infringement  Cause:  Infringing shoe logos and designs Plaintiff:  Large sporting goods company  Defendant:  Large shoe retailer Plaintiff's Expert:  $40.0 million Defendant’s Expert: $2.0 million Award:  $60.0 million
Lost Sales ,[object Object],[object Object],[object Object]
Quantifying Lost Sales Lost Sales Profits (in millions) Infringing Sales $100.6 Allocated Direct Costs $30.3 Other Allocated Incremental Costs $25.0 Infringer’s Profits $45.3
Lost Sales: Practical Considerations ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Reasonable Royalties ,[object Object],[object Object],[object Object]
Georgia-Pacific  Elements ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Establishing Comparable Royalty Rates LICENSOR ROYALTY RATE COMMENTS TOTAL Wimbledon / TM 6.0% 2-4% for advertising 8.0  –  10.0% Rawlings 3.5% - 5.0% ------- 3.5% - 5.0% NFL 8.0%  –  15.0% 2% for advertising 10.0% - 17.0% MLBB 6.0% - 12.0% 2% for advertising 8.0% - 14.0% LA Gear 4.0% - 6.0% 1-3% for advertising 5.0% - 9.0% Playboy 6.0% - 10.0% 2% for advertising 8.0% - 12.0% Bancroft 3.0% - 5.0% Product design fees 3.5% - 5++% Louisville Slugger 5.0% - 8.0% 2% for advertising 7.0% - 10.0% RANGE 3.5% - 17.0% SPREAD 485%
Quantifying Reasonable Royalties Annual Sales of Brand X Widgets $100,000 Industry Average Royalty Rate for Branded Widgets     15.0% Estimated Annual Royalty Income    $15,000 Extended for 10 years $150,000 Annual Discount Rate   15.0%   Total Value or Damage   =  $80, 730 Simplified Damages Analysis
Royalties : Practical Considerations ,[object Object],[object Object],[object Object],[object Object],[object Object]
Price Erosion ,[object Object],[object Object],[object Object]
Approaches to Quantifying Price Erosion ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Price Erosion: Practical Considerations ,[object Object],[object Object]
Disgorgement of Profits ,[object Object],[object Object],[object Object]
Calculating Infringer’s Profits ,[object Object],[object Object],[object Object],[object Object],*With full discovery and disclosure – which is NEVER forthcoming
Disgorgement of Profits: Practical Considerations ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Loss of Business Value ,[object Object],[object Object],[object Object],[object Object]
Quantifying Loss of Business Value Annual Sales $15.9 M $24.1 M Operating Expenses $5.4M $6.3 M Pre-Tax Margins (5 years) $10.5 M $17.8 M Discount Rate 18.8% 18.8% Net Business Value $7.2 M $24.9 M LOSS IN BUSINESS VALUE: $17.7 M
Loss of Business Value: Practical Considerations
Corrective Advertising ,[object Object],[object Object],[object Object]
Seeking Corrective Advertising Damages ,[object Object],[object Object],[object Object],[object Object]
Other damages issues to keep in mind ,[object Object],[object Object],[object Object],[object Object],[object Object]
Damages / Valuation Methodologies are Changing ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Problems in Litigation Damages Cases ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

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Monetary Remedies in Trademark Cases

  • 1. Monetary Remedies in Trademark Cases Weston Anson, CONSOR Intellectual Asset Management R. Charles Henn Jr., Kilpatrick Stockton LLP Paul C. Llewellyn, Kaye Scholer LLP May 25, 2010
  • 2.
  • 3.
  • 4.
  • 5.
  • 6.
  • 7. Opposing Valuation Conclusions: Case Study Action: Federal trademark infringement Cause: Infringing shoe logos and designs Plaintiff: Large sporting goods company Defendant: Large shoe retailer Plaintiff's Expert: $40.0 million Defendant’s Expert: $2.0 million Award: $60.0 million
  • 8.
  • 9. Quantifying Lost Sales Lost Sales Profits (in millions) Infringing Sales $100.6 Allocated Direct Costs $30.3 Other Allocated Incremental Costs $25.0 Infringer’s Profits $45.3
  • 10.
  • 11.
  • 12.
  • 13. Establishing Comparable Royalty Rates LICENSOR ROYALTY RATE COMMENTS TOTAL Wimbledon / TM 6.0% 2-4% for advertising 8.0 – 10.0% Rawlings 3.5% - 5.0% ------- 3.5% - 5.0% NFL 8.0% – 15.0% 2% for advertising 10.0% - 17.0% MLBB 6.0% - 12.0% 2% for advertising 8.0% - 14.0% LA Gear 4.0% - 6.0% 1-3% for advertising 5.0% - 9.0% Playboy 6.0% - 10.0% 2% for advertising 8.0% - 12.0% Bancroft 3.0% - 5.0% Product design fees 3.5% - 5++% Louisville Slugger 5.0% - 8.0% 2% for advertising 7.0% - 10.0% RANGE 3.5% - 17.0% SPREAD 485%
  • 14. Quantifying Reasonable Royalties Annual Sales of Brand X Widgets $100,000 Industry Average Royalty Rate for Branded Widgets 15.0% Estimated Annual Royalty Income $15,000 Extended for 10 years $150,000 Annual Discount Rate 15.0% Total Value or Damage = $80, 730 Simplified Damages Analysis
  • 15.
  • 16.
  • 17.
  • 18.
  • 19.
  • 20.
  • 21.
  • 22.
  • 23. Quantifying Loss of Business Value Annual Sales $15.9 M $24.1 M Operating Expenses $5.4M $6.3 M Pre-Tax Margins (5 years) $10.5 M $17.8 M Discount Rate 18.8% 18.8% Net Business Value $7.2 M $24.9 M LOSS IN BUSINESS VALUE: $17.7 M
  • 24. Loss of Business Value: Practical Considerations
  • 25.
  • 26.
  • 27.
  • 28.
  • 29.