U.S. Supreme Court Obliterates Willfulness Precondition for Profits Award in Trademark CasesApril 23, 2020 – Alerts
In a big win for brand owners, the U.S. Supreme Court has ruled that the plaintiff in a trademark infringement claim is not required to prove willfulness when seeking an award of the defendant's profits under Section 1117(a) of the Lanham Act.
The high court's unanimous decision in Romag Fasteners, Inc. v. Fossil Group Inc. settles a long-time split among the federal circuit courts regarding whether proof of a defendant's willfulness is a prerequisite to securing a disgorgement of profits.
The Third, Fourth, Fifth, Seventh and Eleventh circuits had adopted a similar rule and have not required a willfulness finding as a prerequisite in order to disgorge ill-gotten profits, but the First, Second, Sixth, Eighth, Ninth, Tenth and District of Columbia circuits have applied a contrary rule. The Romag Fasteners decision settles the question for all trial courts, precluding the application of the requirement that a brand owner show that the defendant acted willfully in the accused infringement.
Proving willfulness is particularly difficult for brand owners because it requires evidence of a defendant’s knowledge or intentions.
The legal question before the Supreme Court hinged on the precise text of several subsections of the Lanham Act.
For a trademark dilution claim §1125(c), the Lanham Act explicitly requires proof of willfulness as a precondition for a profits award. But it has never included such a requirement for a trademark infringement or unfair competition claim, such as the false or misleading use of trademarks under §1125(a).
In a trademark or unfair competition matter, under §1125(a), the Lanham Act creates a civil cause of action against any person who in the connection with any goods or services uses in commerce any word, term, name, symbol, or device, or any false or misleading description of fact, which is likely to:
- cause confusion; or
- cause mistake; or
- deceive as to the affiliation, connection, or association of such person with another
The statutory text states that if a brand owner establishes likelihood of confusion, mistake, or deception under §1125(a), then the courts must look to §1117(a), which excludes any mention of willfulness and provides for the following types of monetary recovery: “(1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.”
At oral argument, Justices Ruth Bader Ginsburg and Neil Gorsuch questioned why, if Congress had wanted to impose a willfulness requirement, it did not simply write one into the Lanham Act. Justice Ginsburg noted that the legislature actually included "willfulness" in other parts of the statute, but failed to include it within the statutory text in §1125(a).
In the April 23, 2020 opinion, Justice Gorsuch declared that the Lanham Act's remedies provision for trademark violations "has never required such a showing of willfulness to win a defendant’s profits.” He cautioned lower courts to resist the temptation of reading such a requirement into a law, especially when Congress “included the term in question elsewhere in the very same statutory provision.”
Justice Gorsuch wrote, “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 that such a consideration “is a far cry from insisting on the inflexible precondition” of requiring a finding of willfulness.
Pursuant to the decision, the judgment of the court of appeals was vacated, and the case was remanded for further proceedings. The plaintiff, Romag Fasteners, will now be able to go back to district court and seek an award that included defendants profits, which were argued to be $6.8 million.
If you have any questions relating to this ruling or brand protection or enforcement, please contact the authors of this alert, Patricia M. Flanagan at [email protected] or Alex L. Braunstein at [email protected]. Visit our website to learn more about Fox Rothschild's Anti-Counterfeiting and Brand Enforcement practice group.