Supreme Court Rules that Willfulness Not Required for Award of Profits in Trademark Infringement Cases
On April 23, 2020, by a unanimous vote, the United States Supreme Court resolved a circuit split and held that a plaintiff in a trademark infringement suit does not need to show that a defendant willfully infringed in order to recover profits.
The Lanham Act, 15 U.S.C. § 1117(a) states that:
“[w]hen 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 in any civil action arising under 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.”
While willfulness is an express precondition to a profits award in a suit for trademark dilution cases under section 1125(c), the statute is silent as to infringement suits under section 1125(a). Prior to the Supreme Court’s decision in Romag Fasteners, Inc. v. Fossil Group, Inc., fka Fossil, Inc., et al. (No. 18-1233), federal and state courts differed in their reading of that provision. Some (including the Second and Ninth Circuits) interpreted the statute as holding that proof of intentional or willful infringement was an essential requirement for recovery of the infringer’s profits. Conversely, other courts held that willful infringement was not a requirement for recovery, but it was nevertheless relevant in deciding whether profits should be awarded. In its decision in Romag, the Court sided with the latter group, holding that while “a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate,” it was improper to insist upon the “inflexible precondition to recovery” sought by Fossil in this case.
In light of this decision, it will be less difficult for trademark infringement plaintiffs to recover profits from their infringers – mark owners do not need to definitively show willful or intentional infringement. Defendants that are able to prove their infringement was accidental or innocent will no longer automatically escape an award of profits in certain jurisdictions – instead it will be up to the court to decide an appropriate remedy after a consideration of all factors – including the defendant’s intent. Some experts worry that this decision may lead to more baseless infringement lawsuits over minor or small-scale infringements filed by plaintiffs tempted by the potential of a high profits award. Similarly, there is some concern that meritorious cases that should settle quickly may be more likely to become drawn-out as plaintiffs consider holding out for larger awards. Others believe that the ruling will have a limited impact, as many courts already weighed willfulness as a factor to consider, rather than a mandate, in awarding damages.
If you have questions about how this decision may affect you, please contact your CSG attorney or the author below.