The Supreme Court issued an opinion in a trademark case that may have wide reaching implications. In Romag Fastener v. Fossil case (2020 WL 1942012, U.S., Apr. 23, 2020), the Court resolved the circuit split regarding whether, in a trademark infringement suit under the trademark statute (the Lanham Act), a plaintiff is required to prove that a defendant’s violation was willful in order to receive an award of profits. The Court refused to read a “willfulness” requirement into the Lanham Act that was not part of the statute’s express language. Willfulness is merely a factor to consider in an award of profits.
The plaintiff, Romag, sells magnetic snap fasteners for use in leather goods. Defendant Fossil contracted with Romag to use the Romag fasteners in Fossil’s leather handbags. Romag later discovered that Fossil’s manufacturer in China was using counterfeit Romag fasteners in the Fossil handbags. Romag sued, in the federal district court in Connecticut in the jurisdiction of the Second Circuit, alleging that Fossil infringed its trademark and falsely represented that its fasteners came from Romag. The jury found that Fossil acted with “callous disregard” of Romag’s rights, but rejected the accusation that Fossil acted willfully. Accordingly, the trial court, following Second Circuit precedent, held Romag could not recover profits on its trademark infringement claim because Romag failed to demonstrate Fossil acted willfully. Since the case also involved patent claims, the case was appealed to the Federal Circuit Court of Appeals rather than the Second Circuit. The Federal Circuit, applying its interpretation of the Second Circuit law affirmed the decision on the point of willfulness. After multiple appeals and remands on other issues, the U.S. Supreme Court agreed to hear the case solely on the issue of whether willfulness was a precondition to infringement claims under the Lanham Act.
The Court noted that in § 1117(a) or § 1125(a) of the Lanham Act, the sections dealing with infringement of a registered mark and an unregistered mark, respectively, willfulness is not mentioned as a prerequisite to recovering profits, damages, or the costs of the action. On the other hand, § 1125(c) of the Lanham Act, creating a cause of action for trademark dilution, does specify that willfulness is a precondition to an award of profits. Absent a specific requirement to show willfulness for trademark infringement, the Court will not imply one, stating “[t]he absence of any such standard in the provision before us … seems all the more telling.”
The Court rejected Fossil’s argument that a willfulness requirement should be read into § 1117(a) due to “principles of equity,” which would align 1117(a) with other provisions in the Lanham Act that did require willfulness. The Court held that “principles of equity” suggests fundamental rules that apply more systematically across claims and practice areas, specifically to trademark law, principles such as “laches, estoppel, and acquiescence.” The Court considered Fossil’s argument one of public policy that is appropriate for lawmakers, not the courts.
In concluding, the Court acknowledged that a “trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate,” but the courts should continue to evaluate the facts of each case in crafting an appropriate remedy without preconditions.