On April 23, 2020, the U.S. Supreme Court (Supreme Court) ruled in a unanimous decision that trademark owners do not need to show that willful trademark infringement occurred in order to claim an infringer’s profits. Romag Fasteners, Inc. v. Fossil Group, Inc., No. 18-1233 (2020).
Romag Fasteners, Inc. (Romag) sued the well-known leather goods company Fossil Group, Inc. (Fossil) for trademark infringement after it discovered Fossil was using counterfeit Romag leather fasteners in Fossil’s leather goods. The parties had previously entered an agreement that Fossil would manufacture and sell products containing Romag’s leather fasteners, but the relationship soured when Romag discovered Chinese factories hired by Fossil to manufacture the goods were using counterfeits. After Romag claimed Fossil did not address the counterfeit issue, it filed suit alleging trademark infringement and seeking damages in the form of Fossil’s profits.
While the jury found that Fossil had acted in “callous disregard” of Romag’s trademark rights, it did not believe there was sufficient evidence that Fossil willfully infringed on Romag’s trademarks. When Romag sought an order for Fossil’s profits from the district court, it refused citing a Second Circuit precedent that a plaintiff in a trademark infringement case must show the defendant willfully infringed to be awarded the defendant’s profits. Romag appealed to the Supreme Court showing the discrepancy between how the circuits were considering willfulness in these cases – many only considered willful infringement as an important factor to consider while others found it was required before the defendant’s profits could even be available.
In its decision, the Supreme Court provided much-needed clarity that willfulness is not a precondition for an award of infringer’s profits for trademark infringement under 15 U.S.C. §1125(a). It also cautioned courts from reading language into statutes when such language does not exist. The court noted that the Lanham Act clearly states when a defendant’s intent to infringe is necessary for a plaintiff to be entitled to certain remedies under the law. As an example, the court pointed to the clear language for claims of trademark dilution under 15 U.S.C. §1125(c) which requires defendants to act willfully in order for profits to be available as an example of how the Lanham Act clearly subscribes intent when it is required. Justice Gorsuch confirmed that it is not the court’s job to cipher through policy and cautioned that while intent is an important factor to consider when awarding damages, it is not a burden that must be shown in order for profits to be available.
Under the court’s ruling, plaintiffs can recover the defendant’s profits upon a showing that trademark infringement occurred, even if the defendant did not intend to infringe. However, this does not mean that intent is no longer important. Courts are still required to consider the unique facts and circumstances of each matter when deciding on awarding damages, including whether the defendant willfully infringed. It is hard to imagine that the “innocent infringer” will be held to the same standard as the willful one, but only time will tell how courts interpret the importance of willfulness in light of this decision. The court made it clear that it passes the baton to Congress for this consideration of innocent vs. willful infringers under the Lanham Act, as it is a policy decision that only Congress can act on.
If you have questions about how this decision might affect your business, please contact the author or a member of the Trademark and Copyright practice.