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Posted on Feb 09 by admin.

The costs and effects of trademark litigation.

What are the costs of a full-blown trademark infringement lawsuit? Can attorney fees be recovered in a trademark infringement case? What can I do to promote settlement? If a lawsuit is necessary, what should I expect?

You have taken the time and effort to have your trademark registered. But someone has begun to infringe on your trademark. Now what? The first thing you should do is see an experienced trademark attorney who has extensive trial experience.

I have litigated these cases (as well as performed transactional services) for over 13 years now related exclusively to trademark and copyright and while there are many experienced IP transactional attorneys out there, it is best at this stage to speak with someone who has experience actually litigating these cases in federal court.

The first thing your attorney will do is send a letter to the infringing party explaining that they are infringing on your trademark. This is known as a trademark cease and desist letter. The tenor of this letter will set the tone of the following discussion and potential litigation. Beware some lawyersâ shoot from the starting gate with guns blazing. This has been referred to as the âGerman Shepherd Response.â This is a typical lawyerly tactic in which the lawyer attempts to fan the flames of small disputes into full-scale battles. In the end no one profits from this but the lawyers.

Trademark infringement lawsuits will be an extraordinary expense for you and your business. From start to finish a trademark infringement lawsuit will cost you in the neighborhood of $150,000 to $250,000 in attorney fees.

Given this fact, it is important to know your relative strengths and weaknesses before a lawsuit is ever filed. If the infringing party is committing a willful trademark infringement, for example, in an effort to solicit your customers away from you and confuse them into believing that they are you, you have a strong case. Also when such infringement is willful you would be able to receive an award of attorney fees (which can be awarded to the prevailing party). However, a consideration is also, will the infringing party simply go out of business or would they not have adequate assets to pay an award even if it was awarded (including triple damages under the Lanham Act).

This brings up another interesting issue. Can triple damages be used to pay attorney fees? The answer is yes. As courts have discretion in whether to award attorney fees, they are required to award triple damages (triple the profits caused by the infringement â in cases where willful infringement is shown). These cases have the potential for generating large sums of money over and beyond what you actually suffered from the infringement. Therefore, these additional monies can be used to pay attorney fees and not cause you to have out of pocket expenses related to the lawsuit. Under some circumstances trademark attorneys may take on willful trademark infringement cases and defer payment until settlement or a judgment is obtained. This is not a contingency fee, because the fee is not based upon the outcome but rather it is simply a method of deferring fees until the plaintiff is in a better position to pay them. Often trademark infringement disputes can be handled in an economical manner for both parties, before a lawsuit needs to be filed. However, if that is not possible, it may be possible to obtain a preliminary or temporary injunction against the infringing party. Such a request is commonly requested immediately following the filing of the lawsuit. Typically, if you prevail in such a request the court will order the infringing party to stop using the trademark in question until the outcome of the lawsuit is determined.

As a practical matter, having a court order of this type asserted against the infringing party puts the infringing party in a weak position from the beginning. Consequently, the party bringing the lawsuit can normally reach a settlement on very favorable terms.

In the end there are no guarantees on what action the court will take, however, registering your trademark is a good first step to establishing your rights to the trademark and your access to the court system. However, beware, it may be a very costly proposition for you to prove yourself right. One possible option to reduce the expense is the use of mediation.

For more information or to register your trademark please contact us directly.