USDC M.D. North Carolina, February 12, 2009  

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In calculating damages for willful copyright infringement and false designation and reverse passing off under the Lanham Act and state law, the court rejected the defendant’s evidence of deductible expenses and costs as unreliable and internally inconsistent, and awarded the plaintiff over $11 million in damages.

The court found the defendant furniture company liable for copyright infringement, reverse passing off and false designation of origin due to its use of the plaintiff’s furniture in its showroom and in promotional materials. Under the Copyright Act, a copyright owner is entitled to recover actual damages it suffered as a result of the infringement and any profits of the infringer that are attributable to the infringement. In this case, the plaintiff sought to recover the defendant’s actual profits rather than its own damages.

The court ordered the defendant to produce summaries of its gross profits, deductible expenses and costs, but found the defendant’s evidence to be “wholly unreliable and confusing.” According to the court, the defendant refused to apply its cost methodology to the invoices submitted to the court despite multiple court orders, provided equivocal and internally inconsistent deposition testimony, and was unable to reconcile its various costs exhibits.

Because the defendant failed to meet its burden of proof, the court awarded the plaintiff all of the defendant’s gross revenue from the sale of the infringing items. Although the court found the defendant’s profits under the Lanham Act and state law violations to be $196,921.00, it adjusted this amount to zero after ordering the defendant to pay the plaintiff over $11 million for copyright infringement.