BERO Group Publications

U.S. Supreme Court rules Willful Infringement is not Required for Award of Defendant’s Profits for Trademark Infringement.

By James L. McGovern, CPA/CFF, CVA, Fellow
April 2020

In a unanimous decision on April 23, 2020, ruling in the matter of Romag Fasteners Inc. v. Fossil Inc. et. al., case number 08-1233, the U.S. Supreme Court ruled that the Lahnam Act does not require a finding of willful infringement in order for a trademark owner to receive an award of defendant’s profits.

The case at issue involved handbag fasteners. The Plaintiff, Romag, sells magnetic snap fasteners for use in leather goods. copyright & trademarkDefendant, Fossil, designs, markets, and distributes a wide range of fashion accessories. The Parties had entered into an agreement allowing Fossil to use Romag’s fasteners in Fossil’s handbags and other products. Over time, Romag discovered that the factories Fossil hired in China to make its products were using counterfeit Romag fasteners—and that Fossil was doing little to guard against the practice. Romag subsequently filed suit in district court alleging Fossil had infringed its trademark and falsely represented that its fasteners came from Romag.

The jury in the original suit found that Fossil had acted “in callous disregard” of Romag’s rights but rejected Romag’s accusation that Fossil had acted willfully in its infringement. As a measure of damages, Romag sought disgorgement of the profits Fossil had earned via its trademark infringement. However, the district court refused that request and in doing so cited precedent from the Second Circuit requiring a plaintiff seeking a profits award to prove that the defendant’s violation was “willful.” Romag appealed the lower court ruling to the U.S. Supreme Court.

Writing for the Supreme Court, Justice Neil Gorsuch distinguished between actions brought under sections 1125(a) of the Lahnam Act which establishes a cause of action for the false or misleading use of trademarks and actions brought under section 1125(c) of the Lahnam Act which creates a cause of action for trademark dilution. Justice Gorsuch writes “The statute does make a showing of willfulness a precondition to a profits award when the plaintiff proceeds under §1125(c).” However, Romag’s case alleged a violation of section 1125(a) and the Court found that the statutory language of section 1125(a) “has never required a showing of willfulness to win a defendant’s profits.”

A complete copy of the Court’s opinion can be found here. pdf document