323-660-9916 info@tsircoulaw.com

On April 23rd, 2020 the Supreme Court handed down a decisive ruling in Romag Fasteners, Inc. v. Fossil Group, Inc., giving an important new development to how damages are calculated in trademark infringement cases.  Specifically, this holding removed the requirement of proving “willfulness” in trademark infringement in order to receive the infringer’s profits.

The background of this case involved Roman Fasteners, a company that created fasteners for watches and jewelry.  Watch mater Fossil Group Inc. entered into a contract where Fossil was to use Romag fasteners on their watch products.  It was discovered however that Fossil was using counterfeit Romag fasteners on their watches, causing Romag to initiate a trademark infringement lawsuit.  While the district court ruled in favor of Romag, finding that Fossil was guilty of infringement, and even though the court found Fossil to be “in callous disregard” of Romag’s trademark, they did not find that Fossil was proven to be willful in this infringement.  Because there was no finding of willfulness, the court did not award Romag the profits of the infringer Fossil, as willfulness was required in order to award infringer profits.

In the Supreme Court’s ruling, Justice Gorsuch writing the unanimous opinion held that while mental state can be considered in deciding whether to award profits, there is no bright line rule that a plaintiff need prove willfulness as a prerequisite.  Specifically, stating the Court does not “usually read into statutes words that aren’t there.” Romag Fasteners, Inc. v. Fossil, Inc., No. 18-1233, slip op. at 3 (Apr. 23, 2020).  Gorsuch went on to explain that while Section 43(c) of the Lanham Act (15 U.S.C. § 1125(c)), which covers trademark dilution, requires willfulness for an award of profits, Section 43(a), which covers trademark infringement, does not.  The Lanham Act imposes no specific requirement as to willfulness of the infringer in order to obtain an award of profits.  So while the act may discuss the infringer’s mental state, the Supreme Court was unwilling to impose the strict condition of “willfulness”, in order to recover profits, where the statute has not specifically stated one.

The development of this new rule cannot be understated.  Previously, much effort in pre-litigation and discovery would be invested in a potential trademark litigation proceeding in order to establish the willfulness of an infringer.   Absent some clear declaration of intention to infringe by the infringer, or evidence of ignored multiple attempts at cease and desist notices, it was exceedingly difficult to prove the “willfulness” condition in order to receive an infringer’s profits.  With this ruling however, that requirement has now been removed.  This means that prosecution can save the time, effort, and capital necessary in establishing willful intent to infringe.  Further, this gives aggrieved parties yet another avenue and option in recovery from their infringement.  Both of these things should lead to encouraging rights holders to enforce their rights, as well as increase leverage of settlement pre-litigation.