La Bamba Licensing, LLC v. La Bamba Authentic Mexican Cuisine, Inc.

75 F.4th 607

LA BAMBA LICENSING, LLC, Plaintiff-Appellee, v. LA BAMBA AUTHENTIC MEXICAN CUISINE, INC.,nka La Villa Rica Mexican Cuisine, Inc., Defendant-Appellant.

No. 22-5853

United States Court of Appeals, Sixth Circuit

Decided and Filed: July 27, 2023

Appeal from the United States District Court for the Western District of Kentucky at Louisville. No. 3:16-cv-00527—Charles R. Simpson III, District Judge.

ON BRIEF: Dawn L. McCauley, Lebanon, Kentucky, for Appellant. Bradley M. Stohry, REICHEL STOHRY DEAN LLP, Indianapolis, Indiana, for Appellee.

Before: GILMAN, LARSEN, and NALBANDIAN, Circuit Judges.

OPINION

LARSEN, Circuit Judge.

La Bamba Licensing, LLC ("La Bamba") filed suit against La Bamba Authentic Mexican, Inc. (now known as "La Villa Rica Mexican Cuisine, Inc.") for trademark infringement and unfair competition in violation of the Lanham Act and for common law unfair competition, alleging that La Villa Rica infringed La Bamba's registered trademark "LA BAMBA." The district court granted summary judgment in favor of La Bamba. The district court then granted La Bamba an award of profits, costs, and attorneys' fees. La Villa Rica appeals the award of profits and attorneys' fees. We AFFIRM.

I.

La Bamba Licensing, LLC ("La Bamba") operates a series of Mexican restaurants in the Midwest under the name "La Bamba." In 1998, La Bamba registered "LA BAMBA" as a trademark for restaurant services and for various food items in the United States. See U.S. Registration Nos. 2,141,892; 3,598,169; 3,598,167; and 3,527,867. Nearly two decades later, La Bamba Authentic Mexican Cuisine, Inc. (hereinafter "La Villa Rica") opened a Mexican restaurant under the name "La Bamba Authentic Mexican Cuisine" with one location in Lebanon, Kentucky—about sixty-five miles from one of La Bamba's restaurants in Louisville, Kentucky.

Shortly after La Villa Rica opened its restaurant, La Bamba learned of its use of the infringing mark. On May 10, 2016, La Bamba sent a cease-and-desist letter to La Villa Rica. The letter advised La Villa Rica of La Bamba's federal trademark registrations and demanded that La Villa Rica cease use of the LA BAMBA mark. La Villa Rica refused, explaining that it did "not see any basis for [La Bamba's] demands." On August 16, 2016, La Bamba sued La Villa Rica, alleging trademark infringement and unfair competition under the Lanham Act and common law unfair competition under Kentucky law. On October 13, 2017, nearly a year and a half after La Villa Rica received actual notice of La Bamba's trademark rights, La Villa Rica changed the name of its restaurant from "La Bamba Authentic Mexican Cuisine" to "La Villa Rica Authentic Mexican Cuisine, Inc."

In January 2018, the district court granted summary judgment in favor of La Bamba on all claims and permanently enjoined La Villa Rica from using the LA BAMBA mark in connection with its services. Following the district court's summary judgment ruling, La Bamba filed a motion seeking: (1) La Villa Rica's profits, (2) La Bamba's costs in bringing the action, and (3) La Bamba's attorneys' fees. After an evidentiary hearing, the district court awarded La Bamba $50,741.76 ($22,907.26 in profits; $27,309.50 for attorneys' fees; and $525.00 for court costs).

II.

La Villa Rica appeals the court's decision to award profits and attorneys' fees, but it does not appeal the calculation of either award. We review both awards under an abuse-of-discretion standard. See La Quinta Corp. v. Heartland Props. LLC, 603 F.3d 327, 342 (6th Cir. 2010); Audi AG v. D'Amato, 469 F.3d 534, 550 (6th Cir. 2006).

A.

Under the Lanham Act, a plaintiff who succeeds on an infringement claim "shall be entitled, . . . subject to the principles of equity, to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action." 15 U.S.C. § 1117(a). In assessing the equities of the case, we have instructed courts to consider "a wide range of factors, including":

the defendant's intent to deceive, whether sales were diverted, the adequacy of other remedies, any unreasonable delay by the plaintiff in asserting its rights, the public interest in making the misconduct unprofitable, and "palming off," i.e., whether the defendant used its infringement of the plaintiff's mark to sell its own products to the public through misrepresentation.

La Quinta, 603 F.3d at 343. The equities may weigh in favor of an award of profits without a showing of willful infringement, but the "defendant's mental state is a highly important consideration in determining whether an award of profits is appropriate." Romag Fasteners, Inc. v. Fossil, Inc., — U.S. —, 140 S. Ct. 1492, 1497, 206 L.Ed.2d 672 (2020).

