Archive for: March, 2016

1794297759_6d53e7c4f5_b                The Nevada Supreme Court recently decided that the waiver of the right to arbitrate a dispute is presumptively within the jurisdiction of the courts, not arbitrators to decide unless the arbitration agreement clearly reserves this question of arbitrability to the arbitrator.  That is if the claimed waiver arises from litigation conduct.

The case involves claims against a payday lender who obtained, according to the court, “thousands of default judgments” against defendants who failed to appear in collection actions brought after default on the short term loans.  Plaintiffs sued as a class to, inter alia, have the court deem the default judgments void and uncollectable when it was learned that the lender’s process server engaged in “sewer service—the practice of accepting summonses and complaints for service, failing to serve them, then falsely swearing in court-filed affidavits that service had been made when it was not.”

The lender’s motion to compel arbitration based on agreements to arbitrate was denied when the District Court held the lender waived its right to arbitration by bringing the collections actions and obtaining the default judgments at issue.  (more…)

In Nevada, the defense of waiver is available where:

  1. A voluntary and intentional express or implied relinquishment of a known right; and
  2. Made with full knowledge of all material facts.

Udevco, Inc. v. Wagner, 100 Nev. 185, 189, 678 P.2d 679, 682 (1984).

 

See elements for other claims at the Nevada Law Library

Generally

Nevada has no limit on the rate of interest to which parties may agree so long as the agreement reflects an arms-length transaction.[1]  Further, Nevada allows compound interest on loans.[2]

Pawnbrokers and Short Term Loans

Although Nevada does not have a general limitation on interest rates, certain transactions and business are subject to interest rate and other restrictions.  Pawnbrokers are prohibited from charging more than 13% interest per month on any loan of money secured by personal property (more…)

QUANTUM MERUIT OR QUASI CONTRACT

In Nevada, the elements for a claim unjust enrichment or quantum meruit are:

  1. A benefit has been conferred upon the defendant;
  2. Defendant appreciated the benefit;
  3. Defendant accepted and retained the benefit under circumstances where it would be inequitable for Defendant to retain the benefit without the payment of value for the same; and
  4. Absence of an express, written contract.

Robinson v. Coury, 115 Nev. 84, 976 P.2d 518 (1999); Leasepartners Corp. v. Robert L. Brook Trust, 13 Nev. 747, 942 P.2d 182, 187 (1997); Asphalt Prod. Corp. v. All Star Ready Mix, Inc., 111 Nev. 799, 898 P.2d 699 (1995); Topaz Mut. Co., Inc. v. Marsh, 108 Nev. 845 (1992); Nevada Indus. Dev. v. Benedetti, 103 Nev. 360, 363 n. 2, 741 P.2d 802, 804 n. 2 (1987); Union America Mortg. & Equity Trust v. McDonald, 97 Nev. 210 (1981).

See elements for other claims at the Nevada Law Library

This is the third in a series of articles on doing business with Native American Tribes in Nevada.  These articles provide an overview of the political and business structures employed by Indian tribes, as well as the advantages and challenges of doing business in Indian Country.

 

Tribal Owned Businesses

Non-Indians conducting business in Indian country are exposed to a mix of tribal, federal, state, and local laws.[1]  Due care should be taken to know the legal status of the entity with which one is conducting business. (more…)

In Nevada, the elements for a claim usurpation of corporate opportunity are:

  1. Defendant is a fiduciary to a company;
  2. Defendant appropriates for her own use, an opportunity that should belong to the company;
  3. The competing business is operated to the detriment of the Plaintiff company;
  4. Defendant has an interest or expectancy in the competing business’s opportunity; and
  5. Causation and damages.

