Prevailing trademark owners do not have to prove willfulness to be awarded the infringer's profits, the Supreme Court held yesterday in Romag Fasteners v. Fossil Group. While a trademark infringer's intent and corresponding willful actions remain relevant to a Lanham Act damages analysis, the Court rejected a categorical rule requiring proof of willfulness. The decision may increase monetary awards in trademark infringement cases.
In 2002, Romag agreed to supply Fossil with Romag's magnetic snap fasteners for Fossil's handbags and other products. In 2010, Romag sued Fossil for patent and trademark infringement after learning that Fossil's contracted factories in China were using counterfeit Romag fasteners and Fossil was no taking action to stop the practice. The U.S. District Court for the District of Connecticut found Fossil liable and the jury awarded Romag $6.7 million of Fossil's profits to "deter future trademark infringement." The trial court overturned the jury's damages award because the jury found Fossil acted "callously," rather than "willfully," as required by the controlling Second Circuit precedent for a profits award. The Federal Circuit upheld the district court's decision.
Not all circuits follow the Second Circuit's willfulness requirement and the Supreme Court granted certiorari to resolve this split.
The opinion, penned by Justice Gorsuch and joined by seven other Justices, focused on interpreting the Lanham Act's damages provisions. Under 15 §1117(a), the Lanham Act authorizes a variety of remedies, including a defendant's profits, plaintiff's damages, and attorney fees, stating:
"When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, 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 provisions of sections 1111 and 1114 of this title, and subject to the principles of equity, to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action."
In its assessment, the Court keyed in on the statute's various intent requirements, noting that the Lanham Act "speaks often and expressly about mental states." The Court found the absence of such an intent requirement relative to § 1125(a) telling. Specifically, the Court noted that the Lanham Act includes a "willfulness" requirement as a precondition to a profits award for trademark dilution under §1125(c) but that there is no corresponding requirement for trademark infringement under §1125(a). The Court refused to read words into the statute, under "principles of equity" or otherwise, especially where the wording was included "elsewhere in the very same statutory provision."
In vacating the Federal Circuit's decision and remanding the case, the Court emphasized that it does not question or seek to overturn pre- or post-Lanham Act case law holding that an infringer's state of mind is an important consideration in determining available relief, noting that "an innocent trademark violator often stands in very different shoes than an intentional one." However, the Court would not take the step of requiring an "inflexible precondition" before trademark owners could secure a defendant's profits.
Justice Sotomayor wrote a concurring opinion, cautioning that a district court's award of profits for innocent or good-faith trademark infringement would not be consistent with the "principles of equity" referenced in §1117(a).
The case is Romag Fasteners, Inc. v. Fossil Group, Inc., No. 18-1233, Slip Op. (S. Ct. April 23, 2020).
Article orignally published on 24 April 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
