United States Supreme Court Rules Willful Infringement Not Required To Award Profits In Trademark Infringement Litigation Under 15 U.S.C. §1125(a).

• United States Supreme Court rules that 15 U.S.C. §1125(a) does not require a finding willful infringement in order to warrant an award of infringer’s profits.
• Decision will likely have far reaching effects on trademark enforcement strategy and encourage diligence in trademark search and positioning in infringement negotiation.
• A clearer pathway to an award of profits increases leverage in negotiation and increases potential recovery.

In a case closely monitored by trademark infringement litigators throughout the nation, on April 23, 2020, the United States Supreme Court unanimously ruled in Romag Fasteners, Inc. v. Fossil, Inc. that a plaintiff need not demonstrate that a defendant willfully infringed plaintiff’s trademark in order to require disgorgement of profits to as a remedy under 15 U.S.C. §1125(a).  At the trial level, a jury found that Fossil violated the Lanham Act and infringed Romag’s trademark resulting in an award of Fossil’s profits.  However, the court ultimately denied the award of profits because Fossil’s actions were motivated by “callous disregard” and did not rise to the level of “willful.”  Accordingly, the Federal Circuit agreed that the relevant sections of the Lanham Act precluded an award of profits.

The Supreme Court reversed the decision of Federal Circuit primarily based upon statutory construction.  At a high-level, the court acknowledged that while trademark dilution claims brought pursuant to 15 U.S.C. §1125(c) expressly require a finding of willfulness as a precondition to an award of profits, Romag alleged and proved infringement under 15 U.S.C 1125(a) which contains no such requirement. The Supreme Court grounded its decision in the logical notion that if the legislature had desired to include intent as a threshold requirement for entitlement to certain remedies, it was free to do so.  The fact that the subject section of the Lanham Act had no such requirement when other sections expressly addressed intent prohibited courts from inferring such a requirement in connection with section 1125(a) claims.  Stated most concisely in the concurrence -  “willfulness is a highly important consideration in awarding profits under [these circumstances], but not an absolute precondition.”

This ruling appears to clear up a long-standing circuit split and now presents potential litigants with trademark infringement claims a path to an award of profits without an express finding of willfulness. That said, it remains an open question as to whether or not profits will be obtainable in innocent or negligent infringement disputes. While the bar has been lowered from a showing of willfulness, logic dictates that if infringement is innocent then equity would not require an award of profits.

For trademark owners, this decision raises strategic business and legal considerations. At the least, for trademark enforcement, it provides additional leverage for negotiation in and outside of litigation when evaluating potential damage due to infringement. By confirming a lower bar to seek an award profits – which can be very significant depending on the nature of the business – the decision may both chill infringement and hopefully curtail baseless defenses to infringement claims.

If you would like guidance on the impact of this decision and other recent legal developments on your business or to discuss how to approach trademark protection and/or enforcement, please contact either Christian Jensen () or Michael Zussman ().