The precise scope of the district court’s discretion in awarding “in lieu” damages presents a more difficult question. Although in all cases the amount of “in lieu” damages is left to the discretion of the district court, limited in certain circumstances by the maximum and minimum amounts prescribed by the Act, the circumstances, if any, under which such an award must be made can be discerned only after properly interpreting F. W. Woolworth Co. v. Contemporary Arts, Inc. and Shapiro, Bernstein & Co. v. 4636 S. Vermont Ave., Inc.
Woolworth, strictly read, teaches us that when only profits are proven the district court has the discretion to award “in lieu” damages. The Supreme Court, however, indicated that “in lieu” damages also could be awarded when only actual damages were proven: “Lack of adequate proof on either element would warrant resort to the statute in the discretion of the court, subject always to the statutory limitations.”[1] F. W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. at 233, 73 S.Ct. at 225 (Emphasis added).
It has been suggested that Shapiro teaches that if either profits or actual damages are not ascertained the district court must award “in lieu” damages. See, e. g., 2 M. Nimmer § 154.13 at 681, n. 91a (June 1976 Supp. at 77–78). We disagree. Shapiro was a case in which both actual damages and profits were ascertained. Under these circumstances the district court declined to award “in lieu” damages. This court affirmed the findings of fact but held, nonetheless, that the trial court in its discretion could award “in lieu” damages but was under no duty to do so.
Those who read Shapiro to impose a duty to award “in lieu” damages if either profits or actual damages are unascertainable point to dicta that states that “the judicial discretion … only comes into play when profits and damages have actually been proved, and unless they have, the court must apply the statutory standard.” 367 F.2d at 240. We read this to mean that the district court has a duty to award “in lieu” damages only when both profits and damages have not been established. Three considerations support this interpretation. First, the cases cited immediately after the above quoted dicta, i. e., Douglas v. Cunningham, 294 U.S. 207, 55 S.Ct. 365, 79 L.Ed. 862 (1935); Jewell-LaSalle Realty Co. v. Buck, 283 U.S. 202, 51 S.Ct. 407, 75 L.Ed. 978 (1931); Westermann Co. v. Dispatch Printing Co., 249 U.S. 100, 39 S.Ct. 194, 63 L.Ed. 499 (1919), all involved fact situations in which neither damages nor profits were proven. With this in mind, it is clear why the court said immediately following the citations that Woolworth did not conflict with these cases. Second, a contrary interpretation of Shapiro would place it in direct conflict with the holding of Woolworth. Faced with ascertained profits, but unascertained damages, the Court nevertheless held that “in lieu” damages were discretionary. Third, inasmuch as Shapiro was decided in the context of ascertained profits and ascertained damages, it is not unreasonable to assume that the court was addressing situations in which either both profits and damages are ascertained or neither is ascertained.
This interpretation of Shapiro leaves the problem of “in lieu” damages in the following posture. If either profits or actual damages or both are ascertained, the court, in its discretion, may award statutory “in lieu” damages.[2] If neither profits nor
- ↑ The Court in Woolworth also noted that the district court has the discretion to award “in lieu” damages when both profits and actual damages have been proved.
[T]he statute has been interpreted to vest in the trial court broad discretion to determine whether it is more just to allow a recovery based on calculation of actual damages and profits, as found from evidence, or one based on a necessarily somewhat arbitrary estimate within the limits permitted by the Act.
344 U.S. at 231–32, 73 S.Ct. at 224.
- ↑ We assume that any such award of “in lieu” damages would exceed the amount of any ascertained damages or profits. Under no circumstances can an award of “in lieu” damages less than the amount of the ascertained damages or profits deprive the aggrieved party of
