In a unanimous decision the US Supreme Court held in Romag Fasteners, Inc. v. Fossil Group, Inc., fka Fossil, Inc., et al, (No. 18-1233), that a plaintiff in a trademark infringement suit is not required to show willful infringement as a precondition to a disgorgement of the infringers’ profits.
Romag Fasteners, Inc. (‘Romag”) sells magnetic snap fasteners for use in wallets, handbags, and other leather goods. Fossil Inc. (“Fossil”) designs, markets, and distributes fashion accessories, including handbags and small leather goods. Romag and Fossil entered into an agreement permitting Fossil to use Romag branded fasteners on Fossil’s products. Romag later discovered that Fossil was selling products with counterfeit snaps bearing the Romag mark.
Romag sued Fossil and certain retailers for patent and trademark infringement. The jury found Fossil liable for trademark infringement. The jury also determined that while Fossil had acted “in callous disregard” of Romag’s rights, it did not act “willfully.” Without a finding of willful infringement, the district court rejected Romag’s request for an accounting of Fossil’s profits under the Lanham Act, holding that a willfulness showing was a prerequisite for such an award in the Second Circuit. On appeal, the Federal Circuit, applying Second Circuit law for the trademark infringement claim, affirmed the district court’s refusal to consider an award of Fossil’s profits. In doing so, the Federal Circuit took note of the split authority among the circuit courts on this issue, recognizing that “the willfulness requirement was not uniformly adopted.” Along with the Second Circuit, the First, Eighth, Ninth, Tenth, and D.C. Circuits required that “willful” infringement exist before an award of the infringer’s profits is available to the plaintiff. By contrast, the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits did not require a showing of willfulness for the plaintiff to recover the infringer’s profits.
Romag sought review and the Supreme Court granted certiorari on the question of whether Section 35 of the Lanham Act, 15 USC. 1117(a), requires a showing of willful infringement for a plaintiff to be awarded an infringer’s profits for a violation of Section 43(a).
Writing for all of the Court except Justice Sotomayor, Justice Neil Gorsuch focused on the statutory language of the Lanham Act governing remedies for trademark violations. Specifically, Justice Gorsuch observed that 15 USC. §1117(a) expressly makes a showing of willfulness a precondition to a profits award in a suit under §1125(c) for trademark dilution, but he pointed out that §1125(a) has never required such a showing for trademark infringement. Justice Gorsuch also noted that the “Lanham Act speaks often and expressly about mental states,” quoting five other provisions that limit remedies to cases of “willful,” “intentiona[l],” “innocent,” or “bad faith” conduct. All of these, he held, makes “[t]he absence of any such standard in the provision before us . . . see[m] all the more telling.”
Against this backdrop, Justice Gorsuch pointed out that “[t]he Court’s limited role is to read and apply the law those policymakers have ordained”—and that any policy arguments for or against a willfulness precondition to disgorgement should be considered by Congress and not the Court.
Justice Alito, joined by Justices Breyer, and Kagan, wrote separately, concurring in the Court’s opinion, and observing that relevant authorities, particularly pre-Lanham Act cases, also show that while willfulness is “a highly important consideration” in awarding profits, it is “not an absolute precondition.” Justice Sotomayor concurred solely with the judgment, writing that while she agreed with the Court that the statute does not impose a willfulness prerequisite for awarding profits, courts of equity rarely award profits in cases of innocent infringement.