The Whole Pie or Just a Slice?

Picture a large consumer-products company that sells dozens of product lines and clears hundreds of millions of dollars a year. One of those lines—say, a single jacket model—carries a name that infringes a smaller competitor's trademark. The competitor sues, survives summary judgment, and wins at trial on liability. The jury files out. And now comes the question that quietly decides what the entire case is worth: how much does the infringer actually have to pay?

The plaintiff's lawyer wants the answer to be "all of the defendant's profits." The defendant's lawyer insists it should be "only the sliver of profit traceable to that one jacket name, if any." The space between those two positions is not a rounding error. It is the difference between a nine-figure judgment and a nominal one—between a verdict that makes headlines and a verdict that barely covers the filing fee. Closing that gap is the work of apportionment: the body of doctrine that determines how much of a defendant's revenue, how much of its profit, and how much of a plaintiff's lost sales can fairly be attributed to the infringement rather than to everything else that drives a business—the defendant's own brand, its product quality, its prices, its distribution, its advertising, and the simple, stubborn fact that it sells a great many things that have nothing to do with the plaintiff's mark.

Apportionment is, at bottom, the law's refusal to confuse correlation with causation. A company that infringes does not thereby forfeit its whole enterprise; it owes what the wrong produced, and not a dollar more. That principle is easy to state and genuinely hard to apply. The rules governing who must prove what, in what order, and at what point a damages theory becomes so speculative that a judge throws it out before the jury ever hears it—these are subtle, consequential, and routinely misunderstood by litigants who assume that winning liability is the same as winning money. It is not. This guide walks through the doctrine that separates the two.

We assume familiarity with the underlying liability analysis—the likelihood-of-confusion inquiry that determines whether there is an infringement to remedy in the first place, covered in our discussion of navigating the maze of trademark confusion. Here the focus is purely on remedies, and on the most contested remedies question in many cases: how to divide the pie.

The Remedies Menu: Section 35 of the Lanham Act

Trademark monetary remedies flow from a single, much-litigated provision: Section 35(a) of the Lanham Act, codified at 15 U.S.C. § 1117(a). Subject to the principles of equity, a prevailing plaintiff may recover three things—(1) the defendant's profits, (2) the plaintiff's actual damages, and (3) the costs of the action. The statute then layers on adjustment powers: the court may enter judgment for a different amount if a profits recovery turns out to be inadequate or excessive, and it may enhance an actual-damages award up to three times—always, the statute insists, "as compensation and not as a penalty."

That single sentence about treble damages is worth pausing on, because it controls the character of the whole remedial scheme. The Lanham Act is compensatory and restitutionary, not punitive. It does not authorize punitive damages at all; those, where available, come from accompanying state-law claims. Even the treble provision is dressed in the language of compensation rather than punishment, and courts in practice reserve enhancement for willful conduct. See, e.g., United Food Imports, Inc. v. Baroody Imports, Inc., 2011 WL 2293364 (D.N.J. June 8, 2011). Keep that compensatory orientation in mind; it is the gravitational center that apportionment orbits.

Two of the three recovery categories raise apportionment problems, and they raise them in different keys.

The defendant's profits remedy—often called disgorgement or an accounting of profits—rests on the idea that an infringer should not pocket the gains it earned from the wrong. The apportionment question here is one of identification: which of the defendant's profits did the infringement actually produce? A defendant's total profits sweep in vast sums that have nothing to do with the plaintiff's mark, and the law does not simply hand all of that over.

The plaintiff's actual damages—including the plaintiff's own lost profits, lost royalties, and corrective-advertising costs—rest instead on compensating the plaintiff for what the infringement cost it. The apportionment question here is one of causation in a competitive marketplace: how many of the plaintiff's lost sales, how much of its price erosion, how much of its repair-the-brand spending did the infringement cause, as opposed to ordinary competition, a softening market, or the plaintiff's own stumbles?

Both inquiries share a spine: recovery is limited to what is attributable to the infringement. But the burden of proof is allocated very differently across the two remedies, and—this is the part that surprises newcomers—even within the profits remedy the burden shifts back and forth several times before the number is fixed. Understanding that choreography is the key to the entire subject.

The Core Principle: Only What the Wrong Caused

Before the mechanics, fix the governing principle firmly, because everything that follows is an application of it: a plaintiff may recover only those profits attributable to—that is, proximately caused by—the defendant's unlawful conduct. This is not a technicality or a soft preference. It is the outer boundary of the remedy, and courts patrol it. An accounting "awards only profits on sales that are attributable to the defendant's wrongful conduct." Restatement (Third) of Unfair Competition § 37, cmt. d. The case law enforces the line: where a plaintiff fails to establish the defendant's sales arising from the infringing activity, a profits award cannot stand. See AECOM Energy & Constr., Inc. v. Morrison Knudsen Corp., 851 F. App'x 20 (9th Cir. 2021) (reversing a damages award where the plaintiff failed to establish sales arising from the infringing activity); Seatrax, Inc. v. Sonbeck Int'l, Inc., 200 F.3d 358, 369 (5th Cir. 2000) ("the plaintiff is entitled to only those profits attributable to the unlawful use of its trademark").