Simply stated, a company’s fiduciary is forbidden from appropriating a business opportunity belonging to the company for her own personal gain.  19 Am. Jur. 2d, Corporations, § 1311.  The Doctrine is recognized in Nevada.  Leavitt v. Leisure Sports, Inc., 103 Nev. 81, 87-88, 734 P.2d 1221 (1987) (“it is generally recognized that a corporate fiduciary cannot exploit an opportunity that belongs to the corporation.”).  The central questions presented to courts in most Corporate Opportunity Doctrine situations are whether the company has an expectancy interest in the opportunity and whether the opportunity, in all fairness, belongs to the Company.  Id.  Under this view, the existence of a protectable opportunity is tested by determining  whether the company has an “expectancy or interest” therein.  If the company has a legal or even equitable interest or expectancy growing out of a pre-existing right or relationship, the fiduciary may not keep the opportunity for herself.  Am. Jur. Proof of Facts 2d 291 Corporate Opportunity Doctrine – Fairness of Corporate Official’s Acquisition of Business Opportunity § 2 (2003).  Stated another way, any proposed activity developed through the company’s assets that is reasonably incident to the business is a protected opportunity.  See Anest v. Audino, 773 N.E.2d 202, 210-11 (Ill. App.  2d  2002).   In such a situation, if a fiduciary takes the opportunity for herself, the Company may elect to claim all benefits therefrom for itself, and the law will impress a trust in favor of the company on the opportunity and its profits.  McLinden v. Coco, 764 N.E.2d 606, 616 (Ind. App. 2002); I.P. Homeowners, Inc. v. Radtke, 558 N.W.2d 582, 288 (Neb. Ct. App. 1997); Bank of Amer. v. Ryan, 207 Cal. App. 2d 698, 24 Cal. Rptr. 739 (1962) (recognizing that the implied trust is imposed not only on the property and its profits, but also imposes liability for interest at the legal rate from the receipt of profits, rents, etc.).

 

See elements for other claims at the Nevada Law Library

 

In Nevada, the defense of the doctrine of unclean hands “derives from the equitable maxim that ‘he who comes into equity must come with clean hands.’ ”  Omega Industries, Inc. v. Raffaele, 894 F.Supp. 1425, 1431 (D.Nev.1995) (quoting Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1097 (9th Cir. 1985)).  The doctrine bars relief to a party who has engaged in improper conduct in the matter in which that party is seeking relief.   As such, the alleged inequitable conduct relied upon must be connected with the matter in litigation, otherwise the doctrine is not available as a defense.  Gravelle v. Burchett, 73 Nev. 333, 342, 319 P.2d 140, 145 (1957).  Truck Ins. Exchange v. Palmer J. Swanson, Inc., 124 Nev. 59 (Nev. 2008); Locken v. Locken, 98 Nev. 369, 650 P.2d 803 (1982).

 

See elements for other claims at the Nevada Law Library

This is the second in a series of articles on doing business with Native American Tribes in Nevada.  These articles provide an overview of the political and business structures employed by Indian tribes, as well as the advantages and challenges of doing business in Indian Country.

 

Tribal Status

A tribe which has obtained “federal recognition” is understood by the U.S. government to be a sovereign nation which may operate legally and politically as an independent entity.  The federal government is, in essence, recognizing that the tribe was a sovereign nation prior to the creation of the United States, and recognizes it as the same today.  Tribes without federal recognition have no legal relationship with the U.S. government, enjoy no protection from state jurisdiction or control, and have no sovereign immunity.[1] (more…)

The Lanham Act prohibits unfair competition. See 15 U.S.C. § 1125.

15 U.S.C. § 1125. False designations of origin, false descriptions, and dilution forbidden (a) Civil action (1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or devise, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which — (A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or (B) in commercial advertising or promotion, misrepresents the nature, characteristics, quahties, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

Courts have recognized that the Lanham Act represents an affirmative code of business ethics. See Gold Seal Co. v. Weeks, 129 F.Supp. 928 (D.D.C. 1995) Aff’d subnom. S.C. Johnson & Son, v. Gold Seal Co., 230 F.2d 832 (D.C. Cir. 1955), cert, denied. 352 U.S. 829 (1956). According to this business code, competitors may not destroy the basis of genuine competition by destroying the buyers’ opportunity to judge fairly between rival products. Id.

For over a century, the United States Supreme Court has recognized that the primary reason for prohibiting unfair competition is to guard against public deception. See Laurence Mfg. Cn. v. Tennessee Mfg. Co., 138 U.S. 537 (1891). “[T]he touchstone of a Section 1125(a) unfair competition claim is whether the defendant’s actions are likely to cause confusion.” Matrix Essentials, Inc. v. Rmporium Drug Mart, Inc., 988 F.2d 587, 592 (5th Cir. 1993). Like claims for trademark infringement, claims for unfair competition under the Lanham Act require the same threshold showing of a likelihood of consumer confusion as to the source of the goods. See John Paul Mitchell Syst. v. Pete-N-Larry’s, Inc., 862 F.Supp. 1020, 1023 (W.D. N.Y. 1994).

