Supreme Court Finds Willfulness Not Required for Trademark Profit Award

On April 23, 2020, the United States Supreme Court vacated and remanded the US Court of Appeals for the Federal Circuit's decision in Romag Fasteners, Inc. v. Fossil, Inc., No. 2018-2417 (Fed. Cir. 2019), ruling that a plaintiff is not required to show that a defendant willfully infringed the plaintiff’s trademark as a precondition to a profits award.

The decision is consistent with the position advocated in AIPLA's amicus brief filed in this case.

Background

The case involves Romag Fasteners Inc., the maker of magnetic snap fasteners often used in leather goods, as it appeals to restore a $6.7 million jury award of Fossil, Inc.'s profits for a trademark violation. Romag sued Fossil and certain retailers for trademark infringement under 15 U. S. C. §1125(a). Relying on Second Circuit precedent, the district court rejected Romag’s request for an award of profits, because the jury, while finding that Fossil had acted callously, rejected Romag’s accusation that Fossil had acted willfully.

Opinion of the Court

Writing for a unanimous court, Justice Gorsuch looked to the  15 U. S. C. §1117(a), the relevant section of the Lanham Act governing remedies for trademark violations, which says that "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.”

"Immediately," Gorsuch wrote, "this language spells trouble for Fossil and the circuit precedent on which it relies." He explained that §1117(a) makes a showing of willfulness a precondition to a profits award in a suit under §1125(c) for trademark dilution, but stresses that §1125(a) never required such a showing. Furthermore, he noted, the Lanham Act frequently mentions mental states in several of its provisions; therefore the absence of such a precondition in §1125(a) "seems all the more telling."

Pointing to §1117(a)’s language indicating that a violation under §1125(a) can trigger an award of the defendant’s profits “subject to the principles of equity,” Fossil argued that equity courts historically required a showing of willfulness before authorizing a profits remedy in trademark disputes. But Gorsuch points out that this "would require us to assume that Congress intended to incorporate a willfulness requirement here obliquely while it prescribed mens rea conditions expressly elsewhere throughout the Lanham Act." This, he notes, while possible, is highly unlikely.

Finally, Gorsuch acknowledges the many policy arguments made by both parties and amici, but points out that reconciling such policy goals is the responsibility of policymakers.

Concurring Opinions

Justice Alito, joined by Justice Breyer and Justice Kagan, filed a concurring opinion explaining that the "relevant authorities" unequivocally state that willfulness, while an important consideration in awarding profits under §1117(a), is not an "absolute precondition."

Justice Sotomayor, concurring in judgment only, disagrees with the majority's suggestion that "courts of equity were just as likely to award profits for such 'willful' infringement as they were for 'innocent' infringement." Instead, Sotomayor found that significant authorities "hardly, if ever, awarded [profits] for innocent infringement."

Read the opinions in this case.