Why Are We Here? Actual Loss Required For Trademark Damages

Clearview Plumbing & Heating Ltd. v. Clockwork IP, LLC is  a trademark infringement action that proceeded to trial despite the parties agreeing that they infringed each other’s trademarks and that there had been no confusion or any loss suffered. In the words of the Court:

 So why are we here when neither party had any lost sales, confusion, or lost revenue?

When the action began, each party claimed infringement of their respective trademark. The parties later filed an agreed statement of facts confirming that both parties infringed, but that there had been no confusion or any loss. Nonetheless, Clearview, argued it was entitled to “damages at large” or, in the alternative, punitive damages of $40,000. Clockwork, on the other hand, asserted there was no reason for a trial and no damages should be awarded.

Damages for infringements are assessed by the actual loss suffered to a plaintiff’s reputation, business, goodwill, or trade. The assessment does not include speculative or unproven damages. The Court noted that “the term ‘damages at large’ used and sought by Clearview is not something that exists in law.” Clearview argued that such damages had been awarded in various cases. However, those cases were “glaringly different” from the present action. The cases showed only that lump sum damages may be appropriate when there is actual loss but, because the infringer does not participate in the court action, evidence cannot be presented of the quantum of the loss suffered by the plaintiff (because such evidence is in the hands of the infringer). That was not the case here, where both parties were present and the evidence showed that Clearview suffered no loss whatsoever (which Clearview admitted in the agreed statement of facts).

The test for punitive damages is a high hurdle, and they are the exception to the general rule of damages. The Court found that Clockwork’s conduct “does not come anywhere close to what is necessary. The evidence led in this case was evidence of ordinary business practices.” Clearview argued that punitive damages were appropriate for two main reasons. First, Clockwork began the case with a number of infringement claims, but ultimately only proceeded with one. The Court held this is not indicative of punishable behavior but, rather, pleadings are often narrowed as litigation proceeds. Second, Clearview argued that Clockwork hired a lawyer to register the disputed trademark in Canada and proceeded to use it without their lawyer informing them it was already registered. Clockwork’s evidence showed that they did not follow through with their lawyer or know that the mark was already registered.

The Court dismissed the action and counterclaim, awarding no damages.

A copy of the decision can be found here.