Rebuttle to Playboy Enterprises, Inc. v. Universal Tel-a-Talk

As set out below, Playboy Enterprises, Inc. v. Universal Tel-a-Talk, is inconsistent with the Supreme Court, the legislative history of the Lanham Act, the structure of trademark law and the 7th circuit court of appeals.
It appears the Court in Playboy Enterprises, Inc. v. Universal Tel-a-Talk based its decision to award damages under 1116(d)(1)(B)(I) on its interpretation of Congresses intention.# I respectfully submit, the Courts analysis in Playboy, is wholly unsupported by the legislative history of The Trademark Counterfeiting Act of 1984 or the Anticounterfeiting Consumer Protection Act of 1996.#
The Trademark Counterfeiting Act of 1984, and the Anticounterfeiting Consumer Protection Act of 1996, was enacted to create stronger remedies in civil cases involving the intentional use of a counterfeit trademark. They provided mechanisms for obtaining statutory damages, treble damages and attorney's fees See 15 U.S.C. § 1117. The Lanham Act also provides for ex parte application by a trademark owner for a court order to seize counterfeit materials and instrumentalities where it can be shown that the defendant is likely to conceal or transfer the materials (Joint Statement at 1701).
The House of Representatives and Senate sponsors intended that the entire text of the 1984 Joint Statement to be the final and authoritative explanation of the legislative intent of the Trademark Counterfeiting Act of 1984 and the Anticounterfeiting Consumer Protection Act of 1996.# See (Joint Statement at 1705). Unless it did so explicitly, (The Trademark Counterfeiting Act of 1984 and the Anticounterfeiting Consumer Protection Act of 1996 did) not in any way modify the Lanham Act or judicial interpretations of it (See Joint Statement at 1706).
In a civil proceeding under the Lanham Act, a number of defenses, affirmative defenses, and limitations on remedies are applicable. Subsection 2320(c) provides that any defense, affirmative defense, or limitation on remedies that would be applicable in an action under the Lanham Act shall be applicable in a prosecution under this section." (See Joint Statement at 1708).
It is clear from the text of The Trademark Counterfeiting Act of 1984 and the Anticounterfeiting Consumer Protection Act of 1996 Joint Statement that, unless it did so explicitly, those Acts did not in any way modify the Lanham Act or judicial interpretations of it and that it intended any limitation on remedies available under the Lanham Act prior to 1984 to remain intact. (See Joint Senate at 1705)
The Seventh Circuit held that § 2320(c) incorporates civil Lanham Act defenses, "[r]estitution in a criminal case is the counterpart to damages in civil litigation" and therefore that restitution could not be imposed in a criminal case where damages would not have been available under the Lanham Act. (See United States v. Sung 51 F.3d 92, 94 (7th Cir. 1995))
Failure to use the statutory symbol does not create a defense: it is merely a limitation on remedies. If notice of registration is not used, statutory damages are limited to those arising after the defendant received actual notification of the charge of infringement. "The only consequence of a holder failing to give such notice is that damages might start running later than if the notice had been given." See also United States v. Sung, 51 F.3d 92, 34 U.S.P.Q.2d 1407, 1409 (7th Cir. 1995); Bambu Sales, Inc. v. Sultana Crackers, Inc., 683 F. Supp. 899, 7 U.S.P.Q.2d 1177 (E.D.N.Y. 1988) See also (J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition§ 19:144 4th ed. 2005).
§ 2320(c) incorporates civil Lanham Act defenses: “[R]estitution in a criminal case is the counterpart to damages in civil litigation,” and thus “restitution payable to the trademark owner is proper only if the goods contained the proper notice or the infringer had actual knowledge of the registration.” See United States v. Sung, 51 F.3d 92, 94 (7th Cir. 1995); See also, J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition§ 19:148 4th ed. 2005. In Sung, the Seventh Circuit held that specific findings on these points—proper notice or actual knowledge of the registration—must be made by the sentencing court on the record before ordering restitution. As noted above The Trademark Counterfeiting Act of 1984 provides for ex parte application by a trademark owner for a court order to seize counterfeit materials and instrumentalities where it can be shown that the defendant is likely to conceal or transfer the materials. § 1116(d). Thus, §1116(d)(1)(B)(i) emanates from the ex parte seizure order provision found at § 1116(d). §1116(d)(1)(B)(i) states: As used in this subsection the term “counterfeit mark” means—
(i) a counterfeit of a mark that is registered on the principal register in the United States Patent and Trademark Office for such goods or services sold, offered for sale, or distributed and that is in use, whether or not the person against whom relief is sought knew such mark was so registered;
