Supreme Court Ruling Holds That Willfulness is Not Required to Claim Profits from Trademark Infringement
On April 23, 2020, the United States Supreme Court ruled that a showing of willful infringement is not required in trademark infringement cases in order to recover a defendant’s profits. The Court’s unanimous decision in Romag Fasteners, Inc. v. Fossil, Inc. rejects “willful violation” as an “inflexible precondition” to such awards, and lays a path for reclaiming significant awards in cases where willfulness is not proven.
BG Law Partner Jeffrey A. Kobulnick wrote in the Los Angeles and San Francisco Daily Journal in October, 2019, on the potential outcomes of the case and their meaning. This decision has the potential to fundamentally change trademark litigation by standardizing application of the law across the country, eliminating possible forum shopping. In courts which have required a finding of willfulness before allowing recovery of profits, that remedy is now available without such a hurdle. As a result, there is likely to be a shift in the risk-benefit analysis for bringing or defending such claims. Since this is especially true in cases involving negligence or disregard of the trademark owners’ rights, there is now a greater incentive for brand owners to engage in more active monitoring and enforcement, and for everyone in general to conduct greater due diligence before adopting any trademark. At BG Law we regularly assist our clients with all of these issues.
In 2010, Romag sued Fossil over the use of counterfeit Romag magnetic fasteners on Fossil products, and a 2014 jury verdict issued an award that included $6.7 million in profits. The award was reduced at a subsequent bench trial and appeal, eliminating disgorgement, since Romag had failed to prove willfulness.
At issue in the case was the interpretation of the Lanham Act, 15 U.S.C. § 1117(a). The section relevant to willfulness states that
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 in any civil action arising under this chapter, 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. The court shall assess such profits and damages or cause the same to be assessed under its direction.
This section, and the specific inclusion of “willful” in relation to section 1125(c), has been a subject of discussion since its adoption in a 1999 amendment. Each Circuit Court has had its own interpretation, with the First, Second, Eighth, Ninth, Tenth and D.C. Circuits having all required willful infringement and the Third, Fourth, Fifth, Sixth, Seventh and Eleventh Circuits allowing disgorgement of profits without a proof of willful infringement. Plaintiffs have thus benefited from the ability to select from potential remedies based on where they chose to file. It is also worth noting that there was a circuit split on the disputed meaning of willfulness prior to the 1999 amendments.
In its decision, authored by Justice Gorsuch, the Court noted that “the Lanham Act exhibits considerable care with mens rea standards,” and that the absence of such language in this section was “all the more telling.” Notably, the decision emphasized that willfulness remains an important consideration in determining whether to award profits, but is not an “absolute precondition.” Justice Sotomayor concurred separately, and Justices Alito, Breyer, and Kagan filed a concurring opinion.