ABA (as amicus) Asks the Supreme Court to Adopt a Flexible Rule for Recapture of Profits in Trademark CasesIntellectual Property Owners Association (as amicus) Argues That a Willfulness Requirement Is Consistent with the Statute and Principles of EquityThe American Bar Association (“ABA”) filed an amicus brief with the Supreme Court in support of the petitioner in Romag Fasteners, Inc. v. Fossil, Inc., No. 18-1233. The ABA’s brief urges the Court to interpret Section 35(a) of the Lanham Act, 15 U.S.C. § 1117(a), as not requiring proof of willfulness in determining whether to award recapture of a trademark infringer’s profits, but allowing willfulness to be considered among other equitable factors. The ABA asserts that such interpretation is supported by the statutory text of § 1117(a) and public policy.

The concurring opinions from Justices Alito, Breyer, Kagan, and Sotomayor kept the door open to consideration of a range of culpable mental states, including willfulness.BackgroundLanham Act, 15 U.S.C. § 1117(a) – Murky Drafting and MisinterpretationsThe Supreme Court's decision in Romag continues a recent line of trademark cases focused on providing guidance on murkily drafted legislation from Congress, and shining a light for the lower courts to resolve the circuit splits that resulted from previous attempts at interpreting to shore up the resulting divergent interpretations of the Lanham Act, 15 U.S.C. § 1117(a). The relevant section of the Lanham Act, 15 U.S.C. § 1117(a) for the violation of a mark owner's rights, which addresses recovery of profits, damages and costs, and attorney fees, states:When 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, ora willful violation under section 1125(c) of this title, shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 of this title, and su

In June 2019, the United States Supreme Court granted certiorari inRomag Fasteners Inc. v. Fossil Inc., et al., No. 18-1233. As set forth in our previous blog post, Romag Fasteners Inc. (“Romag”) seeks to have the Court resolve a longstanding circuit split on the issue: “[w]hether, under section 35 of the Lanham Act, 15 U.S.C. § 1117(a), willful infringement is a prerequisite for an award of an infringer’s profits for a violation ofsection 43(a), id. § 1125(a).”As our previous blog post explains, an April 2014 jury verdict in the District of Connecticut found that Fossil Inc. (“Fossil”) had infringed Romag’s trademark and patent for magnetic clips for purses and wallets.

Two weeks from now, on January 14, 2020, the Supreme Court will hear oral argument in Romag Fasteners, Inc. v. Fossil, Inc. on the long-standing circuit split over whether willful infringement is a necessary precondition for an award of profits in a Section 43(a) trademark infringement case.Under the Lanham Act, a victorious plaintiff in a trademark infringement case may be entitled to an election of either a monetary award of its damages or a disgorgement of the infringer’s profits, subject to equitable principles. 15 U.S.C. §1117(a). However, monetary relief is not a given, and injunctive relief is awarded far more commonly.

Romag Fasteners, Inc. v. Fossil Group, Inc., No. 18-1233 (Apr. 23, 2020). In a 9-0 opinion authored by Justice Neil Gorsuch, the Court held that the plain language of 15 U.S.C. § 1117(a) does not require a finding of willfulness in trademark cases brought under §1125(a). The Court’s reasoning should apply equally to false advertising cases.

Rather, the availability of profit awards are governed by “principles of equity.” While “willfulness” is relevant to these principles, it is not determinative.The majority in Romag reached this conclusion by analyzing the plain language of the Lanham Act section governing remedies for trademark violations, 15 U.S.C. § 1117(a). It provides:When 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.

Last week,the U.S. Supreme Court held that willful infringement of a trademark is not required for a plaintiff to recover defendant’s profits upon a showing of a likelihood of confusion. The Court focused on the language of 15 U.S.C. § 1117 of the Lanham Act itself, which it found “has never required a showing of willfulness” to win profits in a likelihood of confusion case, while expressly making “a showing of willfulness a precondition to a profits award” in a dilution case. The Court also cited several passages in the Lanham Act that reference mental states, and emphasized the lack of such a reference in the likelihood of confusion provision.Background of the case:Romag and Fossil entered an agreement by which Romag would supply fasteners for use in Fossil’s handbags.

The Lanham Act provides that a prevailing plaintiff is entitled to recover a defendant’s profits “subject to the principles of equity.” See 15 U.S.C. § 1117(a). Certain circuits—the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh—considered willfulness as one of several factors in determining whether to award defendant’s profits.

SummaryOn April 23, 2020, the Supreme Court unanimously held in Romag Fasteners Inc. v. Fossil Inc. that “willfulness” is not required for trademark owners to recover lost profits from infringers under § 35(a) of the Lanham Act, 15 U.S.C. § 1117(a). 140 S. Ct. 1492 (2020).

The district court held that Romag could not recover Fossil’s profits because the trademark infringement was not willful. The US Court of Appeals for the Federal Circuit, applying controlling Second Circuit precedent, affirmed and held that willfulness is a prerequisite to an award of the infringer’s profits under 15 U.S.C. § 1117(a). The Court of Appeals cited George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532, 1540 (2d Cir. 1992), which reasoned that such an award would cause an undue windfall to a plaintiff and result in inequitable treatment of an “innocent” or “good faith” infringer.