## Facts

- Fleischmann Distilling Corp. owned a federally registered “Black & White” trademark used for Black & White Scotch whisky sold in the United States for decades.
- Maier Brewing Co. brewed and sold a low-priced beer branded “Black & White.”
- Ralph’s Grocery Co. distributed Maier’s “Black & White” beer through its grocery chain.
- An earlier appellate ruling had held Fleischmann’s mark valid and Maier’s use on beer infringing, characterizing the infringement as deliberate.
- On remand, the district court ordered injunctive relief and an accounting of profits and later calculated profits attributable to the infringement as $34,912 (Maier) and $29,849 (Ralph’s).
- After separate review eliminated attorney’s fees as a Lanham Act remedy, the remaining dispute on appeal concerned the district court’s authority to order, and the correctness of, the profits accounting.

## Issues

1. Whether the district court had subject-matter jurisdiction under the Lanham Act to award an accounting of profits based on defendants’ use of the mark in commerce affecting interstate commerce.
2. Whether disgorgement of defendants’ profits was an appropriate equitable remedy where the parties’ goods (Scotch whisky and beer) did not directly compete and proof of diverted sales was limited, but infringement was knowing and willful.
3. Whether defendants carried their burden to prove deductible costs and other offsets to reduce profits attributable to infringing sales.

## Decision

- The Ninth Circuit affirmed the district court’s award of profits against both Maier and Ralph’s.
- The court held that the infringement affected interstate commerce, supporting federal jurisdiction and Lanham Act remedies.
- The court held that an accounting of profits was proper despite the absence of direct product competition because the infringement was knowing and willful and the remedy serves equitable goals beyond compensating diverted sales.
- The court upheld the district court’s profit figures because defendants did not adequately substantiate claimed deductions.

## Legal Principles

- The Lanham Act reaches infringing uses of a mark that affect interstate commerce; intrastate features do not defeat jurisdiction where the challenged activity is part of commerce within the Act’s scope.
- Disgorgement of an infringer’s profits under Lanham Act § 35 is “subject to the principles of equity” and may be awarded to prevent unjust enrichment and to deter deliberate infringement.
- Direct competition between the parties’ goods is not a prerequisite to a profits award when the infringing use creates a likelihood of source or sponsorship confusion and the infringement is willful.
- In a profits accounting, once the plaintiff shows sales/gross receipts from infringing goods, the defendant bears the burden to prove costs, overhead, and other deductions; unproven deductions may be disallowed.

## Conclusion

The Ninth Circuit sustained profit disgorgement against a brewer and retailer that knowingly used another company’s longstanding “Black & White” trademark, holding that Lanham Act jurisdiction was satisfied by conduct affecting interstate commerce and that equitable profits awards can apply even to noncompeting goods, with defendants responsible for proving any reductions to the profits subject to recovery.


Maier Brewing Co. v. Fleischmann Distilling Corp., 390 F.2d 117 (9th Cir. 1968)