Monetary Damages under the Lanham Act: Eighth Circuit Holds Actual Confusion Is Not a Prerequisite

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I. Introduction

While the Lanham Act provides a cause of action against trademark infringers, some courts have limited the types of relief accessible to the trademark owners according to the type of evidence presented at trial. (1) The text of the Lanham Act requires the plaintiff in a trademark infringement case to establish that the defendant used a trademark confusingly similar to his own in a manner that is "likely to cause confusion" in the minds of the buying public as to who actually manufactured the product or supplied the service in question. (2) However, the statute also has the caveat that the remedies available to the plaintiff are "subject to the principles of equity." (3)

The equitable scheme of the Lanham Act has prompted some courts to read into the statute a requirement that plaintiffs in trademark infringement cases establish "actual confusion" in the minds of consumers before they are entitled to monetary damages.4 The courts applying the actual confusion standard have reasoned that the principles of equity require this heightened level of proof because without such proof there is no assurance that the plaintiff suffered an actual injury as a result of the infringement. (5) These same courts have concluded that absent actual injury, injunctive relief alone is equitable. (6)

The federal circuits are currently split over the question of whether a plaintiff must prove actual confusion to receive monetary relief under the Lanham Act. (7) The Eighth Circuit Court of Appeals appeared to adopt the stance that proof of actual confusion was necessary. (8) However, in Masters v. UHS of Delaware, Inc., the Eighth Circuit clarified that actual confusion is not a prerequisite for an award of monetary damages after upholding a jury's award of disgorged profits to a plaintiff who, according to the jury, proved no actual damages. (9)

This Note will examine the Lanham Act and the ways in which courts have interpreted it, particularly its provisions dealing with trademark infringement. (10) This Note will then explain the concept of "actual confusion" and what has prompted courts to read the requirement into the Lanham Act with respect to establishing monetary awards. (11) This Note also will provide an overview of the current split between circuits requiring proof of actual confusion and those allowing proof of "likelihood of confusion" to support an award of damages. (12) Particular emphasis is placed on Eighth Circuit precedent. Finally, this Note will argue that the Eighth Circuit's rejection of the actual confusion requirement will lead to fairer results by removing near insurmountable obstacles for trademark plaintiffs seeking to be compensated for wrongs perpetrated by trademark infringers. (13)

II. Facts and Holding

Appellant UHS of Delaware, Inc. (UHS) owns numerous psychiatric hospitals and mental health facilities located throughout the United States. (14) Respondent Mary Masters, who worked under the professional name of Virginia E. Johnson, and her deceased former husband, Dr. William H. Masters, were researchers in the field of human sexuality. (15) Together they developed innovative treatments for sexual dysfunction and sexual trauma, which they marketed under the unregistered service mark "Masters and Johnson" (the mark). (16) Dr. and Mrs. Masters--and consequently the mark--garnered wide recognition for their work in the field of sexual medicine. (17) As a result, the Masters began receiving business propositions from companies desiring to use the mark to advertise their own sexual therapy services. (18)

In 1991, Dr. and Mrs. Masters entered into a ten-year licensing agreement that granted the use of the mark to UHS to use in connection with its sexual dysfunction and sexual trauma treatment programs, provided that its programs followed the Masters' treatment methodology. (19) The agreement was later renegotiated, and the lease was extended until 2005. …