In U.S. trademark infringement actions, a plaintiff who establishes violations of the Lanham Act is routinely granted injunctive relief requiring the defendant to discontinue use of the offending mark. But such plaintiffs also have other remedies at their disposal. One such remedy is corrective advertising in the form of affirmative injunctive relief (i.e., an order that the defendant engage in corrective advertising)and/or in the form of monetary relief (i.e., an order that the defendant make payments to the plaintiff to cover the costs of past or future corrective advertising). While defendants have been ordered to perform advertising to undo the adverse effects of confusion, courts more commonly order defendants to pay compensatory damages once infringement has been shown. Subject to restrictions on awarding duplicative remedies, however, there does not appear to be any reason why a court may not award some combination of these equitable and monetary remedies.
One of the earliest monetary awards for corrective advertising was made over 35 years ago in the well-known“BIGFOOT” case. Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365, 1374–75 (10th Cir. 1977). In that case, defendant Goodyear infringed plaintiff Big O’s BIGFOOT mark in a $9.7 million nationwide advertising campaign. A jury awarded Big O $2.8 million for future corrective advertising. While the district court reduced the award to $678,302, it acknowledged that Big O was “entitled to recover a reasonable amount to that of a concurrent corrective advertising campaign.” 561 F.2d at 1375. While there have been a number of BIGFOOT-type cases and other corrective advertising “sightings” over the years, the legal principles applicable to the remedy have evolved since that early case.
This article is part one of a two-part series discussing the current requirements for and the current limitations placed on corrective advertising. Part one addresses the general requirements for the remedy, discusses cases in which affirmative injunctive relief was ordered requiring acts of corrective advertising by the defendant, and identifies a split among the courts on the propriety of a monetary damage award when the plaintiff did not expend sums on corrective advertising in advance of trial. Part two will focus on the standards for quantifying a monetary award for past or future corrective advertising. As these articles will make clear, trademark owners should consider such relief as part of their arsenal of potentially effective remedies for trademark infringement.
Corrective Advertising—General Standards
Generally, corrective advertising may be available where a plaintiff establishes that the defendant infringed its mark, the mark has been damaged by confusion in the marketplace, and advertising is needed to restore the mark to its original value. Corrective advertising may comprise: (1) injunctive relief requiring the defendant to take steps to counteract public confusion resulting from the infringement; or (2) monetary relief designed to compensate a plaintiff for the cost of past or future advertising undertaken to alleviate confusion or restore the loss in value of the plaintiff’s mark. Under the Lanham Act, compensatory damages may be awarded “even when they are not susceptible to precise calculations.” Aronowitz v. Health-Chem Corp., 513 F.3d 1229, 1241 (11th Cir. 2008).
The Need for Proof of Actual Confusion
Corrective advertising is a remedy designed to “counteract the public confusion resulting from a defendant’s [trademark infringement].”Big O, 561 F.2d at 1374–75. As such, courts frequently examine the extent of proof of actual confusion when assessing the propriety of a request for corrective advertising. There is some authority for the proposition that proof of actual confusion is a requirement for obtaining a corrective advertising damage award. See Zelinski v. Columbia 300, Inc., 335 F.3d 633, 639 (7th Cir. 2003). Indeed, the absence of actual confusion, in conjunction with other considerations, has led courts to deny such relief and/or to overturn substantial corrective advertising damage awards. See, e.g., Lurzer GMBH v. Am. Showcase, Inc., 75 F. Supp. 2d 98, 101 (S.D.N.Y. 1998) opinion clarified, 97 CIV. 6576 (JSR), 1999 WL 111931 (S.D.N.Y. Mar. 4, 1999) and aff’d, 201 F.3d 431 (2d Cir. 2000) (rejecting request for prospective advertising costs to correct the “misleading impressions created by defendant’s infringement” where the plaintiff “was unable to adduce material evidence of actual confusion and, instead, submitted its infringement claims to the jury on a theory of intentional deception”); Simon Property Group, L.P. v. mySimon, Inc., No. IP 99-1195-CH/G, 2001 WL 66408, at *26 (S.D. Ind. Jan. 24, 2001) (holding that the plaintiff’s expert’s $5.3 million estimate of needed corrective advertising expenditures was not based on any assessment or knowledge of “the extent of actual confusion” and held unreliable). Thus, it can be important for a plaintiff to adduce proof of actual confusion in order to obtain a corrective advertising injunction or monetary award.
