Unfair advertising: Liability for punitive damages

In a case in which the Supreme Court ultimately got involved, the Ninth Circuit Court of Appeals ruled that copying a competitor's product did not constitute a violation of trademark law but that using photographs of a modified version of the competitor's product in advertising constituted unfair advertising or passing off. Because the passing off was intentional, the Court of Appeals in Leatherman Tool Group Inc v Cooper Industries Inc initially approved compensatory damages of $50,000 and punitive of $4,500,000. In its decision, the Supreme Court directed the Court of Appeals to review the determination that the punitive damages award was not constitutionally excessive. In light of criteria set by the Supreme Court, the Court of Appeals concluded that the award should be reduced.