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Banjo Buddies, Inc. v. Renosky

United States Court of Appeals for the Third Circuit

March 23, 2004, Argued ; February 22, 2005, Filed

Nos: 03-2038 / 03-2107

Opinion

 [***1866]   [*171]  ROTH, Circuit Judge:

This appeal requires us to decide whether a showing of willful infringement is a prerequisite to an accounting of a trademark infringer's profits for a violation of section 43(a) of the Lanham Act. We hold that wilfulness is an important equitable factor but not a prerequisite to such an award, noting that our contrary position in SecuraComm Consulting Inc. v. Securacom Inc., 166 F.3d 182, 190 (3d Cir. 1999), [**2]  has been superseded by a 1999 amendment to the Lanham Act. We further affirm the District Court's resolution of several other damages issues, with a single exception explained below.

I. Factual Background and Procedural History

Joseph Renosky was a member of the board of directors of Banjo Buddies, Inc., ("Banjo Buddies" or "BBI") from February 1996 until May 1999. Banjo Buddies' principal product during that time was an extremely successful fishing lure called the Banjo Minnow, which Renosky helped develop.

The Banjo Minnow was principally advertised via "infomercial" broadcast, and was also sold in sporting goods catalogs and sporting goods stores. Tristar Products, Inc., obtained exclusive rights to advertise and sell the Banjo Minnow through all forms of "direct response marketing, . . . print media, and retail distribution." BBI received 48% of Tristar's net profits in return. Renosky agreed to provide the manufactured Banjo Minnow lure kit through his corporation, Renosky Lures, Inc., to both Tristar and BBI at $ 5.20 per kit. 2 Renosky received additional shares of BBI stock in exchange for producing the Banjo Minnow kits at a "fair price." Renosky also executed a [**3]  non-compete agreement in favor of BBI in exchange for more BBI stock. The Banjo Minnow sold very well for a little over a year, from mid-1996 through mid-1997, but then sales dwindled considerably. BBI introduced several derivative Banjo Minnow products in 1998, but none approached the success of the original.

During the Banjo Minnow's early success in 1996, Renosky presented an idea to the BBI board for a "new and improved" Banjo Minnow called the Bionic Minnow. 3 The board took no formal action on the proposal, and a month later Renosky advised one of BBI's directors that he would develop the new lure independently. At least two board members urged Renosky against this course of action, but Renosky could not be swayed. He immediately began developing the Bionic Minnow through Renosky [**4]  Lures and ultimately marketed  [*172]  the new lure via infomercial and other means beginning in February 1999.

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399 F.3d 168 *; 2005 U.S. App. LEXIS 3014 **; 73 U.S.P.Q.2D (BNA) 1865 ***

BANJO BUDDIES, INC. v. JOSEPH F. RENOSKY, Appellant

Prior History:  [**1]  Appeal from the United States District Court for the Western District of Pennsylvania (D.C. No. 99-cv-01389). District Judge: Donetta W. Ambrose.

Disposition: Affirmed.

CORE TERMS

district court, profits, infringer's, damages, lure, estimated, distributions, willfulness, Media, costs, accounting, expenses, sales, Lanham Act, overcharging, records, business manager, burden of proof, calculation, shareholder, marketing, invoices, products, argues, prices, clearly erroneous, prerequisite, percent

Antitrust & Trade Law, Consumer Protection, Likelihood of Confusion, General Overview, Business & Corporate Compliance, Federal Unfair Competition Law, False Designation of Origin, Elements of False Designation of Origin, Trademark Law, Entertainment Industry Falsity & Performance Misattribution, Trade Dress Protection, False Advertising, Lanham Act, Civil Procedure, Appeals, Standards of Review, Clearly Erroneous Review, De Novo Review, Infringement Actions, Abuse of Discretion, Remedies, Equitable Relief, Equitable Accountings, Causes of Action, Unfair Competition, Causes of Action Involving Trademarks, Determinations, Trademark Cancellation & Establishment, Registration Procedures, Federal Registration, Governments, Legislation, Interpretation, Copyright Law, Damages, Types of Damages, Infringement Profits, Profits, Burdens of Proof, Judicial Officers, Judges, Discretionary Powers, Litigation Costs, Evidence, Burdens of Proof, Torts