When must a trademark infringer disgorge its profits?

On Behalf of | Nov 15, 2019 | Trademark Law |

The U.S. Supreme Court released its January 2020 oral argument calendar and it schedules argument in an important trademark infringement case. On Jan. 14, the fourth case heard in the new year will be Romag Fasteners v. Fossil Inc., requiring the justices to decide whether the trademark owner must show the infringement was willful under the Lanham Act to be awarded the infringer’s profits.

Do federal courts have flexibility to award profits or must they first find willful infringement?

Infringement of a trademark occurs when a nonowner uses the mark or one confusingly similar for the same or related goods or services associated with the trademark such that the public would be confused about the source of the goods or services. The issue in Romag Fasteners is following a finding of infringement, under what circumstances may an infringer be required to disgorge its profits, and whether it is necessary to establish the infringement was “willful.”

Professionals and courts split down the middle on the issue

As explained in an IP Watchdog article, several professional organizations have taken stands in the case, most urging for a flexible approach that would allow the trial court to fashion an appropriate remedy for infringement without first establishing willfulness. For example, the American Bar Association argues that the Supreme Court has supported lower courts having “flexibility and discretion” in Lanham Act infringement cases. The ABA asserts that willfulness in infringement (as opposed to negligent or accidental infringement) should be a factor to consider in awarding profits, but not a prerequisite.

By contrast, the Intellectual Property Owners Association or IPO takes the opposite approach, pushing for a willfulness requirement to be awarded profits. IPO believes the Lanham Act’s “plain language and legislative history” require willfulness (quoting IPO’s amicus brief).

In addition, the circuits (of the U.S. Courts of Appeal) are split six-six on the issue, with the 9th Circuit (which includes California) agreeing with the IPO.

We will report back in this space on this important trademark case.