IP Law Daily, TRADEMARK—7th Cir.: Punitive damages, disgorgement of profits, and compensatory damages affirmed in ‘Diesel Test’ infringement lawsuit, (Dec 20, 2024)

By Saurabh Kashyap, B.A., LL.B., LL.M.

District court correctly found punitive damages proportional to harm caused, compensatory damages were fairly awarded, and disgorgement was properly included as equitable relief.

The U.S. Court of Appeals for the Seventh Circuit affirmed a Chicago district court's decision awarding $900,000 in punitive damages, $2,500 in compensatory damages, and $547,095.44 in disgorged profits in a trademark infringement lawsuit filed by an individual plaintiff against Revolution Laboratories, LLC, and its executives. The jury awarded the punitive and compensatory damages, while the district court determined the disgorgement as equitable relief. The appellate court upheld the punitive damages as proportional to the harm caused by the defendant's intentional infringement, affirmed the compensatory damages as appropriately awarded, upheld the disgorgement as an appropriate equitable remedy under the Lanham Act, and found that the claim for punitive damages was properly presented to the jury (Curry v. Revolution Laboratories, LLC, No. 23-2850 (7th Cir. Dec. 19, 2024)).

Background. The plaintiff/appellee, Charles Curry, operates a nutritional supplements business, Get Diesel Nutrition. The business markets its products under the “Diesel” brand name, targeting fitness enthusiasts with testosterone-boosting supplements. The defendant/appellant, Revolution Laboratories, LLC, is a competing nutritional supplement and apparel company. It markets a variety of products, including the infringing supplement, Diesel Test, which led to the present litigation.

In this lawsuit, Curry asserted unregistered trademark rights in the brand “Diesel Test,” which he began using in 2005 for a testosterone-boosting supplement. Despite not registering the trademark, Curry claimed protection under the Lanham Act and Illinois common law. He argued that his extensive marketing and the association of the Diesel Test brand with his personal reputation established his rights to the mark.

The dispute arose when Curry discovered that Revolution Laboratories was selling a product called "Diesel Test," which shared the name of his testosterone-boosting supplement marketed since 2005. Revolution rebranded its "Rev Test" as "Diesel Test" in 2016, causing confusion among consumers. Curry received customer complaints about Revolution's product, which were mistaken for his own. He sent multiple cease-and-desist notices to Revolution in late 2016, but the company dismissed them and continued selling its product. Internal emails revealed that Revolution's executives decided to ignore Curry's claims and exhaust their existing inventory.

In February 2017, Curry filed a complaint with Amazon, leading to the removal of Revolution’s product from the platform, but the company continued selling it elsewhere. Curry filed a pro se lawsuit in March 2017 in the Northern District of Illinois, which was initially dismissed for lack of personal jurisdiction. On appeal, the Seventh Circuit reinstated the case in 2020. After Revolution admitted liability under the Lanham Act and Illinois common law, a jury in 2023 awarded Curry $2,500 in compensatory damages, $547,095.44 in disgorged profits, and $900,000 in punitive damages. Revolution appealed the punitive damages, arguing that the awards were excessive and violated the Fourteenth Amendment’s Due Process Clause. It also challenged the district court’s decision to allow Curry’s punitive damages claim to go to the jury and the inclusion of disgorgement in the court’s proportionality analysis.

Punitive damages. The appellate court upheld the district court’s decision to allow Curry to present his punitive damages claim to the jury. It found that Curry’s pleadings and subsequent litigation made clear his intention to seek punitive damages under Illinois common law. Relying on Federal Rule of Civil Procedure 54(c), the court explained that courts may grant relief supported by the facts, even if not explicitly demanded in the pleadings. The court rejected the defendants’ claims of unfair prejudice, emphasizing that Curry had actively litigated the issue well before trial, including during discovery. Distinguishing the case from Cullen v. Saddler, 668 F. App’x 656 (7th Cir. 2016), the court noted that the defendants were not blindsided by a sudden increase in liability, as they were on notice of Curry’s punitive damages claim from early in the litigation.

Reprehensibility of conduct. The court considered Revolution’s conduct highly reprehensible, warranting punitive damages. Revolution continued to sell its Diesel Test product even after receiving multiple cease-and-desist notices and a takedown notice from Amazon. The court cited State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003), emphasizing that punitive damages are justified where the conduct involves intentional malice, trickery, or repeated actions. Internal communications among Revolution's executives revealed a calculated strategy to exhaust their infringing inventory despite acknowledging potential legal risks. This demonstrated a deliberate disregard for Curry's rights, heightening the degree of reprehensibility under the Campbell framework.

Ratio of punitive to compensatory damages. The court addressed the ratio of punitive to compensatory damages, concluding that the punitive damages were constitutionally permissible. It calculated the ratio by combining the compensatory damages and equitable disgorgement award, resulting in a less-than-1:1 ratio. The court relied on Kapelanski v. Johnson, 390 F.3d 525 (7th Cir. 2004), which upheld punitive damages with a low ratio as constitutionally valid. Additionally, the court relied on Epic Systems Corp. v. Tata Consultancy Services Ltd., 980 F.3d 1117 (7th Cir. 2020), to support the inclusion of equitable remedies, such as disgorgement, in assessing the proportionality of punitive damages. The court rejected Revolution’s argument that only compensatory damages could be considered in the analysis, emphasizing that equitable relief could reflect the magnitude of the misconduct.

Comparable civil penalties. The appellate court compared the punitive damages with penalties authorized under the Lanham Act, which allows for treble damages or profits and statutory damages up to $2 million for willful violations. The court concluded that the punitive damages awarded were consistent with these statutory benchmarks, demonstrating proportionality. Citing BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), the court highlighted the importance of aligning punitive damages with binding case law about appropriate sanctions. It also referenced Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672 (7th Cir. 2003), which affirmed that punitive damages can deter calculated misconduct, particularly in cases of intentional infringement.

Conclusion. Thus, the Seventh Circuit affirmed the district court’s judgment, emphasizing that Revolution’s calculated disregard for Curry’s trademark rights and its decision to continue infringing despite warnings justified the punitive damages.

The Case is No. 23-2850.

Judge: Hamilton, D.

Attorneys: Nicholas Cooper Hailey (Oppenheim & Zebrak, LLP) for Charles Curry, Jr. d/b/a Get Diesel Nutrition. Matthew De Preter (Aronberg Goldgehn Davis & Garmisa) for Revolution Laboratories, LLC, Joshua Nussbaum and Barry Nussbaum.

Companies: Get Diesel Nutrition; Revolution Laboratories, LLC

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