To determine if there is a likelihood of confusion, courts consider multiple factors. The Ninth Circuit Court of Appeals has recognized that eight non-dispositive factors should be considered when evaluating a likelihood of confusion: (1) the strength of the mark; (2) the proximity of the goods; (3) the similarity of the marks; (4) evidence of actual confusion; (5) the marketing channels; (6) the type of goods and the degree of care likely to be exercised by the purchaser; (7) the defendant’s intent in selecting the mark; and (8) the likelihood of expansion of the product lines. See AMP, Tnr,. v. Sleekcraft Boats. 599 F.2d 341, 348-49 (9th Cir. 1976). Most commonly, these factors are used to determine the likelihood of confusion in trademark infringement cases. Id.

 

See elements for other claims at the Nevada Law Library

The following are actual client reviews found on Avvo, Google, Yelp, and Facebook for Jay Young


New Business Setup 5.0 stars

Posted by Kristina

Jay Young is an outstanding attorney. He is very informative and takes time out to teach his clients. I recently changed the legal structure of my business. Jay took the time to assess my business and gave me his recommendation. I was very pleased with his team. I definitely recommend using an attorney for any business set up. Jay is prompt, kind, and such a pleasure to work with.

(more…)

In Nevada, the elements for a claim civil trespass are:

  1. Invasion or invasion upon property of another;
  2. Defendant acted intentionally to intrude; and
  3. Causation and damages.

NRS 207.200; Bradley v. Am. Smelting & Ref. Co., 104 Wash.2d 677, 692-693 (1985); Lied v. Clark County, 94 Nev. 171, 173-174, 579 P.2d 275 (1978).

 

See elements for other claims at the Nevada Law Library

Those entering into a business relationship with a Native American Indian tribe[1] or in Indian Country[2] would be well served to understand the unique landscape of tribal law which gives rise to both challenges and rewards.  19 tribes in Nevada are recognized and eligible to receive services from the United States Bureau of Indian Affairs (“BIA”).[3]  (more…)

The elements of a Lanham Act false advertising claim are as follows:

  • the defendant made a false or misleading statement of fact in a commercial advertisement about a product;
  • the statement either deceived or had the capacity to deceive a substantial segment of potential consumers;
  • the deception is material, in that it is likely to influence the con­sumer’s purchasing decision;
  • the product is in interstate commerce; and
  • the plaintiff has been or is likely to be injured as a result of the statement.

See, e.g., Cook, Perkiss and Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 244 (9th Cir. 2000); Clorox Co. Puerto Rico v. Procter & Gamble Commercial Co., 228 F.3d 24, 33 n.6 (1st Cir. 2000); Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 495 (5th Cir. 2000); Balance Dynamics Corp. v. Schmitt Indus., 204 F.3d 683, 689 (6th Cir. 2000); United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1180 (8th Cir. 1998); Johnson & Johnson-Merck Consumer Pharm. Co. v. Rhone-Poulenc Rorer Pharm., Inc., 19 F.3d 125, 129 (3d Cir. 1994); Skil Corp. v. Rockwell Int’l Corp., 375 F. Supp. 777 (N.D. Ill. 1974).

A false advertiser “shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.”  15 U.S.C. § 1125(a) (emphasis added). This element states both standing injury requirements.  Courts have consistently rejected consumer standing to sue for false advertising under the Lanham Act, however. See, e.g., Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379, 1383 n.5 (5th Cir. 1996) (“[W]e have found no case which suggests that ‘consumers’ have standing under § 43(a).”); Stanfield v. Osborne Indus., Inc., 52 F.3d 867, 873 (10th Cir. 1995) (“[T]hus, to have standing for a false advertising claim, the plaintiff must be a competitor of the defendant and allege competitive injury.”); Serbin v. Ziebart Int’l Corp., 11 F.3d 1163, 1177 (3d Cir. 1993) (holding that the consumers, as noncommercial plaintiffs, do not have standing under the Lanham Act); Colligan v. Activities Club of New York, Ltd., 442 F.2d 686 (2d Cir. 1971) (analyzing the legislative history and purpose behind § 43(a) and concluding that consumers lacked standing to bring action under the Lanham Act); Bacon v. Sw. Airlines Co., 997 F. Supp. 775, 780 (N.D. Tex. 1998) (holding that there is no private cause of action for consumers under the false advertising prong of the Lanham Act); see also James S. Wrona, False Advertising and Consumer Standing Under Section 43(a) of the Lanham Act: Broad Consumer Protection Legislation or a Narrow Pro-Competitive Measure?, 47 RUTGERS L. REV. 1085  (1995) (concluding that most courts agree that consumers do not have standing to sue, although various rationales are still employed).

