Wednesday, May 09, 2012

The difference between seeking damages and injunctive relief

General Steel Domestic Sales, LLC v. Chumley, 2012 WL 1439228 (D. Colo.)

General Steel and defendant Armstrong (founded by Chumley) compete in the prefabricated steel building market.  General Steel sued for trademark infringement and false advertising under state and federal law, seeking disgorgement of profits, statutory damages, and compensation for corrective advertising.

The court started with the Colorado deceptive trade practices claim under the Colorado Consumer Protection Act, which requires injury to a legally protected interest.  The court held that General Steel failed to identify any actual injury; disgorgement is a theory of recovery, but there was no evidence of actual injury.

General Steel also claimed that Armstrong’s use of “General Steel Buildings” in ads infringed General Steel’s registered mark.  But General Steel neither sought injunctive relief nor identified actual damages.  To recover an award for corrective advertising, General Steel still needed to establish actual injury.

Despite all that, a plaintiff in a case of a counterfeit mark can seek statutory damages, but General Steel didn’t invoke that provision of the Lanham Act.  The court was willing to let General Steel try its hand at that argument before finally resolving summary judgment on the trademark claim.

General Steel’s separate false advertising claim targeted Armstrong’s claims “that [it is] a manufacturer, that [it] posess[es] environmentally controlled painting facilities, and that [its] facilities use laser-precision engineering.”  Again, no evidence of actual damages, but this time General Steel sought injunctive relief, which is available upon a showing of literal falsity even with no evidence of actual damages. 

Armstrong admitted to the statements and asserted a “vague and unsupported denial” of falsity.  Though it argued that materiality ought to be separately required in a literal falsity case, it failed to explain why statements about whether and how Armstrong makes its products would be immaterial.  Not only was Armstrong’s summary judgment motion denied, it was ordered to show cause why General Steel wouldn’t be entitled to summary judgment.

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