The Supreme Court of the United States has held in Romag Fasteners, Inc. v. Fossil, Inc., No. 18-1233, that a trademark owner does not necessarily need to show willful infringement by the defendant to obtain an award of the defendant’s profits. The decision resolved a longstanding circuit split in trademark cases by ruling that courts cannot read a willfulness requirement into the “principles of equity” governing remedies under the Lanham Act.
The case involved a suit brought in the United States District Court for the District of Connecticut by Romag against Fossil alleging that Fossil allowed the factories it hired in China to use counterfeit Romag fasteners for Fossil’s fashion products. After trial, the jury found that Fossil acted “in callous disregard” when it violated Section 1125(a) of the Lanham Act and awarded Romag $6.7 million of Fossils profits but rejected Romag’s argument that Fossil acted willfully. The district court refused to award Fossil’s profits to Romag citing controlling Second Circuit precedent requiring a finding of willfulness for such an award, a decision later affirmed by the Federal Circuit Court of Appeals, to which the decision was appealed due to the patent claims also at issue.
The Supreme Court disagreed with the lower courts’ decisions, stating that the willfulness requirement is not supported by the statute’s language or the common law. Romag alleged and proved a violation under Section 1125(a) of the Lanham Act, for which a prevailing party may be entitled to recover a defendant’s profits under Section 1117(a). Nothing in either Section’s language explicitly requires a showing of willfulness to obtain a defendant’s profits. Justice Gorsuch noted that the Lanham Act “speaks often and expressly about mental states,” exhibiting “considerable care with mens rea standards,” and that Section 1117(a) explicitly does require a showing of willfulness for parties prevailing on claims under Section 1125(c). Fossil’s argument was that language in Section 117(a) provides that remedies are nevertheless “subject to principles of equity” and, under the common law, these principles would have required a showing of willfulness. Justice Gorsuch held, to the contrary, that to agree with Fossil’s argument would “…require [the Supreme Court] to assume that Congress intended to incorporate a willfulness requirement here obliquely while it prescribed mens rea conditions expressly elsewhere throughout the Lanham Act.” Even though the Supreme Court maintained that willfulness was not categorically required for an award of profits, the decision went on to note that the Lanham Act’s structure, language and history suggest that an infringer’s intent is a “highly important consideration.”
There is some debate as to whether or not this decision makes it easier for plaintiffs to obtain an award of the defendant’s profits under the Lanham Act. The Supreme Court’s decision may seem to diminish the burden for plaintiffs, because demonstrating an infringer’s mental state is normally quite difficult. However, if an infringer’s intent is still “highly important consideration” and there may still be relatively few circumstances in which the other factors will justify an award of profits without it.
Winterfeldt IP Group is continuing to monitor decisions in key trademark-related cases in order to keep you informed of any important developments that affect our clients. Please feel free to reach out to us if you have any questions or if you need additional trademark support. Although we have moved to remote work in line with social distancing guidelines in light of the COVID-19 pandemic, our team’s operations have not been affected by the outbreak and we would be more than happy to provide any assistance or guidance you may need.
If you have any questions regarding this update or wish to discuss it in more detail, please contact any of the following Winterfeldt IP Group team members:
Brian Winterfeldt, brian@winterfeldt.law, +1 202 903 4422
David Rome, david@winterfeldt.law, +1 847 757 3790
