Page 106 - Intellectual Property Disputes

Chapter 5

Unjust Enrichment Damages

Unjust Enrichment

Unjust enrichment is an alternative damages measure to compensatory damages. Compensatory
damages seek to restore the plaintiff to the financial position in which it would have been but for the
defendant’s wrongful act. In contrast, unjust enrichment seeks to deprive the defendant of whatever gain
or benefit it obtained from the wrongful act. In essence, unjust enrichment compels the defendant to
disgorge all ill-gotten gains to the owner of the infringed intellectual property.

As discussed previously in chapter 2, Dobbs Law of Remedies: Damages—Equity Restitution identified
five methods for measuring the gain obtained by a defendant for purposes of an unjust enrichment
award. fn 1 The unjust enrichment remedy is frequently employed by the courts in copyright, trademark,
and trade secret litigation and is incorporated in the federal statutes governing intellectual property. With
respect to copyrights, Section 504(b) of the Copyright Act provides that "[t]he copyright owner is
entitled to recover the actual damages suffered by him or her as a result of the infringement, and any
profits of the infringer that are attributable to the infringement and are not taken into account in
computing the actual damages." fn 2 Therefore, unless it is duplicative, recovery of both actual damages
and the defendant’s profits is allowed.

With respect to trademarks, the Lanham Act authorizes a trademark owner to recover both the
infringer’s profits and its own damages sustained "subject to the principles of equity and upon such
terms as the court deems reasonable . . ." fn 3

The DTSA and UTSA provide that in addition to recovering its actual loss, a trade secret owner may
recover the "unjust enrichment" caused by the misappropriation to the extent the enrichment is not taken
into account in calculating the owner’s actual loss. fn 4 Unjust enrichment is also permitted as a measure
of damages in design patent disputes, but it is unavailable for utility patents.

A copyright owner may be entitled to recover indirect profits from copyright infringement. However,
before doing so, the copyright owner must first demonstrate that the infringing acts had an effect on the
profits earned by the infringer. fn 5 In Mackie v. Rieser, the court determined that the artist was not
entitled to indirect profits from the symphony’s infringement of his copyrighted sculpture, even though
an unauthorized photograph of the sculpture was used in an advertising brochure. The court indicated

fn 1 See the section, "Unjust Enrichment as Damages," in chapter 2 of this practice aid.

fn 2 17 USC 504(b).

fn 3 15 USC 1125 (c)(1).

fn 4 UTSA with 1985 Amendments, 11.

fn 5 Mackie v. Rieser, 296 F.3d 909 (9th Cir. 2002).

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