The causation requirement quietly does two distinct jobs, and prising them apart is the single most clarifying move in the entire analysis. There are, in effect, two layers of apportionment, and they belong to different parties.

The first layer asks which sales count at all. Out of everything the defendant sold, only the sales connected to the infringement are even in the conversation. If the defendant sells fifty product lines and one of them infringes, the universe of relevant sales is that one line—not the whole catalog, not the corporate parent, not the affiliated sister company down the hall. This layer is the plaintiff's to establish.

The second layer asks how much of the profit on those relevant sales was actually driven by the infringing mark, as opposed to the other forces that would have moved the product anyway. Even inside the infringing line, some—often most—of the profit traces to the defendant's own reputation, the product's quality, its price, or its independent advertising. Dividing the profit between the mark and these other causes is the classic apportionment question. As we will see, the burden on this second layer sits squarely on the defendant.

Hold these two layers apart. Most of the confusion in this area—and many a lost damages case—comes from blurring them: from assuming that because the defendant bears the apportionment burden at layer two, the plaintiff has nothing to prove at layer one. That assumption is wrong, and the error can sink an otherwise winning case.

The Burden-Shifting Engine of Section 35

The statute sets up an unusual burden-shifting machine for the defendant's-profits remedy, and its operative words are worth quoting because litigators fight over their precise sequence: "In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost or deduction claimed." 15 U.S.C. § 1117(a).

Read literally, this is a strong pro-plaintiff rule about costs. The plaintiff proves the defendant's sales—its revenue. The burden then shifts to the defendant to prove every cost or deduction it wants to subtract from that revenue to arrive at profit. If the defendant fails to prove a cost, that cost is not deducted, and the plaintiff recovers the full revenue figure as if it were pure profit. The Seventh Circuit recently put the point with unusual bluntness: under the statute, "the infringing defendant's sales (that is, revenue) and profits are the same thing, until the defendant proves otherwise." Dyson Tech. Ltd. v. David 7 Store, 132 F.4th 526, 528–29 (7th Cir. 2025) (emphasis in original). A defendant that sits on its hands, declines to put on a costs case, and trusts the court to assume reasonable margins is courting catastrophe; it may be ordered to disgorge its gross revenue as though every dollar were profit. Accord WMS Gaming Inc. v. WPC Prods. Ltd., 542 F.3d 601, 609 (7th Cir. 2008) (where the defendant proves no expenses, the plaintiff may recover total gross sales).

But—and this is the qualifier that does the real work—the "sales" the plaintiff must prove are not just any sales. They are the sales related to the infringement, not the defendant's entire gross revenue across an unrelated empire. The Sixth Circuit made the point explicit: the plaintiff must prove the sales connected to the alleged infringement, not the defendant's total revenue. Max Rack, Inc. v. Core Health & Fitness, LLC, 40 F.4th 454 (6th Cir. 2022). This is layer one again, now expressed as a burden. The plaintiff's "prove sales only" obligation is an obligation to prove the right sales—the ones tied to the accused products or the infringing activity. A plaintiff cannot discharge its burden by gesturing at the defendant's company-wide revenue and demanding that the defendant carve out the non-infringing portion. The plaintiff must do the first cut itself, at least far enough to isolate the infringement-related sales. The Third Circuit has policed this boundary aggressively, refusing to let a court "speculate based on general data, for example, an arbitrary fraction of the defendant's industry-wide sales." Covertech Fabricating, Inc. v. TVM Bldg. Prods., Inc., 855 F.3d 163, 176–77 (3d Cir. 2017).

There is, candidly, a genuine and unresolved split on exactly how heavy the plaintiff's layer-one burden is. Some courts treat the apportionment-away-from-infringement burden as wholly the defendant's, requiring the plaintiff to prove little more than gross sales of the relevant product. See Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1408 (9th Cir. 1993); Venture Tape Corp. v. McGills Glass Warehouse, 540 F.3d 56, 64 (1st Cir. 2008). Others put the onus on the plaintiff to show, when proving gross sales, that those sales are attributable to the infringing conduct. See Gucci Am., Inc. v. Daffy's Inc., 354 F.3d 228, 242 (3d Cir. 2003). The honest reconciliation is that everyone agrees the plaintiff must connect its number to the infringement at some threshold level; the dispute is about how granular that connection must be before the burden flips. A litigator who knows which view her circuit takes has a meaningful tactical edge.

Dewberry: The Defendant Means the Named Defendant

There is now a recent and important limit on what even counts as "the defendant's sales" in the first place. In Dewberry Group, Inc. v. Dewberry Engineers Inc., 604 U.S. 321 (2025), the Supreme Court held that "the defendant's profits" under Section 35 means the named defendant's profits—full stop—and not the profits of separately incorporated, non-party affiliates that happen to share common ownership. A plaintiff cannot sweep the revenue of the defendant's sister companies into the disgorgement pool merely because the corporate family tree connects them. The income of non-party affiliates is simply not "the defendant's profits" for purposes of the statute, and a damages theory that aggregates corporate affiliates now collides head-on with Dewberry.

