Hard Candy, LLC v. Anastasia Beverly Hills, Inc.
921 F.3d 1343 (2019)
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Rule of Law:
A plaintiff in a trademark infringement action who seeks only an accounting and disgorgement of the defendant's profits, and not actual damages, is not entitled to a jury trial under the Seventh Amendment because the remedy sought is purely equitable in nature.
Facts:
- Hard Candy, LLC, a cosmetics company, has continuously used the 'HARD CANDY' trademark since its predecessor first filed for it in 1995.
- Anastasia Beverly Hills, Inc., another cosmetics company, announced the release of a 'Gleam Glow Kit' in December 2015.
- This makeup palette contained four shades of facial highlighter, one of which was named 'hard candy' on the back and inside of the package.
- An Anastasia developer stated she chose the name because the product's shimmer reminded her of candies from her childhood, and she was not aware of Hard Candy's continued existence.
- The day after the product's announcement, Hard Candy sent Anastasia a cease and desist letter.
- After discussions between attorneys failed to resolve the dispute, Anastasia proceeded to sell the Gleam Glow Kit.
- The kit was sold online and in major retail stores from December 2015 until August 2016, consistent with Anastasia's plan for it to be a limited-edition product.
Procedural Posture:
- Hard Candy, LLC sued Anastasia Beverly Hills, Inc. in the U.S. District Court for the Southern District of Florida for trademark infringement and unfair competition.
- The complaint sought injunctive relief, an accounting of Anastasia's profits, and actual damages, and included a demand for a jury trial.
- Prior to trial, Hard Candy stipulated that it was no longer seeking actual damages or lost profits.
- Based on this stipulation, the district court struck Hard Candy's jury demand, finding that all remaining remedies were equitable in nature.
- After a three-day bench trial, the district court entered judgment for Anastasia, concluding there was no likelihood of confusion and that Anastasia had established a fair use defense.
- Hard Candy, as the appellant, appealed the district court's judgment to the U.S. Court of Appeals for the Eleventh Circuit.
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Issue:
Does a trademark plaintiff have a right to a jury trial under the Seventh Amendment when seeking only an accounting and disgorgement of the defendant's profits under the Lanham Act, and not actual damages?
Opinions:
Majority - Marcus, J.
No, a trademark plaintiff does not have a right to a jury trial under these circumstances. An accounting and disgorgement of a defendant's profits is a remedy that is historically equitable in nature. The court applied the Supreme Court's two-part test from Tull v. United States. First, trademark infringement actions were historically brought in both courts of law and courts of equity, making this factor indeterminate. Second, and more importantly, the nature of the remedy sought—an accounting and disgorgement of profits—is traditionally equitable. This remedy was developed in courts of equity as an ancillary to injunctive relief and is founded on the equitable theory of a constructive trust, where the infringer is treated as a trustee holding ill-gotten gains for the rightful owner. The Supreme Court's decision in Dairy Queen, Inc. v. Wood did not convert this remedy into a legal one; that case involved a claim for contract debt and damages, which are quintessentially legal remedies, despite being framed as an 'accounting.' Because Hard Candy expressly dropped its claim for actual damages, it sought only equitable relief, and thus had no Seventh Amendment right to a jury trial.
Analysis:
This decision solidifies the Eleventh Circuit's position that the disgorgement of profits under the Lanham Act is a purely equitable remedy, aligning it with the Sixth and Ninth Circuits. It clarifies that plaintiffs cannot obtain a jury trial by framing a request for profits as a 'proxy' for damages; the nature of the remedy itself, not the plaintiff's justification for it, is what matters for the Seventh Amendment analysis. This ruling significantly impacts litigation strategy, forcing trademark plaintiffs who desire a jury to plead and pursue a claim for their own actual damages, which can often be difficult to prove. Consequently, defendants may be more likely to face bench trials in cases where infringement is alleged but the plaintiff's direct financial losses are speculative.