Section 45 of the Lanham Act protects “persons engaged in … commerce against unfair competition.  15 U.S.C. § 1127.  Section 45 requires a commercial or competitive injury.  In the Ninth Circuit, a plaintiff must “allege commercial injury based upon a misrepresentation about a product, and also that the injury was ‘competitive,’ i.e., harmful to the plaintiff’s ability to compete with the defendant.”  Barrus v. Sylvania, 55 F.3d 468, 470 (9th Cir. 1995) (quoting Waits v. Frito-Lay, Inc., 978 F.2d 1093 (9th Cir. 1992)).

The Plaintiff must first prove the Defendant made a false or misleading statement of fact.  Falsity is demonstrated by proving either: (1) the statement is literally false, or (2) although literally true, the statement is likely to mis­lead, confuse, or deceive consumers.  S.C. Johnson & Son, Inc. v. Clorox Co., 241 F.3d 232, 238 (2d Cir. 2001); United Indus. Corp., 140 F.3d at 1179; Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139–40 (9th Cir. 1997).  Whether an advertisement is liter­ally false is an issue of fact.  See, e.g., Clorox Co. Puerto Rico, 228 F.3d at 34.  “A claim is conveyed by necessary implica­tion when, considering the advertisement in its entirety, the audience would recognize the claim as readily as if it had been explicitly stated.”  Id. at 35.  A suggestive representation is less likely to be found as a literally false statement.  See, e.g., Id.; United Indus. Corp., 140 F.3d at 1175.  Proving that the adver­tisement is literally false depends on the nature of the claim made in the advertisement, as well as the context in which the claim was made.  See Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 495 (5th Cir. 2000) (“When construing the allegedly false or misleading statement to determine if it is actionable under section 43(a), the statement must be viewed in the light of the overall context in which it appears.”); United Indus. Corp., 140 F.3d at 1180.  For example, a visual image may make an advertisement literally false.  In Rhone-Poulenc Rorer Pharm., Inc. v. Marion Merrell Dow, Inc. (93 F.3d 511, 516 (8th Cir. 1996)), the court found literal falsity when a drug manufacturer’s television advertisement showed images of two gasoline pumps side by side, but displaying different prices, together with a question “Which one would you choose?”  The court held the advertisement inaccurately portrayed that the manufacturer’s and competitor’s drugs are substituted for one another.

Misleading Statements

A statement which is literally true may nevertheless be actionable false advertising. “Statements that are literally true or ambigu­ous but which nevertheless have a tendency to mislead or deceive the consumer are actionable under the Lanham Act.”  United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1182 (8th Cir. 1998).  This is true where claims convey a false impres­sion, are misleading in context, or may be deceptive when viewed by consumers.  Id. at 1180.

If an advertisement is literal­ly true but misleading, the plaintiff must also prove that the adver­tisement has in fact deceived or has a tendency to deceive.  See, e.g., Clorox Co. Puerto Rico v. Procter & Gamble Commercial Co., 228 F.3d 24, 33 (1st Cir. 2000).  The plaintiff must prove materiality by extrinsic evidence showing what consumers actually believe when viewing the advertising.  Id.; Gordon & Breach Science Publishers S.A. v. Am. Inst. Of Physics, 859 F. Supp. 1521, 1532 (S.D.N.Y. 1994).

Opinion and Puffery

Opinion and puffery are not actionable. For a statement to be actionable under Section 43(a), it must be a statement of fact, as opposed to mere opinion or bald assertion. See also Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1145 (9th Cir. 1997); Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 496 (5th Cir. 2000) (collecting cases); Groden v. Random House, 61F.3d 1045, 1051 (2d Cir. 1995) (stating that when a statement is “obviously a statement of opinion,” it cannot “reasonably be seen as stating or implying provable facts”).  A state­ment of fact is one that “(1) admits of being adjudged true or false in a way that (2) admits of empirical verification.”  Presidio Enter., Inc. v. Warner Bros. Distrib. Corp., 784 F.2d 674, 679 (5th Cir. 1986);  “Puffery,” comes in two forms: (1) an exaggerated, blustering, and boasting statement upon which no reasonable buyer would be justified in relying; or (2) a general claim of superiority over com­parable products that is so vague that it can be understood as noth­ing more than a mere expression of opinion.  Pizza Hut, 227 F.3d at 496-97.

