The Supreme Court may soon resolve a circuit split regarding the availability of a trademark infringer’s profits in the absence of willful infringement. On Tuesday, January 14, 2020, the Supreme Court will hear oral argument in the case of Romag Fasteners, Inc. v. Fossil, Inc., No. 18-1233. According to petitioner Romag Fasteners, Inc. (“Romag”), the question for the Supreme Court is whether, under Section 35 of the Lanham Act, willful infringement is a prerequisite for the award of an infringer’s profits for a violation of Section 43(a) of the Lanham Act.
The Second, Eighth, Ninth, Tenth, and the District of Columbia Circuits require proof of an infringer’s willful infringement before making the infringer’s profits available to a prevailing plaintiff. The First Circuit requires only a showing of willfulness where the parties are not direct competitors. In contrast, the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits consider, but do not require, an infringer’s willfulness when determining an appropriate remedy, “subject to the principles of equity.” 15 U.S.C. § 1117(a).
Amendments to Section 35 of the Lanham Act have contributed to the division of authority on this point. In 1999, Congress added the following italicized language to Section 35, which provides, in relevant part, that “a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established . . . the plaintiff shall be entitled . . . subject to the principles of equity, to recover (1) defendant’s profits.” 15 U.S.C. § 1117(a). Some courts interpreted the additional language as limiting the required showing of willful infringement solely to dilution causes of action under Section 43(c). According to petitioner Romag, the language of the Lanham Act does not require a showing of willful infringement before a prevailing plaintiff can receive an award of the infringer’s profits for false designation of origin and false advertising causes of action under Section 43(a).
In the dispute that began in 2010, Romag sued Fossil, Inc. and other defendants (“Fossil”) for trademark infringement and false designation of origin under Section 43(a), based on Fossil’s use of counterfeit Romag fasteners in Fossil’s products. At the jury trial in the District of Connecticut, the jury found that Fossil had infringed Romag’s trademark rights. The jury also found that although Fossil acted with “callous disregard” for Romag’s rights, Fossil’s infringement was not willful. The jury awarded Romag nearly $6.8 million based on Fossil’s profits, but the court struck the award because Second Circuit law requires a finding of willfulness for the awarding of a defendant’s profits.
Romag appealed to the Federal Circuit, which applied Second Circuit law and affirmed the district court’s ruling. The Federal Circuit noted that although the Second Circuit had not directly addressed the 1999 amendment to Section 35, “we see nothing in the 1999 amendment that permits us to declare that the governing Second Circuit precedent is no longer good law.” Romag Fasteners, Inc. v. Fossil, Inc., 817 F.3d 782, 789 (footnote omitted). After subsequent appeals, the Supreme Court granted Romag’s petition for certiorari.
In its petition, Romag emphasized that because plaintiffs’ damages can be difficult to measure, the awarding of a trademark infringer’s profits is meaningful monetary relief for plaintiffs. In its brief in opposition, Fossil asserted that although some courts require willful infringement for an awarding of profits, the different standards of various courts produce “similar” results. Specifically, Fossil argued that most cases awarding defendants’ profits involved intentional or willful misconduct. The Supreme Court’s ruling in this case is likely to resolve the disparate standards in the courts of appeals for awarding infringers’ profits.
The case is Romag Fasteners v. Fossil, No. 18-1233.
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