Supreme Court in Romag v. Fossil Finds Willfulness Relevant but Not Required for Trademark ProfitsMay 1, 2020

On April 23, 2020, the United States Supreme Court issued a landmark ruling in a trademark infringement matter. They answered the long-standing question: When can courts order trademark infringers to disgorge their profits to a trademark owner? Over the years there has a been a long-standing circuit split on the answer to this question with four circuits having a categorical rule requiring willful infringement before any award of the defendant’s profits, two circuits requiring a showing of willfulness for companies that were not direct competitors, and six circuits considering willfulness in determining when profit awards were appropriate but not requiring it. 

The ruling in Romag Fasteners, Inc. v. Fossil, Inc., (No. 18-1233) ends years of uncertainty among the lower courts and holds that a finding of willfulness is not an absolute prerequisite for disgorgement of the defendant’s profits.

The Romag Fasteners case involved the infringement of handbag fasteners.  Fossil, Inc., a handbag company, entered into an exclusive license agreement with Romag to use Romag’s trademarked and patented fasteners in its handbags.  Several years later, Romag learned that Fossil was instead using counterfeit fasteners and sued Fossil in federal court in Connecticut. Romag alleged that Fossil infringed Romag’s trademark and patent. A jury found Fossil liable for patent and trademark infringement, and held that although Fossil had acted with “callous disregard,” it had not willfully infringed Romag’s trademark. Following Second Circuit precedent, the district court refused to award Romag profits since willfulness had not been found. Romag petitioned the Supreme Court for a writ of certiorari, which the Court granted.

Justice Gorsuch’s concise and textualist opinion holds that while the precise language of the Lanham Act requires willfulness for an award of profits for trademark dilution, no such language exists in relation to trademark infringement.  He concludes therefore that while a “defendant’s mental state is a highly important consideration” in determining whether profits should be awarded, a finding of willfulness is not an “inflexible precondition” to disgorgement of a defendant’s profits.   In a one paragraph concurrence, Justice Alito, joined by Justices Breyer and Kagan, reiterated that “willfulness is a highly important consideration in awarding profits,” but “not a precondition.”  Justice Sotomayor, acknowledging the concerns raised by Fossil that the Court’s ruling could lead to large judgments against innocent trademark infringers, concurred on the judgment only.

Significantly, while the decision only addressed trademark infringement, it also would apply to false advertising and false designation claims, as section 1117(a) of the Lanham Act covers such claims.

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