## Facts

- Julio Blanco-Herrera owned U.S. registrations for the “Cristal” trademark used for a malt beverage (“malta”) and assigned the U.S. mark to Maltina Corporation after leaving Cuba.
- Maltina attempted to produce and distribute “Cristal” in the United States but produced only about $356 worth of product due to financing problems.
- Cawy sought to register “Cristal” for its own malta product; the application was denied because of Maltina’s prior registration.
- Despite knowing plaintiffs’ trademark ownership, Cawy began producing and selling malta under the “Cristal” label in February 1968.
- After a prior appellate ruling validated plaintiffs’ U.S. trademark ownership, the district court found infringement willful, enjoined further use, ordered an accounting, awarded $55,050 as Cawy’s gross profits, and separately awarded $35,000 as “actual damages.”
- On appeal, only the monetary remedies (profits accounting and damages) were challenged.

## Issues

1. Whether equity permitted an accounting of Cawy’s profits from willful trademark infringement even without proof of diverted sales.
2. Whether the district court could measure the accounting by gross profits where Cawy did not prove deductible expenses attributable to the infringing product.
3. Whether a $35,000 award of “actual damages” could stand without evidence of Maltina’s actual loss.

## Decision

- Affirmed the order requiring Cawy to account for profits from its infringing “Cristal” sales.
- Affirmed the use of gross profits where Cawy failed to prove and allocate deductible costs and expenses.
- Reversed the separate $35,000 “actual damages” award for lack of evidentiary support.

## Legal Principles

- Under the Lanham Act, disgorgement of an infringer’s profits may be awarded as an equitable remedy, particularly where infringement is willful, to prevent unjust enrichment and deter infringement.
- A profits award is not limited to situations where the plaintiff proves specific diverted sales; willfulness and equity can justify the remedy.
- In calculating profits, the plaintiff must show the infringer’s sales; the infringer bears the burden to prove deductible costs and to attribute expenses to the infringing product.
- “Actual damages” require proof of actual injury; courts may not award a substantial compensatory figure based on speculation where the record does not support the amount.

## Conclusion

The court allowed disgorgement of profits as an equitable response to knowing trademark infringement and placed the burden of proving deductions on the infringer, but it rejected a separate compensatory damages award where the plaintiff failed to prove actual loss or support the amount awarded.


Maltina Corp. v. Cawy Bottling Co., 613 F.2d 582 (5th Cir. 1980)