Lindy Pen Company, Inc. v. Big Pen Corporation

Brief Fact Summary. Lindy Pen Company, Inc. (Liny) (Plaintiff) brought suit against Bic Pen Corporation (Bic) (Defendant) claiming trademark infringement, breach of contract, unfair competition, and trademark dilution; an accounting was ordered by the Ninth Circuit.

Synopsis of Rule of Law. In those cases where infringement yields financial rewards, an accounting of profits will be ordered so as to prevent trademark infringement.

Facts. Lindy Pen Company, Inc. (Plaintiff) alleged that Big Pen Corporation (Defendant) infringed its trademark by using the word “Auditor’s†on its pen barrels.  The district court entered judgment in favor of Defendant, and the circuit court upheld the ruling because Defendant did not infringe in the major retail markets, but remanded the case to determine whether there was a likelihood of confusion in telephone order sales.  The district court determined that any confusion in the telephone order market could be cured upon receipt of the goods.  The circuit court disagreed, however, and found that post-sale inspection could not cure the confusion.  It ordered an accounting to award damages.  On remand, the district court held that an accounting of profits was inappropriate because Bic’s (Defendant) infringement was innocent.  Lindy (Plaintiff) appealed.

Issue. In those cases where infringement yields financial rewards, will an accounting of profits be ordered so as to prevent trademark infringement?

Held. (Roll, J.)  Yes.  In those cases where infringement yields financial rewards, an accounting of profits will be ordered so as to prevent trademark infringement.  The district court determined that Lindy’s (Plaintiff) mark was weak and there was no evidence of actual confusion as Bic’s (Defendant) infringement was unintentional.  To award profits in this situation would amount to a punishment in violation of the Lanham Act, which clearly stipulates that a remedy shall constitute compensation, and not a penalty.  The district court was correct in finding that Plaintiff failed to sustain its burden to prove reasonably forecast profits.  An accounting is intended to award profits only on sales that are attributable to the infringing conduct.  Lindy (Plaintiff) failed to produce any evidence of sales of the Big (Defendant) “Auditor’s Fine Point†in the infringing market.  Affirmed.

Discussion. The court held that Lindy (Plaintiff) had only to establish Bic’s (Defendant) gross profits from the infringing activity with reasonable certainty.  Once gross profits are demonstrated, they are presumed to be the result of the infringing activity.  Because Plaintiff failed to produce a reasonable estimate of Defendant’s sales in the telephone submarket, the question of actual damages failed because of a lack of proof at the damages proceeding.