In relevant part section 1116(d)(1)(B)(i) defines “counterfeit mark” and narrows the identity of those who may apply for an ex parte seizure order to those who own a mark that is: (1) registered on the principal register, (2) in current use by the mark owner (3) on the same classification of goods as the alleged counterfeit mark, (4) whether or not the person against whom relief is sought knew such mark was so registered. As it would be counterintuitive to give notice to fly by night defendants who may attempt to evade the jurisdiction of the courts (See Joint Senate at 1711), it follows, the whether or not the person against whom relief is sought knew such mark was so registered; portion of Section 1116(d)(1)(B)(i) speaks specifically to ex parte seizure orders.
Thus, the stronger remedies in civil cases involving the intentional use of a counterfeit trademark found in The Trademark Counterfeiting Act of 1984 and Anticounterfeiting Consumer Protection Act of 1996, were intended to be available to only infringed marks that are registered on the principal register in the United States Patent and Trademark Office for such goods or services sold, offered for sale, or distributed and that are in use by the mark owner (Joint Statement at 1707).
When reading § 1117(b) and 1117(c) it is plain there is no language expressly stating Congresses intent to limit the availability of these stronger remedies to owners of marks that are registered on the principal register in the U.S. Patent and Trademark Office for such goods or services sold, offered for sale, or distributed and that are in use by the mark owner. That limitation can only be determined by the (as defined in section 1116 (d) of this title) text found in § 1117(b) § 1117(c). Thus, it is reasonable to infer Congresses intent for inserting section 1116(d)(1)(B)(i) into the text of the stronger remedies provided by § 1117(b) § 1117(c) as a means of limiting those remedies to owners of marks registered on the principal register, that is in use on the same classification of goods as the alleged infringing mark.
This analysis is buttressed by the plain language found in Section 1111 and the structure of Section’s 1117(a), 1117(b) and 1117(c) of the Lanham Act.
Section 1111 states that displaying the words “Registered in U.S. Patent and Trademark Office” or “Reg. U.S. Pat. & Tm. Off” “or the letter R enclosed within a circle” is notice of registration. It then states that “in any suit for infringement under this chapter by such a registrant failing to give such notice of registration, no profits and no damages shall be recovered under the provisions of this chapter unless the defendant had actual notice of the registration.” Section 1111 is in Chapter 22; all of plaintiff’s claims under federal law are in Chapter 22.
The plain meaning of Section 1111 is that registered mark owners cannot obtain a profit or damage remedy without proof of actual notice. See Stark Brothers Nurseries v. Stark, 255 U.S. 756 (1921).
Section’s 1117(a), 1117(b) and 1117(c) of the Lanham Act read as follows:
1117(a) Profits; damages and costs; attorney fees
When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 1125 (a) or (d) of this title, or a willful violation under section 1125 (c) of this title, shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 of this title, and subject to the principles of equity, to recover
(1) defendant’s profits,
(2) any damages sustained by the plaintiff, and
(3) the costs of the action.....
1117(b) Treble damages for use of counterfeit mark
In assessing damages under subsection (a) of this section, the court shall, unless the court finds extenuating circumstances, enter judgment for three times such profits or damages, whichever is greater,
together with a reasonable attorney’s fee, in the case of any violation of section 1114 (1)(a) of this title or
section 220506 of title 36 that consists of intentionally using a mark or designation, knowing such mark or designation is a counterfeit mark (as defined in section 1116 (d) of this title),......
1117 (c) Statutory damages for use of counterfeit marks
In a case involving the use of a counterfeit mark (as defined in section 1116 (d) of this title) in connection with the sale, offering for sale, or distribution of goods or services, the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits under subsection (a) of this section, an award of statutory damages for any such use in connection with the sale, offering for sale, or distribution of goods or services in the amount of—......

Summary:

The language of § 1117 is clear and unambiguous. The plaintiff does not have the option to choose or elect damages under 1117(a) or 1117(c). Under 1117(a) an award of damages is subject to the provision regarding notice found in Section 1111. Given the above analysis and the plain language of 1117(c); “the plaintiff may elect, …to recover, instead of actual damages and profits under subsection (a) of this section”, it is clear that an election for damages under 1117(c) assumes that the plaintiff is entitled to an award of damages under 1117(a). It follows then that if the plaintiff is not entitled to damages under 1117(a), then the plaintiff cannot be entitled to an award of damages under 1117(c).

In conclusion, the plaintiff may not ‘substitute’ or elect for ‘something in lieu of’ one thing (an award of damages under 1117(a)), if the plaintiff is not entitled to that one thing in the first place.