NEW ORLEANS (LN) — A Fifth Circuit panel on Thursday affirmed trademark infringement liability and a combined $4.7 million disgorgement award against a Texas golf-cart company that used the "TROJAN" name belonging to one of the country's dominant battery brands. The panel also vacated a permanent injunction it held swept far beyond the markets where consumer confusion was actually likely.
Trojan Battery Company, a California-based manufacturer that has sold deep-cycle batteries under the TROJAN mark since 1925, sued Golf Carts of Cypress and its sister entity Trojan EV after the defendants began selling golf carts under the "TROJAN-EV" brand in January 2021. The battery maker holds 80% of the original-equipment market and 50% of the aftermarket for golf-cart batteries, and sells hundreds of millions of dollars in TROJAN-branded product each year.
After a four-day bench trial in June 2023, the Southern District of Texas found the defendants liable and ordered disgorgement. The court initially set the award at about $1.19 million from Trojan EV and about $1.42 million from Golf Carts of Cypress. The parties later jointly identified additional profits, and the total was revised to about $1.3 million from Trojan EV and about $3.4 million from Golf Carts of Cypress. The district court also entered a permanent injunction barring the defendants from using the word "TROJAN" on any good or in connection with any service.
The Fifth Circuit, in an opinion by Circuit Judge Carl E. Stewart, held that the district court did not clearly err in its likelihood-of-confusion analysis across seven of the eight digits of confusion, even though it held the district court clearly erred on one. The panel held the district court clearly erred in concluding that actual-confusion evidence was compelling — Trojan Battery had presented only five instances of confusion over roughly two and a half years of concurrent sales, including golf-cart dealer Bill Malloy's testimony that he initially thought Trojan EV was affiliated with Trojan Battery when he first visited the company's website. That evidence, the panel held, fell short of the standard set in Amstar Corp. v. Domino's Pizza. But with the remaining digits — including mark strength, similarity of the marks, relatedness of the products, overlapping retail channels, shared advertising media, defendants' intent, and purchaser sophistication — the overall liability finding survived.
On disgorgement, the panel rejected the defendants' argument that the district court had improperly shifted the burden of proving that profits were attributable to infringement. Under the Lanham Act's burden-shifting framework, a plaintiff need only prove the defendant's sales; the defendant must then prove all costs and deductions. The panel cited the Supreme Court's 1942 decision in Mishawaka Rubber & Woolen Manufacturing Co. v. S.S. Kresge Co. for the proposition that "The burden is the infringer's to prove that his infringement had no cash value in sales made by him." Because the defendants failed to establish entitlement to deductions for items including mold fees, total expenses, and per-unit shipping costs of approximately $975, the district court's calculation stood.
The injunction was a different matter. The district court's order barred the defendants from using the word "TROJAN" as an element of any mark in connection with any good or service — a prohibition the Fifth Circuit held reached far beyond the golf-cart and golf-cart-battery markets where confusion was actually probable. The panel noted that confusion between the parties' marks arose specifically because both used "TROJAN" to market related products industry to the same customers through the same channels. Outside that context, the panel held, confusion would be unlikely given other well-known uses of the word, including Trojan condoms and the University of Southern California's Trojan mascot.
The panel also declined to apply the safe-distance rule to justify the broader sweep. That doctrine, which allows courts to require an enjoined party to stay well clear of prohibited conduct, was not warranted here, the court held, because the willfulness finding rested largely on the district court's credibility determination about defendant Federico Nell — not on a history of improper behavior of the kind that justified a broad injunction in Kentucky Fried Chicken Corp. v. Diversified Packaging Corp.
The case returns to the Southern District of Texas for the district court to rewrite an injunction limited to the golf-cart and golf-cart-battery markets. Defendants Trojan EV and Golf Carts of Cypress filed for Chapter 11 bankruptcy in April 2024, and the disgorgement claims against them now total more than $4.7 million.