The decision has real teeth, and it cuts against a tempting plaintiff's move. When the named infringer is a thinly capitalized operating entity that books little profit while its commonly owned affiliates collect the rents, plaintiffs were tempted to treat the corporate group as one economic unit and disgorge the whole. Dewberry forecloses that shortcut. (It also leaves open harder questions—piercing the corporate veil, the "just-sum" adjustment power in § 1117(a), and naming the right defendants in the first place—that now matter enormously to how a profits case is structured at the pleading stage.)

So the sequence on defendant's profits is: the plaintiff proves the named defendant's own sales that are related to the infringement (layer one); those sales are treated as profit until the defendant proves its deductible costs; and only then does layer two—apportioning the remaining profit between the mark and the world—come into play, where, as we turn to next, the burden falls on the defendant.

The Apportionment Burden Falls on the Infringer

The second layer of apportionment—dividing the profit on infringement-related sales between the portion the infringing mark drove and the portion everything else drove—carries a burden allocation more than a century old, and it favors the plaintiff. Once the plaintiff has established the relevant sales, the burden shifts to the defendant to prove the share of those profits not attributable to the infringing mark.

The Supreme Court recognized this in 1916. In Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251 (1916), the Court accepted apportionment in principle but placed the burden on the infringer to prove any proportion of its profits that was not attributable to the use of the infringing mark. The classic statement—the one every brief quotes—came in 1942, in Mishawaka Rubber & Woolen Manufacturing Co. v. S.S. Kresge Co., 316 U.S. 203 (1942). The Court explained that if an infringer can show its customers bought for reasons other than the plaintiff's mark—because of the defendant's own recommendation, its reputation, or "for any reason other than a response to the diffused appeal of the plaintiff's symbol"—then the profits on those sales should not flow to the plaintiff. But, critically: "the burden of showing this is upon the poacher." Id. at 206. The infringer, having created the entanglement, must do the work of disentangling its legitimate profits from its ill-gotten ones. The plaintiff is not required to prove a negative.

The Second Circuit applies this allocation faithfully. In International Star Class Yacht Racing Ass'n v. Tommy Hilfiger U.S.A., Inc., 146 F.3d 66, 72 (2d Cir. 1998), the court recognized that a district court may consider apportionment evidence—such as testimony from a department-store buyer that some portion of the defendant's sales rode on the appeal of the defendant's own well-known mark and reputation rather than the plaintiff's mark—to reduce a profit award in service of equity. That is precisely the kind of proof a defendant must assemble to carry its layer-two burden: concrete, record evidence that buyers were drawn by the defendant's brand, its quality, or its price, and not by the infringing element.

The reason for parking this burden on the infringer is both practical and moral. Practically, the infringer controls the information about its own business—its marketing studies, its sales data, its customer research, its A/B tests—and is therefore best positioned to show what actually moved the merchandise. Morally, the law resolves uncertainty against the wrongdoer who created it: having mingled its rightful and wrongful gains, the infringer should bear the risk that the two cannot be cleanly separated. A defendant that offers no apportionment evidence forfeits the right to complain when the court declines to apportion in its favor. As we will see in the worked example below, that silence can be a multimillion-dollar mistake.

A caution for ambitious defendants, though: the apportionment lever is not infinitely long. Some courts will deny an apportionment for sales attributable to the infringer's own well-known brand when the infringement is especially egregious, see Truck Equip. Serv. Co. v. Fruehauf Corp., 536 F.2d 1210, 1222–23 (8th Cir. 1976), and will refuse to apportion at all when the infringing and non-infringing elements are genuinely inseparable. Equity gives, and equity can take away.

Deductible Costs: What the Defendant Gets to Subtract

Layer-two apportionment is sometimes confused with a separate, earlier battle: the fight over deductible costs. They are different, and conflating them muddies many a damages memo. Apportionment divides profit between causes. The costs fight is about how you get from revenue to profit in the first place—what the defendant may subtract from gross sales.

Here, too, the burden is the defendant's, and the rules are unforgiving toward sloppy proof. A defendant may deduct only the expenses it actually proves are attributable to the infringing product or service. If it proves none, the plaintiff recovers gross sales. WMS Gaming, 542 F.3d at 609. If the defendant's evidence is too vague to support an accurate calculation, a court may disallow the deductions entirely. See Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc., 778 F.3d 1059, 1076 (9th Cir. 2015).

What counts as deductible is its own minefield. Courts have allowed deductions for variable costs and for overhead genuinely attributable to the infringement, see Manhattan Indus., Inc. v. Sweater Bee by Banff, Ltd., 885 F.2d 1, 7–8 (2d Cir. 1989), but they routinely reject deductions for fixed costs the defendant would have incurred regardless of the infringement, see Roulo v. Russ Berrie & Co., 886 F.2d 931, 941 (7th Cir. 1989), and for overhead "that would have been incurred even without the infringement," Maltina Corp. v. Cawy Bottling Co., 613 F.2d 582, 586 (5th Cir. 1980). The economic logic is incremental: the defendant gets credit for the marginal costs the infringing line truly added, not a pro-rata slice of the rent it was paying anyway. A defendant that tries to load every category of corporate overhead onto the infringing jacket line, hoping to shrink the profit to zero, will usually find the court striking the fixed costs and leaving a stubborn profit behind.

