United States District Court, W.D. Virginia, Roanoke Division
Elizabeth K. Dillon, United States District Judge.
matter is before the court for a determination of damages to
be awarded Choice Hotels International, Inc. (Choice Hotels
or Choice) in this trademark infringement action. For the
reasons stated below, the court will award $2, 426, 936.96 in
lost profits, $618, 868.32 in actual damages, and $575.00 in
costs. The court will also award $47, 687.57 in
alleges that A Royal Touch Hospitality, LLC (NC) (A Royal
Touch (NC)), Ujas B. Patel, and Ketki Patel (the Franchisee
Defendants) continued using Choice’s trademarks after
their franchise agreement with Choice was terminated. Choice
also alleges that A Royal Touch Hospitality, LLC (VA) (A
Royal Touch (VA)), a related non-franchisee, made
unauthorized use of Choice’s marks. Choice moved for
summary judgment. (Pl.’s Mot. for Summ. J., Dkt. No.
36.) This motion was unopposed.
August 26, 2019, the court issued a Memorandum Opinion and an
Order granting in part and taking under advisement in part
Choice’s motion for summary judgment. (See
8/26/19 Mem. Op., Dkt. No. 41; 8/26/19 Order, Dkt. No. 42.)
The court determined that Choice was entitled to judgment as
a matter of law on its claims for federal trademark
infringement, federal unfair competition, and common law
trademark infringement. See 2019 WL 4017247, at
**3–6 (W.D. Va. Aug. 26, 2019). The court also issued a
permanent injunction prohibiting defendants from further use
of the QUALITY® marks. (8/26/19 Order.) Regarding
damages, the court requested further briefing from Choice on
the Synergistic factors, “six nonexclusive
factors that should be considered when awarding damages or a
defendant’s profits.” 2019 WL 4017247, at *7. The
court also found that Choice was entitled to an award of
attorneys’ fees, and invited Choice to submit an
appropriate lodestar petition together with its supplemental
briefing on damages. Id. at *8. Choice submitted its
supplemental brief on damages on September 25, 2019, and its
lodestar petition on September 26, 2019, both of which are
now before the court for its consideration.
Fourth Circuit has identified six nonexclusive factors that
should be considered when awarding damages under the Lanham
(1) whether the defendant had the intent to confuse or
deceive, (2) whether sales have been diverted, (3) the
adequacy of other remedies, (4) any unreasonable delay by the
plaintiff in asserting his rights, (5) the public interest in
making the misconduct unprofitable, and (6) whether it is a
case of palming off.
Synergistic Int’l, LLC v. Korman, 470 F.3d
162, 175 (4th Cir. 2006). The court addresses each factor in
Intent to confuse or deceive
first Synergistic factor “addresses whether
there has been a willful infringement on the trademark rights
of the plaintiff, or whether the defendant has acted in bad
faith.” Id. As the court stated in its
analysis of the likelihood of confusion factors,
A Royal Touch (VA) used Choice’s marks despite never
being a party to a franchise. This is clear evidence of
intent to adopt Choice’s marks. The other three
defendants (the Franchisee Defendants) continued using
Choice’s marks after the Franchise
Agreement/Reinstatement Agreement was terminated. This is
also clear evidence of intent to adopt the marks.
2019 WL 4017247, at *5. This factor therefore weighs in favor
of a damages award.
Diversion of sales
factor “involves the issue of whether the plaintiff
lost sales as a result of the defendant’s trademark
infringement activities, and the extent to which the
plaintiff had entered the market area where the infringement
occurred.” Synergistic, 470 F.3d at 175.
Defendants were franchisees of Choice Hotels, and their
continued unauthorized use of Choice’s marks after the
Franchise Agreement was terminated occurred in the same
market area––indeed the same exact location.
Also, under the Franchise Agreement, defendants were required
to pay monthly fees in the amount of 8.5% of the preceding
month’s gross room revenues. (See Dkt. No.
1-15, ¶ 4(b).) Therefore, this factor also weighs in
favor of an award of damages.
Adequacy of other remedies
factor “addresses whether another remedy, such as an
injunction, might more appropriately correct any injury the
plaintiff suffered from the defendant’s infringement
activities.” Synergistic, 470 F.3d at 176. The
court has issued a permanent injunction in this case, but
injunctive relief does not compensate Choice for more than
two years of unauthorized use of its marks. The court also
notes that it ordered defendants to submit a sworn statement
of compliance with the injunction order within thirty days,
but no compliance statement has been filed, further
demonstrating the inadequacy of the injunction remedy. This
factor weighs in favor of a damages award.
factor looks to whether there was “any unreasonable
delay by the plaintiff in asserting his rights.”
Id. The record reflects that Choice acted promptly
in asserting its trademark rights, for example, by
terminating the Reinstatement Agreement in 2015, issuing a
Notice of Service Mark Infringement in 2016, conducting a
site inspection of the subject property in 2017, and
ultimately, bringing this lawsuit in 2017. See Choice
Hotels, 2019 WL 4017247, at *2. The court does not
consider this to be a “substantial delay between the
commencement of ...