The U.S. Supreme Court recently granted writ of certiorari in a case with significant potential to alter the trademark infringement damages calculus. In that case, Romag Fasteners Inc. v. Fossil Inc. et al., Case No. 18-1233, the Supreme Court is expected to resolve a circuit split and decide what an aggrieved trademark owner must establish to recover an infringer’s profits.

The Lanham Act, codified at 15 U.S.C. § 1117(a), provides that trademark owners may collect “(1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” Whether profits, damages, or costs, that statute makes clear that a trademark owner’s recovery is “subject to the principles of equity.”

The federal courts of appeal have split when considering whether a finding of willful infringement is necessary to qualify an award of a “defendant’s profits” as “subject to the principles of equity.” The First, Second, Eighth, Ninth, Tenth, and D.C. circuits interpret the statute to require willful infringement as a prerequisite to any such award. Meanwhile, the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh circuit courts of appeal do not expressly require a willfulness prerequisite. Instead, those circuit courts see willfulness as one of several considerations relevant when determining whether a profits award is consistent with “the principles of equity.”

The Supreme Court is poised to resolve this circuit split, with the question presented as:

Whether, under Section 35 of the Lanham Act, 15 U.S.C. § 1117(a), willful infringement is a prerequisite for an award of an infringer’s profits for a violation of Section 43(a), 15 U.S.C. § 1125(a).

In the case that will go before the Court, a jury found that petitioner Romag Fasteners, Inc.’s trademark rights had been infringed and awarded damages including infringer’s profits of about $6.7 million. The district court subsequently struck Romag’s profits award because the jury also found that the infringement was not willful. On appeal, that ruling was affirmed by the Federal Circuit (applying Second Circuit law).

Bryan Cave Leighton Paisner LLP will continue to track developments in the case.