This is why the costs fight and the apportionment fight, though distinct, run on the same current. Both place the burden on the infringer; both resolve doubt against it; and both reward a defendant that keeps clean, granular, product-level books and punish one that does not.

When Apportionment Can't Be Done with Certainty

What happens when the profit attributable to the mark genuinely cannot be separated from the profit attributable to everything else with any real precision? The law does not respond by handing the whole pie to the plaintiff, nor by awarding nothing. It responds with the court's equitable power to reach a fair, defensible result—often by discounting the award to reflect the uncertainty.

A clean illustration is Pure Oil Co. v. Paragon Oil Co., 117 U.S.P.Q. 321, 329 (N.D. Ohio 1958), where the court, unable to apportion infringement-related profits from other profits with reasonable certainty, reduced the profit award substantially—by two-thirds. That is the sensible middle path: rather than throw up its hands, the court used its judgment to approximate the portion fairly attributable to the wrong and discounted the rest. Section 35 expressly authorizes this maneuver, empowering the court to enter judgment for a sum it finds just when the mechanical computation yields a figure that is either inadequate or excessive.

The lesson for both sides is that imprecision is not automatically fatal, but it is not free either. A plaintiff who cannot isolate the infringement-related profits at all may recover little or nothing; a defendant who offers no basis to trim an inflated figure may be stuck with it; and where the truth lies in between, courts will exercise equitable discretion to land on a defensible number—frequently a reduced one. The party that gives the court a credible methodology to anchor that discretion usually likes the result better than the party that gives it nothing.

The Plaintiff's Threshold Burden—and Where Damages Cases Die

Return now to layer one, because it is where damages cases most often founder, and it answers the question that prompts so much apportionment litigation: can a plaintiff recover when it cannot tie revenue to specific accused products?

The short answer is that the plaintiff bears the burden of connecting the defendant's sales to the infringement, and a plaintiff that cannot make that connection is in serious trouble no matter how favorable the cost rules sound. The "prove sales only" rule is generous on costs, but it does not relieve the plaintiff of identifying the right sales—the ones related to the infringing products or activity. A plaintiff who simply offers the defendant's total company-wide revenue, with no effort to isolate the sales attributable to the accused products, has not carried its burden under Max Rack and Covertech, and the profits claim may fail at the threshold. Layer-one isolation is the plaintiff's job, even though layer-two apportionment within the isolated pool is the defendant's.

This is precisely where courts exclude or reject damages testimony before it ever reaches a jury. A damages expert who builds a model on the defendant's enterprise-wide revenue—lumping in non-infringing product lines, unrelated business segments, or (after Dewberry) the revenue of corporate affiliates—has offered a figure unmoored from the infringement, and that figure is vulnerable to exclusion. The methodology fails the causation requirement and, when offered through an expert, runs straight into the reliability gatekeeping of Federal Rule of Evidence 702 and the Daubert line of cases. An opinion that does not "fit" the facts, or that rests on the unsupported assumption that all of the defendant's revenue is attributable to the infringement, can be struck as unreliable or unhelpful. The remedy is not a magic wand that converts a defendant's whole income into the plaintiff's recovery; it is a causation-bounded measure, and a damages theory that ignores the boundary invites a motion to exclude. The reliability standards that govern this gatekeeping—and the survey and accounting experts who typically carry the damages load in trademark cases—are doctrines in their own right, and a plaintiff's expert who has not internalized them is an expert waiting to be excluded.

The point intersects with discovery practice in a way worth flagging. If a party fails to disclose, in discovery, the data or methodology behind its damages theory—or refuses to identify the products, accounts, or revenue streams it later wants to rely on—it may be precluded from offering that evidence at all under Rule 37(c)(1), independent of any substantive apportionment defect. We treat that preclusion mechanism at length in our companion guide to Rule 37(c)(1) preclusion of undisclosed evidence. A damages case can therefore die in two distinct ways: substantively, because the theory is not tied to infringement-related sales; or procedurally, because the supporting evidence was never disclosed. Diligent litigators guard both doors.

Speculation, Reasonable Certainty, and the Fact-Versus-Amount Distinction

The standard for excluding damages as speculative deserves its own treatment, because it harbors a nuance that resolves much of the apparent inconsistency in the cases. Damages cannot rest on pure speculation or conjecture; a plaintiff must furnish a non-speculative, evidentiary basis for the recovery it claims, and courts will reject guesswork dressed up as calculation. See Synygy, Inc. v. Scott-Levin, Inc., 51 F. Supp. 2d 570 (E.D. Pa. 1999); Broan Mfg. Co. v. Associated Distribs., Inc., 923 F.2d 1232, 1236 (6th Cir. 1991) ("Courts cannot award arbitrary or speculative damage[s]").

