Maier Brewing Co. v. Fleischmann Distilling Corp.
157 U.S.P.Q. (BNA) 76, 390 F.2d 117 (1968)
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Rule of Law:
Under the Lanham Act, a court may award an accounting of the infringer's profits based on a theory of unjust enrichment to deter willful infringement, even when the plaintiff's and defendant's products are non-competitive.
Facts:
- Buchanan manufactures a well-known scotch whisky abroad under the registered trademark 'Black & White.'
- Fleischmann Distilling Corp. is the exclusive importer and seller of 'Black & White' scotch in the United States, where it has been sold for over 50 years and has an excellent reputation.
- Maier Brewing Company, a brewery, began producing and selling its own beer under the name 'Black & White.'
- Ralph's Grocery Company sold the 'Black & White' beer produced by Maier Brewing.
- The scotch whisky sold by Fleischmann and the beer sold by Maier Brewing are non-competitive products.
- The district court found that Maier Brewing and Ralph's Grocery Company knowingly, willfully, and deliberately infringed the 'Black & White' trademark.
Procedural Posture:
- Fleischmann Distilling Corp. sued Maier Brewing Company and Ralph's Grocery Company for trademark infringement in the U.S. District Court.
- The District Court initially entered a judgment for the defendants, Maier and Ralph's.
- Fleischmann appealed to the United States Court of Appeals for the Ninth Circuit, which reversed the district court's judgment and remanded the case with instructions to grant an injunction and consider an accounting of profits.
- On remand, the District Court awarded Fleischmann an accounting of profits from both Maier Brewing and Ralph's Grocery Company.
- Maier Brewing and Ralph's Grocery Company, as appellants, appealed the District Court's order granting the accounting of profits to the United States Court of Appeals for the Ninth Circuit.
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Issue:
Does the Lanham Act permit a court to award an accounting of an infringer's profits as a remedy for trademark infringement where the parties' products are not in direct competition, the plaintiff has not shown actual damages, and the infringement was deliberate and willful?
Opinions:
Majority - Byrne, J.
Yes. The Lanham Act permits an accounting of profits even for non-competing goods where the infringement was willful, as the remedy serves to prevent unjust enrichment and deter future infringement. The court rejected the older view that an accounting of profits is only a proxy for plaintiff's damages from diverted sales, a theory which requires direct competition. Instead, it embraced the modern rationale of unjust enrichment, which focuses on disgorging profits the infringer unfairly obtained by trading on the plaintiff's goodwill. This approach aligns with the Lanham Act's purpose to make infringement unprofitable. The court reasoned that in an age of mass marketing, an infringer poaches on the 'commercial magnetism' and psychological value of a mark, and an injunction alone is an insufficient deterrent for deliberate piracy, as it would be a 'tacit invitation to other infringement.' Therefore, by making willful infringement unprofitable, the court protects the trademark owner's goodwill and the public from deception.
Analysis:
This decision solidifies the shift in trademark remedy theory from pure compensation to include deterrence and restitution. By endorsing an accounting of profits for willful infringement of non-competing goods, the court expanded the availability of monetary remedies under the Lanham Act. The case establishes that a plaintiff does not need to prove diverted sales or direct financial harm to recover the infringer's profits. This precedent significantly strengthens the hand of trademark owners against deliberate infringers by focusing on the defendant's wrongful gain rather than the plaintiff's loss, thereby making it easier to justify substantial monetary awards in cases of intentional piracy.
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