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Keurig, Inc. v. Sturm Foods, Inc.

United States District Court for the District of Delaware

February 19, 2013, Decided; February 19, 2013, Filed

Civ. No. 10-841-SLR-MPT

Opinion

MEMORANDUM ORDER

At Wilmington this 19th day of February, 2013, having considered the parties' letters regarding the burden of proof for disgorgement of defendant's profits (D.I. 422, 424);

IT IS ORDERED, in connection with the pretrial evidentiary disputes:

1. ] Disgorgement of defendant's  [*2] profits ("accounting") is an equitable remedy permitted under 15 U.S.C. § 1117(a). 1 In determining an accounting under 15 U.S.C. § 1117(a), the court must: (1) decide whether, under the principles of equity, a plaintiff should get an accounting of profits ("the first stage"); and, if so, (2) assess, or estimate, the profits ("the second stage"). 2 See Banjo Buddies, 399 F.3d at 176.

2. The First Stage. The parties do not dispute that ] in the first stage, plaintiff carries the burden of proof to demonstrate that an accounting is appropriate. In Banjo Buddies, 399 F.3d at 175, 3 the Third Circuit held that, "in evaluating whether equity supports disgorging the infringer's profits," the factors that a court should evaluate

include, but are not limited to (1) whether the defendant had the intent to confuse or deceive; (2) whether sales have been diverted; (3) the adequacy of other remedies; (4) any unreasonable delay by the plaintiff in asserting his rights; (5) the public interest in making the misconduct unprofitable; and (6) whether it is a case of palming off.

Id. (internal quotation marks omitted) (quoting Quick Techs., Inc. v. Sage Group PLC, 313 F.3d 338, 349 (5th Cir. 2002)).

3. The  [*3] Second Stage. Once an accounting is deemed appropriate under the principles of equity, the court must estimate the profits. The parties dispute the burden of proof in this second stage. Consistent with statutory language and recent Third Circuit law, ] once plaintiff proves liability and that an accounting is appropriate, defendant bears the burden of proving how much, if any, of its profits were not derived from its wrongful conduct. Section 35(a) of the Lanham Act provides: "In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost or deduction claimed." 15 U.S.C. § 1117(a). The holding in Banjo Buddies discusses this statutory language and clearly follows it. See Banjo Buddies, 399 F.3d at 176 (finding that plaintiff's burden of estimating profits was satisfied by a financial report and that defendant's burden of costs and deductions was not satisfied by an unreliable expense study).

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2013 U.S. Dist. LEXIS 22484 *; 2013 WL 633574

KEURIG, INC., Plaintiff, v. STURM FOODS, INC., Defendant.

Prior History: Keurig, Inc. v. Sturm Foods, Inc., 2012 U.S. Dist. LEXIS 130762 (D. Del., Sept. 13, 2012)

CORE TERMS

profits, burden of proof, infringer's, accounting, sales, equitable, second stage, disgorgement, Lanham Act, estimate

Trademark Law, Remedies, Equitable Relief, Equitable Accountings, Damages, Types of Damages, Profits, Causes of Action Involving Trademarks, Infringement Actions, Burdens of Proof, General Overview, Litigation Costs, Civil Procedure, Trials, Jury Trials, Province of Court & Jury