But the law draws a vital line between the fact of damage and the amount of damage. The plaintiff must prove the fact that it was injured (or that the defendant benefited) with reasonable certainty; that is a real burden, and speculation will not satisfy it. Lindy Pen, 982 F.2d at 1407 (plaintiff must prove injury "with reasonable certainty"). Once the fact of injury or benefit is established, however, the amount may be approximated, and the courts grow markedly more forgiving—resolving doubts about the precise figure against the wrongdoer who created the uncertainty. See Otis Clapp & Son, Inc. v. Filmore Vitamin Co., 754 F.2d 738, 745 (7th Cir. 1985) ("the defendant bears the burden of any uncertainty" as to amount); Aronowitz v. Health-Chem Corp., 513 F.3d 1229, 1241 (11th Cir. 2008) (plaintiff "does not need to show a precise calculation"). This is the same equitable instinct that animates the Mishawaka apportionment burden: a defendant whose conduct made exact measurement impossible should not profit from that impossibility. The wrongdoer bears the risk of uncertainty as to amount; it does not assume the plaintiff's burden as to the fact of injury.

The practical upshot is bracing in its symmetry. A plaintiff cannot survive by proving neither fact nor amount. But it need not prove the amount with mathematical precision once it has established that the infringement caused some quantifiable harm or yielded some quantifiable benefit tied to infringement-related sales. The danger zone—where exclusion lives—is the case in which the plaintiff offers a number untethered to any proven causal connection, or a model whose assumptions the record does not support. That is speculation, and courts strike it regardless of how sophisticated the spreadsheet looks.

Lost Profits and the Product-Tracking Problem

A recurring practical question is whether a plaintiff can prove its own lost profits without product-specific revenue tracking—when its books do not break out sales by the lines that compete with the infringer's. This is a genuine difficulty, sitting right at the intersection of causation and the reasonable-certainty standard.

Lost-profits recovery requires the plaintiff to show, with reasonable certainty, that the infringement caused it to lose sales it otherwise would have made—and to provide a non-speculative basis for quantifying those lost sales and the margin on them. Lindy Pen, 982 F.2d at 1407–08. Where a plaintiff tracks revenue at the product level, the task is comparatively clean: show a sales decline in the affected line, correlate it to the defendant's infringing entry, account for confounding variables, and apply the margin. Where the plaintiff lacks product-level data, the task gets harder and the risk of a speculation challenge rises sharply. A plaintiff who can point only to a general downturn in overall business, with no way to tie that downturn to the specific infringement rather than to ordinary competition, market conditions, or its own performance, may see its lost-profits theory rejected as conjectural. Courts deny such awards as "overly speculative when the plaintiff cannot prove it actually lost sales," even as they grant recovery when "only the amount, and not the fact, of lost sales is uncertain." Cf. Broan, 923 F.2d at 1235.

Product-level tracking is not strictly indispensable, though. A plaintiff may establish lost profits through other reliable means—a well-supported diverted-customer analysis, evidence of price erosion, or expert testimony grounded in defensible assumptions. Some courts even permit the defendant's profits to serve as a proxy for the plaintiff's lost sales when the parties compete directly, on the theory that a sale the defendant made is a sale the plaintiff lost. See Maier Brewing Co. v. Fleischmann Distilling Corp., 390 F.2d 117, 121 (9th Cir. 1968). But that proxy is no free pass: courts deny it where the plaintiff offers nothing beyond a "gut feeling" that the defendant's sales would have come its way, see Toyo Tire & Rubber Co. v. Hong Kong Tri-Ace Tire Co., 281 F. Supp. 3d 967, 989–90 (C.D. Cal. 2017), or where the parties target different markets. The further a plaintiff drifts from concrete, infringement-specific data, the more its theory resembles the speculation courts exclude. The honest guidance: lost profits can sometimes be proven without granular tracking, but only with a rigorous methodology that ties the claimed losses to the infringement. Absent that, a plaintiff is often better served pursuing the defendant's profits, where Section 35's burden structure tilts in its favor.

Reasonable Royalty and Corrective Advertising: Two Underused Measures

Lost profits are not the only measure of a plaintiff's actual damages, and the alternatives carry apportionment wrinkles of their own.

A reasonable royalty—the license fee the defendant would have paid to use the mark lawfully—offers an appealing escape from the lost-profits proof problem, and courts will award one "if there is any reliable basis for calculating the royalty." Gucci Am., Inc. v. Guess?, Inc., 858 F. Supp. 2d 250, 253 (S.D.N.Y. 2012). But the escape is narrower than it looks. In practice, courts usually reject a reasonable-royalty theory as speculative unless the parties have a pre-existing licensing relationship or established rate to anchor it. See A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 166 F.3d 197, 208–09 (3d Cir. 1999). A royalty award must also be "rationally related to the scope of the infringing use," Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 461 (5th Cir. 2017)—itself a form of apportionment, confining the fee to the slice of use the defendant actually made. And a court may not impose a compulsory ongoing royalty that effectively licenses the defendant to keep infringing. A & H Sportswear, 166 F.3d at 208. The reasonable royalty, in short, is a real measure but a finicky one; pursue it only when you can point to a license that actually existed or was actually proposed and rejected, as in Boston Professional Hockey Ass'n v. Dallas Cap & Emblem Manufacturing, Inc., 597 F.2d 71, 75–76 (5th Cir. 1979).

