Supreme court puts bite in tradename suits
Tradename infringement is now a more costly proposition.
A unanimous Wisconsin Supreme Court held on Dec. 2 that compensatory
awards are available where the damages are shown “to a reasonable
certainty.” Further, the court ruled that intentional infringement
invites punitive damages. The court held that a contract providing for
recovery of attorney fees can extend to non-contract actions such as
These rulings arose from D.L.
Anderson’s Lakeside Leisure Co., Inc. v. Anderson,
2008 WI 126, in which Donald Anderson sold the marine company bearing
his name to Scott and Steven Statz. The sale contract for D.L. Anderson
Co. transferred the business’ goodwill and tradename for $200,000.
also accepted a noncompetition clause for $400,000.
Before the expiration of the noncompetition clause, Anderson returned
to the boating trade under the name of Anderson Marine, LLC and operated
within geographic proximity of the Statzes. A jury awarded $15,000 in
compensatory damages for the noncompetition clause breach and $75,000
for compensatory damages from the tradename infringement. Anderson and
his new corporation were additionally liable for $180,000 in punitive
damages. The Statzes were permitted to recover attorney fees.
The Wisconsin Court of Appeals affirmed the findings of breach and
tradename infringement as well as the damages awarded for contract
breach. But it reversed the award of compensatory and punitive damages
for tradename infringement. Accordingly, the court remanded the case for
a determination of attorney fees associated only with the breach.
In its review, the supreme court found a broader standard for
recovery on the infringement claim, citing to Eden Stone Co. v.
Oakfield Stone Co., 166 Wis. 2d 105, 479 N.W.2d 557
(Ct. App. 1991). The court
reasoned that “‘the nature of the tort and the circumstances
of the case’ make precise determinations of damages
impossible.” Consequently, the court held that proof of damages
“need only be proved with reasonable, not absolute,
certainty.” The court affirmed the jury’s compensatory award
based on the purchase price of the goodwill and the value of the
noncompetition clause as well as testimony from customer and vendors
frustrated by the infringement.
After reinstating the compensatory award, the court affirmed the
punitive damages largely on the strength of Anderson’s
testimony that he “chose to use the name Anderson Marine, LLC,
because he knew it would be familiar to his potential
The supreme court rejected Anderson’s argument that the
sales contract provision governing attorney fees excluded non-contract
claims such as tradename infringement. The court emphasized the contract
language urging an interpretation giving its terms “the broadest,
lawful and enforceable scope permissible.” Moreover, the court
reasoned that the infringement claim is an action concerning the
contract because the contract was the instrument transferring ownership
of the tradename. This rationale supported recovery of attorney fees
incurred through the trial, but not to the costs of the appeals because
that issue was not properly considered below.
By org wisbarnews wisbar Alex De Grand, Legal
Writer, State Bar of Wisconsin