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IP Alert: Supreme Court Holds Willfulness Not Required to Award Trademark Profits

April 27, 2020

Is a defendant’s mental state an important consideration in determining an award of profits in a trademark infringement action? The U.S. Supreme Court, in Romag Fasteners, Inc. v. Fossil, Inc., answered that question and rectified a split in the federal circuits, unanimously holding that willfulness is not a requirement for an award of defendant’s profits. The case is expected to lead to more-frequent claims for a defendant’s profits in trademark litigation.

Romag and Fossil had an agreement for Fossil to manufacture some of its fashion accessory products with magnetic fasteners of Romag. As time went on, a third-party manufacturer of the Fossil accessories began to use counterfeit fasteners, and Romag sued Fossil for trademark infringement and false designation of origin under the Lanham Act. After finding Romag liable for infringement, the jury in that underlying suit found that Fossil had acted in “callous disregard” of the rights of Romag, but simultaneously found that Fossil had not acted willfully in its infringement of the rights of Romag. The district court held that Romag was not entitled to an award of Fossil’s profits because the controlling Second Circuit precedent required a finding of willfulness to award profits.

Not all circuits followed the rule of the Second Circuit on this issue, and the Supreme Court agreed to hear the case to resolve the dispute. In its opinion, the Court found that the Lanham Act statute section 1125(a) does not require a finding of willfulness to award profits. Fossil argued that while the statute might not specify a finding of willfulness for granting an award of profits, such an award is subject to “principles of equity.” As such, it argued, the Second Circuit rule is appropriate to require a finding of willfulness for an award of profits. The Court rejected that argument, finding that the language of the statute itself is clear and holding that while the issue of willfulness is appropriate in other enquiries, it is not an appropriate requirement under section 1125(a). As a result, the Court remanded the case for further proceedings consistent with this ruling.

For further information on this case, please contact Fitch Even partner Joseph T. Nabor, author of this alert.

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