Corrective advertising damages compensate a plaintiff for the cost of advertising to repair the consumer confusion the infringement sowed. See Adray v. Adry-Mart, Inc., 76 F.3d 984, 988 (9th Cir. 1995). The measure comes in two flavors. The first reimburses corrective advertising the plaintiff actually ran before trial. Otis Clapp, 754 F.2d at 745. The second—more contested—funds the prospective corrective campaign needed to undo lingering harm. Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365, 1375–76 (10th Cir. 1977). Because letting a plaintiff demand a dollar-for-dollar match of the infringer's entire ad budget would wildly overcompensate, courts apportion: a recurring rule of thumb, borrowed from the FTC's corrective-advertising practice, caps the award at roughly 25% of the defendant's infringing advertising expenditures. See West Des Moines State Bank v. Hawkeye Bancorporation, 722 F.2d 411, 414 (8th Cir. 1983); Big O Tire, 561 F.2d at 1375–76. That 25% figure is itself a crude apportionment device—an admission that not every advertising dollar the infringer spent caused harm the plaintiff must now spend to cure. And the measure has limits: a plaintiff who never advertised its own mark, or whose mark is worth less than the corrective campaign would cost, may recover nothing. See Zazu Designs v. L'Oreal, S.A., 979 F.2d 499, 506–07 (7th Cir. 1992). A final guardrail unites these measures: a plaintiff cannot stack a profits award on top of actual damages where the combination overcompensates. Big O Tire, 408 F. Supp. 1219, 1241 (D. Colo. 1976). The court will not pay for the same harm twice.

The Equitable Overlay: The Second Circuit Factors and Willfulness After Romag

In the Second Circuit—and, in varying forms, most others—the defendant's-profits remedy is not a mechanical entitlement that vests the instant the plaintiff proves infringement-related sales. Because equitable disgorgement is, well, equitable, the court weighs a set of discretionary factors in deciding whether, and how much, to award. The Second Circuit's non-exclusive list: the degree of certainty that the defendant benefited from the unlawful conduct; the availability and adequacy of other remedies; the role of the particular defendant in effectuating the infringement; any delay by the plaintiff; and the plaintiff's clean or unclean hands. 4 Pillar Dynasty LLC v. New York & Co., 933 F.3d 202, 214 (2d Cir. 2019). These factors operate alongside apportionment: even where some profit is attributable to the infringement, the equities may counsel a reduced award—or, occasionally, none at all. Whether a judge or a jury decides those equitable questions is itself a fought-over issue, since disgorgement sounds in equity while actual damages sound at law; we untangle that allocation in our guide to bench trial versus jury trial issues in trademark litigation.

The role of willfulness in this calculus shifted meaningfully with Romag Fasteners, Inc. v. Fossil, Inc., 590 U.S. 212 (2020). Before Romag, several circuits—the Second among them—treated willful infringement as a categorical precondition to any award of the defendant's profits in a standard infringement case. (The Second Circuit's pre-Romag rule came from George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532, 1540 (2d Cir. 1992), which also catalogued the rationales for a profits award: unjust enrichment, deterrence, and use of profits as a proxy for the plaintiff's damages.) In Romag, a unanimous Supreme Court held that willfulness is not an absolute prerequisite to a profits award under § 1117(a) for a § 1125(a) violation—though the defendant's mental state remains "a highly important consideration" in the equitable weighing. The decision resolved a long-running circuit split and quietly opened the disgorgement remedy to plaintiffs who could prove infringement but not bad intent.

The interplay of willfulness and apportionment is illustrated, almost too neatly, by what happened on remand in Romag itself. Applying the 4 Pillar Dynasty factors and leaning on the jury's finding that the infringement was not willful, the district court limited the profits award to the 1% of the defendant's profits that the jury had found attributable to the infringement. Romag Fasteners, Inc. v. Fossil, Inc., 2021 U.S. Dist. LEXIS 81803, at *7–22 (D. Conn. Apr. 29, 2021). That is apportionment in action: out of substantial profits, only the sliver actually caused by the infringing feature was disgorged, and the absence of willfulness reinforced the court's restraint. District courts in the circuit have continued to apply the equitable factors after Romag, recognizing that because they rest on equitable principles, they survive the willfulness holding. See Experience Hendrix LLC v. Pitsicalis, 2020 U.S. Dist. LEXIS 115075, at *16–17 n.4 (S.D.N.Y. July 1, 2020); Diesel S.p.A v. Diesel Power Gear, LLC, 2023 U.S. Dist. LEXIS 156499, at *8 (S.D.N.Y. Sept. 5, 2023). Other circuits embraced analogous apportionment principles even before Romag; the Third Circuit's discussion in Banjo Buddies, Inc. v. Renosky, 399 F.3d 168, 176 (3d Cir. 2005), and the Ninth Circuit's in La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., 762 F.3d 867 (9th Cir. 2014), reflect the same insistence that profits awards track the infringement rather than the whole enterprise.