Affirmative Equitable Relief for Corrective Advertising
According to the principles of equity, a court may grant injunctive relief under the Lanham Act to prevent the violation of any right of the trademark owner. 15 U.S.C. § 1116(a). Such equitable relief may include an order requiring a defendant to engage in corrective advertising designed to undo confusion engendered by its prior trademark infringement, or to prevent future confusion that may arise from past wrongful conduct. Generally, a plaintiff seeking a corrective advertising injunction must satisfy the Lanham Act requirements for permanent injunctive relief, i.e., irreparable injury; inadequate remedies at law; the balance of hardships between the parties favors an injunction; and, the injunction is in the public interest. See Irwin Indus. Tool Co. v. Worthington Cylinders Wisconsin, LLC, 747 F. Supp. 2d 568, 581 (W.D.N.C. 2010). Additionally, “[a]n order of corrective advertising must be reasonable and causally related to the false advertising.” C=Holdings B.V. v. Asiarim Corp., 12 CIV. 928 RJS, 2013 WL 6987165, at *19 (S.D.N.Y. Dec. 16, 2013).
There are relatively few reported decisions in which a court has ordered a defendant in a trademark infringement action to engage in affirmative acts of corrective advertising. Court orders granting such relief are more prevalent in false advertising cases. See, e.g., Rhone-Poulenc Rorer Pharmaceuticals, Inc. v. Marion Merrell Dow, Inc., 93 F.3d 511, 516 (8th Cir. 1996) (ordering corrective advertising to remedy false statements in the defendant’s advertising regarding substituting use of the defendant’s drug for that of the plaintiff).
In terms of trademark cases, in Taco Cabana Intern., Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1126 (5th Cir. 1991), aff’d 505 U.S. 763 (1992), the court ordered a defendant that infringed a plaintiff’s trade dress “to dispel customer confusion by displaying a prominent sign for a year acknowledging that Two Pesos had unfairly copied Taco Cabana’s restaurant concept.” Similarly, in C=Holdings B.V. v. Asiarim Corp., the court directed the defendant to publish a statement on its website, and to submit a statement to various customers who purchased products featuring the infringing mark, explaining the court’s decision that the defendant had engaged in trademark infringement. 2013 WL 6987165, at *19. Neither of the above trademark cases analyzed the issue of a corrective advertising injunction in depth. However, in each case, the plaintiff presented relatively strong proof of infringement, including survey evidence of supporting actual confusion, evidence of intentional copying, trade secret misappropriation and/or use of a counterfeit mark. Where courts have denied or limited such relief, they have done so on, among others, the grounds that the scope of the corrective advertising injunction sought is commercially broader than the infringing use; any lingering association between the parties is the result of prior lawful use of the plaintiff’s mark pursuant to a business relationship, not post-termination infringement; and/or the injunctive remedies proscribing the defendant’s infringing conduct should sufficiently serve to dispel confusion. See, e.g., Century 21 Real Estate, LLC, v. Destiny Real Estate Properties, No. 4:11-CV-38 JD, 2011 WL 6736060, at *7 (N.D. Ind. Dec. 19, 2011).
Compensatory Damages for Past or Future Corrective Advertising
As noted above, courts have been more commonly faced with requests for monetary compensation for the cost of corrective advertising than with requests for injunctive relief requiring the defendant to discontinue use of the offending mark. This imbalance may be attributable to the fact that obtaining a damages award based on the defendant’s advertising expenditures or on the plaintiff’s own pre-trial corrective advertising may be a more readily quantifiable, and arguably less speculative, measure of the plaintiff’s damages than obtaining injunctive relief based on proving lost sales due to trademark infringement. In other words, the prevalence of the damages award remedy may be a function of the strategic advantages it presents.
