American Rice Inc. v. Producers Rice Mill Inc.

For more than 35 years, Delaware-based American Rice Inc. (AMI) (plaintiff) sold parboiled, long-grain rice to retailers in Saudi Arabia. During that time, AMI spent millions of dollars on advertising specific to the Saudi market and accrued significant goodwill in the country. AMI’s logo featured an image of a girl, which became so closely linked to the product in the minds of Saudi customers that many referred to it as “girl brand” rice. Later, Arkansas-based co-op Producers Rice Mill Inc. (PRMI) began selling the same type of rice in Saudi Arabia using a similar image of a girl as part of its trademark. AMI brought a trademark-infringement action against PRMI pursuant to the Lanham Act. AMI and PRMI reached a settlement agreement. However, PRMI continued to sell long-grain rice in the Saudi market using a similar image. AMI again brought suit, both for trademark infringement and for violation of the settlement agreement, in federal district court. The court found in favor of AMI, issued a permanent injunction, and initially ordered PRMI to pay damages of $1,256,635.00—an amount that represented PRMI’s profits for 2005. However, the court vacated the damages award after PRMI showed that, because it was a farmer-owned cooperative, its profits had technically passed through its individual members, leaving taxable income of only $227.10 on the company’s 2005 tax return. The court changed the damages award to that amount. Both sides appealed to the United States Court of Appeals for the Fifth Circuit.