1. Burger King Corporation v. C.R. Weaver; M-W-M, Inc

2. In 1999 the U.S. court of Appeals for the eleventh Circuit considered whether a district court properly awarded Burger King Corporation (BKC) an accounting of Weaver’s profits as damages for trademark infringement under the Lantham Act, 15 U.S.C.A. 1117. Weaver operated 2 Burger King franchises in Great Falls, Montana. He stopped paying his franchise rent and royalty fees after another franchise, located near his restaurant, opened. After negotiations between BKC and Weaver failed, BKC terminated his franchises. Weaver continued to operate both restaurants, placing the franchise fees into an escrow account. Both parties brought suit. Case Overview

3. The Arguments BKC’s Arguments: Weaver is guilty of trademark infringement. He continues to use the franchise rights, but he is not paying for it. If one party to a contract has no right to exclusive territory, the other party has no duty to limit licensing of new restaurants. Weaver’s Arguments: BKC breached its implied covenant of good faith and fair dealing among other claims.

4. Court Decision A district court dismissed Weaver’s claims on summary judgment. His arguments do not withstand with the lack of explicit contract obligations related to this. The court awarded BKC an accounting for profits under the Lantham Act.

5. Appeal Weaver appealed the award of lost profits. He argued that BKC was not damaged by his infringement of its trademark since the franchise fees have been held in escrow. He further argued that BKC, in fact, benefited from the infringement because “BKC’s goodwill and marks were enhanced by Weaver’s continued operation, and thus, an award of lost profits to BKC represents a windfall”

6. The Eleventh Circuit The eleventh circuit disagreed. It noted that BKC does not need to show actual damages to receive a lost profits accounting under the Lantham Act. It further noted that an accounting for profits under this act is designed to make the infringement unprofitable and deter the infringer from future similar activity. The Eleventh Circuit affirmed the award of a lost profits accounting because Weaver’s use of the mark after receiving a note of termination was willful and deliberate.

7. Findings Lost profits accounting awarded even though the franchiser may have benefited from the trademark Infringement.

8. The court proceedings can be found here: http://caselaw.findlaw.com/us-11th-circuit/1374888.html

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