SW Legal studies in Business

"Innocent Infringer" Liable for Compensatory Damages
Description Appeals court affirmed that compensatory damages may be imposed on an innocent infringer. A telephone company left a business name in a listing when it had been instructed to delete the name. The result was a loss of business to the listing company. The mistake was innocent but not objectively reasonable.
Topic Intellectual Property
Key Words Trademark; Lanham Act; Innocent Infringer; Objective Reasonableness
C A S E   S U M M A R Y
Facts Dial One is a franchisor. Durr was a Dial One franchisee but lost the franchise in January 1998. In May and October 1998, BellSouth white pages and yellow pages improperly listed Durr as a Dial One franchisee. Dial One sued BellSouth for damages for itself and the franchisees in the New Orleans area who lost business when people called Durr instead of actual Dial One franchisees. The trial court awarded $155,000 in damages for lost profits. BellSouth appealed.
Decision

Affirmed. BellSouth contends that it is an innocent infringer that had no improper motive when it listed Durr when it should not have. Under the Lanham Act, "the proper standard for evaluating whether an infringer is innocent is objective reasonableness." False commercial speech has no constitutional protection, so that argument does not help BellSouth. BellSouth was notified of the change to be put in the phone books; it did not make the change. There was no malice on the part of BellSouth, but to include Durr in the listings as a Dial One franchisee was not objectively reasonable. The damages awarded were supported by evidence; the court is guided by rules of compensatory damages. There may be no punitive damages since there was no showing of knowing infringement.

Citation Dial One v. BellSouth Telecommunications, Inc., 269 F.3d 523 (5th Cir., 2001)

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