Defendant's Profits

Definition

Defendant's profits refer to the monetary gains or revenue obtained by the defendant as a result of their infringement of a trademark. This term is particularly relevant in the context of trademark remedies, where the trademark owner may seek to recover the defendant's ill-gotten profits as a form of compensation for the harm caused by the infringement.

5 Must Know Facts For Your Next Test

1. Defendant's profits are a type of monetary remedy available to the trademark owner in a successful trademark infringement lawsuit.
2. The trademark owner must prove that the defendant's profits are attributable to the infringement, rather than other factors, in order to recover them.
3. The burden of proof for establishing the defendant's profits is on the trademark owner, who must provide a reasonable basis for calculating the amount.
4. Defendant's profits can be reduced by the defendant's deductible expenses, such as the cost of goods sold, to arrive at the net profits subject to disgorgement.
5. The recovery of defendant's profits is intended to serve as a deterrent against future trademark infringement and to prevent the defendant from unjustly benefiting from their unlawful conduct.

Review Questions

• Explain the purpose of awarding a trademark owner the defendant's profits in a successful infringement lawsuit.
  • The purpose of awarding a trademark owner the defendant's profits is to serve as a deterrent against future trademark infringement and to prevent the defendant from unjustly benefiting from their unlawful conduct. By disgorging the ill-gotten gains, the law aims to strip the defendant of the financial incentive to infringe on the trademark owner's rights and to make the trademark owner whole by recovering the profits that were wrongfully obtained at their expense.
• Describe the burden of proof required for a trademark owner to recover the defendant's profits in an infringement lawsuit.
  • The burden of proof for establishing the defendant's profits is on the trademark owner, who must provide a reasonable basis for calculating the amount. The trademark owner must prove that the defendant's profits are directly attributable to the infringement, rather than other factors, in order to recover them. This may involve presenting financial records, sales data, and other evidence to demonstrate the causal link between the infringement and the defendant's gains.
• Analyze the role of deductible expenses in the calculation of the defendant's profits subject to disgorgement.
  • When calculating the defendant's profits that are subject to disgorgement, the defendant is entitled to deduct certain expenses, such as the cost of goods sold, from the gross revenue. This is to ensure that the trademark owner only recovers the net profits that were unjustly obtained by the defendant through the infringement, rather than the defendant's entire revenue. The deduction of legitimate business expenses helps to prevent the trademark owner from being overcompensated and ensures a more equitable distribution of the financial consequences of the infringement.

Related terms

Trademark Infringement: Trademark infringement occurs when a party uses a mark that is confusingly similar to a registered trademark, without the trademark owner's permission, in a way that is likely to cause consumer confusion or deceive the public.

Disgorgement: Disgorgement is the act of a defendant surrendering their profits or gains obtained through unlawful or unethical acts, such as trademark infringement, to the injured party as a form of remedy.

Unjust Enrichment: Unjust enrichment refers to a situation where a party has unfairly or unlawfully obtained a benefit at the expense of another, and the law requires the party to make restitution or repay the unjustly obtained gains.