IP Law Daily, TRADEMARK—D. Nev.: Golden Nugget awarded injunction and $300,000 against defunct Ohio casino, (Jul 6, 2015)

By Cheryl Beise, J.D.

For continuing to use the GOLDEN NUGGET mark in violation of a settlement agreement, the operators of a defunct casino-style business in Canton, Ohio, must pay GNLV Corp., the owner of the famous Golden Nugget casinos and hotels, $300,000 in statutory damages and $5,000 in corrective advertising, the federal district court in Las Vegas has decided (GNLV Corp. v. T. Warren Enterprises, Inc., July 1, 2015, Mahan, J.). The court also granted GNLV’s request for a permanent injunction, but denied its requests for $11.2 million in the defendants’ profits, $900,000 treble damages, and $102,491 in attorney fees and costs.

Background. This case stemmed from a previous lawsuit between the parties in which GNLV sued the defendants (T. Warren Enterprises Inc., Great Vibe Entertainment, Inc., Tracie Pastore, and Yabachushyanei Bennett) after learning that they were operating a casino-style business in Ohio under the name “Golden Nugget Arcade, Inc.” In December 2012, the parties entered into a settlement agreement whereby the defendants agreed to immediately and permanently cease using GOLDEN NUGGET or similar names and marks in relation to gaming services. In exchange, GNLV voluntarily dismissed its case.

In May 2013, the Internal Revenue Service confiscated 222 slot-like machines from the defendants’ illegal gaming arcade. A local Canton, Ohio, newspaper reported the raid with the headline “IRS confiscates games from Golden Nugget.” A picture in the article showed a door with the name “The Nugget” written on it.

News of the IRS raid prompted GNLV to file the present suit against the defendants. On November 18, 2014, the court granted summary judgment to GNLV on claims for trademark infringement and false designation of origin under the Lanham Act, common law trademark infringement, and breach of contract. The defendants’ casino was no longer in operation.

Before the court was GNLV’s motions for permanent injunctive relief; $12,116,000 in compensatory damages, $300,000 in statutory damages, $900,000 in treble damages; and $102,491.29 in attorney fees and costs.

Defendants’ profits. Under the Lanham Act, a plaintiff may request actual damages in the form of the defendant's profits. 15 U.S.C. § 1117(a). GNLV requested $11,211,000 in actual damages from the defendants’ purported profits for the defendants’ infringing conduct in breach of the parties’ settlement agreement.

GNLV calculated the defendants’ profits based on GNLV own experience. GNLV claimed that it made approximately $200 average daily profit from its slot machines in Las Vegas. GNLV estimated that the defendants’ casino would have made about half that amount, or approximately $100 per day, for each of its 222 slot machines from the time GNLV filed suit until the day the machines were seized by the IRS (roughly 505 days).

The court found GNLV’s estimate of $100 profit per slot machine per day to be excessive and “highly speculative.” GNLV provided no evidence that a small Ohio casino generated profits similar to a popular Las Vegas casino. Moreover, the purpose of Section 1117 is equity and a plaintiff is not entitled to a windfall. While the court in its discretion could have awarded partial damages, it chose not to do so in view of its award of statutory damages.

Statutory damages. Under the Lanham Act, when the use of the counterfeit mark is willful, a plaintiff may recover statutory damages of “not more than $1,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just.” 15 U.S.C. § 1117(c).

GNLV requested statutory damages of $100,000 for each trademark infringement claim under § 1117(c) of the Lanham Act, for a total of $300,000. The court granted GNLV’s request, finding that the requested amount was reasonable in light of the defendants’ failure to cooperate during discovery.

Treble damages. When a defendant intentionally infringes upon a trademark, a plaintiff is entitled to three times the damages, unless the court finds extenuating circumstances. 15 U.S.C. § 1117(b). However, the Lanham Act expressly forbids awarding damages to punish an infringer.

GNLV sought $900,000, jointly and severally, from the defendants for trademark infringement and unfair competition due to defendants’ “lengthy and lucrative infringement.” The court denied the request, finding such an award in this case would be punishment and not compensation. Although the defendants willfully infringed upon GNLV’s mark, “attaching nearly a million dollars in statutory damages, largely based on one single article that ran in a small Ohio newspaper, would be punitive,” the court said.

Corrective advertising. An award of corrective damages is intended to make a trademark owner whole again by allowing recovery of costs of advertising to dispel confusion due to the defendant’s infringement. GNLV conceded that it was difficult to ascertain the actual damages it had suffered as a result of the defendants’ conduct. In light of this uncertainty, the court decided to award GNLV a nominal amount of $5,000 for corrective advertising.

Permanent injunction. Under the Lanham Act, the court may grant injunctive relief for the trademark holder in order to prevent further infringement. 15 U.S.C. § 1116. Injunctive relief is the remedy of choice for trademark and unfair competition cases, since there is no adequate remedy at law for the injury caused by continued infringement, the court noted. The court accordingly granted GNLV’s request for a permanent injunction prohibiting the defendants from using the “Golden Nugget” name, mark, logo, and any confusingly similar mark.

Attorney fees and costs. GNLV claimed that is was entitled to $102,491.29 in costs and attorney fees. The court, however, denied GNLV’s request because GNLV failed to file its motion within the 14-day time period prescribed by Federal Rule of Civil Procedure 54(d). The court released its case dispositive judgment on November 18, 2014. GNLV filed a motion for final judgment and damages on January 26, 2015, which was more than a month outside the 14-day window allotted under Rule 54(d)(B)(i).

Summary. GNLV was awarded $300,000 in statutory damages under 15 U.S.C. 1117(c), $5,000 in corrective advertising, and a permanent injunction. GNLV’s requests for awards of $11,211,000 in the form of the defendants’ profit, $900,000 in treble damages, and $102,491.29 in attorney fees and costs were denied.

The case is No. 2:13-CV-943 JCM (CWH).

Attorneys: Lauri S. Thompson (Greenberg Traurig, LLP) for GNLV, Corp. Robert Joseph Behal (The Behal Law Group LLC), and Thomas Martin Gonzalez (Thompson, Sizemore, Gonzalez & Hearing, PA) for T. Warren Enterprises, Inc., and Great Vibe Entertainment, Inc.

Companies: GNLV, Corp.; T. Warren Enterprises, Inc.; Great Vibe Entertainment, Inc.

Cases: Trademark NevadaNews