## Facts

- Lindy owned a federal registration for the mark “Auditor’s” for ballpoint pens.
- In 1965, before Lindy’s registration issued, Bic used “Auditor’s” on pen barrels and later stopped after Lindy objected.
- In 1966, Lindy’s federal registration for “Auditor’s” issued and was later perfected by required filings.
- About fourteen years later, Bic began using “Auditor’s Fine Point” for a pen model after searching and finding other third-party uses and perceiving Lindy’s claim as weak in the marketplace.
- Lindy sued in 1980 for federal trademark infringement and related claims.
- Prior proceedings ultimately limited actionable infringement to a specific channel: telephone-order sales, and the courts ordered an injunction and a remand to determine profits and damages, if appropriate.
- On the damages remand, Lindy presented evidence of overall sales but did not segregate sales or profits attributable to the infringing telephone-order submarket.
- The district court denied an accounting of profits, found no proof of actual damages, rejected enhanced remedies and fees, and limited state-law relief based on pleading and proof defects.

## Issues

1. Whether equity required an accounting of Bic’s profits under the Lanham Act when infringement was found only in telephone-order sales and Bic’s conduct was not willful.
2. Whether Lindy proved actual damages (lost sales, lost profits, or goodwill injury) attributable to the infringing telephone-order submarket.
3. Whether Lindy could obtain statutory state trademark remedies absent pleading and proof of required state registration, and whether common-law theories supported monetary relief.
4. Whether the case was “exceptional” such that attorneys’ fees or enhanced monetary remedies were warranted.

## Decision

- The court affirmed the district court’s denial of an accounting of profits.
- The court affirmed the finding that Lindy failed to prove actual damages.
- The court affirmed the limitation and denial of state-law monetary relief based on failure to establish required predicates for statutory state remedies and lack of proven compensable harm under common law.
- The court affirmed the denial of attorneys’ fees and enhanced remedies because the case was not “exceptional.”
- The court denied Bic’s cross-appeal and left injunctive relief in place without monetary recovery.

## Legal Principles

- An award of a defendant’s profits for trademark infringement is equitable and discretionary, not automatic, and must be consistent with the Lanham Act’s compensatory purpose rather than serving as a penalty.
- Willfulness or deliberate intent to exploit another’s mark is a significant factor supporting a profits award; innocent infringement can justify denial of profits where equity does not support disgorgement.
- To obtain profits, the plaintiff must first prove the defendant’s gross profits from the infringing activity with reasonable certainty; only then does the burden shift to the defendant to prove deductions or apportionment.
- When infringement is confined to a particular channel or submarket, profits and damages must be proven as to that infringing submarket rather than by reliance on overall sales.
- Actual damages require competent evidence of quantified loss or goodwill injury attributable to the infringement; speculative or unsegregated proof is insufficient.
- Attorneys’ fees and enhanced monetary remedies require an “exceptional” case, generally involving willful, malicious, or fraudulent conduct.

## Conclusion

The Ninth Circuit held that, although Bic was enjoined from using “Auditor’s” based on infringement in telephone-order sales, Lindy was not entitled to profits, damages, fees, or enhanced remedies because the infringement was not willful and Lindy failed to prove profits or measurable harm tied to the infringing submarket.


Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400 (9th Cir. 1993)