In general, “[a]n award of corrective advertising is intended to compensate a trademark owner for the amount it has spent, or will be required to spend in the future, to dispel harmful confusion caused by a defendant’s infringement.” Simon Prop. Grp., L.P., 2001 WL 66408, at *23. Such relief is intended to make the injured plaintiff whole. See Big O, 561 F.2d at 1374–75. The Seventh Circuit has also stated that an award of corrective advertising should be limited to cases where the plaintiff shows not only that the confusion injured the plaintiff, but also that the “‘repair’ of the old trademark, rather than adoption of a new one, is the least expensive way to proceed.” Zazu Designs v. L’Oreal, S.A., 979 F.2d 499, 506 (7th Cir. 1992).
As noted above, in the BIGFOOT case, plaintiff Big O was awarded $678,302 for prospective corrective advertising as a result of defendant Goodyear’s infringement of Big O’s BIGFOOT mark in a $9.7 million national advertising campaign. 561 F.2d at 1375–76. The Tenth Circuit noted that Big O did not have the economic resources to concurrently counteract Goodyear’s campaign, and held that damages for future corrective advertising were recoverable even though Big O spent no money in advance seeking to undo confusion. Id. at 1375. Over the years, the BIGFOOT case discussion of Big O’s lack of resources has morphed into a requirement, imposed by some courts, that a plaintiff show that financial constraints prohibited it from conducting remedial advertising prior to trial.
Courts are now divided on whether the plaintiff must show a financial inability to pay to obtain damages for future corrective advertising. The Ninth Circuit has expressly held that no showing of financial inability is necessary to obtain monetary compensation for future advertising. See Adray v. Adry–Mart, Inc., 76 F.3d 984, 989 (9th Cir. 1995). Other courts outside of the Ninth Circuit have awarded prospective corrective advertising damages without evidence of a plaintiff’s economic hardship. See, e.g., Zelinski, 335 F.3d at 640; Novell, Inc. v. Network Trade Ctr., Inc., 25 F. Supp. 2d 1233, 1241 (D. Utah 1998); Nellcor Puritan Bennett LLC v. Cas Medical Systems, Inc., — F. Supp. 2d —, 2014 WL 1304428, at *19–20 (E.D. Mich. 2014) (citing Adray with approval).
A number of district courts outside the Ninth Circuit, however, have held that prospective advertising is recoverable only where a plaintiff has shown it could not afford such advertising before trial. See, e.g., PBM Prod., Inc. v. Mead Johnson & Co., 174 F. Supp. 2d 417, 420–21 (E.D. Va. 2001); Cuisinarts, Inc. v. Robot–Coupe Int’l, 580 F. Supp. 634, 641 (S.D.N.Y. 1984); Simon Prop. Group, L.P., 2001 WL 66408, at *26. Indeed, the Seventh Circuit has stated that a plaintiff’s failure to make corrective advertising expenditures suggests that either it was not injured or that it is cheaper to use a new name than to correct any confusion. Zazu Designs, 979 F.2d at 507.
Thus, depending on a trademark owner’s posture with regard to pre-trial corrective advertising expenditures, venue considerations could significantly impact the remedy’s availability.
Corrective advertising remedies remain viable methods of helping to recuperate a mark that has been damaged by infringement. Such remedies can be an effective way of compensating a plaintiff who has expended or needs to expend sums advertising to undo harm caused by the resulting consumer confusion. Part two of this series will continue the BIGFOOT exploration with a review of the standards for and methods of quantifying a monetary award for past or future corrective advertising. An examination of the types of past and future corrective advertising for which payment has and has not been awarded should further assist trademark owners in their pursuit of this remedy.
Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.
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