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Western District Pares Back Big Jury Award in Hendrix Trademark Dispute

I’ve been busy!

That’s my excuse for not staying more on top of recent developments in the Experience Hendrix, L.L.C. v. Hendrixlicensing.com, Ltd., litigation involving use of Jimi Hendrix’s name and likeness in connection with the sale of art. The case has had some big implications along the way, including the Western District’s finding that portions of the Washington right of publicity statute are unconstitutional (STL post here).

Long story short, the case went to trial. After motions for summary judgment and settlement of defendants’ state law counterclaims, the only issues that remained were plaintiffs’ damages on their trademark infringement claim; defendants’ liability for violating Washington’s Consumer Protection Act; and the damages that flowed from any such violation.

On May 9, the jury found for plaintiffs. After a 3+ day trial, the jury deliberated for 1.5 hours and awarded plaintiffs $306,650 in lost profits and $60,000 in defendants’ profits on the infringement claim; and $750,000 in injury to reputation, $300,000 in injury to goodwill, and $306,650 in lost profits on the CPA claim.

Defendants moved for a judgment as a matter of law or for a new trial, arguing that much of the damages award was not supported by the evidence. They did not challenge the jury’s award of defendants’ profits or their liability under the CPA. Plaintiffs moved for treble damages under the CPA and for attorney’s fees.

On Sept. 21, Western District Judge Thomas Zilly pared back most of the jury’s award. He granted defendants’ motion for judgment as a matter of law and granted their motion for a new trial in the event an appeal results in the being case remanded. The court denied plaintiffs’ motion for treble damages and granted in part and denied in part their motion for attorney’s fees.

In the end, the court entered judgment against defendants imposing a permanent injunction and awarding $60,000 representing the undisputed amount of defendants’ profits attributable to their trademark infringement, plus $50,000, constituting reasonable attorney’s fees under the CPA, for a total award of $110,000.

Perhaps most interesting is the observation that businesses do not have “reputations”; they only have “goodwill,” so the award of damages for both reputation and goodwill elements was improper. The court also found the amount of the awards was based purely on speculation.

“[C]ontrary to plaintiffs’ position, Washington courts have consistently defined reputation as merely one component of a business’s goodwill. Similarly, Washington’s Department of Labor and Industries has explained by way of regulation that goodwill is ‘the value of a trade or business based on expected continued customer patronage due to its name, reputation, or any other factor.’.

“Thus, the Court’s unchallenged supplemental instruction to the jury that reputation and goodwill are synonymous comports with Washington law, as well as the observation by a district court in our circuit that business entities do not have reputations per se, but rather have goodwill. The jury’s verdict awarding vastly different amounts for injury to reputation and injury to goodwill cannot be reconciled with the Court’s instruction that, for a business, reputation and goodwill are the same thing.

“If these duplicative awards were supported by substantial evidence, the Court would face the difficult task of crafting an appropriate remedy, whether it be striking one award in favor of the other, offering plaintiffs the option of either accepting a remittitur or submitting to a new trial, or simply requiring a new trial. The Court need not, however, engage in such analysis because the damages at issue are based entirely on speculation. The jury was provided no evidence from which it could determine the diminution in value, if any, of plaintiffs’ goodwill as a result of defendants’ violation of the CPA. Plaintiffs proffered no estimate, by way of expert testimony or otherwise, of the value of their goodwill either before or after defendants’ wrongful conduct. Indeed, plaintiffs’ counsel conceded during discussions concerning the related jury instructions that ‘[t]here’s not a specific number in evidence.’”

The case cite is Experience Hendrix, L.L.C. v. Hendrixlicensing.com, Ltd., No. 09-285, 2011 WL 4402775 (W.D. Wash. Sept. 21, 2011) (Zilly, J.).

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