Supreme Court Eases Recovery of Profits from Trademark Infringers

The United States Supreme Court recently made it potentially easier for plaintiffs in trademark infringement lawsuits to recover a defendant’s profits from their infringing acts.  More specifically, the Court held in Romag Fasteners, Inc. v. Fossil, Inc. 590 U.S. ___ (2020) that the plaintiff need not show that a defendant’s infringement is willful before recovering the defendant’s profits.

Romag is a seller of magnetic snap fasteners for use in leather goods, and Fossil designs, markets, and distributes a range of fashion accessories, notably watches.  Romag and Fossil entered into an agreement for Fossil to use Romag’s fasteners in Fossil’s handbags and other products.  Some time later, however, Romag discovered that the factories hired by Fossil to make these products were instead using counterfeit fasteners and that Fossil was doing little to stop the use of counterfeits.

Romag sued Fossil, alleging that Fossil infringed its trademark and falsely represented that its fasteners came from Romag.  A jury agreed that Fossil infringed Romag’s trademark, but the jury declined to award the profits that Fossil had realized from use of the counterfeit fasteners because the jury decided Fossil’s infringement wasn’t willful (i.e., knowing or reckless).  The Federal Circuit affirmed and Romag appealed to the Supreme Court, arguing that a defendant’s profits could be awarded as damages without first finding willful infringement.

On appeal, the Court noted that although an award of profits for trademark dilution[1] requires proof of willfulness, Romag didn’t sue Fossil for trademark dilution.  Rather, Romag sued Fossil for trademark infringement and the relevant statutory language[2] has no explicit willfulness requirement.  The Court also rejected Fossil’s argument that the words “subject to the principles of equity” implied that a defendant’s infringement must be willful in order for profits to be awarded.  As there are numerous express references to “willful conduct” elsewhere in the Lanham Act, the Court reasoned that Congress could have explicitly required “willful conduct” for an award of the defendant’s profits in trademark infringement, if that was their intent.

The Court did acknowledge that a defendant’s intent is still an important consideration in determining whether an award of profits is appropriate, and it remains to be seen whether obtaining defendant’s profits in an infringement case will now prove significantly easier than in the past.  However, the Court concluded that it was ultimately up to Congress to make willfulness, or any other applicable standard, a statutory requirement in this context.  As Congress did not do so, the Court held that proof of willful conduct on the part of a trademark infringer is not a precondition to recovering the infringer’s profits.

[1] Trademark dilution occurs from an association between a famous mark and a mark that impairs the distinctiveness of the famous mark.  E.g., “Victoria’s Secret” and “Victor’s Little Secret.”

[2] Section 1117 of the Lanham Act states that “[w]hen 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…, 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.”