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Supreme Court Finds ‘Willfulness’ Not Required To Obtain A Profits Award From An Infringer
May 5, 2020

By Michael Snyder and Laura Lipschutz

On Thursday, April 23, 2020, in the case Romag Fasteners, Inc. v. Fossil Group, Inc., the Supreme Court held that the statutory provision governing remedies for violations in the Trademark Act, §1117(a), does not require a showing of willfulness in order for a plaintiff to recover profits in an infringement action arising under Trademark Act, 15 U.S.C. § 1125(a). This decision could tip the scales in favor of trademark owners.

The case involved a fastener manufacturer, Romag, that originally contracted with Fossil, to allow Fossil to use Romag’s magnetic snap fasteners for Fossil handbags. At some point in the business relationship, Romag discovered that Fossil had arranged for a factory in China to create allegedly counterfeit Romag fasteners to be used on Fossil merchandise. Romag brought a trademark infringement suit in the United States District Court for the District of Connecticut. The jury found that although Fossil acted with “callous disregard,” it did not act “willfully.” Therefore, following Second Circuit precedent that a finding of willfulness was required for an award of profits under the Lanham Act, the district court refused Romag’s request for an award of Fossil’s profits. The Supreme Court granted certiorari to resolve a circuit split regarding whether willfulness was required for an award of a defendant’s profits in a federal trademark infringement suit.

The Supreme Court, reviewing the text of the Trademark Act, noted that willfulness is a listed precondition for an award of profits in connection with a trademark dilution claim under Section 1125(c). However, Justice Gorsuch, writing for the unanimous Court, noted that willfulness is a concept absent from the text of Section 1125(a), relating to false designation of origin.

The Supreme Court reasoned that the statutory text of the Lanham Act does discuss an alleged infringer’s state of mind expressly and often, demonstrating Congress’s “considerable care with mens rea standards”. That is, when Congress sought to have an alleged infringer’s mental state considered, they were explicit in the text of the statute. Thus, the absence of such mens rea requirement under Section 1125(a) “seems all the more telling.”

The Court disagreed with Fossil’s contention that the language “subject to the principles of equity” found in Section 1125(a) was akin to a willfulness requirement. The Court noted that this reading “would not directly contradict the statute’s other, express mens rea provisions,” but that such a reading would require the Court to assume that Congress intended for a willfulness requirement to be read into the statute implicitly, while such a requirement is expressly stated in other parts of the Lanham Act. The Court further reasoned that “principles of equity” is not understood to include “a narrow rule about profits remedy within trademark law.”

The Romag case is a boost for trademark infringement plaintiffs seeking to recover monetary damages. Prior to this decision, there were certain federal Circuits where a trademark owner might have been discouraged from filing a lawsuit, because a meaningful damages award was unlikely without a strong showing of willfulness or bad faith. Now, trademark owners may be emboldened by the Supreme Court’s decision. Higher and more frequent trademark infringement damages awards may be on the horizon.