In trademark infringement cases involving competitors, the plaintiff typically seeks damages in the form of lost profits once infringement has been proven. The purpose of “lost profits” is to compensate the plaintiff for its losses. In contrast, disgorgement requires a defendant to give up all profits it has made as a result of illegal or wrongful acts, regardless of the actual loss incurred by the plaintiff. Disgorgement is an equitable remedy issued by the court, not the jury. Accordingly, a plaintiff seeking disgorgement in lieu of actual damages is not entitled to a jury trial in the remedies phase.
The case America Can! Cars for Kids v. Kars 4 Kids Inc., Case No. 3:16-cv-4232 (D.N.J.), demonstrates how courts may view a damages theory framed as lost profits as a de facto claim for disgorgement. The parties, America Can! and Kars 4 Kids, are both charities that sell donated vehicles to fund children’s programs. In seeking lost profits, America Can! alleged that any donation to Kars 4 Kids was a donation that America Can! should have received but for the alleged infringement, due to the parties’ relationship as direct competitors. Based on this allegation alone, the district court determined that America Can!’s claim to Kars 4 Kids’ profits as a “rough proxy measure” of America Can!’s own damages was in fact a claim of disgorgement, and ordered the parties to present evidence relating to remedies outside the presence of a jury.