## Facts

- Mishawaka Rubber & Woolen Manufacturing Co. manufactured shoes and rubber heels and owned a registered trademark: a red circular plug embedded in the center of a heel.
- Mishawaka spent substantial sums advertising the mark to build consumer recognition and goodwill.
- S.S. Kresge Co., a retailer, sold heels not made by Mishawaka bearing a red or reddish circular plug so similar that purchasers would have difficulty distinguishing Kresge’s goods from Mishawaka’s.
- The heels sold by Kresge were found inferior in quality, tending to harm Mishawaka’s goodwill associated with its superior product.
- Although there was no direct proof of actual purchaser deception in specific transactions, the trial court found a reasonable likelihood that ordinary purchasers familiar with the mark would believe Kresge’s heels were Mishawaka’s.
- The district court enjoined further infringement and ordered an accounting of profits, but limited recovery to sales to purchasers induced to buy by the mistaken belief the heels were Mishawaka’s and that Mishawaka would otherwise have made those sales.
- The court of appeals affirmed the limited accounting approach.
- The Supreme Court granted review limited to the measure of profits and damages under § 19 of the Trade-Mark Act of 1905.

## Issues

1. Whether § 19 of the Trade-Mark Act of 1905 requires a trademark owner, to recover an infringer’s profits, to prove that purchasers bought because they believed the goods were the owner’s and that the owner would otherwise have made those sales.

## Decision

- The Supreme Court reversed the judgment affirming the limited accounting rule and remanded.
- The Court held that a trademark owner is not required to prove, transaction by transaction, that purchasers were induced by the infringing mark to believe they were buying the owner’s goods, nor that the owner would otherwise have made those sales, in order to recover profits under § 19.
- The Court reasoned that a trademark functions as an identifying symbol and “merchandising short-cut” with “drawing power” created by the owner’s efforts; wrongful use of a confusingly similar mark appropriates that drawing power even if particular purchasers’ subjective motivations cannot be shown.
- The Court treated the infringer’s profits as an appropriate measure of the benefit obtained from the wrongful use of the mark, subject to equitable administration.

## Legal Principles

- Under § 19 of the Trade-Mark Act of 1905, an accounting of the infringer’s profits does not depend on proof that each infringing sale was caused by actual, demonstrated consumer confusion about source.
- Trademark value lies in the goodwill and consumer recognition associated with the mark; infringement wrongfully exploits that goodwill by trading on the mark’s drawing power.
- Because harm from confusion and injury to goodwill is often difficult to trace to individual transactions, equity does not require the trademark owner to reconstruct each purchaser’s mental process to obtain profits.
- Profit recovery in trademark infringement serves both compensatory and protective functions, including deterring appropriation of another’s goodwill and limiting damage from inferior goods sold under a confusingly similar mark.

## Conclusion

The Court held that, for recovery of an infringer’s profits under § 19 of the 1905 trademark statute, the trademark owner need not prove that each purchaser was actually misled and would otherwise have bought from the owner; the infringer’s wrongful exploitation of a confusingly similar mark is sufficient to support an accounting, subject to equitable adjustment on remand.


Mishawaka Rubber & Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203 (1942)