Commercial Advertising or Promotion

The false or misleading statement of fact must appear in a “com­mercial advertising or promotion.”  See 17 U.S.C. § 1125(a); Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379, 1383 (5th Cir. 1996).  “Commercial advertising or promotion” is defined as:

  • commercial speech;
  • by a defendant who is in commercial competition with the plaintiff;
  • for the purpose of influencing consumers to buy the defendant’s goods or services; and
  • that is disseminated sufficiently to the relevant purchasing pub­lic to constitute “advertising” or “promotion” within that industry, even if not made in a “classical advertising campaign.” Coastal Abstract Serv., Inc. v. First Am. Tit. Ins. Co., 173 F.3d 725, 734 (9th 1999); Gordon & Breach Science Publishers S.A. v. American Inst. of Physics, 859 F. Supp. 1521, 1532 (S.D.N.Y. 1994); see also Sports Unlimited, Inc. v. Lankford Enter., Inc., 275 F.3d 996, 1004-05 (10th Cir. 2002) (using these four factors to determine whether challenged conduct constitutes “commercial advertising or promotion”); Seven-Up Co., 86 F.3d at 1384. The definition excludes non-commercial speech; non-commercial speech is entitled to a greater protection under the First Amendment than commercial speech.  Gordon & Breach, 859 F. Supp. at 1536.

Materiality

A plaintiff must demonstrate that the false or misleading advertising or promotion at issue is “material.”  JTH Tax, Inc. v. H&R Block East Tax Serv., Inc., 28 Fed. App. 207 (4th Cir. 2002).  Materiality centers on whether the false or misleading advertisement deceives or is likely to deceive.  Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 502 (5th Cir. 2000); Sandoz Pharm. Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 228-29 (3d Cir. 1990).  Such materiality generally is established when the advertisement deceives, or has the capacity to deceive, a substantial segment of potential con­sumers about a relevant quality or characteristic of the prod­uct or service.

Literally False Statements

Where the statement at issue is literally false, materiality is presumed. “With respect to materi­ality, when the statements of fact at issue are shown to be lit­erally false, the plaintiff need not introduce evidence on the issue of the impact the statements had on consumers.”  Pizza Hut, 227 F.3d at 497; see also S.C. Johnson & Son, 241F.3d at 232; Clorox Co. Puerto Rico v. Procter & Gamble Commercial Co., 228 F.3d 24 (1st Cir. 2000).  Section 43(a) does not require an additional showing of deception.

Misleading Statements

With a literally true but misleading statement, materiality is decided based on public’s actual reaction to the advertisement.  See Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1140 (9th Cir. 1997);  Pizza Hut, 227 F.3d at 497; Johnson & Johnson-Merck Consumer Pharm. Inc. Co. v. Rhone-Poulenc Rorer Pharm., 19 F.3d 125 (3d Cir. 1994).  “The plaintiff may not rely on the judge or the jury to determine, based solely upon his or her own intuitive reaction, whether the advertisement is deceptive.”  Pizza Hut, 227 F.3d at 497 (quotation omitted); see also Clorox Co. Puerto Rico, 228 F.3d at 37; Johnson & Johnson v. Smithkline Beecham Corp., 960 F.2d 294, 297 (2d Cir. 1992).  Plaintiff must demonstrate that the advertising deceived a substantial portion of the public.  See United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1182 (8th Cir. 1998).  “[W]here the advertisement is liter­ally true, [public perception] is often the only measure by which a court can determine whether a commercial’s net communicative effect is misleading.”  Pizza Hut, 227 F.3d at 503 n.13.  Generally, surveys are the preferred vehicle; however, evidence of consumers’ letters, calls, and affidavits, can also show consumer deception.  See Clorox Co. Puerto Rico, 228 F.3d at 36; Pizza Hut, 227 F.3d at 497; Pizza Hut, 227 F.3d at 497.

Willful or Bad Faith Conduct

The 9th Circuit held that if the defendant violated the Lanham Act will­fully or in bad faith, a plaintiff is not required to provide a con­sumer survey or any other extrinsic evidence in order to prove materiality.  U-Haul Intl., Inc. v. Jartan, Inc., 793 F.2d 1034 (9th Cir. 1986).

