## Facts

- American Rice, Inc. (ARI) sold parboiled American long-grain rice in Saudi Arabia for decades under the “Abu Bint” brand featuring a prominent “Girl Design,” supported by substantial advertising and consumer recognition as “girl brand” rice.
- ARI owned a federal registration for the Girl Design and claimed strong goodwill and premium pricing tied to that packaging.
- Producers Rice Mill, Inc. (PRMI), a farmer-owned cooperative, sold the same type of rice in Saudi Arabia using rice bags depicting a “Girl with a Hat Design” and the script mark “Par Excellence,” along with Arabic wording associated with the girl image.
- ARI and PRMI previously resolved related disputes through a settlement agreement limiting PRMI’s use of certain girl imagery; ARI later alleged PRMI’s continued use violated both the settlement and the Lanham Act.
- After trial, the district court found PRMI liable for trademark infringement/unfair competition and breach of the settlement agreement, issued a permanent injunction, and initially awarded ARI $1,256,635 based on PRMI’s 2005 profits.
- On PRMI’s post-trial showing that cooperative earnings flowed through to members and PRMI reported only $227.10 as corporate taxable income, the district court replaced the initial award with $227.10.
- Both parties appealed: PRMI challenged liability; ARI challenged the reduced damages and aspects of the attorney’s fee ruling.

## Issues

1. Whether PRMI’s use of girl-themed packaging in Saudi Arabia created a likelihood of confusion with ARI’s Girl Design under the Lanham Act.
2. Whether PRMI’s post-settlement conduct breached the settlement agreement restricting PRMI’s use of certain designs.
3. Whether “defendant’s profits” for Lanham Act monetary relief may be reduced to nominal corporate taxable income because the defendant is a cooperative that passes earnings through to members.
4. Whether attorney’s fees were properly awarded under the Lanham Act’s “exceptional case” standard.

## Decision

- The court affirmed the district court’s findings of Lanham Act liability and breach of the settlement agreement, including the likelihood-of-confusion determination tied to the Saudi market.
- The court rejected the damages reduction to $227.10, holding that Lanham Act profits are not limited to a cooperative’s reported corporate taxable income.
- The court remanded for entry of a damages judgment consistent with its profits analysis.
- The court vacated the attorney’s fee award and remanded for reconsideration in light of the corrected damages posture and the exceptional-case inquiry.

## Legal Principles

- Likelihood of confusion may be evaluated with reference to the market where the challenged sales occur; overlapping products, channels, and similar trade dress can support infringement findings.
- A long-used, well-advertised design associated by consumers with a single source supports strong trademark protection and can make similar imagery on competing goods actionable.
- Lanham Act recovery of the defendant’s profits is an equitable remedy aimed at preventing unjust enrichment and deterring infringement; “profits” refers to economic gains from the infringing conduct, not merely corporate taxable income.
- A cooperative’s distribution of earnings to member-owners does not eliminate those earnings as “profits” attributable to infringement for purposes of equitable monetary relief.
- Attorney’s fees under the Lanham Act require a supported finding that the case is “exceptional,” and the fee determination may require reassessment when the damages analysis changes on appeal.

## Conclusion

The Fifth Circuit upheld liability for trademark infringement and breach of a settlement limiting confusingly similar packaging, but held that a cooperative cannot avoid a meaningful profits award by pointing to nominal corporate taxable income; it remanded for a proper profits-based damages judgment and reconsideration of attorney’s fees.


American Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321 (5th Cir. 2008)