Zero damages does not preclude equitable relief

United States of America

In Platypus Wear Inc v Horizonte LTDA (Case No 13-11784, March 10 2014) (per curiam), the US Court of Appeals for the 11th Circuit has vacated and remanded a district court’s conclusion that, where the jury found liability but awarded zero damages, the district court was precluded from entertaining a request for equitable relief. The unanimous panel clarified that plaintiff-appellant Platypus Wear Inc will have an opportunity to re-urge its demands for equitable relief; the panel also emphasised that any such relief turns on the broad discretion of the district court. 

In a complex dispute, Platypus and former licensee Horizonte LTDA, a Brazilian energy drink company, went to trial on a number of issues, including the ownership and right to use the BAD BOY clothing trademark. From 2000 to 2003, Horizonte contracted with Platypus’ Brazilian licensee to sell energy drinks in Brazil bearing the BAD BOY mark. The licence agreement ended in 2003, giving rise to a series of claims such as conversion of the BAD BOY mark and aiding and abetting breach of a fiduciary duty to Platypus.

As relevant to the appeal, the jury found Horizonte liable for converting one or more of Platypus’s trademarks and also found that Horizonte aided and abetted in the breach of a fiduciary duty owed to Platypus. The jury awarded zero damages. Thereafter, the district court concluded that, because the jury did not award damages after finding liability and, because proof of damages was a necessary element for the claims on which Horizonte was liable, Platypus had failed to establish success on the merits.

The 11th Circuit disagreed. While damages are a necessary element for several of the causes of action at issue, Platypus was not precluded from pursuing declaratory and equitable/injunctive relief. The declaratory and equitable issues were remanded for a case-by-case assessment based on the relevant facts. The appellate decision also endorsed future litigation of equitable defences such as unclean hands, equitable estoppel and in pari delicato. The 11th Circuit did not offer an opinion as to how additional proceedings should unfold on remand (and even suggested that the district court could reach the same result). The decision did, however, reject Platypus’ request for a new trial on damages.

Natalie A Bennett, McDermott Will & Emery LLP, Washington DC

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