In some circuits, if the defendant “intentionally set out to deceive the public,” using “deliberate conduct” of an “egregious nature” in light of the advertising culture of the marketplace in which the defendant competes, a presumption arises that consumers were, in fact, deceived, dispensing with the need for the plaintiff to commis­sion a consumer survey.

Clorox Co. Puerto Rico v. Procter & Gamble Commercial Co., 228 F.3d 24 36 n.9 (1st Cir. 1998); see also United Indus. Corp., 140 F.3d at 1183; Johnson & Johnson-Merck Consumer Pharm. Co. v. Rhone-Poulenc Rorer Pharm., Inc., 19 F.3d 125 (3d Cir. 1994); Resource Dev., Inc. v. Statue of Liberty-Ellis Island Found., Inc., 926 F.2d 134 (2d Cir. 1991).

Remedies

The Lanham Act provides for both injunctive and monetary relief.  See 15 U.S.C. §§ 1116 – 1117.  For literally false claims where a plaintiff is only seeking injunctive relief, no additional evidence is necessary, and for misleading claims, a tendency to deceive consumers must be established.  See, e.g., Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 497 (5th Cir. 2000); American Council, 185 F.3d at 618 (“Although plaintiff need not present consumer surveys or testimony demonstrating actual deception, it must present evidence of some sort demonstrating that consumers were misled.”).  If a plaintiff seeks damages, however, it must prove actual confusion or deception arising from the violation. See generally George Basch Co., Inc. v. Blue Coral, Inc., 968 F.2d 1532, 1537 (2d Cir. 1992).  Injunctive relief only requires a showing that the defendant’s rep­resentations have a tendency to deceive consumers (which is presumed where the statement is literally false).  See, e.g., Pizza Hut, 227 F.3d at 497; American Council, 185 F.3d at 618.

Monetary Damages

Once a violation of section 43(a) has been established, the plaintiff is 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. . . . In assessing profits the plaintiff shall be required to prove defendant’s sales only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. If the court shall find that the amount of recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case. Such sum in either of the above circumstances shall constitute compensation and not penalty. The court in exceptional cases may award reason­able attorney fees to the prevailing party.

15 U.S.C. § 1117(a).  The courts enjoy broad discretion when determining damages.  Burger King Corp. v. Mason, 855 F.2d 779 (11th Cir. 1988).

Several forms of monetary relief are possible, including the amount of profits lost as a result of the defendant’s false advertising (marketplace damages), the defendant’s profits gained as a result of its false advertising (unjust enrichment), amounts necessary for corrective advertising, and attorney fees.  Ninth Circuit law holds that punitive damages are not available for vio­lation of section 43(a).  Harper House, Inc. v. Thomas Nelson, Inc., 889 F.2d 197 (9th Cir. 1989).  Further, the Ninth Circuit has held that the “[p]ublication of deliberately false comparative claims gives rise to a presumption of actual deception and reliance,” reasoning that:

The expenditure by a competitor of substantial funds in an effort to deceive consumers and influence their purchasing decisions justi­fies the existence of a presumption that consumers are, in fact, being deceived. He who has attempted to deceive should not com­plain when required to bear the burden of rebutting a presumption that he succeeded.

U-Haul Int’l, Inc. v. Jartran, Inc., 793 F.2d 1034, 1040-41 (9th Cir. 1986); see also Resource Dev., Inc. v. Statue of Liberty-Ellis Island Found., Inc., 926 F.2d 134 (2d Cir. 1991) (“[U]pon a proper showing of such deliberate conduct, the burden shifts to the defendant to demonstrate the absence of consumer confusion.”); Porous Media Corp. v. Pall Corp., 110 F.3d 1329, 1334-35 (8th Cir. 1992) (applying rule only in context of comparative advertising where plaintiff’s product was specifically targeted).

Defendant’s Profits

The Ninth Circuit suggests that willful con­duct is required in order to recover defendant’s profits.  See Minn. Breeders, Inc. v. Schell & Kampeter, Inc., 41 F.3d 1242, 1247 (8th Cir. 1994); Gracie v. Gracie, 217 F.3d 1060, 1068 (9th Cir. 2000).

 

See elements for other claims at the Nevada Law Library