Whenever there is an important Supreme Court ruling in trademark law, I like to write summaries about the case. Recently, the Supreme Court made its ruling in Romag Fasteners, Inc. v. Fossil Group, Inc. This case dealt with trademark infringement damages, and when they can be awarded. Before this case, there was a split in the federal circuit courts on the issue of willfulness. In some courts, a plaintiff was required to prove willfulness before they could be awarded profits from the defendant. But in other courts, there was no such requirement. In this case, the Supreme Court ruled that it was not necessary to prove willfulness for profits to be awarded as a part of trademark infringement damages.
In order to understand this ruling, you must first understand what is meant by the term “willfulness.” In the context of trademark infringement, willfulness refers to the specifics of how the infringement occurred. An infringement is willful if the infringer knew that use of a trademark was infringing but used it anyway. Willfulness is often tied to the concept of “bad faith.” Basically, when someone knows that they are doing something wrong and do it anyway, then their behavior was willful.
This often comes up in the context of trademark law because infringing is a way to free ride on the hard work of others. For example, if someone makes a knockoff Louis Vuitton handbag they may be able to sell it for much more than if they tried to start their own business and brand. And if they can pass it off as the real thing, they may be able to sell it for the same price as the real thing. In that case, it is a near certainty that the infringement was willful. However, in some circuits Louis Vuitton would have needed prove that element of willfulness before they could be awarded any of the profits that the infringer made selling the knockoff bags.
Romag Fasteners, Inc. v. Fossil Group, Inc.
This case started at the district court, where a jury found that Fossil had infringed on the ROMAG trademark as well as Romag’s trademark rights to its magnetic snap fasteners. The jury awarded Romag nearly $7 million in trademark infringement damages. However, they did not rule that Fossil’s infringement was willful. Instead, they found that Fossil’s infringement was a result of “callous disregard” of Romag’s trademark rights. As a result, the district court held that Romag was not entitled to any of Fossil’s profits. After appealing to the Federal Circuit, which upheld the lower court’s ruling, the case was taken by the Supreme Court.
In a unanimous ruling, the Supreme Court held that willfulness is not a requirement for an award of profits as part of trademark infringement damages. This is in large part because the Trademark Act does not specify such a requirement, even though much of the act focuses on standards of mental state:
We do not doubt that a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate. But acknowledging that much is a far cry from insisting on the inflexible precondition to recovery.
So what does this mean for parties to a trademark infringement suit? While the ruling is certainly good news for plaintiffs, there most likely won’t be a dramatic shift in trademark infringement litigation. For one thing, the state of mind remains an important factor in determining damages. Justice Sotomayor points out that defendant’s profits are rarely, if ever, awarded in cases of “innocent infringement,” and that is not likely to change.
Want to Help Avoid Having to Pay Trademark Infringement Damages?
If you are starting a new business, conducting a trademark search can help you to avoid having to defend yourself against claims of trademark infringement. On the other hand, if you already own a business, then getting a trademark registration can make it easier for you should you ever have to go after someone for infringement. Regardless of where you are in your business timeline, if you haven’t looked at your trademark as the valuable asset that it is, please call me at (480) 360-3499, email me at email@example.com, or complete the contact form found on this page to schedule your free initial consultation today. I look forward to speaking with you.