Here, after an evidentiary hearing, the magistrate judge determined that two of the La Quinta factors, as well as "willfulness," counted as a separate factor, weighed in favor of an award of profits, two factors weighed against, and two factors were not relevant. So, it concluded "that an award of profits is equitable." The district court adopted the magistrate's recommendation. We think the court's calculations were a little off. But, ultimately, we find no abuse of discretion in the district court's award.

First, to the extent that the district court treated the task of equitable balancing as a math problem (3 > 2), that was error. Although we have set forth criteria to guide the district court's discretion, the list is not exhaustive. By its own terms, the list "includ[es], inter alia," the six factors we have described. La Quinta, 603 F.3d at 343. And we would not presume that, in every case, the factors will have equal weight.

Next, to the extent that it matters, it is not clear to us that "willfulness" is an additional factor, rather than a variation on the first ("the defendant's intent to deceive") or an element of the fifth ("the public interest in making the misconduct unprofitable"). See Synergistic Int'l, LLC v. Korman, 470 F.3d 162, 175 (4th Cir. 2006) ("[W]hether the defendant had an intent to confuse or deceive [ ]addresses whether there has been a willful infringement on the trademark rights of the plaintiff, or whether the defendant has acted in bad faith."); Seatrax, Inc. v. Sonbeck Int'l, Inc., 200 F.3d 358, 370 (5th Cir. 2000) (considering willfulness under the first factor).

Third, the district court said that the lack of "unreasonable delay by the Plaintiff in asserting its rights . . . weighs in favor of an award of profits." But that gets the baseline wrong. Timely assertion of rights is the expectation. And, because an accounting of profits is an equitable award, it "is never automatic and never a matter of right." 5 McCarthy on Trademarks and Unfair Competition § 30:59 (5th ed.). So the fact that a plaintiff did not unreasonably delay asserting its rights cannot be a plus factor. Though a plaintiff's unreasonable delay could surely count against an award, a plaintiff who acts as a plaintiff should is entitled to no bonus; in such situations, this factor remains neutral. See Synergistic, 470 F.3d at 176 ("A substantial delay between the commencement of infringement activities and the plaintiff seeking judicial relief should weigh against an award.").

These minor corrections do not require us to reverse the district court's award, however. District courts have "a great deal of discretion in fashioning an appropriate remedy in cases of trademark infringement." La Quinta, 603 F.3d at 342 (quoting U.S. Structures, Inc. v. J.P. Structures, Inc., 130 F.3d 1185, 1191 (6th Cir. 1997)). And, in light of the arguments presented below, we see no abuse of discretion here.

The district court noted that two factors (diverted sales and palming off) were not relevant here, as La Bamba conceded. No one challenges the district court's conclusion that the third factor cut against an award—an injunction was likely an adequate remedy to prevent further damage to La Bamba given the distance between the two restaurants, the different dining styles of the restaurants, and the fact that La Villa Rica had changed its name. La Bamba's timely filing should have been considered neutral, however, as explained above. So, of the factors the district court considered, two La Quinta factors—the defendant's intent (factor one) and the "public interest in making the misconduct unprofitable" (factor five)—plus defendant's "willfulness" remained to support the award.

With respect to intent, the district court credited the testimony of La Villa Rica's owner, who said he was not aware of La Bamba's restaurant until he received the cease-and-desist letter; thus, the court found that La Villa Rica did not "intend[ ] to deceive anyone." But the court concluded that there was a strong public interest in making La Villa Rica's "misconduct unprofitable." That misconduct, of course, was the trademark infringement, which the court deemed "willful." Even after La Villa Rica received a cease-and-desist letter containing notice of La Bamba's registered mark, and "in the face of [its] attorney's advice that [it] might have a 'problem,' " La Villa Rica continued to use the LA BAMBA mark for a year and a half and "offered no legally sufficient explanation or support for its actions." Although the district court did not define "willful" behavior, and we seem to have adopted no authoritative definition ourselves,¹ the court's reasoning seems in line with the reasoning of other circuit courts considering similar circumstances. See PlayNation Play Sys., Inc. v. Velex Corp., 924 F.3d 1159, 1170-71 (11th Cir. 2019) (Without "other evidence of willfulness," merely continuing to sell products "under the color of" its own "valid federal trademark" after receipt of complaint alleging infringement of another's trademark could not support award of profits.); 4 Pillar Dynasty LLC v. New York & Co., Inc., 933 F.3d 202, 210 (2d Cir. 2019) (explaining that failure to "halt sales of a challenged product" would not constitute willful behavior...