By: Robin Gentry
On April 23, 2020, the Supreme Court issued a ruling in Romag Fasteners, Inc, v. Fossil, Inc. that should make it easier for trademark owners to be awarded the defendant’s profits when someone infringes their mark. The Supreme Court took the case because some, but not all, appeals, or circuit courts, required that a trademark owner prove “willful” infringement before the Court would award profits. The Eleventh Circuit, which hears cases from Georgia courts, and the Second Circuit, which hears cases from New York, were two of the Circuits that required “willful infringement.” Willful infringement is hard to prove and is usually reserved for cases involving only the most premediated and calculated of defendants, or those that refused to stop infringement after being warned to do so. This meant that trademark owners could often stop the infringement but could not get a damages award.
In its Romag Fasteners decision, the Supreme Court ruled that a finding of willful infringement was not a necessary precondition for awarding a defendant’s profits. The Court focused on the text of the Trademark Act (called the Lanham Act). The Court noted that the statutory language had “never required a showing of willfulness to win a defendant’s profits” for trademark infringement. In contrast, the Lanham Act explicitly required that a defendant’s infringement be willful to receive profits in a dilution case. According to the Supreme Court this meant that if Congress had intended to limit damages to cases of willful trademark infringement, it would have included specific language in the statute.
The Supreme Court rejected Fossil’s argument that the phrase “principles of equity” in the statute required that profits only be awarded in cases of willful infringement. The Supreme Court examined the history of the statute and the general meaning of principles of equity and concluded that “it seem a little unlikely Congress meant ‘principles of equity’ to direct us to a narrow rule about a profits remedy within trademark law.” The Court also noted that while some courts had historically required willfulness for a profits award, the majority of cases did not.
Despite holding that a finding of willfulness was not required to award a trademark owner the defendant’s profits, the Court noted that it did “not doubt that a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate.” But, it refused to make that willfulness an “inflexible” requirement.
So, it is likely that a trademark owner will be more likely to receive a defendant’s profits if it can show willfulness. But in cases where it cannot, the trademark owner can make other arguments for why it should be awarded profits. We expect to see more awards of profits after this case and will watch to see how the law continues to develop.
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