The U.S. Supreme Court has granted certiorari for Romag Fasteners Inc. v. Fossil Inc., No. 18-1233, and trademark practitioners are hopeful that the ruling will finally adjudicate the long-standing issue of whether a plaintiff must prove willfulness in order to obtain an award of a trademark infringer’s profits for violating 15 U.S.C. § 1125(a) of the Lanham Act.
In Romag Fasteners Inc., Plaintiff Romag succeeded on its trademark infringement claim against Defendant Fossil for the infringing use of the ROMAG mark. Although Romag and Fossil had previously entered into an agreement to use Romag’s fasteners—which bore the ROMAG mark—on Fossil’s products, Romag discovered that Fossil had been using counterfeit fasteners bearing the mark on Fossil’s handbags. The jury verdict in the ensuing trial awarded Romag nearly $6.8 million based on Fossil’s profits. However, the district court struck the jury’s award, since Romag had not shown Fossil committed willful infringement and that “a finding of willfulness remains a requirement for an award of defendants’ profits in this Circuit.” Romag Fasteners, Inc. v. Fossil, Inc., 29 F. Supp. 3d 85, 109 (D. Conn. 2014).
The Federal Circuit affirmed the District Court’s holding on appeal, determining that willfulness was a prerequisite for an award of profits in the Second Circuit. Romag Fasteners, Inc. v. Fossil, Inc., 817 F.3d 782 (Fed. Cir. 2016). The Federal Circuit held that since Romag could not prove that Fossil had “willfully” infringed, an award of Fossil’s profits was unwarranted. However, the Court also acknowledged the split in Circuit authority, noting that “the willfulness requirement was not uniformly adopted” and that “the Fifth Circuit held that whether the defendant had the intent to confuse or deceive is simply a relevant factor to the court’s determination of whether an award of profits is appropriate.” Id. at 787 (internal citations omitted).
Along with the Second Circuit, the First, Eighth, Ninth, Tenth, and D.C. Circuits all require that “willful” infringement must occur before an award of the infringer’s profits is available for the plaintiff. By contrast, the Third, Fourth, Fifth, Sixth, Seventh and Eleventh Circuits do not require a showing of willfulness for the plaintiff to recover an award of the infringer’s profits.
Recovery under the Lanham Act seeks to combine and balance theories of compensation (i.e. assessing profits) and deterrence (i.e. assessing damage). See 15 U.S.C. § 1117. However, trademark monetary awards are challenging to establish due to the difficulty in assessing the actual damage to a brand. Through disgorgement of the infringer’s profits and by awarding the infringer’s profits that the infringer would not have earned but for the wrongful acts, trademark awards may be reasonably calculated.
The Supreme Court’s ruling, if it were to resolve the circuit split, will change the state of the law for several circuits by standardizing whether willfulness is a prerequisite for an award of damages based on the defendant’s profits. The ruling may also have far-reaching effects on other actions under the Lanham Act, since 15 U.S.C. § 1117 of the Lanham Act impacts recovery for other tangential areas of law such as claims for false advertising.