## Facts

- Waco International, Inc. manufactured scaffolding products and owned the registered “WACO” trademark.
- KHK Scaffolding & Formwork Ltd. manufactured scaffolding compatible with Waco’s products, and KHK Scaffolding Houston, Inc. distributed those products in the United States.
- Some KHK Houston marketing materials and invoices referred to certain frames as “WACO” or “WACO-style,” but the scaffolding itself did not bear the WACO mark.
- Waco sued under the Lanham Act and obtained an ex parte seizure order under 15 U.S.C. § 1116(d), leading to seizure of scaffolding and related materials from KHK Houston.
- After a post-seizure hearing, the district court found the seized scaffolding did not bear the WACO mark and dissolved the seizure order, while granting Waco limited injunctive relief restricting misleading use of “Waco” in advertising.
- KHK Houston, its officer Jim Yung Kim, and related entities asserted counterclaims for wrongful seizure under § 1116(d)(11).
- The district court found the seizure wrongful and awarded damages, including attorneys’ fees and costs, against Waco and its surety.
- Waco appealed the wrongful-seizure finding and damages; KHK Houston and Kim cross-appealed on aspects of relief and damages.

## Issues

1. Whether an ex parte seizure under 15 U.S.C. § 1116(d) is “wrongful” under § 1116(d)(11) when seized goods do not bear the plaintiff’s trademark.
2. Whether § 1116(d)(11) requires proof of bad faith or similar culpability to impose liability for wrongful seizure.
3. What categories of damages (including lost profits and attorneys’ fees) are recoverable under § 1116(d)(11), and what proof and causation standards apply.

## Decision

- The Fifth Circuit affirmed the determination that the seizure was wrongful because the seized goods did not bear the WACO mark and therefore fell outside the statute’s limited authorization.
- The court held “wrongful” seizure does not require proof of bad faith; the statutory scheme places the risk of error on the seizure applicant.
- The court affirmed in part and vacated and remanded in part the damages award, requiring adequate evidentiary support and a causal link between the seizure and each claimed loss.
- The court recognized § 1116(d)(11) authorizes recovery of reasonable attorneys’ fees and costs attributable to the wrongful seizure, subject to reasonableness and proper allocation.

## Legal Principles

- Lanham Act ex parte seizure under 15 U.S.C. § 1116(d) is an extraordinary remedy subject to strict statutory limits and safeguards, including a bond to secure potential wrongful-seizure damages.
- A seizure is “wrongful” under § 1116(d)(11) when the seizure is not supported by the statutory predicates (including when seized goods are not counterfeit or do not bear the mark alleged), regardless of the applicant’s subjective good faith.
- Section 1116(d)(11) imposes liability for damages “as a result of” a wrongful seizure; claimants must prove actual damages and establish causation rather than speculation.
- Recoverable damages may include business losses proximately caused by the seizure and reasonable attorneys’ fees and costs incurred because of the seizure, but not fees unrelated to the seizure dispute.

## Conclusion

The Fifth Circuit treated the Lanham Act’s wrongful-seizure provision as imposing liability when an ex parte seizure captures goods outside the statute’s narrow scope, and it required that any resulting damage award—including attorneys’ fees—be supported by evidence and tied by causation to the wrongful seizure.


Waco Int'l, Inc. v. KHK Scaffolding Hous., Inc., 278 F.3d 523 (5th Cir. 2002)