Dyson Technology Ltd. v. David 7 Store

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 23-2948
DYSON TECHNOLOGY LTD.,
Plaintiff-Appellant,
v.
DAVID 7 STORE, et al.,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:22-cv-05936 — Steven C. Seeger, Judge.
____________________
A RGUED M AY 23, 2024 — DECIDED M ARCH 24, 2025
____________________
Before JACKSON-AKIWUMI, LEE, and PRYOR, Circuit
Judges.
JACKSON-AKIWUMI, Circuit Judge. Dyson Technology,
Ltd., brought a trademark infringement action against multi-
ple e-commerce stores allegedly selling counterfeit Dyson
goods. The district court entered a default judgment in Dy-
son’s favor but did not award one aspect of the remedy Dyson
sought: the infringing sellers’ profits. The district court rea-
soned that Dyson had provided evidence of the revenue the

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e-commerce stores earned from selling the counterfeit goods,
but not the profits. Because the district court erred in its inter-
pretation of the relevant trademark infringement law and be-
cause Dyson met its burden, we reverse and remand.
United Kingdom-based Dyson sells a variety of consumer
products including hair dryers and hairstyling appliances.
Scores of e-commerce stores tried to capitalize on Dyson’s
reputation by selling counterfeit Dyson products. When Dy-
son learned about these e-commerce stores, it filed suit under
the Lanham Act, the federal law that allows trademark hold-
ers to sue infringing parties. See 15 U.S.C. § 1114. The Act
gives trademark holders “three nonexclusive monetary rem-
edies: (1) recovery of profits; (2) damages sustained by the
plaintiff; and (3) costs of the action.” Sands, Taylor & Wood v.
Quaker Oats Co., 34 F.3d 1340, 1347 (7th Cir. 1994); see also 15
U.S.C. § 1117.
After Dyson filed suit, the infringing sellers failed to ap-
pear, so Dyson won a default judgment. Among other reme-
dies, Dyson asked to recover the e-commerce stores’ profits,
pursuant to the Lanham Act. The district court refused: “The
Court declines the request to award profits because Plaintiff
offered evidence of revenue, not profits. Revenue and profits
are not the same thing. The Court declines the invitation to
assume that all of the revenue equals profits.” The district
court limited Dyson’s award to $1,000 in statutory damages
from certain infringing sellers.
Dyson now appeals, and we begin with a brief word about
the standard of review. Dyson asks us to review the district
court’s interpretation of a statute, a question we consider de
novo. United States v. Thayer, 40 F.4th 797, 801 (7th Cir. 2022);
see also Monasky v. Taglieri, 589 U.S. 68, 83 (2020) (“Generally,

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No. 23-2948 3
questions of law are reviewed de novo.…”). Dyson does not
ask us to review the court’s entry of default judgment or its
calculation of damages, questions we review for abuse of dis-
cretion. Arwa Chiropractic, P.C. v. Med-Care Diabetic & Med.
Supplies, Inc., 961 F.3d 942, 946 (7th Cir. 2020); Domanus v.
Lewicki, 742 F.3d 290, 303 (7th Cir. 2014). Here, the outcome
does not depend on how the question is formulated. An error
of statutory interpretation is an error of law, and errors of law
are an abuse of discretion. Today’s outcome is the same under
both standards of review, so we will proceed with Dyson’s
articulation of the question and apply de novo review.
The Lanham Act states that a prevailing plaintiff is entitled
to the defendant’s profits, and the defendant bears the burden
of establishing the amount of profits. If the plaintiff prevails:
[T]he plaintiff shall be entitled . . . to recover (1)
defendant’s profits, (2) any damages sustained
by the plaintiff, and (3) the costs of the action.
The court shall assess such profits and damages
or cause the same to be assessed under its direc-
tion. In assessing profits the plaintiff shall be re-
quired to prove defendant’s sales only; defendant
must prove all elements of cost or deduction
claimed.
15 U.S.C. § 1117(a) (emphasis added).
The district court contravened the Lanham Act’s plain lan-
guage when it found Dyson’s evidence of revenue as opposed
to profits insufficient and declined to assume that revenue
equals profits. The Act presumes that the infringing defend-
ant’s sales (that is, revenue) and profits are the same thing,
until the defendant proves otherwise. See 15 U.S.C. § 1117(a).

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4 No. 23-2948
Accordingly, “[c]ourts consistently find that when a trade-
mark plaintiff offers evidence of infringing sales and the in-
fringer fails to carry its statutory burden to offer evidence of
deductions, the plaintiff’s entitlement to profits under the
Lanham Act is equal to the infringer’s gross sales.” WMS
Gaming Inc. v. WPC Prods. Ltd., 542 F.3d 601, 609 (7th Cir.
2008). The district court was incorrect to hold otherwise. A
trademark plaintiff need not disentangle revenue and profits.
This rule may well result in a windfall to the trademark
holder, but that is a price worth paying—a principle the Su-
preme Court established eighty years ago. See Mishawaka Rub-
ber & Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 207 (1942)
(holding that an award equal to the infringer’s revenue “may
well be a windfall to the trademark owner where it is impos-
sible to isolate the profits which are attributable to the use of
the infringing mark[, b]ut to hold otherwise would give the
windfall to the wrongdoer”); accord WMS Gaming, 542 F.3d at
608.
The Lanham Act does give district courts the ability to
modify an award of profits if the court deems the modifica-
tion just. Under the statute, “[i]f the court shall find that the
amount of the recovery based on profits is either inadequate
or excessive the court may in its discretion enter judgment for
such sum as the court shall find to be just, according to the
circumstances of the case.” 15 U.S.C. § 1117(a). Here, how-
ever, the district court did not make any such findings or en-
gage in any such analysis. Nothing in the court’s order
demonstrates to us that it “possessed a sufficient understand-
ing of the amount of profits involved to determine whether
disgorgement would be appropriate.” BASF Corp. v. Old
World Trading Co., Inc., 41 F.3d 1081, 1095 (7th Cir. 1994).

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No. 23-2948 5
Rather, the court appears to have disliked the idea of conflat-
ing revenue and profit and ruled accordingly.
The statutory scheme devised by Congress supplies the
marching orders here: Dyson provided uncontested evidence
of revenue, which suffices as profits when assessing Dyson’s
recovery under the Lanham Act. See 15 U.S.C. § 1117(a). On
remand, if the district court wishes to award more or less than
these profits, it retains the discretion to do so, as long as it
makes a finding based on the facts of the case. See id.
We reverse and remand for further proceedings consistent
with this opinion.

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