## Facts

- Banjo Buddies, Inc. (BBI) developed and sold the “Banjo Minnow,” a fishing lure marketed heavily through infomercials and retail channels.
- Joseph F. Renosky served on BBI’s board (1996–1999), helped develop the Banjo Minnow, and through his company, Renosky Lures, Inc. (RLI), manufactured Banjo Minnow kits for BBI and its exclusive marketer, Tristar Products, Inc.
- Renosky entered into a non-compete agreement in favor of BBI in exchange for additional BBI stock.
- During the Banjo Minnow’s early commercial success, Renosky proposed a “new and improved” lure (the “Bionic Minnow”); BBI’s board took no formal action, and board members urged him not to proceed independently.
- Renosky developed the Bionic Minnow through RLI and began marketing it by infomercial and other means beginning in 1999.
- BBI alleged the Bionic Minnow’s marketing and presentation created a false impression of association with, or continuity from, BBI and the Banjo Minnow, constituting false designation of origin under Lanham Act § 43(a), along with related contract claims.
- The district court found Renosky liable under § 43(a) and ordered an accounting and disgorgement of profits from Bionic Minnow sales; it rejected Renosky’s claimed net-loss showing as not credible and estimated profits using a 16% margin drawn from comparable RLI products.

## Issues

1. Whether willful infringement is a legal prerequisite to awarding an infringer’s profits for a Lanham Act § 43(a) violation under 15 U.S.C. § 1117(a).
2. Whether the district court correctly applied the burdens and evidentiary standards in calculating profits, including its rejection of claimed deductions and its use of an estimated profit margin.

## Decision

- The Third Circuit held that willfulness is not a prerequisite to awarding an infringer’s profits for a § 43(a) violation; it is a significant equitable factor.
- The court affirmed the district court’s use of equitable discretion to award profits and to reject inadequate or not-credible cost and deduction evidence offered by the infringer.
- The court largely affirmed the damages determination, reversing and remanding only for a narrow correction on a discrete damages point, while leaving the overall profits methodology intact.

## Legal Principles

- Under 15 U.S.C. § 1117(a), an award of profits for a Lanham Act § 43(a) violation is “subject to the principles of equity”; willfulness is an important factor but not a mandatory threshold requirement.
- Statutory text matters: Congress’s express insertion of a willfulness requirement for dilution (and not for § 43(a) false designation) supports treating willfulness as nonmandatory for § 43(a) profits awards.
- In a profits accounting under § 1117(a), the plaintiff must prove the defendant’s sales, and the defendant bears the burden to prove deductible costs and expenses.
- If the defendant fails to produce reliable, detailed deduction evidence, the court may approximate profits using reasonable inferences, and uncertainty created by the wrongdoer is not used to reduce the recovery.

## Conclusion

The Third Circuit ruled that profits may be awarded for false designation of origin under Lanham Act § 43(a) without proving willful infringement, treating intent as an equitable consideration rather than a prerequisite, and it upheld a district court’s authority to reject unsupported deductions and reasonably estimate profits, subject to a limited remand for a narrow damages adjustment.


Banjo Buddies, Inc. v. Renosky, 399 F.3d 168 (3d Cir. 2005)