The takeaway is that willfulness and apportionment are distinct but mutually reinforcing. Apportionment caps the award at the profit the infringement caused; the equitable factors, including willfulness, then shape whether and how much of that capped figure is actually disgorged. A non-willful infringer who can show that most of its profit came from its own brand and product will usually face a modest award. A willful infringer who kept poor records and offered no apportionment evidence may face a large one—and, on top of it, a treble enhancement under § 1117(a) and an exceptional-case fee award. The willfulness inquiry also reaches beyond damages into the question of fee-shifting, a related but separate doctrine we cover in our guide to Lanham Act attorneys' fees under 15 U.S.C. § 1117(a).

A Worked Example

Consider an invented but realistic dispute (entirely hypothetical, offered to make the doctrine concrete). "Crestline," a large outdoor-apparel company with annual revenue of $400 million across forty product lines, launches a jacket called the "Summit Ridge." A smaller competitor, "Summit Gear," owns the registered mark SUMMIT for outdoor apparel and sues for infringement. A jury finds the "Summit Ridge" name infringes. Now the parties fight over money.

Start with layer one, the plaintiff's burden. Summit Gear cannot simply demand 100% of Crestline's $400 million in revenue; that figure includes thirty-nine product lines with no connection to the infringement. Under Max Rack and Covertech, Summit Gear must prove the sales related to the infringement—here, the "Summit Ridge" jacket line, say $20 million. If its damages expert built a model on the entire $400 million (or, worse, swept in the revenue of Crestline's separately incorporated footwear affiliate, which Dewberry now flatly forbids), the model would be ripe for exclusion as untethered to the infringement. So Summit Gear isolates the $20 million in jacket-line sales. Under the statute, that $20 million is treated as profit until Crestline proves its costs.

Now Crestline's costs burden. Crestline must prove the costs and deductions attributable to the "Summit Ridge" line—materials, manufacturing, the marginal overhead the line actually added. Suppose it proves $14 million in deductible costs, leaving $6 million in profit on the infringing line. Note what Crestline may not deduct: the fixed corporate overhead it would have paid anyway, Roulo, 886 F.2d at 941; Maltina, 613 F.2d at 586. And if Crestline had failed to prove any costs at all, under Dyson and WMS Gaming the court could treat the full $20 million as profit—a sobering reminder that the costs case is the defendant's to lose.

Now layer two, apportionment, where the burden is again Crestline's. Crestline argues that consumers bought the "Summit Ridge" jacket not because of the word "Summit" but because of Crestline's own famous house brand, the jacket's superior waterproofing, and its competitive price. To carry its Mishawaka burden, Crestline must put on evidence—consumer surveys, a retail buyer's testimony à la International Star Class Yacht Racing, marketing studies—showing that, say, 80% of the purchasing decision was driven by Crestline's brand and product features and only 20% by the infringing name. If the factfinder credits that showing, the attributable profit is roughly 20% of $6 million, or $1.2 million. If Crestline offers no apportionment evidence, it cannot complain when the court declines to apportion and awards the full $6 million. Silence here is not neutrality; it is a concession.

Finally, the equitable overlay. Because this is the Second Circuit, the court weighs the 4 Pillar Dynasty factors. The jury found the infringement was not willful; Crestline played a direct role but acted without intent to deceive; there was no undue delay or unclean hands by Summit Gear. Emphasizing the lack of willfulness—exactly as the court did on remand in Romag—the court might award the apportioned $1.2 million and decline to enhance it. Change the facts to willful, deliberate copying with spoliated records, and both the apportionment evidence (now unavailable to Crestline) and the equities (now hostile to it) would tilt toward a far larger award, potentially trebled.

Notice how the burdens travel: Summit Gear isolates the infringing line's sales; Crestline proves its costs and then proves how little of the remaining profit the name actually drove; and the court filters the whole result through equity. That choreography—plaintiff isolates, defendant deducts and apportions, court adjusts—is the beating heart of trademark damages apportionment.

Apportionment's Cousins: Cancellation and the Larger Litigation

Apportionment does not happen in a vacuum. It is the back end of a case whose front end shaped everything—the strength of the mark, the registration, the confusion proof. A defendant who cannot beat liability sometimes turns the tables by attacking the registration itself, seeking cancellation as a counterclaim; success there can erase the basis for any monetary recovery at all. That dynamic, and its interaction with the remedies phase, is the subject of our guide to trademark cancellation in federal litigation. The practical lesson is that damages strategy should be reverse-engineered from the start of the case: the discovery you take, the financial records you demand, and the experts you retain in the first months determine whether you can prove (or rebut) apportionment in the last.

