Plaintiff not required to show willfulness for profits awards

By Ferraiuoli LLC

On April 23, 2020, the Supreme Court of the United States vacated and remanded a previous ruling from the United States Court of Appeals for the Federal Circuit, regarding the case Romag Fasteners, Inc. v. Fossil Group, Inc., which held that, under Second Circuit law, an award of profits could not be sustained.

Romag Fasteners, Inc., and Fossil, Inc., signed an agreement to use Romag’s fasteners in Fossil’s leather goods. Romag eventually discovered that factories in China making Fossil products were using counterfeit Romag fasteners. Romag sued Fossil and certain retailers of Fossil products (collectively, Fossil) for trademark infringement pursuant to 15 U. S. C. §1125(a). Relying on Second Circuit precedent, the district court rejected Romag’s request for an award of profits, because the jury, while finding that Fossil had acted callously, rejected Romag’s accusation that Fossil had acted willfully.

In its ruling, the Supreme Court stated that a plaintiff in a trademark infringement suit is not required to show that a defendant willfully infringed the plaintiff’s trademark as a precondition to a profits award. The Lanham Act provision governing remedies for trademark violations, §1117(a), makes a showing of willfulness a precondition to a profits award in a suit under §1125(c) for trademark dilution, but §1125(a) has never required such a showing. Reading words into a statute should be avoided, especially when they are included elsewhere in the very same statute.

“Fossil argues that equity courts historically required a showing of willfulness before authorizing a profits remedy in trademark disputes. But this suggestion relies on the curious assumption that Congress intended to incorporate a willfulness requirement here obliquely while it prescribed mens rea conditions expressly elsewhere throughout the Act. Nor is it likely that Congress meant to direct ‘principles of equity’—a term more naturally suggesting fundamental rules that apply more systematically across claims and practice areas—to a narrow rule about a profits remedy within trademark law”, stated the Supreme Court. “Even crediting Fossil’s assumption, all that can be said with certainty is that Pre-Lanham Act case law supports the ordinary principle that a defendant’s mental state is relevant to assigning an appropriate remedy. The place for reconciling the competing and incommensurable policy goals advanced by the parties is before policymakers”, it added.