124 F.4th 441
7th Cir.2024Background
- Charles Curry (“Get Diesel Nutrition”) sold a testosterone supplement called “Diesel Test” since 2005 but did not register the trademark.
- Revolution Laboratories and its principals Joshua and Barry Nussbaum began selling a supplement under the same name (“Diesel Test”) in 2016.
- Curry sent several cease-and-desist notices after receiving customer complaints intended for Revolution; Revolution ignored these warnings and continued selling the product.
- Curry filed suit in 2017 under the federal Lanham Act and Illinois common law for trademark infringement, seeking actual, disgorged, and punitive damages.
- After a jury verdict for Curry (including compensatory, disgorgement, and punitive awards), the district court recalculated the disgorgement amount and upheld the punitive damages.
- Revolution appealed, challenging the allowance and amount of punitive damages as unconstitutional.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was Curry entitled to seek punitive damages at all? | Curry gave ample notice and discovery | Punitive damages request was unexpected; no notice | Properly allowed due to lack of prejudice |
| Was it constitutional for the jury to award punitive damages? | Defendants’ conduct was egregious | The harm was economic only; punitive damages too high | Constitutionally permissible |
| Should the punitive/compensatory ratio be calculated per-defendant or in aggregate? | Ratio must reflect individual culpability | Ratio should be based on total (aggregate) liability | Ratio is assessed per defendant |
| Should equitable disgorgement be included in the ratio analysis? | Disgorgement reflects economic harm | Only compensatory (legal) damages count | Disgorgement properly included |
Key Cases Cited
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (most important guidepost for punitive damages is the degree of reprehensibility)
- BMW of North America, Inc. v. Gore, 517 U.S. 559 (set out the three guideposts for evaluating constitutionality of punitive damages)
- Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672 (punitive damages can far exceed compensatory in certain egregious cases)
- Epic Systems Corp. v. Tata Consultancy Servs. Ltd., 980 F.3d 1117 (actual or potential harm, not just compensatory damages, can be denominator for punitive ratio)
- Saccameno v. U.S. Bank N.A., 943 F.3d 1071 (confirmed the flexibility of the punitive-actual damages ratio analysis)
- Kapelanski v. Johnson, 390 F.3d 525 (affirmed that a punitive ratio of 1:1 is generally permissible)