Practical Takeaways

For the plaintiff, the discipline is to respect layer one before reaching for layer two. Build the damages case on the defendant's infringement-related sales, not its enterprise-wide revenue, and be ready to prove the connection between the accused products and the dollars you claim—because a model that ignores that connection invites exclusion under Max Rack, Covertech, Dewberry, and the speculation line of cases. Establish the fact of damage or benefit with reasonable certainty first; only then do the favorable rules kick in—sales are profit until the defendant proves its costs, and the burden to apportion away from the mark is the defendant's. Disclose your data and methodology fully in discovery so the proof is not precluded on procedural grounds under Rule 37(c)(1). Consider the alternative measures—reasonable royalty, corrective advertising—where lost profits are hard to prove, but respect their limits. And marshal the equitable factors, including any evidence of willfulness, because they can expand the award and unlock both treble damages and fees.

For the defendant, the message is blunt: silence is dangerous and evidence is everything. Do not assume the court will impute reasonable margins—prove your costs and deductions in granular, product-level detail, or risk having gross revenue treated as profit under Dyson. Carry your Mishawaka apportionment burden affirmatively: develop consumer surveys, marketing analyses, and witness testimony showing that buyers were drawn by your own brand, quality, price, and reputation, so that only a fraction of profit is attributable to the wrong. Invoke Dewberry to keep affiliate revenue out of the pool and Max Rack to confine the base to genuinely infringement-related sales. Challenge speculative or enterprise-wide damages models through Rule 702 and Daubert, and through Rule 37(c)(1) preclusion where the supporting evidence was never disclosed. Police the deduction rules—but do not overreach by loading fixed overhead the court will only strike. And press the equitable factors, especially the absence of willfulness, to argue for a reduced award, just as Fossil successfully did on remand in Romag.

For both sides, the unifying idea is causation. Trademark damages are not a windfall keyed to the size of the defendant's business; they are a measured recovery keyed to the harm the infringement caused and the benefit it produced. The plaintiff must connect the dollars to the wrong; the defendant must separate its legitimate gains from its wrongful ones; and the court, exercising equity, divides the pie so the plaintiff recovers its slice and no more. Master that structure—two layers of apportionment, a burden that shifts at each, a deductible-cost battle in between, and an equitable overlay on top—and the most contested phase of a trademark case becomes navigable rather than mysterious.

Frequently Asked Questions

Does winning on liability mean I'll recover the defendant's entire profits? Almost never. Liability and recovery are separate inquiries. Even after you win on confusion, you recover only the profits attributable to the infringement. The defendant can deduct proven costs and can apportion away the profit its own brand, quality, or price drove. Awards are frequently a small fraction of the defendant's total profit on the line—on remand in Romag, just 1%.

Who has the burden of proof on apportionment? It shifts. The plaintiff must prove the defendant's infringement-related sales (15 U.S.C. § 1117(a); Max Rack). Those sales are then treated as profit until the defendant proves its deductible costs. Finally, the defendant bears the burden of proving the share of remaining profit not attributable to the infringing mark (Mishawaka; Hamilton-Brown). Courts split on exactly how granular the plaintiff's initial showing must be before the burden flips.

Is willfulness required to recover the defendant's profits? No—not since Romag Fasteners, Inc. v. Fossil, Inc., 590 U.S. 212 (2020), which held that willfulness is a "highly important consideration" but not a categorical precondition to a profits award for a § 43(a) violation. Willfulness still matters enormously: it shapes the equitable factors, drives whether a court will treble the award, and bears on an exceptional-case fee award. (Dilution claims are different—willfulness is statutorily required there.)

Can I sweep in the revenue of the defendant's affiliated companies? Not after Dewberry Group, Inc. v. Dewberry Engineers Inc., 604 U.S. 321 (2025). "The defendant's profits" means the named defendant's profits, not the profits of separately incorporated, non-party affiliates under common ownership. If the real money sits in a sister entity, you generally must name it as a defendant or pursue veil-piercing—not simply aggregate the corporate family's revenue.

What if the profit attributable to the mark can't be measured precisely? Imprecision is not automatically fatal. Courts distinguish the fact of injury or benefit (which must be proven with reasonable certainty) from the amount (which may be approximated, with doubts resolved against the wrongdoer). Where apportionment cannot be done cleanly, courts use their equitable power under § 1117(a) to enter a just sum—often a discounted one, as in Pure Oil, where the court cut the award by two-thirds.

Can I recover both the defendant's profits and my own lost profits? Only if the combination does not overcompensate. Courts will not pay for the same harm twice and will reduce or bar a double recovery that exceeds the actual injury. See Big O Tire, 408 F. Supp. at 1241.

What measures of actual damages exist besides lost profits? Chiefly a reasonable royalty (usually viable only where the parties had or proposed a license) and corrective-advertising costs (often capped at roughly 25% of the defendant's infringing ad spend). Each carries its own causation and apportionment constraints, and each is denied when the proof grows speculative.

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This article is provided for general informational purposes and does not constitute legal advice. Trademark damages are intensely fact-specific and the governing law continues to evolve; consult qualified trademark litigation counsel about any particular matter.