Willfulness not needed to disgorge profits for infringing trademark

On Behalf of | Sep 23, 2020 | Intellectual Property Litigation, Trademark Law |

On April 23, the U.S. Supreme Court said that the federal Lanham Act does not require that a trademark infringer did so willfully as a precondition to the trademark owner getting back the profits the infringing party made in violation of the Act. At the time the highest court scheduled oral argument in Romag Fasteners v. Fossil Inc., we posted a detailed blog about the issues in the case.

The dispute

The case arose out of an agreement between purse maker Fossil and purse clasp maker Romag in which they contracted to use Romag fasteners on Fossil purses. Romag learned that Fossil purses made in China used knockoffs of Romag fasteners, but not the real deal. Allegedly, Fossil was not policing the operations enough to stop the practice. Romag sued Fossil for trademark infringement and won.

Callously disregarding is not willful

The federal jury found that Fossil had infringed Romag’s trademark “in callous disregard” of Romag’s intellectual property rights, but that the infringement was not willful. Following the precedent of the U.S. Court of Appeals for the 2nd Circuit, the district court judge did not allow an award of disgorged profits because the infringement was not willful.

No willfulness required for profits

The federal circuits were split on the issue, until the Supreme Court decided on April 23 that willfulness is not required to get profits wrongfully gained during infringing activity, but that the state of mind of the infringer is relevant to the decision whether to award profits.

Statutory language

The Supreme Court mostly based its decision on the language of the Lanham Act. For example, the subsection of the applicable statute allowing a cause of action for false and misleading trademark use under which Romag sued does not say that willfulness is required to get profits for infringement. However, in a suit for trademark dilution under another subsection, willfulness is literally required for a profit award.

The court said that it could not read in a willfulness requirement where Congress was silent, but that an infringer’s state of mind is still relevant to the decision whether to disgorge profits made by infringing. For example, innocent or even negligent infringement is less actively engaging in the unlawful behavior than would be willful infringement.