What damages can Tasty Tacos pursue in infringement action?

Tasty Tacos is near and dear to my heart.  I was distraught to learn that there is a pending trademark infringement action against Ohio-based More than Gourmet for its “Wicked Tasty Taco” seasoning.  The Des Moines Register ran an article on June 11, 2019 providing some background that you can see here.

There are several remedies available for Tasty Tacos – first and foremost is an injunction.  According to the Des Moines Register, Tasty Tacos is currently seeking injunctive relief to prevent More than Gourmet from using the “Wicked Tasty Taco” name and similar names.  Outside of injunctive relief, general damages for trademark infringement are provided in Section 35 of the Lanham Act (the Trademark Statute) and Section 36 of the Restatement of Unfair Competition Third (Restatement).

Actual damages include lost profits and corrective advertising.  Additionally, some courts may allow for a reasonably royalty analysis.  Lost profits can occur when a defendant’s infringing trademark causes the plaintiff to lose sales in the following ways:

1.       The customers purchase goods from the defendant, believing they were buying them from the plaintiff;

2.       After buying such infringing goods, the customers are disappointed with the quality and buy elsewhere; or

3.       The defendant sells the infringing brands for an amount less than the plaintiff’s customary practice, causing the plaintiff to lower its prices to maintaining its customer base.

Source: The Comprehensive Guide to Economic Damages, Fifth Edition, Nancy J. Fannon and Jonathan M. Dunitz.  To recover lost profits, the plaintiff must show lost sales as a result of the defendant’s infringement.  The Tasty Tacos action appears to be a case where a company used a name that is so similar it would tend to confuse the customers. 

Another remedy available is unjust enrichment.  With unjust enrichment, the focus is on the gain the defendant earned from the infringement.  This is a slightly different approach than lost profits as the analysis does not contemplate the plaintiff’s loss (unless both remedies are pursued).  In limited circumstances both lost profits and unjust enrichment may be pursued.  It is often beneficial for the plaintiff to pursue an unjust enrichment remedy in a trademark infringement action to shift the burden of proof.  Section 1117(a) of the Lanham Act provides “[i]n assessing profits the plaintiff shall be required to prove defendant’s sales only; the defendant must prove all elements of cost or deduction claimed.” Predominantly, in trademark infringement cases, an expert witness will calculate unjust enrichment while lost profits can be viewed as a secondary or separate damages claim.